boe

GBP: Services inflation to stay above 6%

The data flow picks up this week in the UK, with labour (Tuesday), CPI (Wednesday) and retail sales (Friday) statistics for the month of December being released. Services inflation is what matters the most for the Bank of England at the current stage and we expect to see it at 6.1% this week, considerably below the Bank of England's estimates. Despite the improvement in services disinflation, 6%+ remains too high and is unlikely to make the BoE endorse dovish rate expectations just yet.

EUR/GBP can retest the 0.8573 lows, but we expect it to find a bit more support this week as the euro may benefit from some hawkish comments by Lagarde in Davos. Our medium-term view on the pair remains bullish.

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(FB) Meta Shares Decreases by 20%, Netflix (NFLX) Shares Goes Down As Well (-30%)

(FB) Meta Shares Decreases by 20%, Netflix (NFLX) Shares Goes Down As Well (-30%)

Alex Kuptsikevich Alex Kuptsikevich 03.02.2022 14:47
Meta (FB) shares lost around 20% post-market, which appears to be an overreaction and shows how wary buyers have become of the former growth leaders, the so-called FAANG stocks. The sharp declines of former crowd favourites could result from a reassessment of the medium-term outlook, for example, due to changes in monetary policy. But they could also be the next domino effect in an impending bear market. Netflix shares lost more than 30% in a few days following a disappointing report late last month and fell 50% from their peak in late November before fumbling for support from bargain hunters. PayPal was not technically in the FAANG big league but was punished just as much, losing around 25% intraday yesterday. After Facebook, Snap (-15%) and Twitter (-7%) also took a tangential hit. In our view, these are not isolated corporate stories but manifestations of broader underline currents. And in the coming days, we will have to determine whether we see a change in the bull market leaders or the first signals of a prolonged bearish trend. In a bear market, the weakest stars are the first to fall, and then the vortex of decline attracts more and more strong participants. The first domino is meme stocks, which had fallen methodically since June when the first signals emerged that the Fed was starting to prepare the markets for a wind-down. Then we saw a peak in many high-tech stocks in November when the Fed started cutting back on buying. By this logic, the downward spiral could pull more strong stocks into a downward spiral by the time interest rates rise, which is expected in March. Looking more broadly at the Nasdaq100 index, there is a rather worrying tech analysis picture. It is once again below its 200-day moving average. The high-tech-filled Meta retreated 2.4% after the report. The S&P500 and DJIA, however, look noticeably stronger on the technical analysis side. But it is worth watching closely how the trading will go this week and whether the buyers will reverse the negative trend of the former Nasdaq favourites. If so, we see a change in the leaders in the form of a rotation in value stocks and other names affected by the pandemic. But fears that the Fed is preparing to take money out of the financial system could force market players to take money off the table by selling blue chips.
Meta (FB) Has Some Things To Worry About, Amazon (AMZN) And Ford (F) Ahead Of Publishing Their Reports

Meta (FB) Has Some Things To Worry About, Amazon (AMZN) And Ford (F) Ahead Of Publishing Their Reports

Swissquote Bank Swissquote Bank 03.02.2022 12:05
Yesterday’s ADP data showed that the US economy lost some 300’000 private jobs in December, versus 185’000 job additions expected by analysts, but no one cared. Google jumped by more than 7% yesterday to a fresh record high on the back of strong earnings. Nasdaq gained for the fourth consecutive session adding another 0.50% to its gains. But don’t uncork the champagne just yet! Because the Nasdaq futures are trading more than 2% lower at the time of writing. Disappointing Facebook results, and a 23% plunge in Meta shares in the afterhours trading calls for a red session in the US. Amazon is the last FAANG stock to announce earnings today, and the company is expected to reveal a second consecutive month of earnings decline. Ouch. Inflation in the Eurozone hit 5.1% in December. So, all eyes are on Christine Lagarde and what she has to say at today’s press conference. Will she insist that inflation is transitory or will she finally accept the defeat, and call it a problem? Across the Channel, the Brits will probably raise their interest rates by another 25bp for the second time at today’s meeting. Elsewhere, OPEC maintained its production increase target at 400’000 barrels per day and the consensus is a further advance in crude oil to $100pb in the foreseeable future. Watch the full episode to find out more! 0:00 Intro 0:36 Market update 2:23 Facebook plunges 20% post-results 3:40 Amazon to reveal another earnings decline 5:03 European inflation puts pressure on ECB 7:12 BoE to raise rates for the second time 8:16 OPEC raises output slowly, only 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.
Deer in the Headlights

Deer in the Headlights

Monica Kingsley Monica Kingsley 03.02.2022 15:56
S&P 500 is slowly getting under pressure, which is likely to culminate on weak non-farm payrolls tomorrow if Wednesday was any guide. Credit markets are pushing for higher yields as inflation data keep surprising those policy makers who had been already surprised throughout 2021. Commodities though aren‘t freezing as a proverbial deer in the headlights, and once the scare of the Fed‘s short tightening cycle gets done away with, precious metals would join. In the meantime, look for silver to act on copper‘s cue, and for gold to do relatively better in risk-off settings.As for stocks, my gentle selling bias while on the lookout to enter short towards the session‘s end, hasn‘t changed since yesterday, and the new position is already profitable:(…) the low volume behind the upswing coupled with credit market reversal shows that the push towards 4,600 is next – but it would be fraught with internal vulnerability. It‘s that value has welcomed the risk-on turn while tech barely prevented lower values – the bond reprieve won‘t last, and is providing more fuel behind the commodities push higher, and precious metals recovery.The Kashkari effect and good ISM Manufacturing PMIs have worked fine, but the services data awaits. And I‘m looking at it to throw a spanner in the works, a modest one. For now, controlling the overall risk is key – fresh portfolio highs were achieved yesterday as new S&P 500 long profits were taken off the table – and commodities with precious metals are likely to do well in this extended (sticking out like a sore thumb) rally off oversold levels (in tech). The other key thought expressed in the linked tweet is that S&P 500 hasn‘t entered a bear market, that it hasn‘t rolled over to the downside for good. It‘s that I expect the return of the bears in the not too distant future, and a smoother sailing in 2H 2022.Let‘s move right into the charts (all courtesy of www.stockcharts.com).S&P 500 and Nasdaq OutlookS&P 500 bulls prevailed yesterday, but would get under pressure relatively soon. The ominous lower knots say a consolidation is knocking on the door.Credit MarketsHYG repelled selling pressure, but that won‘t last – I‘m looking for lower values across the bond spectrum, coinciding with (temporary) dollar upswing. Risk-off.Gold, Silver and MinersAll this risk-off already in and still to come, is failing to press gold and silver really down – and that tells you the true direction is up, just waiting for a (Fed, inflation, stagflation) catalyst.Crude OilCrude oil bulls aren‘t yet wavering, but remain perched pretty high – I‘m looking for sideways to down consolidation as the bears get emboldened by the rising volume. Trying their luck soon.CopperCopper is back to the middle of its recent range, still positioned for an upside breakout. Commodities are pointing in the right direction – note the absence of sellers yesterday. How far would the USD upswing compress the red metal today? Not much, not lastingly.Bitcoin and EthereumThe narrow crypto trading range is over, and the bears are on the move – look for them to take some time before they get going towards BTC $35K.SummaryS&P 500 bulls are about to meet the bears again, and higher yields won‘t save value stocks, let alone spawn a rush to tech safety. The pressure in stocks to probe lower values, is building up, and 4,450 may not be enough to stop it. For all the pause in Fed hawkish jawboning, the tightening cycle is merely getting started, and stocks will feel it. Unlike precious metals, which would reverse prior hesitation once the rate raising starts in earnest, and start going up. And commodities? These aren‘t waiting for anyone‘s greenlight. And neither should you in life – what I would like to bring to your attention, is that volatility is rising, and it thus makes sense to pare back the overall portfolio exposure and position sizing while taking only the strongest of opportunities.Thank you for having read today‘s free analysis, which is available in full at my homesite. There, you can subscribe to the free Monica‘s Insider Club, which features real-time trade calls and intraday updates for all the five publications: Stock Trading Signals, Gold Trading Signals, Oil Trading Signals, Copper Trading Signals and Bitcoin Trading Signals.
Seasonality favors another wave up

Seasonality favors another wave up

Florian Grummes Florian Grummes 03.02.2022 21:05
However, these gains attracted some profit-taking at prices around US$1,850. And in the aftermath of last week’s FOMC meeting, gold sold off for three days in a row. This merciless sell-off only ended at US$1,780 wiping out nearly all gains since mid of December. It was some form of the classic “the bull walks up the stairs and the bear jumps out the window” pattern, which is a typical behavior within an uptrend.Hence and exactly for this reason, the deep pullback did not necessarily end the recovery in the gold market. Of course, in the bigger picture, the entire precious metals sector is still stuck in this tenacious correction which has been ongoing since August 2020. In the short-term, however, the pullback has created an oversold setup and once again proved that there is buying interest at prices below US$1,800.US-Dollar index, daily chart as of February 3rd, 2022. False breakout?US-Dollar index, daily chart as of February 3rd, 2022.It also seems that the US-Dollar might have hit an important top last Thursday and is now moving lower, which would be very supportive for gold, of course. Everyone is expecting the US-Dollar to go up as the FED is expected to raise interest rates. But the US-Dollar has been discounting this “hike and taper scenario” for several months already. Actually, the US-Dollar index has been rallying +8.8% since May 2021! During the recent FOMC meeting, however, big money might have used the seeming breakout to sell their dollar longs into a favorable high-volume setup. At the same time, stock market sentiment was extremely bearish. Hence, last week likely triggered a top in the US-Dollar and a violent back and forth bottoming pattern for the stock-market.US-Dollar index, monthly chart as of February 3rd, 2022. A series of lower highs!US-Dollar index, monthly chart as of February 3rd, 2022.In the big picture, a top in the US-Dollar would continue the series of lower highs for the dollar. As well, the US-Dollar is moving within a huge triangle since 2001. After a series of three lower highs since December 2016, a test of the lower boundary of the triangle would give gold prices an extreme tailwind in the coming years. Hence, even if it´s hard to come up with any bearish arguments for the dollar at the moment, technically it looks like the dollar could roll over.Gold in US-Dollar, daily chart from February 3rd, 2020. Gold’s behavior is changing.Gold in US-Dollar, daily chart as of February 3rd, 2022.For gold, a weaker US-Dollar would be very helpful. In fact, since the beginning of this week, we perceive an ongoing change in gold’s behavior. We are getting impressed by its intraday strength! Every small pullback around and below US$1,800 was rather quickly bought again. So far, gold has only recovered 38.2% of last week’s nasty sell-off and currently sits pretty much exactly at its 200-day moving average (US$1,805).But the fresh buy signal from the slow stochastic oscillator on the daily chart promises more upside. Hence, we see gold fuming its way higher in the coming weeks. In the next step, gold will have to overcome the 38.2% resistance around US$1,808.50 and then continue its recovery towards US$1,830. In any case, the seasonal component is at least very favorable until the end of February. Therefore, even higher price targets are conceivable too. But gold needs to breakout above the triangle and clear US$1,850. Only then a more sustainable bullish momentum would emerge which could last further into spring.If, on the other hand, gold takes out US$1,780, the recovery since mid of December might be over already and the medium-term correction might likely pick up again.Conclusion: Seasonality favors another wave upOverall, we assume that seasonality favors another wave up in the gold market. Thus, another rally towards at least US$1,830 is realistic. We are short-term bullish, mid-term neutral to skeptic and long-term very bullish for gold.Feel free to join us in our free Telegram channel for daily real time data and a great community. If you like to get regular updates on our gold model, precious metals and cryptocurrencies you can also subscribe to our free newsletter.Disclosure: Midas Touch Consulting and members of our team are invested in Reyna Gold Corp. These statements are intended to disclose any conflict of interest. They should not be misconstrued as a recommendation to purchase any share. This article and the content are for informational purposes only and do not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision. The views, thoughts and opinions expressed here are the author’s alone. They do not necessarily reflect or represent the views and opinions of Midas Touch Consulting.By Florian Grummes|February 3rd, 2022|Tags: EUR/USD, Gold, Gold Analysis, Gold bullish, gold chartbook, Gold neutral, precious metals, Reyna Gold, US-Dollar|0 CommentsAbout the Author: Florian GrummesFlorian Grummes is an independent financial analyst, advisor, consultant, trader & investor as well as an international speaker with more than 20 years of experience in financial markets. He is specialized in precious metals, cryptocurrencies and technical analysis. He is publishing weekly gold, silver & cryptocurrency analysis for his numerous international readers. He is also running a large telegram Channel and a Crypto Signal Service. Florian is well known for combining technical, fundamental and sentiment analysis into one accurate conclusion about the markets. Since April 2019 he is chief editor of the cashkurs-gold newsletter focusing on gold and silver mining stocks. Besides all that, Florian is a music producer and composer. Since more than 25 years he has been professionally creating, writing & producing more than 300 songs. He is also running his own record label Cryon Music & Art Productions. His artist name is Florzinho.
AMC Entertainment Holdings Stock News and Forecast: AMC nearly doubles debt raise

AMC Entertainment Holdings Stock News and Forecast: AMC nearly doubles debt raise

FXStreet News FXStreet News 03.02.2022 16:35
AMC stock slumped yesterday as debt raise news was digested. AMC now nearly doubles the raise from $500 million to $950 million. AMC is down over 40% in the last month and 43% for 2022. AMC Entertainment Holdings (AMC) stock is back on the news wires the last few days, but unfortunately for holders it has not been well received. AMC stock put in three consecutive green days before slumping over 8% on Wednesday. Risk aversion returned, but AMC also announced it was raising more debt to refinance its existing debt. The stock closed at $15.42 for an 8.5% loss on the day. AMC Stock News This morning AMC has nearly doubled its debt offering from $500 million to $950 million. There is also see a bit more detail on the offering. It is to carry a 7.5% interest rate and expires in 2029. The funds will be used to retire existing debt at 10.5% expiring in 2025. The extra $450 million sees AMC also redeeming some notes at 15-17% due in 2026. So AMC is basically remortgaging at a lower rate. This will reduce its interest payments. AMC needs to do this, however, as it carries too much debt. The company has $5.4 billion in long-term debt. AMC has about $1.6 billion in cash, but it spends nearly $100 million per quarter on debt repayments. So remortgaging makes sense, but it is not exactly comforting. CEO Adam Aron has been looking for ways to improve the financial position of the company, and investors baulked at more share issuances. This was the obvious next step but comes a bit later than optimal. Junk bond yields had reached a record low during the summer. The rate of 7.5% is more or less in line with the sector. CCC high yield corporate bonds are currently yielding on average 8.3%. This is up from 6% during the summer. Moody's reacted positively and changed its outlook to positive. AMC Stock Forecast For now, AMC shares are holding the support at $14.54, but risk aversion is growing after FB earnings last night and a suprisngly hawkish Bank of England this morning. Equity markets will suffer with high risk names getting hit the most. Expect $14.54 to break with the next support at $12.22. A break here and the lure of $10 will be obvious. Only beaking $21.04 ends this curent bearish trend. AMC daily chart
Crypto Airdrop - Explanation - How Does It Work?

Cryptomarket Seems Not To Lose That Much as Bitcoin decreases by 0.7%, ETH by 1.8% and Luna Gains 4.3%

Alex Kuptsikevich Alex Kuptsikevich 04.02.2022 08:28
Bitcoin fell 0.7% on Thursday, ending the day around $36,800. Ethereum lost 1.8%, while other leading altcoins in the top 10 showed mixed dynamics from a 1.5% decline (Solana and Polkadot) to a 4.3% rise (Terra). Total crypto market capitalisation, according to CoinGecko, added 0.2% to $1.79 trillion overnight. Bitcoin’s dominance index remained unchanged at 39.2%. Most cryptocurrencies were under pressure from declines in US tech stocks on Thursday. A weak report from Meta (Facebook) was published the day before, and the company’s shares lost more than 26% on the day, with the high-tech Nasdaq down almost 4%. The correlation between bitcoin and the Nasdaq stock index has recently reached a new high. The first cryptocurrency was also hit by a shutdown of mining farms in Texas, caused by bad weather and a snowstorm. The state leads bitcoin mining in the US, accounting for about half of all BTC hash rates. Bitcoin volatility has fallen to 15-month lows in recent days. With the comparative performance of traditional financial markets, bitcoin has managed to add around 2.9% since the start of the day on Friday, reaching 38,000 and again testing the upper limit of the downward channel. However, the first cryptocurrency will need to break the key $40,000 level to confirm bullish sentiment. Otherwise, the pressure on BTC will continue and may even intensify. The developers of the 14th cryptocurrency, Shiba Inu, have partnered with fast-food restaurant Wellu’s of Naples, Italy. The restaurant will use SHIB as a means of payment and has also fully rebranded its outlet in token style.
Having A Look At The Markets Considering Tensions, COVID-19 And National Banks Decisions

EURUSD - Heading To 1.1480? GBPUSD After BoE Decision, CADJPY - A Quite Wide Rang?

John Benjamin John Benjamin 04.02.2022 09:38
EURUSD breaks higher The euro soared as traders bet that persistent inflation could force the ECB to act sooner than later. A break below the daily support at 1.1300 had put the single currency under pressure. However, a swift rebound above this support-turned-resistance indicates strong commitment from the buy-side. The pair is rising towards the January peak at 1.1480. The RSI’s triple top in the overbought area may slow the momentum down as intraday buyers take a break. 1.1270 is a key support to keep the rebound relevant. GBPUSD tests resistance The pound popped higher after the BOE raised interest rates to 0.5%. The latest rebound above the resistance at 1.3520 has prompted sellers to cover. Then the rally is accelerating towards 1.3660 which is a major hurdle from the sell-off in late January. A bullish breakout could turn sentiment in the sterling’s favor and send the price to the previous peak at 1.3740. On the downside, 1.3500 is an important support and its breach could invalidate the recovery despite the bullish catalyst. CADJPY awaits breakout The Canadian dollar recovers over growing risk appetite. A fall below the demand zone around 90.60 weighed on sentiment as the loonie struggled to make a higher high. The pair found support at 89.70 in what used to be a former supply area on the daily chart. The current consolidation is a sign of indecision. 91.10 proves to be a tough resistance to crack. A bullish breakout could bring the price to the recent peak at 92.00. Failing that, the pair may suffer from another round of sell-off below 89.10.
Price Of Gold Update By GoldViewFX

How the Fed Will Affect Gold? Let's Take A Look Back...

Arkadiusz Sieron Arkadiusz Sieron 04.02.2022 14:47
  Beware, the Fed’s tightening of monetary policy could lift real interest rates! For gold, this poses a risk of prices wildly rolling down. The first FOMC meeting in 2022 is behind us. What can we expect from the US central bank this year and how will it affect the price of gold? Well, this year’s episode of Fed Street will be sponsored by the letter “T”, which stands for “tightening”. It will consist of three elements. First, quantitative easing tapering. The asset purchases are going to end by early March. To be clear, during tapering, the Fed is still buying securities, so it remains accommodative, but less and less. Tapering has been very gradual and well-telegraphed to the markets, so it’s probably already priced in gold. Thus, the infamous taper tantrum shouldn’t replay. Second, quantitative tightening. Soon after the end of asset purchases, the Fed will begin shrinking its mammoth balance sheet. As the chart below shows, it has more than doubled since the start of the pandemic, reaching about $9 trillion, or about 36% of the country’s GDP. It’s so gigantic that even Powell admitted during his January press conference that “the balance sheet is substantially larger than it needs to be.” Captain Obvious attacked again! In contrast to tapering, which just reduces additions to the Fed’s holdings, quantitative tightening will shrink the balance sheet. How much? It’s hard to say. Last time, during QT from 2017 to 2019, the Fed started unloading $10 billion in assets per month, gradually lifting the cap to $50 billion. Given that inflation is now much higher, and the Fed has greater confidence in the economic recovery, the scale of reduction would probably be higher. The QT will create upward pressure on interest rates, which could be negative for the gold market. However, QT will be a very gradual and orderly process. Instead of selling assets directly, the US central bank will stop reinvestment of proceeds as securities run off. As we can read in “Principles for Reducing the Size of the Federal Reserve's Balance Sheet”, The Committee intends to reduce the Federal Reserve's securities holdings over time in a predictable manner primarily by adjusting the amounts reinvested of principal payments received from securities held in the System Open Market Account. What’s more, the previous case of QT wasn’t detrimental to gold, as the chart below shows. The price of gold started to rally in late 2018 and especially later in mid-2019. Third, the hiking cycle. In March, the Fed is going to start increasing the federal funds rate. According to the financial markets, the US central bank will enact five interest rate hikes this year, raising the federal funds rate to the range of 1.25-1.50%. Now, there are two narratives about American monetary policy in 2022. According to the first, we are witnessing a hawkish revolution within the Fed, as it would shift its monetary stance in a relatively short time. The central bank will “double tighten” (i.e., it will shrink its balance sheet at the same time as hiking rates), and it will do it in a much more aggressive way than after the Great Recession. Such decisive moves will significantly raise the bond yields, which will hit gold prices. However, in this scenario, the Fed’s aggressive actions will eventually lead to the inversion of the yield curve and later to recession, which should support the precious metals market. On the other hand, some analysts point out that central bankers are all talk and – given their dovish bias – act less aggressively than they promise, chickening out in the face of the first stock market turbulence. They also claim that all the Fed’s actions won’t be enough to combat inflation and that monetary conditions will remain relatively loose. For example, Stephen Roach argues that “the Fed is so far behind [the curve] that it can’t even see the curve.” Indeed, the real federal funds rate is deeply negative (around -7%), as the chart below shows; and even if inflation moderates to 3.5% while the Fed conducts four hikes, it will remain well below zero (about -2%), providing some support for gold prices. Which narrative is correct? Well, there are grains of truth in both of them. However, I would like to remind you that what really matters for the markets is the change or direction, not the level of a variable. Hence, the fact that real interest rates are to stay extremely low doesn’t guarantee that gold prices won’t decline in a response to the hiking cycle. Actually, as the chart above shows, the upward reversal in the real interest rates usually plunges gold prices. Given that real rates are at a record low, a normalization is still ahead of us. Hence, unless inflation continues to rise, bond yields are likely to move up, while gold – to move down. Thank you for reading today’s free analysis. We hope you enjoyed it. If so, we would like to invite you to sign up for our free gold newsletter. Once you sign up, you’ll also get 7-day no-obligation trial of all our premium gold services, including our Gold & Silver Trading Alerts. Sign up today! Arkadiusz Sieron, PhDSunshine Profits: Effective Investment through Diligence & Care.
Smelling Blood

Smelling Blood

Monica Kingsley Monica Kingsley 04.02.2022 15:58
S&P 500 is grinding lower, and bonds concur. Risk-off posture and rising yields aren‘t tech‘s friend really, and the VIX is back to moving up. The odd thing is that the dollar wasn‘t well bid yesterday as could have been expected on rising rates – the sentiment called for a bad non-farm payrolls number today. Understandably so given Wednesday‘s preview, and the figure would just highlight how desperately behind the inflation curve the Fed is, what kind of economy it would be tightening into, and shine more light on its manouevering room for Mar FOMC.Fun times ahead for the bears, and the S&P 500 short profits can go on growing – the ride isn‘t over: If tech – in spite of the great earnings Amazon move – gets clobbered this way again on the rising yields, then we could very well see even energy stocks feel the initial selling wave. Not that value stocks would be unaffected, to put it more than mildly – just check yesterday‘s poor showing of financials. Something is going to give, and soon.Precious metals are holding up relatively well, regardless of the miners‘ weakness. Commodities can go on enjoying their time in the limelight – crude oil is not even momentarily dipping, and copper stands ready to keep probing higher values within its still sideways range. Even cryptos are benefiting from what could almost be described as a daily flight to safety.As I wrote in extensive Monday‘s analysis and repeated since, stiff winds are still ahead in spite of the soothing verbal pause in tightening. As the 467K figure just in beats expectations, the Fed gets its justification to withdraw liquidity any way it pleases.Let‘s move right into the charts (all courtesy of www.stockcharts.com).S&P 500 and Nasdaq OutlookS&P 500 bulls are getting slaughtered, and the downhill path is likely to continue, thanks to tech. Brace for a volatile day today.Credit MarketsHYG selling pressure made a strong return, predictably. Credit markets are leading stocks to the downside, certainly.Gold, Silver and MinersAs written yesterday, all this risk-off already in and still to come, is failing to press gold and silver really down – and that tells you the true direction is up. The downswings are being bought.Crude OilCrude oil bulls in the end didn‘t waver, and are pushing higher already – the upside breakout can really stick.CopperCopper is back to the middle of its recent range, still positioned for an upside breakout. It would take time, and precede the precious metals one. Rising commodities are sending a clear message as to which way the wind is blowing.Bitcoin and EthereumThe crypto bears didn‘t get far, and it looks like we‘re back to some chop ahead. SummaryS&P 500 bulls are getting rightfully challenged again – the Fed hikes are approaching. See though how little are commodities and precious metals affected. Meanwhile the S&P 500 internals keep deteriorating. Today‘s analytical introduction is special in talking the non-farm payrolls and Fed tightening dynamic, and explains why the pressure in stocks to probe lower values, is still building up, and that 4,450 may not be enough to stop it. For all the pause in Fed hawkish jawboning, the tightening cycle is merely getting started, and today‘s surprisingly strong data gives the Fed as much justification as the quickening wage inflation. I hope you enjoyed today‘s extensive analysis and yesterday‘s risk exposure observations. Have a great day ahead!Thank you for having read today‘s free analysis, which is available in full at my homesite. There, you can subscribe to the free Monica‘s Insider Club, which features real-time trade calls and intraday updates for all the five publications: Stock Trading Signals, Gold Trading Signals, Oil Trading Signals, Copper Trading Signals and Bitcoin Trading Signals.
Ethereum Price Prediction: ETH targets $3,000

Ethereum Price Prediction: ETH targets $3,000

FXStreet News FXStreet News 04.02.2022 16:06
Ethereum price made a false break below a short-term trend line yesterday.ETH price breaks above $2,695 and is set for a run towards $3,018.This would mean 13% gains for ETH and a more favourable outlook for next week.Ethereum (ETH) price is set to book the best gains it has made for the whole of 2022, as a bullish candle has now formed on the back of a significant support level. With that move, many bears are getting hurt as they probably fell in the bear trap with the false break below the supportive short-term trend line. Expect more upside to come with global markets enjoying the rally in Amazon shares, which is spilling over into cryptocurrencies and lifting sentiment in ETH towards $3,018.ETH bulls are stabbing bears in the back with a trapEthereum price was dangling below a short-term trend line and looked quite heavy after the slippage (https://www.fxstreet.com/cryptocurrencies/news/top-3-price-prediction-bitcoin-ethereum-ripple-crypto-sentiments-rolls-over-as-meta-shakes-nasdaq-202202031412) from META earnings. But that markets can change their minds overnight is proven yet again, after Amazon’s earnings fueled a booster rally which we are seeing today. This has spilled over into cryptocurrencies and is lifting sentiment in ETH prices with a firm break above $2,695, squeezing out bears in the process, who went short on the false break of the trend line, and it is now just a matter of time before they close out and take their losses.ETH price is thus set for a second rally today as those bears will need to revert to the buy-side volume (https://www.fxstreet.com/cryptocurrencies/news/ethereum-price-pushes-higher-eth-targeting-3-500-202202021800) to close and cut their losses. This will add a boost to ETH prices and could see Ethereum bulls hitting the price target at $3,018, taking out the $3,000 level, and setting the stage for next week. With that move, the red descending trend line could be broken, and with that, the downturn since December, finally (https://www.fxstreet.com/cryptocurrencies/news/ethereum-price-pushes-higher-eth-targeting-3-500-202202021800) breaking the chances for bears and setting the stage for a possible longer-term uptrend.ETH/USD daily chartNevertheless, there are still some earnings on the docket for today that could surprise to the downside and see those tailwinds (https://www.fxstreet.com/cryptocurrencies/news/top-3-price-prediction-bitcoin-ethereum-ripple-crypto-markets-to-favor-bears-soon-202202020838) as quickly fade as they came. Expect that with that lack of support, ETH price will collapse back to $2,695 and start to weigh further on the bulls. Should that spiral into equities, pushing them firmly in the red, and impacting safe haven flow – expect a dip back towards $2,600.
Ukrainian Tensions and Oil - Is Russia Really the Bad Guy?

Ukrainian Tensions and Oil - Is Russia Really the Bad Guy?

Finance Press Release Finance Press Release 04.02.2022 18:04
While everyone is criticizing Russia, it’s easy to follow the US ‘savior’ narrative. However, what if we looked at what’s happening with oil in mind?Disclaimer to today’s article: I’m providing this analysis from a pure energy-focused perspective. I do not claim it represents THE right view, but rather one of those that won’t be as visible in the mainstream. It is interesting to add different views as pieces of the same puzzle. I am looking forward to reading yours in the comments!Picture Source: MemedroidSeveral port facilities in Germany, the Netherlands and Belgium have been the target of cyberattacks, prompting the judicial authorities to investigate the suspicions of extortion of funds at the expense of German operators in the oil sector. Indeed, it would appear that this series of computer hackings that began several days ago primarily concerns oil terminals. This is disrupting deliveries in several major European ports against a backdrop of soaring energy prices.After jumping the day before, thanks to the strengthening of the euro against the US dollar induced by ECB President Lagarde, oil prices continued to rise during the European session on Friday. Consequently, the fall in the greenback came on top of the recovery in demand, the fall in US crude inventories and the disruptions in supply to boost the price of black gold on the climb, the two crude benchmarks evolving above the psychological mark of 90 dollars a barrel, galvanized by solid demand and tensions on the offer coming from (geo-)political risks.Who is Provoking Who?The situation is rather complex on the geopolitical scene, with the US claiming that Russia is planning an invasion in Ukraine, whereas the US under NATO cover sent additional troops to Eastern Europe. The question that may arise here is: who is provoking who? So far, we haven’t seen Russia placing troops in Mexico, on the border with the United States. On the other hand, the Biden administration may encounter difficulties in accepting that the Kremlin can agree to various partnerships with its European neighbors, especially regarding more favorable energy supplies. Instead, it’s in the US interest to weaken those diplomatic relations, potentially leading to additional partnerships that may arise between the EU and Putin.And as we see the US-led narrative getting through the Western mainstream media with more aggressive, suspicious, and tense tones towards Russia, this obviously has the effect of pouring some oil on the Russian-Ukrainian fire. Furthermore, the US needs reasons to demonstrate that NATO is still alive and relevant while a number of countries are now questioning their own participation in the US-led military organisation created in 1949, even going so far as to show some doubts regarding its current motivations.Isolating the Russian BearBy maintaining a hostile tone towards Russia’s intentions, the US is consequently trying to isolate the Russian bear and push their European partners to blindly follow the “official narrative” (as the EU being part of NATO), which could possibly lead to new sanctions on Russia, the latter being able to retaliate by using its energy assets and capacities to deprive the EU of the Russian supplies, which currently on the gas side represent between 30% and 40% of total gas imports for Europe. Then, as a result, the Americans could start exporting more gas into Europe via Liquefied Natural Gas (LNG) shipping – which again could benefit their energy-led commercial balance – the Europeans thus becoming the losing players in this game.As an example, we saw this week that a tanker loaded with LNG from the US will arrive at the LNG terminal in Świnoujście (Poland) at the end of this month, since Poland has LNG import capabilities which could be used to deliver US gas to Ukraine. Apparently, this is the second time (after the first one took place two years ago) that such gas deliveries are made by PGNiG, the Polish state-controlled oil and gas company, in cooperation with ERU (their strategic trading partner on the Ukrainian market).Actually, Ukraine suspended imports of Russian gas at the end of 2015. After relying on Russian gas imports for decades, they currently increasingly depend on imports from Europe. Since Ukraine has no LNG import capabilities, such US gas deliveries have been organized via a pipeline from the Polish terminal (through re-gasified LNG).WTI Crude Oil (CLH22) Futures (March contract, daily chart)Brent Crude Oil (BRJH22) Futures (April contract, daily chart)RBOB Gasoline (RBH22) Futures (March contract, daily chart)Henry Hub Natural Gas (NGG22) Futures (February contract, daily chart)In summary, geopolitics is always complex because it relies on individual economic and strategic interests of countries. The readings also depend on different views, and since there is always a lot of noise, it often helps to take some steps back in order to analyze the global situation from a different angle.Have a nice weekend! And remember to chime in on the conversation.Like what you’ve read? Subscribe for our daily newsletter today, and you'll get 7 days of FREE access to our premium daily Oil Trading Alerts as well as our other Alerts. Sign up for the free newsletter today!Thank you.Sebastien BischeriOil & Gas Trading Strategist* * * * *The information above represents analyses and opinions of Sebastien Bischeri, & Sunshine Profits' associates only. As such, it may prove wrong and be subject to change without notice. At the time of writing, we base our opinions and analyses on facts and data sourced from respective essays and their authors. Although formed on top of careful research and reputably accurate sources, Sebastien Bischeri and his associates cannot guarantee the reported data's accuracy and thoroughness. The opinions published above neither recommend nor offer any securities transaction. Mr. Bischeri is not a Registered Securities Advisor. By reading Sebastien Bischeri’s reports you fully agree that he will not be held responsible or liable for any decisions you make regarding any information provided in these reports. Investing, trading and speculation in any financial markets may involve high risk of loss. Sebastien Bischeri, Sunshine Profits' employees, affiliates as well as their family members may have a short or long position in any securities, including those mentioned in any of the reports or essays, and may make additional purchases and/or sales of those securities without notice.
Bitcoin is gaining momentum

Bitcoin is gaining momentum

Alex Kuptsikevich Alex Kuptsikevich 07.02.2022 08:52
Bitcoin is up 9% over the past week, ending at around $41,700. Ethereum is up 15%. Altcoins also woke up from hibernation and grew stronger than the market: from 5.8% (Binance Coin) to 17.3% (Solana).Over the same period, the total capitalization of the crypto market, according to CoinGecko, grew by 11.2%, up to $1.99 trillion.The primary growth of the crypto market last week came on Friday when bitcoin at the end of the day soared by 10% in a few hours. The increase was not prevented even by strong data on the US labor market, which came out a couple of hours before the jump.It is worth noting that the Nonfarm Payrolls can force the Fed to move faster to tighten monetary policy. Against this background, the yield of 10-year Treasuries jumped above 1.93%, hitting new two-year highs, and this could soon lead to sales in the stock market. If cryptocurrencies manage to resist and continue to grow, this will be a serious trend reversal order. Just like on Friday, when investors decided to buy BTC in order to protect investments from inflation.Since then, Bitcoin has already added 17%, moving into a phase of an active uptrend. Technically, the first cryptocurrency broke the resistance of the descending corridor. Accelerating growth and steady buying throughout the weekend indicate a strong bullish momentum. Cautious investors are now looking at the test of the 50-day moving average. Previously, repeatedly fixing above this line preceded a multi-month uptrend.Potentially, this will also be lost now. Therefore, some players consider this impulse as an important first signal of a recovery in demand for risky assets, despite fears of a rate increase.Meanwhile, billionaire Ray Dalio has warned that a number of governments could outlaw cryptocurrencies. The government of the Russian Federation is considering introducing a tax on miners of at least 15%. According to the authorities, the tax on all participants in the crypto market can bring up to 1 trillion rubles to the treasury. In the meantime, the Fed has presented the Digital Dollar White Paper, but the issue of its future launch has not yet been resolved.
Rally Time

Rally Time

Monica Kingsley Monica Kingsley 07.02.2022 15:59
S&P 500 refused to break below 4,450s, and junk bonds took off the lows as well. The bottom isn‘t in, but I‘m looking for a little reprieve next. The degree to which bonds were sold off vs. stocks, hints that we would have lower to go still, ultimately bottoming around late Feb, perhaps even early Mar. Increasingly more Fed hikes are being priced in, and Friday‘s good non-farm payrolls figure is reinforcing these expectations.Treasuries are telling the story as well – the 10-year yield has been surging lately while the 30-year bond didn‘t move nearly as much. It means a lot of focus on Fed tightening, which is making the recent Amazon and Meta earnings ability to move stocks this much, all the better for the S&P 500 in the short run. The 10-year yield is likely to retrace a part of its prior increase, and that would give stocks some breathing room. At the same time though, I don‘t think that the tech selling is done, that tech is out of the woods now – the current rally is likely to run out of steam over the next 5-10 days, then go sideways to down.As for the immediate plan for Monday‘s session, I think the 4460s would hold on any retest, should we get there at all. The bulls have a very short-term advantage, then as mentioned above, selling would resume, and around May or June we could get the answer as to whether we‘ve been just consolidating or topping out. Before that, we‘re in a quite wide range where current stock market values aren‘t truly reflecting bond market sluggishness.Keeping in mind the key Friday‘s conclusion:(…) Precious metals are holding up relatively well, regardless of the miners‘ weakness. Commodities can go on enjoying their time in the limelight – crude oil is not even momentarily dipping, and copper stands ready to keep probing higher values within its still sideways range. Even cryptos are benefiting from what could almost be described as a daily flight to safety.As I wrote in extensive Monday‘s analysis and repeated since, stiff winds are still ahead in spite of the soothing verbal pause in tightening. As the 467K figure just in beats expectations, the Fed gets its justification to withdraw liquidity any way it pleases.Let‘s move right into the charts (all courtesy of www.stockcharts.com).S&P 500 and Nasdaq OutlookS&P 500 bulls aren‘t yet winning, but have a good chance to suck in those who believe the tech bottom is in – tech bears would get another opportunity in the not too distant future.Credit MarketsHYG paused, and the heavy selling is catching a bid – reprieve is approaching even if Friday‘s highs didn‘t last.Gold, Silver and MinersPrecious metals aren‘t getting anywhere, and are likely to warmly embrace the upcoming pause in higher yields. But that‘s not yet the true fireworks we would get later in 2022, which would come on the Fed‘s abrupt U-turn.Crude OilCrude oil bulls aren‘t even remotely pausing – I wouldn‘t count on pullback towards $88 or lower really. There is still much strength in black gold regardless of the Iran sanctions waiver – triple digit oil I called for months ago, is getting near.CopperCopper is back to the middle of its recent range, and the downside looks fairly well defended. The upside breakout would take time, and precede the precious metals one. Rising commodities are still sending a clear message as to which way the wind is blowing.Bitcoin and EthereumThe crypto break higher attests to the return of strength underway, and it‘s supported by the volume. The buyers have the short-term upper hand.SummaryS&P 500 bulls withstood the prospect of hawkish Fed getting more job market leeway on Friday, and look to be entering the week with a slight advantage. Also the bond markets look nearning the moment of calming down as the longer durations are painting a different picture than the 10-year Treasury. S&P 500 would like that, but the tech rebound would get tested as we likely move lower to welcome Mar. Till then, stocks are likely to drift somewhat higher before the rally runs out of steam over the next 5-10 days. Full game plan with reasoning is introduced in the opening part of today‘s extensive analysis. Cryptos good performance on Friday is as promising as the commodities surge – enjoy the days ahead.Thank you for having read today‘s free analysis, which is available in full at my homesite. There, you can subscribe to the free Monica‘s Insider Club, which features real-time trade calls and intraday updates for all the five publications: Stock Trading Signals, Gold Trading Signals, Oil Trading Signals, Copper Trading Signals and Bitcoin Trading Signals.
Bitcoin, Ethereum, Metaverse Tokens Sink After Holiday Crypto Rally

Top 3 Price Prediction Bitcoin, Ethereum, Ripple: BTC bears to go extinct beyond $53,000

FXStreet News FXStreet News 07.02.2022 16:06
Bitcoin price looks overextended as it grapples with the 50-day SMA and the weekly resistance barrier at $42,816. Ethereum price pierces through the bearish breaker and approaches the 50-day SMA at $3,242. Ripple price approaches the $0.757 to $0.807 supply zone that could cut the uptrend short. Bitcoin price has seen tremendous gains over the past three days as it attempts to overcome a massive hurdle. While altcoins like Ethereum and Ripple have corresponded to this bullishness, investors need to exercise caution with fresh investments as a retracement could be around the corner. Bitcoin price faces a decisive moment Bitcoin price has risen 18% over the past four days and is currently hovering below the 50-day Simple Moving Average (SMA) and the weekly resistance barrier confluence at $42,816. If this uptrend is a bull trap, BTC is likely to see rejection followed by a retracement to the immediate support level at $8,481. A breakdown of the said barrier will knock the big crypto down to $34,752. In an extremely bearish case, Bitcoin price could revisit the $30,000 psychological barrier and collect the liquidity resting below it. BTC/USD 1-day chart If BTC produces a daily candlestick close above the breaker’s upper limit at $44,387, however, it will invalidate the bearish thesis. While this development will alleviate the sell-side pressure, it does not mean that Bitcoin price has flipped bullish. A daily candlestick close above $52,000 will produce a higher high and suggest the possible start of an uptrend. Ethereum price slithers close to bearish thesis invalidation Ethereum price has followed the big crypto and pierced the bearish breaker, ranging from $2,789 to $3,167. Any further bullish momentum will push ETH to climb higher and retest the 50-day SMA at $3,242. Assuming BTC retraces, investors can expect Ethereum price to face rejection at $3,242, leading to a 25% pullback to the weekly support level at $2,324. In a highly bearish case, Ethereum price could revisit the $1,730 weekly support level and collect the sell-side liquidity resting below it. ETH/USD 1-day chart Regardless of the bearish outlook, the Ethereum price can invalidate the short-term bearish outlook if it produces a daily candlestick close above the $3,167 resistance zone. A bullish scenario could be kick-started, however, if buyers push ETH to produce a swing high at $3,413. Ethereum price gains momentum to breakout to $3,300 Ripple price faces a blockade Ripple price broke out of its consolidation and rallied 25% from $0.604 to $0.754. This impressive move is currently retesting the weekly resistance barrier at $0.740, which rests below another hurdle that extends from $0.757 to $0.807. Rejection at this multi-resistance zone seems likely considering the situation in which Bitcoin is in, and investors can expect the Ripple price to retrace 16%, returning to the consolidation zone at $0.628. XRP/USD 1-day chart A daily candlestick close above the supply zone’s upper limit at $0.807 will signal a resurgence of buyers and indicate their willingness to move higher. In this case, Ripple price could set up a higher high by rallying 12% to $0.911.    
Are You Thinking the Dollar Will Collapse? That’s False Hope

Are You Thinking the Dollar Will Collapse? That’s False Hope

Przemysław Radomski Przemysław Radomski 07.02.2022 15:49
  Gold’s latest feats increased investors’ appetite. The outlook for the dollar, however, remains healthy. That can only mean one thing. As volatility erupts across the financial markets, gold and silver prices are being pulled in conflicting directions. For example, with the USD Index suffering a short-term decline, the outcome is fundamentally bullish for the precious metals. However, with U.S. Treasury yields rallying, the outcome is fundamentally bearish for gold and silver prices. Then, with panic selling and panic buying confronting the general stock market, the PMs are dealing with those crosscurrents. However, with QE on its deathbed and the Fed poised to raise the Federal Funds Rate in the coming months, the common denominator is rising real interest rates. To explain, the euro’s recent popularity has impacted the USD Index. For context, the EUR/USD accounts for nearly 58% of the dollar basket’s movement. Thus, if real interest rates rise and the U.S. dollar falls, what will happen to the PMs? Well, the reality is that rising real interest rates are bullish for the USD Index, and the euro’s recent ECB-induced rally is far from a surprise. With investors often buying the EUR/USD in anticipation of a hawkish shift from the ECB, another ‘hopeful’ upswing occurred. However, the central bank disappointed investors time and time again in 2021, and the currency pair continued to make new lows. As a result, we expect the downtrend to resume over the medium term.  Supporting our expectations, I wrote the following about financial conditions and the USD Index on Feb. 2: To explain, the blue line above tracks Goldman Sachs' Financial Conditions Index (FCI). For context, the index is calculated as a "weighted average of riskless interest rates, the exchange rate, equity valuations, and credit spreads, with weights that correspond to the direct impact of each variable on GDP." In a nutshell: when interest rates increase alongside credit spreads, it's more expensive to borrow money and financial conditions tighten. To that point, if you analyze the right side of the chart, you can see that the FCI has surpassed its pre-COVID-19 high (January 2020). Moreover, the FCI bottomed in January 2021 and has been seeking higher ground ever since. In the process, it's no coincidence that the PMs have suffered mightily since January 2021. To that point, with the Fed poised to raise interest rates at its March monetary policy meeting, the FCI should continue its ascent. As a result, the PMs' relief rallies should fall flat like in 2021.  Likewise, while the USD Index has come down from its recent high, it's no coincidence that the dollar basket bottomed with the FCI in January 2021 and hit a new high with the FCI in January 2022. Thus, while the recent consolidation may seem troubling, the medium-term fundamentals supporting the greenback remain robust. Furthermore, tighter financial conditions are often a function of rising real interest rates. As mentioned, the USD Index bottomed with the FCI and surged to new highs with the FCI. As a result, the fundamentals support a stronger, not weaker USD Index. As evidence, the U.S. 10-Year real yield, the FCI, and the USD Index have traveled similar paths since January 2020. Please see below: To explain, the green line above tracks the USD Index since January 2020, while the red line above tracks the U.S. 10-Year real yield. While the latter didn’t bottom in January 2021 like the USD Index and the FCI (though it was close), all three surged in late 2021 and hit new highs in 2022. Moreover, the U.S. 10-Year Treasury nominal and real yields hit new 2022 highs on Feb. 4.  In addition, if you compare the two charts, you can see that all three metrics spiked higher when the coronavirus crisis struck in March 2020. As such, the trio often follows in each other’s footsteps. Furthermore, with the Fed likely to raise interest rates at its March monetary policy meeting, this realization supports a higher U.S. 10-Year real yield, and a higher FCI. As a result, the fundamentals underpinning the USD Index remain robust, and short-term sentiment is likely to be responsible for the recent weakness.  Likewise, as the Omicron variant slows U.S. economic activity, the ‘bad news is good news’ camp has renewed hopes for a dovish Fed. However, the latest strain is unlikely to affect the Fed’s reaction function. A case in point: after ADP’s private payrolls declined by 301,000 in January (data released on Feb. 2), concern spread across Wall Street. However, after U.S. nonfarm payrolls (government data) came in at 467,000 versus 150,000 expected on Feb. 4, the U.S. labor market remains extremely healthy.  Please see below: Source: U.S. Bureau of Labor Statistics (BLS) On top of that, the BLS revealed that “the over-the-month employment change for November and December 2021 combined is 709,000 higher than previously reported, while the over-the-month employment change for June and July 2021 combined is 807,000 lower. Overall, the 2021 over-the-year change is 217,000 higher than previously reported.”  Thus, the U.S. added more than 700,000 combined jobs in November and December than previously reported, and the net gain in 2021 was more than 200,000. Please see below: Source: BLS As for wage inflation, the BLS also revealed: “In January, average hourly earnings for all employees on private nonfarm payrolls increased by 23 cents to $31.63. Over the past 12 months, average hourly earnings have increased by 5.7 percent.” As a reminder, while investors speculate on the prospect of a hawkish ECB, the latest release out of Europe shows that wage inflation is much weaker than in the U.S. To explain, I wrote on Feb. 1: Eurozone hourly labor costs rose by 2.5% YoY on Dec. 16 (the latest release). Moreover, the report revealed that “the costs of wages & salaries per hour worked increased by 2.3%, while the non-wage component rose by 3.0% in the third quarter of 2021, compared with the same quarter of the previous year.”  As a result, non-wage labor costs – like insurance, healthcare, unemployment premiums, etc. – did the bulk of the heavy lifting. In contrast, wage and salary inflation are nowhere near the ECB’s danger zone. Please see below: And why is wage inflation so critical? Well, ECB Chief Economist Philip Lane said on Jan. 25: Source: ECB As a result, when the ECB’s Chief Economist tells you that wage inflation needs to hit 3% YoY to be “consistent” with the ECB’s 2% overall annual inflation target, a wage print of 2.3% YoY is far from troublesome. Thus, while euro bulls hope that the ECB will mirror the Fed and perform a hawkish 180, the data suggests otherwise.  In addition, while U.S. nonfarm payrolls materially outperformed on Feb. 4, I noted on Feb. 2 that there are now 4.606 million more job openings in the U.S. than citizens unemployed. Please see below: To explain, the green line above subtracts the number of unemployed U.S. citizens from the number of U.S. job openings. If you analyze the right side of the chart, you can see that the epic collapse has completely reversed and the green line is now at an all-time high. Thus, with more jobs available than people looking for work, the economic environment supports normalization by the Fed. Thus, if we piece the puzzle together, the U.S. labor market remains healthy and U.S. inflation is materially outperforming the Eurozone. As a result, the Fed should stay ahead of the ECB, and the hawkish outperformance supports a weaker EUR/USD and a stronger USD Index. Moreover, the dynamic also supports a higher FCI and a higher U.S. 10-Year real yield. As we’ve seen since January 2021, these fundamental outcomes are extremely unkind to the PMs. Finally, while the Omicron variant has depressed economic sentiment, I noted previously that the disruptions should be short-lived. For example, with Americans’ anxiety about COVID-19 decelerating, renewed economic strength should keep the pressure on the Fed. Please see below: To explain, the light brown line above tracks the net percentage of Americans concerned about COVID-19, while the dark brown line above tracks the change in flight search trends on Kayak. In a nutshell: the more concern over COVID-19 (a high light brown line), the more Americans hunker down and avoid travel (a low dark brown line). However, if you analyze the right side of the chart, you can see that the light brown line has rolled over and the dark brown line has materially risen. Moreover, with the trend poised to persist as the warmer weather arrives, increased mobility should uplift sentiment, support economic growth, and keep the Fed’s rate hike cycle on schedule. The bottom line? The USD Index’s fundamentals remain extremely healthy, and while short-term sentiment has been unkind, rising real yields and a hawkish Fed should remain supportive over the medium term. Moreover, with the PMs often moving inversely to the U.S. dollar, more downside should confront gold, silver, and mining stocks over the next few months. In conclusion, the PMs rallied on Feb. 4, despite the spike in U.S. Treasury yields. However, with so much volatility confronting the general stock market recently, sentiment has pulled the PMs in many directions. However, the important point is that the medium-term thesis remains intact: the USD Index and U.S. Treasury yields should seek higher ground, and the realization is profoundly bearish for the precious metals sector. Thank you for reading our free analysis today. Please note that the above is just a small fraction of today’s all-encompassing Gold & Silver Trading Alert. The latter includes multiple premium details such as the targets for gold and mining stocks that could be reached in the next few weeks. If you’d like to read those premium details, we have good news for you. As soon as you sign up for our free gold newsletter, you’ll get a free 7-day no-obligation trial access to our premium Gold & Silver Trading Alerts. It’s really free – sign up today. Przemyslaw Radomski, CFAFounder, Editor-in-chiefSunshine Profits: Effective Investment through Diligence & Care * * * * * All essays, research and information found above represent analyses and opinions of Przemyslaw Radomski, CFA and Sunshine Profits' associates only. As such, it may prove wrong and be subject to change without notice. Opinions and analyses are based on data available to authors of respective essays at the time of writing. Although the information provided above is based on careful research and sources that are deemed to be accurate, Przemyslaw Radomski, CFA and his associates do not guarantee the accuracy or thoroughness of the data or information reported. The opinions published above are neither an offer nor a recommendation to purchase or sell any securities. Mr. Radomski is not a Registered Securities Advisor. By reading Przemyslaw Radomski's, CFA reports you fully agree that he will not be held responsible or liable for any decisions you make regarding any information provided in these reports. Investing, trading and speculation in any financial markets may involve high risk of loss. Przemyslaw Radomski, CFA, Sunshine Profits' employees and affiliates as well as members of their families may have a short or long position in any securities, including those mentioned in any of the reports or essays, and may make additional purchases and/or sales of those securities without notice.
Bubble stocks...

Recovery Of Gold (XAUUSD), Will NZDUSD Meet The Sell-off? UK 100 Keeps Quite High Values

John Benjamin John Benjamin 08.02.2022 08:48
XAUUSD breaks resistance Gold continues to recover as the US dollar treads water. The previous fall below the daily support at 1785 had put the bulls on the defensive. The RSI’s oversold signal attracted some buying interest and prompted sellers to cover, driving up the price. The rebound has since gained traction after the metal rallied above the support-turned-resistance at 1817. In fact, the bullish breakout may raise momentum and open the door to the recent peak at 1850. On the downside, 1795 is a major support to keep buyers committed. NZDUSD remains under pressure The New Zealand dollar edges lower amid cautious market sentiment at the start of the week. The pair previously bounced off September 2020’s low around 0.6530. However, 0.6700 on the 20-day moving average so far has proven to be a tough hurdle. A drop below the fresh support (0.6630) indicates that the directional bias remains bearish. And sellers would be eager to fade another rebound. 0.6590 is the closest support. A break below 0.6530 could trigger a new round of sell-off towards 0.6400. UK 100 awaits breakout The FTSE 100 rallies supported by solid performance in the commodity sector. The recent rebound hit resistance near the January peak at 7640. Narrowing consolidation and higher highs suggest increased buying pressure. A bullish breakout would flush sellers out and attract momentum traders, firing up volatility in the process. This would be a strong bullish continuation signal. 7460 is a fresh support if the market remains indecisive. Its breach could extend the correction back to 7250.
Bears Are Watching Crude Oil (WTIC) Carefully As It's Very Close To $91

Bears Are Watching Crude Oil (WTIC) Carefully As It's Very Close To $91

Monica Kingsley Monica Kingsley 08.02.2022 15:34
S&P 500 bulls missed the opportunity, but credit markets didn‘t turn down. Yesterday‘s pause is indicative of more chop ahead – the risk-on rally can‘t be declared yet as having run out of steam, no matter the crypto reversal of today. Bonds are in the driver‘s seat, and the dollar is also cautious – unless these move profoundly either way, the yesterday described S&P 500 reprieve can still play out even if: (…) The bottom isn‘t in, but I‘m looking for a little reprieve next. The degree to which bonds were sold off vs. stocks, hints that we would have lower to go still, ultimately bottoming around late Feb, perhaps even early Mar. Increasingly more Fed hikes are being priced in, and Friday‘s good non-farm payrolls figure is reinforcing these expectations. As for the immediate plan for Monday‘s session, I think the 4460s would hold on any retest, should we get there at all. The bulls have a very short-term advantage, then as mentioned above, selling would resume, and around May or June we could get the answer as to whether we‘ve been just consolidating or topping out. The 4,460s are still holding while commodities look to be consolidating today. As the dollar is up somewhat, bonds would have to face opening headwinds – the effect upon tech would be telling. I‘m still looking for downswing rejection in stocks while precious metals would hold up better than commodities today. Let‘s move right into the charts (all courtesy of www.stockcharts.com). S&P 500 and Nasdaq Outlook As stated yesterday, S&P 500 bulls aren‘t yet winning, but have a good chance to suck in those who believe the tech bottom is in – tech bears would get another opportunity in the not too distant future. Credit Markets HYG gave up the opening strength, and the bulls are likely to get under pressure soon – it‘s that yesterday‘s session lacked volume, thus interest of the buyers. The clock is ticking. Gold, Silver and Miners Precious metals keep refusing to make lower lows – that‘s the most important aspect of their tempered ascent. And price gains would accelerate later in 2022, which would come on the Fed‘s abrupt U-turn. Crude Oil Now, crude oil bulls did pause, but the dip isn‘t likely to reach too far – I still wouldn‘t count on pullback towards $88 or lower really – oil stocks would have to turn decidedly down first. Copper Copper is getting cautious, and would probably decline should the commodities pause continue – no matter what other base metals would do at the same time. Still, that‘s internal strength in the waiting, similarly to the precious metals strength. Bitcoin and Ethereum The crypto break higher ran out of steam, warning of a rickety ride ahead – not just in cryptos. Things can still get volatile. Summary S&P 500 bulls haven‘t lost the opportunity to force higher prices, but need to repel the upcoming intraday flush that can come today, and possibly even continue tomorrow. Yes, instead of seizing upon the chance, bonds have merely paused, creating a perfect environment for whipsawish trading today – I‘m still expecting Friday‘s lows to hold on a closing basis, but I‘m not ruling out a fake breakdown first. The very short-term outlook is simply choppy until the bond market upswing kicks in in earnest. And that would provide more fuel to precious metals and commodities while pressuring the dollar – seems though we would have to wait for a while to see that happen. Thank you for having read today‘s free analysis, which is available in full at my homesite. There, you can subscribe to the free Monica‘s Insider Club, which features real-time trade calls and intraday updates for all the five publications: Stock Trading Signals, Gold Trading Signals, Oil Trading Signals, Copper Trading Signals and Bitcoin Trading Signals.
Payrolls Release: Gold Reacted Quickly And Decreased... And Got Back In The Game A Moment Later!

Payrolls Release: Gold Reacted Quickly And Decreased... And Got Back In The Game A Moment Later!

Arkadiusz Sieron Arkadiusz Sieron 08.02.2022 16:42
  The latest employment report strongly supports the Fed’s hawkish narrative. Surprisingly, gold has shown remarkable resilience against it so far. What a surprise! The US labor market added 467,000 jobs last month. As the chart below shows, the number is below December’s figure (+510,000) but much above market expectations – MarketWatch’s analysts forecasted only 150,000 added jobs. Thus, the report reinforces the optimistic view of the US economy’s strength, especially given that the surprisingly good nonfarm payrolls came despite the disruption to consumer-facing businesses from the spread of the Omicron variant of the coronavirus. The unemployment rate increased slightly from 3.9% in December to 4% in January, as the chart above shows. However, it was accompanied by a rise in both the labor force participation rate (from 61.9% to 62.2%) and the employment-population ratio (from 59.5% to 59.7%). Last but not least, average hourly earnings have jumped 5.7% over the last 12 months, as you can see in the next chart. It indicates that wage inflation has intensified recently, despite the surge in COVID-19 cases that was expected by some analysts to dent demand for workers. Hence, the January employment report will cement the hawkish case for the Fed. Rising wages will add to the argument for decisive hiking of interest rates, while the surprisingly strong payrolls will strengthen the Fed’s confidence in the US economy.   Implications for Gold What does the latest employment report imply for the gold market? The unexpectedly high payrolls should be negative for the yellow metal. However, while gold prices initially plunged below $1,800, they rebounded quickly, returning above its key level, as the chart below shows. Gold’s resilience in the face of a strong jobs report is noteworthy and quite encouraging. After all, the report strengthened the US dollar and boosted market expectations of a 50-basis point hike in the federal funds rate in March (from 2.6% one month ago to more than 14% now). Such a big move is unlikely, but the point is that financial conditions are tightening without waiting for the Fed’s actual actions. In the past, gold disliked strong economic reports and rising bond yields and showed a negative correlation with nonfarm payrolls, but not this time. More generally, although long-term fundamentals have turned more bearish in recent months, gold has remained stuck at $1,800. However, last week, two factors could have supported gold prices. The first was rising volatility in the equity market. The S&P 500 Index dropped almost 500 points, or 10%, in January, as the chart below shows. Although it has recovered somewhat, it still remains substantially below the top, with the tech sector experiencing weakness. On Thursday, the shares of Meta, Facebook’s parent company, plunged more than 20%. The second potentially bullish driver was last Thursday’s meeting of the ECB’s Governing Council. The central bank of the Eurozone was more hawkish than expected. Christine Lagarde acknowledged inflationary risks and said that she had become more concerned with the recent surge in inflation. According to initial estimates, the annual inflation rate in the euro area amounted to 5.1% in January 2022, the highest since the common currency was created. Lagarde also backed off her previous guidance that the interest rate hike was “very unlikely” in 2022. The ECB’s pivot – the central bank opening the door for the first rate increase since 2011 – boosted the euro against the greenback. The bottom line is that gold has made itself comfortable around $1,800 and simply doesn’t want – or is not ready – to go away in either direction, at least not yet. The battle between bulls and bears is still on. I’m afraid that, given the relatively aggressive monetary and financial tightening, the sellers will win this clash and gold will drop before the bulls can regain control over the market. However, recent gold’s resilience indicates that there is an underlying bid in the markets and bulls are not giving up. If you enjoyed today’s free gold report, we invite you to check out our premium services. We provide much more detailed fundamental analyses of the gold market in our monthly Gold Market Overview reports and we provide daily Gold & Silver Trading Alerts with clear buy and sell signals. In order to enjoy our gold analyses in their full scope, we invite you to subscribe today. If you’re not ready to subscribe yet though and are not on our gold mailing list yet, we urge you to sign up. It’s free and if you don’t like it, you can easily unsubscribe. Sign up today! Arkadiusz Sieron, PhDSunshine Profits: Effective Investment through Diligence & Care
Crypto Airdrop - Explanation - How Does It Work?

February 8th, 2022, Crypto Chartbook

Korbinian Koller Korbinian Koller 08.02.2022 20:48
Stacking bitcoins winning edges It is not the number of edges that get it low risk. And again, there are no hidden magic formulas. What works well is covering multiple aspects in stacking one’s edges: Market behavior Time of day Oscillators for ranging markets Indicators for trending markets Supply/demand zone identification (VWAP=volume weighted average price, in addition to support and resistance lines) Inter-market relationships Leading/lagging (relative strength within a sector or group) Candlestick pattern Volume Time frame relationships Action-reaction principle News Day of the week Swing leg count MAE (=maximum adverse excursion) Mathematical/statistical edges like standard deviation Your list might look vastly different but should include tools that cover the principal variants of market behavior (ranging, trending, slow/fast price action, liquidity, time, volume, transactions). Investopedia is a good research tool for finding definitions and explanations of the various available technical tools. BTC in US-Dollar, daily chart, how we stack odds in our favor: Bitcoin in US-Dollar, daily chart as of February 8th, 2022. Our previous chart book release described fundamental reasons for being bullish on bitcoin, which we stack in a similar principled fashion. We pointed out that we were looking for low-risk entry points to build up a long-term position for bitcoin. Such a low-risk opportunity arose on February 3rd, last week. We had the following edges stacked at the time of entry (green arrow): General price strength (directional yellow line channel) Previous day retracement (action-reaction principle) Small range Doji for tight stop and possible reversal indication VWAP (blue histogram to the right of the chart) indicating a supply zone Scheduled ECB news item out of the way Time of week Time of day (we entered near the close of the daily candle) Extended from the mean (blue line, standard deviation) Commodity Channel Index (CCI). A momentum-based oscillator useful in congested sideways channels, gave the prior day to execution indication of a long entry (yellow arrow) We posted our entry in real-time in our free Telegram channel. Within a 24-hour period, we could profit on half of the position size for a gain of 8.73%. We also posted this first profit-taking target in real-time in our free Telegram channel. Our quad exit strategy provides income-producing revenues like this but, even more, eliminates risk. Consequently, this approach supports trading the remaining position with psychological ease for the intended long-term holding period. Hence, even starting out as a a short-term trade, the last 25% of the initial position can become a long-term invest. BTC in US-Dollar, weekly chart, well-positioned: Bitcoin in US-Dollar, weekly chart as of February 8th, 2022. With previous entries at recent lows established in much the same manner, we are now exposed to the market with seven remaining rest positions at zero risk. Such an approach can afford to negate whether this will be the long-term turning point or not. Profits have been made. Should our plan pan out, then the remaining exposed capital will lead to further profits. Otherwise, this remaining position size will stop out at breakeven entry level. The weekly chart shows now a confirmed situation of a weekly bar takeout. For most traders this is an entry signal while we were already well established. We are playing with the market’s money and profits banked. With this time frame alignment more money is expected to join the long side. The chart also illustrates the favorable risk/reward-ratio to the right of the chart.   BTC in US-Dollar, monthly chart, early bird: Bitcoin in US-Dollar, monthly chart as of February 8th, 2022. A glance at the monthly chart shows we are positioned very early and aggressively for this time frame. Nevertheless, as soon as prices might reach US$48,000, we will find ourselves here as well time frame aligned with a bar takeout. Green numbers show our entry prices for January with two entries and February with five entries. Should prices move upwards in our favor, we would take again partial profits near the red horizontal trend line slightly below all-time highs. The remaining positions stays in place for a possible breakout to all-time new highs. Too late if you are not positioned yet? No! This continuous flow of adding low-risk entry trades followed by partial profit-taking allows participating at all stages of market swings. Stacking bitcoins winning edges: In short, you want to have a clear instruction sheet on what to do in whatever market condition bitcoin throws at you. With a set of tools broadly covering all these variants and measuring them, you will be able to act without hesitancy. Then you can hope for the best, since you planned for the worst. Risk control is the core of each advanced trading approach! We aim to keep it simple, like a card counter, which supports executing high probability winning trades. At the same time, the crowd is confronted by surprising news or fast-moving markets. They use reactionary, inappropriate execution, which in turn creates losing trades. Feel free to join us in our free Telegram channel for daily real time data and a great community. If you like to get regular updates on precious metals and cryptocurrencies, you can also subscribe to our free newsletter. Disclosure: This article and the content are for informational purposes only and do not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision. The views, thoughts and opinions expressed here are the author’s alone. They do not necessarily reflect or represent the views and opinions of Midas Touch Consulting. By Korbinian Koller|February 6th, 2022|Tags: Bitcoin, Bitcoin bounce, Bitcoin bullish, bitcoin consolidation, crypto analysis, Crypto Bull, crypto chartbook, DeFi, low risk, quad exit, technical analysis, trading education|0 Comments About the Author: Korbinian Koller Outstanding abstract reasoning ability and ability to think creatively and originally has led over the last 25 years to extract new principles and a unique way to view the markets resulting in a multitude of various time frame systems, generating high hit rates and outstanding risk reward ratios. Over 20 years of coaching traders with heart & passion, assessing complex situations, troubleshoot and solve problems principle based has led to experience and a professional history of success. Skilled natural teacher and exceptional developer of talent. Avid learner guided by a plan with ability to suppress ego and empower students to share ideas and best practices and to apply principle-based technical/conceptual knowledge to maximize efficiency. 25+ year execution experience (50.000+ trades executed) Trading multiple personal accounts (long and short-and combinations of the two). Amazing market feel complementing mechanical systems discipline for precise and extreme low risk entries while objectively seeing the whole picture. Ability to notice and separate emotional responses from the decision-making process and to stand outside oneself and one’s concerns about images in order to function in terms of larger objectives. Developed exit strategies that compensate both for maximizing profits and psychological ease to allow for continuous flow throughout the whole trading day. In depth knowledge of money management strategies with the experience of multiple 6 sigma events in various markets (futures, stocks, commodities, currencies, bonds) embedded in extreme low risk statistical probability models with smooth equity curves and extensive risk management as well as extensive disaster risk allow for my natural capacity for risk-taking.
Stocks: Is $4,500 The Current S&P 500's "Target"

Stocks: Is $4,500 The Current S&P 500's "Target"

Paul Rejczak Paul Rejczak 08.02.2022 15:33
  The S&P 500 index remains close to the 4,500 level following last week’s retreat. Was this just a downward correction? The broad stock market index lost 0.37% on Monday, as it continued to fluctuate within a short-term consolidation. The broad stock market’s gauge retraced some of its recent rally, as it fell to the local low of 4,451.50 on Friday. The market found a short-term bottom after reversing from last Wednesday’s local high of 4,595.31. This morning the S&P 500 index is expected to open 0.2% lower. We will likely see more consolidation along the 4,500 level. The nearest important resistance level remains at 4,540, market by the recent local highs. The resistance level is also at 4,600. On the other hand, the support level is at 4,400-4,450. The S&P 500 continues to trade below the November-January consolidation, as we can see on the daily chart (chart by courtesy of http://stockcharts.com): Nasdaq 100 Remains Relatively Weaker The technology Nasdaq 100 index followed a similar path last week, as it retraced some of the rally. It remains relatively weaker than the broad stock market. The support level is at 13,800-14,000, and the resistance level is at 15,000-15,200. Futures Contract – Short-Term Consolidation Let’s take a look at the hourly chart of the S&P 500 futures contract. It broke above the short-term downward trend line a week ago before rallying up to around the 4,600 level. It’s trading along the 4,500 level after backing from the Wednesday’s high of 4,586. The market remains close to the resistance level of its previous local lows, but there have been no confirmed negative signals so far. So in our opinion, no positions are currently justified from the risk/reward point of view. (chart by courtesy of http://tradingview.com): Conclusion The S&P 500 index trades within a short-term consolidation following the decline from last week’s Wednesday’s local high. The market will likely extend its consolidation, as investors will be waiting for the Thursday’s Consumer price index release. The quarterly earnings season is mostly over now, and there is still an uncertainty concerning Russia-Ukraine tensions. Here’s the breakdown: The S&P 500 index will likely trade within a consolidation ahead of the important Thursday’s consumer inflation number release. In our opinion, no positions are currently justified from the risk/reward point of view. Like what you’ve read? Subscribe for our daily newsletter today, and you'll get 7 days of FREE access to our premium daily Stock Trading Alerts as well as our other Alerts. Sign up for the free newsletter today! Thank you. Paul Rejczak,Stock Trading StrategistSunshine Profits: Effective Investments through Diligence and Care * * * * * The information above represents analyses and opinions of Paul Rejczak & Sunshine Profits' associates only. As such, it may prove wrong and be subject to change without notice. At the time of writing, we base our opinions and analyses on facts and data sourced from respective essays and their authors. Although formed on top of careful research and reputably accurate sources, Paul Rejczak and his associates cannot guarantee the reported data's accuracy and thoroughness. The opinions published above neither recommend nor offer any securities transaction. Mr. Rejczak is not a Registered Securities Advisor. By reading his reports you fully agree that he will not be held responsible or liable for any decisions you make regarding any information provided in these reports. Investing, trading and speculation in any financial markets may involve high risk of loss. Paul Rejczak, Sunshine Profits' employees, affiliates as well as their family members may have a short or long position in any securities, including those mentioned in any of the reports or essays, and may make additional purchases and/or sales of those securities without notice.
Having A Look At The Markets Considering Tensions, COVID-19 And National Banks Decisions

EURUSD Keeps Plain Line, US 30 With A Bounce, GBPUSD Gains A Bit

John Benjamin John Benjamin 09.02.2022 08:51
EURUSD hits resistance The euro fell back after ECB President Lagarde tried to cool rate hike expectations. The rally came under pressure at the January peak of 1.1480. The RSI’s overextension at this daily resistance prompted momentum buyers to cash in. A combination of profit-taking and fresh selling may drive the exchange rate lower. Short-term sentiment remains upbeat though unless the single currency drops below the origin of its bullish push at 1.1270. A recovery above 1.1480 could pave the way to last October’s high at 1.1690. GBPUSD consolidates gains The sterling turns higher as traders price in an increasingly hawkish Bank of England. A break above 1.3520 forced sellers to cover some of their positions. However, the pound’s rally came to a halt in the supply zone around 1.3620. The RSI’s overbought situation and bearish divergence suggest softness in the underlying momentum. The pair found bids on the 50% Fibonacci retracement level (1.3490), which sits in the aforementioned supply area. A new rally may propel the pair to the daily resistance at 1.3750. US 30 bounces higher The Dow Jones 30 inches higher supported by better-than-expected earnings. The index steadied after successive breaks above 34800 and 35450. Nonetheless, the recent recovery slowed down on the 30-day moving average, a sign of a lingering cautious mood. 34500 is a key support to keep the rebound relevant. A bearish breakout could extend the correction to 33800. On the upside, a rally above 35700 could attract momentum traders and initiate a bullish reversal to 36500.
NIO - Will It Support The Rise Of Chinese Tech Stocks?

NIO - Will It Support The Rise Of Chinese Tech Stocks?

FXStreet News FXStreet News 08.02.2022 16:08
NIO stock gets a strong rating from latest Barclays research. NIO remains bearish and is down 25% year to date. NIO and other Chinese EV names remain in growth mode as the latest delivery data showed. NIO stock remains mired as it ended Monday virtually flat. The stock is down over 40% from three months ago as Chinese names see international investors flee on regulatory concerns. NIO Stock News It has been a turbulent time for holders of Chinese tech stocks. Alibaba's ANT Group spin-off set things off. Then the DIDI delisting not long after its IPO added to woes. Then a host of regulatory crackdowns was the final straw for international investors who bailed out of the names en masse. This is despite the EV names in particular remaining on track from a growth perspective as all have posted strong delivery data. While January deliveries slowed from December, the yearly growth rates still are impressive. January is traditionally the slowest month of the year in China though due to the lunar new year. NIO for example delivered 7.9% fewer vehicles in January versus December. On a yearly basis, January deliveries were 33.6% higher. This was replicated across many other Chinese EV names. Now Barclays has picked up the theme as it issues a bullish note this morning. "We believe that the rapid adoption of EVs around the world and booming EV sales have presented China’s EV makers a rare opportunity to not only take a sizable market share of the domestic auto market – the largest in the world with about 25-30% global share by units sold per annum – but also build a dominant position on the world stage." Barclays put a $34 price target on the shares. This does highlight the potential growth potential of Chinese tech stocks and the EV space in particular. We question whether investors will reenter, however, having been let down previously. Fool me once, shame on you, fool me twice... Ok, let's not have another George W. Bush moment! The point is a valid one. It will likely take more than analyst upgrades to tempt investors back to the space. Goldman, the king of investment banks, has previously been strongly bullish on NIO and to no avail. It will take a series of strong earnings and relative calm in terms of regulatory concerns to eventually tempt investors back. NIO Stock Forecast The recent spike lower did fill the gap from back in October 2020. The market just loves to fill gaps. We also note this spike lower created a shooting star candle, a possible reversal signal. There is already a bullish divergence from the Relative Strength Index (RSI) as shown. The area around $27.34 is the first resistance. Getting back above indicates the bearish trend may finally be slowing. That would then bring NIO into a range-bound zone from $27 to $32. Only breaking $33.80 from January 3 ends the downtrend. Support is at $14 from the strong volume profile. Look for an RSI breakout as that could signal more gains. The RSI has been shrinking in range and may test an upside breakout. NIO 1-day chart
EURGBP And GBPUSD Chart Linked With Indices And Obviously BoE

EURGBP And GBPUSD Chart Linked With Indices And Obviously BoE

Alex Kuptsikevich Alex Kuptsikevich 09.02.2022 12:02
GBPUSD is gaining 0.35% on Wednesday, surpassing 1.3585, not far from the month's highs of 1.3620. The British pound is closely correlated with equity market dynamics, and the latest upward momentum in major global indices supports GBP buyers. Also noteworthy is that the Bank of England switched to the next gear in its monetary policy tightening as last week's rate hike was 25 b. p. rather than 50 b. p. by only a slight margin. The euro is also losing ground against the pound after a sharp spike at the ECB meeting. In our view, the EURGBP surge was caused by a technical bounce on touching the 6-year low area. Meanwhile, the Bank of England's stance suggests a much more decisive rate hike, which should provide a carry trade inflow into the pound and further push up the British currency. With the continued upward trajectory of equity indices, a renewal of the 6-year highs of the pound to the euro and a test of the 1.3750 area should come in just a matter of weeks.
Crypto Airdrop - Explanation - How Does It Work?

Top 3 Price Prediction Bitcoin, Ethereum, Ripple: Cryptos to retrace before the bull run

FXStreet News FXStreet News 09.02.2022 16:19
Bitcoin price slows down its ascent after flipping the $42,748 hurdle into a foothold. Ethereum price contemplates a retracement after facing the 50-day SMA at $3,208. Ripple price looks ready for consolidation after a 51% ascent over the past four days. Bitcoin price rally is slowing, allowing bulls to take a breather before the next leg-up. While some might argue the short-term outlook looks bearish – due to the flash crash in January, the bigger picture reveals cryptocurrency (https://www.fxstreet.com/cryptocurrencies) markets still have the potential to go higher. A Wells Fargo report published in February reveals that cryptocurrency adoption is growing exponentially and, in many cases, resembles the growth curve of internet adoption. The American financial corporation even goes on to state the crypto sector could soon exit the initial phases of adoption and enter “an inflection point of hyper-adoption.” Wells Fargo Report: Internet usage history vs crypto users Bitcoin price at a decisive moment Bitcoin price rallied 25% in the last four days and set up a swing high at $45,539.(https://www.fxstreet.com/cryptocurrencies/news/bitcoin-begins-correction-after-45k-rejection-where-can-btc-price-bounce-next-202202081914) The rally rippled out, triggering copycat moves in other altcoins and the cryptocurrency market in general. Yet BTC failed to produce a daily candlestick close above the breaker’s upper limit at $44,387. So, as a result, the bearish outlook is still in play. Investors should be prepared for anything between a minor retracement and a full-blow bear trap. An optimistic scenario will likely see BTC retest the weekly support level at $39,481 before triggering the next leg-up. A more pessimistic scenario, however, would speculate that Bitcoin price could crash to $34,752. A breakdown of this support floor could be the key to triggering a crash to $30,000 or lower. BTC/USD 1-day chart While things look on the fence for Bitcoin price, (https://www.fxstreet.com/cryptocurrencies/bitcoin) a daily candlestick close above $44,387 will invalidate the bearish thesis. A bullish regime, however, will only kick-start if BTC produces a daily candlestick (https://www.fxstreet.com/rates-charts/chart/candlestick-patterns) close above $52,000.   Ethereum price takes a breather Ethereum (https://www.fxstreet.com/cryptocurrencies/ethereum) price seems to be undergoing a pullback (https://www.fxstreet.com/cryptocurrencies/news/ethereum-price-holds-above-3k-but-network-data-suggests-bulls-may-get-trapped-202202090153) as it faces off with the 50-day Simple Moving Average (SMA) at $3,208 while still hovering inside a bearish breaker, extending from $2,789 to $3,167. A rejection here could lead to a retracement to $2,812, where buyers have a chance at restarting the uptrend. Assuming the bullish momentum picks up, there is a good chance ETH could slice through the $3,208 and make a run for the $3,413 hurdle. The local top for Ethereum price could be capped around the convergence of the 50-day and 100-day SMAs at roughly $3,600. ETH/USD 1-day chart On the other hand, if Ethereum price fails to stay above $2,812, it will indicate that buyers are taking a backseat. This development will invalidate the bullish scenario and trigger a crash to the weekly support level at $2,324. Ethereum price could liquidate bulls if ETH falls below $3,000 Ripple price to reestablish directional bias Ripple price broke out of its ten-day consolidation (https://www.fxstreet.com/cryptocurrencies/news/xrp-price-could-easily-return-to-1-under-one-condition-202202081437) and rallied 51% in just four days. This run-up sliced through the $0.740 and $0.817 hurdles, flipping them into support levels. While this climb was impressive, XRP price is likely to retrace as investors begin to book profits. The resulting selling pressure could push Ripple price down to the $0.740 support level where buyers can band together for a comeback. In some cases, the U-turn might not arrive until a retest of the $0.595 to $0.632 demand zone. Regardless, investors can expect XRP price to run up to $1 and collect the liquidity resting above it. XRP/USD 1-day chart On the contrary, if the Ripple price fails to stay above the $0.595 to $0.632 demand zone, it will reveal the lack of bullish momentum and hint that a further descent is likely. In this case, XRP price will sweep below the $0.518 support level to collect the sell-side liquidity resting beneath. XRP price could easily return to $1 under one condition
Peloton Interactive (PTON) Stock News and Forecast: And just like that, it's back

Peloton Interactive (PTON) Stock News and Forecast: And just like that, it's back

FXStreet News FXStreet News 09.02.2022 16:19
Peloton shares continue to be the most discussed stock on mainstream and social media. Two straight days of 20%-plus gains for PTON stock. The new CEO gets just the start he would have wanted. It is not exactly reassuring to your confidence when you step down as CEO of a company and the stock immediately explodes higher. Investors clearly had enough of Peloton's (PTON) former CEO John Foley. New man Barry McCarthy hits the ground running despite some mixed commentary from the analyst community this morning. Peloton Stock News Peloton reported earnings on Tuesday. The stock had already surged on news (https://www.fxstreet.com/news) of a new CEO and continued reports that the company may be in the sights of big tech eyeing a potential takeover for the beleaguered fitness company. Revenue came in at $1.13 billion below the $1.15 billion estimate. Earnings per share (EPS) came in below estimates at $-1.39 versus the $-1.20 estimate. The outlook was also weak with Peloton seeing full-year 2022 revenue at $3.8 billion, while analysts had forecast $4 billion. Following the results, Stifel maintained its buy rating on PTON with a $45 price target. Macquarie maintained its outperform rating with a lowered $60 price target, while Barclays also lowered its price target to $60 as well. Bank of America said, "Our estimates that assumed price cuts would drive new demand were too optimistic." BofA has a $42 price target for the stock. Peloton shares had already been strongly ahead in Tuesday's premarket before the earnings release. This was due to the new CEO and a cost-cutting plan including laying off 2,800 employees. The list of potential buyers for Peloton continued to grow as speculation mounted. Potential acquirers include virtually every major fitness company, numerous big tech firms, Berkshire Hathaway and SoftBank. We do question whether in particular big tech would get much benefit out of the acquisition. Fitness has been a big part of the wearable market, and Peloton's subscribers are its value, but do Apple, Amazon and Google really struggle that much for users? Sports companies mentioned include Nike (NKE) and Adidas (ADDYY). These may make more sense as the subscribers could generate more value, add-ons and ancillary sales. Peloton Stock Forecast The weekly chart (https://www.fxstreet.com/rates-charts/chart) gives us all the information we need going back to the launch in September 2019. Peloton (PTON) rallied all the way up to $171 this time last year before steadily falling back. The stock has now totally retraced all of the pandemic gains and then some. In that respect, investors may be tempted to buy into the name as subscribers in 2019 totaled just over 500,000, whereas currently Peloton has 2.77 million subscribers. From the weekly chart, we can see the power of volume gaps we often talk about. Peloton broke sharply once it entered the light volume zone from $81 to $37. Now it has stabilized at a high volume zone and the point of control. This does set a potential base for the stock. (https://www.fxstreet.com/markets/equities) Peloton (PTON) chart, weekly The daily chart below shows we have had a bullish divergence on the Relative Strength Index (RSI) since the last earnings despite the share price continuing to slide. $23 remains support with first resistance at $46. This latest move is likely to calm down unless more takeover talk surfaces. If the price move does calm, then holding above $30 is key to keeping the bottom in place. Peloton (PTON) chart, daily  
Considering Portfolios In Times Of, Among Others, Inflation...

More Profits Ahead

Monica Kingsley Monica Kingsley 09.02.2022 15:54
S&P 500 bulls took the opportunity yesterday amid mild credit market support. Looks like more fireworks are to come – the risk-on turn is merely starting. Not only financials, but also tech welcomed higher yields – it seems that the positive seasonality of 2nd to 3rd week of Feb, is working. We have quite a way to go still on the upside – 4,600s are waiting, and it remains to be seen how far in the 4,600 – 4,700 range stocks make it. Consumer discretionaries are outperforming staples, and energy isn‘t cratering – the brief commodities reprieve (don‘t look though at copper, which seems preparing a nice upside move, or crude oil‘s shallow dip) supports the stock market advance. Precious metals are rising strongly – both thanks to inflation expectations not budging much, and the expected copper upturn. Not even cryptos are plunging. The open S&P 500 and oil profits can keep on rising. Looks like the markets are slowly positioning for yet another hot inflation number tomorrow. How many times lately have there been expectations that high CPI data would sink stocks – but these rallied instead? Thursday is likely to turn out similarly – I‘m not looking for the stock market rally to top out tomorrow. The Mar FOMC is still quite a few weeks away, 50bp rate hike fears notwithstanding. Let‘s move right into the charts (all courtesy of www.stockcharts.com). S&P 500 and Nasdaq Outlook S&P 500 bulls have made the opening step, and look ready to extend gains. Even volume has returned a little, but importantly, sellers were nowhere to be seen – and that‘ll likely be the case today as well. Credit Markets HYG couldn‘t keep the opening gains, but junk bonds still did better than their quality counterparts. Anyway, the HYG weakness looks likely to be reversed (to some degree) today. Gold, Silver and Miners Precious metals are firmly on another upleg – and miners strength is confirming that. When inflation turns out more stubborn than generally appreciated, and bond yields don‘t catch up nearly enough, precious metals would like that. Love that. Crude Oil Now, crude oil bulls did pause, but the dip isn‘t likely to reach too far – I still wouldn‘t count on pullback towards $88 or lower really – this correction is more likely to be in time than in price. Copper Copper is clearly refusing to decline – its upswing looks to be a question of shortening time only. Likewise the commodities reprieve would be reversed shortly. The red metal‘s price action coupled with precious metals one, is very nice to see – for the fruits it would bring. Bitcoin and Ethereum Cryptos aren‘t weakening – they look to be pausing in the upswing only. How long would they need to consolidate before continuing the attempt to go higher? Summary S&P 500 bulls have a firm grip on higher prices – we‘re looking at another green day today. And if it‘s accompanied by the turning bonds, then all the better. Tech has risen, oil is a little down while sectoral breadth improves – the conditions are in place for S&P 500 to overcome 4,600. The risk-on rally hasn‘t yet run out of time, and the Mar FOMC is still far away. Upgraded rate hike prospects are being increasingly absorbed by the markets, and stocks don‘t look spooked at the moment. The bears‘ time would still come though, but let‘s first enjoy the gains our timely positioning is bringing. Thank you for having read today‘s free analysis, which is available in full at my homesite. There, you can subscribe to the free Monica‘s Insider Club, which features real-time trade calls and intraday updates for all the five publications: Stock Trading Signals, Gold Trading Signals, Oil Trading Signals, Copper Trading Signals and Bitcoin Trading Signals.
AUDUSD Gets Rid Of The Recent Resistance, EURGBP Flows Calmly And USOIL Hovers Around $90

AUDUSD Gets Rid Of The Recent Resistance, EURGBP Flows Calmly And USOIL Hovers Around $90

John Benjamin John Benjamin 10.02.2022 08:47
AUDUSD breaks higher The Australian dollar climbs as traders wager on a hawkish shift from the Reserve Bank of Australia. On the daily chart, a break above the 30-day moving average suggests improved sentiment in the short term. The pair extended its gains after it broke the supply area around 0.7170. As sellers scramble to cover their bets, driving up bids, the rally is heading to the next resistance at 0.7210. The RSI’s overbought situation may cause a temporary pullback with 0.7110 as the first support. EURGBP seeks support The euro consolidates gains amid mixed messages from the ECB. The pair found support at February 2020’s low at 0.8290, and a bullish MA cross on the daily chart suggests a potential turnaround. A break above the daily resistance at 0.8405 has put the single currency back on track. An overbought RSI led momentum traders to take profit. The current pullback is testing the 38.2% Fibonacci retracement level (0.8405) which used to be a resistance. 0.8475 is the main hurdle for the reversal to gain traction. USOIL tests support WTI crude bounces higher after the EIA reported a sharp drop in US inventories. Price action is looking to consolidate its gains above the psychological level of 90.00. Sentiment remains upbeat though the bulls need to take a breather after the latest vertical ascent. 88.00 on the 20-day moving average is the immediate support. An oversold RSI may attract buying interest. A deeper retracement would test 85.00. A recovery above 92.30 could trigger momentum buying once again and resume the rally towards 95.00.
The Question Is How Will Price Of Gold Act In Times Of ECB Meeting

The Question Is How Will Price Of Gold Act In Times Of ECB Meeting

Arkadiusz Sieron Arkadiusz Sieron 10.02.2022 16:22
  Lagarde opened the door to an interest rate hike, which gave the European Central Bank a hawkish demeanor. Does it also imply more bullish gold? The ECB has awoken from its ultra-dovish lethargy. In December 2021, the central bank of the Eurozone announced that its Pandemic Emergency Purchase Program would end in March 2022. Although this won’t also mean the end of quantitative easing as the ECB continues to buy assets under the APP program, the central bank will be scaling down the pace of purchases this year. Christine Lagarde, the ECB’s President, admitted it during her press conference held last week. She said: “We will stop the Pandemic Emergency Programme net asset purchases in March and then we will look at the net asset purchases under the APP.” She also left the door open for the interest rates to be raised. Of course, Lagarde did not directly signal the rate hikes. Instead, she pointed out the upside risk of inflation and acknowledged that the macroeconomic conditions have changed: We are going to use all instruments, all optionalities in order to respond to the situation – but the situation has indeed changed. You will have noticed that in the monetary policy statement that I just read, we do refer to the upside risk to inflation in our projection. So the situation having changed, we need to continue to monitor it very carefully. We need to assess the situation on the basis of the data, and then we will have to take a judgement. What’s more, Lagarde didn’t repeat her December phrase that raising interest rates in 2022 is “very unlikely”. When asked about that, she replied: as I said, I don’t make pledges without conditionalities and I did make those statements at our last press conference on the basis of the assessment, on the basis of the data that we had. It was, as all pledges of that nature, conditional. So what I am saying here now is that come March, when we have additional data, when we’ve been able to integrate in our analytical work the numbers that we have received in the last few days, we will be in a position to make a thorough assessment again on the basis of data. I cannot prejudge what that will be, but we are only a few weeks away from the closing time at which we provide the analytical work, prepare the projections for the Governing Council, and then come with some recommendations and make our decisions. It sounds very innocent, but it’s worth remembering that Lagarde is probably the most dovish central banker in the world (let’s exclude Turkish central bankers who cut interest rates amid high inflation, but they are under political pressure from Erdogan). After all, global monetary policy is tightening. For example, last week, the Bank of England hiked its main policy rate by 25 basis points and started quantitative tightening. Even the Fed will probably end quantitative easing and start raising the federal funds rate in March. In such a company, the ECB seems to be a reckless laggard. Hence, even very shy comments mean something in the case of this central bank. The markets were so impressed that they started to price in 50 basis points of rate hikes this year, probably in an exaggerated reaction.   Implications for Gold What does the latest ECB monetary policy meeting mean for the gold market? Well, maybe it wasn’t an outright revolution, but the ECB is slowly reducing its massive monetary stimulus. Although the euro area does not face the inflationary pressure of the same kind as the US, with inflation that soared to 5% in December and to 5.1% in January (according to the initial estimate), the ECB simply has no choice. As the chart below shows, inflation in the Eurozone is the highest in the whole history of euro. Additionally, in the last quarter of 2021, the GDP of the euro area finally reached its pre-pandemic level, two quarters later than in the case of the US. Europe is back in the game. The economic recovery strengthens the hawkish camp within the ECB. All of this is fundamentally bullish for gold prices. To be clear, don’t expect that Christine Lagarde will turn into Paul Volcker and hike interest rates in a rush. Given the structural problems of the euro area, the ECB will lag behind the Fed and remain relatively more dovish. However, German bond yields have recently risen, and there is still room for further increases. If the market interest rates go up more in Europe than across the pond, which is likely given the financial tightening that has already occurred in the US, the spread between American and German interest rates could narrow further (see the chart below). The narrowing divergence between monetary policies and interest rates in the US and in the Eurozone should strengthen the euro against the greenback – and it should be supportive of gold. As the chart above shows, when the spread was widening in 2012-2018, gold was in the bear market. The yellow metal started its rally at the end of 2018, just around the peak of the spread. On the other hand, if the divergence intensifies, gold will suffer. Given that Powell is expected to hike rates as soon as March, while Lagarde may only start thinking about the tightening cycle, we may have to wait a while for the spread to peak. One thing is certain: it can get hot in March! If you enjoyed today’s free gold report, we invite you to check out our premium services. We provide much more detailed fundamental analyses of the gold market in our monthly Gold Market Overview reports and we provide daily Gold & Silver Trading Alerts with clear buy and sell signals. In order to enjoy our gold analyses in their full scope, we invite you to subscribe today. If you’re not ready to subscribe yet though and are not on our gold mailing list yet, we urge you to sign up. It’s free and if you don’t like it, you can easily unsubscribe. Sign up today! Arkadiusz Sieron, PhDSunshine Profits: Effective Investment through Diligence & Care
Bear Came And Drove Out Gold Enthusiasts, Will Silver Decrease As Well?

Bear Came And Drove Out Gold Enthusiasts, Will Silver Decrease As Well?

Przemysław Radomski Przemysław Radomski 10.02.2022 15:14
  The market was up, but mining stocks chose to reverse. Meanwhile, gold sent a clear signal to investors. So, when everyone buys, what happens? The gold mining stocks and silver mining stocks have reversed, even though gold didn’t. The top for the former is likely in. Most developments regarding the precious metals and their immediate surroundings were a continuation of what we had seen in the previous days, but one thing was different. That one thing is particularly informative. It has trading implications, too. Without further ado, let’s jump into mining stocks. Gold miners fell. Even though they declined by just $0.06, it was profound. The miners were following gold higher during the early part of yesterday’s (Feb. 9) session, but they lost strength close to the middle thereof and were back down before the closing bell. If the gold price reversed and then declined during the day, that would have been normal. However, gold stayed up. It’s fairer to compare GDX to GLD than to compare GDX to gold continuous futures contracts, as the former have the same closing hours, so let’s take a look at what GLD did yesterday. There was no reversal. GLD simply stopped at its declining medium-term resistance line. Also, the general stock market was up yesterday. Consequently, gold mining stocks had no good reason to decline. In fact, they “should have” rallied. They didn’t – they reversed instead. This tells us that the buying power has either dried up or is drying up. When everyone who wanted to get into the market is already in it, the price can do only one thing (regardless of bullish factors) – fall. Those who are already in can then sell. Monitoring the markets for this kind of cross-sector performance is one of the more important gold trading tips. Look, I’m not saying that declines now are “guaranteed”. There are no guarantees in the markets. There might be buyers that haven’t considered mining stocks that would now enter the market, but history tells us that this is unlikely. Instead, declines are very likely to follow. Let’s focus on the GLD ETF chart one more time. As I wrote earlier, it approached its declining medium-term resistance line. Any small breakout here is likely to be invalidated just like what we saw previously in November 2021 and January 2022. This time, however, the volume is low, so gold might not have enough strength for a breakout, and it could decline right away. Junior mining stocks provide us with a perfect confirmation of the bearish narrative. I emphasized before that juniors hadn’t moved above their 50-day moving average, and that they stayed below their rising blue resistance line. Consequently – I wrote – the downtrend in them remained clearly intact. Yesterday’s reversal served as a perfect confirmation of the above. The previous breakdowns were verified in one of the most classic ways. The silver price has been quite strong recently, which is also something that we see close to the local tops. The reversals in mining stocks, the situation in gold, AND the situation in the USD Index together paint a very bearish picture for the precious metals market in the short and medium term. By “the situation in the USD Index”, I’m referring to the fact that it’s after its early-month reversal and right above its rising medium-term support line that was not successfully broken. Since the USD Index remains above its rising medium-term support line, the trend remains up. Therefore, higher – not lower – USD Index values are to be expected. All in all, it seems that gold, silver, and mining stocks are going to decline in the coming weeks (quite possibly days) and that we won’t have to wait too long for the next big decline to start. Thank you for reading our free analysis today. Please note that the above is just a small fraction of today’s all-encompassing Gold & Silver Trading Alert. The latter includes multiple premium details such as the targets for gold and mining stocks that could be reached in the next few weeks. If you’d like to read those premium details, we have good news for you. As soon as you sign up for our free gold newsletter, you’ll get a free 7-day no-obligation trial access to our premium Gold & Silver Trading Alerts. It’s really free – sign up today. Przemyslaw Radomski, CFAFounder, Editor-in-chiefSunshine Profits: Effective Investment through Diligence & Care * * * * * All essays, research and information found above represent analyses and opinions of Przemyslaw Radomski, CFA and Sunshine Profits' associates only. As such, it may prove wrong and be subject to change without notice. Opinions and analyses are based on data available to authors of respective essays at the time of writing. Although the information provided above is based on careful research and sources that are deemed to be accurate, Przemyslaw Radomski, CFA and his associates do not guarantee the accuracy or thoroughness of the data or information reported. The opinions published above are neither an offer nor a recommendation to purchase or sell any securities. Mr. Radomski is not a Registered Securities Advisor. By reading Przemyslaw Radomski's, CFA reports you fully agree that he will not be held responsible or liable for any decisions you make regarding any information provided in these reports. Investing, trading and speculation in any financial markets may involve high risk of loss. Przemyslaw Radomski, CFA, Sunshine Profits' employees and affiliates as well as members of their families may have a short or long position in any securities, including those mentioned in any of the reports or essays, and may make additional purchases and/or sales of those securities without notice.
XAGUSD And US100 Slides Down, USDJPY Near 116.00

XAGUSD And US100 Slides Down, USDJPY Near 116.00

John Benjamin John Benjamin 11.02.2022 10:06
USDJPY to test major resistance The US dollar surged after consumer prices hit a 40-year high. Higher lows and then a close above the recent peak at 115.65 is an indication of strong bullish pressure. This breakout has propelled the greenback to January’s high at 116.35. Its breach could trigger a runaway rally and resume the uptrend in the medium term. An overbought RSI on the hourly chart may briefly restrain the bullish fever. 115.30 is the closest support and the bulls may see a pullback as an opportunity to stake in. XAGUSD seeks support Bullions fell back after US Treasury yields soared over hot US inflation data. The psychological level of 22.00 has proven to be a solid demand area. A break above 23.00 has forced sellers to cover, paving the way for an upward extension. 24.00 from a previous rectangle consolidation is the next resistance. A bullish breakout would bring silver back to this year’s high at 24.70. On the downside, the resistance-turned-support at 22.80 could see buying interest in case of a retracement. US 100 hits resistance The Nasdaq 100 struggles as record-high US inflation exacerbates rate hike concerns. The previous rebound has eased selling pressure but hit resistance under 15350. The subsequent pullback bounced off the 61.8% Fibonacci retracement level (14400), which suggests buyers’ strong interest in keeping the index afloat. Sentiment is still a tad cautious unless the bulls clear the said hurdle. Then the psychological level of 16000 could be within reach. 14500 is a key support in case of an extended consolidation.
S&P 500 Moved Up... Then Down... But Will Strengthen All In All?

S&P 500 Moved Up... Then Down... But Will Strengthen All In All?

Paul Rejczak Paul Rejczak 11.02.2022 15:27
  Stocks retraced their Wednesday’s advance yesterday. Was this a downward reversal, or just a correction within an uptrend? The S&P 500 index lost 1.81% on Thursday, Feb. 10 after gaining 1.5% on Wednesday, as investors reacted to higher-than-expected inflation number release. Investors fear that the rising inflation will lead to a faster tightening by the Fed. On Wednesday the index got close to its previous Wednesday’s local high of 4,595.31, and yesterday it fell to the 4,500 level (the daily low was at 4,484.31). This morning the market will likely open 0.2% higher after an overnight decline. We may see some more short-term uncertainty. For now, it looks like a flat correction or a consolidation within an uptrend from the Jan. 24 local low of 4,222.62. The nearest important resistance level remains at 4,550-4,600. On the other hand, the support level is at 4,450-4,500. The S&P 500 index is close to the previous Friday’s daily closing price, as we can see on the daily chart (chart by courtesy of http://stockcharts.com): Futures Contract Trades Along the 4,500 Level Let’s take a look at the hourly chart of the S&P 500 futures contract. It broke above the short-term downward trend line in late January before rallying up to around the 4,600 level. Since then, it has been fluctuating along the 4,500 level. The market remains at the resistance level of its previous local lows, but there have been no confirmed negative signals so far. So in our opinion, no positions are currently justified from the risk/reward point of view. (chart by courtesy of http://tradingview.com): Conclusion The S&P 500 index will likely extend its almost two-week long consolidation after rallying from the mentioned late January local low. So far, it looks like a consolidation within an uptrend. The quarterly earnings season is mostly over now, and there is still an uncertainty concerning Russia-Ukraine tensions. Here’s the breakdown: The S&P 500 index will likely open slightly higher this morning and we may see more fluctuations along the 4,500 level. In our opinion, no positions are currently justified from the risk/reward point of view. Like what you’ve read? Subscribe for our daily newsletter today, and you'll get 7 days of FREE access to our premium daily Stock Trading Alerts as well as our other Alerts. Sign up for the free newsletter today! Thank you. Paul Rejczak,Stock Trading StrategistSunshine Profits: Effective Investments through Diligence and Care * * * * * The information above represents analyses and opinions of Paul Rejczak & Sunshine Profits' associates only. As such, it may prove wrong and be subject to change without notice. At the time of writing, we base our opinions and analyses on facts and data sourced from respective essays and their authors. Although formed on top of careful research and reputably accurate sources, Paul Rejczak and his associates cannot guarantee the reported data's accuracy and thoroughness. The opinions published above neither recommend nor offer any securities transaction. Mr. Rejczak is not a Registered Securities Advisor. By reading his reports you fully agree that he will not be held responsible or liable for any decisions you make regarding any information provided in these reports. Investing, trading and speculation in any financial markets may involve high risk of loss. Paul Rejczak, Sunshine Profits' employees, affiliates as well as their family members may have a short or long position in any securities, including those mentioned in any of the reports or essays, and may make additional purchases and/or sales of those securities without notice.
Fed And BoE Ahead Of Interest Rates Decisions. Having A Look At Nasdaq, S&P 500 and Dow Jones Charts

Many Would Want To Know The Near Future Of S&P 500

Monica Kingsley Monica Kingsley 11.02.2022 15:57
S&P 500 upswing was rejected – the intraday comeback didn‘t succeed. Risk-off posture won the day, and the dust is settling. Day 4-5 of the rally‘s window of opportunity that I talked on Monday, is proving as a milestone. Hot CPI data has increased the bets on Mar 50bp rate hike to a virtual certainty, and asset prices didn‘t like that. Not just stocks across the board, but commodities likewise (to a modest degree only) gave up intraday gains, turning a little red. Cryptos too ended down – it had been a good decision to cash in solid open long profits in S&P 500, oil and copper. Fresh portfolio highs reached over this 12+ months period (details on my homepage): What‘s the game plan for today? As the dollar closed flat while yields rose, I‘m not ruling out a reflexive intraday rebound attempt – after all, the bears should rule in the 2nd half of Feb most clearly. As time passes, the rips would be sold into unless bonds and tech can catch a solid bid. With focus on inflation, that‘s unlikely. Medium-term S&P 500 bias continues being short while commodity dips are to be cautiously bought. Crude oil looks to need to spend a bit more time around $90 while copper defending the low $4.50 is equally important. While silver didn‘t rise by nearly as much as the red metal did, it is down approximately as much in today‘s premarket – the white metal would recover on a less headline heavy day. Remember that PMs are trading sideways to up, with decreasing sensitivity to rising 10-year yield, and have done historically well when rate hikes finally start. Let‘s move right into the charts (all courtesy of www.stockcharts.com). S&P 500 and Nasdaq Outlook S&P 500 momentum has sharply shifted to the downside, and today‘s recovery attempts are likely to be sold into. I‘m keeping a keen eye on bonds, tech and risk-on in general – not expecting miracles. Credit Markets HYG keeps showing the way, resolutely down as of yesterday. With rising yields not propelling even financials, the bears have returned a few days earlier than they could – in a show of strength. Gold, Silver and Miners Miners issued a warning to gold and silver – yesterday brought a classic short-term top sign. I‘m though not ascribing great significance to it, for it isnt‘a turning point. Gold would be relatively unmoved while silver recovers however deep setback it suffers today. Crude Oil Crude oil appears to need more time to base – while the upside is being rejected for now, the selling attempts aren‘t materializing at all. Higher volume adds to short-term indecision, but strong (long) hands are to win. Copper Copper is running into selling pressure, and looks in need of consolidation in order to overcome $4.60. The red metal remains true to its reputation for volatility. Bitcoin and Ethereum Cryptos are taking their time, and the bulls need to act. Given that volume isn‘t disappearing, the bears have a short-term advantage. Summary S&P 500 looks to be getting under pressure soon again, today. There is no support from bonds, unless these stage an intraday risk-on reversal. The momentum is with the sellers, and rips are likely to be sold as markets digest yet more hawkish Fed action slated for March. Digest and slated are the key words – the Fed‘s hand is being forced here. Commodities and precious metals are likely to do best in what‘s coming – the 5-10 day window of bullish S&P 500 price action, is slowly closing down. Thank you for having read today‘s free analysis, which is available in full at my homesite. There, you can subscribe to the free Monica‘s Insider Club, which features real-time trade calls and intraday updates for all the five publications: Stock Trading Signals, Gold Trading Signals, Oil Trading Signals, Copper Trading Signals and Bitcoin Trading Signals.
Mining Stocks Don't Stay As Strong As Gold

Mining Stocks Don't Stay As Strong As Gold

Przemysław Radomski Przemysław Radomski 11.02.2022 15:41
  In line with bearish bets, miners have thrown a match. Gold, however, doesn’t want to leave the ring without a fight. How long will it stay high? While gold remains relatively firm despite stock market turbulence, rising real yields, and bearish technical indicators, even a confluence of headwinds hasn’t been able to knock the yellow metal off its lofty perch. However, mining stocks haven’t been so lucky. With my short position in the GDXJ ETF offering a great risk-reward proposition, the junior gold miners’ underperformance has played out exactly as I expected. Moreover, with major spikes in volume preceding predictable sell-offs (follow the vertical dashed lines below), I’ve warned on several occasions that the GDX ETF is prone to tipping its hand – we saw this volume spike in January, which was the 2022 top (as of today). In addition, with mining investors’ power drying up by the day, the medium-term looks equally unkind. Please see below: On Wednesday, gold miners fell. Even though they declined by just $0.06, it was profound. The miners were following gold higher during the early part of Wednesday’s (Feb. 9) session, but they lost strength close to the middle thereof and were back down before the closing bell. If the gold price reversed and then declined during the day, that would have been normal. However, gold stayed up. This tells us that the buying power has either dried up or is drying up. When everyone who wanted to get into the market is already in it, the price can do only one thing (regardless of bullish factors) – fall. Those who are already in can then sell. Monitoring the markets for this kind of cross-sector performance is one of the more important gold trading tips. Look, I’m not saying that declines now are “guaranteed”. There are no guarantees in the markets. There might be buyers that haven’t considered mining stocks that would now enter the market, but history tells us that this is unlikely. Instead, declines are very likely to follow. Yesterday’s big daily decline confirmed my above comments. Gold miners declined much more than gold did, and they did so at above-average volume. The latter indicates that “down” is the true direction in which the precious metals market is heading. To that point, the HUI Index provides clues from a longer-term perspective. When we analyze the weekly chart, it highlights investors’ anxiety. For example, after hitting an intraweek high of roughly 260, the HUI Index ended the Feb. 10 session at roughly 250 – just 3.99 up from last Friday – that’s an intraweek reversal. Furthermore, with the index still in a medium-term downtrend, shades of 2013 still profoundly bearish, and sharp declines often preceded by broad head and shoulders patterns (marked with green), there are several negatives confronting the HUI Index. As such, a sharp drawdown will likely materialize sooner rather than later. Please see below: Finally, the GDXJ ETF is the gift that keeps on giving. For example, with lower highs and lower lows being part of the junior miners’ roughly one-and-a-half-year journey, false breakouts have confused many investors. However, while I’ve been warning about the weakness for some time, more downside is likely on the horizon. To explain, I wrote on Feb. 10: I emphasized before that juniors hadn’t moved above their 50-day moving average, and that they stayed below their rising blue resistance line. Consequently – I wrote – the downtrend in them remained clearly intact. Yesterday’s reversal served as a perfect confirmation of the above. The previous breakdowns were verified in one of the most classic ways. The silver price has been quite strong recently, which is also something that we see close to the local tops. The reversals in mining stocks, the situation in gold, outperformance of silver, AND the situation in the USD Index (the medium-term support held) together paint a very bearish picture for the precious metals market in the short and medium term. All in all, if the weakness continues, I expect the GDXJ ETF to challenge the $32 to $34 range. However, please note that this is my expectation for a short-term bottom. While the GDXJ ETF may record a corrective upswing at this level, the downtrend should continue thereafter, and the junior miners should fall further over the medium term. In conclusion, gold showcased its steady hand throughout the recent volatility. However, mining stocks have cracked under the pressure. With the latter’s underperformance often a bearish omen for the former, the yellow metal’s mettle may be tested over the medium term. As such, while the long-term outlooks for gold, silver, and mining stocks remain profoundly bullish, a final climax will likely unfold before their secular uptrends continue. Thank you for reading our free analysis today. Please note that the above is just a small fraction of today’s all-encompassing Gold & Silver Trading Alert. The latter includes multiple premium details such as the targets for gold and mining stocks that could be reached in the next few weeks. If you’d like to read those premium details, we have good news for you. As soon as you sign up for our free gold newsletter, you’ll get a free 7-day no-obligation trial access to our premium Gold & Silver Trading Alerts. It’s really free – sign up today. Przemyslaw Radomski, CFAFounder, Editor-in-chiefSunshine Profits: Effective Investment through Diligence & Care * * * * * All essays, research and information found above represent analyses and opinions of Przemyslaw Radomski, CFA and Sunshine Profits' associates only. As such, it may prove wrong and be subject to change without notice. Opinions and analyses are based on data available to authors of respective essays at the time of writing. Although the information provided above is based on careful research and sources that are deemed to be accurate, Przemyslaw Radomski, CFA and his associates do not guarantee the accuracy or thoroughness of the data or information reported. The opinions published above are neither an offer nor a recommendation to purchase or sell any securities. Mr. Radomski is not a Registered Securities Advisor. By reading Przemyslaw Radomski's, CFA reports you fully agree that he will not be held responsible or liable for any decisions you make regarding any information provided in these reports. Investing, trading and speculation in any financial markets may involve high risk of loss. Przemyslaw Radomski, CFA, Sunshine Profits' employees and affiliates as well as members of their families may have a short or long position in any securities, including those mentioned in any of the reports or essays, and may make additional purchases and/or sales of those securities without notice.
Price Of Gold Update By GoldViewFX

Price Of Gold Hitting $2.000? Metal Seems To Feel Good

Florian Grummes Florian Grummes 14.02.2022 07:34
Given last week’s strong price action and gold’s intraday resilience, it is now very likely that gold indeed is breaking out of the multi-month consolidation triangle. Actually, this large and symmetrical triangle had been building for more than a year, at least. However, the correction in gold began on August 7th, 2020. Now it looks like the breakout is in process. Typically, traders tend to aggressively buy into such a breakout. And given Friday’s sharp spike higher, it actually looks exactly like this. Hence, expect more volatility and a sharp move higher as the direction of gold’s next move has become more obvious. Please note, that it is rather challenging to draw and determine the correct triangle, because gold has been in a tricky sideways market for such a long time and many trend-lines have been invalidated during this messy period. But at the latest, a weekly close above US$1,875 should confirm the breakout. This should unleash enough energy to push gold prices quickly towards US$1,900 and even US$1,950 within a few weeks. Obviously, that would fit very well with gold’s seasonal cycle, which is bullish until the end of February at least, but often saw gold rallying into mid of march, too. Consumer sentiment at 10-year low but Fed wants to hike and taper From a fundamental perspective, it leaves us speechless how the Fed can go on a hiking rampage while consumer sentiment is at a 10-year low. While the confidence in governments worldwide is collapsing and inflation is spiking higher, raising rates will have zero impact upon supply shortages. Instead, it will make these shortages only worse and bankrupt more companies in the supply chain. Also, it will bankrupt emerging markets, as the strong dollar has already been putting so much pressure on dollar indebted nations and creditors. It’s all a big mess, and we believe there is no way out. That’s why the warmongering industrial and military complex of the US is desperately trying to push Russia into an attack on Ukraine! Without showing any proof, the Biden administration and their mouthpiece “the mainstream media” have been pushing people’s focus on fears that Russia will soon invade Ukraine. Another noteworthy fundamental observation: Gold’s correction began in earnest when Pfizer & Biontech announced their vaccine on November 9th, 2020. In a first reaction, gold immediately sold off $150 on that same day. Many more similar large red daily candles followed over the last 16 months, destroying the confidence of the gold bugs and shifting millions of dollars to the short sellers. Now that more and more very serious questions about the vaccines are debated in the news, it would make sense for gold to run back to US$1,950. This was the level where gold was trading back on November 9th, 2020. Gold in US-Dollar, weekly chart as of February 13th, 2022. Gold in US-Dollar, weekly chart as of February 13th, 2022. On the weekly chart, gold has been slowly but surely progressing into the apex of the triangle over the last few months. It now looks like Gold is breaking out with vengeance. Theoretically, the resistance zone between US$1,850 and US$1,875 could still stop the bullish train. The weekly Bollinger Bands (US$1,864) sits right in this zone and should at least challenge the bulls for some days. However, the weekly stochastic has just given a new buy signal. On top, the oscillator has been making higher lows since March 2021. A measured move out of this triangle could take gold to around US$1,950 to US$1.975 until spring. The monthly Bollinger Band ($1,975) could become the logical target! Overall, the weekly chart is becoming more and more bullish, suggesting that gold can at least move around US$80 to US$100 higher. Gold in US-Dollar, daily chart as of February 13th, 2022. Gold in US-Dollar, daily chart as of February 13th, 2022. On the daily chart, gold has been struggling with the upper triangle resistance in November and January. Each time, the bears managed to push back. Now it looks like the bulls are finally successful. The fierce and sharp pullback two and half weeks ago had created a nice oversold setup which became the launching pad for the ongoing attack. Since then, the slow stochastic has been nicely turning around. This buy signal is still active and has not yet reached the overbought zone. Thanks to Friday’s big green candle, the bulls are now bending the upper Bollinger Band (US$1,858) to the upside. To conclude, the daily chart is bullish, and gold should have more upside. If the bulls continue their attack, we could see prices directly exploding for four to seven days. More likely would be a consolidation. Only with prices below US$1,835 the breakout would have failed. In that rather unlikely case, the picture could quickly turn ugly again. Conclusion: Gold is breaking out! In mid of December, gold made an important low around US$1,752. Back then, most gold bugs had enough and did throw in the towel after a very difficult and messy 16-month correction. Gold, silver and the mining stock had become the most hated asset. But actually, all that gold might have been doing was building an epic base and a launch pad to start the next leg higher within its bull market. Overall, we expect that Gold is breaking out after a short consolidation! The successful breakout above resistance between US$1,850 and US$1,875 should happen within the next few days or weeks. This should then lead to higher prices and gold will likely run towards US$1,950, at least. However, we are not sure yet whether this will also bring an attack towards the round number resistance at US$2,000. Given the fact, that gold usually starts to struggle somewhere in spring, the ongoing rally could still be just a counter-trend move within the larger ongoing consolidation/correction. Hence, we are short-term very bullish, mid-term neutral and long-term very bullish for gold. Feel free to join us in our free Telegram channel for daily real time data and a great community. If you like to get regular updates on our gold model, precious metals and cryptocurrencies you can also subscribe to our free newsletter. Disclosure: Midas Touch Consulting and members of our team are invested in Reyna Gold Corp. These statements are intended to disclose any conflict of interest. They should not be misconstrued as a recommendation to purchase any share. This article and the content are for informational purposes only and do not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision. The views, thoughts and opinions expressed here are the author’s alone. They do not necessarily reflect or represent the views and opinions of Midas Touch Consulting. By Florian Grummes|February 13th, 2022|Tags: Gold, Gold Analysis, Gold bullish, gold chartbook, gold fundamentals, precious metals, Reyna Gold, US-Dollar About the Author: Florian Grummes Florian Grummes is an independent financial analyst, advisor, consultant, trader & investor as well as an international speaker with more than 20 years of experience in financial markets. He is specialized in precious metals, cryptocurrencies and technical analysis. He is publishing weekly gold, silver & cryptocurrency analysis for his numerous international readers. He is also running a large telegram Channel and a Crypto Signal Service. Florian is well known for combining technical, fundamental and sentiment analysis into one accurate conclusion about the markets. Since April 2019 he is chief editor of the cashkurs-gold newsletter focusing on gold and silver mining stocks. Besides all that, Florian is a music producer and composer. Since more than 25 years he has been professionally creating, writing & producing more than 300 songs. He is also running his own record label Cryon Music & Art Productions. His artist name is Florzinho.
US 30 Is On A Slightly Low Level, Which Way Will GBPJPY Choose?

US 30 Is On A Slightly Low Level, Which Way Will GBPJPY Choose?

John Benjamin John Benjamin 14.02.2022 08:48
USDCHF to test resistance The US dollar rises as traders seek safe haven amid tensions in Ukraine. The pair is grinding up along a rising trendline from support at 0.9180. A series of higher lows suggests strong buying interest. A break above the intermediate resistance at 0.9275 may boost buyers’ confidence further. 0.9310 is the next hurdle and its breach would bring the greenback to the double top (0.9370) on the daily chart. On the downside, the trendline is the closest support, and then 0.9180 is a critical level to keep the short-term rally intact. GBPJPY tests demand zone The pound may find support from Britain’s upbeat GDP in Q4. A break above January’s high at 157.70 suggests that the bulls have reclaimed control of price action. The next challenging task is to push above last October’s peak at 158.20. This would resume the uptrend in the medium term. In the meantime, a combination of profit-taking and fresh selling is driving the price towards 155.20. Sentiment would remain steady as long as the sterling met bidders in this demand area. US 30 seeks support The Dow Jones 30 struggled as white-hot US inflation fanned fears of aggressive rate hikes. Nonetheless, a break above the 30-day moving average on the daily chart indicates improved market sentiment. An overbought RSI prompted momentum traders to exit. A fall below 34820 would suggest lingering hesitation among market participants and shake out weak hands. The bulls may see a pullback towards 34500 as a buying opportunity. The rebound may only resume if the price lifts offers around 35400.
Russian Rouble (RUB) Has Been Supported By Local Moves, But Is Under Geopolitical Pressure Now

Russian Rouble (RUB) Has Been Supported By Local Moves, But Is Under Geopolitical Pressure Now

Alex Kuptsikevich Alex Kuptsikevich 14.02.2022 09:28
The strengthening of the ruble was interrupted on Friday as geopolitical factors again came to the forefront, pushing aside the fundamental and long-term factors that supported the ruble. The Bank of Russia did everything in its power to support the Russian currency: the rate was raised by 100 points to 9.5%, investors were warned of further increases, and the pause in foreign currency purchases for the Finance Ministry was extended. Nevertheless, before the weekend, investors again preferred to reduce the risks of owning Russian assets against the background of the fact that several Foreign Ministries of different countries called on their citizens to leave Ukraine. For the markets, this is a signal that a new round of geopolitical tensions and the negotiations in the outgoing week did not bring the long-awaited agreement. Against the backdrop of news about geopolitics, the RTS index lost more than 4.6%, and the Moscow Exchange fell by 3%. It seems that the Russian market will have to experience the convulsions of geopolitics more than once for at least another week. Fixing the ruble above 76.40 per dollar and 86.60 per euro will mean that the period of corrective rollback of the ruble has come to an end, and we need to prepare for a new wave of growth. But this is from the standpoint of technical analysis. In practice, geopolitics now rules the roost, where détente can be as fast as escalation. At the same time, fundamental factors (high rates of the Central Bank, expensive oil, and a pause in foreign currency purchases) continue to play on the side of the ruble. These factors promise to return the ruble to the path of growth very quickly, repeating the dynamics of the previous two weeks. If we are right, then the ruble may remain in an upward trend until the end of February, rushing to the area of 71 per dollar and 83 per euro by the end of the month.
Dogecoin price prediction: DOGE to first tank 7%, before rallying 40%

Dogecoin price prediction: DOGE to first tank 7%, before rallying 40%

FXStreet News FXStreet News 14.02.2022 15:59
Dogecoin price action is under pressure as global markets are nervous about a possible escalation between Ukraine and Russia. DOGE looks set to break the low from the previous week and dip towards $0.1357 Expect once DOGE price reaches that level to see a rally into the weekend that could hold 40% gains. Dogecoin (DOGE) is set for a solid rally but first needs to face the most vital forces with global markets pressing on all assets with a mood of risk-off, as today and tomorrow could be the tipping point in the escalation towards a war between Russia and Ukraine. As tailwinds are just too big a force to face, DOGE will dip further towards solid support at $0.1357. Once bulls enter, expect a big rally that could swing up to 40% towards $0.19. Time for the bulls to stake a step back and look at the bigger picture Dogecoin is under pressure as the overall cryptocurrency space joins global markets rattled by a crucial moment in the Russia-Ukraine development. As Russian army exercises near the Ukrainian border are set to end tomorrow, the crucial moment for a possible invasion to take place before then. This is putting markets on edge with risk-off across the board and EU equities down more than 3%. This risk sentiment is weighing on DOGE price action with the low of last week being tested, and bears using the entry-level from Sunday at $0.1594 where the 55-day Simple Moving Average and the pivotal historical level delivered a firm rejection to the upside. With that, expect this downtrend to continue today and dip towards $0.1357, which already proved its support at the end of January. Once there, expect bulls to jump on the opportunity and lead a rally that could jump as much as 40% towards $0.19 once the geopolitical rhetoric dies down and cools off. DOGE/USD daily chart Should Russia engage in war with Ukraine and invade, expect this to pull the trigger for investors to flee the markets and cause a fire sale across the board. For DOGE this would mean that it could tank another 24% on top of the 7% forecasted for today. That would bring DOGE price action down to around $0.1030, where the monthly S1 support level is situated, the red descending trendline and the $0.1000 psychological level – providing three elements that could catch the falling price action.
Technical Analysis: Moving Averages - Did You Know This Tool?

S&P 500 Chart - There's A Big Red Candle On The Right Hand Side

Monica Kingsley Monica Kingsley 14.02.2022 16:24
S&P 500 opening range gave way to heavy selling as 4,470s didn‘t hold. Risk-on was overpowered, and the flight to Treasuries didn‘t support tech. And that‘s most medium-term worrying – stocks don‘t look to have found a floor, and gave up the opportunity for a tight range trading on Friday all too easily. The prospects of war were that formidable opponent, against which the S&P 500 didn‘t really stand a chance. So, the downtrend has reasserted itself, and HYG doesn‘t look to have found a floor – junk bonds are leading to the downside, with energy, materials and financials standing out, which isn‘t exactly a bullish constellation. The other key beneficiaries of the safe haven bid were gold, miners and oil. Silver lagged as copper retreated all too easily, but I‘m looking for that to change. As for Monday‘s session in stocks, the odds of a countertrend move to the upside, at least intraday, are good. Just a quick glance at the dollar, gold, oil and Bitcoin would reveal the extent of possible stabilization. Stabilization, not a reversal, because HYG is unlikely to turn up, and I‘m not looking for stocks to start moving up again. Thursday marked a high point in the countertrend rally, which was cut short after some 5 days only. Sideways to a little up is the best the bulls can hope for on Monday. Funny though how with all eyes on Eastern Europe, the inflation and steep rate hike bets receded? What a Super Bowl! Let‘s move right into the charts (all courtesy of www.stockcharts.com). S&P 500 and Nasdaq Outlook Whatever backing and filling there could have been, the S&P 500 didn‘t hesitate, and is pointing to the downside. The bears are back, and aren‘t yielding. Credit Markets Credit markets went decidedly risk-off, and a little sideways reprieve wouldn‘t be surprising. But it would change nothing as the bets on rising rates, are on, and the 2-year Treasury is forcing the Fed‘s hand. Gold, Silver and Miners Miners and gold came alive on the tensions escalation news – the uptrend is alive and well indeed, even without these geopolitical developments. The upswing wasn‘t really sold into. Crude Oil Crude oil correction came to an abrupt close, and it‘s unlikely black gold would dip in the current environment. The upcoming corrections would be bought as much as the previous one, and given the oil stocks performance, wouldn‘t likely reach far to the downside. Copper Copper is under pressure, and not holding up as well as other commodities. Base metals though are breaking higher, which is why I‘m looking at Friday‘s red metal trading as a temporary setback only. Bitcoin and Ethereum The floor in cryptos is heralding a tight range day – it‘s good for risk-on that Friday‘s downswing isn‘t immediately continuing, it‘s buying some time. Summary S&P 500 bears are back in the driver‘s seat, and the rush to Treasuries took the spotlight off rate hikes – to a small degree. Not that the Fed would be changing course on geopolitics, we aren‘t there yet. To the contrary, credit markets are pressuring the central bank to move – as decisively as possible in the overleveraged system – and Powell would find it hard not to deliver. Come autumn latest, the strain on the real economy would be hard to ignore – real estate is feeling the pinch already. Stock bulls can‘t expect higher prices unless tech recovers, and we look to be still far from that moment. Real assets with safe haven appeal are likely to do best, and the same goes for the dollar temporarily too. Thank you for having read today‘s free analysis, which is available in full at my homesite. There, you can subscribe to the free Monica‘s Insider Club, which features real-time trade calls and intraday updates for all the five publications: Stock Trading Signals, Gold Trading Signals, Oil Trading Signals, Copper Trading Signals and Bitcoin Trading Signals.
Tesla Stock Price and Forecast: Should I buy TSLA, RIVN or LCID?

Tesla Stock Price and Forecast: Should I buy TSLA, RIVN or LCID?

FXStreet News FXStreet News 14.02.2022 15:59
TSLA drops nearly 5% on Friday as macro factors in charge. All EV stocks LCID, Chinese names suffer the same fate. Tesla once again is targetting its 200-day moving average. Tesla (TSLA) followed many EV names (all, if we are correct) lower on Friday as macro factors took charge over equity markets. The dominant theme so far in 2022 has been one of rising rates and inflationary pressures. This has led to high growth and tech names underperforming, while energy and financial stocks have been the place to be. That is likely to remain the theme for at least the next quarter if not also Q2. Russia and Ukraine tensions have pushed the oil price above $90, and financial stocks benefit from higher interest rates. Growth stocks, however, do not benefit from higher interest rates as investors look for businesses with cash. With higher interest rates, future cash flows become less valuable. So of the three names mentioned, Tesla, Rivian (RIVN) or Lucid (LCID), we would not want to currently be long any of them. We expect TSLA to perform best of the three due to its market-leading position and revenue, but this sector is out of favour and likely to remain so. Tesla Stock News The latest data from the China Passenger Car Association (CPCA) confirms what we saw from Chinese EV companies earlier. Deliveries for January were down versus December. This is due to the lunar new year in China. Tesla sold 59,845 vehicles in January, down from 70,847 China-made vehicles in December. The Chinese electric vehicle market remains the largest EV market in the world, helped by government incentives and population demand. Tesla Stock Forecast Tesla remains in the strong downtrend identified earlier this year. $945 was tested multiple times as resistance and failed. This has resulted in the recent pullback. Now $824 remains as the 200-day moving average. Below we have trendline support at $752. The 200-day is the key level. Tesla has not closed below its 200-day moving average since June 2021. It has broken the 200-day on an intraday basis several times since but always failed to close below. Notice how volume has steadily been declining in Tesla this month, despite some hugely volatile days. This is indicative of a lack of conviction in the stock. Tesla (TSLA) chart, daily
Will USDJPY Find Its Stability? XAUUSD Is Trades Higher And Higher

Will USDJPY Find Its Stability? XAUUSD Is Trades Higher And Higher

John Benjamin John Benjamin 15.02.2022 09:04
USDJPY hits double top The US dollar recovers as hot CPI fuels bets of a 50 basis points hike in March. The rally came to a halt at January’s high (116.35). Profit-taking compounded by new selling triggered a liquidation below 115.50. The medium-term trajectory remains upward and the bulls may be eager to buy the dips. 114.90 is the next support and an oversold RSI may attract bargain hunters. Further down, the daily support at 114.20 is a major demand zone in case of a deeper correction. A close above the double top could resume the uptrend. XAGUSD tests resistance Bullion rallies over investors’ flight to safety. Silver continues to climb from the daily support at 22.00. Following a brief pullback, a break above the recent high at 23.70 indicates strong buying interest. A bullish MA cross is a sign of acceleration to the upside. The psychological level of 24.00 is the next hurdle and a breakout would bring the price to January’s peak at 24.70. The RSI’s overbought situation may cause a limited fallback; if so the previous low at 22.90 would be the closest support. GER 40 tests critical floor The Dax 40 remains under pressure over Russia-Ukraine tensions. The last rebound’s failure to achieve a new high showed that the bears were still in charge. Trend followers are likely to sell into strength as sentiment remains wary. The index saw bids in the critical demand zone around 14900 which has been tested several times in the last four months. A bearish breakout would trigger a broader sell-off and put a serious dent in the medium-term rally. The bulls will need to reclaim 15500 before they could turn things around.
Decentralized Autonomous Organisation - Another Addition To Our Personal Dictionaries

BTC Wants To Let Us Forget About January's Lows. On Monday: BTC Decreased By 0.2%, ETH And LUNA Gained

Alex Kuptsikevich Alex Kuptsikevich 15.02.2022 09:28
The first cryptocurrency returned to growth on Tuesday morning, adding 3.3% and rising to 43,500. Technically, BTCUSD held above the 50-day moving average and received support from buyers after another touch of this level. At the same time, however, this average is directed downwards, emphasizing the general downward trend. Cryptocurrencies seem to be once again trying on the role of a safe-haven asset, becoming a little more like gold and a little less like stocks. Although US stock indices were under pressure on Monday, they decided to stop the sharp decline at the end of last week. However, the high-tech Nasdaq ended the day unchanged. European stock indicators showed a noticeable drop under the influence of tensions around Ukraine. On the same background, gold shot up 3% to highs since June last year. It should be understood that in the event of a massive sale of shares, only short-term government bonds will be the protective asset of last resort. Institutions invested $75 million in crypto funds last week, according to CoinShares. Over the past four weeks, net inflows to crypto funds amounted to $209 million. The head of Uber said that the company would definitely start accepting cryptocurrencies in the future. A British crypto investor has announced the creation of a city for crypto investors in the Pacific and expects thousands of supporters from around the world to join soon. The Ministry of Finance of the Russian Federation proposed to limit the investments of unqualified Russian investors in cryptocurrencies to 50 thousand rubles. The agency estimates tax revenues to the budget from the legalization of the cryptocurrency market at 10-15 billion rubles, and the main amount of payments will fall on the miners. Overall, Bitcoin was down 0.2% on Monday, ending the day at around $42,200. Ethereum added 0.1%, while other leading altcoins from the top ten showed mixed dynamics: from a decrease of 1.6% (XRP) to a rise of 2 .2% (Terra). The total capitalization of the crypto market, according to CoinGecko, grew by 0.5% per day, to $1.97 trillion. The BTC dominance index did not change during the day, remaining at the level of 40.7%. The Fear and Greed Index is up 2 points to 46 and is in a state of fear.
Will Oil (BRENT) Call For A Oxygen Cylinder? It Climbed Really High...

Will Oil (BRENT) Call For A Oxygen Cylinder? It Climbed Really High...

Alex Kuptsikevich Alex Kuptsikevich 15.02.2022 15:22
Events in recent weeks have brought back interest in assets that have benefited from tensions in previous decades, with gold rising as insurance against currency destabilisation and oil rising on fears of surging demand and shortages of supply if sanctions constrain supplies from Russia. Interestingly, the West is trying to balance sanctions restrictions on oil as more encouraging comments come out of the talks with Iran. In our view, oil is very expensive, climbing to current heights faster than the economy can afford it. This rise is caused by geopolitical tensions around Russia, which acts as the world's largest energy exporter by a wide margin. Fears about the stability of future supply have so far outweighed any negatives, but it is still prudent to zero in on geopolitical influences over the medium to long term. And with that in mind, the oil price looks unsustainably high, vulnerable to a corrective pullback once the dust of military hardware settles. About 12 years ago, we saw a similar picture when oil prices recovered quickly. And then, the result was another round of global economic weakness, which also knocked down demand for commodities and forced regulators to postpone policy normalisation steps. Will it be like that now? Quite possibly, and then in the second half of the year, oil could turn sharply to correction and cause another shock for the economy. In recent weeks, significant factors are potentially capping price rises with increased drilling activity. Also, Russia will ramp up production as most of the wells are in areas with a harsh climate. Looking locally, we can see how quickly any declines in oil over the last three months are being bought out. In such an environment, oil could soon find itself in short squeeze territory, with short positions being forced to close due to rising prices. This mirrors what we saw in April 2020. It is difficult to predict the peak price level in such an environment. It would be an ideal market picture if the short squeeze occurred at the end of April on another major expiry, paying homage to events two years earlier. And ideally, if we saw a price return to the $112 area where the bear market in oil started in July 2014. But this is an idealised picture. The reality is likely to be less mathematically accurate, as so much is now tied to the actions and comments of policymakers.
Sandbox price set for breakout as bulls target some low-hanging fruit

Sandbox price set for breakout as bulls target some low-hanging fruit

FXStreet News FXStreet News 15.02.2022 16:09
Since December, sandbox has been trying to break the downtrend. As bulls attempt to break through, expect some profits to be booked as some targets lie nearby. Once above $4.72, expect $5.00 and $6.00 to be the following targets in the relief rally. Sandbox (SAND) price action is surfing on a wave of relief this morning as tensions between Russia, and the West start to ease on positive news. With that, investors have been falling over each other to get back into cryptocurrencies, and Sandbox price is set to break the longer-term red descending trendline, and downtrend since December last year. Some low-hanging fruit will be targeted in the breakthrough and could provide enough incentive for bulls to book partial profits and go for the ultimate goal of $6.00, holding 47% of gains. Sandbox bulls are in for 47% gains in the relief rally Sandbox price action is again hammering on the red descending trend line that originates from December last year and has been dictating the downtrend ever since. The renewed push comes from tailwinds that emerged overnight on some positive news around de-escalation in the situation between Russia and Ukraine. As the scene is set for a solid relief rally, expect to see some excellent (https://www.fxstreet.com/cryptocurrencies/news/sandbox-tests-support-at-425-before-sand-test-prior-all-time-highs-202202112001) returns, beginning with some nice profits nearby as a good start. SAND bulls will have their eyes on $4.72 with the 55-day Simple Moving Average and an overall (https://www.fxstreet.com/cryptocurrencies/news/cryptocurrencies-price-prediction-dogecoin-sandbox-and-cardano-european-wrap-10-february-video-202202101133) pivotal level falling in line around the same area. Although this level is not far from the red descending trendline, it will still return around 16% of gains intraday. Bulls will have a good incentive to book profits midway but stay in the trade with more considerable profits gained when the price rises towards $5.00 and $6.00 – the next targets in this week’s relief rally. The trade has an excellent risk-return ratio and is the most viable (https://www.fxstreet.com/cryptocurrencies/news/sandbox-price-bound-for-another-30-gains-as-sand-finds-support-202202101005) as we advance. SAND/USD daily chart Should German chancellor Scholz come out with some negative comments and ramp up the rhetoric of full-scale escalation of the tensions, expect (https://www.fxstreet.com/cryptocurrencies/news/shiba-inu-to-enter-the-metaverse-and-challenge-axie-infinity-sandbox-and-decentraland-202202091718) a knee jerk reaction with a firm rejection or false break of the red descending trend line, trapping bulls and pushing them out of their positions as SAND price action collapses back towards $3.50. From there, another leg lower could follow towards $3.00, with the 200-day SMA coming in at around $2.85 and playing its part as a supportive element in the belief that a recovery is still possible. If the 200-day SMA is no match for the downward pressure, expect a break and further push towards $2.50 or $2.00.
Should Someone Tell The Price Of Gold It's Time To Review Its Incoming "Oponents"?

Should Someone Tell The Price Of Gold It's Time To Review Its Incoming "Oponents"?

Przemysław Radomski Przemysław Radomski 15.02.2022 16:00
  Gold continues to benefit from the market turmoil and has apparently forgotten about medium-term problems. Meanwhile, the rising USD and a hawkish Fed await confrontation. With financial markets whipsawing after every Russia-Ukraine headline, volatility has risen materially in recent days. With whispers of a Russian invasion on Feb. 16 (which I doubt will be realized), the game of hot potato has uplifted the precious metals market. However, as I noted on Feb. 14, while the developments are short-term bullish, the PMs’ medium-term fundamentals continue to decelerate. For example, while the general stock market remains concerned about a Russian invasion, U.S. Treasury yields rallied on Feb. 14. With risk-off sentiment often born in the bond market, the safety trade benefiting the PMs didn’t materialize in U.S. Treasuries. As a result, bond traders aren’t demonstrating the same level of fear. Please see below: Source: Investing.com Furthermore, while the potential conflict garners all of the attention, the fundamental issues that upended the PMs in 2021 remain unresolved. For example, with inflation surging, St. Louis Fed President James Bullard said on Feb. 14 that “the last four [Consumer Price Index] reports taken in tandem have indicated that inflation is broadening and possibly accelerating in the U.S. economy.” “The inflation that we’re seeing is very bad for low- and moderate-income households,” he said. “People are unhappy, consumer confidence is declining. This is not a good situation. We have to reassure people that we’re going to defend our inflation target and we’re going to get back to 2%.” As a result, Bullard wants a 50 basis point rate hike in March, and four rate hikes by July. Please see below: Source: CNBC Likewise, while San Francisco Fed President Mary Daly is much less hawkish than Bullard, she also supports a rate hike in March. Source: CNBC As a result, while the PMs can hide behind the Russia-Ukraine conflict in the short term, their medium-term fundamental outlooks are profoundly bearish. As mentioned, Bullard highlighted inflation’s impact on consumer confidence, and for a good reason. With the University of Michigan releasing its Consumer Sentiment Index on Feb. 11, the report revealed that Americans’ optimism sank to “its worst level in a decade, falling a stunning 8.2% from last month and 19.7% from last February.” Chief Economist, Richard Curtin said: “The recent declines have been driven by weakening personal financial prospects, largely due to rising inflation, less confidence in the government's economic policies, and the least favorable long term economic outlook in a decade.” “The impact of higher inflation on personal finances was spontaneously cited by one-third of all consumers, with nearly half of all consumers expecting declines in their inflation adjusted incomes during the year ahead.” Please see below: To that point, I’ve highlighted on numerous occasions that U.S. President Joe Biden’s re-election prospects often move inversely to inflation. With the dynamic still on full display, immediate action is needed to maintain his political survival. Please see below: To explain, the light blue line above tracks the year-over-year (YoY) percentage change in inflation, while the dark blue line above tracks Biden’s approval rating. If you analyze the right side of the chart, you can see that the U.S. President remains in a highly perilous position. Moreover, with U.S. midterm elections scheduled for Nov. 8, the Democrats can’t wait nine to 12 months for inflation to calm down. As a result, there is a lot at stake politically in the coming months. As further evidence, as inflation reduces real incomes and depresses consumer confidence, the Misery Index also hovers near crisis levels. Please see below: To explain, the blue line above tracks the Misery Index. For context, the index is calculated by subtracting the unemployment rate from the YoY percentage change in the headline CPI. In a nutshell, when inflation outperforms the unemployment rate (the blue line rises), it creates a stagflationary environment in America. To that point, if you analyze the right side of the chart, you can see that the Misery Index is approaching a level that coincided with the global financial crisis (GFC). As a result, reversing the trend is essential to avoid a U.S. recession. As such, with inflation still problematic and the writing largely on the wall, the market-implied probability of seven rate hikes by the Fed in 2022 is nearly 93% (as of Feb. 10). Please see below: Ironically, while consumers and the bond market fret over inflation, U.S. economic growth remains resilient. While I’ve been warning for months that a bullish U.S. economy is bearish for the PMs, continued strength should turn hawkish expectations into hawkish realities. To that point, the chart above shows that futures traders expect the U.S. Federal Funds Rate to hit 1.75% in 2022 (versus 0.08% now). However, Michael Darda, Chief Economist at MKM Partners, expects the Fed’s overnight lending rate to hit 3.5% before it’s all said and done. “We have this booming economy with high inflation and a rapid recovery in the labor market – much different relative to the last cycle,” he said. “The Fed is behind the curve this time. They are going to have to do more.”  Singing a similar tune, John Thorndike, co-head of asset allocation at GMO, told clients that “inflation is now here, [but] the narrative is that inflation goes away and markets tend to struggle with change. It is more likely than not that real yields and policy rates need to move above inflation during this cycle.” The bottom line? While the Russia-Ukraine drama distracts the PMs from the fundamental realities that confront them over the medium term, their outlooks remain profoundly bearish. Moreover, while I’ve noted on numerous occasions that the algorithms will enhance momentum in either direction, their influence wanes materially as time passes. As such, while headline risk is material in the short-term, history shows that technicals and fundamentals reign supreme over longer time horizons. Thus, while the recent flare-up is an unfortunate event that hurts our short position, the medium-term developments that led to our bearish outlook continue to strengthen. In conclusion, the PMs rallied on Feb. 14, as the Russia-Ukraine conflict is the primary driver moving the financial markets. However, while the PMs will ride the wave as far as it takes them, they ignored that the USD Index and U.S. Treasury yields also rallied. Moreover, with Fed officials ramping up the hawkish rhetoric, the PMs' fundamental outlook is more bearish now than it was in 2021 (if we exclude the Russia-Ukraine implications). As a result, while the timeline may have been delayed, lower lows should confront gold, silver, and mining stocks in the coming months. Thank you for reading our free analysis today. Please note that the above is just a small fraction of today’s all-encompassing Gold & Silver Trading Alert. The latter includes multiple premium details such as the targets for gold and mining stocks that could be reached in the next few weeks. If you’d like to read those premium details, we have good news for you. As soon as you sign up for our free gold newsletter, you’ll get a free 7-day no-obligation trial access to our premium Gold & Silver Trading Alerts. It’s really free – sign up today. Przemyslaw Radomski, CFAFounder, Editor-in-chiefSunshine Profits: Effective Investment through Diligence & Care * * * * * All essays, research and information found above represent analyses and opinions of Przemyslaw Radomski, CFA and Sunshine Profits' associates only. As such, it may prove wrong and be subject to change without notice. Opinions and analyses are based on data available to authors of respective essays at the time of writing. Although the information provided above is based on careful research and sources that are deemed to be accurate, Przemyslaw Radomski, CFA and his associates do not guarantee the accuracy or thoroughness of the data or information reported. The opinions published above are neither an offer nor a recommendation to purchase or sell any securities. Mr. Radomski is not a Registered Securities Advisor. By reading Przemyslaw Radomski's, CFA reports you fully agree that he will not be held responsible or liable for any decisions you make regarding any information provided in these reports. Investing, trading and speculation in any financial markets may involve high risk of loss. Przemyslaw Radomski, CFA, Sunshine Profits' employees and affiliates as well as members of their families may have a short or long position in any securities, including those mentioned in any of the reports or essays, and may make additional purchases and/or sales of those securities without notice.
COT Currency Speculator Sentiment rising for Euro & British Pound Sterling

Mean Reversion

Monica Kingsley Monica Kingsley 15.02.2022 16:32
S&P 500 refused further downside yesterday, and while credit markets didn‘t move much, rebound looks approaching as stocks might lead bonds in the risk appetite. When the East European tensions get dialed down, S&P 500 can be counted on to lead, probably more so when it comes to value than tech. That‘s why the tech participation is key as it would make up for the evaporating risk premium in energy. Or precious metals – these are likely to rise once again when the spotlight shifts to the inadequacy of Fed‘s tightening in the inflation fight. For now, the war drums took the limelight away, but don‘t count on gold, silver or oil correcting significantly and lastingly. Cryptos are supporting the return of risk-on as the touted war just isn‘t happening either today or tomorrow, and market participants are dialing back the panicky bets. That‘s why Treasuries and tech movements are so key these days – copper trading shows that we‘re in for paring back of the fire sales. I can‘t call it a full fledged stock market reversal, not yet. Let‘s move right into the charts (all courtesy of www.stockcharts.com). S&P 500 and Nasdaq Outlook Pause but more likely a rebound, is what comes next for S&P 500. Closing above the 200-day moving average is possible, but more is needed for a trend reversal in this correction. Credit Markets Credit markets moderated their pace of decline, and there‘s no risk-on posture apparent yet. We may be though nearing the point of credit market reprieve – as much as that‘s compatible with rate raising cycle. Gold, Silver and Miners Miners and gold are benefiting from the tensions, but they‘ll just as easily give up some of these gains next. What‘s important though, is the continued trend of making higher highs and higher lows. Crude Oil Crude oil looks also likely to lose some of the prior safe haven bid, but similarly to precious metals, the trend is higher, and corrections are more or less eagerly bought. Only should the Fed‘s actions harm the real economy, would oil prices meaningfully decline. Copper Copper is rebounding, but still remains trading in a not too hot fashion – the red metal is still trailing behind other commodities significantly. Bitcoin and Ethereum Cryptos deciding to go higher, is a positive sign for stocks as well – the volume looks to be noticeable enough at the close later today to lend the upswing credibility. Summary S&P 500 bulls have the opportunity today, but the market remains as headline sensitive as everything else. Treasuries stabilizing or even moving higher while funds flow out of the dollar, that would be a bullish confirmation – and the same goes for precious metals not getting hammered, but finding a decent floor. The point is that war jitters calming down when Russia doesn‘t take the bait, makes assets to continue with their prior trends and focus, which is Fed and tightening. The bets on 50bp rate hike in Mar went down recently, and when they start rising again, it would make sense to deploy more capital – including into oil above $90, give or take a buck. Thank you for having read today‘s free analysis, which is available in full at my homesite. There, you can subscribe to the free Monica‘s Insider Club, which features real-time trade calls and intraday updates for all the five publications: Stock Trading Signals, Gold Trading Signals, Oil Trading Signals, Copper Trading Signals and Bitcoin Trading Signals.
Speaking Of nVidia Stock, S&P500 (SPX), The Conflict In Eastern Europe And GBP State

Look At This XAUUSD Slide. Did GBPUSD Find Its Straight Line?

John Benjamin John Benjamin 16.02.2022 08:43
EURUSD bounces off support The US dollar retreats as the Fed’s half-point hike in March remains uncertain. The euro’s break above the daily resistance at 1.1480 boosted buyers’ confidence after a sell-off in January. It bounced off 1.1280 at the base of the recent bullish breakout. The support also is right next to the 61.8% Fibonacci retracement level (1.1265) making it an area of congestion. A close above the intermediate resistance (1.1370) would attract more buying interest. Then an extension above 1.1490 may fuel a rally towards 1.1600. GBPUSD awaits breakout The sterling holds well as Britain’s wage growth beats expectations in December. The current rebound came under pressure in the supply zone around 1.3660 which was the origin of a sharp drop in late January. An overbought RSI led to some profit-taking but the pound has found support above 1.3480. The bears’ failed attempts to push lower indicates strong demand. A bullish close above 1.3640 would lift offers towards last month’s high at 1.3750. The daily support at 1.3370 is a key floor in keeping the rally intact. XAUUSD seeks support Gold drifts lower on signs of de-escalation in Ukraine. A break above last November’s high at 1875 may have put the precious metal back on track. However, the rally ran out of steam in the short term with the RSI shooting into the overbought territory. The price is taking a breather and buyers may see a pullback as an opportunity to stake in. A drop below 1852 may wash out weak hands and deepen the correction towards 1830. 1880 is now a fresh resistance and its breach could propel bullion to last June’s high at 1910.
Stumbling Again

Stumbling Again

Monica Kingsley Monica Kingsley 16.02.2022 15:53
S&P 500 rebound goes on reflexively, but stormy clouds are gathering – I‘m looking for the bears to reassert themselves over the next couple of days latest. The credit markets posture is far from raging risk-on even though select commodities are recovering (what else to expect in a secular commodities bull) and precious metals suffered a modest setback (not a reversal though). Crypto recovery is nodding towards the risk-on upturn that is though likely to get checked soon.It‘s great that tech was the driver of yesterday‘s S&P 500 upswing, but for how long would it keep leadership now that attention is shifting back towards inflation. Yesterday I wrote that: (...) rebound looks approaching as stocks might lead bonds in the risk appetite. When the East European tensions get dialed down, S&P 500 can be counted on to lead, probably more so when it comes to value than tech. That‘s why the tech participation is key as it would make up for the evaporating risk premium in energy. Or precious metals – these are likely to rise once again when the spotlight shifts to the inadequacy of Fed‘s tightening in the inflation fight.So far the stock market advance hasn‘t met a brick wall, but value upswing has been sold into (unlike tech‘s). Energy stocks lost, but are likely to come back – and the next microrotation might not be powerful enough to carry S&P 500 higher. Anyway without a HYG upswing, stock bulls are facing stiff headwinds.Let‘s move right into the charts (all courtesy of www.stockcharts.com).S&P 500 and Nasdaq OutlookS&P 500 rebounded on low volume but that wouldn‘t be an issue in a healthy bull market – the trouble is that this 2022 price action isn‘t very healthy.Credit MarketsHYG didn‘t trade on a strong note, and the rise in yields continues almost unabated. This is what I meant yesterday by saying that we may be though nearing the point of credit market reprieve – as much as that‘s compatible with rate raising cycle.Gold, Silver and MinersPrecious metals suffered a temporary setback – they easily gave up some of the safe haven gains, which isn‘t surprising. The bulls though haven‘t lost control, and that‘s key.Crude OilCrude oil dip was bought, and there wasn‘t much bearish conviction to start with. The general uptrend is likely to continue, and $90 appears likely to hold over the next few days definitely.CopperCopper is now in for some backing and filling, but managed to catch up with other commodities a little yesterday. The red metal remains range bound, but making good bullish progress.Bitcoin and EthereumCryptos are paring back yesterday‘s advance, and unless the mid Feb lows give, they‘re likely to muddle through with a modest bullish bias till the attention shifts to the Fed again.SummaryS&P 500 bulls‘ opportunity seems slipping away with each 1D or 4H candle, and I‘m not counting on the credit markets to ride to stocks‘ rescue. The commodities bull though is likely to carry on with little interference – and so does the precious metals bull as the yield curve keeps compressing. Slowdown in economic growth with rampant inflation and the realization that the Fed tightening hasn‘t had the effect, is awaiting, and would usher in strong gold and silver gains.Thank you for having read today‘s free analysis, which is available in full at my homesite. There, you can subscribe to the free Monica‘s Insider Club, which features real-time trade calls and intraday updates for all the five publications: Stock Trading Signals, Gold Trading Signals, Oil Trading Signals, Copper Trading Signals and Bitcoin Trading Signals.
Binance Coin set for pop above significant resistance as relief rally takes a short halt

Binance Coin set for pop above significant resistance as relief rally takes a short halt

FXStreet News FXStreet News 16.02.2022 16:18
Binance Coin takes a small step back this morning due to some profit-taking.BNB bulls hold all the cards as the relief rally is not over yet.Expect a pop above $444-$452 with a profit target set at $480 for the moment.Binance Coin (BNB) price action shot back above the red descending trend line yesterday with a massive relief rally that lifted market sentiment. With that, the downtrend looks to be broken, and an uptrend could be on the cards if bulls can take out the $444-$452 resistance barrier with a triple top formation, the 55-day Simple Moving Average (SMA) and the longer-term pivotal level all coincide in this region. Once through there, expect the next stage to be set for a move towards $480 with the 200-day SMA coming in, returning another 10%.Binance Coin set for the second phase in the recovery rallyBinance Coin is undergoing some profit-taking this morning after the solid relief rally from yesterday (https://www.fxstreet.com/cryptocurrencies/news/cryptocurrencies-price-prediction-decentraland-binance-dogecoin-asian-wrap-16-feb-video-202202160214) that has lifted market sentiment and saw some decent inflows into markets. On the way up, bulls hit some resistance from the double top from February 08 and January 21 and, in the process, made it a triple top resistance. This, together with the already known $452 and the 55-day SMA coming in at $445, makes it a substantial (https://www.fxstreet.com/cryptocurrencies/news/binance-coin-must-break-out-above-this-level-before-bnb-can-retest-660-202202152150) barrier that will need to be broken to prove that the relief rally still has plenty of juice to go.Expect thus some profit-taking today, a little bit on the back foot with $419 as support to bounce off back to $445. Some more positive signals coming from the Russia-Ukraine developments could be the needed additional catalyst to push through this difficult barrier. The next target is set at $480, with the 200-day SMA falling in line with that considerable number, resulting in probably the same profit-taking pattern (https://www.fxstreet.com/cryptocurrencies/news/dogecoin-and-shiba-inu-price-climbs-as-binance-smart-chain-whales-accumulate-meme-coins-202202151719) as BNB price action shows today.BNB/USD daily chartOverall, the US keeps claiming that the situation in Central-Europe remains precarious and could see an escalation (https://www.fxstreet.com/cryptocurrencies/news/cryptocurrencies-price-prediction-bitcoin-binance-coin-and-decentraland-european-wrap-11-february-202202111055) any time now. Once those headlines hit the wires, expect the whole cryptocurrency space to collapse and for there to be a massive pullback from investors, with BNB price falling back initially to $389. Depending on the severity of the attacks, another push lower towards $340 would be the logical outcome and result in BNB price shedding 22% of its value.
Tesla Stock News and Forecast: TSLA, RIVN or LCID stock, which is the best buy?

Tesla Stock News and Forecast: TSLA, RIVN or LCID stock, which is the best buy?

FXStreet News FXStreet News 16.02.2022 16:18
Tesla bounces strongly on Tuesday as risk assets surge. TSLA stock gains just over 5% on Tuesday. Geopolitical tensions falling help risk appetites return. Tesla (TSLA) shares bounced strongly on Tuesday, eventually closing up over 5% in a strong day for equities. The stock market was buoyed by news of some Russian deployments returning to their bases. Russia then appeared to confirm this as hopes grew for a diplomatic solution. This saw an obvious bounce in equities (https://www.fxstreet.com/markets/equities) with the strongest names being those that were previously the weakest. Understandable, but is this gain sustainable? NATO this morning has said it sees no sign of Russian troops pulling back from the Ukraine border. NATO has said it sees Russian troop numbers still growing along the Russian-Ukraine border. This news (https://www.fxstreet.com/news) still has legs. Volatility has been high as a result and will likely continue that way. Tesla Stock News The latest quarterly SEC filings have provided much information to pore over. In particular, Tesla, they do note some hedge fund selling. This is not too surprising given the record highs TSLA stock pushed on to before Elon Musk sold a stake. Benzinga reports that the latest filing shows Ray D'Alio's Bridgewater cutting its stake in Tesla. Cathie Wood of ARK Invest was regularly top-slicing her firm's stake in Tesla recently. CNBC also reported yesterday that hedge fund Greenlight Capital had made a bearish bet on Tesla shares. Greenlight, according to the report, has been a long time Tesla bear. Apart from those snippets though, macroeconomic factors are the main driver of the Tesla stock price currently. Electric vehicle stocks have not been a strong sector so far in 2022 as growth, in general, is out of favor with investors. This has led to steep falls in other names such as Rivian (RIVN) and Lucid (LCID). Both are at a much earlier stage of development than Tesla (TSLA) and on that basis, we would favor Tesla (TSLA) over them. But we must stress we would ideally avoid the sector entirely until perhaps the second quarter. Once markets have adjusted to the prospect of higher rates, some high-growth stocks may benefit. historical in a Fed (https://www.fxstreet.com/macroeconomics/central-banks/fed) hiking cycle the main indices do advance but growth sectors struggle. Rivian so far is down 36% year to date, Lucid is down 24% while Tesla is the outperformer, down 12% for 2022. Tesla Stock Forecast We remain in the chop zone between the two key levels of $945 and $886. Breaking $945 should lead to a move toward $1,063. That would still be consistent with the longer-term bearish trend. Nothing goes down or up in a straight line. TSLA is unlikely to be able to fight the current overpowering macroeconomic backdrop of rising rates (https://www.fxstreet.com/rates-charts/rates) hitting high growth stocks. But breaking $945 is still significant in the short term and should see some fresh momentum. While $886 is significant, the 200-day moving average at $826 should have our real attention on the downside. Tesla has not closed below this level in over 6 months, so that would be significant and again lead to a fresh influx of momentum. Just this time though, it would be selling momentum. Tesla (TSLA) chart, daily Short-term swing traders should note the volume momentum behind moves. Once volume dries up, Tesla tends to fall off intraday. From the 15-minute chart below, we have an opening gap from Tuesday down to $880. This is short-term support, but a break will see the bottom of Monday's range at $840 tested. Tesla (TSLA) 15-minute chart
NYMEX Gas Prices Catapulted Like Fighter Jets from an Aircraft Carrier

NYMEX Gas Prices Catapulted Like Fighter Jets from an Aircraft Carrier

Sebastian Bischeri Sebastian Bischeri 16.02.2022 16:56
  The Natural Gas flight has passed its first goal and is on its way to the second target. Here is a map showing the route to Natgas’ new destination. In today’s edition, I will provide some updates on recent market developments for Natural Gas futures (NGF22) following my last projections published on Friday, Feb. 11, for which the stop was also updated on Wednesday. Trade Plan We all love it when a trade plan comes together! The market has to cope with stronger demand to fuel increasing industrial activity after being surprised by the warming mid-February weather forecast. Therefore, you can see that the rebounding floor (support) provided was ideal for the Henry Hub, which is also supported by unyielding global demand for US Liquefied Natural Gas (LNG) to turn its momentum back up. The recommended objective of $4.442 was almost hit yesterday. However, it was achieved this morning (during the European session) and the $4.818 level is now the next goal. As I explained in more detail in my last risk-management-related article to secure profits, my recommended stop, which was located just below the $ 3.629 level (below one-month previous swing low), was recently lifted up around the $3.886 level (around breakeven). Now it could be lifted one more time up to 4.180, which corresponds to the 50% distance between the initial entry and target 1. By doing so, the second half of the trade would become optimally managed. Alternatively, you can also use an Average True Range (ATR) multiple to determine a different level (above breakeven) that may better suit your trading style. Henry Hub Natural Gas (NGH22) Futures (March contract, daily chart) Now, let’s zoom into the 4H chart to observe the recent price action all around the abovementioned levels of our trade plan: DHenry Hub Natural Gas (NGH22) Futures (March contract, 4H chart) That’s all folks for today. Happy trading! Like what you’ve read? Subscribe for our daily newsletter today, and you'll get 7 days of FREE access to our premium daily Oil Trading Alerts as well as our other Alerts. Sign up for the free newsletter today! Thank you. Sebastien BischeriOil & Gas Trading Strategist * * * * * The information above represents analyses and opinions of Sebastien Bischeri, & Sunshine Profits' associates only. As such, it may prove wrong and be subject to change without notice. At the time of writing, we base our opinions and analyses on facts and data sourced from respective essays and their authors. Although formed on top of careful research and reputably accurate sources, Sebastien Bischeri and his associates cannot guarantee the reported data's accuracy and thoroughness. The opinions published above neither recommend nor offer any securities transaction. Mr. Bischeri is not a Registered Securities Advisor. By reading Sebastien Bischeri’s reports you fully agree that he will not be held responsible or liable for any decisions you make regarding any information provided in these reports. Investing, trading and speculation in any financial markets may involve high risk of loss. Sebastien Bischeri, Sunshine Profits' employees, affiliates as well as their family members may have a short or long position in any securities, including those mentioned in any of the reports or essays, and may make additional purchases and/or sales of those securities without notice.
Wednesday Wasn't A Big Gain Day For BTC (+0.1%), ETH Added More (+1.4%)

Wednesday Wasn't A Big Gain Day For BTC (+0.1%), ETH Added More (+1.4%)

Alex Kuptsikevich Alex Kuptsikevich 17.02.2022 09:15
Bitcoin ended Wednesday with symbolic gains, gaining 0.1% to stay around $44,100. Ethereum rose 1.4%, and the other leading altcoins in the top ten also showed mostly upward momentum, from 0.3% (Binance Coin) to 5.5% (Avalanche). The total capitalization of the crypto market, according to CoinGecko, grew by 0.9% over the day, to $2.09 trillion. Altcoins were in high demand, which led to a decrease in the Bitcoin dominance index by 0.3%, to 40.1%. The Fear and Greed Index rose another 1 point to 52 (neutral). For the second time this month, Bitcoin's growth is interrupted by attempts to gain a foothold above $45,000. In the event of a pullback, traders should monitor the dynamics near 42,000, where Bitcoin found support at the beginning of the week. Consolidation between 42,000 and 45,000 can be regarded as a positive signal, as it will consolidate confidence that the downtrend of recent months will not resume after a pause. The US Securities and Exchange Commission (SEC) has launched an audit of the US representative office of the Binance crypto exchange. The Canadian authorities intend to track transactions in cryptocurrencies and block bank accounts in order to cut off funding for the Freedom Convoy truckers' protest movement. Twitter has added support for Ethereum addresses to the money transfer service within its application. The Bank of Russia plans to start the second stage of testing the cryptoruble in autumn. On Thursday morning, the markets and bitcoin experienced a downward momentum due to news of shelling in Ukraine. Cryptocurrencies reacted impulsively as a risk asset, but last week's example shows that they can also act as safe havens, as some investors may try to save capital using Bitcoin, Ethereum and a number of other large altcoins.
Bearish Turn Coming

Bearish Turn Coming

Monica Kingsley Monica Kingsley 17.02.2022 15:57
Thanks to Fed minutes, the S&P 500 closed modestly up, but could have taken the stronger credit markets cue. Instead, the upswing was sold into – the selling pressure is there, and neither value nor tech took the opportunity to rise, even against the backdrop of a weakening dollar. That‘s quite telling – the stock market correction hasn‘t run its course yet, and whatever progress the bulls make, is being countered convincingly. Precious metals adored the combo of yields and dollar turning down – and reacted with the miners‘ outperformance. The silver to copper ratio is basing, and the white metal looks to have better short-term prospects than the red one. Still in the headline sensitive environment we‘re in, gold would be stronger than silver until inflation is recognized for what it is. If there‘s one thing that the aftermath of Fed minutes showed, it‘s that the commodities superbull is alive and well, and that precious metals likewise are acting very positively in this tightening cycle. Suffice to say that gold has a track record of turning up once the rate hikes finally start… Excellent, the portfolio is positioned accordingly. Let‘s move right into the charts (all courtesy of www.stockcharts.com). S&P 500 and Nasdaq Outlook S&P 500 rebound is getting suspect, and should stocks close on a weak note today, it‘s clear that today‘s wobbling Philly Fed Manufacturing Index won‘t be balanced out by the succession of Fed speakers – the signs of real economy headwinds are here. Credit Markets HYG upswing could have had broader repercussions, and it‘s quite telling it didn‘t. The risk-on turn would likely be sold into, with consequences. Gold, Silver and Miners Precious metals suffered a temporary setback only indeed – I‘m looking for the gains to continue as the miners outperformance just can‘t be overlooked. Crude Oil Crude oil dipped some more, and the dip was again bought. Given the late session wavering, I‘m looking for some more sideways and volatile trading ahead before the upswing reasserts itself. Copper Copper continues trading sideways, but with bullish undertones. More consolidation before another upswing attempt is probable. Bitcoin and Ethereum Cryptos are turning down, but still haven‘t broken either way out of the current range. Both Bitcoin and Ethereum are sending a message of caution. Summary S&P 500 bulls‘ opportunity seems increasingly slipping away given that the buyers couldn‘t defend gains after Fed minutes release. The upturn in credit markets is likely to prove of fleeting shelf life, and would exert downward pressure upon stocks. As I wrote yesterday (and talked extensively within today‘s article chart captions), the commodities bull is likely to carry on with little interference – and so would the precious metals bull as the yield curve keeps compressing, and the beginning of rate hikes would mark further headwinds for the real economy at a time of persistent inflation that could be perhaps brought down to 4-5% official rate late this year (which would leave the mainstream wondering why it just isn‘t transitory somewhat more – what an irony). The Fed‘s tools to be employed are simply insufficient to break the inflation‘s back, that‘s it. Thank you for having read today‘s free analysis, which is available in full at my homesite. There, you can subscribe to the free Monica‘s Insider Club, which features real-time trade calls and intraday updates for all the five publications: Stock Trading Signals, Gold Trading Signals, Oil Trading Signals, Copper Trading Signals and Bitcoin Trading Signals.
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.
Decentralized Autonomous Organisation - Another Addition To Our Personal Dictionaries

Top 3 Price Prediction Bitcoin, Ethereum, Ripple: Investors spooked by renewed geopolitical tensions

FXStreet News FXStreet News 17.02.2022 16:10
Bitcoin price gets caught in a bearish triangle as tensions in Ukraine flare up again. Ethereum price returns to pivotal support, money repatriation goes into the second day. XRP price in pennant ready for a bearish breakout under the current sentiment. Cryptocurrencies are on the back foot as investors are getting worried about the escalating situation between Ukraine and Russia, as more reports come in from shots in the Donbas region near Luhansk. As the situation does not seem to de-escalate, investors are pulling their money out of what was believed to be the start of a solid and longer-term relief rally that is stalling at the moment. With more downside pressure to come, expect all significant cryptocurrencies to fall back to supportive pivotal levels. Bitcoin price falls into a bearish triangle, set to dip back below $40,000 Bitcoin (BTC) price is getting battered on Thursday after a fade on Wednesday that could still be attributed to some short-term profit-taking. The extension of the falls seems to confirm that sentiment is yet again dipping below zero towards risk-off. Investors pulling out their funds preemptively is reflected with the sharp decline in the Relative Strength Index, where the sell-side demand is outpacing the buy-side demand. In this context, Bitcoin price will remain under pressure for the rest of the week and could be set to slip below $40,000 in the coming days as the situation in Ukraine is set to deteriorate again, potentially inflicting further damage to the market mood. BTC price sees bulls unable to hold price action above $44,088 and in the process is forming a descending trend line that, together with the base at $41,756, is forming a bearish triangle. Expect Bitcoin valuation to decline further as the tensions around Luhansk increase by the hour. Once the $41,756 support is broken, the road is open for a nosedive towards $39,780 with the $40,000 psychological level broken yet again to the downside. BTC/USD daily chart A hail mary could be provided by the 55-day Simple Moving Average at $42,340, which already provided support on February 9 and February 15. With that move, a sudden breakthrough in the peace talks could become the needed catalyst to improve the situation and dislocate Bitcoin price action from the drag of the geopolitical news that is weighing. Bitcoin would see the demand on the buy-side blow up and see a big pop above $44,088. Ethereum bulls are breaking their jaws on the 55-day SMA as the price fades further Ethereum (ETH) price is getting crushed against the 55-day Simple Moving Average (SMA) around $3,143, with bulls unfit to push and try to close price action above it. After three failed attempts in a row, it is becoming clear that the bullish support is wearing thin as, on Tuesday, the daily candle closed above there, and even if the next day ETH price opened above again, it closed below the 55-day SMA. On Wednesday, finally, both the open and the closing price were below the 55-day SMA. This proves that sentiment has shifted in just three trading days and looks set to fade further away from the 55-day SMA on Friday. Expect going forward in the next coming hours that bulls will get squeezed against the wall at $3,018 with both a pivotal level and the $3,000 marker a few dollars below there. As tensions mount, expect some more negative headlines, a breach in defense of the bulls with even the monthly pivot at $2,929 getting involved in the crosshairs. Depending on the severity and the further deterioration of the political situation in Ukraine and the correction in the stock markets, it is possible to see a nosedive towards $2,695. ETH/USD daily chart Global market sentiment is hanging on the lips of Ukraine and the geopolitical situation. With that, it is clear that once the situation gets resolved or de-escalates, markets can shift 180 degrees in a matter of seconds. That same rule applies to cryptocurrencies where Ethereum could pop back above the 55-day SMA and even set sail for $3,391, breaking the high of February and flirting with new highs for 2022. Bulls joining the rally will want to keep a close eye and be mindful of the RSI, as that would start to flirt with being overbought and, from there on, limiting any further big moves in the hours or next trading days to come. Ethereum short squeeze could trigger a spike to $4,000 XRP price set to lose 10% of market value as headline news breaks down relief rally Ripple (XRP) price is stuck in a pennant and is close to a breakout that looks set to be a bearish one. As global markets are continuing the fade from Wednesday, XRP price is breaking below the recent low and sees bears hammering down on the ascending side of the pennant. As more negative headlines cross the wires, expect this to add ammunition for bears to continue and start breaking the pennant to the downside. XRP price will look for support on the next support at hand, which comes in at $0.78, and depending on the severity of the news flow, that level should hold again as it did on February 14. If that is not the caseany further downside will be cut short by the double bottom around $0.75 from February 12 and 13 and the 55-day SMA coming in at or around that area. With that move, the RSI will be triggering some "oversold" red flags and see bears booking profit. XRP/USD daily chart A false bearish breakout could easily see bears trapped on entering on the break to the downside out of the pennant as bulls go in for the squeeze. That would mean that price shoots up towards $0.88 and takes out this week's high. Bears would be forced to change sides and join the buy-side demand to close their losing positions, adding to even more demand and possibly hitting $0.90 in the process. XRP set to explode towards $1.00, bulls hopeful over SEC vs Ripple case
Gores Guggenheim Stock News and Forecast: Is GGPI a better bet than LCID or RIVN?

Gores Guggenheim Stock News and Forecast: Is GGPI a better bet than LCID or RIVN?

FXStreet News FXStreet News 17.02.2022 16:10
GGPI Stock has rallied after a Superbowl ad. GGPI stock surges another 4% on Wednesday as momentum remains high. GGPI may struggle as markets turn negative and growth stocks struggle to hold gains. Gores Guggenheim (GGPI) stock is probably more commonly referred to as Polestar stock now that the SPAC will take electric vehicle maker Polestar public this year. The deal is due to complete some time in the first half of 2022. Polestar is an electric vehicle maker backed by Volvo and Chinese company Geely. So what is different about this one compared to the others? Gores Guggenheim Stock News Polestar looks merely like Volvo's EV division. We know this is not the case as Volvo has its hybrid and EV models planned. However, the companies certainly have strong links. Rivian (RIVN) went public in a blaze of hype and publicity due largely to its links to Amazon (AMZN) and Ford (F). Both companies had stakes in Rivian. However, from what we know, Rivian will have to build out its manufacturing and distribution network. It will not piggyback on Ford for this. Polestar uses the Volvo service network in the UK, and Polestar will utilize Volvo's South Carolina plant to manufacture Polestar models in the US. Previously, Polestar said it will have its showrooms in the US but use Volvo for servicing. Polestar will look to do as much sales work as possible online and use Volvo then for manufacturing and servicing. This gives it an obvious advantage over LCID and RIVN. Gores Guggenheim Stock Forecast On Wednesday, the stock spiked again, closing nearly 5% higher at $12.02. The company has been in charge since the Superbowl ad brought more attention to the stock and the cars. Both seem well received. Now GGPI stock has ramped up to a strong resistance area. Above $12 and as high as $12.36 is the previous spike high from December. This will be tough to break given that high risk stocks are likely to suffer as we close out the week. Geopolitical events are dominating and high growth names are still not favored. SPACs generally hold $10 cash until the deal goes through, so this is obvious support. The best strategy with SPAC trading is to try and buy as close to $10 as possible. GGPI 1-day chart
Oh, Someone Has Stopped Brent Oil Price From Going "Out Of Range"

Oh, Someone Has Stopped Brent Oil Price From Going "Out Of Range"

Alex Kuptsikevich Alex Kuptsikevich 18.02.2022 13:20
Gold and oil, former beneficiaries of geopolitical tensions late last week, have gone their separate ways, with the former rising 2.4% and the latter losing 5% since the start of this week. Brent crude rolled back below $90 and, at one point on Friday, was losing 2.3% to $89, despite still worrying reports of tensions around Ukraine and Russia. It has fallen below the local support of the past ten days and is now just one step away from a decline since the start of the month. While geopolitics remains a joker capable of playing, either way, the macroeconomic picture is working to cool the oil price. US commercial oil inventories rose last week against a seasonally typical decline. As a result, inventories are now 10.9% lower than a year earlier, although it was -15% in mid-January. Production stagnated at 11.6m b/d, but at the end of last week, there was an increase in the number of operating oil rigs from 497 to 516. New data will be released later this evening. Probably, we will see more evidence that producers have stepped up production, convinced of the strength of demand and record profits in many years at their disposal. Locally, the activation of extractive companies is playing into the price pullback from current levels. However, it is a factor in slowing price growth in the longer term, but not a failure. The vector of monetary policy is also worth paying attention to. Rising rates often derail speculative growth in oil. We saw the last two examples on this theme in 2014-2015 when oil collapsed by 75%, and in 2018, it fell by 45%. After those hard lessons, OPEC+ has worked much more closely to meet quotas, so we are talking about a correction rather than a new bear market for oil. Speaking of a local correction, we assume a pullback in the Brent price to the $85 area. That is the peak area in October last year and September 2018 and close to the 38.2% Fibonacci retracement level of the rally from December to mid-February. Deeper drawdowns are also possible if monetary tightening coincides with geopolitical détente and slowing demand. In that case, Brent might briefly correct towards $80. Positive signals on the Iran deal are also factors holding oil back. An agreement with Iran would signal an easing of some of the geopolitical tensions in the Middle East and add around 1% to the global energy system, allowing the resulting shortfall to be digested and a smooth return to restocking for the world.
Fed And BoE Ahead Of Interest Rates Decisions. Having A Look At Nasdaq, S&P 500 and Dow Jones Charts

Mid & Small Cap Indexes May Surge Higher

Chris Vermeulen Chris Vermeulen 16.02.2022 21:32
As the global markets move away from recent concerns of war and Fed rate hikes, I believe both Small and Mid Cap indexes are uniquely positioned to potentially surge 7% to 11%, or more, from recent lows. My analysis suggests both the Small and Mid Cap Indexes may have moved excessively lower over the past 30+ trading days. They may be poised for a unique opportunity and a substantial price rally if the global markets continue to move away from extreme risk events. As the US Fed and global central banks position to combat inflation while war tensions build near Ukraine, I believe the US Small and Mid Cap Indexes are uniquely undervalued and ready for a potential move higher. The recent recovery in the US major indexes may be evidence of strong bullish price momentum underlying the US Major Indexes. I believe that foreign capital is moving into various US assets to avoid foreign market/currency risks. The US Small and Mid Cap Indexes seem like perfect opportunities for this capital deployment. IWM May Rally 12 to 14% - Targeting $238 to $240 This Weekly IWM chart highlights a support level near $191.00 and a recent Three River Morning Star bottom reversal pattern near $194.40. It also highlights the previous range-based trading and dual Pennant/Flag setups using shaded BLUE and YELLOW Rectangles. I believe IWM has a solid potential to rally back to near the $220 level before finding resistance (+7.25%). If this bullish price momentum continues, IWM may rally to levels above $238 to $240. The global markets may have recently focused too much on the US Fed and Global Central Banks while missing the underlying strength of the US economy. Consumers are still spending, and the US Fed has yet to make any substantial adjustments to rates or balance sheets. These recent lows may provide an excellent opportunity for traders to capitalize on a “reversion price move” soon. The only way to navigate and capitalize on these price swings is to stay focused on Technical Analysis and strategic opportunities for trades when they occur. WHAT TRADING STRATEGIES WILL HELP YOU TO NAVIGATE CURRENT MARKET TRENDS? Learn how I use specific tools to help me understand price cycles, setups, and price target levels in various sectors to identify strategic entry and exit points for trades. Over the next 12 to 24+ months, I expect very large price swings in the US stock market and other asset classes across the globe. I believe the markets are starting to transition away from the continued central bank support rally phase. This may start a revaluation phase as global traders identify the next big trends. Precious Metals will likely start to act as a proper hedge as caution and concern drive traders/investors into Metals. I invite you to learn more about how my three Technical Trading Strategies can help you protect and grow your wealth in any type of market condition by clicking the following link:   www.TheTechnicalTraders.com 
Bonds Not Reflecting Risks Like They Usually Do – Where's The Beef?

Bonds Not Reflecting Risks Like They Usually Do – Where's The Beef?

Chris Vermeulen Chris Vermeulen 11.02.2022 21:46
I've been paying close attention to Bonds as the global markets react to rising inflation and global central bank moves recently. The US Federal Reserve has yet to take any actions to raise rates, but we all know it will come at some point. Longer-term bonds are acting as if these risks are much more subdued than many traders/investors believe – which has me questioning if global central banks have overplayed the stimulus game? Why would traditional safe-haven assets fail to act in a manner that reflects current market risks like they would typically do? Why have precious metals failed to reflect these risks also properly? Is there something brewing in traders' minds that are muting or mitigating these traditional safe-haven assets? Bonds Continue To Slide After COVID Rally This table, reflecting the recent downward trend in Bonds, highlights the weakened safe-haven tendencies. These assets would generally present with rampant inflation and the possibility of multiple Fed rate increases. (Source: SeekingAlpha.com) Increasing uncertainty throughout the globe, and as inflation climbs to the highest levels since the mid-1970s and 1980s, – “where's the beef?” (to reference a 1980s Wendy's commercial phrase). This TLT Weekly chart shows how risks climbed when COVID hit in February 2020. Yet, take a look at how price has consolidated below $156 and has continued to trend lower over the past six months. After a brief move higher, to levels near the $147 to $155 level, TLT has moved decidedly lower over the past 6+ months. This downward price trend illustrates the diminishing fear levels as traders piled into the post-COVID rally phase. This move suggests traders believe inflation may be temporary or that the US Federal Reserve has room to raise rates without disrupting the global economy. I think the current premise and price trend in TLT vastly underestimates the amount of disruption a series of Fed rate hikes would cause the international markets. The US Federal Reserve will likely consider all options before taking an aggressive move to raise rates. Additionally, the US Fed may decide to allow foreign central banks to move more aggressively to raise rates while it decides to take a more measured approach to inflation. The key to future rate increases is how supply chains open up and how consumers continue to engage in economic activities. Any sudden shift by consumers, or further disruptions in supply for manufacturing and consumer staples/discretionary items, could prompt the Fed into taking aggressive actions. From where the Fed Funds Rates currently are, a move above 0.50% would reflect a +500% rate increase. This may prompt some type of “pop” in certain asset bubbles. (Source: St. Louis Fed) Traders should stay keenly focused on market risks and Bond levels throughout 2022 into 2023 as any sudden shift away from current trends could spell trouble. Right now, Bonds are pricing in minimal risks – which may be a mistake. The market dynamics and trends are changing from what we have experienced over the past 40 years for stocks and bonds. The 60/40 portfolio is costing you money now, and bonds can’t keep up with inflation and are more or less yield-less. The only way to navigate the financial markets safely, no matter the direction, is through technical analysis. By following assets and money flows, we identify trend changes and move our capital into whatever index, sector, industry, bond, commodity, country, and even currency ETF. By following the money, you become part of new emerging trends and can profit during weak stock or bond conditions. What Trading Strategies Will Help You To Navigate Current Market Trends? Learn how I use specific tools to help me understand price cycles, set-ups, and price target levels in various sectors to identify strategic entry and exit points for trades. Over the next 12 to 24+ months, I expect very large price swings in the US stock market and other asset classes across the globe. I believe the markets are starting to transition away from the continued central bank support rally phase. This may start a revaluation phase as global traders attempt to identify the next big trends. Precious Metals will likely start to act as a proper hedge as caution and concern start to drive traders/investors into Metals. I invite you to learn more about how my three Technical Trading Strategies can help you protect and grow your wealth in any type of market condition by clicking the following link:   www.TheTechnicalTraders.com 
In Contrary To Others, DXY Is Likely To Feel Stable

In Contrary To Others, DXY Is Likely To Feel Stable

Przemysław Radomski Przemysław Radomski 18.02.2022 16:25
  Gold and the USDX reacted vigorously to the worrisome news concerning Eastern Europe. However, only the latter can be calm about its medium-term future. As geopolitical tensions uplift gold, silver, and mining stocks, they’re in rally mode each time a doom-and-gloom headline surfaces. However, while the ‘will they or won’t they’ saga commands investors’ attention, the USD Index continues to behave rationally. For example, while volatility has increased recently, the dollar basket has held firm. To explain, I wrote on Feb. 17: The USD Index is at its medium-term support line. All previous moves to / slightly below it were then followed by rallies, sometimes really big rallies, so we’re likely to see something like that once again. Such a rally would be the prefect trigger for the triangle-vertex-based reversal in gold and the following slide. Please see below: Furthermore, the USD Index’s recent pullback was far from a surprise. For example, I highlighted on numerous occasions that the greenback is nearing its weekly rising resistance line, and the price action has unfolded as I expected. Moreover, while overbought conditions resulted in a short-term breather, history shows that the USD Index eventually catches its second wind. To explain, I previously wrote: I marked additional situations on the chart below with orange rectangles – these were the recent cases when the RSI based on the USD Index moved from very low levels to or above 70. In all three previous cases, there was some corrective downswing after the initial part of the decline, but once it was over – and the RSI declined somewhat – the big rally returned and the USD Index moved to new highs. As a result, with the USD Index showcasing a reliable history of profound comebacks, higher highs should materialize over the medium term. Please see below: Just as the USD Index took a breather before its massive rally in 2014, it seems that we saw the same recently. This means that predicting higher gold prices (or those of silver) here is likely not a good idea. Continuing the theme, the eye in the sky doesn’t lie, and with the USDX’s long-term breakout clearly visible, the wind remains at the dollar’s back. Furthermore, dollar bears often miss the forest through the trees: with the USD Index’s long-term breakout gaining steam, the implications of the chart below are profound. While very few analysts cite the material impact (when was the last time you saw the USDX chart starting in 1985 anywhere else?), the USD Index has been sending bullish signals for years. Please see below: The bottom line? With my initial 2021 target of 94.5 already hit, the ~98-101 target is likely to be reached over the medium term (and perhaps quite soon). Mind, though: we’re not bullish on the greenback because of the U.S.’s absolute outperformance. It’s because the region is fundamentally outperforming the Eurozone. The EUR/USD accounts for nearly 58% of the movement of the USD Index, and the relative performance is what really matters. In conclusion, the financial markets remain on Russia-Ukraine watch. While gold, silver, mining stocks, and the USD Index whipsaw on the news, the technical and fundamental backdrops support higher prices for the latter, not the former. Thus, while geopolitical tensions are always short-term bullish for the precious metals, the rush is often short-lived. As a result, the trios’ downtrends that began in late 2020 will likely resurface once the headline-driven market returns to normal. Thank you for reading our free analysis today. Please note that the above is just a small fraction of today’s all-encompassing Gold & Silver Trading Alert. The latter includes multiple premium details such as the targets for gold and mining stocks that could be reached in the next few weeks. If you’d like to read those premium details, we have good news for you. As soon as you sign up for our free gold newsletter, you’ll get a free 7-day no-obligation trial access to our premium Gold & Silver Trading Alerts. It’s really free – sign up today. Przemyslaw Radomski, CFAFounder, Editor-in-chiefSunshine Profits: Effective Investment through Diligence & Care * * * * * All essays, research and information found above represent analyses and opinions of Przemyslaw Radomski, CFA and Sunshine Profits' associates only. As such, it may prove wrong and be subject to change without notice. Opinions and analyses are based on data available to authors of respective essays at the time of writing. Although the information provided above is based on careful research and sources that are deemed to be accurate, Przemyslaw Radomski, CFA and his associates do not guarantee the accuracy or thoroughness of the data or information reported. The opinions published above are neither an offer nor a recommendation to purchase or sell any securities. Mr. Radomski is not a Registered Securities Advisor. By reading Przemyslaw Radomski's, CFA reports you fully agree that he will not be held responsible or liable for any decisions you make regarding any information provided in these reports. Investing, trading and speculation in any financial markets may involve high risk of loss. Przemyslaw Radomski, CFA, Sunshine Profits' employees and affiliates as well as members of their families may have a short or long position in any securities, including those mentioned in any of the reports or essays, and may make additional purchases and/or sales of those securities without notice.
Wondering How Inflation And Fed Reaction Will Affect Gold

Wondering How Inflation And Fed Reaction Will Affect Gold

Arkadiusz Sieron Arkadiusz Sieron 18.02.2022 16:05
  Not only won’t inflation end soon, it’s likely to remain high. Whether gold will be able to take advantage of it will depend, among others, on the Fed. Do you sometimes ask yourself when this will all end? I don’t mean the universe, nor our lives, nor even this year (c’mon, guys, it has just started!). I mean, of course, inflation. If only you weren’t in a coma last year, you would have probably noticed that prices had been surging recently. For instance, America finished the year with a shocking CPI annual rate of 7.1%, the highest since June 1982, as the chart below shows. Now, the key question is how much higher inflation could rise, or how persistent it could be. The consensus is that we will see a peak this year and subsequent cooling down, but to still elevated levels. This is the view I also hold. However, would I bet my collection of precious metals on it? I don’t know, as inflation could surprise us again, just as it did to most of the economists (but not me) last year. The risk is clearly to the upside. As always in economics, it’s a matter of supply and demand. There is even a joke that all you need to turn a parrot into an economist is to teach it to say ‘supply’ and ‘demand’. Funny, huh? When it comes to the demand side, both the money supply growth and the evolution of personal saving rate implies some cooling down of inflation rate. Please take a look at the chart below. As you can see, the broad money supply peaked in February 2021. Assuming a one-year lag between the money supply and price level, inflation rate should reach its peak somewhere in the first quarter of this year. There is one important caveat here: the pace of money supply growth has not returned to the pre-pandemic level, but it stabilized at about 13%, double the rate seen at the end of 2019. Inflation was then more or less at the Fed’s target of 2%, so without constraining money supply growth, the US central bank couldn’t beat inflation. As the chart above also shows, the personal saving rate has returned to the pre-pandemic level of 7-8%. It means that the bulk of pent-up demand has already materialized, which should also help to ease inflation in the future. However, not all of the ‘forced savings’ have already entered the market. Thus, personal consumption expenditures are likely to be elevated for some time, contributing to boosted inflation. Regarding supply factors, although some bottlenecks have eased, the disruptions have not been fully resolved. The spread of the Omicron variant of the coronavirus and regional lockdowns in China could prolong the imbalances between booming demand and constrained supply. Other contributors to high inflation are rising producer prices, increasing house prices and rents, strong inflation expectations (see the chart below), and labor shortages combined with fast wage growth. The bottom line is that, all things considered – in particular high level of demand, continued supply issues, and de-anchored inflation expectations – I forecast another year of elevated inflation, but probably not as high as in 2021. After reaching a peak in a few months, the inflation rate could ease to, let’s say, around 4% in December, if we are lucky. Importantly, the moderate bond yields also suggest that inflation will ease somewhat later in 2022. What does it mean for the gold market? Well, I don’t have good news for the gold bulls. Gold loves high and accelerating inflation the most. Indeed, as the chart below shows, gold peaks coincided historically with inflation heights. The most famous example is the inflation peak in early 1980, when gold ended its impressive rally and entered into a long bearish trend. The 2011 top also happened around the local inflationary peak. The only exception was the 2005 peak in inflation, when gold didn’t care and continued its bullish trend. However, this was partially possible thanks to the decline in the US dollar, which seems unlikely to repeat in the current macroeconomic environment, in which the Fed is clearly more hawkish than the ECB or other major central banks. The relatively strong greenback won’t help gold shine. Surely, disinflation may turn out to be transitory and inflation may increase again several months later. Lower inflation implies a less aggressive Fed, which should be supportive of gold prices. However, investors should remember that the US central bank will normalize its monetary policy no matter the inflation rate. Since the Great Recession, inflation has been moderate, but the Fed has tightened its stance eventually, nevertheless. Hence, gold may experience a harsh moment when inflation peaks. Thank you for reading today’s free analysis. We hope you enjoyed it. If so, we would like to invite you to sign up for our free gold newsletter. Once you sign up, you’ll also get 7-day no-obligation trial of all our premium gold services, including our Gold & Silver Trading Alerts. Sign up today! Arkadiusz Sieron, PhDSunshine Profits: Effective Investment through Diligence & Care.
Bullish momentum remains strong

Bullish momentum remains strong

Florian Grummes Florian Grummes 20.02.2022 17:36
Even at the last important low (US$$1,750) on December 15th, 2021, the sentiment was still awful as the sector had become the most hated asset class. Now fast-forward, gold has been successfully breaking out of its multi month triangle and keeps sprinting higher. The bulls currently are bending the daily and weekly Bollinger Bands to the upside, and seasonality is still supportive.Gold in US-Dollar, weekly chart as of February 20th, 2022.Gold in US-Dollar, weekly chart as of February 20th, 2022.Looking at the weekly chart, it appears that gold not only broke out of a triangle consolidation pattern, but also out of a large inverse head and shoulder pattern. It’s not a textbook head and shoulder, but worthwhile noting. A measured move projection could theoretically take gold towards US$2,125! However, the monthly Bollinger Band, sitting at around US$ 1,975, might be a much more realistic target for the ongoing move. As you might remember, the zone between US$1,950 to US$1,975 is very strong resistance. We would not rule out a short-lived overshoot towards US$,2000, though.Overall, the weekly chart is not yet overbought and looks bullish. Hence, the rally has very good chances to continue for a few more weeks.Gold in US-Dollar, daily chart as of February 20th, 2022.Gold in US-Dollar, daily chart as of February 20th, 2022.As expected, the breakout above US$1,840 to US$1,850 has unleashed enough energy to quickly push gold prices towards the round psychological number of US$1,900. Fortunately, the daily stochastic has transformed its overboughtness into the rare “embedded status”, where both signal lines are sitting above 80 for more than three days in a row. Hence, the uptrend is locked-in and shorting this market would be fighting the uptrend.Of course, given the uncertain and complex geopolitical situation, events can and likely will strongly influence gold over the coming days and weeks. Speaking from a technical point of you, any pullback towards the breakout zone around US$1,845 would be a buying opportunity. However, prices below US$1,875 would already be a surprise in the short-term. On the contrary, it’s much more likely that gold will continue its run to at least US$1,930 over the coming days.In summary, the daily chart is bullish. Especially the bullish embedded stochastic oscillator likely will not allow any larger pullback, but rather a consolidation around US$1,900. Watch those two signal lines. Only if one of them would be dropping below 80on a daily close, the bull run might be over!GDX (VanEck Gold Miners ETF) in US-Dollar, daily chart as of February 20th, 2022.GDX, daily chart as of February 20th, 2022.Gold & gold related mining stocks often stabilize your portfolio during uncertain times and do act as a hedge. While the stock market continued its dive due to the crisis in Ukraine and the potential interest rate turnaround in the US, the GDX VanEck Gold Miners ETF is up more than 21.5% since its low in mid of December. Over the last two weeks, the leading gold mining stocks recorded some of their best days in the last 12 months. Last week, Barrick Gold ($GOLD) jumped up more than 7% due to good earnings, a dividend increase, and a new share repurchase program. Some smaller gold stocks like Sabina Gold & Silver ($SGSVF) went up even more (+15% Friday, 11th).Now that gold is on the rise, it’s time for the beaten down and undervalued mining stocks to catch up. Usually, it starts with the big senior produces like Barrick Gold, Agnico Eagle Mines ($AEM) and Newmont Corporation ($NEM), then the juniors like for example Victoria Gold Corp. ($VITFF) join and finally, the explorer and developers literally explode higher.However, the GDX has nearly reached its downtrend line as well as the 38.2% retracement of the whole corrective wave since August 2020. Hence, the big miners are running into string resistance and might need to consolidate soon.At the same time, note, that silver has been lagging. Silver always lags most of the time, but in the final stage of sector wide rally it suddenly passes all the other metals and shots up nearly vertically. That also typically is the sign that the rally in the sector is coming to an end. Obviously, we have not yet seen any strong silver days. Therefore, silver actually confirms that the sector has more room and time to run higher!Conclusion: Bullish momentum remains strongOverall, gold continues to look promising here as the bullish momentum remains strong. Hence, Gold is probably on the way towards US$1,950 and US$1,975, with a slight chance for an overshot to US$2,000. But of course, given the rather overbought daily chart, the risk/reward is not that good anymore. Silver and many of the smaller mining stocks, however, might still offer a chance to play the ongoing rally over the next few weeks. Once gold tops out in spring, expect a big pullback. Maybe even back towards the higher trending 200-day moving average (currently at US$1,808) at some point in midsummer. But that is all somewhere in the future. For now, the bullish momentum remains strong.Feel free to join us in our free Telegram channel for daily real time data and a great community. If you like to get regular updates on our gold model, precious metals and cryptocurrencies you can also subscribe to our free newsletter.Disclosure: Midas Touch Consulting and members of our team are invested in Reyna Gold Corp. These statements are intended to disclose any conflict of interest. They should not be misconstrued as a recommendation to purchase any share. This article and the content are for informational purposes only and do not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision. The views, thoughts and opinions expressed here are the author’s alone. They do not necessarily reflect or represent the views and opinions of Midas Touch Consulting.By Florian Grummes|February 20th, 2022|Tags: $GDXJ, Barrick Gold, GDX, Gold, Gold Analysis, Gold bullish, gold chartbook, gold fundamentals, Newmont Corporation, precious metals, Reyna Gold, Sabina Gold & Silver, Silver, silver bull, US-Dollar, Victoria Gold|0 CommentsAbout the Author: Florian GrummesFlorian Grummes is an independent financial analyst, advisor, consultant, trader & investor as well as an international speaker with more than 20 years of experience in financial markets. He is specialized in precious metals, cryptocurrencies and technical analysis. He is publishing weekly gold, silver & cryptocurrency analysis for his numerous international readers. He is also running a large telegram Channel and a Crypto Signal Service. Florian is well known for combining technical, fundamental and sentiment analysis into one accurate conclusion about the markets. Since April 2019 he is chief editor of the cashkurs-gold newsletter focusing on gold and silver mining stocks. Besides all that, Florian is a music producer and composer. Since more than 25 years he has been professionally creating, writing & producing more than 300 songs. He is also running his own record label Cryon Music & Art Productions. His artist name is Florzinho.
GBPUSD Chart - Green Candles On The Right Hand Side, USDCAD Moved Down A Little

GBPUSD Chart - Green Candles On The Right Hand Side, USDCAD Moved Down A Little

John Benjamin John Benjamin 21.02.2022 08:53
GBPUSD tests resistance The sterling edged higher after January’s retail sales beat expectations. The recent pause has been an opportunity for the bulls to accumulate. A break above 1.3640 would signal solid buying after previous failed attempts. The daily resistance at 1.3750 would be the next hurdle. Its breach could trigger a broader reversal in the weeks to come. 1.3560 is the immediate support. And 1.3490 at the lower end of the horizontal consolidation is the second line of defense in case the pair needs to attract more support. USDCAD awaits breakout The Canadian dollar tanked after disappointing retail sales in December. The US counterpart is still struggling below the supply zone around 1.2800. A close above this daily resistance could propel the pair to last December’s high at 1.2950, a prerequisite for a bullish continuation in the medium-term. The current sideways action is a sign of indecision. 1.2640 is the lower boundary of the recent consolidation range. A bearish breakout would bring the greenback to a previous low at 1.2560. EURJPY struggles for support The Japanese yen rallies amid growing risk aversion across the board. The euro continues to shed gains from the surge earlier this month. A fall below 131.90 triggered profit-taking, and the latest rally came out to be a dead cat bounce after it was capped by this support-turned-resistance. A break below 130.40 (which sits over the 30-day moving average) shows fragility in market sentiment and would cause another round of sell-off. 129.20 at the base of the bullish impetus would be the next support.
Technical Analysis: Moving Averages - Did You Know This Tool?

S&P 500 Chart And Credit Markets Candles Nears Quite Low Levels

Monica Kingsley Monica Kingsley 21.02.2022 13:33
S&P 500 opening upswing gave way to more selling, but credit markets didn‘t lead to the downside on a daily basis. This tells me the plunge would likely be challenged shortly. As in facing a reversal attempt – it‘s that junk bonds for all the recent (and still to come) deterioration, will probably rebound a little next. Value already retraced part of Friday‘s decline – it‘s just tech that didn‘t yet react to the Treasuries reprieve. Good to have taken short profits off the table. The table is set for S&P 500 to rise, and for bonds to rally somewhat. And that wouldn‘t be the result of war tensions lifting up Treasuries, gold and oil. Red hot inflation, decelerating growth and compressing yield curve are a challenging environment, and the odds of a 50bp Mar rate hike are overwhelming, but the Fed‘s balance sheet is still rising – now within spitting distance of $9T. Sure they will take on inflation, but I continue to think that by autumn they would be forced to reverse course, and start easing. Fresh stimulus after markets protest during 1H 2022? Would be helpful for the midterms... The consumer isn‘t in a great shape as the confidence data reveal – and that‘s also reflected in the direction of discretionaries vs. staples. Inflation is pinching, and the pressure on the Fed to act, is on – its credibility is being challenged. Food inflation is high, and seeing food at home prices rising this much, is as surefire marker of coming recession as yield curve inversion is. And yield differentials are flattening around the world – quite a few central banks are more ahead in the tightening path than the Fed. Economy slowing down, stock market correction far from over (yes, in spite of the coming rebound, I‘m looking for lower lows still), and precious metals upleg underway – yes, underway, and especially our gold profits can keep rising - as I wrote on Friday: (…) With gold at $1,900 again and silver approaching $24, copper‘s fate is also brightening – the miners‘ continued outperformance is a very good sign. With crude oil taking a breather, the inflationary pressures aren‘t at least increasing, but don‘t look for the Bullard or other statements to defeat inflation – I‘m standing by the 4-5% official rate CPI data for 2022 (discussed in yesterday‘s summary). CPI might turn out even a full percentage point higher – depends upon the hedonics and substitution massaging. Let‘s move right into the charts (all courtesy of www.stockcharts.com). S&P 500 and Nasdaq Outlook S&P 500 caught a little buying interest going into the long weekend – better days though look to be coming. Not a monstrous rally, but still an upswing. Credit Markets HYG is indeed basing, and will help stocks move higher next. LQD and TLT are already rising, and there is still somewhat more to come. Bonds have simply deteriorated too fast in 2022, and need a breather. Gold, Silver and Miners Precious metals fireworks continue – we‘re getting started, and $1,920 is the next stop. Kiss of life from the bond market reprieve comes next, on top of all the other factors I‘ve talked about recently. Crude Oil Crude oil is fairly well bid, but the war jitters are helping it out (as in staving off a bit deeper correction). As both oil and base metals are rising, inflation isn‘t likely to slow down (perhaps later in summer?) - black gold‘s uptrend isn‘t over really. Copper Copper keeps going sideways in a volatile fashion, and can be counted on to break higher – inflationary pressures aren‘t abating, and outweigh the slowing economy. Bitcoin and Ethereum Cryptos did break down over the weekend, but the anticipated risk-on rebound fizzled out a bit too fast – as said on Friday, the bears have the upper hand now. Summary S&P 500 appears on the verge of trying to swing higher, and credit markets would be leading the charge as tech finally turns. Value had trouble declining some more on Friday already. Stock market upswing though wouldn‘t throw the precious metals bulls off balance – not too many weeks have passed since I was at the turn of the year predicting that gold (and silver with miners implied) would be the bullish surprise of 2022 – and for all the talk and preemtive tightening in the credit markets, we haven‘t yet seen the Fed move. Anyway, such a lag in moving the Fed funds rate higher, is normal these decades – we are a long way from the early 1980s when the delay between say 2-year Treasury and Fed funds rate move was some 2 months. Crude oil is likewise going to keep rising, and the same goes naturally for copper following in the footsteps. Thank you for having read today‘s free analysis, which is available in full at my homesite. There, you can subscribe to the free Monica‘s Insider Club, which features real-time trade calls and intraday updates for all the five publications: Stock Trading Signals, Gold Trading Signals, Oil Trading Signals, Copper Trading Signals and Bitcoin Trading Signals.
Pinterest (PINS) Stock News and Forecast: Earnings see shares rise, but can it continue?

Pinterest (PINS) Stock News and Forecast: Earnings see shares rise, but can it continue?

FXStreet News FXStreet News 04.02.2022 16:06
Pinterest shares rise over 12% in the premarket on Friday. PINS stock surges down to an earnings beat on the top and bottom lines. Pinterest shares remain in a long-term downtrend. Pinterest (PINS) reported strong earnings after the close Thursday night that saw the stock move up over 18% in afterhours trading. So far, most of those gains are holding early on Friday with PINS at $27.70. This represents a gain of 13% from Thursday's close. Pinterest Stock News Earnings per share came in at $0.49 versus consensus estimates for $0.45. Revenue hit $846.7 million versus consensus estimates of $827.2 million. The shares immediately jumped on the news. (https://www.fxstreet.com/news) "We took important steps in 2021 with the launch of our foundational technology to deliver a video-first publishing platform. And, I'm proud to say that for the first time, we surpassed $2 billion in revenue for the year — growing 52% over the previous year — and reached our first full-year of GAAP profitability," said Ben Silbermann, CEO and co-founder of Pinterest. PINS was set up for outperformance and the risk-reward was clearly to the upside. PINS stock had closed the regular session on Thursday down over 10% as the read-across from Facebook saw investors dump the stock. (https://www.fxstreet.com/markets/equities) Just like Amazon, a surprise to the upside offered a better risk-reward profile, and so it proved with investors rushing to cover positions. Pinterest Stock Forecast Pinterest remains mired in a long-term downtrend. Paypal (PYPL) had been rumoured to be in discussion to acquire PINS back in October of last year. PINS shares had spiked to $65 on the rumour, but supposedly Paypal shareholders resisted and nothing ever happened. This led PINS shares on a steady downweard path ever since. The shares are down nearly 70% in the last year and 26% already this year. This move does not really do much to turn that trend around in our view. The big damage was done in the break of $32.34. That remains the bullish pivot. The first support is at $24.08. Pinterest (PINS) chart, (https://www.fxstreet.com/rates-charts/chart) 20 hourly
UK100 Price Trades Below Levels Of The Week Before, Silver Price Raised Noticeably

UK100 Price Trades Below Levels Of The Week Before, Silver Price Raised Noticeably

John Benjamin John Benjamin 22.02.2022 08:59
USDCHF tests daily support The Swiss franc surges as the US-Russia stalemate boosts demand for safe haven assets. Consecutive drops below 0.9220 and then 0.9180 suggest that sellers have taken control. The greenback is heading towards January’s double bottom around 0.9110. A break below this key floor would trigger a deeper correction towards the psychological level of 0.9000. The RSI’s oversold situation may cause a temporary rebound. The support-turned-resistance at 0.9220 is the level to break to give the bulls any hope of recovery. XAGUSD bounces higher Bullion rallies over ongoing geopolitical tensions in Eastern Europe. Silver gained momentum after a break above the supply zone at 23.90. A brief fallback found support over 23.10 which indicates solid buying interest. The price is grinding up along a rising trendline and sentiment remains upbeat as long as it stays above the congestion area near the trendline and 23.60. January’s peak at 24.70 is the target when volatility picks up again. A bullish breakout could trigger a broader reversal in the weeks to come. UK 100 struggles for support The FTSE 100 tumbles as risk appetite slips across the board. The bulls’ latest effort to push beyond 7630 turned out to be futile. A break below 7500 suggests a lack of commitment and weighs on short-term sentiment. Intraday traders have switched sides and look to fade the next bounce towards the former support. A dip below 7430 has opened the door to 7330 as the next target. Further down, the daily support at 7240 would be a major level to keep the uptrend intact in the medium term.
Crypto Charts - BTC Monthly, Weekly, Daily Chart

Crypto Charts - BTC Monthly, Weekly, Daily Chart

Korbinian Koller Korbinian Koller 22.02.2022 09:33
Bitcoin, best in play   The Covid environment brought an additional variant risk factor to the table, especially when it comes to investor psychology. Our last weekly chart book publication made a case for positioning one’s risk hedge plays this year when equity markets most likely trade in a volatile sideways range. We also spoke of a proper wealth preservation strategy, holding both bitcoin and gold within a hedged risk reduction approach for your monies. With our primary focus on risk, the next question is allocation size between bitcoin and gold. As mentioned in the intro, it feels intuitively natural to have significant exposure to the gold side from a cycle history. Yet, insurance seems essential at this time, and as such, we tend to be a bit more aggressive towards bitcoin allocations. Bitcoin, daily chart, not just yet: Bitcoin, daily chart as of February 22nd, 2022. The daily chart reflects the common notion of bitcoin trading alongside PMI numbers and the market as a whole. With the recent break of the modest bounce from the US$33,500 level up leg (yellow up-channel), no immediate low-risk entries for longer-term exposure seems in play.   Bitcoin, weekly chart, great setup, bitcoin, best in play: Bitcoin, weekly chart as of February 22nd, 2022. Nevertheless, we find now zooming out to the weekly time frame a quite interesting entry zone (white box) between the levels US$30,000 to US$34,000. We identified by stacking multiple edges that an entry near US$31,800 would provide the most low-risk entry profile. However, it will depend on how prices will arrive at these levels. As such, we encourage you to check back in our free Telegram channel.  There we post-entries, and exits for educational purposes in real-time. Bitcoin, monthly chart, amazing potential: Bitcoin, monthly chart as of February 22nd, 2022. Where matters become more transparent, and our headlines supported, is at a view of the monthly chart. The first leg up was nothing short of a 1,600% advancement. Now we have been trading for a year in a bullish up sloping sideways channel. With a possible entry at the lows of this channel, a long-term investment provides for a stellar risk/reward-ratio. The second legs are typically longer than the first legs! But that is not all; bitcoin has a higher probability of four-leg moves versus three-leg moves. Consequently, this trade could turn out to be highly profitable after some time. One aspect of risk is the relationship between the size of a potential down move of price and the size of a likely up move. We find bitcoins’ upward potential much more significant than gold for its fundamental characteristics and stellar outperforming history percentagewise. Bitcoin, best in play: Summing it up, bitcoin might not be at its lowest retracement levels yet. Still, its powerful potential in risk/reward-ratio and as an overall risk hedge makes it best in play. We share a low-risk cost averaging in strategy in our free Telegram channel. We find that allocation of funds should be more dominant towards bitcoin. In addition, holding some cash as much as money is deflating can still be a good strategy. Cash is king to purchase desired goods and vehicles, especially when those are even more depressed.    Feel free to join us in our free Telegram channel for daily real time data and a great community. If you like to get regular updates on precious metals and cryptocurrencies, you can also subscribe to our free newsletter. Disclosure: This article and the content are for informational purposes only and do not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision. The views, thoughts and opinions expressed here are the author’s alone. They do not necessarily reflect or represent the views and opinions of Midas Touch Consulting. By Korbinian Koller|February 22nd, 2022|Tags: Bitcoin, Bitcoin bounce, bitcoin consolidation, Bitcoin correction, crypto analysis, crypto chartbook, DeFi, Gold, Gold bullish, low risk, NASDAQ, quad exit, S&P 500, technical analysis, trading education|0 Comments
Credit Markets Trades Really Low, Oil Price Reaches High Levels At The Same Time

Credit Markets Trades Really Low, Oil Price Reaches High Levels At The Same Time

Monica Kingsley Monica Kingsley 22.02.2022 15:36
S&P 500 is waking up to fresh European news, and holds up well. There is no panic upswing in gold and silver, but crude oil and natural gas are up the most. As the U.S. markets are to open following yesterday‘s Washington‘s Birthday holiday, let‘s bring up the key details of yesterday‘s analysis: (…) S&P 500 opening upswing gave way to more selling, but credit markets didn‘t lead to the downside on a daily basis. This tells me the plunge would likely be challenged shortly. As in facing a reversal attempt – it‘s that junk bonds for all the recent (and still to come) deterioration, will probably rebound a little next. Value already retraced part of Friday‘s decline – it‘s just tech that didn‘t yet react to the Treasuries reprieve. Good to have taken short profits off the table. The table is set for S&P 500 to rise, and for bonds to rally somewhat. And that wouldn‘t be the result of war tensions lifting up Treasuries, gold and oil. Red hot inflation, decelerating growth and compressing yield curve are a challenging environment, and the odds of a 50bp Mar rate hike are overwhelming, but the Fed‘s balance sheet is still rising – now within spitting distance of $9T. Sure they will take on inflation, but I continue to think that by autumn they would be forced to reverse course, and start easing. Fresh stimulus after markets protest during 1H 2022? Would be helpful for the midterms... The consumer isn‘t in a great shape as the confidence data reveal – and that‘s also reflected in the direction of discretionaries vs. staples. Inflation is pinching, and the pressure on the Fed to act, is on – its credibility is being challenged. Food inflation is high, and seeing food at home prices rising this much, is as surefire marker of coming recession as yield curve inversion is. And yield differentials are flattening around the world – quite a few central banks are more ahead in the tightening path than the Fed. Economy slowing down, stock market correction far from over (yes, in spite of the coming rebound, I‘m looking for lower lows still), and precious metals upleg underway – yes, underway, and especially our gold profits can keep rising - as I wrote on Friday: (…) With gold at $1,900 again and silver approaching $24, copper‘s fate is also brightening – the miners‘ continued outperformance is a very good sign. With crude oil taking a breather, the inflationary pressures aren‘t at least increasing, but don‘t look for the Bullard or other statements to defeat inflation – I‘m standing by the 4-5% official rate CPI data for 2022 (discussed in yesterday‘s summary). CPI might turn out even a full percentage point higher – depends upon the hedonics and substitution massaging. What a long quote – let‘s update it with the premarket action. S&P 500 is still waiting with its potential upsing, dollar has gone nowhere really, and precious metals look like having a bright day today. The crude oil upswing shows that markets don‘t like the geopolitical news, and are likely to behave in a risk-off way of late (Treasuries, gold and oil up benefiting most). The internals of today‘s stock market action would be telling – I recently got an interesting question touching also upon rates and real estate: Q: I read your most recent newsletter with great interest: 1. You think the Fed would start to ease this fall? In your opinion, how long would that last?  Midterm would be done soon there after so would it be a quick few months then revert back to higher rates? 2. I’m asking question #1 as it would impact real estate. 3. You anticipate a “temporary” rise in the S&P this week? Are you thinking just a few days? I noticed 10 yr is going down. A: Thank you for asking. I'll take 1 & 2 in one go - I think they would change course latest autumn. So, now hawkish and raising, then turning to easing before midterms. Let's see first the damage this tightening does, and the degree to which they then turn dovish. As regards real estate, it's slowing down, homebuilders, XLRE... Headwinds would be stiffening, rates are eating into mortgages, but those ZIP codes where immigration into is high, would do best - but the overall, total real estate isn't an appealing proposition. When markets open, there is likely to be a little SPX rally off oversold readings. Sure, they can get more oversold - that's the way it goes during bearish episodes, which is why I'm not long. The trend for now is to the downside, so I would keep predominantly looking and taking opportunities to short. Let‘s move right into the charts (all courtesy of www.stockcharts.com). S&P 500 and Nasdaq Outlook S&P 500 caught a little buying interest going into the long weekend – better days though look to be coming. Not a monstrous rally, but still an upswing. Credit Markets HYG is indeed basing, and will help stocks move higher next. LQD and TLT are already rising, and there is still somewhat more to come. Bonds have simply deteriorated too fast in 2022, and need a breather. Gold, Silver and Miners Precious metals fireworks continue – we‘re getting started, and $1,920 is the next stop. Kiss of life from the bond market reprieve comes next, on top of all the other factors I‘ve talked about recently. Crude Oil Crude oil is fairly well bid, but the war jitters are helping it out (as in staving off a bit deeper correction). As both oil and base metals are rising, inflation isn‘t likely to slow down (perhaps later in summer?) - black gold‘s uptrend isn‘t over really. Copper Copper keeps going sideways in a volatile fashion, and can be counted on to break higher – inflationary pressures aren‘t abating, and outweigh the slowing economy. Bitcoin and Ethereum Cryptos stopped breaking down today, and the price action smacks of joining in the modest risk-on upswing, as unbelievable as it sounds. Summary Yesterday‘s summary is valid also today – S&P 500 appears on the verge of trying to swing higher, and credit markets would be leading the charge as tech finally turns. Value had trouble declining some more on Friday already. Stock market upswing though wouldn‘t throw the precious metals bulls off balance – not too many weeks have passed since I was at the turn of the year predicting that gold (and silver with miners implied) would be the bullish surprise of 2022 – and for all the talk and preemtive tightening in the credit markets, we haven‘t yet seen the Fed move. Anyway, such a lag in moving the Fed funds rate higher, is normal these decades – we are a long way from the early 1980s when the delay between say 2-year Treasury and Fed funds rate move was some 2 months. Crude oil is likewise going to keep rising, and the same goes naturally for copper following in the footsteps. Thank you for having read today‘s free analysis, which is available in full at my homesite. There, you can subscribe to the free Monica‘s Insider Club, which features real-time trade calls and intraday updates for all the five publications: Stock Trading Signals, Gold Trading Signals, Oil Trading Signals, Copper Trading Signals and Bitcoin Trading Signals.
Tension Beetween Ukraine And Russia Definetely Shaped News In Recent Days

EURGBP - Does The Single Currency Strengthen? Bearish GER 40 Ahead?

John Benjamin John Benjamin 23.02.2022 08:52
EURUSD bounces off support The euro surged over signs that Moscow may remain open to diplomacy. The pair found support at the base of the previous rally (1.1290), indicating the bulls’ commitment to keeping the rebound intact. The RSI’s oversold situation attracted a slew of bargain hunters betting on a lengthy rebound. A break above 1.1390 would prompt sellers to cover and pave the way for a sustained recovery. The recent peak and daily resistance at 1.1490 is a major hurdle. Its breach could extend the rally to 1.1600. EURGBP attempts reversal The sterling whipsawed after BOE officials’ comment about a “modest” rate hike over the coming months. The euro saw strong bids at the base of the February breakout rally (0.8310). A break above 0.8370 wiped out some selling interest, a prerequisite for a meaningful recovery. 0.8400 is the next resistance and its breach would further boost buyers’ confidence and propel the single currency to the recent high at 0.8475. On the downside, a bearish breakout would invalidate the rebound pattern and cause a sell-off below 0.8280. GER 40 breaks floor Trepid sentiment continues to weigh on the Dax. The plunge below the 9-month long consolidation area (14850) may foreshadow a bear market. As traders grew wary, trapped bulls would look to get out of their positions while the bears saw any rebound as an opportunity to sell into strength. An oversold RSI brought in some bids and 14850 is the immediate resistance. However, the index would remain under unless it lifts offers around 15200. Otherwise, the psychological level of 14000 would be the next stop.
Terra (LUNA) Price Went Up And The Most Popular Crypto Increased By 3.6% On Tuesday

Terra (LUNA) Price Went Up And The Most Popular Crypto Increased By 3.6% On Tuesday

Alex Kuptsikevich Alex Kuptsikevich 23.02.2022 08:35
The rebound of bitcoin began along with the growth of European stock indices at the beginning of the day. They corrected up after three days of decline on the crisis around Ukraine. Futures for the S&P 500 and Nasdaq, with which BTC has been highly correlated lately, also showed gains on Tuesday. So far, the rebound of risky assets, which includes cryptocurrencies, can be considered as a movement within a downtrend. Bitcoin has been trying to correct from levels close to the lows of February, but this is probably not the bottom yet. Expectations of a rate hike by the US Federal Reserve and rising geopolitical tensions are putting pressure on all risky assets. Despite the rather low levels of the Cryptocurrency Fear Index, the history of the indicator suggests that the best moments to enter were periods of falling into the 10 area. Meanwhile, Ricardo Salinas Pliego, one of the richest Mexican billionaires, called for not selling bitcoin during the fall. In his opinion, BTC will rise in the long term. Overall, Bitcoin is up 3.6% over the past day to 38,100, closing Tuesday higher after five days of decline. Ethereum gained 6.1% over the same time period, while other leading altcoins from the top ten showed mixed dynamics: from 4% growth in XRP to 13% in Terra. The total capitalization of the crypto market, according to CoinGecko, decreased by 1.5% over the day to $1.79 trillion. Altcoins grew worse than the first cryptocurrency, which led to an increase in the Bitcoin dominance index by 0.4%, to 40.3%. The index of fear and greed turned back again, losing 5 points to 25 and remaining in a state of "extreme fear".
Let‘s Try Again

Let‘s Try Again

Monica Kingsley Monica Kingsley 23.02.2022 15:53
S&P 500 had a wild swings day, and didn‘t rise convincingly – credit markets didn‘t move correspondingly either. The upswing looks postponed unless fresh signs of broad weakness arrive. Yesterday‘s session didn‘t tell much either way – the countdown to the upswing materializing, is on even though tech didn‘t take advantage of higher bond prices. That can still come.VIX though reversed to the downside, and the relatively calmer session we‘re likely going to experience today, would be consistent with a modest attempt for stocks to move higher. I‘m though not looking for a monstrous rally, even though we‘re trading closer to the lower end of the wide S&P 500 range for this year than to its upper border. The 4,280s are so far holding but as the Mar FOMC approaches, we‘re likely to see a fresh turn south in the 500-strong index. For now, the talk of raising rates is on the back burner – Europe is in the spotlight.Note that the flight to safety on rising tensions (Treasuries, gold and oil up) didn‘t benefit the dollar. Coupled with the yields reprieve, that makes for further precious metals gains – the bull run won‘t be toppled if soothing news arrives. Likewise crude oil isn‘t going to tank below $90, and remain there. Commodities can be counted on to keep running – led by energy and agrifoods, with base metals (offering a helping hand to silver) in tow. As I wrote weeks ago, this is where the real gains are to be found.Let‘s move right into the charts (all courtesy of www.stockcharts.com).S&P 500 and Nasdaq OutlookS&P 500 volume moved a little up, meaning the buying interest is still there – convincing signs of a trend change are though yet not apparent. Should prices prove to have trouble breaking lower over the next 1-2 days, this could still turn out a good place for a little long positon.Credit MarketsHYG continues basing, and keeps trading in a risk-off fashion, which is why I can‘t be wildly bullish stocks for now. Stock market gains are likely to remain subdued, noticeably subdued – as a bare minimum for today.Gold, Silver and MinersPrecious metals fireworks continue, but a little reprieve is developing – nothing though that would break the bull. The run is only starting, and would continue through the rate raising cycle.Crude OilCrude oil is fairly well bid, and doesn‘t appear to be really dipping any time soon. Oil stocks are preparing for an upswing, and would remain one of the best performing S&P 500 sectors. Tripple digit oil is a question of time.CopperCopper‘s moment in the spotlight is approaching as commodities keeps pushing higher, and base metals are breaking up. All of these factors are inflationary.Bitcoin and EthereumCryptos are attempting to move up today, and further gains are likely. I‘m though looking for the 50-day moving average in Bitcoin (corresponding roughly to the mid Feb lows in Ethereum) to prove an obstacle.SummaryS&P 500 didn‘t break to new lows overnight, and appears to be picking up somewhat today. The anticipated rebound might materialize later today, and would require bond participation to be credible. I‘m not looking for sharp gains within this upswing though – the correction looks very much to have further to run. It‘s commodities and precious metals where the largest gains are to be made, with the European tensions taking the focus off inflation (momentarily). The pressure on the Fed to act decisively, is though still on as various credit spreads tell – and the same goes for the compressed yield curve speaking volumes about the (precarious) state of the real economy.Thank you for having read today‘s free analysis, which is available in full at my homesite. There, you can subscribe to the free Monica‘s Insider Club, which features real-time trade calls and intraday updates for all the five publications: Stock Trading Signals, Gold Trading Signals, Oil Trading Signals, Copper Trading Signals and Bitcoin Trading Signals.
Stocks Fell Again – a Dip Buying Opportunity?

Stocks Fell Again – a Dip Buying Opportunity?

Paul Rejczak Paul Rejczak 23.02.2022 15:35
  Stocks were volatile yesterday and the broad stock market fell by another 1%. Was it a final decline or just another leg within a downtrend? The S&P 500 index lost 1.01% on Tuesday, Feb. 22, as it extended its last week’s Thursday’s-Friday’s sell-off. The daily low was at 4,267.11, and the market closed slightly above the 4,300 mark. We’ve seen a lot of volatility following the U.S. President Biden’s speech on Russia-Ukraine conflict. This morning the S&P 500 index is expected to open 0.7% higher. We may see more volatility, however it looks like a short-term bottoming pattern. The nearest important resistance level is at 4,350-4,400, marked by the recent local low and some previous support levels. On the other hand, the support level is at 4,250-4,300, among others. The S&P 500 index trades within its late January consolidation, as we can see on the daily chart (chart by courtesy of http://stockcharts.com): Futures Contract – Short-Term Consolidation Let’s take a look at the hourly chart of the S&P 500 futures contract. It extended the downtrend on Monday, but it managed to stay slightly above its late January local lows. For now, it looks like a short-term consolidation. It may be a bottoming pattern before an upward correction. Yesterday, we decided to open a speculative long position before the opening of the cash market. We are expecting an upward correction from the current levels (chart by courtesy of http://tradingview.com): Conclusion The S&P 500 index went below the 4,300 level yesterday, as investors reacted to the ongoing Russia-Ukraine crisis news. The market may be trading within a short-term consolidation and we may see an attempt at reversing the downtrend. Here’s the breakdown: The S&P 500 index will likely bounce or fluctuate following its late last week’s sell-off We are maintaining our yesterday’s long position. We are expecting an upward correction from the current levels. Like what you’ve read? Subscribe for our daily newsletter today, and you'll get 7 days of FREE access to our premium daily Stock Trading Alerts as well as our other Alerts. Sign up for the free newsletter today! Thank you. Paul Rejczak,Stock Trading StrategistSunshine Profits: Effective Investments through Diligence and Care * * * * * The information above represents analyses and opinions of Paul Rejczak & Sunshine Profits' associates only. As such, it may prove wrong and be subject to change without notice. At the time of writing, we base our opinions and analyses on facts and data sourced from respective essays and their authors. Although formed on top of careful research and reputably accurate sources, Paul Rejczak and his associates cannot guarantee the reported data's accuracy and thoroughness. The opinions published above neither recommend nor offer any securities transaction. Mr. Rejczak is not a Registered Securities Advisor. By reading his reports you fully agree that he will not be held responsible or liable for any decisions you make regarding any information provided in these reports. Investing, trading and speculation in any financial markets may involve high risk of loss. Paul Rejczak, Sunshine Profits' employees, affiliates as well as their family members may have a short or long position in any securities, including those mentioned in any of the reports or essays, and may make additional purchases and/or sales of those securities without notice.
Miners for Breakfast, Gold for Dessert: Bearish Fundamentals Will Hurt

Miners for Breakfast, Gold for Dessert: Bearish Fundamentals Will Hurt

Przemysław Radomski Przemysław Radomski 23.02.2022 15:59
  To the disappointment of gold bulls, the yellow metal’s upward trend will not last long. Fundamentals have already taken their toll on gold miners.  While gold remains uplifted due to the Russia-Ukraine drama, the GDXJ ETF declined for the second-straight day on Feb. 22. Moreover, I warned on numerous occasions that the junior miners are more correlated with the general stock market than their precious metals peers. As a result, when the S&P 500 slides, the GDXJ ETF often follows suit. To that point, with shades of 2018 unfolding beneath the surface, the Russia-Ukraine headlines have covered up the implications of the current correction. However, the similarities should gain more traction in the coming weeks. For context, I wrote on Feb. 22: When the Fed’s rate hike cycle roiled the NASDAQ 100 in 2017-2018, the GDXJ ETF suffered too. Thus, while the Russia-Ukraine drama has provided a distraction, the fundamentals that impacted both asset classes back then are present now. Please see below: To explain, the green line above tracks the GDXJ ETF in 2018, while the black line above tracks the NASDAQ 100. If you analyze the performance, you can see that the Fed’s rate hike cycle initially rattled the former and the latter rolled over soon after. However, the negativity persisted until Fed Chairman Jerome Powell performed a dovish pivot and both assets rallied. As a result, with the Fed Chair unlikely to perform a dovish pivot this time around, the junior miners have some catching up to do. Furthermore, while the S&P 500 also reacts to the geopolitical risks, the Fed’s looming rate hike cycle is a much bigger story. With the U.S. equity benchmark also following its price path from 2018, a drawdown to new 2022 lows should help sink the GDXJ ETF. Please see below: Source: Morgan Stanley To explain, the yellow line above tracks the S&P 500 from March 2018 until February 2019, while the blue line above tracks the index's current movement. If you analyze the performance, it's a near-splitting image. Moreover, while Morgan Stanley Chief Equity Strategist Michael Wilson thinks a relief rally to ~4,600 is plausible, he told clients that "this correction looks incomplete." "Rarely have we witnessed such weak breadth and havoc under the surface when the S&P 500 is down less than 10%. In our experience, when such a divergence like this happens, it typically ends with the primary index catching down to the average stock," he added. As a result, while a short-term bounce off of oversold conditions may materialize, the S&P 500's downtrend should resume with accelerated fervor. In the process, the GDXJ ETF should suffer materially as the medium-term drama unfolds.  To that point, the Fed released the minutes from its discount rate meetings on Jan. 18 and Jan. 26. While the committee left interest rates unchanged, the report revealed: “Given ongoing inflation pressures and strong labor market conditions, a number of directors noted that it might soon become appropriate to begin a process of removing policy accommodation. The directors of three Reserve Banks favored increasing the primary credit rate to 0.50 percent, in response to elevated inflation or to help manage economic and financial stability risks over the longer term.” For context, the hawkish pleas came from the Cleveland, St. Louis, and Kansas City Feds. Moreover, the last time Fed officials couldn’t reach a unanimous decision was October 2019. As a result, the lack of agreement highlights the monetary policy uncertainty that should help upend financial assets in the coming months. As evidence, the report also revealed: Source: U.S. Fed Thus, while I’ve highlighted on numerous occasions that a bullish U.S. economy is bearish for the PMs, the Russia-Ukraine drama has been a short-term distraction. However, with Fed officials highlighting that growth and inflation meet their thresholds for tightening monetary policy, higher real interest rates and a stronger USD Index will have much more influence over the medium term. To that point, IHS Markit released its U.S. Composite PMI on Feb. 22. With the headline index increasing from 51.1 in January to 56.0 in February, an excerpt from the report read: “February data highlighted a sharp and accelerated increase in new business among private sector companies that was the fastest in seven months. Firms mentioned that sales were boosted by the retreat of the pandemic, improved underlying demand, expanded client bases, aggressive marketing campaigns and new partnerships. Customers reportedly made additional purchases to avoid future price hikes. Quicker increases in sales (trades) were evident among both manufacturers and service providers.” More importantly, though: Source: IHS Markit In addition, since the Fed’s dual mandate includes inflation and employment, the report revealed: Source: IHS Markit Likewise, Chris Williamson, Chief Business Economist at IHS Markit, added: “With demand rebounding and firms seeing a relatively modest impact on order books from the Omicron wave, future output expectations improved to the highest for 15 months, and jobs growth accelerated to the highest since last May, adding to the upbeat picture.” If that wasn't enough, the Richmond Fed released its Fifth District Survey of Manufacturing Activity on Feb. 22. While the headline index wasn't so optimistic, the report revealed that "the third component in the composite index, employment, increased to 20 from 4 in January" and that "firms continued to report increasing wages." For context, the dashed light blue line below tracks the month-over-month (MoM) change, while the dark blue line below tracks the three-month moving average. If you analyze the former's material increase, it's another data point supporting the Fed's hawkish crusade. Source: Richmond Fed Finally, the Richmond Fed also released its Fifth District Survey of Service Sector Activity on Feb. 22. For context, the U.S. service sector suffers the brunt of COVID-19 waves. However, the recent decline in cases has increased consumers’ appetite for in-person activities. The report revealed: “Fifth District service sector activity showed improvement in February, according to the most recent survey by the Federal Reserve Bank of Richmond. The revenues index increased from 4 in January to 11 in February. The demand index remained in expansionary territory at 23. Firms also reported increases in spending, as the index for capital expenditures, services expenditures, and equipment and software spending all increased.” Furthermore, with the employment index increasing from 12 to 14, the wages index increasing from 41 to 46, and the average workweek index increasing from 9 to 10, the labor market strengthened in February. Likewise, the index that tracks businesses’ ability to find skilled workers increased from -21 to -19. As a result, inflation, employment and economic growth create the perfect cocktail for the Fed to materially tighten monetary policy in the coming months.  Source: Richmond Fed The bottom line? While the Russia-Ukraine saga may dominate the headlines for some time, the bearish fundamentals that hurt gold and silver in 2021 remain intact: the U.S. economy is on solid footing, and demand is still fueling inflation. Moreover, with information technology and communication services’ stocks – which account for roughly 39% of the S&P 500 – highly allergic to higher interest rates, the volatility should continue to weigh on the GDXJ ETF. As such, while gold may have extended its shelf life, mining stocks may not be so lucky. In conclusion, the PMs were mixed on Feb. 22, as the news cycle continues to swing financial assets in either direction. However, while headlines may have a short-term impact, technicals and fundamentals often reign supreme over the medium term. As a result, lower lows should confront gold, silver, and mining stocks in the coming months. Thank you for reading our free analysis today. Please note that the above is just a small fraction of today’s all-encompassing Gold & Silver Trading Alert. The latter includes multiple premium details such as the targets for gold and mining stocks that could be reached in the next few weeks. If you’d like to read those premium details, we have good news for you. As soon as you sign up for our free gold newsletter, you’ll get a free 7-day no-obligation trial access to our premium Gold & Silver Trading Alerts. It’s really free – sign up today. Przemyslaw Radomski, CFAFounder, Editor-in-chiefSunshine Profits: Effective Investment through Diligence & Care * * * * * All essays, research and information found above represent analyses and opinions of Przemyslaw Radomski, CFA and Sunshine Profits' associates only. As such, it may prove wrong and be subject to change without notice. Opinions and analyses are based on data available to authors of respective essays at the time of writing. Although the information provided above is based on careful research and sources that are deemed to be accurate, Przemyslaw Radomski, CFA and his associates do not guarantee the accuracy or thoroughness of the data or information reported. The opinions published above are neither an offer nor a recommendation to purchase or sell any securities. Mr. Radomski is not a Registered Securities Advisor. By reading Przemyslaw Radomski's, CFA reports you fully agree that he will not be held responsible or liable for any decisions you make regarding any information provided in these reports. Investing, trading and speculation in any financial markets may involve high risk of loss. Przemyslaw Radomski, CFA, Sunshine Profits' employees and affiliates as well as members of their families may have a short or long position in any securities, including those mentioned in any of the reports or essays, and may make additional purchases and/or sales of those securities without notice.
Final Target Hit on NYMEX Natural Gas!

Final Target Hit on NYMEX Natural Gas!

Sebastian Bischeri Sebastian Bischeri 23.02.2022 16:59
  The Natural Gas flight just landed after hitting its second and last target yesterday. The perfect trade does not exist, but this one has been developing pretty well following our flying map. In today’s edition, I will provide a trade review for Natural Gas futures (NGH22) following my last projections published on Friday Feb-11, for which the stop was also updated last Wednesday and trailed again last Thursday. Trade Plan Just to remember, our initial plan was relying on a gas market having to cope with stronger demand to fuel and increasing industrial activity after being surprised by the warming mid-February weather forecast. Hence, the projected rebounding floor (or support level) provided, which was ideal for the Henry Hub given the unyielding global demand for US Liquefied Natural Gas (LNG), providing a catapulting upward momentum. Then, it took a few days for the first suggested objective at $4.442 to be passed, and a few extra days for the second target located at the $4.818 level to be hit (as it was yesterday). Meanwhile, as I explained in more detail in my last risk-management-related article to secure profits, our subscribers were kindly and promptly invited to place their initial stop just below the $3.629 level (below one-month previous swing low), before receiving a couple of trading alerts suggesting they manually trail it up around the $3.886 level (around breakeven), then one more time up towards 4.180 (which corresponds to the 50% distance between initial entry and target 1), and finally to be lifted up to 4.368 optimally. Consequently, after a reconnaissance mission got close enough to target number 2, the Nat-Gas flight started running out of kerosene after passing through the first target like a fighter jet would break the sound barrier. Therefore, after getting refueled at a lower altitude (just above our highest elevation trailing stop) by a refuelling aircraft, the jet was finally ready to point and lock its last target before striking it. Here is a picture-by-picture record of that trade. First step: flight preparation on carrier ship Henry Hub Natural Gas (NGH22) Futures (March contract, daily chart) Second step: prices catapulted and stop lifted at breakeven once the mid-point target was reached Henry Hub Natural Gas (NGH22) Futures (March contract, daily chart) Third step: target one hit and stop dragged up Henry Hub Natural Gas (NGH22) Futures (March contract, daily chart) Zoom to target one (4H chart): Henry Hub Natural Gas (NGH22) Futures (March contract, 4H chart) Fourth step: mission reconnaissance to target two and refueling aircraft en route to refill the jet tank (stop trailing again) Henry Hub Natural Gas (NGH22) Futures (March contract, daily chart) Zoom to lock final target (4H chart): Henry Hub Natural Gas (NGH22) Futures (March contract, 4H chart) Fifth step: final strike to target two Henry Hub Natural Gas (NGH22) Futures (March contract, daily chart) Now, let’s zoom one more time into the 4H chart to observe the recent price action all around the abovementioned steps of our flying map: Henry Hub Natural Gas (NGH22) Futures (March contract, 4H chart) As you may observe, target one is now serving as a new landing space (support) for a new ranging market cycle. That’s all, folks, for today. I hope that you enjoyed the flight with our company! Like what you’ve read? Subscribe for our daily newsletter today, and you'll get 7 days of FREE access to our premium daily Oil Trading Alerts as well as our other Alerts. Sign up for the free newsletter today! Thank you. Sebastien BischeriOil & Gas Trading Strategist * * * * * The information above represents analyses and opinions of Sebastien Bischeri, & Sunshine Profits' associates only. As such, it may prove wrong and be subject to change without notice. At the time of writing, we base our opinions and analyses on facts and data sourced from respective essays and their authors. Although formed on top of careful research and reputably accurate sources, Sebastien Bischeri and his associates cannot guarantee the reported data's accuracy and thoroughness. The opinions published above neither recommend nor offer any securities transaction. Mr. Bischeri is not a Registered Securities Advisor. By reading Sebastien Bischeri’s reports you fully agree that he will not be held responsible or liable for any decisions you make regarding any information provided in these reports. Investing, trading and speculation in any financial markets may involve high risk of loss. Sebastien Bischeri, Sunshine Profits' employees, affiliates as well as their family members may have a short or long position in any securities, including those mentioned in any of the reports or essays, and may make additional purchases and/or sales of those securities without notice.
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.
Having A Look At The Markets Considering Tensions, COVID-19 And National Banks Decisions

How Did Markets Reacted To The Latest Events In The Eastern Europe?

Walid Koudmani Walid Koudmani 24.02.2022 14:22
The worst case scenario - Russian invasion of Ukraine - is materializing. We try to analyze its consequences for the economy and financial markets Oil price increases past $100 per barrel Russia is a key player on the energy commodities market, especially important for Europe. Situation on the oil market proves it - oil prices jumped above $100 per barrel for the first time since 2014. Russia is exporting around 5 million barrels of oil each day, around 5% of global demand. Around a half of that is exported to the European Union. If the West decides to cut Russia off the SWIFT settlements system, Russian exports to the European Union could be halted. In such a scenario oil prices could jump $20-30 per barrel. In our opinion, the war risk premium included in current oil barrel prices amounts to $15-20. Europe is the main recipient of Russian oil. Source: Bloomberg, XTB Research Gold and palladium rally Conflict is the main driver of moves on the gold market. It is not the first time when gold proves to be a good store of value at times of geopolitical conflicts. Ounce of gold trades over 3% higher today, near $1,970, and just slightly over $100 below its all-time highs. Russia is an important producer of palladium, an important metal for the automotive sector. Source: Bloomberg, XTB Research Russia is a significant producer of palladium, which is a key metal in production of catalytic converters for the automotive sector. Palladium prices rallied almost 8% today. Fear means sell-off on the market Global stock markets are taking a hit not seen since 2020. However, panic is not as big as it was in early-2020. Uncertainty is the most important driver for global stock markets now as investors do not know what will come next. Correction on Nasdaq-100 futures deepened past 20% today. A big part of this drop, however, was caused by expectations of Fed tightening. DAX futures dropped around 15% since mid-January and trade near pre-pandemic highs. DE30 trades to halt decline at pre-pandemic high. Source: xStation5 Business in Ukraine is in danger It should not come as a surprise that Russian companies and companies with big exposure to Russia are the ones taking the biggest hit. Russian RTS dropped over 60% off the October 2021 high and briefly traded below 2020 lows! Polymetal International is a company worth mentioning - stock is plunging over 30% on London Stock Exchange as market fears sanctions will hit Anglo-Russian companies. Renault is also taking a hit as Russia is the second biggest market for the company. Banks with large exposure to Russia - UniCredit and Societe Generale - are also dropping hard. Even higher inflation From an economic point of view the situation is clear - military conflict will generate a new inflationary impulse. Prices of almost all commodities are trading higher, especially energy commodities. However, in case of commodity markets, a lot will depend on how conflict impacts logistics. Keep in mind that global logistics have not recovered from Covid-19 hit yet and now another negative factor is surfacing. According to the New York Fed index, global supply chains are the most tight on record. Central bankers' headache Covid-19 panic has been very short-lived, thanks to an enormous support offered by central banks. However, such an action is unlikely now. As conflict is inflationary and has a bigger impact on supply and logistics rather than demand, inflation becomes an even bigger problem for major central banks. On the other hand, quick tightening monetary policy would only magnify market turmoil. In our opinion, major central banks will continue with announced policy tightening. Risk of a 50 basis point rate hike by the Fed in March dropped but a 25 bp rate hike looks like a done deal. What's next? A key question for global markets now is - how much will the conflict escalate? An answer to this question will be a key to calming the markets. Once it is answered, calculations of impact on sanctions and speculations over changes in economic policy will begin.
It Begins

It Begins

Monica Kingsley Monica Kingsley 24.02.2022 16:00
S&P 500 reprieve that wasn‘t – the buyers didn‘t arrive, and the overnight military action sparking serious asset moves, shows that buying the dip would have been a bad idea. And it still is. Risk-on assets are likely to suffer, and I‘m not looking for a sharp, V-shaped rebound. The partial retracement seen in cryptos wouldn‘t translate to much upside in paper assets – it will likely be sold into as the bottom would take time to form. The safe haven premium seen in precious metals, crude oil and other real assets would ebb and flow, but a higher base has been established. The world has changed overnight, and recognition thereof is still pending.I think it‘s clear why I had been derisking as much as possible, wary of volatility both ways in paper assets, and betting instead on a mix of real assets. This has been hugely paying off to subscribers and readers likewise favoring gold and crude oil with some copper added for good measure.Let‘s move right into the charts (all courtesy of www.stockcharts.com).S&P 500 and Nasdaq OutlookThis isn‘t how an S&P 500 bottom looks like – downswing continues with more volatility ahead.Credit MarketsHYG is going down again, and credit markets are turning risk-off – look for Treasuries to do relatively better next, with little impact upon stocks.Gold, Silver and MinersPrecious metals fireworks continue, and the upswing got a poweful ally. Whatever retracement seen next, would be marginal in light of the developments.Crude OilCrude oil upswing can be counted on to continue, and oil stocks would remain among the best performing S&P 500 pockets. Black gold is though notorious for its wild volatility, and the coming days won‘t be an exception.CopperCopper upswing would take time to develop, especially now – but the breakout in base metals is on, the inflationary messaging is still there and thriving.Bitcoin and EthereumCryptos aren‘t in a rally mode, but are attempting to put in a low. I don‘t think it would hold, the dust hasn‘t settled yet.SummaryS&P 500 is plunging, and attempting to base, but more selling would inevitably hit. The overnight dust hasn‘t settled yet, but the panic lows would not happen today. Even if it weren‘t for geopolitics, stocks were in rough waters for weeks already, in a serious, yields and liquidity driven correction, with a slowing real economy on top. For all the short-term focus, the buying opportunity would materialize only once the Fed turns – by autumn 2022. The best places to be in right now, are those presented below – precious metals and commodities – as inflation fires continue to rage on.Thank you for having read today‘s free analysis, which is available in full at my homesite. There, you can subscribe to the free Monica‘s Insider Club, which features real-time trade calls and intraday updates for all the five publications: Stock Trading Signals, Gold Trading Signals, Oil Trading Signals, Copper Trading Signals and Bitcoin Trading Signals.
Will War Change How We Spend Or Invest Our Money?

Will War Change How We Spend Or Invest Our Money?

Chris Vermeulen Chris Vermeulen 24.02.2022 22:23
I discussed the potential for the invasion into Ukraine with a friend over the past few days and how this new war may change the global economy. We ended up discussing the Invasion of Kuwait that took place in August 1990. At that time, as soon as the Invasion of Kuwait started, consumers almost immediately changed their spending and financial habits.Suddenly, people stopped going out to dinner after work. They stopped going out for drinks. They also stopped playing computer games and spending money on most outside entertainment (movies and movie rentals – back in the Blockbuster days). In short, consumers became fascinated by the televised war and lost focus on almost everything else.Sign up for my free trading newsletter so you don’t miss the next opportunity! As the conversation progressed, we started talking about how the US Federal Reserve may suddenly find that consumers have begun pulling away from traditional spending habits and how quickly these consumer trends can alter the economic landscape. For example, nearly 60 days into the Invasion of Kuwait, my friend remembered the US economy shifted into a much slower gear, and consumers continued to stay away from more normal spending habits.If this happens in today's super-inflated world, we may see a sudden shift in inflation, retail, housing, and general consumer demand very quickly. Recently, I started receiving messages from friends and clients worldwide who are focused on the Invasion of Ukraine – a whole new generation of people who may become entranced in the televised war (again).Consumer Retail May Suffer A -60% CollapseThis XRT Weekly Chart highlights the pre-COVID support levels that may become future targets if consumer spending habits suddenly shift. XRT has already fallen nearly -32% from the recent highs. If consumers continue to move away from outside economic activities, or more common post-COVID economic activities, we may see the Retail sector continue to move lower.Housing May Contract Faster Than ExpectedReal Estate may contract to near the COVID lows if consumers shy away from chasing speculative price trends in housing. Flipping houses has become a very hot industry over the past 5+ years. Yet, suddenly larger firms like Zillow and OpenDoor started offloading their Real Estate inventory because consumer demand shifted ahead of the US Fed's proposed rate hikes in 2022. The double-whammy of rising rates and war may be similar to what happened in the US between 1993 and 1994 – a very stagnant housing market.IYR has already fallen -16.5% from the highs and may decline to levels closer to -30% (or more) before finding a bottom. Wars tend to shift economies and spending habits very quickly.What To Stay Focused On Amid All The NoiseTraders should stay keenly focused on market risks and weaknesses. I expected the conflict in Ukraine to have been priced into the US markets over the past 7+ days. However, I believe the markets were unprepared for this scale or invasion and will attempt to settle fair stock price valuation levels as the conflict continues. This is not the same US/Global market Bullish trend we've become used to trading over the past 5+ years. The market dynamics and trends are changing from what we have experienced over the past 40 years for stocks and bonds. The 60/40 portfolio is costing you money now. Traders need an edge to stay ahead of these markets trends and to protect and profit from big trends.The only way to navigate the financial markets safely, no matter the direction, is through technical analysis. By following assets and money flows, we identify trend changes and move our capital into whatever index, sector, industry, bond, commodity, country, and even currency ETF. By following the money, you become part of new emerging trends and can profit during weak stock or bond conditions.What Trading Strategies Will Help You To Navigate Current Market Trends?Learn how I use specific tools to help me understand price cycles, set-ups, and price target levels in various sectors to identify strategic entry and exit points for trades. Over the next 12 to 24+ months, I expect very large price swings in the US stock market and other asset classes across the globe. I believe the markets are starting to transition away from the continued central bank support rally phase and may start a revaluation phase as global traders attempt to identify the next big trends. Precious Metals will likely start to act as a proper hedge as caution and concern start to drive traders/investors into Metals.I invite you to learn more about how my three Technical Trading Strategies can help you protect and grow your wealth in any type of market condition by clicking the following link:   www.TheTechnicalTraders.com 
On Thursday: Bitcoin Added 10.7%, Ether (ETH) Increased By 9.6%

On Thursday: Bitcoin Added 10.7%, Ether (ETH) Increased By 9.6%

Alex Kuptsikevich Alex Kuptsikevich 25.02.2022 10:32
After reaching the lows for the month, the first cryptocurrency received support from buyers, as was the case at the end of January. Of course, the growth dynamics were relatively modest, which indicates the caution of buyers. It is likely that these are long-term holders rather than short-term speculators, as markets generally remain wary. Interestingly, buying during the decline has become a key outline of the American session. After more than a 3% fall, US stock indices not only bounced back but also managed to show growth at the end of the day. This stimulated bitcoin to strengthen. A short-term surge of bullish sentiment could end quickly if risky assets resume their decline again. If the situation in Ukraine escalates even more, bitcoin may fall below $30,000 as investors leave for defensive assets. According to The New York Times, Russia is legalizing cryptocurrency to circumvent US sanctions. Otherwise, the country will not survive the growing sanctions pressure from Western countries. Bitcoin rose over the past day by 10.7% to $38,500, reducing the decline in 7 days to 5%. Ethereum jumped 12% but is still 10% lower than it was exactly a week ago. Other leading altcoins are moving almost in unison, adding about 10% in most cases. The total capitalization of the crypto market, according to CoinMarketCap, increased by 9.6% per day to $1.72 trillion. The bitcoin dominance index rose 0.3 points to 42.6%, due to a smaller strengthening of altcoins. The index of fear and greed of the crypto market has risen from 23 to 27, into the territory of fear.
Food prices are breaking multi-year highs, and the CBs are helpless

Food prices are breaking multi-year highs, and the CBs are helpless

Alex Kuptsikevich Alex Kuptsikevich 25.02.2022 10:40
Wheat futures on the CBOE are up 16% since the start of the week, the biggest rally since the poor harvest in 2012. At one point yesterday, the weekly rise was close to 20%. The price level was the highest since April 2008, as traders anxiously assessed the impact of the conflict between two of the world’s biggest exporters of wheat, corn, and other agricultural products. The FAO’s Food Price Index in January was near its 2011 peak (in nominal terms) and one step below its 1974 peak - a time of stagflation and the aftermath of the oil crisis. And the latest spike in grains prices suggests that these highs will already be surpassed in February. It means that people will spend more on food and less on durable goods and services, worsening living standards. Such price hikes are an additional headache for central banks around the world. They may find themselves forced to turn a blind eye to inflation so as not to put the economy and consumer demand under additional stress. But this is terrible news for currencies. Forced inflation tolerance by the Central Bank will depreciate the value of money and suppress the exchange rate. This promises to be a problem for the euro and the British pound. High inflation may no longer be a reason to buy the euro and the pound against the dollar on the forex market, as it would not increase the chances of a tightening of the central bank policy in the coming months. There could also be a reverse reaction when currencies come under pressure as investors sell off local bonds amid falling real yields.
USDCHF Trades Lower, EURGBP - EUR Weakened A Bit, US 100 Looks To Hold Its Normal Level

USDCHF Trades Lower, EURGBP - EUR Weakened A Bit, US 100 Looks To Hold Its Normal Level

Jing Ren Jing Ren 01.03.2022 10:07
USDCHF struggles for support The Swiss franc rallies as new sanctions against Russia trigger a flight to safety. The pair has met stiff resistance in the supply area (0.9290). Then a drop below 0.9220 and 0.9170 suggests that sentiment remains cautious and buyers are hesitant. 0.9150 is a key level to safeguard the greenback’s latest bounce. A bearish breakout could send the pair to the daily support at 0.9110. An oversold RSI may attract some buying interest. The bulls need to reclaim 0.9230 before they could hope for a turnaround. EURGBP attempts to rebound The euro struggles amid escalation in Western sanctions. A bullish attempt above 0.8400 indicates an upward bias as sellers cover their positions. 0.8310 has been solid support. And the market mood may become increasingly upbeat if buyers succeed in holding above this level. An extended rally may send the single currency to the daily resistance at 0.8475, where a breakout may cause a bullish reversal in the weeks to come. On the downside, a fall below the said demand zone may send the euro to 0.8260. US 100 to test key resistance The Nasdaq 100 bounces as Russia and Ukraine meet for peace talks. The index saw bids near last May’s lows (13050), an important floor to prevent further bleeding. A rebound above 14050 has prompted some sellers to take profit, easing the downward pressure for the moment. Price action is heading to the next resistance at 14500 which sits on the 30-day moving average, and high volume could be expected in this area of interest. A bullish breakout could boost sentiment in the short term and extend gains to 15280.
Told You, Risk On

Told You, Risk On

Monica Kingsley Monica Kingsley 01.03.2022 15:45
S&P 500 erased opening downside, not unexpectedly. Markets say we‘ve turned the corner, and while the medium-term correction isn‘t over, we‘re going higher for now. The tired performance in credit markets suggests that the pace of the upswing would indeed likely slow, but the dips are being bought – even the 4,300 overnight level held unchallenged.VIX is slowly calming down, and it wouldn‘t be a one-way ride. I hate to say it, but we‘re trading closer to the more complacent end of the volatility spectrum – that‘s though in line with my assumption of toned down price appreciation expectations that I discussed on Sunday and yesterday:(…) While we made local lows on Thursday after all, the upside momentum is likely to slow down next – this week would bring a consolidation within a very headline sensitive environment. It‘s looking good for the bulls at the moment – till the dynamic of events beyond markets changes.Inflation isn‘t wavering, and I‘m not looking for its meaningful deceleration given the events since Thursday, no. Friday is likely to mark a buying opportunity beyond oil and copper – these longs have very good prospects. Another part of the S&P 500 upswing explanation were the still fine fresh orders data – while the real economy has noticeably decelerated (and Q1 GDP growth would be underwhelming), solid figures would return in the latter quarters of 2022. That‘s also behind the gold downswing on Friday, which hadn‘t been confirmed by the miners – the very bright future ahead for precious metals is undisputable. And the same goes for crude oil as oil stocks foretell – the fresh long crude trade together with long S&P 500 one, are both solidly in the black already.Precious metals have found a floor, and aren‘t selling off either. In fact, they are looking at a great week ahead, and the same goes for crude oil followed to a lesser degree by copper. Weekend developments on the financial front triggered a rush into cryptos, and the bullish prospects I presented yesterday, are coming to fruition.Let‘s move right into the charts (all courtesy of www.stockcharts.com).S&P 500 and Nasdaq OutlookDaily S&P 500 consolidation as the bulls did shake off the opening setback rather easily – and the same goes for the late session trip approaching 4,310s. Expecting more volatility of the current flavor, and higher prices then.Credit MarketsHYG managed to close above Friday‘s values, and the overall bond market strength bodes well for risk appetite ahead. Let‘s consolidate first, and march higher later.Gold, Silver and MinersPrecious metals are consolidating the high ground gained, miners aren‘t yielding, and silver weakness yesterday actually bodes well for the very short term. Launching pad before the next upleg.Crude OilCrude oil bears have a hard time from keeping black gold below $100. The table is clearly set for further gains – the chart can be hardly more bullish.CopperCopper is a laggard, but will still participate in the upswing. Its current underperformance as highlighten by yesterday‘s downswing, is a bit too odd, i.e. bound to be reversed.Bitcoin and EthereumCrypto bulls were indeed the stronger party, and similarly to gold, it‘s hard to imagine a deep dive coming to frution. I‘m looking for the safety trade to be be ebbing and flowing, now with some crypto participation sprinkled on top.SummaryS&P 500 turnaround goes on, and we‘re undergoing a consolidation that‘s as calm as can be given the recent volatility. Credit markets and the dollar though continue favoring the paper asset bulls now, but their gains would pale in comparison with select commodities such as oil and gold‘s newfound floor. Even agrifoods look to be sold down a bit too hard, and I‘m not looking for them to be languishing next as much as they have been over the last two trading days. Cryptos upswing highlights the present global uncertainties faced – as I have written on Thursday that the world has changed, the same applies for weekend banking events being reflected in the markets yesterday.Thank you for having read today‘s free analysis, which is available in full at my homesite. There, you can subscribe to the free Monica‘s Insider Club, which features real-time trade calls and intraday updates for all the five publications: Stock Trading Signals, Gold Trading Signals, Oil Trading Signals, Copper Trading Signals and Bitcoin Trading Signals.
Will S&P 500 (SPX) Go Up? On Monday It Decreased By 0.24%

Will S&P 500 (SPX) Go Up? On Monday It Decreased By 0.24%

Paul Rejczak Paul Rejczak 01.03.2022 15:31
  The S&P 500 went sideways yesterday, as investors hesitated following the recent rally. Will the short-term uptrend resume? The broad stock market index lost 0.24% on Monday, after gaining 2.2% on Friday and 1.5% on Thursday. The sentiment improved following the Thursday’s rebound, but there’s still a lot of uncertainty following the ongoing Russia-Ukraine conflict news. On Thursday, the broad stock market reached the low of 4,114.65 and it was 704 points or 14.6% below the January 4 record high of 4,818.62. And yesterday it went closer to the 4,400 level. For now, it looks like an upward correction. However, it may also be a more meaningful reversal following a deep 15% correction from the early January record high. The market sharply reversed its short-term downtrend, but will it continue the advance? This morning the S&P 500 index is expected to open 0.2% lower and we may see some more volatility. The nearest important resistance level remains at 4,400 and the next resistance level is at 4,450-4,500. On the other hand, the support level is at 4,300-4,350, among others. The S&P 500 index broke slightly above the downward trend line, as we can see on the daily chart (chart by courtesy of http://stockcharts.com): Futures Contract Remains Above the 4,300 Level Let’s take a look at the hourly chart of the S&P 500 futures contract. On Thursday it sold off after breaking below the 4,200 level. Since Friday it is trading along the 4,300 mark. We are still expecting an upward correction from the current levels (chart by courtesy of http://tradingview.com): Conclusion The S&P 500 index fluctuated following the recent rally yesterday. This morning it is expected to open 0.2% lower and we may see some further volatility. Obviously, the markets will continue to react to the Russia-Ukraine conflict news. Here’s the breakdown: The S&P 500 index bounced from the new low on Thursday after falling almost 15% from the early January record high. We are maintaining our speculative long position. We are expecting an upward correction from the current levels. Like what you’ve read? Subscribe for our daily newsletter today, and you'll get 7 days of FREE access to our premium daily Stock Trading Alerts as well as our other Alerts. Sign up for the free newsletter today! Thank you. Paul Rejczak,Stock Trading StrategistSunshine Profits: Effective Investments through Diligence and Care * * * * * The information above represents analyses and opinions of Paul Rejczak & Sunshine Profits' associates only. As such, it may prove wrong and be subject to change without notice. At the time of writing, we base our opinions and analyses on facts and data sourced from respective essays and their authors. Although formed on top of careful research and reputably accurate sources, Paul Rejczak and his associates cannot guarantee the reported data's accuracy and thoroughness. The opinions published above neither recommend nor offer any securities transaction. Mr. Rejczak is not a Registered Securities Advisor. By reading his reports you fully agree that he will not be held responsible or liable for any decisions you make regarding any information provided in these reports. Investing, trading and speculation in any financial markets may involve high risk of loss. Paul Rejczak, Sunshine Profits' employees, affiliates as well as their family members may have a short or long position in any securities, including those mentioned in any of the reports or essays, and may make additional purchases and/or sales of those securities without notice.
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.
Real Assets, Bonds and New Profits

Real Assets, Bonds and New Profits

Monica Kingsley Monica Kingsley 02.03.2022 15:49
S&P 500 broke through 4,350s in what appears a back and forth consolidation, for now. Credit markets aren‘t leading to the downside – HYG merely corrected within the risk-on sentiment. Stocks and bonds are starting to live with the new realities, and aren‘t undergoing tectonic shifts either way no matter what‘s happening in the real world. Expect to see some chop not of the most volatile flavor next, and for the bulls to step in in the near future.What‘s most interesting about bonds now, is the relenting pressure on the Fed to raise rates – the 2-year yield is moving down noticeably, and that means much practical progress on fighting inflation can‘t be expected. Not that there was much to start with, but the expectations of the hawkish Fed talk turning into action, are being dialed back. The current geopolitical events provide a scene to which attention is fixated while inflation fires keep raging on with renewed vigor (beyond energies) – just as I was calling for a little deceleration in CPI towards the year end bringing it to probably 5-6%, this figure is starting to look too optimistic on the price stability front.Predictable consequence are strong appreciation days across the board in commodities and precious metals – let‘s enjoy the sizable open profits especially in oil and copper. I told you weeks ago that real assets are where to look for in portfolio gains – and even the modest S&P 500 long profits taken off the table yesterday, are taking my portfolio performance chart to fresh highs. I hope you‘ve been enjoying my calls, and are secure in the turmoil around. Way more profits are on the way, and I am not even discussing the lastest agrifoods calls concerning wheat and corn, for all the right reasons (just check out the key exporters overview)…Let‘s move right into the charts (all courtesy of www.stockcharts.com).S&P 500 and Nasdaq OutlookThis time, the S&P 500 bulls didn‘t shake off the selling pressure – the broad retreat though smacks of temporary setback. As in that the direction to the downside hasn‘t been decided yet – I‘m looking for the buyers to dip their toes here.Credit MarketsHYG downswing didn‘t attract too many sellers, and was partially bought, which means that the pendulum is ready to shift (have a go at shifting) the other way now.Gold, Silver and MinersPrecious metals are doing just great, and can be counted on to extend gains. Remember about the rate raising reappreciation that I talked in the long opening part of today‘s analysis – at central banks, that‘s where to look financially.Crude OilCrude oil bears have been taken to the woodshed, except that not at all discreetly. Let‘s keep riding this bull that had brought great profits already, for some more – as I have learned, I was a lone voice calling for more upside before last week‘s events.CopperCopper is a laggard, but still taking part in the upswing. The prior underperformance which I took issue with yesterday, was indeed a bit too odd.Bitcoin and EthereumCrypto bulls are consolidating well reasoned and deserved gains, and the circumstances don‘t favor a steep downswing really. The current tight range is likely to be resolved to the upside in due course.SummaryS&P 500 turnaround is not a rickety-free ride, but goes on at its own shaky pace. Stocks are likely to consolidate today as bonds turn a little more in the risk-on side, which reflects last but not least the looming reassessment of hawkish Fed policies. That‘s where the puck is (and will increasingly be even more so as Wayne Gretzky would say) financially, and I discussed that at length in the opening part of today‘s analysis – have a good look. Precious metals and commodities already know they won‘t be crushed by any new Paul Volcker. Enjoy the profitable rides presented !Thank you for having read today‘s free analysis, which is available in full at my homesite. There, you can subscribe to the free Monica‘s Insider Club, which features real-time trade calls and intraday updates for all the five publications: Stock Trading Signals, Gold Trading Signals, Oil Trading Signals, Copper Trading Signals and Bitcoin Trading Signals.
The Put / Call Ratio - A Technique Used To Gauge Market Extremes

The Put / Call Ratio - A Technique Used To Gauge Market Extremes

Chris Vermeulen Chris Vermeulen 02.03.2022 21:32
Perhaps you’ve heard of the “Put / Call Ratio” (PCR) and been unsure of exactly what it is or when and how to use it.First, a quick review of what Calls and Puts are. Calls are option contracts that increase in value from a RISE in the price of the underlying stock or index. Puts are option contracts that increase in value from a DROP in the price of the underlying stock or index.Let’s jump in and see what’s “under the hood” and how we might use that to better inform our decision-making as traders and investors.What Is the Put / Call Ratio?The PCR is a contrarian indicator based on the idea that market participants tend to get too bearish or bullish shortly before a reversal is about to materialize. When the market is at a point of extreme bearishness, participants tend to buy more Puts than usual. Conversely, when the market is at a point of extreme bullishness, participants tend to buy more Calls than normal. Contrarian logic suggests that most participants tend to be wrong when the market is near inflection points.Mathematically the Put / Call Ratio is simply the number of Puts divided by the number of Calls. A value of 1 would indicate that the same number of Calls and Puts are being purchased. A value greater than 1 indicates more Puts than Calls purchased. It follows that a value below 1 means that more Calls than Puts are purchased.Sign up for my free trading newsletter so you don’t miss the next opportunity!The PCR can be calculated using either open interest or volume of contracts. It can be calculated for individual stocks and for indexes. Most trading and charting platforms have several versions of the PCR available for the major indexes. Indexes generally have charts available, while individual stocks may only have daily numerical value readily available. The PCR is generally more useful as an overall market sentiment indicator for the major indexes like the S&P 500. For most underlying, including major indexes like the S&P 500, the PCR tends to be below 1 much of the time. That makes some sense, as major indexes tend to have a long-term bullish bias. But in times of elevated fear, Put buying tends to be elevated in a rush to buy portfolio “insurance”. Outright bets on a market decline can add to that volume.How Do I Use the pcr?It helps to understand what “normal” behavior is for the number of Calls and Puts purchased for the particular index or stock. For an index like the S&P 500, a PCR of 0.9 or above suggests heavy Put buying and is typically seen as bullish from the contrarian view. For reference, at the height of the dot-com bubble in March 2000, the PCR dropped to as low as 0.39. Lots of calls were being purchased as the market was peaking.Let’s look at some recent examples where we see the Put / Call Ratio at extreme levels. Below we see a chart of the S&P 500 displayed with Heikin Ashi candles overlayed with the PCR (magenta line).In the first instance (circled in magenta), we see a low in the PCR where significantly more Calls than Puts were purchased. When interpreted as a contrarian indicator, that suggests bearishness to come. And indeed, we do see five days of bearishness to follow.We then see a sharp reversal to a relatively high PCR (blue circle), and we do see a bullish reversal that lasted for six days.At the yellow circle, we see a spike up in the PCR accompanied by a sharp increase in the underlying volume. However, we see a few days delay before the bullish reversal materializes in this instance. And the market was rather volatile on those days, as evidenced by the tall candles with long tails.At the green circle, we have a somewhat elevated PCR and another delayed reversal.ConclusionThe PCR is not particularly useful in sideways markets. But it can be useful at market extremes, albeit at times with some delay.Like many indicators, the PCR is far from 100% reliable unto itself. Used in conjunction with volume, volatility (VIX), support/resistance levels, trendlines, moving averages, and other technical indicators, the PCR can give us valuable clues about market sentiment and when a reversal may be in the making.Now That You Know more About the put / call ration, Read On To Learn More About Options TradingEvery day on Options Trading Signals, we do defined risk trades that protect us from black swan events 24/7. Many may think that is what stop losses are for. Well, remember the markets are only open about 1/3 of the hours in a day. Therefore, a stop loss only protects you for 1/3 of each day. Stocks can gap up or down. With options, you are always protected because we do defined risk in a spread. We cover with multiple legs, which are always on once you own.   If you are new to trading or have been trading stock but are interested in options, you can find more information at The Technical Traders – Options Trading Signals Service. The head Options Trading Specialist Brian Benson, who has been trading options for almost 20 years, sends out real live trade alerts on actual trades, such as TSLA and NVDA, with real money. Ready to subscribe, click here:  TheTechnicalTraders.com.Enjoy your day!
Stocks Want to Go Higher Despite Ukraine News

Stocks Want to Go Higher Despite Ukraine News

Finance Press Release Finance Press Release 03.03.2022 15:34
The S&P 500 index topped the 4,400 level yesterday despite the ongoing Russia-Ukraine conflict news. Will the uptrend continue?The broad stock market index gained 1.86% on Wednesday following its Tuesday’s decline of 1.6%, as it fluctuated following last week’s rebound from the new medium-term low of 4,114.65. It was 704 points or 14.6% below the January 4 record high of 4,818.62. So the sentiment improved recently, but there’s still a lot of uncertainty concerning the ongoing Russia-Ukraine conflict news. Yesterday the index went slightly above the 4,400 level and it was the highest since Feb. 17.For now, it looks like an upward correction. However, it may also be a more meaningful reversal following a deep 15% correction from the early January record high. This morning the S&P 500 index is expected to open 0.6% higher following better-than-expected Unemployment Claims number release. However, we may see some more volatility.The nearest important resistance level remains at 4,400 and the next resistance level is at 4,450-4,500. On the other hand, the support level is at 4,300-4,350, among others. The S&P 500 index broke above the downward trend line recently, as we can see on the daily chart (chart by courtesy of http://stockcharts.com):Futures Contract Trades Along the Local HighsLet’s take a look at the hourly chart of the S&P 500 futures contract. On Thursday it sold off after breaking below the 4,200 level. And since Friday it was trading along the 4,300 mark. This morning it is trading along the local highs.We are maintaining our profitable long position, as we are still expecting an upward correction from the current levels (chart by courtesy of http://tradingview.com):ConclusionThe S&P 500 index will likely open 0.6% higher this morning. We may see more short-term fluctuations and obviously, the markets will continue to react to the Russia-Ukraine conflict news.Here’s the breakdown:The S&P 500 index bounced from the new low on Thursday after falling almost 15% from the early January record high.We are maintaining our profitable long position.We are expecting an upward correction from the current levels.Like what you’ve read? Subscribe for our daily newsletter today, and you'll get 7 days of FREE access to our premium daily Stock Trading Alerts as well as our other Alerts. Sign up for the free newsletter today!Thank you.Paul Rejczak,Stock Trading StrategistSunshine Profits: Effective Investments through Diligence and Care* * * * *The information above represents analyses and opinions of Paul Rejczak & Sunshine Profits' associates only. As such, it may prove wrong and be subject to change without notice. At the time of writing, we base our opinions and analyses on facts and data sourced from respective essays and their authors. Although formed on top of careful research and reputably accurate sources, Paul Rejczak and his associates cannot guarantee the reported data's accuracy and thoroughness. The opinions published above neither recommend nor offer any securities transaction. Mr. Rejczak is not a Registered Securities Advisor. By reading his reports you fully agree that he will not be held responsible or liable for any decisions you make regarding any information provided in these reports. Investing, trading and speculation in any financial markets may involve high risk of loss. Paul Rejczak, Sunshine Profits' employees, affiliates as well as their family members may have a short or long position in any securities, including those mentioned in any of the reports or essays, and may make additional purchases and/or sales of those securities without notice.
Surging Commodities

Surging Commodities

Monica Kingsley Monica Kingsley 03.03.2022 15:55
S&P 500 returned above 4,350s as credit markets indeed weren‘t leading to the downside. Consolidation now followed by more upside, that‘s the most likely scenario next. Yesterday‘s risk-on turn was reflected also in value rising more than tech. Anyway, the Nasdaq upswing is a good omen for the bulls in light of the TLT downswing – Treasuries are bucking the Powell newfound rate raising hesitation – inflation ambiguity is back. The yield curve is still compressing, and the pressure on the Fed to act, goes on – looking at where real asset prices are now, it had been indeed unreasonable to expect inflation to slow down meaningfully. Told you so – as I have written yesterday:(…) What‘s most interesting about bonds now, is the relenting pressure on the Fed to raise rates – the 2-year yield is moving down noticeably, and that means much practical progress on fighting inflation can‘t be expected. Not that there was much to start with, but the expectations of the hawkish Fed talk turning into action, are being dialed back. The current geopolitical events provide a scene to which attention is fixated while inflation fires keep raging on with renewed vigor (beyond energies) – just as I was calling for a little deceleration in CPI towards the year end bringing it to probably 5-6%, this figure is starting to look too optimistic on the price stability front.Predictable consequence are strong appreciation days across the board in commodities and precious metals. – let‘s enjoy the sizable open profits especially in oil and copper. I told you weeks ago that real assets are where to look for in portfolio gains – and even the modest S&P 500 long profits taken off the table yesterday, are taking my portfolio performance chart to fresh highs. Crude oil keeps rising as if there‘s no tomorrow, copper is joining in, agrifoods are on fire – and precious metals continue being very well bid. Cryptos aren‘t selling off either. Anyway, this is the time of real assets...Let‘s move right into the charts (all courtesy of www.stockcharts.com).S&P 500 and Nasdaq OutlookS&P 500 bulls are back, and I‘m looking for consolidation around these levels. The very short-term direction isn‘t totally clear, but appears favoring the bulls unless corporate junk bonds crater. Not too likely.Credit MarketsHYG performance shows rising risk appetite, but the waning volume is a sign of caution for today. Unless LQD and TLT rise as well, HYG looks short-term stretched, therefore I‘m looking for consolidation today.Gold, Silver and MinersPrecious metals are doing great, and they merely corrected yesterday – both gold and silver can be counted on to extend gains if you look at the miners‘ message. As the prospects of vigorous Fed action gets dialed back, they stand to benefit even more.Crude OilCrude oil surge is both justified and unprecedented – and oil stocks aren‘t weakening. It looks like we would consolidate in the volatile range around $110 next.CopperCopper is joining in the upswing increasingly more, and the buyer‘s return before the close looks sufficient to maintain upside momentum that had been questioned earlier in the day. The break higher out of the long consolidation, is approaching.Bitcoin and EthereumCrypto buyers are consolidating well deserved gains, and the bullish flag is being formed. The sellers are nowhere to be seen at the moment – I‘m still looking for the current tight range to be resolved to the upside next.SummaryS&P 500 has reached a short-term resistance, which would be overcome only should bonds give their blessing. It‘s likely these would confirm the risk-on turn, but HYG looks a bit too extended – its consolidation of high ground gained, could slow the stock bulls somewhat. The risk appetite and „rush to safety“ in commodities and precious metals goes on, more or less squeezing select assets such as crude oil. The CRB Index upswing is though of the orderly and broad advance flavor, and does reflect the prospects of inflation remaining elevated for longer than foreseen by the mainstream.Thank you for having read today‘s free analysis, which is available in full at my homesite. There, you can subscribe to the free Monica‘s Insider Club, which features real-time trade calls and intraday updates for all the five publications: Stock Trading Signals, Gold Trading Signals, Oil Trading Signals, Copper Trading Signals and Bitcoin Trading Signals.
S&P 500 At Tipping Point To Start A Bear Market And What You Need To See

S&P 500 At Tipping Point To Start A Bear Market And What You Need To See

Chris Vermeulen Chris Vermeulen 03.03.2022 21:38
Is a bear market on the way? My research suggests the downward sloping trend line (LIGHT ORANGE in the Daily/Weekly SPY chart below) may continue to act as solid resistance – possibly prompting a further breakdown in the markets for US major indexes.As we've seen recently, news and other unexpected events prompt very large price volatility events in the US major indexes. For example, the VIX recently rose above 30 again, which shows volatility levels are currently 3x higher than normal levels.Increased Volatility & The Start Of An Excess Phase Peak Should Be A Clear WarningThis increased volatility in the markets, coupled with the increased fear of the US Fed and the global unknowns (Ukraine, China, Debt Levels, and others), may be just enough pressure to crush any upside price trends over the next few months. Technically, my research suggests the $445 to $450 level is critical resistance. The SPY must climb above these levels to have any chance of moving higher.Sign up for my free trading newsletter so you don’t miss the next opportunity! Unless the US markets find some new support and attempt to rally back towards recent highs, an “Excess Phase Peak” pattern will likely continue to unfold throughout 2022. This unique price pattern appears to have already reached a Phase 2 or Phase 3 setup. Please take a look at this Weekly GE example of an Excess Phase Peak pattern and how it transitions through Phase 1 through Phase 4 before entering an extended Bearish price trend.Read this research article about Excess Phase Peaks: HOW TO SPOT THEN END OF AN EXCESS PHASE - PART 2SPY May Already Be In A Phase 4 Excess Peak PhaseThis Daily SPY chart highlights my analysis, showing the major downward sloping trend line, the Middle Resistance Zone, and the lower Support Zone. Combined, these are acting as a “Wedge” for price over the past few weeks – tightening into an Apex near $435~440.If the US major indexes attempt to break this downward price trend, then the price must attempt to move solidly above this downward sloping price channel and try to rally back into the Resistance Zone (near $445~$450). Unless that happens, the price will likely transition into a deeper downward price move, attempting to break below recent lows, near $410, and possibly quickly moving down to the $360 level.SPY Weekly Chart Shows Consolidation Near $435 – Possibly Starting A Phase 4 Excess PeakTraders should stay keenly aware of the risks associated with the broad US and global market decline as the Ukraine war, and other unknowns continue to elevate fear and concerns related to the global economy. In my opinion, with the current excess global debt levels, extended speculative market bubbles, and the continued commodity price rally, we may be starting to transition away from an extended growth phase and into a deeper depreciation cycle phase.My research suggests we entered a new Depreciation cycle phase in late 2019 and are already more than 25 months into a potential 9.5-year global Depreciation cycle. What comes next should not surprise anyone.Read this article about Depreciation Cycle Phases: HOW TO INTERPRET & PROFIT FROM THE RISKS OF A DEPRECIATION CYCLE Traders should stay keenly focused on market risks and weaknesses. I expected the conflict in Ukraine to have been priced into the US markets over the past 7+ days. However, I believe the markets were unprepared for this scale or invasion and will attempt to settle fair stock price valuation levels as the conflict continues. This is not the same US/Global market Bullish trend we've become used to trading over the past 5+ years. Looking Forward - preparing for a possible Bear marketMarket dynamics and trends are changing from what we have experienced over the past 40 years for stocks and bonds. The 60/40 portfolio is costing you money now. Traders need an edge to stay ahead of these markets trends and to protect and profit from big trends.The only way to navigate the financial markets safely, no matter the direction, is through technical analysis. By following assets and money flows, we identify trend changes and move our capital into whatever index, sector, industry, bond, commodity, country, and even currency ETF. By following the money, you become part of new emerging trends and can profit during weak stock or bond conditions.Want Trading Strategies that Will Help You To Navigate Current Market Trends?Learn how I use specific tools to help me understand price cycles, set-ups, and price target levels in various sectors to identify strategic entry and exit points for trades. Over the next 12 to 24+ months, I expect very large price swings in the US stock market and other asset classes across the globe. I believe the markets are starting to transition away from the continued central bank support rally phase and may start a revaluation phase as global traders attempt to identify the next big trends. Precious Metals will likely start to act as a proper hedge as caution and concern start to drive traders/investors into Metals.I invite you to learn more about how my three Technical Trading Strategies can help you protect and grow your wealth in any type of market condition by clicking the following link:   www.TheTechnicalTraders.com 
Intraday Market Analysis – USD Consolidates Gains - 04.03.2022

Intraday Market Analysis – USD Consolidates Gains - 04.03.2022

John Benjamin John Benjamin 04.03.2022 09:19
USDJPY tests supply areaThe Japanese yen stalled after an increase in January’s unemployment rate.The pair’s rally above the supply zone around 115.80 has put the US dollar back on track. The general direction remains up despite its choppiness. 114.40 has proved to be solid support and kept the bulls in the game.A close above 115.80 would extend the rally to the double top (116.30), a major resistance on the daily chart. Meanwhile, an overbought RSI caused a limited pullback, with 115.10 as fresh support.NZDUSD breaks resistanceThe New Zealand dollar recovers amid commodity price rallies.After the pair found support near last September’s lows (0.6530), a bullish MA cross on the daily chart suggests that sentiment could be turning around. A bullish breakout above the recent high (0.6810) would further boost buyers’ confidence and lift offers to January’s high at 0.6890.On the downside, 0.6730 is the first support if buyers struggle to gather more interest. 0.6675 would be a second layer to keep the current rebound intact.UK 100 lacks supportThe FTSE 100 slipped after the second round of talks between Russia and Ukraine ended without much result.The index met stiff selling pressure at 7560 then fell below the critical floor at 7170. Increasingly bearish sentiment triggered a new round of sell-off to the psychological level of 7000 from last November.A deeper correction would lead to a retest of 6850, dampening the market mood in the medium-term. On the upside, the bulls must clear 7300 and 7450 to reclaim control of the direction.
Top 3 Price Prediction Bitcoin, Ethereum, Ripple: Sentiment turns as the U.S. looks to regulate cryptos

Top 3 Price Prediction Bitcoin, Ethereum, Ripple: Sentiment turns as the U.S. looks to regulate cryptos

FXStreet News FXStreet News 03.03.2022 16:07
Bitcoin price sees its gains being pared back a bit after more talks on regulatory crackdown out of U.S. on cryptocurrencies. Ethereum price slips further away from $3,018 after Powell's speech before Congress talked about regulating cryptocurrencies. XRP price sideways, awaiting a catalyst to go either way. Cryptocurrencies are facing some headwinds – whilst they have enjoyed more inflows of late as both Ukrainian and Russian inhabitants reverted to cryptocurrencies as an alternative means of payment to avoid sanctions – there are signs this loophole will soon be closed. During Biden's State of the Union speech the president asked for a crackdown on cryptocurrencies to close the escape route for wealthy Russians. FED chair Powell added fuel to the fire by saying that he would welcome further regulation to monitor and control cryptocurrencies better. The result is that these comments have triggered some nervousness in all significant cryptocurrency pairs. Bitcoin bulls are rejected at $44,088 with the risk of sliding back to $42,000 Bitcoin (BTC) price saw a full paring back of the losses accumulated during the Russian invasion as cryptocurrencies saw renewed cash inflow from both Russians and Ukrainians looking for alternative means of payment after both central banks had put in cash withdrawal restrictions. As Bitcoin looked to be poised for another leg higher, both Biden and Powell created some headwinds by urging for more regulatory crackdown, as it is emerging that cryptocurrencies are undermining sanctions on Russia. With this renewed negative attention towards cryptocurrencies, investors are being quick to book profits and, in the process, are pushing BTC price action to the downside. BTC price saw an initial rejection at $45,261, a level which coincides with the low of December 17, and as such triggered some profit-taking. As profit-taking continues bulls are faced with another rejection at $44,088, a level that goes back to August 06. Below that, the search for support finds nothing until $41,756 or the psychological $42,000 level near the baseline of a bearish triangle we had marked up earlier. BTC/USD daily chart As more talks are underway, a breakthrough could still happen at any moment. If that happened, it would mean that bears would fail in their attempt to squeeze out bulls and get stopped out themselves once the price pierced through $44,088 to the upside. That move would even accelerate after shooting through $45,261, with a quick rally to $48,760 and, from there, positioning Bitcoin to pop back above $50,000 next week. Ethereum bulls are defending the 55-day SMA, but support is wearing thin Ethereum (ETH) price takes another step back today after more negative connotations from FED Chair Powell in the house hearing before Congress. Next to committing to more rate hikes, Powell also drilled down on cryptocurrencies and called them a risk that needs to be prioritised with regulations. That puts greater regulation for cryptocurrencies at the top of the congressional agenda – after Ukraine, and inland inflation had pushed that bullet point further down the list. For the moment, ETH sees bulls defending the 55-day Simple Moving Average (SMA) at $2,880. Although it looks good to hold for now, in the past, the 55-day SMA has not built a solid reputation of being well respected. So expect a possible breach once the US session kicks in and Powell makes more negative comments on cryptocurrencies in his second day of congressional hearings, which will likely push ETH price below the 55-day SMA at $2,880, through the monthly pivot at $2,835, and down to a possible endpoint at around $2,695. ETH/USD daily chart As the situation in Russia further deteriorates with more sanctions on the shelf, residents will be forced even more to flee into cryptocurrencies to avoid any repercussions from the financial sanctions imposed. That would mean broad flux inflow throughout the coming days, with ETH price action popping above $3,018, and in the process breaking the double top of rejection from Tuesday and Wednesday. To the upside, that could see $3,391 for a test as the inflow will outweigh any bearish attempts from short sellers. XRP price testing monthly pivot to the downside as dollar strength weighs Ripple's (XRP) price is under pressure to the downside as bears are putting in their effort to break the new monthly pivot at $0.76. Bears are getting help from the other side of the asset pair by the dollar’s strength weighing on price action for a second consecutive day. With Ukraine's current tension and possible retaliation from Russia against the West, safe havens are broadly bid with the Greenback on the front foot and thus outpacing XRP’s valuation, resulting in a move lower. Expect XRP price to see an accelerated move once the monthly pivot at $0.76 gives way. With not much in the way, the road is open to drop to $0.62, with $0.70 and $0.68 as possible breaking off points where bears could see some profit-taking and attempts by bulls to halt the downturn. But the trifecta of the negative comments from both Biden and Powell joined with the safe-haven bid is too big of a force to withstand, making $0.62 almost inevitable in the coming hours or trading days. XRP/USD daily chart The only event that could turn this around is if a catalyst were to remove the safe-haven bid. That could come with a resolution of the current tension in Ukraine or surrender of the Russian army of some sort. In such an outcome, the safe-haven bid would evaporate, followed by a massive risk-on flow which would see XRP pop above $0.78 and rally to $0.88, taking out $0.84 along the way to the upside.
Fighting Continues: Good for Ukraine... And Gold

Fighting Continues: Good for Ukraine... And Gold

Arkadiusz Sieron Arkadiusz Sieron 03.03.2022 16:10
  Kherson fell, but Ukrainians are still fighting fiercely. In the face of war, gold also shows courage – to move steadily up. The battle of Ukraine is still going on. Russian troops took control of Kherson, a city of about 300,000 in the south of Ukraine, but other main cities haven’t been captured yet. Ukrainian soldiers even managed to conduct some counter-offensive actions near the country’s capital. There is a large Russian column advancing on Kyiv, but its progress has been very slow over the last few days due to the staunch Ukrainian resistance and Russian forces’ problems with equipment, tactics, and supplies, including fuel and food. David is still bravely fighting Goliath! Of course, Russian forces still have an advantage and are progressing. However, the pace of the invasion is much slower than Vladimir Putin and his generals expected. The Ukrainians’ defense is much fiercer, while Russia’s losses are more severe. The Russian defense ministry admitted that 498 Russian soldiers have already been killed and 1,597 wounded, but the real number is probably much higher. Even if Russia takes control of other cities, it’s unclear whether it will be able to hold them. What’s more, although the West didn’t engage directly in the war, the response of the West was much stronger than Putin could probably have expected. The US and its allies supplied Ukraine with weapons and imposed severe sanctions against Putin and the Russian governing elite, as well as on Russia’s economy and financial system. For instance, the West decided to exclude several Russian banks from SWIFT and also to freeze most of Russian central bank’s foreign currency reserve assets. Additionally, many international companies are moving out of Russia or exporting their products to this country, adding to the economic pressure. The ruble plummeted, as the chart below shows.   Implications for Gold What does the ongoing war in Ukraine mean for the precious metals market? Well, the continuous heroic stance of President Volodymyr Zelenskyy and Ukrainian defenders is not only heating up the hearts of all freedom-lovers, but also gold prices. As the chart below shows, the price of the yellow metal has soared to about $1,930, the highest level since January 2021. As a reminder, until recently, gold was unable to surpass $1,800. Thus, the recent rally is noteworthy. The war is clearly boosting the safe-haven demand for gold. Another bullish driver is rising inflation. According to early estimates, euro area annual inflation soared from 5.1% in January to 5.8%, and the war is likely to add to the inflationary pressure due to rising energy prices. Both Brent and WTI oil prices have surged above $110 per barrel. Last but not least, I have to mention Powell’s appearance before Congress. In the prepared testimony, he said that the Fed would hike the federal funds rate this month, despite the war in Ukraine: Our monetary policy has been adapting to the evolving economic environment, and it will continue to do so. We have phased out our net asset purchases. With inflation well above 2 percent and a strong labor market, we expect it will be appropriate to raise the target range for the federal funds rate at our meeting later this month. This sounds rather hawkish and, thus, bearish for gold. However, Powell acknowledged that the implications of Russia’s invasion of Ukraine for the U.S. economy are highly uncertain. The near-term effects on the U.S. economy of the invasion of Ukraine, the ongoing war, the sanctions, and of events to come, remain highly uncertain. Making appropriate monetary policy in this environment requires a recognition that the economy evolves in unexpected ways. We will need to be nimble in responding to incoming data and the evolving outlook. Hence, the war in Eastern Europe could make the Fed more dovish than expected at a time when inflation could be higher than forecasted before the war outbreak. Such an environment should be bullish for the gold market. However, there is one important caveat. The detailed analysis of gold prices shows that they declined around the first and second rounds of negotiations between Russian and Ukrainian diplomats in anticipation of the end of the conflict. However, when it became apparent that the talks ended in a stalemate, gold resumed its upward move. The implication should be clear: as long as the war continues, the yellow metal may shine, but when the ceasefire or truce is agreed, we could see a correction in the gold market. It doesn’t have to be a great plunge, but a large part of the geopolitical premium will disappear. Having said that, the war may take a while. I pray that I’m wrong, but the slow progress of the Russian invasion could prompt Vladimir Putin to adopt a “whatever it takes” stance. According to some experts, he is already more emotional than usual, and when faced with the prospects of failure, he could become even more brutal or irrational. We already see that Russian troops, unable to break the Ukrainian defense in open combat, siege the cities and bomb civilians. Hence, the continuation or escalation of Russia’s military actions could provide support for gold prices. If you enjoyed today’s free gold report, we invite you to check out our premium services. We provide much more detailed fundamental analyses of the gold market in our monthly Gold Market Overview reports and we provide daily Gold & Silver Trading Alerts with clear buy and sell signals. In order to enjoy our gold analyses in their full scope, we invite you to subscribe today. If you’re not ready to subscribe yet though and are not on our gold mailing list yet, we urge you to sign up. It’s free and if you don’t like it, you can easily unsubscribe. Sign up today! Arkadiusz Sieron, PhDSunshine Profits: Effective Investment through Diligence & Care
Back to Risk-Off

Back to Risk-Off

Monica Kingsley Monica Kingsley 04.03.2022 15:50
S&P 500 consolidation isn‘t turning out well for the bulls as 4,300 can be easily broken again if I look at credit markets‘ posture. Treasuries just aren‘t sliding no matter the Fed‘s ambiguity on inflation, let alone markets sniffing out rate hike ideas getting revisited. Still, tech gave up opening gains, and closed on a weak note while commodities and precious metals maintained high ground, and the dollar continued rising.The odds are stacked against paper market bulls, and as I had been telling you weeks ago already, this is the time of real assets outperformance. In this sense, miners‘ leadership is a great confirmation of more strength to come, of inflation to continue… Everyone‘s free to make their own opinion after the State of the Union address.On the bright side, the flood of recently closed series of trades spanning stocks, precious metals, oil and copper, has resulted in sharp equity curve gains – and more good calls are in the making, naturally:Let‘s move right into the charts (all courtesy of www.stockcharts.com).S&P 500 and Nasdaq OutlookS&P 500 is facing a setback, which could turn a lot worse if the sentiment turn continues. Odds are it would, and we would see some selling going into the weekend.Credit MarketsHYG refused to extend opening gains, and the message is clear, and also a reaction to the Fed‘s pronouncements. Treasuries though are more careful in the tightening prospects assessment – risk-off in bonds and the dollar continues.Gold, Silver and MinersPrecious metals are doing great, and are likely to continue rising no matter what the dollar does. There is no good reason for a selloff if you look around objectively. Miners are confirming, the upleg is underway.Crude OilCrude oil upswing isn‘t yet done, it would be premature to say so. It seems though that the time of volatile chop and new base building can continue – oil stocks are the barometer.CopperCopper outperformance leaves me a bit cautious – the advance is likely to slow down and get challenged next. It was a good run, and the red metal isn‘t at all done in the medium-term.Bitcoin and EthereumCrypto downswing is reaching a bit farther than I would have been comfortable with. The buyers are welcome to step in on good volume, but I‘m not expecting miracles today or through the weekend.SummaryS&P 500 bulls are losing the initiative, and neither credit markets nor the dollar favor a turnaround today. Treasuries rising in spite of the Fed‘s messaging are also casting a clear verdict, and the yield curve compression continues. The risk-off sentiment that is getting an intermezzo here and there, is likely to rule unless the Fed makes a profound turn before the Mar FOMC. And given the inflation dynamics with all the consequences beyond economics, that‘s unlikely to happen. Markets are thus likely to continue fearing the confluence of events till...Thank you for having read today‘s free analysis, which is available in full at my homesite. There, you can subscribe to the free Monica‘s Insider Club, which features real-time trade calls and intraday updates for all the five publications: Stock Trading Signals, Gold Trading Signals, Oil Trading Signals, Copper Trading Signals and Bitcoin Trading Signals.
Fed’s Tightening Cycle: Bullish or Bearish for Gold?

Fed’s Tightening Cycle: Bullish or Bearish for Gold?

Finance Press Release Finance Press Release 04.03.2022 16:14
This month, the Fed is expected to hike interest rates. Contrary to popular belief, the tightening doesn't have to be adverse for gold. What does history show?March 2022 – the Fed is supposed to end its quantitative easing and hike the federal funds rate for the first time during recovery from a pandemic crisis . After the liftoff, the Fed will probably also start reducing the size of its mammoth balance sheet and raise interest rates a few more times. Thus, the tightening of monetary policy is slowly becoming a reality. The golden question is: how will the yellow metal behave under these conditions?Let’s look into the past. The last tightening cycle of 2015-2019 was rather positive for gold prices. The yellow metal rallied in this period from $1,068 to $1,320 (I refer here to monthly averages), gaining about 24%, as the chart below shows.What’s really important is that gold bottomed out in December 2015, the month of the liftoff. Hence, if we see a replay of this episode, gold should detach from $1,800 and go north, into the heavenly land of bulls. However, in December 2015, real interest rates peaked, while in January 2016, the US dollar found its local top. These factors helped to catapult gold prices a few years ago, but they don’t have to reappear this time.Let’s dig a bit deeper. The earlier tightening cycle occurred between 2004 and 2006, and it was also a great time for gold, despite the fact that the Fed raised interest rates by more than 400 basis points, something unthinkable today. As the chart below shows, the price of the yellow metal (monthly average) soared from $392 to $634, or more than 60%. Just as today, inflation was rising back then, but it was also a time of great weakness in the greenback, a factor that is currently absent.Let’s move even further back into the past. The Fed also raised the federal funds rate in the 1994-1995 and 1999-2000 periods. The chart below shows that these cases were rather neutral for gold prices. In the former, gold was traded sideways, while in the latter, it plunged, rallied, and returned to a decline. Importantly, just as in 2015, the yellow metal bottomed out soon after the liftoff in early 1999.In the 1980s, there were two major tightening cycles – both clearly negative for the yellow metal. In 1983-1984, the price of gold plunged 29% from $491 to $348, despite rising inflation, while in 1988-1989, it dropped another 12%, as you can see in the chart below.Finally, we have traveled back in time to the Great Stagflation period! In the 1970s, the Fed’s tightening cycles were generally positive for gold, as the chart below shows. In the period from 1972 to 1974, the average monthly price of the yellow metal soared from $48 to $172, or 257%. The tightening of 1977-1980 was an even better episode for gold. Its price skyrocketed from $132 to $675, or 411%. However, monetary tightening in 1980-1981 proved not very favorable , with the yellow metal plunging then to $409.What are the implications of our historical analysis for the gold market in 2022? First, the Fed’s tightening cycle doesn’t have to be bad for gold. In this report, I’ve examined nine tightening cycles – of which four were bullish, two were neutral, and three were bearish for the gold market. Second, all the negative cases occurred in the 1980s, while the two most recent cycles from the 21st century were positive for gold prices. It bodes well for the 2022 tightening cycle.Third, the key is, as always, the broader macroeconomic context – namely, what is happening with the US dollar, inflation, and real interest rates. For example, in the 1970s, the Fed was hiking rates amid soaring inflation. However, in March 1980, the CPI annul rate peaked, and a long era of disinflation started. This is why tightening cycles were generally positive in the 1970s, and negative in the 1980s.Hence, it seems on the surface that the current tightening should be bullish for gold, as it is accompanied by high inflation. However, inflation is expected to peak this year. If this happens, real interest rates could increase even further, creating downward pressure on gold prices. Please remember that the real federal funds rate is at a record low level. If inflation peaks, gold bulls’ only hope will be either a bearish trend in the US dollar (amid global recovery and ECB’s monetary policy tightening) or a dovish shift in market expectations about the path of the interest rates, given that the Fed’s tightening cycle has historically been followed by an economic slowdown or recession.Thank you for reading today’s free analysis. We hope you enjoyed it. If so, we would like to invite you to sign up for our free gold newsletter. Once you sign up, you’ll also get 7-day no-obligation trial of all our premium gold services, including our Gold & Silver Trading Alerts. Sign up today!Arkadiusz Sieron, PhDSunshine Profits: Effective Investment through Diligence & Care.
Markets Situation In Times Of Russia Vs Ukraine, ECB Interest Rate Decision, EU Leaders Summits And US Core CPI Are Events To Watch Next Week

Markets Situation In Times Of Russia Vs Ukraine, ECB Interest Rate Decision, EU Leaders Summits And US Core CPI Are Events To Watch Next Week

Mikołaj Marcinowski Mikołaj Marcinowski 04.03.2022 16:27
Monday seems to be a calm beginning of the week (despite the Russia-Ukraine conflict) as there’s no any major event planned. The rest of the week 7/03-11/03 will surely arouse more interest. What to follow? Have a look at Economic Calendar by FXMAG.COM Tuesday – Japan and Poland The first important indicator of the week is the Japanese GDP (QoQ) (Q4) which is released very lately on Tuesday at 11:40 p.m. The previous value – 1.3% As tensions rise, the country which lies closely to Ukraine has its currency (PLN) weakened, so the Interest Rate Decision of National Bank released on Tuesday as well is worth a look as well. Wednesday - USA On Wednesday we focus on USA, where JOLTs Job Openings (3 p.m.) and US Crude Oil Inventories (3:30 p.m.) are released. Thursday – European Union and USA Thursday is full of Europe-targeted events. According to Investing.com, at 10 a.m., EU Leaders meet at the Summit and shortly after midday ECB releases its Marginal Lending Facility its Interest Rate Decision. At 1.30 p.m. there is a Press Conference planned. The same time ECB speaks to media, US Bureau Of Labor Statistics releases Core CPI (MoM) of February which previously hit 0.6% Friday – UK, EU And Canada Who’s going to wake up early on Friday? The answer is UK Office of National Statistics which releases GDP (MoM) and Manufacturing Production (MoM) at 7 a.m. EU Leaders will rest a little longer as they meet at the another Summit at 10 a.m. According to Investing.com the latest “triple-star” event of 11/03 is the release of Employment Change indicator in Canada, which hit -200.1K in the month before. Data: Investing.com Time: GMT
Bitcoin (BTC) To Hit $100k In A Few Years' Time?

Bitcoin (BTC) To Hit $100k In A Few Years' Time?

Alex Kuptsikevich Alex Kuptsikevich 07.03.2022 09:05
With a sharp decline over the weekend, Bitcoin wiped out the initial gains, gave away the positions to bears after the third straight week of gains. On Saturday and Sunday, there were drawdowns to $34K on the low-liquid market. So the rate of the first cryptocurrency fell to $38K with a 3.8% loss. However, over the past 24 hours, BTC has reached $39,000 while Ethereum has lost 4.5%. Other leading altcoins from the top ten decline from 2% (XRP) to 6.8% (LUNA). According to CoinMarketCap, the total capitalization of the crypto market decreased by 3.8%, to $1.71 trillion. The bitcoin dominance index sank from 42.9% on Friday to 42.3% due to the sale of bitcoin over the weekend. The cryptocurrency fear and greed index is at 23 now, remaining in a state of "extreme fear". Looking back, in the middle of the week, the index had a moment in the neutral position. The FxPro Analyst team mentioned that the sales were triggered by reports that the BTC.com pool banned the registration of Russian users. Cryptocurrencies do not remain aloof from politics, and they are weakly confirming the role of an alternative to the banking system now, supporting EU and US sanctions against Russia, and showing their own initiative. The news appeared that Switzerland would freeze the crypto assets of the Russians who fall under the sanctions. In the second half of the week, bitcoin lost almost all the growth against the backdrop of a decline in stock indices. Although, last week started on a positive wave: BTC added almost $8,000 (21%) since previous Monday, but couldn't overcome the strong resistance of mid-February highs at around $45,000 and the 100-day moving average. Speaking about the prospects, pressure on all risky assets will continue to be exerted by the situation around Ukraine, where hostilities have been taking place for two weeks. Worth mentioning that the world-famous investor and writer Robert Kiyosaki said that the US is “destroying the dollar” and called for investing in gold and bitcoin. At the same time, the founder of the investment company SkyBridge Capital (Anthony Scaramucci) is confident that bitcoin will reach $100,000 by 2024. At the moment, he has invested about $1 billion in BTC. Plis, a group of American senators is developing a bill that opens access to the crypto market for institutional investors. And one more news to consider: the city of Lugano in Switzerland has recognized bitcoin and the leading stablecoin Tether (USDT) as legal tender.
Is It Too Late To Begin Adapting To Higher Volatility In The Market?

Is It Too Late To Begin Adapting To Higher Volatility In The Market?

Chris Vermeulen Chris Vermeulen 07.03.2022 22:18
Now is the time for traders to adapt to higher volatility and rapidly changing market conditions. One of the best ways to do this is to monitor different asset classes and track which investments are gaining and losing money flow. Knowing what the Best Asset Now is (BAN) is critical for consistent growth no matter the market condition.With that said, buyers (countries, investors, and traders) are panicking as the commodity Wheat, for example, gained more than 40% last week.‘Panic Commodity Buying’ in Wheat – Weekly ChartAccording to the US Dept. of Agriculture, China will hold 69% of the world’s corn reserves, 60% of rice and 51% of wheat by mid-2022.Commodity markets surged to their largest gains in years as Ukrainian ports were closed and sanctions against Russia sent buyers scrambling for replacement supplies. Global commodities, commodity funds, and commodity ETFs are attracting huge capital inflows as investors seek to cash in on the rally in oil, metals, and grains.How does the Russia – Ukraine war affect global food supplies?The conflict between major commodity producers Russia and Ukraine is causing countries that rely heavily on commodity imports to feed their citizens to enter into panic buying. The breadbaskets of Ukraine and Russia account for more than 25% of the global wheat trade and nearly 20% of the global corn trade.Last week, it was reported that many countries have dangerously low grain supplies. Nader Saad, an Egypt Cabinet spokesman, has raised the alarm that currently, Egypt has only nine months’ worth of wheat in silos. The supply includes five months of strategic reserves and four months of domestic production to cover the bread needs of 102 million Egyptians. Additionally, Avigdor Lieberman, Israel’s economic minister, said on Thursday (3/3/22) that his country should keep “a low profile” regarding the conflict in eastern Europe, given that Israel imports 50 percent of its wheat from Russia and 30 percent from Ukraine.Sign up for my free trading newsletter so you don’t miss the next opportunity!The longer-term potential for much higher grain prices exists, but it’s worth noting that Friday’s close of nearly $12.00 a bushel for wheat is not that far away from the all-time record high of $13.30, recorded 14-years ago. According to Trading Economics, wheat has gone up 75.08% year-to-date while other commodity markets like Oats are up a whopping 85.13%, Coffee 74.68%, and Corn 34.07%.How are other markets reacting to these global events?Year-to-date comparison returns as of 3/4/2022:-9.18% S&P 500 (index), -7.49% DJI (index), -15.21% Nasdaq (index), +37.44% Exxon Mobile (oil), +20.08% Freeport McMoran (copper & gold), -20.68% Tesla (alternative energy), -24.49% Microstrategy (bitcoin play), -40.51% Meta-Facebook (social media)As stock holdings and 401k’s are shrinking it may be time to re-evaluate your portfolio. There are ETFs available that can give you exposure to commodities, energy, and metals.Here is an example of a few of these ETFs:+53.81% WEAT Teucrium Wheat Fund+41.79% GSG iShares S&P TSCI Commodity -Indexed Trust+104.40 UCO ProShares Ultra Bloomberg Crude Oil+59.32% PALL Aberdeen Standard Physical Palladium SharesHow is the global investor reacting to rocketing commodity prices and increasing market volatility?We can track global money flow by monitoring the following 1-month currency graph (www.finviz.com). The Australian Dollar is up +4.25%, the New Zealand Dollar +3.72%, and the Canadian Dollar +0.30% vs. the US Dollar due to the rising commodity prices like metals and energy. These country currencies are known as commodity currencies.The Switzerland Franc +0.96%, the Japanese Yen +0.35%, and the US Dollar +0.00% are all benefiting from global capital seeking a safe haven. As volatility continues to spike, these country currencies will experience more inflows as capital comes out of depreciating assets and seeks stability.We also notice that capital outflow is occurring from the European Union-Eurodollar -4.55% and the British Pound -2.22% due to their close proximity (risk) to the Russia - Ukraine war.www.finviz.comGlobal central banks will need to begin raising their interest rates to combat high inflation!Due to the rapid acceleration of inflation, the US Federal Reserve may have been looking to raise interest rates by 50 basis points at its policy meeting two weeks from now. However, given Russia’s invasion of Ukraine, the FED may become more cautious and consider raising interest rates by only 25 basis points on March 15-16.What strategies can help you navigate current market trends?Learn how I use specific tools to help me understand price cycles, set-ups, and price target levels in various sectors to identify strategic entry and exit points for trades. Over the next 12 to 24+ months, I expect very large price swings in the US stock market and other asset classes across the globe. I believe the markets have begun to transition away from the continued central bank support rally phase and have started a revaluation phase as global traders attempt to identify the next big trends. Precious Metals are starting to act as a proper hedge as caution and concern start to drive traders/investors into Metals and other safe-havens.Now is the time to keep your eye on the ball!I invite you to learn more about how my three Technical Trading Strategies can help you protect and grow your wealth in any type of market condition by clicking on the following link: www.TheTechnicalTraders.com
Crude Oil Climbs High. Is It Enough to Enjoy a Better View?

Crude Oil Climbs High. Is It Enough to Enjoy a Better View?

Sebastian Bischeri Sebastian Bischeri 07.03.2022 16:45
  The threat of sanctions caused a stir in the markets: WTI spiked above $130 and Brent is nearing the $140 mark. Where is crude oil going next? A possible Western embargo on Russian oil caused oil prices to soar again on Monday, as stock markets feared persistent inflation and a consequent economic slowdown. On the US dollar side, the continued rally of the greenback has propelled the dollar index (DXY) towards higher levels, as it is now approaching the three-figure mark ($100), even though it has not had a huge impact on crude oil, other petroleum products, or any other commodities in general. What we rather witness here is the greenback’s safe haven effect attracting investors, much like gold would tend to act in a “store of value” role. US Dollar Index (DXY) CFD (daily chart) On the geopolitical scene, Russia-Ukraine peace talks will be resumed today in Brest (Belarus) at 14:00 GMT, while another meeting is already scheduled at the Antalya Diplomacy Forum on Thursday in Turkey. Russian Foreign Minister Sergei Lavrov and his Ukrainian counterpart Dmytro Kuleba will talk there in the presence of the Turkish foreign minister. We might therefore expect some de-escalation in the Black Sea basin this week if the two parties involved were able to reach an agreement after further negotiations. WTI Crude Oil (CLJ22) Futures (April contract, daily chart) Brent Crude Oil (BRNK22) Futures (May contract, daily chart) RBOB Gasoline (RBJ22) Futures (April contract, daily chart) Henry Hub Natural Gas (NGJ22) Futures (April contract, daily chart) Regarding natural gas, the U.S. Energy Information Administration (EIA) published its Annual Energy Outlook (AEO) 2022 report, suggesting that even with non-hydro renewable sources set to rapidly grow through 2050, oil and gas-derived sources should still remain the top energy sources to fuel most of the United States. The agency is forecasting a rise in the production of Liquefied Natural Gas (LNG) – which mainly comes from shale gas – by at least 35%! In summary, the threat of sanctions has already wiped out almost all Russian oil – at least 7% of global supply – from the world oil market. In the weeks or months to come, we can see sanctions on Russian oil exports create a boomerang effect on European economies, decreasing world market supply, increasing prices for industry, as well as even more rising expenses, and thus cost of living through a ripple effect. Like what you’ve read? Subscribe for our daily newsletter today, and you'll get 7 days of FREE access to our premium daily Oil Trading Alerts as well as our other Alerts. Sign up for the free newsletter today! Thank you. Sebastien BischeriOil & Gas Trading Strategist * * * * * The information above represents analyses and opinions of Sebastien Bischeri, & Sunshine Profits' associates only. As such, it may prove wrong and be subject to change without notice. At the time of writing, we base our opinions and analyses on facts and data sourced from respective essays and their authors. Although formed on top of careful research and reputably accurate sources, Sebastien Bischeri and his associates cannot guarantee the reported data's accuracy and thoroughness. The opinions published above neither recommend nor offer any securities transaction. Mr. Bischeri is not a Registered Securities Advisor. By reading Sebastien Bischeri’s reports you fully agree that he will not be held responsible or liable for any decisions you make regarding any information provided in these reports. Investing, trading and speculation in any financial markets may involve high risk of loss. Sebastien Bischeri, Sunshine Profits' employees, affiliates as well as their family members may have a short or long position in any securities, including those mentioned in any of the reports or essays, and may make additional purchases and/or sales of those securities without notice.
XAUUSD Chart And Bitcoin Charts - BTC/USDT And Bitcoin Vs Gold Chart

XAUUSD Chart And Bitcoin Charts - BTC/USDT And Bitcoin Vs Gold Chart

Korbinian Koller Korbinian Koller 08.03.2022 10:21
Bitcoins image boost   In times of war, unfortunately, other news is quickly overshadowed temporarily. Gold, monthly chart, cup and handle: Gold in US Dollar, monthly chart as of March 7th, 2022. One significant factor is the gold bullish monthly chart with its cup and handle price formation. The larger time frame of the related market plays a substantial role in inter-market analysis. Gold, leading wealth preservation “insurance” for your money in inflationary times, should be on a bitcoin trader/investor’s radar. We find a bullish tone in gold to support possible bitcoin price increases.     Bitcoin/Gold-Ratio, monthly chart, bitcoin is cheap: Bitcoin versus Gold in USD, monthly chart as of March 8th, 2022. An additional welcoming factor can be found in the monthly chart of the bitcoin relationship towards gold. Presently, around 20 ounces buy you one bitcoin, while in the last quarter of last year, the same bitcoin cost you instead 37 ounces of gold. Consequently, those who have exited a fiat currency system or those who constructively hedge their wealth preservation portfolio might have a greater focus on bitcoin currently as on gold; it is cheaper. Bitcoin, weekly chart, still a couple weeks: Bitcoin in USD, weekly chart as of March 8th, 2022. A look at a weekly bitcoin chart shows temporary weakness in a general up slope near an entry zone. The last two weeks provided for substantial income-producing trading through partial profit-taking. Bitcoin had delivered a 32% range from US$34,322 to US$45,400. Unfortunately, there was no directional follow-through beyond this point, and bitcoin has yet again retraced substantially. Currently, Bitcoin is hovering right above a low-risk entry zone again, and we are hawkishly looking out for low-risk entries. A look into the past shows that it took bitcoin ten weeks to turn around in scenario A. Our timing prognosis is another two weeks now before we see possibly fast advancements. Bitcoins image boost: Some think of chocolate when thinking of Switzerland, and indeed this news is sweet to the bitcoin community. Bitcoins’ last step to gain momentum is widespread adoption. News, like the 10% increase in GDP since El Salvador’s declaration of bitcoin being accepted legal tender, is impressive. Yet, it is still met with doubt due to either political or economic situations of countries that have adopted bitcoin so far. With a central money mecca now representing progressive bitcoin use and old history of a conservative, strong financial stability image backing such behavior, widespread mass doubt can be swayed towards more bitcoin adaptation.   Feel free to join us in our free Telegram channel for daily real time data and a great community. If you like to get regular updates on precious metals and cryptocurrencies, you can also subscribe to our free newsletter. Disclosure: This article and the content are for informational purposes only and do not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision. The views, thoughts and opinions expressed here are the author’s alone. They do not necessarily reflect or represent the views and opinions of Midas Touch Consulting. By Korbinian Koller|March 8th, 2022|Tags: Bitcoin, Bitcoin bounce, Bitcoin bullish, Bitcoin consolidation, bitcoin/gold-ratio, crypto analysis, crypto chartbook, DeFi, Gold, Gold bullish, low risk, quad exit, technical analysis, trading education|0 Comments About the Author: Korbinian Koller Outstanding abstract reasoning ability and ability to think creatively and originally has led over the last 25 years to extract new principles and a unique way to view the markets resulting in a multitude of various time frame systems, generating high hit rates and outstanding risk reward ratios. Over 20 years of coaching traders with heart & passion, assessing complex situations, troubleshoot and solve problems principle based has led to experience and a professional history of success. Skilled natural teacher and exceptional developer of talent. Avid learner guided by a plan with ability to suppress ego and empower students to share ideas and best practices and to apply principle-based technical/conceptual knowledge to maximize efficiency. 25+ year execution experience (50.000+ trades executed) Trading multiple personal accounts (long and short-and combinations of the two). Amazing market feel complementing mechanical systems discipline for precise and extreme low risk entries while objectively seeing the whole picture. Ability to notice and separate emotional responses from the decision-making process and to stand outside oneself and one’s concerns about images in order to function in terms of larger objectives. Developed exit strategies that compensate both for maximizing profits and psychological ease to allow for continuous flow throughout the whole trading day. In depth knowledge of money management strategies with the experience of multiple 6 sigma events in various markets (futures, stocks, commodities, currencies, bonds) embedded in extreme low risk statistical probability models with smooth equity curves and extensive risk management as well as extensive disaster risk allow for my natural capacity for risk-taking.
Summarised Fluctuations Of Gold, Crude Oil, Bitcoin And Rouble Since The Russia-Ukraine War Started (with chart)

Summarised Fluctuations Of Gold, Crude Oil, Bitcoin And Rouble Since The Russia-Ukraine War Started (with chart)

Mikołaj Marcinowski Mikołaj Marcinowski 08.03.2022 12:27
It’s been almost two weeks since Russia invaded Ukraine. Even if the first day weren’t affected by huge rises, recent days show a major lift across markets. Source: TradingView.com Nickel There are some sensational rises beginning with Nickel price which increased by over 150% what can significantly affect many branches as Nickel is used, among others, in automotive and medical industries. Gold Gold raised by ‘only’ 4%, but it trades over magic $2000 level which nears ATH of Ca. $2100 (2020). XAU is believed to be a safe-haven as tensions rise and other assets’ fluctuations scare off investors. Crude Oil – BRENT and WTI Crude Oil prices have been rising since the first sights of invasion, but hitting Ca. $130 per barrel (to put it mildly) confused both investors and drivers around the world. Generally speaking, Crude Oil price has increased by Ca. 30% since the beginning of the war. Bitcoin BTC hasn’t fluctuated much and sticks to the levels near $40k, increasing by Ca. 5% since the invasion. Russian Rouble Currency of the invader has weakened significantly – by ca. 40% as RUBUSD chart shows. It will be really hard to get the Russian currency back to the game after such decrease. MOEX Some say Russian Index (RTSI – RU50) ‘surrendered’ shortly after the invasion has started as it remains closed since 1/03. At that time RTSI had been ca. 26% higher than on the first day of the warfare. DAX (GER 40) One of the greatest European index has lost almost 10%, what shows how broad is the influence of Russia-Ukraine War. Wheat Last but (definitely) not least… Wheat price increased by over 40% as conflicted countries – Russia and Ukraine are the major suppliers of such commodities. Don’t forget to follow us on Twitter! Data: TradingView.com
Will The Conflict Between Russia And Ukraine Maintain The Rise Crude Oil Prices?

Will The Conflict Between Russia And Ukraine Maintain The Rise Crude Oil Prices?

Alex Kuptsikevich Alex Kuptsikevich 08.03.2022 12:18
Brent oil is trading near $125 - in the 2011 and 2012 highs area. The market continues to receive pretty bullish comments from politicians and officials. However, traders seemed set to pause to digest current price levels after a frightening rally to $129 at one point on Monday, reacting to reports that the US and allies are weighing a ban on Russian oil and gas imports. In Russia, Novak (a former energy minister and co-founder of OPEC+ deals) points out that the oil embargo will push prices into the $300 a barrel area. Probably, this forecast is based on a comparison of the current situation with the OPEC embargo in late 1972, when the price soared 3-4 times within a few weeks. The International Energy Agency's executive director said the Oil can still move higher from current levels. Officially, Russia is not refusing to export Oil and Gas, but local companies have recently failed to sell Oil because of a buyers' boycott or fears of being hit by US and EU sanctions. Shell's just-announced refusal to buy all Russian Oil is doing little to bring down the commodity price. With this news backdrop, Oil is getting support on the downside in the $115 area, where last week's highs were located. It will take a lot more political will to reverse the trend in Oil. Also, the chances of Oil from Iran to make up for the drop-offs are somewhat thawed, as the president has said that Tehran will not give up its red lines. Iran would logically be expected to use the situation to bargain for better terms on a deal with the West. The same applies to Venezuela, where US representatives have headed to secure a rise in global production. Will the countries previously most disadvantaged by US sanctions use the momentum to ramp up production? That question is not yet answered. Likely, we should expect price rises to accelerate in the coming days before the situation reverses into a constructive direction and prices head for a correction.
GBPUSD (Pound To US Dollar) Reaches Quite Old Levels

GBPUSD (Pound To US Dollar) Reaches Quite Old Levels

Alex Kuptsikevich Alex Kuptsikevich 08.03.2022 14:49
The British pound was down to a 16-month low at 1.3080 in the morning, having lost 2% last Thursday. The pressure on the British currency looks to be developing capital outflows from Europe on speculation that reduced energy and materials supplies from Russia will prove to be a shock to the region's economy in the near term. In addition, the British pound was probably influenced by technical factors yesterday and today. The single currency has been sharply oversold in recent days and the EURGBP approach of 0.8200 on Monday morning triggered a strong wave of buying, bringing the pair back above 0.8310. On Monday, the euro got visible support against a wide range of other currencies, from the Swiss franc to the New Zealand dollar. Interest in the euro was also supported on Tuesday by a rally in equities on EU plans to issue joint bonds. But these are also good fundamentals for the British currency, which often directly correlates to the stock market. Short-term, relatively strong oversold conditions in the British currency creates the potential for a technical bounce in the coming days and in the area of 1.30-1.31 to stop its decline, gaining strong buy support until the end of the week and further heading to 1.3350 by the end of the month.
S&P 500 (SPX) Plunges, Metals And Crude Oil Prices Go Up

S&P 500 (SPX) Plunges, Metals And Crude Oil Prices Go Up

Monica Kingsley Monica Kingsley 08.03.2022 15:41
S&P 500 indeed didn‘t reverse on Friday in earnest, and both tech and value sold off hard. Not much reason to be bullish thanks to credit markets performance either – the posture is very risk-off, and the rush to commodities goes on. With a little check yesterday on the high opening prices in crude oil and copper, but still. My favorite agrifoods picks of late, wheat and corn, are doing great, and the pressure within select base metals, is building up – such as (for understandable reasons) in nickel and aluminum. Look for more to come, especially there where supply is getting messed with (this doesn‘t concern copper to such a degree, explaining its tepid price gains). And I‘m not talking even the brightest spot, where I at the onset of 2022 announced that precious metals would be the great bullish surprise this year. Those who listened, are rocking and rolling – we‘re nowhere near the end of the profitable run! Crude oil is likely to consolidate prior steep gains, and could definitely continue spiking higher. Should it stay comfortably above $125 for months, that would lead to quite some demand destruction. Given that black gold acts as a „shadow Fed funds rate“, let‘s bring up yesterday‘s rate raising thoughts and other relevant snippets: (,,,) If TLT has a message to drive home after the latest Powell pronouncements, it‘s that the odds of a 50bp rate hike in Mar (virtual certainty less than two weeks ago, went down considerably) – it‘s almost a coin toss now, and as the FOMC time approaches, the Fed would probably grow more cautious (read dovish and not hawkish) in its assessments, no matter the commodities appreciation or supply chains status. Yes, neither of these, nor inflation is going away before the year‘s end – they are here to stay for a long time to come. Looking at the events of late, I have to dial back the stock market outlook when it comes to the degree of appreciation till 2022 is over – I wouldn‘t be surprised to see the S&P 500 to retreat slightly vs. the Jan 2022 open. Yes, not even the better 2H 2022 prospects would erase the preceding setback. Which stocks would do best then? Here are my key 4 tips – energy, materials, in general value, and smallcaps. But the true winners of the stagflationary period is of course going to be commodities and precious metals. And that‘s where the bulk of recent gains that I brought you, were concentrated in. More is to come, and it‘s gold and silver that are catching real fire here. Let‘s move right into the charts (all courtesy of www.stockcharts.com). S&P 500 and Nasdaq Outlook S&P 500 didn‘t do at all well yesterday, and signs of a short-term bottom are absent. It‘s entirely possible that the brief upswing that I was looking to be selling into to start the week, has been not merely postponed. Credit Markets HYG is clearly on the defensive, and TLT reassessing rate hike prospects – yet, long-dated Treasuries still declined. There is no appetite to buy bonds, and that confirms my thesis of lower lows to be made still in Mar. Gold, Silver and Miners Precious metals keep doing great, and will likely continue rising no matter what the dollar does – last three days‘ experience confirms that. This is more than mere flight to safety - I‘m looking for further price gains as the upleg has been measured and orderly so far. Crude Oil Crude oil‘s opening gap had been sold into, but we haven‘t seen a reversal yesterday. The upswing can continue, and it would happen on high volatility. I don‘t think we have seen the real spike just yet. Copper For all the above reasons, copper isn‘t rising as fast as other base metals (one of the key engines of commodities appreciation). The run is respectable, and not overheated. $5.00 would remain quite a tough nut to crack – for the time being. Bitcoin and Ethereum Cryptos haven‘t made up their mind yet, but one thing is sure – they aren‘t acting as a safe haven. Given the extent of retreat from Mar highs, it means I‘m looking for not too spectacular performance in the days ahead. Summary S&P 500 missed an opportunity to rise (even if just to open the week on a positive note), and its prospects for today aren‘t way too much brighter. It‘s that practically nothing is giving bullish signals for paper assets, and the market breadth has understandably deteriorated. The rush into precious metals, dollar and commodities remains on – these are the pockets of strength, lifting to a very modest and hidden degree Treasuries as well (these are however reassessing the hawkish Fed prospects) at a time when global growth downgrades are starting to arrive. Pretty serious figures, let me tell you. As I wrote yesterday, stocks may even undershoot prior Thursday‘s lows, but I‘m not looking for that to happen. The sentiment is very negative already, the yield curve keeps compressing, commodities are rising relentlessly, and all we got is a great inflation excuse / smoke screen. Inflation is always a monetary phenomenon, and supply chain disruptions and other geopolitical events can and do exacerbate that. Just having a look at the rising dollar when rate hike prospects are getting dialed back, tells the full risk-off story of the moment, further highlighted by the powder keg that precious metals are. And silver isn‘t yet outperforming copper, which is something I am looking for to change as we go by. Thank you for having read today‘s free analysis, which is available in full at my homesite. There, you can subscribe to the free Monica‘s Insider Club, which features real-time trade calls and intraday updates for all the five publications: Stock Trading Signals, Gold Trading Signals, Oil Trading Signals, Copper Trading Signals and Bitcoin Trading Signals.
Gold Tries to Hold Above $2000 - Hard Landing Ahead?

Gold Tries to Hold Above $2000 - Hard Landing Ahead?

Przemysław Radomski Przemysław Radomski 08.03.2022 16:02
  Gold has hit $2,000 but is still struggling to maintain that historical level. It has already tried 8 times - will the ninth attempt succeed? Many indications make this doubtful. Gold is attempting to break above the $2,000 milestone, and miners are trying to break above their declining resistance line. Will they manage to do so, and if so, how long will the rally last? Yesterday, gold didn’t manage to close above the $2,000 level and it’s making another attempt to rally above it in today’s pre-market trading. However, will it be successful? Given the RSI above 70 and the strength of the current resistance, it’s doubtful. In fact, nothing has changed with regard to this likelihood since yesterday, so what I wrote about it in the previous Gold & Silver Trading Alert remains up-to-date: Gold touched $2,000 in today’s pre-market trading, which is barely above its 2021 high and below its 2020 high. Crude oil is way above both analogous levels. In other words, gold underperforms crude oil to a significant extent, just like in 2003. Interestingly, back in 2003, gold topped when crude oil rallied about 40% from its short-term lows (the late-2002 low). What happened next in 2003? Gold declined, and the moment when crude oil started to visibly outperform gold was also the beginning of a big decline in gold stocks. That makes perfect sense on the fundamental level too. Gold miners’ share prices depend on their profits (just like it’s the case with any other company). Crude oil at higher levels means higher costs for the miners (the machinery has to be fueled, the equipment has to be transported, etc.). When costs (crude oil could be viewed as a proxy for them) are rising faster than revenues (gold could be viewed as a proxy for them), miners’ profits appear to be in danger; and investors don’t like this kind of danger, so they sell shares. Of course, there are many more factors that need to be taken into account, but I just wanted to emphasize one way in which the above-mentioned technical phenomenon is justified. Back in 2003, gold stocks wiped out their entire war-concern-based rally, and the biggest part of the decline took just a bit more than a month. Let’s remember that back then, gold stocks were in a very strong medium- and long-term uptrend. Right now, mining stocks remain in a medium-term downtrend, so their decline could be bigger – they could give away their war-concern-based gains and then decline much more. Mining stocks are not declining profoundly yet, but let’s keep in mind that history rhymes – it doesn’t repeat to the letter. As I emphasized previously today, back in 2003 and 2002, the tensions were building for a longer time, and it was relatively clear in advance that the U.S. attack was going to happen. This time, Russia claimed that it wouldn’t attack until the very last minute before the invasion. Consequently, the “we have to act now” is still likely to be present, and the dust hasn’t settled yet – everything appears to be unclear, and thus the markets are not returning to their previous trends. Yet. However, as history shows, that is likely to happen. Either immediately, or shortly, as crude oil is already outperforming gold. The above chart features the GDXJ ETF. As you can see, the junior miners moved to their very strong resistance provided by the declining resistance line. This resistance is further strengthened by the 38.2% Fibonacci retracement, and the previous (late-2021) high. This means that it’s particularly strong, and any breakout here would likely be invalidated shortly. Given the clear sell signal from the RSI indicator, a turnaround here is even more likely. I marked the previous such signals to emphasize their efficiency. When the RSI was above 70, a top was in 6 out of 7 of the recent cases, and the remaining case was shortly before the final top, anyway. This resistance seems to be analogous to the $2,000 level in gold. By the way, please note that gold tried to break above $2,000 several times: twice in August 2020; twice in September 2020 (once moving above it, once moving just near this level); once in November 2020 (moving near this level); once in January 2021 (moving near this level); once in February 2022 (moving near this level). These attempts failed in each of the 7 cases mentioned above. This is the eight attempt. Will this very strong resistance break this time? Given how much crude oil has already soared, and how both markets used to react to war tensions in the case of oil-producing countries, it seems that the days of the rally are numbered. Moving back to the GDXJ ETF, please note that while gold is moving close to its all-time highs, the junior miners are not doing anything like that. In fact, they barely moved slightly above their late-2021 high. They are not even close to their 2021 high, let alone their 2020 high. Instead, junior mining stocks are just a bit above their early-2020 high, from which their prices were more than cut in half in less than a month. In other words, junior miners strongly underperform gold, which is a bearish sign. When gold finally declines – and it’s likely to, as geopolitical events tend to have only a temporary effect on prices, even if they’re substantial – junior miners will probably slide much more than gold. One of the reasons is the likely decline in the general stock market. I recently received a question about the impact the general stock market has on mining stocks, as the latter moved higher despite stocks’ decline in recent weeks. So, let’s take a look at a chart that will feature junior mining stocks, the GLD ETF, and the S&P 500 Index. Before the Ukraine crisis, the link between junior miners and the stock market was clear. Now, it's not as clear, but it’s still present. Juniors only moved to their late-2021 highs, while gold is over $100 above those highs. Juniors underperform significantly, in tune with the stock market's weakness. The gold price is still the primary driver of mining stock prices – including junior mining stocks. After all, that’s what’s either being sold by the company (that produces gold) or in the properties that the company owns and explores (junior miners). As gold prices exploded in the last couple of weeks, junior miners practically had to follow. However, this doesn’t mean that the stock market’s influence is not present nor that it’s going to be unimportant going forward. Conversely, the weak performance of the general stock market likely contributed to junior miners’ weakness relative to gold – the former didn’t rally as much as the latter. Since the weakness in the general stock market is likely to continue, and gold’s rally is likely to be reversed (again, what happened in the case of other military conflicts is in tune with history, not against it), junior miners are likely to decline much more profoundly than gold. Speaking of the general stock market, it just closed at the lowest level since mid-2021. The key thing about the above chart is that what we’ve seen this year is the biggest decline since 2020, and the size of the recent slide is comparable to what we saw as the initial wave down in 2020 – along with the subsequent correction. If these moves are analogous, the recent rebound was perfectly normal – there was one in early 2020 too. This also means that a much bigger decline is likely in the cards in the coming weeks, and that it’s already underway. This would be likely to have a very negative impact on the precious metals market, in particular on junior mining stocks (initially) and silver (a bit later). All in all, it seems that due to the technical resistance in gold and mining stocks, the sizable – but likely temporary (like other geopolitical-event-based-ones) – rally is likely to be reversed shortly. Then, as the situation in the general stock market deteriorates, junior miners would be likely to plunge in a spectacular manner. Thank you for reading our free analysis today. Please note that the above is just a small fraction of today’s all-encompassing Gold & Silver Trading Alert. The latter includes multiple premium details such as the targets for gold and mining stocks that could be reached in the next few weeks. If you’d like to read those premium details, we have good news for you. As soon as you sign up for our free gold newsletter, you’ll get a free 7-day no-obligation trial access to our premium Gold & Silver Trading Alerts. It’s really free – sign up today. Przemyslaw Radomski, CFAFounder, Editor-in-chiefSunshine Profits: Effective Investment through Diligence & Care * * * * * All essays, research and information found above represent analyses and opinions of Przemyslaw Radomski, CFA and Sunshine Profits' associates only. As such, it may prove wrong and be subject to change without notice. Opinions and analyses are based on data available to authors of respective essays at the time of writing. Although the information provided above is based on careful research and sources that are deemed to be accurate, Przemyslaw Radomski, CFA and his associates do not guarantee the accuracy or thoroughness of the data or information reported. The opinions published above are neither an offer nor a recommendation to purchase or sell any securities. Mr. Radomski is not a Registered Securities Advisor. By reading Przemyslaw Radomski's, CFA reports you fully agree that he will not be held responsible or liable for any decisions you make regarding any information provided in these reports. Investing, trading and speculation in any financial markets may involve high risk of loss. Przemyslaw Radomski, CFA, Sunshine Profits' employees and affiliates as well as members of their families may have a short or long position in any securities, including those mentioned in any of the reports or essays, and may make additional purchases and/or sales of those securities without notice.
Boeing Company Stock News and Forecast: BA slips on Russian supply woes

Boeing Company Stock News and Forecast: BA slips on Russian supply woes

FXStreet News FXStreet News 08.03.2022 16:05
Boeing stock falls as Russian raw material supplies are likely to be in short supply. Boeing earlier said it was suspending buying Russian titanium. BA stocks fell over 6% on Monday as main indices fell over 3%. Boeing (BA) stock slipped on Monday, even disproportionally versus the main market. While the S&P 500 and the Nasdaq fell in the region of 3% to 4%, Boeing underperformed as it fell just under 6.5%. Boeing Stock News Monday's move took Boeing stock to new 52-week lows as the stock remains pressured in the current risk-off environment. The Wall Street Journal reported on Monday that Boeing had suspended purchases of titanium from Russia as the company felt it had enough supply from other sources. “Our inventory and diversity of titanium sources provide sufficient supply for airplane production, and we will continue to take the right steps to ensure long-term continuity,” a Boeing spokeswoman told WSJ. Also on Monday Cowen & Co. lowered their price target for Boeing from $265 to $230. Cowen maintained their outperform rating on Boeing. Breaking Defense had last week reported that Air Force One's replacement was running up to 17 months late, according to two sources. Boeing is the supplier of Air Force One. Boeing will also likely feel headwinds from the current surge in oil prices. While not directly affected, higher oil prices will flow through to higher airfares and a likely reduction in passenger demand. This would see a knock-on but delayed demand for additional planes affecting Boeing and its main competitor, Airbus. However, Boeing does have a large military division. At the end of 2021 the Boeing Defence, Space & Security division accounted for over 33% of total Boeing revenues. The US Department of Defense is the top customer of this division. Boeing Stock Forecast Breaking the 52-week low is significant, and from the weekly chart below we can see how Boeing failed to regain its pre-pandemic levels. This should have been setting off alarm bells as stocks and indices reached all-time highs. The aerospace sector was a special case, but technically this was a bearish signal. BA stock chart, weekly The daily chart outlines the series of bearish lower lows and highs. Any rally to $185 can be used to instigate fresh bearish positions. BA stock chart, daily
Intraday Market Analysis – USD Consolidates Gains - 09.03.2022

Intraday Market Analysis – USD Consolidates Gains - 09.03.2022

John Benjamin John Benjamin 09.03.2022 08:47
USDJPY breaks higherThe Japanese yen softened after weaker-than-expected GDP in Q4. Despite choppiness in recent price action, confidence in the greenback remains high.A failed attempt at the supply zone (115.80) suggests a lack of momentum, but a swift bounce off 114.65 reveals strong enough buying interest.A bullish breakout would lead to the double top at 116.35. Its breach could end the two-month-long consolidation and trigger an extended rally towards January 2017’s highs around 118.00. 115.40 is fresh support.AUDUSD seeks supportThe Australian dollar stalls as commodity prices consolidate. The rally above 0.7310, a major supply area, has weakened selling pressure and put the pair on a bullish reversal course.The Aussie’s parabolic ascent and an overbought RSI prompted short-term buyers to take profit. As the RSI swings back into the oversold zone, the bulls may see the current fallback as an opportunity to stake in.0.7380 is a fresh resistance and 0.7250 is the immediate support. Further below 0.7170 is a critical level to keep the rebound valid.UK 100 sees limited bounceThe FTSE 100 struggles as the UK plans to ban Russian energy imports.On the daily chart, a break below the demand zone (6850) wiped out 11-months worth of gains and signaled a strong bearish bias. The RSI’s oversold situation may cause a temporary rebound, but a bearish MA cross could attract more selling interest.The liquidation is yet to end as medium-term buyers scramble for the exit. 7200 is a fresh resistance and 7450 is a major supply zone. A drop below 6800 may lead to 6500.
Ringing the Bell

Ringing the Bell

Monica Kingsley Monica Kingsley 09.03.2022 16:03
S&P 500 once again gave up intraday gains, and credit markets confirmed the decline. Value down significantly more than tech, risk-off anywhere you look. For days without end, but the reprieve can come on seemingly little to no positive news, just when the sellers exhaust themselves and need to regroup temporarily. We‘re already seeing signs of such a respite in precious metals and commodities – be it the copper downswing, oil unable to break $130, or miners not following gold much higher yesterday. Corn and wheat also consolidated – right or wrong, the market seeks to anticipate some relief from Eastern Europe.The big picture though hasn‘t changed:(…) credit markets … posture is very risk-off, and the rush to commodities goes on. With a little check yesterday on the high opening prices in crude oil and copper, but still. My favorite agrifoods picks of late, wheat and corn, are doing great, and the pressure within select base metals, is building up – such as (for understandable reasons) in nickel and aluminum. Look for more to come, especially there where supply is getting messed with (this doesn‘t concern copper to such a degree, explaining its tepid price gains).And I‘m not talking even the brightest spot, where I at the onset of 2022 announced that precious metals would be the great bullish surprise this year. Those who listened, are rocking and rolling – we‘re nowhere near the end of the profitable run! Crude oil is likely to consolidate prior steep gains, and could definitely continue spiking higher. Should it stay comfortably above $125 for months, that would lead to quite some demand destruction. Given that black gold acts as a „shadow Fed funds rate“, ......its downswing would contribute to providing the Fed with an excuse not to hike in Mar by 50bp. After the prior run up in the price of black gold that however renders such an excuse a verbal exercise only, the Fed remains between a rock and hard place, and the inflationary fires keep raging on.Let‘s move right into the charts (all courtesy of www.stockcharts.com).S&P 500 and Nasdaq OutlookS&P 500 is reaching for the Feb 24 lows, and may find respite at this level. The upper knot though would need a solid close today (above 4,250) to be of short-term significance. Remember, the market remains very much headline sensitive.Credit MarketsHYG clearly remains on the defensive, but the sellers may need a pause here, if volume is any guide. Bonds are getting beaten, and the outlook remains negative to neutral for the weeks ahead. Gold, Silver and MinersPrecious metals keep doing great, but a pause is knocking on the door. Not a reversal, a pause. Gold and silver are indeed the go-to assets in the current situation, and miners agree wholeheartedly.Crude OilCrude oil is having trouble extending gains, and the consolidation I mentioned yesterday, approaches. I do not think however that this is the end of the run higher.CopperCopper is pausing already, and this underperformer looks very well bid above $4.60. Let the red metal build a base, and continue rising next, alongside the rest of the crowd.Bitcoin and EthereumCryptos upswing equals more risk appetite? It could be so, looking at the dollar‘s chart (I‘m talking that in the summary of today‘s analysis).SummaryEvery dog has its day, and the S&P 500‘s one might be coming today or tomorrow. It‘s that the safe havens of late (precious metals, commodities and the dollar) are having trouble extending prior steep gains further. These look to be in for a brief respite that would be amplified on any possible news of deescalation. In such an environment, risk taking would flourish at expense of gold, silver and oil especially. I don‘t think so we have seen the tops – precious metals are likely to do great on the continued inflation turning into stagflation (GDP growth figures being downgraded), and commodities are set to further benefit from geopolitics (among much else).Thank you for having read today‘s free analysis, which is available in full at my homesite. There, you can subscribe to the free Monica‘s Insider Club, which features real-time trade calls and intraday updates for all the five publications: Stock Trading Signals, Gold Trading Signals, Oil Trading Signals, Copper Trading Signals and Bitcoin Trading Signals.
EURUSD Rallies, GBPUSD Moves Up A Little, USOIL Goes Back To "Normal" (?) Levels

EURUSD Rallies, GBPUSD Moves Up A Little, USOIL Goes Back To "Normal" (?) Levels

Jing Ren Jing Ren 10.03.2022 08:43
EURUSD bounces back The euro rallies on news that the EU may issue a joint bond to fund energy and defense. The pair found bids near May 2020’s lows (1.0810). An oversold RSI on the daily chart prompted sellers to take profit, easing the downward pressure. A rally above the immediate resistance at 1.0940 and a bullish MA cross may improve sentiment in the short term. However, buyers will need to clear the support-turned-resistance at 1.1160 before they could hope for a meaningful rebound. 1.0910 is the support in case of a pullback. GBPUSD inches higher The sterling claws back losses as risk appetite makes a timid return across the board. Following a three-month-long rebound on the daily chart, a lack of support at 1.3200 and a bearish MA cross shows strong selling pressure. A bounce-back above 1.3200 may only offer temporary relief as sellers potentially look to fade the rebound. 1.3350 is a key hurdle that sits along the 20-day moving average. 1.3080 is fresh support and its breach could trigger a new round of sell-off below the next daily support at 1.2880. USOIL breaks support WTI crude tumbled after the UAE said consider boosting production. The parabolic climb came to a halt at 129.00 and pushed the RSI into an extremely overbought condition on the daily chart. A bearish RSI divergence suggested a loss of momentum and foreshadowed a correction as traders would be wary of chasing the rally. A fall below 115.00 led buyers to bail out, triggering a wave of liquidation. 105.00 is the next support and a breakout could bring the price back to 95.00 near the 30-day moving average.
DAX (GER 40) Has Lost About 3% Over last 24 hours. Mercedes (MBG), Delivery Hero (DHER) And BMW Have Decreased.

DAX (GER 40) Has Lost About 3% Over last 24 hours. Mercedes (MBG), Delivery Hero (DHER) And BMW Have Decreased.

Mikołaj Marcinowski Mikołaj Marcinowski 10.03.2022 14:39
Five-day DAX Price Chart shows it went up after a significant decline few days ago. However, today’s daily chart shows there’s a small downtrend and many companies have decreased since yesterday. Significantly affected - two major automotive industries and Delivery Hero. All of presented charts are courtesy of TradingView.com GER 40 has caught the ‘ground level’, but still trades Ca. 8% lower than before warfare in the Eastern Europe as chart shows: But what about last 24 hours what triggers us mostly? A decline amounts to ca. 3%. Many of stocks have decreased by these three – BMW, MBG And DHER have done it significantly. Mercedes-Benz AG has declined by almost 6% BMW has neared the -7% level. Delivery Hero (DHER) has plunged by almost 6.5%, have a look at the chart below: Source: TradingView.com, Investing.com, Capital.com
How the latest CPI affected Bitcoin

How the latest CPI affected Bitcoin

Alex Kuptsikevich Alex Kuptsikevich 10.03.2022 15:19
Consumer prices in the USA rose by 0.8% in February as expected. Inflation for the same month a year earlier was 7.9% compared to 7.5% a month earlier and in line with average forecasts.Over the last 12 months, the actual data has exceeded the forecast ten times, so the stabilisation seen in February is regarded as cautiously good news. Previously, market participants had assumed that inflation would peak in February, but the latest round of commodity prices makes these forecasts overly optimistic. In peacetime, markets would have priced in more decisive monetary policy tightening moves by the Fed. However, investors have recently discounted expectations of a rate hike by 50 points, contrary to a jump in commodity prices. The markets assume that the Fed will be much more cautious in tightening policy. This thesis is doubly true against the background of falling government bond yields and widening spreads between them and high-yield bonds.When the Fed has limited capacity to respond to inflation, this is bad news for the dollar because it undermines its long-term prospects for maintaining purchasing power. In this regard, the impulsive pressure on the US currency immediately after the release should not be surprising.Long term, this is also good news for bitcoin, which is not subject to inflation. However, the short-term reaction could well be mixed, as fears of a new stock market decline are also added to this cocktail, as stocks "don't like" accelerating inflation.
Not Passing Smell Test

Not Passing Smell Test

Monica Kingsley Monica Kingsley 10.03.2022 16:01
S&P 500 tech driven upswing makes the advance a bit suspect, and prone to consolidation. I would have expected value to kick in to a much greater degree given the risk-on posture in the credit markets. The steep downswing in commodities and precious metals doesn‘t pass the smell test for me – just as there were little cracks in the dam warning of short-term vulnerability at the onset of yesterday, the same way there are signs of the resulting downswing being overdone now.And that has consequences for the multitude of open positions – the PMs and commodities super bull runs are on, and the geopolitics still support the notion of the next spike.Let‘s move right into the charts (all courtesy of www.stockcharts.com).S&P 500 and Nasdaq OutlookS&P 500 turned around, and the volume isn‘t raising too many eyebrows. However, the bulls should have tempered price appreciation expectations, to put it politely...Credit MarketsHYG turned around, but isn‘t entirely convincing yet. We saw an encouraging first step towards risk-on turn that requires that the moves continue, which is unlikely today – CPI is here, and unlikely to disappoint the inflationistas.Gold, Silver and MinersPrecious metals downswing looks clearly overdone, and I continue calling for a shallow, $1,980 - $2,000 range consolidation next. This gives you an idea not to expect steep silver discounts either. Miner are clear, and holding up nicely.Crude OilCrude oil downswing came, arguably way too steep one. Even oil stocks turned down in spite of the S&P 500 upswing, which is odd. I‘m looking for gradual reversal of yesterday‘s weakness in both.CopperCopper has made one of its odd moves on par with the late Jan long red candle one – I‘m looking for the weakness to be reversed, and not only in the red metal but within commodities as such.Bitcoin and EthereumCryptos are giving up yesterday‘s upswing – they are dialing back the risk-on turn and rush out of the safe havens of late.SummaryThe S&P 500 dog indeed just had its day, but the price appreciation prospects are not looking too bright for today. With attention turning to CPI, and yesterday‘s „hail mary decline aka I don‘t need you anymore“ in the safe havens of late (precious metals, crude oil, wheat, and the dollar to name just a few) getting proper scrutiny, I‘m looking for gradual return to strength in all things real (real assets) – it‘s my reasonable assumption that the markets won‘t get surprised by an overwhelmingly positive headline from Eastern Europe at this point. Focusing on the underlying fundamentals and charts, I don‘t think so we have seen the real asset tops – precious metals are likely to do great on the continued inflation turning into stagflation (GDP growth figures being downgraded), and commodities are set to further benefit from geopolitics (among much else).Thank you for having read today‘s free analysis, which is available in full at my homesite. There, you can subscribe to the free Monica‘s Insider Club, which features real-time trade calls and intraday updates for all the five publications: Stock Trading Signals, Gold Trading Signals, Oil Trading Signals, Copper Trading Signals and Bitcoin Trading Signals.
NZDUSD Trades Higher, XAGUSD Nears $25.50-26 Range, US 30 Chart Shows Fluctuations

NZDUSD Trades Higher, XAGUSD Nears $25.50-26 Range, US 30 Chart Shows Fluctuations

Jing Ren Jing Ren 11.03.2022 07:40
NZDUSD consolidates gains The New Zealand dollar inched higher supported by roaring commodity prices. A break above the daily resistance at 0.6890 has put the kiwi back on track in the medium term. A bullish MA cross on the daily chart suggests an acceleration to the upside. As sentiment improves, the bulls may see the current consolidation as an opportunity to accumulate. A close above 0.6920 would extend the rally to 0.7050. 0.6800 is the first support and 0.6730 over the 30-day moving average a key demand zone. XAGUSD seeks support Silver consolidates amid ongoing geopolitical instability. A bearish RSI divergence suggests a deceleration in the rally. A tentative break below 25.40 has prompted some buyers to take profit. While sentiment remains optimistic, a correction might be necessary for the bulls to take a breather. The psychological level of 25.00 is a major demand zone. Its breach could send the precious metal to 24.30 which sits on the 30-day moving average. A rally above 26.90 could propel the price to last May’s highs around 28.50. US 30 struggles for buyers The Dow Jones 30 turned south after talks between Russia and Ukraine stalled again. A rebound above 34000 has provided some relief. Nonetheless, enthusiasm could be short-lived after the index gave up all recent gains. The prospect of a bear market looms if this turns out to be a dead cat bounce. A fall below 32300 could trigger another round of liquidation and push the Dow to a 12-month low at 30800. On the upside, 33500 is the first resistance. The bulls will need to lift offers around 34100 before they could attract more followers.
Economic Indicators Of Great Britain Released

Economic Indicators Of Great Britain Released

Alex Kuptsikevich Alex Kuptsikevich 11.03.2022 09:11
The new monthly package of UK statistics highlighted the fine shape of the economy in January. For the month, GDP rose by 0.8%, against an expected strengthening of 0.2% and the three-month growth rate accelerated from 1.0% to 1.1%. Industrial production strengthened by 0.7% for the month and 2.3% for January 2021, also beating economists' expectations. The UK economy started the year in good shape, responding positively to the easing of the coronavirus restrictions. This is short-term positive news for the British pound, which has managed to find support after touching another low since November 2020 at 1.3080 per dollar. A strong base in the economy will allow the Bank of England to strengthen its fight against inflation by raising rates. However, price shocks across many commodities and foodstuffs dramatically increase the chances of short-term stagflation in the UK as consumers will save more by cutting back on purchases of non-essential goods and services due to rising energy and food prices. The Ukrainian war crisis, now in its third week, has seen the GBPUSD fall 3.8%, taking more than 1/3 of the pair's rise from the lows at the start of the pandemic. A move below 1.3160 was a signal to a move into a deeper correction phase, and the pair could plunge to 1.2880 at the beginning of next week.
Crypto Update: Bitcoin Price Has Decreased By 1%, ETH Hasn't Fluctuate Much. XRP Has Gone Up By 1.6%

Crypto Update: Bitcoin Price Has Decreased By 1%, ETH Hasn't Fluctuate Much. XRP Has Gone Up By 1.6%

Alex Kuptsikevich Alex Kuptsikevich 11.03.2022 08:37
Bitcoin fell 5.4% on Thursday, ending the day near $39.6K, and further to $38.9K on Friday morning, down 1% in 24 hours. Ethereum has remained almost unchanged over the same time (-0.3%), while other leading altcoins from the first are changing in different directions, from a 1.6% increase (XRP) to a 1% decrease (BNB). According to CoinMarketCap, the total capitalization of the crypto market sank by 0.2% over the day to $1.74 trillion. The bitcoin dominance index continues to decline, falling from 42.7% yesterday to 42.4% due to the greater stability of altcoins. The crypto-currency index of fear and greed lost 6 points in a day to 22, again entering the territory of "extreme fear". Bitcoin fully returned the growth of Wednesday, which was caused by the adoption in the United States of the first document on the regulation of cryptocurrencies. The decline in stock indices and the growth of the dollar also did not favour the purchases of the first cryptocurrency, which often moves in unison with the general demand for risks. The first decree on cryptocurrencies signed the day before can become the basis for future US legislation on regulating relations in the crypto sphere. Against this background, the shares of companies associated with cryptocurrencies have noticeably risen in price. One of the largest investment banks, Goldman Sachs, is going to expand its offering for trading digital assets. The bank is exploring the possibility of launching bilateral crypto-currency options. World-famous investor and writer Robert Kiyosaki has warned that the world economy is now on the verge of hyperinflation and advised to "stay away" from the stock market. Against the backdrop of a severe crisis in the financial system of the Russian Federation and restrictions imposed on the circulation of the dollar and the euro, the demand of the population for cryptocurrency has increased sharply. Now it is primarily used for the transfer of capital abroad or for parking in "hard" currency. Analysts believe that regulators are unlikely to be able to effectively prevent such transactions. But the state is helped by crypto-exchanges, which block the Russians on their own initiative. There remain the possibilities of p2p platforms, that is, transfers between individuals. However, there are significant risks of fraud associated with such transactions.
UK100 (FTSE 100) 24H Chart: Top 3 Losers: Coca-Cola HBC (CCH), FRES (Fresnillo PLC) And Associated British Foods (BF)

UK100 (FTSE 100) 24H Chart: Top 3 Losers: Coca-Cola HBC (CCH), FRES (Fresnillo PLC) And Associated British Foods (BF)

Mikołaj Marcinowski Mikołaj Marcinowski 11.03.2022 11:42
It would be good to end this week with some positive news like stock rally. In general UK100 perform quite well, but one popular brand has lost ca. 1.5% over last 24 hours. All charts are courtesy of TradingView.com Coca-Cola HBC (CCH) Chart Fresnillo (FRES) Has Plunged deeper – the loses amount to ca. 3% Associated British Food (ABF) chart also shows a decline. The price has declined by ca. 1.5% as CCH has done Source: TradingView.com
Now, That‘s Better

Now, That‘s Better

Monica Kingsley Monica Kingsley 11.03.2022 15:59
S&P 500 gave up the opening gains, but managed to close on a good note, in spite of credit markets not confirming. Given though the high volume characterizing HYG downswing and retreating crude oil, we may be in for a stock market led rebound today. It‘s that finally, value did much better yesterday than tech.CPI came red hot, but didn‘t beat expectations, yield curve remains flat as a pancake, and the commodity index didn‘t sell off too hard. It remains to be seen whether the miners‘ strength was for real or not – anyway, the yesterday discussed shallow $1,980 - $2,000 range consolidation still remains the most likely scenario. I just don‘t see PMs and commodities giving up a lion‘s share of the post Feb 24 gains next.Let‘s move right into the charts (all courtesy of www.stockcharts.com).S&P 500 and Nasdaq OutlookS&P 500 can still turn around, and the odds of doing so successfully (till the closing bell today), have increased yesterday. The diminished volume points to no more sellers at this point while buyers are waiting on the sidelines.Credit MarketsHYG has only marginally closed below Tuesday‘s lows – corporate junk bonds can reverse higher without overcoming Wednesday‘s highs fast, which would still be constructive for a modest S&P 500 upswing.Gold, Silver and MinersPrecious metals are indeed refusing to swing lower too much – the sector remains excellently positioned for further gains. For now though, we‘re in a soft patch where the speculative fever is slowly coming out, including out of other commodities. Enter oil.Crude OilCrude oil still remains vulnerable, but would catch a bid quite fast here. Ideally, black gold wouldn‘t break down into the $105 - $100 zone next. I‘m looking for resilience kicking in soon.CopperCopper fake weakness is being reversed, and the red metal is well positioned not to break below Wednesday‘s lows. I‘m not looking for selloff continuation in the CRB Index either.Bitcoin and EthereumCryptos remain undecided, and erring on the side of caution – this highlights that the risk appetite‘s return is far from universal.SummaryS&P 500 missed a good opportunity yesterday, but the short-term bullish case isn‘t lost. Stocks actually outperformed credit markets, and given the commodities respite and value doing well, bonds may very well join in the upswing, with a notable hesitation though. That wouldn‘t be a short-term obstacle, take it as the bulls temporarily overpowering the bears – I still think that the selling isn‘t over, and that the downswing would return in the latter half of Mar if (and that‘s a big if) the Fed‘s response to inflation doesn‘t underwhelm the market expectations that have been dialed back considerably over the last two weeks. Token 25bp rate hike, anyone? That wouldn‘t sink stocks dramatically...Thank you for having read today‘s free analysis, which is available in full at my homesite. There, you can subscribe to the free Monica‘s Insider Club, which features real-time trade calls and intraday updates for all the five publications: Stock Trading Signals, Gold Trading Signals, Oil Trading Signals, Copper Trading Signals and Bitcoin Trading Signals.
Natural Gas: When A Trade Plan Provides Consecutive Wins

Natural Gas: When A Trade Plan Provides Consecutive Wins

Finance Press Release Finance Press Release 11.03.2022 16:24
From time to time, we may want to consider volatility as an ally. After all, why would highly volatile markets necessarily mean more losing trades?The first target was hit – BOOM! Today – just before the weekend – it is time to bank some profits from my recent trade projections (provided on March 2). Since then, the trade plan has provided our dear subscribers with multiple bounces to trade the NYMEX Natural Gas Futures (April contract) in various ways, always depending on each one’s personal risk profile.The first possibility is the swing trading with trailing stop method explained in my famous risk management article.Trade entry triggered on Tuesday, March 8 (firm rebound on yellow band), stop lifted once price extends beyond mid-point (median) price between first target and entry, thus ending at $4.607 (black dotted line), given the market closed at its daily high of $4.704 (purple dotted line) that same day and assuming you entered that long trade at $4.550 (top of the yellow band). That was a quick one that lasted only a couple hours for the day traders who closed their trades at the regular market close (two candles later, see below chart). For the swing traders, the win-stop was triggered the next day (Wednesday) on the following pull-back. Henry Hub Natural Gas (NGJ22) Futures (April contract, hourly chart)The second option is to scale the rebounds with fixed targets (active or experienced traders).This method consists of “riding the tails” (or the shadows). To get a better grasp of this concept, let’s zoom out on a 4H-chart so you can see the multiple rebounds of the price characterized by the shadows (or tails) of candlesticks, where a crowd of bulls are placing buy orders around that yellow support zone, therefore squeezing bears by pushing prices towards the upside (like some sort of rope pulling game). This trading style often requires stops to be tighter with some profit-to-risk ratio greater than 1.5 (with usually fixed targets). Henry Hub Natural Gas (NGJ22) Futures (April contract, 4H chart)Third possibility: position trading. This is probably the most passive trading style, as it would suit everyone’s busy timetable (and be the most rewarding). This is usually the one we privilege at Sunshine Profits since it allows us to provide trade projections some time in advance for our patient sniper traders to lock in their trading targets and take sufficient time to assess the associated risk with each projection as part of a full trade plan (or flying map).Let’s zoom out again to spot our first target getting hit today on a daily chart so we can have an overall view of the next target to be locked in while lifting our stop to breakeven (entry), previous swing low ($4.450) or using an Average True Range (ATR) ratio as some of you may like to use:Henry Hub Natural Gas (NGJ22) Futures (April contract, daily chart)That’s all folks for today. Have a great weekend!Like what you’ve read? Subscribe for our daily newsletter today, and you'll get 7 days of FREE access to our premium daily Oil Trading Alerts as well as our other Alerts. Sign up for the free newsletter today!Thank you.Sebastien BischeriOil & Gas Trading Strategist* * * * *The information above represents analyses and opinions of Sebastien Bischeri, & Sunshine Profits' associates only. As such, it may prove wrong and be subject to change without notice. At the time of writing, we base our opinions and analyses on facts and data sourced from respective essays and their authors. Although formed on top of careful research and reputably accurate sources, Sebastien Bischeri and his associates cannot guarantee the reported data's accuracy and thoroughness. The opinions published above neither recommend nor offer any securities transaction. Mr. Bischeri is not a Registered Securities Advisor. By reading Sebastien Bischeri’s reports you fully agree that he will not be held responsible or liable for any decisions you make regarding any information provided in these reports. Investing, trading and speculation in any financial markets may involve high risk of loss. Sebastien Bischeri, Sunshine Profits' employees, affiliates as well as their family members may have a short or long position in any securities, including those mentioned in any of the reports or essays, and may make additional purchases and/or sales of those securities without notice.
Gold Likes Recessions - Could High Interest Rates Lead to One?

Gold Likes Recessions - Could High Interest Rates Lead to One?

Finance Press Release Finance Press Release 11.03.2022 16:52
We live in uncertain times, but one thing is (almost) certain: the Fed’s tightening cycle will be followed by an economic slowdown – if not worse.There are many regularities in nature. After winter comes spring. After night comes day. After the Fed’s tightening cycle comes a recession. This month, the Fed will probably end quantitative easing and lift the federal funds rate. Will it trigger the next economic crisis?It’s, of course, more nuanced, but the basic mechanism remains quite simple. Cuts in interest rates, maintaining them at very low levels for a prolonged time, and asset purchases – in other words, easy monetary policy and cheap money – lead to excessive risk-taking, investors’ complacency, periods of booms, and price bubbles. On the contrary, interest rate hikes and withdrawal of liquidity from the markets – i.e., tightening of monetary policy – tend to trigger economic busts, bursts of asset bubbles, and recessions. This happens because the amount of risk, debt, and bad investments becomes simply too high.Historians lie, but history – never does. The chart below clearly confirms the relationship between the Fed’s tightening cycle and the state of the US economy. As one can see, generally, all recessions were preceded by interest rate hikes. For instance, in 1999-2000, the Fed lifted the interest rates by 175 basis points, causing the burst of the dot-com bubble. Another example: in the period between 2004 and 2006, the US central bank raised rates by 425 basis points, which led to the burst of the housing bubble and the Great Recession.One could argue that the 2020 economic plunge was caused not by US monetary policy but by the pandemic. However, the yield curve inverted in 2019 and the repo crisis forced the Fed to cut interest rates. Thus, the recession would probably have occurred anyway, although without the Great Lockdown, it wouldn’t be so deep.However, not all tightening cycles lead to recessions. For example, interest rate hikes in the first half of the 1960s, 1983-1984, or 1994-1995 didn’t cause economic slumps. Hence, a soft landing is theoretically possible, although it has previously proved hard to achieve. The last three cases of monetary policy tightening did lead to economic havoc.It goes without saying that high inflation won’t help the Fed engineer a soft landing. The key problem here is that the US central bank is between an inflationary rock and a hard landing. The Fed has to fight inflation, but it would require aggressive hikes that could slow down the economy or even trigger a recession. Another issue is that high inflation wreaks havoc on its own. Thus, even if untamed, it would lead to a recession anyway, putting the economy into stagflation. Please take a look at the chart below, which shows the history of US inflation.As one can see, each time the CPI annul rate peaked above 5%, it was either accompanied by or followed by a recession. The last such case was in 2008 during the global financial crisis, but the same happened in 1990, 1980, 1974, and 1970. It doesn’t bode well for the upcoming years.Some analysts argue that we are not experiencing a normal business cycle right now. In this view, the recovery from a pandemic crisis is rather similar to the postwar demobilization, so high inflation doesn’t necessarily imply overheating of the economy and could subsidy without an immediate recession. Of course, supply shortages and pent-up demand contributed to the current inflationary episode, but we shouldn’t forget about the role of the money supply. Given its surge, the Fed has to tighten monetary policy to curb inflation. However, this is exactly what can trigger a recession, given the high indebtedness and Wall Street’s addiction to cheap liquidity.What does it mean for the gold market? Well, the possibility that the Fed’s tightening cycle will lead to a recession is good news for the yellow metal, which shines the most during economic crises. Actually, recent gold’s resilience to rising bond yields may be explained by demand for gold as a hedge against the Fed’s mistake or failure to engineer a soft landing.Another bullish implication is that the Fed will have to ease its stance at some point in time when the hikes in interest rates bring an economic slowdown or stock market turbulence. If history teaches us anything, it is that the Fed always chickens out and ends up less hawkish than it promised. In other words, the US central bank cares much more about Wall Street than it’s ready to admit and probably much more than it cares about inflation.Having said that, the recession won’t start the next day after the rate liftoff. Economic indicators don’t signal an economic slump. The yield curve has been flattening, but it’s comfortably above negative territory. I know that the pandemic has condensed the last recession and economic rebound, but I don’t expect it anytime soon (at least rather not in 2022). It implies that gold will have to live this year without the support of the recession or strong expectations of it.Thank you for reading today’s free analysis. We hope you enjoyed it. If so, we would like to invite you to sign up for our free gold newsletter. Once you sign up, you’ll also get 7-day no-obligation trial of all our premium gold services, including our Gold & Silver Trading Alerts. Sign up today!Arkadiusz Sieron, PhDSunshine Profits: Effective Investment through Diligence & Care.
Intraday Market Analysis – The Canadian Dollar Recovers

Intraday Market Analysis – The Canadian Dollar Recovers

Jing Ren Jing Ren 14.03.2022 07:50
USDCAD struggles for supportThe Canadian dollar surged after a sharp drop in February’s unemployment rate. A break above the recent peak at 1.2875 has consolidated the US dollar’s lead.The RSI’s repeatedly overbought condition has led to some profit-taking. As the indicator swung into the oversold area, a pullback attracted bargain hunters in the demand zone between 61.8% (1.2700) Fibonacci retracement level and 1.2680.A rally above 1.2840 may resume the rally and send the pair to December’s high at 1.2960.EURJPY attempts reversalThe euro continues upward after the ECB left the door open to an interest rate hike. A pop above 128.60 has prompted sellers to reconsider their bets.However, traders can expect strong bearish pressure in the supply zone around 129.20. This level overlays with the 20-day moving average, making it a congestion area.An overbought RSI has tempered the initial comeback and the bulls need to consolidate their positions before they could push further. 126.50 is key support and 124.40 a second line of defense to keep the pair afloat.UK 100 bounces backThe FTSE 100 recoups losses as Britain’s GDP beat expectations in January. The rebound has gained traction after it broke above 7200.After a brief pause, the index met buying interest over 7050 and a bullish MA cross indicates an acceleration to the upside. Sentiment remains cautious from the daily chart perspective though and the bears could be waiting to sell into strength.7450 at the origin of the latest sell-off is a major hurdle as its breach could turn the mood around. Otherwise, there could be a revision of 6800 soon.
Blockchain Gaming - Where NFT, RPG And Layer 2 Meet

Apple Co-Founder Speaks Of The Future Of Bitcoin Price

Alex Kuptsikevich Alex Kuptsikevich 14.03.2022 08:42
Bitcoin has decreased over the past week by 0.9%, ending it at around $38,700. Yesterday, the decline continued, bringing the price to 38500. Ethereum lost 0.7% in 24 hours and added 1.5% in a week. Other leading altcoins from the top ten show mixed dynamics over 24 hours: from a decline of 3.8% (XRP) to a rise of 3.3% (Terra). According to CoinMarketCap, the total capitalization of the crypto market decreased by 14% in 24 hours, to $1.72 trillion. The Bitcoin Dominance Index fell 0.1% to 42.4%. The FxPro Analyst Team emphasized that the Cryptocurrency fear and greed index added 2 points in a day to 23 and remains in "extreme fear" condition. In the first half of the past week, the first cryptocurrency tried to strengthen, testing five-day highs near $42,600. Later, BTC lost all gains, again being thrown back to support near $38,000. Pressure on all risky assets continues to be exerted due to the situation in Ukraine. One of the Apple founders, Steve Wozniak, said that bitcoin would reach $100,000, which will be facilitated by the general interest in cryptocurrency. At the same time, he has a negative attitude towards altcoins and non-fungible tokens (NFTs). The US Securities and Exchange Commission (SEC) has again rejected applications from the NYSE Arca and Cboe BZX Exchanges to create spot bitcoin ETFs due to non-compliance with US exchange law. El Salvador has announced that it will postpone the issuance of bonds in bitcoins in connection with the events in Eastern Europe. The received funds were planned to be used for the construction of the "Bitcoin City". Visiting the UAE, Russians massively sell cryptocurrency for billions of dollars. Earlier, FBI Director Christopher Wray emphasized that the United States has vast experience in tracking cryptocurrencies, and Russia will not be able to use them to circumvent sanctions.  
BITCOIN LIKELY MOVE- RISE TO $41,000 & FALL TO $37,600

BITCOIN LIKELY MOVE- RISE TO $41,000 & FALL TO $37,600

Peter Adepoju Peter Adepoju 14.03.2022 09:45
What we have here is a descending triangle with two areas of support and resistance. We also have the inner trendline acting as potential support. I expect this inner trendline support to push price to $41,000, then a drop to $37,600. What do you think? Share your opinion in the comment section You can also demand for analysis of your preferred coin Happy Trading https://www.tradingview.com/chart/BTCUSDT/vmA5Ojqf-BTC-LIKELY-MOVE-RISE-TO-41k-FALL-TO-37-600/ Join my FREE Telegram Channel for daily updates and signals https://t.me/Petrock_Signals
Fed, COVID-19, Russia-Ukraine - There Are Several Factors Which Affect Chinese Stock Markets

Fed, COVID-19, Russia-Ukraine - There Are Several Factors Which Affect Chinese Stock Markets

Alex Kuptsikevich Alex Kuptsikevich 14.03.2022 11:12
News from Ukraine remains the dominant topic on the financial markets but by no means the only one. Also noteworthy is the increased pressure on Chinese companies, which has intensified since February 17th, almost exactly one month ago. In that time, the Hang Seng has lost more than 20% and in Monday's trading was below 20,000 for the first time in six years. This is an important support area of the last ten years near which the market has previously found support. In all, the drop from the peak in February 2021 represents a fall of more than 40%. The pressure on the Chinese market is due to four factors simultaneously. Firstly, the military crisis in Ukraine is exacerbating logistical problems and causing higher prices for raw materials and agricultural products, which are hitting local companies and households far higher than in developed countries. Secondly, China remains committed to a zero-tolerance approach to COVID-19, once again closing multi-million-dollar areas to contain the outbreak. While Europe and the US are smoothly removing restrictions because of the pandemic, they are the toughest in China since 2020. Thirdly, there continues to be a mass exodus of investors due to fears of delisting several Chinese companies from US exchanges. The technology sector of Chinese companies is caught between a hammer and anvil as it previously faced regulatory pressure domestically and now has the biggest investor outflow. Fourth, even in peaceful times and without the regulatory guillotine, capital traditionally flees emerging markets in the early stages of a reversal in monetary policy. The first Fed rate hike since 2018 is expected this week. Higher inflation is shaping expectations that central banks will act more aggressively than previously anticipated, further shaking out weak players from the market. Those investors trying to see signs of a bottom forming in Chinese assets are likely to watch the market's reaction to comments from the Fed, Bank of England, and Bank of Japan later this week with heightened scrutiny. If regulators focus solely on fighting inflation, the sell-off promises to intensify. If there is more focus on financial stability risks and already observed tightening of financial conditions, we could see attempts to form a bottom.
Credit Markets Keeps Downward Move, S&P 500 (SPX) Trades Lower Than Usual, Bitcoin (BTC) Price Is... Quite Stable (Sic!)

Credit Markets Keeps Downward Move, S&P 500 (SPX) Trades Lower Than Usual, Bitcoin (BTC) Price Is... Quite Stable (Sic!)

Monica Kingsley Monica Kingsley 14.03.2022 13:09
S&P 500 bulls again missed the opportunity, and credit markets likewise. Not even the virtual certainty of only 25bp hike in Mar is providing much relief to the credit markets. Given that the real economy is considerably slowing down and that recession looks arriving before Q2 ends, the markets continue forcing higher rates (reflecting inflation). In a risk-on environment, value and cyclicals such as financials would be reacting positively, but that‘s not the case right now. At the same time, equal weighted S&P 500 (that‘s RSP) hasn‘t yet broken below its horizontal support above $145, meaning its posture isn‘t as bad as in the S&P 500. Should it however give, we‘re going considerably below 4,000. That‘s why today‘s article is titled hanging by a thread. Precious metals and commodities continue consolidating, and the least volatile appreciation opportunity presents the red metal. And it‘s not only about copper – crude oil market is going through supply realignment, and demand is not yet being destroyed on a massive scale. Coupled with the long-term underinvestment in exploration and drilling (US is no longer such a key producer as was the case in 2019), crude oil prices would continue rising on fundamentals, meaning the appreciation pace of Feb-Mar would slow down. Precious metals would have it easy next as the Fed is bound to be forced to make a U-turn in this very short tightening cycle (they didn‘t get far at all, and inflation expectations have in my view become unanchored already). Let‘s move right into the charts (all courtesy of www.stockcharts.com). S&P 500 and Nasdaq Outlook S&P 500 bears won the day, and Nasdaq remains in a sorry state. 4,160s are the line in the sand, breaking which would accelerate the downswing. Inflation is cutting into the earnings, and stocks aren‘t going to like the coming Fed‘s message. Credit Markets HYG didn‘t keep at least stable – the pressure in the credit markets is ongoing, and the stock market bulls don‘t have much to rejoice over here. Gold, Silver and Miners Precious metals downswings are being bought, and are shallow. The sellers are running out of steam, and the opportunity to go somewhat higher next, is approaching. Crude Oil Crude oil is stabilizing, but it may take some time before the upswing continues with renewed vigor. As for modest extension of gains, we won‘t be disappointed. Copper Copper had one more day of fake weakness, but the lost gains of Friday would be made up for next – and given no speculative fever here to speak of, it would have as good lasting power as precious metals. Bitcoin and Ethereum Cryptos remain undecided, but indicate a little breathing room, at least for today. Still, I wouldn‘t call it as risk-on constellation throughout the markets. Summary S&P 500 is getting in a precarious position, but the internals aren‘t (yet) a screaming sell. Credit markets continue leading lower, and the risk-off positioning is impossible to miss. Not even financials are able to take the cue, and rise. It‘s that the rise in yields mirrors the ingrained inflation, and just how entrenched it‘s becoming. No surprise if you were listening to me one year ago – the Fed‘s manouevering room got progressively smaller, and the table is set for the 2H 2022 inflation respite (think 5-6% year end on account of recessionary undercurrents) to be superseded with even higher inflation in 2023, because the Fed would be forced later this year to turn back to easing. Long live the precious metals and commodities super bulls! Thank you for having read today‘s free analysis, which is available in full at my homesite. There, you can subscribe to the free Monica‘s Insider Club, which features real-time trade calls and intraday updates for all the five publications: Stock Trading Signals, Gold Trading Signals, Oil Trading Signals, Copper Trading Signals and Bitcoin Trading Signals.
Tuesday's EUR/USD Analysis: Chaotic Movements on 30M Chart

DAX (GER 40) Has Increased By Ca. 3% Since Friday. Deutsche Bank (DBK), Porsche (PAH3) And Volkswagen (VOW3) Have Gained The Most

Mikołaj Marcinowski Mikołaj Marcinowski 14.03.2022 15:53
It’s a quite good day for German most popular index. Charts - courtesy of TradingView.com There are three brands which should be definitely satisfied as shortly before markets closes… Deutsche Bank (DBK) has gone ca. 7.4% up: Porsche (PAH3) has added ca. 6%: Volkswagen has increased by ca. 5.2% Source: TradingView.com  
Apple Stock News and Forecast: AAPL likely to see more supply chain disruptions, $120 price target

Apple Stock News and Forecast: AAPL likely to see more supply chain disruptions, $120 price target

FXStreet News FXStreet News 14.03.2022 15:57
AAPL stock closed lower on Friday as fears over Ukraine escalation hit.Apple is likely to see more supply chain disruptions due to Chinese lockdowns.Inflation will also cause significant headaches for Apple's top brass.Apple's stock (AAPL) closed lower on Friday as initial optimism on peace talks was quickly washed away by reports of an escalation of the Russian conflict in Ukraine. The market closed lower for the Nasdaq and S&P 500, and most sectors were dragged lower. Apple was not immune to the selling pressure. Apple Stock NewsApple did stage a mid-week product release called Peak Performance. The company unveiled a lower-cost iPhone and some other products in the Mac and IPad space, but the show failed to generate much investor enthusiasm as geopolitical events remain dominant. The analyst community was reasonably impressed with the launch though with Loup stealing the show as they slapped a $250 price target on Apple."Apple remains our Top Pick in IT Hardware given durable fundamentals, predictable cash flows, additional 2022 product launches, and platform stability in an otherwise uncertain and volatile market backdrop," Morgan Stanley said as they put a $210 price target on the stock.However, we note the situation in China over the weekend where lockdowns are back in the cards as the country tries to contain the latest covid surge. According to Reuters, Foxconn has had to close its Shenzen factory, and that will be a hit to Apple's supply chain. The closure is expected to be brief, but the situation is fluid. Assuming this is the Omicron variant, then it is extremely transmissible compared to earlier versions where China was able to contain the circus using strict lockdowns. This is not a good look for Apple.Apple Stock ForecastApple stock is now likely to break the key support at $153.17 today as the market will take the lockdown news negatively. But more importantly, breaking this support at $153.17 means Apple will also break the 200-day moving average, which is set just above at $153.60. This adds yet more negative momentum to the picture. The move will likely slow as there is a lot of volume down here as we can see from the volume profile bars on the right of the chart. It does bring $138.31 as the next target though. The declining Relative Strength Index (RSI) and Moving Average Convergence Divergence (MACD) are confirming the bearish trend.Apple chart, daily
Increase Of Whales Wallets And California's Digital Financial Assets Law

Top 3 Price Prediction Bitcoin, Ethereum, Ripple: Crypto markets in disarray

FXStreet News FXStreet News 14.03.2022 15:57
Bitcoin price loses momentum as it slides back into consolidation along the $36,398 to $38,895 demand zone. Ethereum price slides below a symmetrical triangle, hinting at a move below $2,000. Ripple price remains bullish as bulls eye a retest of $1 psychological level. Bitcoin price continues to tag the immediate demand area, weakening it. Despite the sudden bursts in buying pressure, BTC seems to be in consolidation mode. Ethereum price has triggered a bearish outlook while Ripple price shows signs of heading higher. Also read: Gold Price Forecast: Lower lows hinting at a steeper decline Bitcoin price moves with no sense of direction Bitcoin price dips into the $36,398 to $38,895 demand zone for the fourth time without producing any higher highs. This price action is indicative of a consolidation and is likely to breach lower. A daily candlestick close below $36,398 will invalidate the demand zone and knock BTC to retest the weekly support level at $34,752, which is the last line of defense. A breakdown of this barrier will open the path for bears to crash Bitcoin price to $30,000 or lower. Here, market makers will push BTC below $29,100 to collect liquidity resting below the equal lows formed in mid-2021. BTC/USD 1-day chart While things look inauspicious for Bitcoin price, a strong bounce off the said demand zone that retests the weekly supply zone, ranging from $45,550 to $51,860, will provide some relief for bulls. Ethereum price favors bears Ethereum price action from January 22 to March 4 created three lower highs and higher lows, which, when connected via trend lines, resulted in a symmetrical triangle formation. This technical formation forecasts a 26% move obtained by measuring the distance between the first swing high and swing low to the breakout point. On March 6, ETH breached below, signaling a bearish breakout, which puts the theoretical target at $1,962. A breakdown of the weekly support level at $2,541 is vital; a breakdown of this barrier will expedite the move lower. ETH/USD 1-day chart Regardless of the recent onslaught of bearishness, Ethereum price needs to produce a daily candlestick close above $3,413 to invalidate the bullish thesis. Such a development will also open the possibility of kick-starting a potential uptrend. https://youtu.be/-U0QTf_NwnI Ripple price maintains its bullish momentum Ripple price traverses a bull flag continuation pattern, a breakout from which hints at a continuation of the uptrend. This technical formation contains an impulsive move higher followed by a consolidation in the form of a pennant. The 55% rally between February 3 and 8 formed a bullish flag pole continuation pattern, and the consolidation that ensued in the form of lower highs and higher lows created the pennant. Together, the bullish setup forecasts a 31% ascent for XRP price, obtained by adding the flag pole’s height to the breakout point from the pennant. On March 11, Ripple price broke out from the pennant, signaling the start of the 31% uptrend to $1. So far, the retest seems to be holding up well, so investors can expect the remittance token to continue its journey higher to the $1 psychological level. XRP/USD 1-day chart A daily candlestick close below the immediate demand zone, ranging from $0.689 to $0.705, will create a lower low and invalidate the bullish thesis for Ripple price. In such a case, XRP has the twelve-hour demand zone, extending from $0.546 to $0.633 to support any residual selling pressure. https://youtu.be/rCFQmMHWJZ4
Is It Time for Brent and WTI Crude Oil Futures to Correct Lower?

Is It Time for Brent and WTI Crude Oil Futures to Correct Lower?

Finance Press Release Finance Press Release 14.03.2022 17:05
Crude oil prices are slipping from their recent highest levels. Where could we see the next support located?Oil prices fell sharply on Monday – extending last week’s decline – driven by potential progress in Ukraine-Russia talks.India is considering taking advantage of Russia's discounted crude oil and other commodities offers by settling transactions through the rupee/ruble payment system. Meanwhile, on the eastern side, there is a rush to replace the Russian barrels in the west, but immediate availability is limited.In addition, some fears that OPEC+ countries might not be able to easily increase supply remain, even though the UAE said last week that OPEC+ could double the output to the market (about 800,000 bpd) very quickly. However, this sounds very challenging since OPEC+ countries have already struggled to bring in 400,000 bbd.On the Asian side, a slowdown in demand could have been seen as 17 million residents in Shenzhen, the technological centre of southern China, were locked down on Sunday after reports of epidemic outbreaks linked to the neighbouring territory of Hong Kong, where the Omicron strain seems to have spread. There are growing fears that other cities could follow suit to comply with the country's strict zero-COVID policy, adopted by the government of the People's Republic of China.WTI Crude Oil (CLJ22) Futures (April contract, daily chart)Like what you’ve read? Subscribe for our daily newsletter today, and you'll get 7 days of FREE access to our premium daily Oil Trading Alerts as well as our other Alerts. Sign up for the free newsletter today!Thank you.Sebastien BischeriOil & Gas Trading Strategist* * * * *The information above represents analyses and opinions of Sebastien Bischeri, & Sunshine Profits' associates only. As such, it may prove wrong and be subject to change without notice. At the time of writing, we base our opinions and analyses on facts and data sourced from respective essays and their authors. Although formed on top of careful research and reputably accurate sources, Sebastien Bischeri and his associates cannot guarantee the reported data's accuracy and thoroughness. The opinions published above neither recommend nor offer any securities transaction. Mr. Bischeri is not a Registered Securities Advisor. By reading Sebastien Bischeri’s reports you fully agree that he will not be held responsible or liable for any decisions you make regarding any information provided in these reports. Investing, trading and speculation in any financial markets may involve high risk of loss. Sebastien Bischeri, Sunshine Profits' employees, affiliates as well as their family members may have a short or long position in any securities, including those mentioned in any of the reports or essays, and may make additional purchases and/or sales of those securities without notice.
EURUSD Has Climbed A Bit, DAX (GER40) Has Moved Up Slightly, AUDUSD Chart Shows A Small Downtrend

EURUSD Has Climbed A Bit, DAX (GER40) Has Moved Up Slightly, AUDUSD Chart Shows A Small Downtrend

Jing Ren Jing Ren 15.03.2022 08:02
EURUSD struggles to rebound The US dollar bounces across the board as the Fed may possibly raise interest rates on Wednesday. The pair found support near May 2020’s lows around 1.0800. The RSI’s oversold condition on the daily chart prompted the bears to take some chips off the table, alleviating the pressure. 1.1110 is a fresh resistance and its breach could lift offers to 1.1270. In fact, this could turn sentiment around in the short term. Failing that, a break below 1.0830 could trigger a new round of sell-off towards March 2020’s lows near 1.0650. AUDUSD lacks support The Australian dollar slipped after dovish RBA minutes. The pair continues to pull back from its recent top at 0.7430. A drop below the demand zone at 0.7250 further puts the bulls on the defensive. The former support has turned into a resistance level. 0.7170 at the origin of a previous breakout is key support. An oversold RSI may raise buyers’ interest in this congestion area. A deeper correction could invalidate the recent rebound and send the Aussie to the daily support at 0.7090. GER 40 attempts to rebound The Dax 40 edges higher as Russia and Ukraine hold a fourth round of talks. The index bounced off the demand zone (12500) from the daily chart, a sign that price action could be stabilizing. The supply zone around the psychological level of 14000 sits next to the 20-day moving average, making it an important hurdle. A tentative breakout may have prompted sellers to cover. 14900 would be the target if the rebound gains momentum. On the downside, 13300 is fresh support, and 12720 is the second line of defense.
Tesla CEO Elon Musk To Save His Bitcoins And Other Crypto

Tesla CEO Elon Musk To Save His Bitcoins And Other Crypto

Alex Kuptsikevich Alex Kuptsikevich 15.03.2022 08:36
Bitcoin slightly strengthened over the past day to 38,800 (+0.5%). Ethereum lost 0.8%, while other leading altcoins from the top ten range showed an amplitude from -2.4% (Avalanche) to +3.7% (Terra). According to CoinMarketCap, the total capitalization of the crypto market grew by 0.4% in 24 hours, to $1.73 trillion. The Bitcoin Dominance Index rose 0.3 points to 42.7%. The fear and greed index is at 21 (-2 points) now and is remaining in a state of "extreme fear". The FxPro Analyst Team emphasized that Bitcoin updated its weekly lows around $37,500 today. Subsequently, the first cryptocurrency bounced up, briefly rising above $39,300 in the middle of the day on the news from Elon Musk. The CEO of Tesla said he had no plans to sell his cryptocurrencies. Musk tweeted that he owns not only Bitcoin but also ETH and DOGE. However, BTC did not show a strong reaction to this statement: during the American session, it levelled a slight increase against the backdrop of a fall in US stock indices. Dogecoin reacted to Musk's comment much more violently, jumping more than 7% at the time. According to CoinShares, institutional investors withdrew about $110 million from crypto funds last week, despite seeing the largest capital inflow in three months the week earlier. The European Union abandoned plans to introduce a virtual ban on mining based on the Proof-of-Work (PoW) mechanism. At the same time, Russian State Duma deputy Alexander Yakubovsky said that Russia has a real opportunity to create its own crypto exchanges.
Have Stocks Reached the Bottom?

Have Stocks Reached the Bottom?

Paul Rejczak Paul Rejczak 15.03.2022 14:44
  The S&P 500 index extended its Friday’s decline yesterday, but it remained within a week-long volatile consolidation. Is this a medium-term bottoming pattern? The broad stock market index lost 0.74% on Monday, Mar. 14, after its Friday’s decline of 1.3%. The market bounced from the short-term resistance level of 4,300 and it extended a volatile consolidation following the early March sell-off from the 4,400 level. Last week on Tuesday it reached the local low of 4,157.87 and then we’ve seen a rebound to the 4,300 level. Yesterday the S&P 500 came back below the 4,200 level again. The market is closer to the Feb. 24 local low of 4,114.65. It was 704 points or 14.6% below the January 4 record high of 4,818.62 then. There’s still a lot of uncertainty concerning the ongoing Ukraine conflict. This morning the S&P 500 index is expected to open 0.5% higher following lower than expected Producer Price Index release. The market will be waiting for the important tomorrow’s FOMC Statement release, and we may see some further consolidation. The nearest important resistance level is now at around 4,200. On the other hand, the support level is at 4,100-4,150. The S&P 500 index continues to trade slightly above the recently broken downward trend line, as we can see on the daily chart (chart by courtesy of http://stockcharts.com): Futures Contract Trades Along the Previous Lows Let’s take a look at the hourly chart of the S&P 500 futures contract. Today it is bouncing from the 4,140 level. It’s a support level marked by the previous local low. The support level is also at 4,100. We are still maintaining our long position, as we are expecting an upward correction from the current levels (chart by courtesy of http://tradingview.com): Conclusion The S&P 500 index will likely bounce this morning following better-than-expected producers’ inflation data release. The market may extend its volatile consolidation and we may see more uncertainty, as investors will be waiting for the Wednesday’s FOMC Statement release. Here’s the breakdown: The S&P 500 index will likely bounce this morning, but we may see some more short-term uncertainty. We are maintaining our long position (opened on Feb. 22). We are still expecting an upward correction from the current levels. Like what you’ve read? Subscribe for our daily newsletter today, and you'll get 7 days of FREE access to our premium daily Stock Trading Alerts as well as our other Alerts. Sign up for the free newsletter today! Thank you. Paul Rejczak,Stock Trading StrategistSunshine Profits: Effective Investments through Diligence and Care * * * * * The information above represents analyses and opinions of Paul Rejczak & Sunshine Profits' associates only. As such, it may prove wrong and be subject to change without notice. At the time of writing, we base our opinions and analyses on facts and data sourced from respective essays and their authors. Although formed on top of careful research and reputably accurate sources, Paul Rejczak and his associates cannot guarantee the reported data's accuracy and thoroughness. The opinions published above neither recommend nor offer any securities transaction. Mr. Rejczak is not a Registered Securities Advisor. By reading his reports you fully agree that he will not be held responsible or liable for any decisions you make regarding any information provided in these reports. Investing, trading and speculation in any financial markets may involve high risk of loss. Paul Rejczak, Sunshine Profits' employees, affiliates as well as their family members may have a short or long position in any securities, including those mentioned in any of the reports or essays, and may make additional purchases and/or sales of those securities without notice.
Unveiling the Hidden Giant: The Growing Dominance of Non-Bank Financial Institutions

GameStop (GME) Stock News and Forecast: What to expect from GameStop earnings

FXStreet News FXStreet News 15.03.2022 16:27
GameStop stock is back on the top trending list but still struggling. GME stock is down 43% year to date. GameStop releases earnings on Thursday after the close. GameStop (GME) is back on the top trending lists, though it has not been seen for a while. Some other stocks have taken the limelight, recently some micro-cap oil stocks, but these have gone back to sleep now as the crowd moves on. GameStop was the original though, and it releases earnings after the close on Thursday. This is generating some attention on the usual social media sites and helping the GME stock price too. At the time of writing, GME stock is up 1.4% at $79.05. GameStop Stock News GameStop earnings are out after the close with a conference call afterward. GME is expected to report earnings per share (EPS) of $0.84 and revenue of $2.22 billion. This would be a marked improvement on Q3 earnings, which it reported on December 8. Back then EPS was forecast at $-0.52 but came in way behind at $-1.39. Revenue came in ahead of forecasts back then too. GME lost 10% the day after its Q3 earnings. We remain bearish on GME stock though and cannot argue against the current trend. The stock has lost 65% over the last nine months and has been on a one-way spiral. The current environment is punishing high growth stocks, and the recent spike in yields will only add to that. It needs blockbuster earnings on Thursday from GME to change that sentiment. GME still trades on a very high multiple compared to other consumer stocks, and rising inflation will hurt. GameStop is also a high street store. It pays wages, electricity, etc., all of which are rising and will continue to do so. GameStop Stock Forecast GME stock closed below our key support at $86 on Monday. This will likely lead to more selling pressure. That will bring GME quickly down to $70, and we may then see a stabilization period as volume is quite strong around the $70 level. GameStop (GME) stock chart, daily    
The Bitcoin Market Is Now Developing The Corrective Cycle To The Downside

Bitcoin Price Charts: BTC/XAUUSD And BTCUSDT - 15/03/22

Korbinian Koller Korbinian Koller 15.03.2022 14:39
Bitcoin is needed as an alternative   The weakened US-Dollar and the present unexpected climate seems not being fully reflected in bitcoin´s price. Consequently, bitcoin prices could soar in the not too distant future. Bitcoin/Gold-Ratio, daily chart, bottom building: Bitcoin/Gold-Ratio, daily chart as of March 15th, 2022. A phenomenon in times of crisis is that individuals look for absolutes or extremes to resolve difficult circumstances. We instead advocate a more principle-based process of solving problems, an approach of choices. Regarding wealth preservation, this would mean gold and silver alongside bitcoin. The daily chart of the bitcoin/gold-ratio shows the bottom building after a downtrend. Currently, one can purchase a bitcoin for twenty ounces of gold. Nearly half as much as five months ago. Indeed, an opportunity to rotate one’s precious metal holding partially into a cheap bitcoin acquisition.     Bitcoin, monthly chart, in waiting position: Bitcoin in USD, monthly chart as of March 15th, 2022. War inherently divides nations, and that does not mean limiting only the ones directly in conflict with each other. It is this divide that, in addition, fuels the competition for each nation to be first in their digital currency release. Sanctioned countries have limited access to the US-Dollar. Consequently, they are highly motivated to create an alternate payment method. The monthly chart is not showing this fundamental support for bitcoin. Early signs of a triangle show that we find likely to break to the upside. Slow stochastic indicator reading (A) shows that the last time around at these levels, a strong up move followed. Similar to the yellow CCI turbo line-level reading (B). Before such a move, we witnessed a quick price spike down (C), which would be no surprise. Bitcoin, weekly chart, bitcoin as an alternative is needed: Bitcoin in USD, weekly chart as of March 15th, 2022. Zooming into the weekly time frame, we can make out the battle between bulls and bears in more detail. Over the last three weeks, prices were rejected above the POC (point of control = high volume node, where our volume profile analysis ranges over the previous fifteen months). As well, price behavior is reflecting the war climate’s uncertainty. At the same time, the bulls have held steady any attempt of the bears trying to push prices below US$37,500. Hence, we should see a substantial move once trading snaps out of this “magnet trading” to the high-volume node. Bitcoin, daily chart, gains and volatility: Bitcoin in USD, daily chart as of March 15th, 2022. The daily chart of bitcoin above describes how we see the future unfold. We anticipate the price to reach all-time highs within the upcoming month. Unfortunately, not in bitcoins typical swing trading manner. We foresee a choppy, volatile market. Consequently, short and midterm trading will be challenging. Stepping up in time frame is a helpful approach to avoid the noise. Bitcoin is needed as an alternative: Governments will try to keep their monopolies and power. However, we don’t think that the adoption of a digital dollar by the masses will not be that easy. We find this especially true to be in a highly transitory time of rapid changes and many challenges. Typically, multiple propaganda waves through media have bridged such doubt but might have lost some of its trustworthiness. Consequently, bitcoin has a fair chance for mass adoption just as well. It already has a history and carries inherent features of freedom that people might long for more than anticipated.   Feel free to join us in our free Telegram channel for daily real time data and a great community. If you like to get regular updates on precious metals and cryptocurrencies, you can also subscribe to our free newsletter. Disclosure: This article and the content are for informational purposes only and do not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision. The views, thoughts and opinions expressed here are the author’s alone. They do not necessarily reflect or represent the views and opinions of Midas Touch Consulting. By Korbinian Koller|March 15th, 2022|Tags: Bitcoin, Bitcoin bounce, Bitcoin bullish, Bitcoin consolidation, bitcoin/gold-ratio, crypto analysis, crypto chartbook, DeFi, Gold, Gold bullish, low risk, quad exit, technical analysis, trading education|0 Comments About the Author: Korbinian Koller Outstanding abstract reasoning ability and ability to think creatively and originally has led over the last 25 years to extract new principles and a unique way to view the markets resulting in a multitude of various time frame systems, generating high hit rates and outstanding risk reward ratios. Over 20 years of coaching traders with heart & passion, assessing complex situations, troubleshoot and solve problems principle based has led to experience and a professional history of success. Skilled natural teacher and exceptional developer of talent. Avid learner guided by a plan with ability to suppress ego and empower students to share ideas and best practices and to apply principle-based technical/conceptual knowledge to maximize efficiency. 25+ year execution experience (50.000+ trades executed) Trading multiple personal accounts (long and short-and combinations of the two). Amazing market feel complementing mechanical systems discipline for precise and extreme low risk entries while objectively seeing the whole picture. Ability to notice and separate emotional responses from the decision-making process and to stand outside oneself and one’s concerns about images in order to function in terms of larger objectives. Developed exit strategies that compensate both for maximizing profits and psychological ease to allow for continuous flow throughout the whole trading day. In depth knowledge of money management strategies with the experience of multiple 6 sigma events in various markets (futures, stocks, commodities, currencies, bonds) embedded in extreme low risk statistical probability models with smooth equity curves and extensive risk management as well as extensive disaster risk allow for my natural capacity for risk-taking.
Kishu Inu, A Meme Coin, Promotes Growth And Development Through Its Transparency

(SHIB) Shiba Inu Price - How Will Be The Altcoin Affected?

FXStreet News FXStreet News 15.03.2022 16:27
Shiba Inu price action sees price pressure against the technical triangle base at $0.00002140. SHIB price action set to test the low of its existence. As global markets threaten to drop into a recession, investors will flee cryptocurrencies in the coming days. Shiba Inu (SHIB) price action is on the cusp of breaking out of a bearish triangle that has dictated price action over the past two months. With a break to the downside, room opens up for an almost 70% drop towards the lowest levels in its existence as investors flee cryptocurrencies overall, following more and more reports that global markets are going into recession. With this dire projection in mind, expect to see further bleeding of SHIB price action as it falls back to $0.00000655. Shiba Inu price action bleeds as investors flee from recession fears Shiba Inu price action is seeing a massive squeeze building from bears trying to break out of the bearish triangle as more and more headwinds combine each day. The situation in Ukraine and new lockdowns in China are spelling supply chain issues again, and banks are starting to use the word recession more often in their reports about the future. This weighs on investor sentiment as cryptocurrencies are put on the backfoot and witness a daily outflow of cash from investors pulling the plug on their positions. SHIB price looks to break below $0.00002140 any moment now, with considerable momentum behind it from the death cross with the 55-day Simple Moving Average (SMA) below the 200-day SMA. Next to that, the Relative Strength Index is nowhere near being oversold, opening the door for short sellers to pick up some more gains in the downtrend. Expect to see a sharp drop in the coming days towards $0.00001000, breaking the monthly S1 and S2 support levels along the way, only to find a floor near $0.00000607, which is near the lowest level in SHIB’s. SHIB/USD daily chart Although red flags are popping up all over financial markets, investors could still be working on a turnaround in an attempt to look beyond the current crisis at hand. If central banks can steer economies out of this dire situation, expect investors to start buying into cryptocurrencies to take advantage of lucrative discounts. This could spill into a turnaround and see price action first pop back above $0.00002500, breaking the bearish 55-day SMA and hitting $0.00002787, above the 28.6% Fibonacci level.
USDCHF Nears 0.940 Levels, EURGBP Keeps Its "Stability", USOIL Is Like A Benchmark For Geopolitical Situation

USDCHF Nears 0.940 Levels, EURGBP Keeps Its "Stability", USOIL Is Like A Benchmark For Geopolitical Situation

Jing Ren Jing Ren 16.03.2022 08:11
USDCHF breaks major resistance The US dollar continues upward as the Fed is set to increase its interest rates by 25bp. The rally sped up after it cleared the daily resistance at 0.9360. The bullish breakout may have ended a 9-month long consolidation from the daily chart perspective. The rising trendline confirms the optimism and acts as an immediate support. Solid momentum could propel the greenback to April 2021’s high at 0.9470. Buyers may see a pullback as an opportunity to jump in. 0.9330 is the closest support should this happen. EURGBP tests key resistance The sterling found support after a drop in Britain’s unemployment rate in January. A break above the daily resistance at 0.8400 has prompted sellers to cover, easing the downward pressure. Sentiment remains downbeat unless buyers push the single currency past 0.8475. In turn, this could pave the way for a reversal in the weeks to come. Otherwise, the bears might double down and drive the euro back into its downtrend. A fall below 0.8360 would force early bulls to liquidate and trigger a sell-off to 0.8280. USOIL drops towards key support WTI crude falls back over a new round of ceasefire talks between Russia and Ukraine. Previously, a bearish RSI divergence indicated a loss of momentum as the price went parabolic. Then a steep fall below 107.00 was a sign of liquidation. Buyers continue to unwind their positions as the price slides back to its pre-war level. The psychological level of 90.00 is an important support on the daily chart. An oversold RSI may attract buying interest in this demand zone. 105.00 is the first resistance before buyers could regain control.
Binance Academy summarise year 2022 featuring The Merge, FTX and more

Crypto Prices: Bitcoin (BTC) Gained 1.4%, ETH Increased By 3.1%, Polkadot (DOT) Went Up By 4.5% And Terra Decreased (-6%)

Alex Kuptsikevich Alex Kuptsikevich 16.03.2022 08:30
BTC added 1.4% over the past day to $39.3K. Attempts to develop an offensive ran into a selling wall. The most important line of defense in the first cryptocurrency at the 38.0K area is still more confident withstanding all bear attacks. Ethereum added 3.1% to $2.6K in 24 hours. Other leading altcoins range from a 6% decline (Terra) to a 4.5% rise (Polkadot). According to CoinMarketCap, the total capitalization of the crypto market grew by 1.4%, to $1.75 trillion. The Bitcoin Dominance Index lost 0.1 percentage points to 42.6%. Cryptocurrency fear and greed index added 3 points to 24, although it remains in the territory of "extreme fear". The FxPro Analyst Team mentioned that during the Asian session, there was a sharp jump in the rate from $39.2K to $41.7K, followed by an almost equally rapid pullback to the area below $39.0K. Stop orders were triggered in the morning low-liquid market, but it is clear that the selling pressure remains huge. In fact, since February 10, the rises in the Bitcoin rate have become less and less long and end at ever lower levels. The reason for the jump in prices in early trading in Asia was the statements of official Beijing on support for the markets, which caused a rally in the shares of the region. However, Bitcoin frankly ignored the drawdown of Asian stocks in recent days, so it quickly returned to its place, because other factors have become its key drivers in recent days. Meanwhile, Glassnode believes that bitcoin investors may face a final capitulation. This is indicated by the high proportion of "unprofitable" coins among short-term holders. At the same time, the uncertainty associated with geopolitics and the Fed rate weakened the accumulation of BTC by hodlers and caused an increase in sales on their part.
CZK: Koruna's Resilience Amid Global Influences - 16.08.2023

Fed Is About To Release The Decision, Bank Of England's (BoE) Turn Incoming. GBP Is In Focus As Interest Rate Is Decided

Mikołaj Marcinowski Mikołaj Marcinowski 16.03.2022 14:08
A week of monetary policy releases is coming to an end. The following day (17/03/22) Bank Of England Releases its decision about interest rate. There are also some important data coming from the European Union and the US. What's ahead? Let's take a look at this brief commentary of the upcoming economic events around the world. Events' data: courtesy of Investing.com Australia and European Union We live in times of inflation and employment some would say. Taking that into consideration all of indicators containing 'inflation' or 'employment' arouses our interest. Having said so, don't forget to stay awake at 0:30 a.m. on Thursday as Australia has their Employment change released. If you struggle to stay awake at night, don't miss the morning releases which are ECB President Lagarde testimony at 9:30 a.m. and the publishing of EU CPI (YoY). Corporate Price Index previously amounted to 5.8%. United Kingdom Exactly at 12 o'clock (there's no better time of the day to release important data there) an important announcement takes place in the UK. At this time BoE interest rate goes public. The current one amounts to 0.5% USA Shortly after important news coming from the UK, a series of the US indicators is published. Simultanously released Bulding Permits (1.895M), Initial Jobless Claims (227K) and Philadelphia Fed Manufacturing (16.0) are ones to keep an eye on. New Zealand In New Zealand, at 9:45 p.m., the GDP (QoQ) is released. The Gross Domestic Product previously amounted to -3.7% Source: Investing.com Time: GMT  
Snowball‘s Chance in Hell

Snowball‘s Chance in Hell

Monica Kingsley Monica Kingsley 16.03.2022 15:40
S&P 500 is turning around, and odds are that would be so till the FOMC later today. The pressure on Powell to be really dovish, is on. I‘m looking for a lot of uncerrtainty and flexibility introduction, and much less concrete rate hikes talk that wasn‘t sufficient to crush inflation when the going was relatively good, by the way.As stated yesterday:(…) The rising tide of fundamentals constellation favoring higher real asset prices, would continue kicking in, especially when the markets sense a more profound Fed turn than we saw lately with the 50bp into 25bp for Mar FOMC. Make no mistake, the inflation horse has left the barn well over a year ago, and doesn‘t intend to come back or be tamed.Not that real assets including precious metals would be reversing on a lasting basis here – the markets are content that especially black gold keeps flowing at whatever price, to whatever buyer(s) willing to clinch the deal. Sure, it‘s exerting downward pressure on the commodity, but I‘m looking for the extraordinary weakness to be reversed.We‘re seeing such a reversal in commodities already, and precious metals have a „habit“ of joining around the press conference. Yesterday‘s performance of miners and copper, provides good enough a hint.Let‘s move right into the charts (all courtesy of www.stockcharts.com).S&P 500 and Nasdaq OutlookS&P 500 upswing looks like it can go on for a while. Interestingly, it was accompanied by oil stocks declining – have we seen THE risk-on turn? This looks to be a temporary reprieve unless the Fed really overdelivers in dovishness.Credit MarketsHYG is catching some bid, and credit markets are somewhat supporting the risk-on turn. Yields though don‘t look to have put in a top just yet, which means the stock market bears would return over the coming days.Gold, Silver and MinersPrecious metals are looking very attractive, and the short-term bottom appears at hand – this is the way they often trade before the Fed. I‘m fully looking for gold and silver to regain initiative following the cautious and dovish Fed tone.Crude OilCrude oil didn‘t test the 50-day moving average, and I would expect the bulls to step in here – after all, the Fed can‘t print oil, and when they go dovish, the economy just doesn‘t crash immediately...CopperCopper is refusing to decline, and the odd short-term weakness would be reversed – and the same goes for broader commodities, which have been the subject of my recent tweet.Bitcoin and EthereumCryptos aren‘t fully risk-on, but cautiously giving the bulls benefit of the doubt. Not without a pinch of salt, though.SummaryS&P 500 bulls are on the (short-term) run, and definitely need more fuel from the Fed. Significant dovish turn – they would get some, but it wouldn‘t be probably enough to carry risk-on trades through the weekend. The upswing is likely to stall before that, and commodities with precious metals would catch a fresh bid already today. This would be coupled with the dollar not making any kind of upside progress to speak of. The true Fed turn towards easing is though far away still (more than a few months away) – the real asset trades are about patience and tide working in the buyers favor. The yield curve remains flat as a pancake, and more stagflation talk isn‘t too far...Thank you for having read today‘s free analysis, which is available in full at my homesite. There, you can subscribe to the free Monica‘s Insider Club, which features real-time trade calls and intraday updates for all the five publications: Stock Trading Signals, Gold Trading Signals, Oil Trading Signals, Copper Trading Signals and Bitcoin Trading Signals.
Bitcoin price undergoes sharp fade as bulls storm out of the gate

Bitcoin price undergoes sharp fade as bulls storm out of the gate

FXStreet News FXStreet News 16.03.2022 16:28
Bitcoin price action jumped 7% but fell back sharply in European trading.BTC price action looks to be set to jump above $41,756.61 once the US session kicks in.Expect to see a further continuation of this price jump throughout the week as long as positive signals come from the ongoing talks in Russia.Bitcoin (BTC) price action is performing a countercyclical move this morning as Asian bulls storm out of the gate on positive-speak from the Chinese government. From now on into the European session, gains are still present but have faded slightly. Expect to see a subsequent round of wins coming in during the US session and going further into this week as long as positive signals are communicated independently from both sides in Ukraine and Russia peace talks.Bitcoin price sees bulls swimming against the tideBitcoin price action seems to have awakened many investors who fell asleep staring at their television screen for the past three weeks on the Russian invasion of Ukraine. As they pulled out their money and went long cash, cryptocurrencies dried up a bit and were left to the mercy of bears. Today a few bears will be licking their wounds as bulls have gone in for a push higher as more positive signals come from both Ukraine and Russia on talks, and markets are getting used to the war headlines as everything looks to be priced in. BTC price action technically got rejected to the upside at $41,756.61, the base of a bearish triangle that formed a few weeks ago. Expect this fade in early trading to provide a window of opportunity for European and American bulls to join the rally and ramp up the price above $41,756.61, where a close above will be key this evening. If trading can start on Thursday with an opening price above $41,756.61, expect to see another leg higher by tomorrow evening, near $44,088.73 and even $45,261.84 by Friday.BTC/USD daily chartThe risk could be that the current fade, after the rejection at $41,756.61, could topple into a deeper loss if bears push the price below the opening price. This would trigger panic amongst bulls that got in and will have them remember the same scenario that happened exactly one week ago on Wednesday with a false breakout and a full paring back, and even eking out further losses the day after. Expect bulls to exit instantly once BTC price action prints red numbers, and this to spiral into a setback for BTC price towards $38,703.32 or even $36,709.19.
Oil Prices Keep Falling. Is It Time to Get Long on Black Gold?

Oil Prices Keep Falling. Is It Time to Get Long on Black Gold?

Sebastian Bischeri Sebastian Bischeri 16.03.2022 16:43
  Crude oil continues to decline due to lowered demand, and the petrodollar seems threatened, losing interest. What is the best strategy to take now?  Oil prices kept falling this week, driven by potential progress in Ukraine-Russia talks and a potential slowdown in the Giant Panda’s (China) economic growth due to epidemic lockdowns in some regions where a surge of Omicron was observed. As I mentioned in my previous article, India considers getting Russian crude oil supplies and other commodities at a reduced price by settling transactions through a rupee/rouble payment system. Meanwhile, we keep getting rumors – notably reported by The Wall Street Journal – that Saudi Arabia and China are also currently discussing pricing some Saudi oil exports directly in yuan. The Chinese are actively seeking to dethrone the dollar as the world’s reserve currency, and this latest development suggests that the petrodollar is now under threat. US Dollar Currency Index (DXY) CFD (daily chart) The recent correction in crude oil, happening just seven days after reaching its 14-year highs, might show some signs that the conflict in Ukraine will slow down consumption. On the other hand, if Iranian and Venezuelan barrels flooded the market, we could see crude oil, petroleum products, and distillates turning into new bear markets. WTI Crude Oil (CLJ22) Futures (April contract, daily chart) Brent Crude Oil (BRNK22) Futures (May contract, daily chart) RBOB Gasoline (RBJ22) Futures (April contract, daily chart) Henry Hub Natural Gas (NGJ22) Futures (April contract, daily chart) That’s all folks for today – happy trading! Like what you’ve read? Subscribe for our daily newsletter today, and you'll get 7 days of FREE access to our premium daily Oil Trading Alerts as well as our other Alerts. Sign up for the free newsletter today! Thank you. Sebastien BischeriOil & Gas Trading Strategist * * * * * The information above represents analyses and opinions of Sebastien Bischeri, & Sunshine Profits' associates only. As such, it may prove wrong and be subject to change without notice. At the time of writing, we base our opinions and analyses on facts and data sourced from respective essays and their authors. Although formed on top of careful research and reputably accurate sources, Sebastien Bischeri and his associates cannot guarantee the reported data's accuracy and thoroughness. The opinions published above neither recommend nor offer any securities transaction. Mr. Bischeri is not a Registered Securities Advisor. By reading Sebastien Bischeri’s reports you fully agree that he will not be held responsible or liable for any decisions you make regarding any information provided in these reports. Investing, trading and speculation in any financial markets may involve high risk of loss. Sebastien Bischeri, Sunshine Profits' employees, affiliates as well as their family members may have a short or long position in any securities, including those mentioned in any of the reports or essays, and may make additional purchases and/or sales of those securities without notice.
XAUUSD After Fed Decision, NZDUSD And CADJPY Climbs

XAUUSD After Fed Decision, NZDUSD And CADJPY Climbs

Jing Ren Jing Ren 17.03.2022 08:15
XAUUSD stabilizes Gold struggles as the Fed maps out aggressive tightening. The precious metal has given up all its gains from the previous parabolic rise, which suggests a lack of commitment to support the rally. The price is testing the origin of the bullish breakout at 1907 which coincides with the 30-day moving average. An oversold RSI attracted some buying interest. 1961 is the hurdle ahead before a rebound could materialize. Further down, 1880 is key support on the daily chart and its breach could reverse the course in the weeks to come. NZDUSD attempts rebound The New Zealand dollar found support from a rebound in commodity prices. The pair saw solid bids in the demand zone around 0.6725 and right over the 30-day moving average. A bullish RSI divergence showed a deceleration in the pullback, which would have caught buyers’ attention in this congestion area. A close above 0.6800 has prompted short-term sellers to cover and leave the door open for a rebound. 0.6870 is the last major resistance and a bullish breakout could propel the kiwi past the recent peak at 0.6920. CADJPY breaks key resistance The Canadian dollar shot higher after February’s CPI beat expectations. A break above last October’s high at 93.00 could be an ongoing signal to end a 5-month long consolidation. The RSI’s double top in the overbought area may temporarily hold the bulls back. As sentiment turns overwhelmingly upbeat, buyers may be eager to jump in at a discounted price. The supply-turned-demand zone near 91.60 is an important level to safeguard the breakout. The psychological level of 94.00 could see resistance.
Russia - Interest Rate Is Released On Friday. Week Of Monetary Policy Releases Ending - Economic Calendar By FXMAG.COM

Russia - Interest Rate Is Released On Friday. Week Of Monetary Policy Releases Ending - Economic Calendar By FXMAG.COM

Mikołaj Marcinowski Mikołaj Marcinowski 17.03.2022 14:01
And it's Thursday again, what a week! Fed raised the interest rate (25 bps) so did Bank of England (25 bps). What will Central Bank of Russia decide? Let's have a look at the Economic Calendar (courtesy of Investing.com). India and Japan Indians have a day free on Friday, but Japanese people have something to announce. At 3 a.m. Monetery Policy Statement goes public and three and a half an hour later Bank of Japan Press Conference takes place. Russia As written above, at 10:30 a.m. Central Bank of Russian Federation releases interest rate, what surely arouses interest as the sanctions remain. Canada and the USA At 12:30 p.m. important event is held in Canada as Core Retail Sales (MoM) is released. This indicator previously amounted to -2.5% Source: Investing.com Economic Calendar Time: GMT  
Speaking Of Rallying Chinese Stocks, Quite Unchanged Bitcoin Price, BoE, Fed And Central Bank Of Turkey Interest Rates Decisions

Speaking Of Rallying Chinese Stocks, Quite Unchanged Bitcoin Price, BoE, Fed And Central Bank Of Turkey Interest Rates Decisions

Swissquote Bank Swissquote Bank 17.03.2022 15:43
Chinese stocks had their best day since 2008 yesterday, as the government said it will ease the crackdown, support property and technology stocks and stimulate economy. Nasdaq’s Golden Dragon China index gained close to 33%, yet risks prevail: we are still in a China that is no longer the land of opportunity of before Xi Jinping. Plus, US maintains a hardline on the Chinese listings in the US, insisting that the companies listed in the US should provide complete access to audits, with the threat of getting de-listed if they don’t comply. The Federal Reserve (Fed) raised its interest rate by 25bp as expected for the first time since the beginning of the pandemic, and more importantly, said that the rate hikes will continue to tame inflation as the US economy looks strong enough to withstand a rapid normalization to avoid pushing the Fed into a darker stagflation environment. The kneejerk reaction to the decision was an early selloff then a strong rebound.The question is, could it last? Elsewhere, Bitcoin remained stoic despite a broad based risk rally, while the US dollar eased allowing the EURUSD trade above 1.10, and Cable above 1.31. Today, the Bank of England (BoE) and the Central Bank of Turkey (CBT) will give their latest monetary policy verdicts. Watch the full episode to find out more! 0:00 Intro 0:25 Chinese stocks rally: is it time for a healthy rebound? 3:30 Fed hikes & says it will hike more 5:37 Market reaction to Fed decision 7:03 Bitcoin stoic 8:06 USD eases, allowing euro and pound to recover 8:24 BoE to hike for the third consecutive meeting 8:59 Turkey's decision is a... nonsense. 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.
Interaction Between Price Of Gold (XAUUSD) And Fed's Interest Rate Decision

Interaction Between Price Of Gold (XAUUSD) And Fed's Interest Rate Decision

Przemysław Radomski Przemysław Radomski 17.03.2022 16:07
  The Fed will want to keep inflation under control, and that could have miserable consequences for gold and miners. Will we see a repeat from 2008?  The question one of my subscribers asked me was about the rise in mining stocks and gold and how it was connected to what was happening in bond yields. Precisely, while short-term and medium-term yields moved higher, very long-term yields (the 30-year yields) dropped, implying that the Fed will need to lower the rates again, indicating a stagflationary environment in the future. First of all, I agree that stagflation is likely in the cards, and I think that gold will perform similarly to how it did during the previous prolonged stagflation – in the 1970s. In other words, I think that gold will move much higher in the long run. However, the market might have moved ahead of itself by rallying yesterday. After all, the Fed will still want to keep inflation under control (reminder: it has become very political!), and it will want commodity prices to slide in response to the foregoing. This means that the Fed will still likely make gold, silver, and mining stocks move lower in the near term. In particular, silver and mining stocks are likely to decline along with commodities and stocks, just like what happened in 2008. Speaking of commodities, let’s take a look at what’s happening in copper. Copper invalidated another attempt to move above its 2011 high. This is a very strong technical sign that copper (one of the most popular commodities) is heading lower in the medium term. Yes, it might be difficult to visualize this kind of move given the recent powerful upswing, but please note that it’s in perfect tune with the previous patterns. The interest rates are going up, just like they did before the 2008 slide. What did copper do before the 2008 slide? It failed to break above the previous (2006) high, and it was the failure of the second attempt to break higher that triggered the powerful decline. What happened then? Gold declined, but silver and mining stocks truly plunged. The GDXJ was not trading at the time, so we’ll have to use a different proxy to see what this part of the mining stock sector did. The Toronto Stock Exchange Venture Index includes multiple junior mining stocks. It also includes other companies, but juniors are a large part of it, and they truly plunged in 2008. In fact, they plunged in a major way after breaking below their medium-term support lines and after an initial corrective upswing. Guess what – this index is after a major medium-term breakdown and a short-term corrective upswing. It’s likely ready to fall – and to fall hard. So, what’s likely to happen? We’re about to see a huge slide, even if we don’t see it within the next few days. In fact, the outlook for the next few days is rather unclear, as different groups of investors can interpret yesterday’s developments differently. However, once the dust settles, the precious metals sector is likely to go down significantly. Gold is up in today’s pre-market trading, but please note that back in 2020, after the initial post-top slide, gold corrected even more significantly, and it wasn’t really bullish. This time gold doesn’t have to rally to about $2,000 before declining once again, as this time the rally was based on war, and when we consider previous war-based rallies (U.S. invasion of Afghanistan, U.S. invasion of Iraq, Russia’s invasion of Crimea), we know that when the fear-and-uncertainty-based top was in, then the decline proceeded without bigger corrections. Thank you for reading our free analysis today. Please note that the above is just a small fraction of today’s all-encompassing Gold & Silver Trading Alert. The latter includes multiple premium details such as the targets for gold and mining stocks that could be reached in the next few weeks. If you’d like to read those premium details, we have good news for you. As soon as you sign up for our free gold newsletter, you’ll get a free 7-day no-obligation trial access to our premium Gold & Silver Trading Alerts. It’s really free – sign up today. Przemyslaw Radomski, CFAFounder, Editor-in-chiefSunshine Profits: Effective Investment through Diligence & Care * * * * * All essays, research and information found above represent analyses and opinions of Przemyslaw Radomski, CFA and Sunshine Profits' associates only. As such, it may prove wrong and be subject to change without notice. Opinions and analyses are based on data available to authors of respective essays at the time of writing. Although the information provided above is based on careful research and sources that are deemed to be accurate, Przemyslaw Radomski, CFA and his associates do not guarantee the accuracy or thoroughness of the data or information reported. The opinions published above are neither an offer nor a recommendation to purchase or sell any securities. Mr. Radomski is not a Registered Securities Advisor. By reading Przemyslaw Radomski's, CFA reports you fully agree that he will not be held responsible or liable for any decisions you make regarding any information provided in these reports. Investing, trading and speculation in any financial markets may involve high risk of loss. Przemyslaw Radomski, CFA, Sunshine Profits' employees and affiliates as well as members of their families may have a short or long position in any securities, including those mentioned in any of the reports or essays, and may make additional purchases and/or sales of those securities without notice.
S&P 500 (SPX) - It Looks Like Fed Decision Was Needed To Go Up

S&P 500 (SPX) - It Looks Like Fed Decision Was Needed To Go Up

Monica Kingsley Monica Kingsley 17.03.2022 15:57
S&P 500 reversed the pre-FOMC decline, and turned up. The upswing didn‘t fizzle out after the conference, quite to the contrary, the credit markets deepened their risk-on posture. I guess stocks are buying the story of 7 rate hikes and balance sheet reduction in 2022 a bit too enthusiastically. Not gonna happen, next quarter‘s GDP data would probably be already negative. Yet Powell says that the risk of recession into next year isn‘t elevated – given the projected tightening, I beg to differ. But of course, Powell is right – it‘s only that we won‘t see all those promised hikes, let alone balance sheet reduction starting in spring. Inflation would retreat a little towards year‘s end (on account of recessionary undercurrents and modest tightening), only to surprise once again in 2023 on the upside. I already wrote so weeks ago – before the East European events. There wouldn‘t enough time to celebrate the notion of vanquishing inflation. For now, stocks can continue the bullish turn – just as commodities and precious metals aren‘t asking permission. The FOMC is over, and real assets can rise, including the badly beaten crude oil. Made a good decision to keep adding to the commodities positions at much lower prices (or turning bullish stocks around the press conference). Let‘s move right into the charts (all courtesy of www.stockcharts.com). S&P 500 and Nasdaq Outlook S&P 500 upswing looks like it can go on for a while. It was driven by tech, participating more enthusiastically than value. The conditions are in place for the rally to continue, and it‘s likely that Friday would be a better day than Thursday for the bulls. Credit Markets HYG is catching quite some bid, and credit markets have turned decidedly risk-on. It also looks like a sigh of relief over no 50bp hike – the stock market rally got its hesitant ally. Gold, Silver and Miners Precious metals upswing can return – and this correction wasn‘t anyway sold heavily into. Needless to say how overdone it was if you look at the miners. $1950s would be reconquered easily. Crude Oil Crude oil bottom looks to be in, and $110s are waiting. Obviously it would take more than a couple of days to return there, but we‘re on the way. Copper Copper is rebounding, and even if other base metals aren‘t yet following too enthusiastically, $4.70 isn‘t far away. Coupled with precious metals returning to more reasonable values, the red metal would continue trending higher. Bitcoin and Ethereum Cryptos are leaning risk-on, and the bulls will close this weekend on a good note. Today‘s price action is merely a consolidation in a short-term upswing. Summary S&P 500 bulls got enough fuel from the Fed, and the run can continue – albeit at a slower pace. Importantly, credit markets aren‘t standing in the short-term way, but I think they would carve out a bearish divergence when this rally starts topping out. I‘m not looking for fresh ATHs, the headwinds are too stiff, but as stated within today‘s key analysis, the tech participation is a very encouraging sign for the short-term. The dollar indeed didn‘t make any kind of upside progress to speak of yesterday – and as I have also written at length in yesterday‘s report, the pre-FOMC trading pattern in real assets can be reversed now. Long live precious metals, oil and copper gains! Thank you for having read today‘s free analysis, which is available in full at my homesite. There, you can subscribe to the free Monica‘s Insider Club, which features real-time trade calls and intraday updates for all the five publications: Stock Trading Signals, Gold Trading Signals, Oil Trading Signals, Copper Trading Signals and Bitcoin Trading Signals.
GBPUSD Almost Full Recovered After BoE's Decision, USDJPY Doesn't Fluctuate Significantly, S&P 500 (SPX) Is Not So Far From 4400.00

GBPUSD Almost Full Recovered After BoE's Decision, USDJPY Doesn't Fluctuate Significantly, S&P 500 (SPX) Is Not So Far From 4400.00

Jing Ren Jing Ren 18.03.2022 07:58
GBPUSD attempts to rebound The British pound stalled after the BOE failed to secure a unanimous vote for higher rates. A bullish RSI divergence suggests exhaustion in the sell-off, and combined with the indicator’s oversold condition on the daily chart, may attract buying interest. A tentative break above 1.3190 led some sellers to take profit. The bulls will need to push above the 1.3250 next to the 20-day moving average to get a foothold. On the downside, the psychological level of 1.3000 is a critical floor to keep the current rebound valid. USDJPY takes a breather The Japanese yen struggles as the BOJ pledges to stick with stimulus. Sentiment turned extremely bullish after the pair rallied above December 2016’s high at 118.60. The RSI went overbought on both hourly and daily charts, and the overextension could refrain buyers from chasing bids. Trend followers may be waiting to buy at pullbacks. 117.70 is the first level to gauge buying interest and 116.80 is the second line of support. A rebound above 119.00 would extend gains beyond the psychological level of 120.00. SPX 500 tests resistance The S&P 500 bounced higher after Russia averted a bond default. Price action has stabilized above last June’s lows around 4140 where a triple bottom indicates a strong interest in keeping the index afloat. A previous attempt above 4350 forced sellers to cover but hit resistance at 4420. A bullish close above this key level on the daily chart could trigger a runaway rally. 4590 would be the next target when sentiment turns around. Otherwise, a lack of conviction from the buy-side would send the index to test 4250.
Gold Is Showing A Good Sign For Further Drop

Can Disinflation Support A Decline Of Price Of Gold?

Arkadiusz Sieron Arkadiusz Sieron 18.03.2022 15:13
  Inflation continues to rise but may soon reach its peak. After that, its fate will be sealed: a gradual decline. Does the same await gold?If you like inviting people over, you’ve probably figured out that some guests just don’t want to leave, even when you’re showing subtle signs of fatigue. They don’t seem to care and keep telling you the same not-so-funny jokes. Even in the hall, they talk lively and tell stories for long minutes because they remembered something very important. Inflation is like that kind of guest – still sitting in your living room, even after you turned off the music and went to wash the dishes, yawning loudly. Indeed, high inflation simply does not want to leave. Actually, it’s gaining momentum. As the chart below shows, core inflation, which excludes food and energy, rose 6.0% over the past 12 months, speeding up from 5.5% in the previous month. Meanwhile, the overall CPI annual rate accelerated from 7.1% in December to 7.5% in January. It’s been the largest 12-month increase since the period ending February 1982. However, at the time, Paul Volcker raised interest rates to double digits and inflation was easing. Today, inflation continues to rise, but the Fed is only starting its tightening cycle. The Fed’s strategy to deal with inflation is presented in the meme below. What is important here is that the recent surge in inflation is broad-based, with virtually all index components showing increases over the past 12 months. The share of items with price rises of over 2% increased from less than 60% before the pandemic to just under 90% in January 2022. As the chart below shows, the index for shelter is constantly rising and – given the recent spike in “asking rents” – is likely to continue its upward move for some time, adding to the overall CPI. What’s more, the Producer Price Index is still red-hot, which suggests that more inflation is in the pipeline, as companies will likely pass on the increased costs to consumers. So, will inflation peak anytime soon or will it become embedded? There are voices that – given the huge monetary expansion conducted in response to the epidemic – high inflation will be with us for the next two or three years, especially when inflationary expectations have risen noticeably. I totally agree that high inflation won’t go away this year. Please just take a look at the chart below, which shows that the pandemic brought huge jumps in the ratio of broad money to GDP. This ratio has increased by 23%, from Q1 2020 to Q4 2021, while the CPI has risen only 7.7% in the same period. It suggests that the CPI has room for a further increase. What’s more, the pace of growth in money supply is still far above the pre-pandemic level, as the chart below shows. To curb inflation, the Fed would have to more decisively turn off the tap with liquidity and hike the federal funds rate more aggressively. However, as shown in the chart above, money supply growth peaked in February 2021. Thus, after a certain lag, the inflation rate should also reach a certain height. It usually takes about a year or a year and a half for any excess money to show up as inflation, so the peak could arrive within a few months, especially since some of the supply disruptions should start to ease in the near future. What does this intrusive inflation imply for the precious metals market? Well, the elevated inflationary pressure should be supportive of gold prices. However, I’m afraid that when disinflation starts, the yellow metal could suffer. The decline in inflation rates implies weaker demand for gold as an inflation hedge and also higher real interest rates. The key question is, of course, what exactly will be the path of inflation. Will it normalize quickly or gradually, or even stay at a high plateau after reaching a peak? I don’t expect a sharp disinflation, so gold may not enter a 1980-like bear market. Another question of the hour is whether inflation will turn into stagflation. So far, the economy is growing, so there is no stagnation. However, growth is likely to slow down, and I wouldn’t be surprised by seeing some recessionary trends in 2023-2024. Inflation should still be elevated then, creating a perfect environment for the yellow metal. Hence, the inflationary genie is out of the bottle and it could be difficult to push it back, even if inflation peaks in the near future. Thank you for reading today’s free analysis. We hope you enjoyed it. If so, we would like to invite you to sign up for our free gold newsletter. Once you sign up, you’ll also get 7-day no-obligation trial of all our premium gold services, including our Gold & Silver Trading Alerts. Sign up today! Arkadiusz Sieron, PhDSunshine Profits: Effective Investment through Diligence & Care.
What Is Going On Financial Markets Today? Russia Will Not Resume Deliveries Of Gas

"Boring" Bitcoin (BTC) And Gaining S&P 500 (SPX). Crude Oil Price Chart Shows A Green Candle At The Right Hand Side,

Monica Kingsley Monica Kingsley 18.03.2022 15:50
S&P 500 extended gains, and the risk appetite in bonds carried over into value rising faster than tech. Given the TLT downswing though, it‘s all but rainbows and unicorns ahead today. Not only that quad witching would bring high volume and chop, VIX itself doesn‘t look to slide smoothly below 25 today. Friday‘s ride would be thus rocky, and affected by momentum stalling in both tech and value. Real assets though can and will enjoy the deserved return into the spotlight. With much of the preceding downswing being based on deescalation hopes (that aren‘t materializing, still), the unfolding upswing in copper, oil and precious metals (no, they aren‘t to be spooked by the tough Fed tightening talk) would happen at a more measured pace than had been the case recently. Pay attention to the biting inflation, surrounding blame games hinting at no genuine respite – read through the rich captions of today‘s chart analyses, and think about reliable stores of real value. And of course, enjoy the open profits. Let‘s move right into the charts (all courtesy of www.stockcharts.com). S&P 500 and Nasdaq Outlook S&P 500 looks likely to consolidate as the 4,400 – 4,450 zone would be tough to overcome, and such a position relative to both the moving averages shown, has historically stopped quite a few steep recoveries off very negative sentiment readings. Credit Markets HYG is likely to slow down here, as in really stall and face headwinds. The run had been respectable, and much of the easy gains happened already yesterday. Gold, Silver and Miners Precious metals upswing did indeed return – and the miners performance doesn‘t hint at a swift return of the bears, to put it mildly. The path to $1950s is open. Crude Oil Crude oil bottom was indeed in, and the price can keep recovering towards $110s and beyond. No, the economy isn‘t crashing yet, monetary policy isn‘t forcing that outcome, and the drawing of petroleum reserves is a telltale sign of upside price pressures mounting. It‘ll be an interesting April, mark my words. Copper Copper is duly rebounding, and not at all overheated. The move is also in line with other base metals. My yesterday‘s target of $4.70 has already been reached – I‘m looking for a measured pace of gains to continue. Bitcoin and Ethereum Cryptos are taking a small break, highlighting the perils of today. The boat won‘t be rocked too much. Summary S&P 500 bulls made the easy gains already yesterday, and today‘s session is going to be volatile, even treacherous in establishing a clear and lasting direction (i.e. choppy), and the headwinds would be out there in the plain open. These would come from bonds not continuing in the risk-on turn convincingly rather than commodities and metals surging head over heels. Both tech and value would feel the heat as VIX would show signs of waking up (to some degree). Today‘s session won‘t change the big picture dynamics of late, and I invite you to read more in-depth commentary within the individual market sections of today‘s full analysis. Thank you for having read today‘s free analysis, which is available in full at my homesite. There, you can subscribe to the free Monica‘s Insider Club, which features real-time trade calls and intraday updates for all the five publications: Stock Trading Signals, Gold Trading Signals, Oil Trading Signals, Copper Trading Signals and Bitcoin Trading Signals.
Natural Gas Hits Its Final Target. The Luck of St. Patrick’s Day?

Natural Gas Hits Its Final Target. The Luck of St. Patrick’s Day?

Sebastian Bischeri Sebastian Bischeri 18.03.2022 17:14
  St. Patrick’s Day is historically considered among the best trading days. Apparently, judging by the results, it may have brought some luck to natural gas. If you are interested in looking at the stats, an article by Market Watch summed them up. The second target hit – BOOM! Yesterday, on St. Patrick's Day, the opportunity to bank the extra profits from my recent Nat-Gas trade projections (provided on March 2) finally arrived. That trade plan has provided traders with multiple bounces to trade the NYMEX Natural Gas Futures (April contract) in various ways, always depending on each one’s personal risk profile. To get some more explanatory details on understanding the different trading ways this fly map (trading plan) could offer, I invite you to read my previous article (from March 11). To quickly sum it up, the various trade opportunities that could be played were as follows (with the following captures taken on March 11): The first possibility is swing trading, with the trailing stop method explained in my famous risk management article. Henry Hub Natural Gas (NGJ22) Futures (April contract, hourly chart) The second option consisted of scalping the rebounds with fixed targets (active or experienced traders). I named this method “riding the tails” (or the shadows). Henry Hub Natural Gas (NGJ22) Futures (April contract, 4H chart) The third way is position trading – a more passive trading style (and usually more rewarding). Henry Hub Natural Gas (NGJ22) Futures (April contract, daily chart) The chart below shows a good overall view of NYMEX Natural Gas hitting our final target, $4.860: Henry Hub Natural Gas (NGJ22) Futures (April contract, daily chart) Henry Hub Natural Gas (NGJ22) Futures (April contract, 4H chart) As you can see, the market has provided us with multiple entries into the same support zone (highlighted by the yellow band) – even after hitting the first target, you may have noticed that I maintained the entry conditions in place – after the suggestion to drag the stop up just below the new swing low ($4.450). The market, still in a bull run, got very close to that point on March 15 by making a new swing low at $4.459 (just about 10 ticks above it). Before that, it firmly rebounded once more (allowing a new/additional entry) and then extended its gains further away while consecutively hitting target 1 ($4.745) again. After that, it finally hit target 2 ($4.860)! That’s all folks for today. It is time to succesfully close this trade. Have a great weekend! Like what you’ve read? Subscribe for our daily newsletter today, and you'll get 7 days of FREE access to our premium daily Oil Trading Alerts as well as our other Alerts. Sign up for the free newsletter today! Thank you. Sebastien BischeriOil & Gas Trading Strategist * * * * * The information above represents analyses and opinions of Sebastien Bischeri, & Sunshine Profits' associates only. As such, it may prove wrong and be subject to change without notice. At the time of writing, we base our opinions and analyses on facts and data sourced from respective essays and their authors. Although formed on top of careful research and reputably accurate sources, Sebastien Bischeri and his associates cannot guarantee the reported data's accuracy and thoroughness. The opinions published above neither recommend nor offer any securities transaction. Mr. Bischeri is not a Registered Securities Advisor. By reading Sebastien Bischeri’s reports you fully agree that he will not be held responsible or liable for any decisions you make regarding any information provided in these reports. Investing, trading and speculation in any financial markets may involve high risk of loss. Sebastien Bischeri, Sunshine Profits' employees, affiliates as well as their family members may have a short or long position in any securities, including those mentioned in any of the reports or essays, and may make additional purchases and/or sales of those securities without notice.
ECB's Dovish Shift: Markets Anticipate Softer Policy Guidance

Major Forex Pairs: EUR/USD, GBP/USD, EURGBP Affected By Interest Rates Decisions – The Week On Markets By FXMAG.COM

Mikołaj Marcinowski Mikołaj Marcinowski 18.03.2022 19:17
Fed raised interest rate by 25bps so did Bank of England. Data shows that these events haven’t hit major Forex pairs so hard so let’s verify the theory. EUR/USD – A ca. 1.2% Gain The chart shows the week began without significant fluctuations until the Fed decision on March 16th. Immediately after the announcement of the key monetary policy indicator a huge declined stopped the strengthening Euro. The pair even neared the 2% gain level, but during the week has declined again slowly ending it near +1.2%. GBP/USD – Two announcements correlation The week hadn’t began too positively for British pound, but the following days had put GBP back on track to a ca. 1% gain after significant declines shortly after Fed and BoE decisions on accordingly Wednesday and Thursday. EUR/GBP – A ca. 1% Increased Corrected Naturally Fed’s announcement didn’t affect the single currency and British bound heavily, but the Bank of England’s fuelled EUR/GBP almost 1% jump which had been gradually corrected in the following days leaving the pair almost unchanged compared to the 14th March. USD/PLN – exotic pair with interesting outlook There’s no doubt PLN has strengthened throughout the week even if Fed announced the raise of interest rate. The stronger outlook of PLN is surely caused by the previous week’s tightening of monetary policy. EUR/PLN – PLN gained ca. 1.5% Global factors makes the pais with PLN the most interesting ones as another shows a significant loss of Euro To Polish zloty. The following week might bring next tempting fluctuations so let’s keep an eye on this pair.
Potential recovery to approx. US$2,000

Potential recovery to approx. US$2,000

Florian Grummes Florian Grummes 20.03.2022 10:13
Starting at a low of US$1,780 on January 28th, gold went up rapidly US$290 within less than six weeks, reaching a short-term top at US$2,070. Since that high on March 8th, however, gold prices fell back even faster. In total, gold plunged a whooping US$175 to a low of US$1,895 in the aftermath of last week’s FOMC meeting. A quick bounce took prices back to around US$1,950, but the weekly close at around US$1,920 came in lower.This volatile roller coaster ride is truly not for the faint of heart. Nevertheless, gold has done well this year, and, despite a looming multi-months correction, it might now be in a setup from which another attack towards US$2,000 could start in the short-term.Gold in US-Dollar, weekly chart as of March 19th, 2022.Gold in US-Dollar, weekly chart as of March 19th, 2022.On the weekly chart, gold prices have been rushing higher with great momentum. For five consecutive weeks, the bulls were able to bend the upper Bollinger band (US$1,963) upwards. However, the final green candle closed far outside the Bollinger bands and looks like a weekly reversal. Consequently, if gold has now dipped into a multi-month correction, a retracement back to the neckline of the broken triangle respectively the inverse head & shoulder pattern in the range of US$1,820 to US$1,850 would be quite typical and to be expected. In this range, the classic 61.8% retracement of the entire wave up (from the low at US$1,678 on August 9th, 2021, to the most recent blow off top at US$2,070) sits at US$1,827.79. The weekly stochastic oscillator has not yet rolled over, but weekly momentum is overbought and vulnerable.In total, the weekly chart shows a big reversal and therefore no longer supports the bullish case. However, it could still take some more time before a potential correction gains momentum.  Gold in US-Dollar, daily chart as of March 19th, 2022.Gold in US-Dollar, daily chart as of March 19th, 2022.While the weekly chart may just be at the beginning of a multi-month correction, the overbought setup on the daily chart has already been largely cleared up by the recent steep pullback. Despite Friday’s rather weak closing, the odds are not bad that gold might very soon be turning up again. However, gold bulls need to take out the pivot resistance around US$1,960 to unlock higher price targets in the context of a recovery. The potential Fibonacci retracements are waiting at US$1,962, US$2,003 and US$2,028. Hence, gold could bounce back to approx. US$2,000, which is a round number and therefore a psychological resistance.On the other hand, if gold fails to move back above Thursday’s high at US$1,950, weakness will increase immediately and significantly. In that case, bulls can only hope that the quickly rising lower Bollinger Band (US$1,861) would catch and limit a deeper sell-off. But since the stochastic oscillator has reached its oversold zone, bears might have a hard time pushing gold significantly below US$1,900.Overall, the daily chart is slightly oversold, and gold might start a bounce soon. Conclusion: Potential recovery to approx. US$2,000After a strong rally and a steep pullback, the gold market is likely in the process of reordering. While the weekly timeframe points to a correction, the oversold daily chart points to an immediate bounce. Given these contradictory signals, investors and especially traders are well advised to exercise patience and caution in the coming days, weeks, and months. If gold has entered a corrective cycle, it could easily take until the early to mid-summer before a sustainable new up-trend might emerge.Alternative super bullish scenarioAlternatively, and this of course is still a possible scenario, the breakout from the large “cup and handle” pattern is just getting started. In this very bullish case, gold is in the process of breaking out above US$2,100 to finally complete the very large “cup and handle” pattern, which has been developing for 11 years! Obviously, the sky would then be the limit.To summarize, gold is getting really bullish back above US$2,030. On the other hand, below $US1,895 the bears would be in control. In between those two numbers, the odds favor a bounce towards US$1,960 and maybe USD$2,000.Feel free to join us in our free Telegram channel for daily real time data and a great community. If you like to get regular updates on our gold model, precious metals and cryptocurrencies you can also subscribe to our free newsletter.Disclosure: Midas Touch Consulting and members of our team are invested in Reyna Gold Corp. These statements are intended to disclose any conflict of interest. They should not be misconstrued as a recommendation to purchase any share. This article and the content are for informational purposes only and do not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision. The views, thoughts and opinions expressed here are the author’s alone. They do not necessarily reflect or represent the views and opinions of Midas Touch Consulting.By Florian Grummes|March 19th, 2022|Tags: Gold, Gold Analysis, Gold bearish, Gold bullish, gold chartbook, Gold consolidation, gold fundamentals, Gold sideways, precious metals, Reyna Gold|0 Commentshttps://www.midastouch-consulting.com/gold-chartbook-19032022-potential-recovery-to-approx-us2000About the Author: Florian GrummesFlorian Grummes is an independent financial analyst, advisor, consultant, trader & investor as well as an international speaker with more than 20 years of experience in financial markets. He is specialized in precious metals, cryptocurrencies and technical analysis. He is publishing weekly gold, silver & cryptocurrency analysis for his numerous international readers. He is also running a large telegram Channel and a Crypto Signal Service. Florian is well known for combining technical, fundamental and sentiment analysis into one accurate conclusion about the markets. Since April 2019 he is chief editor of the cashkurs-gold newsletter focusing on gold and silver mining stocks. Besides all that, Florian is a music producer and composer. Since more than 25 years he has been professionally creating, writing & producing more than 300 songs. He is also running his own record label Cryon Music & Art Productions. His artist name is Florzinho.
Can Bitcoin (BTC) Become An Alternative To... Gold? BTC Increased By 6.3% And Reached Ca. $41.3k

Can Bitcoin (BTC) Become An Alternative To... Gold? BTC Increased By 6.3% And Reached Ca. $41.3k

Alex Kuptsikevich Alex Kuptsikevich 21.03.2022 09:33
Bitcoin gained 6.3% over the past week, finishing near $41.3K. The price retreated slightly to $41.0K on Monday morning, losing 2.1% over the last 24 hours. Ethereum has corrected by 2% over the same period but still added 11.6% to the price seven days ago. Other leading altcoins in the top 10 have gained between 7.3% (Polkadot) and 24.8% (Avalanche) over the past week. Total cryptocurrency market capitalisation, according to CoinMarketCap, rose 7.5% for the week to $1.86 trillion. The Bitcoin Dominance Index fell 0.6 points to 41.9% due to outperforming altcoins. The Cryptocurrency Fear and Greed Index rose 7 points for the week to 30 and moved into "fear" from "extreme fear". Last week turned out to be a good one for the crypto market, with bitcoin rising the most in six weeks. Last Wednesday, the US Federal Reserve meeting weakened the dollar and boosted stocks, which benefited all risky assets, including cryptocurrencies. Meanwhile, bitcoin has continued to trade in a sideways range of $38-45K for the second month, with a closer look marked by a sequence of declining local highs with bullish momentum fading near 42 in the last two weeks. The positive sentiment is supported by the 50-day moving average reversing upwards. BTCUSD broke it in a relatively strong move on March 16th, and it has been acting as local support ever since. The external environment in the financial markets remains mixed. Traders have tighter financial conditions due to higher rates and waning economic growth on one side of the scale. On the other side is the demand for purchasing power insurance for capital due to the highest inflation in two generations. Weighing these factors, Galaxy Digital head Mike Novogratz said bitcoin would continue to trade in a sideways range this year. He said BTC will resume growth and reach $500K by 2025 as inflation curbing measures are too weak. Piyush Gupta, chief executive of Singapore's largest bank, DBS, said cryptocurrencies could be an alternative to gold but would not be able to fit into the traditional financial system due to excessive volatility.
AUD/USD Touches 9-Month Low as Australian Job Growth Slips

DAX (GER 40) Has Gone Up Slightly. BMW, BAYN And DBK Have Added The Most

Mikołaj Marcinowski Mikołaj Marcinowski 21.03.2022 14:55
German Index doesn’t shock investors with significant fluctuations despite the fact many countries interact with persistent conflict between Russia and Ukraine. DAX opened only a bit lower than it closed on Friday, March 17th and seems to end the day without any major move. As before we highlight below three companies which have gained the most during today’s session. BMW Bavarian automotive company is today’s leader, as until now it has gained over 2%. BAYN - Bayer Well-known brand associated with medicaments until now has gained over 2% DBK – Deutsche Bank One of the most recongizable banks of the world has gained ca. 2% until now Charts: courtesy of TradingView.com Source: TradingView.com
The (SPX) S&P 500 Price Way Up Likely To Make Many "WOW!"

The (SPX) S&P 500 Price Way Up Likely To Make Many "WOW!"

Paul Rejczak Paul Rejczak 21.03.2022 14:19
  The S&P 500 extended its short-term uptrend on Friday after breaking above the early March local high. Will we see some profit-taking action soon? The broad stock market index gained 1.17% on Friday following its Thursday’s advance of 1.2%. Stocks extended their rally and since last Monday’s low of around 4,162, the index has already gained over 300 points. The market accelerated higher after the Wednesday’s FOMC interest rate hike. There’s still a lot of uncertainty concerning the ongoing Ukraine conflict, however, investors were jumping back into stocks despite that geopolitical uncertainty. This morning the S&P 500 index is expected to open 0.1% lower. We may see a consolidation or some profit-taking action following the mentioned 300-point rebound from the last Monday’s low. The nearest important resistance level is at around 4,500. On the other hand, the support level is at 4,400-4,415, marked by the previous local high. The S&P 500 index trades just below its early February consolidation, as we can see on the daily chart (chart by courtesy of http://stockcharts.com): Futures Contract Broke Above the Previous High Let’s take a look at the hourly chart of the S&P 500 futures contract. On Friday it broke above the early March local highs of around 4,400. It’s the nearest important support level right now. We may see a correction following the recent run-up. However, there have been no confirmed negative signals so far. We are maintaining our profitable long position from the 4,340 level, as we are still expecting a bullish price action in the near-term (our premium Stock Trading Alert includes details of our trading position along with the stop-loss and profit target levels) (chart by courtesy of http://tradingview.com): Conclusion Stocks extended their uptrend once again on Friday, as the S&P 500 index broke above the previous local high. It rallied over 300 points from its last Monday’s local low, so we may see a consolidation or some profit-taking action soon. This morning the broad stock market’s gauge is expected to open 0.1% lower. The war In Ukraine is still a negative factor for the markets. Here’s the breakdown: The S&P 500 index rallied over 300 points from the last Monday’s local low; we may see a correction at some point. We are maintaining our profitable long position. We are still expecting an advance from the current levels. Like what you’ve read? Subscribe for our daily newsletter today, and you'll get 7 days of FREE access to our premium daily Stock Trading Alerts as well as our other Alerts. Sign up for the free newsletter today! Thank you. Paul Rejczak,Stock Trading StrategistSunshine Profits: Effective Investments through Diligence and Care * * * * * The information above represents analyses and opinions of Paul Rejczak & Sunshine Profits' associates only. As such, it may prove wrong and be subject to change without notice. At the time of writing, we base our opinions and analyses on facts and data sourced from respective essays and their authors. Although formed on top of careful research and reputably accurate sources, Paul Rejczak and his associates cannot guarantee the reported data's accuracy and thoroughness. The opinions published above neither recommend nor offer any securities transaction. Mr. Rejczak is not a Registered Securities Advisor. By reading his reports you fully agree that he will not be held responsible or liable for any decisions you make regarding any information provided in these reports. Investing, trading and speculation in any financial markets may involve high risk of loss. Paul Rejczak, Sunshine Profits' employees, affiliates as well as their family members may have a short or long position in any securities, including those mentioned in any of the reports or essays, and may make additional purchases and/or sales of those securities without notice.
Blackberry Stock Price & News: BB bounces as company says Jarvis to be rolled out

Blackberry Stock Price & News: BB bounces as company says Jarvis to be rolled out

FXStreet News FXStreet News 21.03.2022 16:05
Blackberry stock is back trending on retail investment sites after a long break.BB stock was one of the old meme stock favorites from last year.The stock also catches a major investment bank upgrade on Monday.Blackberry shares are back. The BB ticker is once again trending all over social media and retail trading sites after quite a long hiatus in the wilderness. That's break to you and me but my editor likes the fancy words! But Blackberry (BB) is definitely back. It was one of the original stocks caught up in the frenzy of short squeeze speculation last year but dropped off most people's attention lists as the stock was unable to push on and gave up all of its gains. BB stock fell from $20.17 in June 2021 to $5.80 in February 2022. Also read: AMC stock starts Monday with more gainsBlackberry (BB) stock news: Announces 13 channel partners for Jarvis 2.0Blackberry was the go-to business phone in the early 2010 decade before being totally outmaneuvered by the emergence of the smartphone. Holding a Blackberry was a sign that you had made it in the business world but the company and phone went the way of Nokia, totally demolished by Apple and other smartphone makers. But both companies Blackberry and Nokia have struggled along with varying degrees of success. Blackberry caught some renewed attention on Monday as it announced its Jarvis 2.0 testing tool will be offered by 13 partners to companies in the Asia Pacific region. “Asia-Pacific is at a tipping point in how it protects infrastructure and industries against growing IoT security threats as digital automation continues to advance,” said Dhiraj Handa, vice president of BlackBerry QNX for the Asia-Pacific region. Jarvis is a testing tool that allows companies to look for potential branches of security in their systems. "BlackBerry® Jarvis® 2.0 is a software composition analysis and static application security testing solution that is designed to analyze binaries within complex embedded systems. It lets you identify security vulnerabilities in products that have software from multiple sources, without the need for source code. It’s a powerful tool that provides you insights into your binaries and helps you catch potential security issues with the click", from Blackberry. This is timely given the heightened security and hacker issues surrounding many systems and companies are spending increasing amounts of their IT budgets on security issues. Blackberry (BB) stock forecastThis certainly reads positively but it is early days in the process. BB stock price has recovered but remains in a powerful downtrend. The recent spike up to the 50-day moving average is encouraging but only a break of $9.47 would really get momentum back towards bulls. Breaking above $48.50 is the first target and would put BB back in a neutral stance. Above $9.47 BB stock is bullish. The first resistance is the 50-day moving average at $7.41. Blackberry (BB) chart, daily
S&P 500 (SPX) Up, Crude Oil Up, Credit Markets Up, Bitcoin Price Oops...

S&P 500 (SPX) Up, Crude Oil Up, Credit Markets Up, Bitcoin Price Oops...

Monica Kingsley Monica Kingsley 21.03.2022 15:37
S&P 500 did really well through quad witching, and the same goes for credit markets. 4-day streak of non-stop gains – very fast ones. Short squeeze characteristics in the short run, makes me think this rally fizzles out before the month ends – 4,600 would hold. We‘re likely to make a higher low next, and that would be followed by 4-6 weeks of rally continuation before the bears come back with real force again. July would present a great buying opportunity in this wild year of a giant trading range. As I wrote yesterday: (…) The paper asset made it through quad witching in style - both stocks and bonds. The risk-on sentiment however didn't sink commodities or precious metals. Wednesday's FOMC brought worries over the Fed sinking real economy growth but Powell's conference calmed down fears through allegedly no recession risks this year, ascribing everything to geopolitics. Very convenient, but the grain of truth is that the Fed wouldn't indeed jeopardize GDP growth this year - that's the context of how to read the allegedly 7 rate hikes and balance sheet shrinking this year still. Not gonna happen as I stated on Thursday already. Such are my short- and medium-term thoughts on stocks. Copper remains best positioned to continue rising with relatively little volatility while crude oil isn‘t yet settled (its good times would continue regardless of the weak volume rally of last two days, which is making me a little worried). Precious metals are still basing, and would continue moving higher best on the Fed underperforming in its hawkish pronouncements. No way they‘re hiking 7 times this year and shrinking balance sheet at the same time as I wrote on Thursday – Treasury yields say they‘ll take on inflation more in 2023. 2022 is a mere warm-up. Let‘s move right into the charts (all courtesy of www.stockcharts.com). S&P 500 and Nasdaq Outlook S&P 500 is now past the 4,400 – 4,450 zone, and hasn‘t yet consolidated. This week would definitely though not be as bullish as the one just gone by – the bulls will be challenged a little. Credit Markets HYG eked out more gains, but the air is slowly becoming thinner. As the sentiment turns more bullish through no deep decline over the coming few days, that‘s when junk bonds would start wavering. Gold, Silver and Miners Precious metals aren‘t turning down for good here – I think they‘re deciphering the Fed story of hiking slower than intended, which in effect gives inflation a new lease on life. Not that it was wavering, though. More upside in gold and silver to come. Crude Oil Crude oil is rising again, but look for a measured upswing that‘s not free from headwinds. While I think we would climb above $110 still, I‘m sounding a more cautious note given the decreasing volume – I would like to see more conviction next. Copper Copper is behaving, and would continue rising reliably alongside other commodities. It‘s also the best play considering downside protection at the moment. Bitcoin and Ethereum Bitcoin isn‘t recovering Sunday‘s setback – but the Ethereum upswing bodes well for risk taking today, even that doesn‘t concern cryptos all too much. Summary S&P 500 has a bit more to run before running into headwinds, which would happen still this week. Credit markets are a tad too optimistic, and rising yields would leave a mark especially on tech. Value, energy and materials are likely to do much better. Crude oil is bound to be volatile over the coming weeks, but still rising and spiking – not yet settled. Copper and precious metals present better appreciation opportunities when looking at their upcoming volatility. Within today‘s key analysis, I‘ve covered the path of stocks, so do have a good look at the opening part. Finally, cryptos likewise paint the picture of risk-on trades not being over just yet. Thank you for having read today‘s free analysis, which is available in full at my homesite. There, you can subscribe to the free Monica‘s Insider Club, which features real-time trade calls and intraday updates for all the five publications: Stock Trading Signals, Gold Trading Signals, Oil Trading Signals, Copper Trading Signals and Bitcoin Trading Signals.
Kishu Inu, A Meme Coin, Promotes Growth And Development Through Its Transparency

Can (SHIB) Shiba Inu Price Go For A Rocket Launch?

FXStreet News FXStreet News 21.03.2022 16:05
Shiba Inu price is hovering above the $0.0000223 support level, eyeing a 40% upswing. A quick liquidity run below $0.0000202 is likely before triggering the move to $0.0000283. A daily candlestick close below $0.0000158 will invalidate the bullish thesis for SHIB. Shiba Inu price action seems to be repeating itself after a recent breakout from its downtrend. The rebound is pausing and might go for a liquidity run below a vital support level before a full-blown rally kicks off. Shiba Inu price prepares for a new leg-up Shiba Inu price crashed 77% from its all-time high before setting up a swing low around $0.0000202. The downswing, however, was breached on February 3, as price undertook a u-turn and made a 75% ascent. The new uptrend failed to sustain, however, leading to another downswing. After a brief period of consolidation, SHIB breached through its mini downtrend and is currently establishing a support level around $0.0000223 before triggering an explosive rally higher. However, investors can expect Shiba Inu price to slide lower first in search of liquidity below the $0.0000202 barrier. Such a move will signal the start of an uptrend and interested investors can enter long at $0.0000202. The resulting momentum will likely catapult SHIB to retest the immediate hurdle at $0.0000283. This move would constitute a 40% gain and is where market participants can book profits. SHIB/USDT 1-day chart Even if Shiba Inu price breaches the $0.0000202 barrier, the bulls will have another chance to regroup and attempt a run-up into the nine-hour demand zone, ranging from $0.0000158 to $0.0000193. A daily candlestick close below $0.0000193, however, will produce a lower low and invalidate the bullish thesis. In this scenario, Shiba Inu price could crash 15% and retest the $0.0000135 support level.
At The Close On The New York Stock Exchange Indices Closed Mixed

S&P500 tests latest rally

Alex Kuptsikevich Alex Kuptsikevich 21.03.2022 16:17
Having added more than 8.2% to Tuesday's lows last week through Friday, S&P500 futures have surpassed the 50-day moving average and are testing the 200-day average by the start of US trading. We mentioned last week that the "death cross" should not be taken as a sell signal this time because it took place after a comparatively long decline. It was a repeat of 2020 when the cross appeared after the market bottomed. The recovery rally of the last week is undergoing an important test. If the S&P500 manages to get above 4500 today or tomorrow, firmly entrenched above the 200-day moving average (currently at 4480), we can confidently talk about breaking the correction. In that case, there is a potential for a quick rally towards 4600 already this week, 4800 over the next 2-3 months, and up to 5000 by the end of 2022. Looking only at the news headlines, the military action in Europe and the tightening of monetary policy by the Fed are not conducive to buyers' optimism. But, paradoxically, we are now in a situation where pessimism has reached or is close to its peak. Managers surveyed by Bank of America note the maximum pessimism since April 2020, which is near historical turning points. The only exception to the last 25 years was in 2007-2008 when pessimistic expectations persisted for an extended period due to banking sector problems. The Fear & Greed Index continues to improve from 16 (extreme fear) a week ago to 40 (fear) now. It has turned solidly around from the extreme lows, but equities are still an impressive distance from the highs at the beginning of the year, which leaves considerable room for growth from current levels. A strong sell-off in US equities from current levels and a consolidation below 4400 on the S&P500 could be a strong bearish signal, indicating an inability for the market to develop the offensive, which risks putting it back into a rapid decline situation.
Central Banks in the 21st Century: Independence, Credibility, and Interest Rate Challenges

UK100 (FTSE 100) Added Ca. 0.5%. Who Gained? AAF, AAL And BP In Focus. The Latter Linked With Rising Crude Oil Price

Mikołaj Marcinowski Mikołaj Marcinowski 21.03.2022 19:11
The most popular British index begins the week in a delicate manner. The amplitude is not that high and we’re to wait a bit longer for more exciting fluctuations. Antofagasta, BP and Anglo American all companies linked with commodities and they all rise. These stock prices fluctuate mostly as the global situation seems to be unsure with the tensions between Russia and Ukraine keep going on. BP and Shell gains as crude oil price increase so expect next uptrends coming, as the 'black gold' keeps rising. UK 100 Chart [UPDATE: 17:30 GMT] BP – British Petroleum Gained Ca. 4%  AAF – Antofagasta Added Over 8% AAL – Anglo American PLC Increased By Over 7% Data/Source: Investing.com, TradingView.com
Warren Buffett's Berkshire Hathaway Stock Tops $500,000

Warren Buffett's Berkshire Hathaway Stock Tops $500,000

Chris Vermeulen Chris Vermeulen 21.03.2022 21:44
A subscriber asked us recently where he should be putting his money and how to limit losses in his retirement portfolio. He expressed frustration as he watched Buffett’s Berkshire Hathaway stock going up, but at the same time, the stock indices going lower and many of his previously favored stocks experiencing substantial losses! This conversation naturally piqued our curiosity. We decided to look into this for him and, at the same time, share our findings with our subscribers.Berkshire Hathaway stock traded at an all-time record high price of $520,654.46. At a stock price of $512,991, Berkshire’s market capitalization is $756.23 billion. Last year, Berkshire generated a record $27.46 billion of operating profit, including gains at Geico car insurance, the BNSF railroad, and Berkshire Hathaway Energy.BERKSHIRE vs. S&P 500 BENCHMARKWarren Buffett, age 91 (known as the ‘Sage of Omaha’), is the chairman and CEO of Berkshire Hathaway. He is considered by many to be the most successful stock investor in the world and, according to Forbes Real-Time Billionaire List, has a personal net worth that exceeds $120 billion USD.Very few can compete with his long-term track record. Since 1965, Berkshire has provided +20% average annual returns, almost double the +10.2% average annual returns for the S&P 500 Stock Index benchmark. The 2022 year-to-date comparison is:BRK.A Berkshire Hathaway +14.53%; SPY SPDR ETF -6.36%; FB Facebook -35.64%However, according to Buffett’s own humility, he has endured years of underperformance and has had his share of bad stock picks. When Buffet was asked about drawdowns at one of Berkshire’s annual meetings, he stated, “Unless you can watch your stock holdings decline by 50% without becoming panic-stricken, you should not be in the stock market.” According to www.finance.yahoo.com, the five biggest percentage losses for Berkshire have been:1974 -48.7%, 1990 -23.1%, 1999 -19.9%, 2008 -31.8%, and 2015 -12.5%.WHAT CAN WE LEARN FROM THE ‘BUFFETT INDICATOR’?The Buffett Indicator, as dubbed by Berkshire shareholders, is the ratio of the total United States stock market valuations (the Wilshire 5000 stock index) divided by the annual U.S. GDP. The indicator peaked at the beginning of 2022 and remains near all-time highs even though many stocks are well off their record levels.This historical chart of the Buffett Indicator was created by www.currentmarketvaluation.com. Doing quantitative analysis, we learn that the indicator is more than 1.6 standard deviations above the historical average, which suggests the market is over-valued and, in time, will fall back to its historical average.Berkshire Hathaway At Fibonacci Resistance!On March 18, 2022, Berkshire hit an all-time high price of $520,654. The Fibonacci resistance level of 2.618 or 261.8% of the March 23 low of $239,440 is $520,196. As shown on the daily chart, Berkshire also met resistance at the 2.618 standard deviations of the quarterly Bollinger Band.THE BENCHMARK: S&P 500 SPY ETFThe S&P 500 Index is the industry standard benchmark when comparing investment returns. It’s worth noting that as Berkshire reached the Fibonacci 2.618 resistance, the SPY found support at the Fibonacci 1.618 of the SPY March 23, 2020 low.Central banks have begun to tighten credit by raising interest rates for the first time since 2018, attempting to bring fast-rising energy, food, and housing prices under control. More time is needed to determine the full impact that rising global interest rates will have on current markets.However, on the chart below, we can see that the SPY put in a major top around 480 and, for the time being, has found support around 420 (the Fibonacci 1.618 level). Considering the increased market volatility and that we are now entering a cycle of higher interest rates, it would not surprise us to see the SPY eventually break below 420.It is worth noting that when a market makes a top after a prolonged bull-market, we usually experience distribution. Distribution with volatility results from large institutions beginning to liquidate their holdings while smaller retail investors are trying to buy stocks on sale. In other words, the retail investors are buying the dip hoping to get a bargain, while the institutional investors are selling the rally hoping to be liquidated and/or go short. It is a battle that retail investors will eventually lose!It is important to understand we are not saying the market has topped and is headed lower. This article sheds some light on some interesting analyses that you should be aware of. As technical traders, we follow price only, and when a new trend has been confirmed, we will change our positions accordingly. We provide our ETF trades with subscribers to our newsletter, and surprisingly, we have just entered five new trades.Sign up for my free trading newsletter so you don’t miss the next opportunity!WHAT STRATEGIES CAN HELP YOU NAVIGATE The CURRENT MARKET TRENDS? Learn how we use specific tools to help us understand price cycles, set-ups, and price target levels in various sectors to identify strategic entry and exit points for trades. Over the next 12 to 24+ months, we expect very large price swings in the US stock market and other asset classes across the globe. We believe the markets have begun to transition away from the continued central bank support rally phase and have started a revaluation phase as global traders attempt to identify the next big trends. Precious Metals will likely start to act as a proper hedge as caution and concern begin to drive traders/investors into Metals and other safe-havens.GET READY, GET SET, GO - We invite you to learn more about how my three ETF Technical Trading Strategies can help you protect and grow your wealth in any type of market condition by clicking on the following link: www.TheTechnicalTraders.com
Hawkish Fed „Surprise“

Hawkish Fed „Surprise“

Monica Kingsley Monica Kingsley 22.03.2022 15:55
S&P 500 wavered but is bound to get its act together in the medium term. Powell‘s statements shouldn‘t have stunned the bulls, but they did – the mere reiteration of the tightening plans coupled with remarks on the need to stamp out aggressive inflation before it‘s too late (anchored inflation expectations, anyone? I talked that in the run up to the Sep 2021 P&G price hikes and how the competition would be following in a nod to high input costs, with heating job market on top of the commodities pressure pinching back then already), sent stocks and bonds down.Add the recession fears that were assuaged during the Wednesday‘s conference, and you get the S&P 500 bulls having to dust off after Monday‘s setback. Given how early we‘re in the tightening cycle, and that the real economy isn‘t yet breaking down no matter what‘s in the pipeline geopolitically as regards various consequences to commodities, goods, services and money flows, the stock market bulls are still likely to take on the 4,600 as discussed already.Only this time, the upswing would be accompanied by a more measured and balanced commodities upswing, joined in by precious metals. Great profits ahead and already in the making.Let‘s move right into the charts (all courtesy of www.stockcharts.com).S&P 500 and Nasdaq OutlookS&P 500 is consolidating above 4,400, and the relative strength in value as opposed to tech, is boding well – the bulls are pushing their luck a bit too hard as a further TLT decline would pressure growth stocks.Credit MarketsHYG is getting under pressure again, but its decline would be uneven in the short run – as in I‘m looking for quite some back and forth action. First, higher in taking on yesterday‘s selling.Gold, Silver and MinersPrecious metals aren‘t turning lower in earnest – the miners‘ leadership bodes well for further gains, and is actually a very good performance given the hawkish Fed „surprise“ (surprise that wasn‘t, shouldn‘t have been).Crude OilCrude oil strength returning is a very good omen for commodities bulls broadly, and the rising volume hints at return of bullish spirits. The upswing is far from over – look how far black gold got on relatively little conviction, and where oil stocks trade at the moment.CopperCopper is acting strongly, and the downswing didn‘t entice the bears much. The path of least resistance remains higher, and the red metal isn‘t yet outperforming the CRB Index. Great pick for portfolio gains with as little volatility as can be.Bitcoin and EthereumBitcoin went on to recover the weekend setback – Ethereum upswing presaged that. They‘re both a little stalling now, but entering today‘s regular session on a constructive note. I‘m looking for modest gains extension.SummaryS&P 500 is bound to recover from yesterday‘s intraday setback – the animal spirits and positive seasonality are there to overcome the brief realization that the Fed talks seriously about tightening and entrenched inflation. While not even the implied readiness to hike by 50bp here and there won‘t cut it and send inflation to the woodshed, let alone inflation expectations, the recession fears would be the next powerful ally of stock market bears. For now though, we‘re muddling through generally higher (I‘m still looking for a tradable consolidation of last week‘s sharp gains), and will do so over the coming several weeks. The real profits are to be had in commodities and precious metals, as I had been saying quite often lately… Enjoy!Thank you for having read today‘s free analysis, which is available in full at my homesite. There, you can subscribe to the free Monica‘s Insider Club, which features real-time trade calls and intraday updates for all the five publications: Stock Trading Signals, Gold Trading Signals, Oil Trading Signals, Copper Trading Signals and Bitcoin Trading Signals.
Binance Academy summarise year 2022 featuring The Merge, FTX and more

Shiba Inu (SHIB), Dogecoin (DOGE) And… PancakeSwap (CAKE) – Daily Crypto Price Report

Mikołaj Marcinowski Mikołaj Marcinowski 22.03.2022 21:11
In the new series we focus on some interesting, meme and other… non-typical coins. Today we highlight fluctuations of popular SHIB, DOGE and tasty PancakeSwap. PancakeSwap (CAKE) Price has risen by 5% today what’s probably not so surprising as it seems to be very activating project with loads of announcements on Twitter. Dogecoin (DOGE) The project which is, let’s say, “supported” by Elon Musk keeps arousing interest. Price has risen by ca. 2% until now. The price has reached but declined suddenly… Shiba Inu (SHIB) Another iteration of Doge-inspired coin has declined recently as well, ranging between 2-3% gain at the time I’m writing. Source/Data: TradingView.com, coinmarketcap.com Charts: Courtesy of TradingView.com
The Bitcoin Market Is Now Developing The Corrective Cycle To The Downside

March 22nd, 2022, Crypto Chartbook

Korbinian Koller Korbinian Koller 22.03.2022 19:44
Bitcoin´s time to go   Trying to pick tops and bottoms is honorable and a desirable goal. Nevertheless, there needs to be other insurances and principles in place. If an ideal spot passes or the market doesn’t provide for a low-risk entry or enough liquidity for an exit, one still needs alternate tools to participate in the market. Our quad exit strategy allows for position building and market participation that consistently extracts monies from the markets. Bitcoin, daily chart, keep calm and keep trading: Bitcoin in USD, daily chart as of March 22nd, 2022. Precision trading gets even more difficult in wartimes, when frequent and conflicting news events jolt prices alternating up and down. The daily chart above shows these jolts over the last three weeks of wartime. We can identify three low-risk long trade entry opportunities (green up arrows on double bottom price scenarios) and one short trading one (red downward arrow at a double top price formation). Our quad exit strategy takes on each of these trades a partial initial profit to mitigate risk, which allows the remainder position size to be the market’s money at risk only.     Bitcoin, weekly chart, pushing up: Bitcoin in USD, weekly chart as of March 22nd, 2022. Zooming out to larger time frames is another way to avoid noise and see a trading scenario more clearly, and, as such, find “go times” with more accuracy. This weekly chart illustrates that entries and exits are rather entry zones (red and green boxes) versus a precise price level. The trader’s goal is to exploit within such a zone a low-risk entry spot on a lower time frame to get positioned. Regarding bitcoin, we find overall price behavior to be up sloping over the last twelve months, a bullish notion. And we find a high likelihood for the momentary entry zone (green box to the right of the chart). In other words, we are right now in a price zone where its Bitcoin´s time to go. Bitcoin, monthly chart, March closing price: Bitcoin in USD, monthly chart as of March 22nd, 2022. Suppose we further remove ourselves from the noise by electing a higher timeframe. In that case, we find a pat situation on the monthly chart, pat not for a more significant edge for prices to go higher up but for timing on when to enter the markets. Our statistics show that it will be essential on what price level the month of March will be closing. With a close above current levels (white line), we will enter a bullish buy zone. Yet, if prices decline from here in the last nine days of this month, the probabilities of an immediate price advance rapidly decline. Bitcoin/Gold-Ratio, daily chart, Bitcoin´s time to go: Bitcoin/Gold-Ratio, daily chart as of March 22nd, 2022. An additional benefit quiet charting provides in turbulent times is to think outside the box. While all noise points toward the most heated issues, finding a trading opportunity elsewhere might be best. In our previous chart book release, we exploited a great go time for bitcoin. Last week, we provided entry points (green up arrows) for rotating one’s gold into bitcoin. Using our quad exit strategy, the trader who wanted to not expose his money to a volatile fiat currency trading world could profit near ten percent on his first fifty percent of position size. We are now placing the stop for the remainder position size to breakeven entry levels. Bitcoin´s time to go: In war, the first casualty is the truth. Under stress, our minds insist on reason, clarity, precise calls for action. Unfortunately, even the best-informed brightest minds can’t find reliable data in times of war since the distortion field of media around the world is at a level where lies and propaganda outweigh facts and truth.  Luckily, a trader can, in these times, rely more heavily on charts. Charts always encompass the sum of opinion. Charts are consistently working as a reliable source to trade from.  The psychological aspect is hugely beneficial since a consistent bombardment of news and everybody’s opinion can get quickly exhausting.  Reduce news data consumption at a time when calm and levelheadedness is the most powerful tool for wealth creation and preservation, and the “go time” will reveal itself nearly effortlessly.     Feel free to join us in our free Telegram channel for daily real time data and a great community. If you like to get regular updates on precious metals and cryptocurrencies, you can also subscribe to our free newsletter. Disclosure: This article and the content are for informational purposes only and do not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision. The views, thoughts and opinions expressed here are the author’s alone. They do not necessarily reflect or represent the views and opinions of Midas Touch Consulting. By Korbinian Koller|March 22nd, 2022|Tags: Bitcoin, Bitcoin bounce, Bitcoin bullish, Bitcoin consolidation, bitcoin/gold-ratio, crypto analysis, crypto chartbook, DeFi, Gold, Gold bullish, low risk, quad exit, technical analysis, trading education|0 Comments About the Author: Korbinian Koller Outstanding abstract reasoning ability and ability to think creatively and originally has led over the last 25 years to extract new principles and a unique way to view the markets resulting in a multitude of various time frame systems, generating high hit rates and outstanding risk reward ratios. Over 20 years of coaching traders with heart & passion, assessing complex situations, troubleshoot and solve problems principle based has led to experience and a professional history of success. Skilled natural teacher and exceptional developer of talent. Avid learner guided by a plan with ability to suppress ego and empower students to share ideas and best practices and to apply principle-based technical/conceptual knowledge to maximize efficiency. 25+ year execution experience (50.000+ trades executed) Trading multiple personal accounts (long and short-and combinations of the two). Amazing market feel complementing mechanical systems discipline for precise and extreme low risk entries while objectively seeing the whole picture. Ability to notice and separate emotional responses from the decision-making process and to stand outside oneself and one’s concerns about images in order to function in terms of larger objectives. Developed exit strategies that compensate both for maximizing profits and psychological ease to allow for continuous flow throughout the whole trading day. In depth knowledge of money management strategies with the experience of multiple 6 sigma events in various markets (futures, stocks, commodities, currencies, bonds) embedded in extreme low risk statistical probability models with smooth equity curves and extensive risk management as well as extensive disaster risk allow for my natural capacity for risk-taking.
Bitcoin Price Hits $42k, ETH And AVAX Have Decreased, Polkadot (DOT) Gained

Bitcoin Price Hits $42k, ETH And AVAX Have Decreased, Polkadot (DOT) Gained

Alex Kuptsikevich Alex Kuptsikevich 23.03.2022 09:12
BTC rose 3.5% on Tuesday. At the peak of the day, the rate exceeded $43.2K, but by Wednesday morning, it rolled back to $42K, demonstrating a 0.7% correction. Growth without solid reasons? Bitcoin tested 19-day highs above $43,000 supported by stock indexes with Chinese equities predominantly pulling it. BTC rose sharply during the Asian session, adding about $2,000 in a few hours, although a corrective mood then prevailed. Bitcoin clearly doesn't have a reason for a solid establishment on the path of growth yet. Ethereum is losing 1% over 24 hours, while other leading altcoins from the top ten showed mixed dynamics yesterday: from a decline of 2.7% (Avalanche) to a rise of 3.8% (Polkadot). According to CoinMarketCap, the total capitalization of the crypto market decreased by 0.5%, to $1.91 trillion. The Bitcoin dominance index fell by 0.1% to 41.9%. The Cryptocurrency Fear and Greed Index added another 5 points to 31, although it remains in a "fear" state. BTC is ready for sharp swing At the moment, on-chain metrics are consistent with a bear market, Glassnode notes. The rise in implied volatility and higher leverage in the derivatives market point to the possibility of a sharp swing in bitcoin. However, the sell-off in "defensive" developed-country government bonds continues in financial markets as investors park their money in stocks and commodities that provide the best hedge against prolonged and high inflation. At the same time, there are no clear signs of an economic and financial catastrophe that could hurt stocks or commodities. The world's largest hedge fund Bridgewater Associates plans to invest in one of the third-party crypto funds, pointing to the risks for fiat currencies, which lose sharply during periods of military and economic wars.
Gold To Go Head To Head With Fed And Inflation

Gold To Go Head To Head With Fed And Inflation

Przemysław Radomski Przemysław Radomski 23.03.2022 15:17
  The Fed's hawkish alerts seem like a voice in the wilderness to gold investors. However, a carefree attitude can backfire on them – in just a few months. An epic battle is unfolding across the financial markets as the Fed warns investors about its looming rate hike cycle and the latter ignores the ramifications. However, with perpetually higher asset prices only exacerbating the Fed's inflationary conundrum, a profound shift in sentiment will likely occur over the next few months. To explain, I highlighted in recent days how the Fed has turned the hawkish dial up to 100. Moreover, I wrote on Mar. 22 that it's remarkable how much the PMs' domestic fundamental outlooks have deteriorated in recent weeks. Yet, prices remain elevated, investors remain sanguine, and the bullish bands continue to play.  However, with inflation still rising and the Fed done playing games, the next few months should elicit plenty of fireworks. For example, with another deputy sounding the hawkish alarm, San Francisco Fed President Mary Daly said on Mar. 22: "Inflation has persisted for long enough that people are starting to wonder how long it will persist. I'm already focused on letting make sure this doesn't get embedded and we see those longer-term inflation expectations drift up." As a result, Daly wants to ensure that the "main risk" to the U.S. economy doesn't end up causing a recession. Please see below: Source: Reuters Likewise, St. Louis Fed President James Bullard reiterated his position on Mar. 22, telling Bloomberg that “faster is better,” and that “the 1994 tightening cycle or removal of accommodation cycle is probably the best analogy here.” Please see below: Source: Bloomberg   Falling on Deaf Ears To that point, while investors seem to think that the Fed can vastly restrict monetary policy without disrupting a healthy U.S. economy, a major surprise could be on the horizon. For example, the futures market has now priced in nearly 10 rate hikes by the Fed in 2022. As a result, should we expect the hawkish developments to unfold without a hitch? Please see below: To explain, the light blue, dark blue, and pink lines above track the number of rate hikes expected by the Fed, BoE, and ECB. If you analyze the right side of the chart, you can see that the light blue line has risen sharply over the last several days and months. For your reference, if you focus your attention on the material underperformance of the pink line, you can see why I’ve been so bearish on the EUR/USD for so long. Also noteworthy, please have a look at the U.S. 2-Year Treasury yield minus the German 2-Year Bond yield spread. If you analyze the rapid rise on the right side of the chart below, you can see how much short-term U.S. yields have outperformed their European counterparts in 2021/2022. Source: Bloomberg/ Lisa Abramowicz More importantly, though, with Fed officials’ recent rhetoric encouraging more hawkish re-pricing instead of talking down expectations (like the ECB), they want investors to slow their roll. However, investors are now fighting the Fed, and the epic battle will likely lead to profound disappointment over the medium term. Case in point: when Fed officials dial up the hawkish rhetoric, their “messaging” is supposed to shift investors’ expectations. As such, the threat of raising interest rates is often as impactful as actually doing it. However, when investors don’t listen, the Fed has to turn the hawkish dial up even more. If history is any indication, a calamity will eventually unfold.  Please see below: To explain, the blue line above tracks the U.S. federal funds rate, while the various circles and notations above track the global crises that erupted during the Fed’s rate hike cycles. As a result, standard tightening periods often result in immense volatility.  However, with investors refusing to let asset prices fall, they’re forcing the Fed to accelerate its rate hikes to achieve its desired outcome (calm inflation). As such, the next several months could be a rate hike cycle on steroids.  To that point, with Fed Chairman Jerome Powell dropping the hawkish hammer on Mar. 21, I noted his response to a question about inflation calming in the second half of 2022. I wrote on Mar. 22: "That story has already fallen apart. To the extent it continues to fall apart, my colleagues and I may well reach the conclusion we'll need to move more quickly and, if so, we'll do so." To that point, Powell said that “there’s excess demand" and that "the economy is very strong and is well-positioned to handle tighter monetary policy." As a result, while investors seem to think that Powell’s bluffing, enlightenment will likely materialize over the next few months. Please see below: Source: Reuters Furthermore, with Goldman Sachs economists noting the shift in tone from “steadily” in January to “expeditiously” on Mar. 21, they also upped their hawkish expectations. They wrote: “We are now forecasting 50bp hikes at both the May and June meetings (vs. 25bp at each meeting previously). The level of the funds rate would still be low at 0.75-1% after a 50bp hike in May, and if the FOMC is open to moving in larger steps, then we think it would see a second 50bp hike in June as appropriate under our forecasted inflation path.” “After the two 50bp moves, we expect the FOMC to move back to 25bp rate hikes at the four remaining meetings in the back half of 2022, and to then further slow the pace next year by delivering three quarterly hikes in 2023Q1-Q3. We have left our forecast of the terminal rate unchanged at 3-3.25%, as shown in Exhibit 1.” Please see below: In addition, this doesn’t account for the Fed’s willingness to sell assets on its balance sheet. For context, Powell said on Mar. 16 that quantitative tightening (QT) should occur sometime in the summer and that shrinking the balance sheet “might be the equivalent of another rate increase.” As a result, investors’ lack of preparedness for what should unfold over the next few months has been something to behold. However, the reality check will likely elicit a major shift in sentiment.  In contrast, the bond market heard Powell’s message loud and clear, and with the U.S. 10-Year Treasury yield hitting another 2022 high of ~2.38% on Mar. 22, the entire U.S. yield curve is paying attention. Please see below: Source: Investing.com Finally, the Richmond Fed released its Fifth District Survey of Manufacturing Activity on Mar. 22. With the headline index increasing from 1 in February to 13 in March, the report cited “increases in all three of the component indexes – shipments, volume of new orders, and number of employees.” Moreover, the prices received index increased month-over-month (MoM) in March (the red box below), while future six-month expectations for prices paid and received also increased (the blue box below). As a result, inflation trends are not moving in the Fed’s desired direction. Please see below: Source: Richmond Fed Likewise, the Richmond Fed also released its Fifth District Survey of Service Sector Activity on Mar. 22, nd while the headline index decreased from 13 in February to -3 in March, current and future six-month inflationary pressures/expectations rose MoM. Source: Richmond Fed The bottom line? While the Fed is screaming at the financial markets to tone it down to help calm inflation, investors aren't listening. With higher prices resulting in more hawkish rhetoric and policy, the Fed should keep amplifying its message until investors finally take note. If not, inflation will continue its ascent until demand destruction unfolds and the U.S. slips into a recession. As such, if investors assume that several rate hikes will commence over the next several months with little or no volatility in between, they're likely in for a major surprise. In conclusion, the PMs declined on Mar. 22, as the sentiment seesaw continued. However, as I noted, it's remarkable how much the PMs' domestic fundamental outlooks have deteriorated in recent weeks. Thus, while the Russia-Ukraine conflict keeps them uplifted, for now, the Fed's inflation problem is nowhere near an acceptable level. As a result, when investors finally realize that a much tougher macroeconomic environment confronts them over the next few months, the shift in sentiment will likely culminate in sharp drawdowns. Thank you for reading our free analysis today. Please note that the above is just a small fraction of today’s all-encompassing Gold & Silver Trading Alert. The latter includes multiple premium details such as the targets for gold and mining stocks that could be reached in the next few weeks. If you’d like to read those premium details, we have good news for you. As soon as you sign up for our free gold newsletter, you’ll get a free 7-day no-obligation trial access to our premium Gold & Silver Trading Alerts. It’s really free – sign up today. Przemyslaw Radomski, CFAFounder, Editor-in-chiefSunshine Profits: Effective Investment through Diligence & Care * * * * * All essays, research and information found above represent analyses and opinions of Przemyslaw Radomski, CFA and Sunshine Profits' associates only. As such, it may prove wrong and be subject to change without notice. Opinions and analyses are based on data available to authors of respective essays at the time of writing. Although the information provided above is based on careful research and sources that are deemed to be accurate, Przemyslaw Radomski, CFA and his associates do not guarantee the accuracy or thoroughness of the data or information reported. The opinions published above are neither an offer nor a recommendation to purchase or sell any securities. Mr. Radomski is not a Registered Securities Advisor. By reading Przemyslaw Radomski's, CFA reports you fully agree that he will not be held responsible or liable for any decisions you make regarding any information provided in these reports. Investing, trading and speculation in any financial markets may involve high risk of loss. Przemyslaw Radomski, CFA, Sunshine Profits' employees and affiliates as well as members of their families may have a short or long position in any securities, including those mentioned in any of the reports or essays, and may make additional purchases and/or sales of those securities without notice.
The US Has Again Benefited From Military Conflicts In Other Parts Of The World, The Capital From Europe And Other Regions Goes To The US

EUR/USD Loses 0.15%, GBP/USD Loses 0.35%, USD/JPY Gains 0.35%! You Hawkish Fed! Dollar Strengthens!

Mikołaj Marcinowski Mikołaj Marcinowski 23.03.2022 20:27
Yesterday we were following forex pairs with dollars. Everybody follows dollar index (DXY) to check market’s reaction to Fed rhetoric which is verbalised by Jerome Powell (Chairman) again. Next rate hikes are highly expected. EUR/USD Chart GBP/USD Chart USD/JPY Chart USD/PLN Chart - exotic pair has gained this time, dollar seems to feel better Source/Data: Investing.com, Goldman Sachs, TradingView.com
What Will Be The Impact Of Rising Rates On Stocks & Commodities?

What Will Be The Impact Of Rising Rates On Stocks & Commodities?

Chris Vermeulen Chris Vermeulen 23.03.2022 21:33
Investors and traders alike are concerned about what investments they should make on behalf of their portfolios and retirement accounts. We, at TheTechnicalTraders.com, continue to monitor stocks and commodities closely due to the Russia-Ukraine War, market volatility, surging inflation, and rising interest rates. Several of our subscribers have asked if changes in monitor policy may lead to a recession as higher rates take a bigger bite out of corporate profits.As technical traders, we look exclusively at the price action to provide specific clues as to the current trend or a potential change in trend. We review our charts for both stocks and commodities to see what we can learn from the most recent price action. Before we dive into that, let’s review the various stages of the market; with special attention given to expansion vs. contraction in a rising interest rate environment which you can see illustrated below.PAY ATTENTION TO YOUR STOCK PORTFOLIOWe are keeping an especially close eye on the price action of the SPY ETF. The current resistance for the SPY is the 475 top that happened around January 6, 2022. This top was 212.5% of the March 23, 2020, low that was put in at the height of the Covid global pandemic.The SPY found support in the 410 area at the end of February. If you recall (or didn't know), 410 was the Fibonacci 1.618 or 161.8% percent of the Covid 2020 price drop. Now, after experiencing a nice rally back, of a little over 50%, we are waiting to see if the rally can continue or if rotation will occur, sending the price back lower.COMMODITY MARKETS SURGEDThe commodity markets experienced a tremendous rally due to fast-rising inflation, especially energy, metals, and food prices.The GSG ETF price action shows that we recently touched 200%, or the doubling of the April 21, 2020, low. Immediately following, similar to the SPY, the GSCI commodity index promptly sold off only to then find substantial buying support at the Fibonacci 1.618 or 161.8 percent of the starting low price of the bull trend. Resistance for the GSG is at 26, and support is 21.A STRENGTHENING US DOLLARThe strengthening US dollar can be attributed to investors seeking a safe haven from geopolitical events, surging inflation, and the Fed beginning to raise rates. The US Dollar is still considered the primary reserve currency as the greatest portion of forex reserves held by central banks are in dollars. Furthermore, most commodities, including gold and crude oil, are also denominated in dollars.Consider the following statement from the Bank of International Settlements www.bis.org ‘Triennial Central Bank Survey’ published September 16, 2019: “The US dollar retained its dominant currency status, being on one side of 88% of all trades.” The report also highlighted, “Trading in FX markets reached $6.6 trillion per day in April 2019, up from $5.1 trillion three years earlier.” That’s a lot of dollars traded globally and confirms that we need to stay current on the dollars price action.Multinational companies are especially keeping a close eye on the dollar as any major shift in global money flows will seriously negatively impact their net profit and subsequent share value.The following chart by www.finviz.com provides us with a current snapshot of the relative performance of the US dollar vs. major global currencies over the past year:KNOWLEDGE, WISDOM, AND APPLICATION ARE NEEDEDIt is important to understand that we are not saying the market has topped and is headed lower. This article is to shed light on some interesting analyses of which you should be aware. As technical traders, we follow price only, and when a new trend has been confirmed, we will change our positions accordingly. We provide our ETF trades to our subscribers, and somewhat surprisingly, we entered five new trades earlier this week, two of which have now hit their first profit target levels. Our models continually track price action in a multitude of markets, asset classes, and global money flow. As our models generate new information about trends or a change in trends, we will communicate these signals expeditiously to our subscribers and to those on our trading newsletter email list.Sign up for my free trading newsletter so you don’t miss the next opportunity! WHAT STRATEGIES CAN HELP YOU NAVIGATE The CURRENT MARKET TRENDS? Learn how we use specific tools to help us understand price cycles, set-ups, and price target levels in various sectors to identify strategic entry and exit points for trades. Over the next 12 to 24+ months, we expect very large price swings in the US stock market and other asset classes across the globe. We believe the markets have begun to transition away from the continued central bank support rally phase and have started a revaluation phase as global traders attempt to identify the next big trends. Precious Metals will likely start to act as a proper hedge as caution and concern begin to drive traders/investors into Metals and other safe-havens.We invite you to join our group of active traders and investors to learn and profit from our three ETF Technical Trading Strategies. We can help you protect and grow your wealth in any type of market condition by clicking on the following link: www.TheTechnicalTraders.com
The Interest Rate Cut Will Not Affect The Ruble (RUB)

Russian Roubles (RUB) As A Way To Pay For The Gas?

Alex Kuptsikevich Alex Kuptsikevich 23.03.2022 15:55
The Russian rubles adds more than 3% to the dollar, trading around 100 on news that "so-called unfriendly countries" will have to pay for gas in rubles. Impulsively (as the Russian currency market remains extremely illiquid), the USDRUB dropped below 95. This is indeed positive news for the Russian currency as it increases demand. But is it such a significant step? All exporters are now obliged to convert at least 80% of their foreign currency earnings into rubles. On the foreign exchange side, buying gas for rubles raises the bar to 100% for Gazprom and several other smaller exporters, but not for all jurisdictions (about 70% of total gas exports). For the balance of supply and demand of the ruble, this is a much less strong move than the initial order to convert 80% of all foreign exchange earnings into rubles. The news itself carries more of an emotional message for the markets. Still, the initial optimism could correct very quickly and is unlikely to be the mainstay for a sustained rally in the rubles. It also looks like an attempt to jab the USA, as selling energy for dollars has often been referred to as the basis of the reserve status of the USD in recent months. A secondary effect was the inversion of the spread between the USDRUB exchange rate on the Moscow Exchange and in Forex. Previously, in early March, USDRUB was traded up to 10 rubles less in Russia than abroad (though the spread diminished over time). Now USDRUB is settling at 98 on FX versus 100.4 on MOEX. Another secondary effect is a rise in oil prices of more than 5% since the start of the day, as some buyers will try to use the remaining alternative to gas, which can still be bought with dollars. Among the adverse effects, albeit in the medium term, it is worth pointing out that the switch to ruble settlements will accelerate a pullback of Russian gas by Europe, reducing export revenues, which has been a guarantee of ruble stability and a driver of economic growth.
Fed Expectations Amid Mixed Data: Wishful Thinking or Practical Pause?

Natural Gas Price Rises As Triggered By Putin’s Rhetoric That He Will ‘Demand Rouble Gas Payments’

Mikołaj Marcinowski Mikołaj Marcinowski 24.03.2022 12:47
According to Investing.com Russia could require gas payment in roubles what clearly affects both Forex pairs (e.g. EUR/RUB) and natural gas price (TTF) which has increased by 31%. What’s more MOEX is back to the game after such a long break. Some companies have gained significantly already and many would like to know what’s ahead. Generally speaking Russian currency and Russia-associated markets are really volatile at the moment and there are many assets to watch in the following days. Let’s begin with natural gas price. Obviously monthly chart (yes, it’s been one month since the warfare started) shows the fluctuations caused by the start of invasion which took place on February 24th We may say that the true rise came few days later, as negotiations of cease-fire haven’t changed a thing and sanctions have begun to impact the markets. Further developments containing some signals of a ceasefire appeared not to coincide with the reality heading price of natural gas to a next rise. Natural Gas Price Chat (TTF) – monthly 24/02-23/03 - +31% Natural Gas Price Chart (TTF) Daily 22-23/03/22 +18.5% Russian Roubel (RUB) – Forex Charts +11% Monthly chart shows a huge decline and strengthening of RUB. EUR/RUB Chart - Monthly +6% EUR/RUB Chart - Daily (24h) Source/Data: Investing.com, TradingView.com Charts: Courtesy of TradingView.com  
Top 3 Price Prediction Bitcoin, Ethereum, Ripple: Cryptos on the front foot as rebound turns into new uptrend

Top 3 Price Prediction Bitcoin, Ethereum, Ripple: Cryptos on the front foot as rebound turns into new uptrend

FXStreet News FXStreet News 24.03.2022 16:22
Bitcoin price set to touch $45,000 by tomorrow if current tailwinds keep supporting price action. Ethereum price set to rally another 12%, with bulls targeting $3,500.00XRP price undergoes consolidation as the next profit level is $0.90.Bitcoin price, Ethereum and other cryptocurrencies are enjoying a calm week with tailwinds finally able to thrive without constant interruption from headlines about Ukraine or Russia. Markets are also starting to adjust to the situation, with no immediate or significant movements anymore triggered by headlines coming out. Expect to see more upside with several possible cryptocurrencies eking out the best week of the year thus far.Bitcoin price has a defined game plan with $44,088 as the target for today and $45,261 by the weekendBitcoin (BTC) price is on the front foot for a third consecutive day as the rally turns into a broader uptrend. The crucial thing will be to see where BTC price will close this week, as bears need to get weakened with several short squeezes and breakouts running stops from short-sellers. Despite being elevated, the Relative Strength Index (RSI) is still not near the 'overbought' level, providing enough incentive for bulls and investors to keep buying BTC price action.BTC price is set to hit $44,088.73 today, the level of the March 03 highs. If that is gained – and given the current tailwinds – markets will start to expect Bitcoin to eke out new highs for the month with still a week to go. This additional bullish element should help conclude a daily close above $44,088.73. A support test on that same level will trigger new inflows from investors and provide the needed juice to pump price action up to $45,261.84, topping $45,000.00.BTC/USD daily chartA tail risk comes from the big joint meeting today in Brussels, with Biden meeting NATO, the G7 and E.U. leaders. An embargo on gas is on the table and could roil markets if the E.U. decides to walk away from Russian gas supplies, opening up the possibility of further Russian retaliation in Ukraine. That would make global markets move back to risk-off mode, with Bitcoin price dropping back to support at $39,780.68, and intersecting with the green ascending trend line. Ethereum price targets $3,500 after bulls force a daily close above $3,018.55Ethereum (ETH) price is performing a 'classic long' trading plan today after bulls pushed a daily close above $3,018.55. With price action in ETH opening slightly above this level, this morning, the price has faded slightly back towards that same $3,018.55 level to find support and offer the opportunity for new bulls and investors to enter the market. Ethereum price will move back to the upside and continue its rally, which is currently looking more and more like an uptrend that could continue over a broader time frame.ETH price will therefore need to find support around $3,018.55 as the fade will need to be kept in check, as too large a fade could spook investors. Seeing as the current favourable tailwinds are quite broadly present in global markets, expect to see another uplift towards $3,200 and $3,391.52 depending on the number of new positive headlines acting as additional accelerators. With those moves, at least new highs for March will be printed and possibly for February, depending on how steep the rally can continue.ETH/USD daily chartThe risk for Ethereum price is that price action slips back below $3,018.55. That could open the door for bears to jump in again and run price action back to $2,835.83, which is the low of March 21 and the monthly pivot. An additional fail-safe system is the 55-day Simple Moving Average at $2,808.84 as an additional supportive factor to take into account.https://youtu.be/wgpCSH70SIQXRP price undergoes consolidation as the bullish breakout hits $0.90Ripple's (XRP) price has bears and bulls being pushed towards each other as the bodies of the candles from the past two sessions grow very thin. This points to bulls and bears fighting it out and neither yet having the upper hand. Bears are defending the area above $0.8390 from bulls running to $0.8791, and bulls are trying to defend their support at $0.7843. With lower highs and higher lows, the stage is set for a breakout that, seeing the current tailwinds, will probably favour bulls, and result in a quick move towards $0.8791.XRP price is thus set to print new highs for March. With the stock markets having their best performing week for this year, expect to see even more tailwinds spilling over to cryptocurrencies and bulls targeting $0.9110. At that level, bulls will run into the 200-day SMA which will possibly be the halting point of the current uptrend as investors will need to reassess the situation before they advance. Where global markets are at that point and how far off a peace treaty is between Russia and Ukraine will determine if bulls will advance towards $1.00 in XRP price.XRP/USD daily chartAlthough several statements suggest it is unlikely, should Putin be backed further into a corner, the use of nuclear weapons could cast a dark shadow on markets. Expect a massive drop in equities and cryptocurrencies with those headlines coming out, where XRP price will fall towards $0.7843 or even $0.7600. In the first case, the historic pivotal level will provide support and further down, the monthly pivot is set to intertwine with the 55-day SMA, which should be enough to catch any falling-knife action. https://youtu.be/ZWrKMd2CiL8
Russia's Active Production Cuts Could Be Grounds For A Bullish Shock

Oil Has Increased By 20%! How Have Crude Oil Price Fluctuated Since The Beginning Of The Russia-Ukraine War? It’s Over $112 Now…

Mikołaj Marcinowski Mikołaj Marcinowski 24.03.2022 15:45
While everybody was wondering about the end of the COVID-19 pandemy and Russia invaded Ukraine what started affecting the markets. Obviously natural gas and crude oil price are volatile recently. EU leaders accompanied by Joe Biden discuss outlooks and most probably next sanctions. As we wrote in the report about natural gas price the rise started to confuse the world few days after the invasion. It seems that all sanctions and fail of ceasefire negotiations made the crude oil price rise gain momentum. In the middle of March prices got back to the levels of the beginning of the month, but aggressive rhetoric of Russia made BRENT and WTI trading higher again. Let’s have a look at the Crude Oil Price monthly chart (courtesy of TradingView.com) 5-days chart (courtesy of TradingView.com) of Crude Oil Price shows a significant rise in recent days Data/Source: TradingView.com Charts: Courtesy of TradingView.com
Crude Oil Holds Its Breath Ahead of World Summits

Crude Oil Holds Its Breath Ahead of World Summits

Finance Press Release Finance Press Release 24.03.2022 16:46
Current levels of oil and petroleum products are high. Given that, what can explain such a surprising drop in US crude inventories?Energy Market UpdatesCommercial crude oil reserves in the United States fell much more than expected in the week ended March 18, according to figures released on Wednesday by the US Energy Information Administration (EIA).US crude inventories have shrunk by more than 2.5 million barrels, which implies greater demand and is obviously another bullish factor for crude oil prices. Such a decline in inventories is particularly remarkable as the American strategic reserves have also recorded a significant drop. This is the 25th consecutive week of falling strategic reserves since the Biden administration started to make those adjustments in an attempt to relieve the market.(Source: Investing.com)WTI Crude Oil (CLK22) Futures (May contract, daily chart)Furthermore, some additional figures extracted from the same EIA report were released and surprised the markets.These are US Gasoline Reserves, which plunged by about 2.95 million barrels over a week, while the market was not even forecasting a two-million decline.(Source: Investing.com)Thus, US exports jumped by more than 30% compared to the previous week, not only due to large flows to Europe to replace Russian barrels, but also marked by a significant rebound in Asian demand.RBOB Gasoline (RBJ22) Futures (April contract, daily chart)Beware that a NATO summit, a G7 summit, and a European Union summit are being held on Thursday, when the various countries could set a new round of sanctions against Moscow.So, how will black gold progress from now on? Do you think that the on-going negotiations with Iran and Venezuela could flood the market with additional barrels? Let us know in the comments!That’s all folks for today. Happy trading!Like what you’ve read? Subscribe for our daily newsletter today, and you'll get 7 days of FREE access to our premium daily Oil Trading Alerts as well as our other Alerts. Sign up for the free newsletter today!Thank you.Sebastien BischeriOil & Gas Trading Strategist* * * * *The information above represents analyses and opinions of Sebastien Bischeri, & Sunshine Profits' associates only. As such, it may prove wrong and be subject to change without notice. At the time of writing, we base our opinions and analyses on facts and data sourced from respective essays and their authors. Although formed on top of careful research and reputably accurate sources, Sebastien Bischeri and his associates cannot guarantee the reported data's accuracy and thoroughness. The opinions published above neither recommend nor offer any securities transaction. Mr. Bischeri is not a Registered Securities Advisor. By reading Sebastien Bischeri’s reports you fully agree that he will not be held responsible or liable for any decisions you make regarding any information provided in these reports. Investing, trading and speculation in any financial markets may involve high risk of loss. Sebastien Bischeri, Sunshine Profits' employees, affiliates as well as their family members may have a short or long position in any securities, including those mentioned in any of the reports or essays, and may make additional purchases and/or sales of those securities without notice.
Price Of Gold Nears $45k As Many Authorities Are Speaking Of Crypto

Price Of Gold Nears $45k As Many Authorities Are Speaking Of Crypto

Alex Kuptsikevich Alex Kuptsikevich 25.03.2022 08:52
Bitcoin is trading above $44.1K on Friday, gaining 2.4% over the past day and 8.2% over the week. Increased inquiry for BTC Yesterday, the first cryptocurrency was in demand during the Asian and American sessions. The current values of BTC are consolidating in the area of 2-month extremes. In contrast to the previous test of these levels, this time, we see a smooth rise in the rate, indicating that the bulls still have some momentum. Also, over the past 24 hours, Ethereum has gained 2.4%, while other leading altcoins from the top ten have strengthened from 0.5% (XRP) to 7.4% (Solana). The exception is Terra, which is shedding 1.8%, correcting part of its gains in the first half of the week. According to CoinMarketCap, the total crypto market capitalization increased by 2.3% to $2 trillion. The Bitcoin Dominance Index rose 0.1 percentage points to 41.8%. The Fear and Greed Cryptocurrency Index added another 7 points to 47 and ended up in the neutral territory. Cardano leads the last week in terms of growth among top coins (+39%) as Coinbase added the possibility of staking cryptocurrency with a current estimated annual return of 3.75% per annum. Countries assess the risks of cryptos Credit Suisse reported that Bitcoin doesn't pose a threat to the banking sector as an alternative to fiat money and banking services. The CEO of BlackRock, one of the world's largest investment companies, noted that military actions in Ukraine and sanctions against Russia will increase the popularity of cryptocurrencies and accelerate their adoption. Despite the rally in global stocks over the past two weeks, financial conditions in the debt markets continue to deteriorate due to rising interest rates and inflation. Largely because of this, El Salvador has postponed the issuance of bitcoin bonds in anticipation of more favorable conditions. Since very active steps to raise key rates are expected in the next year and a half, and Bitcoin is far from the highs, it is unlikely that such bonds will be issued soon. The Bank of England intends to tighten supervision of cryptocurrencies due to the financial risks that their adoption carries. However, the Central Bank urged commercial banks to exercise maximum caution when dealing with these extremely volatile assets.
Is There Any Gold in Virtual Worlds Like Metaverse?

Is There Any Gold in Virtual Worlds Like Metaverse?

Finance Press Release Finance Press Release 25.03.2022 12:15
Imagine all the people… living life in the Metaverse. Once we immerse ourselves in the digital sphere, gold may go out of fashion. Or maybe not?Do you already have your avatar? If not, maybe you should consider creating one, as the Metaverse is coming! What is the Metaverse? It is a digital, three-dimensional world where people are represented by avatars, a network of 3D virtual worlds focused on social connection, the next evolution of the internet, “extended reality,” and the latest buzzword in the marketplace since Facebook changed its name to Meta. If you still have no idea what I’m talking about, you can watch this or just Spielberg’s Ready Player One.The idea of personalities being uploaded online is an intriguing concept, isn’t it? In this vision, people meet with others, play, and simply hang out in a digital world. Imagine friends turning group chats on Messenger or WhatsApp into group meetups in the Metaverse of family gatherings in virtual homes. Ultimately, people will probably be doing pretty much everything there, except eating, sleeping, and using the restroom.Sounds scary? For people in their 30s and older who were fascinated by The Matrix, it does. However, this is really happening. The augmented reality technology market is expected to grow from $47 billion in 2019 to $1.5 trillion in 2030, mainly thanks to the development of the Metaverse. China’s virtual goods and services market is expected to be worth almost $250 billion this year and $370 billion in the next four years.In a sense, it had to happen as the next phase of the digital revolution. You see, we now experience much of life on the two-dimensional screens of our laptops and smartphones. The Metaverse moves us from a flat and boring 2D to a 3D virtual universe, where we can visualize and experience things with a more natural user interface. Let’s take shopping as an example. Instead of purchasing items on Amazon, customers could enter a virtual shop, see and touch all products in 3D, and buy whatever they wanted (actually, Walmart launched its own 3D shopping experience in 2018).OK, we get the idea, but why does Metaverse matter, putting aside sociological or philosophical issues related to transferring our minds into the digital world? Well, it might strongly affect every aspect of business and life, just as the internet did earlier. Here are a couple of examples. Famous brands, like Dolce & Gabbana, are designing clothes and jewelry for the digital world. Some artists are giving concerts in virtual reality. You could also visit some museums virtually, and instead of taking a business trip, you can digitally teleport to remote locations to meet with your co-workers’ avatars.Finally, what does the Metaverse imply for the gold market? Well, it’s difficult to grasp all the possible implications right now. However, the main threat is clear: as people immerse deeper and deeper into the digital world, gold could become obsolete for many users. Please note that cryptocurrencies and non-fungible tokens (NFTs) are and will continue to be widely used as payment methods in the Metaverse.However, there are some caveats here. First, the invention and spread of the internet didn’t sink gold. Actually, the internet enabled gold to be widely traded by investors all over the world. Just take a look at the chart below. Although gold was in a bear market in the 1990s and struggled during the dot-com bubble, it rallied after the bubble burst.Second, the digital world didn’t kill the analog reality. Despite digital streaming of music, vinyl record sales soared last year, reaching a record high in a few decades. The development of the Metaverse could trigger a similar backlash and a return to tangible goods like gold.Third, some segments of the Metaverse look like bubbles. Maybe I’m just too old, but why the heck would anybody spend hundreds of thousands, or even millions of dollars to buy items in the virtual world? These items include virtual real estates (CNBC says that sales of real estate in the metaverse topped $500 million last year and could double this year), digital pieces of art or even tweets (yup, the founder of Twitter sold the first tweet ever for just under $3 million)! It does not make any sense to me, as I can right-click and download a copy of the same digital files (like a PNG file of a grey pet rock) for which people pay thousands and millions of dollars.Of course, certain items could increase the utility of the game or virtual experience, but my bet is that at least some buyers simply speculate on prices, expecting that they will be able to resell these items to greater fools. When this digital gold rush ends – and given the Fed’s tightening cycle, it may happen in the not-so-distant future – real gold could laugh last.Thank you for reading today’s free analysis. We hope you enjoyed it. If so, we would like to invite you to sign up for our free gold newsletter. Once you sign up, you’ll also get 7-day no-obligation trial of all our premium gold services, including our Gold & Silver Trading Alerts. Sign up today!Arkadiusz Sieron, PhDSunshine Profits: Effective Investment through Diligence & Care.
S&P 500 Has Been Moving Up For A While. What's Next?

S&P 500 Has Been Moving Up For A While. What's Next?

Paul Rejczak Paul Rejczak 28.03.2022 15:55
  Stocks extended their short-term uptrend on Friday, but this week we may see some more uncertainty and a possible profit-taking action. The S&P 500 index gained 0.53% on Friday following its Thursday’s advance of 1.4%. The broad stock market’s gauge extended its short-term uptrend after breaking above the 4,500 level. It gained over 380 points from the Mar. 14 local low of around 4,162. There have been no confirmed negative signals so far. However, we may see another correction and a profit-taking action at some point. There’s still a lot of uncertainty concerning the ongoing Ukraine conflict, but investors were recently jumping back into stocks despite that geopolitical uncertainty. This morning the index is expected to open virtually flat after an overnight advance followed by its retracement. The nearest important resistance level is at around 4,550-4,600, marked by the previous local highs. On the other hand, the support level is at 4,400-4,450. The S&P 500 index trades closer to its January-February local highs along the 4,600 level, as we can see on the daily chart (chart by courtesy of http://stockcharts.com): Futures Contract Remains Above the 4,500 Level Let’s take a look at the hourly chart of the S&P 500 futures contract. It is trading close to the new local high. Potential resistance level is at around 4,585, marked by the previous highs. There have been no confirmed negative signals so far. We are maintaining our profitable long position from the 4,340 level, as we are still expecting a bullish price action in the near-term. However, to protect our gain, we decided to move the stop-loss (take profit) and price target levels higher. (our premium Stock Trading Alert includes details of our trading position along with the stop-loss and profit target levels) (chart by courtesy of http://tradingview.com): Conclusion The S&P 500 index will likely open virtually flat this morning. However, the futures contract retraced its overnight advance, so we may see more uncertainty and a potential profit-taking action. The war In Ukraine remains a negative factor for the markets. The global markets will also be waiting for this Friday’s monthly jobs data release. Here’s the breakdown: The S&P 500 index extended its uptrend on Friday; this morning the futures contract retreated from its new local high. We are maintaining our profitable long position (opened on Feb. 22 at 4,340), but we moved stop-loss (take profit) and price target levels higher. We are still expecting an advance from the current levels. Like what you’ve read? Subscribe for our daily newsletter today, and you'll get 7 days of FREE access to our premium daily Stock Trading Alerts as well as our other Alerts. Sign up for the free newsletter today! Thank you. Paul Rejczak,Stock Trading StrategistSunshine Profits: Effective Investments through Diligence and Care * * * * * The information above represents analyses and opinions of Paul Rejczak & Sunshine Profits' associates only. As such, it may prove wrong and be subject to change without notice. At the time of writing, we base our opinions and analyses on facts and data sourced from respective essays and their authors. Although formed on top of careful research and reputably accurate sources, Paul Rejczak and his associates cannot guarantee the reported data's accuracy and thoroughness. The opinions published above neither recommend nor offer any securities transaction. Mr. Rejczak is not a Registered Securities Advisor. By reading his reports you fully agree that he will not be held responsible or liable for any decisions you make regarding any information provided in these reports. Investing, trading and speculation in any financial markets may involve high risk of loss. Paul Rejczak, Sunshine Profits' employees, affiliates as well as their family members may have a short or long position in any securities, including those mentioned in any of the reports or essays, and may make additional purchases and/or sales of those securities without notice.
Crypto trading volume exceeds $100 billion in 24 hours as bulls flock to the market

Crypto trading volume exceeds $100 billion in 24 hours as bulls flock to the market

FXStreet News FXStreet News 28.03.2022 16:34
Proponents noted a 63.07% spike in the total transaction volume of cryptocurrencies across exchanges. Coinmarketcap data reveals a month-on-month increase of 4.75% in crypto trading volume. Bitcoin price crossed $47,000, fueled by $200 million shorts liquidated across exchanges. Bitcoin price is rallying, fueled by a frenzy of massive short liquidations on crypto exchanges. Proponents believe bulls have flocked to the market, as transaction volume exceeded $100 billion. Bitcoin price pushes past $47,000 in recent rally Bitcoin price crossed key resistance to hit a high above $47,000 in a rally fueled by the liquidation of millions of short positions. Analysts at the crypto intelligence platform Santiment observed a massive liquidation of shorts across exchanges at 1 pm and 6 pm UTC across crypto exchanges on March 27, 2022. Analysts argue that Bitcoin’s recent price rally to $47,000 was a response to liquidation in large quantities over the weekend. The average funding rate entered the long zone, where uncertainty among market participants increased. Therefore, analysts conclude that Bitcoin shorts have fueled the asset’s ongoing rally. Bitcoin and altcoin shorts liquidatedColin Wu, a Chinese journalist, reported a spike in the total transaction volume of cryptocurrencies, exceeding $100 billion over the past 24 hours. Wu referred to data from Coinmarketcap and observed a 63.07% increase in crypto transaction volume compared to March 26, 2022. The total crypto market value now exceeds $2.12 trillion. Historically, analysts have witnessed high transaction activity when large wallet investors flock to the market or scoop up crypto. Bloomberg analysts argue that Bitcoin looks overbought, compared to its 50-day Moving Average. Bitcoin price crossed key resistance at $45,000 in the current rally, erasing its losses for the year. FXStreet analysts have evaluated Bitcoin price and predicted the start of a new uptrend in the asset, as it crossed the $45,000 level.
Tesla Stock News and Forecast: Shareholders to vote on TSLA stock split

Tesla Stock News and Forecast: Shareholders to vote on TSLA stock split

FXStreet News FXStreet News 28.03.2022 16:34
Tesla stock surges on news of a potential stock split dividend.TSLA is up at $1,066 of +5.6% in Monday premarket trading.Tesla stock has rallied sharply from early March lows.Tesla stock (TSLA) is back to the top of the social media chatter on Monday, usurping GameStop and AMC in the process. The stock is surging this morning on news of a potential stock split dividend. Tesla previously did a 5-for-1 stock split back in August 2020, and other companies have followed suit, notably Amazon. This makes it easier for retail investors to own the stock when it has a more affordable share price.Tesla Stock News: Stock split imminent?Tesla's board of directors has already approved the plan to split the shares for a stock dividend and will put it to a vote of the shareholders. The news was well-received by retail shareholders who tend to be more active in the premarket than other holders. A stock dividend is exactly what it sounds like. Instead of receiving cash, shareholders receive new shares in the company. This means companies do not use up cash to fund the dividend. Stock dividends are usually dilutive to earnings per share (EPS) as more shares are in issue after the event. Tesla is up nearly 6% before the open. It is not all plain sailing though for the EV giant as more Chinese covid lockdowns are announced. Tesla will close its Shanghai giga plant for at least a day on the back of lockdowns in the city. Tesla Stock ForecastA powerful rally with the next target now set at $1,210. This would set up Tesla's (TSLA) stock to break to all-time highs. Currently, on the longer-term time horizon, the narrative is still bearish with a series of lower highs and lower lows. So breaking $1,210 turns Tesla bullish on all time horizons. Naturally, it is already bullish in the short term after last week's strong rally. Holding above $945 is the key pivot for medium and long-term traders. TSLA 20-hour chartThere is a short-term pivot at $1,000, with high volume at this level. Below sees a volume gap to $945, the key as mentioned above. Tesla chart, 15-minute
Who Benefits Most From the Russia-Ukraine War?

Who Benefits Most From the Russia-Ukraine War?

Finance Press Release Finance Press Release 28.03.2022 17:25
With the unrest in the Black Sea basin, it appears that there are two more cross-trade wars in the world. These are about energy and currency.Crude oil prices, down most of Friday, finally ended the week higher after a huge fire broke out at oil facilities in Jeddah, Saudi Arabia, following attacks by Yemeni rebels.The great winner of the Russian-Ukrainian conflict is undoubtedly the United States, which now seems to be taking advantage of Europe’s moment of weakness.The latter is indeed currently switching its energy supplies from Russian natural gas (pipeline-transported) to the much more polluting and much more expensive US shale gas. The reasons are much higher extraction (fracking) and transportation costs since it requires additional processes such as liquefaction/degasification and the deployment of more port terminals that are able to provide such steps – also much more energy-consuming – linked to Liquefied Natural Gas (LNG) supplies.(Source: ResearchGate.net)By doing so, the European Union is going to increase its dependence on the US whilst a new and stronger block (including Asia) emerges on the east side.As a result, we have already started to witness dedollarisation in international trade, with the petroyuan set to dethrone the heavily-printed petrodollar.No wonder that the US dollar supply surge has ended up triggering uncontrollable and probably still underestimated inflation. As a result, this monetary virus is spreading through the global economy at a faster pace than any other variant! WTI Crude Oil (CLK22) Futures (May contract, daily chart) Henry Hub Natural Gas (NGK22) Futures (May contract, daily chart)“Inflation is like toothpaste. Once it's out, you can hardly get it back in again. So, the best thing is not to squeeze too hard on the tube.” – Dr Karl Otto PöhlThat’s all folks for today. Happy trading!Like what you’ve read? Subscribe for our daily newsletter today, and you'll get 7 days of FREE access to our premium daily Oil Trading Alerts as well as our other Alerts. Sign up for the free newsletter today!Thank you.Sebastien BischeriOil & Gas Trading Strategist* * * * *The information above represents analyses and opinions of Sebastien Bischeri, & Sunshine Profits' associates only. As such, it may prove wrong and be subject to change without notice. At the time of writing, we base our opinions and analyses on facts and data sourced from respective essays and their authors. Although formed on top of careful research and reputably accurate sources, Sebastien Bischeri and his associates cannot guarantee the reported data's accuracy and thoroughness. The opinions published above neither recommend nor offer any securities transaction. Mr. Bischeri is not a Registered Securities Advisor. By reading Sebastien Bischeri’s reports you fully agree that he will not be held responsible or liable for any decisions you make regarding any information provided in these reports. Investing, trading and speculation in any financial markets may involve high risk of loss. Sebastien Bischeri, Sunshine Profits' employees, affiliates as well as their family members may have a short or long position in any securities, including those mentioned in any of the reports or essays, and may make additional purchases and/or sales of those securities without notice.
Volatility Retreats As Stocks & Commodities Rally

Volatility Retreats As Stocks & Commodities Rally

Chris Vermeulen Chris Vermeulen 28.03.2022 21:32
The CBOE Volatility Index (VIX) is a real-time index. It is derived from the prices of SPX index options with near-term expiration dates that are utilized to generate a 30-day forward projection of volatility. The VIX allows us to gauge market sentiment or the degree of fear among market participants. As the Volatility Index VIX goes up, fear increases, and as it goes down, fear dissipates.Commodities and equities are both showing renewed strength on the heels of global interest rate increases. Inflation shows no sign of abating as energy, metals, food products, and housing continues their upward bias.During the last 18-months, the VIX has been trading between its upper resistance of 36.00 and its lower support of 16.00. As the Volatility Index VIX falls, fear subsides, and money flows back into stocks.VIX – VOLATILITY S&P 500 INDEX – CBOE – DAILY CHARTSPY RALLIES +10%The SPY has enjoyed a sharp rally back up after touching its Fibonacci 1.618% support based on its 2020 Covid price drop. Money has been flowing back into stocks as investors seem to be adapting to the current geopolitical environment and the change in global central bank lending rate policy.Resistance on the SPY is the early January high near 475, while support remains solidly in place at 414. March marks the 2nd anniversary of the 2020 Covid low that SPY made at 218.26 on March 23, 2020.SPY – SPDR S&P 500 ETF TRUST - ARCA – DAILY CHARTBERKSHIRE HATHAWAY RECORD-HIGH $538,949!Berkshire Hathaway is up +20.01% year to date compared to the S&P 500 -4.68%. Berkshire’s Warren Buffet has also been on a shopping spree, and investors seem to be comforted that he is buying stocks again. Buffet reached a deal to buy insurer Alleghany (y) for $11.6 billion and purchased nearly a 15% stake in Occidental Petroleum (OXY), worth $8 billion.These acquisitions seem to be well-timed as insurers and banks tend to benefit from rising interest rates, and Occidental generates the bulk of its cash flow from the production of crude oil.As technical traders, we look exclusively at the price action to provide specific clues as to the current trend or a potential change in trend. With that said, Berkshire is a classic example of not fighting the market. As Berkshire continues to make new highs, its’ trend is up!BRK.A – BERKSHIRE HATHAWAY INC. - NYSE – DAILY CHARTCOMMODITY DEMAND REMAINS STRONGInflation continues to run at 40-year highs, and it appears that it will take more than one FED rate hike to subdue prices. Since price is King, we definitely want to ride this trend and not fight it. It is always nice to buy on a pullback, but the energy markets at this point appear to be rising exponentially. The XOP ETF gave us some nice buying opportunities earlier at the Fibonacci 0.618% $71.78 and the 0.93% $93.13 of the COVID 2020 range high-low.Remember, the trend is your friend, as many a trader has gone broke trying to pick or sell a top before its time! Well-established uptrends like the XOP are perfect examples of how utilizing a trailing stop can keep a trader from getting out of the market too soon but still offer protection in case of a sudden trend reversal.XOP – SPDR S&P OIL & GAS EXPLORE & PRODUCT – ARCA – DAILY CHARTKNOWLEDGE, WISDOM, AND APPLICATION ARE NEEDEDIt is important to understand that we are not saying the market has topped and is headed lower. This article is to shed light on some interesting analyses of which you should be aware. As technical traders, we follow price only, and when a new trend has been confirmed, we will change our positions accordingly. We provide our ETF trades to our subscribers, and somewhat surprisingly, we entered five new trades last week, four of which have now hit their first profit target levels. Our models continually track price action in a multitude of markets, asset classes, and global money flow. As our models generate new information about trends or a change in trends, we will communicate these signals expeditiously to our subscribers and to those on our trading newsletter email list.Sign up for my free trading newsletter so you don’t miss the next opportunity! Furthermore, successfully trading is not limited to when to buy or sell stocks or commodities. Money and risk management play a critical role in becoming a consistently profitable trader. Correct position sizing utilizing stop-loss orders helps preserve your investment capital and allows traders to manage their portfolios according to their desired risk parameters. Additionally, scaling out of positions by taking profits and moving stop-loss orders to breakeven can complement ones’ success.WHAT STRATEGIES CAN HELP YOU NAVIGATE The CURRENT MARKET TRENDS? Learn how we use specific tools to help us understand price cycles, set-ups, and price target levels in various sectors to identify strategic entry and exit points for trades. Over the next 12 to 24+ months, we expect very large price swings in the US stock market and other asset classes across the globe. We believe the markets have begun to transition away from the continued central bank support rally phase and have started a revaluation phase as global traders attempt to identify the next big trends. Precious Metals will likely start to act as a proper hedge as caution and concern begin to drive traders/investors into Metals and other safe-havens.We invite you to join our group of active traders and investors to learn and profit from our three ETF Technical Trading Strategies. We can help you protect and grow your wealth in any type of market condition by clicking on the following link: www.TheTechnicalTraders.com
Indonesia's Inflation Slips, Central Bank Maintains Rates Amidst Stability

Intraday Market Analysis – JPY Struggles For Bids

Jing Ren Jing Ren 29.03.2022 08:40
USDJPY seeks support The Japanese yen recouped some losses after a drop in February’s unemployment rate. The pair surged to August 2015’s high and the psychological level of 125.00. An overwhelmingly overbought RSI may cause a pullback if short-term buyers start to unwind their bets. As the market mood stays upbeat, trend followers could be waiting to jump in at a discount. 122.20 is the closest level if the greenback needs to gather support. A break above the current resistance would propel the pair to new highs above 127.00. AUDUSD hits major resistance The Australian dollar stalls as caution prevails ahead of major economic data. The rally slowed down at last October’s peak at 0.7550. A combination of profit-taking and fresh selling weighs on the Aussie. The bulls may see a pullback as an opportunity to accumulate in hope of a new round of rally. 0.7400 from the latest bullish breakout would be key support should this happen. On the upside, an extended rally could propel the pair to last June’s highs around 0.7770 and pave the way for a reversal in the medium-term. US 100 to test major resistance Growth stocks rose amid a sell-off in the bond market. Short-term sentiment remains bullish after a series of higher lows which indicates sustained buying interest. The Nasdaq 100 is heading to the daily resistance at 15050. A bearish RSI divergence suggests a deceleration in the rally, foreshadowing a potential retracement. 14600 is the support and its breach may trigger a sell-off towards 14200 which sits at the base of the recent breakout. A close above the said hurdle may put the index back on track in the weeks to come.
Bitcoin has become a leading indicator of investor sentiment

Bitcoin has become a leading indicator of investor sentiment

Alex Kuptsikevich Alex Kuptsikevich 29.03.2022 08:51
BTC is up 4% on Monday, ending the day around $48K, and corrected by about 1% to $47.5K on Tuesday morning. Ethereum was up 1.8% in the last 24 hours to $3.4K. Terra is a leader of the day According to CoinMarketCap, the total capitalization of the crypto market increased by 1% over the day, to $2.15 trillion. The Bitcoin dominance index fell by 0.1 points to 42.1%. The crypto-currency index of fear and greed rose by 11 points over the day, to 60, and moved from neutral level to the "greed" grade. On Tuesday, the index dropped to 56 points. Among the leading altcoins, Terra soared by 10%, Doge corrected by 2%. In most others, there is a slight correction in the growth of the last days, but they are in positive territory over the last day. Bitcoin continued to rise on Monday after it broke through the strong resistance of the February highs around $45K in the previous evening. By the end of the day, BTC has renewed the highs of early January above $48K, having won back the decline since the beginning of the year. Bitcoin is correlating with S&P500 The growth of the first cryptocurrency rested on the 200-day moving average ($48.2K). Confident consolidation above it promises to strengthen and expand the growth of the entire crypto market and breathe fresh impetus into the growth of bitcoin. In December, we saw a false break, but then the price levels were higher, and corrective sentiment intensified in the stock markets. Now Bitcoin is growing along with the rise of stock indices and often even acts as a leading indicator of investor sentiment. According to Arcane Research, BTC's correlation with the S&P 500 stock indicator recently hit a 17-month high. According to CoinShares, institutions invested $193 million in crypto funds last week, and it was the most significant amount in three months. Glassnode believes that the Bitcoin trend has already changed to bullish, as evidenced by the increase in the number of addresses accumulating BTC.
US ADP Employment March Preview: Private job creation slows while yield curve flattens

US ADP Employment March Preview: Private job creation slows while yield curve flattens

FXStreet News FXStreet News 29.03.2022 16:43
US ADP payrolls are foreseen at 438K in March, NFP at 475K.US yield curve is flattening, rings recession alarm amid 50-bps May Fed rate hike bets.Fed Chair Powell believes the labor market is strong enough, recession unlikely.The US private sector hiring is seen slowing in March after the American companies added more jobs than expected in February. The US ADP private employment report, due on Wednesday at 12.15 GMT, usually provides a good hint at Friday’s full jobs report, so investors will be looking for clues on any potential labor market slowdown.Pace of jobs creation slows in the USThe Automatic Data Processing (ADP) is forecast to show that US companies have created 438,00 new jobs in March, less than the previous month’s addition of 475,000. In February, business payrolls rose more than the expected 375,000 figure. ADP’s payroll data represent firms employing nearly 26 million workers in the US and its monthly release shows the employment change in the economy.Source: FXStreetOn Friday, the US Labor Department will release the Nonfarm Payrolls, which is expected to show that the economy has likely added 475,000 new jobs in March after a surprise increase of 678,000 reported in February.The Automatic Data Processing ADP jobs report is usually considered a proxy to the official Nonfarm Payrolls figures, which will be released on Friday, April 1.The disparity between the two indicators in recent months, however, makes the ADP result unreliable to gauge the NFP trend and, therefore, could have a limited market impact.US yield curve flattens, Fed remains hawkishHeading into the monthly payrolls data, the Russia-Ukraine conflict rages on while the odds of a 50-basis points (bps) Fed rate hike in May almost appears a done deal.Against this backdrop, the yields on the US Treasuries have rallied to three-year highs, although the increase in the longer-dated yields has failed to match the pace of the advance in the shorter ones. The spread between the two- and 10-year yields narrowed to its lowest since early 2020 on Tuesday. The flattening of the yield curve is usually indicative of a likely recession, as investors remain worried that the aggressive Fed’s tightening would damage the US economy over the longer term.At the March FOMC meeting, Fed Chair Jerome Powell said that the labor market is strong enough that a recession is unlikely. Although Powell remains optimistic about the economy and labor market, he said in his speech last week, “this is a labor market that is out of balance," adding "we need the labor market to be sustainably tight."To concludeMarkets are pricing in a roughly 60% chance of a 50-bps rate hike at the Fed’s May meeting.A slowdown in the hiring pace in the world’s biggest economy could likely feed the risks of a recession, especially in the face of soaring inflation. This could pour cold water on the recent Fed’s hawkishness.The ADP report, however, is unlikely to have any major impact on the US dollar and other related markets. Friday’s NFP release will hold the key to gauging the Fed’s policy action going forward.
The Bitcoin Market Is Now Developing The Corrective Cycle To The Downside

Bitcoin (BTC) Price Charts - Daily, Monthly, BTC/GOLD - 29/03/22

Korbinian Koller Korbinian Koller 29.03.2022 11:35
Bitcoin wins the race   While Russia accepts hard currencies like gold, a move like this shows that the efficient attributes of bitcoin come to the forefront in times of crisis and are accepted for large business transactions between nations. Bitcoin, daily chart, price breakout: Bitcoin in USD, daily chart as of March 29th, 2022. Shortly after, president Putin confirmed this new way of doing business. In addition, China and Russia agreed to a thirty-year contract in the gas sector, transacted in Euros. We can see that we find ourselves in times of currency warfare and that it is essential to pay close attention to where and in what form we store our values. The daily chart above reflects this recent news in a price advance of bitcoin from US$37,567 to US$47,701. A 28% advance in just two weeks. Bitcoin broke through the sideways range, and this week shall show whether this breakout will be a successful one or not. In this case, the bulls have their odds much in favor over the bears.     Bitcoin, weekly chart, price left the station: Bitcoin in USD, weekly chart as of March 29th, 2022. We have now left the entry zone (green box) compared to last week’s chart book and the published weekly chart. While the crowd now chases a trade, struggling with the typical inefficiencies of volatility breakouts (bad fills, slippage, being late), we are established in our positioning with the sum of 9 accumulated runners. The runners being the last 25% of each initial position. A fully de-risked or more precisely no-risk venture (see quad exit)! Looking at the weekly chart, we find the resistance distribution zones at around US$49,650 and US$52,430. We place additional entries if the price returns to the entry box top. Bitcoin, monthly chart, if March closes strong: Bitcoin in USD, monthly chart as of March 28th, 2022. The price has entered the confirmed buy zone from a monthly perspective. The dual chart shows the progression from last week’s anticipation to this week’s chart book release. Should prices within this week stay within the green box, all-time frames are in alignment. A picture of a confirmed bullish bitcoin trend. It is a rare occurrence and confirmation for larger time frame traders and a call to look for low-risk entries, if no sufficient exposure is at play yet. Bitcoin/Gold-Ratio, daily chart, Bitcoin wins the race: Bitcoin/Gold-Ratio, daily chart as of March 28th, 2022. Another split-screen view of a chart (a daily chart of the bitcoin/gold ratio) shows the progression of last week’s chart book publication and the situation right now. We had a triangle breakout last week and a substantial advance since then. The suggested rotation out of gold and into bitcoin was/is a successful one. The overall move was 30% in just two weeks. One can use this relationship as well to indicate bitcoins’ recent gain in strength and direction. Bitcoin wins the race: Change is never accepted lightly. We typically resist change and prefer an existing state of affairs as human beings. Nevertheless, we find ourselves in less than average circumstances with a worldwide pandemic, a never-ending war, and a general divide in opinions. Russia’s recent move towards approval of bitcoin shows that when the rubber meets the road, what works and is practical in times of crisis and need, wins the race. While governments around the globe feverishly try to get their electronic payment systems developed, bitcoin already finds its use spreading, and successfully so.    Feel free to join us in our free Telegram channel for daily real time data and a great community. If you like to get regular updates on precious metals and cryptocurrencies, you can also subscribe to our free newsletter. Disclosure: This article and the content are for informational purposes only and do not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision. The views, thoughts and opinions expressed here are the author’s alone. They do not necessarily reflect or represent the views and opinions of Midas Touch Consulting. By Korbinian Koller|March 29th, 2022|Tags: Bitcoin, Bitcoin bounce, Bitcoin bullish, Bitcoin consolidation, bitcoin/gold-ratio, crypto analysis, crypto chartbook, DeFi, low risk, quad exit, technical analysis, trading education|0 Comments About the Author: Korbinian Koller Outstanding abstract reasoning ability and ability to think creatively and originally has led over the last 25 years to extract new principles and a unique way to view the markets resulting in a multitude of various time frame systems, generating high hit rates and outstanding risk reward ratios. Over 20 years of coaching traders with heart & passion, assessing complex situations, troubleshoot and solve problems principle based has led to experience and a professional history of success. Skilled natural teacher and exceptional developer of talent. Avid learner guided by a plan with ability to suppress ego and empower students to share ideas and best practices and to apply principle-based technical/conceptual knowledge to maximize efficiency. 25+ year execution experience (50.000+ trades executed) Trading multiple personal accounts (long and short-and combinations of the two). Amazing market feel complementing mechanical systems discipline for precise and extreme low risk entries while objectively seeing the whole picture. Ability to notice and separate emotional responses from the decision-making process and to stand outside oneself and one’s concerns about images in order to function in terms of larger objectives. Developed exit strategies that compensate both for maximizing profits and psychological ease to allow for continuous flow throughout the whole trading day. In depth knowledge of money management strategies with the experience of multiple 6 sigma events in various markets (futures, stocks, commodities, currencies, bonds) embedded in extreme low risk statistical probability models with smooth equity curves and extensive risk management as well as extensive disaster risk allow for my natural capacity for risk-taking.
USDCHF - Swiss Franc Strengthens, XAUUSD Rebounces, Will UK100 Start To Gain Consequently?

USDCHF - Swiss Franc Strengthens, XAUUSD Rebounces, Will UK100 Start To Gain Consequently?

Jing Ren Jing Ren 30.03.2022 07:41
USDCHF tests support The US dollar edged lower as traders ditched its safe-haven appeal. The pair met strong support at 0.9260 over the 30-day moving average. A break above the immediate resistance at 0.9340 prompted short-term sellers to cover their positions, opening the door for potential bullish continuation. A break above 0.9370 could bring the greenback back to the 12-month high at 0.9470. 0.9260 is major support in case of hesitation and its breach could invalidate the current rebound. XAUUSD struggles for support Gold struggles as risk appetite returns amid ceasefire talks. A fall below 1940 forced those hoping for a swift rebound to bail out. On the daily chart, gold’s struggle to stay above the 30-day moving average suggests a lack of buying power. Sentiment grows cautious as the metal tentatively breaks the psychological level of 1900. A drop below 1880 could make bullion vulnerable to a broader sell-off to 1850. An oversold RSI attracted some bargain hunters, but buyers need to lift offers around 1940 before they could expect a rebound. UK 100 heads towards recent peak The FTSE 100 continues upward as Russia promises to de-escalate. A bullish close above the origin of the February sell-off at 7550 has put the index back on track. Sentiment has become increasingly upbeat over a series of higher highs. The lack of selling pressure would send the index back to this year’s high at 7690. A bullish breakout may resume the uptrend in the medium term. As the RSI shot into the overbought zone, profit-taking could drive the price down temporarily and 7460 would be the closest support.
What Moves GBPUSD? GDP, Inflation And BoE In Focus

What Moves GBPUSD? GDP, Inflation And BoE In Focus

Alex Kuptsikevich Alex Kuptsikevich 31.03.2022 09:28
On Thursday morning, another pack of upbeat statistics from the UK supports the British pound. Final GDP data for the fourth quarter showed a gain of 1.3%, revised up from the previous estimate of 1.0%. The balance of payments deficit at 7.3 bln was the lowest in 11 years. Separately, Nationwide reported that the price of houses rose 1.1% YoY in March and accelerated to 14.3% YoY, the fastest pace since 2004. This is another factor favouring the Bank of England’s stance on tightening monetary policy to prevent the credit bubble and curb inflation from spiralling further out of control. Such data suggests less outflow of currency from the country and points to solid fundamentals in the economy to withstand further monetary policy tightening to combat inflation, which is positive for GBP. Earlier, the Bank of England showed that it could implement policy tightening ahead of the US Fed, which is positive for the GBPUSD and suggests the potential for a sustained reversal of the pair to long-term growth. The technical picture is also on the bullish side. GBPUSD has corrected around 40% of the rally from the lows at the start of the pandemic from May 2021 to March 2022, which fits into the Fibonacci retracement. Resilience at current levels opens up the potential for further long-term strengthening to 1.6000.
Indonesia's Inflation Slips, Central Bank Maintains Rates Amidst Stability

US Dollar (USD) Continues To Trump Euro (EUR) And British Pound (GBP). EUR Fails To Get Boost Post Macron Election Victory - Good Morning Forex!

Rebecca Duthie Rebecca Duthie 25.04.2022 11:28
Summary: Macron's victory was supposedly expected to stabilize EUR. Fed further increase in yields strengthening USD. USD continues to strengthen against the EURO inlight of further US yield increases. Market sentiment for this currency pair is bearish as of market open today, the price is down almost 0,6%. On friday the Fed announced a further increase in the bond yields, this marks the seventh consecutive week that the Fed has increased the US yields. The European Central bank is still behind the Fed on their yield increases, the expectation for this change is increasing but the increased expectations are not helping the EUR to strengthen against the USD. EUR/USD Price Chart Read Next: ECB Announcements to Possibly Tighten Monetary Policy Strengthens the Euro. EUR/USD, EUR/GBP, AUD/NZD and EUR/CHF All Increased The EURO showed overall strengthening against the GBP over the past week. Since the market opened this morning the market sentiment for this currency pair is bullish. The EUR has strengthened against the GBP continuously over the last week. Today the increase has shown almost 0,3%. The EUR is strengthening as a result of the uncertainty with the Bank of England's future yields and the inflation causing personal spending to decrease, hampering the economy. In addition, the EUR strengthened against the GBP inlight of Macron taking the win in the French elections. EUR/GBP Price Chart   Read next: A Reward For A Transaction!? What Is Kishu Inu Coin? ($KISHU) Let's Take A Look At This New Altcoin | FXMAG.COM   EUR/JPY showing bullish signals. Since the market opened this morning the market sentiment is bullish for this currency pair. Despite the bullish sentiment, the price has still fallen by almost 0,8% since this morning. This currency pair is sensitive to trends in broad based market sentiment trends, therefore, inlight of Macron’s victory causing changes in market sentiment it is not surprising this price is seeing volatility. EUR/JPY Price Chart CHF Strengthening. Market sentiment for the currency pair is bullish at the moment. However, despite the bullish signals the price has still fallen almost 4% since the market opened this morning. The Swiss Franc has strengthened today causing this fall. EUR/CHF Price Chart Sources: finance.yahoo.com, dailyfx.com, poundsterlinglive.com Read next: Monetary Policy Drives EUR/USD, The Future of the EUR/GBP Awaits the Bank Of England's Speech - Good Morning Forex  
Record-breaking but near-peak inflation in Britain

Record-breaking but near-peak inflation in Britain

Alex Kuptsikevich Alex Kuptsikevich 19.05.2022 08:40
UK consumer prices rose by 2.5% in April, the second-biggest monthly gain in the indicator’s history since 1988. Annual inflation jumped from 7% to 9%, unseen in the indicator’s history. Metals, meanwhile, have withdrawn from the highs The longer-established retail price index last saw a high annual growth rate (11.1% y/y in April) in 1982, while such a big monthly jump (3.4% m/m) was last observed in 1980. However, despite the horror that these figures represent, there are still indications that the UK’s peak annual rate of inflation will be much lower than in the 1980s (22%) or 1970s (27%). While Output Producer Prices are showing an acceleration in the annual growth rate, rising to 14%, Input PPI has slowed from 19.2% to 18.6%. Although remaining volatile in recent weeks, oil and gas have regularly retreated from highs, limiting upward pressure on prices. Metals, meanwhile, have withdrawn from the highs. Read next: Altcoins: What Is Monero? Explaining XMR. Untraceable Cryptocurrency!? | FXMAG.COM Early hints that UK inflation may be slowing in the coming months may allow the Bank of England to raise the rate by 25 points At the same time, there are growing questions about final global demand, which will constrain producers in shifting costs to consumers. Early hints that UK inflation may be slowing in the coming months may allow the Bank of England to raise the rate by 25 points at its next meeting in mid-June and not copy the Fed’s 50-point move. This is moderately negative news for the British currency, which started to retreat from the $1.25 area on the data after a 2.9% rally from last Friday’s lows. Short-term traders should pay particular attention to the 1.2350 area. Read next: Altcoins: What Is Litecoin (LTC)? A Deeper Look Into The Litecoin Platform| FXMAG.COM Already, a dip lower this week would suggest that the brief period of recharging dollar bulls has ended. In this case, GBPUSD could quickly fall below 1.2000, making the 1.1500 area a potential ultimate target for this attack Follow FXMAG.COM on Google News
Britain's Rishi Sunak And EU's Ursula Von Der Leyen Will Meet Today To Finalize The Northern Ireland Drama

FOMC Meeting Minutes Offer Support To The US Dollar (EUR/USD), Improved Market Attitude Favoured The GBP On Thursday (EUR/GBP, GBP/USD), Market Awaits RBA Monetary Policy - Good Morning Forex!

Rebecca Duthie Rebecca Duthie 26.05.2022 11:58
Summary: Investor confidence in both the Euro and US Dollar causing mixed sentiment for the EUR/USD currency pair. GBP beats Euro and USD despite poor PMI data released on Tuesday. RBA June policy meeting will determine the AUD strength Read next: Hawkish ECB Bodes Well For The Euro, UK PMI Data Disappoints (EUR/GBP), Hawkish SNB Offers Swiss Franc Still Support (USD/CHF), AUD/JPY - Good Morning Forex!  Mixed sentiment for the EUR/USD The market is reflecting mixed market signals for this major currency pair. In the Wake of the FOMC meeting minutes, the US Dollar has found some stability. The market can expect a 50bp interest rate hike at the next two Fed meetings, with a possible pause in the hikes later on in the year. The Euro is also on an upward streak with the strong possibility of the European Central Bank (ECB) tightening monetary policy in July. EUR/USD Price Chart GBP strengthens The market is reflecting bearish market sentiment for this currency pair. On Thursday the GBP recovered some of its losses against the Euro after the UK PMI report on Tuesday. Improved market attitude acted in favour of the Pound Sterling against the Euro on Thursday. However, the outlook for the GBP still looks challenging going forward with an overly cautious Bank of England, high-inflation and global risk aversion. EUR/GBP Price Chart GBP/USD reflecting bullish sentiment Market sentiment for this currency pair is reflecting bullish signals. On Thursday the GBP recovered some of its losses against the US Dollar. Improved market attitude acted in favour of the Pound Sterling against the US Dollar on Thursday. GBP/USD Price Chart Future of the AUD waits the RBA monetary policy decision The market is reflecting bullish signals for this currency pair. The Reserve Bank of Australia (RBA) June policy meeting will likely see a future hike in interest rates. If the RBA tightens their monetary policy the Australian Dollar could strengthen. If the RBA chooses a dovish approach, the Aussie Dollar could struggle. AUD/USD Price Chart Read next: EUR Falls To US Dollar (EUR/USD), Pound Sterling Due To Weaken As UK Recession Looms (EUR/GBP), Market Awaits Fed Meeting Minutes (USD/CHF, GBP/USD)  Sources: finance.yahoo.com, dailyfx.com, poundtserlinglive.com
Rising U.S. Treasury Bond Yields Have Helped The USD/JPY Bulls

US CPI Inflation Acceleration Likely To See Hawkish Fed Retaliation (EUR/USD), On Thursday The Market Expects The BoE Monetary Policy Decision (EUR/GBP)

Rebecca Duthie Rebecca Duthie 13.06.2022 14:42
Summary: High US CPI inflation is likely to cause the Fed to retaliate, offering USD support. The market is reflecting mixed market signals for the EUR/GBP currency pair. Sharp decline in the value of the JPY sparks BoJ response. Read next: US CPI Data Due On Friday Offers USD Support (EUR/USD, USD/JPY, USD/CHF), Pound Sterling Rallies Against Euro Due To The ECB Press Conference Ambiguity (EUR/GBP)  EUR/USD Bearish as the market expects a hawkish Fed The market is reflecting bearish signals for this currency pair. The Euro to US Dollar exchange rate fell heavily during last week's trading week in the wake of a toxic combination of international and domestic headwinds and could likely remain under pressure in the coming days if the Fed and US bond yields continue to wear down global investor sentiment. The high US CPI inflation rate indicates that inflation is showing no signs of peaking, the Federal reserve is likely to continue on its hawkish path of tightening monetary policy, which is offering the USD support. EUR/USD Price Chart Hawkish BoE could offer GBP support The market is reflecting mixed market signals for this currency pair. On Thursday the Bank of England (BoE) is due to make a monetary policy decision, if the Bank adopts a more hawkish tone, the pound sterling could strengthen against the EUR. However, economists don't expect a large increase in interest rates and the BoE has been pushing back from hawkish market expectations for its interest rate to reach either 2% or more by year end. EUR/GBP Price Chart BoJ may be ready to step in to save the JPY The market is reflecting bullish signals for this currency pair. On Friday the Bank of Japan (BoJ) made a joint government statement which echoed the concerns over the yen’s sharp decline, which indicated that the BoJ may be ready to respond appropriately. In his latest address to parliament, Kuroda stated, "The yen's recent sharp declines are negative for Japan's economy and therefore undesirable, as they make it hard for companies to set business plans". USD/JPY Price Chart AUD/JPY currency pair The market is reflecting bullish market sentiment for this currency pair. The sharp weakening of the Japanese Yen has caused the BoJ to hint plans of stepping in to save the safe-haven currency. AUD/JPY Price Chart Sources: finance.yahoo.com, dailyfx.com, poundsterlinglive.com  
Britain's Rishi Sunak And EU's Ursula Von Der Leyen Will Meet Today To Finalize The Northern Ireland Drama

The Market Has Strong Expectations Of An Even More Hawkish Fed (EUR/USD, USD/CHF), Pound Sterling Tumbled Amidst Investor Sell-off Sentiment (EUR/GBP, GBP/USD)

Rebecca Duthie Rebecca Duthie 14.06.2022 12:19
Summary US Dollar supported by prospects of a hawkish Fed. The Pound sterling remains vulnerable to further losses against the Euro. Read next: US CPI Inflation Acceleration Likely To See Hawkish Fed Retaliation (EUR/USD), On Thursday The Market Expects The BoE Monetary Policy Decision (EUR/GBP)  Expectations of a hawkish Fed is driving the dollar up. The market is reflecting bearish signals for this currency pair. As expectations for the Federal Reserve to continue on its hawkish path, and raise interest rates even higher at the next FOMC heighten, the US Dollar is strengthening. A hawkish move from the Fed will likely drive the US Dollar higher as it will gain a yield advantage over its G10 peers. Uncertainty around driving the US economy into a recession also brings about the appeal for the US Dollars liquidity. EUR/USD Price Chart Pound Sterling tumbles in the wake of investor sell-off sentiment The market is reflecting bullish signals for this currency pair. The Pound sterling remains vulnerable to further losses against the Euro following the losses experienced in the last 24 hours which was driven by the strong risk-off sentiment that has been seen by the global markets, which is also linked to the strong expectations for larger interest rate hikes at the US Federal Reserve. EUR/GBP Price Chart US Dollar/Swiss Franc (USD/CHF) Bullish The market is reflecting bullish signals for this currency pair. With expectations for the US Federal Reserve to further tighten monetary policy, the US Dollar is strengthening against most of its counterparts, including the Swiss Franc. USD/CHF Price Chart UK employment data released UK jobs data was released early on Tuesday, which reflected an employment change for March beating estimates whilst the employment statistic missed expectations. The initial reaction to this data saw the pound sterling weaken against the US Dollar as the ease in the labor market could be a signal towards the start of an economic shift. GBP/USD Price Chart Sources: finance.yahoo.com, dailyfx.com, poundsterlinglive.com
Serious liquidity crisis? According to Franklin Templeton, a massive, but unlikely deposit flight from Credit Suisse would have to happen

Fears Of A Global Recession Strengthen (EUR/USD), Expectations More Hawkish BoE (EUR/GBP), CHF Was The Best Performing Currency Last Week (EUR/CHF), NZD/USD

Rebecca Duthie Rebecca Duthie 20.06.2022 13:48
Summary: Swiss Franc could be the most appealing safe-haven currency right now. Fears of a high level of striking in the United Kingdom. Russia under-delivers on its gas obligations to some European countries. Read next: Eurozone Inflation Data Offering Euro Support (EUR/USD, EUR/GBP), SNB 0.5% Interest Rate Hike Bombshell (EUR/CHF), BoJ Left Monetary Policy Unchanged (USD/JPY)  EUR/USD The market is reflecting mixed signals for this currency pair. In general there are fears of a global economic recession, this fear is affecting the foreign exchange markets. Russia cut some of its exports in gas to Germany, Italy and France, which foreshadows an increase in gas prices and possibly a complete stop to gas flows. If this occurs, expectations of a euro area recession is likely and will add to further inflation in Europe. All of these factors are driving the price of the EUR/USD currency pair. EUR/USD Price Chart EUR/GBP The market is reflecting bearish signals for this currency pair. Fears of a high level of striking in the United Kingdom is putting the Bank of England (BoE) under pressure to hike interest rates at a rate faster than economists expectations. Expectations of a more hawkish BoE is offering the pound sterling support against the Euro. EUR/GBP Price Chart The SNB’s surprise interest rate hike offered the CHF support The market is reflecting mixed signals for this currency pair. The CHF was the best performing currency during the trading week last week as the Swiss National Bank (SNB) surprised the market with a 50 basis point hike in interest rates. This move was the first of its kind in 15 years and offered the Swiss Franc support, and made the currency the most appealing safe-haven currency. EUR/CHF Price Chart NZD/USD The market is reflecting bearish signals for this currency pair. The New Zealand Dollar has lost momentum as expectations of a hawkish Reserve Bank of New Zealand (RBNZ) fade and Oil prices rise. Global markets continue to struggle amidst rising energy prices and hawkish central banks everywhere. NZD/USD Price Chart Sources: finance.yahoo.com, dailyfx.com, poundsterlinglive.com
The UK Markets Remain Volatile, Possible Contraction Of The Eurozone Economy

British Pound (GBP) And Australian Dollar (AUD) May Fluctuate Shortly! Bank Of England And RBA Are Expected To Hike Rates!

Craig Erlam Craig Erlam 16.08.2022 13:17
European stock markets are a little positive on Tuesday following another mixed session in Asia while US futures are pointing marginally lower ahead of the open on Wall Street. It seems investors are gaining confidence amid a recovery in stock markets in recent weeks rather than feeling anxious about its sustainability against a worrying economic backdrop. I wonder how long that can last even if US inflation shows further signs of pulling back from the peak. Recessions around the world are coming and inflation is not falling fast enough. ​ Hard to see the positives in the UK data It’s no secret that the UK is facing a period of stagflation and recession and today’s jobs report highlighted just how grim the situation is becoming. Despite wages rising by 5.1% including bonuses in June, real wages when adjusted for inflation fell at their fastest pace on record while job vacancies fell for the first time in a couple of years. While the situation isn’t exactly dire yet, the path of travel is clear and the energy price cap increase in a couple of months is going to deliver another economic shock to the system. The jobs report today was oddly horrible in two ways. Falling real wages will make life much harder for many but headline wage growth (not adjusted for inflation) will force the BoE to continue hiking aggressively in order to prevent a wage-price spiral. Unemployment still remains extremely low but the BoE believes it will rise quite sharply over the next couple of years. The competitive nature of the labour market over the last couple of years may slow the process but for how long will depend on the severity of the downturn. I’m not sure the retail sales and inflation data over the next couple of days will make for easy reading either. Indian inflation eases but another 50 basis point hike is still possible Indian inflation fell a little faster than expected last month with a deceleration in food prices contributing to the decline. Other factors could continue to support a drop in inflation in the coming months such as declining oil prices and above-average inventories of finished goods. That said, there also remain significant upside risks into year-end and so the RBI will likely continue raising rates next month, it’s just a question of how aggressive it will be. The consensus appears to be 25 basis points but 50 will no doubt be on the table. RBA is not on a pre-set path The RBA minutes didn’t really contain any surprises, with the central bank reiterating its data-dependent stance, insisting that it is not on a pre-set path. Another 50 basis point hike is likely at the next meeting after similar moves at each of the last three meetings. With inflation expected to peak later this year, the central bank may consider moderating its hikes although that ultimately depends on how the data performs in the interim. Has rally run its course? Bitcoin is a little flat today after another failed run at $25,000 at the start of the week. It briefly broke above here but as has been the case for many days now, there was no momentum behind the rally so it quickly crumbled. Perhaps this is a sign that the two-month rally has run its course, at which point it’s just a question of whether we’re facing a correction or a test of the lows. For a look at all of today’s economic events, check out our economic calendar: www.marketpulse.com/economic-events/ This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds. Too much optimism? - MarketPulseMarketPulse
Forecasts To Decrease. Russia PMI index has already fallen

Forecasts To Decrease. Russia PMI index has already fallen

Kamila Szypuła Kamila Szypuła 05.09.2022 08:33
Retail Sales in Australia Today at 3:30 CET Australia released monthly retail sales data. Retail sales in Australia started the year high at 7.3%. Unsettled at the end of January, and at the beginning of February, it dropped sharply to the level of -4.4%. After that, it recovered significantly to 1.8%. In the steppe it slightly decreased to the level of 0.9% and in July to the level of 0.2%. At the end of last month, positive changes appeared and the index will reach 1.3%. It was much higher than forecasted, the weather forecast for this period was 0.3%. According to the data, the current change in the total value of sales adjusted for inflation at the retail level remains at the level of 1.3%. This is the expected level. Source: investing.com PMI Index will drop? The UK awaits Composite PMI Index results. The level of activity of purchasing managers in Great Britain remained at the level of 53.6 at the beginning of the year. It reached the highest level in March (60.9). After that, it began to decline gradually. In May it fell to 51.8. In the following two months, it remained at 53.1 and 52.8, respectively. Although the index was above 52, it is forecast to drop to 50.9. Official data will be released at 10:30 CET. Source: investing.com Read next: ECB Will Continue To Hike Rates To Slow Inflation? | FXMAG.COM The U.K. Services Purchasing Managers Index At 10:30 CET UK will also publish the results of the monthly activity level of purchasing managers in the service sector. For the first 3 months of this year, this activity was in a rising trend. In January, the index reached the level of 54.1, and then rose to the levels of 60.5 and 62.6, respectively. In April, it began to decline, reaching the level of 58.9. In May, it fell to 53.4. In June, it increased by 0.9. The lowest level of 52.6 was recorded in July. The current forecasts show a slight decrease in the ratio to 52.5. The visible decline, that will begin in April, may be largely due to the geopolitical situation. Source: investing.com Important Speech and Meeting Today at 17:30 CET there will be a speech from the Monetary Policy Committee of the Bank of England, Dr Catherine L Mann. Its public involvement is often used to throw up subtle hints about future monetary policy. OPEC is responsible for nearly 40% of the world's oil supplies. An OPEC meeting will be held at 12 CET in the United States. Representatives of 13 oil-rich countries take part in OPEC meetings. The situation of energy markets and the quantity of oil produced is most often discussed at such meetings. Will the indicator go down again ? The PMI monthly Composite Reports on Manufacturing and Services are based on research by more than 300 business executives at private manufacturing companies and 300 private service companies, due to be published today at 10 CET. In the initial periods, there was an increase. In January, the index was recorded at 52.3. Later, it also increased and fluctuated between 54 and 55. Since June, the trend was reversed, the indicator in this period reached the level of 52. In the following month it dropped below the level of 50. In July, the PMI monthly Composite Reports on Manufacturing and Services was 49.9. It is forecasted that the result will decrease to the level of 49.2. Source: investing.com The Russia HSBC Services PMI Index Russia today released HSBC Services PMI data at 8 CET. The results for the last period are much lower than before. The current reading is at 49.9. Meanwhile, the result for July was quite high at 54.7. Such a decrease is perceived negatively for the RUB. The HSBC Services PMI Index is developed for providing the most up-to-date possible indication of what is really happening in the private sector economy by tracking variables such as sales, employment, inventories and prices. Source: investing.com Source: https://www.investing.com/economic-calendar/
Forex: What to expect from British pound against US dollar - January 17th

UK Job Market Means More To Bank Of England (BoE) Than You May Think

ING Economics ING Economics 13.09.2022 11:24
The number of workers classified as long-term sick has jumped dramatically in the past couple of months, and that's one reason why firms are still struggling to source the staff they need. While worker demand has cooled, Bank of England hawks will be worried that these shortages will continue to push up wage growth   At a headline level, the latest UK jobs numbers don’t look too bad. Unemployment fell by two-tenths of a per cent to 3.6%, the lowest level since 1974. But this is driven not by an increase in the number of people in employment, but primarily by another dramatic rise in those classified as inactive – that is neither in work nor actively seeking it. Alarmingly, the number of people classifying as not working due to long-term sickness is up by almost 400,000 since late 2019, and almost 150,000 in the last two months' worth of data alone. It’s hard to escape the conclusion that this is linked to the pressures in the NHS (National Health Service). The Bank of England will view all of this through the lens of the worker shortages that have plagued the jobs market for the past year or so. While some causes of that shortage appear to be abating – e.g. inward migration of non-EU workers has increased noticeably this year – other factors are, if anything, getting worse. A look at the survey evidence suggests firms are finding it no easier to find staff than they were a few months ago either. Both the BoE’s Agent’s survey and the ONS’ bi-weekly business survey have shown no improvement in the number of firms saying they are struggling to source workers. UK jobs market dashboard Worker shortages is taken from a question in the ONS bi-weekly business survey Source: Macrobond, ONS, ING   At the same time, demand for employees does appear to be cooling, though not necessarily very quickly. The level of job vacancies has fallen from its high, but the number of redundancies is low and stable (even if the level increased slightly in this latest data). The question now is whether the pressure from energy prices will force companies to revisit these plans and make more material changes to their workforce. We would expect a more visible impact on the jobs market over the next few months, but the government’s newly-announced pledge to cap corporate energy bills as well as households’ should help avoid a sharp rise in unemployment this winter. Persistent worker supply constraints coupled with so far only modest signs of reduced hiring demand will provide further ammunition for Bank of England hawks to push ahead with further tightening. We expect a 50 basis-point rate hike next week, and another in November. While markets may be overestimating how far the Bank will take interest rates over the coming months, we think the BoE is less likely to be cutting rates early into 2023 than some other global central banks. Read this article on THINK TagsUK jobs Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more
The UK Markets Remain Volatile, Possible Contraction Of The Eurozone Economy

United Kingdom: Inflation Is Expected To Hit 11% As Energy Price Cap Is Set To Be Applied

ING Economics ING Economics 14.09.2022 13:37
Headline inflation will rise a little further having eased back below 10% in August, and it's likely to stay around 11% into early next year before falling back more dramatically. However, the Bank of England is watching wage growth more closely, as the hawks worry that worker shortages could lead to core inflation staying more persistently above target The introduction of a government cap on household energy prices means that we should now be fairly close to the peak in these headline figures The absence of another upside surprise to UK inflation this month takes a bit of pressure off the Bank of England to move even more aggressively when it meets next week. Headline CPI came in a touch lower than both consensus and last month’s level, at 9.9%, and that’s largely because of a near-7% fall in petrol/diesel prices during August. We expect another 2% decline in next month’s figures. The introduction of a government cap on household energy prices means that we should now be fairly close to the peak in these headline figures. The fact that electricity/gas bills won’t be rising by around 80% in October and a further 30-40% in January means that the peak in CPI should be around 5 percentage points lower. With the government due to cap the average household energy bill at £2500, up from around £2000 now, we expect a peak in the region of 11% in October. That's compared to 16% in January which is what we’d forecasted before the support was announced. UK inflation now set to peak at around 11% after energy price support Source: Macrobond, ING forecasts   We’d expect inflation to stay around there until early next year, before cooling more quickly as energy base effects kick-in. We think it could be more-or-less back to the Bank of England’s 2% target by the end of next year, crazy as that currently seems. But what policymakers are more interested in is core inflation – or to put it more accurately, the more persistent parts of the inflation basket. Here the news is mixed. On a month-on-month price basis, the increases we saw in August do seem fairly broad-based. However, there are signs that ‘core goods’ inflation is easing off, linked perhaps to the rise in retailer inventory levels relative to sales. That’s a function of supply chains beginning to improve, and in some cases commodity prices having fallen, which is coinciding with reduced demand for goods. Higher inventories and lower sales reducing pressure on goods prices Source: Macrobond, ING   However, the Bank is more focused on wage growth, and as we noted yesterday, the worker shortages that have plagued the jobs market for several months now don’t appear to be resolving themselves very quickly. The BoE’s hawks are concerned that this will translate into persistent pressure on wage growth. We aren’t totally convinced this will be enough to swing the pendulum in favour of a 75 basis-point rate hike next week, despite both the ECB and Federal Reserve going down this path. It’s a pretty close call, not least because the hawks will be worried about the recent slide in sterling, and markets are closer to pricing a 75bp move than a 50. But for now, we think another 50bp move next week is the most likely outcome, followed by another such move in November. Read this article on THINK Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more
UK Budget: Short-term positives to be met with medium-term caution

The Bank of England (BOE) And Public Inflation Expectations

TeleTrade Comments TeleTrade Comments 15.09.2022 12:41
The quarterly survey conducted by the Bank of England (BOE) showed that the public's expectations in Britain for inflation over the coming surged. Key takeaways   UK public inflation expectations for the coming year 4.9%. UK public inflation expectations for 12 months after that are 3.2%. UK public inflation expectations for 5 years' time are 3.1%. Net public confidence in BOE-7% vs -3% in May. UK public's year-ahead inflation expectations highest since the survey began in 1999.   Market reaction The pound fails to pay any heed to the BOE survey, with GBP/USD keeping its range around 1.1525, down 0.07% on the day.
The GBP/USD Pair Did Not Reach The Nearest Target Level Of 1.2259

It's Going To Be A Thrilling Week For Euro, Dollar And British Pound (GBP)! Bank Of England And Fed Decide On Interest Rates!

ING Economics ING Economics 16.09.2022 11:54
The prospect of lower near-term inflation takes some of the pressure off the Bank of England to move even more aggressively on Thursday. We expect a second consecutive 50 basis point rate hike, although it's a close call between that and a 75bp move Our Bank of England call We narrowly favour a 50bp hike on Thursday, taking the Bank Rate to 2.25%, although 75bp is clearly on the table and we would expect at least a couple of policymakers to vote for it. It's even possible we get a rare three-way vote – the first since 2008 – if dovish committee member Silvana Tenreyro votes for a 25bp hike as she did in August. If our call is correct, then we expect another 50bp move in November and at least another 25bp in December. That would take Bank Rate to the 3% area. It's a tough meeting to call... Next week’s Bank of England meeting is crucial. It will tell us not only how worried policymakers are about the slide in sterling and other UK markets, but also how the government’s decision to cap household/business energy prices will translate into monetary policy. It has also, undeniably, become a close meeting to call. Hawks at the Bank of England will undoubtedly be concerned about the independent sterling weakness we've seen recently (down 4% in trade-weighted terms), even if in practice it’s unlikely to make a huge difference to the big-picture inflation outlook. Both the Fed and ECB will have also done (at least) 75bp hikes by Thursday, and markets are increasingly concluding the BoE will do the same. But we’d caution against assuming UK policymakers will ramp up the pace of rate hikes simply because that’s what everyone else is doing – or indeed because that’s what markets are pricing. As recently as June, the BoE hiked by ‘only’ 25bp, despite the Fed having done 75bp the night before, and defying market expectations for more. Indeed, there are good reasons to think the Bank will ‘stick to its guns’ and simply repeat the 50bp hike it executed in August. Government energy price guarantee means inflation unlikely to go much higher Source: Macrobond, ING forecasts   One immediate consequence of the government’s decision to cap household electricity/gas bills this winter is that headline inflation should be dramatically lower. We now expect CPI to peak at 11% in October, only slightly above where it is now, compared to 16% in January had the government not intervened. It also means headline inflation should be back around the BoE’s 2% target at the end of next year, crazy as that sounds. All of that should help keep consumer inflation expectations in check, and in fact, we’ve already seen a noticeable pullback in long-term price expectations according to the latest BoE survey. Admittedly there appears to be a wide range of views at the BoE about how much all of this actually matters. But we know from recent comments, notably from hawk Catherine Mann, that some policymakers have had a keen eye on consumer expectations over recent months. By the BoE's own measure, consumer inflation expectations have dipped Source: Macrobond   The flip side, of course, is that extra government support potentially means higher medium-term inflation, even if headline rates are lower in the very near term. We think this is ultimately what most committee members will be more interested in. The hit to GDP this winter is likely to be more moderate than the 2% cumulative decline the BoE forecast in August, while the sharp rise in unemployment it projected is less likely to materialise too. With worker shortages proving to be a long-running issue in the jobs market, the risk is that higher wage growth could become a persistent feature that requires more central bank tightening. That doesn't necessarily have to manifest itself as a radically higher policy rate, and we still believe investors are overestimating the tightening to come. The swaps market is pricing a terminal rate in the region of 4.5% next year. Hiking by 75bp risks adding even more fuel to the fire, something we suspect the committee will be wary of doing, even if there are advantages in front-loading hikes. But even if the Bank doesn’t hike as far as markets expect, we do think the arrival of government stimulus means the BoE won’t be racing towards rate cuts next year, unlike some of its developed market counterparts. Gilts, looking for some clarity Gilts are looking for a much-needed reduction in uncertainty next week. Clearly, a 50bp hike would be a dovish surprise and help reverse some of the front-end’s weakness but even in the case of a 75bp move, the BoE clarifying its reaction function with regards to the energy package would be helpful. Fiscal and monetary policy competing with each other is an unnerving thought for bondholders. The Treasury’s fiscal event next week should also help answer any lingering questions about the size and financing of the energy support measures. Gilts should widen to 200bp against Bund on a generous fiscal package Source: Refinitiv, ING   Even if the gilt ‘fear factor’ eases next week, it doesn’t answer the key question: who will buy all these gilts? A deficit-financed energy package will add to supply and to the BoE reducing the size of its portfolio. Private investors will have to make up the shortfall. This is not impossible but they will likely be some reluctance initially given the amount of new debt released into the market. The BoE’s plan to start outright sales of gilts, albeit in small amounts initially, is an additional source of concern. On Thursday, the Bank is expected to vote in favour of starting this process, despite concerns about stress in the UK bond market. Divergence in the size and financing of energy packages in the UK and the eurozone means the spread between 10Y gilts and bund should widen to 200bp. Read this article on THINK TagsUK fiscal policy Inflation Central banks Bank of England Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more
Forex: What to expect from British pound against US dollar - January 17th

UK Sales: British Pound (GBP) Most Probably Doesn't Like August Prints

Alex Kuptsikevich Alex Kuptsikevich 16.09.2022 12:30
A package of retail sales statistics in Britain appears to have removed the last layer of support for the Pound, sending it into a dive. GBPUSD earlier today renewed its lows since 1985, dropping to 1.1350. Sales Drop Fresh data showed a 1.6% m/m and 5.4% y/y drop in sales, which was noticeably weaker than the expected 0.5% m/m and 4.2% y/y decline. This upsetting surprise has added to the pressure on Pound, which has been losing 0.9% against the dollar and yen and 0.6% against the euro after the report. Where Can GBP/USD Go? There has been an almost non-stop, albeit very measured, sell-off in the Pound since August 11, with a brief pause for a shake-out of the dollar bulls' positions. In turn, this momentum looks to be part of a downward wave since March. In that case, the GBPUSD can fall to 1.06, where the 161.8% Fibonacci mark passes from the February peaks to the July lows. It is also worth noting that this technical target is very close to the historical lows of the GBPUSD at 1.0520, which only adds to its attractiveness for the rest of the year. Bank Of England Due to inflation being off the charts by historical standards, the Bank of England has much more motive to make currency or verbal interventions to buy the collapse of the Pound. This is especially true given the recent one-way movement in the British currency. As such, traders and investors should be prepared for a rate hike of more than 50 points next week, as previously done and expected. A tightening of monetary authority rhetoric is also likely.
Sustainability-Linked Products: Navigating Growth and Challenges for the Future

British Pound (GBP) Has Decreased By 15 Percent So Far!

Conotoxia Comments Conotoxia Comments 16.09.2022 15:19
The UK economy, including the British pound's quotations, has had a very turbulent year. The authority of the British currency may have first been undermined by the exit from the European Union, and then the British economy suffered a blow from a pandemic. The British Isles' severe energy crisis and high inflation may be adding to this. Read next: China Positive Reports,Drop In Retail Sales, Waiting For European CPI| FXMAG.COM Since the beginning of this year, the British pound has lost more than 15 percent of its value against the U.S. dollar. This makes the GBP the second weakest of the world's major currencies, just after the Japanese yen, losing more than 19 percent. In addition, if someone was taking the 2014’s peak as a reference point, the GBP's loss against the USD could reach more than 30 percent. As a result, the market has reached levels last seen in 1985. Source: Conotoxia MT5, GBP/USD, MN The British pound after a rough ride Observed in the chart above, the two significant lows in the region of $1.1400 were first the impact of brexit on GBP quotes, and the second was the impact of the pandemic. Currently, this level seems to be tested for the third time. Today, further disappointing data from the British economy may have contributed to the pound's weakness.  The volume of UK retail sales in August fell 1.6 percent from the previous month, the Office for National Statistics reported on Friday. The regression was larger than analysts had expected. Sales fell on a monthly basis for the first time since July 2021.  Non-food store sales slid 1.9 percent month-on-month, auto fuel sales fell 1.7 percent and grocery store sales were 0.8 percent lower, according to the data, which is summarized by BBN's website. As a result of weakening consumer demand and thus possibly the overall British economy, investors seem abandoning the GBP, which this morning is at its weakest since the 1980s against the USD. Rate hikes are not helping the GBP Expectations of interest rate hikes in the UK at this point also do not seem to be helping the pound. Some analysts note that even the GBP is moving like an emerging market currency. These could be characterized by the fact that the higher the investment risk, the lower the exchange rate, despite interest rate hikes. While interest rates in the UK may be higher than in the US over time, investors seem to be turning away from the pound anyway. It seems that under these circumstances, the British currency might have a hard time regaining investor confidence.   Daniel Kostecki, Director of the Polish branch of Conotoxia Ltd. (Conotoxia investment service) Materials, analysis and opinions contained, referenced or provided herein are intended solely for informational and educational purposes. Personal opinion of the author does not represent and should not be constructed as a statement or an investment advice made by Conotoxia Ltd. All indiscriminate reliance on illustrative or informational materials may lead to losses. Past performance is not a reliable indicator of future results. Read article on Conotoxia.com
Chinese Stocks: Attractive Valuations Amidst Challenges and a Cyclical Recovery - 12.09.2023

Fed Decides On Interest Rate, So Does BoE - The Coming Week Is Simply Action-Packed

Craig Erlam Craig Erlam 16.09.2022 23:35
US Many on Wall Street are watching the Fed’s rate hiking cycle and are getting nervous they will tip the economy into a recession.  With scorching inflation, the FOMC may consider a full-point rate hike but will likely settle on delivering its third consecutive 75 basis-point increase. At Wednesday’s policy meeting, Fed Chair Jerome Powell will likely acknowledge downside risks to growth are here and unrelenting inflation is forcing them to maintain an aggressive pace of tightening.  Inflation risks are still tilted to the upside and will likely keep the Fed from providing any hints that a “Fed put” is coming. EU  The ECB appears to be one of the few major central banks not holding a monetary policy meeting next week but that won’t keep them out of the headlines. Policymakers are scheduled to make regular appearances including Philip Lane on Saturday which may present some weekend risk. On Friday, the flash PMIs could give an idea of how the economy is coping and whether it is heading for a recession in the fourth quarter, as some fear. UK Monday is a bank holiday in the UK as the country pays its respects to Queen Elizabeth II on the day of her funeral. After being pushed back a week due to the 10-day period of national mourning, the BoE will meet on Thursday and it has a big decision to make. Inflation is running extremely hot – although it did drop back below 10% last month – and while it has likely not yet peaked, the high should be much lower now that the new government has announced a cap on energy bills.  That may come as a relief to many but it could mean higher core inflation and interest rates further down the road. How the BoE responds to all of this without the aid of new economic projections is what will interest investors. The week draws to a close with PMIs on Friday. Russia Markets continue to monitor the situation in Ukraine amid a strong counteroffensive that saw Russia concede a lot of ground while raising the prospect of defeat and waning support for Vladimir Putin. The only economic release next week is PPI inflation on Wednesday.  South Africa The SARB is expected to hike rates by another 75 basis points to 6.25% on Thursday as inflation continues to rise. The CPI is currently well above the 3-6% target range at 7.8% and the central bank will get an update on this the day before their decision, which could play a role in just how aggressive they’ll be this month.  Turkey One central bank that almost certainly won’t be raising interest rates next week is the CBRT. Last month, it unexpectedly cut rates by another 100 basis points to 13% despite inflation running at almost 80%. That has risen further since but the central bank will not be deterred. No change is expected from the CBRT next week but clearly, another rate cut should not be ruled out. Switzerland Inflation continues to run hot which makes a large rate hike on Thursday from the SNB highly likely. Markets are pricing in at least 75 basis points, maybe even 100, taking the policy rate out of negative territory for the first time since early 2015. The central bank loves to spring a surprise though, the biggest recently perhaps being that it’s waited until a scheduled meeting to act. We’ll see how bold it’s prepared to be on Thursday.  China China is expected to keep rates unchanged at 3.65%, as the 1-year LPR (Loan Prime Rate) was just recently adjusted down from 3.7%. If the Chinese central bank unexpectedly adjusts rates to a lower level again, it may be detrimental to the yuan. The PBOC’s fixings are must-watch events now that the yuan has weakened beyond the key 7 against the dollar.   India Traders will pay close attention to the second quarter current account data.  Expectations are for the current account deficit to widen from $13.4 billion to $30.36 billion.  India has been weakening as trade balances balloon and foreign investment takes a big hit.   Australia & New Zealand Traders are awaiting the release of the minutes of the RBA meeting next Tuesday and upcoming speeches by RBA’s Kearns and Bullock. The RBA seems poised to move forward with smaller rate hike moves, but traders will look to see if the latest round of RBA speak confirms the downward shift discussed by central bank chief Lowe.  It will be a busy week in New Zealand as a steady flow of economic data is accompanied by a couple of RBNZ speeches by Governor Orr and Deputy Governor Hawkesby.  The big economic releases of the week are Wednesday’s credit card spending data and Thursday’s trade data.     Japan The FX world is closely watching everything out of Japan. Traders are waiting to see if policymakers will intervene to provide some relief for the Japanese yen. What could complicate their decision is that Japan has a holiday on Monday.   The divergence between the Fed’s tightening cycle and the Bank of Japan’s steady approach continues to support the dollar against the yen. The BOJ is widely expected to keep rates on hold even as core inflation extends above the BOJ’s 2% target.    Singapore The focus for Singapore will be the August inflation report that should show pricing pressures remain intense.  The year-over-year reading is expected to rise from 7.0% to 7.2%.  Economic Calendar Saturday, Sept. 17 Economic Data/Events Thousands pay their respects to Queen Elizabeth II at Westminster  European Central Bank chief economist Lane speaks at the Dublin Economics Workshop in Wexford, Ireland Monday, Sept. 19 Economic Data/Events World leaders attend Queen Elizabeth II’s funeral in Westminster Abbey in London UK Bank Holiday Japan Bank Holiday New Zealand performance services index RBA’s head of domestic markets Kearns delivers the keynote address at the Australian Financial Review Property Summit in Sydney ECB’s de Guindos speaks at the annual Consejos Consultivos meeting   Tuesday, Sept. 20 Economic Data/Events US housing Starts Canada CPI China loan prime rates Japan CPI Mexico international reserves Spain trade Sweden rate decision: Expected to raise rates by 75bp to 1.500% UK Parliament in session Annual UN General Assembly in New York Dockworkers at the UK’s Port of Liverpool are expected to begin a two-week strike Norges deputy central bank Governor Borsum speaks German Economy Minister Habeck speaks at the congress of municipal energy suppliers RBA releases minutes from its September policy meeting. BOC Deputy Governor Beaudry delivers a lecture on “pandemic macroeconomics” at the University of Waterloo in Ontario Wednesday, Sept. 21 Economic Data/Events FOMC Policy Decision: Fed expected to raise rates by 75bps US existing home sales Argentina unemployment, trade Australia leading index New Zealand credit-card spending South Africa CPI Big-bank CEOs testify before the US House Financial Services Committee at a hearing titled, “Holding Megabanks Accountable.” RBA Deputy Governor Michele Bullock speaks at a Bloomberg event in Sydney ECB’s de Guindos to speak at Insurance Summit 2022 organized by Altamar CAM in Cologne, Germany EIA crude oil inventory report Thursday, Sept. 22 Economic Data/Events US Conference Board leading index, initial jobless claims China Swift global payments Eurozone consumer confidence BOJ rate decision: No changes expected with rates and 10-year yield target Japan department store sales New Zealand trade, consumer confidence Norway rate decision: Expected to raise rates by 50bps to 2.25% South Africa rate decision: Expected to raise rates by 75bps to 6.25% Switzerland rate decision: Expected to raise rates by 75bps to 0.50% Taiwan jobless rate, rate decision, money supply Thailand trade Turkey rate decision: Expected to cut rates by 100bps to 12.00% UK BOE rate decision: Markets remain split between expectations for a half-point or a three-quarter-point hike. US Treasury Secretary Janet Yellen addresses the Atlantic Festival in Washington. The UN Security Council holds a meeting on Ukraine   BOE’s Tenreyro speaks at a seminar at the San Francisco Fed on “climate-change pledges, actions and outcomes.” Friday, Sept. 23 Economic Data/Events US Flash PMIs Australia prelim PMI Canada retail sales European Flash PMIs: Eurozone, Germany, France, and the UK Singapore CPI Spain GDP Taiwan industrial production Thailand foreign reserves, forward contracts Norway Central Bank Governor Wolden speaks Sovereign Rating Updates Germany (S&P) Hungary (Moody’s) Sweden (Moody’s) European Union (DBRS) Finland (DBRS) This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds. Week Ahead - Aggressive tightening - MarketPulseMarketPulse
Forex: What to expect from British pound against US dollar - January 17th

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

Jing Ren Jing Ren 19.09.2022 08:22
EURGBP breaks key resistance The pound tumbles as the UK’s August retail data disappoint. The buying pressure has been building up under June’s peak at 0.8720. The breakout prompted the last sellers to cover. As the euro’s rally gains momentum, this could open the door for a sustained climb towards 0.8900, which is a supply area from January 2021’s sell-off. 0.8800 is the intermediate resistance ahead. The RSI’s overbought situation could temporarily trim the buying and 0.8700 would be the first support in case the euro takes a breather. Read next: How High Will The Bank Of England Raise Rates?| FXMAG.COM AUDJPY seeks support The Australian dollar softens as investors shun risk assets. The pair is looking to hold onto its recent gains after rallying above June’s high at 96.60. However, short-term price action may struggle as there is no sign of committed buying yet. A break below 96.70 has forced leveraged buyers to bail out. The daily support and psychological level of 95.00 is a major area to gauge buying interest. A bounce will need to lift 96.40 before it could take hold. Failing that, a bearish breakout would deepen the correction below 94.00. GER 40 tests critical floor The Dax 40 slips as high interest rates prompt investors to take refuge in cash. After hitting the supply zone around 13500, the index has given up all gains from this month’s rally. This is a strong indication of the prevailing bearish bias. 12610 is the next support and its breach would bring the index back to the critical level of 12420. Then a bearish breakout may cause the remaining bulls to abandon the ship, resuming the downtrend towards 11900 in the medium-term. 12900 is a fresh resistance in case of a bounce.
Hawkish Fed Minutes Spark US Market Decline to One-Month Lows on August 17, 2023

EUR/USD Exposed To Fed Interest Rate Decision Risk, BoE Interest Rate Decision Due This Week (EUR/GBP, GBP/CAD)

Rebecca Duthie Rebecca Duthie 20.09.2022 17:34
Summary: EUR/USD exposed to risks related to the Fed interest rate decision on Wednesday. The BoE interest rate decision on Thursday will be crucial. GBP/CAD may now be on the verge of lurching toward all-time lows. Euro is still stronger than some other currencies The market is reflecting mixed market signals for this currency pair. The EUR/USD has been able to maintain its stability recently by simply remaining stable, which isn't really saying much for it. The Euro to Dollar exchange rate began the new week near parity and exposed to risks related to the Federal Reserve's (Fed) interest rate decision on Wednesday, however there is an admittedly remote chance that the latter could spark a firecracker surge by the single currency later this week. The Euro is still stronger than some of the other currencies, but it is expected to keep falling against the Dollar and reach new cycle lows. EUR/USD Price Chart BoE interest rate on Thursday The market is reflecting bullish signals for this currency pair. The exchange rate between the pound and the euro has fallen for seven straight weeks, but it might go considerably further this week and possibly to record lows if the market panics about a probable Bank of England (BoE) decision to sharply raise Bank Rate on Thursday. With the scale of the most recent Bank Rate increase and any hints or guidance regarding the outlook for the benchmark, the BoE interest rate decision on Thursday will be crucial, yet there is a risk that the bank will feel pressured to literally knock the Bank Rate ball out of the park. EUR/GBP Price Chart GBP/CAD How the market could be likely to react to any particularly substantial interest rate rise from the Bank of England (BoE) this Thursday, the Pound to Canadian Dollar exchange rate may now be on the verge of lurching toward all-time lows. Although there is a chance it might fall further if the BoE smashes the Bank Rate ball out of the park on Thursday, sterling crept higher versus the Canadian Dollar to start a holiday-shortened week and remained safely above the 12-year lows reached over a fortnight earlier. A recent increase in core inflation, the BoE's most recent Inflation Attitudes Survey, and the new UK Prime Minister's proposal to freeze or cap household energy costs through public subsidy are reasons to believe it might as well. These factors could influence policymakers to view this as a medium-term inflation risk. GBP/CAD Price Chart Sources: finance.yahoo.com, dailyfx.com, poundsterlinglive.com
GBP/USD Options Market Anticipates 70 Pip Range on BoE Day

Could There Be A Corrective Increase In The British Pound After The BoE Meeting?

InstaForex Analysis InstaForex Analysis 22.09.2022 08:06
As a result of yesterday, when the Russian President announced the mobilization of 300,000 military from the reserve (the number may be reduced depending on the situation in Ukraine) and the Federal Reserve raised the rate by 0.75%, the British pound lost 109 points. The Bank of England will hold a meeting today, and the rate can also be raised by 0.75%. The change in the rate is significant, and it can stop, or even turn the pound rate into a correction. From a purely technical point of view, we expect the support price to work out at 1.1170, then convergence with the Marlin Oscillator and recovery to 1.1385 is likely. Consolidating below 1.1170 is undesirable for the pound, as it will lose market support and will fall until investors get tired of selling (the target at 1.0830 is a technically powerful support for higher timeframes). The price is completely in a downward position on the four-hour chart, but here, too, the price is converging with the Marlin Oscillator. We are waiting for the BoE meeting and look forward to corrective growth of the British pound.   Relevance up to 05:00 2022-09-23 UTC+2 Company does not offer investment advice and the analysis performed does not guarantee results. The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade. Read more: https://www.instaforex.eu/forex_analysis/322353
EM Index Inclusions and Exclusions: India Thrives, Egypt Faces Challenges

Yesterday's Decisions Strongly Influenced The Situation In The Market, How Will Today's Decisions Affect The Market?

Swissquote Bank Swissquote Bank 22.09.2022 10:28
We thought that the Federal Reserve (Fed) decision would be the highlight of yesterday but news from Russia came to eclipse the FOMC. Putin’s announcement and Fed decision Vladimir Putin declared partial mobilization yesterday morning. Putin’s announcement, which fell like a bomb on investors who were already stressed out due to the Fed decision, sent capital to safe haven assets yesterday, but gains elsewhere than the US dollar remained short-lived.On the FOMC front, the Fed delivered the third 75bp hike yesterday, as expected, but the dot plot revealed that the officials’ rate projections went well above the market expectations. Banks' decisions The Bank of Japan (BoJ) maintained its policy unchanged. The Swiss National Bank hiked by 75bp hike*. The Bank of England (BoE) could opt for 50bp hike, instead of 75bp, as Liz Truss’s energy package could help taming inflation. While the Central Bank of Turkey (CBT) should keep its rate at 13%. BUT WHO KNOWS! Watch the full episode to find out more! 0:00 Intro 0:28 Russia escalates tensions in Ukraine 2:35 Fed hikes 4:34 BoJ maintains status quo 5:42 SNB hikes, as expected*  6:12 BoE could hike by 50bp 7:30 Turkey: God knows. *decision came after the shooting of the show Ipek Ozkardeskaya 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. #FOMC #Fed #SNB #BoE #BoJ #CBT #rate #decision #jumbo #hikes #XAU #USD #JPY #GBP #CHF #TRY #BIST #Russia #Ukraine #war #SPX #Dow #Nasdaq #investing #trading #equities #stocks #cryptocurrencies #FX #bonds #markets #news #Swissquote #MarketTalk #marketanalysis #marketcommentary ___ Learn the fundamentals of trading at your own pace with Swissquote's Education Center. Discover our online courses, webinars and eBooks: https://swq.ch/wr ___ Discover our brand and philosophy: https://swq.ch/wq Learn more about our employees: https://swq.ch/d5 ___ Let's stay connected: LinkedIn: https://swq.ch/cH
Sustainability-Linked Products: Navigating Growth and Challenges for the Future

The Bank of England Is Widely Expected To Take Decisive Action

InstaForex Analysis InstaForex Analysis 22.09.2022 13:42
By the end of this week, the pound sterling drifted lower. It lost its early gains in anticipation of the Bank of England meeting. However, it may resume steady growth following the BoE's key rate decision. Today, the pound sterling reached a new 37-year low against the greenback amid geopolitical tensions that fueled demand for safe-haven assets, especially the US dollar. The GBP/USD pair has fallen to its lowest level since 1985, touching a critically low level of 1.1235. On Thursday morning, the GBP/USD pair was trading at 1.1226. Shortly after, it was fluctuating in the range of 1.1300 -1.1400. Analysts at Scotiabank believe that the GBP/USD pair could extend more losses in the medium term. Now, the pound sterling is weakening due to risk aversion. Traders are flocking back to safe-haven assets, especially the US dollar. Besides, the greenback is rising across the board. The pound sterling will eventually recover yet its growth will be unsteady. Investors are now anticipating the upcoming meeting of the BoE, scheduled for September 22. According to Reuters, a chance of a 75 basis point rate hike totals 75%. Analysts reckon that this is the most appropriate size of the rate hike. The Bank of England is widely expected to take decisive action against inflation. Some analysts assume that the regulator may raise the interest rate by another 125 basis points at the next two meetings before the end of 2022. Currently, it stocks to a dovish stance. The watchdog is reframing from switching to aggressive tightening. For this reason, some economists criticize the regulator for a slower response to inflation and monetary policy adjustments. According to FX strategists at Barclays Bank, it is pushing the pound sterling down. To facilitate its growth, the central bank should raise the benchmark rate more aggressively. This move may help revive demand for the British currency. If the BoE hikes the cash rate by 100 basis points instead of an expected 75 basis point increase, the pound sterling will rise sharply, analysts at Barclays stated. Market participants are also concerned about the possibility of a recession following the release of the UK's fresh macro stats. Retail sales contracted by 1.6% in August compared to a 0.4% increase in July. On an annual basis, this indicator sank by 5.4%, logging the worst performance since 2008. At the same time, in August, the budget deficit stood at £11.8 billion ($ 13.38 billion) amid the rising cost of servicing government debt. According to the Office for National Statistical (ONS), since April 2022, British public borrowing has amounted to £58.2 billion, a decrease of £21.4 billion compared to 2021. Earlier, the BoE repeatedly warned about the high risks of a recession in the fourth quarter of 2022. According to experts, it may begin to subside no earlier than 2024. At the same time, some analysts revised upward their outlooks for inflation in the UK amid the adoption of the Energy Price Guarantee. In August, the Bank of England predicted that inflation would peak at more than 13% in October. Yet, the reading, on the contrary, declined. Therefore, analysts recommend holding short positions on the GBP/USD pair with the target level of 1.1250.   Relevance up to 09:00 2022-09-25 UTC+2 Company does not offer investment advice and the analysis performed does not guarantee results. Read more: https://www.instaforex.eu/forex_analysis/322377
UK GDP Already Falling And Continuing To Do So For This Calendar Year, Copper Is Still Within A Tightening Range

Is BoE Able To Conduct A FX Intervention? Bank Of England Hiked The Rate By 50bp, What Can We Expect From GBP/USD And EUR/GBP?

ING Economics ING Economics 22.09.2022 14:59
The Bank of England has stuck to its guns and hiked rates by a further 50bp, less than markets had been pricing and defying some expectations that UK policymakers might be forced into a larger move given what other central banks have done recently. Gilts and sterling are failing to find support and remain vulnerable before Friday's 'fiscal event' Bank of England Governor, Andrew Bailey A divided central bank What stands out most from this decision is that the Bank of England's Monetary Policy Committee is becoming more divided. It’s no surprise that three hawks voted to hike rates by 75bp, not least given some have been vocal about the implications of sterling's weakness this year. But for the first time since the great financial crisis, we have a three-way split. One dove, Swati Dhingra, voted to hike by ‘only’ 25bp, signalling she’s worried about the demand outlook. For investors, this increasing divide should be seen as a sign that market expectations are unlikely to be met. Swap markets are now pricing a peak for the Bank Rate close to 5% next year. This increasing divide is a sign that market expectations are unlikely to be met Admittedly the statement makes it clear that extra government spending, and we'll get more details on that tomorrow, will lead to higher medium-term inflation, given that it should dramatically lower the risk of a deep recession. But the accompanying meeting minutes also explicitly highlight that the government’s energy price guarantee - which caps prices for households and businesses this winter - reduces the risk of inflation expectations becoming de-anchored. Headline inflation will be around 5pp lower by January compared to a scenario without the price cap.  A 75bp move later this year can’t be ruled out, and it’s clear the bank is delaying some judgement on the government’s fiscal plans until it has had a chance to update its forecasts ahead of the November meeting. But Thursday’s decision makes us more comfortable with our existing call that the BoE will simply hike by 50bp again in November, and by at least 25bp if not 50bp again in December. That would take Bank Rate a little above 3%. Undeterred, Sonia swaps are now pricing a terminal rate near 5% Source: Refinitiv, ING Gilts: no relief from the 50bp hike A smaller than expected 50bp hike (markets were pricing 70bp ahead of the meeting) failed to provide any relief to gilts. The swap curve continues to price a terminal rate near 5% and the curve’s knee-jerk reaction was to invert further. The tone of the statement is expectedly hawkish in highlighting strong inflation dynamics and in noting that the energy price guarantee would add to inflationary pressure in the medium term. That three MPC members voted for a 75bp hike is leading markets to expect larger rises than the 50bp delivered today in the future, seeing as this has become the standard increment at both the Fed and the ECB. It should also come as no surprise that the BoE is pressing ahead with its active quantitative tightening (QT) plans, through bonds maturing and through active sales to start next month, by £80bn in the first year. We understand the Bank's willingness to show that its balance sheet reduction plan won’t be scuppered by market volatility but we continue to argue that current gilt market conditions warrant greater attention. The BoE and the Treasury are  competing for private investor demand  Attention now turns to tomorrow’s ‘fiscal event’. Market expectations are for the majority of new energy-related spending to be financed via gilt issuance. Given that future wholesale gas prices are unknown, this amounts to an open-ended liability for the Treasury. The BoE didn’t step off the brink today on QT and will add to the number of gilts private investors have to buy. The BoE and the Treasury competing for this private investor demand is the key reason why gilt yields have risen faster than their peers. We continue to expect 10Y gilts to trade 200bp above Bund yields. This could put gilt yields at 4% in the near future. Fiscal support and QT mean private investors will have to absorb a record amount of gilts Source: Refinitiv, ING BoE can only stand and stare at the weaker pound With the market split on whether the BoE would tighten 50 or 75bp , the smaller 50bp adjustment has seen sterling sell-off by roughly 0.5%. Reading through the statement and the minutes it is quite remarkable how little the pound featured. Businesses are concerned that the weak pound is adding to their input costs. But the Bank had very little to say on sterling beyond that it had fallen 4.5% since its August meeting.  The lack of comment probably reflects the realpolitik of linking sterling weakness to growing fiscal concerns in the UK. It is quite remarkable how little sterling featured Ssterling will go into tomorrow’s ‘fiscal event’ on a fragile footing. The 4% sterling sell-off since August did go hand-in-hand with the sell-off in gilts. Concerns over unfunded government giveaways and debt sustainability challenges could well see the pound continue to underperform this year. A stronger dollar also favours GBP/USD to 1.10, while even EUR/GBP can press 0.88. And don’t expect UK authorities to emulate their Japanese counterparts by trying to support the pound with FX intervention. The UK doesn’t have sufficient FX reserves for that.     Read this article on THINK
Italian headline inflation decelerates in January, courtesy of energy

The Italian Elections And Their Impact On The Euro, Interest Rates Around The World

Swissquote Bank Swissquote Bank 23.09.2022 10:24
A busy week for central banks come to an end with plenty of rate hikes, increased prospects of slowing growth, that leave investors with a bad taste in their mouth. Eyes on rate hike The Swedish Riksbank was the first major central bank to surprise with a 100bp rate hike. The US Federal Reserve (Fed) delivered its third 75bp hike. But the dot plot hinted at another jumbo hike before the year-end. The Bank of Japan (BoJ) maintained its policy rate unchanged at -0.10%, but intervened directly in the FX market to buy yen to fight back the strengthening dollar. The Swiss National Bank (SNB) raised its policy rate by 75bp. The Bank of England (BoE) opted for a 50bp hike, combined with an £80 billion Quantitative Tightening, and said the UK is now in recession. The UK will reveal the ‘mini’ budget today. Norges Bank also increased its policy rate by 50bp but signaled that tightening may be coming to an end. Indonesia and the Philippines also hiked by 50bp. Taiwan raised by a modest 12.5% as expected, Vietnam opted for a 100bp hike, South Africa raised by 75bp… …and Turkey… cut its rate by 100bp for the second consecutive meeting! But the week is not over. The Italian elections due Sunday will likely continue pressuring the euro lower. Watch the full episode to find out more! 0:00 Intro 0:26 Keeping up with the central banks 4:37 UK 'mini' budget is all but mini. 6:15 Continue keeping up with the central banks 7:22 Market update 8:42 Into the Italian elections Ipek Ozkardeskaya 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. #FOMC #Fed #SNB #BoE #BoJ #CBT #rate #decision #jumbo #hikes #USD #JPY #GBP #EUR #CHF #TRY #BIST #UK #mini #budget #Italy #elections #crude #oil #FedEx #SPX #Dow #Nasdaq #investing #trading #equities #stocks #cryptocurrencies #FX #bonds #markets #news #Swissquote #MarketTalk #marketanalysis #marketcommentary ___ Learn the fundamentals of trading at your own pace with Swissquote's Education Center. Discover our online courses, webinars and eBooks: https://swq.ch/wr ___ Discover our brand and philosophy: https://swq.ch/wq Learn more about our employees: https://swq.ch/d5 ___ Let's stay connected: LinkedIn: https://swq.ch/cH
The ECB President Christine Lagarde's Speech Could Bring Back Risk Appetite

"Fed Listens" Takes Place Today! In Europe, Eurozone PMIs Are Released And ECB's, Bundesbank's And SNB's Members Are Set To Speak

ING Economics ING Economics 23.09.2022 11:14
Rates push higher and curves flatten as the hawkish message from the latest central bank meetings sinks in. The decisions have also highlighted policy transmission issues that have to be overcome as negtiave rates are left behind. Today's eurozone PMIs underscore the growing economic pain the ECB is willing to tolerate, as it focuses on inflation  Gilts lead the sell off, caught between BoE and fiscal measures As the hawkish message of this week’s raft of central bank meetings sinks in, rates markets remain under pressure with front to intermediate rates underperforming initially. The German 2Y 10Y curve came close to inversion, re-steepened only as 10Y Bund yield pushed towards 2%. Yet it was Gilts that led the sell-off. At first sight, it was surprising as the Bank of England underwhelmed market expectations with a smaller than expected 50bp hike, but the Bank later added that the impact of the government’s fiscal package would only be considered at the next meeting. With the promise to act forcefully if necessary that leaves the door open to substantial increases further down the road – 75bp not excluded with three Monetary Policy Committee votes in favour already this time around. It gets uncomfortable for Gilts amid quantitative tightening and fiscal spending  However, it is also the Gilt supply dynamics weighing heavily. The BoE announced yesterday its plans to kick off active sales of its bond holdings in October. This would amount to the portfolio shrinking by £80bn over the next 12 months, half of that sales, the other half passive roll off. Those numbers were not entirely unexpected, but amid current market conditions and given that the government's energy-related spending plans could create unpredictable upside risks for Gilts issuance, this puts private Gilt investors in an uncomfortable position. We would not exclude 10Y Gilt yields at 4% soon. Fiscal measures and QT add up to a daunting amount of Gilt supply Source: Refinitiv, ING Transmission and cost issues as rates are hiked A more technical aspect faced by central banks as policy rates are lifted from zero or below into positive territory was highlighted by the Swiss National Bank yesterday. It hiked the key rate by 75bp to 0.5%. But to ensure that the market rate actually follows the policy rate higher, it introduced what essentially boils down to a reverse tiering system. Sight deposits are now remunerated at the key rate up to a multiple of individual banks’ reserve requirements, and anything above does not earn interest. Crucially, that will compel banks to participate in the SNB’s repo and bills issues have been introduced alongside to mop up this remaining excess liquidity, ensuring that the overnight rate actually trades at the policy rate. Rate hikes are not properly transmitted into all corners of the money market The European Central Bank has also faced the problem that its rate hikes are not properly transmitted into all corners of the money market. Collateral scarcity is affecting core rates with Germany’s 3m treasury bills still trading some 40bp below ESTR OIS (euro short-term rate overnight indexed swap) for instance. The ECB has prevented at least a worsening of the situation by remunerating the vast government cash holdings at national central banks that would have otherwise pushed into the tight market for collateral. But it is only a temporary fix and the ECB may eye other central banks’ approaches, in this case, the SNB's issuance of central bank bills – which is essentially converting excess liquidity into collateral. It does not address the issue of the ECB being left with rising interest costs as it has started to remunerate banks’ excess liquidity holdings.     Collateral scarcity means higher ECB rates don't transmit fully to German bonds and bills Source: Refinitiv, ING Today's events and market view The eurozone PMIs are expected to drop further below the 50 threshold as high energy prices bite and force manufacturing production cuts. Yet ECB officials have already started to prepare markets for upcoming pain, signalling their intent to remain focused on inflation and hike rates despite an economic downturn. This had boosted the flattening dynamic of yield curves, and while yesterday it was already close, the Bund curve should eventually follow the OIS and swap curves into inversion.   Gilts markets will focus on today's fiscal event and what it will mean for issuance. At least equally important will be the implications for the upcoming BoE policy decisions, with the Bank having already warned that the government's energy package will increase medium-term inflation pressure. Elsewhere, we will follow comments from the ECB's Martins Kazaks as well as Bundesbank's Joachim Nagel alongside the SNB's Thomas Jordan. Later in the day, Fed Chair Jerome Powell will open a "Fed Listens" event with Vice Chair Lael Brainard and the Fed's Michelle Bowman. Read this article on THINK TagsRates Daily Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more
Saxo Bank Podcast: US Equities Continue To Trade Up, Natural Gas In Europe, Bank of Japan Meeting Ahead And More

Podcast: The European Gas Market, Comments On Events At Central Banks

Saxo Bank Saxo Bank 23.09.2022 12:58
Summary:  Equities are sliding further yesterday and today as the market is rattled by sizeable upwards moves in the long end of the US yield curve with the US 10-year pushing beyond 3.7%. We also go through the series of central bank events yesterday from various rate decisions and most importantly the historic JPY intervention by the Bank of Japan. In addition we take a look at commodities and in particularly the European gas market which is set for its fourth straight weekly loss. Today's pod features Peter Garnry on equities, Ole Hansen on commodities, and John Hardy on FX and hosting. Listen to today’s podcast - slides are found via the link. Follow Saxo Market Call on your favorite podcast app: Apple  Spotify PodBean Sticher If you are not able to find the podcast on your favourite podcast app when searching for Saxo Market Call, please drop us an email at marketcall@saxobank.com and we'll look into it.   Questions and comments, please! We invite you to send any questions and comments you might have for the podcast team. Whether feedback on the show's content, questions about specific topics, or requests for more focus on a given market area in an upcoming podcast, please get in touch at marketcall@saxobank.com.   Source: https://www.home.saxo/content/articles/podcast/podcast-sep-23-2022-23092022
Bank of England survey highlights easing price pressures

Banks In The Old Continent Are Doing Their Best To Fight Inflation

ING Economics ING Economics 24.09.2022 08:18
The Swiss National Bank’s decision to introduce bank reserve tiering sheds light on similar potential decisions at the Bank of England and European Central Bank. Central banks have to balance monetary policy transmission, interest costs, and incentive structures for banks In this article SNB: actively moving to absorb liquidity BoE: saving money where it can ECB: peering into pandora’s box Source: Shutterstock European central banks are gradually adjusting their policy setting to a world of positive interest rates but with still abundant liquidity. The common theme here is that hundreds of billions, or trillions in the ECB’s case, of bank reserves will be remunerated at positive interest rates, at a cost for their central banks, and ultimately their domestic government treasury. SNB: actively moving to absorb liquidity The Swiss National Bank (SNB) was the first one to actually implement a reserve tiering system at its September meeting. In a nutshell, banks’ sight deposits at the SNB up to a certain threshold will earn the SNB policy rate, currently 0.5%, and 0% on balances above that threshold. This, however, is only part of the story. In parallel, the SNB announced it will conduct liquidity-absorbing operations (Open Market Operations or OMOs). With a threshold set at an elevated 28 times banks required reserves, it won’t take much effort for the SNB to absorb enough liquidity so that all that remains is remunerated at the SNB. In effect, the SNB rate should remain the marginal rate in CHF money markets, and tiering should act as an incentive for banks to participate in liquidity-absorbing operations. The SNB's goal seems to be to make sure higher policy rates are transmitted to the economy The upshot is that the main feature of the new liquidity set-up at the SNB will be to remove liquidity from the system as it tightens policy in order to get inflation under control. There is likely to be only marginal interest rate savings for the central bank on its CHF640bn of sight deposits, if at all, but this doesn’t seem to be the point of the policy change. Rather the SNB's goal seems to be to make sure higher policy rates are transmitted to the economy. Bank reserves at the BoE will decline with QT, but not fast enough to save much interest cost to the BoE   Source:Refinitiv, ING BoE: saving money where it can There have been persistent press reports that the UK is looking to reduce the amount of interest it pays to banks. This is a more pressing issue in the UK because bank reserves now approach £945bn and the swap curve is implying that the Bank Rate could climb to 5% next year. This is something of a worst-case scenario, but this would result in an interest rate bill approaching £50bn per year. In practice, we think that rate hike expectations are exaggerated, and the BoE intends to reduce its bond holdings, and so the amount of reserves, by £80bn per year at least. At a time of large open-ended fiscal support to energy consumers, the Treasury could be forgiven for trying to save on this interest rate bill. The Treasury could be forgiven for trying to save on its interest rate bill Two options present themselves to the BoE. Designing a reserve tiering system akin to the SNB would allow it to gradually reduce the amount of liquidity in the system. Interest cost saving would probably be underwhelming at first, but it could attempt to gradually increase the amount of liquidity withdrawn from the system, thus also supporting its monetary tightening stance. Inversely, it could determine a fixed amount of reserves that is remunerated at 0%, with balances above that threshold earning the Bank Rate. If that threshold is set too high, this measure would incentivise banks to get rid of their liquidity and would push money market rates lower, thus contradicting the BoE’s monetary policy stance. Setting the threshold lower would mean a lower interest rate saving from the BoE but also probably less disruption in GBP money markets. We think this is the option that would likely deliver the best near-term compromise for public finances. Its market impact should be limited at first. The distribution of bank liquidity and TLTRO borrowing is uneven across the eurozone Source: Refinitiv, ING ECB: peering into pandora’s box The European Central Bank’s motivation could be similar to the BoE's. As policy rates rise, the interest banks earn by placing liquidity at the ECB will gradually rise above the rate they are paying on their targeted longer-term refinancing operations (TLTRO) loans, presenting them with an interest rate gain. If this is the sole problem it is intending to solve, one option would be to retroactively change the TLTRO terms by raising its interest rate. This would be detrimental to the predictability, and so attractiveness of future TLTRO operations, however. With the brunt of TLTRO loans due to expire by the middle of next year, one could also question the need to come up with risky solutions to a problem that will disappear in nine months. The ECB has effectively allowed banks to borrow money at a lower rate than they earn when they place it back at the ECB If on the other hand, the goal is to reduce its interest bill over the longer term, it could borrow one of the two designs described above. A set-up similar to the SNB’s, where a fixed amount of reserves earns the policy rate and the amount in excess earns 0%, would imply that it intends to actively withdraw liquidity. This could be achieved if banks rush to repay TLTRO loans, but this is likely to result in at least a temporary drop in money market rates. To prevent this temporary disruption, the ECB could bridge the period until the next quarterly TLTRO repayment opportunity with ad hoc liquidity draining operations, or simply make the tiering apply on the same date as TLTRO repayment. If this is the option retained by the ECB, the reduction in excess liquidity resulting from early TLTRO repayments, and other liquidity draining operations, would push money market rates higher relative to the ECB deposit rate. Interbank lending rates would be the first area where we expect a reaction as banks move to replace TLTRO funding. In time, we'd also expect greater competition among banks to attract wholesale deposits. Both would push Euribor fixings higher relative to euro short-term rate (Estr) swaps. This should also contribute to pushing Estr fixings above the deposit rate, and closer to the refinancing rate. Draining liquidity would eventually push Estr above the ECB deposit rate Source: Refinitiv, ING   A design similar to the one described above for the BoE, where a fixed amount earns 0% and balances above that threshold earn the policy rate, would guarantee some interest rate saving but wouldn’t provide an incentive for banks to repay TLTRO funds if the threshold is set low enough. If the threshold is set high, then the risk is that 0% becomes the marginal interest rate for many banks and that some countries end up being net lenders, and others net borrowers. The result would be a drop in money market rates in some countries, and a rise in others. TagsSNB ECB BoE   Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more
Metals Update: Gold Demand Declines Marginally, Copper and Aluminium Positions Adjusted

Will The Bank Of England Be Able To Maintain Financial Stability?

ING Economics ING Economics 24.09.2022 08:40
Price action in UK gilts is going from bad to worse. A daunting list of challenges has arisen for sterling-denominated bond investors, and the Treasury’s mini-budget has done little to shore up confidence. Widening rate differentials are no consolation for the pound, with FX remaining the main vehicle to price UK country risk In this article 2022 mini-budget: blank cheques (Monetary) context matters Financial stability in question GBP: The glass is half empty 2022 mini-budget: blank cheques It was largely expected that the bill for the government’s energy price guarantee would run in the 12-digits (over £100bn) over its life and that most of this would be financed with extra issuance from the Debt Management Office (DMO). And yet, the mini-budget unveiled by the new chancellor added fuel to the fire already burning on the gilt market. The updated DMO remit for FY2022-23 includes an extra £72bn of borrowing, £10bn in T-bills and the balance in gilts. In our view, this is well within expectations but the current environment isn’t favourable to gilt sales. Investors are worried the Treasury has effectively committed to open-ended borrowing Alongside the confirmation of additional borrowing this year, the raft of tax cuts unveiled today clearly implies that it will not be contained to just this fiscal year. The cost of the newly-announced measures is reported to be £160bn over five years but, with the cost of the energy price guarantee highly dependent on wholesale energy prices, investors are worried the Treasury has effectively committed to open-ended borrowing. Markets are expecting a forceful BoE response to the new announced fiscal package Source: Refinitiv, ING (Monetary) context matters Of course, the additional borrowing comes at an inopportune time for gilts. Bond holders are already rattled by inflation and by the prospect of more Bank of England (BoE) hikes. Even if the central bank hiked only 50bp yesterday, compared to market pricing of 75bp, markets are betting that the pace of hikes will have to accelerate. The recent jump in yields implies that Bank Rate will peak next year well above 5%. That in itself is not a great backdrop for bonds but what has rattled investors is the prospect of the BoE hiking more in response to generous fiscal policy. Markets are jumping to the conclusion that the BoE will have to respond in kind with even higher rates Effectively, the BoE has reserved judgement on the inflationary implications of the energy price guarantee until its November monetary policy report but noted that the net effect will likely be to boost inflation over the medium term. Given the extra tax cuts announced, markets are jumping to the conclusion that the BoE will have to respond in kind with even higher rates. The prospect of the BoE and the Treasury competing with each other is a particularly unnerving one for bond investors. The already impaired gilt market is no longer able to accommodate more supply and quantitative tightening Source: Refinitiv, ING Financial stability in question To us, the magnitude of the jump in gilt yields has more to do with a market that has become dysfunctional. If a sell-off in gilts is rational in response to more fiscal spending, tax cuts, and higher inflation, the magnitude of the move should give policymakers pause for thought. This is particularly true of the BoE which is about to ramp up its quantitative tightening (QT) programme with outright gilt sales at £10bn per quarter. We have written at length before that trading conditions in the gilt market call for the BoE to tread very cautiously when it comes to adding to the selling pressure already evident in gilt markets. A number of indicators, from implied volatility to widening bid-offer spreads, suggest that liquidity is drying up and market functioning is impaired. A signal from the BoE that it is willing to suspend gilt sales would go a long way to restoring market confidence, especially if it wants to maximise its chances of fighting inflation with conventional tools like interest rate hikes. The QT battle, in short, is not one worth fighting for the BoE. The spread between UK gilt and German bund yields widest in over two decades Source: Refinitiv, ING   Barring a change of direction on QT, we expect 10Y gilt yields to cross 4% and for the spread to German bunds to widen 200bp. The fact that the DMO’s additional borrowing is skewed to the front end of the curve, the sector most affected by expected BoE hikes, has added to the curve flattening dynamics. GBP: The glass is half empty Sterling has had another wild ride on today’s fiscal event – initially rallying on the biggest tax cut since the 1980s, but subsequently falling hard as the UK gilt market reacted to the prospect of a heavy new supply slate. Sterling has been trading off fiscal concerns since early August. Expect this to remain the dominant theme as international investors again consider the right price, both in terms of sterling and gilt yields, to fund the UK’s widening budget deficit. FX is probably the easiest vehicle to trade UK country risk We have to remember that FX is probably the easiest vehicle to trade UK country risk – given that there is not much liquidity in sovereign credit default swaps for the UK. On this subject, investors will take great interest in what the rating agencies have to say about UK fiscal plans. The UK's long-term sovereign outlook is currently stable at all three of the rating agencies, S&P (AA), Fitch (AA-) and Moody’s (Aa3). The risk of a possible shift to a negative outlook will come when the ratings are reviewed on 21 October (S&P and Moody’s) and 9 December (Fitch).   Notably as well has been sterling’s disregard for interest rate differentials, where the very aggressive re-pricing of the BoE tightening cycle has provided no support to the pound. This leaves the BoE in a quandary but presumably would have to be even more hawkish if the weaker exchange rate were to damage the UK inflation profile still further. Unless something can be done to address these fiscal concerns, or the economy shows some surprisingly strong growth data, it looks like investors will continue to shun sterling. For reference, the FX options now prices the chances of GBP/USD hitting 1.00 by year-end at 17%. That is up from 6% in late June. Given our bias for the dollar rally going into over-drive as well, we think the market may be underpricing the chances of parity.   TagsGBP Fiscal Policy Bank Of England   Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more
Sustainability-Linked Products: Navigating Growth and Challenges for the Future

Investors' Concerns About The Coming Recession In The UK, Will GBP/USD Pair Reach Its Lowest Level In History?

InstaForex Analysis InstaForex Analysis 26.09.2022 08:05
How low can the exchange rate fall? Will the Bank of England take measures to support the pound? At the end of last week, bearish positions on the British pound sharply intensified. Traders seem to have tried to resist such a powerful downward movement until the last moment, but it did not work out. Events are developing in such a way that the pound in the future can not only update distant historical lows, but also risks setting a new anti-record. The BoE's decision on the rate and the announcement of the interim budget, to put it mildly, did not impress the markets. The central bank raised the rate by only 50 bps, accumulating a backlog from the Federal Reserve. The new economic plan failed to allay investors' concerns about the approaching recession in the country. The collapsed economic indicators were also another reason for short positions. The GfK consumer confidence indicator plunged to -49 from -41, updating the historical record. The last time such figures could be seen was in 1974. The CBI retail activity indicator fell to -20 in September from 37 in August. Preliminary PMI estimates could not act as a kind of reassurance for the market. The composite index fell to 48.4 from 49.6 due to the deterioration in the service sector, where the corresponding indicator fell to 49.2 from 50.9. At first, the GBP/USD pair fell to the area of 1.1020, which is the low since 1985. Then shorts intensified and the quote easily broke down the 1.0900 mark. Since the beginning of the year, GBP/USD has lost approximately 20%. Given inflation of 10%, nervousness should be not only among market players, but primarily among the government and the BoE. If officials do step up their efforts to maintain the pound, volatility in the foreign exchange market risks being prohibitive or getting out of control. What's Wrong with Government Measures? The pound was mostly brought down by new government measures. The authorities have announced significant tax cuts since 1972 in an attempt to push the country's economic growth to 2.5%. At least some, but actions and in theory, and even according to the government's plan, it was supposed to support the mood. However, investors have their own vision of the situation and they did not believe that the British authorities, led by Liz Truss, would be able to finance these measures without hindrance. Radical changes to the tax code imply a reduction in the basic income tax rate from 20p to 19p from April 2023. The highest income tax rate has been reduced from 45p to 40p, while the increase in national insurance contributions this year will be canceled in November. In addition, the planned increase in corporate tax has been postponed indefinitely. At the same time, Brits buying housing for the first time will be able to see a noticeable weakening of the state fee. The cost of all the announced tax cuts, according to the authorities, is 45 billion pounds. At the same time, the government's decision to limit electricity bills will cost much more, approximately 130 billion pounds. In general, this means that the British government will need to borrow more, increasing the supply of gold on the market. What will Happen to the Pound? The panic selling of the pound made many think about the future prospects of the British currency. What is it: a temporary turbidity and an excessively strong and completely unreasonable reaction of worried investors, or is the pound really on the path of a great crisis? Will there be parity with the dollar for the first time in history? Indeed, the pound is now under the strongest pressure, including due to the incessant advance of the dollar. The fall of the pound coincides with the time when there was a significant sell-off on world markets. Even in normal times, this creates obstacles for the national currency of Britain. Parity with the dollar is considered by analysts as an extreme measure, which is still far from reality. At the same time, new record lows are quite possible. It is unlikely that government measures will lead to a collapse of the pound or create problems when selling gold coins. "Given that the economy is flirting with recession, tax cuts supporting demand are not necessarily a bad idea. But this tax cut should be permanent, not temporary," Oxford Economics believes. The pound is expected to continue to decline to about 1.0500 against the dollar in the short term. Meanwhile, the BoE will have no choice but to raise the size of the rate hike. At the November meeting, the central bank should increase the rate by 75 bps. Thus, the markets will raise the forecast for the maximum bank rate from 3% to 4%.   Relevance up to 23:00 UTC+2 Company does not offer investment advice and the analysis performed does not guarantee results. Read more: https://www.instaforex.eu/forex_analysis/322592
The UK Markets Remain Volatile, Possible Contraction Of The Eurozone Economy

GBP/USD Is Expected To Trade Between 1.07 And 1.09 Today. Could British Pound Touch 1.0350 In Next Month? Fed And ECB Members Speak Today

ING Economics ING Economics 27.09.2022 11:08
September has proved an exceptional month for the dollar. In the G10 space, the dollar has rallied anywhere from 1% against the Swiss franc to as much as 7% against sterling. Events in the UK highlight the pressure-cooker conditions facing non-USD currencies. Expect a day of consolidation today and a focus on central bank speakers in the US, UK, and Europe USD: An array of Fed speakers today Monday was a wild day in FX markets. Sterling was falling heavily and the dollar was firmer across the board as both bond and, to a much lesser degree, equity markets were under pressure. G7 FX volatility is now back to levels last seen in March 2020. Interestingly EMFX volatility is higher too, but still below the highs of this year. Sterling is clearly making a difference here. The narrative remains the same. Central bankers remain wholly focused on taming inflation – even at the expense of recession. We think last week's economic's projections from the Fed will still take some time to sink into the market's consciousness. The Fed projects that the US unemployment rate will rise to 4.4% by the end of next year from 3.7% today - but will still be raising rates to 4.50/4.75% in the process. Overnight the Fed's Loretta Mester reiterated that a more restrictive policy was needed for longer. Mester was also asked about the strong dollar and understandably replied that the Fed does take it into account when setting policy and also looks at the dollar's impact on financial market volatility. On the latter subject we suspect the 12 October meeting of G20 central bankers and finance ministers will garner more attention than usual – e.g. does the FX language in the Communique get tweaked to express concern over disorderly FX moves? For today's session, the focus will be on Fed speakers and second-tier data. On the roster, we have Evans (0930, 1115CET), Powell (1330) and Bullard (1555). We also have durable goods orders, new home sales, and consumer confidence. Any upside surprise in US consumer confidence only makes matters worse for the rest of the world, in that the Fed will have to tighten harder to bring aggregate demand lower. DXY may hold support at 113.00 since we look to be in a powerful phase of a dollar bull trend. Chris Turner EUR: One way traffic EUR/USD touched a new low for the year near 0.9550. Looking at a EUR/USD chart it has been pretty much one-way traffic since the summer of 2021. Question: what changed then? Answer: The Fed, which shifted from its super-dovish experiment with average inflation targeting to more conventional tightening. Events in Ukraine have only managed to cement the Fed's inflationary concern while hitting Europe's growth prospects. In short, do not expect a turn in EUR/USD until the Fed's work is done – and that doesn't look like it's happening until 1Q23 at the earliest. Separately, European growth prospects remain challenged as clearly demonstrated in some very concerning German IFO data released yesterday.   Expect intra-day EUR/USD rallies to stall in the 0.9700 region again and we doubt much hawkish ECB speak makes much difference here.  Elsewhere, we still like EUR/CHF lower. The dollar is the second-largest weight in the Swiss National Bank's (SNB's) Swiss franc trade-weighted index. A higher USD/CHF means the SNB will tolerate a lower EUR/CHF as it seeks to guide the nominal Swiss franc stronger. 0.93 is the direction of travel for EUR/CHF. Chris Turner  GBP: Buying time for the pound For a major reserve currency, it is typically hard to maintain these high levels of volatility for prolonged periods – but sterling may well try to defy that. We say that because UK policymakers have tried to buy time for the pound by: a) the UK Treasury promising a proper budget assessment on 23 November from the Office for Budget Responsibility (OBR) alongside a medium-term fiscal plan and b) the BoE promising to take all market moves into account when it decides on monetary policy on 3 November. But six-to-nine weeks is a long time in FX markets and on Monday investors were disappointed about the lack of an emergency rate hike from the BoE. We had felt that the BoE would prefer to avoid getting sucked into defending the pound with rate hikes. The delay in a policy response until November, therefore, leaves sterling vulnerable – though we would prefer to describe it as sterling finding the right level such that the Gilt markets clear. We are not sure we are there yet, however. FX markets feel like the dollar is going into early 1980s over-drive territory and barring a stark reversal in hawkish Fed expectations or slowing growth dynamics, we would say Cable could retest 1.0350 over the next month. UK markets will now be hyper-sensitive to any communication from UK policymakers. Today at 13:00CET sees BoE chief economist, Huw Pill, speak on the well-timed subject of 'Economic and Monetary Policy challenges ahead'. We doubt he will offer more than what was in yesterday's BoE statement, but on a day in which the dollar is consolidating, GBP/USD could trace out something like a 1.07-1.09 range. Chris Turner  HUF: Is the hiking cycle coming to a peak? The National Bank of Hungary's (NBH) monetary policy meeting takes place today and we expect another strong 75bp rate hike to 12.50%. Surveys are leaning more towards a 100bp step but market pricing is a bit more complicated. Short-term expectations in the one-month horizon (1x4 FRA) are pricing in just over 150bp, however they do include the October meeting as well. On the other hand, market expectations have cooled in recent weeks and while the terminal rate was still priced in at around 14.50% in early September, at the moment markets are expecting the peak of the hiking cycle to be just over 13.50%. Thus, it should not be a problem for NBH to support hawkish expectations. On the other hand, since the publication of our preview, we have heard several statements from NBH officials that the hiking cycle is coming to an end. From this perspective, this would make our 75bp hike call look hawkish. However, the forint is once again approaching the 410 EUR/HUF level and a dovish surprise would not be good news for the forint. Moreover, markets are increasingly questioning whether Hungary will get an injection of EU money, which Fitch highlighted as a risk to the sovereign rating on Friday, and more headlines should emerge in the coming days. So overall the picture is very mixed and it is hard to find a clear path on what to do next. However, our call for today's NBH decision should mean positive support for the forint. Frantisek Taborsky Read this article on THINK TagsFX Daily FX Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more
"Private investors will be required to increase their gilt exposure by at least £268bn in FY2023-24"

Could GBP/USD Hit 1.00? There Are Several Solutions To Fight GBP (British Pound's) Weakness (26/09/22)

ING Economics ING Economics 27.09.2022 11:29
Sterling has fallen close to 10% on a trade-weighted basis in a little under two months. That's a lot for a major reserve currency. And traded volatility levels for the pound are those you would expect during an emerging market currency crisis. We take a look at the (unpalatable) policy options available to stabilise sterling British pound hits all time low against US Dollar, London, United Kingdom - 26 Sep 2022 Source: Shutterstock Defining a crisis Unlike equity markets where in excess of a 20% fall from a peak is called a bear market, definitions in FX markets are a little looser. Suffice to say that GBP/USD is the worst performing G10 currency this year at -20% year-to-date, just pipping the Japanese yen to that position. (Japan intervened last week to support its currency for the first time since 1998). Typical emerging market currency crises since the early 1990s have seen exchange rates fall anywhere near 50-80%. The large size of these adjustments has typically been a function of the breaking of an exchange rate regime/peg. The UK has learned from its experiences in ERM II in 1992 and has operated a free-floating FX regime ever since – arguing against sterling following some of the outsized EM FX adjustments outlined above. However, the 3.5% decline in Asia overnight and the now 28% levels for one week traded GBP/USD volatility (close to the highs in March 2020) certainly marks trading out as ‘disorderly’. Disorderly markets normally prompt a response from policymakers. As we go to press, headlines suggest that the Bank Of England (BoE) is considering making a statement later today. Below we take a look at the possible policy responses and their likelihood. GBP/USD sinks towards parity - one week volatility surges Source: ING, Refinitiv Sterling stabilisation measures – a look at the policy options Fiscal U-turn. Comments from the UK government over the weekend that the Treasury is mulling further tax breaks in coming months, would suggest ministers are unlikely to change course imminently. But mounting pressure, perhaps coupled with comments from rating agencies over coming weeks, means investors will be looking for signs of at least a partial policy U-turn. Ministers may emphasise that tax measures will be coupled with spending cuts, and there are hints at that in today’s papers. We also wouldn’t rule out the government looking more closely at a wider windfall tax on energy producers, something which the prime minister has signalled she is against. Such a policy would materially reduce the amount of gilt issuance required over the coming year. BoE to suspend QT. First inflation, then fiscal concerns, and finally a broader run on sterling and sterling-denominated assets. In all three cases, gilts have been at the wrong end of the stick. One particular concern for gilts is policy cooperation between the Bank of England and the Treasury. Be it on inflation, fiscal, or on confidence in the currency, markets have the distinct, and unnerving, impression that the two institutions in charge of economic management in the country are working at cross purposes. Gilts are caught in the crossfire. Despite this list of legitimate macro concerns, we also suspect that the magnitude of the move in gilts these past days (adding up to roughly 100bp moves at the front-end of the curve in two days) has been magnified by worsening liquidity. We have been highlighting the deterioration in gilt trading conditions all year. The BoE has added fuel to the fire by seeking to reduce its gilt holdings. In an environment where private investors are justifiably nervous about greater gilt issuance, and also greater gilt riskiness, the BoE is adding to gilt supply, and will soon engage in outright sales. A low-hanging fruit, in our view, would be to suspend quantitative tightening until market conditions improve.  Emergency BoE rate hike. The collapse in sterling over recent days has unsurprisingly sparked expectations of an inter-meeting rate hike. That should not be ruled out, though we suspect the committee will be reluctant. Thursday’s BoE decision suggests the BoE is – rightly or wrongly - less concerned about sterling than a lot of market commentary is suggesting they should be. As a rough guide, the 7-8% fall in trade-weighted sterling since the start of August, if persistent, would add somewhere between 0.6-0.8ppt to inflation at its peak. That’s not insignificant, but is it enough in itself to necessitate an inter-meeting hike? Probably not. But the key question is whether an emergency rate hike would do all that much. Certainly, it would need to be bold, and likely in excess of 75bp. A bold rate hike would prompt further complications, too. Rate hikes of the magnitude now being priced by investors would start to be highly problematic for mortgage holders and corporate borrowers. While the vast majority of UK mortgages are fixed, around a third of those are locked in for less than two years. For corporates, the BoE estimated last year that 400bps worth of rate hikes (from near-zero) would take the proportion of firms with low-interest coverage ratios to a record high. In the first instance, we’re more likely to see BoE hawkishness channelled through speeches this week, emphasising that it can move more forcefully if needed in November. Indeed, the pendulum is increasingly swinging towards a 75bp hike (or perhaps more) at that meeting. We would also say that the BoE may be psychologically scarred from the events in 1992, where defensive rate hikes failed to keep sterling in the ERM II mechanism. FX Intervention. Last week Japan intervened to support their currency for the first time since 1998. We do not think FX intervention is a credible option for the UK. The UK only has net FX reserves of $80bn, less than two months’ worth of import cover. The adage in FX markets is that no intervention is better than failed intervention. Instead, we may see building interest in the G20 central bankers and finance ministers meeting on 12 October. Will the FX language in the Communique get tweaked to show concern over disorderly dollar strength and hint at joint FX intervention?   Dollar swap lines. Typically in a currency crisis, we hear about the need for additional access to dollar funding through dollar swap lines. For reference, the BoE already has a permanent and unlimited dollar swap with the Federal Reserve. However, these lines are designed to provide support for dollar funding challenges and not for Balance of Payments needs. Dollar funding does not seem to be a problem for UK banks, but the BoE could make a pre-emptive move here by re-introducing an 84-day dollar auction in addition to the current 7-day facility.    IMF Flexible Credit Line. Given many references to Friday’s UK budget being the most generous since the Barber budget of the early 1970s, there will, unfortunately, be comparisons drawn to the UK seeking an IMF bailout in 1976. We assume the stigma of going to the IMF would prompt some aggressive UK policy adjustments beforehand, but just for reference, a good quality credit, Chile, (sovereign-rated A/A-) recently received an $18bn ‘precautionary’ Flexible Credit Line (FCL) from the IMF, joining the likes of Colombia, Mexico, Peru and Poland. Chile’s FCL was eight times its IMF quota. The UK receiving eight times its IMF quota ($200bn) would seem unlikely in that the IMF already has a total of $144bn lent out according to some estimates and the lack of conditionality of an FCL may not be a good signal given the nature of the sterling crisis. Capital controls. Highly unlikely. Capital controls have been used by Russia this year to support the rouble. But Margaret Thatcher dismantled capital controls in the UK in 1979. A reversal of such measures would be a complete anathema to the new Truss government’s agenda of deregulation and liberalisation. GBP/USD May Reach Parity, EUR/GBP To Near 0.95? At this stage, we think UK authorities will probably just have to let sterling find its right level. The UK has a reserve currency so it can always issue debt – it’s just a question of the right price. We are still bullish on the dollar this year as Fed leads the deflationary charge and global growth slows. That means GBP/USD is now vulnerable to a break of parity later this year, while - quite unexpectedly - EUR/GBP can make a run towards the March 2020 high of 0.95, with outside risk to the 2008 high of 0.98.  Read this article on THINK Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more
Thursday's Bank's of England decision may be record-breaking!

British Pound (GBP) May Be Helped With Forex Intervention, But It May Take A While. Bank Of Japan Supported Yen This Way, Swiss National Bank May Do The Same

Alex Kuptsikevich Alex Kuptsikevich 27.09.2022 12:01
The US dollar is under some pressure on Tuesday morning, which can be attributed to the dollar's local profit-taking after substantial gains on previous days. European equities and US index futures are also getting some relief, pulling back from lows. Read next: GBP/USD Is Expected To Trade Between 1.07 And 1.09 Today. Could British Pound Touch 1.0350 In Next Month? Fed And ECB Members Speak Today| FXMAG.COM The dollar has been in increasing demand in recent months, as comments from the Fed are methodically pushing higher the expected interest rate ceiling and for longer However, until we see a change in the fundamentals, bounces like today's are likely to be nothing more than local retracements of established trends - bullish for the dollar and bearish for equities. There is little doubt in the markets now that the main driving force behind the markets is the continuing tightening of current and, most notably, expected conditions. The dollar has been in increasing demand in recent months, as comments from the Fed are methodically pushing higher the expected interest rate ceiling and for longer. Not all major central banks have the ability or the courage to maintain the same pace, which is taking the dollar's main competitors out of the game. But these same conditions require regulators to act more aggressively. Last week, Japan began its interventions to defend the yen exchange rate. The Swiss National Bank has repeatedly warned that it is ready to intervene. Observers have also demanded action from the Bank of England. But the latter has yet to budge, taking a week to assess the situation. In the words of the ECB officials, there is more and more evident dissatisfaction with the ongoing weakening of the euro. Because a sharp rise in interest rates in over-leveraged economies may come as a shock, the central bank may intervene to stop the unilateral weakening of national currencies. Right now, it seems unlikely that the major central banks would be willing to press on the dollar in a coordinated way as they did in 1985 with the secretly prepared so-called Plaza Accord. It hardly fits with US priorities to lower inflation and weaker commodity prices. At the same time, there are increasing risks that the major central banks, one by one and acting on the situation, may use this almost forgotten instrument to stop unilateral speculation against their currencies. Among the other majors, the GBP has the highest currency intervention risks right now, with EUR and CHF slightly less so In our view, since last week and for the foreseeable future, Japan has already included interventions in its active policy, potentially limiting the USDJPY from rising above 145. It is unlikely to be an easy ride for Japan's Ministry of Finance, but it has the strength to fight back. Among the other majors, the GBP has the highest currency intervention risks right now, with EUR and CHF slightly less so. In Canada and China, the monetary authorities are not concerned about the exchange rate, as inflation is slowing down there. Hence, it is unlikely that we will see interventions in the CAD and the CNY. Although the Australian dollar has lost 6% since the beginning of the month, it is now 18% above the 2020 'bottom', so in our view, monetary authorities can use traditional rate hikes and quantitative tightening for now.
UK GDP Already Falling And Continuing To Do So For This Calendar Year, Copper Is Still Within A Tightening Range

British Pound (GBP) Hasn't Been Significantly Supported So Far, What Do We Know About The Potential Move Of BoE?

Craig Erlam Craig Erlam 27.09.2022 14:37
Bank Of England "Ready To Act" Stock markets have steadied in Asia and early European trade on Tuesday but that is not reflective of the mood in the markets at the moment so it may struggle to hold. The volatility in FX markets at the start of the week has been extreme but it’s also been building for weeks as authorities desperately try to arrest the decline in their currencies, particularly against the US dollar. On Monday it was the UK that was front and centre following the mini-budget on Friday that showed total disregard for the environment in which it was being implemented. Promising much higher borrowing to fund huge tax cuts at a time of double-digit inflation that hasn’t even peaked is beyond bold and the backlash is well underway. There’s nothing wrong with being ambitious on the economy but timing is everything and when the cost is much higher interest rates, there won’t be many winners and the economy simply won’t see the benefit. The question now is whether the pressure both externally and from within will force a rethink in order to settle things down. Read next: The Weakening Real Estate Market In The USA And More Speeches| FXMAG.COM The Bank of England did little to help. After speculation all day of an impending announcement, the central bank only sought to reassure markets that they stand ready to act but probably not until the next meeting in early November when it is armed with new macroeconomic projections. Needless to say, that reassured no one and sterling plummeted again after recovering amid the rumours of the announcement. BoJ intervenes amid rising yields It’s not just the UK that’s contending with a haemorrhaging currency, the Japanese Ministry of Finance was forced to intervene last week for the first time in 24 years in order to support the yen. Of course, while the UK’s problems appear largely self-inflicted, Japan is suffering as a result of a growing rate divergence that is worsening month to month. So much so that the Bank of Japan was forced to intervene itself overnight with another bond-buying operation to the tune of 250 billion yen. The problem with yield curve control is that when yields are rising everywhere, pulling those in Japan with them, the upper limit is frequently tested necessitating intervention which in turn weakens the currency. It seems Japan is now stuck in an intervention doom loop until central banks elsewhere see peak inflation and therefore rates, or the BoJ loosens its grip and allows yields to move a little higher. This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds. More turmoil to come? - MarketPulseMarketPulse
Inflation Outlook: Energy Prices Drive Hospitality, Food Inflation Eases

Morgan Stanley Expects GBP/USD To Reach 1.00 In 2022 And EUR/GBP To Hit 0.95

Conotoxia Comments Conotoxia Comments 27.09.2022 15:27
The end of last week and the beginning of this week have been a veritable rollercoaster in the financial markets. The volatility experienced by the currencies of developed countries during this time, especially the British pound, could be compared to the period of the Great Financial Crisis, the Brexit referendum or the pandemic hitting the financial markets. Current overview of financial markets Today, financial markets seem to be trying to catch their breath after the recent turmoil. The U.S. dollar seems to be slightly losing value in the broad market, which may also be caused by the phenomenon of profit realization from sudden dollar trends. As of 09:300 GMT+3 on the Conotoxia MT5 platform, the EUR/USD was up 0.57 percent to $0.9663 today. The GBP/USD rallied 1.3 percent to $1.0821, while bitcoin returned above the $20000 level, rising just under 6 percent. Stock index contracts also rebounded. The DAX rose less than 1.5 percent to 1,377 points, and the S&P500 rose 1.48 percent to 3704 points. The dollar index, on the other hand, retreated 0.65 percent to 113.57 points. It had earlier set a new peak in a multi-month trend above 114.60 points. Source: Conotoxia MT5, USDIndex, H4 Financial markets race to peak interest rates The market at present, seems to be outdoing itself in betting on which level and country would peak in interest rates. The British pound may come out on top due to the fact that the Bank of England might be forced to counter the British government's fiscal easing and may raise interest rates faster and more than previously expected. Currently, the market is assuming that interest rates in the UK could rise as much as 175 bps and only until November, while the market sees the peak of the cycle in the region of 6%. Meanwhile, in the US, the interest rate market is assuming that the Fed funds rate range could reach its peak in February 2023. This could be between 4.5 and 4.75 percent. Thus, the U.S. bond market may also be close to the full discount of hikes, as yields on 2-year bonds reached 4.3 percent yesterday. In the Eurozone, on the other hand, the EUR could be above 3 percent in six months. Thus, lower than the pound and the dollar, while higher than the Japanese yen. For the JPY, interest rates are expected to remain unchanged over the year, according to the market's valuation of interest rate levels. Source: Conotoxia MT5, GBP/USD, m30 What's next for the British pound? According to Citigroup, parity on GBP/USD looks "quite likely," as there are no clear valuation thresholds for the pound, but "I still wouldn't go so far as to say it's inevitable," Ebrahim Rahbari, global head of FX analysis at Citigroup, said on Bloomberg TV. "We are looking at parity as the next big level," he added. While conventional valuation suggests that sterling doesn't need to get much weaker, "it's really that risk premium that comes with some of the policy measures that makes it so likely that we'll drift, perhaps beyond parity." Currency troubles are unlikely to escalate into a crisis, he said, because the UK doesn't have much debt denominated in foreign currencies. He added that: "The threat of default is much less significant." Meanwhile, Morgan Stanley has revised its forecast for the pound and now sees it reaching parity with the dollar by the end of the year, as neither currency interventions nor emergency rate hikes by the Bank of England will stop the sterling's weakening. "Recent price action suggests that the GBP is under pressure," - Morgan Stanley analysts wrote in a Monday note. The bank's previous forecast for GBP/USD was 1.02. It is now 1.00. The analysts also revised their forecast for EUR/GBP to 0.9500 by year-end from 0.9100 previously. Daniel Kostecki, Director of the Polish branch of Conotoxia Ltd. (Conotoxia investment service) Materials, analysis and opinions contained, referenced or provided herein are intended solely for informational and educational purposes. Personal opinion of the author does not represent and should not be constructed as a statement or an investment advice made by Conotoxia Ltd. All indiscriminate reliance on illustrative or informational materials may lead to losses. Past performance is not a reliable indicator of future results. Read article on Conotoxia: Stock market news: The financial market tries to take a breather. What's happening to the pound? (conotoxia.com)
Why India Leads the Way in Economic Growth Amid Global Slowdown

Bank Of England Intervention Boosts Risk Appetite And The Possible End Of The iPhone Era

Swissquote Bank Swissquote Bank 29.09.2022 10:39
The Bank of England (BoE) jumped in the UK’s shattered sovereign market to buy long-term UK bonds yesterday, because apparently, they have been warned that collateral calls on Wednesday afternoon could force investors to further dump their UK sovereign holdings. And the UK could no longer afford another heavy selloff wave on its sovereigns. Will the enthusiasm last?  The British 10-year yield fell 10% yesterday, and the pound jumped past the 1.08 mark against the US dollar and consolidated below 0.90 against the euro. The FTSE recovered early losses and closed the session 0.30% higher, gold recovered to $1662 an ounce, American crude rallied past the $80 per barrel, also boosted by the Hurricane Ian’s negative impact on supply. Around 11% of the Gulf of Mexico production was halted due to the storm.The S&P500 gained almost 2% yesterday to above 3700 level, while Nasdaq jumped more than 2%. Will the enthusiasm last? Not so sure. Yesterday’s price action was a sugar rush, triggered by the BoE intervention. Enthusiasm will likely fall as the level of blood sugar falls across the financial markets. Amazon is on the rise Amazon jumped 3% as investors liked the new devices at Wednesday’s annual device event, and Apple slipped on announcement that it will, finally, not produce more iPhones compared to last years.In Europe, all eyes are on Porsche that starts flying with its own wings today! Watch the full episode to find out more! 0:00 Intro 0:27 BoE finally jumps in 3:24 BoE intervention boosts risk appetite, but for how long? 5:30 Amazon convinces, Apple disappoints 8:54 Porsche is now up for grab! Ipek Ozkardeskaya 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. #BoE #intervention #UK #gilt #GBP #Hurricane #Ian #crude #oil #energy #crisis #XAU #FTSE #sovereign #bonds #rally #Apple #Amazon #Porsche #IPO #SPX #Dow #Nasdaq #investing #trading #equities #stocks #cryptocurrencies #FX #bonds #markets #news #Swissquote #MarketTalk #marketanalysis #marketcommentary ___ Learn the fundamentals of trading at your own pace with Swissquote's Education Center. Discover our online courses, webinars and eBooks: https://swq.ch/wr ___ Discover our brand and philosophy: https://swq.ch/wq Learn more about our employees: https://swq.ch/d5 ___ Let's stay connected: LinkedIn: https://swq.ch/cH
John Hardy to FXMAG: The UK economy faces significant head-winds from supply side limitations

Podcast: The Bank Of England's Announcement Of Emergency QE And How This Affect On UK And Whole Market

Saxo Bank Saxo Bank 29.09.2022 12:25
Summary:  Today we discuss the Bank of England's announcement of emergency QE yesterday, and how the impact of that on not just UK, but also, global yields impacted risk sentiment yesterday. Arguably, the UK is merely the weakest link and the BoE's actions might have to be repeated elsewhere - but on what time frame? We also look at the impact on gold, the latest on crude oil and the natural gas supply situation for Europe this winter even without any Russian gas deliveries, and much more. Today's pod features Ole Hansen on commodities and John J. Hardy hosting an on FX. Listen to today’s podcast - slides are found via the link. Follow Saxo Market Call on your favorite podcast app: Apple  Spotify PodBean Sticher If you are not able to find the podcast on your favourite podcast app when searching for Saxo Market Call, please drop us an email at marketcall@saxobank.com and we'll look into it.   Questions and comments, please! We invite you to send any questions and comments you might have for the podcast team. Whether feedback on the show's content, questions about specific topics, or requests for more focus on a given market area in an upcoming podcast, please get in touch at marketcall@saxobank.com.   Source: https://www.home.saxo/content/articles/podcast/podcast-sep-29-2022-29092022
Oil Prices Soar on Prospect of Soft Landing, Eyes Set on $80 Breakout

On Thursday S&P 500 (SPX) Lost 2.11%, Nasdaq Went Down By 2.84%

ING Economics ING Economics 30.09.2022 08:27
Equities and FX decouple as we end the quarter Source: shutterstock Macro outlook Global markets: The bounce didn’t last long. Both S&P500 and NASDAQ fell sharply again on Thursday, the S&P by 2.11% and the NASDAQ by 2.84%. That puts year-to-date losses at respectively 23.62% and 31.37%. And we’d be inclined to argue that we haven’t yet seen the bottom. The S&P500, for example, is sitting just around its June lows, so any break below this level sets the scene for some substantial further declines. On the positive side, equity futures are pricing in small gains at today’s open, but that's a long way from saying that stocks will rally into the weekend and the end of the quarter. UK Gilts gave back some of their gains yesterday on the Truss government’s insistence on sticking to its mini-budget, and yields have risen across the UK curve, though this doesn’t seem to have the market’s eye in the same way it did earlier this week. 2Y US Treasury yields headed up 5.8bp to 4.192% and the yield on the 10Y bond rose a similar amount to 3.786%. 10Y Bunds rose 5.8bp to 2.14%, hurt by a 10% YoY September inflation print (10.9% for the harmonized index). And while this is cementing thoughts of a 0.75% rate increase at the next ECB meeting, that seems like a lame response in a month where the price index rose by 2 percentage points. For now, currency markets seem to disagree, and the EURUSD has risen to 0.982, though this seems a little incongruous against the data backdrop. Other G-10 currencies also did better against the USD. The AUD is now back up above 65 cents, while the GBP has risen to 1.1145 – a long way from the 1.035 low of the week (and approx. last 4 decades!). Can this last? It seems a long shot as there’s plenty more bad news to be priced in. The JPY has also had a reprieve, and is back to 144.42, while the CNY led APAC’s FX gains, gaining by more than a per cent to 7.1249 onshore. G-7 Macro: Besides the unpleasant German inflation data, the macro picture was quite thin, with some marginal upward revisions to 2Q22 US GDP, and a lower than expected initial claims figure suggesting that the Fed still has its work cut out to slow the economy enough to bring inflation down. Today, we see the full European inflation picture for September, which is likely to exceed the 9.7%YoY consensus estimate. This won’t have been adjusted yet for the German figures. US Personal income and spending data will show how consumer spending held up in August together with the latest PCE inflation figures.  And we round off the week with the University of Michigan consumer sentiment (and inflation expectations) figures. China: We expect the manufacturing PMI to be under 50 as manufacturing for real estate construction will still be in monthly contraction. Furthermore, export demand is waning and that could affect manufacturing activity for holiday-season exports. However, services should continue to pick up as Covid measures become more localised. India: The Reserve Bank of India (RBI) meets today to decide on rate policy and the following three factors are relevant to that decision: 1) Inflation is 7.0%, a full per cent above the top of the RBI's target range 2) it is heading in the wrong way. 3) RBI commentary has been clear about the need to focus on fighting inflation. Put that all together and it looks likely that the RBI will deliver a further 50bp of tightening today, taking the repo rate to 5.9%. Later this evening, we will also get India’s fiscal deficit figures for August. Although all major rating agencies have India’s long-term foreign credit rating at "stable', and the deficit data year-to-date seem on track to meet the government’s 6.4% (GDP) target, it wasn’t that long ago that Fitch raised their outlook from negative. The deficit numbers have been whipped around by government subsidies and attempts to limit the pass-through of high energy prices to the consumer, so these are still worth a quick look. South Korea: Industrial production dropped more than expected in August, recording a -1.8%MoM decline (vs -1.3% in July and -0.8% market consensus). Automobile production rebounded (8.8%) but the declines in semiconductors (-14.2%) and petrochemicals (-5.0%) were bigger. We believe that re-opening will support 3QGDP, but thereafter, there should be a sharp deceleration. We also now expect only a 0.1% QoQ gain in 3Q22 (vs 0.7% in 2Q). Yesterday’s business survey outcomes were also quite weak, with manufacturing sentiment rapidly deteriorating to the lowest level since October 2020. Also, today’s forward-looking construction orders data were soft, suggesting more recessionary signals in the coming quarters. Japan: Japan’s data releases surprised the market on the positive side. The jobless rate edged down to 2.5% (vs 2.6% in July), in line with the market consensus. The Jobs-to-applications ratio continued to rise (has risen for several months in a row). And industrial production in August not only recorded a third monthly rise (2.7% MoM sa), but also beat the market expectation significantly (0.2%). We will revise up third quarter GDP soon based on today’s releases. The stronger jobs market is also a good sign for wage growth together with solid production gains. However, we think it is still too early to tell because Japan is reopening at a slower pace than other Asian countries and the reopening effects are just kicking in. With growing global recession headwinds, the BoJ will likely take its time to see whether Japan can still produce solid outcomes in a sustainable way. What to look out for: US core PCE, personal spending and Michigan sentiment South Korea industrial production (30 September) Japan labor market data (30 September) China official and Caixin PMI manufacturing (30 September) India RBI meeting (30 September) Hong Kong retail sales (30 September US personal income, personal spending and core PCE (30 September) US University of Michigan sentiment (30 September) Read this article on THINK TagsEmerging Markets Asia Pacific Asia Markets Asia Economics Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more
Bank of England survey highlights easing price pressures

The UK Assets Will Be Pressured| Japan And Its A Huge Foreign Debt

Saxo Bank Saxo Bank 30.09.2022 09:54
Summary:  While the Bank of England’s emergency bond-buying has propped up the sterling recently, there are hardly any reasons to turn positive on UK assets in general unless the government changes course on its fiscal policy roadmap. In fact, Japanese authorities remain better placed to defend their currency than the UK, given their better reserves position. While UK’s pain is self-inflicted, the overarching theme of tighter global liquidity conditions continues to pose threats of wider market disruptions. The Fed’s aggressive monetary policy tightening and the unrelenting surge in the US dollar this year is now tightening global financial conditions, with effects reverberating through global financial markets. Still, the degree to which this can be blamed for what is happening in the UK remains under the scanner. Despite the Fed tightening remaining an overarching theme, UK’s pain is largely self-inflicted. While bond buying by the Bank of England (BOE) is somewhat on the lines of what the Bank of Japan (BOJ) has been, the motives are completely different and the impact is likely to vary as well from here. The motives BoJ’s wider bond-buying operations are a reflection of its desire to stoke inflation. Japan’s headline inflation has averaged under 1% in the last two decades with the core print being in negative territory. The latest print for August was 3%, above the BOJ’s 2% goal, but wage pressures still remain subdued. UK’s inflation, on the contrary, is running at nearly three times that, and the BOE’s plan to begin purchasing long-dated gilts was a forced emergency measure to support pension funds that may be on the verge of a default due to the jump in gilt yields stemming from fiscal concerns after the announcement of the new government’s mini-budget. The vulnerabilities Japan’s fiscal and current account are also not in great shape, and it has a huge foreign debt. But it has huge FX reserves of the order of over $1.2 trillion as of end-August. This equates to 20% of GDP and over 18 months of import cover. Of this, about $136bn is deposits with foreign central banks that can be used immediately to intervene. So, while the Japanese yen remains vulnerable due to its twin deficits and high debt levels, the huge FX war chest still gives Japanese authorities some ammunition to intervene against excessive pace of yen decline. Meanwhile, UK’s problem is not just in its high inflation but also its twin deficits and weak FX reserves position. Foreign currency debt levels in the UK are more contained, however, and that may be one of the reasons why FX reserves are low. As we noted in a previous piece, UK’s net forex reserves of $100bn are also enough to only cover two months of imports, or roughly equal to 3% of GDP as compared to Japan’s 20% and Switzerland’s 115%. This gives the UK policymakers less room to prop up the sterling. Threats to Sterling and UK assets Sterling has undoubtedly regained some strength since the massive selloff on the fiscal plan announcement. It has been ‘temporarily’ supported by the BOE’s bond purchase program, which has led to the global reprieve in yields. Also, the month-end/quarter-end rebalancing has possibly helped cap dollar gains after massive USD strength seen in the quarter. To be clear, BOE didn’t ‘pivot’, rather it acted as the lender of last resort for the domestic pension funds, and there is hardly anything to be bullish about, or turn positive on UK assets. The UK assets will likely continue to be pressured until the UK government remains in denial. Even an emergency rate hike, at this point, seems unlikely to be able to support the sterling or gilts, as it would signify panic and a divergence in fiscal and monetary policies, further weighing on general confidence in the economy and its policies. Meanwhile, markets are currently pricing in a close to 150bps rate hike from the BOE at the November 3 meeting. That’s massive, and will mean significant pain to the UK economy. Threat of global contagion The UK is becoming a major credit risk not only for GBP assets but also for the rest of the world, primarily the eurozone as my colleague Chris Dembik noted in his piece. We see some kind of contagion effect in the eurozone credit market. There’s also risk of more markets succumbing to evaporating liquidity, and it is inevitable to ponder over who could be next? The Chinese currency has also weakened dramatically lately, but the PBoC has numerous tools available and credit impulse in China is also turning positive. South Korea has already intervened to prop up its currency, and more economies are likely to follow that path if things continue like this. The G20 meetings on November 15-16 will be particularly important to watch not just for geopolitical updates, but also for possible collective concerns on the impact of global tightening and the strong dollar. Atleast until then, if not longer, there is not enough reason for the US Treasury to intervene to buoy the battered pound or yen or another faltering currency. Most US officials, including Treasury secretary Yellen, expressed no urgency to act. Wider market disruptions and increasing risks to global financial stability, beyond the financial turmoil emanating from Britain and Japan, therefore remain likely.   Source: https://www.home.saxo/content/articles/macro/macro-insights-bank-of-england-bank-of-japan-and-the-risks-of-wider-market-disruptions-30092022
Thursday's Bank's of England decision may be record-breaking!

British Pound: Oanda Expects That If Liz Truss Doesn't Change The Plan, The UK Inflation May Go Up!

Kenny Fisher Kenny Fisher 30.09.2022 15:54
British pound calm after tumultous week The British pound has posted slight gains, after a spectacular showing on Thursday. In the European session, GBP/USD is trading at 1.1145, up 0.26%. For anyone looking for lots of volatility, look no further. The pound has taken riders on a wild ride, with GBP/USD surging 2.1% on Thursday. On Monday, the pound traded in a stunning 500-point range, which saw GBP/USD touch a record low of 1.0359. Since then, the pound has padded on 800 points, in what has been a truly remarkable week. The driver behind the pound’s volatility was Chancellor Kwarteng’s mini-budget, which included tax cuts and increased borrowing. The package was roundly criticized, with even the IMF and US officials panning the plan. This led to a near-crash in the UK bond market, forcing the Bank of England to take emergency measures and pledge unlimited purchases of securities. The bailout will continue for over two weeks and could cost up to 60 billion pounds. The BoE’s intervention has reassured investors and stabilized the bond market. The pound continued to swing wildly, but it has recovered almost all of the losses triggered by the mini-budget. What happens now? The government clearly was not expecting a financial tsunami after a mini-budget, which are usually tame affairs that don’t affect the financial markets. Prime Minister Truss is under pressure to shelve or at least make changes to the mini-budget, but so far Truss is holding firm and insisting that she will stick with the plan. If she does, we can expect inflation, which is running at a 9.9% clip, to climb even higher. GBP/USD Technical GBP/USD has support at 1.1144 and 1.1052 There is resistance at 1.1265 and 1.1384 This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds. Pound takes a breather after wild ride - MarketPulseMarketPulse
The UK Markets Remain Volatile, Possible Contraction Of The Eurozone Economy

The UK Markets Remain Volatile, Possible Contraction Of The Eurozone Economy

ING Economics ING Economics 01.10.2022 09:03
Despite a lot of tightening priced into the swaps market, we believe it is unlikely that the Bank of England will hike rates before the scheduled November meeting. In the US, unemployment remains stable at 3.7% and with wage growth staying elevated, we see few signs that the pace of tightening will slow In this article US: Inflation is sticky as unemployment remains low and wage growth remains elevated UK: Intermeeting Bank of England hike looks unlikely despite ongoing turmoil Canada: Hopeful for a stabilisation in the jobs market Eurozone: Expecting declining trend in retail sales Source: Shutterstock US: Inflation is sticky as unemployment remains low and wage growth remains elevated Financial markets are currently favouring the Federal Reserve implementing a fourth consecutive 75bp rate hike on 2 November and we agree. Inflation is sticky while the near-term growth story is looking OK and the economy continues to add jobs in significant numbers. That message should be reinforced by the upcoming labour report with unemployment staying at just 3.7%, payrolls increasing by around 200,000 and wage growth staying elevated. There are also plenty of Federal Reserve officials scheduled to speak and so far there is little sign of any inclination to slow the pace of policy tightening. The ISM business activity report should remain firmly in growth territory as well with the trade balance making further improvements. As such, we are expecting 3Q GDP to come in at close to 2%. UK: Intermeeting Bank of England hike looks unlikely despite ongoing turmoil UK markets remain volatile, and sensitive to further headlines over the coming week. We remain sceptical that the Bank of England will hike rates before its scheduled November meeting, despite a lot of tightening priced into swaps markets. Instead, we’ll be watching for any update on the Bank’s bond strategy. The BoE was forced to start buying long-dated gilts amid concerns about the stability of UK pension funds, but this is for a limited period and the Bank has said it plans to plough on with gilt sales from the end of the month. We think that’s likely to get pushed back, however, given the strains in the gilt market. Markets will also remain hyper-sensitive to any headlines related to the government’s controversial growth plan. In the first instance, press reports suggest the focus will be on spending cuts to offset some of the planned tax cuts, though this could be both practically and politically challenging. The Office for Budget Responsibility is due to provide a first draft of its post-Budget forecasts to the Chancellor privately on Friday. Canada: Hopeful for a stabilisation in the jobs market In Canada, the jobs market has wobbled of late with employment falling for three consecutive months after some very vigorous increases earlier in the year. We are hopeful of stabilisation in Friday’s September report given the economy is still performing relatively well, but if we are wrong and we get a fourth consecutive fall then expectations for Bank of Canada tightening could be scaled back somewhat – especially after some softer than anticipated CPI prints. We are currently forecasting a 50bp rate hike at the October BoC policy meeting with a final 25bp hike in December. Eurozone: Expecting declining trend in retail sales For the eurozone, it’s a pretty light week in terms of data. Retail sales on Thursday catch the eye as we’ll get more information on consumer spending in the eurozone, as purchasing power remains under severe pressure. We’ve seen a declining trend in spending since last November and have little indication that August data will have shown a big turnaround. Continued declines would fuel our view that the eurozone economy could have already tipped into contraction in the third quarter. Key events in developed markets next week Source:  Refinitiv, ING TagsUnited States Eurozone Canada Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more
Italian headline inflation decelerates in January, courtesy of energy

Securing Italy In Case Russia Cuts Off All Gas Supplies| Eyes On Elections In Brazil And More

Saxo Bank Saxo Bank 03.10.2022 09:45
Summary:  Market sentiment continued to deteriorate late last week on geopolitical concerns and despite the Bank of England’s intervention helping to at least temporarily stabilize global sovereign bond markets after their aggravated slide of late. The week ahead features a busy economic calendar from the US, capped by Friday’s September jobs report as markets wonder whether the US labor market will allow the Fed any chance to change its hawkish tune.   What is our trading focus? Nasdaq 100 (USNAS100.I) and S&P 500 (US500.I) S&P 500 futures pushed below the 3,600 level this morning, which is obviously a major level to watch and indicates that the equity market is still facing headwinds. The latest risk sources adding to the negative sentiment are talks about Credit Suisse and their financial strength, and then macro indicators in Asia continuing to weaken against estimates. On a positive note, the US 10-year yield has stabilised around the 3.75% level which is critical for stabilisation in the equity market. Our medium-term outlook continues to be negative on equities driven by higher rates for longer and structurally higher inflation being priced in by the market over time. USD and risk sentiment The US dollar found support as US treasury yields bottomed out and recovered on Friday. An interesting test for the USD here if treasury yields continue to churn sideways or lower and yet risk sentiment remains on the defensive. Is the USD still a safe haven without the constant turning of the screws from treasury yields that have been a key factor in the huge upswing in the greenback this year? Key levels for the USD include the 145.00 area tested overnight in USDJPY (the Bank of Japan intervened above this level previously) for resistance and 0.9900 resistance/USD support in EURUSD. A busy data week for the US this week as well – a strong September jobs report on Friday could continue to support the dollar. GBPUSD and EURGBP after climactic week Sterling made a bid at a full reversal of its enormous slide last week, but the jury is still out on whether the currency has put in a major low A major sentiment shift to the upside might require the Truss government to go or at least to roll back some of the measures that helped to trigger the currency’s slide (although pension fund hedging was a significant factor in the lock-up in the UK’s gilt market that brought both the chaotic slide and the Bank of England’s emergency response.) EURGBP focus on the 0.8700-0.8750 area that was the former top of the longer term range, and GBPUSD focus on 1.1200-1.1250 if sterling continues to attempt a recovery. The Bank of England is priced to hike 122 bps at its November 3 meeting, down from over 150 bps at times last week. Gold (XAUUSD) Gold holds above Friday’s low at $1660, supported by geopolitical and financial risks and a cooling of the recent dollar and yield surge. At this stage the main buyer is likely to be money managers reducing short bets on COMEX gold. In the week to September 27, the net short held by these speculators jumped 25% to a near four-year high. Focus now being the critical resistance zone into 1,678-1,690 that is the departure point for this latest bear market move. Crude oil (CLX2 & LCOX2) Crude oil trades higher ahead of Wednesday’s OPEC+ meeting in Vienna as the alliance is considering a production cut of more than 1 million barrels to support prices following a 25% slump during Q3-22. Both WTI and Brent, however, trade up by less than 3% with the decision by no means final while the impact of such a move would be smaller than the headline number suggests as several producers, including Russia, produces below their target. Relative to the current quotas, only a handful of producers led by Saudi Arabia would be able to deliver the cuts without losing additional market share relative to the quota system in place. In addition, the group also need to consider the impact of a Russian embargo starting in December and the US pausing its sales from Strategic Reserves as well as the Biden administration asking gasoline producers to curb overseas sales. Weighing on prices are the potential for more fuel exports from China after it issued its biggest fuel-export quota for this and potentially the next quarter. US treasuries (TLT, IEF) US treasury yields rebounded from local lows for the week on Friday, suggesting that very weak risk sentiment elsewhere is not yet seeing significant interest in treasuries as a safe haven – although at least rising yields aren’t the primary driver of weak risk sentiment at the moment. The upside focus remains to on the 4.00% area highs for the US 10-year treasury yield benchmark from last week and to the downside on the 3.50% prior high from June. Important macro data points from the US include the ISM surveys today and Wednesday and the Friday US September jobs report. What is going on? Hot US PCE paves the way for another CPI surprise this month US PCE data came in stronger-than-expected, with the headline up 6.2% YoY from 6.3% YoY prior and 6.0% YoY expected. The core measure was at 4.9% YoY, coming in both higher than last month’s 4.6% YoY and the expected 4.7% YoY. This will likely push up the pricing of another 75bps rate hike from the Fed at the November meeting, as the CPI report out this month is generally likely to follow the same trend of remining close to its highs. Meanwhile, the final estimate of University of Michigan survey was revised lower to 58.6 from preliminary print of 59.5 due to the slide in expectations to 58 from 59.9, even as the current conditions fared better at 59.7 from 58.9 previously. The inflation metrics also diverged with 1yr consumer inflation expectations edging higher to 4.7% (prev. 4.6%), although the longer term 5yr slightly fell to 2.7% (prev. 2.8%). Credit Suisse credit in focus The FRA-OIS spread is rising rapidly indicating that the risk priced by the market in the overall banking sector is deteriorating and thus the banking sector is in focus by investors this week. Tesla Q3 deliveries miss estimates The EV-maker reports 343,830 cars delivered in Q3 against estimates of 358,000 which the EV-maker says is due to logistical obstacles, but other consumer companies have faced headwinds due to elevated energy costs so it would be natural to expect Tesla’s delivery figures being hit by the current cost-of-living and energy crisis. Eurozone inflation remains painfully high The September Eurozone consumer price index (CPI) reached double-digits at 10 % year-over-year versus prior 9.1 % and expected 9.7 %. The core CPI (excluding volatile components) is up to 4.8 % year-over-year versus expected 4.7 %. What is clearly worrying is the acceleration in price pressures beyond energy and food prices. This is a signal that inflation is now broad-based. In France, the EU-harmonized CPI was out at 6.2 % year-over-year in September. This is much lower than what the consensus expected (6.7 %). It stood at 6.8 % in July and 6.6 % in August. On the downside, the producer price index (PPI) for August reached a new high at 29.5 % year-over-year against expected 27.6 %. This matters. The PPI usually represents the pipeline in inflation which will be passed on to consumers, at least partially. This means that the peak in inflation is likely ahead of us in France and in all the other Eurozone countries. Expect to reach it in the first quarter of next year, at best. Norway set to purchase record amounts of foreign currency On Friday, the Norges Bank said it would raise the level of daily foreign FX purchases to $400 million in October as it transfers revenues from its energy exports into the enormous sovereign wealth fund. NOK sold off sharply on the news on Friday, with EURNOK rising to a new high for 2022 above 10.60. Election in Brazil headed to October 30 run-off The former left-populist president Lula polled strongly at 48%, but not over the 50% margin required to avoid a run-off. Incumbent president Jair Bolsonaro received 43% of the vote. Observers are watching the election with some level of unease on fears of election interference or lack of acceptance of the results from Bolsonaro. USDBRL trades near the highs since January, just below 5.50. Wheat jumps after US production disappoints On Friday, the USDA published its Quarterly Stocks and wheat production reports, and the result drove Corn (ZCZ2) higher after the stocks came in lower than analysts had forecast while soybean slumped in response to higher-than-expected stocks. December wheat (ZWZ2) jumped 2.8% with stocks in line but production in all categories falling short of expectations, reducing all wheat production levels to 1650 million bushels, some 8% below expectations. Meanwhile, geopolitical concerns are on the rise with Russia threatening use of low-yield nuclear weapons as its military advantage starts to diminish. This has again raised concerns over the fate of the Black Sea export corridor and the supply situation in agriculture commodities may continue to be challenged. Gazprom cuts gas supplies to Italy Just days after the NordStream pipelines blew up, Gazprom announced it was halting supplies to Italy via Austria due to a contractual dispute. Last week the newly elected Italian PM said she stood with Ukraine. While flows through Ukraine, the only remaining major pipeline bringing gas straight to Europe is operating as normal, it highlights an increased risk that Russia eventually may cut all of its supply. A situation the European market should be able to cope with given the current level of stocks and increased flows from Norway and LNG. Italy meanwhile has already sourced sufficient alternative supplies of gas from North Africa to make up for any shortfalls this winter if Russia were to cut off supplies. China relaxes mortgage rates’ lower bound for first-time homebuyers The People’s Bank of China (PBoC) and the China Banking and Insurance Regulatory Commission (CBIRC) announced last Friday to lower or even remove the lower bounds imposed on first-time homebuyers in cities that experienced three consecutive months (from June to August 2022) declines in new home prices both sequentially and y/y. The currently lower bound is the 5-year Loan Prime Rate minus 20bps.  The new policy will benefit first-time homebuyers in lower-tier cities while tier-1 cities do not meet the above price decline criterion. Among the top-70 cities, eight Tier-2 cities and 15 Tier-3 cities are eligible. The PBoC and the CBIRC also reportedly told the largest banks in the country to extend at least RMB600 billion in net new financing to the housing sector for the rest of the year. What are we watching next? US ISM manufacturing on tap today Due later today, 7ISM manufacturing is unlikely to dent the optimism around the US economy that has been building up further with positive economic indicators released over the last few weeks. While the Bloomberg consensus estimates show some signs of a slowdown to 52.1 in September from 52.8 in August – that should likely be underpinned by improving supply chains, while new orders should remain upbeat. Australia’s RBA to announce latest hike tonight The market is leaning for a 50 basis point move that would take the rate to 2.85%, though a strong minority are looking for a smaller move as Governor Lowe had previously signalled that the pace of rate hikes is likely to slow from here after four consecutive rate hikes of the magnitude of 50bps. The RBA is seen as not wanting to clamp down on financial conditions. A significant risk for the Australia economy is that 60% of mortgages in the country are based on floating rates, with the short yield in Australia now at the highest level in over a decade, when they were close to record lows just over a year ago. On Tuesday, Japan’s Tokyo CPI will see impact of reopening Japan’s inflationary pressures are likely to continue to surge amid higher global prices of food and electricity, as well as on the weak yen propping up import prices. Bloomberg consensus estimates point to a slightly softer headline print of 2.7% YoY from 2.9% YoY previously, but the core is pinned higher at 2.8% YoY from 2.6% YoY previously. Further, the reopening of the economic from the pandemic curbs likely means demand side pressures are also broadening, and services inflation will potentially pick up as well. UK government on the rocks? After recent polls suggest that the Conservative party has its weakest popular support since the 1990’s, the Truss government is in a fight for its very survival. A Conservative Party conference is ongoing and will end on Wednesday with a closing speech from PM Truss. Chancellor Kwarteng, meanwhile, has been out battling to defend his policy moves, but breaking news this morning suggests that the government may be set to reverse its move to cut taxes for the highest earners. We should get some clarity on that today with a speech from Kwarteng. The only glue holding the fractious Conservative party together is the knowledge that early elections (not required until early 2025) would see the party losing power for the first time since 2010. Earnings to watch The earnings season officially starts next week with the first group of US financials reporting but in the meantime a few earnings are worth watching this week. Biogen reports Q3 earnings (ending 30 September) tomorrow with analysts expecting revenue growth of -11% y/y and EBITDA at $847mn down from $959mn a year ago. While the current financial performance of Biogen is volatile and weak the recent news about its breakthrough in Alzheimer’s with a drug that can slow down the disease is what analysts will focus on in terms of gauging the outlook. On Wednesday, Tesco is in focus as the UK largest grocery retailer is at the center of the current food inflation and insights from Tesco will be valuable from a macro point of view. Tuesday: Biogen Wednesday: Keurig Dr Pepper, Aeon, Lamb Weston, Tesco, RPM International Thursday: Seven & I, Conagra Brands, Constellation Brands, McCormick & Co Economic calendar highlights for today (times GMT) 0630 – Switzerland Sep. CPI 0715-0800 – Eurozone Sep. Manufacturing PMI 1330 – Canada Sep. Manufacturing PMI 1345 – US Sep. Final S&P Global Manufacturing PMI 1400 – US Sep. ISM Manufacturing 1910 – US Fed’s Williams (Voter) to speak 2330 – Japan Sep. Tokyo CPI 0330 – Australia RBA Rate Announcement  Follow SaxoStrats on the daily Saxo Markets Call on your favorite podcast app: Apple  Spotify PodBean Sticher   Source: https://www.home.saxo/content/articles/macro/market-quick-take-oct-3-2022-03102022
UK Budget: Short-term positives to be met with medium-term caution

The Bank Of England's (BoE) Intention To Spend £65bn To Stabilize Financial Markets

InstaForex Analysis InstaForex Analysis 03.10.2022 12:19
Markets need to be prepared. Otherwise, hysteria will happen to them. The Fed knows this very well, which, looking at the "taper tantrum" of 2013, began to gradually introduced investors the QE curtailment in 2021. But governments communicate with the markets less often. Unless they have to. UK Prime Minister Liz Truss, amid a sharp decline in the ratings of her Conservative Party, was forced to admit a mistake. More attention should have been paid to preparing investors for tax cuts. However, the help of the Bank of England smoothed out this oversight: the GBPUSD pair, after sinking to a new anti-record, completely regained the lost ground. The worst month for sterling since 2008 and the best week since 2020. It is rare to find such a breathtaking roller coaster in Forex. The presentation of the fiscal stimulus package to the general public turned into a large-scale sale of British bonds and the fall of the GBPUSD to a new historical bottom. Only the suspension of the quantitative tightening (QT) program and the resuscitation of quantitative easing (QE) allowed the bulls to recover. The reaction of the debt market to the actions of the government and the Central Bank With the BoE's intention to spend £65bn to stabilize financial markets, many thought the worst was over. The panic is over. But what will happen after October 14, when the program ends? The Bank of England will return to QT again and continue the cycle of raising the repo rate. Its policy will be contrary to the actions of the government. In addition, the reputation of the regulator was dealt a blow. Rumors began to circulate in Forex that Andrew Bailey and his colleagues are on the sidelines of the Cabinet of Ministers and are ready to finance the embarrassed government of Liz Truss by printing money. Indeed, due to the fiscal stimulus package and the associated S&P downgrade of the UK's credit rating outlook to "negative" and panic in the financial markets, the gap in the popularity of Labor and the Conservatives has widened to 33 points. Elections will be held in 2024. Contradictions in monetary and fiscal policy and shaken confidence in the Bank of England and the Cabinet of Ministers are far from the only problems of the pound. Britain remains the only G7 economy still smaller than it was before the pandemic. Due to the energy crisis, the country is on the verge of recession. Dynamics of the G7 economies Thus, the markets managed to calm down. And this is good news for sterling. But is it enough to continue the GBPUSD rally? Personally, I doubt it. The pound has many unresolved issues, including the echoes of Brexit. It is unlikely that this currency is capable of a long rally. On the contrary, the US dollar continues to be in high demand as a safe-haven asset, and the Fed is able to bring the federal funds rate up to 5%. Technically, there is a consolidation in the 1.105–1.1265 range on the 4-hour GBPUSD chart. An unsuccessful test of its upper border with a subsequent return to 1.115 is a reason for selling within the false breakout pattern.   Relevance up to 09:00 2022-10-06 UTC+2 Company does not offer investment advice and the analysis performed does not guarantee results. The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade. Read more: https://www.instaforex.eu/forex_analysis/323226
ECB's Knot: July Rate Hike Necessary, Beyond July Uncertain; Canadian CPI Supports Rates on Hold; Global Crypto Market at $1.2 Trillion; Oil Market Tightens with Russian Shipments Drop and China's Support Measures

Situation In The UK And Japan And OPEC+ Commented In The Latest Episode Of Oanda's Market Insights Podcast

Craig Erlam Craig Erlam 05.10.2022 22:50
OANDA Senior Market Analyst Craig Erlam reviews the latest market news with Jonny Hart. They discuss the UK fiscal situation, Japanese intervention, OPEC+ and the week ahead. http://www.subscribeonandroid.com/audioboom.com/channels/4947364.rss This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds. Market Insights Podcast (Episode 382) - MarketPulseMarketPulse
Bank Of England Will Probably Be Unable To Avoid A Significant Easing Of Policy

BoE Survey And Expectations Of British Companies For Inflation

TeleTrade Comments TeleTrade Comments 06.10.2022 11:59
The Bank of England’s (BOE) Decision Maker Panel survey of chief financial officers showed on Thursday, British businesses' expectations for consumer price inflation continued its rise in September. Key takeaways “British businesses' expectations for consumer price inflation in one year's time rose to 9.5% last month, up from 8.4% in August.” “Businesses expected output prices to rise by 6.6% in the year ahead, up from expectations of 6.5% in August.” Market reaction GBP/USD remains vulnerable near 1.1300 amid risk-aversion, US dollar rebound and UK financial woes. The spot is down 0.19% on the day.
The Outlook Of EUR/USD Pair For Long And Short Position

Today ECB Meeting Minutes Are Released. UK: Jonathan Haskel (Bank Of England) Speaks

ING Economics ING Economics 06.10.2022 12:13
Central banks are still far from bailing markets out. There is no evidence that financial stability concerns are distracting them from their inflation fight. Their inflexibility is why we see more upside for rates and spreads Risks remain to the upside for rates BoE and ECB let markets fly on their own If financial stability no doubt registers on central banks’ consciousness, it is doubtful that they see policy implications. The Bank of England (BoE) balking at buying long-end gilts for the second day in a row clearly confirmed that it sees its operation as a temporary backstop, and not something that should dilute its monetary policy stance. Along the same lines, the European Central Bank’s (ECB) reluctance to support peripheral bond markets in August and September 2022 by using PEPP reinvestment flexibility sends a similar message. In the BoE’s case, the gilt long-end received the message loud and clear. 10s30s is racing back towards the levels prevailing before the mini budget and subsequent BoE intervention. If the shape of the curve is the best sign that markets are pricing out BoE intervention, it is the speed of the sell-off that should keep investors up at night. 30Y yields are up almost 40bp this week. Let us hope that pension funds and other structural swap receivers managed to reduce their exposure, or found funding sources for inevitable collateral calls. Markets are forward-looking, and there are no ECB purchases for them to look forward to The glass half full take on European Central Bank (ECB) intervention, or lack thereof, is that spreads remained contained without its help. This is particularly notable in a context of rising core rates and rates volatility. The problem with this take is that markets are forward-looking, and that there are no ECB purchases for them to look forward to. It seems, the bar for purchases is higher than previously thought and could get even higher as hawks seem intent on pushing discussions on quantitative tightening (QT). Read next: RBNZ “Hawkish” Move Offers NZD Support, Australian Retail Sales Rose 0.6% During August| FXMAG.COM Gilt 10s30s is steepening back to its pre-BoE intervention level Source: Refinitiv, ING Central banks can't afford to be complacent on financial stability A look at wider market stress indicators in rates and credit yields a similar conclusion. For the most part, peripheral and core rates are already at crisis levels, but not yet at a breaking point. This is hardly encouraging. A bright spot so far has been short-term funding and money markets but, each time, it is clear that the ECB’s heavy hand is responsible. This is all well and good but the expiration of TLTRO loans, tiering, and the looming QT discussion means markets cannot count on ECB support going forward. Expect to see new highs in yields and spreads as a result of central bank intransigence We think it would be wrong to take comfort in still (barely) functioning markets and that central banks should pay greater attention to financial stability. Balance sheet reduction programmes are adding to financial instability and could ultimately make their fight against inflation harder, not easier, if they are forced to choose between rescuing financial institutions and cooling the economy. Despite the BoE’s intervention last week, we keep a cautious outlook on bond markets. We expect to see new highs in yields and spreads as a result of central bank intransigence. The ECB barely intervened to support spreads in August/September 2022 Source: ECB, ING Today's events and market view European data releases today comprise German and UK construction PMIs and eurozone retail sales, but the minutes of September ECB meeting are likely to steal the limelight. We’re unlikely to get much discussion on QT but we might see some on reserve tiering. Even if this isn’t the case, it is possible that officials discuss in the press the content of yesterday’s ‘non-policy’ meeting discussions on either topics. In the minutes proper, the extent of the ECB’s inflation worries and reasons for a change in reaction function should be the main focus. Jonathan Haskel, of the BoE, is on today’s list of speakers. Bond markets have to absorb supply from Spain (7Y/8Y/10Y/30Y) and France (10Y/30Y/44Y). Today’s US job data menu includes jobless claims and Challenger Job Cuts but this will merely be an appetiser to tomorrow’s employment report. Charles Evans, Lisa Cook, Neel Kashkari, Christopher Waller, and Loretta Mester are all lined up to give their spin on the latest economic, and perhaps financial, developments. Read this article on THINK TagsRates Daily Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more
The Data May Keep The British Pound (GBP) From Rising

Kenny Fisher (Oanda) Comments On GBP/USD And Its Realties

Kenny Fisher Kenny Fisher 06.10.2022 23:11
GBP/USD is down sharply today. In the North American session, GBP/USD is trading at 1.1150 down a massive 1.58%. The pound continues to exhibit sharp volatility, with swings of over 1% every day this week. Fitch downgrades UK debt outlook The fallout surrounding Chancellor Kwarteng’s ill-fated mini-budget just won’t go away. After immense pressure, Kwarteng abolished the tax breaks for the top 1% earners in a humiliating U-turn that has badly damaged the credibility of the new government. The fiasco sent the pound to a record low and forced the Bank of England to step in after the bond market was close to crashing. On Wednesday, the Fitch ratings agency lowered its outlook for UK debt from “stable” to “negative”, following a similar move by Standard & Poor’s after the mini-budget. Fitch did maintain the UK’s credit rating of AA-, but the lower outlook will not help Prime Minister Truss’ beleaguered government. The pound was pummelled in September, losing 3.9%. The outlook for the pound does not look good, with soaring inflation and the new government’s serious missteps after only a few weeks in office. Manufacturing PMI remained below 50, which indicates contraction. Today’s Construction PMI rose to 52.3, up from 49.2, but much of the improvement was due to an easing in supply shortages, and new orders fell to their lowest level since May 2020. In the US, the spotlight will be on Friday’s nonfarm payroll report. The reading is an important bellwether of the health of the US economy and can provide insights into the Federal Reserve’s future rate policy. On Wednesday, the ADP employment report showed a slight improvement at 208,000, up from 185,000 (200,000 est.) The ADP release is not a reliable forecaster of the official NFP release, but ADP is now using a new methodology, which hopefully will improve its reliability. Non-farm payrolls are expected to decline to 250,000 in September, down from 315,000 in August. A reading that is well off the estimate could trigger volatility from the US dollar – a strong reading will raise expectations that the Fed will stay very aggressive, while a soft release could mean the Fed has to pivot earlier than it expected. GBP/USD Technical GBP/USD is testing support at 1.1206. The next support line is at 1.1085 There is resistance at 1.1350 and 1.1486 This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds. GBP/USD slides after Fitch's downgrade - MarketPulseMarketPulse
ECB press conference brings more fog than clarity

The Eurozone Focuses On Industrial Performance| The Main US Data Report To Watch Will Be CPI

ING Economics ING Economics 08.10.2022 13:27
Despite the headline rate of inflation being depressed in the US, core inflation continues to rise. We look for a 0.4% month-on-month increase in prices, nudging core inflation up to 6.5%. In the UK, next week's new jobs figure will be in focus, where we suspect the unemployment rate will notch a little higher In this article US: core inflation set to rise rapidly in the short term UK: jobs data in focus as BoE mulls huge November hike Eurozone: expect the energy crisis to worsen the trade deficit Source:Shutterstock US: core inflation set to rise rapidly in the short term The main US data report to watch next week will be consumer price inflation. The headline rate will be depressed by the lagged effects of the fall in gasoline prices, which is also likely to translate into lower airline fares to some extent. However, the core (ex food and energy) component is set to continue rising at a rapid pace. We look for a 0.4% MoM increase in prices, which would nudge the annual rate of core inflation up to 6.5% from 6.3% - remember it was down at “just” 5.9% in June and July. This unfavourable shift is primarily due to housing costs and recreation prices and should cement expectations for a fourth consecutive 75bp interest rate increase from the Federal Reserve on 2 November. However, the medium-term outlook for inflation is looking more encouraging. Inflation expectations continue to fall back – we will get an update from the NY Federal Reserve Bank’s survey and the University of Michigan consumer sentiment report next week, which publish both short and longer-term consumer expectations of inflation – while corporate price plans appear to be rapidly declining. In this regard, we will be closely watching the NFIB small business optimism report. Within it, there is a series for the proportion of businesses that are looking to raise their prices in the coming period. Last month it plunged and as the chart below shows, it has historically had a great relationship with predictive power for core inflation. If it falls further this would give us more confidence that the Fed will hike rates more modestly in December given this softening inflation backdrop in an environment of weakening economic activity. Also watch for retail sales. Auto sales rebounded and should provide a lift while gasoline will be less of a drag given a recent stabilisation in prices. We will also get the minutes of the Federal Reserve’s September FOMC meeting when they hiked rates 75bp. Corporate price plans rapidly declining   Source:  Macrobond, ING UK: jobs data in focus as BoE mulls huge November hike The UK unemployment rate fell last month. This was driven not by a corresponding increase in employment but by another surge in the number of people classed as inactive – that’s neither in work nor actively seeking it. This is overwhelmingly because of an increase in long-term sickness, and it’s hard to escape the conclusion that this is linked to pressure in the health service. This is likely to be the dominant trend in next week’s new jobs figures, even if we suspect the unemployment rate will notch a little higher again. For the time being, the Bank of England will view all of this through the lens of worker shortages. The Bank’s latest survey of firms has shown another increase in wage growth expectations and no material improvement in the number of companies finding it hard to get staff. We’re expecting a 100bp rate hike in November, though this will partly depend on how sterling trades between now and then. If the situation calms, we wouldn’t rule out a 75bp move, not least because the committee is heavily divided. Eurozone: expect the energy crisis to worsen the trade deficit The eurozone focuses on industrial performance next week with industrial production and trade in goods data due to be released. The trade data continues to be dominated by the energy crisis. A trade surplus of around €20bn per month turned into a deficit of around €40bn in July as energy prices soared. With August seeing new highs reached for natural gas prices, expect the trade deficit to have increased. In terms of production, shutdowns due to high energy costs are likely to have had a significant effect already. Key events in developed markets next week Source: Refinitiv, ING Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more  
The UK Economy Looks Worse Than The Rest Of The G7 Countries

UK: Spending Cuts Are likely, But Also Challenging

ING Economics ING Economics 09.10.2022 09:55
The UK government has U-turned on part of its controversial tax plan but markets are looking for further measures to reduce borrowing requirements over the next couple of years. The prospect of further Bank of England tightening means higher mortgage rates, which coupled with expensive (though capped) energy bills likely means recession In this article The UK's fiscal event has prompted a wave of volatility in markets Markets want further reassurances on tax cuts and the BoE's QT plans Higher mortgage and energy costs point to a mild recession Source: Shutterstock The UK's fiscal event has prompted a wave of volatility in markets The British government’s not-so-mini Budget a couple of weeks ago sparked chaos in UK financial markets. Investors are worried both about the amount of extra borrowing markets will need to absorb as a result of the government’s energy price guarantee and unfunded tax cuts, and the inflationary impact and resulting Bank of England reaction. Any resolution to the current crisis needs to be seen through that lens. The government has since rowed back on a plan to cut the top rate of income tax, and will also bring forward the publication of its ‘medium-term fiscal plan’. The latter likely involves spending cuts to offset the tax rises, and it’ll also be coupled with a forecast from the Office for Budget Responsibility. Investors are reading this both as a sign that the government is prepared to compromise in the face of market (and political) pressure, and that it is seeking to restore the role of the UK’s independent OBR in the process. The lack of an independent forecast with the mini-Budget had added to investor concerns. The cost of fixing household energy bills has tumbled - but that could change if gas prices surge once more Source: Ofgem Methodology, Refinitiv, ING calculations Without the government's guarantee, the unit prices for energy bills are set by the regulator Ofgem. We have estimated what these unit prices would have been based on wholesale gas and electricity futures now, and as of 26 August when gas prices peaked. The cost to the government is calculated as the difference between these unit prices, and the government's price guarantee (£2500) over a period of two years Markets want further reassurances on tax cuts and the BoE's QT plans These are first steps, however, and neither U-turn addresses the central issue for investors described earlier. Scrapping the 45% tax bracket made up only £2bn out of the total £45bn tax cuts package. Spending cuts are likely, but these may prove both politically and practically challenging. Many government departments are already set to face real-terms cuts in budgets while reducing public-sector investment goals looks inconsistent with ambitions to improve the supply side of the economy. Fortunately, gas futures prices have fallen sharply since August, and the aggregate cost of fixing household energy bills has more than halved. The 'energy price guarantee' will fix the average household energy bill at £2500, which is roughly where it has been since April once additional discounts are added in. Still, the government may find it needs to look again at a broader windfall tax covering certain types of energy producers – something that is politically popular, would likely raise tens of billions, and would provide a natural hedge should energy prices surge once again (raising the government's bill for capping consumer/business costs). Our base case for the economy is still recession For now, some limited order has been restored to both the pound and the government bond (gilt) market – though the latter heavily relies on the Bank of England’s verdict on whether to plough ahead with active bond sales later this month, as part of its quantitative tightening process. Together with a decision earlier this year to stop reinvesting the proceeds of maturing bonds in its portfolio, selling gilts would add roughly £80bn of extra supply for the market to absorb over 12 months. In such a volatile environment that’s a hard sell – and we suspect the BoE will put its plans to sell gilts on ice for a little while longer. Higher mortgage and energy costs point to a mild recession Our base case for the economy is still recession – albeit perhaps a mild one by historical comparison. Despite the mounting fiscal concerns, we shouldn’t underestimate the difference the government’s energy price cap will make to the outlook. It will save £1500 on average over the next 12 months. Still, households will still be paying more than twice as much for energy as they were two years ago, and it’s a similar story for mortgages. The average monthly payment on a two-year fix looks set to top £1600, up from around £900 in 2020, looking at the current rates available. Households inevitably need to cut back on non-essential spending, and that likely means negative GDP growth rates through the winter. TagsUK Housing Bank of England Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more
GBP/USD Options Market Anticipates 70 Pip Range on BoE Day

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

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

The Bank Of England Has Made Another Pre-market Attempt To Calm Investors

ING Economics ING Economics 11.10.2022 11:32
More turmoil in the UK bond market has seen the Bank of England step in with another emergency measure, this time to support battered inflation-linked bonds. Today's 30Y linker auction and speech by Governor Andrew Bailey will be key to watch, but GBP/USD looks too strong at 1.10 considering the fragility of the bond market. USD to stay bid across the board In this article USD: Dismissing slightly less hawkish tone by Brainard EUR: Assessing implications of EU joint debt issuance GBP: Heading lower on more UK bond carnage AUD: The China proxy trade We have published the October edition of FX Talking: No margin for error USD: Dismissing slightly less hawkish tone by Brainard Despite reduced volatility due to the US markets’ closure yesterday, the generalised risk-off environment saw the dollar start the week on the front foot. The worst performers since the weekend are the Antipodeans and the Swedish krona, which is a testament to how the two poles of the market's economic and geopolitical concerns – China and Europe – are affecting proxy trades in G10. US fresh trade restrictions on Chinese chip exporters and an escalation in missile strikes in Ukraine following the Crimean bridge blast look set to keep such proxy trades unattractive for now. In the US, we heard some slightly less hawkish comments by Fed officials yesterday. Admittedly, they did come from two of the most “dovish” members of the FOMC – Lael Brainard and Charles Evans – who both seemed to suggest a higher caution over excessive tightening, while still reiterating the commitment to fight inflation. There is still little doubt among market participants that the overall consensus within the FOMC is firmly hawkish, and that a 75bp hike in November should not be particularly challenged by doves. The US calendar includes the NFIB Small Business Optimism survey and a speech by the Fed’s Loretta Mester (expect more hawkish remarks here). We continue to see the general market narrative as predominantly dollar-positive for now, and expect the 114.76 DXY late-September highs to be tested in the coming days. Francesco Pesole EUR: Assessing implications of EU joint debt issuance The euro received negligible help yesterday from the (unconfirmed) news that German Chancellor Olaf Scholz has ultimately given support to a joint issuance of EU debt to fund measures against the energy crisis, with the condition that funds are distributed as loans and not grants. The market impact should be quite straightforward: positive for peripheral spreads (Italian bonds rallied yesterday), negative for EZ core rates, and potentially fuelling speculation of more ECB tightening if the Bank views these measures as inflationary. For the euro, the net impact may well be neutral in the near term, potentially positive in the longer run. Today, the eurozone’s calendar is quite light, but some interest will be on speeches by ECB’s Chief Economist Philip Lane and Governing Council Member Francois Villeroy. We still see EUR/USD declining into the 0.9540 September lows over the coming days, and target 0.9200 as a year-end level. Francesco Pesole GBP: Heading lower on more UK bond carnage The UK debt market faced a fresh round of turmoil yesterday, with 10-year inflation-linked yields rising by 64bp, signalling how the British bond market remains highly dysfunctional. Those securities were likely at the epicentre of the sell-off as large parts of the holders were pension funds who are running liability-driven investment strategies following the post-Mini Budget market meltdown. This morning, the Bank of England delivered another pre-market attempt to calm investors, by announcing it will widen the scope of daily gilt purchase operations, including inflation-linked bonds. This follows yesterday’s increase of the upper limit of daily purchases of long-term bonds from £5bn to £10bn as well as the deployment of a temporary repo facility. All eyes today will be on how the gilt market will receive the new emergency measures by the BoE, with a specific focus on the results of a 30-year linker auction. The other major event to keep an eye on are the speeches by Jon Cunliffe and above all from BoE Governor Andrew Bailey at the IIF annual meeting in Washington. On the data side, UK jobs data came in quite solid this morning, with average weekly earnings touching 6.0% YoY, ultimately offering no reasons for the BoE to turn less hawkish. We continue to see downside risks for the pound, as levels around 1.10 do not mirror the fragility of the UK bond market. Cable is pressing the 1.1000 support as we speak: we expect a decisive break below this level today or in the coming days, and currently target the 1.00-1.05 area for the pair into year-end. Francesco Pesole AUD: The China proxy trade The Aussie dollar has slumped by around 1.8% since the start of the week, underperforming compared to all its G10 peers. As highlighted in the USD section above, AUD is a quintessential proxy trade for China’s economic outlook, and has historically been highly sensitive to any US-China trade relationship developments. Despite domestic monetary policy not being a primary driver for AUD in the past months, the Reserve Bank of Australia's lower-than-expected rate hike last week – especially when compared to the Reserve Bank of New Zealand's larger move – may be exacerbating the bearish sentiment on the currency. We’ll see whether there is any tilt in the message in tonight’s speech by Assistant Governor Luci Ellis, but the downside risks for AUD/USD remain quite elevated anyway. We currently forecast 0.6100 as a year-end value, but chances of a break below the key 0.6000 level have risen substantially. Francesco Pesole TagsFX Dollar Bank of England Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more
Beyonce Bounce and Soaring UK Inflation: A Challenge for Bank of England

Bank Of England (BoE) And Its Gilts, European Central Bank's Balance Sheet

ING Economics ING Economics 11.10.2022 21:27
The approaching end to the Bank of England’s purchases has sent gilts into a tailspin, a repo facility would help deal with margin financing but won’t solve the underlying problem. Joint EU debt issuance could compound fears of a more hawkish European Central Bank The Bank of England The end of BoE gilt buying looms large The Bank of England (BoE) tried – and failed – to reassure markets about the end of its gilt-buying program on 14 October. Despite a greater buying capacity of £10bn at each of the remaining operations, offers were limited and the BoE only managed to buy less than £1bn on Monday. The underlying concern is that even as its intervention draws to a close, not enough deleveraging has been achieved by pension funds, and that another wave of forced selling will emerge into next week. Volatility could well force the BoE back to the gilt market, maybe as early as today As the BoE itself has said, the aim of the buying facility was to buy pension funds time to shore up their liquidity position. Concerns remain about whether the last week-and-a-half was enough to achieve this in distressed market conditions. Eventually, the gilt sell-off could force the BoE back into the market. As we wrote at the time, we think a longer period of support for gilts will be necessary to restore market confidence. 30Y gilts traded at 4.7% yesterday, just 30bp below their pre-intervention peak, and their weakness dragged the pound lower. Volatility could well force the BoE back to the gilt market, maybe as early as today. And indeed, the Bank just announced that it will extend its purchases to inflation-linked gilts, adding one buying operation of up to £5bn each day this week to the already scheduled conventional gilt purchases. Helpfully, the announcement came alongside the launch of a repo facility accepting a broader range of assets as collateral. The idea is that instead of being forced sellers of, say, corporate bonds due to growing margin requirements, pension funds could instead pledge them as collateral to obtain financing. The facility will be in place for one month. In our view, this should be viewed as a complement to support the gilt market, not as a replacement, as a gilt sell-off (30Y yields have risen 110bp since their post-intervention through, for 30Y inflation-linked gilts, that figure is over 150bp) could still generate margin calls that exceed the fund’s funding capacity. In a further sign of its concern for market stability, the BoE also temporarily suspended its corporate bonds' quantitative tightening (QT) sales for two days. Long-end gilts are back in the danger zone Source: Refinitiv, ING The multi-headed fiscal hydra is back Of course, the difficulties facing the UK are not unique. The Fed’s tightening cycle and the rising dollar are thorns in the side of many central banks already grappling with inflation, including the ECB. In that context, Bloomberg reporting that Germany is dropping its opposition to joint EU borrowing to finance the energy support package is unlikely to be greeted kindly by bond investors. If confirmed, it would mean more issuance in already nervous markets (have a look at today’s supply slate in the last section), but investors would also worry about the inflationary impact and the ECB’s reaction. Markets can find solace from the contradictory sources cited by Reuters late yesterday. The concern however is that the reports come after Germany unveiled an up to €200bn package, drawing criticism from other countries with insufficient bond market liquidity to finance a commensurate package. Joint issuance would be bad news for core bonds which would nervously await the ECB’s reaction. For sovereign spreads, however, this is good news, as EU loans would lower pressure on peripheral bond markets. The prospect of ECB balance sheet reduction also casts a long shadow on bond markets. Klass Knot suggested that QT could begin at the earliest in early 2023. We still doubt QT could start in such a short timeframe but, if it does, we could see phased-out asset purchase programme (APP) redemptions in 2023, followed by pandemic emergency purchase programme (PEPP) redemptions in 2025. The strongest impact should be felt in peripheral debt markets, while it could also compound the tightening of money market spreads (eg rising Euribor vs Estr or Estr vs ECB deposit rate) due to targeted longer-term refinancing operations (TLTROs) repayments. The reduction in ECB purchases has already sent bond yields up Source: ECB, ING Today's events and market view Italian industrial production is the main item on today’s economic calendar but it is fair to say that the attention will be on the heavy bond supply slate after yesterday's gilt-led, long-end sell-off. The EU and Germany have both mandated banks for the sales of 7Y/20Y and 30Y bonds, respectively, via syndication. This will come on top of 2Y and 7Y auctions already scheduled by Germany and the Netherlands. The aftermath of the sales could see relief in the sector provided the gilt sell-off doesn’t accelerate. In that respect, the results of the sale of £0.9bn of 30Y inflation-linked gilts, the epicentre of yesterday's market rout, and the focus of newly announced purchases operations, will be key. In the afternoon, the main flashpoint will be US small business optimism. Our economics team flagged the pricing intention component as an important indicator to watch for declining inflation. The US Treasury kicks off this week's supply slate with a 3Y T-note auction for $40bn. Central bank speakers will also be plentiful. From the ECB, Philip Lane and François Villeroy are on the schedule. We’ll look closely for comments on QT or on the risk of more fiscal spending (see above). Andrew Bailey, of the BoE, will also be closely watched as the Bank’s response to the jitter in the gilt market is coming under greater scrutiny. Read this article on THINK TagsRates Daily Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more
Assessing 'Significant Upside Risks to Inflation': Insights from FOMC Minutes

The Actions Of The US Central Bank (Fed) Continue To Guide The Market

InstaForex Analysis InstaForex Analysis 12.10.2022 08:26
The attention of markets is now riveted not to the ECB or the Bank of England, but to the Fed. This is because even though the UK was the first to start raising interest rates, much more importance is paid to the Fed than other banks. That is why it is not surprising that the actions of the US central bank continue to guide the market, especially since at this time there is not a single hint that Fed rates will stop increasing in the foreseeable future. Of course, rates will decrease sooner or later, but it is unlikely to happen before the figure hits 4.5%. Almost all FOMC representatives agree that monetary policy needs to be tightened further in order to curb inflation. Yesterday, Fed Vice President Lael Brainard delivered a speech, confirming the fact that the bank will continue to do everything to stabilize prices. In particular, Brainard said that inflation is a serious problem and requires a clear, balanced approach. Supply remains fairly low and demand high, creating imbalances that are still pushing inflation higher. The labor market is likely to remain in a weaker state than before the pandemic. The economy may face a new shock associated with rising food and fuel prices due to the military conflict in Ukraine. Brainard also noted that the risks of a new rise in inflation remain due to OPEC's actions to reduce oil production, which could cause a new rise in prices in the energy market. The Fed is yet to consider easing the pace of rate hike as it intends to closely monitor economic data in order to clearly understand how the rate increase affects the economy and inflation. Selling securities off the Fed's balance sheet is a good way to raise rates in the end goal. These are the main statements of Lael Brainard, from which only one thing can be understood: the Fed will raise interest rates for at least a few more months, which could lead to a new increase in demand in dollar. Together with the difficult geopolitical situation in the world, which in itself increases the demand for dollar, these factors may be enough for euro and pound to fall further. And even though the ECB and the Bank of England will raise rates at the same time, the market will react to it very reservedly. Little will also depend on the US inflation report this Thursday as the value of the indicator is still too high for the Fed to even slow down the pace of monetary policy tightening. Based on this analysis, it is likely that the downward trend in EUR/USD will continue, but could end at any time. There may be an upward corrective wave, so it is best to sell up to the 423.6% retracement level of 0.9397. There is also need for caution as it is not clear how much longer the decline in euro will continue.   Relevance up to 06:00 2022-10-13 UTC+2 Company does not offer investment advice and the analysis performed does not guarantee results. The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade. Read more: https://www.instaforex.eu/forex_analysis/324047
Analysis And Trips For Trading The GBP/USD Pair In Short And Long Positions

There Are Hardly Any Positives In The British Assets Market

Saxo Bank Saxo Bank 12.10.2022 08:41
Summary:  Bank of England’s warning to end intervention sent an offered tone to bonds and equities towards the overnight session close, and added to the tightening risks that are being seen globally. Fed’s Mester reiterated hawkish comments as well, sending yields and dollar higher at the Asia open. USDJPY blew past 146, raising intervention threat again although yen crosses remain lower. Crude oil prices also plunged amid dollar strength and China lockdown concerns. Sterling and other UK assets look poised for a tough day ahead, and FOMC minutes are also due, which might mean ripples across global markets. What’s happening in markets? The Nasdaq 100 (USNAS100.I) and S&P 500 (US500.I) indices declined for the 5th day US stocks erased earlier gains as bond yield rose and incoming Q3 earnings and the CPI on Thursday added to the risk-off sentiment. The S&P500 skidded for the 5th day on further tech selling, ending 0.65% down, while the Nasdaq 100 index fell 1.2%. As for the biggest laggards in the S&P 500 sectors, for the second day in row, both the Casino and Gaming and Semiconductor sectors were among the biggest losers down ~4.7% and ~4.3% respectively, gaining downside momentum. Meanwhile, investors continued to top up defensive sectors, buying into the Food Retail and Drugs sectors for the second day in a typical risk-off fashion. Noteworthy US company news and moves General Motors (GM) plans to compete with Tesla’s (TSLA) solar Powerwall business by offering its own sun-generated storage system starting late next year. Tesla shares fell 2.9%, while GM closed almost unchanged. Also making headlines, Uber (UBER) and Lyft (LYFT) plunged 10% and 12% respectively after the US Department of Labor proposed to tweak the way it determines if workers are classified as employees or contractors. Amgen (AMGN:xnas) rose 5.7% after an analyst upgrade citing the potential of its experimental weight-loss drug. Chip maker, KLA (KLAC: xnas) plunged 6.2% after saying the company will stop sales to China-based customers form Wednesday, including South Korea’s SK Hynix’s operations in China. U.S. treasury yields (TLT:xnas, IEF:xnas, SHY:xnas) finished a choppy session with long-end yields higher After reaching 4% during Asian hours, the 10-year yields retraced to as low as 3.87% at around mid-day New York before bouncing back to finish the day 7bps higher at 3.95%.  The move higher in yields in the afternoon was first triggered by the Bank of England Governor Baily pushing back on calls to extend the emergency bond-buying programme and repeated the BoE’s prior day announcement to stick to the Oct 14 end day of the programme.  He told the audience at the Institute of International Finance annual meeting in Washington that he had warned U.K. pension funds that only three were left to wind up positions. In addition, poor 3-year U.S. treasury note auction results in the afternoon caused some traders to adjust their positions ahead of the 10-year and 30-year auctions on Wednesday and Thursday. 2-year yields finished the day unchanged at 4.31% and the 2-10 year curve bear steepened to -36. Hong Kong’s Hang Seng (HSIU2) retreated as China’s CSI300 (03188:xhkg) stabilized Stocks traded in Shanghai and Shenzhen bourses stabilized and traded little changed from yesterday’s closes, with power generation and lithium producers gaining. CATL rose 6% and led the share prices of the lithium space higher after the company preannounced Q3 net income surging 169-200% Y/Y to RMB8.8-9.8 billion. Eve Energy (300014:xsec) gained 6.2% and Guangzhou Tinci Materials (002709:xsec) soared 10% limit up. China National Nuclear Power (601985:xssc) surged 7.3% after the company reported a 7.2% Y/Y electricity output growth in the first 9 months of the year. On the other hand, Hong Kong’s Hang Seng Index continued to slide, falling 2.2% with financials, China Internet names, EV makers, and China property developers dragging down the benchmark.  The tightening of pandemic control in large cities including Shanghai and the editorials on the mouthpiece People’s Daily reiterating the country’s adherence to the Dynamic-Covid-Zero policy two days in a row dashed the notion of reopening held by some analysts and investors. Airline stocks dropped from 1.4% to 9.1%. Macao casino stocks plunged from 3% to over 5%. Reportedly short selling increased in China Internet names, with Alibaba (09988:xhkg), Tencent (00700:xhkg), JD.COM (09618:xhkg), Meituan (03690:xhkg), Bilibili (09626:xhkg) declining from 3% to more than 9%. Chinese developers, Country Garden (02007:xhkg ) and Longfor (00960:xhkg) were the two largest losers in the Hang Seng Index. Australia’s ASX200 (ASXSP200.1) is tipped to fall 0.3% (futures). Focus on Bank of Queensland results, fertilizer companies and oil So far this week, the ASX200 has fallen 1.7% outperforming global markets, with the most selling in the Tech Sector, while the most gains have been in Consumer Staples, Materials and Industrials, with fertilizer and agricultural stocks rising the most on supply concerns. The Bank of Queensland (BOQ) reported a 5% drop its cash profit for the full year, while the closely watched metric of banking profits, its net interest margin reduced to 1.74% with the bank blaming increased competition on its margin falling. Loan growth in housing rose 7%. The group also declared an impairment of $13 million. That being said, the BOQ and other regional banks are seeing more loan growth when compared to the big four banks year on year. Elsewhere, it’s worth watching oil stocks today after the oil price fell back to $88 after the USD roared up again. Also keep an eye on gold stocks that are likely to come under further selling. While iron ore companies could be worth a look after a strike in Africa hit the countries top iron ore port. Yen past the previous intervention level, GBPUSD dropped below 1.10 USDJPY was seen rising above 146 in early Asian trading hours after the US yields surged higher overnight after BOE’s Governor Bailey warned on end to intervention (read below). The gilt market was closed by the time his comments came, but the US treasuries reacted to it and so the response from the yen could be expected. The Japanese yen has been trapped below this intervention threat level for weeks, but the pressure to the upside will continue to soar amid fresh surge in dollar and yields as dollar’s safe haven bid continues to play. Other yen crosses, however, remain below at sub-142 levels vs. 144 at the time of September intervention and AUDJPY below 92 vs. 97-levels previously. Response on Bailey’s comments was also seen in the sterling which dropped below 1.10 for the first time in October. Crude oil (CLX2 & LCOZ2) down about 3% Oil prices slumped on Tuesday amid further gains in the US dollar towards the NY session close and reports on China’s fresh lockdowns ahead of its key Communist Party meeting that begins later this week. WTI futures slid below $90/barrel, while Brent was below $94 after touching $98+ levels on Monday. Geopolitical tensions however appear to be escalating, with Putin warning further missile attacks on Ukraine. Meanwhile, US-Saudi tensions also remain key to monitor after the OPEC+ production cut announced last week.   What to consider? Bank of England’s Bailey warns intervention to end on Friday Bank of England Governor Bailey gave a “three day” deadline to investors to wind up their positions that they can’t maintain because the central bank will halt its intervention at the end of this week as planned. There had been some expectations that the BoE might extend the purchases to quell financial instability in the UK, but Bailey did not give way on those. This also comes as a hint that QT may begin later this month as planned. There is hardly any silver lining visible for UK assets at this point. Fed’s Mester stays hawkish, FOMC minutes ahead Cleveland President Loretta Mester (2022 voter) reiterated the hawkish rhetoric saying that the Fed has yet to make any progress on lowering inflation and policy needs to be moved to restrictive levels and the biggest policy risk is that the Fed does not hike enough. She does not expect Fed rate cuts in 2023. As we have been saying, she also remarked that “at this point the larger risks come from tightening too little.” FOMC meeting minutes from the September 21 meeting will be released today and will likely continue to send out hawkish signals. China’s outstanding RMB loans grew at 11.2% Y/Y in September, above expectations China released its September credit data last evening. New aggregate financing in September came in at RMB3,530 billion, much stronger than the RMB2,750 billion expected (Bloomberg Survey) and RMB2,430 billion in August as well as the RMB2,903 billion in September 2021. It brought the growth rate of the aggregate financing to 10.6% Y/Y, higher than the 10.5% in August.  New RMB loans rose to RMB2,470 billion, above RMB1,800 billion expected and RMB1,250 billion in August.  An acceleration in loans to the corporate sector, which rose to RMB1,910 billion in September from RMB875 billion, drove the overall loan growth.  Outstanding RMB loans in September grew 11.2% from a year ago. The instructions as well as window guidance from the regulators to urge banks to lend to infrastructure projects, manufacturing industries, and the property sector contributed to the better-than-expected growth in corporate loans. IMF’s warning on global growth After recession threats from Jamie Dimon and Paul Tudor Jones, now the IMF has said there is a growing risk that the global economy will slide into recession next year as households and businesses in most countries face “stormy waters” and the “worst is yet to come”. The institute has said that global growth will slow from 6.0% in 2021 to 2.7% in 2023, being the weakest growth since 2001. The IMF also warned of an increased risk of rapid, disorderly repricing in financial markets, which is exacerbated by existing vulnerabilities and a lack of liquidity. China signaling it will stick with the Dynamic Covid Zero policy after the CCP’s national congress People’s Daily published for the third day in a row this week to reiterate the Chinese authorities’ determination to adhere to the “Dynamic Covid Zero” policy and pledge not to “lie down” passively. It warns that any relaxation of pandemic control would result in a large number of inflection and death and a collapse in the healthcare system so the insistence on Dynamic Covid Zero is the best way to protect people’s lives and health which are of utmost importance. The series of articles is apparently to dash the speculation of relaxation of pandemic control after the Chinese Communist Party’s national congress next week. In the meantime, as Covid cases bounced above 2,000 after the National Day golden week holiday during which many people travelled around the country. Large cities, including Shanghai and Shenzhen tightened pandemic control measures somewhat. Fertilizer supply at risk amid fresh Russian tensions and Hurricane Ian aftermath Amid fresh tension from Russian upon Ukraine, fertilizer producers have once again been put in the spotlight on supply concerns. Equities in APAC involved in phosphate/fertilizers rallied yesterday as a result. So perhaps it’s worth watching stocks in the sector again today, such as Nufarm (NUF), and Orica (ORI) which are this weeks best performers on the ASX. The phosphate fertilizer mining industry’s supply has already been put at risk after Hurricane Ian hit Florida, impacting more than 1 billion ‘stacks’ of supply. And recall that Russia is the world’s largest supplier of nitrogen-based fertilizers, but its supply has slimmed from embargoes after launching attacks against Ukraine. Perhaps the market is thinking more development are to come, so it's worth watching to see how this space develops.    For a week-ahead look at markets – tune into our Saxo Spotlight. For a global look at markets – tune into our Podcast.     Source: https://www.home.saxo/content/articles/equities/market-insights-today-12-oct-12102022
Forex: British pound against US dollar - technical analysis - January 2nd

UK: Can We Anticipate More Bank's Of England Interventions?

ING Economics ING Economics 12.10.2022 10:43
US data and policy should remind markets of the difficulty in timing the Fed’s pivot. Conditions for market volatility should remain in place until year-end. The Bank of England is keeping gilt investors on their toes – expect more volatility, and more interventions Navigating on sight Rates markets can look forward to a couple of days driven not by Bank of England (BoE) intervention on the gilt market, but by old-fashioned macroeconomic drivers. This is the hope at least. Today’s US PPI and Federal Open Market Committee minutes will be reminders that the hawkish Fed juggernaut and strong dollar wrecking ball are the key forces behind the current market volatility. This will be followed by US CPI tomorrow. The hawkish Fed juggernaut and strong dollar wrecking ball are the key forces behind the current market volatility Markets are on high alert for a Fed pivot, and have been disappointed so far. Some Fed speakers of late have highlighted that the Fed will soon be in an area where there are two-way risks to tightening policy. If similar comments were made in the minutes, they are likely to get much airplay. In plain English, some Fed officials are worrying about over-tightening but recent data, such as job creations and tomorrow’s CPI, should support another 75bp hike according to our US economist. 10Y Treasury yields could well climb above 4% this year before the pivot comes into view. Markets are navigating on sight and volatility is reducing their ability to position for longer-term moves such as the end of this cycle and the subsequent cuts that some, including us, are expecting. The danger of course is that the 75bp November hike is followed by another in December (we expect 50bp), and then another in February (we expect none), should data fail to turn as quickly as we think. Rising real yields and falling inflation swaps suggest the Fed will reach its target Source: Refinitiv, ING The BoE sticks to piecemeal intervention The BoE’s game of financial whack-a-mole pushed it to announce purchases of gilt linkers yesterday morning. The first operation was more successful than its earlier conventional gilt counterparts, managing to hoover up almost £2bn. Gilt markets remain understandably nervous about the end of the purchases scheduled for this Friday. The 30Y is still the worst performing sector on the curve, but at least some measures of bid-offer spreads have tightened from the extreme levels reached in late September. The underlying concern for gilt investors remains of course the lack of BoE commitment to support the market in times of stress. Interventions have so far been piecemeal, targeted, and limited in scope and time. Markets are, rightly in our view, inferring that there is strong reluctance at the monetary arm of the BoE to engage in any operations that could expose it to accusations of monetary financing, or more simply to contradict its monetary tightening stance. Our base case is for a continued gilt sell-off followed by more BoE intervention All these concerns are understandable but the end result is markets questioning the efficacy of BoE market intervention. History has shown that central bank interventions need to have as little restriction in time or amount in order to be effective. The alternative, market jitters close to each intervention cliff edge (the next one is this Friday), could serve a purpose however. Effectively, by not extending its support in time, the BoE is piling pressure on pension funds to use the facility before it expires. We’re far from a level of purchases that would reassure markets, however, for now our base case is for a continued gilt sell-off followed by more BoE intervention. Tha approach of dealing with cliff edges and market stress when they arise was highlighted by Andrew Bailey yesterday evening. The governor repeated the BoE's ultimatum to pension funds, that they had only three more days to reduce their interest rates exposure before gilt support ends. The stance seemed later contradicted by an article in the Financial Times saying the Bank is ready to extend purchases.  Gilt bid-offer spreads remain elevated but there is some improvement at the long end Source: Refinitiv, ING Today's events and market view European industrial production features prominently on today’s European economic calendar. Germany (10Y) and Portugal (3Y/10Y) will be today’s supply slate. In the afternoon, US PPI will set the stage to tomorrow’s CPI. The September FOMC minutes will be closely scrutinised for hints of a pivot. More specifically, any worries about financial stability would resonate with markets in light of the recent volatility. There is an impressive roster of central banks today to crown this already busy events calendar. Andrew Bailey and Christine Lagarde of the BoE and ECB respectively will be the headliners. It is hard to imagine the BoE governor acknowledging that he expects more gilts purchases, with the focus of his comments more likely to be the fight against inflation. In that light, this should not prove a very positive session for gilts unless the BoE steps up its purchases again (see above). Read this article on THINK TagsRates Daily Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more
There Are No Obvious Reversal Of GBP/USD Pair Signs Yet

Bank Of England Helped GBP/USD, But Purchasing Period Ends On Friday

Alex Kuptsikevich Alex Kuptsikevich 12.10.2022 11:27
The Bank of England's frenzy of emergency bond market support is rocking the currency market boat, leaving GBPUSD as one of the protagonists on FX. The Bank of England extended emergency support to the debt market yesterday to include inflation-linked bonds in its buying list, triggering GBPUSD to rise from 1.10 to 1.1180 intraday. But in the evening, Governor Bailey reminded that the emergency measure remains temporary and these extended purchases will end on October 14 as planned. These statements triggered mini-chaos in the debt market and took more than 2.3% off the pound from its peak to bottom on Wednesday morning at 1.0923. This bipolar policy is perplexing, although it makes a certain sense. The Bank of England insists on leaving emergency market support temporary, while the market wants an extension of the support programmes, although it makes little use of it. The Bank of England issued bids for £40bn over the two weeks of the program but bought £5bn. Distressed pension funds are in no hurry to sell bonds, simply hoping that the very presence of a "buyer of last resort" will drive up prices — a habit developed in the markets over the past decades. Remarkably, the FX market is greeted by news of an extension of the QE programme or a "flexible approach" to bond purchases with GBP buying. Conventional logic suggests that buying assets on the balance sheet is a net issue for the pound, increasing its supply, which is harmful to the exchange rate. But now bond purchases are lowering the heat on the UK debt market, bringing buyers back into the pound. Locally GBPUSD is gaining support on declines in the 1.0900 area, reassuring that the exchange rate has already passed its low point in September. It is worth being prepared for the Bank of England to accelerate short-term interest rate hikes to support the attractiveness of the short-term debt market. But in the meantime, periodic interventions at the far end of the curve are not ruled out. Overall, this is a positive strategy for the pound, although frequent shifts between support and constraint regimes create volatility in the pound and increase risk premiums in the markets.
The EUR/USD Price May Fall Under 1.0660

"The ECB is also seeing the risk of fiscal policies pushing it towards more aggressive tightening"

ING Economics ING Economics 13.10.2022 11:06
It's been helpful to see core US inflation easing off the highs through the summer. However, the past month or so has seen a re-elevation. And today, the market expects US core inflation to get back up to the 6.5% peak that was seen in March. Market rates remain well below this, as is the Fed funds rate. Based off this alone, rising rates pressure is the upshot Rises in core US inflation can only pressure market rates higher When the Federal Reserve delivered its first 25bp hike in March, core consumer price inflation (CPI) was running at 6.5%. That in fact proved to be a peak, as it wandered to below below 6% in subsequent months. But, it rose last month, and the market is expecting it to have risen again for September (today's report), back up to 6.5%. That’s discouraging against a backdrop where the Federal Open Market Committee minutes paint a clear picture of an intention to keep rate hike pressure elevated until inflation has been tamed. A wider problem for the Treasury market has been the tendency for core measures of inflation to edge higher again in the past couple of months. We saw that from the US PPI report yesterday, with similar expected from the US CPI report today.  The Fed's target of 2% inflation remains quite deviant from the 6% handle that core inflation continues to cling to. And even though we expect inflation to fall in a precipitous manner in the quarters ahead on base effects, a recent tendency for core to remain quite elevated and sticky does not help. This maintains upward pressure on Treasury yields. The 10yr yield has popped above 4% twice in the past few weeks (for the second time yesterday), and seems reluctant to push on above. But in all probability should we see a 6.5% core CPI inflation reading confirmed today, it should provide enough ammunition for it to make the break above. Yes, it’s what is discounted. But confirmation still has real meaning. It’s these inflation numbers that continue to drive market rates, and even though real rates have moved solidly positive and breakeven inflation resolutely lower, the fact remains that market rates remain well below printed inflation rates, as does the funds rate (and the Fed knows it). 30Y GBP swap indicates gilt yields will soon rise above their pre-intervention peak again Source: Refinitiv, ING The BoE is trying to hold the line In the wake of the Fed pressing ahead on its aggressive tightening trajectory, tensions in other markets become more apparent. The UK rates market continues to be a large contributor to volatility as the Bank of England tackles the ongoing fallout from monetary and fiscal policy working at cross purposes. The BoE’s chief economist had signalled the need to raise rates significantly in November, also citing the likely inflationary impact of the government's budget plans as they currently stand. But the announcement of the medium-term fiscal strategy has been brought forward to 31 October, just days before the BoE is set decide on interest rates. Gilt yields only dropped back after the BoE accepted all bids in its daily buying operation Until then the BoE may well continue to play hard ball, at least to the extent that financial stability allows. For now the intervention in the long-end sector of gilts is set to expire by the end of this week, as much was confirmed by a Bank statement after mixed signals in the press. On that prospect the 30Y gilt yield had indeed briefly climbed above 5%, the level reached before the BoE first started long-end gilt purchases, and only dropped back after the BoE accepted all bids in its daily buying operation. The question remains whether two more days of BoE purchases will be enough to calm markets.       ECB quantitative tightening talk is becoming more concrete The European Central Bank is watching the BoE’s struggles closely. It is also seeing the potential risk of fiscal policies pushing it towards more aggressive tightening than otherwise. ECB President Lagarde urged cooperation between central banks and their governments. The remarks of the Dutch Central Bank’s Klaas Knot reflected some unease when he said that he was not sure whether all fiscal measures were targeted enough. Against that backdrop the pricing of rate hikes had already become more aggressive with the market pricing more than 125bp of hikes still this year and the 1y1y ESTR OIS forward close to 3%. The ECB is also seeing the risk of fiscal policies pushing it towards more aggressive tightening And looking beyond rate hikes, the talk of quantitative tightening is already becoming more concrete. President Lagarde confirmed yesterday that the Council had started deliberations on the topic. Other members have already been more specific about the ECB’s plans for its balance sheet. France's Villeroy reiterated that the balance sheet reduction should commence after the normalisation of rates, first with the repayments of the targeted longer-term refinancing operations, where a good part expires in the middle of next year, and then by a gradual reduction of the asset purchase programme portfolio as reinvestments are phased out. This could start before 2024. ECB QT will widen money market spreads, starting in 2023 Source: ECB, ING   Wary of the impact that already the communication surrounding quantitative tightening may have on markets, the ECB’s current messaging does appear more streamlined than we have experienced in the past. It was also Klaas Knot who remarked that bond markets had become more sensitive to debt sustainability issues, and thus “a process like QT – it should be predictable, it should be gradual, it should be even a little bit boring”. The key risk gauge is the 10Y spread between Italian and German government bonds, which temporarily rose some 8bp yesterday, though also amid greater market volatility spilling over from the UK. For eurozone bond markets the ECB's bond purchases have been instrumental in bringing down bond spreads, and with the excess liquidity injected also in the compression of money market. A reversal of the purchases is therefore all but boring. While the emerging outlines of the ECB's quantitative tightening plans are consistent with the assumptions we have made so far, we think there could still be a considerable effect on sovereign and money market spreads.   Today's events and market view Markets will continue to have one eye on the UK's and the BoE's buying operations – and any hint that the intervention could be prolonged. Gilt markets remain a major source of volatility, though today should also see US data taking the spotlight with the CPI data for September. It is the one release where a large surprise could potentially still swing the Fed away from another 75bp jumbo hike, which markets by now are fully discounting. The consensus is looking for the headline rate to be 8.1% year-on-year. In the core rate the focus should be on the anticipated decline in the monthly rate from 0.6% to 0.4%. In the eurozone primary market Italy will sell a new 3-year bond alongside reopenings of 7-, 15- and 30-year bonds for a total of up to €8.75bn. The US Treasury will reopen the 30Y for US$18bn.  Read this article on THINK TagsRates Daily Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more
Central Bank Policies: Hawkish Fed vs. Dovish Others"

Bank Of England, The UK Economy Indicators, FOMC Minutes And More Discussed In the Latest Episode Of Oanda Market Insights Podcast

Craig Erlam Craig Erlam 13.10.2022 11:33
OANDA Senior Market Analyst Craig Erlam reviews the latest market news with Jonny Hart. They discuss the Bank of England, UK GDP, Bank of Korea rate decision and preview the Fed minutes. http://www.subscribeonandroid.com/audioboom.com/channels/4947364.rss This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.
The Market May Continue To Buy The Pound (GBP) This Week

British Pound Faces Lot Of Headwinds. Failed Kwarteng's Ideas Are Still Casting A Shadow

Kenny Fisher Kenny Fisher 14.10.2022 14:13
GBP/USD has reversed directions today and is in negative territory. In the North European session, GBP/USD is trading at 1.1274, down 0.34%. Pound jumps on tax cut U-turn The pound continues to show strong volatility and jumped 2% on Thursday. The sharp swings over the past few weeks were triggered by Chancellor Kwarteng’s mini-budget in late September. Normally tame affairs, the mini-budget contained sweeping tax cuts to stimulate economic growth. Perhaps a solid idea in normal times, but with soaring inflation, high interest rates and the spectre of a recession, the markets absolutely savaged the plan. Even the IMF gave the plan a thumbs-down. The pound plunged to a 37-year low after the tax cuts were announced, and the Bank of England had to intervene due to a near-crash in the UK bond market. The new Truss government has had to make a humiliating about-face, and reports on Thursday that the government would abolish the planned tax cuts sent the pound sharply higher. The BoE was forced to step in with an emergency gilt-buying program, which is expected to end today. There is some concern that the bond market could show further volatility, in which case the BoE will have to again intervene. The government’s clumsy attempt to slash taxes could cost Prime Minister Truss and Chancellor Kwarteng their jobs, and the political uncertainty and instability surrounding the new Truss government will only add to the pound’s problems. The US wraps up the week with the September retail sales report. This will be a report card on how consumer spending is holding up, given red-hot inflation and high interest rates. Headline retail sales is expected to nudge lower to 0.2% MoM (0.3% prior), while core retail sales is projected to come in at -0.1% (-0.3% prior). GBP/USD Technical GBP/USD faces resistance at 1.1373 and 1.1455 There is support at 1.1214 and 1.1085 This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds. GBP/USD dips, US retail sales next - MarketPulseMarketPulse
The Pound Is Now Openly Enjoying A Favorable Moment

The New UK Chancellor Jeremy Hunt Has A Lot Of Options To Choose

ING Economics ING Economics 17.10.2022 12:44
Investors want to see bold changes from new Chancellor Jeremy Hunt later today. Further wholesale changes to the "mini" Budget are likely, and so is a fall in 10-year government bond yields to 4%. But closing the fiscal hole entirely will be challenging, and without the Bank of England's bond buying, sustaining the rally in gilts could prove challenging New UK Chancellor poised to announce fresh U-turn The story is once again moving pretty fast in the UK. New UK Chancellor Jeremy Hunt will unveil further U-turns on the government’s "mini" Budget later today (11am UK time), in effect bringing forward large parts of the ‘Medium-Term Fiscal Plan’ from 31 October. With Prime Minister Liz Truss under heavy political pressure, there’s a sense that Hunt now has the latitude to make sweeping changes. The goal is to meet a fiscal rule that says debt should fall as a percentage of GDP in the medium term. Friday’s lukewarm market reaction to reinstated plans to increase corporation tax showed that a piecemeal/incremental approach to policy change is unlikely to be sufficient to reassure investors. According to reports in the Sunday Times, the Office for Budget Responsibility (OBR) forecasts that including the measures in the Growth Plan a few weeks ago, the government faces a shortfall of £72bn. That’s now closer to £50bn as a result of the most recent U-turns. So what options does the Chancellor have?  Seven possible options for the Chancellor Delay (or cancel entirely) the planned cut to the basic rate of income tax and abandon smaller plans. This looks like it’s essentially a done deal, judging by press reports. Abandoning plans for a 1p cut to income tax would save roughly £5bn, and a further £5-8bn could be saved by getting rid of smaller measures in the growth plan, including on tax-free shopping for visitors. Reverse the planned cut in national insurance (a tax on workers/their employers). Previous Chancellor Rishi Sunak had increased this tax last year, and new PM Truss committed over the summer to reverse it. Treasury costings suggest this decision would cost £18bn per year by 2026-27. The government will be highly reluctant to do a U-turn here, partly because a bill repealing Sunak’s NI change passed through the House of Commons last week. Cut day-to-day public spending. Chancellor Hunt hinted in TV interviews over the weekend that spending is unlikely to rise as quickly as previously planned. But promising spending cuts is often much easier than delivering them. Partly that’s because many departmental budgets have already been cut heavily in recent years, but also because many were already set to see their funding fall sharply in real terms over the next couple of fiscal years. As a result, we think investors will treat any pledges to cut spending with some caution. Cut public sector net investment plans. Before Covid, government capital spending was typically 2% of GDP in each fiscal year, but under former PM Boris Johnson, this was projected to increase to 3%. Cutting back these plans could potentially save £25bn a year, though in practice this could take time. Needless to say, this is inconsistent with plans to grow the supply side of the economy. But we think cuts here are likely given the challenges involved with reducing current (day-to-day) spending. Look at other tax rises. Given challenges elsewhere of closing the fiscal hole entirely, the government may find it needs to look at more wide-ranging tax increases. An increase in the rate of VAT for instance would raise upwards of £10bn depending on the scale. Revenue cap on renewable energy producers. The FT reported last week that this is effectively a done deal, subject to the finer details. It would work in a similar way to the EU’s proposals, which would heavily tax any revenues made by renewable energy producers above a certain level of wholesale electricity prices. Depending on its construction this could potentially raise tens of billions of pounds. But perhaps more importantly, it would act as a natural hedge against the cost of the government’s energy price guarantee. Make the energy price guarantee less generous. The government’s decision to cap household electricity/gas prices for two years went further than many expected when it was announced in early September. The fact that it applies equally to all households does suggest some room to make the policy more targeted, though in practice that’s complicated. Without the cap, households in most income deciles were set to see energy costs top 10% of disposable incomes. With few ways to target support beyond the income tax and benefits system, the practicalities of adjusting support based on economic need could be challenging. Nevertheless, there are potentially big savings to be made if a mechanism can be found to target the policy more accurately. Increasing income tax rates temporarily is the most obvious way of achieving this, though clearly would be hugely politically challenging. The BoE has pushed back against expectations of more gilt purchases Source: Refinitiv, ING A rally in gilts is likely - but can it be sustained? The latest reports suggest that we should expect most of the "mini" Budget to be scrapped today, with the exception of the stamp duty cut (that has already come through) and the national insurance cut. But the lesson from the menu of options presented above is that the government will likely find it needs to go further than that to balance the budget - and indeed may find it needs to lean more heavily on tax rises than spending cuts in order to make the biggest impression on financial markets. The chancellor will also be acutely aware that wherever borrowing costs settle over the coming days will have a bearing on OBR forecasts due on 31 October. A fall in gilt yields would translate into a fall in projected interest costs and in turn, reduce the fiscal hole a little bit further. OBR ready-reckoners suggest a 1 percentage point fall in gilt yields and short-term rates would see a £16bn fall in annual spending requirements by 2026/27. So far, gilt markets have reacted positively this morning to the latest fiscal press reports. But ultimately, the monetary value of the deficit reduction measures to be announced today matters, and so does the message sent about the importance of fiscal sustainability. A rally to 4% for 10Y gilts is a likely outcome but a more difficult question is whether these gains will be sustained. The BoE confirmed this morning its reluctance to engage in more gilt purchases, after buying £19.3 in recent weeks. effectively leaving the chancellor to deal with market turmoil on his own. Meanwhile, market functioning is and will likely remain impaired for a while. Investors will understandably fret about the prospect of BoE gilt sales resuming at the end of the month. Read this article on THINK Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more
Bank of Japan to welcome Kazuo Ueda as its new governor

Forex: Japanese Yen (JPY) Gathers Interest Again

Craig Erlam Craig Erlam 17.10.2022 22:33
A humiliating blow Another turbulent start to the week, albeit a positive one broadly speaking with equity markets around 1% higher in Europe after a decent start to the week in Asia. Since Liz Truss became UK Prime Minister, uneventful days have eluded us and this week has also got off to another hectic start. While the Prime Minister had every intention of making waves in her first weeks in charge, she clearly didn’t anticipate the storm that was brewing and I’m sure she more than anyone at this point would do just about anything for a more peaceful few weeks. Read next: Netflix Stock Price May Tumble Tomorrow! What Can We Expect From NFLX Earnings? | FXMAG.COM Assuming she lasts that long, of course. The u-turn this morning was even more historic than the initial mini-budget. A humiliating moment after a chaotic period for Truss in which confidence in her in the markets, the public and her own party, it seems, has been decimated. That said, we are seeing some improvement from a market perspective. It just took reversing almost all of the unfunded tax cuts to achieve it. Who’d have thought? The job isn’t done yet though, the new Chancellor has done what was necessary now but the harder decisions arguably come later this month in the budget. How low can it go? The yen is continuing to slide against the US dollar, hitting 148.89 this morning and trading beyond the level the country intervened at in 1998 and, of course, last month. We’ve had the usual plethora of commentary from various officials overnight; “high sense of urgency”, “ready to act” etc. It does seem only a matter of time until we get another powerful intervention in the FX markets, it’s just a question of what they’ll do differently this time as doing the same again every few weeks simply isn’t sustainable. The question is whether the yen will surpass 150 against the dollar first. This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds. The mother of all U-turns - MarketPulseMarketPulse
Belgian housing market to see weaker demand and price correction

The US Housing Market Is Experiencing Severe Price Drops | The Market Is Now Leaning Towards A RBNZ Rate Hike By 75 bp

Saxo Bank Saxo Bank 18.10.2022 11:38
Summary:  A huge squeeze across equity markets developed yesterday on no readily identifiable catalyst, with yields easing a bit lower and the US dollar dropped falling sharply, as most markets posted a sudden reversal of the Friday melt-down in sentiment. One possible driver for the fresh thaw in sentiment was a report that the Bank of England may delay its quantitative tightening programme, perhaps raising hopes that other central banks will eventually do the same.   What is our trading focus? Nasdaq 100 (USNAS100.I) and S&P 500 (US500.I) Strong equity session yesterday with S&P 500 futures closing at their highest level since 7 October as the index futures rebounded 2.6%. The momentum is continuing this morning with S&P 500 futures trading around the 3,742 level with the 3,800 as the next major resistance level on the upside. Nasdaq 100 futures are trading around the 11,295 level this morning with 11,494 as the next upside level to watch. The US 10-year yield is still hovering around the 4% level and US financial conditions remain around their average historical level. As we scan across different markets there are no obvious reasons for the major rebound so our best guess is short coverings and technical flows. Our medium-term outlook is still negative on equities. Hong Kong’s Hang Seng (HSIV2) and China’s CSI300 (03188:xhkg) Stocks traded in Hong Kong bounced the second day in a row with the benchmark Hang Sang Index rising nearly 1.5%. Heavy weight HSBC (00005:xhkg) gained 2.6% and China Internet names surged from 3% to 7%. BYD (01211:xhkg) surged 6.4% after the leading EV maker said its Q3 profit may soar up to 365%. CSI300 was bouncing around small gains and losses. China’s National Development and Reform Commission said China’s economic growth “rebounded significantly” in Q3 while the National Bureau of Statistics delayed the release of Q3 GDP, September industrial production, retail sales, and fixed asset investment data that were scheduled to come today without providing a reason or a new schedule. A document from the European Action Service advises EU’s finance ministers that EU must take a tougher line in its dealing with China and see the latter as an all-out competitor. USD drops as risk sentiment jolts back higher...BoE to drop QT for now? Yesterday was the third consecutive session in which risk sentiment posted a sharp U-turn, as equities rallied sharply and the US dollar sold off steeply, led initially by a drop versus a hard rallying sterling yesterday on hopes that newly minted Chancellor Jeremy Hunt’s elimination of most of PM Liz Truss’ initiatives will stabilize the currency and the country’s bond market. An additional report from the FT that the Bank of England would look to delay its original quantitative tightening (QT) plan may be at the root of some of the broad risk-on, as hopes that other central banks will slow the tightening pressure could bring some relief to deteriorating liquidity across markets. Crude oil (CLX2 & LCOZ2) Crude oil prices stabilized in early Asian hours on Tuesday after a slight decline yesterday. WTI futures rose towards $86/barrel while Brent was above $91. Chinese demand concerns however weighed on the commodities complex coming out of the weekend CCP announcements on Zero Covid. On the OPEC front, Algeria's Energy Minister echoed familiar rhetoric from the group that the decision to reduce output is a purely technical response to the world economic circumstances. US treasuries (TLT, IEF) US treasury yields fell slightly, and the curve steepened in a session marked by far less volatility than the gyrations elsewhere, as the US dollar sold off and risk sentiment squeezed sharply higher. At stake for the longer end of the curve is whether yields remain sticky near the key 4.00% level and head higher still. Data this week is generally second tier stuff. If treasuries rally, the downside focus would be on the 3.84% pivot low in yields. What is going on? Hot Q3 CPI in New Zealand data jolts RBNZ rate expectations The Q3 CPI report came in far above expectations, with the headline printing at 2.2% q/q and +7.2% YoY, far above the 1.5/6.5% expected. This took RBNZ rate expectations sharply higher, and the NZD snapped higher as well. The market is now leaning for the RBNZ to hike by 75 basis points (about 70 bps priced in) at the November 23 meeting, which would be the first time the bank has hiked by more than 50 basis points for this cycle. NZDUSD rose to 0.5700 and AUDNZD punched lower to near 2-month lows after breaking below 1.11 with RBA minutes continuing to highlight concerns of rapid tightening for housing market and household budgets. Q3 earnings recap Bank of America beat estimates yesterday with stronger earnings on disciplined cost controls and robust client activity across both the commercial banking and investment banking activities. Q3 EPS was down 5% y/y, which is much better than its peers, and up q/q to $0.81 from $0.79 in Q2. The US bank is seeing a little slowdown in consumer spending, but it is still minimal supporting the view that the US consumer remains strong and with confidence in the future despite the tighter financial conditions this year. S&P 500 Q3 EPS is down 1.9% q/q but given the weakness among US banks q/q it is too early to say whether this will end up being the conclusion when the entire S&P 500 has reported earnings. Japanese yen paying no heed to jawboning efforts The US dollar moved lower on Monday, but that was no respite for the Japanese yen, which was the only G10 currency that weakened further on Monday, continuing to test the intervention limits of the authorities. USDJPY rose to 149.08, printing fresh 32-year highs. Bank of Japan Governor Kuroda was out overnight noting that the BoJ is watching the market and that JPY weakening drives inflation, but that inflation would eventually fall. He was also defiant when a lawmaker suggested he should resign, saying he had no plans to quit. While intervention expectations rose, the yen remains weak, with EURJPY, for example, hitting new cycle highs and the highest level in nearly eight years. Natural gas prices continue to fall in Europe … with the Netherlands 1-month forward contract falling more than 10% yesterday and at its lowest level since late June as EU storage is essentially fully and weather has been mild thus far this fall. Germany announced that it would keep its three remaining nuclear plants in operation until at least mid-April, cancelling their planned mothballing for now, although there are still no strong signs of a strategic rethink from Germany on the future of nuclear power. NY Fed manufacturing headline lower on mixed components The NY Fed manufacturing survey for October fell to -9.1, contracting for a third consecutive month and coming in below the expected -4.0 and the prior -1.5. While survey data remains hard to trust to decipher economic trends, given a small sample size and questioning techniques impacting results, it is worth noting that more factories are turning downbeat about future business conditions which fell 10 points to -1.8 and was the second weakest since 2009. Also, the prices paid measure rose for the first time since June, echoing similar results as seen from the University of Michigan survey. The U.S. housing market bubble is deflating According to the latest data released by the real estate company Redfin, the U.S. housing market is going through a severe drop in prices in several major cities. From May 2022 to October 2022, the drop in sale prices is the most pronounced in Oakland (minus 16 %), San Jose (minus 14 %), Austin (minus 14 %), Ogden in Utah (minus 11 %) and San Francisco (minus 9 %). The decrease is the most important in California and Texas where home prices jumped sharply in the aftermath of the Covid outbreak. So far, the decrease in prices is positive news for inflation and for home buyers, as the affordability index was at historical levels a few months ago. But this could seriously increase the ongoing economic slowdown. Note that we will see important indicators on the US housing market this week – more below. What are we watching next? US Housing Market Data Housing markets are very interest rate sensitive and thus generally a leading indicator on the direction of the economy. Financing for US house purchases is mostly done on a 30-year fixed mortgage basis, meaning that most of the impact from rising rates, a global phenomenon, is on new purchases in the US. (This contrasts with the floating rates that are popular elsewhere – note the Australian RBA’s and Bank of England’s concerns on housing impact from sharp rate rises). Today we get the Oct. NAHB Housing Market survey, one of the more leading US indicators on housing demand and a survey that has been in freefall in recent months – dropping from 83 in January to 46 last month and expected Earnings to watch Today’s earnings focus is Netflix, Johnson & Johnson, and Lockheed Martin. Headwinds have been building for Netflix since the pandemic growth sprint and analysts expect revenue growth to have slowed down to 5% y/y in Q3 and EPS of $2.22 down 23% y/y and down 12% q/q. Johnson & Johnson is expected to see flat revenue growth in Q3 which given other consumer staples companies might be a bit too pessimistic and we believe there is a good chance that Johnson & Johnson can surprise to the upside given what we know about the US consumer. Today: Charles Schwab, Johnson & Johnson, Goldman Sachs, Intuitive Surgical, Lockheed Martin, Truist Financial, Netflix Wednesday: ASML, Elevance Health, Tesla, IBM, Lam Research, P&G, Abbott Laboratories, Atlas Copco Thursday: China Mobile, China Telecom, ABB, Danaher, Investor, Philip Morris, Union Pacific, CSX, AT&T, Blackstone, Marsh & McLennan, Yara International, Nordea, Volvo, Ericsson, Freeport-McMoRan, Dow, Snap Friday: CATL, American Express, Schlumberger, Verizon Communications, HCA Healthcare, Sika Economic calendar highlights for today (times GMT) 0900 – Germany Oct. ZEW Survey 1215 – Canada Sep. Housing Starts 1315 – US Sep. Industrial Production 1400 – US Oct. NAHB Housing Market Index 1600 – ECB's Schnabel to speak 2130 – US Fed’s Kashkari (voter 2023) to speak Follow SaxoStrats on the daily Saxo Markets Call on your favorite podcast app: Apple  Spotify PodBean Sticher   Source: https://www.home.saxo/content/articles/macro/market-quick-take-oct-18-2022-18102022
Bank Of England Will Probably Be Unable To Avoid A Significant Easing Of Policy

Bank Of England Is Facing A Difficult Decision |UK Government Energy Price Guarantee Will Change From Next April

ING Economics ING Economics 18.10.2022 13:12
The UK government has announced it will make its energy price cap less generous from April next year. That could add 3pp to inflation for much of 2023, and depending on how the changes are made, could deepen the recession we're forecasting this winter. We now expect a 'smaller' 75bp rate hike from the Bank of England in November In this article The UK Chancellor has reversed much of the ill-fated growth plan Fiscal U-turns give Bank of England a route to less aggressive tightening The UK Chancellor has reversed much of the ill-fated growth plan UK bond markets reacted well to new Chancellor Jeremy Hunt’s announcement that large parts of the so-called "mini" Budget will be reversed. That said, there is undoubtedly further work to be done. For debt to fall as a share of GDP, the government needs to find £72bn a year by 2026/27, according to leaked reports from the Office for Budget Responsibility over the weekend. Recent U-turns have roughly halved that shortfall. That inevitably leaves more to be announced by the time of the 31 October Medium-Term Fiscal Plan. We expect a revenue cap on renewable energy generators, and cuts to public sector investment, to do some of the leg work (we wrote more on the different options yesterday). The Chancellor will also hope the fall in Gilt yields will enable the OBR to lower its estimate of future debt-servicing costs. But by far the most consequential announcement for the UK economy on Monday was that the government’s energy price guarantee will change from next April. At present, this guarantee has fixed consumer gas/electric unit prices such that the average household’s annual bill is capped at £2500 for the next two years. The Chancellor has signalled that will no longer be the case from April, and instead will become more targeted. The government is getting a helping hand from a plunge in gas prices   Source: Macrobond, ING   The fact that the energy guarantee currently applies equally to all households does suggest some room to make the policy more targeted, though in practice that’s complicated. Any policy needs to recognise a) that energy usage doesn’t vary hugely across the income spectrum, but b) it does vary considerably within different income brackets (owing to varying household sizes). At present, the government only really has two ways to means-test its energy price cap. The most obvious option is to offer all households the same energy price but to temporarily raise higher rates of income tax to make the system fairer. That would probably be the most accurate and therefore cost-effective option, but would most likely be politically untenable. The alternative would simply differentiate between those on Universal Credit (welfare benefits) - around 15-20% of energy-using households - and those that aren’t. This is effectively what former Chancellor Rishi Sunak did before the summer. Barring the Treasury finding a more innovative solution, this option could conceivably see most households move back onto the price set quarterly by the regulator Ofgem from April 2023. Using current gas/electricity futures prices, we estimate that the average household electricity bill would total £3700 in fiscal year 2023, peaking at £4250 on an annualised basis between April and June next year. The cost of the energy price guarantee has more than halved   Source: Refinitiv, ING estimates Cost calculation takes the difference between the £2500 cap and our projected estimates of where household bills would be without government support. This is then multiplied by the number of households using electricity/gas (for simplicity we're using the price paid by those on duel-fuel direct debit payment)   This could save the Treasury roughly £25bn in FY2023 and a further £6bn in FY2024, if we make the simple assumption that those on Universal Credit continue to have their bills fixed for the full two years. If that doesn’t sound like that much, it’s because gas prices have fallen considerably in recent weeks. By our estimates, the cost of the household energy cap has more than halved since its inception. Of course, this sort of policy would inevitably come at a cost to both growth and inflation. The chart below shows that inflation would be roughly 3 percentage points higher through much of 2023 if energy prices revert to those set by the regulator Ofgem. Households across the income spectrum would in most cases be spending close to, or in excess of, 10% of their disposable incomes on energy bills in FY2023. That would be 15%+ if energy prices were to return to their August high – and it’s worth saying that our Commodities team forecasts gas prices to end up higher next winter than during the coming one. Inflation could be 3pp higher through much of 2023 if most households revert back to the Ofgem price Source: Macrobond, ING   That kind of hit to disposable incomes would inevitably deepen what would otherwise hopefully be a reasonably mild recession this winter. The Chancellor will be hoping that energy prices continue to fall, lessening the blow to households. Indeed for now his focus is on reducing the OBR’s borrowing estimates as much as possible in its forecast due on 31 October. He’ll also be hoping a scaled-back support package will reduce the need for the Bank of England to tighten aggressively. But in practice – and especially if gas prices start rising again – we think the Treasury may well need to offer extra support in one form or another before April next year. Households could spend around 10% of disposable income on energy without the government guarantee Source: ING analysis of ONS Living Costs and Food Survey, Effects of Tax and Benefits, Ofgem, UK Treasury For simplicity we've used most recent 2020/21 equivalised disposable income data (in practice this will have increased but doesn't materially change the end result). Assumes all households move back to the Ofgem price cap system and that energy prices increase by same percentage for all income deciles. Disposable income = after income tax/national insurance etc but before accounting for housing and other costs Fiscal U-turns give Bank of England a route to less aggressive tightening For the time being though, the moves by the Chancellor will reduce the need for the Bank of England to act as aggressively. Having pencilled in a 100 basis-point rate hike in November, we now think that’s more likely to be 75bp. Markets are still expecting Bank Rate to peak at 5.2% next summer, albeit this pricing has been pared back since the fiscal U-turns. This leaves the Bank with a difficult decision: meet those expectations, and bake in what are now very uncomfortable mortgage and corporate borrowing rates. Undershoot investor expectations, and the pound could fall materially. But in practice a weaker pound – and the extra imported inflation that might bring – is probably more desirable than the current strains that are starting to emerge as a result of ultra-high borrowing costs. The challenge for policymakers will be to gradually talk down market rate expectations without causing abrupt pressure on the currency. Ultimately, we think a 75bp hike in November will be followed by another 50-75bp hike in December. We think Bank Rate will peak somewhere between 3.5-4%.   Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more
Beyonce Bounce and Soaring UK Inflation: A Challenge for Bank of England

Bank Of England May Hike The Rate By 75bp As The Energy Price Cap Can Lead To Higher Inflation And Longer Recession

ING Economics ING Economics 19.10.2022 10:12
There is growing speculation that the UK government will need to cut budget spending further after the fiscal U-turn. We already estimate that the change in the energy price guarantee will cause higher inflation, a deeper recession and may cause the BoE to hike by 75bp rather than 100bp. GBP downside risks persist. Elsewhere, US housing data will be in focus USD: Housing data becoming more relevant The rally in global equities yesterday pushed some high-beta currencies higher: in G10, the New Zealand dollar and Swedish krona had a good day. However, currency-specific stories overshadowed the risk-on environment. GBP fell as markets slowly digest the fiscal U-turn, Norway's krone and Canada's dollar suffered from their elevated exposure to oil prices, where the post-OPEC cuts rally seems to have run out of steam and sub-$90 levels are being explored again. The trade-weighted dollar remains close to its highs, likely being shielded from the equity rally thanks to market expectations of a 75bp Federal Reserve rate hike in November, and a terminal rate priced at 4.90-4.95%. As long as the Fed retains its hawkish stance (we suspect well into 2023), dollar corrections should continue to prove short-lived. Today’s US calendar includes housing starts and building permits data, which will provide hints of how much strain is being put on the housing market from sharply rising mortgage rates. As discussed earlier this week, it appears that most developed central bankers are accepting a contraction in house prices as a necessary evil in the process of fighting inflation. Given the elevated weighting of shelter in the US inflation basket, a (controlled) downturn in house prices would likely mean a faster slowdown in inflation in 2023, and this is good news for the Fed. It’s probably too early anyway to see a material impact on Fed rate expectations from the housing data. The Fed will publish the Beige Book today, and there are a few speakers to keep an eye on: Neel Kashkari, Charles Evans and the arch-hawk James Bullard. We expect a consolidation in the dollar around current levels, and retain a bullish view on the greenback into year-end. Francesco Pesole EUR: Domestic picture remains grim EUR/USD has been stabilising in the 0.98-0.99 area after the rally from 0.9700, likely reflecting some positioning adjustments more than any change in the key drivers. Dollar strength remains the main hindrance to recovery in the pair, but the domestic picture is still far from looking appealing to investors. Despite a smaller-than-expected slump in the ZEW expectations index, the current situation survey plunged dramatically to -72.2 in October. These are levels last seen only in 2020 and 2009. The easing in gas prices is likely preventing a return to the 0.9540 lows, but we think the next round of dollar appreciation will heavily test that support. Today, the eurozone calendar includes the final CPI reading for September, as well as speeches by the ECB’s Francois Villeroy, Mario Centeno and Ignazio Visco. Francesco Pesole GBP: Austerity times? In a matter of days, the UK government has shifted from a large and unfunded expansionary fiscal policy to measures clearly in the direction of fiscal rigour. Chancellor Jeremy Hunt’s policy U-turn earlier this week has paved the way for a radically different policy agenda, and many are now speculating on widespread budget cuts after government offices suggested further savings worth 15% of the budget may need to be found by the government. A key Conservative policy, the hike in state pensions in line with inflation, may be scrapped in what could be the start of a new period of austerity. Just looking at what the government has already changed from the "mini" Budget, the implications for markets are very significant. Our UK economist argues that the U-turn in energy bills cap can add 3pp to inflation next year and should increase the size/length of the recession. We think the Bank of England will need to take this into account and will hike by 75bp rather than the 100bp expected by investors at the November meeting. To be sure, inflation hitting double-digits today (10.1%), with the core rate at 6.5%, makes any dovish surprise a harder sell. Today, Prime Minister Liz Truss will face questions by MPs. There is growing speculation that she will be forced to leave soon due to the loss of credibility and opinion polls currently suggesting the main opposition party (Labour) holding a 35-point lead. GBP/USD has found some tentative stability around 1.13-1.14 as 10-year Gilt yields edged back below 4.0% for the first time in nearly a month. Our rates team remains doubtful that sub-4% levels are sustainable and continues to see elevated risks of Gilt market fragility. A key question is whether the Bank of England will go ahead with planned Gilt sales from the start of November. Yesterday, a media report suggesting another delay in quantitative tightening was dismissed as “inaccurate” by the BoE. We still struggle to see a return to 1.15+ levels in cable, as a combination of political instability, risks of a deeper recession and smaller rate hikes by the BoE along the path of fiscal rigour – along with a strong dollar - may more than offset the benefits of quieter debt-related concerns. It’s too early to dismiss a return to sub-1.10 levels. Francesco Pesole CAD: Inflation to stir rate expectations The Canadian dollar suffered from a contraction in oil prices yesterday, as global demand fears appear to be overshadowing the tighter supply picture following the OPEC+ output cuts. Our commodities team still expects Brent to close the year in the $95-100/bbl range on the back of tighter supply, but downside risks are clearly mounting with global recession fears. We still want to highlight how the Canadian dollar is in a good position to benefit from any recovery in risk sentiment (although that may only materialise from 1Q23 onwards), thanks to Canada’s limited exposure to the two major poles of geopolitical and economic risk: Russia and China. But growing uncertainty about global demand dynamics may further postpone any strong rebound in the loonie. The Bank of Canada will announce policy next week, and we expect a moderation in the tightening pace to 50bp as the economy starts to show signs of slowing and inflation recently came in below expectations. Today, September CPI numbers will be published, and the consensus is centred around a slowdown in headline inflation from 7.0% to 6.7%. With markets currently pricing in 60bp ahead of next week’s meeting, any upside or downside surprise can definitely direct rate expectations towards 50bp or 75bp, and generate CAD volatility in both directions. In our view, the balance of risks appears slightly skewed to the upside for CAD today, but there is still room for USD/CAD appreciation (1.38-1.40) into year-end. Francesco Pesole Read this article on THINK Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more
UK Budget: Short-term positives to be met with medium-term caution

Some Excessive Rate Hikes Are Looming In The United Kingdom

Kenny Fisher Kenny Fisher 19.10.2022 12:32
GBP/USD is in negative territory today. In the European session, the pound is trading at 1.1261, down 0.48%. Inflation rises to double-digits UK inflation rose to 10.1% in September, up from 9.9% in August and above the consensus of 10.0%. It was a similar story from Core CPI, which edged up to 6.5%, up from 6.4% and higher than the forecast of 6.3%. A return to double-digit inflation is certainly not something the Bank of England wanted to see. Inflation is not showing any signs of peaking, which leaves no doubt that the BoE will have to continue to raise interest rates. The cash rate remains relatively low at 2.25% in comparison with the Federal Reserve (3.25%) and other major central banks. The cash rate will likely hit 4% or even higher by mid-2023, which means some oversize rate hikes are on the way. The BoE meets next on November 3rd and policy makers will need to deliver a hike of 0.75% or a full point in order to maintain credibility. The recent political maelstrom, in which Chancellor Hunt has abolished most of the planned tax cuts and signalled spending cuts instead, means that the BoE may not have to act as aggressively as anticipated just a few weeks ago. A key point in the fiscal U-turn provided by Hunt is the energy cap plan. The cap, which was supposed to remain in place for two years, has been scaled down to just six months. Higher energy bills for households will mean higher inflation unless energy falls substantially in the winter. The economic outlook for the UK does not look all that bright, which will likely be reflected in a weaker British pound. Goldman Sachs has downgraded its UK growth outlook, with the economy expected to decline by 1% in 2023, worse than the previous estimate of -0.4%. . GBP/USD Technical GBP/USD faces resistance at 1.1373 and 1.1455 There is support at 1.1214 and 1.1085 This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.
The UK Economy Looks Worse Than The Rest Of The G7 Countries

UK Inflation Rate: The UK CPI Came At 10.1%, Input PPI Hit 20%, Almost A Percent Less Than In August

ING Economics ING Economics 19.10.2022 12:57
The portion of the UK inflation data showed that the problem is in no hurry to recede. The consumer price index returned to 10.1% y/y, changing hopes that the trend had already reversed. The retail price index is climbing further upwards, reaching 12.6%. The contribution of food to inflation has already exceeded the impact of transport costs. Excluding these volatile components, the acceleration continues, with the core CPI rising to 6.5% compared to 6.3% the previous month. Britain's retail price index at 12.6% y/y was last seen in March 1981. However, producer prices signal an easing of inflationary pressures, albeit not as quickly as previously hoped. Input PPI has slowed to 20% from 20.9% a month earlier and peaked at 24.2% in June. Output PPI inflation slowed to 15.9% after peaking at 17% in July. The persistent downward trend in exchange prices for agricultural and energy products has reinforced disinflationary trends all these months. The higher inflation trajectory is creating pressure on the Bank of England to take even more steps to raise rates. The Bank of England's recent statements about its willingness to move to quantitative tightening from November and its reluctance to stretch out its emergency government bond-buying programme show that the central bank is indeed concerned about inflationary pressures.
At The Close Of The New York Stock Exchange 728 Securities Closed In The Red

Netflix's Results Will Be A Hit On The Wall Street | The Bank Of England (BoE) Will Have To Be Very Aggressive

Craig Erlam Craig Erlam 19.10.2022 14:34
Trading is mixed in Europe on Wednesday, with Wall Street eyeing a slightly stronger open amid bumper Netflix earnings. Netflix is a hit Netflix results are expected to be a hit on Wall Street when the bell rings on Wednesday, with pre-markets pointing to a more than 13% rally in the stock. The streaming company reported revenues and earnings that comfortably surpassed expectations, while subscriber growth more than doubled forecasts. That was largely driven by the Asia-Pacific region which will become increasingly important for growth in the coming years. The company will continue to crack down on password sharing going forward, while the ad-supported plan will hope to draw in additional subscribers. After a tough year, things may be looking up for Netflix. UK inflation back in double-digits Inflation in the UK surpassed 10% again in September, slightly beating market expectations and further fueling concerns about the cost of living crisis and the role of the Bank of England in reining in rapid price increases. Naturally, all of this has been complicated by the political soap opera over the past few weeks, something the new Chancellor, Jeremy Hunt, has sought to calm by abandoning almost the entire controversial mini-budget. But inflation is still a problem, regardless, and the BoE will have to be very aggressive at upcoming meetings in order to try and get a grip of it. Markets are now undecided between a 75 and 100 basis point hike on 3 November but are quite confident that Bank Rate will end the year at 4% either way. With inflation now broad-based and fuel even offsetting some of the larger price increases, the worry is that these forecasts may prove too optimistic. ​ Intervention talk ramps up as USDJPY nears 150 Japan remains in focus as the dollar closes in on 150 against the yen. The threats of intervention have been coming thick and fast and many are wondering if 150 could be the point at which the Ministry of Finance pushes back once more. The last intervention wasn’t particularly successful, with the benefits unwinding in a matter of days. The question now is when they’ll jump back in and how forceful they’ll be. The message is clearly falling on deaf ears at the moment. Continuing to fluctuate Bitcoin continues to consolidate, with the recent rebound failing once more around $20,000. That level was once believed to be hugely significant as support but the reality is that it has simply become the point at which the price fluctuates around. That will change eventually but we’re now two months into that broadly being the case so there’s little to suggest it’s imminent. For a look at all of today’s economic events, check out our economic calendar: www.marketpulse.com/economic-events/ This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.
"Private investors will be required to increase their gilt exposure by at least £268bn in FY2023-24"

Yesterday Liz Truss resigned, today UK retail sales print was released

Alex Kuptsikevich Alex Kuptsikevich 21.10.2022 15:03
As if the political storm hitting the UK was not enough, macroeconomic data is also not encouraging markets, adding pressure to the country's assets. GBPUSD is losing more than 1.4% since the start of the day on Friday, back below 1.1060, losing 2.4% from Thursday's peak on news of Liz Truss stepping down as prime minister. Great Britain retail sales for September were down 1.4%, and down 1.5% excluding fuel, after falling 1.7% a month earlier. Sales were down 10% from their April 2021 peak and 10.7% ex-fuel, having lost for almost the whole of the last year and a half. Falling consumer activity makes it harder for the Bank of England to find a balance sheet. Today's disappointing sales data is a strong case for the monetary dove camp. The weakness in the economy, as seen through the prism of falling sales and industrial production, can deter the Bank of England from raising its key rate more decisively, which is harmful to the Pound. Should GBPUSD fall below 1.09 in the coming days, a retest of the 1.03-1.05 historic low area will be an issue, even though recently it seemed that the worst for the Pound is over.
Forex: British pound against US dollar - technical analysis - January 2nd

New UK PM, Rushi Sunak, is going to face a lot of headwinds. Bank of England may hike the rate by 75bp or even a 100bp rate hike, Kenny Fisher says

Kenny Fisher Kenny Fisher 24.10.2022 18:27
The pound pushed higher at the start earlier today but has given up all of these gains. GBP/USD is trading at 1.1293, down 0.03%.   Sunak takes over as PM Rushi Sunak has become the new UK Prime Minister after Penny Mordaunt dropped out of the Conservative leadership race. Liz Tross beat Sunak for the leadership last month but her short tenure as Prime Minister was an unmitigated political disaster. Elizabeth Truss’s record of a mere 44 days in office caused financial damage as well, as her financial plan with unfunded tax cuts roiled the markets, with the pound taking a beating and the Bank of England intervening in an emergency move to stabilize the bond market. Sunak, a former finance minister, will have his work cut out. The Conservative party remains deeply divided and will have to coalesce quickly or face a general election that it would likely lose. Sunak inherits a weak economy, high inflation and uncertainty over the UK’s direction in the post-Brexit era. Last week ended on a sour note, as retail sales for September declined by 6.9% YoY, down from -5.6% in August and below the consensus of -5.6%. Core retail sales also dropped sharply to -6.2%, down from -5.3% and well below the consensus of -4.1%. The Bank of England can hopefully concentrate on more routine matters, such as its policy meeting on November 3rd. Inflation has climbed back into double digits and the Bank will have to deliver an oversize interest rate in order to curb inflation. This will slow the economy which may already be in recession. A 0.75% hike is most likely, although a full-point increase is a slight possibility.   GBP/USD Technical 1.1388 and 1.1471 are the next resistance lines 1.1266 is a weak support level. This is followed by 1.1093     This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds. Pound drifting, Sunak takes over as PM - MarketPulseMarketPulse
Forex: What to expect from British pound against US dollar - January 17th

ING expects that Bank of England will hike the interest rate by 50bp

ING Economics ING Economics 28.10.2022 18:12
Markets and most economists are expecting a 75 basis-point rate hike from the Bank of England on 3 November. But we think a 50bp increase is narrowly more likely. More importantly, we think the Bank Rate is unlikely to go above 4% next year. And that suggests that markets are overestimating the amount of tightening still to come   Shift in UK leadership reduces pressure on the Bank of England   Investors have pared back rate hike expectations, but perhaps not far enough It’s been a wild ride for Bank of England (BoE) expectations since September’s fateful ‘mini budget’. The resulting chaos in financial markets had prompted investors to, at one point, price in more than 150bp worth of tightening by the time of the November meeting. BoE chief economist Huw Pill spoke of the need for a ‘significant’ response. Since then, UK markets have calmed, buoyed by the appointment of Rishi Sunak as prime minister and the steadier backdrop for public finances that is perceived to have ushered in. Markets have drastically scaled back expectations for November’s rate hike and are now pricing less than 75bp. Having previously been among those looking for a 75bp hike, we now think 50bp has become narrowly more likely – though either way the committee is likely to be heavily divided. Consensus expects a 75bp move. 50bp ING's BoE rate hike forecast (vs. 75bp priced) The Bank of England is becoming more vocal about excessive hike expectations It’s becoming increasingly clear that the Bank of England is uncomfortable with the amount of tightening markets are pricing. Investors still expect Bank Rate to peak around 5% next year. In a recent speech, BoE deputy governor Ben Broadbent suggested that GDP would take a near-5% hit over coming years if the Bank were to deliver that sort of tightening. The Bank’s August forecasts – which themselves already pointed to a five-quarter recession – were based on a much lower terminal rate of roughly 3%. Citing a simple model, Broadbent suggests recent fiscal announcements warrant ‘only’ an extra 75bp of tightening on top of that. It’s important not to take this too literally, but it’s nevertheless compatible with our long-standing view that Bank Rate is unlikely to go above 4%. Even Catherine Mann, one of the most hawkish committee members, was quoted saying recently that markets are “too aggressively priced”. That frames the messaging we can expect from Thursday’s meeting. The new set of forecasts due, which crucially are based on market interest rate expectations, are likely to be dismal – showing both a deep recession and inflation falling below target in the medium-term. That should be read as a not-so-subtle hint that market pricing is inconsistent with achieving its inflation goal. Markets still expect Bank Rate to peak close to 5% next year Source: Macrobond, ING Sky-high mortgage rates likely to outweigh concerns about a weaker pound The obvious counter-point here is that the Bank’s forecasts have been sending this signal for much of this year – and the Bank hasn’t made much of an effort to otherwise talk down market expectations. Partly that's been because of mounting concerns about a weaker pound, and partly because of growing caution about the accuracy of forecasts as inflation has consistently outpaced expectations. But this calculation is now changing. Not only does it look like inflation is close to peaking, but the risk of overdoing it with rate hikes is growing. Two-year mortgage rates hit 6.5% this month, and despite a fall in swap rates since the abolition of the 'mini budget', we suspect they’ll stay pretty high. Especially for high loan-to-value, lenders will either keep mortgage products off the market or build in more of a premium given the mounting risk of a house price correction. On a similar note, the Bank of England’s financial policy arm has also warned that small and medium-sized businesses are vulnerable given their heavier reliance on floating-rate borrowing. Given the choice of hiking aggressively and baking in – or even pushing up – these borrowing costs, or tightening more cautiously and risking a weaker pound, we suspect most policymakers will lean towards the latter. Inflation is close to a peak, though could stay 2-3pp higher from April 2023 if energy support becomes less generous Source: Macrobond, ING Five reasons for a 50bp rate hike Admittedly none of what we’ve said so far necessarily precludes the central bank from hiking by 75bp on Thursday. Policymakers may feel the bank needs to reassert its authority after a chaotic few weeks. But here are five reasons why we think the committee will lean towards a smaller move: 1   First, the fact that we’re essentially back to square one on the mini-budget also reduces the pressure for a jumbo hike. Admittedly the Bank finds itself in the awkward position of not knowing the full details of PM Sunak’s rewrite of the Medium-term Fiscal Plan. But the most consequential government action for the economic outlook has always been the Energy Price Guarantee, the cap the government has placed on consumer and business energy costs. This had already been announced well before the Bank of England’s September meeting, where the committee resisted pressure to hike by 75bp. Indeed, we have since learned that the government has committed to making its energy support less generous (albeit we don't yet know how this will work). In short, and with the notable exception of the cut in National Insurance, the expected boost from fiscal policy is similar to what was expected before September’s meeting.  2   Second, the economic dataflow doesn't provide a clear enough justification for more aggressive tightening. It's certainly true that the Bank's own surveys continue to point to chronic staff shortages and wage pressures, and this remains a key concern for the BoE. But the most recent inflation data was mostly as expected, while activity data has clearly deteriorated.  3   Third, trade-weighted sterling is actually now stronger than it was at the time of the September meeting. Concerns about depreciation we'd been seeing through the summer will have been a factor in the decision of three committee members to vote for 75bp at the last meeting. The latest market moves should alleviate some of these concerns at the margin. 4   Fourth, the Bank will be acutely aware that hiking by 75bp sets a precedent – it risks becoming viewed as the default move by investors, having only hiked in 50bp increments until now. At a time when the Bank is trying to talk down market rate expectations, that’s not ideal. With economic risks growing, the BoE will want to retain some optionality for future meetings. Policymakers have also shown on more than one occasion now that they don’t feel pressured into a big move by what other central banks are doing. We’d therefore caution against assuming the BoE will hike by 75bp, just because that’s what the Fed and more recently the ECB have opted to do. 5   Finally, the committee is divided. While three members voted for a 75bp hike in September, one rate-setter – Swati Dhingra – voted for just 25bp. We think other committee members will remain reluctant to step up the pace of rate rises this late into its hiking cycle. That potentially heralds another three-way-vote-split on the committee on Thursday. Read this article on THINK TagsBank of England Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more
The Pound Is Now Openly Enjoying A Favorable Moment

Forex market opens tomorrow! British pound to US Dollar - 30/10/22

InstaForex Analysis InstaForex Analysis 30.10.2022 19:14
Analysis of Friday's deals: 30M chart of the GBP/USD pair     The GBP/USD pair tried to continue its downward movement on Friday after settling below the trend line, however, the upward movement resumed in the afternoon, so at the moment it is not at all obvious that the pound will start to fall. We have repeatedly said before that the British currency has a greater chance of growth than the euro. In reality, this is exactly what happens. The euro was flat on Friday, and the pound rose by the end of the day. The pound moved away from its annual lows by 1,300 points, and the euro - by only 550. There were no important events and reports in the UK on Friday, just like last week. Thus, there was practically nothing for traders to react to, except for several reports in the US, which turned out to be as neutral as possible. However, during the day the volatility was about 120 points, which is neither too much nor too little. The pound has accustomed us to high volatility in recent weeks, so 120 points now looks undignified. In general, even considering that the pound and the euro are unlikely to move radically differently, we believe that the British currency is more likely to continue to grow. 5M chart of the GBP/USD pair     You can clearly see on the 5-minute timeframe that there was no pronounced flat on Friday. Quotes, of course, for quite a long time were near the level of 1.1550, but still moved in a more trendy manner. The first sell signal was formed at the beginning of the European trading session, when the price settled below 1.1550. After that, it passed about 30 points down, which allowed beginners to set Stop Loss to breakeven, at which the position was closed. The second buy signal also turned out to be false, and the price could not even go up 20 points. Therefore, there was a small loss here. Since the first two signals turned out to be false, all the subsequent signals around the same level of 1.1550 should not have been worked out. As a result, the day ended with a minimal loss. It's okay. How to trade on Monday: The pound/dollar pair has overcome the ascending trend line on the 30-minute time frame, but has not yet been able to continue moving down. It is possible that the upward trend will continue, and the trend line will again have to be rebuilt. Next week the meetings of the Bank of England and the Federal Reserve will take place, so the pair can "fly" from side to side and show the highest volatility. On the 5-minute TF tomorrow it is recommended to trade at the levels 1.1356, 1.1443, 1.1479, 1.1550, 1.1608, 1.1648, 1.1716, 1.1755, 1.1793, 1.1863- 1.1877. When the price passes after opening a position in the right direction for 20 points, Stop Loss should be set to breakeven. There are no important events scheduled for Monday in the UK, and the calendar of events in the US is also empty. However, a little later in the week there will be very important events that the market can start working out in advance. Basic rules of the trading system: 1) The signal strength is calculated by the time it took to form the signal (bounce or overcome the level). The less time it took, the stronger the signal. 2) If two or more positions were opened near a certain level based on false signals (which did not trigger Take Profit or the nearest target level), then all subsequent signals from this level should be ignored. 3) In a flat, any pair can form a lot of false signals or not form them at all. But in any case, at the first signs of a flat, it is better to stop trading. 4) Trade positions are opened in the time period between the beginning of the European session and until the middle of the US one, when all positions must be closed manually. 5) On the 30-minute TF, using signals from the MACD indicator, you can trade only if there is good volatility and a trend, which is confirmed by a trend line or a trend channel. 6) If two levels are located too close to each other (from 5 to 15 points), then they should be considered as an area of support or resistance. On the chart: Support and Resistance Levels are the Levels that serve as targets when buying or selling the pair. You can place Take Profit near these levels. Red lines are the channels or trend lines that display the current trend and show in which direction it is better to trade now. The MACD indicator (14,22,3) consists of a histogram and a signal line. When they cross, this is a signal to enter the market. It is recommended to use this indicator in combination with trend lines (channels and trend lines). Important speeches and reports (always contained in the news calendar) can greatly influence the movement of a currency pair. Therefore, during their exit, it is recommended to trade as carefully as possible or exit the market in order to avoid a sharp price reversal against the previous movement. Beginners on Forex should remember that not every single trade has to be profitable. The development of a clear strategy and money management are the key to success in trading over a long period of time. Relevance up to 07:00 2022-10-31 UTC+1 Company does not offer investment advice and the analysis performed does not guarantee results. The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade. Read more: https://www.instaforex.eu/forex_analysis/325704
The Data May Keep The British Pound (GBP) From Rising

Australian trade balance, Bank's of England interest rate decision and more - Thursday, November 3rd commented by InstaForex

InstaForex Analysis InstaForex Analysis 30.10.2022 20:01
Thursday 03 November A public holiday in Japan. Japanese banks and exchanges will be closed, and trading volumes during the Asian trading session will be reduced. Australia. Trade balance This indicator evaluates the difference in the volume of exports and imports. The excess of exports over imports leads to a trade surplus, which has a positive impact on the national currency quotes. A decrease in the trade balance surplus may have a negative impact on the quotes of the national currency. Conversely, the growth of the trade surplus is a positive factor. Previous values (in billion Australian dollars): 8.324 (August), 8.733 (July), 17.670 (June), 15.016 (May), 13.248 (April), 9.738 (March), 7.437 (February), 11.786 (January). The level of influence on the markets is from low to medium. UK. Composite PMI and Services PMI (final release) The UK Composite PMI (from S&P Global) is an important indicator of the health of the UK economy. If the data turns out to be worse than the forecast and the previous value, then the pound is likely to fall sharply in the short term. Data better than the forecast and the previous value will have a positive impact on the pound. At the same time, a result above 50 is considered positive and strengthens the GBP, below 50 is considered negative for the GBP. Previous values: 49.1, 49.6, 52.1, 53.7, 53.1, 58.2, 60.9, 59.9, 54.2 (in January 2022). The preliminary score was 47.2. The level of influence on the markets (final release) is from low to medium. The PMI in the UK services sector (S&P Global) is an important indicator of the state of the British economy. The service sector employs the majority of the UK's working-age population and contributes approximately 75% of GDP. The most important part of the service industry is still financial services. If the data turns out to be worse than the forecast and the previous value, then the pound is likely to fall sharply in the short term. Data better than the forecast and the previous value will have a positive impact on the pound. At the same time, a result above 50 is considered positive and strengthens the GBP, below 50 is considered negative for the GBP. Previous values: 50.0, 50.9, 52.6, 54.3, 53.4, 58.9, 62.6, 60.5, 54.1 (in January 2022). The preliminary score was 47.5. The level of influence on the markets (final release) is from low to medium. UK. BoE interest rate decision. Minutes of the BoE meeting. The planned volume of asset purchases by the BoE. Monetary Policy Report The level of interest rates is the most important factor in assessing the value of a currency. Most other economic indicators are only looked at by investors to predict how rates will move in the future. It is possible that at this meeting the BoE will again raise the interest rate (up to 2.75% - 3.00%). However, despite the positive macro data coming out of the UK, the interest rate may remain at the same level of 2.25%, which could cause the pound to weaken. The minutes of the Monetary Policy Committee (MPC) of the BoE contain information on the distribution of votes "for" and "against" the increase/decrease in the interest rate. The report of the BoE on monetary policy, which will also be published at the same time, contains an assessment of the economic situation, the outlook for the economy and inflation. The soft tone of the report will help weaken the pound. Conversely, the tough rhetoric of the report regarding inflation, which implies a further increase in the interest rate, will cause the pound to strengthen. The level of influence on the markets is high. USA. Unemployment claims The US Department of Labor will publish a weekly report on the state of the US labor market with data on the number of primary and secondary claims for unemployment benefits. The state of the labor market (together with data on GDP and inflation) is a key indicator for the Fed in determining the parameters of its monetary policy. The result is higher than expected and the growth of the indicator indicates the weakness of the labor market, which negatively affects the US dollar. The drop in the indicator and its low value is a sign of the recovery of the labor market and may have a short-term positive impact on the USD. Initial and re-claims are expected to remain at pre-coronavirus lows, which is also positive for the dollar, indicating the stability of the US labor market. Previous (weekly) figures for initial jobless claims: 217,000, 222,000, 228,000, 237,000, 245,000, 252,000, 248,000, 254,000, 261,000, 244,000, 235,000, 231,000, 232,000, 202,000, 211,000 Previous (weekly) values for repeated claims for unemployment benefits: 1,438,000, 1,473,000, 1,437,000, 1,412,000, 1,434,000, 1,430,000, 1,420,000, 1,368,000, 1,384,000, 1,333,000, 1,372,000, 1,324,000, 1,331,000, 1,309,000, 1,309,000 The level of influence on the markets is medium to high. UK. Speech by BoE Governor Andrew Bailey As head of the central bank, Bailey has more influence on the British pound than any other person in the UK government. Market participants will closely follow the progress of his speech to better understand the prospects for the monetary policy of the BoE. Volatility during a speech by the head of the BoE usually rises sharply in the quotes of the pound and the FTSE London Stock Exchange index if it gives any hints of tightening or easing monetary policy of the BoE. If Bailey does not touch upon the topic of monetary policy, then the market reaction to his speech will be weak. The level of influence on the markets is from low to high. USA. Indices (from S&P Global) business activity (PMI): composite and in the service sector of the economy (final release) The monthly S&P Global report publishes (among other data) a composite PMI index and PMI indices in the manufacturing sector and in the services sector of the US economy, which are an important indicator of the state of these sectors and the US economy as a whole. A result above 50 is considered positive and strengthens the USD, below 50 is considered negative for the US dollar. The data above the value of 50 indicate an acceleration of activity, which has a positive effect on the quotes of the national currency. If the indicator falls below the forecast and, especially, below the value of 50, the dollar may sharply weaken in the short term. Previous values of the PMI indicator: -composite 49.5, 44.6, 47.7, 52.3, 53.6, 56.0; - in the service sector 49.3, 43.7, 47.3, 52.7, 53.4, 55.6. The level of influence on the markets (final release) is medium. It is also lower than the similar report from ISM (American Institute of Supply Management) USA. PMI in the services sector of the economy (from ISM, Institute of Supply Management) The ISM Index is the result of a monthly survey of the largest US companies from 62 segments of the service sector, which accounts for almost 90% of US GDP and about 80% of the country's working citizens. Previous values: 56.7 in September, 56.9 in August, 56.7 in July, 55.3 in June, 55.9 in May, 57.1 in April, 58.3 in March, 56.5 in February , 59.9 in January. Forecast for October: 56.0. This is a high figure. A result above 50 indicates an increase in activity and is seen as a positive factor for the USD. However, a stronger relative decline in the index could negatively impact the dollar in the short term. The level of influence on the markets is medium to high. Relevance up to 10:00 UTC+1 Company does not offer investment advice and the analysis performed does not guarantee results. The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade. Read more: https://www.instaforex.eu/forex_analysis/325632
Saxo Bank Podcast: A Massive Collapse In Yields, Fed's Tightening Cycle And More

Fed Is Not Facing The Problem Of A Falling Economy But The Same Cannot Be Said About The Bank Of England

InstaForex Analysis InstaForex Analysis 31.10.2022 08:20
The first of the three meetings of central banks has been left behind, and now the market will closely monitor the Fed's meeting, which will be held on Wednesday. All three banks continue to follow the path of tightening monetary policy, but the moment is approaching when rates will rise too much, and their further growth will no longer be necessary. Or the economy will slow down too much, which is why the regulator may refuse new increases. However, this is unlikely to happen in the next month or two, as inflation in the European Union, the UK, or the US remains well above the 2% target. Thus, I doubt that the Fed and the Bank of England will raise rates this week. Fed decision ahead In the case of the Fed, the situation is twofold. The US regulator has already raised the rate to 3.25%, and this Wednesday, it will likely rise to 4%. With one or two more increases, the rate will reach a level at which inflation will accelerate its slowdown. It has been declining for three months, but not yet at a high enough pace, so the regulator will not stop there in November. From my point of view, the demand for the US currency may begin to grow again in November-December 2022 since the factor of tightening the Fed's policy is still one of the most significant. The wave marking of the instruments can be transformed again, and the downward section of the trend can resume its construction. Lower probability of a recession in the United States Demand for the dollar may also begin to grow due to the decreasing likelihood of a recession in the United States. The quarterly US GDP report showed that the economy grew by 2.6%, although the previous two quarters were negative. Thus, the slowdown of the US economy is indisputable, but it cannot constantly grow and constantly accelerate its growth. In my opinion, everything is going well for the US economy. The fall wasn't strong enough to sound the alarm. It almost painlessly survived the increase in rates to 3.25%. Inflation has already started to decline, and there are not so many rate hikes left ahead to expect a major reduction.  Janet Yellen US Treasury Secretary Janet Yellen also believes the US economy is strong and the financial system remains stable. She noted that the situation in the global economy is "too dangerous" at the moment and poses risks to America's financial stability. However, according to her, the administration of President Biden is closely monitoring the situation in the economy and is ready, if necessary, to take certain measures to reduce risks. For the Fed, a strong economy allows it to continue raising rates almost painlessly and fight inflation. The Fed is not currently facing the problem of a falling economy, which may not allow it to raise the rate to the desired level.  The Bank of England The same cannot be said about the Bank of England, which recently had to launch an emergency asset purchase program to stabilize financial markets. Although it will continue to raise the rate, for now, there are big doubts that it will be able to bring the matter to an end without significant damage to the economy. Based on the analysis, I conclude that the construction of an upward trend section has begun, but it may not last very long. At this time, the instrument can build a new impulse wave, so I advise buying with targets near the estimated mark of 1.0361, which equates to 261.8% by Fibonacci, by MACD reversals "up." However, by the end of this trend section, you must be ready now.     Relevance up to 06:00 UTC+1 Company does not offer investment advice and the analysis performed does not guarantee results. The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade. Read more: https://www.instaforex.eu/forex_analysis/325728
Australia Is Expected To Produce A Bumper Year Of Crops

Grain Prices May Rise As A Result Of Russia's Actions | Stock Markets Increased Profit

Saxo Bank Saxo Bank 31.10.2022 08:58
Summary:  Equities closed higher on Friday on the Wall Street, sending a bid tone to Asian stocks to start the new week. However a host of risks ahead including the Fed meeting which will see another jumbo rate hike but focus is also whether the members send out signals of a downshift in rate hike path. WSJ Timiraos has now hinted at higher for longer interest rates in his latest article, and this has helped a bid tone in US dollar to return in early Asian trading hours. Geopolitics also took an ugly turn with Russia backing off from grain export deal, threatening food crisis again. What is happening in markets? Need to know Asian stocks look to build on last week's US gains, though investors may be cautious ahead of the FOMC meeting. The S&P 500 jumped 2.5% on Friday in another turbulent session, buoyed by tech shares and some modestly positive economic data. Treasuries snapped a three-day rally, with 10-year yields rising back to around 4%, while the dollar inched up. Russia pulls out of the agreement to allow Ukrainian crop shipments, meaning its ready to halt Ukraine Wheat exports. Chinese President Xi Jinping will host a flurry of foreign leaders this week, making a return to the world stage after China's Covid Zero restrictions. On Thursday some Chinese cities ramped up COVID-19 restrictions and the IMF downgraded China’s growth expectations to 3.2%, after a 8.1% rise in 2021. Oil and gold both retreated. The Nasdaq 100 (USNAS100.I) & S&P 500 (US500.I) trade near 6-week highs Apple (AAPL) shares rocked up 7.6% after it reported mostly better than expected results last week, and the sentiment buoyed technology shares, helping the S&P 500 and the Nasdaq 100 notch their longest weekly rising streak since August. Plus, economic data showed small signs of improvement in the battle against inflation. This week, the most prominent companies to report quarterly results include; Exxon Mobil, Berkshire Hathaway, Advanced Micro Devices, Qualcomm, UBER, PayPal, and Starbucks. If you are looking for inspiration this week, here is the Five Stocks To Watch video. Australia’s ASX200 (ASXSP200.1) futures suggest a bullish 1.3% rise on Monday AM The Reserve Bank of Australia on Tuesday is expected to deliver a 2nd straight quarter of 0.25% hikes on Tuesday’s meeting, according to Bloomberg. Australia’s corporate bond market is showing signs of succumbing to the global volatility in fixed income, unleashed by central bank tightening. And this is causing Australian tech stocks to remain pressured. Focus today is on earnings from Nickel Mines (NIC), Origin Energy(ORG), and coal company Corando Global (CRN). Elsewhere, pressure will likely be on iron ore giants, which might expect their selling rout after China increased covid-19 restrictions. Focus will be on Fortescue Metal, BHP and Rio Tinto which are all trading under their 200-day moving average. Crude oil (CLX2 & LCOZ2) trades at $88. Iron ore (SOCA) erases 3-years of gains Oil fell on Friday with WTI (CLX2 & LCOZ2) settling near $88 but posting a 3.4% weekly gain, despite the biggest crude importer, China, widening its COVID-19 curbs. This week; OPEC unveils its 2022 World Oil Outlook at the ADIPEC conference Monday. Plus, there is a swathe of energy ministers from Saudi Arabia, Kuwait, Iraq and Nigeria will also weigh in, as well as CEOs from BP and Occidental. Meanwhile, Iron ore (SCOA) now trades at its lowest level since 2019, US$78.40 after China confirmed it will maintain its covid-19 policies. Markets, businesses, commodities with high exposure to China see heavy selling this week. Will it continue?  Assets with exposure to China are being heavily penalized as it seems investors are realigning their portfolios somewhat with the priorities of President Xi and his policy on stronger state control over the economy, which means markets could be challenged for years. Xi confirmed this stance on Sunday 24 October, and on top of that China increased covid-19 curbs, which is why Hong Kong’s Heng Seng suffered at 8.3%, drop last week, while the iron ore (SCOA, SCOX2) price fell ~15% last week, and now traded at $78.40 its lowest level since Feb 2019, on concerns that the biggest iron ore consumer will further slow demand, all while iron ore seems oversupplied. The biggest pure play iron ore company in the southern hemisphere, Fortescue (FMG) shares fell 10% last week, plus what added to the selling was that Fortescue affirmed it is increasing its spending, while its margins are tightening. Fortescue says it will ramp up iron ore production at its expanded facility in March, instead of June. Meaning, this could likely further push the iron ore market into greater oversupply. Some investors are concerned Fortescue Metals technical indicators show that perhaps more selling could be ahead, despite the stock trading somewhat in oversold territory. US dollar back on the front foot in Fed week The US dollar was seen returning to mild gains against most major currencies after Fed-pivot bets picked up last week. A turnaround in comments from Fed whisperer Nick Timiraos who is now suggesting higher-for-longer rates (read below) may be one of the reasons. The uptick in geopolitical worries with Russia pulling out of the grain deal may however also play a part in bidding safe haven flows to the dollar. Fed is expected to hike rates by another 75bps this week, and pricing for December is also close to 75bps still. This will likely revive pressure on the JPY this week, while GBP seems to have priced in all the good news for now. USDJPY heading to 148 in early Asian hours while GBPUSD testing 1.1600. Wheat futures (ZWZ2) gap higher Wheat futures (ZWZ2) gapped up 7% to open at $8.88/bushel after Russia pulled out of the UN brokered black sea grain deal over the weekend after Ukraine carried out an attack on Russia’s Black Sea fleet off Sevastopol. Corn has also gained 2.5% to open at $6.96/bushel. What to consider? US core PCE sends no clear signal to the Fed The US core PCE, Fed’s preferred inflation gauge, remained elevated for September as expected. The core measure came in at 5.1% YoY from 4.9% previously, but remained a notch softer than expected at 5.2% YoY. On a m/m basis, gains were flat at 0.5% as expected. While the case for November’s 75bps rate hike from the Fed is still intact, it still remains hard to argue a downshift with the kind of strength we are seeing in the US economy. WSJ Fed whisperer now signalling higher-for-longer rates Nick Timiraos, who is seen as the Fed’s messenger, had sent shivers across markets last week with a report suggesting that the November FOMC meeting may be used to signal a downshift to smaller rate hikes. This saw equity markets extending gains while the USD was on the backfoot last week, but now he has come out with another article saying that higher savings buffers and lower interest expenses could make the Federal Reserve raise rates higher and keep them there for longer. Russia exits Ukraine grain deal Russia suspended its participation in the Ukraine grain export deal after a swarm of drones targeted at least one Russian warship from the Black Sea navy. This will block the passage of millions of tonnes of grain via southern Ukraine and may lead to a fresh jump in prices. The report is especially catastrophic as it comes together with massive wheat crop damage with the US crop belt seeing La Nina for its third consecutive year. Putin is getting desperate after losing ground militarily and in terms of Europe’s winter gas requirement, so he has likely gone back to using the food crisis as another tool. Fed, BOE, RBA meet – what can you expect The Fed and BOE and RBA are expected to hike this week, with robust labour markets defying efforts to tamp down inflation, despite predictions of a imminent recession. Companies are complaining of chronic worker shortages, and a persistent mismatch between hiring demand and supply is supporting wages and shielding consumers from slowdowns. Consensus expects the RBA to take the cash rate from 2.6% to 2.85% on Tuesday. On Wednesday the Fed meets and consensus expects to take rates up by 0.75% to 4%. All in all, Goldman Sachs raised its peak Fed rate prediction to 5% from 4.75%, citing "uncomfortably high" prices will keep rates higher for long. On Thursday the Bank of England meets, and consensus expects to take the rate from 2.25% to 3%. This means FX markets are expected to be quite volatile along with equity market, especially interest rate sensitive parts of the market, tech, consumer spending and real estate stocks. Lula’s comeback in Brazilian presidential elections Luiz Inácio Lula da Silva claimed a victory in Brazil’s presidential election on Sunday, defeating incumbent rightwing leader Jair Bolsonaro by less than two percentage points and setting the stage for a return to leftwing governance in Latin America’s largest nation. Brazilian ETFs including such as EWZ:arcx, IBZL:xams, RIO:xpar, BRZU:arcx, or BRQ:arcx may be the ones to watch, as will be the BRL later in the day. BRL has been the best performer in the EM basket (excluding Russian rouble) against the USD so far this year. Lack of economic plans from Lula may make a case for market outperformance somewhat weaker, however. China PMIs out today at 9:30am SGT/HKT China’s October PMIs are due for a release today and expectations are for the manufacturing number to dip into the contractionary territory with Bloomberg consensus expecting a 49.8 print from 50.1 in September. A slowdown is also expected in the non-manufacturing print, but it still may remain in expansion.   For a global look at markets – tune into our Podcast.     Source: https://www.home.saxo/content/articles/equities/market-insights-today-31-oct-31102022
The Commodities Feed: Stronger Oil Prices Boost US Oil Production and Supply

Escalating Tensions With Russia | This Week Focus On The Fed, RBA And The Bank Of England Decisions

Swissquote Bank Swissquote Bank 31.10.2022 10:09
Despite the broadly disappointing Big Tech earnings, and the heavy selloff we saw in most Big Tech stocks, US equities ended last week on a positive note, thanks to record profits from US Big Oil companies, and a much better than expected reaction to Apple results. American crude consolidates above the 50-DMA, but failed to clear the $90 offers last week, as recession fears prevent a further rally from developing. Fed, RBA & Bank of England This week, attention shifts to Federal Reserve (Fed), expected to raise rates by another 75bp. The Reserve Bank of Australia (RBA) and the Bank of England (BoE) are also expected to hike by 25bp, and 75bp respectively.Elsewhere, news is not great. Russia decided to pull out of a deal to allow Ukrainian crop shipments; wheat futures jumped more than 5% this morning. China China’s manufacturing and services PMI slipped below 50, to the contraction zone in October due to Covid restrictions in major cities, and many cities are still dealing with lockdown measures, and Xi Jinping made sure to emphasize that he will continue to fight… the virus. Brazil In Brazil, Lula won the election bearing Bolsonaro by less than 2 percentage points. The latter said he refuses the defeat, which means that we will see some more political uncertainty in Brazil in the coming weeks. Watch the full episode to find out more! 0:00 Intro 0:24 Big Oil earns Big 4:07 Big Tech disappoints 5:41 Don’t look at Powell to make you feel better 7:19 Russia scraps wheat deal, China slows, Brazil elections 8:32 Watch Fed, BoE, RBA decisions, US jobs & EZ inflation 9:30 …and some more earnings… Ipek Ozkardeskaya  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. #ExxonMobil #Chevron #Shell #BP #earnings #crudeoil #natural #gas #Fed #RBA #BoE #monetary #policy #decision #USD #GBP #AUD #EUR #ECB #inflation #wheat #futures #Ukraine #Russia #war #Brazil #elections #Lula #Bolsonaro #SPX #Dow #Nasdaq #investing #trading #equities #stocks #cryptocurrencies #FX #bonds #markets #news #Swissquote #MarketTalk #marketanalysis #marketcommentary ___ Learn the fundamentals of trading at your own pace with Swissquote's Education Center. Discover our online courses, webinars and eBooks: https://swq.ch/wr ___ Discover our brand and philosophy: https://swq.ch/wq Learn more about our employees: https://swq.ch/d5 ___ Let's stay connected: LinkedIn: https://swq.ch/cH
Hang Seng Index Plummets -2% Amid Weak China Data, Short-Term Trend Intact

Major Currency Pairs (EUR/USD And GBP/USD) Are Now Subject To A Future Fed Decision

InstaForex Analysis InstaForex Analysis 31.10.2022 11:02
According to a preliminary estimate released by the Bureau of Economic Analysis, U.S. real GDP increased at an annualized rate of 2.6 percent in the third quarter of 2022, well above expectations. The main contribution to GDP growth was from data on foreign trade, other indicators turned out to be noticeably less positive. Take note that the US stock indexes were impressed by the strong reporting of companies, the S&P 500 index rose 2.5%, exceeding the cumulative fall of 1.35% over the previous two days, ending the week up 3.95%, which was the second consecutive weekly gain. In general, the US economy looks quite confident, which gives reason to expect that the Federal Reserve will not give clear signals about the slowdown in tightening, and the dollar may well win back the positive data, continuing to strengthen. In any case, the probability of a rate hike by the same 0.7% in December remains high. European stock indices showed mixed dynamics, high inflation and the threat of an energy crisis are still the main negative factors for the euro, which will prevent it from resuming growth. EURUSD As expected, the European Central bank raised interest rates by 0.75%, but did not give any signal that the pace of rate hikes will continue to be high. Most likely, the ECB is inclined to slow down the pace of rate hikes, as it noted "substantial progress" in the revision of monetary policy, plans for quantitative tightening will be determined at the December meeting, which came as a surprise to markets that were waiting for specifics. The insufficiently hawkish stance of the ECB provoked a decline in global bond yields, European ones suffered the most, and amid accelerating inflation. Germany's overall consumer price index reached an annualized rate of 11.6% in October, well above the 10.9% expected by economists, while Italy (11.9% vs. 9.5% experience) and France (7.1 % vs 6.5% experience) also exceeded expectations. The net long position on the euro increased during the reporting week by 3.4 billion to 9.3 billion, this is a very strong growth, indicating an increase in the positive relative to the euro. However, despite such a strong change, the settlement price turned down, the reason being that even the apparently hawkish decision of the ECB did not lead to an increase in European bond yields, and the yield differential between European and US bonds did not decrease, but even slightly increased. This discrepancy between the long-term positioning in the futures and options market, which is reflected in the CFTC report, and current yields does not yet allow us to break the trend towards the weakening of the euro. EURUSD, as we suggested a week earlier, made a successful attempt to corrective growth, it passed the resistance of 0.9920/40, however, short positions resumed in the area above parity. We assume that the euro will be under slight pressure ahead of the Federal Reserve meeting, growth above the local high of 1.0092 is unlikely, trading will go in a sideways range with a downward trend. The main target is the support zone of 0.9820/40. This scenario can be canceled if the Fed shows more pronounced weakness on Wednesday than the markets have been laying down so far. GBPUSD The Bank of England will hold a regular meeting on Thursday, and the rate is expected to rise by 0.75%. The government change has calmed the markets, yields have pulled back, and now the focus will be on inflation forecasts, as they directly affect the position of the BoE. The net short position on the pound slightly decreased during the reporting week by 0.2 billion to -3.4 billion, positioning, unlike the euro, remains confidently bearish. The yield differential widened sharply in favor of the dollar, resulting in a rapid decline in the settlement price. The pound on the wave of rumors about the easing of the Fed's position still went higher than we expected, and reached the upper limit of the long-term bearish channel. We assume that a high will be formed here, an attempt to test the strength of the local high of 1.1735 is not ruled out, but a downward reversal from current levels is much more likely. Technical support at 1.1336 and 1.1147 can also act as immediate targets. High volatility is unlikely before the announcement of the results of the Fed meeting.   Relevance up to 09:00 UTC+1 Company does not offer investment advice and the analysis performed does not guarantee results. The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade. Read more: https://www.instaforex.eu/forex_analysis/325776
Indonesia's Inflation Slips, Central Bank Maintains Rates Amidst Stability

The Currency Markets This Week Will Be Dominated By Fed Decisions

ING Economics ING Economics 31.10.2022 11:58
It is a busy week for FX markets, with key policy rate meetings on both sides of the Atlantic and some tier-one data releases. The question to be answered this week: is the Federal Reserve ready to pivot? We would argue that the Fed has less cause than many to pivot. And weak growth overseas should mean that it is too early to unwind long dollar positions In this article USD: Wednesday's FOMC will dominate EUR: Markets still price a 75bp ECB hike in December GBP: Thursday's BoE could do some damage CEE: Tough times are back USD: Wednesday's FOMC will dominate FX markets this week will be dominated by Wednesday's FOMC meeting and whether the Fed provides any oxygen to the idea of a pivot - or a shift to a slower pace of tightening. As we discuss in our FOMC preview, the Fed faces several challenges here, but we suspect the bar is quite high for a pivot and we feel it is too early to call time on the dollar's rally. After all, the market in effect already prices the pivot (pricing a 75bp hike this week and a 50bp hike in December) and we suspect the chances of another 75bp hike in December are under-priced. In addition, this week sees a whole raft of US data culminating in Friday's nonfarm employment data. We forecast 220k in job gains and an unemployment rate of 3.6% - still below the 3.8% the Fed forecast for year-end. Recall that even with the unemployment rate rising to 3.8%, the Fed's dot plots had assumed that a policy rate in the 4.25-4.50% area would be appropriate for the end of this year. As always there are two sides to the dollar story - what's going on at home and what's going on abroad. High beta currencies like the Norwegian krone, New Zealand dollar and British pound have been some of the best performers against the dollar over the last month. That has largely been due to the turnaround in sterling. But as my colleague James Smith discusses in his Bank of England (BoE) preview, the BoE may well disappoint with just a 50bp hike.  A weaker tone in sterling could undermine the recent renaissance in European currencies and push more wind back into the dollar's sails. At the same time, Chinese data continues to disappoint, with the October composite PMI dropping back into contraction territory for the first time since May. In short, it looks as though the dollar's month-long, 4.5% correction could have ended last Thursday and events this week could prove a catalyst to send the dollar back towards the highs. Our base case does see the dollar retesting the highs later this year. A break of 111.00/10 in DXY today could open up a move to the 111.80 area. Chris Turner EUR: Markets still price a 75bp ECB hike in December The eurozone continues to battle with inflation and today should see the release of a new cycle high in CPI at 10.3% year-on-year - and potentially even higher given the German CPI release. Today we will also get a first look at 3Q22 eurozone GDP, expected at 0.1% quarter-on-quarter. The news may temporarily push eurozone rates higher, even though a 75bp hike is virtually priced for the 15 December ECB meeting. Ultimately, however, our macro team believes the ECB will only hike 50bp in December and that the terminal rate for this cycle proves to be in the 2.25% area rather than the 2.80% currently priced by the markets. And bluntly, the ECB has far more cause than the Fed to pivot. With global growth under pressure from tighter rates and a misfiring Chinese economy, we think the eurozone and the euro will continue to struggle. That is why last Thursday's high of 1.0089 in EUR/USD could have been significant. A close back under the 0.9900/9910 area this week would support our preferred view of EUR/USD retesting the lows near 0.95. Chris Turner GBP: Thursday's BoE could do some damage GBP/USD is consolidating above the important 1.1500 level, holding onto recent gains. The highlight this week will be Thursday's Bank of England meeting. The market firmly prices 75bp, but we think the risk of a softer 50bp is under-priced as the BoE prepares for the coming recession. As we have argued previously - now that a lot of the fiscal risk premium has come out of sterling - the forthcoming tighter fiscal and more dovish than expected monetary policy could prove a bearish combination for sterling. We are dollar bulls and would thus favour GBP/USD breaking back under 1.1500 based on this week's confluence of events. This would also point to current EUR/GBP losses under 0.8600 proving short-lived. Chris Turner CEE: Tough times are back This week we have a busy calendar not only at the global level but also in Central and Eastern Europe. Today we start with Polish inflation, which will be crucial for next week's National Bank of Poland meeting. We expect a jump from 17.2% to 18.1% year-on-year, slightly above market expectations, mainly due to higher fuel, energy and food prices. Tomorrow in the Czech Republic, 3Q GDP data, October PMI and the state budget result will be released. The first GDP result in the region should show a contraction in the economy and confirm the start of a shallow recession. On Wednesday, we will see October PMIs in Poland and Hungary, which will confirm the downward trend in industrial sentiment. On Thursday, the highlight of this week is the Czech National Bank meeting. In line with the market, we expect interest rates to remain unchanged. A new forecast will be presented which will show lower inflation but higher wage growth, which together with the cost of FX intervention is the main risk for us in terms of a possible additional interest rate hike at the coming meetings. However, we consider the CNB hiking cycle to be finished. The FX market in the region will be dominated by global events in the coming days. Already last week, the positive trend in CEE was halted by the ECB meeting. This week will see a series of central bank meetings led by the Fed. Therefore, we see both support from high-interest rate differentials in the region and EUR/USD as being at risk. In addition, gas prices have been rising again in the last two days and many of the reasons for the strengthening trend in the CEE region over the past two weeks are now dissipating. Of course, at the local level, we will be watching the inflation numbers in Poland and the CNB meeting in particular but this week speaks strongly against CEE FX.  We see the Czech koruna as the most vulnerable at the moment, which will again be the focus of short positioning ahead of the central bank meeting. We will likely see a move towards the 24.60-24.70 EUR/CZK levels. The Hungarian forint is likely to look above 415 EUR/HUF again. On the other hand, the Polish zloty should be best positioned this week, supported by a high inflation number and an increase in NBP rate hike bets. Frantisek Taborsky Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more
Analysis And Trips For Trading The GBP/USD Pair In Short And Long Positions

The Great Britain Needs Foreign Investment To Finance Current Deficit

InstaForex Analysis InstaForex Analysis 31.10.2022 12:06
Slow and steady wins the race? If at the time of the announcement of £45bn fiscal stimulus by the Liz Truss government, the derivatives market estimated the repo rate ceiling in the current monetary tightening cycle above 6%, then it has now decreased to 4.5% by May 2023. However, in September, the pound plunged to a historic low against the US dollar, and by the end of October it recovered by 12%. Will a small move by the Bank of England in November push GBPUSD even higher? If at the peak of the market turmoil the derivatives market believed in a giant 150 bps increase in the repo rate, then as the MPC meeting approaches, we are talking about 75 bps. The probability of such an outcome is estimated at 90%, and it should be noted that this is already so much. As a result, the cost of borrowing will rise to 3%, the highest level since 1989. Dynamics of expectations for the REPO rate According to Barclays, a larger move of 100 bps can be justified by a strong labor market, which accelerates inflation due to the rapid growth of wages. At the same time, 75 bps is the optimal solution, since there are no contradictions between fiscal and monetary policy in Britain now. On the contrary, ING and Citigroup believe that BoE Governor Andrew Bailey and his colleagues are able to surprise investors by raising the repo rate by 50 bps. This will potentially further ease the pressure on the bond market after the collapse caused by unjustified tax cuts from the Liz Truss government. In my opinion, the markets have already calmed down. The combination of Rishi Sunak as prime minister and Jeremy Hunt as Chancellor of the Exchequer is working in their favor. Britain needs foreign investment to finance its current account deficit, and the return of confidence in the government provides these flows, contributing to the growth of GBPUSD quotes. Another thing is that the fate of the pair does not entirely depend on the BoE. The day before its verdict, the Federal Reserve will announce its decision, and a day after the MPC meeting, a report on the US labor market will be released. The +200,000 expected by Bloomberg analysts for non-agricultural employment is a very decent figure, which will indicate the resilience of the US economy to monetary tightening and will allow the Fed to continue what they started. The position of the FOMC is of paramount importance. If it changes amid deteriorating macroeconomic statistics, the markets will smell a dovish turn, which will negatively affect the US dollar. I don't think falling Treasury yields, a weaker dollar and a rally in stocks are in the plans of Fed Chairman Jerome Powell and his colleagues. Surely the Fed will continue to talk about the determination that will support the US currency. Technically, the 1-2-3 reversal pattern continues to be realized on the GBPUSD daily chart, which can be transformed into a Dragon. This requires consolidation. If we consider this scenario as a baseline, a decline below 1.15 is a reason for short positions, followed by longs from 1.143 and 1.139.     Relevance up to 10:00 UTC+1 Company does not offer investment advice and the analysis performed does not guarantee results. The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade. Read more: https://www.instaforex.eu/forex_analysis/325796
UK GDP Already Falling And Continuing To Do So For This Calendar Year, Copper Is Still Within A Tightening Range

ING Economics presents four possible variants of Bank of England decision and their possible consequences for i.a. GBP/USD

ING Economics ING Economics 31.10.2022 12:51
Thursday's Bank of England meeting has become a close call, and we now narrowly favour a 50bp rate hike. That would be a surprise for markets, sending gilt yields lower and driving GBP/USD back towards 1.14   Shift in UK leadership reduces pressure on the Bank of England   Four scenarios for the Bank of England meeting Forecasts based on spot rates as of 31 October. GBP/USD at 1.1560 and 10Y yields at 3.50 Source: ING We narrowly expect a 50bp rate hike this week Judging by recent comments, it’s increasingly clear that the Bank of England is uncomfortable with the amount of tightening priced into financial markets over coming months. Investors expect Bank Rate to peak just shy of 5% next year (from 2.25% currently). That leaves two potential options for Thursday’s meeting. Firstly, the BoE could validate market expectations and hike by 75bp for the first time in this tightening cycle, but signal clearly that it’s likely to be a one-off. That’s the consensus view among economists. Alternatively, the Bank could hike by 50bp, as it did in September, but continue to signal that it is prepared to hike forcefully if required. We now narrowly think this is the more likely outcome, though in either scenario the committee is likely to be highly divided. Read our preview for more detail on our thinking. The central message though, be it via the vote split, the new forecasts or the language in the policy statement, is that markets are overestimating the scope for future rate hikes. Our own view is that Bank Rate is unlikely to go above 4%. Regardless of whether we get a 50bp or 75bp hike this week, we think we’ll get a 50bp hike in December and another 25 (or perhaps 50bp) move in February before the Bank pauses. Six reasons why the BoE could hike by 50bp this week Source: ING Gilts: re-steepening on a 50bp hike For gilts, and by extension sterling-denominated rates, all of the good fiscal news is already in the price. Granted, larger windfall taxes could help close the ‘political risk premium’ that opened against euro and dollar rates in September. This is likely to be balanced by the reduced sense of urgency that the government potentially feels in implementing unpopular fiscal tightening, now that markets have calmed down somewhat. In short, we think fiscal risks are now reduced, and roughly balanced. The focus is instead squarely on the BoE meeting, especially since the 31 October budget has been delayed. A 50bp call by the BoE would be a powerful signal that it doesn’t intend to bow to market pressure for aggressive tightening. There is a risk to this strategy, however. Markets have consistently priced a more hawkish path than the BoE has signalled ever since the start of this tightening cycle last year, so the BoE faces an uphill battle to convince them that smaller increments are the correct approach. A 50bp call by the BoE would be a powerful signal that it doesn’t intend to bow to market pressure Despite this risk, we expect a bullish reaction in gilts. The move would be a hint of a less hawkish BoE reaction function but this is likely to be balanced by greater term and inflation premia baked into longer-dated yields. The gilt rally into this meeting already incorporates decent dovish expectations so a 50bp hike would allow gilts to consolidate their gains below 3.5%, though they will struggle to make more headway towards lower yields. A more noticeable reaction would be a re-steepening of the curve on the lower BoE path at the short end and greater inflation premia at the long end. GBP: A 50bp rate hike would weigh on the currency Sterling continues to trade with high volatility in the FX options market, which prices a 150 pip GBP/USD range for Thursday. As per the scenario analysis table, we believe the disappointment of a 50bp rate hike would send GBP/USD back down to the 1.1400 region this week. Providing some backing to this view is the external environment, where we think the balance of risks favour a stronger dollar. Plus, tighter liquidity conditions around the world will typically weigh on currencies like sterling, with large external funding needs. A GBP/USD rally from here requires a soft dollar environment, the Sunak government credibly filling the £35bn funding gap at the 17 November Autumn statement, and the BoE pushing ahead with a more aggressive tightening cycle. We think the combination of all three is unlikely.   Read this article on THINK Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more
Solid Wage Growth in Poland Signals Improving Labor Market Conditions

Eurozone Inflation Touches Record High, US Treasury, What To Watch At BoE Rate Setting Meeting

Rebecca Duthie Rebecca Duthie 31.10.2022 12:59
Summary: Consumer prices in the Eurozone reached a new record high. Investors in US government bonds are pleading with the Treasury department to intervene. The BoE will this week publish its latest decision on interest rates. Eurozone inflation rises for 12th consecutive month According to a flash estimate from the European Union's statistics office, consumer prices in the Eurozone reached a new record high for the twelfth consecutive month, driven by a persistent rise in energy prices. In October, annual inflation in the currency region increased by 10.7%, exceeding economists' expectations of 10.2% and up from the previous level of 9.9%. As a result of ongoing tensions regarding the provision of crucial Russian gas flows into Europe after the start of the war in Ukraine, energy costs increased by 41.9% during the month. Food, drink, and tobacco prices all went up 13.1%. Core inflation, which excludes volatile commodities like food and energy, registered at 5.0%, up from the previous reading of 4.8% and also higher than expected. Businesses have displayed symptoms of pessimism about the future, and economists anticipate that the Eurozone will enter a recession this year as a result of spillover effects from this skyrocketing inflation. According to Eurostat's flash statistics, which was also issued on Monday, the third quarter saw an unusually severe slowdown in economic development in the Eurozone. The seasonally adjusted gross domestic product increased by 0.2% when compared to the prior three months, which was less than the 0.8% increase seen in the second quarter and the 1.0% increase expected. In morning trade, the euro decline against the dollar and little changed thereafter. ⚠️BREAKING:*EURO ZONE ANNUAL INFLATION RATE JUMPS TO 10.7% IN OCTOBER, HIGHEST LEVEL ON RECORD 🇪🇺🇩🇪🇫🇷🇮🇹🇪🇸🇳🇱 pic.twitter.com/3qj1Ddy4dr — Investing.com (@Investingcom) October 31, 2022 Investors pleading with US Treasury department Investors in US government bonds are pleading with the Treasury department to intervene in the market in the hopes that this week will bring signs of potential buybacks following months of erratic price fluctuations and little liquidity. The fast rate hikes and quantitative tightening program implemented by the Federal Reserve this year have heightened the tension in the typically subdued $24 trillion Treasury market. When the Treasury announces its funding for the fourth quarter in the coming days, investors are hoping for hints about what it has in store. The cost of borrowing for the US government and the benchmark for prices across asset classes are determined by Treasury rates, which have fluctuated drastically in 2022. Even though the Treasury bond market is supposedly the most liquid in the world, the volatility has made it more difficult and expensive for investors to buy or sell Treasury bonds.Investors, strategists, and primary dealers anticipate that the Treasury will provide some information in the documents it releases this week after reviewing the survey's findings with them last week. The expected financing requirements for the fourth quarter and the Treasury's intentions for issuance will be revealed on Monday. Investors urge US Treasury to boost bond market liquidity with buyback scheme https://t.co/xlPeGVvvK2 — Financial Times (@FT) October 31, 2022 BoE to make UK economy estimates and interest rate decision The Bank of England will this week publish its latest decision on interest rates along with updated estimates for the UK economy in what is the most anxiously awaited monetary policy meeting in years. One of the most volatile periods in recent UK economic history preceded the BoE's most recent interest rate meeting on September 22. Liz Truss' "mini" Budget, which included £45 billion in unfunded tax cuts, caused a spike in government borrowing costs, necessitated an emergency BoE intervention, and increased mortgage rates for homeowners. In the government's autumn statement on November 17, the new prime minister Rishi Sunak promises a new economic plan that will demonstrate how debt would decrease as a share of gross domestic product over the medium term. Thus, without complete knowledge of Sunak's strategy, the BoE Monetary Policy Committee will be largely "flying blind" when it announces its interest rate decision on Thursday. Four things to watch out for are listed below. Interest rate decision. Economic growth and inflation forecasts. Quantitative tightening. Monetary policy management expectations. Four things to watch at the Bank of England’s rate-setting meeting https://t.co/u2hMRgYqu7 — Financial Times (@FT) October 31, 2022 Sources: ft.com, twitter.com, investing.com
China's Position On The Russo-Ukrainian War Confirmed At The G20 Meeting

Positive Signals In Global Markets Helped The Asian Stock Market

TeleTrade Comments TeleTrade Comments 01.11.2022 09:15
Chinese equities are enjoying significant gains after upbeat Caixin Manufacturing PMI data. The market mood has turned cheerful which has weighed on the DXY. Oil prices have picked bids despite the soaring fears of a slowdown in overall demand. Markets in the Asian domain have extended their recovery on Tuesday amid positive cues from global markets. More traction in risk-perceived assets has trimmed the US dollar index (DXY) appeal. The DXY has slipped to near 111.30 as investors have shrugged off uncertainty ahead of the interest rate decision by the Federal Reserve (Fed). At the press time, Japan’s Nikkei225 added 0.10%, ChinaA50 soared 2.60%, Hang Seng jumped 2.37%, and Nifty50 gained 0.74%. Chinese equities are having a ball after the release of the upbeat Caixin Manufacturing PMI data. The economic data landed higher at 49.2 vs. the projections of 49.0 and the prior release of 48.1. The PMI data has remained solid despite the continuation of the no-tolerance approach to Covid-19 by the Chinese administration. Also, the official manufacturing data from the China National Bureau of Statistics (NBS) was weaker than projections. Outside Asia, Reserve Bank of Australia (RBA) Governor Philip Lowe hiked its Official Cash Rate (OCR) by 25 basis points (bps) for the second time to 2.85%. Australian central bank policymakers have adopted a less hawkish approach, keeping in mind that economic prospects could not be sacrificed entirely in achieving price stability. On the oil front, oil prices have rebounded firmly after sensing buying interest around $85.00. Black gold has witnessed demand despite a fresh rate hike cycle by western central banks. This week, the Bank of England (BOE) and the Fed will announce their monetary policies. As per the projections, the central banks will announce a rate hike of 75 bps. This may trigger fears of a slowdown in overall demand and may also dampen the demand for oil.
Forex: British pound against US dollar - technical analysis - January 2nd

"Hikes are only partially transmitted to markets, and so to the economy"

ING Economics ING Economics 02.11.2022 14:35
There is a new front in the war against gilt market dislocations: the repo squeeze and short-dated gilt shortage. Pressure is building on the Bank of England and Debt Management Office to intervene on the repo market Source: Shutterstock Problems in the transmission of BoE rates It is becoming increasingly difficult to buy short-dated gilts, or to borrow them via repurchase agreements (repo). The crisis has been brewing for some time due to increased market volatility and investors' risk aversion, but it worsened when pension funds and other market participants decided to increase their liquidity holdings in anticipation of the September/October gilt crisis. This abundance of liquidity is typically used to buy safe short-dated securities, such as gilts, or lent out against high-quality collateral on the repo market. On the repo front, the squeeze is visible in the drop of the RONIA index, a measure of overnight repo rates, relative to the Bank Rate, now 42.5bp below. Apart from quarter-end dislocations, this is a new record. On the gilt front, this is visible in ever-widening front-end swap spreads: 2Y gilt yields are now 125bp below 2Y swaps. The results of the first BoE gilt Quantitative Tightening sale also highlighted that demand is strongest for the shortest bond on offer (3Y), reinforcing the impression of a shortage of bonds at the front-end.  Hikes are only partially transmitted to markets, and so to the economy This could become an issue for the BoE. Firstly because this means hikes are only partially transmitted to markets, and so to the economy. There is also a market functioning issue: squeezed repo and swap spreads suggest liquidity in short bonds is worsening. And indeed, we've observed that liquidity (as measured by bid-offer spreads) in short-dated gilts has been most affected by the recent turmoil, even when most of the attention was on the long-end of the curve. Gilt liquidity is bad, but worse at the front-end Source: Refinitiv, ING Towards greater intervention in the repo market What can be done about this? The DMO has standing and special repo facilities where it can lend out gilts to market participants (typically dealers, called GEMMs) on repo for a week. These bonds are most often created by the DMO for that purpose, but also sometimes made available by the BoE from its APF (QE) portfolio as was, for instance, the case in the spring of 2020 during the 'dash for cash'. Use of these facilities has been limited (compared to the scale of the repo and gilt markets) in the past, however. The reason for this  is that counterparties can typically borrow the bonds at 75bp below the Bank Rate, a punitive rate, even in light of the recent drop of Ronia (42.5bp below). The DMO may also be reluctant to create bonds on such a large scale at a time of increased market scrutiny on public borrowing. Uses of the DMO's repo facilities is limited due to punitive pricing Source: Refinitiv, ING   There are many long-term solutions possible, as discussed, for the Fed, SNB (Swiss National Bank), and ECB (European Central Bank) previously (reverse repo facility, creation of central bank bills etc.) but one more immediate fix is simply to make more APF bonds available to lend, and to lend them at a higher rate (say Bank Rate -10bp). Note also that Quantitative Tightening (QT) should help on the gilt scarcity front, by releasing more bonds into the market. Note however that the 'replacement' of maturing bonds is effectively done by the DMO by issuing bonds at longer maturities, so it doesn't help much. As for 'active' QT, gilt sales, the shorter maturity of the bonds on offer is 3Y. Read this article on THINK TagsInterest Rates Bank Of England Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more
Bank of England survey highlights easing price pressures

Expectations For The Decision Of The Bank Of England (BoE)

TeleTrade Comments TeleTrade Comments 03.11.2022 08:48
Analysts at Societe Generale provide a sneak peek at what they expect from the Bank of England’s (BoE) ‘Super Thursday’. Also read: BoE Interest Rate Decision Preview: A close call between 50 bps and 75 bps, GBP/USD set to suffer Key quotes “We maintain our forecast of a 75 bps hike on the way to a peak of 4.5% at the March 2023 meeting.“ “Now that the markets have settled down and pension funds seem to have weathered their collateral problems after the Bank’s successful intervention, it looks likely that active gilt sales will commence, as twice rescheduled, on 1 November.” “The revised plan excludes sales at the long end because of the impact of the pension fund issue on that part of the curve.”
Bestway Might Have Larger Designs On The UK's Second Biggest Supermarket

Eyes On Bank Of England (BoE) | Gold Is Under Pressure

Swissquote Bank Swissquote Bank 03.11.2022 10:35
Jerome Powell abated the latest risk rally yesterday, saying that the rate hikes will slow down, but the levels will go higher. Equities sold off, the yields jumped, the dollar gained, and hopes of seeing the end of the market turmoil got completely dashed. US Stock Market The US 2-year yield soared to 4.90%. The Dow Jones lost more than 1.50%, the S&P500 dived 2.50% and Nasdaq fell more than 3%. Forex In the FX, the prospect of higher terminal rate from the Fed boosted the USD appetite. The dollar index gained yesterday, as the EURUSD slipped again below its 50-DMA, Cable slipped below 1.14, the dollar-franc is back above parity, the dollar-yen is set for another advance to 150 on the back of the diverging rate prospects between the Fed that is now set to increase rates slower, but higher, and the Bank of Japan (BoJ), set to do nothing, for now. Gold & Bitcoin Gold is also under the pressure of a stronger US dollar and the higher US yields. Bitcoin, on the other hand, is surprisingly resilient to the broad risk selloff. Crude Oil The barrel of American crude rose to $90, as the latest EIA data showed that the US crude inventories fell by more than 3-million-barrel last week, much faster than a 200’000 barrel decline expected by analysts. Bank Of England Today, the Bank of England (BoE) is also expected to raise rates by 75bp today, but that expectation is down from around 100-150bp hike expected when Liz Truss was busy shaking the financial markets with her crazy mini budget. The BoE should no longer act twice as aggressively to compensate for the actions of an irresponsible government, but it still must fight the rising inflation in Britain. Watch the full episode to find out more! 0:00 Intro 0:25 Powell points at slower but higher rates, investors sell assets 4:13 Oil up on falling inventories 5:00 USD up against majors 7:05 BoE to hike by 75bp today 8:13 Gold under pressure, but Bitcoin surprisingly resilient Ipek Ozkardeskaya 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. #Fed #FOMC #rate #decision #USD #ADP #US #jobs #report #crudeoil #Apple #Amazon #Meta #Google #ExxonMobil #selloff #UK #inflation #BoE #GBP #EUR #XAU #Bitcoin #SPX #Dow #Nasdaq #investing #trading #equities #stocks #cryptocurrencies #FX #bonds #markets #news #Swissquote #MarketTalk #marketanalysis #marketcommentary ___ Learn the fundamentals of trading at your own pace with Swissquote's Education Center. Discover our online courses, webinars and eBooks: https://swq.ch/wr ___ Discover our brand and philosophy: https://swq.ch/wq Learn more about our employees: https://swq.ch/d5 ___ Let's stay connected: LinkedIn: https://swq.ch/cH
ECB's Tenth Consecutive Rate Hike: The Final Move in the Current Cycle

Saxo Bank's Podcast: The Reaction Of The Markets To The Fed's Decision

Saxo Bank Saxo Bank 03.11.2022 11:58
Summary:  Today we look at the hawkish Fed Chair Powell press conference delivering a hammer-blow to sentiment as he managed to both pull off the idea that the Fed may indeed soon pivot to a slower pace of rate hikes as soon as December, but that any talk of a pause is "very premature". The result? Sentiment thrashed and the USD going vertical as the market takes Fed rate expectations and the terminal rate next year higher still. Incoming US data could further aggravate this move if the data remains even resilient, much less hotter than expected. We also talk through the reaction to the FOMC in gold, risks to sterling today if BoE fails to take the hawkish hint from Powell, stocks to watch, perspective on where we are with equity valuations and more. Today's pod features Peter Garnry on equities, Ole Hansen on commodities and John J. Hardy hosting an on FX. Listen to today’s podcast - slides are available via the link. Follow Saxo Market Call on your favorite podcast app:           If you are not able to find the podcast on your favourite podcast app when searching for Saxo Market Call, please drop us an email at marketcall@saxobank.com and we'll look into it.   Questions and comments, please! We invite you to send any questions and comments you might have for the podcast team. Whether feedback on the show's content, questions about specific topics, or requests for more focus on a given market area in an upcoming podcast, please get in touch at marketcall@saxobank.com.
"Private investors will be required to increase their gilt exposure by at least £268bn in FY2023-24"

The Bank Of England (BoE) Will Likely Hike Rates By 75bps

Craig Erlam Craig Erlam 03.11.2022 12:02
Equity markets are coming under some pressure on Thursday, with Asia mostly in the red and Europe poised to open almost a percentage point lower. Chinese stocks are among the worst hit after the National Health Commission sought to quash rumours on social media that the country is studying ways to exit Covid-zero. That sparked a strong rally earlier this week which has only partly been reversed following the clarification. Perhaps that’s a sign of how low stocks have fallen that investors are keen to jump back in on any bullish story, well-founded or not. Maybe there’s a view that there’s no smoke without fire and the denial is not entirely honest. We’ll see over the coming days whether other officials seek to put an end to those rumours but it is interesting how few rejections there have been and a number of days have now passed. The Fed gives with one hand and takes with the other Just as investors believed they’d secured the dovish pivot they so craved, Chair Powell stepped up to deliver another crushing blow to the markets. Well, that’s how it’s been perceived initially but that could change once the dust settles. The acknowledgment that future decisions will take into account cumulative tightening and policy lags was a strong nod to slowing the pace of tightening in December, barring some frankly terrible data in the interim. That is exactly what investors wanted to hear. What they didn’t want was the claim that rates could go higher than they previously thought and they still have some way to go. This is still a net positive as a slower pace buys them time to see an improvement in the data and ease off the brake ensuring the least economic cost. That’s not to say a recession will be avoided but maintaining 75bps makes that job much harder. There are two jobs and inflation reports to come before the December meeting. By that time, things may look a little more promising and less uncertain. ​ Who’d want to be at the BoE right now? The Bank of England will likely join the Fed in raising rates by 75bps later today. The central bank has had the unenviable job of fighting soaring inflation amid enormous economic and political uncertainty. In recent months the country has had three prime ministers, three very different economic agendas, and no budgets outlining them. Not ideal for a central bank that’s fighting double-digit inflation. It hasn’t handled things perfectly this year either, that’s clear. It’s taken a far more cautious approach than others leaving it in the situation now that it must raise rates aggressively and publish economic forecasts with little insight into government spending and tax plans. The outlook is uncertain enough without that. A crushing blow Bitcoin also saw its hopes crushed as Powell took to the stage and spoiled the party. An initial rally to $20,800 was quickly wiped out and the sell-off didn’t stop there. Bitcoin ended the day lower but managed to survive a run at $20,000. Whether it can hold above here will depend on tomorrow’s jobs data. Another red-hot report could weigh heavily on risk appetite and see bitcoin slip back below $20,000 once more. ​ For a look at all of today’s economic events, check out our economic calendar: www.marketpulse.com/economic-events/ This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.
Analysis And Trips For Trading The GBP/USD Pair In Short And Long Positions

The Market Will Remain Balanced With The Option Of The GBP/USD Pair Growth

InstaForex Analysis InstaForex Analysis 03.11.2022 12:54
In my morning forecast, I paid attention to the 1.1380 level and recommended deciding on entering the market there. Let's look at the 5-minute chart and figure out what happened. The bears did not keep waiting long and continued actively selling the pound. The breakthrough of 1.1380 took place without a reverse test, so I failed to enter short positions there and from 1.1307. In the afternoon, the technical picture was completely revised. To open long positions on GBP/USD, you need the following: It is difficult to say what the Bank of England should do to influence the situation somehow. Whatever decisions the regulator resorted to today, it is unlikely that the bulls will be able to buy off the morning fall. In the afternoon, I advise you to wait for Andrew Bailey's statement and only then look for convenient entry points into the market. I told you more about what the central bank governor can say in the morning forecast. In case of further fall of the pair, only a false breakdown in the area of 1.1210 will give a buy signal with a return to the resistance of 1.1276 formed by the results of European trading. Practically nothing depends on this area, so bulls can easily get above this range. A breakdown of 1.1276 and a reverse test from top to bottom will open the way to 1.1341. You can reach the resistance of 1.1416, where the moving averages are playing on the sellers' side. It will become more difficult for buyers to control the market there. A more distant target will be the 1.1489 area, which will lead to a fairly large capitulation of sellers - I recommend fixing profits there. If GBP/USD falls and there are no buyers at 1.1210, we may reach another low of 1.1137. Therefore, do not rush to enter the market. Only a false breakdown at 1.1137 will ensure the presence of major players. It is possible to open long positions on GBP/USD immediately for a rebound from 1.1066, or around the minimum of 1.1013, with the aim of correction of 30-35 points within a day. To open short positions on GBP/USD, you need the following: Bears keep everything under their control, which can only strengthen after the data is scheduled for the afternoon. Reports are expected on the number of initial applications for unemployment benefits and the balance of the US foreign trade balance. But much more important will be ISM's index of business activity in the service sector. If it grows, the pressure on the pound will likely only increase. At the moment, sellers need to defend the resistance of 1.1276 with all their might, where a false breakdown against the background of weak US statistics will give a sell signal based on the return of pressure on the pound and its downward movement to the next support of 1.1210. A breakout and a reverse test from the bottom up of this range will already give an entry point for sale with an update of the minimum of 1.1137. A more distant target will be the 1.1066 area, where I recommend fixing profits. The market will remain balanced with the option of GBP/USD growth and the absence of bears at 1.1276 in the afternoon. In this case, it will be possible to count on an upward movement to the maximum of 1.1341. Only a false breakout at this level forms an entry point into short positions in the expectation of a new downward movement of the pair. If there is no activity there, there may be a jerk up to the maximum of 1.1316, where I advise you to sell GBP/USD immediately for a rebound, counting on the pair moving down by 30-35 points inside the day. The COT report (Commitment of Traders) for October 25 recorded a reduction in short positions and an increase in long ones. Political changes in the UK are playing on the side of buyers of the pound. Still, many are waiting for how the Bank of England will behave about rates and a new economic program from British Prime Minister Rishi Sunak. Do not forget that the pound, as a risky asset, largely reacts to the decisions of the Federal Reserve System on interest rates. A committee meeting will be held this week, where the rate will be increased by 0.75%, which may weaken the position of GBP/USD and lead to a larger decline. However, only the Fed's commitment to maintaining a super-aggressive policy in the near future will be able to change the upward trend in the pound. Otherwise, observing the next pullback of the pound will be possible. The latest COT report indicates that long non-commercial positions increased by 3,183 to 43,511. In contrast, short non-commercial positions decreased by 223 to 91,316, which led to a slight decrease in the negative value of the non-commercial net position to -47,805 versus -51,211 a week earlier. The weekly closing price rose to 1.1489 against 1.1332. Signals of indicators: Moving Averages Trading is conducted below the 30 and 50-day moving averages, indicating a bear market's development. Note: The author considers the period and prices of moving averages on the hourly chart H1 and differ from the general definition of the classic daily moving averages on the daily chart D1. Description of indicators Moving average (moving average determines the current trend by smoothing out volatility and noise). Period 50. The graph is marked in yellow. Moving average (moving average determines the current trend by smoothing out volatility and noise). Period 30. The graph is marked in green. MACD indicator (Moving Average Convergence / Divergence - moving average convergence/divergence) Fast EMA period 12. Slow EMA period 26. SMA period 9 Bollinger Bands (Bollinger Bands). Period 20 Non-profit speculative traders, such as individual traders, hedge funds, and large institutions, use the futures market for speculative purposes and to meet certain requirements. Long non-commercial positions represent the total long open position of non-commercial traders. Short non-commercial positions represent the total short open position of non-commercial traders. Total non-commercial net position is the difference between the short and long positions of non-commercial traders.   Relevance up to 12:00 2022-11-04 UTC+1 Company does not offer investment advice and the analysis performed does not guarantee results. The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade. Read more: https://www.instaforex.eu/forex_analysis/326174
Kiwi Faces Depreciation Pressure: RBNZ Expected to Hold Rates Amidst Downward Momentum

Craig Erlam And Jonny Hart Discuss The Fed And Bank Of England (BoE) Rate Decisions

Craig Erlam Craig Erlam 03.11.2022 11:47
OANDA Senior Market Analyst Craig Erlam reviews the latest market news with Jonny Hart. They discuss the Fed and BoE rate decisions and the surge in Chinese stocks amid zero-Covid rumours. This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.
Bank Of England Will Probably Be Unable To Avoid A Significant Easing Of Policy

A Dovish Bank Of England (BoE) Can Make A Downward Pressure On The British Pound (GBP)

TeleTrade Comments TeleTrade Comments 03.11.2022 13:08
BoE Monetary Policy Decision – Overview The Bank of England (BoE) is scheduled to announce its monetary policy decision this Thursday at 12:00 GMT. The UK central bank is widely expected to lift interest rates by 75 bps - the biggest hike since 1989. Meanwhile, the worsening outlook for the UK economy might have already set the stage for a dovish pivot. Hence, the market focus will be on the accompanying statement that provides the Monetary Policy Committee's (MPC) economic and inflation projections. Apart from this, investors will scrutinize BoE Governor Andrew Bailey's comments at the post-meeting press conference at 12:30 GMT. Analysts at TD Securities offer a brief preview of the key central bank event risk and write: “We look for a 75 bps hike from the BoE in November. While the labour market has tightened further, inflation has matched the MPC's forecasts. Moreover, the several fiscal U-turns and change of PM and Chancellor should lower the risk of a larger hike. The delay of the fiscal event shouldn't mean much for the decision as the broad characteristics of fiscal policy are already known.” How could it affect GBPUSD? Ahead of the BoE's Super Thursday, the GBPUSD pair tumbles to a two-week low, below mid-1.1200s on Wednesday amid post-FOMC strong follow-through US dollar buying interest. A dovish BoE tilt could exert additional downward pressure on the British Pound and set the stage for an extension of the pair's recent pullback from a multi-week high. Meanwhile, a decision to frontload the rate hike might do little to provide any respite to bulls amid looming recession risks, suggesting that the path of least resistance for the GBPUSD pair is to the downside. Eren Sengezer, European Session Lead Analyst at FXStreet, outlines important technical levels to trade the major: “GBPUSD trades within a touching distance of 1.1250, where the 200-period SMA on the four-hour is located. In case the pair falls below that level and starts using it as resistance, additional losses toward 1.1200 (psychological level) and 1.1100 (psychological level) could be witnessed.” “On the upside, 1.1300 (Fibonacci 61.8% retracement) aligns as first resistance ahead of 1.1350 (Fibonacci 50% retracement, 100-period SMA) and 1.1435 (Fibonacci 38.2% retracement),” Eren adds further. Key Notes   •  Bank of England Preview: Why Super-Thursday is set to sink sterling, even in case of a big hike   •  BoE Interest Rate Decision Preview: A close call between 50 bps and 75 bps, GBP/USD set to suffer   •  GBP/USD Forecast: Pound looks vulnerable as BoE decision looms About the BoE interest rate decision The BoE Interest Rate Decision is announced by the Bank of England. If the BoE is hawkish about the inflationary outlook of the economy and raises the interest rates it will be positive, or bullish, for the GBP. Likewise, if the BoE has a dovish view on the UK economy and keeps the ongoing interest rate, or cuts the interest rate it will be seen as negative, or bearish.    
UK Budget: Short-term positives to be met with medium-term caution

Committee Of The Bank Of England (BoE) Is Very Divided

ING Economics ING Economics 03.11.2022 14:34
The Bank of England has hiked interest rates by 75 basis points for the first time. But its policy statement and new forecasts signal very plainly that the Bank rate is unlikely to rise as far as investors expect over coming months. We expect a 50bp hike in December, so it's unlikely to go above 4% next year The Bank of England has stepped up the pace of hikes The Bank of England faced a choice today between a ‘hawkish’ 50 basis-point rate hike and a ‘dovish’ 75bp – and in the event, it chose the latter path. Unlike the Fed and the European Central Bank, this is the first time the BoE has hiked by 75bp in this cycle. But there are no good options for the Bank, and the central message from its latest communications is clear: investors are expecting too much tightening at future meetings. We think today’s 75bp move is likely to be a one-off. The BoE’s new projections show that, if policymakers were to follow investor expectations and hike rates to 5%, the size of the economy would shrink by roughly 3 percentage points over several quarters. Inflation would be at zero in 2025. The Bank of England is forecasting a deep recession regardless of whether it hikes any further Source: Macrobond, ING, Bank of England   Curiously the message is similar – though far less extreme – in the Bank’s projections based on interest rates staying flat at 3% from now on. Not only does that suggest markets are overdoing tightening expectations, but at a pinch you could also say this hints at potential rate cuts somewhere down the line. Admittedly the Bank has been telling this story to a more limited extent for several months now in its forecasts. Governor Bailey also highlights that there’s an upward skew to its inflation forecasts, and policymakers are unsurprisingly nervous about putting too much weight on its models at a time of such uncertainty. A 75bp hike is likely to be a one-off Nevertheless, Andrew Bailey was very forthright in his press conference that rates are unlikely to rise as far as markets expect (currently just shy of 5%). What's more, the committee is very divided. One policymaker, Silvana Tenreyro, voted for just 25bp worth of tightening today. The Bank may have stepped up the pace this month, but central banks globally are having to assess whether ongoing aggressive rate hikes can be justified at a time when housing and corporate borrowing markets are beginning to creak. The choice the Bank faces at coming meetings is one of hiking aggressively to protect sterling, or moving more cautiously to allow mortgage rates to gradually fall. With around a third of UK mortgages fixed for just two years, we suspect the latter option will increasingly be seen as more palatable. The dovish messages littered throughout today’s statement and forecasts are a clear sign of that. We're pencilling in a 50bp rate hike in December and we think the Bank rate is unlikely to rise above 4% next year.   Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more  
Solid Wage Growth in Poland Signals Improving Labor Market Conditions

BoE Hikes Interest Rates 75bps, ECB Feeling Post-fed Interest Rate Hike Repercussions, Fed Hikes Interest Rates 75bps

Rebecca Duthie Rebecca Duthie 03.11.2022 15:49
Summary: The Bank of England increased interest rates by 0.75 percentage points to 3%. The Fed, which has an impact on international markets, must be monitored by the ECB. Jay Powell forewarned that US interest rates may rise higher than anticipated. BoE interest rate hikes The Bank of England increased interest rates by 0.75 percentage points to 3% in order to combat inflation in a way that hasn't been attempted in the past 30 years. The central bank offered unusually strong guidance that interest rates wouldn't need to rise much higher to bring inflation back to its objective of 2%, despite predicting a "particularly tough outlook" with a protracted recession ahead. The Monetary Policy Committee of the Bank of England stated that market estimates for an interest rate peak of 5.25 percent were excessively high. According to the statement, the majority of the committee thought that "additional hikes" could be necessary "for a durable return of inflation to goal, albeit to a peak lower than priced into financial markets." BoE’s latest interest rate hike was was aggressive The BoE's decision followed a similar move by the European Central Bank last week and a 0.75 percentage point increase by the US Federal Reserve on Wednesday. The official interest rate in the UK reached its highest point since late 2008 after being raised to 3%. Aside from a sharply reversible jump on September 16, 1992, often known as "Black Wednesday," it is the biggest increase since 1989. A bigger rise at the meeting "would help to bring inflation back to the 2% target sustainably in the medium term, and to minimise the risks of a more lengthy and costly tightening later," according to the meeting minutes, which were approved by seven of the nine MPC members. ⚠️BREAKING:*BANK OF ENGLAND RAISES KEY INTEREST RATE BY 75BPS TO 3.00%, LARGEST RATE HIKE SINCE 1989🇬🇧🇬🇧 pic.twitter.com/A3rx8jpeLz — Investing.com (@Investingcom) November 3, 2022 ECB facing repercussions from aggressive Fed The U.S. Federal Reserve, which has an impact on international markets, must be monitored by the European Central Bank, but it cannot simply copy its policy decisions, according to ECB President Christine Lagarde on Thursday, following the Fed's guidance for even higher interest rates. On Wednesday, the Fed increased its benchmark rate by another 75 basis points. Fed chair Jerome Powell also stated that borrowing costs would need to increase "higher than previously projected" in order to combat inflation, which caused investors to price in additional ECB rate increases as well. But Lagarde argued that because economic conditions in the 19-country euro zone were different from those in the United States (and the ECB itself raised rates by 75 basis points last week), the ECB could not simply mimic the Fed. This point was also made by ECB board member Fabio Panetta and Bank of Italy governor Ignazio Visco. Lagarde acknowledges ECB was affected by the Fed’s actions Lagarde acknowledged that the ECB was "affected by the repercussions" of Fed action on the financial markets, particularly the decline in the value of the euro relative to the dollar on Thursday. Lagarde reiterated her commitment to bringing inflation down to the ECB's 2% objective by stating that "clearly the exchange rate matters and has to be taken into account in our inflation projections." According to ECB data released on Thursday, the interest rate that banks seek from businesses increased by 55 basis points in September, the largest monthly increase since the creation of the euro, to stand at 2.41%. Since 2015, this was the highest. *ECB PRESIDENT LAGARDE: A RECESSION WON'T BE SUFFICIENT TO SETTLE INFLATION🇪🇺🇩🇪🇫🇷🇮🇹🇪🇸🇳🇱 pic.twitter.com/zcfEzCi1ZB — Investing.com (@Investingcom) November 3, 2022 Fed may slow down their interest rate hiking cyc;e Jay Powell forewarned that US interest rates may rise higher than anticipated, but he also left open the prospect that the Federal Reserve might slow down its drive to tighten monetary policy. Speaking after the central bank raised its benchmark interest rate by 0.75 percentage points for the fourth time in a row, Powell cautioned that there was still work to be done in bringing down inflation and cited a number of economic indicators to support his claim. Powell did, however, provide a suggestion that policymakers would be open to adopting a less drastic rise at the Fed's upcoming meeting in December. The following meeting or the one after that may mark the beginning of that period. Powell made a crucial point when he noted that before transitioning to lesser hikes, the Fed did not need to wait for several months of lower inflation data. ⚠️BREAKING:*FED CHAIR POWELL SAYS TIME TO SLOW RATE HIKES MAY COME 'AS SOON AS NEXT MEETING'$DIA $SPY $QQQ 🇺🇸 🇺🇸 — Investing.com (@Investingcom) November 2, 2022 Sources: twitter.com, investing.com, ft.com
OPEC+ Meeting: Saudi Arabia Implements Deeper Voluntary Cuts to Boost Oil Prices

Supply Outlook Of Crude Oil Remains Challenged | The Norges Bank (NB) Took The Dovish Path

Saxo Bank Saxo Bank 04.11.2022 08:44
Summary:  While the Fed surprised hawkish this week, most other central banks have been surprising dovish, with the latest being Bank of England which tried to cool down the aggressive market pricing for their terminal rate. Meanwhile, Norges Bank also took the less hawkish path, and this has made USD the king again with sterling suffering the heaviest blow. US stocks and bonds were lower, and oil prices, as well as precious metals, also suffered in the aftermath of Fed’s hawkish tilt. Focus turns to NFP today which should continue to suggest a tight labor market. What is happening in markets?   The Nasdaq 100 (USNAS100.I) and S&P 500 (US500.I) continued to slide on hawkish Fed and weaker outlook U.S. stocks continued to adjust for the second day to the increased prospect of interest rates being higher for longer following Powell’s pushback to the market’s speculation for Fed pivot on Wednesday, with S&P falling 1.06% and Nasdaq 100 down 2%. For a discussion on the implication of Powell’s hawkish comments on equities, please refer to Peter Garnry’s article here. Information technology, falling 3%, was the worst-performing sector in the S&P 500 while energy, up 2%, and industrials, up 1% were the outperformers. Announcements of hiring or headcount freezes from Amazon (AMZN:xnas), Apple (AAPL:xnas), Lyft (LYFT:xnas), and Morgan Stanley stirred concerns among investors about the outlook of the economy and corporate earnings. After closing, Starbucks (SBUX:xnas) reported above expectations revenues and earnings while a number of software companies, including Atlassian (TEAM:xnas), Twilio (TWLO:xnys), Appian (APPN:xnas), missed revenues guidance. 10-year U.S. treasury yields (TLT:xnas, IEF:xnas, SHY:xnas) The U.S. yield curve bear flattened as the 2-year yield jumped to as high as 4.74%, before finishing the session at 4.71%, the highest level since 2007. It brought the 2-10 year spread to was wide as -58 and close at -56, the most inverted level in 40 years. The market has brought another 75bp hike in December back to the table, pricing in a slightly more than 50-50 chance. Hong Kong’s Hang Seng (HSIX2) China’s CSI300 (03188:xhkg) Being hit by the double whammy of the reiteration from China’s National Health Commission that dynamic zero-Covid is the primary pandemic control strategy and a hawkish Fed Chair Powell hinting at higher terminal rates, Hang Seng Index tumbled 3.06% and the Hang Seng Tech Index (HSTECH.I) dropped 3.8% on Thursday. China Internet, EV, healthcare and property stocks dragged the benchmark indices lower. Following the hike by the U.S. Fed overnight, five leading commercial banks in Hong Kong raised their prime rates by 25bps. On the data front, Caixin China PMI Services came in at 48.4 in October (consensus: 49.0; Sep: 49.3), falling further into contractionary territory. CSI300 performed relatively more resilient and pared some losses in the afternoon to finish the day losing only 0.8%. Semiconductors, defence and basic chemicals gained. Buying emerged overnight in the U.S. hours, Nasdaq China Golden Dragon Index jumped more than 3% and Hang Seng futures were nearly 1.5% higher from Hong Kong closing. FX: GBPUSD suffered on BOE-Fed differential The USD is seeing another leg higher not just on the back of Powell’s hawkishness this week, but also with the other central banks taking the less hawkish path. Both Norges Bank and BOE surprised dovish yesterday, in continuation of the trend that we have seen from Reserve Bank of Australia, Bank of Canada and the ECB earlier. GBPUSD fell over 2% to sub-1.12 on the announcement that BOE thinks market’s current pricing is too aggressive. December pricing is still at another 50bps rate hike but it won’t be a surprise if it is pulled lower after we had two dovish dissenters on Thursday. NOK saw a selloff as well, while USDJPY continues to find trouble to overcome 148.50 despite the fresh surge in US yields. Crude oil (CLX2 & LCOZ2) worried about demand After a hawkish FOMC, commodity markets have once again started to focus on demand weakness that could come as a result of Fed’s rapid tightening pace. Meanwhile, any hopes of a recovery in Chinese demand have also been crushed for now with authorities still standing by their zero Covid strategy. WTI futures traded close to $88/barrel while Brent futures were below $95. Supply outlook remains challenged however going into the winter, with OPEC+ having announced production cuts followed by EU sanctions on Russian crude flows from December. Gold (XAUUSD) and Silver (XAGUSD) to face short-term pressures Our Head of Commodity Strategy Ole Hansen wrote yesterday on how gold and silver turned sharply lower yesterday after Fed Chair Powell delivered a hammer-blow to sentiment across markets as he managed to both pull off the idea of the Fed may indeed soon pivot to a slower pace of rate hikes, but that any talk of a pause is “very premature”. Gold touched sub-1620 levels yesterday before a slight recovery later in the session while Silver took a look below $19. There is likely to be more pressure in the short term, but as yields get closer to a peak or as the possibility of central bank policy mistake increases, while inflation continues to run higher, the outlook for the precious metals could revert to being positive.   What to consider? Bank of England’s dovish hike The BOE hiked by 75bps to 3%, as expected by the consensus, but strongly pushed back against expectations for the scale of future moves, saying that the terminal rate priced in currently by the markets would induce a two-year recession. There were also two dovish dissenters at the meeting, one calling for 50bps rate hike and another for a mere 25bps. New forecasts were also released, which gave a particularly grim outlook for the economy, looking for a GDP print of -0.5% QoQ in Q3 2022 vs -0.1% expected in September. The inflation forecast now shows a peak around 11% in Q4, which is marginally hotter than the prior meeting’s projection. US weekly jobless claims tick lower, ISM services softened There was a slight decline in initial jobless claims to 217k from previous 218k, coming in marginally below the expected at 220k. Still, labor market remains tight despite some signs of cooling and continues to provide room to the Fed to continue its tightening cycle. Meanwhile, the ISM services index fell more than expected to 54.4 in October from 56.7 previously, however the prices paid gauge increased by 2% pts to 70.7 and remains elevated. Norges Bank hiked by 25bps With expectations split between a 25 or 50bps rate hike, Norges Bank took the dovish path as well despite a deteriorating inflation outlook. However, the Committee continues to place emphasis on the growth situation writing "there are signs that some areas of the economy are cooling down" and acknowledging the tightening effect that the higher policy rate is beginning to have. For the December gathering, the Committee points to a further hike being likely. Australia to double its Royal Australian Airforce cargo fleet in a $10 billion US military deal US officials are looking to approve the sale of $10 billion of iconic cargo aircraft, including 24 Hercules planes, to Australia. The US Defence Security Co-operation Agency says Australia is one of its most important allies in the western Pacific and its location and economic power ‘contributes significantly to ensuring peace and economic stability in the region’. Australia has operated the Hercules aircraft for decades, with the aircraft playing a major role in moving troops and equipment in and out of war zones and evacuating civilians after the fall of Kabul last year. It has also performed countless missions flying humanitarian supplies to countries hit by natural disasters. Australia trade surplus swells on surging energy exports Australia’s trade surplus swelled to $12.4 billion in September, smashing expectation of a $8.75 billion surplus. It comes as exports rose far than expected, up 7% vs the 1% consensus expected thanks to greater demand for mineral fuels for energy, while iron ore exports also rose. Imports remained unchanged month on month. Multiple reports of hiring freezes emphasizing margin pressures Apple paused all hiring for roles outside research and development. Amazon will pause new incremental hires in its corporate workforce, citing an "uncertain" economy and its recent hiring boom. Lyft will eliminate 13% of staff, or around 683 people.   For a global look at markets – tune into our Podcast.     Source: https://www.home.saxo/content/articles/equities/market-insights-today-4-nov-04112022
The Downside Of The US Dollar Index Remains Limited

Bank of Englad went for a 75bp hike, in Norway and Australia hikes were less hawkish. US dollar may be supported by NFP released today

ING Economics ING Economics 04.11.2022 10:25
There is a growing (USD-positive) divergence between the Fed – which delivered only a 'timid' dovish pivot – and other major central banks. Yesterday, the Bank of England pushed back against market pricing as it hiked by 75bp, following dovish turns in Norway, Canada and Australia. Today's US payrolls may come in above 200k, adding fuel to the USD rally Today's US payroll figures may add fuel to the dollar rally USD: Payrolls can keep Fed away from pivot The dollar has retained very good momentum in the aftermath of the FOMC announcement on Wednesday, with markets continuing to push their Fed peak rate expectations higher. Fed Funds futures for the March 2023 meeting are currently trading in the 5.10/5.20% region, a clear testament to how markets have not bought into any dovish pivot narrative.  This is particularly relevant for FX given the growing divergence between the Fed and other major central banks. Yesterday, the Bank of England and Norges Bank both surprised on the dovish side, and so did the Bank of Canada and the RBA a few days ago. There's a growing perceived chance that the Fed will be the last major central bank to throw in the towel and arrest its tightening cycle, and we think this notion can provide quite sustainable support to the dollar into the new year.  Today, the focus will shift back to data as US October payrolls are released. Our US economist sees room for a slightly above-consensus headline read (220k vs a conservative 195k), which should overshadow the widely expected 0.1% increase in the unemployment rate and marginal slowdown in wage growth. We expect today's release to leave markets still searching for a higher Fed terminal rate, ultimately keeping the dollar bid. A decisive break above 113.00 in DXY appears on the cards: if not today, probably in the coming days.  Francesco Pesole  EUR: Caught in the crossfire EUR/USD remains primarily a function of dollar moves, and today's US payrolls release should continue to put pressure on the pair in our view. Having now moved back to the trading ranges seen before the late-October correction (which has proven exceptionally short-lived), we think markets have switched back to a more structurally bearish tone on EUR/USD, and a return to 0.9500 is our base case in the near term. Domestically, markets will keep an eye on ECB president Christine Lagarde's comments this morning. With the OIS curve currently embedding 60bp of tightening at the ECB December meeting, there is surely room for speculation in either direction on the size of the next hike. From an FX perspective, the implications for the euro have been quite limited, and we doubt this will change drastically in the very near term.  Francesco Pesole  GBP: A very dovish hike We had highlighted downside risks for sterling as we approached yesterday's Bank of England (BoE) announcement. Our call was for a 50bp dovish surprise, and while the BoE hiked by 75bp, it seemed to tweak the policy message to the dovish side as much as reasonably possible, ultimately triggering a GBP reaction (-1.5% vs USD) quite similar to what we would have seen if it only hiked by 50bp.  As discussed in our BoE review note, the Bank pushed back quite firmly against what markets were previously pricing in terms of tightening (i.e. a 5% peak rate), adding in its forecasts that following the market-implied rate path could cause a three percentage point economic contraction over several quarters and inflation at zero in 2025. The bottom line is that the BoE is essentially shutting the door to another 75bp, and we expect a 50bp hike in December.  The negative reaction in the pound was – in our view – not just due to the dovish repricing in rate expectations, but also a re-connection of FX dynamics with the rather concerning domestic economic outlook, which was flagged quite clearly by the BoE. The fiscal rigour brought by the new UK government may have already had a beneficial effect on the pound, and now the size of the current UK recession may become a primary currency driver. Indeed, the downside risks are still quite significant, and next week's GDP numbers will surely be watched quite closely: consensus is currently around a 0.4% quarter-on-quarter contraction.  Today, BoE chief economist Huw Pill will deliver some remarks, but there are no other key events to monitor in the UK. Risks are skewed towards a re-test of 1.1000 in cable over the next few days, with today's US payrolls possibly adding pressure on the pair. Francesco Pesole  CEE: Speaking of selloffs... As expected, the Czech National Bank (CNB) left interest rates unchanged at 7.00% today, in line with surveys and market expectations. In a statement, the phrase "...the CNB will continue to prevent excessive fluctuations of the koruna exchange rate" returned after a hiatus in September. If we are looking for a surprise at this meeting we can find it in the new forecast, which has undergone a significant transformation. Overall, the CNB forecasts slower economic growth, including a recession next year and lower inflation, alongside a massive tightening of monetary conditions. However, despite the big changes in the CNB's forecast, nothing has changed in our view of the main story yesterday. The board considers interest rates high enough and FX interventions are doing their job well with no end in sight for now. Thus, we continue to see the risk of additional rate hikes as low and consider the hiking cycle to be closed, the only one in the CEE region. On the FX side, the situation remains unchanged. CNB interventions will continue and the line in the sand is clearly drawn at 24.60-70 EUR/CZK. Given the low central bank costs, we do not expect any changes in the CNB's approach anytime soon. This setup coupled with relatively high carry may serve as a good base against the Polish zloty or Hungarian forint, which are much more vulnerable in global emerging market selloffs especially ahead of the upcoming winter. And speaking of selloffs, the CEE region, surprisingly for us, remains stable despite global conditions deteriorating further. EUR/USD passed another milestone on the way lower again yesterday, the selloff in equity markets clearly indicates a risk-off mood and gas prices also cannot deliver much optimism. Thus, despite the resilience in the region, we continue to believe that the current strong levels are not sustainable. Next week we have a heavy calendar including a National Bank of Poland meeting and CPI prints across the region which we believe can easily serve as a selloff trigger. At the moment, we see room for a move higher in the Polish zloty towards 4.75 EUR/PLN and the Hungarian forint towards 415 EUR/HUF. Frantisek Taborsky Read this article on THINK TagsUS dollar Payrolls FX Federal Reserve Bank of England Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more
Only Ugly US Data Could Reverse Sentiment | Gilt Yields In UK Were Steady To Lower

Only Ugly US Data Could Reverse Sentiment | Gilt Yields In UK Were Steady To Lower

Swissquote Bank Swissquote Bank 04.11.2022 11:30
Investors got the policy pivot they were looking for this week; unfortunately, not from the Federal Reserve (Fed), but from the Bank of England (BoE) instead. Bank of England In a confusing way, the Bank of England raised its interest rate by 75bp yesterday, but announced that the city analysts have got the BoE’s terminal rate wrong, and that the future rate hikes from the BoE will be softer, given that the economic situation is alarming. Sterling dived, while gilt yields were steady to lower. Mareket Reaction Elsewhere, in an extended market reaction to Wednesday’s Fed decision, the US dollar gained across the board, as investors repositioned for a more aggressive Fed tightening. Fed The thing that could throw cold water on burning hot Fed expectations is soft jobs data from the US. That’s also the only thing that could save the rest of the world from the worsening Fed aggression: rapidly deteriorating economic conditions in the US. Due today, the NFP is expected to reveal 200’000 new nonfarm jobs in October, for an average hourly pay rise steady around 0.3%. Watch the full episode to find out more! 0:00 Intro 0:26 Confusing action & statement from the BoE 2:39 The dollar rally continues post-Fed, pre-US jobs 5:20 Stock selloff intensifies 7:10 Only ugly US data could reverse sentiment 8:22 Stoxx600’s 30% discount to S&P hides risk Ipek Ozkardeskaya 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. #US #NFP #jobs #wages #data #Fed #hawks #UK #BoE #GBP #dovish #hike #Netflix #Disney #BasicWithAd #SPX #Dow #Nasdaq #investing #trading #equities #stocks #cryptocurrencies #FX #bonds #markets #news #Swissquote #MarketTalk #marketanalysis #marketcommentary ___ Learn the fundamentals of trading at your own pace with Swissquote's Education Center. Discover our online courses, webinars and eBooks: https://swq.ch/wr ___ Discover our brand and philosophy: https://swq.ch/wq Learn more about our employees: https://swq.ch/d5 ___ Let's stay connected: LinkedIn: https://swq.ch/cH
EUR: Stagflation Returns Amid Weaker Growth and Sticky Inflation

Saxo Bank's Podcast: Eyes On The US October Jobs Report

Saxo Bank Saxo Bank 04.11.2022 12:21
Summary:  Today we look at whether the US October jobs (and earnings!) report later today will extend or disrupt the powerful market reaction to Fed Chair Powell's hawkish FOMC press conference on Wednesday. We also look at the impact of a very dovish Bank of England meeting and the market thumbing its nose at the BoE's rate guidance next year. We also look at crude oil, gold, copper & cotton, stocks to watch including a huge positive beat from SocGen this morning. Today's pod features Peter Garnry on equities, Ole Hansen on commodities and John J. Hardy hosting an on FX Listen to today’s podcast - slides are available via the link. Follow Saxo Market Call on your favorite podcast app: Apple  Spotify PodBean Sticher If you are not able to find the podcast on your favourite podcast app when searching for Saxo Market Call, please drop us an email at marketcall@saxobank.com and we'll look into it.   Questions and comments, please! We invite you to send any questions and comments you might have for the podcast team. Whether feedback on the show's content, questions about specific topics, or requests for more focus on a given market area in an upcoming podcast, please get in touch at marketcall@saxobank.com.       Source: https://www.home.saxo/content/articles/podcast/podcast-nov-4-2022-04112022
Unraveling UK Inflation: The Bank of England's Next Move

The Dovish Decision Of The Bank Of England (BoE) Puts A Heavy Burden On The GBP

Saxo Bank Saxo Bank 04.11.2022 13:39
Summary:  The FOMC meeting this week forced the market to adjust to the idea that the Fed could continue to take rates higher than had previously been priced. But clearly, to drive tightening expectations higher still, we’ll need to continue to see hotter than expected US data, with today’s US jobs report the next test on that. Elsewhere, sterling is in a world of hurt after BoE’s very dovish guidance. FX Trading focus: US incoming data focus after hawkish FOMC. BoE in dovish pushback against market hike expectations. The US dollar followed through stronger yesterday on the momentum off the back of the hawkish Powell presser Wednesday, but has come in for a chunky reversal overnight and today since a somewhat softer than expected ISM services survey yesterday (nudged lower to 54.4 vs. 55.3 expected and 56.7 in September, with the employment sub-index dipping back below 50 at 49.1 vs. 53.0 in September). Wouldn’t it be ironic if we also were to get a soft US jobs report today that takes US yields back to their starting point of the week, making Powell’s hawkish message so much noise, at least until the next incoming data point jerks the market the other way? Interestingly, the USD is selling off ahead of today’s US data releases even as short US yields are posting new highs for the cycle Specifically in today’s jobs report, in addition to any strong directional surprise in payrolls (multi-month grain of salt needed with this data series, as single releases require further corroborating evidence), we should keep both eyes on the average hourly earnings survey. Arguably, if we get the expected 0.3% month-to-month average hourly earnings print today after a couple of prior prints of a similar size, observers may begin to judge that the annualized rise in earnings is beginning to look far less threatening at sub-4.0%. The year-on-year is expected to drop to a 15-month low of 4.7% today. A significant upside surprise in earnings is perhaps could generate significant volatility. Chart: EURGBPWorth considering how the dovish Bank of England meeting yesterday (see more below) is weighing heavily on sterling, as it should, with the Bank of England reluctant to signal much tightening energy when it sees an incoming recession. Sterling is down sharply across the board, with EURGBP suddenly well backed up within the old range and now far away from the sub-0.8600 range support. The next area between the 0.8800 and pivot high of 0.8870 area looks key for whether sterling weakness is set to become a bit more unhinged, and the next key event-risk test is likely how the market greets an austere Autumn budget statement on November 17. Bank of England wrap. The BoE hiked by 75 bps to 3%, as most expected and as was mostly priced in, but Bailey and company strongly pushed back against expectations for the scale of future moves, saying that the terminal rate priced in currently by the markets would induce a two-year recession. There were also two dovish dissenters at the meeting, one calling for 50 bps rate hike and another for a mere 25 bps. New forecasts were also released, which gave a particularly grim outlook for the economy, looking for a GDP print of -0.5% QoQ in Q3 2022 vs -0.1% expected in September. The inflation forecast now shows a peak around 11% in Q4, which is marginally hotter than the prior meeting’s projection. Sterling was crushed lower, having already fallen heading into the meeting, and it speaks volumes that even though the BoE pushed back against the forward implied expectations for further tightening, which it said would trigger a 2-year UK recession, the market did not budge those expectations. In short: the market refuses to acknowledge what the BoE thinks it might do, probably figuring that the BoE will have no choice due to sterling weakness but to pursue the path to 4.50% or higher rates before mid-next year. I was surprised by the lack of discussion or journalist questioning in the press conference around the risk that currency weakness drives worse inflationary outcomes if the BoE fails to do as much as the market is pricing. Sterling remains in a heap of trouble. Table: FX Board of G10 and CNH trend evolution and strength.The USD needs to stick the move off the back of the FOMC meeting after the US jobs data today, otherwise we’ll suddenly be back to square one. The hottest movement in FX was clearly the sterling sell-off yesterday on a very clearly dovish Bank of England meeting. CNH is making waves on a lot of movement overnight and noise (unconfirmed) of an eventual opening up. Table: FX Board Trend Scoreboard for individual pairs.While the US dollar flipped to a positive trend in many places, we must still consider the risk that incoming data complicates the plot. GBP is already registering a negative trend in many new GBP pairs after yesterday’s BoE meeting. Interesting that the NOK failed to roll over to the downside in a couple of key pairs after the small hike from the Norges Bank yesterday. Upcoming Economic Calendar Highlights 1215 – UK Bank of England Chief Economist Huw Pill to speak 1230 – US Oct. Nonfarm Payrolls Change 1230 – US Oct. Unemployment Rate 1230 – US Oct. Average Hourly Earnings 1230 - Canada Oct. Unemployment Change/Rate 1400 – Canada Oct. Ivey PMI 1400 – US Fed’s Collins (Voter 2022) to speak Source: https://www.home.saxo/content/articles/forex/fx-update-us-incoming-data-sterling-pays-price-after-dovish-boe-04112022
Solid Wage Growth in Poland Signals Improving Labor Market Conditions

OANDA Senior Market Analyst Craig Erlam Talks Recent Important Market Events

Craig Erlam Craig Erlam 04.11.2022 14:10
OANDA Senior Market Analyst Craig Erlam discusses the latest developments in GBP/USD as the Federal Reserve and Bank of England hike interest rates by 0.75%. This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.
Bank Of England Will Probably Be Unable To Avoid A Significant Easing Of Policy

U.K. GDP Is Projected To Decline, Recession Is On The Horizon?

Kamila Szypuła Kamila Szypuła 06.11.2022 10:53
The outlook for Britain’s economy is very challenging. Slowing economic growth and a changing fiscal policy are a major concern for the British. Previous data and expectations of downward Monthly GDP changes suggest a downward trend. After the reading in September, the GDP M/M index returned to the level of zero. It is expected to decline from -0.3% to -0.4%. As shown by the data, for a significant part of the year the monthly change was weak, even negative. Source: investing.com The quarterly change of the index, despite the fact that it is currently in a positive position, it is expected that the next reading will be negative. the downward trend in GDP q / q continues and has recently reached the level of 0.2%, the current expectations are at -0.5% The annual change is also in a downward trend. GDP Y / Y is expected to reach 2.1%. Since the end of 2021, it has been at a low level of less than 10%, but despite several positive and quite high readings this year, the British economy shows signs of weakening. The official data about the indicator will be announced on Friday, November 11. Source: investing.com Generla outlook The Bank of England's forecasts are particularly difficult to put together, given the government's as yet unclear fiscal strategy. The Bank of England forecast last month that Britain would slip into a recession at the end of 2022 and not come out of it until early 2024. Food and energy prices have jumped, in part because of the Ukraine war, which has left many households facing hardship and started to drag on the economy. A recession is defined as when a country's economy shrinks for two three-month periods - or quarters - in a row. Typically, companies make less money, pay falls and unemployment rises. This means the government receives less money in tax to use on public services such as health and education. The unemployment rate is now at its lowest in 50 years, but is expected to rise to almost 6.5%. The forecast predicts an increase in the unemployment rate and a decline in household income. It is a picture of a painful economic period in which the UK is doing worse than the US and the euro area. Recession For most people, economic growth is good. It usually means there are more jobs. Companies are more profitable and can pay employees and shareholders more. The higher wages and larger profits seen in a growing economy also generate more money for the government in taxes. When the economy shrinks, all these things go into reverse. This is signal that recession is coming. However, the pain of a recession is typically not felt equally across society, and inequality can increase. Some people may lose their jobs, and unemployment could rise. Graduates and school leavers could find it harder to get their first job. Others may find it harder to be promoted, or to get big enough pay rises to keep pace with price increases. The results are already visible after the recent decisions of the Bank of England. Higher loan costs are already affecting households. Home buyers with tracking or floating rate mortgages will immediately feel the pain of an interest rate hike. These are just a few simple examples, but a recession can have long-term consequences for the citizen and the economy as a whole. Source: investing.com
FX Daily: Hawkish Powell lends his wings to the dollar

The inflation print and mid-term elections make the line-up of events which could influence greenback

ING Economics ING Economics 07.11.2022 09:38
The dollar long squeeze on Friday was likely triggered by optimism on China's Covid rules. We suspect this is too premature, and macro factors continue to point to dollar strength. But there are two key risk events for the dollar this week: US CPI (we expect a 0.5% MoM core reading) and mid-term elections (Biden losing control of Congress may be a USD negative) USD: Room for recovery, but watch for the mid-terms Last week was a hectic one in FX. Fed Chair Jerome Powell’s hawkish press conference left markets searching for an even higher peak rate (currently at 5.1%) and highlighted the divergence between the still hawkish Fed and the growing list of developed central banks that are turning more cautious on tightening (Bank of England, Bank of Canada, Reserve Bank of Australia, Norges Bank). This was a clear bullish narrative for the dollar, which was well supported until Friday when optimism in risk assets triggered some heavy position-squaring on dollar longs. A key risk-on driver on Friday was the apparent loosening of Covid restrictions in China. Indeed, China’s economic woes have been a major factor weighing on global sentiment in recent months. However, a larger relief rally appears a bit premature. First, because the course of Beijing’s health policy has been very hard to interpret, and Chinese officials have already pushed back against any speculation they will drop the zero-Covid policy. Second, this morning’s drop in Chinese exports is yet another signal that slowing global demand is a major drag on Chinese growth. Third, China has been only one factor in the negative risk equation: the search for a higher Fed peak rate and elevated uncertainty around the medium-term economic outlook and energy crisis should keep a cap on risk assets for longer – and ultimately may still favour defensive trades like long dollar positions. The dollar correction that started in late October was fully unwound in about a week, and this indicated – in our view – how macro factors continue to favour dollar strength and the corrections are mostly related to position-squeezing events. We, therefore, expect a re-appreciation of the dollar in the near term, although there are two major risk events to watch this week in the US: the CPI report and mid-term elections. Our US economist expects inflation numbers this week to be important, but not critical for future policy action by the Fed. Most of the focus will be on the monthly change in core CPI, which we expect to come in at 0.5%, in line with consensus. That would indicate further resilience in underlying price pressures and may prevent markets from completely discarding another 75bp hike in December, ultimately offering the dollar a floor. Below-consensus readings may force a dovish re-pricing in rate expectations though. When it comes to the US mid-term elections, we discussed the scenarios and market implications in this article. The bigger downside risk for the dollar is that the Republicans secure control of both the House and the Senate, which would imply a hamstrung administration unable to deliver fiscal support in a downturn. A split Congress (House control going to the Republicans) may be mostly priced in, and the implications for the dollar could be relatively limited. We expect more FX volatility this week, but retain a near-term bullish USD bias and expect DXY to climb back above 113.00 in the coming weeks. Today’s calendar in the US only includes speeches by Fed’s Loretta Mester and Tom Barkin. Francesco Pesole EUR: China's push looks premature Europe’s elevated exposure to the China growth story means that the euro should benefit from speculation that Beijing will loosen Covid restrictions. As discussed in the USD section above, this appears premature speculation, and Chinese growth is still facing the grim prospect of slowing global demand. In line with our view that the dollar should recover in the near term, we don’t think EUR/USD will be able to climb back above parity on a sustainable basis – even though the two risk events this week (US CPI and mid-term elections) could trigger another USD long squeeze. There are not many key data releases in the eurozone this week, and most focus will be on European Central Bank speakers. A pre-registered video of Christine Lagarde on the digital euro will be released this morning, and we’ll hear from Fabio Panetta later today. There are a plethora of other speakers during the week, but the direct impact of expected ECB policy on the euro looks set to remain rather contained. Francesco Pesole GBP: In an uneasy position Despite the dollar’s correction on Friday, the pound still has to fully recover from the post-Bank of England blow. Indeed, the combination of a highly concerning economic outlook and a forced dovish repricing in rate expectations look set to keep the pound rather unattractive. This week, 3Q growth figures are the highlight in the UK calendar, and our economist forecasts a 0.5% quarter-on-quarter contraction, which should all but endorse the BoE’s more cautious approach. There are a few MPC members speaking this week, including Chief Economist Huw Pill and Silvana Tenreyro, the latter having voted for a 25bp hike last Thursday. Cable may be primarily driven by dollar moves this week, but EUR/GBP could extend gains to the 0.8850/70 area. Francesco Pesole CEE: Local story replaces global factors We have another heavy week ahead in the Central and Eastern European region. Today, we start with industrial production in the Czech Republic, where PMIs show a steep decline in production at the end of the year. Tomorrow, in addition to retail sales and industrial production in Hungary, we will see the Romanian central bank's last meeting of the year. We expect a slowdown in the tightening pace to 50bp to 6.75%, in line with market expectations, which could be the last hike in this cycle. But an additional 25bp hike cannot be ruled out in January. Hungarian inflation for October will be published on Wednesday. We expect another jump from 20.1% to 21.0% YoY. Also, on Wednesday we will see the Polish central bank meeting. Our call is for a 25bp hike to 7.00%, but no change will also be on the table, in our view. Thursday will see the release of October inflation in the Czech Republic. We expect only a slight increase from 18.0% to 18.2% YoY, slightly above market expectations, but the risk is new government measures and the approach of the statistical office. Then on Friday, we will finish the series of October inflation prints in Romania, where we expect a slowdown from 15.9% to 15.2% YoY, slightly below market expectations. In the FX market, surprisingly for us, CEE has survived tough weeks which have seen ECB and Fed rate hikes, a stronger dollar and gas prices at higher levels. This week, the local story will come into play. EUR/USD and gas prices are back to more CEE FX-friendly levels, which should be positive for the region in the first half of the week. On the other hand, interest rate differentials are still pointing to weaker FX in the region, and central bank decisions and CPI readings (except in Hungary) support a rather dovish mood, which is negative for FX. From this perspective, we see the Polish zloty as most vulnerable at the moment, which should suffer from the central bank's dovish decision. Moreover, the cost of funding has fallen from its peak in recent days, making shorting less expensive. Thus, we see the zloty closer to 4.750 EUR/PLN in the second half of the week. The Hungarian forint shows the biggest gap in our models at the moment against a weaker interest rate differential. However, higher inflation should again support market expectations and hold the forint slightly above 400 EUR/HUF. The Czech koruna reached its strongest levels since August after the Czech National Bank meeting and is benefiting from temporary short position liquidation. However, we see its value rather closer to 24.50 EUR/CZK. The Romanian leu is down from NBR intervention levels and is closely following global sentiment. Therefore, we expect it to remain below 4.90 EUR/RON for longer. Frantisek Taborsky Read this article on THINK Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more
There Are No Obvious Reversal Of GBP/USD Pair Signs Yet

Monetary Policy Divergences Makes Negative Views On Sterling (GBP)

InstaForex Analysis InstaForex Analysis 07.11.2022 11:34
In early November, the Fed and the Bank of England sent clear statements to the markets. Don't underestimate the potential for higher federal funds rates. And there is no need to overestimate the peak values of the repo rate. Different rates of monetary tightening seemed to convince investors that the GBPUSD pair has decided on the direction of further movement. It must go down. Alas, the market reaction to the US employment data for October turned everything upside down. After Rishi Sunak replaced Liz Truss as prime minister, the risk of a mismatch between fiscal and monetary policies disappeared from the pound, causing the GBPUSD to soar from 1.04 to 1.16. Speculators significantly reduced their bearish rates on sterling, but after the Bank of England became the focus of investors' attention, the sellers got down to business again. Dynamics of speculative positions on the pound Despite the increase in the repo rate by 75 bps to 3%, which was the BoE's widest move since 1989, Governor Andrew Bailey, at a press conference, preferred "dovish" rhetoric. According to him, market expectations of the borrowing cost ceiling are too high, while the UK economy is already in the deepest recession since 1990. Chief Economist Huw Pill confirmed his opinion a little later. Pill noted that rates will certainly continue to rise, but not to 5.25%, as expected by the futures market. The BoE is obviously trying to slow down sterling fans by all means. And their statements about the recession have the same purpose. At first glance, rumors of a recession spread by the regulator are counterproductive because, in such conditions, households can restrain spending, and enterprises can slow down investments. On the other hand, if the recession finally makes itself felt, the Bank of England may pause in the process of tightening monetary policy, explaining this by implementing its own plans. Dynamics of recessions in the UK economy Thus, despite the decisiveness shown in November in the form of a 75 bps increase in the repo rate, Bailey and his colleagues are moving towards gradualism, which, on paper, should support the GBPUSD bears. Especially in conditions when the Fed is ready to raise the cost of borrowing to almost 5.25%. Monetary policy divergences allow large banks and investment firms to hold negative views on sterling. Thus, Mitsubishi UFJ, Deutsche Bank and Rabobank predict that it will fall to $1.1 or lower. To their dismay, the collapse of the US dollar in response to the seemingly strong statistics on the US labor market was a real blow to the plans. In the coming days, the market will decide what it was: a dead cat bounce or a change in trend. Technically, on the GBPUSD daily chart, the pair's inability to consolidate above the fair value at 1.135 and within the corrective ascending channel indicates the weakness of the bulls and gives rise to sales in the direction of 1.12 and 1.11.   Relevance up to 09:00 2022-11-12 UTC+1 Company does not offer investment advice and the analysis performed does not guarantee results. The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade. Read more: https://www.instaforex.eu/forex_analysis/326384
UK Budget: Short-term positives to be met with medium-term caution

Sunak (UK Prime Minister) May Have Won Back Investor Confidence

ING Economics ING Economics 06.11.2022 11:34
Prospects of fiscal tightening, limited energy support, and sky-high mortgage rates look set to reduce the size of the UK economy by roughly 2% over several quarters In this article The new prime minister has succeeded in calming markets Energy support to become less generous A recession looks inevitable Source: Shutterstock The new prime minister has succeeded in calming markets The appointment of Rishi Sunak as the new UK prime minister heralds a very different fiscal approach to his predecessor. Promises of debt sustainability have succeeded in stabilising financial markets, and both the pound and gilt yields have gone full circle since the mid-September ‘mini budget’. The political risk premium, as measured by the spread between German and UK 10-year yields, has narrowed back, although it is still wider than it was before the Conservative leadership contest started in July. Unfortunately, that’s where the good news stops. Sunak may have tentatively won back investor confidence, but he’ll need to find savings worth roughly £30-40bn/year to convince the independent Office for Budget Responsibility that debt won’t rise across the medium-term as a percentage of GDP. With very limited scope to cut day-to-day spending, we suspect he’ll have to chop back public investment plans and potentially also look at increases to personal taxes. Energy support to become less generous None of this will be good for growth, though the impact will be dominated by a decision to make the government’s flagship energy support programme less generous from April 2023. Under existing plans, the average household energy bill is capped at £2,500 for two years, but the government has signalled this will become more targeted. Aside from adjusting income tax rates, the only obvious way of doing this would be to make a distinction between those on welfare support and those that aren’t. One scenario could see most consumers move back to paying the Ofgem-regulated price from April. The cost of fixing household energy bills has collapsed Source: Refinitiv, Ofgem, ING calculations   Under that sort of policy, we'd expect most households to pay on average £3,300 in FY2023 for energy, without any government support. As the chart shows, the sharp fall in gas prices means that estimate has halved since August. But that would still leave the average household paying close to 10% of their disposable income on energy. Alongside that, mortgage rates look set to fall fairly gradually, against a backdrop of stubbornly high Bank of England expectations and a greater premium from lenders for high loan-to-value products. With roughly a third of mortgages fixed for two years, millions of homeowners look set to lock-in these higher rates. The two-year fixed rate recently peaked at 6.5%. A recession looks inevitable All of this suggests a recession is now inevitable, and we’ve once again downgraded our GDP forecasts. We now expect the size of the economy to shrink by roughly 2% over four quarters, concentrated in the first half of 2023. Admittedly these forecasts are still heavily contingent on how the government adjusts its energy support. If gas prices begin to rise, particularly for winter 2023/24 contracts, then the government will be under heavy pressure to once again extend its energy support to all households beyond April next year. TagsUK fiscal policy Energy crisis
Assessing 'Significant Upside Risks to Inflation': Insights from FOMC Minutes

In USA Inflation Is Showing Little Sign Of Slowing

ING Economics ING Economics 05.11.2022 09:13
We're now expecting the Fed Funds Rate to hit 5% early next year, albeit in more modest steps. We also think there are limits to how much further both the European Central Bank and Bank of England can hike rates amid a looming recession In this article Federal Reserve European Central Bank Bank of England People's Bank of China Central banks: Our forecasts Source: Macrobond, ING Federal Reserve After four consecutive 75bp Federal Reserve interest rate increases officials have opened to door to a slower pace of hikes from December. The harder and faster a central bank moves into restrictive territory, the less control over the outcome and the greater chance of an adverse reaction. Given the state of the residential real estate market and the deteriorating corporate and consumer outlook, recession in the US now looks unavoidable. However, inflation is showing little sign of slowing. We need 0.1% or 0.2% month-on-month core inflation readings to get the annual rate down to 2% rather than the 0.5% or 0.6% MoM increases in ex-food and energy prices we are seeing. So, while the pace of hikes may slow, the expected terminal rate keeps moving higher. Nonetheless, with housing rents and used car prices now falling, and corporate pricing power being squeezed by the downturn, we think a 5% Fed Funds Rate will mark the peak in February and the door will open for rate cuts through the second half of 2023. European Central Bank The ECB’s October meeting had something for everyone. Another jumbo rate hike of 75bp and the opening for more for the hawks, but also more recession warnings and an opening to a dovish pivot in December for the doves. Consequently, the times of uncontested decisions at the ECB seem to be over. The December meeting will be much more controversial with a looming recession and a high chance that the ECB’s longer-term inflation forecasts will point to a sharp inflation retreat in 2024 and 2025. These aren't really the best arguments to hike into restrictive territory. We expect the ECB to deliver rate hikes totalling 75bp at the December and February meetings. The balance sheet reduction has started with the announced changes to the ECB’s longer-term loans to banks and the option for earlier repayments. More will follow as a gradual phasing out of the reinvestments of asset purchases could become a substitute for additional rate hikes in 2023. Bank of England Markets have pared back interest rate expectations in light of a more stable fiscal backdrop but are still pricing Bank Rate to near 5% next year. Bank of England officials have begun to hint more explicitly that this would come with huge damage to the economy and is inconsistent with the amount of tightening needed to get inflation lower. Still, policymakers face an unpalatable decision. If they undershoot market rate expectations, the risk is that we see a renewed downside for the pound – not least because a full-blown pivot from the Federal Reserve seems at least a few months off. That helps explain why the BoE accelerated the pace of rate hikes in November. But doing so repeatedly risks baking in mortgage rates and corporate borrowing costs which risk material stress in the economy. Around a third of mortgages are fixed for two years, while small and medium-sized enterprises (SMEs) are typically on floating interest rate products. We therefore expect the Bank to undershoot market expectations and remain unconvinced Bank Rate will go above 4% next year. We think the 75bp hike was a one-off. People's Bank of China The PBoC seems to have abandoned the traditional monetary policy tool of policy rate cuts and Reserve Requirement Ratio (RRR) cuts as a means to support the economy. Instead, the central bank has increased liquidity via policy banks in China. These policy banks lend directly to local governments for a specific policy target, for example, to finish unfinished home construction projects. This should be more time efficient as commercial banks would not be able to lend to property developers due to the still restrictive policies set for property developers, and they would be reluctant to lend to construction companies. This kind of direct lending to local government avoids them having to increase bond issuance, and therefore reduces interest costs of local governments in general. We expect the central bank to increase liquidity injections through policy banks until all unfinished residential projects are completed. TagsPBoC Federal Reserve ECB Central banks Bank of England   Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more
Services PMIs and Fed Minutes: Analyzing Market Focus and Central Bank Strategy

The GBP/JPY Pair Portrays The Market’s Indecision

TeleTrade Comments TeleTrade Comments 08.11.2022 08:46
GBPJPY fades two-day uptrend, remains sidelined of late. BOE witnessed a dim response of the first gilt sale, optimism surrounding UK’s fiscal policy fades. UK businesses fear gloomy Christmas amid inflation woes. Yields remain firmer as recession looms, China’s covid numbers escalate during a sluggish session. GBPJPY treads water around 168.80, pausing the two-day uptrend, heading into Tuesday’s London open. In doing so, the cross-currency pair portrays the market’s indecision amid mixed clues and a lack of major data/events. It should, however, be noted that a dim response to the Bank of England’s (BOE) first medium-term gilt selling operation seem to have teased the pair bears of late. On the same line was the recent survey for Barclays that suggest British businesses fear a gloomy Christmas ahead, as almost half of households plan to cut festive spending due to the soaring cost of living and sales are already falling sharply in inflation-adjusted terms. Furthermore, GBPJPY’s inaction could be linked to news suggesting that the UK Chancellor Jeremy Hunt is set to announce a new tax raid on inheritance, per the UK Telegraph. The news also mentioned that Chancellor Hunt and Prime Minister (PM) Rishi Sunak are understood to have agreed to freeze the threshold above which people must pay tax for another two years. Alternatively, chatters over likely positive outcomes from the next fiscal plan and UK Prime Minister (PM) Rishi Sunak’s efforts to justify his election keep the pair buyers hopeful. UK PM Sunak is poised to announce a major gas deal with America after the Cop27 climate change summit, The Telegraph can disclose. “Talks about the “energy security partnership” are in their final stages, with the US planning to sell billions of cubic meters of Liquefied Natural Gas (LNG) to Britain over the coming year,” the news adds. It’s worth mentioning that the Bank of Japan’s (BOJ) bond-buying operations and fears surrounding China’s higher covid counts since April, as well as a light calendar, restrict the GBPJPY pair’s moves. Moving on, a lack of major data/events could keep the quote sidelined but optimism surrounding the UK’s fiscal policies may allow the cross-currency pair to remain firmer ahead of the UK’s Gross Domestic Product (GDP) for the third quarter (Q3), up for publishing on Friday. Technical analysis GBPJPY bulls attack the 10-DMA hurdle surrounding 169.00 but the bearish MACD signals and steady RSI keeps sellers hopeful.
Upcoming Corporate Earnings Reports: Ashtead, GameStop, and DocuSign - September 5-7, 2023

Good Retail Sales Result In Europe | Household Spending In Japan Has Declined

Kamila Szypuła Kamila Szypuła 08.11.2022 11:14
There are no important reports scheduled for today that could significantly affect the markets. Today the attention is focused on the mid-term election in the USA and on the speeches of representatives of central banks on the old continents. Japan Household Spending Japan has published a report on household spending. The result of this report was not satisfactory. The current level of 2.3% was lower than expected. It was expected to drop from 5.1% to 2.7%. This year in Japan, spending is not looking very well. They reached the level below zero several times, and the last scare was a false signal. The monthly change in household spending is already more positive. The current score of 1.8% has increased from 1.7%. Which means that within a month there was an increase in expenses, but compared to last year, the result was negative. Household expenditure is an important factor in building the country's economy and has a significant impact on the GDP level. The less households spend, the smaller the turnover is, which affects the number of companies. The profits of companies in such a situation can sleep. This situation will significantly affect individuals. Observing this indicator, it can be concluded that households have started to save to a greater extent, and thus it gives a signal about the plunging situations of life in this country. BRC Retail Sales Monitor The value of same-store sales in BRC-member retail outlets in the U.K decreased from 1.8% to 1.2%. This is a negative result despite the fact that a decrease has been reported. this decline was 0.5% larger than expected. This year is not the best. After the record level in February, there were declines and sales were negative for several months. Speeches At 9:15 CET there were speeches from the old continent. Speakers were the German Buba President Nagel, member of German Buba Wuermeling and ECB's Enria. They probably spoke at 10:00 CET. Information provided in speeches that the focus is on closing inflation and thus on raising rates. At 10:30 CET, the SNB Gov Board Member Maechler also took the floor and thus gave instructions on Switzerland's moetary policy. At 11:00 CET a representative of the Bank of England also took the floor. The speaker was Huw Pill. His statement may turn out to be a signal for the motoring policy, and thus it may direct the pound's (GBP) situation in the present day. He is expected to speak again at 18:00 CET. Outside the European continent, a representative of the Reserve Bank of Australia (RBA) also spoke at 11:30 CET. The speaker was Governor Philip Lowe. As a key adviser to RBA board members, who decide short term interest rates, Lowe has considerable influence over the value of the Australian dollar. Traders scrutinize his public engagements for clues regarding future monetary policy. EU Retail Sales Retail sales figures from the European bloc were also published today. An improvement was expected in the monthly and in the annual shift. As a result of retail sales, y/y growth was expected from -2.0% to -1.3%. Also in the monthly change, the projected increase from -0.3% to 0.4%. The current readings are positive. The annual change in retail sales rose to 0.6%, and the monthly change met expectations. The current result in such a difficult economic situation is interpreted as a slight improvement, i.e. a positive report. Summary 1:30 CET Japan Household Spending 2:01 CET BRC Retail Sales Monitor 9:15 CET German Buba President Nagel Speaks 9:15 CET German Buba Wuermeling Speaks 9:15 CET ECB's Enria Speaks 10:30 CET SNB Gov Board Member Maechler Speaks 11:00 CET BoE MPC Member Pill Speaks 11:30 CET RBA Governor Lowe Speaks 12:30 CET EU Retail Sales (MoM) (Sep) 18:00 CET BoE MPC Member Pill Speaks Although there were no important reports today, one should watch the following days. Source: https://www.investing.com/economic-calendar/
Assessing 'Significant Upside Risks to Inflation': Insights from FOMC Minutes

High Inflation, The Aggressive Fed And Geopolitical Uncertainty Increases The Likelihood Of A US Recession

InstaForex Analysis InstaForex Analysis 09.11.2022 08:15
In my previous reviews, I pointed out that the wave structures of the two instruments I analyze daily were about to see the completion of the ascending sections of the trend. These sections will comprise 5 waves, and they won't be impulse ones. This is the most likely scenario because demand for the dollar may soar in the near term. Let's now analyze possible reasons for a stronger greenback. Future decisions This article is mostly about Goldman Sachs Group. Its analysts have downgraded their forecasts for EUR to $0.94 from $0.97 for the coming three months. In the course of its latest fall, the instrument approached $0.95. Given the latest forecast, we may expect the descending section of the trend to resume its formation or a new section to build up. According to Goldman Sachs, having a floating target, the US Federal Reserve may raise interest rates to 5% by March 2023, with one increase of 0.50% and two increases of 0.25%. Meanwhile, other central banks, including the Bank of England and the ECB, won't have any floating targets. Therefore, monetary policy divergence may deepen towards the US dollar. Economic growth in the United States In addition, Goldman Sachs says there is a 35% probability of the United States entering a recession in the coming 12 months, citing high inflation, the aggressive Federal Reserve, and geopolitical uncertainty. The company underlined that its forecast is more optimistic compared to the outlooks from other firms and banks because it foresees a realistic scenario of an economic path from high inflation to low inflation and without a recession. Economic growth in the United States is expected to fall below the trend line but remain above zero. The balance in the labor market is likely to be restored, and unemployment growth to be limited. The euro and the pound If it is an accurate forecast, the US economy is unlikely to get hurt badly. If a recession is weak and inflation gets back to 2% rather fast, there will be still no reason for an increase in demand for the dollar because analysts do not expect an easy path for the European or British economy. BoE Governor Bailey announced the British economy entered a recession in the third quarter, which may last for 2 years. Meanwhile, the ECB will hardly lift interest rates to 5% because the European Union is not a single country but a union of nations in different financial situations. Some countries will survive high rates painlessly, some may need economic support for quite a long time. By economic aid, we mean new allocations and stimulus programs, and this is something the ECB would like to avoid. Thus, the dollar again looks more promising than the euro and the pound. The sum up Based on the analysis, we may anticipate that the formation of the ascending trend section will become more complex and comprise up to five waves. It may be that the fifth wave of this section is now building up. Therefore, consider buying with targets located above the peak of wave c, based on the reversals of the MACD to the upside. The entire section of the trend after September 28th now has the a-b-c-d-e structure. However, once it is complete, the formation of a new downtrend section may begin.     Relevance up to 05:00 2022-11-10 UTC+1 Company does not offer investment advice and the analysis performed does not guarantee results. The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade. Read more: https://www.instaforex.eu/forex_analysis/326596
Apple Q3 2023 Results – Surpassing Expectations and Aiming for New Heights

The Bank Of England's Gloomy Outlook Should Undermine The Pound (GBP)

TeleTrade Comments TeleTrade Comments 09.11.2022 09:13
EURGBP lacks any firm intraday direction and remains confined in a narrow trading band. Talks for aggressive policy tightening by the ECB underpin the Euro and offers support. The BoE’s gloomy outlook could weigh on the British Pound and favour bullish traders. The EURGBP cross struggles to capitalize on the previous day's modest gains and oscillates in a narrow trading band, just above the 0.8700 mark through the early European session on Wednesday. Talks of a more aggressive policy tightening by the European Central Bank (ECB) continue to benefit the shared currency and offer support to the EURGBP cross. In fact, several ECB policymakers said that higher rates are needed for longer to bring down double-digit inflation in the Eurozone back to its 2% target. This, in turn, pushes the rate-sensitive two-year German bond yield to its highest since December 2008 and is seen acting as a tailwind for the Euro. The British Pound, on the other hand, draws support from the recent slump in the US Dollar and keeps a lid on the EURGBP cross. That said, the Bank of England's gloomy outlook for the UK economy should undermine the Sterling and supports prospects for some upside for the cross. It is worth recalling that the UK central bank forecasts a recession to last for all of 2023 and the first half of 2024 while indicating a lower terminal peak than is priced into markets. The fundamental backdrop suggests that the path of least resistance for the EURGBP cross is to the upside and any slide below the 0.8700 round figure could be seen as a buying opportunity. Bulls, however, might wait for a sustained strength beyond the 0.8775-0.8780 resistance zone before placing fresh bets amid absent relevant market-moving economic releases. The market focus now shifts to the release of the Preliminary UK Q3 GDP report on Friday.
Britain's Rishi Sunak And EU's Ursula Von Der Leyen Will Meet Today To Finalize The Northern Ireland Drama

The UK Demanding That The European Court Of Justice Be Stripped Of Its Role In Settling Brexit Disputes

InstaForex Analysis InstaForex Analysis 09.11.2022 12:09
UK and the European Union are rumored to be close to a major breakthrough in the months-long dispute over Northern Ireland's post-Brexit trading rules. Initially, the problem threatens a full-scale trade war, but the current crisis in which both regions experience record inflation seem to have made authorities do everything to find common ground. According to reports, the EU has begun testing the current UK database that tracks goods moving from the UK mainland to Northern Ireland. If they are satisfied with the system's performance, an agreement on customs checks in the Irish Sea may be signed. This recent upswing regarding negotiations allows Prime Minister Rishi Sunak's government to hope the deal will defuse tensions in the region and help the government resolve a number of problems. However, another key point to be addressed is the UK demanding that the European Court of Justice be stripped of its role in settling Brexit disputes in the region, which is not acceptable to the EU. The representative of the European Commission declined to comment on the progress of the talks, as did the British Foreign Office. Nevertheless, resolving the issue is beneficial as it would help correct supply chain disruptions and ease price pressures, especially if the Bank of England continues to increase rates at the current pace, which could push GDP down by up to 3.0% next year. GBP/USD In terms of GBP/USD, buyers are now focused on defending the support level of 1.1510 and breaking through the resistance level of 1.1590. This limits the upside potential as only a breakdown of 1.1590 will lead to a rise to 1.1690, 1.1730 and 1.1780. If pressure returns and sellers take control of 1.1510, the pair will drop to 1.1430 and 1.1360. EUR/USD In EUR/USD, sellers are not very active yet, so buyers have a chance to push the pair above 1.0090. A breakdown will spur growth to 1.0140, while a drop below 1.0030 will push euro back to 0.9970, 0.9920, 0.9880 and 0.9830.   Relevance up to 08:00 2022-11-10 UTC+1 Company does not offer investment advice and the analysis performed does not guarantee results. The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade. Read more: https://www.instaforex.eu/forex_analysis/326624
There Are No Obvious Reversal Of GBP/USD Pair Signs Yet

The Pound (GBP) Has Neither Economic Grounds For Growth

InstaForex Analysis InstaForex Analysis 10.11.2022 08:48
The GBP/USD currency pair also began to adjust on Wednesday but, at the same time, failed to overcome the moving average confidently. As in the case of the euro currency, the pair failed to update its last local maximum, so there are certain reasons to assume that the upward trend will be completed at this point. Recall that just a few days ago, the price overcame the Senkou Span B line on the 24-hour TF, which opens up good prospects for it. However, the fundamental and geopolitical backgrounds remain such that it is very difficult to believe in the pound's growth over a long distance. Moreover, we still believe that the growth of the British currency in the last few days was illogical. This week, there was no important macroeconomic event in the US or the UK. At the expense of what did the pound grow then? Thus, we still believe that the pair's fall is more likely than its growth. Recall that bitcoin has been around the important $18,500 level for several months, bouncing 15 or 16 times. But in the end, when everyone thought growth had begun, he took "acceleration" before breaking through the "reinforced concrete" level. Therefore, we can observe something similar in currency pairs. Perhaps the movement we are seeing now is illogical and groundless – it's just an attempt by traders to drive the pairs higher so that they can sell at a more favorable rate. Recall that the UK and its economy are no longer just on the verge of recession. They already have one foot in this "swamp." This Friday, a report on GDP for the third quarter will be published, likely to turn out negative and will be the first in a series of failed reports. Thus, the pound has neither economic grounds for growth nor the support of the Bank of England nor geopolitical grounds. Interim results of the US parliamentary elections One of the most interesting recent topics has been the US Parliament's midterm elections. We want to make a reservation right away that the fall of the dollar is unlikely to be related to them since, at the moment, it is not even clear who will establish control over both chambers. Yes, the interim results speak in favor of the Republicans, but this statement is true only for the lower house. Currently, 199 seats out of 435 go to Republicans and 172 to Democrats. That is, the fate of 64 more seats is still unknown, and even the current leadership of the Republicans can be lost easily. Experts note that the second round of voting may be required in some states, which will occur no earlier than December. In some states, the votes have not yet been fully counted, and the results are very close, so the scales may tilt in either direction. Experts also believe that final results should not be expected in the coming days because counting millions of votes is not a fast process. There are states where the results are obvious, and all votes need not be considered for intermediate results. But such a picture does not develop everywhere. As for the Senate, the Republicans are leading by a margin of 1 vote. However, the fate of 5 more senators remains unknown, so the Democrats can calmly level the gap here. Recall that with equal seats in the Senate, of which there are only 100, the decisive vote will remain with Kamala Harris, who is a representative of the Democratic Party. Therefore, Democratic senators need to get three votes out of the remaining 5 to win the election to the Senate. If Republicans win in the House of Representatives, they will be able to block some of the Democrats' decisions, but they will not be able to make their own decisions alone. Both ruling parties will have to negotiate with each other on all important issues, which is perhaps even good. The average volatility of the GBP/USD pair over the last five trading days is 228 points. For the pound/dollar pair, this value is "high." On Thursday, November 10, thus, we expect movement inside the channel, limited by the levels of 1.1152 and 1.1607. A reversal of the Heiken Ashi indicator upwards will signal a new round of upward movement. Nearest support levels: S1 – 1.1353 S2 – 1.1292 S3 – 1.1230 Nearest resistance levels: R1 – 1.1414 R2 – 1.1475 R3 – 1.1536 Trading Recommendations: The GBP/USD pair has started a new downward movement in the 4-hour timeframe. Therefore, at the moment, you should stay in sell orders with targets of 1.1230 and 1.1152 until the Heiken Ashi indicator turns up. Buy orders should be opened when fixing above the moving average with targets of 1.1536 and 1.1607. Explanations of the illustrations: Linear regression channels – help determine the current trend. The trend is strong if both are directed in the same direction. The moving average line (settings 20.0, smoothed) – determines the short-term trend and the direction in which trading should be conducted now. Murray levels are target levels for movements and corrections. Volatility levels (red lines) are the likely price channel in which the pair will spend the next day, based on current volatility indicators. The CCI indicator – its entry into the oversold area (below -250) or into the overbought area (above +250) means that a trend reversal in the opposite direction is approaching.       Relevance up to 01:00 2022-11-11 UTC+1 Company does not offer investment advice and the analysis performed does not guarantee results. The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade. Read more: https://www.instaforex.eu/forex_analysis/326709
Bank of England survey highlights easing price pressures

The UK Central Bank (BoE) Expects A Recession To Last For All Of 2023

TeleTrade Comments TeleTrade Comments 10.11.2022 09:51
EURGBP lacks any firm intraday direction and oscillates in a range on Thursday. A combination of factors, however, continues to act as a tailwind for the cross. Talks for aggressive tightening by the ECB underpin the Euro and offers support. The BoE’s bleak outlook for the UK economy supports prospects for further gains. The EURGBP cross is seen oscillating in a range, around the 0.8800 round-figure mark through the early European session and consolidating the overnight strong gains to a nearly one-month high. The Bank of England's gloomy outlook for the UK economy turns out to be a key factor behind the British Pound's relative underperformance and acts as a tailwind for the EURGBP cross. In fact, the UK central bank expects a recession to last for all of 2023 and the first half of 2024. Moreover, the BoE last week indicated a lower terminal peak than was priced into the markets. The shared currency, on the other hand, continues to draw some support from bets for a more aggressive policy tightening by the European Central Bank (ECB). Several ECB policymakers, including President Christine Lagarde, indicated that the central bank will keep raising rates aggressively to tackle red-hot consumer inflation, which accelerated to a record high of 10.7% in October. This, in turn, pushed Germany’s short-dated yields to fresh multi-year highs earlier this week and adds credence to the near-term positive bias for the EURGBP cross. Even from a technical perspective, the previous day's sustained move and acceptance above the 0.8775-0.8780 supply zone support prospects for an extension of a nearly three-week-old uptrend. There isn't any major market-moving economic data due for release on Thursday, either from the Eurozone or the UK. Hence, the focus remains on the Preliminary UK Q3 GDP print on Friday. Investors will also look forward to British Finance Minister Jeremy Hunt's fiscal statement on November 17. Nevertheless, the fundamental backdrop seems tilted in favour of bullish traders.
Positive Shift in Inflation Structure: Core Inflation Falls in Hungary

RICS House Price Balance Is Below Zero | Inflation Data From Both Americas Are Ahead

Kamila Szypuła Kamila Szypuła 10.11.2022 11:30
Today there are no major economic events than the result of the US CPI report. In addition, there will be important speeches by members of the FOMC and other central banks, including the Bank of England of Canada. RICS House Price Balance The Royal Institution of Chartered Surveyors (RICS) House Price Balance was published early in the day. The result showed that the index fell sharply below zero. The current reading is at -2%. A drop from 30% to 20% was forecast, but the current figure has turned out to be more drastic. This means that house prices in the designated area have dropped drastically. There has been a decline in prices since May, and the present one signifies a significant deepening of this trend. The first speeches The first speech of the day took place at 2:45 CET. The speaker was Michele Bullock serves as an Assistant Governor of the Reserve Bank of Australia (RBA). The next speech was from America. Fed member Christopher J. Waller spoke at 9:00 CET More speeches Ahead Today also representatives of European banks will take the floor. Andrea Maechler serves as Governing Board Member of the Swiss National Bank (SNB) is set to speak at 14:30 CET. At the same time will be speak Andrea Enria, Chair of Supervisory Board of the European Central Bank. Speech by representatives of the Bank of England is scheduled for 15:00 CET and 15:10 CET. Speakers in turn: David Ramsden, Deputy Governor of the Bank of England and Silvana Tenreyro, a member of the Monetary Policy Committee (MPC). Another Fed speech and one from the Bank of Canada are also planned. Bank of Canada Member Governor Tiff Macklem will speak at 6:50 PM CET. After the published reports, the following will speak: Federal Reserve Bank of Philadelphia President Patrick Harker, Federal Open Market Committee (FOMC) Member Mester and Federal Reserve Bank of Kansas City President Esther George. All speeches can provide valuable information about the future of monetary policy actions of the banks concerned. ECB Economic Bulletin At 11:00 CET the ECB published a Bulletin. The Economic Bulletin provides a comprehensive analysis of economic and monetary developments and interim updates on key indicators. Which can help investors to assess the future development of this region, as well as summarize the effectiveness of ECB's work South Africa Manufacturing Production Today, South Africa will also publish a report on Manufacturing Production. The shift from Y / Y of output produced by manufacturers is forecast to decline from 1.4% to -2.4%. A smaller index in this sector may indicate serious problems which the country's economy is struggling with, which will hinder the growth. Brazil CPI Brazil as well as the United States will publish inflation data. In South America's largest economy, Y/Y inflation is expected to decline from 7.17% to 6.34%. It is very likely as the CPI has been in a downward trend since July. Meanwhile, the CPI m/m is expected to increase from -0.29% to 0.48%. US CPI Expectations for US inflation are positive. Slightly dropping is expected. Read more: Inflation In The USA Has A Chance Of Cooler| FXMAG.COM Initial Jobless Claims The number of individuals who filed for unemployment insurance for the first time during the past week is expected to increase by 3K weekly report. The last reading was at 217K and it was a positive reading as the level persisted for another week and the forecasts will increase to 220K. At 15:30 CET it will turn out if the reading is positive this time. Summary: 2:01 CET RICS House Price Balance 2:45 CET South Africa Assist Gov Bullock Speaks 9:00 CET Fed Waller Speaks 11:00 CET ECB Economic Bulletin 13:00 CET RPA Manufacturing Production 14:00 CET Brazil CPI 14:30 CET SNB Gov Board Member Maechler Speaks 14:30 CET ECB's Enria Speaks 15:00 CET MPC Member Ramsden Speaks 15:10 CET MPC Member Tenreyro Speaks 15:30 CET US CPI 15:30 CET Initial Jobless Claims 16:00 CET FOMC Member Harker Speaks 18:50 CET BoC Gov Macklem Speaks 19:30 CET FOMC Member Mester Speaks 20:30 CET FOMC Member George Speaks Source: https://www.investing.com/economic-calendar/
The Pound Is Now Openly Enjoying A Favorable Moment

Needless to say - greenback plunged after the inflation release, so Sterling gained. If released next week GDP come at less than -0.5%, pound may recede

Kenny Fisher Kenny Fisher 10.11.2022 20:41
The British pound has soared today, following the US inflation report. GBP/USD is trading at 1.1661, up a massive 2.7%. US dollar retreats as inflation falls The October inflation report was lower than what everyone had expected, which has triggered strong volatility in the currency markets. The US dollar is sharply lower against the majors, as the markets are expecting the Fed to ease up on interest rates after today’s favourable inflation data. Headline CPI dropped to 7.7%, down from 8.2% in September and below the consensus of 8.0%. Core inflation slowed to 6.3%, down from 6.6% and lower than the forecast of 6.5%. The surprisingly low numbers have turned rate pricing on its head. Prior to the inflation release, the markets had priced in 55% for a 50 bp increase and 45% for a 75 bp hike. This has changed to 80-20 in favor of a 50 bp hike, which has sent the US dollar into a broad retreat. The Fed may end up delivering a 50 bp move in December, but investors should remind themselves that this doesn’t mean the Fed is going soft. It wasn’t too long ago that a 0.50% hike was considered ‘supersize’; it’s only in comparison to 0.75% or full-point moves that a 0.50% increase can be considered dovish. Secondly, Fed Chair Powell said at last month’s meeting that the terminal rate would be higher than previously expected, a clear sign that the Fed remains hawkish. The UK releases key data on Friday, and the markets are braced for soft readings. GDP for the third quarter is expected to slow to -0.5% QoQ, down from 0.2% in the second quarter. Manufacturing Production for September is expected at -0.4%, which would mark the third decline in four months. If these releases are weaker than expected, the pound could give back some of today’s huge gains. GBP/USD Technical There is resistance at 1.1767 and 1.1844 1.1609 and 1.1505 and providing support This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds. GBP/USD rockets as US inflation dips - MarketPulseMarketPulse
Services PMIs and Fed Minutes: Analyzing Market Focus and Central Bank Strategy

The British Central Bank’s (BoE) Plan To Sell Gilts

TeleTrade Comments TeleTrade Comments 11.11.2022 08:42
GBPJPY struggles to extend the daily gains amid sluggish yields, pre-data anxiety. Optimism surrounding Brexit, BOE’s next move keeps buyers hopeful but fears of Japan’s meddling test upside. Yields dropped after US inflation data amplified risk-on mood. Fears that UK Q3 GDP will amplify recession woes weigh on the prices. GBPJPY prints mild gains around 165.80 while snapping a three-day downtrend at the lowest levels in a month. In doing so, the cross-currency pair struggles to cheer the Japanese Yen’s (JPY) weakness amid cautious optimism in the UK. The reason could be linked to the bank holiday in the US and anxiety ahead of the UK’s preliminary Gross Domestic Product (GDP) figures for the third quarter (Q3) of 2022. Firmer equities in the Asia-Pacific region join the hopes of Japan’s meddling to defend the JPY to exert downside pressure on the Yen. Also likely to have favored the GBPJPY price could be the mixed readings of Japan’s Producer Price Index (PPI) for October, stronger-than-expected on YoY but matching forecasts on MoM. Talking about the risks, an eight-month low print of the US Consumer Price Index (CPI) allowed the US Federal Reserve (Fed) policymakers to back easy rate hikes and drown the US Dollar, which in turn helped the market sentiment to bolster. Amid these plays, Asian stocks rise but the S&P 500 Futures struggles for clear directions around a two-month high. It should be noted that the US 10-year Treasury yields remain inactive around the monthly low near 3.81%, flashed on Thursday, after registering the heaviest slump since early December 2021. Also challenging the GBPJPY buyers, other than the sluggish yields, are fears emanating from China’s covid conditions and anxiety ahead of Monday’s meeting between US President Joe Bide and his Chinese counterpart Xi Jinping. At home, UK PM Rishi Sunak’s optimism to solve the Brexit issue appears to defend the GBPJPY buyers of late. “British Prime Minister Rishi Sunak said on Thursday he was pleased with the progress the government was making on resolving a long-running post-Brexit trade row with the European Union over Northern Ireland,” reported Reuters. Furthermore, headlines from the Bank of England (BOE), suggesting the British central bank’s plan to sell gilts, also favor the pair buyers. “The Bank of England said on Thursday that from Nov. 29 it would start to sell back to the market some of the 19 billion pounds ($22 billion) of long-dated and index-linked gilts which it bought last month to quell market turmoil,” said Reuters. Looking forward, the UK Q3 GDP is expected to print -0.5% QoQ figure versus 0.2% prior and may recall the pair bears. However, fears of a recession are already priced-in and hence a surprise positive could have a welcome reaction. Also read: UK GDP Preview: Barrelling toward recession. Pound Sterling set to fall? Technical analysis Although a downside break of the one-month-old ascending trend line, around 166.75 by the press time, keeps sellers hopeful, the 100-day EMA challenges the bears around 164.25.    
Bank of England survey highlights easing price pressures

September’s GDP In UK Hit Was Unrelated To The Funeral Of Queen

ING Economics ING Economics 12.11.2022 08:08
UK recession coming as economy begins to contract Not all of the latest weakness in UK GDP is explained away by September's extra bank holiday, and we're expecting further declines in output over the coming quarters. As the cost of living squeeze continues, we expect a 2% hit to GDP by next summer, though much depends on how the government's energy support evolves between now and then. Queen's funeral added to September's GDP hit The UK economy shrank by 0.2% in the third quarter of the year, marking the start of what’s likely to morph into a recession spanning several quarters. Admittedly that’s less bad than expected, partly because August’s data was revised more favourably. Unsurprisingly these latest figures are also somewhat skewed by the extra bank holiday in September, which marked the Queen’s funeral. Workplaces – including many that would typically be open on a bank holiday – were reported to be temporarily closed. GDP fell by 0.6% during September as a result. That muddies the water when it comes to assessing the underlying strength of the economy, and probably also means the fourth quarter figures will be a little higher than they otherwise would be, assuming the lost activity returns in October. Further weakness is coming Nevertheless, there are unmistakable signs that the economy is slowing. The ONS hints that at least some of September’s GDP hit was unrelated to the funeral, while retail sales have now fallen for two consecutive months. We expect a further decrease in data released next week. We also expect to see a similar trend in hospitality over the coming months, which has been operating well above pre-pandemic levels for some time on the back of renewed consumer interest. Lower consumer spending appetite is likely to help push GDP into a second-straight contraction during the fourth quarter. We’re pencilling in a 0.3% hit to economic activity, the same as the Bank of England. As the winter wears on, we also expect to see more strain emerge in manufacturing and construction – both of these sectors suffered noticeably during the 1990s and 2008 recession. The fall in manufacturing new orders, linked to falling global consumer demand for goods and rising inventory levels, as well as higher energy costs, point to lower production by early 2023. Likewise, the sharp rise in mortgage rates, and the very early signs of house price declines, point to weaker building activity through next year. A winter recession looks highly likely Wrapping that all together, we currently expect a cumulative hit to GDP of roughly 2% by the middle of 2023. That would be a comparable hit to the 1990s recession, and is somewhere between the Bank of England’s two forecasts released last week – one that was premised on no further rate hikes (rates constant at 3%), and one which assumed a terminal Bank Rate of 5%. We expect Bank Rate to peak at around 4%. Ultimately a lot will depend on next week’s budget announcements. A lot of the focus understandably will be on how the Chancellor closes the forecasted fiscal deficit in 2026/27. But above all, we’ll be looking for details on how the government will make its energy support less generous from April, something which has the greatest scope to reshape the 2023 outlook. The Chancellor has signalled support for households will become more targeted in a bid to make the policy less costly. The challenge here is that there’s no easy way of targeting support efficiently, and it may be that the Chancellor simply differentiates households by whether they receive means-tested income support. The upshot is that we could see the majority of households shift back to paying the Ofgem-regulated price, which is updated quarterly. The sharp fall in wholesale gas prices could see most households paying £3,300 on average during FY2023, compared to £2,500 annually under the government guarantee. That would equate to roughly 9% of household disposable income and would add a further drag to overall economic activity next summer. TagsGBP Energy crisis   Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more
Asia Morning Bites: Inflation Data in Focus, FOMC, ECB, and BoJ Meetings Ahead

The Polish Economy Is Clearly Slowing Down And Core Inflation Momentum Is High

ING Economics ING Economics 12.11.2022 08:15
Next week UK chancellor Jeremy Hunt will deliver his Autumn Statement. Exactly how the fiscal deficit will be closed remains uncertain – we believe there will be more noticeable cuts to investment spending. Data-wise, October's CPI reading will mark the peak in UK inflation, given energy will be fixed over the coming months In this article US: Fed officials will have to tread carefully regarding hiking expectations UK: Autumn Statement in focus amid busy data week Poland: inflation remains broad-based and core inflation momentum is high Source: Shutterstock US: Fed officials will have to tread carefully regarding hiking expectations The low CPI print from the US this week has boosted expectations that the Federal Reserve will raise interest rates by “only” 50bp in December after four consecutive 75bp hikes. However, the Fed will be nervous that Treasury yields fell so far as some market participants interpreted the number as an indication that the Fed’s work is nearly done. However, Fed officials won't want to signal that yet as it will reinforce a loosening of financial conditions that could undermine all the hard work in trying to constrain inflation. We expect to hear some fairly hawkish rhetoric over the coming days, messaging that while there likely will be a moderation in the size of rate hikes, inflation is not defeated and there is likely to be a higher terminal interest rate than the central bank signalled in September. In terms of data, we have retail sales, industrial production, producer price inflation, housing starts and existing home sales. Moderate growth is likely to be the order of the day in the activity reports, while the housing numbers will be soft due to the rapid rises in mortgage borrowing costs that have prompted a collapse in demand. PPI should come in on the softer side of expectations, thanks to falling commodity prices and freight costs plus the strong dollar and easing supply chain pressures. UK: Autumn Statement in focus amid busy data week Markets have generally given new UK prime minister Rishi Sunak and his chancellor Jeremy Hunt the benefit of the doubt when it comes to next week’s Autumn Statement. That’s partly because these announcements will be accompanied by new forecasts from the Office for Budget Responsibility – something that was lacking when the ill-fated mini-budget was announced in September. Investors no doubt expect the Chancellor to do enough to convince the OBR that debt will fall across the medium-term, closing a fiscal deficit that would probably otherwise be £30-40bn/year by 2026-27. Exactly how that will be achieved remains somewhat uncertain, and pretty much every possible lever available to the Chancellor has been touted in the press at some point over the past few weeks. Recent reports suggest the Treasury will rely more on spending than taxes to do the heavy lifting. But given the real-term cuts (in some cases sizable) already facing certain government departments, it may be that this means more noticeable cuts to investment spending. For the economy, much will depend on how much of the burden is placed on consumers via higher taxation, and how immediately those changes come through. But we’ll also be looking out for further detail on how the government intends to re-structure its flagship Energy Price Guarantee. The price cap, which had been due to last for two years, will be scaled back from April. Our working assumption is that most households will be shifted back to the Ofgem regulated price, which we estimate will average £3,300 annually based on current futures prices, up from £2,500 at the current government-guaranteed level. We also have a few key pieces of data: Jobs (Tue): Hiring indicators have begun to turn lower, but so far there’s been little-to-no sign of increased redundancies. Firms continue to face material staff shortages, driven in part by rising rates of long-term sickness in older workers. We expect the unemployment rate to remain low next week, and greater scope for "labour hoarding" compared to previous recessions could feasibly limit how far and fast unemployment rises over the coming month. Inflation (Wed): Famous last words but October’s inflation data is likely to mark the peak in UK CPI – or there or thereabouts. This data will include the latest rise in electricity/gas prices, but given they’re now being fixed by the government until at least April, their contribution has probably peaked. Still, headline inflation is unlikely to slip back into single digits until March/April next year. Retail sales (Fri): We expect a third consecutive month-on-month fall in sales as the cost of living squeeze continues to bite. Poland: inflation remains broad-based and core inflation momentum is high Current account (Sep): €-3025mn The external position remains under pressure and we expect another wide current account deficit for September amid a deep foreign trade imbalance and unfavourable secondary income balance, as September was a month when Poland paid more to the EU budget than received from it. On a 12-month cumulative basis, the current account is projected to have expanded to 4.1% of GDP vs. 3.9% of GDP in August. CPI (Oct): 17.9% YoY We expect the flash estimate of 17.9% year-on-year to be confirmed by the final data. Prices of petrol went up by 4.1% month-on-month and energy for housing by 2.0% MoM, so the energy crisis is not over yet. At the same time, prices of food and non-alcoholic beverages jumped up by 2.7% MoM as farmers, food manufacturers and retailers continue to pass on higher costs of energy and transport onto their final products. Inflation remains broad-based and core inflation momentum is high. We estimate that core inflation excluding food and energy prices went up by 1.2% MoM i.e. 11.2% YoY in October vs. 10.7% YoY in September. GDP (3Q22): +3.5% YoY The recent revision of national accounts point to an even stronger 1H22 and increases the upside risk to our forecast of 2022 GDP at 4.3%. We forecast that in 3Q22, GDP bounced back after declining by 2.1% quarter-on-quarter seasonally-adjusted in 2Q22, but annual growth moderated toward 3.5% YoY. The Polish economy is clearly slowing down and a strong performance in 1H22 has created a high reference base for 2022 so we expect dismal annual GDP figures at the beginning of 2023 and risks to our 1.5% forecast for the next year are increasingly skewed to the downside. Developed Markets Economic Calendar Source: Refinitiv, ING EMEA Economic Calendar Source: Refinitiv, ING This article is part of Our view on next week’s key events   View 2 articles TagsTreasury Federal Reserve EMEA   Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more
Economic Calendar Details and Trading Analysis - August 7 & 8

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

Craig Erlam Craig Erlam 12.11.2022 08:29
US After a round of soft inflation data triggered a buy-everything relief rally, Wall Street will focus on Fed speak and a plethora of data points that might show the economy remains resilient.  The key economic readings include manufacturing activity, retail sales, and housing data. There will be no shortage of appearances by the Fed this week. Brainard and Williams speak on Monday, while Tuesday includes speeches by Harker, Cook, and Barr. Wednesday brings Williams, Barr, and Waller, and on Thursday we will hear from Bullard, Bowman, Mester, Jefferson, and Kashkari. In addition to a swathe of economic releases, traders will also closely monitor big retail earnings from Walmart, Target, Macy’s, and Kohl’s. We should learn more about the health of the consumer and if we should expect a further easing of prices as we enter the holiday season. EU  It’s a relatively quiet week for the EU with the two standout economic releases being flash GDP and final HICP. With the economy facing a recession, the GDP data will be an interesting insight into how quickly growth is slowing going into an uncertain winter. The inflation data will naturally be of interest but it may take a significant revision to really grab investors’ attention. UK The Autumn statement has been a long time coming, it feels. The markets have calmed down a lot since the ridiculous mini-budget but it will still take time for the government to regain credibility and the confidence of the markets. It starts next week and all eyes will be on Parliament as we learn how the new government plans to balance the books while not piling more misery on the economy. The BoE monetary policy report hearing next week is another highlight but there’s also a lot of economic data due. The path for interest rates remains uncertain so it’s not just what policymakers have to say that matters, it’s whether the data allows them to slow the pace of tightening going forward as they so clearly want to do. CPI on Thursday is the obvious highlight but there’s plenty more throughout the week. Russia A quiet week with no economic data of note. South Africa Another quiet week with the only economic release being retail sales on Wednesday. Turkey No major economic releases next week, with investors still focused on the central bank and inflation. Switzerland Tier three data dominate next week. Focus remains on what the SNB will do in December, with Chair Jordan acknowledging on Friday that monetary policy isn’t restrictive enough to bring inflation back into the range of price stability over the medium term. The risk of a pre-meeting rate hike remains. China Weeks of speculation around China’s commitment to its zero-Covid policy have spurred a recovery in local stocks and we may be about to get more information on what that will entail. A relaxation of quarantine measures has been announced in recent days and a press briefing is now reportedly scheduled for Saturday. At the same time, China is seeing a steady rise in Covid cases resulting in more restrictions and mass testing.  China’s October retail sales, industrial production, and investment data will be released next week.  The PBOC is also expected to keep its one-year medium-term lending facility rate at 2.75% in November.   India A key inflation report could show pricing pressures are easing which might allow the RBI to be less aggressive with its tightening path.  Headline inflation is expected to ease from 7.4% to 6.7%.    Australia & New Zealand The focus for both Australia and New Zealand might stay on China and their weakening outlook due to their struggles with COVID.  Australian employment data is expected to show job growth continues, while unemployment remains at 3.5%. Wage pressures in the third quarter are expected to rise, but some of that is attributed to the increase in the minimum wage.    In New Zealand house sales data and producer prices will be released. Japan Japan’s third-quarter GDP reading is expected to show significant weakness as import costs skyrocketed.  Japan’s core inflation is also expected to surge from 3.0% to 3.5%, which should clearly weigh on consumer spending.  Given the weakness in the US dollar, the BOJ might save its ammunition and hold off intervening anymore in the foreign exchange market. Singapore It is expected to be a quiet week with the exception of non-oil domestic export data.   Economic Calendar Sunday, Nov. 13 Economic Data/Events China medium-term lending The ASEAN summit concludes in Cambodia. Monday, Nov. 14 Economic Data/Events Eurozone industrial production India trade, CPI, wholesale prices New Zealand performance services index Fed’s Williams moderates a panel at the Economic Club of New York ECB’s Fabio Panetta speaks in Florence ECB’s de Guindos speaks in Frankfurt. BOJ announces the outright purchase amount of Japanese government securities Tuesday, Nov. 15 Economic Data/Events US empire manufacturing, PPI France CPI Poland CPI  Eurozone GDP Hungary GDP Canada existing home sales China retail sales, industrial production, surveyed jobless France unemployment Germany ZEW survey expectations Japan industrial production, GDP Mexico international reserves New Zealand home sales, net migration South Korea export/import price index, money supply UK jobless claims, unemployment G-20 summit in Bali IEA monthly oil market report ECB’s Elderson speaks Fed’s Harker speaks at GIC Annual Monetary & Trade Conference Former US President Trump is due to make an announcement in Florida RBA releases minutes of its November interest rate meeting Wednesday, Nov. 16 Economic Data/Events US business inventories, cross-border investment, retail sales, industrial production Australia leading index Canada CPI, housing starts China property prices Israel GDP Italy CPI Japan machinery orders, tertiary index, department store sales Philippines Bloomberg economic survey Russia GDP South Africa retail sales UK CPI EIA crude oil inventory report G-20 summit in Bali BOE Gov Bailey appears before the Treasury committee   Fed’s Williams and Brainard, SEC’s Gensler speak at the 2022 Treasury Market conference ECB Financial Stability Review ECB President Lagarde speaks ECB’s Fabio Panetta speaks Thursday, Nov. 17 Economic Data/Events US housing starts, initial jobless claims Italy trade Singapore trade Australia unemployment China Swift payments Eurozone CPI, new car registrations Hong Kong jobless rate Japan exports, trade balance New Zealand PPI Singapore non-oil exports UK fiscal statement, economic forecasts Fed’s Kashkari and Jefferson speak at the Federal Reserve Bank of Minneapolis Fall Institute Research Conference Fed’s Mester speaks at the Federal Reserve Bank of Cleveland and the Office of Financial Research Annual Financial Stability Conference Fed’s Evans speaks ahead of his retirement BOE’s Silvana Tenreyro speaks SNB’s Maechler speaks at Money Market Event in Geneva BOE’s Huw Pill speaks at the Bristol Festival of Economics on ‘What Next for Central Banks’ Friday, Nov. 18 Economic Data/Events US Conference Board leading index, existing home sales Norway GDP Japan CPI Thailand foreign reserves, forward contracts, car sales ECB President Lagarde, Nagel, and Knot speak alongside BOE’s Mann Fed’s Collins speaks at the Federal Reserve Bank of Boston Economic Conference BOE’s Jonathan Haskel speaks Sovereign Rating Updates Italy (Fitch) Sweden (Fitch) Turkey (Fitch) Ireland (S&P) South Africa (S&P) Portugal (Moody’s) South Africa (Moody’s) Denmark (DBRS) This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.
The UK Economy Looks Worse Than The Rest Of The G7 Countries

UK Data Shows A Less Tragic Slowdown Trajectory

Alex Kuptsikevich Alex Kuptsikevich 12.11.2022 08:48
The pound rally gained new momentum on Friday morning, following a respite after the 3% rise in GBPUSD on Thursday. The British currency was supported predominantly by better-than-expected economic data and comments from the Governor of the Bank of England on the intention for further rate hikes. Forecast The UK economy contracted by 0.2% in the third quarter - noticeably less than the forecasted drop of 0.5%. One year ago, growth in the same period diminished to 2.4% after 4.4% in the second quarter and +2.1% expected. For September, the economy contracted by 0.6%, following a decline of 0.1% in August. Industrial production and manufacturing Industrial production added 0.2% in September, losing 3.1% y/y. Manufacturing is more challenging, holding on to volumes in September after contracting by a cumulative 2.9% in the previous three months. Separately, there is an improvement in the balance of foreign trade. The monthly deficit decreased to 15.6bn compared to 17.2bn a month before, 16.1bn a year ago and a peak of 23 in January. However, this is well above 'normal' levels from 2013 to 2019, near 12bn. Exports are up 46% y/y, or 11.8bn and imports are up 27% or 11.4bn. UK economy The UK economy has started to contract without surprises, evidenced by earlier labour market figures. Nevertheless, so far, it is a softer landing than previously feared. GBP/USD Nevertheless, it is essential for market participants that the published data shows a less tragic slowdown trajectory and that the decline in commodity prices in recent months is easing the pressure on imports and industry. In this environment, there are more and more reasons for long-term buying of the British pound, which renewed its historic low against the dollar in September. As a result, the GBPUSD is now above 1.1750, having beaten off losses since August. The rise in the British currency also shows signs of breaking the downtrend as GBPUSD has surpassed previous local highs and has consolidated above the 50-day average. On the technical analysis side, GBPUSD may encounter little resistance up to the 1.20 area by the end of the month, where the bulls will still have to prove their strength.
UK Budget: Short-term positives to be met with medium-term caution

Markets Have Challenged The Bank Of England's (BoE) Stance

ING Economics ING Economics 13.11.2022 09:50
2023 will be the year the UK yield curve re-steepens. Bank of England hike expectations are still too high and recession fears will bite. Long-dated gilts will continue to trade with a political risk premium but the 10yr will converge to 3% by the end of the year In this article The long and arduous road to regaining credibility Re-steepening in the cards Market liquidity remains a challenge Source: Shutterstock The long and arduous road to regaining credibility 2022 was a bruising year for gilts and GBP rates in general. The bar for a more stable 2023 is not a very high one to clear. Yet, it will take a long time to restore market confidence. UK markets had to deal with a uniquely adverse interplay between fiscal and monetary policy, effectively undoing each other’s work. We would love to say that this is a thing of the past and that the two main institutions in charge of the UK’s economy, the Treasury and the BoE, are now coordinating better. Sadly, this is far from certain. Sterling-denominated assets are justified to trade with a greater risk premium In letting the Treasury feel the force of market pressure, the BoE may have won a battle but left the persistent impression that it will only step back into the bond market when it absolutely has to, as it did in September 2022. Barring a more severe crisis of this sort, sterling-denominated assets are justified to trade with a greater risk premium than previously. Our base case is for the fiscal tightening promised by the incoming government to be delivered at least in part. This, in turn, will ultimately close the gap between hawkish market expectations for monetary policy, in part justified by hopes of intervention to defend the currency, and ours. Markets have challenged the BoE’s stance ever since the start of this tightening cycle. Tighter fiscal policy is a potential catalyst for this to happen although we’re not holding our breath here. A severe recession could also go some way to convincing market participants that rates aren’t heading as high as current pricing suggests. Gilt yields should decline to 3% in 2023, but will continue to trade with a political risk premium Source: Refinitiv, ING Re-steepening in the cards Our working assumption for 2023 is that we’ve seen the peak in market interest rate hike expectations. Markets routinely priced a terminal rate above 5% in late 2022 but we think a more realistic figure is between 3.5%-4%. Even in the case of persistent inflation, this leaves some margin for front-end rate rates to fall further, especially since the end of the BoE's hiking cycle will likely bring expectations of rate cuts, with Bank Rate ending this cycle above what most would describe as the neutral level. We expect 2Y Sonia swaps to fall below 4% by mid-2023 We expect 2Y Sonia swaps to fall below 4% by mid-2023 as cuts come into view but we think longer-dated rates will retain a significant risk premium. This implies that 10Y swap rates will struggle to fall as fast as their shorter equivalent even in the event of a more dovish BoE. Firstly, this is because the Sonia swap curve is already dramatically inverted, and so a re-pricing at the front end would likely re-steepen the curve. Secondly, because the scars of the long-end market meltdown in September/October will take time to heal and we think duration/term premium is here to stay. All this is to say we expect a comparatively smaller drop in 10Y swap rates over the course of 2023. Translating this to 10Y gilt yields, we think 3% is an achievable target by year-end. 2023 will see the GBP swap curve gradually dis-invert Source: Refinitiv, ING Market liquidity remains a challenge Market functioning will remain an issue for sterling-denominated markets for some time. Liquidity indicators in the gilt and swaption markets certainly point to decreased risk-taking ability on the part of participants, also pointing to greater transaction costs. Policy choices may have exacerbated market functioning issues in 2022 but the underlying cause, macroeconomic uncertainty, could persist for a quarter or two in 2023, provided our forecast for a gradual decrease in inflation proves correct.   This article is part of Rates Outlook 2023: Belt up, we’re going down   View 8 articles TagsSterling Outlook Interest Rates   Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more  
Nasdaq 100 Underperforms and Faces Key Resistance - Technical Analysis and Market Outlook

Markets Are Left More Susceptible To Credit Events

ING Economics ING Economics 13.11.2022 10:00
The rapid tightening of monetary policy and significant outlook uncertainty is straining the system and testing the markets' capacity to absorb risks. The UK has shown how sketchy market liquidity can quickly lead to a solvency issue. Central bank ambitions to tighten could be frustrated if confronted with material pressure on the system In this article The financial system is vulnerable amid deteriorating market liquidity From home grown risks ... ... to outside triggers Suppression of money market risks about to fade The financial system is vulnerable amid deteriorating market liquidity As we approach the start of a new year, markets remain in a fragile state. At its foundation is the issue of market liquidity. Many of the common indicators of market liquidity are now at worse levels than they were at the peak of the Covid-19 pandemic. Take bid-offer spreads for government bonds, the go-to safe and supposedly most liquid of assets, which still reside at exceptionally wide levels. High realised and implied market volatility, while also an effect of central banks moving into action and a sign of the uncertainty surrounding the outlook, are straining the market’s capacity to absorb risk and lead to higher costs for market making. Wider gilt bid-offer spreads show that markets are increasingly dysfunctional Source: Refinitiv, ING   A liquidity problem can quickly morph into a solvency issue. This is what the UK recently experienced when the government’s expansionary fiscal plans sent shockwaves through gilt markets. Fears of higher issuance and a more hawkish Bank of England (BoE) reaction sent rates higher, but it was the pension funds' leveraged positions and ensuing margin calls that led to the situation spiralling out of control, eventually forcing the BoE to step in with purchases of long-end gilts, as well as forcing it to revisit fiscal plans.    From home grown risks ... On the back of the UK experience, the fiscal factor has received more attention as a potential trigger of market moves that could eventually put market liquidity to the test. The initial impact on rates can work via the sheer supply and credit channel, but currently also via the anticipated central bank response if the fiscal developments are seen to have a clear inflationary effect. A fiscal trigger for sudden moves may look less likely in the euro area and US political setups ... Substantial government programmes to support economies in light of surging energy prices have been set up or at least flagged in the euro area. One would think that the political decision process in the euro area – as well as in the US – as an aggregate makes the central bank response channel a trigger for sudden repricing less likely than what was witnessed in the UK. But if the economic slump deepens and another winter with potentially limited energy supply looms, one cannot exclude markets starting to focus on fiscal sustainability again. Euro sovereign spreads remain a cause for concern, but are holding up better than expected Source: Refinitiv, ING   This happens against the backdrop of central banks running down their balance sheets, leading to an increased net government debt supply that private investors will have to absorb. The Federal Reserve has been in the process of quantitative tightening (QT) for some time, the BoE just started this November – with the notable hiccup in gilt markets surrounding the pension funds – and the European Central Bank (ECB) is slated to begin in 2023. ... but sovereign debt crisis fears still linger amid ECB quantitative tightening It seems obvious to look at government bond auction metrics which have already suffered, though those are also a reflection of a limited desire for duration risk rather than the credit itself. However, with a view to the eurozone and its experience of the 2012 sovereign debt crisis burnt into collective memory, it is not too hard to imagine how a combination of political choices and geopolitical events could again sour investor confidence. The ECB has put in place a backstop – the Transmission Protection Mechanism – but being tied to conditionalities, its effectiveness could be blunted. ... to outside triggers Of the outside factors that could put the financial system’s capabilities to the test, geopolitical risks are one of the more obvious given the ongoing conflict in Ukraine. A sudden escalation, and in particular an immediate impact on energy prices, could put central banks in a tough spot as their inflation goals move further into the distance, requiring more forceful action while the economic backdrop takes a heavy blow, further straining public and private finances. One of the outside risk factors, however, relates to the policies of the Bank of Japan (BoJ) which so far has been an outlier amid the global charge of central banks tightening their policy reins. Importantly, the BoJ is conducting purchases at the long end of the Japanese government bond curve to cap yields. Any sign of the BoJ yield curve control ending could have large knock-on effects on yields outside of Japan. It could trigger another large and potentially sudden hike in global bond yields. Markets are already eying the end of the current BoJ governor’s (Haruhiko Kuroda) term in April 2023. Stable markets are no longer an argument for owning fixed income   Source: Refinitiv, ING Suppression of money market risks about to fade Money markets can be viewed as the plumbing of financial markets, which is also the reason why we have seen central banks acting quickly to intervene here in the past. We are still seeing the effects of this in the high levels of excess reserves within the banking system and the compression of money market spreads. The blanket provision of excess reserves is no longer compatible with the goal of tackling inflation But this suppression of risks is bound to be scaled back as the blanket provision of excess reserves is no longer seen as compatible with the broader policy goal of tackling inflation. Markets are left more susceptible to credit events or sudden dashes for liquidity.   For instance, the term funding provided to banks by the ECB via the targeted longer-term refinancing operations (TLTROs) and the excess of reserves flooding the system has led to a compression of Euribor rates over the risk-free 3m ESTR swap, a spread that has traditionally served as a measure of risks embedded in the banking system. In the United States, one indicator that we like to monitor is where banks print 3-month commercial paper as a spread over the risk-free rate (3mth term SOFR). It’s a simple measure of how easy it is for banks to fund themselves in the short-term market. Currently, this spread is at around 30bp (and European banks are printing at 50-60bp). That’s far wider than it was, but not yet enough to cause any material consternation.   The scaling back of central bank support is adding to the uncertainty investors are already facing as markets are perceived to be more prone to the materialisation of systemic risks, and the UK is considered a warning shot. The implication should be that risk measures can stay elevated or may even have to rise further. The above are only a selection, but it is especially relevant to monitor systemic risk measures while central banks are still tightening policies, in the sense that ambitions to do so will be frustrated if confronted with material negative pressure on the system. Anything that threatens to take the system down, or to risk doing so, is therefore out of the question. It’s also relevant as we progress through the 2023 slowdown/recession period, as any deep recession can pressure the system, as defaults can rocket. In that sense, it can act to accelerate a transition back to interest rate cuts. As such systemic risks could be a more credible reason for a “material pivot” than recessionary fears. After all, tighter policies from central banks are designed to slow growth and tend to accept the risk of recession. But what central banks can’t accept is any threat to the functioning of the system. No need to panic yet, but this is what we really need to be cognisant of.   This article is part of Rates Outlook 2023: Belt up, we’re going down   View 8 articles TagsRates outlook   Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more
Despite The Improvement In The Outlook Due To Falling Energy Prices, The Economic Environment In Britain Remains Difficult

The Bank of England Is Well Advanced On The Way To Quantitative Tightening

ING Economics ING Economics 13.11.2022 10:03
Quantitative tightening and a reduction in central bank liquidity will add upward pressure to long rates. Money market rates were suppressed in 2022. In 2023, they will be free to reflect systemic risks In this article The age of quantitative tightening Counterintuitive and delayed effect on duration The age of quantitative tightening The Federal Reserve will continue to allow US$95bn of bonds per month to roll off its balance sheet over the course of 2023. At the end of 2022, the balance sheet will have shrunk by a little over US$0.5tn, and then a further US$1.1tn is scheduled to be rolled off by the end of 2023. That would be a cumulative reduction of over US$1.6tn if all goes to plan. One issue here, however, is the roll-off over the second half of 2023 would co-exist with interest rate cuts from the Fed. While these may seem at odds with one another, remember that balance sheet roll-off is not outright selling bonds (hard quantitative tightening), it’s just allowing the Fed’s balance sheet to normalise. That can be viewed as a separate exercise to interest rate cuts, at least for a period. QT can be viewed as a separate exercise to interest rate cuts, at least for a period. The Bank of England is also well advanced on the way to quantitative tightening. The first non-reinvestment of a gilt reaching maturity occurred in March 2022, and the first gilt sale took place in November. Overall, the Bank intends to shrink its balance sheet by £80bn a year in the first year through a mix of passive (non-reinvestments) and active (outright sales) QT. This pace may accelerate in future years, but we assume that this is the relevant pace in the near term which, in FY 2023-24, should result in roughly half of that amount in passive and half in active QT. Net QT flow out of key European government bonds in 2023 should be limited   Source: ECB, Refinitiv, ING   The European Central Bank is only at the beginning of this process. QT will start in 2023 with a gradual phasing out of its Asset Purchase Programme redemptions (one of its two QE bond portfolios), followed by the same process for the Pandemic Emergency Purchase Programme (the other portfolio) in 2025. Assuming a 50% APP reinvestment cap for the second and third quarters, and an end in the fourth, the balance sheet reduction should amount to €156bn. Counterintuitive and delayed effect on duration The main effect of QE on markets is to suppress duration premium, the extra yield investors demand as compensation for taking interest risk over long periods of time. There are a variety of models that show how much lower yields are as a result of QE. In the case of the 10yr Bund, our own estimate stands at 230bp. It should also be noted that the effect of QE has typically been priced into yields before purchases actually happened. Markets are, after all, forward looking. We’ve already seen part of the increase in yields that QT should trigger As a general rule, we think it is fair to think of QT as QE in reverse. In our view, central bank balance sheet moves have been well-telegraphed months in advance, and so we’ve already seen part of the increase in yields that this should trigger. Much, however, depends on how long QT lasts. In a world where the process of balance sheet reduction is allowed to continue for years, the upward pressure on yields should gradually build up. QE has supressed Bund yields by 230bp, but don't expect a sharp reversal Source: Refinitiv, ING   We’re more circumspect, however. We think QT poses financial stability risks and central banks will struggle to carry on once their policy focus shifts to easing. As a result, we suspect most of the upward effect on yields has already been felt. This is at least true for treasuries and gilts, and less so for euro rates. If we’re wrong, however, and central banks manage to significantly reduce their balance sheets, then some upside risk to our forecasts will have to be reckoned with. If central banks manage to significantly reduce their balance sheets, then some upside risk to our forecasts will have to be reckoned with What these models have in common is that the impact of QE is greater at longer maturities. At face value, this means QT should exert a steepening effect on the curve. In practice, it hasn’t. The reasons are manifold, but the main one is that the QT effect has been drowned out by central bank hiking cycles, typically a flattening influence on the curve. In places where the sequencing between hikes and QT is clearer, like in the eurozone, there is a better chance of that steepening effect to be visible once the ECB ends its hiking campaign over the course of 2023.   This article is part of Rates Outlook 2023: Belt up, we’re going down   View 8 articles TagsQuantitative tightening Outlook Interest Rates   Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more  
Assessing 'Significant Upside Risks to Inflation': Insights from FOMC Minutes

There Is Ample Room For The Fed To Maintain The Roll-Off

ING Economics ING Economics 13.11.2022 10:09
Central bank balance sheet reduction started in 2022, but it is in 2023 that its effect will be felt in money markets. Expect a better reflection of credit and term premia, and for repo rates to normalise, with liquidity being swapped for collateral In this article US reverse repo volumes and bank reserves to fall in 2023 Repo could see a material move higher as reverse repo volumes drop The end of abundant liquidity Collateral shortage becoming a monetary policy issue US reverse repo volumes and bank reserves to fall in 2023 The way to think about the Fed’s balance sheet in round numbers is to start with its current size at almost $9trn. Of that, there is $2.25trn showing up at the reverse repo facility, $3trn in bank reserves, and most of the rest is cash in circulation (apart from other bits and pieces). So what comes out of reserves has been going into the reverse repo facility. And as the Fed’s balance sheet falls in size through bonds rolling off the front end (soft quantitative tightening), there must be a corresponding fall in bank reserves and/or in usage of the reverse repo facility. How much balance sheet roll-off is required for better balance? We think US$2trn The question then is how much balance sheet roll-off is required in order to bring about a sense of equilibrium between collateral and liquidity. A measure of this need is the $2trn of liquidity that routinely gets shovelled back to the Fed in its overnight reverse repo facility. The large use of this facility is reflective of an ongoing liquidity overflow that manifests in market repo rates struggling to match the rate being offered by the Fed (at 5bp above the fed funds floor). In fact, at times, the SOFR rate (effectively the general collateral rate) has been trading below the funds rate floor, which is not a great look. To help rectify the situation, more available collateral will help, and the counterpart to this is a better balance versus liquidity. The rise in usage of the reverse repo window has coincided with a fall in bank reserves, which are now running at $3trn. These peaked at $4.25trn in the fourth quarter of 2021. The previous low for bank reserves was $1.4trn in 2019, having come from a prior peak of $2.75trn in 2014. Back then, the Fed’s financial crisis-inspired bond-buying programme came to a conclusion (2014), and a bond roll-off then ran through 2018/19. Part of the fall in reserves reflected an uptick in economic activity and an increase in currency in circulation, and a requirement to build a buffer of high-quality liquid assets, the other part was a reduction in the Fed’s balance sheet as bonds rolled off. Fast forward to today and bank reserves are down from the highs, still at a relatively elevated $3trn, but primed to ease lower through 2023. Reverse repo balances should be the Fed liabilities that shrink the fastest in 2023 Source: Refinitiv, ING Repo could see a material move higher as reverse repo volumes drop For 2023, we can see the bond roll-off continuing throughout the year. If things get really tough macro-wise, there may be an argument for the roll-off to be put on pause. But barring the unexpected, there is ample room for the Fed to maintain the roll-off. That could have the direct effect of reducing the use of the Fed’s reverse repo facility. It does not have to, but this facility can wind all the way down to zero, which would be a desirable outcome as the market should not require recourse to repo away from the market. Should things get tight liquidity-wise, the Fed now has a permanent repo facility, where liquidity can be supplied back to the market (with bonds posted to the Fed). Ideally, the Fed should not be required to do large volumes through either of these windows. But they are there as a buffer - a buffer in both directions. 2023 should see an accelerated reduction in usage of the Fed’s reverse repo facility Overall, 2023 should see an accelerated reduction in usage of the Fed’s reverse repo facility. This should coincide with a rise in general collateral rates to above the reverse repo rate, ideally towards the effective fed funds rate. This is typically 8bp above the fed funds floor, compared with 5bp above for the reverse repo rate. Something like 8-10bp over the fed funds floor would be a good area for SOFR to settle at, correlating with a drying up of the usage of the Fed’s reverse repo facility. 2023 should also see bank reserves falling to US$2.5trn, or lower Beyond that, there could also be pressure for bank reserves to ease lower, but these should ease lower by far less than the contraction in the reverse repo volumes. We think reserves could slip down to the $2.5trn area, and if they go lower, we’d be surprised to see them dip below $2trn. This leaves them likely some $1trn above the lows seen before the pandemic but in any case at least $0.5trn above those lows. Lower eurozone liquidity will make Euribor fixings more sensitive to credit risk Source: Refinitiv, ING The end of abundant liquidity Most of the decisions pertaining to the withdrawal of central bank liquidity were taken in 2022, but the effects should only become evident in 2023. Even with central banks in various stages of the QT process, it is clear that their preference would be for a faster withdrawal of liquidity than that produced by a simple reduction of their bond portfolios. In cases where some of that liquidity stems from other policies than QE, for instance, in the case of the ECB’s Targeted Longer-Term Refinancing Operation loans to banks, faster liquidity withdrawal is simply a matter of creating incentives for early repayments. The ECB has taken steps to that end at its October meeting and we’re expecting around half of the €2.1tn TLTRO balances to be repaid by March 2023. You’d be hard-pressed to show the effect of shrinking liquidity in money markets in 2022. This will change The Bank of England has an arduous task at hand. The basic principle is to introduce new facilities to absorb liquidity from banks. This, in effect, is what the Fed’s reverse repo facility is doing in exchange for collateral. The BoE has taken no such steps yet but the repo rates and short gilt yields' reluctance to fully reflect rate hikes might trigger calls for faster liquidity absorption. Truth be told, you’d be hard-pressed to show the effect of shrinking liquidity in money markets in 2022. This will change in 2023. Regardless of the currency zone, the liquidity situation can still be described as plentiful. This, in turn, has resulted in suppressed money market rates. In the case of government bonds and repo, these have diverged further, to the downside, from policy rates. In the case of supposedly credit-sensitive money market rates, they have failed to reflect growing systemic risk and the looming recessions. UK and German bond scarcity is stretching valuations against swaps Source: Refinitiv, ING Collateral shortage becoming a monetary policy issue The other side of the abundant liquidity problem is the shortage of high-quality collateral evident across developed markets, but most prominently making the headlines in the eurozone and UK due to ever-widening swap spreads. On one level, collateral shortage and abundant liquidity are two sides of the same coin: too much money chasing too few assets. On another, regulations and falling unsecured interbank volumes mean the availability of collateral is becoming a problem of money market functioning, which is likely to persist even after liquidity is withdrawn. Both excess liquidity and collateral shortages can be solved with the same tools The good news is that both excess liquidity and collateral shortages can be solved with the same tools, as the Fed's experience has shown. The BoE and ECB both have securities lending facilities, but their use is more anecdotal, and insufficient to keep repo rates close to the policy rates. There have been calls for more ambitious facilities to be put in place. The BoE can point to the existing standing and special repo facilities although the lending rate would have to be raised and gilts would have to be borrowed from the Asset Purchase Facility (QE) portfolio. As is the case in the UK, the ECB can also point to efforts by some institutions, more notably the German Treasury, to release more bonds on repo. More is likely to come, including to finance energy-related spending. Combined with QT, and TLTRO repayments, they will chip away at the collateral scarcity in the eurozone, but we expect the effect to be backloaded to the second half of 2023.   This article is part of Rates Outlook 2023: Belt up, we’re going down   View 8 articles   Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more
Soft PMIs Are Further Signs Of A Weak UK Economy

October's Inflation Print May Be Market Moving

Kamila Szypuła Kamila Szypuła 13.11.2022 12:30
Every month a team of specialists in UK collects around 180,000 separate prices of over 700 items covering everything a typical family might buy, such as milk, bread and bananas. The results of analysis is published evry month as CPI report. The October reading report will be published on November 16. Previous data The Consumer Prices Index including owner occupiers’ housing costs (CPIH) rose by 8.8% in the 12 months to September 2022, up from 8.6% in August and returning to July’s recent high. The largest upward contributions to the annual CPIH inflation rate in September 2022 came from housing and household services (principally from electricity, gas and other fuels, and owner occupiers’ housing costs), food and non-alcoholic beverages, and transport (principally motor fuels). On a monthly basis, CPIH rose by 0.4% in September 2022, compared with a rise of 0.3% in September 2021. The Consumer Prices Index (CPI) rose by 10.1% in the 12 months to September 2022, up from 9.9% in August and returning to July’s recent high. Rising food prices made the largest upward contribution to the change in both the CPIH and CPI annual inflation rates between August and September 2022. Inflation Returning to double-digit inflation will be difficult for ministers and the Bank of England. It shows that price increases have not yet reached their peak, despite the energy price guarantee that will reduce gas and electricity bills this winter. September's inflation figures highlight the severity of the UK's inflation crisis and comes as the country is going through a period of economic instability. The central bank will assess rising price pressures against the government's recent changes to unfunded tax cuts, which could help ease inflation in the coming months. Double-digit inflation is expected to continue. And it will increase again to the level of 10.6%. The monthly change is also forecast to increase by 1.2%. Source: investing.com The Outlook Inflation has been on an upward trajectory, and since May this year the pace has accelerated to double digits. Gross domestic product fell 0.2% from the second quarter, a slightly better outcome than the 0.5% decline feared. Overall in the third quarter, service sector output was flat, driven by a fall in consumer-facing services. Retail sales volumes in particular fell 1.9% in the period. The negative data adds to the country’s dampened economic outlook and already depressed consumer sentiment. Some model predicts the UK to enter a recession as early as this year. This is largely due to surges in inflation as the cost of living crisis impacts all demographic groups. The central bank of England expects GDP to continue falling through 2023 and into the first half of 2024. Expectatiosn Here are few reasons why we expect inflation in the UK to fall sharply from the middle of next year. First, the price of energy won’t continue to rise so quickly. The Government has introduced a scheme that caps energy bills for households and businesses for six months. Second, Bank Of England don’t expect the price of imported goods to rise so fast. That’s because some of the production difficulties businesses have faced are starting to ease. Third, there can be less demand for goods and services in the UK. That should mean the price of many things will not rise as quickly as they have done. Source: https://www.ons.gov.uk/, investing.com
Bank Of England Will Probably Be Unable To Avoid A Significant Easing Of Policy

It Is Very Difficult For The Bank Of England To Make Responsible Decisions

InstaForex Analysis InstaForex Analysis 14.11.2022 09:28
Whatever problems the government and the Bank of England face, they all pale in comparison with the market's belief in slowing down the process of tightening the Fed's monetary policy. The decline in the growth rate of US consumer prices in October from 8.2% to 7.7% and core inflation from 6.6% to 6.3% was the catalyst for large-scale sales of the US dollar. And even the pound, vulnerable due to the weakness of the British economy, managed to soar above $1.18.—last seen at these levels in late August. The sterling rally was much less violent than the euro or the yen due to the presence of significant uncertainty in monetary and fiscal policies of the UK. On November 17, the government is due to present a new plan showing how it intends to close the £50 billion budget gap. Tax hikes will be likely, which, in a recession already in place, looks like cutting the branch you're sitting on. Indeed, the UK GDP sank by 0.2% QoQ in the third quarter. The final figure was less than Bloomberg experts predicted, but Britain remains the only G7 economy that has not yet recovered from the pandemic. Dynamics of the G7 economies In such circumstances, the appearance of "dovish" speeches from representatives of the Bank of England does not look surprising. Silvana Tenreyro believes that repo rate was in restrictive territory even before the 75 bps increase in November to 3%. It's just that monetary restrictions affect the economy with a time lag, and the current level of borrowing costs is enough to bring inflation back to the 2% target. Personally, I have serious doubts about her words, considering the forecasts of Bloomberg experts about the acceleration of consumer prices in the UK in October from 10.1% to 10.4%. According to Investec, this time, the main driver of the CPI acceleration will be energy: in the second month of autumn, electricity bills for British households rose by 27%. At the same time, economists believe that core inflation has slowed from 6.5% to 6.2% amid weakening domestic demand. Thus, it is very difficult for both the government and the Bank of England to make responsible decisions against the backdrop of a recession, the need to put public finances in order and high inflation. However, the GBPUSD is at risk of further gains due to massive sell-offs in the US dollar. Unlike in Britain, inflation in the United States continues to slow down and, most likely, has already passed its peak. This allows the futures market to assume that the federal funds rate will never reach the 5% mark that everyone expected. If so, then the top of the USD index is left behind. Technically, the Three Indians pattern has formed on the GBPUSD daily chart. However, its implementation requires a drop in quotes below 1.155. Until that happens, the sentiment remains bullish. We use the pair's pullbacks followed by a rebound from the supports at 1.175 and 1.165 for purchases.   Relevance up to 07:00 2022-11-19 UTC+1 Company does not offer investment advice and the analysis performed does not guarantee results. The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade. Read more: https://www.instaforex.eu/forex_analysis/327014
Apple Q3 2023 Results – Surpassing Expectations and Aiming for New Heights

US Dollar (USD) Recovery Keeps A Lid On Any Meaningful Upside For The EUR/GBP Cross

TeleTrade Comments TeleTrade Comments 14.11.2022 10:58
EURGBP gains some positive traction for the second straight day, though lacks any follow-through. A modest USD rebound is weighing on the common currency and acting as a headwind for the cross. Traders also seem reluctant ahead of this week’s UK macro data and Chancellor Hunt’s statement. The EURGBP cross edges higher for the second successive day on Monday and sticks to its modest intraday gains through the early European session. The cross is currently placed above the mid-0.8700s, though lacks any follow-through buying or bullish conviction. The shared currency continues to draw some support from bets for a more aggressive policy tightening by the European Central Bank (ECB). The British Pound, on the other hand, is undermined by the gloomy outlook for the UK economy. In fact, the National Institute of Economic and Social Research (NIESR) expects the UK GDP growth to be flat in Q4 and noted that the risk of a contraction remains elevated. This, in turn, is seen lending some support to the EURGBP cross. That said, the prospects for further interest rate hikes by the Bank of England act as a tailwind for the Sterling. Apart from this, a modest US Dollar recovery from a nearly three-month low exerts some pressure on the Euro and keeps a lid on any meaningful upside for the EURGBP cross, at least for now. Traders also seem reluctant to place aggressive bets ahead of this week's important UK macro data - the monthly jobs report on Tuesday and the CPI report on Wednesday. Investors will further take cues from the BoE's Monetary Policy Report Hearings on Wednesday and Chancellor Jeremy Hunt’s Autumn Statement on Thursday. This will play a key role in influencing the near-term sentiment surrounding the GBP and determine the next leg of a directional move for the EURGBP cross. In the meantime, spot prices seem more likely to consolidate in a range amid absent relevant market-moving economic releases, either from the Eurozone or the UK.
Craig Erlam and Jonny Hart talk UK Autumn Statement and more

The cable's performance is outstanding indeed. XTB's Walid Koudmani highlights huge, 6% percent gain

Walid Koudmani Walid Koudmani 14.11.2022 13:37
Crypto markets attempt to recover despite widespread panic   The panic surrounding the crypto market continues this week after further developments regarding the FTX situation led to a widespread uncertainty involving the whole sector with many now questioning the safety of other major exchanges and defi protocols. Many large institutions rushed to reassure their customers, investors and market as a whole of their financial positions after major doubts emerged following the FTX collapse. Understandably, the Crypto fear and greed index is signaling levels of extreme fear as a large outflux of coins and cash from exchanges is threatening the stability of the ecosystem even further. Major price swings, spiky volatility and projects approaching collapse are all factors causing an outflow of capital from the ecosystem as the overall market cap hovers around $844 billion while major crypto currencies like Bitcoin and Ethereum attempt to hold above their key supports. While there is a high potential for unexpected developments and high volatility, some investors may take the fact that BTC and ETH stabilized slightly as a reassuring sign, at least in the short term. On the other hand, confidence in the crypto industry is likely hovering around historic lows as many who may have been supporters have begun to doubt their conviction as they see companies that may have seemed too big to fail crumble almost overnight leaving investors and customers to deal with the aftermath.    Pound pulls back from highest level since August   The pound has managed to pull off an impressive recovery since the beginning of November with the GBPUSD pair rising over 6% and reaching a high of 1.185, a level not seen since the end of August. This came as the USD started to retreat following macroeconomic reports supporting a slightly less hawkish approach by the FED and as the recently appointed British PM attempted to calm investor sentiment after his predecessor. Today we can see a fairly balanced situation in the FX market with both USD and GBP performing strongly and with the pair pulling back slightly as it trades around 1.177. Many will be focused on the G20 taking place this week as progress on the geopolitical front may also help with improving sentiment while Sunak remains under pressure with regards to taxes, cuts and migrants. From a technical perspective, the GBPUSD pair is trading at an interesting price reaction area after encountering resistance and pulling back almost 1% and breaking below the 21SMA on the hourly chart. As the sentiment surrounding the pound remains uncertain, any major developments may cause large volatility spikes that could cause a breakout from the short term trading range.
Riksbank's Role in Shaping the Swedish Krona's Future Amid Economic Challenges

Eurozone Continue To Expect Weaker Production

ING Economics ING Economics 14.11.2022 13:41
The third quarter saw remarkably strong production as easing supply problems helped production growth. Don’t expect this to continue much from here on as new orders, production expectations and increasing inventories point to weakening production ahead Industrial production increased by 0.9% in September and that resulted in a total quarterly increase of 0.5% for 3Q. This was a surprise that added to the positive GDP figure for the quarter. It is most likely caused by fading supply side problems which industry has battled since mid-2020. This is helping backlogs of work to be dealt with, which is boosting production, despite survey data having disappointed consistently over recent months. In September, production categories were a mixed bag, so there was no broad-based improvement in production. Capital goods and non-durable consumer goods production saw strong growth – just like last month – while intermediate, durable consumer goods, and energy production all declined. Germany was the only large country that recorded growth, while France, Spain and Italy all saw production contract. While August and September both saw surprisingly strong production, there is little hope for this to be the start of a strong recovery. Businesses continue to report falling new orders as demand is fading and inventories have increased. For the winter months we, therefore, continue to expect weaker production as the catch-up effect for production is unlikely to last much longer. TagsGDP Eurozone   Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more
Bank Of England Will Probably Be Unable To Avoid A Significant Easing Of Policy

The Value Of The Cable Makret (GBP/USD Pair) Is Very High

InstaForex Analysis InstaForex Analysis 15.11.2022 08:03
The GBP/USD currency pair also showed no desire to move volatile on Monday. The price continues to be above the moving average line, and at least one linear regression channel is already directed upwards. As in the case of the euro currency, the pound overcame the important lines of the Ichimoku indicator on the 24-hour TF, so it has technical grounds for continuing growth in the medium term. However, there are a lot of questions about the "foundation" and geopolitics. What will happen if the conflict in Ukraine escalates with renewed vigor? What will happen if the Bank of England stops raising the rate in the near future? Recall that the military conflict between Ukraine and Russia has not been completed or frozen, and peace talks are not even "smelling" now. The APU is gradually moving forward, but this hardly means that the Russian army will turn back, which would end the conflict. New rocket attacks on Ukrainian cities are not excluded, the use of new weapons is not excluded, and the intervention of third countries directly into the conflict is not excluded. I don't even want to talk about sanctions because the parties have already introduced almost everything that could have been introduced. We can assume that the worst is over, but the probability of this is not 100%.  Bank of England The same is true with the Bank of England and its monetary policy. The British regulator has already raised the rate eight times in a row, and inflation has been growing and continues to grow. The key rate at the moment is already 3%; this is the value at which it is possible to expect at least a slight slowdown in price growth. However, this week, the next inflation report will be published and judging by the forecasts, there is no point in expecting something good from it. Currently, inflation in the UK is 10.1%, and forecasts for October indicate a new increase to 10.7–11.0%. Consequently, the Bank of England can be expected to tighten monetary policy by another 0.75% in December, but to what extent can it raise the rate? After all, its economy is also going through hard times. The British government So far, it is unclear how the British government will close the "hole" in the budget by 50 billion pounds. The corresponding financial plan from Jeremy Hunt and Rishi Sunak will be presented only on November 17. Most likely, taxes will be raised, which may cause serious discontent among the British population and significantly lower the ratings of the Conservative Party. Therefore, the BA does not have the opportunity, like the Fed, to raise the rate as much as it wants. British inflation British inflation is the most important report of the week. Unemployment rate In the UK, the unemployment rate, changes in average wages, and retail sales will also be published this week. Of course, these reports do not match the inflation report, so we associate the main market reaction with this report. A new increase in the consumer price index can support the pound, as it will likely mean a new increase in the BA rate in December by another 0.75%. But this is just a theory and an assumption, and the market can react as you like. And also, no one can know if this report has not already been worked out because it is very easy and simple to expect a new acceleration of inflation in Britain now. UK Data In the US, retail sales, industrial production, and data on applications for unemployment benefits will be released this week. Also, quite secondary are the reports. With such a macroeconomic background, it will be difficult for the pair to continue growing, which now largely depends on traders' expectations for the Fed and BA rates. We expect a tangible correction after the "take-off" last week. The pound has recovered from its absolute lows by 1400 points and is regularly adjusted downwards. Therefore, this week is a good time for a rollback. As for the longer-term prospects, the pound may continue to grow, but we do not expect a rapid recovery after losses over the past year and a half. Most likely, periods of growth and rather deep corrections will alternate. The pound still needs to look like a stable and safe currency. GBP/USD The average volatility of the GBP/USD pair over the last five trading days is 222 points. For the pound/dollar pair, this value is "very high." On Tuesday, November 15, thus, we expect movement inside the channel, limited by the levels of 1.1516 and 1.1954. The upward reversal of the Heiken Ashi indicator signals the resumption of the upward movement. Nearest support levels: S1 – 1.1719 S2 – 1.1597 S3 – 1.1475 Nearest resistance levels: R1 – 1.1841 R2 – 1.1963 Trading Recommendations: The GBP/USD pair has started a minimal correction in the 4-hour timeframe. Therefore, at the moment, buy orders with targets of 1.1841 and 1.1960 should be considered in the case of a reversal of the Heiken Ashi indicator upwards. Open sell orders should be fixed below the moving average with targets of 1.1475 and 1.1353. Explanations of the illustrations: Linear regression channels – help to determine the current trend. The trend is strong if both are directed in the same direction. The moving average line (settings 20.0, smoothed) – determines the short-term trend and the direction in which trading should be conducted now. Murray levels are target levels for movements and corrections. Volatility levels (red lines) are the likely price channel in which the pair will spend the next day, based on current volatility indicators. The CCI indicator – its entry into the oversold area (below -250) or into the overbought area (above +250) means that a trend reversal in the opposite direction is approaching.       Relevance up to 01:00 2022-11-16 UTC+1 Company does not offer investment advice and the analysis performed does not guarantee results. The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade. Read more: https://www.instaforex.eu/forex_analysis/327097
Mexican Rate Spread: Tight vs. Central Bank's Rate Spread and Implications for Dis-inversion

Aggressive Bearish Bets Has Arrived Around The EUR/GBP Pair

TeleTrade Comments TeleTrade Comments 15.11.2022 10:04
EURGBP comes under some selling pressure on Tuesday, though the downside remains cushioned. The mixed UK employment figures reaffirm further BoE rate hikes and underpin the British Pound. Talks for a more aggressive tightening ECB  benefit the shared currency and lend support to the cross. The EURGBP cross extends the previous day's modest pullback from the 0.8820-0.8830 resistance zone and edges lower through the early European session on Tuesday. The cross remains on the defensive around the 0.8770-0.8765 region and moves little following the release of the latest UK employment details. The UK Office for National Statistics reported that the jobless rate unexpectedly ticks higher to 3.6% during the three months to September from 3.5% previous. Adding to this, the number of people claiming unemployment-related benefits came in at 3.3K against consensus estimates pointing to a fall of 12.6K. The disappointment, however, was offset by stronger wage growth figures. In fact, the Average Earnings Excluding Bonuses rose to 5.7% from 5.5%, beating estimates for an uptick to 5.6%. The data reaffirms market bets for a further policy tightening by the Bank of England, which is seen offering some support to the British Pound. That said, a modest pickup in demand for the shared currency acts as a tailwind for the EURGBP cross and limits the downside. Against the backdrop of talks for a more aggressive policy tightening by the European Central Bank (ECB), the emergence of fresh selling around the US Dollar offers support to the Euro. This, in turn, warrants some caution before placing aggressive bearish bets around the EURGBP cross and positioning for any further intraday losses ahead of the German ZEW Economic Sentiment.
Bank of Japan to welcome Kazuo Ueda as its new governor

The Results Of Japanese GDP Is Negative | US PPI Ahead

Kamila Szypuła Kamila Szypuła 15.11.2022 11:10
It is busy day. Reports will be from many economies CPI from European countries and PPI from America. And also Asian countries shared their GDP and Industrial Production reports. Japan GDP Events on the global market started with the publication of GDP in Japan. The results turned out to be negative. GDP fell from 1.1% to -0.3% quarter on quarter, while GDP y/y fell even more sharply, from 4.6% to -1.2%. Both results were below zero, which proves that the recession is starting in this country. RBA Meeting Minutes From Australia came a summary of the economic situation, i.e. Minutes of the Monetary Policy Meeting of the Reserve Bank Board. Members commenced their discussion of international economic developments by observing that inflation abroad. Members also noted that Australian financial markets had followed global trends. Such a summary can help to assess the condition of the country and its sub-sectors and determine next steps. Industrial Production in China and Japan China and Japan have published reports on their Industrial Production. Comparing October this year to October last year, a decrease was recorded in China. The current Industrial Production level was 5.0%, down 1.3% from the previous reading. In Japan there was also a decline, but in Industrial Production M/M. The indicator fell from 3.4% to -1.7%. Which means that the change in the total inflation-adjusted value of output produced by manufacturers, mines, and utilities has dropped drastically. This is a consequence of high inflation and, as far as China is concerned, the fight against the Covid pandemic. UK data The UK released the reports at 9am CET. Two of them were positive. Only the unemployment rate turned out to be negative as it increased slightly from 3.5% to 3.6%. The change in the number of unemployed people in the U.K. during the reported month fell. U.K. Claimant Count Change dropped from 3.9K to 3.3K. This may turn out to be a slight decrease, but in the face of the forecasts of 17.3K, it turns out to be very optimistic. Average Earnings Index +Bonus, although it fell from 6.1% to 6.0%, is a positive reading as it was expected to fall to 5.9%. Which may mean that despite the forecasts, the decline is milder and personal income growth during the given month was only slightly lower, which is good news for households. CPI Two Western European countries, France and Spain, published data on CPI. In France, CPI y/y increased from 5.0% to 6.2%. The opposite was the case in Spain where consumer inflation fell from 8.9% to 7.3%, moreover meeting expectations. Despite high inflation, which is still higher than the expected level of 2%, these European countries, can be said, are doing well and their economies are not facing recession. Speeches Today's attention-grabbing speeches will be from the German Bundesbank. The first one took place at 10:00 CET, and the speaker was Dr. Sabine Mauderer. The next speeches will take place in the second half of the day at 16:00 CET. The speakers will be: German Bundesbank Vice President Buch and Burkhard Balz ZEW Economic Sentiment Economic sentiment in Germany rose once again. Currently, they have risen to the level of -36.7. Previously, they rose from -61.0 to 59.2. Although ZEW have increased but are still below zero, which means that the general mood is pessimistic US PPI The most important event of the day is the result of inflation from the producer side in the US, i.e. U.S. Producer Price Index (PPI). The previous level of 0.4% is expected to hold. This may mean that from the producers' point of view, the situation in price changes tends to stabilise, which may have a positive impact on the dollar as well as on the US economy in general. Canadian data Canada will release its Manufacturing Sales and Wholesale Sales reports at 15:30 CET. Both are expected to be below zero. Manufacturing Sales is projected to increase from -2.0% to -0.5%. This means that progress in this sector is expected. The wholesale sales level is forecasted at -0.2% vs. the previous 1.4%. Summary 1:50 CET Japan GDP (Q3) 2:30 CET RBA Meeting Minutes 4:00 CET China Industrial Production (YoY) 6:30 CET Japan Industrial Production (MoM) (Sep) 9:00 CET UK Average Earnings Index +Bonus (Sep) 9:00 CET UK Claimant Count Change (Oct) 9:00 CET UK Unemployment Rate (Sep) 9:45 CET French CPI 10:00 CET German Buba Mauderer Speaks 10:00 CET Spanish CPI 12:00 CET German ZEW Economic Sentiment (Nov) 12:00 CET EU ZEW Economic Sentiment (Nov) 15:30 CET US PPI (MoM) (Oct) 15:30 CET Canada Manufacturing Sales (MoM) (Sep) 16:00 CET German Buba Balz Speaks 16:00 CET German Buba Vice President Buch Speaks Source: https://www.investing.com/economic-calendar/
The RBA Will Continue At A 25bp Pace At Coming Meetings

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

Craig Erlam Craig Erlam 15.11.2022 11:45
Equity markets are looking slightly positive in early trade on Tuesday, adding to modest gains at the start of the week. While the rally is perhaps slowing a little after the strong gains of recent weeks, there doesn’t appear to be much appetite at this stage to bail on it. Perhaps the experience of the last year and the huge declines in equity markets have left investors seeing substantial value and they’ve become excited at even the prospect of a bull run. Perhaps there’s some FOMO at play after a long time of such opportunities being few and far between. Not a great UK labour market report I’m not entirely sure who will look at the UK labour market and be able to take many positives from it. The unemployment rate ticking up when job vacancies have fallen for the fourth month may suggest to the BoE that slack is appearing. But at the same time, the rate remains very low and wages excluding bonuses rose by 0.2% to 5.7%, exceeding expectations, which will be a concern when inflation is already above 10% and rising. Inactivity is another negative takeaway as this makes the job of increasing slack in the labour market all the more difficult. Whichever way you look at it, this isn’t a great report and it will likely keep the pressure on the BoE to keep hiking aggressively, creating further headwinds for the economy. Sensible RBA minutes move away from the era of forward guidance The key takeaway from the RBA minutes overnight was that forward guidance will no longer be a tool the central bank leans on unless there is value in doing so. The RBA wants to maintain a flexible approach based on the incoming data rather than be tied to its guidance, which makes a lot of sense in these highly uncertain times. It highlighted the benefits of explicit and specific guidance in certain situations but the current one simply doesn’t tick any of those boxes. As such, while a 25 basis point hike was appropriate at the last meeting – and I assume will be at the next – the central bank could move back to 50bps should the data warrant it. That all sounds very sensible. Traders may be tempted to sidestep cryptos for a while Bitcoin is fighting back this morning but it remains very much on the ropes. Gains of more than 2% barely offset the losses since Friday, let alone what came earlier that week. Cryptos remain very vulnerable, not just to the fallout from FTX – the full extent of which remains a cloud of uncertainty over the industry – but also to what else may be uncovered as the environment becomes ever more challenging. What we’ve seen recently will be discouraging to some who may have become tempted in recent years but with rates no longer at zero and more traditional assets arguably becoming attractive once more, traders may be tempted to sidestep cryptos and wait for the storm to pass. For a look at all of today’s economic events, check out our economic calendar: www.marketpulse.com/economic-events/ This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.
The UK Economy Looks Worse Than The Rest Of The G7 Countries

UK Hiring Demand Is Undoubtedly Falling Back Now

ING Economics ING Economics 15.11.2022 13:05
Hiring appetite is undoubtedly past its peak, but there isn't much sign that the acute labour shortages are easing. We expect the Bank of England to pivot back to 50bp rate hikes from December, though if we’re looking for signs that the Bank is about to halt its tightening cycle, the jobs data probably isn’t the place to look UK hiring demand is clearly slowing The UK jobs market is clearly past its peak. The question is whether we will see a significant deterioration as the economy slips into recession over the winter – and so far the signs are mixed. Hiring demand is undoubtedly falling back now, and we can see that most clearly in a downtrend in unfilled vacancy numbers. But so far this is manifesting itself more as a hiring freeze rather than via layoffs. Redundancy numbers, be they planned or actual, are showing little-to-no sign of increasing from their lows – albeit we’d expect that to start to change fairly soon. UK labour market dashboard Source: Macrobond, ING, Bank of England Worker shortage data is based on a question in the Bank of England's Decision Maker Panel survey   The unemployment rate edged higher too – from 3.5% to 3.6% – though given the sharp rise in inactivity numbers through the pandemic, this perhaps isn’t the best gauge of hiring demand right now. This rise in inactivity – ie those neither employed nor actively seeking a job – is increasingly linked to long-term sickness numbers, which rose yet again in the latest data. There are now almost half a million additional people registered as out of the workforce due to long-term illness than before the pandemic began. Unnervingly, this seems to be a fairly UK-specific issue, and most countries have seen inactivity rates resume a long-term downtrend as the Covid shock has faded. Recent ONS analysis confirmed that there’s no single condition that's causing all this, though it’s hard to escape the conclusion that ballooning NHS waiting lists are a contributing factor. Those workers that have left a job due to illness are predominantly in lower-paid sectors and roles, most noticeably in consumer services. That suggests it may well be a contributing factor to the worker shortages we’re seeing in hospitality. But generally those sectors with the highest ratio of vacancies to existing employee numbers – the likes of IT and professional/scientific/technical roles – are the ones less affected by the loss of workers to long-term sickness. In other words, sickness isn’t the only factor driving labour shortages right now. Immigration is also playing a role, and the latest quarterly data showed that the number of EU nationals working in the UK fell again in the third quarter. These numbers are down by roughly 9% since late 2019, though interestingly, the number of non-EU (and non-UK) nationals employed in Britain is up by a third over the same period. The number of EU nationals working in the UK has fallen through the pandemic Source: ONS   The bottom line for the Bank of England is that skill shortages are unlikely to be resolved quickly. Its own surveys have shown that the percentage of firms reporting difficult hiring conditions has stayed resolutely high, and wage growth expectations have climbed to almost 6%. If we’re looking for signs that the Bank is about to halt its tightening cycle, the jobs data probably isn’t the place to look. Nevertheless, with inflation close to a peak and the economy headed for recession, we still think investors are overestimating the scope for further rate rises – albeit less so than a few weeks ago. We expect a 50bp hike in December and the Bank rate to peak around 4% early next year. TagsUK jobs Bank of England   Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more  
The GBP/USD Pair Did Not Reach The Nearest Target Level Of 1.2259

United Kingdom headline inflation beat market expectations but GBP remains in hostile environment

Rebecca Duthie Rebecca Duthie 16.11.2022 09:15
Summary: Stagflation is exemplified by the UK as a hostile environment for the pound. The headline CPI inflation rate was 11.1% YoY. BoE is forced to keep hiking interest rates. GBP CPI beat market expectations Stagflation, in which an economy is plagued by rising prices and a lack of growth, is best exemplified by the UK as a hostile environment for the pound. In October, the headline CPI inflation rate was 11.1% year over year, easily surpassing September's reading of 10.1% and beyond the consensus forecast of 10.7%. According to the ONS, core inflation, which is a better indicator of "home grown" inflationary pressures, increased by 6.5% in October, unchanged from September but higher than consensus expectations of 6.5%. Due to the fact that this is three times greater than the Bank of England's legal target of 2.0%, the Bank is forced to keep hiking interest rates. The increase in energy costs following the Ofgem price increase in October also contributed to the surge. It should be noted that if not for the government's Energy Price Guarantee, which regulates the amount that households pay for energy, inflation would have been closer to 13.8%. Rising prices and interest rates continue to be a threat to the UK economy, and on Thursday, Chancellor Jeremy Hunt is expected to unveil yet another round of tax increases and spending reductions, adding to the misery. Market reaction to the GBP CPI inflation Following some hotter-than-expected UK inflation figures that suggested the Bank of England could not yet afford to stop its interest rate hike cycle, the British Pound plummeted against the Euro, the Dollar, and other major currencies. The FTSE 100 index rallied in the wake of the release of the data. However, we cautioned in our week-ahead forecast that the market might now consider stronger-than-expected inflation as a negative, as rising prices and interest rates would snuff out the UK's prospects for economic development. Normally, such a result would help the Pound. Sources: poundsterlinglive.com, dailyfx.com
Saxo Bank Podcast: The Risk Of An Escalation In The US-China Confrontation, The Risk Of An Escalation In The US-China Confrontation And More

Russian Missiles Fell To Poland | China Home Prices Fall

Swissquote Bank Swissquote Bank 16.11.2022 10:36
US stocks extended rally yesterday, as the unexpected easing in producer prices beefed up the optimism that the Federal Reserve (Fed) would soften the monetary tightening and the better-than-expected New York Empire State Manufacturing index hinted that the US economy is holding up well. The geopolitical fears News that Russian missiles fell to Poland somehow killed a part of that falling-inflation, resilient growth optimism. But escalation of the tensions has been avoided so far, with US President Joe Biden saying that the missile was ‘unlikely’ fired from Russia. On the index level, the geopolitical fears remained short-lived, and the S&P500 finally rebounded to close the session a touch below the 4000 psychological mark. Crude Oil On the individual level, TSM jumped on Warren Buffet and Apple news, as Walmart gained on earnings, revenue beat and $20-billion buyback. In energy, US crude gained on the geopolitical concerns after the Poland attack, and on a more-than-5-million-barrel decline in US oil inventories last week. In the FX, the US dollar eased after the mixture of soft PPI and solid Empire Manufacturing revived the dovish Fed expectations. The EURUSD traded briefly above its 200-DMA, and Cable hit the 1.20 for the first time since this summer. UK  On the data front, UK inflation data showed that inflation in the UK hit 11.1% in October vs 10.7% penciled in by analysts, revived the hawkish Bank of England (BoE) expectations but not GBP-appetite. Watch the full episode to find out more! 0:00 Intro 0:24 US stocks extend rally on encouraging data 2:17 Poland hit by missiles, but Biden contains escalation 3:37 Market update 4:13 TSM, Walmart gain 5:51 Latest on US midterms 6:28 Oil recovers 6:50 FX: USD down, UK CPI exceeds 11.1%! 8:49 China home prices fall 9:21 What else you can watch today? Ipek Ozkardeskaya 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. #Poland #attack #crude #oil #Fed #US #inflation #Walmart #earnings #TSM #Apple #USD #EUR #GBP #UK #Bbudget #China #property #rally #SPX #Dow #Nasdaq #investing #trading #equities #stocks #cryptocurrencies #FX #bonds #markets #news #Swissquote #MarketTalk #marketanalysis #marketcommentary ___ Learn the fundamentals of trading at your own pace with Swissquote's Education Center. Discover our online courses, webinars and eBooks: https://swq.ch/wr ___ Discover our brand and philosophy: https://swq.ch/wq Learn more about our employees: https://swq.ch/d5 ___ Let's stay connected: LinkedIn: https://swq.ch/cH
The Bank Of England Will Be Under Pressure To Continue Hiking Aggressively

The Bank Of England Will Be Under Pressure To Continue Hiking Aggressively

Kenny Fisher Kenny Fisher 16.11.2022 12:28
The British pound has moved higher on Wednesday. In the European session, GBP/USD is trading at 1.1934, up 0.56%. The pound roared on Tuesday, gaining close to 1% and punching past the 1.20 line for the first time in three months. It has been a busy time for sterling, which has been marked by sharp swings that would make an exotic currency blush. The pound’s volatility has been especially pronounced in the month of November. The US dollar has hit a rocky patch and the pound has taken full advantage, climbing 3.5% this month. It’s up, up, up for UK inflation UK inflation continues to rise and hit a staggering 11.1% in October, a 41-year high. The upward trend continued despite the government introducing an energy price guarantee. Inflation jumped from 10.1% in September and ahead of the consensus of 10.7%. Core CPI remained unchanged at 6.5%, but was higher than the forecast of 6.4%. The Bank of England hasn’t been able to stem rising inflation despite tightening policy but will be hoping that its jumbo 0.75% hike earlier in November will take a bite out of the next inflation report. The UK economy is facing a double-whammy of high inflation and a recession, and all eyes will be on Finance Minister Jeremy Hunt, who will announce the government budget on Thursday. Hunt will aim to restore the government’s credibility and stability, after the recent political soap opera which resulted in three different prime ministers in a matter of months and significant financial instability. The UK employment report on Tuesday was lukewarm, with unemployment ticking higher to 3.5%, up from 3.4%. The Bank of England will be concerned about the increase in wage growth, which will create even more inflation. Wages excluding bonuses rose to 5.7%, up from 5.5% and ahead of the consensus of 5.6%. The BoE will be under pressure to continue hiking aggressively, even though this will hurt the struggling UK economy.   GBP/USD Technical GBP/USD has pushed above resistance at 1.1878. The next resistance is 1.2030 1.1767 and 1.1660  are providing support This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.  
Indonesia's Inflation Slips, Central Bank Maintains Rates Amidst Stability

The Impact On The Volatility Of The Forex Market Is Mainly Geopolitical Risk In Europe

ING Economics ING Economics 16.11.2022 13:03
FX markets are maintaining very high levels of realised volatility. Driving markets in the very short term is the stand-off between geopolitical risk in Europe and the powerful short squeeze in risk assets on the back of softer US price data. On the calendar today are US retail sales, industrial production, and a host of Fed and ECB speakers In this article USD: Buy-side wants and needs a weaker dollar EUR: Ongoing correction GBP: BoE speakers in focus JPY: Wild ride continues Source: Shutterstock USD: Buy-side wants and needs a weaker dollar Realised levels of FX volatility remain near the highs of the year. For example, one-month EUR/USD realised volatility, at 14%, is back to levels not seen since April 2020. The dominant near-term theme is the aggressive position adjustment in FX, perhaps more so than in other asset classes, on the back of softer US price data. The dollar took another sharp leg lower on yesterday's release of soft October PPI data. Clearly, US price data is the hottest commodity in the macro space right now. Dollar price action does suggest the market is caught long dollars at higher levels and that corrective rallies in the dollar are tending to be relatively shallow. There is also a lot of buy-side interest in expectations (and hopes) that the dollar has peaked. If so, that will release some handsome gains for emerging market local currency bond and equity markets. For example, were it not for the recent dollar correction, returns in the EM local currency bond index would be a lot lower than the current -10% year-to-date figures, and EM hard currency bond indices are down closer to 20% year-to-date.  Given the weight of long dollar positioning after a major 18-month bull trend, it looks too early to expect that this position adjustment has run its course. Yet developments in Poland late yesterday have somewhat clouded the picture. The market will await any announcement from NATO representatives today on the source of the explosion - although President Biden has partially defused the situation by suggesting the missile was not fired from Russia.  Beyond geopolitics today, the focus will be on US retail sales and industrial production data. Both should be reasonably strong, but less market-moving than price data. We will also hear from the Federal Reserve's John Williams and Mary Daly around 16CET. For the DXY today, we did note that the dollar seemed to find a little natural buying interest after the PPI data, but before the Polish news broke. That might tend to favour a 106.00-107.20 DXY trading range today. In terms of the bigger picture, the question is whether 105 is a large enough correction for DXY.   Chris Turner EUR: Ongoing correction EUR/USD turned from a high of 1.0480 yesterday - driven there by the softer US PPI data. By comparison, today's US data is second tier and might prove a weak dollar positive if retail sales and industrial production emerge on the strong side. Attention may also return to the energy markets given events in Poland. And this will also serve as a reminder of the upcoming embargo on Russian oil exports due to start in early December. This potentially is a downside risk to European currencies should energy prices take a leg higher. On the calendar today are plenty of European Central Bank speakers. The ECB will also release its semi-annual financial stability report. Expect plenty of focus on the regulation of the non-bank financial sector after the recent debacle amongst the UK pension fund industry with its LDI hedges in the UK Gilt markets. Remarks earlier this week from the ECB relating to this report drew a conclusion that financial risks had increased. We noted yesterday that EUR/USD seemed to turn naturally from 1.0480, suggesting the corrective rally might have run its course - at least for the very short term. But the bottom of the short-term range has now been defined at 1.0270 - pointing to a 1.0270-1.0500 range over coming sessions. This assumes no major escalation in geopolitics. Bigger picture, we are in the camp that something like 1.05/1.06 may be the best EUR/USD levels between now and year-end. Chris Turner GBP: BoE speakers in focus Bank of England speakers will be in focus today after the release of the October CPI data. This is expected to be peaking around the 11%year-on-year level around now.  BoE Governor Andrew Bailey and colleagues testify to the Treasury Select Committee at 1515CET today. We suspect the message will be very much the same as that given at the policy meeting earlier this month - i.e. do not expect 75bp hikes to become common and that the market pricing of the tightening cycle is too aggressive.  GBP/USD briefly peaked over 1.20 yesterday. We think 1.20 is a good level to hedge GBP receivables. Equally, we have a slight preference for EUR/GBP staying over 0.8700. Tomorrow is the big event risk of the autumn budget - which on paper should be sterling negative. Chris Turner  JPY: Wild ride continues USD/JPY continues to deliver 20% annualised readings in volatility (as do the high beta commodity currencies and those in Scandinavia). We suspect the next five big figures in USD/JPY come to the upside. We see this because the US 10-year Treasury yield typically only trades 50-75bp below the Fed funds rate towards the end of the tightening cycle. And given that our team is looking for the policy rate to still be taken 100bp higher, we think US 10-year Treasury yields will probably return to the 4.25/4.35% area before the end of the year. Equally and once position adjustment has run its course, the yen rather than the dollar should become the preferred funding currency should market conditions begin to settle. Although that does seem an unlikely prospect right now. Chris Turner Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more
Soft PMIs Are Further Signs Of A Weak UK Economy

The Bank Of England Is Undoubtedly Worried About Inflation

ING Economics ING Economics 16.11.2022 13:10
With the government fixing energy prices until at least April, it looks like October's 11.1% inflation rate could mark the peak. But it's unlikely to fall below double-digits until early next year, and the Bank of England is undoubtedly worried about inflation linked to the tight jobs market. Still, a pivot back to a 50bp hike in December looks likely The latest rise in household energy costs was enough to take UK inflation up to 11.1% in October. That’s a bit higher than was expected, and seems to be partly explained by another punchy 2% month-on-month increase in food prices, and a little bit of upside at the core level. All of this is marginally hawkish for the Bank of England in that its closely watched measure of ‘core services’ inflation, which excludes some volatile components and the impact of VAT changes, came in a few percentage points higher than they’d pencilled in. By our calculation, that sits slightly above 6% YoY, compared to a forecast of 5.7% by the BoE a couple of weeks ago.   As we noted yesterday, worker shortages are proving to be a persistent issue for firms, and that potentially points to stickier inflation rates for service-sector firms where pay is a key pricing input. Still, with hiring demand falling, we suspect we’re near the peak for wage growth. In fact – famous last words – it looks like UK headline inflation is at its peak too, or there or thereabouts. The fact that the government is effectively fixing electricity/gas unit prices below wholesale costs until next April means this is probably as high as it will get, though admittedly we expect headline rates to stay in double-digits until at least February next year. From there, we think there are compelling reasons to expect headline inflation to drift lower through the year, ending up closer to the Bank of England’s 2% target by early 2024. That’s especially true of goods categories, where lower input/shipping prices, stalling consumer demand and rising inventory levels not only point to lower inflation rates, but potentially also outright price falls in certain areas as retailers are forced to become more aggressive with discounting. The story, as we discussed earlier, is less clear-cut for services inflation. UK inflation in 2023 will depend a lot on how energy support evolves after April   Source: Macrobond, ING   The 2023 inflation outlook will also heavily depend on how the government adapts energy support next year. We’re still awaiting detail, but one possibility is that the majority of households switch back to paying the Ofgem regulated price from April. Based on our latest estimates using wholesale energy costs, the average household would pay £3300 in fiscal-year 2023 without any government support, compared to £2500 if prices remain capped. That would initially bump up inflation rates after April by roughly 2pp. While it’s tempting to say that higher headline inflation rates in that scenario would be hawkish for the Bank of England, in practice the opposite is probably true. Reduced energy support would amplify the UK recession that most, including ourselves, now expect. That would imply lower core inflation further down the line. With signs that inflation – both in core and headline terms – is close to or at a peak, and signs of recession mounting, we think the Bank of England is likely to pivot back to hiking in 50bp increments in December. Assuming another 25-50bp hike in February, we think the peak for Bank Rate is likely to be around 4%, a little below what markets are now pricing.   Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more
Services PMIs and Fed Minutes: Analyzing Market Focus and Central Bank Strategy

Softer Japanese Yen (JPY) Continues To Lend Support To The GBP/JPY

TeleTrade Comments TeleTrade Comments 17.11.2022 09:24
GBPJPY is seen oscillating in a narrow trading band around the 166.00 mark. Expectations for further rate hikes by the BoE continue to lend some support. Bulls now await the UK government's financial plan before placing fresh bets. The GBPJPY cross struggles to gain any meaningful traction and seesaws between tepid gains/minor losses through the early European session on Thursday. The cross is currently placed near the top end of its weekly range, just above the 166.00 mark, awaiting the UK government's financial plan before the next leg of a directional move. Chancellor Jeremy Hunt will unveil his Autumn Statement later today and is expected to reduce the size of the fiscal gap. This will play a key role in influencing the sentiment surrounding the British Pound and help determine the near-term trajectory for the GBPJPY cross. In the meantime, growing acceptance that the Bank of England will continue raising borrowing costs to combat stubbornly high inflation acts as a tailwind for the Sterling. The bets were reaffirmed by Wednesday’s release of hotter-than-expected UK consumer inflation figures, which showed that the headline CPI accelerated to a 41-year high of 11.1% in October. Furthermore, BoE Governor Andrew Bailey said on Wednesday that Britain's very tight labour market was a key reason why further interest rate increases were likely. This, along with a softer Japanese Yen, continues to lend some support to the GBPJPY cross. The initial market reaction to the latest geopolitical development fades rather quickly after early findings point to the missile that hit Poland on Tuesday being accidentally fired by Ukrainian forces. Apart from this, a more dovish stance adopted by the Bank of Japan is seen undermining the safe-haven JPY. In fact, Governor Haruhiko Kuroda said on Thursday that it is important to continue monetary easing to support the economy. The fundamental backdrop supports prospects for a further near-term appreciating move for the GBPJPY cross, though bulls prefer to wait on the sidelines ahead of the key event risk. This makes it prudent to wait for some follow-through buying before positioning for additional intraday gains. That said, any meaningful downtick could attract some buyers near the 100-day SMA support, which should now act as a key pivotal point.  
Saxo Bank Podcast: Nvidia And Siemens Earnings, The Budget Statement From UK And More

Saxo Bank Podcast: Nvidia And Siemens Earnings, The Budget Statement From UK And More

Saxo Bank Saxo Bank 17.11.2022 11:01
Summary:  Today we look at risk sentiment taking a breather after a particularly strong US October US Retail Sales report, although long US treasury yields fell on the day and took the yield curve inversion to its most negative in over forty years as markets continue to price a recession ahead. The key incoming data doesn't start rolling in for another couple of weeks, so we wonder if a possible shift in weather into proper winter mode could change the complacent stance in energy markets. Elsewhere, we wonder if the Budget Statement from UK Chancellor Hunt can continue to support sterling, look at the plunge in coffee prices, Nvidia and Siemens earnings, and more. Today's pod features Peter Garnry on equities and John J. Hardy hosting an on FX. Listen to today’s podcast - slides are available via the link. Follow Saxo Market Call on your favorite podcast app: Apple  Spotify PodBean Sticher If you are not able to find the podcast on your favourite podcast app when searching for Saxo Market Call, please drop us an email at marketcall@saxobank.com and we'll look into it.   Questions and comments, please! We invite you to send any questions and comments you might have for the podcast team. Whether feedback on the show's content, questions about specific topics, or requests for more focus on a given market area in an upcoming podcast, please get in touch at marketcall@saxobank.com.   Source: https://www.home.saxo/content/articles/podcast/podcast-nov-17-2022-17112022
Pound Sterling: Short-Term Repricing Complete, But Further Uncertainty Looms

European CPI Reached 10.6% | UK Budget Ahead

Kamila Szypuła Kamila Szypuła 17.11.2022 11:54
At the beginning of the day positive data came from Australia. GBP traders eyes will be on the UK budget release. Behind the assessment, there will also be important reports and speeches that may affect the situation on the currency market. Australian Labour Market In October, there was an improvement in the employment sector. The number of people employed increased from a negative level (-3.8K) to 32.2K. The unemployment rate also turned out to be positive. The reading was lower than expected and will reach 3.4% against the previous 3.5%. Strong employment data may help the Australian currency (AUD) and also influence the RBA's future monetary policy decisions. EU CPI Inflation in Eurozone turned out to be slightly lower than expected. The current reading showed that inflation rose from 9.9% to 10.6%. It was expected to reach 10.7%. Core inflation reached the expected level of 5.0%. Read more: Forecast For The Eurozone Are Not Optimistic, Inflation Can Reach A Record High| FXMAG.COM Autumn UK Forecast Statement Chancellor Jeremy Hunt will deliver the statement to MPs. The government is set to announce tens of billions of pounds worth of spending cuts and tax rises. It is expected about 55% of the measures will be spending cuts, but confirmation of this will appear at 14:30 CET. The Autumn Statement will affect the take-home pay and household budgets of millions of people, as well as money for key public services. Some of the Autumn Statement will affect the whole of the UK. However, the governments of Scotland, Wales and Northern Ireland also make some tax and spending decisions independently. UK Speeches In connection with the publication of budget data, speeches from the UK are also expected. The first speech will take place at 14:30 CET with MPC Member Huw Pill as the speaker. The next speaker will be Silvana Tenreyro, his speech is scheduled for 16:30 CET. US Building Permits Building permits are a key indicator of demand in the housing market. The change in the number of new construction permits issued by the government last time increased to 1,564M. It is expected that there will be no further increase and the number of permits will fall to the level of 1,512M. Observing the data from the beginning of the year, we see that the downward trend continues, and the few rebounds from the trend suggest better temporary periods. Source: investing.com Initial Jobless Claims The weekly report on he number of individuals who filed for unemployment insurance for the first time during the past week will appear today. Previously, this number increased significantly from 218K to 225K. The figure from the previous reading is expected to hold. Philadelphia Fed Manufacturing Index The Philadelphia Federal Reserve Manufacturing Index rates the relative level of general business conditions in Philadelphia. We have been seeing negative results since May. And the last two readings were below zero, and it is expected that this time the level will be below zero, but will increase slightly. Forecasts show that the indicator may increase from -8.7 to -6.2. This may mean that a bad situation may slowly improve. Source: investing.com FOMC speeches Fed officials will also speak today. The first speeches will take place at 15:00 CET. The Federal Reserve Bank of St. Louis President and Federal Open Market Committee (FOMC) voting member James Bullard. At 16:15 CET, Michelle W. Bowman, member of the Board of Governors of the Federal Reserve System, will speak. U.S. Federal Open Market Committee (FOMC) Member Mester also speaks at 16:40 CET. Summary: 2:30 CET Employment Change 2:30 CET Unemployment Rate (Oct) 12:00 CET EU CPI (YoY) (Oct) 14:30 CET Autumn UK Forecast Statement 14:30 CET BoE MPC Member Pill Speaks 15:00 CET FOMC Member Bullard Speaks 15:30 CET US Building Permits (Oct) 15:30 CET Initial Jobless Claims 15:30 CET Philadelphia Fed Manufacturing Index (Nov) 16:15 CET FOMC Member Bowman Speaks 16:30 CET MPC Member Tenreyro Speaks 16:40 CET FOMC Member Mester Speaks Source: https://www.investing.com/economic-calendar/
Kiwi Faces Depreciation Pressure: RBNZ Expected to Hold Rates Amidst Downward Momentum

Rates: 50bp As Next Likely Move By Central Banks

ING Economics ING Economics 17.11.2022 12:12
Markets outside the US are also increasingly leaning towards 50bp being the next probable moves by central banks. European Central Bank speakers turning less hawkish and the rediscovered UK austerity should validate the rally in rates In this article 50bp is becoming the new norm Gilts benefit from both fiscal tightening and the need for less BoE hikes Today’s events and market view 50bp is becoming the new norm Looking at the Fed, markets have converged on a 50bp hike in December following the US CPI data. Fed officials have attempted – with some success – to push back against the pricing of the terminal rate dropping too much, and it has since hovered just below 5%, but it hasn’t prevented longer rates such as the 10Y UST slipping below 3.7%. Appetite seems to have returned to longer durations with yesterday’s 20Y auction also posting very decent metrics. In the eurozone, ECB officials also appear to have dialed down their hawkishness. When arch-hawk Holzmann of the Austrian central bank is mindful that too strong tightening would not just lead to stagnation but to a recession, then markets should take note. Even with its new ECB reaction function, there appears only so much pain officials are willing to tolerate. Renewed appetite for duration risk is flattening yield curves Source: Refinitiv, ING   The ECB’s hawks might ask for more progress on quantitative tightening The ECB's shift was later corroborated by a Bloomberg story suggesting that momentum for a further 75bp move was lacking. With the market still eyeing a 20% probability of a larger move in December, there is still room to test a little lower. Alongside central bankers seemingly more mindful of the recessionary risks appears to validate the rally in rates that has also pushed the 10Y Bund yield below 2%. But mind you, that the ECB could eventually slow once the key rate approaches a neutral level – seen around 2% – is not news. With a view to the December meeting we caution that the ECB’s hawks might ask for more progress on quantitative tightening in return for less aggressive action on rates. The tightening of monetary policy could thus just rely to a growing degree on the balance sheet. That could eventually test the current  indiscriminate rally across sovereign credit in the eurozone.   Gilts benefit from both fiscal tightening and the need for less BoE hikes When it comes to the Bank of England, the next expected policy moves have become more interlinked with fiscal policies. This puts the attention squarely on today’s Autumn Statement that will outline the government’s fiscal plans. The government’s main task with a view to financial markets will be to rebuild credibility lost in September’s ill-fated mini budget. To that end much is already achieved by having forecasts of the independent Office for Budget Responsibility accompany the new plans. And looking at 10Y gilt yields, they have indeed already slipped back towards levels seen before the September budget just now. The government’s main task will be to rebuild credibility lost in September’s ill-fated mini budget Perhaps the greater risk is that the government decides to push austerity too far under the impression of the rattling experience in the wake of the last budget. That could see markets further pricing out their Bank of England hike expectations. Long-end yields could also decline further, though our expectation would be that of an overall steeper curve. Keep in mind that the effective debt that private investors will have to absorb will see a considerable increase nonetheless. A Reuters survey among gilt dealers sees issuance in the 2022/23 financial year falling to £185bn compared to DMO’s September plans, but issuance in 2023/24 will rise towards £240bn. Crucially, one has to add the Bank of England’s quantitative tightening.      Private investors will be required to increase their gilt holdings by a record amount in FY2023-24 Source: Refinitiv, ING Today’s events and market view Main event on the calendar is the UK government’s Autumn Statement. The FT has reported that up to £60bn of savings may be required, which is higher than had been expected. Reports also suggest the Chancellor will more heavily focus on spending cuts than tax rises. As our economist notes, the impact on the economy will depend on how much of the burden is placed on consumers via higher taxation, and how immediately those changes come through. A fair amount of pain could be delayed until after the 2024 election. Another point to watch are details on how the government intends to restructure its flagship Energy Price Guarantee, which can have more direct bearing on funding needs. Away from the UK the focus remains on central bank speakers and how they bridge the gap between signaling a slower pace and ensuring that financial conditions don’t already ease too much. Scheduled today are the Fed’s Bullard, Mester, Jefferson and Kashkari.   In data the focus is on the US housing market where numbers should be softer due to the rapid rises in mortgage borrowing costs that have prompted a collapse in demand. Also on the calendar are initial jobless claims as well as Philadelphia and Kansas Fed activity indices. The eurozone see the final CPI for October. Today’s supply comes from France in shorter dated bonds as well as inflation linked securities, as well as Spain with taps in 3Y to 20Y bonds. TagsRates Daily   Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more
Beyonce Bounce and Soaring UK Inflation: A Challenge for Bank of England

ING Economics predicts Bank of England may go for a 50bp rate hike during the December meeting

ING Economics ING Economics 17.11.2022 15:55
Markets have calmed in recent weeks which has allowed the Chancellor to push back some of the fiscal pain, particularly on public spending. The result is elevated borrowing in the near term, but the impact on UK growth isn't necessarily huge. Still, with energy support becoming less generous, the Bank of England can afford to hike more gradually Chancellor Jeremy Hunt leaves 11 Downing Street to present the Autumn Statement Has the government done enough to calm markets? This is a much less pertinent question than it was a few weeks ago. The change in political management, relentless leaks of possible austerity measures, and an end to the liability-driven investment (LDI) pension crisis have all contributed to calmer markets and a narrower risk premium in UK assets. Investors have also bet that a tighter budget will lessen pressure on the Bank of England to increase rates. That is perhaps an exaggeration, but the combination of these factors helped 10-year government bond yields fall from 4.5% to 3.25% in the run-up to today's Budget. But this logic was still contingent on Chancellor Jeremy Hunt presenting a plan which saw debt stabilise as a percentage of GDP in the medium-term – and the Office for Budget Responsibility has confirmed this will be the case by the fiscal year 2027/28. But the story is a little more complex than that, and the reality is the Chancellor faced a trade-off between boosting credibility by presenting immediate plans to reduce borrowing and avoiding amplifying the forthcoming recession. If anything, the Chancellor is leaning more towards the second of those priorities, in that much of the pain – particularly in terms of tighter government spending – won’t kick in for a couple of years. Public sector net investment rises to 3% of GDP next year but then falls back to 2.2% in five years’ time. The result is that borrowing is still elevated over the next couple of years, to the extent that gilt issuance plans have actually increased for the next fiscal year. Taking the Debt Management Office’s forecast 2023-24 remit of £305bn, and the BoE’s quantitative tightening programme, we estimate that private investors will be required to increase their gilt exposure by at least £268bn in FY2023-24. The previous peak was £107bn in FY2020-21. Gilt markets may be calmer, but there’s still plenty of supply for private investors to absorb – and a lot rests on delayed pain coming through in the public finances later this decade. For now, though, sterling has taken the Autumn Statement in its stride, barely changing against the euro and slightly softening against today’s modest dollar recovery. The lack of reaction will be down to the well-flagged measures from the new government, although the currency market might once again be keeping one eye on the slight softness in the gilt market today. Our baseline view sees GBP/USD dipping below 1.15 after the current bout of position adjustment has run its course, while we also favour some modest underperformance against the euro. EUR/GBP could be trading back to 0.89 by year-end. Energy support is becoming less generous Source: Ofgem, Refinitiv, ING calculations The impact on the economy and inflation The fact that a fair chunk of the pain has been delayed means that the economic impact of the Autumn Statement on next year’s growth isn’t necessarily huge – or at least not compared to expectations. A lot of the near-term tax rises are also either concentrated on higher-income earners or energy companies – and remember that the national insurance cut implemented under former Prime Minister Liz Truss hasn't been reversed. That said, the major change is that the average household will see energy bills fixed at £3,000 a year from April, up from £2,500 previously promised. That’s still slightly more generous than would otherwise be implied by wholesale gas/electricity futures, but not by much. We estimate that, without government intervention, the average energy bill would be £3,200 in FY2023, and that reflects the big fall in prices we’ve seen since August. Interestingly, even though the Chancellor has committed to supporting households for another 12 months beyond April, we estimate that energy bills will actually fall below £3,000 on an annualised basis by the first quarter of 2024 if wholesale prices stay where they are. Admittedly that's a big "if", and the risk for the Treasury is that they increase once more, particularly for futures covering the winter of 2023/24, pushing up the cost of support – albeit this is somewhat mitigated by a widened windfall tax that will now cover renewable electricity generators. For the economy, the important point is that households will be paying a little over 8% of disposable incomes for energy in FY2023, from 7% under the original guarantee, by our estimates. However, this is before considering new payments for low-income households, which will help cushion the blow. We’re forecasting a recession with a cumulative hit to GDP of roughly 2% by the middle of next year, and expect overall 2023 GDP to fall by 1.2%. The decision on energy prices lifts our inflation forecasts by roughly one percentage point from April next year. UK inflation will be roughly 1pp higher after April Source: Macrobond, ING The impact on the Bank of England The reality is there’s not much in the Autumn Statement to cause any earthshattering changes to the Bank of England’s view that it unveiled at the November meeting. The BoE's forecasts, which envisaged recession with or without further rate hikes, were premised on some withdrawal of energy support. The assumptions it made at the time are not wildly different from what has been announced today. As a result, we think the November 75bp rate hike will probably prove to be a one-off. Admittedly, some hawkish surprises in this week’s inflation data, and signs of ongoing worker shortages, suggest the Bank’s work isn’t finished yet. But we think the committee will pivot back to a 50bp hike in December and either 25bp or 50bp in February, seeing the Bank Rate peak around 4%. Read this article on THINK TagsUK fiscal policy Inflation Bank of England Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more
The Japanese Yen Retreats as USD/JPY Gains Momentum

Elon Musk seems to be determined in applying his ideas

Walid Koudmani Walid Koudmani 18.11.2022 08:55
UK Retail sales show signs of improvement Retail sales in the UK rose by 0.6% in October compared to the expected 0.5% increase and previous 1.5% decline as British consumers managed to recover slightly despite rising inflation and the ongoing cost of living crisis. While this may appear to be a positive sign, there is still a long way to go before the economic picture begins to look brighter, particularly after yesterday's statement from Chancellor Jeremy Hunt referring to a recession. The pound is starting Friday's session attempting to hold onto some gains with GBPUSD pair testing the 1.19 area after pulling back to 1.175 yesterday. Meanwhile, the FTSE100 remains in the 7370 points area and it remains to be seen if it will be able to extend the upward move or fall further as investors continue to be uncertain. Read next: NVIDIA (NVDA) Q3 earnings results outperformed part of the markets forecasts| FXMAG.COM Twitter saga continues as offices close  Twitter's turbulent story continues after Elon Musk's company just announced the closing of its offices effective immediately until next week. The decision came as a surprise to many, including the employees who were told to comply with company policy. This adds further uncertainty and skepticism as to how the new owner intends to transform the business that took months to acquire while continuing to be a controversial figure. While Twitter stock is no longer available on the market, this is certainly an interesting situation as it could have ramifications and effects on the market as a whole with many holding varying opinions on the matter. In either case, it seems that Elon Musk is willing to take chances and act in unexpected ways if it means achieving his vision for Twitter even if it costs him employees.
Unraveling UK Inflation: The Bank of England's Next Move

The Influence Of The UK Autumn Statement On The Performance Of Pound (GBP)

Craig Erlam Craig Erlam 11.11.2022 09:16
OANDA Senior Market Analyst Craig Erlam discusses how the pound has performed against the dollar recently and what impact the UK Autumn Statement had. This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.
Unraveling UK Inflation: The Bank of England's Next Move

The Influence Of The UK Autumn Statement On The Pound's (GBP) Situation

Craig Erlam Craig Erlam 18.11.2022 09:22
OANDA Senior Market Analyst Craig Erlam discusses how the pound has performed against the dollar recently and what impact the UK Autumn Statement had.   This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.
"Private investors will be required to increase their gilt exposure by at least £268bn in FY2023-24"

"Private investors will be required to increase their gilt exposure by at least £268bn in FY2023-24"

ING Economics ING Economics 18.11.2022 09:40
The rates rally has run into resistance as central bankers signal that their job is far from being done. In Europe the first TLTRO repayment will kick off the European Central Bank's balance sheet reduction, though the impact should at first be marginal. Over in the UK the prospect of substantial net supply has limited the downside in gilt yields First TLTRO repayment kicks off ECB balance sheet reduction The ECB’s outstanding targeted liquidity operations (TLTRO) and the quantitative easing portfolio currently still bloat the central bank’s balance sheet, a situation not deemed compatible with the ECB’s overarching goal of reining in policy accommodation to tackle high inflation. To that end the ECB had revised the terms of the TLTROs at the last meeting in October. Today the central bank will announce how much of the currently still €2.1tn outstanding banks will repay at the first additional repayment date on 23 November, the day that the new less attractive borrowing terms come into force. Some ECB officials have said they expected a sizeable repayment, though a Bloomberg survey sees estimates in a wide range anywhere from €200bn to €1500bn with a median at €600bn. At this early stage we think the risk is skewed towards a smaller repayment – we have pencilled in €400bn.    The Euribor-Estr basis will become more correlated to credit spreads after TLTRO repayments Source: Refinitiv, ING   Given total excess reserves of €4.7tn today’s repayment by itself will have a marginal impact Officials have hope that the repayments can ease the collateral scarcity. We would caution that the collateral pledged in these operations will unlikely be of the high quality liquid type so dearly in demand. For the system as an aggregate, the repayments will imply a lower amount of excess reserves chasing this quality collateral. Considering that the overall excess reserves are still at a staggering €4.7tn, today’s repayment is likely to have only a marginal impact. Over time with further repayments and at the latest with the bulk of the TLTROs maturing by mid next year the impact should increase, however. The suppression of money market rates that was achieved by high levels of excess reserves should start to fade. The overnight rates ESTR could see fading downward pressure, allowing it to gradually return to the deposit facility rate. Credit sensitive money market rates like the Euribor fixings could become more sensitive to growing systemic risks and the looming recession. Gilt investors will have plenty of supply to absorb The UK Chancellor has presented a plan that will stabilise the country’s debt over the medium term – as much has been confirmed by the independent OBR’s new projections, if only towards 2027/28. But faced with the trade-off between boosting credibility by presenting immediate plans to reduce borrowing and avoiding amplifying the forthcoming recession, the Chancellor is leaning more towards the second of those priorities – much of the fiscal tightening has been deferred to the later years.  Private investors will be required to increase their gilt exposure by at least £268bn in FY2023-24 The result is that borrowing is still elevated over the next couple of years, to the extent that gilt issuance plans have actually increased for the next fiscal year. Taking the Debt Management Office’s forecast 2023-24 remit of £305bn, and the BoE’s quantitative tightening programme, we estimate that private investors will be required to increase their gilt exposure by at least £268bn in FY2023-24. The previous peak was £107bn during the pandemic of FY2020-21.  The size of the gilt market will increase by a record amount next year Source: Refinitiv, ING Today's events and market view The rally in rates has finally run into some resistance. With a look to the UK the higher gilt remit will have helped, but it also seems that Fed officials saw more pushback was in order, warning not to read too much into one CPI reading. Standing out was the Fed’s Bullard, who signalled that he saw the terminal rate at least at 5-5.25%. There is little on the data calendars worth mentioning apart from US existing home sales. The attention should remain on central bank speakers. In the US only the Fed's Collins is scheduled to speak on the labour market, but over in Europe we will see President Lagarde, the Bundesbank’s Nagel and the Dutch central bank’s Knot speaking at the European Banking Congress. Read this article on THINK TagsRates Daily Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more
Services PMIs and Fed Minutes: Analyzing Market Focus and Central Bank Strategy

UK Retail Sales Offer Support To The GBP/JPY Cross

TeleTrade Comments TeleTrade Comments 18.11.2022 10:28
GBPJPY struggles to preserve its modest gains to the weekly high and retreats below mid-166.00s. Stronger domestic inflation figures, the cautious mood underpin the safe-haven JPY and cap gains. A bleak outlook for the UK economy overshadows upbeat UK Retail Sales and acts as a headwind. The GBPJPY cross surrenders a major part of its intraday gains to the weekly high and retreats below mid-166.00s during the early European session on Friday. A combination of factors provides a modest lift to the Japanese Yen, which, in turn, acts as a headwind for the GBPJPY cross. Data released on Friday showed that Japan’s core consumer inflation (excluding volatile fresh food prices) accelerated to the highest level in 40 years and rose 3.6% YoY in October. This, along with the cautious mood, is seen driving some haven flows towards the JPY. That said, the Bank of Japan's dovish stance keeps a lid on any meaningful upside for the JPY and helps limit the downside for the GBPJPY cross. In fact, BoJ Governor Haruhiko Kuroda reiterated on Friday that the central bank will stick to its monetary easing to support the economy. In contrast, the Bank of England is expected to continue raising rates to combat stubbornly high inflation. The bets were reaffirmed by Wednesday's release of hotter-than-expected UK consumer inflation figures, which showed that the headline CPI accelerated to a 41-year high in October. Furthermore, BoE Governor Andrew Bailey said on Wednesday that Britain's very tight labour market was a key reason why further interest rate increases were likely. This, along with mostly upbeat UK monthly Retail Sales figures for October, offer support to the GBPJPY cross. That said, a bleak outlook for the UK economy is holding back bullish traders from placing aggressive bets around the GBPJPY cross. After processing Chancellor of the Exchequer Jeremy Hunt's new figures in the Autumn Statement, the UK Office for Budget Responsibility (OBR) has published new forecasts that predict UK GDP to shrink by 1.4% next year, as opposed to the 1.8% growth in its previous foercast, in March. The mixed fundamental backdrop warrants caution before positioning for an extension of the recent bounce from the 163.00 mark, or the monthly low touched last Friday. Traders now look to speeches by BoE's external MPC members - Catherine Mann and Jonathan Haskel - for some impetus. Nevertheless, the GBPJPY cross remains on track to register its first weekly gains in the previous three.
Kuroda Stayed On The Sidelines And The Yen Responded With Losses

High Inflation Print In Japan | Most Fed Members Remain Relatively Hawkish

Swissquote Bank Swissquote Bank 18.11.2022 10:57
Inflation in Japan soared to the highest levels in more than 30 years, to 3.7% in October, up from 3% printed a month earlier. High inflation print sure revived the Bank of Japan (BoJ) hawks, and the calls for a policy rate hike, and kept the dollar-yen below the 140 level, but it’s unsure whether the BoJ will give up on its ultra-soft policy stance. Therefore, if the US dollar picks up momentum, which will certainly be the case, the USDJPY could easily rebound back above its 50-DMA, which stands near 145. US And the reason I think the US dollar will recover is because most Fed members remain relatively hawkish regarding the Fed’s policy tightening. Plus, option traders are building topside structure over the one-month tenor that covers the next US inflation report and the Fed’s next policy meeting in December. Stock market So, the ambiance in the stock markets is not as cheery as it was at the end of last week. UK In the UK, the autumn budget statement went happily eventless. Gilts rallied, pound saw limited sell-off, while energy companies’ reaction to windfall taxes remained muted. Watch the full episode to find out more! 0:00 Intro 0:30 Japan inflation soars, Mr. Kuroda! 1:34 Should you prepare for another USD rally? 3:32 Market mood turns… meh. 4:01 The retail roundup 6:11 The happily eventless UK budget Ipek Ozkardeskaya 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.   #hawkish #Fed #USD #recovery #US #retail #sales #Walmart #Target #Macys #HomeDepot #Lowes #Alibaba #earnings #UK #Budget #GBP #SPX #Dow #Nasdaq #investing #trading #equities #stocks #cryptocurrencies #FX #bonds #markets #news #Swissquote #MarketTalk #marketanalysis #marketcommentary ___ Learn the fundamentals of trading at your own pace with Swissquote's Education Center. Discover our online courses, webinars and eBooks: https://swq.ch/wr ___ Discover our brand and philosophy: https://swq.ch/wq Learn more about our employees: https://swq.ch/d5 ___ Let's stay connected: LinkedIn: https://swq.ch/cH
Craig Erlam and Jonny Hart talk UK Autumn Statement and more

Craig Erlam and Jonny Hart talk UK Autumn Statement and more

Craig Erlam Craig Erlam 18.11.2022 13:25
OANDA Senior Market Analyst Craig Erlam reviews the latest market news with Jonny Hart. They discuss the UK Autumn Statement and US economic data. Subscribe on Android This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds. Market Insights Podcast (Episode 399) - MarketPulseMarketPulse
Kiwi Faces Depreciation Pressure: RBNZ Expected to Hold Rates Amidst Downward Momentum

Attention Turns Back To The Economic Data And The Riksbank Policy Rate

ING Economics ING Economics 18.11.2022 13:35
With the UK's Autumn Statement out of the way, attention turns back to the economic data which are deteriorating – UK PMIs are likely to re-emphasise the worsening condition and that a recession is coming. In Sweden, the Riksbank is expected to hike by 75bp next week, raising the policy rate to 2.5% In this article US: Ongoing weakness in housing data UK: Focus switches back to the data and Bank of England Sweden: Riksbank expected to hike by 75bp Source: Shutterstock US: Ongoing weakness in housing data Thanksgiving means a holiday-shortened week in the US with the focus set to remain on the outlook for Federal Reserve policy. Market pricing has switched markedly since the surprisingly soft October CPI print but Federal Reserve officials continue to suggest there is more work to be done to ensure the inflation front is defeated. Indeed, we continue to hear comments suggesting the risk of doing too little outweighs the consequences of doing too much in terms of interest rate increases. Expect more next week. Data-wise we are looking at ongoing weakness in housing data, but durable goods orders should rise given firm Boeing aircraft orders. Nonetheless, it is doubtful this will be market moving in any meaningful way. The November jobs report on 2 December and the November CPI print on 13 December are the big releases to watch. UK: Focus switches back to the data and Bank of England The key takeaway from the UK’s Autumn Statement was that much of the anticipated fiscal pain has been pushed back until after the next election. Chancellor Jeremy Hunt has calculated that calmer financial markets and the announcement of certain tax rises mean he can push back some of the tougher spending decisions, without sparking a fresh crisis of confidence in UK assets. No doubt the Treasury is banking on less aggressive Bank of England rate hikes to lower future debt interest projections, giving scope to water down some of the cuts further down the line. Read more about the Budget announcements here.  With the fiscal event out of the way, attention turns back to the economic data which is clearly deteriorating. Next week’s PMIs are likely to re-emphasise that more companies are seeing conditions worsen than improve right now, the latest sign that a recession is coming. There’s also the question of whether the Bank of England will pivot back to a 50bp rate hike in December, and we think it will, despite some mildly hawkish inflation data in recent days. We’ll hear from a couple of rate-setters next week to help shape expectations ahead of that meeting in a few weeks' time. Sweden: Riksbank expected to hike by 75bp Back in September, the Riksbank hiked the policy rate by a full percentage point but signalled that it expected to pivot back to a 50bp rate hike in November. Since then, core inflation has exceeded the central bank’s forecasts by half a percentage point, while the jobs market has remained relatively tight. Given that the ECB has continued with its 75bp rate hikes – and the Riksbank has been vocal about staying out in front of the eurozone’s interest rate policy – we expect further aggressive tightening by Swedish policymakers next week. Remember this is the Riksbank’s last meeting before February, and we therefore expect a 75bp hike on Thursday. We’d expect the new interest rate projection published alongside the decision to pencil in at least another 25bp worth of tightening early next year, but ultimately there are limits to how far it can go given the fragile housing market. Key events in developed markets next week Refinitiv, ING TagsUS UK fiscal policy Sweden Riksbank Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more
Forex: What to expect from British pound against US dollar - January 17th

There Was Justification For The Pound (GBP) To Increase This Week

InstaForex Analysis InstaForex Analysis 20.11.2022 12:29
Long-term outlook. The GBP/USD currency pair has risen by only 30 points in the current week. Remember that a week ago, the increase was 500 points. As you can see, traders ignored the report on American inflation, which caused the dollar to fall sharply in recent weeks. Rather than inflation, the decrease in the likelihood of aggressive tightening of the Fed's monetary policy is to blame. But remember that this was known even before the inflation figures were released because the Fed cannot keep raising interest rates indefinitely. It is currently 4%, with a maximum level of 5% considered. As a result, a "slowdown" had to occur in any case, and the market had to be prepared for it. Another issue is the Bank of England and the British pound. Sincerely speaking, traders have no interest in the work being done in Britain by the regulator. Remember that at least seven of the BA's eight rate hikes went unheeded, and this week the UK's inflation rate updated a record set 40 years prior without causing the pound to make a significant rise or decline. The report on British inflation is generally identical to the report on American inflation. If the consumer price index continues to rise, the Central Bank's aggressive monetary policy will be more likely to be maintained. There was justification for the pound to increase this week. In the end, neither the first nor the second occurred. As a result, this report was ignored by the market. The same is true of the budget proposal that UK Treasury Chief Jeremy Hunt unveiled on November 17. Taxes won't significantly increase, but the cutoff points for applying various tax rates will be adjusted. In other words, because their annual incomes are now considered higher than before, those who previously paid at a lower rate will now pay a higher rate. Additionally, it was revealed that Liz Truss had underestimated the amount of money given to the British people as compensation for their electricity bills. Even so, this news did not significantly impact the pair's movement. Technically speaking, the pound and the euro are trading almost identically once again and continue to have the same chances of growth. COT evaluation. The "bearish" sentiment continued to weaken, according to the most recent COT report on the British pound. The non-commercial group closed 1,900 buy contracts and 8,800 sell contracts for the week. As a result, non-commercial traders' net position increased by 7,000. The net position indicator has been gradually increasing over the past few months. However, the major players' outlook is still "bearish," and despite the pound's recent rise, it is not yet clear that it is getting ready for a protracted upward trend. Furthermore, if the situation with the euro is anything to go by, it is improbable that the pair will experience significant growth based on COT reports. The market is waiting for new geopolitical shocks to return to dollar purchases, as demand for the US currency remains very high. The non-commercial group has now opened 67,500 sales contracts and 34,500 purchase contracts. As we can see, the difference is still significant. Remember that the euro cannot show strong growth while major players are "bullish." In terms of the total number of open buy and sell positions, the bulls have a 17-thousand-position advantage. However, as we can see, this indicator only helps the pound a little. Despite technical grounds for doing so, we remain skeptical of the British currency's long-term growth. Fundamental event analysis This week, several significant reports were released in the UK. Naturally, the inflation report comes first. It has already increased to 11.1% y/y and should, in theory, cause a significant market response. Additionally, there were reports on average wages (+6%), retail sales (+0.6% m/m in October), and unemployment (growth to 3.6%). The other reports, on the other hand, were even less likely to elicit a response if inflation did not. The growth potential of the pound sterling has been reached at this point. We stated a week ago that all technical indicators supported the pair's medium-term growth, but now we require a slight downward correction. The outcome is unchanged as of right now. Trading strategy for the week of November 21–25: 1) The pound/dollar pair has broken through the Ichimoku indicator's key lines, giving it the technical support necessary to establish a new long-term upward trend. We continue to be dubious about this possibility because we must see clear fundamental and geopolitical justifications. Still, we also understand that the couple can survive on nothing but technology. 1.2080 and 1.2824 are the closest targets; 2) The pound has advanced significantly, but it is still challenging to wait for rapid growth. The pair's decline can resume with targets in the range of 1.0632-1.0357 if the price fixes back below the Kijun-sen line. Sales, though, are no longer important. Explanations of the illustrations: Price levels of support and resistance (resistance and support), Fibonacci levels – target levels when opening purchases or sales. Take Profit levels can be placed near them. Ichimoku indicators (standard settings), Bollinger Bands (standard settings), MACD (5, 34, 5). The net position size of each trading category is represented by Indicator 1 on the COT charts. The net position size for the "Non-commercial" group is indicated by indicator 2 on the COT charts. Company does not offer investment advice and the analysis performed does not guarantee results. The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade. Read more: https://www.instaforex.eu/forex_analysis/327566
Equity Markets Rise, VIX at 12 Handle After ECB Rate Hike and US Economic Resilience

The Fed, ECB And Bank Of England's Upcoming Data Will Be More Key In Determining The Rate Pricing

Saxo Bank Saxo Bank 21.11.2022 09:48
Summary:  With FOMC meeting minutes out and two Fed speakers to stand up, the USD is on watch along with equities that could be at risk of taking a haircut. Any hint of more hawkish comments could spark a knee-jerk reaction to the upside in the USD, which means equities could move into a risk-off mode. Focus is also on NZD with RBNZ to poised to hike by 0.75%. The NZDAUD is worth watching given the RBNZ is hiking harder than the RBA can, which theoretically supports NZDAUD. In China, attention will be on how local authorities respond to outbreaks and how commodities respond. Equites that make most of their revenue from China are also in focus like Fortescue Metals (FMG). Plus why buy now pay later equities are again on notice, plus the Saxo Strats 2022 World Cup Predictions.   FOMC minutes and more Fed speakers to be key for terminal rate pricing The FOMC minutes from the November 2 meeting are scheduled to be released on Wednesday, just ahead of the Thanksgiving holiday. The key message delivered by Powell at this meeting was that the pace of rate hikes will slow down as needed, and that will likely remain the highlight of the minutes as well. However, Powell managed to deliver this message hawkishly at the press conference, but the risk from the minutes remains tilted to the dovish side. There is likely to be little consensus about whether the rates are in restrictive territory or there’s still room for that, and the divide within the committee remains key to watch as investors remain on the edge to expect a Fed pivot sometime in 2023. We have heard multiple Fed speakers over the past week, after a significant downside surprise in US CPI prompted a move lower in Fed’s terminal rate projections and fuelled significant easing of financial conditions as equity and bond markets rallied and the US dollar weakened. Waller and Bullard have tilted on the hawkish side, while the usual-dove Brainard remained more balanced as she repeated the message on cumulative tightening and being data-dependent. Daly, Mester, George and Bullard will be on the wires this week. In China, attention will be on how local authorities respond to outbreaks and implement pandemic control measures. Watch how commodities respond The economic calendar in China is light this week. However authorities may respond to China’s first Covid-related death in almost six months and the surge in new cases, which have hit their highest levels since April last year. There is concern there could be tighter restrictions, while China implements its new 20-point tweaking covid restriction plan, aimed at minimising disruptions to people’s daily lives and the economy, while adhering to zero-Covid. Officials will find it difficult to balance this, as well as the surge in cases. As such, commodities pegged to Chinese demand are front and centre again this week. The iron ore price is lower on Monday down 4% on fears China could increase restrictions, but the key steel ingredient holds onto a gain of 23% this month. This means stocks that make most of their revenue from China are also in focus like Fortescue Metals (FMG) which is up 30% this month, after China announced a somewhat property rescue package. Oil prices will continue to remain volatile as well as global growth and China lockdowns remain on watch, and the deadline for European sanctions on Russia crude also looms. Flash PMIs on the radar for US, UK and EU The S&P flash PMIs for the US, EU and UK will be released in the week, and will likely test the soft landing rhetoric that has been gaining traction. We will likely see further broad-based easing in the metrics from the October prints, as consumer spending remains constrained amid high inflation and a rise in interest rates. While expectations for December remain tilted towards a downshift in rate hikes for the Fed, ECB and the BOE, the upcoming data point will be more key in determining the terminal rate pricing. Markets are now back at pricing 5% levels for the Fed, but the ECB’s pricing for the terminal rate is still sub-3% while UK’s is 4.7% with fiscal austerity being delayed. RBNZ’s hawkishness to continue to outperform while Riksbank to play catchup The monetary policy decision from the Reserve Bank of New Zealand (RBNZ) will be key on Wednesday to determine the direction of NZD, which has seen strong gains over the past month from higher hawkishness. After a series of 50bps rate hikes, there are some expectations that RBNZ could deliver a 75bps rate hike this week, as inflation and labour market conditions support the case for further front-loading. Inflation has reached 7.2% YoY in Q3 – well above the RBNZ’s 1-3% target. Most members of the RBNZ shadow board also supported a 75bps rate hike. Meanwhile, the Riksbank has been lagging other G10 central banks in tightening policy and is now playing catch up after delivering a 100bp hike in September. The Riksbank is expected to deliver a 75bps hike on Thursday while another 100bps hike can’t be ruled out. Key earnings to watch this week; from Virgin, to Dell to two Chinese companies  Virgin Money, which is one of the UK’s biggest banks reports earnings this week, as well as the agricultural giant Deere & Co and the PC juggernaut, Dell. Separately, as discussed in Peter Garnry’s note, the highlight may be from Kuaishou Technology and Xioami, as Chinese equities have recently rallied amid the country’s fine-tune pandemic control measures. Nonetheless, increasing regulation in the private and technology sectors have still caused headwinds. The two Chinese earnings results are not expected to be blockbusters, but their outlooks may give investors a glimpse through the curtain. Buy now pay later equities again on notice Buy now pay later (BNPL) companies could be further bruised this week, with the Australian government considering policies that could see BNPL firms subject to the same rules as credit card providers. This could not only affect Australian firms but global companies which operate in Australia, such as Block (SQ, SQ2) - which owns Afterpay and Affirm (AFRM). The Australian government is weighing up options to strengthen the BNPL Industry Code, and perhaps introduce an affordability test or put the BNPL companies under the Credit Act. Such a move would ensure BNPL companies that operate in Australia, would work within the guardrails as other credit providers. Companies to watch include Zip, Block and Affirm. Sentiment could also flow to other BNPL companies including Japan’s GMO Payment Gateway and India’s Paytm. Saxo Strats 2022 World Cup Predictions: the Netherlands has the highest probability of being the champion In this article, Peter Garnry, Saxo’s Head of Equity Strategy shows how Saxo Strats used quantitative analysis to predict the winner of the 2022 World Cup and came up with a non-consensus result: expecting the Netherlands to win.   Key economic releases & central bank meetings this week Monday, Nov 21 Germany Producer Prices (Oct) Taiwan Export Orders (Oct) Tuesday, Nov 22 New Zealand Trade (Oct) Eurozone Consumer Confidence (Nov, flash) Wednesday, Nov 23 Japan Market Holiday Australia S&P Global Flash PMI, Manufacturing & Services UK S&P Global/CIPS Flash PMI, Manufacturing & Services Germany S&P Global Flash PMI, Manufacturing & Services France S&P Global Flash PMI, Manufacturing & Services Eurozone S&P Global Flash PMI, Manufacturing & Services US S&P Global Flash PMI, Manufacturing & Services New Zealand Cash Rate (23 Nov) Singapore Consumer Price Index (Oct) United States Durable Goods (Oct) United States Initial Jobless Claims United States UoM Sentiment (Nov, final) United States New Home Sales (Oct) US Fed FOMC Meeting Minutes (Nov) Thursday, Nov 24 US Market Holiday Japan au Jibun Bank Flash Manufacturing PMI South Korea Bank of Korea Base Rate (Nov) Japan Leading Indicator (Sep) Germany Ifo Business Climate (Nov) Friday, Nov 25 US Market Holiday (Partial) New Zealand Retail Sales (Q3) Singapore GDP (Q3, final) United Kingdom GfK Consumer Confidence (Nov) Germany GDP (Q3) Germany GfK Consumer Sentiment (Dec)   Key earnings releases this week Monday: Virgin, Compass, Agilent Technologies, Zoom Video, Dell Technologies Tuesday: Kuaishou Technology, Medtronic, Analog Devices, VMware, Autodesk, Dollar Tree, Baidu, HP, Best Buy Wednesday: Xioami, Prosus, Deere Friday: Meituan, Pinduoduo Source: https://www.home.saxo/content/articles/macro/saxo-spotlight-21-nov-2022-21112022
WTI Oil Shows Signs of Short-Term Uptrend Amid Medium-Term Uptrend Phase

The EU And UK's Currencies Do Not Significantly Outperform The US Dollar (USD)

InstaForex Analysis InstaForex Analysis 22.11.2022 08:10
The foreign exchange market may currently be undergoing significant structural changes. Recall that the market has been busy creating a downward trend section for the past two years. This section ended up being very lengthy and complex. Since in this section, we have yet to see any classical structures (5 waves down - 3 up) or at least structures resembling them, some waves still need to be identified. The geopolitical situation in Ukraine and rising Fed rates were the main drivers of the increase in demand for US currency in 2022. Regarding geopolitics, nothing changes, but things start to go the other way when it comes to Fed interest rates. If the market responds favorably to the FOMC's rate hike, then the ECB and the Bank of England will likely raise interest rates more quickly in the coming months than the FOMC. As a result, the gap, which widened in favor of the dollar, will now close and no longer favor the dollar. This reasoning leads to the conclusion that the new environment will favor the euro and the pound in the next three to six months. Of course, geopolitics will also play a significant role, but making predictions in this area is much more challenging. The only way to prevent a protracted decline in the US dollar is for the ECB and the Bank of England to eventually raise their rates less than the Fed. The ECB rate, for instance, will be 4%, while the Fed rate will be 5%. The US dollar would then be able to avoid a sharp decline. The Bank of England operates similarly. The dollar will only fall in value if the rates eventually equalize, but it won't have a significant advantage either. Since the Fed rate is no longer rising faster than the ECB or the Bank of England rate, the market is pulling both instruments away from the lows reached a few months ago. However, we need more than this element to detect a long-term upward trend section. Additionally, the upward trend that is currently in place is not an impulse. It is five waves long and corrective at the same time. Even now, the EU and UK's currencies do not significantly outperform the dollar, preventing them from smiling as they look to the future. Based on everything stated above, I do not anticipate both instruments to experience significant growth over the next six months. The likelihood is that descending structures will be constructed after the current corrective ascending structures are finished. The news background is unlikely to be appropriate for impulsive downward trends, so the instruments can alternate the trend's correction sections one after the other. All of this implies that the euro and the pound can live comfortably for a long time in an area that is 700–800 base points wide. Based on the analysis, the upward trend section's construction has been complicated into five waves. However, because the wave markup does not suggest a further increase, I cannot advise purchasing euros. If there is a successful attempt to break through the 1.0359 level with targets near the estimated 0.9994 level, which corresponds to the 323.6% Fibonacci, I advise selling.   Relevance up to 06:00 2022-11-23 UTC+1 Company does not offer investment advice and the analysis performed does not guarantee results. The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade. Read more: https://www.instaforex.eu/forex_analysis/327742
The Bank Of England Has Warned That Negative Growth Will Extend All The Way

The Bank Of England Has Warned That Negative Growth Will Extend All The Way

Kenny Fisher Kenny Fisher 24.11.2022 11:33
The British pound has steadied on Thursday, after soaring 1.4% a day earlier. In the European session, GBP/USD is trading at 1.2074, up 0.17%. The pound has enjoyed a splendid November, gaining 5.3%. The upswing has been impressive but is more a case of a broad pullback in the US dollar rather than newfound strength in the pound. The UK economy is likely in a recession, and the outlook is as gloomy as a rainy November day in London. The October Manufacturing and Services PMIs remained mired in negative territory, pointing to contraction. The labour market has been a bright spot but that could soon change, with the Bank of England projecting that unemployment will double to 6.5%. The UK economy declined by 0.2% in Q3, and the BoE has warned that negative growth will extend all the way to the first half of 2024. With these formidable economic headwinds, it’s difficult to make a case for the pound continuing its upswing. Inflation has hit a staggering 11.1%, despite the BoE raising the cash rate to 3.0%. The bank pressed harder on the rate pedal at the last meeting, raising rates by 75 basis points. The BoE expects rates to peak at 5%, which means there’s a lot more tightening on the way. The bank will have to tread carefully in order not to choke off economic growth as it continues to tighten in order to curb red-hot inflation. Fed says pace of hikes will ease The Fed minutes reiterated what the Fed has been telegraphing for weeks; namely, smaller rates are on the way. Fed members agreed that smaller rate increases would happen “soon”, as they continue to evaluate the impact of the current policy on the economy. Members also noted that inflation was yet to show any signs of a peak. The markets aren’t completely convinced that we’ll see lower rates at the December meeting – the odds of a 75 basis point move are at 65%, with a 35% chance of a 50 bp increase. GBP/USD Technical 1.2040 and 1.1875 are the next support levels There is resistance at 1.2192 and 1.2357 This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.  
Bank of England survey highlights easing price pressures

Inflation In The UK May Therefore Start To Slow Down Soon

InstaForex Analysis InstaForex Analysis 25.11.2022 08:25
Currently, the Bank of England is a "dark horse." It is difficult to predict how much longer the British regulator will raise its rate, even though it is doing so slower than the Fed and the ECB. It decided to increase the rate by 75 basis points at the most recent meeting, a record increase over the previous 12 to 13 years and the first increase during the current tightening monetary policy cycle. Although the Bank of England rate has already increased to 3%, inflation in the UK is still rising, and there are currently no signs that it will slow down. One could anticipate at least a slight slowdown in the consumer price index with such a rate value, but keep in mind that there is a "time lag" that could take up to 3–4 months for the economy to fully adjust to the most recent (and subsequent) PEPP tightenings. Inflation in the UK may therefore start to slow down soon, but I believe it will only be able to disappear at a 3% rate, even below the 10% threshold. It increased to 11.1% in October, and Andrew Bailey recently predicted that the peak value might reach 13% or 15%. The fact that British inflation has yet to display any discernible slowdown that would be considered the start of a fall is a major disadvantage. Based on this, it can be assumed that the Bank of England's relatively high rate is already impacting the economy and inflation. However, no one can say with certainty how significant this impact is. There may be an impact, but it is probably insignificant in light of the factors that drive monthly price increases. A 3% rate may only stop prices from increasing even more quickly. Since I cannot respond, it is too early to discuss the Bank of England's final interest rate. In light of the current situation, the regulator should increase the rate by 75 basis points at least twice more, bringing it to 4.5%. After that, he can follow the Fed's lead and raise the rate gradually while he waits for inflation to respond to three or four rounds of extremely strict PEPP tightening. However, given the current state of the British economy, analysts now have serious doubts about the Bank of England's ability to take such actions. According to Andrew Bailey, the recession "has already begun" and at the same time "has just begun" due to the most recent GDP report for the third quarter showing a contraction. It can last for up to two years (assuming no further economic shocks), and it is difficult to predict how much the British GDP will decline due to high rates. According to Dave Ramsden, the deputy governor of the Bank of England, it is imperative to respond to the state of the British economy. If things continue to go poorly, it will be prudent to lower the rate to prevent making the already challenging financial situation for households even worse. The objective of bringing inflation back to 2% remains the same, but the Bank of England will need to monitor economic expansion. The construction of a new downward trend segment is predicated on the wave pattern of the pound/dollar instrument. I cannot suggest purchasing the instrument immediately because the wave marking already permits the development of a downward trend section. Sales are more accurate now that the targets are close to the 200.0% Fibonacci level.     search   g_translate     Relevance up to 05:00 2022-11-26 UTC+1 Company does not offer investment advice and the analysis performed does not guarantee results. The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade. Read more: https://www.instaforex.eu/forex_analysis/328102
There Are No Obvious Reversal Of GBP/USD Pair Signs Yet

Rejection Of Scotland's Candidacy For The Independence Referendum

InstaForex Analysis InstaForex Analysis 25.11.2022 08:42
The GBP/USD pair tested the 21st figure on Thursday - for the first time since the beginning of August. This is mainly due to the dollar getting weaker, as it stopped moving upward across the market. U.S. trading floors were closed yesterday (Thanksgiving Day in America), and the minutes of the November FOMC meeting, published the day before, were interpreted against the dollar. Such a fundamental background made it possible for GBP/USD bulls to hit a new multi-month high, marking 1.2152. Take note that the bulls were getting closer to the area of 20 figures during the last two weeks. After almost a week-long flat in the range of 1.1800-1.1950, the bulls decided to make a swift upward move, which enabled them not only to cross the level of 1.2000, but to also probe the area of the 21st figure. Do remember that the pound's growth was caused not only by the dollar getting weaker, but because it also had political overtones. The fact is that this week the British Supreme Court rejected the Scottish referendum bid for independence. According to the court's verdict, the Scottish government cannot initiate a second referendum without the UK Parliament's approval. In other words, the Supreme Court put an end to a long-playing story that has emerged (making GBP/USD traders nervous) and then disappeared into oblivion. Therefore, this court ruling is strategically important for the British currency. The pound got rid of a threat that had been hanging over it for several years, threatening to collapse. After all, if the Supreme Court verdict had been the opposite, next year the UK could have experienced events comparable to those of 2016, when the historic referendum on Brexit was held. As mentioned, the so-called "Scottish issue" has been hyped from time to time in the global press, going beyond local discussions in the local media. The last time this topic was actively discussed was at the end of last year, when the problems associated with the Coronavirus receded into the background. Back in September 2021, Scottish Prime Minister Nicola Sturgeon confirmed at the Scottish National Party conference that she was planning to hold a second independence referendum before the end of 2023. She stressed that these plans, put on pause because of the pandemic, are "unchanged." Recall that in the 2014 Scottish independence referendum, 45% of those who voted "for" and 55% voted "against." That is, the majority voted for union with Great Britain. This plebiscite was held two years before another - historic - referendum, where the majority of British residents (though by a slim margin) voted for secession from the European Union. The Scots, in turn, were unequivocal: nearly 70% of the region's population voted against Brexit. After that "separatist" sentiments intensified in the region. According to experts, Scotland is now essentially divided 50/50 on independence. But analysts don't rule out a possibility that many politically neutral residents of Scotland can mobilize if necessary and use the chance that fell out. After all, it would obviously present itself to them next time in several decades. That is why sociologists have repeatedly warned that at the "X hour", when hypothetical plans for a new referendum take shape, the scales will tip in favor of the region's independence. But to the disappointment of supporters of Scottish independence, the Supreme Court did not allow the local authorities to organize a second vote without an approval from the British Parliament. Downing Street has already rushed to say that the Cabinet will not allow another plebiscite. According to the government, this is a "once in a generation" event. It is obvious that the Conservatives, who control the House of Commons (and will control it at least until 2024) will not allow the Scottish nationalists to realize the idea of another referendum. Therefore, this issue can be considered closed: for the foreseeable future, all slogans and calls for Scottish independence will have no effect on the pair. However, despite the importance and significance of the Supreme Court ruling, the pair's fate now depends on the dollar's behavior. The "Scottish issue" usually flares up brightly, but fades quickly. And it looks like this time it will fade today and for a long time. Next week traders of dollar pairs will focus on the Federal Reserve representatives' rhetoric. The market's tumultuous reaction to the minutes of the November FOMC meeting suggests that the dollar continues to "rule" the currency pairs of the major group. Traders in the second round played back the news that the U.S. central bank will slow down the pace of monetary policy tightening as early as December. But at the same time, the question of what level of the rate the central bank will stop at in the current cycle is still a matter of debate. And this discussion, the degree of "hawkishness" of which will be determined by members of the Fed, will allow GBP/USD traders to determine the vector of price movement. In my opinion, the Fed's minutes will fade into the background at the beginning of next week (Fed representatives have already announced all the theses of this document). The focus will be on U.S. statistics (Nonfarm) and comments of the Fed members. If they reiterate that it is not the speed of rate hikes that matters but the end of the current cycle, then the dollar may come out on top again. The probability of this scenario is quite high, given the earlier statements of Fed Chairman Jerome Powell and many of his hawkish wing colleagues. Bulls on GBP/USD, who are taking advantage of the moment (shortened trading session on Friday, low liquidity), may try to cross the resistance level of 1.2150 (the upper line of the Bollinger Bands on the D1 timeframe) again. However, taking into account the current fundamental background, it is better to wait for the upward momentum to end, and by next week, you should consider short positions with the first target being 1.1940 (the Tenkan-sen line on D1) and the main target at 1.1700 (the middle line of Bollinger Bands on the same timeframe). Relevance up to 03:00 2022-11-26 UTC+1 Company does not offer investment advice and the analysis performed does not guarantee results. The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade. Read more: https://www.instaforex.eu/forex_analysis/328094
Hungary's Central Bank to Maintain Base Rate at 13%, Eyes on Effective Rate Amid Forint's Performance

The Actions Of The ECB May Be A Factor Providing Some Support For The EUR/GBP Cross

TeleTrade Comments TeleTrade Comments 25.11.2022 09:35
EUR/GBP stages a modest recovery from the monthly low touched on Thursday. A combination of factors underpins the shared currency and offers some support. Rising bets for additional BoE rate hikes benefit the GBP and seem to cap gains. The EUR/GBP cross gains some positive traction on Friday and reverses a part of the overnight slide to a fresh monthly low. The cross maintains its bid tone through the early European session, though seems to struggle to capitalize on the strength beyond the 0.8600 mark and remains below the 100-day SMA. The shared currency's relative outperformance could be attributed to talks of a more aggressive policy tightening by the European Central Bank (ECB). This, in turn, is seen as a key factor offering some support to the EUR/GBP cross. The ECB Governing Council member Isabel Schnabel said on Thursday that the central bank will probably need to raise rates further into restrictive territory. Schnabel added that the incoming data suggests that the room for slowing down the pace of interest rate adjustments remains limited. Adding to this, the prevalent selling bias around the US Dollar, along with an upward revision of the German Q3 GDP print, benefit the Euro and act as a tailwind for the EUR/GBP cross. According to the final reading, the Eurozone's economic powerhouse expanded by 0.4% during the three months to September and the annual growth rate in Q3 2022 stood at 1.3% vs. the 1.2% estimated. The intraday uptick, however, lacks bullish conviction and remains capped amid the underlying bullish sentiment surrounding the British Pound. The recent sharp decline in the UK government bond yields represents an easing of financial conditions, which should allow the Bank of England to continue raising borrowing costs to tame inflation. This, in turn, is seen underpinning the Sterling Pound and keeping a lid on any further gains for the EUR/GBP cross, at least for the time being. Hence, it will be prudent to wait for strong follow-through buying before confirming that spot prices have bottomed out and positioning for any meaningful appreciating move.
BSP Maintains Rates Amid Moderate Inflation; Eyes Further Tightening if Needed

FX: The US Dollar (USD) Is Getting Close To Some Decent Support Levels

ING Economics ING Economics 25.11.2022 10:33
FX markets are becalmed by holiday trading conditions in the US and a very light data calendar. A further unwinding of long dollar positioning remains the risk, but we think the dollar is getting close to some decent support levels. Elsewhere, 75bp rate hikes are still going through in the likes of Sweden and South Africa In this article USD: Focus on 'Cyber Five' retail sales EUR: A little less pessimism GBP: BoE stays hawkish JPY: Set for out-performance into 2023   US retailers have come up with the 'Cyber Five' sales promotion campaign which should boost retail sales    USD: Focus on 'Cyber Five' retail sales Today sees another holiday-shortened US session following the Thanksgiving public holiday. Innovative US retailers have come up with the 'Cyber Five' sales promotion campaign which stretches from Thursday's Thanksgiving all the way through to Monday. Expect to hear reports as to how this has gone, although high levels of employment and lower levels of petrol prices (now $4.30/gallon versus a high of $5.50 in June) suggest retail sales may hold up despite talk of the looming 2023 recession. FX markets are becalmed and the only stand-outs yesterday were the large 75bp rate hikes in Sweden and South Africa, plus the 150bp rate cut in Turkey in preparation for elections next year. We also note the further legacy of this year's rise in dollar and US yields, where Ghana looks set to impose a 30% haircut on Eurobond holders as it seeks a deal with the International Monetary Fund (IMF). Back to the dollar – buy-side surveys taken right before the big sell-off on 10/11 November still had long dollar positions as 'the most crowded trade' and saw the dollar as the most over-valued on record. We doubt those views will have changed that much and the buy-side will now be eager to sell any dollar rallies, believing the dollar may well have peaked. That may be the case, but as we discuss in our 2023 FX outlook, we doubt conditions will be in place for a major dollar bear trend.  We mentioned earlier that the dollar may be nearing some decent support levels. We think DXY has strong support near 105.00, marking the 200-day moving average, important lows in early August and a big 38.2% retracement level of the whole rally from summer 2021 (when the Fed started this dollar rally with its more hawkish Dot Plots). For those needing to buy dollars, DXY levels near 105 may be as good as any. Chris Turner  EUR: A little less pessimism Business surveys in Germany and France released yesterday showed a little less pessimism. And increasingly there is a view that the forthcoming downturn will be mild because of issues like a) strong employment b) large government support and c) strong household savings. Our eurozone team, however, are a bit more pessimistic. Certainly, Europe's large exposure to the manufacturing cycle and what should be weaker export markets make us sub-consensus on European growth prospects.  Despite the looming eurozone recession, ECB hawks such as Isabel Schnabel suggest it may be premature to scale back rate increases. Currently, the market prices 61bp of hikes on 15 December (we expect 50bp). Clearly, the 50bp versus 75bp debate will continue to run. For EUR/USD, it still looks like the big dollar story is dominating. We cannot rule out a further correction into the 1.05-1.06 region but would see these as the best levels before year-end. These levels could be seen next week should Fed speakers or November US jobs data prove the catalyst. Chris Turner GBP: BoE stays hawkish Recent speeches have seen the Bank of England (BoE) staying pretty hawkish despite the fiscally tight budget and broadening consensus of recession. We think positioning has played a major role in this sterling recovery and GBP/USD could see some further, temporary gains to the 1.22/23 area – which we would again see as the best levels before year-end.  Equally, EUR/GBP has good support in the 0.8550/8600 area, and given our view of a difficult risk environment into year-end and early 2023 as central banks raise rates into recessions, sterling should remain vulnerable. Chris Turner  JPY: Set for out-performance into 2023 Probably the best chance of the dollar having peaked is against the Japanese yen (JPY). USD/JPY is now nearly 10% off its high near 152 in late October. Next week we will find out whether Japanese authorities sold FX in November – having sold a combined $70bn in September and October. So far intervention can be considered to be exceptionally well-timed and effective.   If the dollar is to move lower in 2023, USD/JPY would be the best vehicle to express the view, in our opinion. This is based on the view that the positive correlation between bonds and equities can break down – bonds rally, equities stay soft – and that the US 10-year Treasury yield ends 2023 at around 2.75%. USD/JPY could be trading at 125-130 under that scenario. We now suspect that any dollar rally between now and year-end stalls at 142/145. In addition, USD/JPY will be facing a change in the ultra-dovish Bank of Japan governor next April – a big event risk for local and global asset markets. Chris Turner TagsYen FX Dollar   Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more
Metals Update: Gold Demand Declines Marginally, Copper and Aluminium Positions Adjusted

Cabel Market (GBP/USD): A New Downward Trend Segment Is Predicated

InstaForex Analysis InstaForex Analysis 27.11.2022 14:25
The wave marking for the pound/dollar instrument currently appears quite confusing, but it still needs to be clarified. We have a completed downward trend section consisting of five waves (a-b-c-d-e). We also have a five-wave upward trend section, which has taken the form a-b-c-d-e and can be completed. As a result, the instrument's quotes may continue to rise for a while. Still, the European currency has already begun (presumably) constructing a new downward section, and the British should do the same. As both central banks recently increased interest rates, the news backdrop could have been interpreted in any way. The week before last, we witnessed a decline in the dollar value relative to the news backdrop, which may have contributed to its potential new growth (Nonfarm Payrolls report). Then came the inflation report, which decreased demand for the dollar even though the opposite outcome might have occurred. The internal wave structure of wave e has been complicated due to the rise in quotes this week, but so far, only this wave and only part of the trend section have done so. This wave might have a longer form. Nicola Sturgeon will research alternate exit strategies from the UK. The expected wave e could continue to build because the pound/dollar instrument's exchange rate rose by several hundred points. The ruling of the Supreme Court of the United Kingdom on the petition for a second Scottish independence referendum was the week's main event. The court ruled that the Scottish Parliament cannot pass legislation calling for a new referendum without the British Parliament's consent. In addition, the court determined that Scotland lacks the authority to organize an "advisory" referendum. Let me remind you that First Minister Nicola Sturgeon has scheduled a purportedly "consultative" referendum for the second half of 2023. This referendum aims to determine the percentage of Scots who favor independence from the UK. The Act of 1998, according to the court's chairman, Lord Robert John Reed, places all constitutional-related matters solely within the purview of the British Parliament. Based on this act, the Scottish Parliament resumed its session in 1999 and is endowed with limited authority. Nicola Sturgeon has previously said that she respects the court's decision but is disappointed. Because Scottish citizens did not support Brexit in greater numbers in 2016, she also said that Scotland would continue to look for ways to hold a referendum. The Scottish authorities "will find another way to express the will of the Scottish people," according to Sturgeon. But as of now, I can only confirm one thing: Scotland does not currently possess the legal authority to hold a referendum and will not do so anytime soon. Therefore, the union between Scotland and Britain will not be broken. At the same time, Nicola Sturgeon plans to keep looking for ways to sever ties with Britain, but it isn't easy to envision what this path might entail given that all strands of the British government are connected in London. Conclusions in general The construction of a new downward trend segment is predicated on the wave pattern of the pound/dollar instrument. I cannot suggest purchasing the instrument immediately because the wave marking already permits the development of a downward trend section. With targets around the 1.1707 mark, or 161.8% Fibonacci, sales are now more accurate. The wave e, however, can evolve into an even longer shape. The Euro/Dollar instrument and the picture look very similar at the larger wave scale, which is good because both instruments should move similarly. The upward correction portion of the trend is currently almost finished. If this is the case, a new downward trend will soon develop.     Relevance up to 11:00 2022-11-28 UTC+1 Company does not offer investment advice and the analysis performed does not guarantee results. The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade. Read more: https://www.instaforex.eu/forex_analysis/328234
RBA Pauses Rates, Australian Dollar Slides 1.3% on Economic Concerns; ISM Manufacturing PMI Expected to Remain Negative

Switzerland Gross Domestic Product (GDP) And Spanish CPI Fell Sharply

Kamila Szypuła Kamila Szypuła 29.11.2022 12:09
Markets await the release of the EU CPI, but before that event we are looking at the CPI reports in Germany and Spain. From North America there are also reports from both the USA and Canada. Switzerland Gross Domestic Product Switzerland Gross Domestic Product fell again. This time it was a drastic drop from 2.2% to 0.5%. On the other hand, the quarterly change in this indicator was higher than the previous reading. GDP Q/Q increased from 0.1% to 0.2%, but was lower than expected (0.3%). Spanish CPI At the beginning of the day, the inflation report from Spain appeared. The readings turned out to be lower than expected and also down compared to previous readings. CPI Y/Y dropped from 7.3% to 6.8%. Natmosiat CPI from month to month fell by as much as 0.6% and reached the level of 6.6%. Growth was expected in both cases. A decrease in this indicator may suggest an improvement in the situation, i.e. prices are not rising but have started to fall. Another reading may confirm this direction. Harmonised Index of Consumer Prices, is the same as CPI, but with a joint basket of products for all Eurozone member countries. The HICP also fell to 6.6%. German CPI The German CPI report is yet to come. CPI Y/Y is expected to maintain its previous level of 10.4%. On the other hand, CPI M/M will fall from 0.9% to -0.2%. As for the German HICP, it is expected to fall in both cases, ie year-on-year and month-on-month. The HICP M/M is expected to reach a horizontal 0.1% and if confirmed, it will be lower than the previous one by 1%. HICP Y/Y is expected to decline slightly by 0.3%. The previous reading was 11.6%. Canada GDP Canada's Gross Domestic Product report comes out today. The monthly change in GDP is expected to be at the same level as last time, ie 0.1%. This may mean that the Canadian economy is stagnating. Source: investing.com On the other hand, the quarterly change shows that the goposadraka is shrinking as it is expected to fall from 0.8% to 0.4%. Speeches Today, markets and traders are also waiting for speeches from the ECB and from the UK. Luis de Guindos, Vice-President of the European Central Bank has already given speeches. This speech took place at 9:10 am CET. The next speech from the European Central Bank is scheduled for 14:30 CET. Isabel Schnabel, member of the Executive Board of the European Central Bank, is set to speak. Two speeches are also scheduled from the Bank of England. The first will take place at 13:25 CET. Dr Catherine L Mann, a member of the Monetary Policy Committee (MPC) of the Bank of England, will speak. The next speech is scheduled for 16:00 CET. This time will be Bank of England (BOE) Governor Andrew Bailey. Bailey has more influence over sterling's value than any other person. Traders scrutinize his public engagements for clues regarding future monetary policy. CB Consumer Confidence The level of consumer confidence in economic activity expects a drop from 102.5 to 100.0 It is a leading indicator as it can predict consumer spending, which plays a major role in overall economic activity. Higher readings point to higher consumer optimism. But this time pessimistic sentiment is expected, once again. The last worsening took place in October and it may happen again this time. Summary: 9:00 CET                Spanish CPI (YoY) 9:00 CET                Switzerland Gross Domestic Product 9:10 CET                ECB's De Guindos Speaks 13:35 CET                BoE MPC Member Mann 14:00 CET                German CPI (Nov) 14:30 CET                Canada GDP 14:30 CET                ECB's Schnabel Speaks  16:00 CET                BoE Gov Bailey Speaks 16:00 CET                CB Consumer Confidence   Source: https://www.investing.com/economic-calendar/
United Kingdom: Money supply increased by 4.8% year-on-year

United Kingdom: Money supply increased by 4.8% year-on-year

Alex Kuptsikevich Alex Kuptsikevich 29.11.2022 14:34
The UK's money supply and credit data showed a much stronger-than-expected slowdown - an important signal of a slowing economy. Broad money supply (M4) was unchanged in October and added 4.8% y/y, significantly below inflation at 11.1% y/y. The money supply growth rate has been falling since last February following the covid stimulus boom. But in recent months, a downward trend in lending considering rising interest rates has also become prominent. The number of approved mortgage applications in October was 15% lower than a year earlier. Excluding the collapse in the early months of the coronavirus, these are the lowest levels in nine years. The net increase in personal loans for October was 4.74bn, compared with a monthly average of 7bn since the start of the year. The fading here is like what we saw in the mortgage lending crisis. However, the difference is that between 2007 and 2009, the Central Bank fought the credit crunch by bringing the rate down to the floor and launching QE, while now the slowdown in the circulation of money is the policy objective. In the UK, the decline in mortgage lending is explained by the fact that loans are mainly made at floating rates, and warnings from the Bank of England about further policy tightening may deter home purchases, especially given the prospect of rising daily and utility costs. This explains the more rapid transmission of monetary policy against the US, where mortgages are mainly issued at a fixed rate. This provoked a surge in new lending in the early stages of its rise, only to cause a downturn months later. For the pound, the fall in money supply growth and the downturn in lending is relatively bearish news as it raises the question of whether the Bank of England can significantly narrow the rate gap with the US. Since 1985 the Bank of England’s key rate has almost always been higher than the US rate. This difference was significant in 2002-2007, supporting the rise in GBPUSD. The latest data suggests that this will not recover in the foreseeable future, making it difficult for the pair to rise near 1.2200 without help from fundamentals.
The Data May Keep The British Pound (GBP) From Rising

GBP/USD Pair: Drop Does Not Even Appear To Be A Correction

InstaForex Analysis InstaForex Analysis 30.11.2022 08:01
The new week began with a decline for the GBP/USD currency pair. This drop does not even appear to be a correction thus far. Any "big," though, always begins with something "small." Recall that for the next week and a half, we anticipate a strong downward correction. While the market has been continuously seeking out new reasons to purchase the pound sterling, unlike the European currency, the pound had good reasons to increase in value. For instance, it was significant that Nicola Sturgeon's request for the right to hold an independence referendum was denied by the Supreme Court of Great Britain. The market also acknowledged for the first time that the Bank of England is actively tightening monetary policy. The resignation of Liz Truss as prime minister and the inauguration of Rishi Sunak may also be advantageous for the pound. Well, it's hard to forget that the initiative to cut taxes was rejected. Taxes will now be increased and spending will be cut, but the economy will benefit from this. The reduction of subsidies and increases in taxes will cause financial difficulties for average Britons, but it is better for the economy if the national debt does not increase by 50 billion pounds. If not more. So, in recent weeks and months, there have been good reasons to buy the pound, but eventually, everything comes to an end. We are currently only discussing correction; however, none of us are aware of the future. We are unable to predict how much the Bank of England will increase the rate. Perhaps it will even go above the Fed rate, in which case the pound will have new justification for an increase of 500–600 points. The possibility of a new escalation in the conflict in Ukraine or between the West and the Russian Federation will raise demand for the dollar, as it did frequently in 2022. We want to emphasize that making forecasts for more than a few weeks out is currently simply impractical. We anticipate that the pair will still start a downward trend correction that could last a few weeks. What will happen next will be heavily influenced by the decisions made by central banks at their most recent meeting this year, as well as inflation data. Is Jerome Powell able to defend the dollar? In general, we don't anticipate Jerome Powell to make any revelations or alter the tone of his rhetoric. We already believe that there are valid reasons to repurchase the dollar from the market because several Fed policymakers have stated that the rate may rise faster and for a longer period than initially anticipated. It's excellent that Jerome Powell most likely shares this viewpoint. Any positive news for the US dollar could act as a "trigger" because, in our opinion, it has already been oversold in some respects. Powell's assertion and confirmation that inflation can remain high for a long time imply the need to exert pressure on it with the aid of monetary policy tools for a long period, and this could serve as the foundation for the US currency's appreciation. Strong labor market data can reassure investors that a recession is not imminent for the US economy. And it is weak if it threatens. The US dollar may benefit from this as well. As a result, we are leaning more and more toward the possibility that both major pairs will start to fall soon. We also want to point out that any fundamental hypothesis is just that—a hypothesis. They shouldn't be worked out without specific technical signals. We frequently discuss tools like bitcoin and concentrate on the fact that many "crypto experts" simply never stop mentioning the exorbitant heights of the value of the original cryptocurrency. But if these predictions come true in a few years and bitcoin itself falls to a point where it is no longer valuable, who would be interested in them? Currency pairs are the same way. Not in a few months, but in the near future, how they move is crucial. Thus, overcoming the moving will make it possible to descend. We anticipate a 500-600 point total decline from the maximum of 1.2153. The pound has been known to fluctuate by that much in recent months. Over the previous five trading days, the GBP/USD pair has averaged 137 points of volatility. This value is "high" for the dollar/pound exchange rate. Thus, on Wednesday, November 30, we anticipate movement that is constrained by the levels of 1.1855 and 1.2130 to occur inside the channel. The Heiken Ashi indicator's upward reversal indicates that the upward movement has resumed. Nearest levels of support S1 – 1.1963 S2 – 1.1902 S3 – 1.1841 Nearest levels of resistance R1 – 1.2024 R2 – 1.2085 R3 – 1.2146 Trading Suggestions: In the 4-hour timeframe, the GBP/USD pair is still corrected. In light of this, new buy orders with targets of 1.2130 and 1.2146 should currently be taken into account in the event of an upward turn in the Heiken Ashi indicator or a recovery in the price from a move. With targets of 1.1902 and 1.1855, open sell orders should be fixed below the moving average. Explanations of the illustrations: Linear regression channels – help determine the current trend. If both are directed in the same direction, then the trend is strong now. The moving average line (settings 20.0, smoothed) – determines the short-term trend and the direction in which trading should be conducted now. Murray levels are target levels for movements and corrections. Volatility levels (red lines) are the likely price channel in which the pair will spend the next day, based on current volatility indicators. The CCI indicator – its entry into the oversold area (below -250) or into the overbought area (above +250) means that a trend reversal in the opposite direction is approaching.     search   g_translate     Relevance up to 01:00 UTC+1 Company does not offer investment advice and the analysis performed does not guarantee results. The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade. Read more: https://www.instaforex.eu/forex_analysis/328514
Bank of England survey highlights easing price pressures

The ECB And The Bank Of England Still Have A 75% Chance Of Tightening Monetary Policy

InstaForex Analysis InstaForex Analysis 04.12.2022 10:38
The wave marking for the pound/dollar instrument currently appears quite confusing, but it still needs to be clarified. We have a five-wave upward trend section, which has taken the form a-b-c-d-e and may already be complete. As a result, the instrument's price increase may last a while. Therefore, both instruments are still in the process of developing an upward trend segment, which will be followed by the start of a mutual decline. Recently, the British pound's news background has been so varied that it is challenging to sum it up in one word. The British pound had more than enough reasons to rise and fall. As you can see, it primarily went with the first option. The internal wave structure of wave e has become more complicated this week due to the rise in quotes over the previous week. I am currently waiting for the decline of both instruments. Still, these trend sections may take an even longer form because the wave marking on both instruments allows the ascending section to be built up to completion at any time. The Fed is indicating that monetary policy will be tightened. The pound/dollar exchange rate on Friday increased by 45 basis points. The dollar displayed positive dynamics for a brief period, and all three US reports were positive, but it wasn't enough to support further gains. The market did not react as it should have on Friday. Given that the number of payrolls turned out to be high, unemployment did not rise, and wages increased more than anticipated, it was anticipated that demand for US currency would increase significantly. However, as I previously stated, the US dollar could not take hold of the hard-won positions. Thus, yet another excellent opportunity to finish building the suggested wave e, and the upward portion of the trend has yet to be recovered. Even though the news context is not calling for sales for the first time, we are once more observing an increase in the instrument. The ECB, Fed, and Bank of England meetings will occur in December. In anticipation of these meetings, the market is already moving its instruments. Recall that the Fed will raise interest rates by only 50 basis points, or almost 100%, while the ECB and the Bank of England still have a 75% chance of tightening monetary policy. As a result, the market favors the euro and the pound more. However, the ECB and the Bank of England will raise their interest rates by 50 basis points and abandon their aggressive stance. In this instance, the recent spike in instrument sales was unfounded. Even though the news background does not support it, I anticipate the development of a new downward trend segment. The market's reluctance to raise demand for the dollar contradicts this. As a result, the current wave markup fails, and sometimes it is difficult to explain why the US dollar is falling. Conclusions in general The construction of a new downward trend segment is predicated on the wave pattern of the pound/dollar instrument. Since the wave marking permits the construction of a downward trend section, I cannot advise purchasing the instrument. With targets around the 1.1707 mark, or 161.8% Fibonacci, sales are now more accurate. The wave e, however, can evolve into an even longer form. The euro/dollar instrument and the picture look very similar at the larger wave scale, which is good because both instruments should move similarly. The upward correction portion of the trend is currently almost finished. If this is the case, a new downward trend will soon develop.   Relevance up to 13:00 UTC+1 Company does not offer investment advice and the analysis performed does not guarantee results. The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade. Read more: https://www.instaforex.eu/forex_analysis/328884
Kiwi Faces Depreciation Pressure: RBNZ Expected to Hold Rates Amidst Downward Momentum

The Pace Of Interest Rate Increases Will Be Slowed Down In The Near Future

InstaForex Analysis InstaForex Analysis 06.12.2022 08:28
After a string of similarly bizarre days, Monday was very strange. Many people are already perplexed as to why the euro and the pound continue to rise even on days without justification. If almost all factors point in this direction, why isn't the creation of a correction set of waves for both instruments started right away? If there is no explanation, why is the demand for US currency decreasing almost daily? Remember that last week, although he said nothing fundamentally novel in his speech, Jerome Powell brought down the dollar's value, demonstrating the validity of these questions. The dollar rose for an hour before falling again, making Friday's payrolls appear paradoxical. Additionally, nonfarm payrolls revealed that everything is fine with the US labor market. There is no need to worry about a recession, and the Fed can keep raising rates to the currently planned level of 5%. What do we ultimately have? The ECB may increase the interest rate by 2% or 2.5%, but there is little difference between those increases. The Fed will increase interest rates by at least 1%, and the Bank of England and ECB will likely do so. All three central banks will increase interest rates to slow inflation, at least for the foreseeable future. The pace of interest rate increases will be slowed down in the near future by all three central banks following the same trend. The situation is unchanged, but demand for US dollars is steadily declining while demand for the euro and the pound is rising. When it was widely believed in the market a few weeks ago that only the Fed would slow the tightening of monetary policy in December, more and more analysts are now inclined to think that the Bank of England and the ECB will do the same. All three banks are now anticipated to increase rates by 50 basis points. In this scenario, there will be even fewer factors supporting the rise of the euro and pound, as one of the few causes of the dollar's decline at the moment could be characterized as the highest likelihood of convergence with the most abrasive PEPP tightening strategy. The euro and the pound will lose this advantage if the ECB and the Bank of England do not raise their rates by 75 basis points. Even without the abovementioned condition, I have long anticipated a quote decline. With the circumstances mentioned above, it ought to be even faster and stronger. The further both instruments go, the more painful and powerful their eventual fall will be. The market may trade in very challenging ways to comprehend, but eventually, everything returns to equilibrium. Additionally, the European and British currencies might not find this balance appealing. I conclude that the upward trend section's construction is complete and has increased complexity to five waves. As a result, I suggest making sales with targets close to the estimated 0.9994 level, or 323.6% Fibonacci. The likelihood of this scenario is increasing, and there is a chance that the upward portion of the trend will become more complicated and take on an extended form. The construction of a new downward trend segment is predicated on the wave pattern of the pound/dollar instrument. Since the wave marking permits the current structure of a downward trend section, I cannot advise purchasing the instrument. With targets around the 1.1707 mark, or 161.8% Fibonacci, sales are now more accurate. The wave e, however, can evolve into an even longer form Relevance up to 06:00 2022-12-07 UTC+1 Company does not offer investment advice and the analysis performed does not guarantee results. The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade. Read more: https://www.instaforex.eu/forex_analysis/329040
Analysis And Trips For Trading The GBP/USD Pair In Short And Long Positions

Despite Grim Background the Bank OF England Will Have To Keep Raising Rates

Kenny Fisher Kenny Fisher 08.12.2022 14:54
The British pound is in negative territory on Thursday. In the European session, GBP/USD is trading at 1.2174, down 0.29%. We’ll get a look at inflation expectations in both the UK and the US on Friday, ahead of the key US inflation report next week. It has been a rather quiet week on the economic calendar, save for the November PMIs out of the US and the UK. The PMIs reflect the different directions taken by the UK and US economies. In the UK, the Services PMI remained in negative territory, unchanged at 48.5. This points to contraction in the services sector, which has been hit by the cost-of-living crisis and economic uncertainty, which has dampened consumer spending. In the US, Services PMIs rose to 56.5, above the previous read of 54.4 and the consensus of 53.5. The services sector is showing expansion and this will lend support to the argument that the US economy is resilient enough to absorb additional rate hikes, as the Fed continues to battle high inflation. BoE expected to raise by 50 bp Like the Federal Reserve, the BoE has also circled inflation as public enemy number one, but Governor Bailey doesn’t have a strong economy to work with. With GDP in negative territory and inflation at a staggering 11.1%, the economy may already be experiencing stagflation. Despite this grim background, the BoE will have to keep raising rates in order to get the upper hand on inflation and keep inflation expectations in check. The BoE is expected to raise rates by 50 bp next week, which would raise the cash rate to 3.50%. As rates continue to rise, there is the danger of the recession becoming deeper and lasting longer. This winter is likely to bring a rash of strikes from public workers, which will keep the BoE on guard for signs of a wage-price spiral, which could complicate the Bank’s efforts to curb inflation.   GBP/USD Technical 1.2169 and 1.2027 are the next support levels GBP/USD is testing support at 1.2169. Below, there is support at 1.2027 This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.  
UK Budget: Short-term positives to be met with medium-term caution

Thursday's Bank Of England Meeting Will Have Too Much Impact On Sterling (GBP)

ING Economics ING Economics 09.12.2022 10:57
Despite higher-than-expected inflation in October, we expect the Bank of England to revert to a 50bp hike at its December meeting. Gilts are back to pre-budget crisis levels. They should outperform Bunds but not Treasuries. Sterling has recovered strongly but will struggle to make further gains in a challenging investment environment We expect the Bank of England to revert to a 50bp hike at its December meeting The 75bp November hike was a one-off, but we may see one more hike in February When the Bank of England (BoE) hiked by 75 basis points (bp) for the first time back in November, it seemed obvious that it would be a one-off move. The clear signal was that markets were – at the time – overestimating the scope for future tightening. The forecasts released back then suggested that keeping rates at 3% would see inflation overshoot (just) in two years, while raising them to 5% would see an undershoot. In other words, we should expect something somewhere in the middle, and that’s why we think Bank Rate is likely to peak at 4% early next year. We think Bank Rate is likely to peak at 4% early next year We shouldn’t totally rule out a repeat 75bp move on Thursday, and the data flow has leaned slightly hawkish since November’s meeting. The Bank’s favoured measure of core services inflation, by our estimates, came in slightly higher than it expected – and jobs market data has also shown few signs of cooling just yet. Inflation and jobs data due out in the days prior to the meeting will be important. Then again, Chancellor Jeremy Hunt probably did just about enough in his Autumn Statement to calm BoE concerns that fiscal policy is working at cross purposes with monetary. While much of the fiscal pain was delayed to future years, the government did still scale back energy support for households next year. With sterling also materially stronger, and markets geared up for a 50bp hike, there’s little need to rock the boat with a more aggressive move. Assuming we’re right, we then expect another 50bp move in February which will likely mark the end of the tightening cycle. But with wage pressures unlikely to fully abate even if the jobs markets begin to weaken, we think the BoE will be less swift to cut rates than the US Federal Reserve. For now, we’re pencilling in that the first rate cut will come in the first few months of 2024. The swap curve has dramatically pared down its BoE hike expectations Source: Refinitiv, ING The BoE hikes, but the swap curve is focused on cuts The gilt market has practically shaken off all of the additional risk premium relative to other ‘core’ government bond markets that appeared around the ill-fated mini-budget. Whilst we would stop short of sounding the all-clear, this is an encouraging sign. The rally has stalled at the 3% level, roughly where 10Y yields were in early September. Spreads to 10Y Bund are back to just above 120bp but the Treasury rally has brought that spread to -25bp after a trough of -50bp. More cuts being priced out of the GBP curve would bring the spread to Bund to 100bp but we think Treasuries would outperform in any rally, meaning we can no longer exclude Treasuries trading through gilts. More cuts being priced out of the GBP curve would bring the spread to Bund to 100bp Unlike the USD curve, the focus on rate cuts in 2024 is nothing new. What’s interesting is that forwards have inverted more even as hikes were being priced out. This is a notable development because one would expect that higher hikes now also mean less room to cut later. In any event, we think this forward curve inversion is only a transitional state of affairs until either the dovish re-pricing shaves more hikes off the front-end, or more stubborn inflation contradict cut expectations. At 3%, gilts could still tighten to Bund but we think Treasuries would outperform in a rally Source: Refinitiv, ING Sterling will struggle to make further gains The BoE's trade-weighted measure of sterling has recovered nearly 8% from its lows in September and is now trading back to levels seen in early August. It looks as though about half of that rally has come from the improvement in the UK's fiscal credibility since the dark days of September. And the other half has come from the broad sell-off in the dollar, where the US currency makes up about 20% of the BoE's sterling basket. We doubt Thursday's BoE meeting will have too much impact on sterling, where a 50bp hike looks priced. But heading into 2023, we suspect sterling will struggle to make substantial further gains. Here, we doubt GBP/USD can sustain gains over the 1.23 area given our view that the next sizable move in the dollar is probably stronger as the Fed stays hawkish through the first quarter of next year, in spite of the looming recession. And we feel that EUR/GBP will find good support below the 0.85/86 area and favour a return to the 0.87/88 region. Here two-year euro versus sterling swap spreads should remain pretty steady in the 130-150bp area. But a call on a challenging investment environment – central banks hiking into recessions – suggests sterling should under-perform given its higher sensitivity to global equity markets.  Read this article on THINK TagsInterest Rates Foreign exchange Bank Of England Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more
Kiwi Faces Depreciation Pressure: RBNZ Expected to Hold Rates Amidst Downward Momentum

A 50bp Hike By The Fed And The ECB Is Firmly Expected Next Week

ING Economics ING Economics 10.12.2022 08:58
A 50bp hike by the Fed is firmly expected. With concerns over the recent steep falls in treasury yields and the dollar, we are likely to end up at a higher ultimate interest rate than the bank indicated back in September. For the ECB, we think the risk of a 75bp hike has increased – still, we expect a 50bp hike, supported by hawkish communication as a compromise In this article US: A hawkish Fed message will likely fall on deaf ears UK: Hectic data week proceeds key Bank of England decision Eurozone: Another jumbo rate hike has become more likely in recent days   Shutterstock US: A hawkish Fed message will likely fall on deaf ears Markets are firmly expecting the Federal Reserve to opt for a 50bp hike at the 14 December Federal Open Market Committee (FOMC) meeting after already implementing 375bp of rate hikes, including consecutive 75bp moves at the previous four meetings. The central bank has been at pains to point out that despite smaller individual steps, we are likely to end up at a higher ultimate interest rate than the central bank indicated was likely back in September. Its forecasts are likely to show the Fed funds rate rising above 5% with potential slight upward revisions to near-term GDP and inflation and a lower unemployment rate to justify this. Officials have been suggesting they may not cut rates until 2024 and we suspect Fed Chair Jerome Powell will echo this sentiment. Nonetheless, this “hawkish” rhetoric is likely the result of concern that the recent steep falls in Treasury yields and the dollar, coupled with a narrowing of credit spreads, is loosening financial condition – the exact opposite of what the Fed wants to see as it battles to get inflation lower. In terms of our view, we continue to expect a final 50bp rate hike in February, but with recession risks mounting, which will dampen inflation pressures further, we look for rate cuts from the third quarter of next year. Ahead of that announcement, we will have consumer price inflation data. The surprisingly soft core CPI print was the catalyst for the recent moves lower in Treasury yields and the dollar, and a second consecutive low reading would reinforce the market conviction that rate cuts are going to be on the agenda for the second half of 2023. This means Powell will have to battle hard with his commentary in the post-FOMC press conference to prevent financial conditions from loosening too much before inflation is defeated. UK: Hectic data week proceeds key Bank of England decision There’s probably just about enough in the latest UK data and recent Autumn Statement for the Bank of England to pivot back to a 50bp rate hike at its meeting next Thursday. Inflation looks like it has peaked, although BoE hawks will be keeping a close eye on the data due a day prior to its announcement. Headline CPI is likely to dip, however core could be more sticky, and last month’s data saw core services inflation come in slightly higher than the bank had forecast in November. Jobs data has also hinted at persistent labour shortages, which will keep the pressure on wage growth. Still, Chancellor Jeremy Hunt probably did enough last month to lower concerns that the BoE and the Treasury are working at cross-purposes, even if the fiscal tightening announced won’t have a huge bearing on the economy, relative to the Bank’s forecasts released last month. We expect a 50bp hike next week, and another 50bp hike in February, which is likely to mark the peak of this tightening cycle. Read our full Bank of England preview here. Eurozone: Another jumbo rate hike has become more likely in recent days Macro data since the European Central Bank's October meeting has shown resilience in the eurozone economy in the third quarter but also confirmed a further cooling of the economy in the last few months of the year. The drop in headline inflation, as little as it says about the impact of the rate hikes so far, could at least take away some of the urgency to continue with jumbo rate hikes. At the same time, the ECB seems to be increasingly concerned that the fiscal stimulus and support measures announced could extend the inflationary pressure. ECB Executive Board Member Isabel Schnabel has been one of the more influential voices to watch, definitely since the summer with her Jackson Hole speech. Judging from her recent comments that “incoming data so far suggest that the room for slowing down the pace of interest rate adjustments remains limited, even as we are approaching estimates of the 'neutral' rate", 75bp is clearly still on the table. We think that the risk of a 75bp rate hike at next week’s ECB meeting has clearly increased. Next to the rate hike, the ECB is likely to set out some general principles of how it plans to reduce its bond holdings. We expect the ECB to eventually reduce its reinvestments of bond purchases but to refrain from outright selling of bonds. Besides the ECB, industrial data for the eurozone are out on Wednesday. Don’t expect anything that will influence the governing council meeting too much. While a tick down in production is to be expected, the fact that industry has outperformed recent expectations is likely to uphold. The Friday data are just as interesting as the PMI will show how the economy is faring at the end of the fourth quarter. Expect it to continue to signal a contraction, but just how deep is the question relevant for markets and policymakers. Finally, trade-in goods data are also out on Friday and will provide a clue on how the trade deficit is faring, which is very important for euro fair value. Read the full ECB preview here. Key events in developed markets next week Refinitiv, ING Read the article on ING Economics TagsUS Federal Reseve ECB Bank of England Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more
Kiwi Faces Depreciation Pressure: RBNZ Expected to Hold Rates Amidst Downward Momentum

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

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

Cable Market (GBP/USD): The Uptrend Is Still Present

InstaForex Analysis InstaForex Analysis 10.12.2022 15:38
After falling during Friday's Asian trading session, the dollar then rose at the beginning of the European session. Thursday's story seems to be repeating itself. After hitting an intraday local low of 104.44, the DXY futures were back on the rise, climbing to the proverbial 105.00 mark. The dollar and its DXY index remain under pressure despite dollar bulls' attempts to regain control. There are 3 weeks left till New Year, but the situation in the financial markets is not becoming less tense, though some big players of the financial market have already summed up the results of the year and are gradually closing positions, balancing their investment portfolios and going out of the market. Due to this, the volume of trades has already started to decline. However, this does not mean that volatility is also declining. Next week we will have another powerful breakthrough in this respect: besides the release of important reports, 4 major world central banks (USA, Switzerland, UK and eurozone) will announce their decisions on monetary policies. British reports will open the upcoming week (at the beginning of the European trading session): the British National Statistics Office will release data on industrial production and GDP for October. This report shows the aggregate economic data and will have a strong impact on the Bank of England's monetary policy decision (the BoE is set to meet on Thursday, December 15). GDP growth means an improvement in economic conditions, which makes it possible (with a corresponding increase in inflation) to tighten monetary policy, which, in turn, usually has a positive effect on the quotes of the national currency. Monthly GDP data (as opposed to quarterly reports) does not affect the pound so much. Nevertheless, traders, who follow the dynamics of its quotes, are likely to pay attention to this report. Indicators in the manufacturing industry and industrial production in the UK are expected to fall, and GDP growth will decrease, which should have a negative impact on the pound, including in the GBP/USD pair. In the meantime, GBP/USD has been on an uptrend for the third consecutive month, having recovered from a deep fall in August and September. Back then, as we remember, the ill-conceived policy of the then Prime Minister Lisa Truss' cabinet to reduce taxes and increase spending led to a sharp drop in the market for British government bonds and the pound. Economists said that the British financial system was hours away from a grand collapse or just a collapse in general. The BoE had to intervene to prevent the pound and the British stock market from plunging even further: in late September, according to Bloomberg, the central bank purchased British government bonds (conventional gilts) with a residual maturity of more than 20 years in the secondary market from September 28, and promised to buy long-term government bonds worth another 65 billion pounds. "The purchases will be carried out on whatever scale is necessary," the BoE said at the time. However, GBP/USD has also been rising in the last 3 months and amid the weakening U.S. dollar. The DXY index reached a local high of 114.74 in September (since June of 2002), but then started falling in November by more than 5.0%. And the DXY has fallen another 1.1% since early December, to its current high of 104.81. And so far, as we noted at the beginning of this article, the dollar and its DXY index remain under pressure. As for GBP/USD, the pair was trading near 1.2240, bullish in the medium-term (above the support levels of 1.2110, 1.1930 and 1.1875) when this article was written. The uptrend is still present for the time being: steady growth to the area above the long-term resistance level of 1.2250. Company does not offer investment advice and the analysis performed does not guarantee results. The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade. Read more: https://www.instaforex.eu/forex_analysis/329414
Gold's Hedge Appeal Shines Amid Economic Uncertainty and Fed's Soft-Landing Challenge

Inflation Rates In Asia Look To Be Peaking Out, Picture Of The CEE Region For Next Year Is A Shallow Recession Driven Mainly By A Fall In Household Consumption

ING Economics ING Economics 11.12.2022 09:48
The global economy at a glance In this article US: Markets doubt the Fed’s intent Eurozone: Lower energy prices have temporarily stopped the downturn UK: Calmer markets and delayed fiscal pain not enough to stop recession China: Still dire from rising number of Covid cases Rest of Asia: No recession, but certainly slowdown CEE: Geopolitical misfortune  Rates: To reverse higher first, and then collapse lower as a theme for 2023 FX: Everyone is asking whether the dollar has topped   Shutterstock The World Reimagined globes in London, UK - 20 Nov 2022   1US: Markets doubt the Fed’s intent The economy is experiencing a strong second half of 2022. Jobs are being created in significant number, wages continue to rise and household keep spending as the Fed signals a step down to 50bp incremental rate hikes, but with a higher ultimate rate than they indicated was likely back in September. Officials suggest they may not cut rates until 2024 given their concern about stickiness in key service sector components of inflation, but their forward guidance needs to be taken with huge handfuls of salt given their recent track record. The “hawkish” rhetoric is likely the result of concern that the recent steep falls in Treasury yields and the dollar, coupled with a narrowing of credit spreads is loosening financial condition – the exact opposite of what the Fed wants to see as it battles to get inflation lower. Nonetheless, the softer core inflation prints seen in October, combined with bad housing market data and weaker business confidence has led the market to anticipate rate cuts from second half of 2023 – in line with our long-held view. 2Eurozone: Lower energy prices have temporarily stopped the downturn With lower natural gas prices on the back of the unusual warm autumn weather the downturn in sentiment has been temporarily halted, though most indicators are still weak. With retail sales falling sharply in October a recession over the winter quarters still looks very likely, albeit perhaps not as deep as we previously pencilled in. Thereafter, growth will be subdued at best, as higher interest rates will start to bite, energy prices are likely to remain at elevated levels, while budgetary stimulus is bound to peter out in the course of 2023. Headline inflation fell back in November to a still high 10%, while underlying inflation remains stuck at 5%. The ECB is therefore likely to lift the deposit rate to 2% in December, considered by some members of the Governing Council as the neutral rate. The first quarter might see another 50 bp further tightening, as well as the start of gradual reduction of the balance sheet, though at a very slow pace in the beginning. 3UK: Calmer markets and delayed fiscal pain not enough to stop recession Calmer financial markets and some fresh tax rises allowed the Chancellor to put off some of the painful spending cuts until after the next election in 2024/25 in his Autumn Statement. Nevertheless, energy support will become considerably less generous for most households from April, and the housing market is showing very early signs of faltering. Despite the sharp fall in swap rates since September’s mini-budget crisis, mortgage rates have fallen much more gradually. A recession now looks virtually inevitable, though it might not be until the first quarter until we see more material signs of slowing. The Bank of England has begun to talk down market rate hike pricing, and investors have taken the hint, but are still probably overestimating what is to come. We expect the BoE to pivot back to a 50bp hike in December, and expect one further 50bp move in February, which is likely to mark the top of this tightening cycle. 4China: Still dire from rising number of Covid cases Even the government offers property developers to increase funding channels, uncompleted home projects are yet to be finished. Most of those projects are left in the hands of local governments to find a private company to finish the construction work. This takes time to finish. The housing market is therefore quiet as home price continues to fall. On Covid, more local governments have subtly changed to slightly softer practices to implement Covid measures. But the higher number of Covid cases means that there is limitation on how fine-tuning can benefit the economy. Sporadic lockdowns would continue and still affect retail sales and production adversely. We have already seen retail sales fell into yearly contraction in October, and PMIs showed that could easily repeat for the rest of 4Q22. More, exports should continue to show weaknesses due to high inflation in US and Europe. The only support to the economy is now fiscal spending, which has been in the area of advanced technology and new energy. 5Rest of Asia: No recession, but certainly slowdown On the positive side, inflation rates in Asia look to be peaking out, and at levels well below comparable rates in Europe and the US. And this has also meant that although central banks across the region have been raising policy rates, they have not gone up alarmingly, and it feels as if in many cases, we are nearing a peak after the next one or two hikes. On the negative side, Asia is highly geared to global growth through global trade, and so with Europe contracting, China in as weak a state as we have seen it, and the US slowing, it is not surprising to see Asia export figures swinging sharply negative, with Korea and Taiwan the bellwethers for the North Asia, and Singapore’s Non-oil domestic export declines performing the same barometer role for SE Asia. Not entirely independently, the global semiconductor downturn is heaping further downward pressure on the region, which is the key production centre for most global technology hardware, weighing on industrial production and exacerbating the export downturn. 6CEE: Geopolitical misfortune  In addition to the global story of high energy prices and headline inflation, the CEE region is suffering from its own problems. The common denominator is the region's unfortunate geographic location in the current geopolitical landscape and historically strong labour market. The result is significantly higher inflation than in Western Europe, but also high and persistent core inflation, underpinned by a still massively tight labour market that shows no signs of easing despite the coming recession. Moreover, in response to the energy and migration crises at the same time, governments across the region have come up with another wave of household support spending, resulting in massive twin deficits. However, this has been countered by central banks tightening monetary conditions through interest rate hikes, well above global peers, but also often through the FX channel. The resulting picture of this wild mix for next year is thus a shallow recession driven mainly by a fall in household consumption, only gradually slowing inflation with a possible upside surprise, and cautious central bank foot-dragging around the timing of the start of monetary policy normalisation.  7Rates: To reverse higher first, and then collapse lower as a theme for 2023 2022 is shaping up to be the biggest bear market for bonds in modern times. This might help explain why market rates have reversed lower in recent weeks. But it’s also to do with position squaring, as a decent rump of investors square up on bear market positions taken in 2022. That requires the buying of both duration and risk. However, this stores up problems for the turn of the year. Arguably, financial conditions (especially in the US) are prone to loosening too much, driven there by falls in market rates. But the Fed is still hiking and needs tighter financial conditions. That should force market rates back up first. But the biggest narrative for 2023 will be one of big falls in market rates. The Fed and the ECB will peak in the first quarter, and once there, market rates will have a carte blanche to anticipate future cuts. 8FX: Everyone is asking whether the dollar has topped At top of everyone’s minds in the FX market is the question as to whether the dollar has topped. Softer US inflation data and some hints of softer Covid policy in China have combined to knock the dollar some 8% off its late September highs. Those arguing for a continued dollar decline are wholly focused on the Fed story and the extension of a Fed pivot into a full-blown easing cycle. We certainly agree that a dovish turn at the Fed – a turn that finally sees short-dated US yields start to fall – is a necessary condition for a drop in the dollar. But a sufficient condition requires investment destinations in Europe and Asia being attractive enough to pull funds out of dollar deposits yielding 4%+. It remains questionable whether either of these necessary or sufficient conditions are met in 2023 and we remain sceptical that EUR/USD will be able to sustain gains above the 1.05 level. Elsewhere, sterling has recovered after November’s fiscal U-turn – a sign that policy credibility has a big role to play in FX markets. And finally, Japanese policy makers will be looking at back at some incredibly effective FX intervention to sell USD/JPY in September and October. Read the article on ING Economics   Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more
The Challenge to the Dollar: De-dollarisation and Geopolitical Shifts

The Second Half Of 2023 Will Be About Rate Cuts By The Fed, But Do Not Expect The People’s Bank Of China To Cut The RRR Or Interest Rates

ING Economics ING Economics 11.12.2022 10:19
Global central banks are facing unprecedented challenges. Here's our focus on the main ones In this article Federal Reserve European Central Bank Bank of England People's Bank of China Shutterstock   Developed markets: Our calls at a glance ING Central and Eastern Europe/EMEA: Our calls at a glance ING Asia (ex Japan): Our calls at a glance ING Central banks: Our forecasts Macrobond, ING Federal Reserve After 375bp of rate hikes since March, including four consecutive 75bp moves, the Federal Reserve has concluded that it is now time to move in smaller increments. Nonetheless, the market doubts the Fed’s intent and the recent falls in Treasury yields and the dollar are undermining the central bank's efforts to defeat inflation. Officials have been trying to convince the market that the ultimate/terminal interest rate will be above where they had signalled in September, but this is falling on deaf ears. The market is focused on soft inflation readings, coupled with a sense that recession is around the corner. While we agree that the second half of 2023 will be about rate cuts, we think there is the risk of a more aggressive response to inflation in the near term, with upside potential to our call for 50bp rate hikes in December and February. We could even see the Fed consider a faster run down of its balance sheet in an effort to re-steepen the Treasury yield curve at a higher level. European Central Bank Eurozone inflation is close to its peak, unless energy prices surge again next year, but the road towards the ECB’s 2% target will be long and bumpy. The pass-through of wholesale gas prices, as well as still high selling price expectations, suggest that there is still inflationary pressure in the pipeline. It could take until 2024 before inflation has returned to 2%. For the ECB, this means that its job is not done, yet. At the same time, the looming recession, the risk of a subdued recovery and increasing government debt bring the ECB closer to the point at which rate hikes become overly restrictive. As a consequence, we expect the ECB to bring the deposit rate to a maximum of 2.5% in the first quarter of 2023. The reduction of the balance sheet, a.k.a reducing the ECB’s bond portfolio, could become the ECB’s main policy instrument to fight inflation. Bank of England The Bank of England may have hiked by 75bp in November but it made it abundantly clear that this was likely to be a one-off, and that investors were overestimating future tightening. Admittedly, recent data has been slightly hawkish, and the committee is alive to the risk that services/wage inflation may only fall gradually despite the forthcoming recession. But the Chancellor’s Autumn Budget probably did just about enough to assuage the BoE's concerns about fiscal and monetary policy working at cross purposes. While much of the fiscal pain was delayed to future years, the government still scaled back energy support for households next year. We expect 50bp rate hikes in both December and February, marking a peak Bank Rate of 4%. With labour shortages unlikely to disappear next year, and wage growth therefore likely to stay more elevated than in past recessions, we suspect the BoE’s first rate cut may not come until 2024, and after the Federal Reserve.  People's Bank of China The PBoC cut the reserve requirement ratio (RRR) by 0.25 percentage points, effective in December, following a cut in April. There were also two 10bp cuts in the 7D reverse repo policy rate and 1Y Medium Lending Facility (MLF) rate back in January and August this year. The loosening of monetary policy has been mild relative to the slow rate of growth, which averaged 3.0% over the first three quarters of 2022. We believe that Covid measures are more likely to ease in 2023. But external demand could be weaker compared to 2022. Overall, growth in the domestic market should outpace the potential contraction of exports. Still, inflation should be absent in China. As such, the PBoC may choose to stay on hold next year as the central bank has hesitated to lower the 7D interest rate to near the 1% level to avoid falling into a liquidity trap. We do not expect the PBoC to cut the RRR or interest rates in 2023. That said, the re-lending programme for specific targets, e.g. SMEs and unfinished home projects, should continue at least in the first half of 2023.  TagsPBoC Federal Reseve ECB Central banks Bank of England Read the article on ING Economics   Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more
The China’s Covid Containment Continued To Negatively Impact The Output At The End Of 2022

China’s New Aggregate Financing May Bounce | Monetary Policy Decisions Ahead

Saxo Bank Saxo Bank 12.12.2022 09:07
    Softer US CPI to offer mixed signals and considerable volatility Last month’s softer US CPI report was a turning point in the markets and inflation expectations have turned markedly lower since then. Consensus is looking for another softer report in November, with headline rate expected at 7.3% YoY, 0.3% MoM (from 7.7% YoY, 0.4% MoM) while the core is expected to be steadier at 6.1% YoY, 0.3% MoM (from 6.3% YoY, 0.3% MoM). While the case for further disinflationary pressures can be built given lower energy prices, easing supply constraints and holiday discounts to clear excess inventory levels, but PPI report on Friday indicated that goods inflation could return in the months to come and wage inflation also continues to remain strong. Easing financial conditions and China’s reopening can be the other key factors to watch, which could potentially bring another leg higher in inflation especially if there is premature easing from the Fed. Shelter inflation will once again be key to watch, which means clear signs of inflation peaking out will continue to remain elusive. Why volatility in equites could pick up this week and what we learnt from prior inflationary out outs Will the inflation read show CPI fell to 7.3% in November as the market expects, down from 7.7% YoY? The risk is that inflation doesn’t fall as forecast, and that may likely push up bond yields and pressure equites lower. We saw this set up play out on Friday. November’s producer price index showed wholesale prices rose more than expected, which spooked markets that this week’s CPI could be bleak. As such bonds were sold off on Friday, pushing yields up; with the 10-year bond yield rising 10bps to 3.58%, while equities were pressure lower. Consider over the past six months, the S&P 500 has seen an average move of about 3% in either direction on the day US CPI has been released, according to Bloomberg. We haven’t seen these moves since 2009. Also consider, the S&P 500 has fallen on seven of the 11 CPI reporting days this year. December FOMC and dot plot may have little new to offer, so focus remains on Powell’s press conference The Fed is expected to lift its Federal Funds Rate target by 50bps to 4.25-4.50%, according to the consensus as well as the general commentary from Fed officials signalling a downshift in the pace of rate hikes. The updated economic projections will also be released, and are expected to show a higher terminal rate than the September projections (4.6%), as has been alluded to by Chair Powell at the November FOMC and in remarks made in December. But that means little room for market surprise as the Fed funds futures are pricing in a terminal rate of 4.96% in May 2023. Easing financial conditions and expected China stimulus could mean Fed continues to chase the inflation train from the back into the next year as well, so Powell’s press conference remains key to watch. There will have to be a lot of focus on pushing out the rate cuts of ~50bps that are priced in for next year, and emphasise that the Fed will not ease prematurely if Powell and committee want to avoid further easing of financial conditions. China is expected to convene the Central Economic Work Conference this week The Chinese Communist Party is expected to have its annual Central Economic Work Conference this week to formulate the macroeconomic policy framework for 2023. Investors are expecting supportive initiatives including measures to ease the stress in the ailing property sector. The conference will set out directions and blueprints but short of releasing key policy targets which will be for the National People’s Conference to be held next March. A weak set of Chinese activity data is expected Economists surveyed by Bloomberg are forecasting that China’s retail sales shrank sharply by 3.9% Y/Y in November. The potential weakness is likely attributed to poor performance of auto sales, dining-in activities, and sales during the “double-11” online shopping festival in the midst of Covid-19 lockdowns during the best part of November. November auto sales in China fell by 9.2 %Y/Y and by 10.5% M/M. Courier parcels processed on Nov 11 fell 20.7% Y/Y. The growth in industrial production is expected to fall to 3.7% Y/Y in November from 5% to 3.7%, following a weak November NBS manufacturing PMI and soft high-frequency data of steel production. Year-to-date fixed asset investment is expected to edge down to 5.6% from 5.8%, dragged by stringent pandemic control practices. ECB also likely to downshift to a smaller rate hike The European Central Bank (ECB) is also expected to slow down its pace of rate hikes to a 50bps increase this week. Headline inflation eased slightly in November, coming in at 10.0% YoY (exp. 10.4%), but was overshadowed by an unexpected rise in core inflation 6.6% YoY (exp. 6.3%, prev. 6.4%). While there is likely to remain some split in ECB members at this week’s meeting, the central bank’s Chief Economist Lane remains inclined to take into account the scale of tightening done so far. There is also uncertainty on the announcement of quantitative tightening. Bank of England may remain more divided than the other major central banks The Bank of England is also expected to follow the Fed and the ECB and downshift to a smaller rate hike this week, but the decision will likely see a split vote. A host of key data, including GDP, employment and inflation will be due this week in the run up to the BOE decision, and significant positive surprises could tilt the market pricing more in favour of a larger move which also creates a bigger risk of disappointment from the central bank. Headline annualised inflation advanced to 11.1% Y/Y in October, while the core rate remained at an elevated level of 6.5%. Consensus expects inflation to cool slightly to 10.9% Y/Y in November, but the core to remain unchanged at 6.5% Y/Y. Wage pressures are also likely to be sustained, and the cooling in the labor market will remain gradual. In Australia, this week the focus will be on consumer confidence and employment data There are a couple of economic read outs that could move the market needle, the ASX200 (ASXSP200.1) this week. Weakening confidence is expected; starting with Consumer Confidence for December (released on Tuesday), followed by Business Confidence for November. Employment reports are due on Thursday for November, and likely to show employment fell; 17,000 jobs are expected to be added, down from the 32,200 that were added in October. So focus will be on the AUD and a potential pull back if the data is weaker than expected. Iron ore equites to see volatility China reopening talk vs shut downs pre lunar new year The iron ore (SCOA) trading at four month highs $110.80 rallying as China has been easing restrictions, plus there are whispers Chinese property developers could get more support, which would support demand for iron ore rising. However we mentioned on Friday, why iron ore could pull back, as buying volume appears slowing. So be mindful of potential pull back in iron ore pricing and mining equities. Secondly, consider seasonable halts of Chinese steel plants ahead of the Lunar New year holiday. Restocking typically occurs 5-8 weeks before the holiday, but plants could be closed earlier, due to poor profits and weaker demand. This could cause volatility in iron ore and iron ore equities. So, keep an eye on iron ore majors, Vale, Fortescue Metals, Champion Iron, BHP and Rio as they could see profit taking after rallying ~25-55% from October.   China’s new aggregate financing and RMB loans are expected to have bounced in November Market economists, as surveyed by Bloomberg, are expecting China’s new aggregate financing to bounce to RMB 2,100 billion in November from RMB 907.9 billion in October and new RMB loans to rise to RMB 1,400 billion in November from RMB 615.2 billion as People’s Bank of China urged banks to extend credits to support private enterprises including property developers. Less bond issuance by local governments and corporate and weak loan demand however might have weighed on the pace of credit expansion in November. Key earnings to watch: Adobe (ADBE:xnas), Trip.com (TCOM:xnas) In his note for key earnings this week, Peter Garnry highlights Adobe and Trip.com. The past five earnings releases have all led to a negative price reaction in Adobe shares as growth has come down while the cost of capital has gone up. Can Adobe buck the trend next when the company reports earnings? Another question investors will be asking is an update on the company’s $20bn acquisition of the industry challenger Figma, which was delayed due to a US Department of Justice investigation of the deal. Adobe reports FY22 Q4 (ending 30 November) earnings on Thursday with revenue growth expected at 10% y/y and EPS of $3.50 up 36% y/y as cost-cutting exercises are expected to improve profitability. Adobe is expected to end the fiscal year with revenue of $17.6bn and strong free cash flow generation of $7.3bn which translates into 5% free cash flow yield. Recently the Chinese government has chosen to move ahead with reopening the economy taking on the associated Covid risks and this could be good for the outlook for travel activity and thus Trip.com. The Chinese online travel agency platform is expected to report earnings on Wednesday with analysts expecting revenue growth of 22% y/y. Analysts expect revenue to increase 50% y/y in 2023 to CNY 29.6bn. •          Monday: Oracle•         Tuesday: DiDi Global•          Wednesday: Lennar, Trip.com, Nordson, Inditex•          Thursday: Adobe•          Friday: Accenture, Darden Restaurants   Key economic releases & central bank meetings this week Monday 12 December United Kingdom monthly GDP, incl. Manufacturing, Services and Construction Output (Oct)United Kingdom Goods Trade Balance (Oct)India CPI and Industrial Output (Nov)China (Mainland) M2, New Yuan Loans, Loan Growth (Nov) Tuesday 13 December Germany CPI (Nov, final)United Kingdom Labour Market Report (Oct)Hong Kong Industrial Production, PPI (Q3)Germany ZEW Economic Sentiment (Dec)United States CPI (Nov) Wednesday 14 December Japan Tankan Survey (Q4)United Kingdom Inflation (Nov)Eurozone Industrial Production (Oct)United States Fed Funds Target Rate (14 Dec) Thursday 15 December New Zealand GDP (Q3)Japan Trade Balance (Nov)South Korea Export and Import Growth (Nov)Australia Employment (Nov)China (Mainland) Industrial Output, Retail Sales, Urban Investment (Nov)Philippines Policy Interest Rate (15 Dec)Switzerland SNB Policy Rate (Q4)Norway Key Policy Rate (15 Dec)United Kingdom BOE Bank Rate (Dec)Eurozone ECB Deposit and Refinancing Rate (Dec)United States Initial Jobless ClaimsUnited States Retail Sales and Industrial Production (Nov)Taiwan Discount Rate (Q4) Friday 16 December Australia Judo Bank Flash PMI, Manufacturing & ServicesJapan au Jibun Bank Flash Manufacturing PMIUK S&P Global/CIPS Flash PMI, Manufacturing & ServicesGermany S&P Global Flash PMI, Manufacturing & ServicesFrance S&P Global Flash PMI, Manufacturing & ServicesEurozone S&P Global Flash PMI, Manufacturing & ServicesUS S&P Global Flash PMI, Manufacturing & ServicesUnited Kingdom GfK Consumer Confidence (Dec)Singapore Non-Oil Exports (Nov)United Kingdom Retail Sales (Nov)Eurozone Total Trade Balance (Oct)Eurozone HICP (Nov, final)   Sign up for our Outrageous Predictions 2023 webinar - APAC edition: Wed, 14 Dec, 11.30am SGT Source:Saxo Spotlight: What’s on the radar for investors & traders for the week of 12-16 Dec? A flurry of central bank meetings from Fed to BOE to ECB, US/UK CPI, China’s reopening and Adobe earnings | Saxo Group (home.saxo)  
Assessing 'Significant Upside Risks to Inflation': Insights from FOMC Minutes

US CPI & FOMC Decision Will Mark The Week! | The ECB, The Norges Bank, The Swiss National Bank And The BoE Interest Rates Decisons Arrive This Thursday

Swissquote Bank Swissquote Bank 12.12.2022 10:04
Friday’s US PPI print was soft, but not soft enough to meet market expectations. The US dollar spiked following the data, closed the week on a strong footage in America and opened the week on a strong footage in Asia. Trend and momentum indicators turned positive last week, and the dollar could gain more field before two important events that will mark the trading week: US November CPI on Wednesday, and the FOMC decision on Wednesday. Interest rates It's important to remember that there is a gap between what the Fed says it will do, and what the market thinks, and prices the Fed will do, even a tiny hawkish message could already weigh on the mood before Xmas. Elsewhere, the European Central Bank (ECB), the Bank of England (BoE), the Swiss National Bank (SNB) and Norges Bank are all due to raise interest rates this Thursday, and most of them are expected to follow the Fed with a 50bp hike. How could it impact the euro, sterling and the franc? Watch the full episode to find out more! 0:00 Intro 0:31 US PPI softened but not enough 1:10 US CPI & FOMC decision will mark the week! 6:15 Then, ECB is expected to hike 50bp 7:26 BoE is expected to hike 50bp 8:36 And SNB is also expected to hike 50bp … but a hawkish Fed statement and the dot plot could boost the USD appetite before Xmas. Ipek Ozkardeskaya 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. #USD #CPI #inflation #data #FOMC #Fed #ECB #BoE #SNB #rate #decision #EUR #GBP #CHF #SPX #Dow #Nasdaq #investing #trading #equities #stocks #cryptocurrencies #FX #bonds #markets #news #Swissquote #MarketTalk #marketanalysis #marketcommentary _____ Learn the fundamentals of trading at your own pace with Swissquote's Education Center. Discover our online courses, webinars and eBooks: https://swq.ch/wr _____ Discover our brand and philosophy: https://swq.ch/wq Learn more about our employees: https://swq.ch/d5 _____ Let's stay connected: LinkedIn: https://swq.ch/cH
Monitoring Hungary: Glimmering light at the end of the tunnel

FX: More Pain For The Forint (HUF) Can Be Expected, The Correlation Between US 10-year Yields And G10 Dollar Crosses Has Picked Pp

ING Economics ING Economics 12.12.2022 12:31
A heavy event risk calendar this week stands to define the core themes for 2023. First and foremost is the question of how quickly US inflation decelerates (CPI on Tuesday) and how the Fed will respond (FOMC Wednesday.) A whole host of central bank meetings around the world, including the ECB on Thursday, will provide insights on how long policy stays tight USD: How long does policy need to stay tight? A pivotal week for FX and global asset markets lies ahead of us. The week will play a major role in determining whether central banks (particularly the Federal Reserve) need to keep policy tighter for longer, or can (as the market prices) start to relax a little over inflation and can consider rate cuts in the second half of next year to ensure a soft landing. The two key event risks here are tomorrow's US November CPI reading and Wednesday's FOMC meeting - including the release of a fresh set of dot plots. Going into these event risks the market is pricing the Fed tightening cycle peaking in the 4.90/5.00% area next spring and then 50bp of rate cuts being delivered in the second half. And consensus is for another relatively soft 0.3% month-on-month core CPI release tomorrow, which would tend to support the market's pricing. We look at a range of Fed scenarios in our FOMC preview. As noted previously here, December is typically a soft month for the dollar and probably a more dovish set out of outcomes and a weaker dollar does the most damage to positioning, which is probably still long dollars. However, we do feel that market consensus still underappreciates the risk of inflation staying higher longer and also is dangerously second-guessing the Fed in terms of 2H23 rate cuts. The Fed has said that it feels there is good forward guidance value in its dot plots and it may choose to get across its current message of tight policy staying in place for longer through those dot plots. Our rates team also sees upside risks to US 10-year yields from the 3.50% area, with outside risk to the Fed discussing outright US Treasury sales (rather than just roll-offs) if it does think the long end of the curve is too stimulative. Notably, the correlation between US 10-year yields and G10 dollar crosses has picked up substantially since the soft October CPI release on 10 November. The long end of the curve is therefore going to be a key battleground for the dollar. Event risks this week will therefore determine whether 2023 starts with a focus on the inflation battle being won and the prospect of stimulative, reflationary policy coming through - a dollar negative. Or whether sticky inflation ties the hands of central bankers, the US yield curve remains steeply inverted and the dollar continues to perform well in a challenging risk environment. We do see the latter scenario as more likely, but this week should certainly give one of the scenarios a big lift. There is very little on the US calendar today and we would expect DXY to go into tomorrow's CPI release near its current 105 levels. Chris Turner EUR: A big week for central bank meetings in Europe This week sees central bank meetings in the eurozone, Switzerland and Norway, where 50bp hikes are expected in the former two and a 25bp hike in the latter. Please see our full European Central Bank preview here and our Swiss National Bank preview here. On the former, we note there is still a slight risk of the ECB doing 75bp rather than 50bp - which would probably help the euro. But this of course comes after the US CPI/FOMC risk. Given the 10% EUR/USD correction off the late September lows, our preference would be that EUR/USD struggles to hold any gains over 1.06 this week and could end the week lower should US events oblige.  Chris Turner GBP: BoE to hike 50bp this week This week's highlight will be the Bank of England meeting on Thursday. Please see our full preview here. We expect the BoE to revert to a 50bp hike (55bp hike priced) as it tries to balance high inflation against growing evidence of a prolonged downturn - with little signs of stimulus.  Our game plan assumes that GBP/USD struggles to hold any gains over 1.23, while EUR/GBP should find support in the 0.85/0.86 area. A winter of discontent should see sterling underperform should central bankers need to keep rates tight(er) into a recession.  Chris Turner CEE: Asymmetric response to global developments A busy week at the global level will be accompanied by several data points from the Central and Eastern Europe region. This week's headline number will be November inflation in the Czech Republic. We expect inflation to accelerate from 15.1% to 15.9% year-on-year, slightly above market expectations. The number will have the market's attention not only because of the Czech National Bank meeting next week but also because of the surprising slowdown in inflation in October when government measures against high energy prices came into play. After this number, we can then expect more headlines coming from the CNB given Thursday's start of the blackout period. Also today, Hungary's assessment is expected to be discussed at the European Council level. However, early rumours suggest that the European Commission's conclusion remains unchanged. November inflation in Romania will be published on Tuesday. We expect an increase from 15.3% to 16.6%, above market expectations. Although we have already seen inflation slowing in previous months, this result would thus raise the peak again. We do not expect another rate hike from the National Bank of Romania in January, but either way, it will be a close call, and tomorrow's number could be key. In the second half of the week, we will then see secondary data across the region such as the current account balances in Poland and the Czech Republic and the final inflation estimate in Poland, including the core number. In the FX market, this week we will be watching the impact of global events on the region. Our baseline scenario of a stable EUR/USD should not bring too much change for the region, but risks both ways are significant and higher volatility compared to previous rather quiet weeks in the CEE FX market can be expected. As we mentioned earlier, interest rate differentials have fallen significantly over the past weeks in the region leaving FX vulnerable to global shocks. Also, the gas story is creeping back and with higher gas prices we see growing signs of a renewed relationship with FX. The region's reaction would thus be asymmetric in the direction of weaker FX in our view, if the US dollar ends up as a winner this week. The Hungarian Forint will be following a separate story in addition to the EU developments and the newly lifted fuel caps. Given the negative rumours, more pain for the forint can be expected and the question is whether EUR/HUF will make another march towards the 430 level as it did in October, which led the central bank to an emergency rate hike in the middle of that month. In our view, the long positioning has fully unwound, and the market is leaning towards the short side again, but we don't think that the negative outcome of the EU story is fully priced in, so it is likely that we will test new highs this week. Frantisek Taborsky Read this article on THINK Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more
Hungary's Central Bank to Maintain Base Rate at 13%, Eyes on Effective Rate Amid Forint's Performance

The EUR/GBP Pair Is Displaying A Sideways Auction Profile

TeleTrade Comments TeleTrade Comments 13.12.2022 09:40
EUR/GBP is auctioning below 0.8600 as investors await UK Employment data. Increment in households’ earnings data could be a double-edged sword for the UK economy. The ECB is expected to hike its interest rates by 50 bps to 2.50%. The EUR/GBP pair is displaying back-and-forth moves marginally below the crucial hurdle of 0.8600 in the early European session. The cross is displaying a sideways auction profile as investors are awaiting the release of the United Kingdom Employment data. The asset remained topsy-turvy on Monday despite upbeat UK Gross Domestic Product (GDP) data. The monthly GDP data (October) reported an expansion of 0.5% while the street was expecting a contraction of 0.1%. Also, Industrial and Manufacturing Production data remained better than anticipation but were contracted on an annual basis for October month. Now, investors have shifted their focus to the UK Employment data. As per the projections, the jobless claims gamut will witness a decline of 13.3K. While the quarterly Unemployment Rate (October) is seen higher at 3.7% against the former release of 3.6%. Apart from that, Quarterly Average Earnings data excluding Bonuses is seen higher at 5.9% vs. the former release of 5.7%. An increment in households’ earnings could be a double-edged sword. No doubt, higher earnings will delight households in offsetting inflation adjusted-payouts but will also increase retail demand, which will escalate inflation further. This week, the interest rate policy by the Bank of England (BOE) will hog the limelight. Analysts from Danske Bank are expecting a 50 basis point (bps) rate hike announcement.  On the Eurozone front, investors are awaiting a monetary policy announcement from the European Central Bank (ECB), which is scheduled for Thursday. Analysts at Rabobank think that the ECB is likely to raise the policy rate by 50 basis points in December but note that they are not fully discounting the possibility of a 75 bps hike. They have forecasted a terminal rate of 3%.
The Commodities Digest: US Crude Oil Inventories Decline Amidst Growing Supply Risks

Focus On US CPI | In Cryptocurrency Market The Drama Continues With Binance

Swissquote Bank Swissquote Bank 13.12.2022 10:37
European equities traded in the red at the start of the week, but equities in the US rebounded as investors are hanging on to hope of slower inflation and reasonably hawkish Federal Reserve (Fed) by their fingernails. US CPI Today and tomorrow will tell whether they are right to be optimistic or not. If, by any chance, we see a softer CPI figure, then the S&P500 could easily jump above its 200-DMA, and even above the ytd descending channel top. But, but, but… today’s US CPI data, unless there is a huge surprise, will probably not change the Fed’s plan to hike the interest rates by 50bp this week. Therefore, even if we see a great CPI print and a nice market rally today, it may not extend past the Fed decision on Wednesday. US In energy, US nat gas prices jumped more than 30% since last week due to a powerful Pacific storm bringing cold and snow to the norther and central plains in the US. UK In the UK, power prices hit another ATH yesterday. European nat gas futures Happily, we haven’t seen a significant rise in the European nat gas futures, which in contrary kicked off the week downbeat. Crude Oil But crude oil rallied as much as 2.60% on Monday on several factors that could however not lead to sustainable gains in the mid-run. Watch the full episode to find out more! 0:00 Intro 0:29 US CPI: possible scenarios 2:50 But the Fed may not care much about the data 4:10 Opportunity to sell the latest crude oil rally? 6:17 Is it time for Chinese stocks to recover… sustainably? 8:03 UK grows more than expected, but… 8:43 Binance may have processes $10bn illegal funds. Bitcoin stable. 9:11 Amgen buys Horizon Therapeutics, Microsoft takes 4% stake in LSE Ipek Ozkardeskaya  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. #USD #CPI #inflation #data #FOMC #Fed #rate #decision #dotplot #enery #crisis #natgas #crudeoil #Russia #China #Covid #reopening #HangSeng #Alibaba #Amgen #HorizonTherapeutics #Microsoft #LSE #acquisition #Bitcoin #SPX #Dow #Nasdaq #investing #trading #equities #stocks #cryptocurrencies #FX #bonds #markets #news #Swissquote #MarketTalk #marketanalysis #marketcommentary _____ Learn the fundamentals of trading at your own pace with Swissquote's Education Center. Discover our online courses, webinars and eBooks: https://swq.ch/wr _____ Discover our brand and philosophy: https://swq.ch/wq Learn more about our employees: https://swq.ch/d5 _____ Let's stay connected: LinkedIn: https://swq.ch/cH      
Bank of England Confronts Troubling Inflation Report; Fed Chair Powell's Testimony Echoes Expected Path

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

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

The Bank Of England Is Likely To Continue Raising Rates Despite Weak Economic Conditions

Kenny Fisher Kenny Fisher 13.12.2022 13:35
The British pound remains calm this week and is trading at 1.2286, up 0.20%. It is a busy week on the economic calendar, but GBP/USD isn’t showing much interest. Today’s UK employment data was within market expectations, which resulted in a muted reaction from sleepy sterling. The unemployment rate ticked upwards to 3.7%, up from 3.6%. Wage growth climbed to 6.1%, up from 5.9% and above the consensus of 5.8%. Wages remain well below the inflation level of 11.1%, but will still be of concern to Bank of England policy makers, who will want to avoid the spectre of a wage-price spiral, which would make the battle against inflation that much more difficult. This may not be something that the BoE can control, with the threat of public workers going on strike to demand more pay. The BoE is likely to continue raising rates, despite weak economic conditions, as defeating inflation remains its first priority.  The BoE meets on Thursday and is expected to raise rates by 50 basis points, which would bring the cash rate to 3.50%. US CPI expected to dip All eyes are on the US inflation report for November, which will be released later today. The consensus stands at 7.3%, following a 7.7% gain in October. The timing of the report is interesting, as it comes just one day before the Federal Reserve meeting on Wednesday. Inflation fell in October and was softer than expected, and the US dollar took a plunge, as the markets became hopeful of a dovish pivot from the Fed. If inflation is again lower than expected, the dollar could find itself under pressure, although the markets could be more cautious with a Fed meeting just around the corner.   GBP/USD Technical 1.2240 and 1.2136 are the next support levels There is resistance at 1.2374 and 1.2478 This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.  
US Inflation Slows as Spending Stalls: Glimmers of Hope for Economic Outlook

Headwinds Are Mounting For Tesla As EV Demand Is Coming Down In China | Risk Sentiment Rushed Higher

Saxo Bank Saxo Bank 14.12.2022 08:57
Summary:  Risk sentiment rushed higher on the soft US November CPI data yesterday, although sentiment rapidly turned more cautious as traders recognize the risk that the Fed may be less willing to react as quickly to signs of easing inflation as the market in today’s FOMC meeting, which will refresh the Fed’s latest economic projections and the “dot plot” of projected Fed rates for coming years. Four G10 central bank meetings follow tomorrow, including the BoE and ECB.   What is our trading focus? Nasdaq 100 (USNAS100.I) and S&P 500 (US500.I) The US November CPI report was exactly what the market was hoping for, sending S&P 500 futures on a rally to the 4,180 level before being sold off declining 3% from the high to the close. This rejection indicates that the market is doubting itself despite the lower US core inflation print. A weak session by Tesla suggests that while inflation fears might be disappearing growth fears will begin to take hold instead posing a new threat to the equity market. Hong Kong’s Hang Seng (HIZ2) and China’s CSI300 (03188:xhkg) Hong Kong and Chinese stocks edged up higher. The news about a delay in China’s central economic work conference due to a surge in Covid inflections in Beijing. Investors are encouraged by signs that the Chinese authorities are not reversing course despite outbreaks after the easing of restrictions. China will stop reporting infections without symptoms as mandatory testing has been dropped. Hang Seng Index climbed 0.7%, led by technology names. Chinese educational services providers were among the top gainers. In A-shares, CSI 300 gained 0.3%, with tourism, lodging, Chinese liquor, and semiconductor outperforming. FX: USD dumped after another soft CPI print The US dollar sold off on Tuesday on the softer November CPI print in the US taking US treasury yields sharply lower. AUDUSD pared some of the gains in early Asian trade and slid below 0.6840 amid concerns on China’s Covid cases ramping up further which also led to the postponement of the Central Economic Work Conference. USDJPY took a brief look below 135 after the CPI release but some of the move was erased later. EURUSD surged to 1.0673 and remains supported above 1.0620 ahead of the FOMC meeting today and ECB meeting tomorrow. Crude oil (CLF3 & LCOG3) pauses ahead of FOMC Crude oil trades softer ahead of FOMC after rallying 6% over the previous two sessions, driven by an improved risk appetite following Tuesday's CPI print and encouraging signs from China where easing restrictions eventually will boost demand. The rally however slowed after the API reported a 7.8 million barrel rise in crude inventories versus expectations for a +3 million barrel draw from EIA later, and OPEC urged caution as it cut its Q1 23 oil demand forecast. The IEA will publish its monthly report later today. Goldman cut its Q1 price forecast by $20 to $90/bbl siting weak demand while saying “The structural oil cycle has taken a pause this year”. Apart from IEA, also focus on a potential Russian response to the price cap and not least today’s FOMC result. Gold (XAUUSD), silver (XAGUSD) and copper (HGH3) all rallied strongly following the lower-than-expected US CPI print Gold closed at its highest level since July above $1808 while silver reached an 8-month high above $24. The recovery in silver has been impressive with the market only requiring 15 weeks to recover half of what it lost during an 82-week period from Feb 2021 to Sept this year. Copper meanwhile briefly traded above its 200-day moving at $3.913/lb before finding stiff resistance ahead of the $4/lb area. All metals finding support from a weaker dollar and lower bond yields on signs that the worst inflation has likely passes, suggesting the Fed could further slow the pace of rate hikes next year. US 10-year treasury benchmark rebounds further (TLT:xnas, IEF:xnas, SHY:xnas) Immediately after the release of the soft CPI data which increased the chance of further downshift to a 25bp hike instead of 50bps in February, the whole yield curve shifted down with the 2-year at one point shedding 24bps to 4.13% and the 10-year 20bps richer to as low as 3.41%. The money market curve now prices the terminal rate at around 4.82% in 2023, down from 4.98%. The long-end however did not manage to keep their gains after some large block selling in the 10-year contracts and a weak 30-year auction. The 10-year gave back nearly half of the gain to close the session 11bps richer at 3.50%. The 2-10-year curve steepened to 72bps. The yield on the 30-year long bonds finished the day only down 4bps at 3.53%. What is going on? Another softer US CPI print The November CPI report was cooler-than-expected across the board, highlighted by the headline cooling to 7.1% from 7.7% (exp. 7.3%), with a M/M gain of 0.1%, slowing from the prior 0.4% and beneath the expected 0.3%. Core metrics saw Y/Y print 6.0% vs 6.3% prior and beneath the 6.1% expectation, while the M/M saw a 0.2% gain, lower than the prior and expected 0.3%. The market pricing has shifted towards a 25-bp rate hike from the Fed for February after we are nearly certain to get a 50bp hike today, while the terminal rate forecast has drifted lower to 4.82%. If we dig into the details, the disinflation is clearly driven by goods and energy, while services prices continue to rise further. This means wage pressures will continue and provides room for the Fed to continue to beat the drum on rates being higher-for-longer. Tesla shares down another 4% Headwinds are mounting for Tesla as EV demand is coming down in China and VW CEO said yesterday that EV sales in Europe is slowing down due to high price points and elevated electricity prices. Tesla shares closed just above the $160 level, which is just below the 200-day moving average at $164, the lowest levels since November 2020. High battery materials prices are also weighing on the outlook for EV makers. Finally, CEO Elon Musk’s endeavour at Twitter is potentially pressuring Tesla shares as he might be forced to put up Tesla shares as collateral for refinanced Twitter debt. Inditex Q3 results in line with estimates The European fast fashion retailer has delivered nine-months results (ending in October) with revenue at €23.1bn and EBIT at €4.2bn in line with estimates. Apple to allow alternative App Stores on its devices This move is a response to new European Union requirements under the Digital Markets Act that are set to go in effect in 2024. The move will initially only apply to the European market unless regulators elsewhere make similar moves. This will allow app developers to avoid paying Apple up to 30% of revenues for payments made through Apple’s app store. Several large app makers’ shares, including those for streaming service Spotify and dating services app Match group jumped on the news. New Zealand forecasts a recession starting Q2 2023 New Zealand Treasury Department issued 2022 half-year economic and fiscal update, forecasting three quarters of negative GDP growth from Q2 2023. Overall, the forecast calls for 0.8% contraction in 2023. Still, comments from RBNZ this morning suggested inflation focus will continue to drive more rate hikes, even as spending slows and unemployment levels increase as more people join the workforce over the coming year, partially helped by improving migration levels. Bank of Japan’s Tankan survey shows weakening business sentiment Sentiment among Japan's large manufacturers deteriorated slightly in the three months to December amid concerns over the global economic slowdown. The main index for sentiment among large manufacturers was +7, compared with +8 in Q3, according to the Bank of Japan's quarterly Tankan survey. Non-manufacturers still took a more positive view as the economic reopening gathered momentum, and large non-manufacturer index rose to 19 in Q4 from 17 previously. US places 30 additional Chinese companies on Entity List, a trade blacklist The companies included Yangtze Memory Technologies, China’s top memory chip producer and others and will prevent them from purchasing selected American components. This expands the original Entity List of companies that were blacklisted back in October for their connection with China’s military. What are we watching next? December FOMC and dot plot may have little new to offer, so focus remains on Powell’s press conference The Fed is expected to lift its Federal Funds Rate target by 50bps to 4.25-4.50%, according to the consensus as well as the general commentary from Fed officials signalling a downshift in the pace of rate hikes. The updated economic projections will also be released, as will the latest “dot plot” projections of the Fed policy rate, which are expected to show a median terminal rate that is higher than the September projections (4.6%, with the market currently projecting 4.32%), as has been alluded to by Chair Powell at the November FOMC and in remarks made in December. Easing financial conditions and an anticipated China stimulus could see the Fed Chair Powell remaining in hawkish mode, so Powell’s press conference remains key to watch. There will have to be a lot of focus on pushing back against the market’s anticipation that the Fed will be trimming rates by Q4 of next year, emphasising that the Fed will not ease prematurely if Powell and committee want to avoid further easing of financial conditions. Four more central bank meetings tomorrow The Swiss National Bank, Norway’s Norges Bank, Bank of England and the European Central Bank will all meet tomorrow, with the Norges Bank expected to hike 25 basis points and the three others expected to hike 50 basis points.  Markets will look for the relative degree to which the central banks signal that they are ready to declare at least a pause in the hiking cycle soon. The Norges Bank has hinted that it sees its tightening cycle near an end and the BoE has said that the peak rate will likely prove lower than the market was forecasting around the time of its last meeting. With the late dollar weakness, a dovish shift is more likely. Earnings to watch Inditex has reported its Q3 results in early European hours (see review above) which extends today’s earnings focus to the US session where our focus will be on Lennar, a US homebuilder. Lennar is expected to show 20% revenue growth y/y in its FY22 Q4 period (ending November), which is expected to decline to 5% y/y in FY23 Q1 (ending February). Today: Lennar, Trip.com, Nordson, Inditex Thursday: Adobe Friday: Accenture, Darden Restaurants Economic calendar highlights for today (times GMT) 0900 – IEA's Monthly Oil Market Report 1000 – Euro Zone Oct. Industrial Production 1330 – Canada Oct. Manufacturing Sales 1530 – EIA's Weekly Crude and Fuel Stock Report 1900 – US FOMC Meeting 1930 – US Fed Chair Powell Press Conference 2145 – New Zealand Q3 GDP 0030 – Australia Nov. Employment Change / Unemployment Rate 0120 – China Rate Decision 0200 – China Nov. Retail Sales 0200 – China Nov. Industrial Production Follow SaxoStrats on the daily Saxo Markets Call on your favorite podcast app: Apple  Spotify PodBean Sticher Source: Financial Markets Today: Quick Take – December 14, 2022 | Saxo Group (home.saxo)
Saxo Bank Podcast: A Massive Collapse In Yields, Fed's Tightening Cycle And More

Rates Spark: A Hawkish 50bp Hike Is Still Expected From The Fed Today

ING Economics ING Economics 14.12.2022 10:41
While US CPI seems to have collapsed, a lot of this is from exceptional factors. The real underlying number is closer to 0.4% MoM in services. Bond yields will test further lower, but there is a limit to that (c.3.25%). A reversion higher (to 3.75%) remains a risk as we move into the first quarter. Look for 50bp from the Fed today, and more to come in Q1. US inflation not as straightforward as seems Falls in real rates and inflation expectations were seen post the CPI number. This solidifies the remarkable recent move in the 10yr from 4.25% to 3.5%, and now approaching 3.4%. The terminal fed funds rate discount has also been shaved lower. It was comfortably discounting a peak at 4.75-5%. It is still in that range, but now toying with pulling that lower, to 4.5-4.75%. The 10yr is more than100bp below this still, which is quite a yield discount. It limits the room for a big move to the downside from here. The marketplace has done a remarkably good job at anticipating this number It feels like the marketplace has done a remarkably good job at anticipating this number, but as always we need to see some repeats before we can conclude that the inflation fighting job is done. The 20bp fall in the 2yr yield to sub-4.2% reflects the same theme, and is now at a sizeable 75bp discount to the market discount for the terminal funds rate. The bond market is trading as if the Fed delivers 50bp today, and then they are done. In all probability the Fed is not done, but if this number proves to be the beginning of a theme of low inflation prints, its increasingly likely that any hikes in the first quarter will be insurance ones, a far cry from the panic stations of previous months that saw consecutive 75bp hikes. Real yields have led the move lower in USD rates Source: Refinitiv, ING Downside to 10Y yields is more limited from here The market has been increasingly sensing this, with the 5yr trading remarkably rich to the curve now, and the 2/10yr segment showing the beginning of a tendency to steepen / dis-invert (from a state of deep inversion). Despite all of this, it is questionable how much room there is to the downside for yields. Anything below 3% for the 10yr looks too low here.  Market rates could still decide to trend higher. Yesterday’s 10yr auction did suggest some resistance to buying at these levels. It will be interesting to see whether the Fed might frustrate things with any suggestion of bond selling (hard QT) going forward. The rationale would be to limit the ability for long yields to go too low too fast, and to downsize it's balance sheet. The inflation flight is still on On the CPI report itself, the 0.2% MoM outcome was largely pulled there by exceptionally large moves in certain components (e.g. used car prices). 60% of the index is "services less energy services", and that is running at a steady 0.4% MoM (which annualises to 6% inflation). That will be tougher to shift lower fast. The inflation flight is still on, the Fed is set to hike, and the bond market could well get a fright at a CPI report not too far from here. For that reason, a hawkish 50bp hike is still expected from the Fed today. They could even contemplate some discussion of bond selling, or even simply entertaining that posibility. That would reverse things quite quickly, allowing the Fed to get more value from the delivered hike. Leaving the market braced for another hike in February 2023 is also probable. European rates have less room to fall, with domestic inflation still not under control Source: Refinitiv, ING European rates struggle to join the US party A striking feature of the post-US CPI bond rally is how sterling-denominated bonds struggled to follow their USD peers higher (lower in yields). The underperformance of EUR bonds relative to Treasuries was less spectacular but speak to an important theme as we head into 2023: it looks like the Fed is getting a grip on inflation much earlier than its European peers, and so US rates are in a better position to outperform until more tangible evidence of lower inflation emerges in the UK and eurozone. It is much less clear European inflation has seen a peak yet In the case of UK bonds, their underperformance was made worse by stronger labour and GDP data this week, and by a warning from Andrew Bailey against second round inflation effects. We see hawkish risk at both the Bank of England (BoE) and European Central Bank (ECB) meetings on Thursday. The difference with the US is that there is a greater chance that these hawkish warnings have a market impact as it is much less clear that European inflation has seen a peak yet. Today's events and market view The main release this morning is eurozone industrial production although this comes on the back of national measures which have taken the surprise out of the eurozone-wide measure. Spain’s CPI reports is a final reading, and Italian unemployment completes this list. US data has a few interesting releases too, including import prices and mortgage applications, but it is the FOMC meeting that will attract the most attention, especially after the second consecutive surprise slowdown in CPI in November (see above). With regards to primary markets today the German debt agency will announce its issuance plans for 2023. There is a significant upside risk to this year’s 230bn in bond issuance. To what degree the higher funding needs feed through to the bond target also depends on what other sources the agency will tap into, i.e. bills, repo or cash reserves. In any case, the market should expect more collateral. Read this article on THINK TagsRates Daily Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more
Despite The Improvement In The Outlook Due To Falling Energy Prices, The Economic Environment In Britain Remains Difficult

There Are Now Many More Uncertainties Surrounding The Bank Of England

InstaForex Analysis InstaForex Analysis 15.12.2022 08:30
The Fed meeting took place (and ended) last night, but the Bank of England meeting, whose outcomes will be made public to the market in a few hours, is now more crucial. How come? Since so many analysts, banks, and businesses in the financial sector had been discussing the Fed meeting's outcomes, the market was prepared for them. Additionally, the FOMC members themselves have stated time and time again that December will see a slowdown in interest rate growth. Only Jerome Powell's performance was intriguing. However, there are now many more uncertainties surrounding the Bank of England, and the direction of future monetary policy is obscured. Read next: From the fundamental point of view, these facts may become a game changer, sending the EUR/USD pair to the parity level | FXMAG.COM A lot of market participants believe that the Bank of England is unable to raise interest rates to a level that is "restrictive." As a result, the UK's inflation rate can return to 2% for a very long time. Given the recent slowdown, it might reach this level in the US within a year. Many people think that the British regulator will need to increase the rate even further, so it might need to be prepared. Andrew Bailey predicts that household debt will rise in the coming year. Real-world mortgage payments will rise. In the UK, wages are increasing much more slowly than other prices. Payments may become a significant issue for 70% of British people with "mortgages" in 2023. Many might start selling their homes, and landlords might raise the rent. The British economy will experience these issues in addition to a two-year recession. Long-term high inflation is expected, so the Bank of England may only raise interest rates by 50 basis points today. While the British regulator's decision will be good for economic growth, it will also lead to many other inflationary issues. Since there is no discernible difference in the rate of economic growth if people's real incomes are falling by double-digit percentages, economic growth is not currently a top priority. If we use the Fed's strategy to combat inflation, the rate should increase by 75 points for at least another couple of meetings. This might lend the Briton even more support. However, the "hard scenario" cancellation could result in the instrument's long-awaited collapse. Read next: Given the peculiarities of the US labor market and the high labor mobility, the acceptable unemployment rate is considered to be 5.0%| FXMAG.COM Additionally, I'd like to point out that although British inflation has started to fall, it has only retreated from its 41-year high. Only after three to four months will it be possible to accurately assess this decline and determine how much more the Bank of England should raise interest rates to slow price growth to levels close to 2%. The Bank of England controls the British pound's future in the interim. Due to a rate increase of only 50 points, the market might see a significant decline in demand for the pound sterling. Since both instruments have been circling and creating a descending set of waves for several weeks, this is the scenario I am hoping for. I'm also hoping for a drop in demand for the euro currency after a 50-point increase in the ECB rate. I conclude from the analysis that the upward trend section's construction has grown more intricate and is almost finished. As a result, I suggest making sales with targets close to the estimated 0.9994 level, or 323.6% Fibonacci. You should wait for a strong sales signal because the upward section of trend could become even more extended and complicated. The likelihood of this happening is still high. The construction of a new downward trend segment is predicated on the wave pattern of the Pound/Dollar instrument. I cannot advise purchasing the instrument at this time because the wave marking permits the construction of a downward trend section. With targets around the 1.1707 mark, or 161.8% Fibonacci, sales are now more accurate. The wave e, however, can evolve into an even longer form Relevance up to 05:00 2022-12-16 UTC+1 Company does not offer investment advice and the analysis performed does not guarantee results. The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade. Read more: https://www.instaforex.eu/forex_analysis/329860
Weekly Commitment of Traders update - Buying of crude oil moderated, ICE gas oil net long reduced to a 30-month low

Overall Crude Consumption Is Expected To Rise Next Year | The ECB And The Bank Of England Are Expected To Follow The Fed

Saxo Bank Saxo Bank 15.12.2022 08:50
Summary:  The widely expected 50bps rate hike by the Fed came along with hawkish revision of the dot plot in which the terminal rate projection was increased to 5.1% from September’s 4.6%. Equities and bonds fell but the reaction faded later at Chair Powell’s presser where he hinted that policy is close to “sufficiently restrictive”. Dollar ended the day lower. Meanwhile, China’s plan to go ahead with the Central Economic Work Conference despite the surge in cases boosted sentiment. Crude oil prices were firmer on IEA expecting higher prices next year. A plethora of G10 central banks, including the BoE, ECB, SNB, & Norges Bank, meet today. What’s happening in markets? Nasdaq 100 (NAS100.I) and S&P 500 (US500.I) erase part of the post-FOMC announcement declines Equity markets were in a whipsaw falling sharply after the announcement of a 50bps rate hike which was accompanied by a hawkish shift in the dot plot which brought the terminal rate projections to 5.1% for end-2023 from 4.6% at the September meeting. Some of the decline was however reversed later as Chair Powell press conference went underway. Fed Chair Powell started the press conference with a hawkish tone in which he noted there is still some ways to go and the Fed needs to see substantially more evidence to have confidence inflation is on a sustained downward path back to target, although there was some reprieve after Powell stated during the Q&A that he thinks policy is getting to a pretty good place and close to sufficiently restrictive. S&P 500 ended the session down 0.6% and Nasdaq 100 was down close to 0.8%. Hong Kong’s Hang Seng (HIZ2) and China’s CSI300 (03188:xhkg) edged higher in a lackluster session Hong Kong and Chinese stocks edged up higher. The Bloomberg story speculating about a delay in China’s annual Central Economic Work Conference due to a surge in Covid inflections in Beijing did not worry investors much. Investors were encouraged by signs that the Chinese authorities were not reversing course despite outbreaks after the easing of restrictions. China will stop reporting infections without symptoms as mandatory testing has been dropped. Hang Seng Index climbed 0.4%. CSPC Pharmaceutical (01093:xhkg), rising 6.5%, was the best performer in the benchmark index. Hengan (01044:xhkg), Sunny Optical (02382:xhkg), Techtronic Industries (00669:xhkg), Li Ning (02331:xhkg), and Baidu (09888:xhkg) were other outperformers, gaining between 3% and 6%. Previously battered Chinese educational services providers soared while online healthcare names pulled back from recent strength on profit-taking. Alibaba Health (00241) slid 7%. In A-shares, CSI 300 gained 0.3%, with semiconductor, tourism, lodging, and Chinese liquor stocks advancing. FX: Hawkish Fed unable to provide a lasting bid to the dollar The USD eventually settled lower on Wednesday following the FOMC rate decision and the press conference by Chair Powell. Initial positive reaction following the upside adjustment in the dot plot was erased as Chair Powell said he thinks policy is getting to a pretty good place and policy is getting close to sufficiently restrictive. GBPUSD tested the critical 1.2450 with UK CPI also coming in softer than expected at 10.7% and cooled from the prior 11.1%. EURUSD got in close sight of 1.0700 while USDJPY fluctuated between 135-136. Crude oil (CLF3 & LCOG3) extended the rally on IEA outlook Crude oil prices surged higher again on Wednesday with the IEA warning that prices may rise next year as sanctions squeeze Russian exports. It expects its output will fall by 14% by the end of the first quarter. It also increased estimates for global demand by 300kb/d, in a nod to China’s reopening. Overall crude consumption is expected to rise 1.7mb/d next year to average 101.6mb/d. A weaker US dollar despite the Fed’s hawkish shift in the dot plot also underpinned, while the unexpectedly large increase in US inventories was shrugged off. WTI futures rose above $77/barrel while Brent touched $83.  Read next: Given the peculiarities of the US labor market and the high labor mobility, the acceptable unemployment rate is considered to be 5.0%| FXMAG.COM What to consider? FOMC sets the terminal rate forecast at 5.1%, above market expectations The Fed voted unanimously to lift the Federal Funds Rate target by 50bps to 4.25-4.50%, as expected, downshifting the pace of rate hikes. While the statement was broadly unchanged, the updated economic projections showed Fed Funds at 5.125% by December 2023 and core PCE still at 3.5% by that time. That implies 75bps of more tightening in this cycle, which will be seen in 2023, but the markets are still pricing in a peak rate of 4.87%. After that point, the dot plot is far more distributed, but the median projects the Federal Funds Rate target at 4.1% by the end of 2024, suggesting 100bps of rate cuts. Equities did see a negative reaction to the upside surprise in terminal rate projections, but this may remain short-lived as markets remain focused on incoming data. Bond markets had little reaction to the Fed’s updated dot plot. Dollar fell. Australia employment report better-than-expected Australia’s November employment rose 64k, higher than the +19k estimate and more than the revised +43k gains for October. Jobless rate was steady at 3.4% and participation rate came out higher to return to the record highs of 66.8% (vs. estimate 66.6%). The strength in the labor market will continue to provide room to the Reserve Bank of Australia to continue with its modest rate hikes, after it has already downshifted to a smaller rate hike trajectory. A weak set of Chinese activity data is expected Economists surveyed by Bloomberg are forecasting that China’s retail sales shrank sharply by 3.9% Y/Y in November. The potential weakness is likely attributed to poor performance of auto sales, dining-in activities, and sales during the “double-11” online shopping festival in the midst of Covid-19 lockdowns during the best part of November. November auto sales in China fell by 9.2 %Y/Y and by 10.5% M/M. Courier parcels processed on Nov 11 fell 20.7% Y/Y. The growth in industrial production is expected to fall to 3.7% Y/Y in November from 5% to 3.7%, following a weak November NBS manufacturing PMI and soft high-frequency data of steel production. Year-to-date fixed asset investment is expected to edge0 down to 5.6% from 5.8%, dragged by stringent pandemic control practices. ECB also likely to downshift to a smaller rate hike The European Central Bank (ECB) is also expected to slow down its pace of rate hikes to a 50bps increase this week. Headline inflation eased slightly in November, coming in at 10.0% YoY (exp. 10.4%), but was overshadowed by an unexpected rise in core inflation 6.6% YoY (exp. 6.3%, prev. 6.4%). While there is likely to remain some split in ECB members at this week’s meeting, the central bank’s Chief Economist Lane remains inclined to take into account the scale of tightening done so far. There is also uncertainty on the announcement of quantitative tightening. Bank of England may remain more divided than the other major central banks The Bank of England is also expected to follow the Fed and the ECB and downshift to a smaller rate hike this week, but the decision will likely see a split vote. A host of key data, including GDP, employment and inflation will be due this week in the run up to the BOE decision, and significant positive surprises could tilt the market pricing more in favour of a larger move which also creates a bigger risk of disappointment from the central bank. Headline annualised inflation advanced to 11.1% Y/Y in October, while the core rate remained at an elevated level of 6.5%. Consensus expects inflation to cool slightly to 10.9% Y/Y in November, but the core to remain unchanged at 6.5% Y/Y. Wage pressures are also likely to be sustained, and the cooling in the labor market will remain gradual. The U.S. is adding China’s top memory chips maker to the trade blacklist The U.S Department of Commerce is reportedly moving Yangtze Memory Technologies, a leading memory chip maker in China, together with 30+ other Chinese companies, from the Unverified List to the Entity List, after the expiry of a 60-day period for the company to answer requests for information about its business and customers. The Entity List is the official export control blacklist that restricts companies from access to American technologies. Read next: From the fundamental point of view, these facts may become a game changer, sending the EUR/USD pair to the parity level | FXMAG.COM New Zealand Q3 GDP comes in above expectations A big positive surprise in NZ Q3 GDP which came in at 2.0% Q/Q sa vs expectations of 0.9% and higher than last quarter’s revised 1.9%. With the possibility of a recession in 2023 highlighted yesterday, this print suggests that there is a substantial amount of work left to be done by the Reserve Bank of New Zealand to dampen demand in order to curb inflation. Bank of Japan policy review speculation gathers further pace Some reports suggested that the BOJ could review policy next year, after pay growth and any slowdown in the global economy are closely examined. The results of spring wage negotiations come in mid-March, after Governor Haruhiko Kuroda's final policy meeting, so an assessment would probably be done after he departs. The review could reaffirm the existing ultra-loose framework, but possibility of some tweaks to the yield curve control policy remains as inflationary pressures remain a concern.   For our look ahead at markets this week – Read/listen to our Saxo Spotlight. For a global look at markets – tune into our Podcast. Source: Market Insights Today: FOMC’s hawkish dot plot; more G10 central bank meetings ahead – 15 December 2022 | Saxo Group (home.saxo)
Kiwi Faces Depreciation Pressure: RBNZ Expected to Hold Rates Amidst Downward Momentum

The European Central Bank (ECB), The Bank Of England (BoE) And The Swiss National Bank (SNB) Are Also Expected To Hike The Rates By 50bp

Swissquote Bank Swissquote Bank 15.12.2022 10:46
As expected, the Fed raised its interest rates by 50bp to 4.25/4.50% range, the dot plot showed that the Fed officials’ median forecast for the peak Fed rate rose to 5.1%. Forecasts Plus, the distribution of rate forecasts skewed higher, with 7 officials out of 19 predicting that the rates could rise above 5.25%. Moreover, the inflation forecast for next year was revised higher DESPITE the latest decline in inflation. Read next: Given the peculiarities of the US labor market and the high labor mobility, the acceptable unemployment rate is considered to be 5.0%| FXMAG.COM And the median rate forecast for 2024 was revised higher to 4.1%. In summary, the FOMC message was very clear: the Fed is not ready to stop hiking rates - even though they will be hiking by smaller chunks. Today's decisions Today, the European Central Bank (ECB), the Bank of England (BoE) and the Swiss National Bank (SNB) are also expected to hike the rates by 50bp to tame inflation in Europe. Watch the full episode to find out more! 0:00 Intro 0:36 Powell dashes dovish Fed hopes 2:40 Stocks fell, and could fall lower 4:30 USD gained, but may not gain much 5:33 ECB to hike by 50bp 7:27 BoE to hike by a dovish 50bp 8:50 SNB to hike by 50bp, as well! But a 50bp hike is not the same for all, as they don’t have the same inflation levels! Ipek Ozkardeskaya 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. Read next: From the fundamental point of view, these facts may become a game changer, sending the EUR/USD pair to the parity level | FXMAG.COM #ECB #BoE #FOMC #Fed #SNB #rate #decision #dotplot #USD #EUR #GBP #CHF #CPI #inflation #growth #forecasts #SPX #Dow #Nasdaq #investing #trading #equities #stocks #cryptocurrencies #FX #bonds #markets #news #Swissquote #MarketTalk #marketanalysis #marketcommentary _____ Learn the fundamentals of trading at your own pace with Swissquote's Education Center. Discover our online courses, webinars and eBooks: https://swq.ch/wr _____ Discover our brand and philosophy: https://swq.ch/wq Learn more about our employees: https://swq.ch/d5 _____ Let's stay connected: LinkedIn: https://swq.ch/cH
UK Budget: Short-term positives to be met with medium-term caution

Bank Of England: Bank Rate May Peak At 4% In The New Year

ING Economics ING Economics 15.12.2022 14:36
The Bank of England's (BoE's) 50bp rate hike decision was coupled with signs that the Committee is prepared to move more cautiously over the coming months. We expect a final 50bp hike in the first quarter – which may ultimately be delivered in smaller 25bp chunks – although we think the UK will be slower to turn to rate cuts than the US Andrew Bailey, governor of the Bank of England Fed caution has given the Bank of England cover to slow rate hikes too The Bank of England’s inaugural 75bp rate hike back in November came accompanied by a strong signal that it was likely to be a one-off move. Since then, the Federal Reserve’s decision to slow the pace of rate hikes in the US, and the associated appreciation in the trade-weighted pound, has given the Bank of England the cover it needs to do the same. In a move that will come as little surprise, the Bank hiked rates by half a percentage point to 3.5% on Thursday. But the new policy statement – that this time isn’t coupled with either a press conference or new forecasts – contains some interestingly dovish signals. While the Committee is clearly divided, and the meeting saw another three-way vote-split, only one policymaker voted for a more aggressive 75bp hike at Thursday’s meeting, while two voted for no change at all. While it’s hard to say what the consensus for this would have been, one or two more voters in the 75bp camp, and the doves opting for a 25bp hike over no change, would have seemed more likely. We expect Bank Rate to peak at 4% in the new year Admittedly the Monetary Policy Committee is no longer warning investors that they’re pricing too much tightening for coming months, though perhaps this isn’t hugely surprising. Market rates have fallen markedly since the political drama and LDI (Liability Driven Investing) pensions issues in October. Markets expect Bank Rate to peak at roughly 4.5% next summer, and while that’s probably still a tad on the high side, this mispricing is much less significant than it was. The Bank is nevertheless still warning that it could act ‘forcefully’ if required, though curiously the meeting minutes suggest that a 50bp rate hike meets this definition. Not only does that suggest there’s a high bar for returning to 75bp rate hike increments, but at a stretch you could also say it lays the groundwork for a further slowdown in the pace of hikes to 25bp increments from the new year. Our view: 50bp in February and done For now, our best guess is the Committee implements another 50bp hike in February before calling it a day. The hawks can continue to point to 6% wage growth and the fact that core services inflation is running higher than expected in November. But today’s meeting is a further demonstration of the delicate balancing act facing the BoE, between mitigating the risks of a tight jobs market on the one hand against mounting concerns about the housing market and the health of corporate borrowers on the other. We expect Bank Rate to peak at 4% in the new year, although we aren’t yet convinced a rate cut will be as quick to follow as in the US (where we expect cuts shortly after the summer). Read this article on THINK TagsBank of England Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more
In December, the Fed maintained a tougher rhetoric than the market consensus, playing on the bears' side

In December, the Fed maintained a tougher rhetoric than the market consensus, playing on the bears' side

Alex Kuptsikevich Alex Kuptsikevich 15.12.2022 15:12
BoE is expected to hike the rate by 50bp on Thursday, but the day before CPI inflation data is published - would you expect a hawkish pivot if CPI bounces back above November print? The annual price growth rate in the UK fell slightly in November to 10.7% from a peak of 11.1% a month earlier. This reversal coincides with earlier trajectory estimates from the Bank of England, so it should not cause a meaningful change in the commentary. On the other hand, the Fed continues to surprise markets with more hawkish rhetoric, even with five months of slowing consumer prices under its belt. Key central bankers are pushing the idea of a more protracted and decisive fight against inflation into the markets at this stage. In contrast, markets are set to repeat post-2008 history, when the central banks' primary concern was stimulus but not suppression of inflation. Read next: The BoE And The ECB Raised Rate By 0.50% To 3.50% Today, Australian Dollar Falls After Disappointing Data From China| FXMAG.COM Santa Rally: Would Santa skip coming to town amid turbulent times and uncertain beginning of the next year? Turbulent times do not rule out periodic and strong rallies against the trend. However, the Fed could now be the Grinch who wants to steal the holiday in the markets. Since the second half of November, the broad stock indices (S&P 500, Russell 2000) have been struggling with resistance against the downtrend. In August, the Fed decided the fate of this battle by siding with the bulls. In December, the Fed maintained a tougher rhetoric than the market consensus, playing on the bears' side. However, market dynamics show that there are fewer sellers anymore.  ECB decides on interest rate this week - what do you expect from the Bank this time? When could the cycle come to an end? The ECB will raise the rate by 50 points, not wanting to surprise the markets. In addition, we should expect indications of further policy tightening via a plan for asset sales from the balance sheet and rate hikes. Currently we expect the ECB to raise rates up to Q3 2023. From the second quarter, it could be a rate hike of 25 points. At the same time, there are many surprises along the way as de-globalisation will contribute to higher inflation in the region and force the ECB to take a more hawkish approach in contrast with zero rates after 2016.
Forex: British pound against US dollar - technical analysis - January 2nd

British pound may plunge further, headline CPI expectations lowered

FXStreet News FXStreet News 15.12.2022 16:10
The BOE has raised rates by 50 bps but has refrained from committing to more action. Two members have voted against raising rates at all. The MPC has noted that government action reduces the inflation path. Two 50 bps rate hikes – a different outcome, and it is due to promises about the future. While the Fed wants to continue raising rates, the Bank of England has its doubts. GBP/USD has reacted negatively to the decision, but here is why there may be more in store. 1) Conditional hikes: The BOE stated that the "majority of the Monetary Policy Committee judges that further increases in the bank rate may be required. The critical word here is the word "may." Has the "Old Lady" reached its limit at 3.50%? That would a shallow rate hike cycle. 2) Two wanted to stop right now: Two out of nine MPC members voted against raising rates at all – not even 25 bps. While one member took the hawkish stance of a 75 bps hike, the two dovish members noted weakness in the labor market. This sentiment comes just after the UK reported an increase in wages. What do they know that others do not? Such pessimism is detrimental for the Pound. Read next: In December, the Fed maintained a tougher rhetoric than the market consensus, playing on the bears' side| FXMAG.COM 3) Inflation will not be that high: According to the BOE, the government's new Autumn Statement, the fiscal cuts will cause headline CPI to drop by 0.75% compared to previous forecasts. That means fewer rate hikes. The BOE and its Governor, Andrew Bailey are pessimistic, adding to the gloom Britain is suffering from soaring energy bills, cold weather, and an "advent calendar of strikes." There is more room for the Pound to fall.
Gold Stocks Have Performed Very Well Under Pressure

Oil Prices Fell, Gold Will Also Weaken Due To The Increase In US Dollar

Saxo Bank Saxo Bank 16.12.2022 08:51
Summary:  Equities tumbled across the world after the ECB and the Bank of England followed the footstep of the Fed in hiking 50bps, but the ECB gave a hawkish surprise by pulling forward QT and warning of more rate hikes to come as inflation remains high. The US dollar regained strength amid risk-off sentiment as US economic data deteriorated further but labor market strength was sustained. The US accounting regulatory body, PCAOB, successfully concluded an inspection on the audit work of eight U.S. listed Chinese companies and removed the delisting risks of Chinese ADRs for now. What’s happening in markets? Nasdaq 100 (NAS100.I) and S&P 500 (US500.I) plummeted on Fed follow-through and hawkish ECB Nasdaq 100 tumbled 3.2% and S&P 500 declined by 2.5% on Thursday, as a rate hike plus hawkish comments from the ECT, and follow-through from a higher terminal rate on the Fed’s projection dot plot the day before weighed on equities. The decline in stocks was broad-based and all 11 sectors of the S&P 500 fell. The decline was led by the communication series, information technology, and materials sectors. Alphabet (GOOGL:xnas) declined 4.4%. Netflix (NFLX:xnas) tumbled 8.6%, following a media report saying the streaming giant is refunding advertisers because it missed viewership guarantees. Lennar (LEN:xnys) gained 3% and was among the top gainers in the S&P 500 on Thursday after the home builder said the cancellation rate for new homes had peaked in October and declined significantly in November. Adobe (ADBE:xnas) surged 4.7% in extended-hour trading on earnings beat. US Treasury yield curve (TLT:xnas, IEF:xnas, SHY:xnas) turned more inverted on hawkish central banks and weak data Following a hawkish rate path dot plot from the Fed the day and hawkish remarks from ECB President Lagarde and pull-forward of QT by the ECB on Thursday but a weak U.S retail sales report, the Treasury yield curve flattened. The 2-year yield rose 3bps to 4.24% while the 10-year yield shed 3bps to 3.45%, bringing the 2-10-year inversion to more negative to -79bps. After Lagarde pledged Eurozone “interest rates will still have to rise significantly higher at a steady pace”, the German 2-year yields jumped as much as 30bps and closed 24bps higher at 2.36%, a 14-year high. The Treasury Department announced a USD12 billion 20-year auction and a USD19 billion 5-year TIPS auction next week. In the futures pit in Chicago, large-size curve flattening trades were seen on selling the five-year contracts versus buying the ultra-10-year contracts. The money market curve is pricing a terminal rate of 4.9% in 2023, significantly lower than the Fed’s dot plot of 5.1%. Hong Kong’s Hang Seng (HIZ2) retreated on Fed rate hike; China’s CSI300 (03188:xhkg) little changed Hong Kong opened sharply lower after the U.S. Fed raised the target Fed Fund rate the day overnight and traded sideways throughout the day to finish 1.6% lower. HSBC (00005:xhkg), down 1.8%,  raised its prime rate by 25bps to 5.625%, and Standard Chartered (02888:xhkg), down 1.4%, lifted its prime rate by 25bps to 5.875%. Other leading banks in Hong Kong also raised their prime rates by 25bps. Shenzhou (02313:xhkg), Wuxi (02269:xhkg), Baidu (09888:xhkg), and Alibaba (09988:xhkg), each declining more than 4%, were the top losers with the benchmark. China’s industrial production, retail sales, and fixed asset investments all came in worse than expected and pointed to Covid containment restrictions’ severe disruption to the economy in November. Investors tend to look beyond the weakness in November as the Chinese authorities have eased the pandemic containment practices substantially in December. China’s CSI300 (03188:xhkg) was little changed on Thursday. Semiconductor and new energy names gained. FX: Dollar strength returned amid weakness in risk sentiment After the markets reacting in a limited way after the hawkish shift of the dot plot by the FOMC on Wednesday, the USD strength returned the following day. Concerns that Fed will be hiking into a recession gathered pace as US economic data deteriorated further but labor market resilience prevailed. Money market pricing for the Fed has still not budged to catch up with the dot plot, suggesting that it is likely the risk sentiment weakness that led to the dollar surge. AUDUSD was the biggest loser on the G10 board, sliding lower to 0.67 from 0.6850+ as weak China activity data offset the impact from positive employment numbers in Australia yesterday. GBPUSD also plunged below 1.22 and EURGBP rose above 0.87 amid relative ECB hawkishness. USDJPY touched 138 again despite a lower in US yields. Crude oil (CLF3 & LCOG3) prices dip on global rate hikes and partial restart of Keystone pipeline Crude oil prices fell on Thursday after the fed’s hawkish tilt was followed by a slew of other G10m central banks especially the ECB which highlighted the struggle to get inflation under control and hinted at more rate hikes and QT was to come. Along with that, a partial restart of the Keystone Pipeline after last week’s oil spill eased some supply concerns. WTI futures tested the $76/barrel support while moved towards $81. However, there are tentative signs that key Russian oil exports from a port in Asia are dipping following G7 sanctions, and this may impede the supply relief, but demand weakness concerns still continue to remain the biggest worry as of now with China’s full reopening demand also likely to be delayed due to the vast spread of infections. Gold (XAUUSD) back below 1800 on central banks hawkishness The return of the strength of the US dollar on Thursday meant weakness in gold. Fed’s message from a day before finally seemed to have been understood by the markets, and hawkishness from other central banks, especially the ECB, further sounded the alarm on rates remaining higher for longer globally. Gold broke below the 1800-mark in the Asian session on Thursday, and the lows extended further to sub-1780 in the European/NY hours. Silver plunged as well to move back towards $23.   What to consider? Bank of England followed the Fed with a 50bps hike, likewise for SNB and Norges Bank The Bank of England opted to step down the pace of its rate hiking cycle to 50bps from 75bps, taking the Base Rate to 3.5%. The decision to move on rates was not a unanimous one with two dovish dissenters and one hawkish dissenter. The markets are pricing in a peak for the BOE at 4.25% in H1 2023, as inflation continues to cool. The MPC is of the view that CPI inflation has reached a peak, but is expected to remain high in the coming months. The Norges Bank and SNB also hiked 50bps, in-line with expectations. ECB surprises with a hawkish tilt The European Central Bank (ECB), much in line with the Fed and the BOE, stepped back from its 75bps rate hike trajectory and announced an increase of 50bps, taking the Deposit rate to 2.0%. It was reported that a third of the Governing Council favored a 75bps increase, and Christine Lagarde warned investors to expect more 50bps moves and not to see this as a ‘pivot’. The commentary was hawkish saying that "interest rates will still have to rise significantly at a steady pace to reach levels that are sufficiently restrictive". Moreover, the bank announced a start of QT in the first quarter of 2023, even though with a small amount. The APP portfolio will decline at an average pace of EUR 15bln per month until the end of Q2 with its subsequent pace to be determined over time. The inflation forecast also came as a surprise, with 2023 HICP raised to 6.3% from 5.5%, and 2024 and 2025 seen at 3.4% and 2.3% respectively and therefore indicative that further tightening will be required to bring inflation back to target over the medium term. On the growth front, 2022 GDP was upgraded to 3.4% from 3.1% and 2023 now seen at just 0.5% (prev. 0.9%) with the upcoming recession likely to be shallow and short-lived. US economic slowdown concerns continue to be offset by a strong labor market Several economic indicators in the US pointed to concerns of an economic slowdown. Headline retail sales declined 0.6% in November, deeper than the 0.1% expectation and paring from October's gain of 1.3%. The December NY Fed Manufacturing survey fell into contractionary territory at -11.2, deeper than the expected -1.0 from the prior +4.5. US manufacturing output fell -0.6% in November, well beneath the expected 0.1% decline and against October's rise of 0.3%, which was upwardly revised from +0.1%. However, labor market resilience was confirmed by jobless claims unexpectedly dropping to 211k from a revised 231k last week, well below the expected 230k. PCAOB concluded its inspection and removed the delisting risks of Chinese ADRs for now The Public Accounting Oversight Board (PCAOB) announced on Thursday that the U.S, accounting regulatory body has “conducted inspection field work and investigative testimony” of the audit work of KPMG Huazhen LLP in mainland China and PwC in Hong Kong on eight Chinese ADR issuers, “in a manner fully consistent with the PCAOB’s methodology and approach to inspections and investigations in the U.S. and globally.” The PCAOB was satisfied that its “investors and investigators were able to view complete audit work papers with all information included, and the PCAOB was able to retain information as needed” without consultation with, or input from Chinese authorities. The PCAOB’s conclusion removes the risk of forced delisting of Chinese ADRs for now. The PCAOB will continue to do regular inspections starting in early 2023. China’s retail sales, industrial production, and fixed asset investment were weak in November November activity data in China came in worse than the already low expectations. Retail sales shrank by 5.9% Y/Y in November (Consensus: -4.0%; Oct: -0.5%). The weakness partly reflected the high base last year and mostly as a result of the outbreaks of Covids and the relevant containment restrictions then were still the modus operandi. Revenue growth tumbled to -6% Y/Y for merchandise, -4.2% Y/Y for auto, and -8.4% Y/Y for catering. Industrial production growth slowed to 2.2% Y/Y in November (consensus: 3.5%; Oct: 5.0%). The manufacturing and utility sectors were weak while the mining sector improved in growth. Smartphone volume shrank by 19.8% Y/Y in November as Foxconn’s factory in Zhengzhou experienced disruption from Covid restrictions and labor unrest. The growth of fixed asset investment plummeted to 0.8% Y/Y in November from 5.0% Y/Y in October. The weakness of fixed asset investment was mainly in the manufacturing and property sectors. Infrastructure fixed asset investment climbed to 13.9% Y/Y in November from 12.8% in October. Adobe delivered earnings and guidance beating expectations Adobe (ADBE:xnas) reported a fiscal Q4 net income of USD1.176 billion, a 4.6% increase from last year and above the USD1.158 billion expected by analysts. Adjusted earnings per share came in at USD3.60, beating the USD3.50 consensus forecast. Revenues increased 10% from a year ago to USD4.525 billion, in line with expectations. The software giant gave an upbeat fiscal Q1 EPS guidance of USD3.65 to USD3.70 on revenue of USD4.60 to USD4.64 billion, above analysts’ estimates of USD3.64 on revenue of USD4.26 billion.   For our look ahead at markets this week – Read/listen to our Saxo Spotlight. For a global look at markets – tune into our Podcast. Source: Market Insights Today: Fed’s message comes through; ECB outpaces other central banks on hawkishness – 16 December 2022 | Saxo Group (home.saxo)
Pound Slides as Market Reacts Dovishly to Wage Developments

European Stocks Posted Their Biggest Drop In Months

Saxo Bank Saxo Bank 16.12.2022 08:59
Summary:  Markets tanked yesterday in part on the very hawkish ECB meeting. Lagarde and company’s commitment to significant further tightening just as a recession is getting under way in Europe took short German yields to new highs for the cycle and pummeled European stocks, which posted their steepest drop in months. In the US, volatility has picked up significantly not only on this week’s big event risks, but also on the estimated $4 trillion of options set to expire today.   What is our trading focus? Nasdaq 100 (USNAS100.I) and S&P 500 (US500.I) The market continues to lick its wounds following hawkish central bank messages across the US, UK, and Euro area with S&P 500 futures extending the declines since the late Wednesday to a close of 3,927 which is just below the 100-day moving average. Nasdaq 100 futures are under more pressure following the latest central bank messages, being more sensitive to the interest rate level and direction. Nasdaq 100 futures are trading around the 11,444 level this morning which is a critical level and the lower bound of the trading range since the US October inflation report on 10 November. Euro STOXX 50 (EU50.I) Ugly session yesterday following ECB’s hawkish outlook on the policy rate surprising most market participants. Stoxx 50 futures declined 3.6% to close at 3,835 erasing all the gains since the rally following the US October inflation report on 10 November. Today’s trading will be a key test of the market’s belief in ECB’s forecast. Hong Kong’s Hang Seng (HIZ2) and China’s CSI300 (03188:xhkg) Hong Kong and mainland Chinese stocks had a choppy morning session. Hang Seng Index opened lower on the back of tumbling overseas markets overnight despite the positive news from the US accounting regulatory body removing the delisting risk of Chinese companies listed in the U.S. bourses for now. Stocks had a brief rally on market chatter of reopening of the border between Hong Kong and the mainland earliest next month before the gains waned and the Hang Seng Index was flat by noon. The front page editorial at the mouthpiece People’s Daily this morning is upbeat about growth in China but it does not catch much attention from investors. Leading Chinese property developers were the top gaining stocks, with Longfor (00960:xhkg) and Country Garden (02007:xhkg) each gaining around 3.7%. In A-shares, CSI300 was modestly lower, driven by profit-taking in semiconductor names and weaknesses in autos. Real estate and educational services outperformed. FX: Dollar strength returned amid weakness in risk sentiment USD strength returned, and in a big way yesterday after the markets hardly registered the hawkish shift of the dot plot by the FOMC on Wednesday. Concerns that Fed will be hiking into a recession gathered pace as US economic data deteriorated further but labor market resilience prevailed. Money market pricing for the Fed has still not budged to catch up with the dot plot, suggesting that it is likely the risk sentiment weakness that drove the dollar surge. AUDUSD was the biggest loser on the G10 board, sliding lower to 0.67 from 0.6850+ as weak China activity data offset the impact from positive employment numbers in Australia yesterday. GBPUSD also plunged below 1.22 on a dovish Bank of England and EURGBP rose above 0.87 amid relative ECB hawkishness. The ECB meeting saw EURUSD relatively unchanged on the day after a rally, while EURJPY was two figures higher on the day on the ECB impact on EU Yields. USDJPY touched 138 again despite a drop in US yields. Crude oil (CLF3 & LCOG3) trades lower as risk sentiment takes a fresh hit Crude oil traded sharply lower on Thursday, thereby reversing some of the strong gains seen earlier in the week, after the Fed’s hawkish tilt was followed by a slew of other G10 central banks, especially the ECB which highlighted the struggle to get inflation under control. However, there are tentative signs that Russian oil exports to Asia are dipping because of the price cap, a development that may support the 2023 outlook for tight supply, especially when China gets through a period of surging virus cases that my cloud the short-term outlook for demand. Given the current focus on recession potentially hurting demand, a supply side struggle may not positively impact prices until the second quarter, and with that in mind, the price of Brent may settle into a range below $90 until then. Gold (XAUUSD) continues to find support ... as the combination of a hawkish Fed and a steeply inverted yield curve points to an increased risk the FOMC will be hiking into a recession. This focus gathered pace on Thursday, the day after the hawkish shift of the dot plot by the FOMC, after weak US economic data supported the dollar as risk sentiment deteriorated across markets, not least the stock market, and bond yields softened. Gold looks ripe for a period of consolidation with some end of year profit taking emerging following the +200-dollar surge since the November 3 low and after the price got rejected above $1800. However, the prospect for a recession and the FOMC joining other central hiking into economic weakness – potentially without succeeding getting inflation under control - continues to strengthen the upside risk for investment metals in 2023.  US Treasury yield curve (TLT:xnas, IEF:xnas, SHY:xnas) turned more inverted on hawkish central banks and weak data Following a hawkish rate path dot plot from the Fed on Wednesday, hawkish remarks from ECB President Lagarde on Thursday, and a weak U.S retail sales report, the Treasury yield curve flattened. The 2-year yield rose 3bps to 4.24% while the 10-year yield shed 3bps to 3.45%, bringing the 2-10-year inversion to more negative to -79bps. After Lagarde pledged Eurozone “interest rates will still have to rise significantly higher at a steady pace”, the German 2-year yields jumped as much as 30bps and closed 24bps higher at 2.36%, a 14-year high. The Treasury Department announced a USD12 billion 20-year auction and a USD19 billion 5-year TIPS auction next week. In the futures pit in Chicago, large-size curve flattening trades were seen on selling the five-year contracts versus buying the ultra-10-year contracts. The money market curve is pricing a terminal rate of 4.9% in 2023, significantly lower than the Fed’s dot plot of 5.1%. What is going on? ECB fails to impress market after hawkish meeting The ECB administered a hawkish broadside yesterday, raising its forecasts for headline inflation to 6.3% for next year and 3.4% for 2024 (From 5.5% and 2.4% previously, suggesting a far longer time frame with uncomfortably high inflation. The core CPI forecasts were raised to 4.2% ex food and energy for 2023 and 2.8% for 2024, versus 3.4%/2.3% in September). It also outlined its quantitative tightening plan to start rolling off EUR 15 billion of asset per month from March, with ECB President Lagarde claiming the willingness to continue to hike 50 basis points at several coming meetings if necessary, with far more rate tightening to do from here. But after an initial sprint higher that saw EURUSD trading well above 1.0700 despite relative USD firmness elsewhere, the EURUSD collapsed back toward 1.0600 before stabilizing closer to 1.0650. STill, the euro was very firm against most of the rest of G10 currencies as the German 2-year yield jumped a full 25 basis points on the day and closed the day at a cycle high (and high since 2008) of 2.39%. Bank of England followed the Fed with a 50bps hike, likewise for SNB and Norges Bank The Bank of England opted to step down the pace of its rate hiking cycle to 50bps from 75bps, taking the Base Rate to 3.5%. The decision to move on rates was not a unanimous one with two dovish dissenters favoring no rate hike and one hawkish dissenter. The markets are pricing in a peak for the BOE at 4.25% in H1 2023, as inflation continues to cool. The MPC is of the view that CPI inflation has reached a peak, but is expected to remain high in the coming months. The dovish expectation that inflation would return to below target in two years and guidance that further rate tightening would come in The Norges Bank and SNB also hiked 50bps, in-line with expectations. Adobe shares rise 5% on stronger than expected profitability FY22 Q4 revenue at $4.5bn was in line with estimates and adjusted EPS at $3.60 vs est. $3.50 was the positive surprise. The 2023 revenue outlook was $19.1-19.3bn vs est. $19.4bn and management reiterates expectations that its Figma acquisition will go through in 2023. US economic slowdown concerns continue to be offset by a strong labor market Several economic indicators in the US pointed to concerns of an economic slowdown. Headline retail sales declined 0.6% in November, deeper than the 0.1% expectation and paring from October's gain of 1.3%. The December NY Fed Manufacturing survey fell into contractionary territory at -11.2, deeper than the expected -1.0 from the prior +4.5. US manufacturing output fell -0.6% in November, well beneath the expected 0.1% decline and against October's rise of 0.3%, which was upwardly revised from +0.1%. However, labor market resilience was confirmed by jobless claims unexpectedly dropping to 211k from a revised 231k last week, well below the expected 230k. US oversight board concluded its inspection and removed the delisting risks of Chinese ADRs for now The Public Accounting Oversight Board (PCAOB) announced on Thursday that the U.S, accounting regulatory body has “conducted inspection field work and investigative testimony” of the audit work of KPMG Huazhen LLP in mainland China and PwC in Hong Kong on eight Chinese ADR issuers, “in a manner fully consistent with the PCAOB’s methodology and approach to inspections and investigations in the U.S. and globally.” The PCAOB was satisfied that its “investors and investigators were able to view complete audit work papers with all information included, and the PCAOB was able to retain information as needed” without consultation with, or input from Chinese authorities. The PCAOB’s conclusion removes the risk of forced delisting of Chinese ADRs for now. The PCAOB will continue to do regular inspections starting in early 2023. China’s retail sales, industrial production, and fixed asset investment were weak in November November activity data in China came in worse than the already low expectations. Retail sales shrank by 5.9% Y/Y in November (Consensus: -4.0%; Oct: -0.5%). The weakness partly reflected the high base last year and mostly as a result of the outbreaks of Covid and the relevant containment restrictions then were still the modus operandi. Revenue growth tumbled to -6% Y/Y for merchandise, -4.2% Y/Y for auto, and -8.4% Y/Y for catering. Industrial production growth slowed to 2.2% Y/Y in November (consensus: 3.5%; Oct: 5.0%). The manufacturing and utility sectors were weak while the mining sector improved in growth. Smartphone volume shrank by 19.8% Y/Y in November as Foxconn’s factory in Zhengzhou experienced disruption from Covid restrictions and labor unrest. The growth of fixed asset investment plummeted (FAI) to 0.8% Y/Y in November from 5.0% Y/Y in October. The weakness of FAI was mainly in the manufacturing and property sectors. Infrastructure FAI climbed to 13.9% Y/Y in November from 12.8% in October. What are we watching next? Enormous US options expiry today, as much as $4 trillion Many traders hedged portfolios or engaged in directional speculation on this week’s important event risks, including the US CPI release on Tuesday and the FOMC meeting Wednesday. Short terms options trading has taken on record proportions in recent months and today, some $4 trillion in options are set to expire, with today’s “witching” or expiry of quarterly financial futures also in the mix and potentially adding to directional volatility today. Earnings to watch Today’s US earnings focus is Darden Restaurants which is expected to deliver 7% y/y revenue growth for the quarter that ended in November highlighting the resilience of the US consumer in some types discretionary spending. Today: Accenture, Darden Restaurants Economic calendar highlights for today (times GMT) 0815-0900 – Eurozone Dec. Preliminary Manufacturing and Services PMI 0930 – UK Dec. Preliminary Manufacturing and Services PMI 1000 – Eurozone Final Nov. CPI 1445 – US Dec. Preliminary S&P Global Manufacturing and Services PMI Follow SaxoStrats on the daily Saxo Markets Call on your favorite podcast app: Apple  Spotify PodBean Sticher   Source: Financial Markets Today: Quick Take – December 16, 2022 | Saxo Group (home.saxo)
US Inflation Rises but Core Inflation Falls to Two-Year Low, All Eyes on ECB Rate Decision on Thursday

Podcast: Craig Erlam Reviews The Latest Market News With Jonny Hart

Craig Erlam Craig Erlam 16.12.2022 09:49
OANDA Senior Market Analyst Craig Erlam reviews the latest market news with Jonny Hart. They discussed the Fed, ECB and BoE interest rate decisions as well as the latest moves in oil. This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.
The ECB Has Made It Clear That Rates Will Remain High Until There Is Evidence That Inflation Is Falling Toward The Target

Surprise Hawkishness From Christine Lagarde | Netflix Ad-Supported Versions Have Poor Demand

Swissquote Bank Swissquote Bank 16.12.2022 12:28
The European Central Bank (ECB) raised its interest rates by 50bp as expected yesterday, and President Christine Lagarde said that the ECB will raise the rates by another 50bp at the next meeting. Then by another 50bp in the meeting after that. And another 50bp in the meeting after that. Then another one! Markets European yields spiked during Madame Lagarde’s speech. The DAX and the CAC fell more than 3%. The S&P500 slipped below its 100-DMA, as Nasdaq fell below its 50-DMA. The EURUSD spiked to 1.0736, the highest level since April. EU The significant hawkish shift in ECB’s policy stance, and the determination of the European leaders to shot inflation to the ground should continue giving some more support to the euro, therefore, price pullbacks in EURUSD could be interesting dip buying opportunities for a further rally toward the 1.10 mark. US And if the US dollar strengthened yesterday, it was certainly due to a heavy selloff in stocks and bonds that ended up with investors sitting on cash. Other than that, the data released in the US yesterday was not brilliant! The retail sales fell by most in a year; holiday shopping apparently didn’t help improve numbers. The Empire Manufacturing index tanked from 4.5 to -11, versus -1 expected by analysts. Both data hinted at a slowing economic growth in the US, which should normally boost recession fears and keep the Fed hawks at bay. And that could mean a further downside correction in the dollar in the run up to Xmas. Netflix In Individual stock news, Netflix slumped more than 8.5% on news that its new ad-supported versions didn’t kick off well, as most people preferred keeping ads away when they were in the middle of the Meghan and Harry drama! Watch the full episode to find out more! 0:00 Intro 0:35 Surprise hawkishness from Christine Lagarde 3:09 … sent sovereign bonds & stocks tumbling 5:13 … should help the euro recover 7:01 … at least against the British pound 8:14 Netflix falls as ad-supported versions sees weak demand Ipek Ozkardeskaya 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. #hawkish #ECB #Lagarde #speech #BoE #FOMC #Fed #SNB #rate #decisions #USD #EUR #GBP #CHF #DAX #CAC #SMI #EuroStoxx50 #Netflix #SPX #Dow #Nasdaq #investing #trading #equities #stocks #cryptocurrencies #FX #bonds #markets #news #Swissquote #MarketTalk #marketanalysis #marketcommentary _____ Learn the fundamentals of trading at your own pace with Swissquote's Education Center. Discover our online courses, webinars and eBooks: https://swq.ch/wr _____ Discover our brand and philosophy: https://swq.ch/wq Learn more about our employees: https://swq.ch/d5 _____ Let's stay connected: LinkedIn: https://swq.ch/cH
EUR/USD: Looking beyond the market’s trust issues with the Fed and ECB

There Was A Rally Of Hawks This Week, Statement Of The President Of The European Central Bank Supported The Euro

Conotoxia Comments Conotoxia Comments 16.12.2022 12:35
Hawks are defined as those members of committees deciding on interest rates who are in favor of raising those rates. So there was a rally of hawks this week, as both the Fed and the ECB and the Bank of England and the Bank of Switzerland, among others, decided to raise the price of money and, moreover, are unlikely to change that for the time being. The king, or rather queen of the hawks, became the president of the European Central Bank, Christine Lagarde, and her statement supported the euro exchange rate. The European Central Bank yesterday raised interest rates by 50 basis points as expected, reiterated that there would be further increases and outlined plans for quantitative tightening. The common currency initially strengthened after the decision and reached a six-month high of $1.07. In the afternoon, however, it gave back some of the earlier gains, with market participants trying to assess how much additional rate hikes would hurt the already fragile economy. The ECB raised its inflation forecasts, while economic growth forecasts were sharply lowered. According to the latest forecasts by ECB economists, inflation is expected to reach 8.4 percent in 2022, only to fall to 6.3 and 3.4 percent in the next two years, respectively. Meanwhile, GDP is expected to grow by 3.4 percent in 2022, only to fall to 0.5 percent in 2023 and rise to 1.9 percent in 2024. However, that was not what seemed to be the most important statement. It was probably that the ECB needs to raise rates more than the market is currently pricing in. Christine Lagarde assumes that rates in the Eurozone can be raised at 50 bps for a longer period of time. Thus, the market has begun to expect the peak in eurozone rates to fall above 3 percent. Source: Conotoxia MT5, EURUSD, H1 As a result, the euro was above $1.07 at one point, and what's more, the eurozone may be coming out on top in terms of the pace of rate hikes in the future. Nevertheless, high interest rates and a weaker outlook for economic growth may leave their mark on other markets like the stock market. Daniel Kostecki, Director of the Polish branch of Conotoxia Ltd. (Conotoxia investment service) Materials, analysis and opinions contained, referenced or provided herein are intended solely for informational and educational purposes. Personal opinion of the author does not represent and should not be constructed as a statement or an investment advice made by Conotoxia Ltd. All indiscriminate reliance on illustrative or informational materials may lead to losses. Past performance is not a reliable indicator of future results. CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 75,21% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
WTI Oil Shows Signs of Short-Term Uptrend Amid Medium-Term Uptrend Phase

Forex Market Week Sum Up:The Overall Picture Of Major Currency Pairs Is Bearish

Kamila Szypuła Kamila Szypuła 17.12.2022 19:51
It was the most important week in 2022. Fed President Jerome Powell and ECB President Christine Lagarde reminded the markets that they are still committed to fighting inflation, rather than focusing on promoting economic growth. EUR/USD The pair ended the week at 1.0574, thus trading below $1.06. The close is similar to earlier this week, with the pair also trading above $1.05. Also on Monday it recorded a low of 1.0511. This week the most important event in the euro zone was the ECB's decision on interest rates. The central bank of the European Union made the same decision as the Fed and the Bank of England, i.e. it raised interest rates by 50 bp. But it was the president of the ECB who gave the euro strength. And on Thursday, after a hawkish statement, it reached its highest level of the week, hadel was close to 1.07 (1.0691 to be exact). A number of significant events took place in the European Union this week. The ECB meeting was adjourned; the remaining data must be resolved. Despite traders' expectations for a fall of 1.5-2.5%, industrial production fell by 2% in October. Instead of an increase of 10%, exactly as indicated by the first estimates of the index, inflation rose in November by 10.1%. The economic activity index in the manufacturing sector increased to 47.8, and in the services sector to 49.1. However, both indicators are still below the 50.0 threshold, so they cannot be considered positive at the same time. This week's macroeconomic reports from the EU seem to be disappointing. This problem has been around for a long time. In general, the euro continues to grow unreasonably, although it has already reached its peak. GBP/USD The GBP/USD pair started the week of December 12-16 at 1.2266. Then after the US data inflation traded between 1.2243-1.2300. The lowest level, similarly to the euro, was recorded by the cable pair at the beginning of the week, the lowest traded at 1.2217, and the highest at 1.2248 this week. The pair ended the week below $1.22 as fears of a recession increase. Overall, the British pound looks set to end the week under strong pressure against the US dollar, with weak economic data on Friday fueling fears of a recession in the national economy. Thursday's Bank of England rate hike of 0.5 percentage point pushed base rates to highs not seen since 2008 (3.5%).Markets interpreted the move as a dovish interest rate hike. The recent decision of the Bank of England revealed a three-way split of votes: six out of nine MPC members voted for a 50 bp rate hike, two members voted for no change, and the last member voted for another 75 bp rate hike. Recession fears are intensifying with prospects for the UK to be in recession for "an extended period" while inflation is expected to remain very high in the short term before falling sharply from mid-2023. Overall, the short-term outlook for the economy in the UK remain negative, which is starting to show in sterling now. AUD/USD The Aussie Pair started the week at 0.6780. The movements of the pair were similar to EUR/USD and GBP/USD. The pair recorded the lowest trade at 0.6678 and the highest at 0.6892. Ending the week at 0.6686. The Australian dollar was weakened last week after the US dollar posted an incredible rally amid growing fears of a recession. The Federal Reserve raised the interest rate by 50 basis points to a target of 4.25% - 4.50% on Wednesday. Read next: Assistance In Making Investment Decisions - Technical Analysis| FXMAG.COM Australia's unemployment rate remains at a multi-generational low of 3.4% after adding 64,000 jobs. jobs in November. This is in addition to the growing trade surplus from the previous week. The rest of the fundamental picture is a little mixed towards the end of the year, when building permits and retail sales data are disappointing. These figures appear to have been influenced by RBA interest rate hikes. USD/JPY USD/JPY started the week trading at 136.6790. The week's high is 138.15 and the low is 134.71. As you can see, the trade was very diverse and the price fluctuated rapidly. The pair ended the week at 136.69 Source: finance.yahoo.com, dailyfx.com, investing.com
Soft PMIs Are Further Signs Of A Weak UK Economy

Is The UK At Risk Of A Long-Term Recession? GDP Is Forecast For Economic Contraction

Kamila Szypuła Kamila Szypuła 17.12.2022 20:29
The economy has contracted in three months as soaring prices hit businesses and households, and the UK is projected to head into recession. The short-term outlook remains grim as consumers continue to grapple with the brunt of high inflation. Final GDP The final UK gross domestic product reading for the third quarter is likely to confirm that the UK economy contracted in the three months leading up to September. GDP is forecast to drop below zero to -0.2 percent. The 0.5% decline in household spending was one of the main obstacles in Q3. Meanwhile, monthly estimates suggest that GDP fell by 0.6% in September, partly due to the public holiday associated with the state funeral of Queen Elizabeth II. From an economic point of view, a level below zero suggests an incipient recession. In his autumn statement last month, Mr Hunt said the UK was already in recession. This is expected to be officially confirmed early next year when the October-December economic figures are released. Read next: Forex Market Week Sum Up:The Overall Picture Of Major Currency Pairs Is Bearish| FXMAG.COM Source: investing.com The overview of UK economy UK consumers are tightening their belts as business activity contracted for a fifth consecutive month, according to new figures that suggest the economy has entered a prolonged recession. UK retail sales fell by 0.4 percent between October and November. Meanwhile, a closely watched private sector health monitor, S&P Global's Preliminary UK Purchasing Managers' Index (PMI), rose to 49 in December from 48.2 in November. Despite the increase, the reading was below 50 for the fifth month in a row, indicating that most companies reported a decline. Purchases of non-food items and fuels also fell, with only food sales recording an increase from October to November. Consumer inflation fell slightly to 10.7 percent last month from a 41-year high of 11.1 percent in October. External demand also remained subdued in December and overall new export orders declined. Over the past three months, economic activity in the UK has slowed across all major sectors, including manufacturing, construction and services. The data fueled fears that the economy had already entered a long recession. Not only the recession is a problem - strikes In 2016, the British economy – like other large economies – was negatively affected by high inflation and falling real wages. In Britain, conflicts between governments and economic failures have exacerbated these problems. The UK faces more strikes over pay and working conditions this month and into the New Year. Some 40,000 train and rail workers will walk out on Tuesday in a series of strikes. Royal Mail workers will also continue industrial action this week with strikes What next? The economy is projected to contract for at least the rest of the winter and possibly longer. On the other hand, there is hope that inflation is close to its peak, which may mean that the Bank will be able to limit the increase in the cost of credit. But the question is not whether the economy will go into a recession, but how deep and how long that recession will be. When a country is in recession, it is a sign that its economy is doing badly. During a downturn, companies typically make less money and the number of people unemployed rises. Graduates and school leavers also find it harder to get their first job. Source: investing.com
Kiwi Faces Depreciation Pressure: RBNZ Expected to Hold Rates Amidst Downward Momentum

It Is Impossible To Predict The Future Of The Rates Of The Fed. The ECB, The BoE Because Of The Current Course Of Action

InstaForex Analysis InstaForex Analysis 19.12.2022 10:18
A crucial week has come to an end. I anticipated that it would move around the two instruments I frequently review. Today, it is certain that no rearrangement has taken place: Over the past week, the expected peak of wave e has been updated on the EUR/USD instrument. Therefore, it was once more about strengthening the euro rather than the end of the upward trend section. The proposed wave e has already taken on a very elaborate and extended form. The market's indirect readiness to begin constructing a descending set of waves is only indirectly indicated by an unsuccessful attempt at the level of 200.0%. There were no surprises as central banks increased their rates by 50 basis points. It is impossible to predict the future of the rates of the three banks because of the current course of action, which prevents an accurate forecast for the beginning of 2023. So let's take a closer look at it. ECB. The rate rose by 50 points to reach 2.5%. According to Christine Lagarde, at least a few more increases of 50 points will be required. The market still needs to be clearer about one thing: will the ECB increase the rate as much as necessary to get inflation back to 2%, or will it only do so up to a certain point, which might not be sufficient to achieve the inflationary goal? The European regulator also announced the introduction of a program of quantitative tightening in 2023. I think the market was expecting more "hawkish" results, so I believe these statements offered little support for the euro. The Bank of England. They did not say anything and increased the rate by 50 basis points. There needs to be more information about inflation or the PEPP's upcoming tightening. Regarding the British regulator, the market is still asking the same question. The UK's inflation rate dropped by 0.4%, but this is only the indicator's first decline. The Bank of England rate is currently 3.5%, and it is currently 10.7%. The British economy is experiencing serious issues, which Jeremy Hunt, Andrew Bailey, and Rishi Sunak openly discuss. If the regulator raises the rate like the Fed, that is, as much as it needs to, then everything is fine. However, the Bank of England may raise the rate differently, given these issues. The Fed. They are prepared to increase the rate, and from this point forward, meetings will decide whether an increase is necessary. Although the rate is expected to rise to 5.1% according to the consensus forecast, some FOMC members have already stated that it may now rise higher than anticipated. As a result, only the American regulator publicly states that it will tighten monetary policy as much as is required. This should increase demand for American currency. Additionally, a set of corrective waves has long been a presumption in wave analysis. I'm still waiting for both instruments to stop working. The upward trend section's construction has grown more intricate and is almost finished. As a result, I suggest making sales with targets close to the estimated 0.9994 level, or 323.6% Fibonacci. It would be best if you waited for a strong sales signal because the upward section of trend could become even more extended and complicated. The likelihood of this happening is still high. The construction of a new downward trend segment is predicated on the wave pattern of the pound/dollar instrument. Since the wave marking permits the construction of a downward trend section, I cannot advise purchasing the instrument. With targets around the 1.1707 mark, or 161.8% Fibonacci, sales are now more accurate. The wave e, however, can evolve into an even longer form Relevance up to 05:00 2022-12-20 UTC+1 Company does not offer investment advice and the analysis performed does not guarantee results. The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade. Read more: https://www.instaforex.eu/forex_analysis/330117
The British Pound Is Showing Signs Of Exhaustion Of The Bullish Force

The GBP/USD Pair Has Clearly Worked Out The Pair's Buying Strategy

Peter Jacimovic Peter Jacimovic 19.12.2022 10:29
Central banks-issuers of G10 currencies seemed to have conspired by raising the main interest rates by 50 bps, but the weakest link was the BoE. Andrew Bailey's statement that inflation in Britain has reached its peak and two MPC members who voted to keep the cost of borrowing at the same level provoked the second best daily EURGBP rally of the year. Sterling weakened against the U.S. dollar by 1.5%, against the Swiss franc by 1%. Dynamics of Central Bank Rates Despite the slowdown in consumer prices from 11.1% to 10.7% in November, it was premature to talk about victory over inflation. And although the head of the central bank tried in every possible way to smooth over the phrase about the peak of CPI with statements about the stability of inflationary pressure and about further decisive measures to tighten monetary policy, he failed. Futures market lowered its forecast for the repo rate ceiling to 4.52% by August, British bond yields declined, and GBPUSD quotes collapsed. While the Fed and the ECB signaled that they were ready to raise rates higher than investors expected, the Bank of England, on the contrary, did not convince that it could reach the peak predicted by the derivatives market. Should we be surprised at the weakening of the pound? GBPUSD could continue its pullback lower as investors adjust their BoE borrowing cost expectations for 2023, Credit Agricole said. Dynamics of expectations for the repo rate In comparison, the ECB has made it clear that it is going to add 50 bps to the deposit rate one or more times in the future, causing derivatives to raise their ceiling forecast to 3.7%. The Fed, in its forecasts, openly stated that the cost of borrowing is likely to rise to 5.25%. Different rates of monetary restriction pushed up the EURGBP quotes and dropped the GBPUSD pair. Curiously, the UK and the Eurozone economies are considered weak, but the latest data signal their greater resilience than previously thought. The ECB used this to support the euro, the BoE ignored it, sinking the pound. An additional driver of the weakening of sterling against the U.S. dollar was a portion of disappointing statistics for the United States, including retail sales, industrial production and business activity. The markets saw the specter of a recession in this, began to sell risky assets and buy safe haven assets, which accelerated the pullback of GBPUSD. As long as global risk appetite continues to fall, and the Bank of England does not begin to repent of its mistake about the peak of inflation, the pair will continue to be under pressure. Technically, on the daily chart, the GBPUSD has clearly worked out the pair's buying strategy from 1.2325, followed by a reversal and the formation of short positions on the rebound from the pivot point at 1.2425. The inability of the "bears" to overcome the support at 1.2065–1.2075 is a reason for profit taking. On the contrary, its successful assault will allow to increase the shorts in the direction of 1.198 and 1.184 Relevance up to 06:00 2022-12-24 UTC+1 Company does not offer investment advice and the analysis performed does not guarantee results. The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade. Read more: https://www.instaforex.eu/forex_analysis/330119
The Results Of The March Meeting Of The Bank Of Japan Are Rather Symbolic

The Bank Of Japan Remains Focused On Achieving Wage Inflation | European Nations' Deal To Cap Natural Gas Prices at €180 Per MWh

Saxo Bank Saxo Bank 20.12.2022 08:55
Summary:  US equities declined on rise in bond yield with noted weaknesses in big tech, even though the USD remained range-bound. The announcement from the Bank of England to include long-maturity gilts in the winding down of QE portfolio in Q1 pushed up yields. Bank of Japan decision will the focus today in Asia, along with China’s Loan Prime Rates, and the US PCE is due later in the week. Earnings from Nike and Fedex today may give investors insights into consumer spending and global economic activities. What’s happening in markets? Nasdaq 100 (NAS100.I) and S&P 500 (US500.I) were dragged down by higher bond yields and tech weaknesses U.S. equities declined for a fourth consecutive session. Nasdaq 100 dropped 1.4% and S&P 500 was 0.9% lower on Monday. All sectors, except energy, within the S&P 500 declined, led by communication services, consumer discretionary, and information technology. The 10bp jump in the 10-year yield weighed on growth stocks. The NAHB Housing Market Index plunged to 31, approaching the March 2020 Covid-19 recession low. Key U.S. stock movers Warner Brothers (WBD:xnas), down 6.6%, Meta (META:xnas), down 4.1%, and Amazon (AMZN:xnas) were among the top losers in the Nasdaq 100. Warner Brothers said the entertainment company is to record a large restructuring charge. Meta was hit by news that the European Union antitrust regulators were probing the company for allegedly unfairly squeezing out rivals. Walt Disney (DIS) slid 4.8% after releasing the debut weekend box office of Avatar: the Way of Water, below expectations. Supported by the possibility that Musk stepping down from Twitter, the shares of Tesla were little changed despite general market weakness and a probe by German prosecutors on suspected illegal storage of hazardous materials. US Treasuries (TLT:xnas, IEF:xnas, SHY:xnas) cheapened as UK yields surged on BOE QT The surge in yield across the pond in the U.K. and Eurozone dragged U.S. Treasury yields higher, with the yield on 2-year notes 8bps higher to 4.26% and that on 10-year notes up 10bps to 3.58%. At the futures trading pits, large selling was on the 10-year (ZNH3) and the ultra 10-year (TNH3) contracts. The 2-10-year curve steepened by 3bps to -68bps. The move was triggered by a 17bp jump in the yield on the U.K. 10-year Gilts after the Bank of England announced the Q1 2023 bond selling schedule for its Asset Purchase Facility portfolio (i.e. bonds accumulated during QE) starting from January 9, 2023, in five auctions for a total of GBP9.75 billion, dividing equally in short, medium, and long-maturity bonds (including the first time). Adding further to the upward pressure on yields were the remarks from ECB’s Simkus and Guindos on more 50bp rate hikes in the Eurozone. Hong Kong’s Hang Seng (HIZ2) and China’s CSI300 (03188:xhkg) slid on surge of Covid cases in mainland China Hong Kong and Chinese stocks pared all the early gains and finished the session lower as investors turned cautious following media reports of rises in Covid inflections and death tolls across large cities in China. The lack of commitment to more large-scale economic stimulus measures from the Central Economic Work Conference was considered underwhelming by investors who had higher expectations ahead of the meeting. The positive development of shifting to a more conciliatory stance towards the private sector was buried in the risk-off sentiment. Alibaba (09988:xhkg), Tencent (00700:xhkg), and Meituan (03690:xhkg) gained between 0.7% and 1.7%. Online healthcare providers were among the largest losers, Alibaba Heath (00241:xhkg), JD Health (06618:xhkg), and Ping An Healthcare tumbled by 4% to 8%. Chinese pharmaceuticals and Macao casino operators were among the largest losers. In A-shares, pharmaceutical and biotech names led the decline while the new energy space bucked the broad market and rise. FX: Dollar range-bound ahead of key PCE data this week The US dollar saw mild selling on Monday in thin markets and lack of any tier 1 data or Fed speak. Focus remains on US PCE data due later in the week which remains the Fed’s preferred inflation gauge. EURUSD rose above 1.06 again supported by hawkish commentary from ECB's Kazmir. Kazmir noted rates will not only need to go to restrictive territory but they will need to stay there much longer, noting inflation requires a strong policy response. Meanwhile, Germany's IFO Business climate data came in better than expected on the headline, led by a rise in both expectations and current conditions. USDJPY saw a modest uptick to 137+ levels in the Asian morning hours on Tuesday as the BOJ policy announcement was awaited, and expected to remain dovish (read preview below). GBPUSD testing a break below 1.2150 following the BOE’s long-end QT announcement. AUDUSD was little changed ahead of the RBA minutes. Crude oil (CLF3 & LCOG3) prices modestly higher Crude oil prices continue to find it challenging to balance the varied narrative around the demand outlook. China demand faces short-term headwinds as the Covid wave spreads, but is likely poised for a rebound in the medium term as authorities remain committed to driving up consumption recovery. Meanwhile, global demand outlook faces headwinds amid the massive tightening seen by global central banks this year. Supply side volatilities also persist with US refilling its SPR and sanctions on Russian oil. Crude oil prices were slightly higher, with WTI futures above $75/barrel and Brent futures getting close to $80.   What to consider? BOE announces restart of long-end bond selling, triggering another sell-off in Gilts After pausing the sales of long-end bonds recently to help the market to stabilize after the September rout, the Bank of England has announced that it will now start selling evenly across short, medium and long maturity bonds starting from Jan 9, as part of its QT. 2yr gilt yields up 20bps and 10yr up 17bps. Still, gilt yields are well below the peaks near 5% struck in late September and early October, when prices slumped in response to plans for tax cuts and extra spending from former British Prime Minister Liz Truss's short-lived government. Further pressure on gilts cannot be ignored as BOE likely to raise rates by another 50bps at the Feb 3 meeting. EU energy ministers lower gas price cap European nations reached a deal to cap natural gas prices at €180 per MWh, in a measure that will be applicable for a year from Feb 15. The price cap is significantly lower than an earlier proposal by the European Commission, and will only take effect if the benchmark Dutch TTF gas prices are above €180 per megawatt-hour, and their price difference with global LNG prices is greater than €35 per megawatt-hour. While this may take the immediate pressure off the consumers who are reeling under the energy crisis, we think price caps rarely work and only transfer the pressure somewhere else. Watch for Bank of Japan’s policy review hints The Bank of Japan is set to announce its policy decision today, and no change is expected in its monetary policy stance. The BOJ is expected to keep rates unchanged at -0.1% while maintaining its cap on the 10-Year JGB at 0.25%. Even as inflation increased to 3.6% YoY in October, the BOJ remains focused on achieving wage inflation before it considers a shift in policy stance. However, keep an eye out for any comments about a monetary policy review, which can trigger a strong JPY correction. There have been some mentions by BOJ members regarding a review of how monetary policy is conducted, they have generally been dismissed. While the timeline is still expected to be closer or after Governor Kuroda’s retirement in spring, any notes on who will succeed him or what policy change can be expected would be critical. US December NAHB housing market index slips further The NAHB housing index fell for a 12th straight month from 84 in December 2021 to 31 this month. However, the rate of decline moderated to its slowest in 6 months, indicating that we are possibly nearing the bottom of the cycle for builder sentiment. Of the index’s three components, current sales conditions fell 3 points to 36, buyer traffic was unchanged at 20, but sales expectations in the next six months increased 4 points to 35, also indicating an improved outlook. Better German business climate than expected in December The headline German IFO business climate index, which is based on 9,000 monthly survey responses from firms in the manufacturing, service sector, trade and construction, was out better than expected in December. It climbed to 88.6 versus prior 86.3 and expected 87.2. The current economic assessment and the expectations also improved to 94.4 and 83.2, respectively. Companies are slightly less pessimistic about the macroeconomic trajectory. Though a recession is certainly unavoidable in Germany, the impact of the energy crisis has been so far more limited than initially feared. On a flip note, ECB policymaker Gediminas Simkus, who serves as the Chairman of the Bank of Lithuania, indicated that a 50 basis points rate hike in February is a done-deal. This is aligned with comments from ECB president Christine Lagarde at last week’s ECB press conference. The market reaction was muted. Nike and FedEx earnings on watch today Recently sell-side analysts have raised their price targets on Nike (NKE:xnys), citing potential margin recovery. The sportswear giant reports FY23 Q2 (ending Nov 30, 2022) today and the street consensus is expecting its revenue to grow 11% Y/Y to USD12.6 billion. Peter Garnry suggests in his note that the focus will be on the outlook for the holiday season quarter ending in February 2023 which can give investors some ideas if consumers are still keeping up their spending on discretionary items. Analysts covering Nike seem more optimistic about consumer spending in 2023 than the US bank CEOs who recently suggested that US consumer spending has been coming down. FedEx (FDX:xnys) earnings are also key to watch today. FedEx is now on the other side of the pandemic boom in logistics and expectations for revenue growth have collapsed to zero revenue growth over the next two quarters which in real terms are very low given the inflation. This means that the bar is set low for FedEx when its earnings hit the wire today.   For our look ahead at markets this week – Read/listen to our Saxo Spotlight. For a global look at markets – tune into our Podcast. Source: Market Insights Today: Markets grinding lower; BOE to restart long-end QT; Eyes on BOJ – 20 December 2022 | Saxo Group (home.saxo)
Despite The Improvement In The Outlook Due To Falling Energy Prices, The Economic Environment In Britain Remains Difficult

The Bank Of England Will Now Start Selling Bonds | A Shift In Bank Of Japan Policy Overnight

Saxo Bank Saxo Bank 20.12.2022 09:08
Summary:  The Bank of Japan surprised global markets overnight with a tweak to their yield curve control policy that came as a large shock to currency traders and even shook risk sentiment more broadly. Not only did the JPY surge broadly, especially against non-USD major currencies, but global yields jumped on the news as yields on Japanese government bonds rose in step-wise fashion on the shift higher in the yield cap on 10-year JGB’s from 0.25% to 0.50%.   What is our trading focus? Nasdaq 100 (USNAS100.I) and S&P 500 (US500.I) After a weak session yesterday that saw the major indices losing about a percent, futures traded lower still overnight after the Bank of Japan decision to tweak its policy (more below) took US long yields sharply higher overnight. The next technical focus lower could be the 61.8% retracement of the rally from the October low – which is at a rather lower level for the cash index at 3,724 because the wild spike higher in US equity futures on the CPI release last week was not traded in the cash market. Equity traders will keep at least one eye on treasury yields after the surge overnight. Euro STOXX 50 (EU50.I) STOXX 50 futures are some 1.5% lower this morning from yesterday’s close after the surprise BoJ policy shift overnight cratered sentiment and have tumbled over 5% since the ECB’s hawkish meeting last week. The next technical focus lower could be the 200-day moving average, which for the cash index comes in near 3,675. Hong Kong’s Hang Seng (HIZ2) and China’s CSI300 (03188:xhkg) Overnight U.S. stock market weaknesses, concerns about spreading of Covid-19, and the upward adjustment of yield cap by the Bank of Japan contributed to the risk-off sentiment in the Hong Kong and mainland Chinese stock markets.  Both the Hang Seng Index and CSI300 Index plunged around 2%. Technology stocks underperformed. Hang Seng TECH Index tumbled 4%, with Alibaba (09988:xhkg) and Tencent (00700:xhkg) dropping by more than 4% and Bilibili (09626:xhkg) tumbling more than 8%. Placement of shares at discount from two Hong Kong listed Chinese developers weighed on the property sector. Chinese banks fixed their 1-year and 5-year loan prime rates unchanged. FX: BoJ move sees massive JPY surge, particularly in the crosses The market was surprised to see a shift in BoJ policy overnight, as Governor Kuroda and company shifted the cap on the 10-year JGB to 0.50% from 0.25%, even as they left the base policy rate of -0.10% alone. The move took the JPY sharply higher, with USDJPY trading some 3% lower to new cycle lows below 133.00, while non-USD JPY crosses surged somewhat more as the BoJ’s move triggered a global surge in bond yields and took risk appetite down a few notches, helping support the US dollar elsewhere. Crude oil (CLF3 & LCOG3) prices modestly higher Crude oil prices continue to find it challenging to balance the varied narrative around the demand outlook. China demand faces short-term headwinds as the Covid wave spreads but is likely poised for a rebound in the medium term as authorities remain committed to driving up consumption recovery. Meanwhile, global demand outlook faces headwinds amid the massive tightening seen by global central banks this year. Supply side volatilities also persist with US refilling its SPR and sanctions on Russian oil with a government response close to being completed. In week to Dec 13 funds cut bullish Brent and WTI bets to lowest since April 2020 and it highlights the risk of large price swings as the short-term outlook remains very clouded. Crude oil prices were slightly higher, with WTI futures above $75/barrel and Brent futures getting close to $80. Gold (XAUUSD) maintains a bid near $1800 ... after Bank of Japan’s surprise tweak of its yield cap sent mixed signals for bullion as the dollar dropped and bond yields rose. Overall, however, the prospect of higher yields in Japan following years of artificially low rates could potentially be seen as gold negative given that the BOJ’s steadfast commitment to defending its 10-year yield cap has served as an anchor indirectly helping keep borrowing costs low around the world. Since the current run up in gold started in early November, the price has not dipped below its 21-day moving average, today at $1777. With momentum showing signs of slowing a break below may signal a period of consolidation ahead of yearend while a close above $1815 is needed for that risk to fade. US Treasuries (TLT:xnas, IEF:xnas, SHY:xnas) drop on BOE and BOJ actions The surge in yield across the pond in the U.K. and Eurozone as well as the surprise announcement from the BOJ that it will lift the yield cap on 10-year JGB’s from 25 bps to 50 bps has driven U.S. Treasury yields higher, with the yield on 2-year notes rising to 4.27% and that on 10-year notes to 3.68%. In futures, large selling was seen on the 10-year (ZNH3) and the ultra-10-year (TNH3) contracts. The 2-10-year curve steepened to -60bps from the recent peak at -84bps. The move was supported on Monday by a 17bp jump in the yield on the U.K. 10-year Gilts after the Bank of England announced the Q1 2023 bond selling schedule for its Asset Purchase Facility portfolio. What is going on? Bank of Japan surprises with lift of yield cap on 10-year JGB’s The BoJ left the policy rate unchanged at -0.10%, but lifted the cap on 10-year JGB’s to 0.50% from 0.25%, triggering an avalanche of JGB selling that immediately took the 10-year JGB yields close to the new target. The market was caught very off-guard despite recent rumblings that the BoJ would likely eventually shift policy. Most observers assessed, given Governor Kuroda’s constant stout defense of the BoJ’s policy mix, that a change to BoJ policy would take place after Kuroda’s exit on April 8 of next year. This decision overnight finally shows a willingness to move that will have the market more likely to anticipate follow up moves after next April, even hikes of the policy rate. For now, this decision took the JPY some 3% higher overnight and sent global bond yields sharply higher and risk sentiment broadly lower as the tightening move comes at a time when many other central banks are shifting to a deceleration of their respective tightening regimes. Better German business climate than expected in December The headline German IFO business climate index, which is based on 9,000 monthly survey responses from firms in the manufacturing, service sector, trade and construction, was out better than expected in December. It climbed to 88.6 versus the prior 86.3 and expected 87.2. The current economic assessment and the expectations also improved to 94.4 and 83.2, respectively. Companies are slightly less pessimistic about the macroeconomic trajectory. Though a recession is certainly unavoidable in Germany, the impact of the energy crisis has been so far more limited than initially feared. On a flip note, ECB policymaker Gediminas Simkus, who serves as the Chairman of the Bank of Lithuania, indicated that a 50-basis points rate hike in February is a done deal. This is aligned with comments from ECB president Christine Lagarde at last week’s ECB press conference. US December NAHB housing market index slips further The NAHB housing index fell for a 12th straight month from 84 in December 2021 to 31 this month. However, the rate of decline moderated to its slowest in 6 months, indicating that we are possibly nearing the bottom of the cycle for builder sentiment. Of the index’s three components, current sales conditions fell 3 points to 36, buyer traffic was unchanged at 20, but sales expectations in the next six months increased 4 points to 35, also indicating an improved outlook. BOE announces restart of long-end bond selling, triggering another sell-off in Gilts After pausing the sales of long-end bonds recently to help the market to stabilize after the September rout, the Bank of England has announced that it will now start selling evenly across short, medium and long maturity bonds starting from Jan 9, as part of its QT. 2yr gilt yields up 20bps and 10yr up 17bps. Still, gilt yields are well below the peaks near 5% struck in late September and early October, when prices slumped in response to plans for tax cuts and extra spending from former British Prime Minister Liz Truss's short-lived government. Further pressure on gilts cannot be ignored as BOE likely to raise rates by another 50bps at the Feb 3 meeting. European nations reached a deal to cap natural gas prices at €180/MWh The deal that will apply for one year from February 15 have no impact on markets this winter given the timing of the implementation and ample supply with stock levels still up 290 TWh year-on-year, the equivalent of 39 days of peak winter demand. The Dutch TTF benchmark gas contract trades near €100/MWh in response to milder weather during the next week and increased power production from renewables reducing demand for gas. The price of gas for the winter 2023/24 period meanwhile has slumped to €110, further reducing the outlook for economic pain next year. Gas consumption in Europe is set to shrink by more than 50 billion cubic meters in 2022, a 12-15% drop and “the sharpest decline in history,” led by price-driven demand destruction and mild weather according to Bloomberg Intelligence. What are we watching next? Follow-on from Bank of Japan move overnight The Bank of Japan move overnight was an uncomfortable one for global markets as it sent global bond yields sharply higher, including the US 10-year yield, which jumped over 10 basis points at one point overnight. Yields also rose elsewhere and this sudden new development in less liquid markets here toward the end of the calendar year could aggravate volatility risks across equity and bond markets. Earnings to watch The bar is set high for Nike earnings as sell-side analysts have recently hiked their price target on the stock and increased their expectations for 2023 on margins. The stock recently tried to retake the 200-day moving average above 110.00, but that effort failed and closed yesterday near 103 ahead of today’s earnings report after today’s close. FedEx will also report after the close. Today: Nike, FedEx, General Mills, FactSet Research Systems Wednesday: Toro, Micron Technology, Cintas, Carnival Thursday: Paychex, CarMax Friday: Nitori Economic calendar highlights for today (times GMT) 1330 – US Nov. Housing Starts and Building Permits 1330 – Canada Oct. Retail Sales 1500 – Eurozone Dec. Consumer Confidence 2100 – New Zealand Dec. ANZ Consumer Confidence 2130 – API's Weekly Report on US Crude and Fuel Inventories  Follow SaxoStrats on the daily Saxo Markets Call on your favorite podcast app: Apple  Spotify PodBean Sticher   Source: Financial Markets Today: Quick Take – December 20, 2022 | Saxo Group (home.saxo)
Soft PMIs Are Further Signs Of A Weak UK Economy

Andrew Bailey Signaled The Start Of A Recession In The British Economy

InstaForex Analysis InstaForex Analysis 21.12.2022 08:38
It's fair to say that this week is a festive one. First off, it is Catholic Christmas this Sunday. Second, there won't be much historical context for the news. The most intriguing report of the week focused on the third quarter's GDP in the UK, in particular. This, however, will be the indicator's third estimate for the third quarter. The third estimate is not likely to differ significantly from the first two given that the previous two estimates showed a decrease of 0.2%, even though a 0.5% drop was initially anticipated. But as I've mentioned in earlier articles, a lot now depends on the interest rates set by the ECB, the Bank of England, and the Fed. The ECB and the Bank of England have not yet been able to approach the Fed rate, although rate-hike cycles are already coming to an end. In the United States, the rate is predicted to increase to 5.25%, while in the European Union, it is currently 2.5% and has already started to decline. Christine Lagarde has never discussed the ultimate rate at which the ECB aspires, and Luis de Guindos said yesterday that he is unsure of the level at which the interest rate must be raised. It sounded as though he was saying, "I don't know to what value the rate will rise," rather than, "I don't know to what value we will be able to raise the rate." The ECB's ambiguity is still half the problem, though. With great difficulty, the Bank of England in the UK managed to slightly lower inflation after raising the rate for eight straight meetings. In this scenario, the British regulator would need to maintain a pace of 75 basis points of tightening monetary policy, but in December, they dropped to 50 points, and a survey by the Bank of England revealed that the market does not anticipate rates to rise above 4.25%. I'm not sure what kind of survey the British regulator conducted or who took part in it, but bakers with movers were most definitely excluded. Analysts and economists, I suppose. And if they truly do not anticipate another rate increase of more than 75 basis points, this could have the most detrimental effects on the pound, which has been rising recently precisely because the Bank of England is catching up to the Fed, which means it will raise interest rates more strongly and for a longer period. However, in reality, it might be the opposite. Let me remind you that Andrew Bailey signaled the start of a recession in the British economy; consequently, with each new tightening of policy, the regulator runs the risk of making the recession worse. The slowdown and, going forward, the refusal of additional tightening are most likely related to this understanding. Notably, the Bank of England may stop raising rates at the same time as the Fed, which would be in February or March of the following year. The likelihood of completing the construction of an upward section of the trend, in my opinion, has increased. For the next two weeks, we may be in the "holiday trading" phase, but in January 2023, I will once again wait for the development of a minimum correction section of the trend for both of the instruments that I monitor daily. I conclude from the analysis that the upward trend section's construction has grown more intricate and is almost finished. As a result, I suggest making sales with targets close to the estimated 0.9994 level, or 323.6% Fibonacci. Although there is a strong likelihood that the upward portion of the trend will become even more extended and complicated, there is currently a signal to turn lower. The construction of a new downward trend segment is predicated on the wave pattern of the pound/dollar instrument. Since the wave marking permits the current construction of a downward trend section, I am unable to advise purchasing the instrument. With targets around the 1.1707 mark, or 161.8% Fibonacci, sales are now more accurate. Wave e is likely finished, though it could take on an even longer form.
UK Budget: Short-term positives to be met with medium-term caution

Britain’s GDP Rate Increased And Has A Positive Effect On The GBP

TeleTrade Comments TeleTrade Comments 22.12.2022 09:43
The UK economy contracted by 0.3% on the quarter in the three months to September of 2022 vs. -0.2% prior, the final revision confirmed on Thursday. The market expected a reading of -0.2% in the reported period. On an annualized basis, Britain’s GDP rate increased by 1.9% in Q3 vs. 2.4% registered in the first estimate while missing 2.4% expectations. Meanwhile, the UK Q3 Current Account arrived at £-19.402 when compared to the £-33.224B expected and the second quarter’s £-35.086B. The country’s Total Business Investment data for Q3 came in at 1.3% QoQ and -2.5% YoY. FX implications GBP/USD was last seen trading at 1.2115, retreating from daily highs of 1.2135, still up 0.25% on the day. The Pound Sterling remains unimpressed by the mixed UK data dump. About the UK GDP The Gross Domestic Product released by the Office for National Statistics is a measure of the total value of all goods and services produced by the UK. The GDP is considered a broad measure of the UK's economic activity. Generally speaking, a rising trend has a positive effect on the GBP, while a falling trend is seen as negative (or bearish).  
Solid Wage Growth in Poland Signals Improving Labor Market Conditions

Saxo Bank And JP Morgan's Negative Views On The Outlook For British Economic Growth

InstaForex Analysis InstaForex Analysis 27.12.2022 08:03
Signs of a painful contraction in the British economy continue to accumulate, causing analysts to doubt whether the currency can extend or even maintain the recent rebound against the dollar. The options market is also showing paranoia, with traders still pessimistic over the long term. The pound sterling jumped from its lowest level ever in September, driven by the government changes that followed the ill-fated term of Liz Truss as the country's prime minister, in addition to the collapse of the dollar. Despite this, the pound sterling still recorded a decline rate of 11% in 2022, to achieve its worst year since the vote to leave Britain from the European Union "Brexit" in 2016. Opportunities for gains next year may be limited by diverging central bank policies, as the Bank of England looks increasingly pessimistic in comparison to other central banks. Moreover, the U.K. economy continues to falter, the budget deficit is skyrocketing, and double-digit inflation has led to the steepest drop in living standards on record, leading to curbs in spending and the worst economic turmoil in decades. The housing market also looks vulnerable to a sharp correction. "The UK is at the forefront of economies teetering on the verge of collapse," said John Hardy, Head of FX Strategy at Saxo Bank. He explained that the pound sterling "could witness further declines in light of the combination of the Bank of England's slowdown towards the increasing tightening of monetary policy and the austere financial situation." The pound bounced back from losses caused by efforts for a broadly funded tax cut in two weeks, but it took more than two months to reverse risks for a year to pre-budget levels. The slow recovery of this gauge, which tracks market sentiment broadly, shows that traders remain deeply pessimistic towards the long-term GBP and that the recovery in the spot market was more based on positioning than outright growth. The latest data from the Futures Trading Commission showed leveraged funds switching to short positions on the British pound in the week ending December 13, after being long positions previously, while asset managers held short positions. JPMorgan Chase & Co. analysts expect the pound to fall to $1.14 at the end of the first quarter, from around $1.21 now, citing their "particularly negative views" on the outlook for British economic growth. And the looming local elections in May could stir up more political uncertainty. Strategists polled by Bloomberg expect the pound to fall to $1.17 in the first quarter before recovering slightly to $1.21 by the end of 2023. Relevance up to 14:00 UTC+1 Company does not offer investment advice and the analysis performed does not guarantee results. The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade. Read more: https://www.instaforex.eu/forex_analysis/330788
Services PMIs and Fed Minutes: Analyzing Market Focus and Central Bank Strategy

The GBP/JPY Pair Is Aiming To Re-Test A Six-Day High As A Continuation Of Loose Policy Is Impacting The Japanese Yen

TeleTrade Comments TeleTrade Comments 27.12.2022 08:54
GBP/JPY is approaching 161.00 as BOJ sees a continuation of easy monetary policy. BOJ Governor sees rising labor demand ahead and a shift in wage-setting behavior by the firms. The BOE needs to slowdown the interest rate hike pace as households are failing to segment monthly installments. The GBP/JPY pair has extended its gains to near 160.78 after rebounding from near the psychological resistance of 160.00 in the Asian session. The cross has gained sheer momentum as Bank of Japan (BOJ) Governor Haruhiko Kuroda is standing with the decade-long view of easy monetary policy. The asset is aiming to re-test a six-day high around 161.00 as a continuation of loose policy is impacting the Japanese yen. After the decision of widening the allowance band around BOJ’s yield target, BOJ’s Governor has cleared that the decision was not meant to be a step towards an exit from ultra-loose monetary policy. BOJ Governor sees rising labor demand ahead and a shift in wage-setting behavior by the firms. While Japan PM Fumio Kishida stated that it was premature to state now whether the government and the central bank could revise a decade-old joint statement that commits the Bank of Japan (BOJ) to achieve its 2% inflation target at the earliest date possible, as reported by Reuters. In the early Tokyo session, the Japan Statistics Bureau reported a decline in the Unemployment Rate to 2.5% vs. the expectations and the former release of 2.6%. The catalyst that has impacted the Japanese Yen is the weak Retail Sales data. The annual Retail Trade has dropped to 2.6% against the consensus of 2.8% while the monthly Retail Trade (Nov) has contracted by 1.1% while the street was expecting a contraction of 0.2%. On the UK front, think tank see a slowdown in the interest rate hike by the Bank of England (BOE) as households are failing to augment their monthly payments. Analysts at BBH think that the Bank of England tightening expectations may need to adjust lower after a separate consumer survey showed nearly two million UK households had failed to make at least one mortgage, rent, loan, credit card, or any other bill payment over the last month."  
Pound Sterling: Short-Term Repricing Complete, But Further Uncertainty Looms

The European Central Bank And The Bank Of England Face An Urgent Need To Continue To Tighten Policy Because Inflation Remains Strong

InstaForex Analysis InstaForex Analysis 30.12.2022 11:54
The foreign exchange market is expected to move quite sharply in 2023 as two mutually directed processes - fighting inflation and trying to slow or prevent the onset of recession in each of the currency zones - follow similar scenarios, but in different conditions. Let's look at the balance of short and long positions in speculative positioning in the long-term, based on CFTC reports. To clearly see how large speculators build their strategy, let's consider the ratio of long and short positions for each of the currencies against the U.S. dollar. We will convert the long and short volumes for each of the currencies using a simple formula: divide the difference between long and short positions by the sum of long and short positions and normalize them between -100 and +100. We will sum up the result in the table. The interpretation of the results is as follows. If the line is above zero, the positioning is bullish, if it is below then it's bearish. The direction of the line whether it's up or down shows the dynamics of the speculators' sentiment over time. As follows from the table, the euro shows the most stable and consistent growth in regards to sentiment. The bullish bias is evident, i.e. long-term expectations on the futures market are in favor of the euro, which suggests that EURUSD will continue to rise during the first weeks of the new year. The New Zealand dollar unexpectedly took second place. The positioning was bearish for a long period, but in the last week a sharp growth of longs and a decline in shorts became evident. This means that the market sees the prospect of the kiwi strengthening against the current levels, the long-term target might be in the resistance area at 0.6680/6720. All other currencies are still in the bearish area (below zero) and are quite close to each other. Nevertheless, the movement in favor of growth in longs and a decline in shorts (upward direction of the lines) is noticeable for all currencies, except for the Canadian dollar. This synchronism allows us to conclude that the foreign exchange market is focused on a scenario of a gradual transition of demand from the dollar to other currencies. Sentiment is determined by a number of factors, and the most important one is inflation expectations in each of the currency areas. As the chart below clearly shows, the spread between the Federal Reserve's discount rate and inflation has been growing most steadily for the dollar since August, which means that the US central bank has been the most consistent among all major central banks in stopping the inflation surge and achieving a noticeable result. And if so, then the market sees the Fed's policy as not only the end of the rate growth cycle, but also a reversal to its decline earlier than the other currencies, that is, long-term expectations for the yield spread suggest a fall in the dollar's position. But the European Central Bank and the Bank of England face an urgent need to continue to tighten policy because the actions they have taken by the end of 2022 did not produce a noticeable result. Inflation remains strong, and as the winter progresses, as sharply higher energy rates begin to factor in, inflation will remain high, real yields will be much lower than in other countries, and they will be forced to continue policy tightening longer than the Fed forecast. This means that in dynamics, long-term yield spread expectations will shift in favor of the euro and the pound. For the euro, we just see a steady bullish repositioning (see the first chart), the pound lags behind, but the projections for the BoE's actions are firmly bullish. Forecasts for the ECB and the BoE's further actions are hawkish, and unlike the Fed, the end of the tightening cycle and a pivot to monetary policy easing are seen much further into the future, meaning that over the long term, the yield spread will start to grow in their favor. Read next: Japan Is Trying To Maintain Cover For LNG Vessels In Russian Waters, How Digital Money Could Look Like According To The IMF| FXMAG.COM We expect both currency pairs, EURUSD and GBPUSD, to resume growth in the first weeks of the new year. Long-term targets for EURUSD are 1.0940 and 1.1270, for GBPUSD we can expect attempts to rise to the area of 1.2750/60. It is necessary to take note that the Bank of Canada is likely to strengthen its hawkish stance since its efforts haven't produced any noticeable result yet. And also the Bank of Japan, as the dynamics of yield on the yen remains negative, which puts the yen in a losing position in the long term due to the risk of increased capital outflow from the country. As for the Australian dollar, there is no clarity yet. The dynamics in the futures market is minimal, the Reserve Bank of Australia is behaving very cautiously and does not allow the aussie to deviate either to one or the other side of the market trends. The U.S. dollar, according to the CFTC reports, is close to exhausting its growth potential, the Fed's role as a flagship is nearing its end. The dollar stands a good chance of continuing to weaken across the currency market spectrum in the first weeks of 2023.     Relevance up to 07:00 UTC+1 Company does not offer investment advice and the analysis performed does not guarantee results. The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade. Read more: https://www.instaforex.eu/forex_analysis/331172
Asia Morning Bites: Inflation Data in Focus, FOMC, ECB, and BoJ Meetings Ahead

In Poland May Not See Inflation Peak Until February, Although 2023 Will Not Be A Stellar One For Most Asian Economies, They Will Still Mostly Grow Faster Than Anywhere else

ING Economics ING Economics 05.01.2023 11:01
The warm weather in Europe is helping the region to get through the energy crisis, though many central bankers across the globe are still not done with rate hikes Back from holidays Happy New Year. We are gradually returning from holiday and sharpening our minds and pens again for another year of economic excitement. The Christmas break is traditionally a period with very little economic news and data, which allows us to keep the first economic update of the year brief. Our main views for 2023 are still intact and nicely presented in our Global Macro Outlook 2023. Still, there have been some important developments since the release of our outlook in early December. China has made a full U-turn on its zero-Covid strategy and is now experiencing a surge in Covid cases. For Western economies, an end to zero-Covid in China has always been a double-edged sword. On the one hand, it means that after a wave of surging Covid cases, the Chinese economy could open earlier and faster than initially thought, lowering the risk of new supply chain frictions. On the other hand, this reopening will very likely push up demand and prices for energy. In Europe, warm temperatures and strong winds since mid-December have not only led to lower wholesale prices for gas but also lowered gas consumption and filled up national gas reserves again. Unless the continent gets caught out by a severe winter in the coming months, the risk of an energy supply crisis has become extremely low. As a result of lower energy prices and government intervention, headline inflation came down more significantly than initially expected in December. If energy prices stay at their current levels throughout the year, headline inflation could come down quickly. Just taking the energy base effects into consideration, eurozone headline inflation could temporarily even touch 2% towards the end of the year. However, let’s not forget that there are still many “pass-throughs” at play and that it is almost normal for headline inflation to drop significantly after energy price shocks, while core inflation could still increase further and stay stubbornly high. Before getting overly enthusiastic remember that energy prices are highly volatile and recent developments cannot be extrapolated to the entire year. We have revised down our energy price assumptions but still expect an increase in the second half of the year when China starts to accelerate and Europe prepares for next winter. The central bank meetings in December hinted at a possible central bank divergence in 2023. While the Bank of England turned more dovish and even the Federal Reserve lost some of its uber-hawkishness, the two most dovish central banks of the last decade – the European Central Bank and the Bank of Japan – became more hawkish. The ECB, in particular, seems determined to continue hiking rates whether or not the economy falls into recession, and headline inflation could retreat faster than expected. As much as many central banks got carried away with ultra-loose monetary policy when inflation was low, there is now the risk that they will get carried away with overly restrictive monetary policy. Maybe it is just human for central bankers to want to secure their place in history as the slayers of inflation. In any event, don’t expect recent positive inflation developments to change central bankers’ minds anytime soon. Many people start the new year expecting the best but preparing for the worst. We take a different stance. We still expect a difficult macroeconomic year but are clearly preparing for the best. At a glance: our house view Energy: mild weather eases natural gas concerns The European natural gas market has come under significant pressure recently with TTF falling by around 50% since early December. Milder weather has reduced heating demand and as a result, Europe is seeing an unusual build in gas storage in the middle of winter. Gas storage is around 84% full compared to a five-year average of around 70%. It appears as though Europe will enter the injection season with comfortable storage, although there are still plenty of risks around the remaining Russian supply and also the potential for increased competition for LNG from China, as the country drops its zero-Covid policy. A more comfortable European market has meant that prices are unlikely to be as strong as initially expected. However, prices will still need to remain elevated to ensure demand destruction keeps the market in balance through the 2023/24 winter. We expect TTF to average EUR125/MWh in 2023, but uncertainty and lingering supply risks mean the market will remain extremely volatile. The outlook for the oil market remains bullish. China’s Covid policy change should prove supportive for demand in the medium to long run, although admittedly rising Covid infections could weigh on demand in the immediate term. Russian oil supply is still expected to fall due to the EU ban on Russian seaborne crude and refined products. As a result, the oil market is expected to tighten from the second quarter onwards, which supports our view for Brent to average a little over US$100/bbl over 2023. Warren Patterson Eurozone: ECB moves into uber hawkish zone The fall in sentiment indicators was partially reversed in December on the back of lower energy prices, courtesy of the extremely mild winter weather. That said, the strong fall in industrial production in October still suggests negative GDP growth in the fourth quarter and falling orders, high inventories and weakening hiring activity point to a further contraction in the first quarter. We expect only a weak recovery thereafter, leading to, at best, stagnating GDP for the whole of 2023. The more subdued energy prices and resolving supply chain frictions will push inflation down further, though core inflation is likely to prove more stubborn. We therefore don’t expect headline inflation to fall below 3% before 2024. After a hawkish monetary policy meeting in December, members of the ECB’s Governing Council have continued to emphasise a very hawkish message, pencilling in 50bp rate hikes for “a period of time”. On the back of this, we expect a 50bp rate hike both in February and March, followed by another 25bp rate hike in May. Bond yields have less upward potential and might fall again in the first half of the year. Peter Vanden Houte US: Fed nears end of hiking cycle as recession draws closer Recession worries are mounting in the US as the Federal Reserve continues hiking interest rates despite the economy already bracing itself for a deep housing market downturn and American CEOs being as pessimistic as they were in the depth of the Global Financial Crisis. With more companies adopting a defensive posture we expect to see hiring and investment plans cut back aggressively. The combination of job worries, lingering inflation and falling asset prices are likely to lead to sizeable falls in consumer spending while residential construction will also drag output lower. We look for a further 50bp of rate hikes in the first quarter given that inflation remains the Federal Reserve’s focus. Nonetheless, we believe that the composition of the CPI basket (heavy weighting towards housing and vehicles) is helpful in bringing about sharp falls in inflation from the second quarter onwards. Remember, too, that the Fed has a dual mandate that places a strong emphasis on the job market as well as targeting 2% inflation. With more flexibility to respond to the recession than most other central banks, we see significant scope for interest rate cuts and falling Treasury yields later in the year. James Knightley UK: Bank of England turns more dovish but rate cuts still a while off The UK economy has most likely been contracting since the third quarter of last year, and we expect this trend to continue until the summer. Admittedly, a recession is likely to be mild by historical standards, not least because the job market remains uber-tight, plagued by increasingly persistent labour shortages. We expect a peak-to-trough fall in GDP of a little over 1.5%. Against that backdrop, it’s not surprising that the Bank of England is turning more dovish. December’s decision registered a noticeable shift in voting patterns among committee members, which much like the Fed, resulted in a ‘smaller’ 50bp rate hike. We expect 50bp worth of additional tightening, though the jury’s out on whether this will come in one burst or split into 25bp increments. Either way, the BoE is likely to be slower to turn to rate cuts than in the US. Stickier inflation, owing to Europe’s energy crisis, and the tight UK job market, suggests the first rate cut is unlikely before 2024. James Smith China: no smooth road to recovery China’s lifting of Covid measures domestically and for international travellers will, in time, help the economy to normalise. But we can expect the short term to be dominated by the very high level of Covid cases, which have come at a time when the economy is already very weak. Looking at other economies in the region which have suffered similar severe waves of Covid (India’s Delta wave springs to mind) we would expect this wave to last no more than three months at which time the economy could start to revert to a more normal footing. However, this could also coincide with the US and Europe entering recession, which will weigh on any manufacturing recovery and export growth even as China’s domestic issues abate. The People’s Bank of China has set the policy tone for 2023 as stable, strong, and precise, which suggests that policymakers do not envisage much adjustment to interest rates or reserve requirements. Instead, a re-lending programme could be the main tool to inject liquidity into specific industries or for a specific purpose. Fiscal stimulus will focus on supporting long-term economic growth and will likely be delivered in March. Iris Pang Asia: region slows as global recessionary fears build Asian growth is slowing as its major external trading partners slide towards recession while its major regional economic hub (China) battles a new Covid wave. Not helping, a global downturn in semiconductor demand is hitting hard at the major manufacturing sector of the region, and domestic demand is being undermined by higher policy rates and the erosion of purchasing power due to inflation. But it isn’t all bad. Inflation, which was never as bad as most of Europe or the US, and has required a more nuanced policy tightening response, already shows clear signs of peaking in many economies. Easier policy and a troughing of the downturn are likely over the middle of the year. Japan may be an outlier here as it is making tentative overtures towards a normalisation of central bank policy, though we think any steps the Bank of Japan makes this year will be extremely tentative. China, too, will emerge from the current Covid wave within a quarter or two and should begin to grow more strongly, lifting regional exports once more. Overall, although 2023 will not be a stellar one for most Asian economies, they will still mostly grow faster than anywhere else. Rob Carnell CEE: New Year's repricing is a reminder that the inflation story is not over Leading indicators suggest a rebound from the bottom in economic activity, but hard data will continue to underwhelm for a while yet. Still, more attention will be paid to inflation, which we think peaked in Hungary and Romania at the turn of the year. In the Czech Republic, the January repricing should bring inflation back within reach of the September peak. In Poland, on the other hand, we may not see inflation peak until February, and we also expect inflation here to be the most persistent in the CEE region. However, we do not expect much more action from central banks. In Romania, after the last surprisingly strong inflation number, it looks as though the National Bank of Romania (NBR) may deliver one more 25bp hike to 7.00%. But otherwise, we consider the hiking cycle in the region to be over. So the main question is when inflation in the region will fall enough that central banks will be willing to start normalising monetary conditions. We see the Czech National Bank and the National Bank of Hungary as the first in this race. Conversely, we forecast the NBR will cut rates only at the end of this year with the National Bank of Poland following next year at the earliest. Frantisek Taborsky FX markets: dollar to find support as central banks spark abrupt decline FX markets have shown a little more stability over the last month and the dollar has found some support after dropping around 8% through October and November. The hawkish December FOMC meeting has certainly helped here and provided a counterweight to a surprisingly hawkish ECB. The major outperformer has been the Japanese yen, which received a further boost in December after the Bank of Japan shifted its 10-year JGB yield target. Rarely can there be said to be a more successful case of FX intervention than Tokyo’s efforts to sell USD/JPY in the 145/150 area. Looking ahead, the seasonal trends are more dollar supportive in the January-February window and this may be the more likely period for EUR/USD to make a move lower. Markets price the turn in the Fed cycle and a weaker dollar from the third quarter onwards, though we suspect sustained gains in EUR/USD may be harder to come by as central bankers continue to hike into recessions. Chris Turner Rates: set to reverse higher before collapsing lower 2022 saw the biggest bear market for bonds in modern times. A peak in US inflation opened the door for a decent rump of investors to square up on bear market positions in the fourth quarter, requiring the buying of both duration and risk. However, this just stored up pressure for resumed higher market rates ahead. Despite the easing in inflation pressures, the first quarter will have a strong rate hiking theme. The Fed is still hiking and needs tighter financial conditions. That should force market rates back up. With the ECB on a hiking mission too, upward pressure on eurozone market rates will also feature. While we see resumed upward pressure on rates dominating the first quarter, the biggest narrative for 2023 as a whole will be one of significant falls in market rates. The Fed and the ECB will peak in the first quarter, and once there, market rates will have a carte blanche to anticipate future cuts. Larger falls for US market rates are projected later in 2023, reflecting likely subsequent Fed cuts. But with cuts less likely from the ECB, expect a relative steepening of the US curve versus the eurozone one. This is a classic box strategy where the US curve steepens out (dis-inversion), and the eurozone one re-steepens by less. By the end of 2023, the US 10yr Treasury yield should be back down at 3% and the eurozone 10yr swap rate at 2.5%. But we should not go below these levels for long. Padhraic Garvey Read this article on THINK TagsRates Monthly Update FX Energy Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more
Despite The Improvement In The Outlook Due To Falling Energy Prices, The Economic Environment In Britain Remains Difficult

The Bank Of England Urgently Needs To Tame Stubbornly High Inflation

InstaForex Analysis InstaForex Analysis 04.01.2023 15:05
Before the end of the year, we asked InstaForex about UK economy, which is expected to decrease significantly, as we approach the end of the year. Let's have a look how do they see the near future of the UK economy and what would BoE consider as a gauge ahead of next interest rate decision. Although the UK GDP for the third quarter turned out to be noticeably worse than expected, the reading was still relatively positive. In annual terms, economic expansion contracted to 1.9% from 4.0%. However, a 2.0% economic growth is quite acceptable for Western countries. At first glance, it might seem that the British economy remains stable. However, in quarterly terms, it shrank by 0.3%. It indicates that the economy is gradually sliding into a recession. Notably, analysts have been predicting such a scenario for a long time. The energy crunch has considerably crippled the eurozone economy as well as the British one. The EU managed to fill its storage sites and avoid fuel shortages. However, it would hardly help it in the future. Even after some stabilization, energy prices soared by two or three times compared to last year. Such sharp price swings adversely affect the European economy. The manufacturing sector is bearing the brunt. Production costs have risen dramatically. Manufacturers are forced to reduce the profit margin to boost their market competitiveness. However, this move leads to a bigger extension of the payback period. However, in the EU,  the payback period is almost the longest one in the world. A few years ago, the payback period of individual industrial enterprises could stretch to 50 years. It made investments in the European economy less attractive.  Over such a long time, investors will only be able to return the invested funds, abandoning hopes for any profit. Recently, the situation has become even worse. It will inevitably lead to an increase in unemployment and a reduction in tax revenues.  Thus, many European manufacturers, including British ones, are now mulling over options for moving industrial production to other regions with lower energy costs and cheap labor. It will inevitably lead to an increase in unemployment and a reduction in tax revenues. In turn, governments will have to deal with worsening social policy, e.g. payments of pensions and benefits.  The situation is extremely challenging. However, those problems appeared a long time ago. The energy crisis and other economic woes have just exposed those cracks.  Things are getting worse due to the Bank of England’s monetary policy stance. It is adamant when it comes to rate increases. As a result, the borrowing costs are rising, which further extends the payback period. Such a problem is quite acute for those who are opening new enterprises or are going to modernize the existing ones.  Even if British companies decide to keep firms and staff, it will be difficult for them even to repair equipment. As for its upgrade, it would seem an attainable goal. Naturally, such companies will quickly lose market competitiveness and lower their production volumes. It will be a rather long and painful downturn.  Read next: Bitcoin: As for the price levels, one should pay attention to the level of $18,000 that has been recently hit. Probably, this level may well serve a starting point for buyers in case the price holds above it on a daily chart | FXMAG.COM The only thing the Bank of England can do is to reduce borrowing costs The Bank of England urgently needs to tame stubbornly high inflation. According to the latest data, inflation slowed to 10.7% from 11.1%. However, it is too early to talk about a steady decline in consumer prices. In June, inflation also dropped to 9.9% from 10.1%. Shortly after, it climbed again. Moreover, its rise was facilitated by supply chain disruptions and production cuts.That is, demand is constantly growing despite the shortage of goods. This is the main reason for an uptick in consumer prices. To some extent, the problem can be resolved at least partially by increasing the output volume. However, this option looks unlikely given the high cost of investment in the industrial sector.  The only thing the Bank of England can do is to reduce borrowing costs. Besides, the watchdog is not responsible for all other issues such as legislation and taxes. Judging by the results of the last meeting, the regulator may start lowering interest rates. Additionally, speculators were surprised that two of the nine board members voted for a rate cut. The Bank of England tries to act preemptively Once inflation starts to decline confidently, the Bank of England will stop the key interest rate hike. Then, after a small pause, it is likely to loosen its monetary policy. It is quite possible that the first key rate cut will take place as early as the first part of 2023. Notably, the BoE was among the first central banks that launched monetary policy tightening. In general, the economic situation in both the US and Europe is almost the same. On both sides of the Atlantic, most structural problems are identical. The Bank of England tries to act preemptively, whereas the European Central Bank and the Federal Reserve are closely monitoring the effect of these actions. If the result is not negative, they immediately take almost the same measures. At least in the last few years, the situation has been developing according to this scenario. There is no wonder. The fact is that the Bank of England is managing a large economy, but it cannot be compared with the economies of the US and the European Union. In other words, the Fed and the European Central Bank have weightier responsibilities. Any unwise decision may lead to alarming global consequences. Apart from inflation, central banks should also take into account the labor market condition. The Bank of England does not have difficulties with this issue. In the UK, the unemployment rate is 3.7%. In the last few months, it has been rising, thus approaching its usual level of 4.0%. This, in turn, provides the BoE with another reason to cut its benchmark rate, especially if the unemployment rate slightly exceeds 4.0%. This is likely to happen when the BoE sees a steady slowdown in inflation. It is highly likely that in early 2023, the Bank of England will raise the key interest rate once more. This time, analysts expect a 25-basis-point rise to 3.75% from 3.5% aimed at reinforcing progress in combat against inflation. At the second meeting of the year, the key rate will remain unchanged so that the regulator can analyze the effect of its previous decisions. At the following meeting, which is scheduled for May 11, the central bank may cut the benchmark rate to 3.5% from 3.75%. All the following cuts will be more moderate compared to the hikes in 2022. They are likely to be limited by rather high inflation and fears that it may resume surging amid a rapid drop in interest rates. It is highly possible that by the end of the year, the key interest rate will be lowered just to 3.0%. Could such measures support the UK economy? The UK is unlikely to avoid a recession. The fact is that the US is expected to slip into a recession, thus negatively affecting the European economy. However, the loosening of monetary policy may cushion the possible impact. Nevertheless, the Bank of England is unable to alter the situation considerably. It simply has no tools to affect structural economic problems. Thus, the regulator has only a minor influence on expenses in the industrial sector. It can settle just the financial component of the issue, which is of minor importance. The Bank of England can postpone the relocation of enterprises outside the United Kingdom, thus allowing the government to take effective steps if it decides to take this opportunity. 
Bank Of England Will Probably Be Unable To Avoid A Significant Easing Of Policy

The Issues That The UK Economy Is Facing Are Real: Interest Rate Expectations Peaking, Inflation Falling, And A Manageable Trading Downturn

Franklin Templeton Franklin Templeton 08.01.2023 12:48
Macroeconomic trends If 2023 is anything like 2022, then the UK may be in for a bumpy ride – inflation surged, interest rates soared, currencies swung, and the UK government clashed. But for us, one of the main challenges ahead for UK equities can be succinctly summarised: Will inflation begin to moderate as economic activity wanes? Indeed, macroeconomic headwinds remain. Investors remain hopeful that UK inflation has peaked, but continue to balance the prospect of surging prices with the rising cost of debt. Whilst the notion of transitory inflation has largely been disproven through 2022 as CPI data remained elevated, some factors are undoubtedly considered stickier than others. Frictional supply chain costs as the world emerges from the COVID-19 pandemic are already beginning to subside, but secular impacts on inflation such as globalisation and demographic change should not be overlooked. Thus, as the prospect of a technical recession is increasingly considered within the UK, the inflationary backdrop will be key to shaping its severity. Fortunately, an easing of global inflationary pressures is beginning to unfold. Data released in November showed that US consumer prices had risen by 7.7% over the past 12 months, falling short of the 8% estimates. In December, China announced a reversal of key zero-Covid policies after weeks of civil unrest. And indeed, global commodity prices have moderated since their extreme volatility earlier in the year. As inflation looks like it is peaking in the UK, the news of a cooling backdrop in the US has helped drive a rerating of equities and a pullback in government bond yields domestically. Inflation in the UK is expected to continue to fall back from highs over the next few months, although the impact from changes in consumer energy support policy will likely be a key determinant as to how this plays out. Assuming an easing in headline inflation figures, we expect the central bank to be nearing a peak in its monetary tightening programme. The Bank of England recently made steps to reduce its balance sheet, embarking on a programme of quantitative tightening in Q4 2022. Higher interest rates mean higher financing costs for corporations and consumers. Combined with the tighter flow of liquidity, this may present some short-term challenges for UK equities whilst the positive effect of moderating inflation takes its time to embed into supply/demand habits. Key economic concerns are the length and depth of this inevitable slowdown – investors remain closely focussed on the central bank response as the risk of a policy mistake is increased. As the short-lived “Trussonomics” regime unwinds, the central bank at least has some relative market stability in order to play its best hand. Market inferred peak base rates have moderated by over 100 basis points (bps) since the (not so) mini budget was announced earlier in 2022. The perception of a safe pair of economic hands with Prime Minister Rishi Sunak and Jeremy Hunt, chancellor of the Exchequer, has improved sentiment to the UK into 2023. With gilt yields stabilised, and an economic catastrophe seemingly circumnavigated, the expectation of relatively benign markets should be well received by the Bank of England as they execute monetary policy over the coming months. One must be reminded that not all consumers are proportionately impacted by the enduring cost-of-living crisis consuming the UK. The UK remains in a position of strength from the perspective of excess household savings – savings accumulated throughout the Covid-19 pandemic are now earning an attractive rate of interest income. Furthermore, the UK mortgage market has evolved since 2005 – the last meaningful period of central bank tightening – when 70% of mortgages were financed on variable terms. Today, only 14% of the UK mortgage market is financed with variable rates. The extent of fixed rate mortgage financing and indeed outright home ownership within the UK should continue to partially offset the cost-of-living burden instilled by soaring consumer energy bills. But we do expect a degree of consumer caution to remain until broader costs begin to moderate. The labour market has continued to demonstrate resilience throughout this period of volatility. Although latest data indicate that unemployment rose to 3.7% in Q3 2022 and that job vacancies dropped for the fifth consecutive quarter, one must be reminded that the labour market remains buoyant relative to historic levels. Signals such as a falling labour inactivity rate are indicative of employment re-engagement, particularly amid the over 50s, as soaring costs prompt ‘early retirees’ back into employment. Thus, we do not expect a surge in the unemployment rate, which should provide some protection against the risk of a prolonged, severe recession. Despite the relative strength of the UK equity market throughout a period of heightened volatility, investors remain mindful of the value that remains. The UK market is trading on a forward P/E ratio of around 10x – 20% beneath its 15-year median – and offers a dividend yield of 4%. Contrasting with the US, trading on a forward P/E ratio of around 18x – 12% above its 15-year median – and a dividend yield of 1.7%, UK equities look cheap to us. An economic slowdown is widely anticipated across global markets and as such, should investors continue to address the notion – is this bad news already priced in to UK assets? The UK market remains forward-looking, and in our mind is pricing in an excess of pessimism given where valuations are today. Thus, we believe the attractiveness of the region is enhanced to investors as evidenced by ongoing M&A activity, as indeed are the prospects for continued resilience through 2023 and beyond. Small- and mid-cap UK equities UK small-and-mid (SMid) cap has been an asset class that has been hugely out of favour over the last 12 months, leading to significant underperformance versus the wider UK equity market. Yet, we believe that the prospects for many companies in this area of the market remain much brighter than the investor value inferred in today’s constricted valuation multiples. Amongst the current barrage of UK negativity, short termism and ongoing selling pressure, we believe opportunities are emerging that set the stage for a recovery in 2023. The issues that the UK economy is facing are real. However, we believe that next year we are likely to see interest rate expectations peaking, inflation falling, and a manageable trading downturn. We are increasingly enthused by some of the compelling opportunities that we observe within the Smid cap market which lays the foundation for future returns. We do expect earnings to come under pressure in the short term, but the degree of valuation discount observed assumes a wide margin of safety. Currently, Smid cap companies are trading towards the lower end of their historical valuation range, along with what we believe to be attractive dividend and free cash flow yields. Many businesses are entering this well signalled downturn with significant balance sheet strength, and this enables them to continue to invest and take advantage of the opportunities which should inevitably arise. After exiting a disruptive pandemic period, not only in sound financial shape, but also operationally and competitively, we believe that many businesses and their prospects have actually been significantly strengthened. In our view, the flexibility, strength and resilience engrained in many Smid cap companies is being underestimated. Thus, we believe the prospects of the UK Smid cap market are enhanced, where the risk/reward opportunity is beginning to look compelling over the long term. Large-cap UK equities UK large-cap businesses kept the UK equity market afloat through 2022, as many other developed markets suffered at the hands of an inflationary resurgence. As humanitarian tragedy and geopolitical unrest reverberate across Europe, investors continue to shelter in recognised safe havens; this has led to an encouraging period of attractive relative returns for the FTSE 100 Index. Looking forward into 2023, the FTSE 100 looks well positioned to continue to demonstrate resiliency in the face of global headwinds. Of course, investors are presented with many unknowns… Will an enduring economic recession engulf the market? The FTSE 100 is comprised of some of the highest quality, cash generative businesses listed within the UK. These businesses are well capitalised and many raised equity where needed during the pandemic, and thus start from a position of strength relative to speculative/higher leveraged alternatives. Defensive havens remain prevalent – tobacco, pharmaceutical and utility businesses are demonstrably less sensitive to economic cyclicality. Will inflation persist? The FTSE 100 is constructed by many companies that exhibit innate inflationary resistance. Real asset businesses such as oil and gas majors and metal miners account for over 20% of the index. Whilst some may argue that their fate is in the hands of global commodity volatility, most would concur that these remain an effective hedge against soaring inflation. Furthermore, regulated businesses such as utility companies have a reliable mechanism for protecting their revenue streams from inflation. Will interest rates settle at 3-4%? Inherent interest rate protection is prevalent within the index. Multinational banks are now beginning to earn material interest income margins from their lending, after over a decade of frankly negligible rates. Furthermore, long-term liabilities for life assurance businesses are now discounted at a higher rate, reducing the value of their liabilities in today’s terms. The UK market has lagged the US market for some time due to the notable omission of high-growth, pre-profit stocks where the terminal value is discounted from many years into the future. These businesses were able to thrive in a zero-rate environment. But as rising interest rates inflate the discount rate used for equity valuations, these high-growth stocks are disproportionately sensitive to hawkish policy relative to the established, profitable, and mature businesses prominent within the FTSE 100 Index. Should investors not know what steps to take next. Then in our mind the notion of being “paid to wait” is an attractive concept amid the UK large-cap market. The mature nature of the UK large-cap landscape instils a degree of resilience in the propensity of businesses to return capital to shareholders. This may be derived from reliable dividend income – the FTSE 100 is a natural hunting ground for income, yielding over 4.5% - or indeed the opportunity to benefit from share buybacks which remain commonplace, particularly amongst businesses generating windfall profits. Source: Bloomberg as at 16/12/2022 unless otherwise stated. Read the full report
Soft PMIs Are Further Signs Of A Weak UK Economy

The U.K. Economy Is In Trouble, Fall Of GDP Is Expected!

Kamila Szypuła Kamila Szypuła 08.01.2023 19:48
A difficult year ahead for the global economy is set to hit some countries harder than others. Inflation was one of the biggest macroeconomic themes in 2022 and it is likely to remain so in 2023. Inflation also contributes to gross domestic product. In Great Britain, this indicator does not look optimistic, and its upcoming reading may turn out to be crucial for the economy this year. The Bank of England has said the country is on track for a prolonged recession, as households struggle to keep up with the soaring costs of food, energy and other basic essentials. Economists opinion Around four-fifths of economists say the UK will experience a much longer recession than its peers. They predict a difficult year 2023 and a potential return to normal by 2024. The UK will face one of the worst recessions and weakest recoveries in the G7 in the coming year, as households pay a heavy price for the government’s policy failings, some economists say. A large proportion of experts expect the UK to fall behind its peers, with gross domestic product already contracting and expected to continue to do so for most or all of 2023. The result is expected to be an increasingly steep decline in household income as higher credit costs add to the pain already caused by soaring food and energy prices. In its macro forecast for 2023, Goldman Sachs forecast a 1.2% decline in UK real GDP over the course of the year, well below all other major G-10 economies. ING pointed out that GDP figures have been somewhat discrepant recently, partly due to the Queen's funeral in September last year. But the economy is clearly weakening and ING expects a negative monthly result in November, after an artificial rebound in October after September's extra day off. Inflation Throughout the last year, the Bank of England has been raising interest rates in an attempt to cool down rampant inflation. This resulted in an increase in interest rates from 0.25% to 3.5%. The cost of borrowing in the UK has increased dramatically, affecting the ability of businesses to borrow money, but also the cost of mortgage payments for millions of Britons. As mortgage repayments increase, household disposable income decreases. Disposable income is also affected by inflation as the cost of goods and services increases. The Office for National Statistics reported last month that Britain's inflation rate was 10.7% in November, down from a 40-year high of 11.1%. GDP Economic activity has slowed sharply in recent months as consumers tighten their belts in response to soaring living costs, while business investment has slumped amid concerns over the strength of the UK and global economy. Last month, GDP showed that the UK economy contracted at a rate of -0.3% in the last quarter. This reinforces speculation that the UK is facing a long recession. When it comes to forecasts for quarterly or year-on-year results, there are no forecasts, but a contraction is to be expected given the prevailing economic conditions. The Pound (GBP) on FX market Based on the current outlook, investors can expect a difficult year ahead for the pound, with the value of sterling coming under significant pressure if the economies of its major counterparts continue to outperform the UK. During the last recession, the pound fell to 1.05 to the euro and 1.14 to the dollar. Cable (GBPUSD) was trading at 1.14 Source: investing.com
Despite The Improvement In The Outlook Due To Falling Energy Prices, The Economic Environment In Britain Remains Difficult

The Bank Of England's Committee Members C.L. Mann: "Restricting Energy Prices Is Forcing A Shift In Spending To The Rest Of The Consumer Basket"

Jakub Novak Jakub Novak 09.01.2023 11:25
More and more politicians have expressed their belief that UK inflation is slowing significantly this year. However, one of the Bank of England's committee members, Catherine L. Mann, said the recent introduction of a price ceiling could trigger inflation in other sectors by boosting consumer spending. Mann speach "By limiting energy prices, we have mechanically lowered the rate of inflation, which is irrelevant to future monetary policy decisions," Mann said during a panel discussion at the American Economic Association's annual conference. "Restricting energy prices is forcing a shift in spending to the rest of the consumer basket, thus causing potentially higher inflation," she added. Mann also spoke about global climate change, arguing that regulatory policies aimed at reducing emissions could change the economic environment over the coming decades. Bank of England  The Bank of England raised interest rates nine times since December 2021 in order to suppress inflation as quickly as possible. Although the bank now expects inflation to fall sharply this year, policymakers are divided on how long interest rates will rise further. Mann voted for a 75 basis point rate hike in December, while the rest of the group opted for a half-point increase. Two other officials opted to leave it at that. At the moment, investors are certain of another rate hike in February this year, but whether it will be by half a point or by a quarter is a big question. Minutes from the last meeting showed that most policymakers consider the labor market to be rather tight and inflationary pressures on domestic prices and wages remain stable. This would well justify further monetary policy tightening. Read next: After The Correction, Jacek Ma's Share In Shareholder Votes Will Fall To 6.2%| FXMAG.COM GBP/USD As far as the technical picture of GBP/USD is concerned, Friday's record rise of over 200 pips was quite impressive. Buyers need to break above 1.2160 to maintain their advantage, adn the breakdown of this range will strengthen the hope for further recovery towards 1.2220. After that, it will be possible to see a rise to 1.2260. But if pressure returns after the bears take control of 1.2100, the pair will rush down to 1.2040 and 1.1980. EUR/USD In EUR/USD, a break above 1.0700 will spur a rise to 1.0730 and 1.0770, while a dip below 1.0650 will increase the pressure on the pair and push it to 1.0610 and 1.0570. Relevance up to 08:00 2023-01-10 UTC+1 Company does not offer investment advice and the analysis performed does not guarantee results. The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade. Read more: https://www.instaforex.eu/forex_analysis/331722
Hang Seng Index Plummets -2% Amid Weak China Data, Short-Term Trend Intact

The EUR/GBP Pair Sticks To Its Modest Intraday Gains

TeleTrade Comments TeleTrade Comments 10.01.2023 09:57
EUR/GBP attracts fresh buying on Tuesday and recovers further from over a two-week low. Dovish BoE expectations weigh on the British Pound and remain supportive of the move. The recent hawkish ECB rhetoric underpins the Euro and supports prospects for further gains. The EUR/GBP cross regains positive traction following an early dip to sub-0.8800 levels and moves away from over a two-week low touched the previous day. The cross sticks to its modest intraday gains through the early European session and is currently placed near the top end of its daily range, around the 0.8825-0.8835 region. The British Pound's relative underperformance comes amid a bleak outlook for the UK economy, which has been fueling expectations that the Bank of England (BoE) is nearing the end of the current rate-hiking cycle. Apart from this, a modest pickup in the US Dollar demand is seen weighing on the Sterling and lending some support to the EUR/GBP cross. The shared currency, on the other hand, benefits from hawkish European Central Bank (ECB) rhetoric. In fact, ECB Governing Council member Francois Villeroy de Galhau said last Thursday that it would be desirable to reach the right terminal rate by next summer. Furthermore, ECB expects wage growth to be very strong over the next few quarters. In the absence of any major market-moving economic releases, either from the UK or the Eurozone, the aforementioned bullish fundamental backdrop supports prospects for additional gains. That said, any subsequent move up might continue to confront stiff resistance and is more likely to remain capped near the 0.8865-0.8875 heavy supply zone.  
British Prime Minister Rishi Sunak Sees No Chance Of Reducing Inflation, Despite Promises To Halve It

British Prime Minister Rishi Sunak Sees No Chance Of Reducing Inflation, Despite Promises To Halve It

Jakub Novak Jakub Novak 10.01.2023 14:10
UK Prime Minister Rishi Sunak said UK inflation is not certain to slow down this year so there is a need to continue influencing wages in order to limit their rise despite ongoing negotiations with striking sectors, including the National Health Service and the railways. Sunak has come under criticism Sunak has come under criticism over promises to halve inflation this year. This is despite the forecasts of the Budget Authority that the rate of price increase will slow down significantly as it is without any additional intervention from the government. Rising energy prices in the UK led to inflation exceeding 11% last year, causing a cost-of-living crisis. The Prime Minister and many other politicians have also changed for this reason. The new Prime Minister, Rishi Sunak, has decided to take seriously the issue of containing price rises, which is his top priority and the reason why he is resisting calls to adopt high public sector wage demands as this is sure to spur yet another rise in inflation. A growing political problem for the prime minister However, unrest is now taking place all over the country as citizens are pushing for a 19% pay rise. Another issue is that Sunak refused to answer the question of whether he has private medical care, saying it was of little consequence. This has become a growing political problem for the prime minister, who is under pressure from both members of his own Conservative Party and the general public. GBP/USD Talking about the forex market, yesterday's rise in GBP/USD is gradually slowing down, so buyers need to stay above 1.2140 in order to maintain their advantage. The breakdown of 1.2200 will push the pair to 1.2260 and 1.2301, while a drop below 1.2140 will bring it to 1.2090 and 1.2040. EUR/USD In EUR/USD, there is a chance to update the December highs, but this is only if the pair breaks above 1.0760. Such a move will push euro to 1.0790 and 1.0850, while a fall below 1.0720 will bring it to 1.0680 and 1.0650.     Relevance up to 09:00 2023-01-11 UTC+1 Company does not offer investment advice and the analysis performed does not guarantee results. The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade. Read more: https://www.instaforex.eu/forex_analysis/331837
Services PMIs and Fed Minutes: Analyzing Market Focus and Central Bank Strategy

The GBP/JPY Cross Is Likely To Display Volatile Moves

TeleTrade Comments TeleTrade Comments 11.01.2023 09:28
GBP/JPY is failing to surpass the immediate resistance of 161.00 as BOJ is discussing an exit from its ultra-loose policy. Japanese administration and the BOJ will review their decade-long loose policy under novel BOJ leadership. The Pound Sterling may display significant action after the release of UK’s economic activities data. The GBP/JPY pair has sensed selling pressure after multiple failed attempts of surpassing the critical resistance of 161.00 from the past two trading sessions. The cross is likely to display volatile moves amid chatters over the review of decade-long easy policy under the new Bank of Japan (BoJ) leadership ahead. Discussions over a review of prolonged ultra-loose monetary policy by the BoJ are getting heated now.  Earlier, Japanese Prime Minister Fumio Kishida said that the administration and the BoJ must discuss their relationship in guiding economic policy after he names a new Bank of Japan (BOJ) governor in April. He further added that the administration is looking to revise its long-decade blueprint of beating deflation and may look for an exit from ultra-loose monetary policy. And, now former BoJ board member Sayuri Shirai said on Wednesday “Review of last 10 years can be conducted under new BoJ leadership, but difficult to envisage a major change in the policy framework.” It seems that the Japanese economy has considered high inflation environment a better way to combat the Japanese yen's weakness as other economies are constantly shrinking the supply of their respective currencies. Read next: According To Analysts, Russia May Collapse Within A Decade, Guaranty Trust Bank Has Fined| FXMAG.COM On the United Kingdom front, investors are awaiting the release of the data belonging to economic activities comprising Gross Domestic Product (GDP) figures, Industrial Production, and Manufacturing Production data, which are scheduled for Friday. Meanwhile, the Bank of England (BOE) has cornered poor execution from Prudential Regulation Authority for their faulty risk-management systems as banks faced high exposure due to sheer market volatility in CY2022. Events like the collapse of Archegos Capital demonstrated firms’ large and concentrated exposure to single counterparties, as reported by Financial Times.  
Analysis Of The Euro To US Dollar Pair Situation - 30.01.2023

The EUR/USD Pair Maintains A Steady Upward Trend, The Aussie Pair Keeps Close To 0.69

Kamila Szypuła Kamila Szypuła 11.01.2023 14:16
Fed Chairman Jerome Powell gave no policy guidance at Tuesday's panel discussion in Stockholm, and with other Fed officials saying their next moves will depend on the data, investors are very focused on the US CPI data. The dollar has weakened sharply in recent months on hopes that U.S. inflation is declining, which, along with some signs of pressure on the U.S. economy, is fueling expectations that the Fed is nearing the end of its rate hike program. In terms of energy, both the UK and the Eurozone have benefited from the fall in oil and gas prices, but with sanctions and price caps tightening on Russia, Russian retaliation could push energy costs up again. USD/JPY The USD/JPY pair is rising today and trading above 132.7500. What's more, the pair keeps its trade above 132.0000 for second day The current term of BoJ Governor Haruhiko Kuroda ends in April, and former Bank of Japan (BoJ) board member Sayuri Shirai has called for a review of the Bank's policies over the past 10 years in light of the changing inflation landscape. Moreover, the generally positive tone in the equity markets is weakening the safe haven of the Japanese yen and providing some support for the USD/JPY pair. In addition, broader risk sentiment will be taken into account for short-term trading opportunities around the USD/JPY pair. Read next: Pietro Beccari Will Be The Louis Vuitton’s CEO, Departures Several Top Executives At Rivian| FXMAG.COM AUD/USD The AUD/USD pair traded above the $0.69 level in the Asian and European sessions. Currently the Aussie pair is below 0.69, trading above 0.6880 at the time of writing The Australian dollar remains high, continuing to push towards the five-month high seen on Monday near 0.6950. Today's retail sales were 1.4% month-on-month in November, well above the forecast of 0.6% and -0.2% previously. The year-on-year figure to the end of November was 7.4%, not the expected 7.2% and 6.9% earlier. The data shows a downward correction in retail sales in early 2021, but an acceleration in November. Today, the monthly CPI for November was also released, with the headline CPI year-on-year printed at 7.4%, above estimates of 7.2% and 6.9% earlier. Markets are currently divided over whether the RBA will deliver another rate hike in February. China changed its Covid-19 policy in December and the reopening of the world's second largest economy could provide further opportunities for Australian exports. Frosty relations between Australia and China appear to be thawing, which could provide additional stimulus to the Australian economy. Source: investing.com EUR/USD The EUR/USD exchange rate maintains a steady upward trend after reaching a 20-year low of 0.9535 in September. EUR/USD regained traction and turned positive during the day near 1.0750. Currently, the pair is trading just below this level (1.0743) European Central Bank (ECB) Governing Council member Mario Centeno said late Tuesday that the current process of interest rate hikes may be coming to an end. As for the inflation outlook, Centeno noted that inflation may encounter some resistance in January and February before starting to decline in March. Nevertheless, these comments had no noticeable impact on the euro's valuation. The hawkish narrative was reinforced by one of the more aggressive officials in Isabel Schnabel, while ECB's Villeroy spoke in today's speech, stating the need for additional rate hikes in the coming months. Given this, higher relative rate hikes could support the strength of the euro over the next few months. Read next: According To Analysts, Russia May Collapse Within A Decade, Guaranty Trust Bank Has Fined| FXMAG.COM GBP/USD GBP/USD extended its downward correction towards 1.2100 during European trading hours on Wednesday. Improving market sentiment seems to be helping GBP/USD to contain losses for now. The Bank of England (BoE) is projected to move slightly slower than other central banks (e.g. ECB), given that the rate hike cycle started much earlier than the ECB. Source: finance.yahoo.com, investing.com, dailyfx.com
Hang Seng Index Plummets -2% Amid Weak China Data, Short-Term Trend Intact

The Bank Of England (BoE) Is Coming To The End Of The Current Cycle Of Interest Rate Increases And Support The EUR/GBP Rate

TeleTrade Comments TeleTrade Comments 13.01.2023 09:53
EUR/GBP struggles to gain any meaningful traction and oscillates in a narrow band on Friday. A bleak outlook for the UK economy undermines the Sterling and continues to lend support. The recent hawkish ECB rhetoric underpins the Euro and supports prospects for further gains. The EUR/GBP cross consolidates its recent gains to the highest level since September 29 touched earlier this Friday and seesaws between tepid gains/minor losses through the early European session. The cross remains below the 0.8900 round-figure mark following the release of the UK macro data, though seems poised to prolong the uptrend witnessed since the beginning of this week. The UK Office for National Statistics reported that the economy expanded a modest 0.1% in November as compared to estimates for a 0.2% contraction. This, however, marked a notable slowdown from the 0.5% growth recorded in October. Moreover, weaker-than-expected UK industrial and manufacturing production data adds to the bleak outlook for the UK economy, which has been fueling speculations that the Bank of England (BoE) is nearing the end of the current rate-hiking cycle. This, in turn, could undermine the British Pound and lend some support to the EUR/GBP cross. The shared currency, on the other hand, continues to draw support from more hawkish signals from the European Central Bank (ECB). In fact, several ECB officials spoke this week and confirmed that they will have to raise interest rates further in the coming months to tame inflation. That said, a modest US Dollar recovery keeps a lid on the Euro and holds back traders from placing aggressive bullish bets around the EUR/GBP cross. Nevertheless, the aforementioned fundamental backdrop suggests that the path of least resistance for spot prices is to the upside. Read next: The New Disney Drama: Disney Is Opposing Activist-Investor Nelson Peltz| FXMAG.COM Even from a technical perspective, the overnight convincing breakout through the 0.8865-0.8875 supply zone supports prospects for a further near-term appreciating move. Some follow-through buying beyond the 0.8900 round figure will reaffirm the positive outlook and allow the EUR/GBP cross to reclaim the 0.9000 psychological mark.
Britain's Rishi Sunak And EU's Ursula Von Der Leyen Will Meet Today To Finalize The Northern Ireland Drama

Sign Of Progress In The Long-Running Dispute Over Post-Brexit Trade Rules

Jakub Novak Jakub Novak 13.01.2023 12:00
Both the European Union and the UK are preparing to enter intensive phase of negotiations to overcome the long-standing dispute over post-Brexit trade relations. They want to resolve the problematic points that prevent the negotiated agreement between the parties from functioning properly. Both sides hope to reach an agreement Representatives of both sides announced that the EU had agreed to use the current UK database to track goods moving from the UK to Northern Ireland. This is a sufficient sign of progress in the long-running dispute over post-Brexit trade rules. Other unresolved issues include disagreement over who should hear the resulting disputes as the UK is demanding that the European Court of Justice be completely stripped of its role in resolving Brexit disputes in the region. However, that is something the EU is clearly not prepared to do under any circumstances. Nevertheless, both sides hope to reach an agreement by the end of next month, ahead of the April 1998 anniversary of the Belfast Peace Accord. Apart from technical issues, any agreement would have to be approved by stakeholders in the UK's Conservative Party, as well as in Northern Ireland, where the Democratic Party is strongly opposed to the protocol. If a new Northern Ireland executive is not formed by January 19, new elections must be scheduled for April 13. The original Brexit deal The dispute stems from the original Brexit deal, when both sides agreed to avoid a land border on the island of Ireland. This arrangement effectively established a border in the Irish Sea and allowed Northern Ireland to remain within the bloc's single market and customs agreements. The UK has so far failed to honor some of these agreements. This kind of news is unlikely to affect the short-term market direction in any way, especially after the release of the latest US inflation data. However, a positive and final decision on the Brexit deal will help pound rally in the medium term. GBP/USD So far, attempts to get out of the horizontal channel in GBP/USD have been unsuccessful, so buyers need to stay above 1.2160 to maintain their advantage. Only the breakdown of 1.2225 will push the pair to 1.2300 and then bring it to 1.2350. Meanwhile, sellers taking control of 1.2160 will lead to a decline to 1.2090. EUR/USD In EUR/USD, the chance of further growth remains, however, buyers need to stay above 1.0810 as that will spur a rise in the pair to 1.0863 and 1.0895. On the other hand, a return of pressure around 1.0810 will push the quote down to 1.0765 and 1.0725, or even towards 1.0685   Relevance up to 08:00 2023-01-14 UTC+1 Company does not offer investment advice and the analysis performed does not guarantee results. The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade. Read more: https://www.instaforex.eu/forex_analysis/332227
Polish Inflation Declines in July, Paving the Way for September Rate Cut

The UK Economy Is Sputtering, GDP For November Outperformed With a 0.1% Gain

Kenny Fisher Kenny Fisher 13.01.2023 12:54
The British pound is slightly higher on Friday. GBP/USD is trading at 1.2234, up 0.24%. The pound has enjoyed a solid week, with gains of 1.2%. US inflation drops again US inflation continues to decline and slowed for a sixth straight month in December. Headline CPI fell to 6.5%, down from 7.1% and matching the estimate. The drop was driven by lower prices for gasoline as well as new and used vehicles. Core CPI showed a similar trend, dropping from 6.0% to 5.7%, which matched the forecast. Inflation is coming down slowly and remains much higher than the Fed’s 2% target, as any Fed member will be quick to point out. Still, it’s clear that inflation is on the right path as the impact of the Fed’s aggressive tightening cycle is being felt in the economy. The inflation data came in as expected, but the markets were nonetheless delighted and the US dollar sustained losses across the board on Thursday. The Fed was also pleased that inflation continues to downtrend. After the inflation release, Fed member Harkins said he supports a 25-basis point hike at the February meeting and expects rates to rise “a few more times this year”, with a 25-bp pace being appropriate. This sounds like an acknowledgment that inflation has peaked, although we won’t be hearing the “P” word from any Fed official, for fear of the markets going overboard and loosening conditions, which would complicate the fight against inflation. Other Fed members have come out in support of a 25-bp hike in February and the CME’s FedWatch has pegged the odds of a 25-bp increase at 93%. Barring some unforeseen event, a 25-bp hike looks like a done deal. In the UK, GDP for November outperformed, with a 0.1%, gain, above the forecast of -0.2% but weaker than the October read of 0.5%. The broader picture is not pretty, with GDP falling by -0.3% in the three months to November. The UK economy is sputtering and the Bank of England has its work cut out as it must continue raising rates, despite the weak economy, in order to curb high inflation. The BoE meets next on February 2nd.   GBP/USD Technical GBP/USD tested support at 1.2192 earlier in the day. The next support level is 1.2017 There is resistance at 1.2290 and 1.2366 This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.  
Kiwi Faces Depreciation Pressure: RBNZ Expected to Hold Rates Amidst Downward Momentum

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

Craig Erlam Craig Erlam 13.01.2023 14:48
It’s been another lively week in financial markets and one in which investors have become increasingly hopeful that 2023 won’t be as bad as feared. In a way, the week started with the jobs report the Friday before as it was this that enabled the enthusiasm to build. The labour market has been a major barrier to optimism as the Fed was never going to pivot quickly unless there were signs in the labour market that slack was building and wages cooling. We’re now starting to see that. That optimism has been compounded by the first monthly inflation decline in two and a half years and further sharp annual declines in both the headline and core readings. While the final hurdle to 2% may be the most challenging, there’s no doubt we’re heading in the right direction and the threat of entrenched inflation has greatly receded. Now it’s over to corporate America to potentially spoil the party as the enthusiasm on inflation is not yet matched to the economic outlook. We haven’t seen mass layoffs yet but a number of firms, starting in the tech space but spreading further, have warned of large redundancies in the coming months. The fourth quarter earnings season may bring investors back down to earth with a bang. The start of the year has been fantastic but the rest of it will still be very challenging. More bleak Chinese trade data That’s very evident in the Chinese trade data, as it has in the data of other major trading nations in recent months. Imports and exports both slumped again, albeit to a slightly lesser degree than expected. The drop in imports reflects the Covid adjustment which is likely weighing on demand and the local economy. Exports is a global issue, with those to the US and EU sliding the most, reflecting the challenging economic environment. That may not improve in the near term but there will be a hope that it could in the second half of the year. Can UK avoid recession? The optimists may put to some of the recent data as an indication of some resilience in the economy but I’m not convinced. Take the UK, for example. It may not be in a technical recession after all, with spending around the World Cup enabling a better performance in November, delivering growth of 0.1% after a 0.5% gain in October. Aside from the fact that December could be worse as a result, or some of those gains could be revised out, those numbers don’t change the reality of the cost-of-living crisis and if accurate, it more likely reflects shifted spending patterns as opposed to a more willing consumer. A recession may be delayed but the economy is still under immense strain. The end of the tightening cycle The Bank of Korea may be among the first central banks to bring its tightening cycle to an end, after raising the Base Rate by 25 basis points before removing reference to the need to hike further. This was replaced with a commitment to judge whether rates will need to raise rates depending on multiple factors including incoming data. I think most others won’t be far behind, with in most cases the end coming at some point in the first quarter. All we have to contend with then is the economic consequences of the tightening. BoJ under pressure to abandon YCC And then there’s the anomaly out there. I’m not talking about the CBRT which I just can’t take seriously and that’s saying something at the moment. The Bank of Japan shocked the markets in December by widening its yield curve control buffer around 0% and it’s been paying the price ever since. Another unscheduled bond buying overnight occurred on the back of the 10-year JGB breaching 0.5%, as investors bail on Japanese debt on the belief that the YCC tool is being phased out and will be abandoned altogether before long. This makes the meeting next week all the more interesting. Revival underway? The risk rally over the last week has even lifted bitcoin out of its pit of despair. It goes without saying that it’s been a tough few months for cryptos but the lack of recent contagion in the space, or new revelations, and the risk rebound in broader markets has lifted it off its lows to trade at its highest level since the FTX scandal erupted. It’s trading at $19,000 and traders may harbour some hope of a move back above $20,000, a level once deemed a disturbing low but now potentially representing a sign of a revival. For a look at all of today’s economic events, check out our economic calendar: www.marketpulse.com/economic-events/ This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.
Wage agreement may be game-changing in a way. First meeting of the new BoJ Governor Ueda takes place on April 28th

The Last Dovish Central Bank (Bank Of Japan) Finally Caved To Market Pressure

Franklin Templeton Franklin Templeton 14.01.2023 09:47
Latest thoughts on global central bank policy (continued) Growing more cautious In a period of extreme market volatility due to the political turmoil originated by the mini-budget announcement in September, later scaled down by the new government, the BoE had to hike by 125 bps over the past two meetings, bringing the policy rate to 3.5% in December. Although the last 50-bp move was anticipated, the Monetary Policy Committee (MPC) vote was a dovish surprise with two members voting for no change. The policy calibration will be set on a meeting-by-meeting approach with a particular focus on wage developments and the persistence of domestic price pressures they are likely causing. The burden of proof is thus on data and a faster-than-expected weakening in the labor market, which could lead to a slowdown in tightening going forward. Internal divisions within the MPC will deepen as the United Kingdom is expected to enter a recession. We now expect a terminal rate of 4.5% with one more 50-bp increase in February, although the policy path will be more data dependent than before, and  two more 25-bp hikes in March and May. After the delayed start due to abrupt moves in long dated gilts (UK government bonds) in the wake of the mini-budget, active quantitative tightening began in November without further complications. Close to peak rate After having slowed down its pace of hiking to 25 bps in November, Norges further hiked its policy rate to 2.75% in December. Despite data coming in on the hawkish side, the deceleration of tightening stemmed from a more careful calibration as some signs of transmission to the real economy became visible. Although the labor market remains tight and wage growth resilient, vacancies and labor shortages are decreasing, and house prices are falling faster than anticipated. The expected policy path was revised downward in the long end and now anticipates some cuts from 2024 onwards. As Norges Bank was the first central bank to embark on its hiking cycle (in September 2021), it will likely be the first to end it, but the hawkish indications from the Fed and ECB on the length of the cycle might add some pressure down the line. We still expect a peak rate of 3.25% by May, acknowledging downside risks to the call. Attentive calibration going forward With fewer meetings scheduled compared to regional and global peers, the Riksbank hiked by 175 bps over the last two meetings to a 2.5% repurchase (repo) rate. Going forward, a quickly deteriorating housing market and hawkish pressures from other central banks will require a delicate balancing act. Sweden’s interest-rate sensitivity is enhanced by a leveraged household sector, which will be hit by increasing interest expenses, limiting the upside for rates as house prices are already plummeting.  On the other hand, the clear hawkish ECB message will challenge the historical interest-rate differential premium between the two. We expect another 50-bp hike in February, while a further 25 bps in March  will depend on the most recent inflation and housing developments. The rate path uncertainty remains particularly high also due to two new board members, including the Governor Erik Thedéen. As the Riksbank previously announced, it will cease quantitative easing (QE) reinvestments this year and it expects the balance sheet to shrink relatively fast compared to other central banks. Slows pace of hiking, signals more tightening in the pipeline   The SNB slowed the pace of tightening at its December meeting with a 50-bp increase. With this third hike, the Bank has lifted its policy rate by a cumulative 175 bps since the tightening process began in June 2022—the fastest increase since 2000. The bank has also signaled that additional hikes cannot be ruled out just yet. While the SNB’s decision to hike in March will likely be guided by its evaluation of  the Swiss franc’s value in the coming months, we also note that the SNB’s inflation forecasts remain broadly unchanged since its September meeting. This suggests that not only does the central bank not believe that the policy rate is high enough to slow down inflation, but it also does not yet consider its policy to be restrictive given that inflation is likely to re-accelerate in late-2024. Therefore, while our base case is for a 25-bp hike, if the franc continues to hold well until the March meeting, the SNB could opt  to stay on hold. The SNB has also vowed to remain active on the foreign exchange market, with Chairman Thomas Jordan even confirming the SNB had sold foreign currency in recent months. Surprise, surprise!  In a surprise move, the BoJ tweaked its Yield Curve Control (YCC) framework at its December policy meeting, widening the band for 10-year Japanese government bonds (JGB) yields to move from 25 bps to 50 bps around its 0.0% target. While making it amply clear that this change was neither tightening nor  an exit from its accommodative policy, it does signal that even the last dovish central bank finally caved to market pressure. If the move’s sole intent was to smooth market conditions, we cannot rule out further tweaks. However, for a sustained pivot to a tightening stance, the central bank will need to continue to keep an eye on the inflation-growth mix. While growth is holding up well as the economy opens and supply chain pressures ease, inflation is becoming more entrenched. The core Consumer Price Index (CPI) in November touched 3.7%, the highest in four decades and well above the 2% target. We will continue to monitor the evolution of price pressures in Japan to predict a clear tightening move, including wage pressures and services inflation. For now, we remain more bullish on inflationary pressures in 2023 and a likely pivot in 2023.   Source: cbw-0123-u.pdf (widen.net)
UK Budget: Short-term positives to be met with medium-term caution

The UK Economy Expects A Slightly Fall In Inflation, Expected To Fall By 0.1%

Kamila Szypuła Kamila Szypuła 15.01.2023 18:56
UK economic data will be released next week. Wednesday will be a particularly special day, as CPI results will be released. Previous data The UK inflation rate fell in November 2022 from its previous record high in October. The measure of price growth across the UK economy fell from a 41-year high of 11.1% to 10.7%. This is a key indicator to understand how severe the ongoing cost of living crisis has become. This seems to confirm the predictions of the Bank of England and other economists that the inflation crisis has reached its peak. There are many factors that contribute to high product prices. Soaring energy costs are a key factor. Demand for oil and gas was higher as life returned to normal after Covid. At the same time, the war in Ukraine meant that fewer raw materials were available from Russia, putting further pressure on prices. The war also reduced the amount of grain available, driving up food prices. Source: investing.com Predictions For now, the focus shifts to the UK in the coming week. UK CPI will be released on Wednesday. They are expected to fall slightly again to 10.6%. The base indicator is estimated at 6.2% y/y, which means maintaining the previous level. Bank of England The Bank of England has a target of keeping inflation at 2%, but the current rate is more than five times higher. Its traditional response to rising inflation is to raise interest rates.When people have less money to spend, they buy fewer things, reducing the demand for goods and slowing down price increases. In December, the Bank raised interest rates for the ninth time in a row, lowering the main interest rate to 3.5%. Inflation and wages Lower inflation does not mean prices will go down. It just means they stop growing so fast.The Office for Budget Responsibility (OBR), which assesses the government's economic plans, predicts that inflation will fall to 3.75% by the final quarter of 2023, well below half of current levels. Prime Minister Rishi Sunak said halving inflation by the end of 2023 is one of five key commitments. But it is unclear whether he will announce new policies to achieve this, or if he is simply relying on earlier interventions.Wage increases for many people have not kept up with rising prices. This is despite wage growth at the fastest pace in more than 20 years. According to official data, average wages - excluding bonuses - increased by 6.1% in the three months to October 2022 compared to the same period in 2021. But when inflation is taken into account, the average wage actually fell. Economic situation The economy grew by 0.1%, supported by demand for services in the technology sector and despite households being squeezed by rising prices. The Office for National Statistics (ONS) said pubs and restaurants also boosted growth as people went out to watch football. While November's gross domestic product reading was much better than expected, the overall picture still suggests the economy is stagnating as food and energy bills soar. The Bank of England predicts that the UK has already entered its longest recession in history. Economic growth has slowed sharply in the country since October, partly due to strikes. Economists generally expect the country's economic performance to be among the worst in the developed world over the next two years.   Source: investing.com
The USD/JPY Price Reversed From The Lower Limit

USD/JPY Pair Is Trading Above 128 Again, The Testimony Of Bank Of England Governor Andrew Bailey May Have Affect On The Pound (GBP/USD)

Kamila Szypuła Kamila Szypuła 16.01.2023 12:52
The dollar started the week on the back foot to a seven-month low against a basket of major competitors in Asian trading, with the yen in particular, as investors increased bets that the Bank of Japan would further improve its yield control policy. USD/JPY Year-on-year PPI by the end of December amounted to 10.2%, above the previous forecasts of 9.5% and 9.7%. The month-on-month figure for December was 0.5%, above 0.3% expected and 0.8% earlier. The data revealed upward revisions. From a macro perspective, the soaring PPI is problematic for corporate Japan, with companies facing a dilemma related to rising production costs. The upcoming central bank meeting, expectations of an upward revision of the bank's inflation forecast, and the imminent announcement of a new BOJ chairman are also likely to fuel expectations for a policy change. A generally positive tone around the equity markets undermines the safe-haven Japanese Yen and lends some support to the USD/JPY pair. Now the pair is above 128.20. Source: investing.com Source: finance.yahoo.com AUD/USD The AUD/USD pair started the new week on a positive note and climbed to its highest level since mid-August during the Asian session, surpassing the 0.70 level. Unfortunately, the Australian pair failed to hold above 0.70 and is now trading above 0.6970. Iron ore, Australia's main export, fell slightly on Monday but remains well above its low of last October. Tomorrow, China's GDP data will be watched closely for clues on the health of the world's second-largest economy. Higher commodity prices and China's quick re-opening from Covid restrictions have also supported the currency, with Australia's main trading partner partially lifting restrictions on Australian coal exports after an unofficial ban in 2020. Markets are currently divided over whether the RBA will make another rate hike in February. Read next: McDonald's Will Be Replaced In Kazakhstan By The Russian Vkusno & Tochka| FXMAG.COM EUR/USD EUR/USD showed a decent gain after breaking the critical resistance of 1.0840 in the Asian session. Although the EUR/USD pair failed to hold above 1.0840 and then dropped significantly, it has recovered and is trading above 1.0830. The publication of the expected decline in the US consumer price index (CPI) for December increased the chances of further slowing down the pace of policy tightening by the Fed. It is worth noting that in December the Fed announced a less hawkish monetary policy. The Fed raised interest rates by 75 basis points (bp), but after observing a significant decrease in inflation, it may change the scope of the increase. In the euro area, the European Central Bank (ECB) wants to reach the final interest rate faster. ECB Governing Council member and French central bank governor Francois Villeroy de Galhau, quoted last week, said the central bank should aim to reach its final interest rate by the summer. GBP/USD GBP/USD halted the correction, recovering to 1.2200 in the European session on Monday. The US dollar continues to rebound despite betting on smaller rate hikes by the Fed. Furthermore, a bank holiday in the US market could also keep volatility high around the GBP/USD pair with limited liquidity. Attention is now focused on the testimony of Bank of England (BoE) Governor Andrew Bailey before the Treasury Select Committee of the UK Parliament. Source: investing.com, finance.yahoo.com
The Results Of The March Meeting Of The Bank Of Japan Are Rather Symbolic

Japan Is Looking To Boost Its 2023 Defence Budget, Copper Fell As Signs Of Weak Demand Persist

Saxo Bank Saxo Bank 17.01.2023 08:19
Summary:  US equity and bond markets were closed on Monday for a holiday. Mainland China stocks surged 1.6% as northbound flows reached over RMB15 billion and were in net buying for the 9th day in a row. Ryan Cohen is building a stake in Alibaba. USD saw a rebound but will likely be driven by the Japanese yen in the next few days as the Bank of Japan meeting kicks off today. While China’s Q4 GDP scheduled to release today was expected to slip to 1.6% Y/Y, more than half of Chinese provinces are setting 2023 GDP growth targets at above 5.5%. The rally in industrial metals paused amid profit-taking ahead of the Lunar New Year.   What’s happening in markets? Nasdaq 100 (NAS100.I) and S&P 500 (US500.I) Closed for U.S. holiday US Treasuries (TLT:xnas, IEF:xnas, SHY:xnas) Closed for U.S. holiday China’s CSI300 (03188:xhkg) gained 1.6%; Northbound net buying for the 9th day CSI300 rose 1.6%, led by brokerage, household appliances, pharmaceuticals, and semiconductor names. Northbound net buying through Stock Connect was RMB15.8 billion on Monday, the 9th day in a row of net buying for a total of around RMB80 billion. Coal miners, autos, and media stocks retraced. Hong Kong’s Hang Seng Index had a choppy session, rising initially to make a new recent high but failing to hold and sliding to losses in the afternoon before closing nearly flat. The news that the Chinese regulators allowed Didi to resume registration of new users failed to boost the sentiment for internet stocks. On the other hand, Meituan (03690:xhkg) slipped 3.3% as investors feared that the company’s ride-hailing business might lose market share as Didi returns. Hardware names, AAC (02018:xhkg) up 11.4%, Techtronic (00669:xhkg) up 6.2%, and Sunny Optical (02382:xhkg) up 4.0%, stood out as top performers. The automaker, Brilliance (01114:xhkg) tumbled 8.2% after announcing a special dividend of HKD0.96 per share from the disposal of its stake in Brilliance BMW below the street estimate of HK$1.5 per share. FX: USDJPY seeing a barrier at 129 USDJPY was seen fluctuating around 128.50 in the Asian morning session as Bank of Japan meeting kicks off with speculations of a further policy tweak continuing to build. GBPUSD also failed at another attempt on 1.2300 while AUDUSD returned below 0.7000 ahead of the key China activity data due today, despite January consumer confidence coming in higher at 84.3 from 80.3 previously. A break above 0.7000 could bring the tough resistance of 0.7125 in focus. NZDUSD testing a break above 0.6400. Crude oil (CLG3 & LCOH3) prices soften Crude oil prices eased on Monday with WTI falling below $79/barrel and Brent back towards $84/barrel as profit-taking emerged after the 8% rally last week. The World Economic Forum’s annual meeting began with warnings of global recession. This was aided by signs of stronger Russian supply. Seaborne crude exports soared by 30% to 3.8mb/d last week, the highest level since April. India was the biggest buyer, snapping up 33 times more crude than a year earlier. There is a lot to digest in the oil markets, with demand concerns and sanctions on Russian supply and risks of OPEC production cuts. Meanwhile, volatility in gas prices also underpins, suggesting crude oil prices can continue to see two-way price action in this quarter. US natural gas higher but European gas prices fall US natural gas settled back above $3.50, higher about 7% on Monday with risks of cold weather at the end of the month. European gas however fell sharply on a strong supply outlook. Dutch front month futures were down more than 15% as full stockpiles in China eased concerns of supply tightness in the LNG market. Chinese importers are trying to divert February and March shipments to Europe amid weak prices at home and high inventories. This is despite a cold snap expected this week. Iron ore selling eases; and respective equities hold record highs shaking off China’s accusations The key steel making ingredient, iron ore (SCOA) has fallen 5.3% from its high, including Tuesday’s 0.4% slide, which takes the price to $118.90. Still the iron ore price holds six months highs and is up 56% from its low. The pullback was triggered by China’s top economic planner, the NDRC accusing market participants of hoarding and price gouging after the iron ore price strongly rallied from October’s low in anticipation of demand picking up from China easing restrictions. Iron ore inventory levels are still lower than they were a year ago, which fundamentally supports iron ore price. And the technical indicators indicate the longer term rally could continue. The 50 day moving average is approaching the 200 day moving average. Historically when the 50DMA cross the 200 DMA buying has picked up. Also consider iron ore majors shares, BHP, Rio Tinto Fortescue are holding in record high territory, as investors remember China has made such accusations in the past of price gouging, and the iron ore price previously recovered over the medium to longer term. Brakes on Copper rally; Aluminium continues to surge higher A slight recovery in the US dollar on Monday paused the strong rally that has been seen in industrial metals so far this year. Copper fell as signs of weak demand persist. The Yangshan copper cathode premium over LME has declined to USD31.50/t, compared with the 10y average of USD72/t. Stockpiles of copper in Shanghai Futures Exchange warehouses are also higher. HG copper dipped back to $4.14 from highs of over $4.20 last week. Aluminium bucked the trend to push higher as inventories continue to fall. Expectations of stronger demand as China reopens also boosted sentiment. Rio Tinto (RIO) reported 4Q iron ore shipments of 87.3mt, +3.8% YoY vs est 86.2mt and still sees 2023 shipments of 320-335mt while mined copper output guidance raised to 650-710kt from 500-575kt previously.   What to consider? China GDP and activity data While the reopening of China from Covid containment is a highly positive development for the Chinese economy, the initial shockwave of infections could be significantly disruptive to economic activities in the near term. The median forecast of economists surveyed by Bloomberg on China’s Q4 GDP growth is 1.6% Y/Y decelerated from 3.9% Y/Y in Q3. Disruption in production activities resulting from infection-induced absence from work is expected to drag the growth of industrial production to 0.1% Y/Y in December from 2.2% in November. Retail sales are expected to shrink 9% Y/Y in December, decelerating further from -5.9% Y/Y in November as dining, retailing, and deliveries were slowed by inflection. Full-year fixed asset investment is expected to come at 5%, down from 5.3% in the first 11 months of the year. More than half of provinces and municipalities in China are targeting above 5.5% GDP growth for 2023 According to China’s Securities Daily, the 28 provinces and municipalities that have released their 2023 GDP targets set them at 6% on average. Hainan is the most aggressive with a 9.5% target. According to data from the Shanghai Securities News, more than half of the 31 provinces and municipalities that have released 2023 work reports, are setting their GDP growth targets above 5.5% for 2023. Economically important provinces of Zhejiang, Jiangsu, Guangdong, and Shandong set their targets at above 5%. BOE’s Bailey comments hint at relief from energy and inflation but worries about labor market The rally in cable has cooled off recently even as the decline in USD has continued. The pair is looking for direction and there may be some key catalysts to watch this week. Bank of England Governor Andrew Bailey spoke on Monday at the Treasury Select Committee hearing, saying that the risk premium on UK assets after the Truss government’s policy shock in September has gone. Still, confidence remains fragile, and risks also remain from China’s chaotic exit from Zero Covid, the continued fallout from the war in Ukraine and the shrinking of Britain’s labor force. Focus will now turn to economic data, with labor market data due today, CPI on Wednesday and retail sales on Friday. Any signs that labor market is cooling or CPI has topped out could mean the BOE could start to consider a slower pace of rate hikes going forward, and that could see the 200DMA in GBPUSD at 1.2000 get threatened. Japan’s military focus supports our optimistic view on the Defence equity basket Japan is looking to overhaul its security policy as geopolitical threats in the region and globally grow. PM Kishida’s G7 tour last week saw multiple deals not just with the US, but focus was also seen on enhancing military ties with Germany, Canada and France, including mutual troop access with the UK and upgrading of defence ties with Italy. The plan to build more nuclear reactors is also a step in that direction. Japan and India also held their first joint air drills as they step up military exercises with other countries amid concerns about China's assertiveness. Japan is looking to boost its 2023 defence budget substantially to a record 6.8 trillion yen, an increase of 20%. This further supports our optimistic view on our Defence equity theme basket as further deglobalization continues to suggest defence spending will remain a key focus. Activist investor Ryan Cohen built a stake in Alibaba According to the Wall Street Journal, Ryan Cohen has built a stake in Alibaba. Cohen is a Canadian investor who is know for investing and attracting a large crowd of retail investors to invest in meme-stocks such as GameStop. His buying into Alibaba may attract retail investors from North America to follow. For a look ahead at markets this week – Read/listen to our Saxo Spotlight. For a global look at markets – tune into our Podcast.   Source: Market Insights Today: - China A shares see large Northbound buying, Ryan Cohen building a stake in Alibaba - 17 January 2023 | Saxo Group (home.saxo)
Wage agreement may be game-changing in a way. First meeting of the new BoJ Governor Ueda takes place on April 28th

The Market Is Convinced That Further Tightening Of The Policy Will Take Place At The Latest With The Appearance Of The New President Of The Bank Of Japan

Saxo Bank Saxo Bank 17.01.2023 09:18
Summary:  The US equity market is back on-line today after trading into the pivotal 4,000 area for the S&P 500 Index, as traders wonder whether the recent rally can extend on hopes for a soft landing scenario or whether the bear market will return on downbeat news from the incoming earnings season. But the big event risk of the week is the Bank of Japan meeting up tomorrow, as markets brace for possible further policy tweaks from the Bank of Japan.   What is our trading focus? Nasdaq 100 (USNAS100.I) and S&P 500 (US500.I) US equities are back on-line today after closing Friday into the key resistance/pivot area around 4,000 in the S&P 500 index (the cash index closed 1 point shy of 4,000 on Friday, the future has traded well above that level), which is also just above the 200-day moving average and near other technical levels. Through next week’s heavy calendar of megacap earnings reports, traders will watch whether the market can clear this key resistance area and make a bid to surpass the December pivot highs near 4,100 for the cash index. The Nasdaq 100 index has more work to do, still trading almost 600 points below its 200-day moving average and the December pivot highs above 12,100. Hong Kong’s Hang Seng (HIF3) and China’s CSI300 (03188:xhkg) The Hang Seng Index pulled back 1.2% and the CSI300 Index retreated by 0.4% as of writing despite China’s Q4 GDP, industrial production, retail sales, and fixed asset investment coming in better than feared. Q4 GDP grew 2.9% Y/Y (consensus 1.9%; Q3: 3.9%). Separately, according to data from the Shanghai Securities News, more than half of the 31 provinces and municipalities that have released 2023 work reports, are setting their GDP growth targets above 5.5% for 2023. Economically important provinces of Zhejiang, Jiangsu, Guangdong, and Shandong set their targets at above 5%. The recent rallies are looking exhausted facing profit-taking pressure. FX: JPY takes centre stage this week as BoJ to meet Wednesday The FX market is bracing for the Bank of Japan meeting up in Asia’s Wednesday session (see preview below) with JPY crosses generally backing up, led by USDJPY pulling all the way above 129.00 at one point overnight after its Friday low just below 127.50. Worth remembering that a BoJ surprise that brings JPY volatility is more of a broad JPY story than a USDJPY story and aggravated volatility that triggers a generalized risk off could support both the yen and the US dollar. Action has generally been sluggish elsewhere, with AUDNZD rolling over a bit and the US dollar finding a some support as the US is back online today. Crude oil (CLG3 & LCOH3) take stock following last week's 8% rally Crude oil trades steady near the top of its current range, after data showed China growing by more than expected in the fourth quarter. Overall, the market has seen a bid this month on China’s reopening optimism. Exports of deeply discounted Russian crude oil soared last week as it continues to circumvent sanctions Later today OPEC will publish its monthly oil market report with the IEA to follow on Wednesday. For now, further upside seems limited with China and parts of Asias about to go dark next week as the Lunar New Year holiday begins. EU gas slumps to 16-month low as supply keeps coming Natural gas prices in Europe slumped on Monday to levels not seen since 2021 as already elevated stock levels look set to get a boost from the resale of LNG previously destined for China. Just like Europe, China has seen mild winter weather and together with increased consumption of coal stockpiles of gas are elevated forcing buyers to send LNG cargoes to Europe instead. The Dutch TTF benchmark future (TTFMc1) closed at €55.5 on Monday, down more than 60% during the past month. EU gas stocks are currently 81.5% compared with a long term average around 62%. Copper rally pauses while aluminum continues higher A slight recovery in the dollar on Monday was all it took to trigger an overdue correction in copper which has surged higher during the past couple of weeks on raised expectations for a pickup in demand as China reopens. However, as we have warned recently, the recovery in demand is unlikely to be felt until well after the Lunar New Year holiday, and following a recent surge in speculative buying, the contract has increasingly been left exposed to profit taking, potentially taking it lower to test key support in the $4 area. Aluminium meanwhile hit its highest since June, up 9% on the month, and with visible inventories being at their lowest since 2002 Goldman Sachs warns about further strong gains in the months ahead. Gold consolidating with the dollar finding a bid Gold trades softer ahead of Wednesday’s BoJ meeting which may trigger an outsizes reaction in the dollar. Following weeks of mostly short covering speculators have now moved to mostly long accumulation, and it's during the early stages of this phase the market remains most vulnerable to a setback as recently established longs are less sticky than long held ones. Given the length gold has travelled in recent weeks a correction all the way back down to $1852 would not alter the overall bullish technical picture. US Treasury yields rebounded slightly Friday (TLT:xnas, IEF:xnas, SHY:xnas) After trading near the cycle lows of late last year into 3.40% for the 10-year benchmark on benign inflation data last week and a series of very strong auctions for especially longer-dated US Treasuries, the 10-year yield rebounded toward 3.50% on Friday and traded slightly higher overnight after coming back from the long holiday weekend. The next US macro data point of note is perhaps tomorrow’s December Retail Sales release. What is going on? Nationwide strike in France on 19 January France is going into a nationwide strike on 19 January as trade unions are protesting the government’s plan to push back the minimum retirement age to 64 and to accelerate a previous reform, called the Touraine reform, which provides for the extension of the required contribution period to 43 years by 2035. Before Covid, the government also tried to implement a pension reform which caused a massive wave of demonstrations across the countries – there was basically almost no public transport in main cities for weeks. This is still uncertain how long the strike will last. But the trade unions are planning to keep fighting as long as needed. Expect a blockage in several sectors (refineries, metro, rail transport, education). At the moment, we don’t think the strike will have a noticeable negative impact on GDP growth this quarter. However, should the strike go beyond Thursday, this could reduce GDP growth by 0.1 or maximum 0.2 point in Q1, in our view. BOE’s Bailey comments hint at relief from energy and inflation but worries about labour market The rally in cable has cooled off recently even as the decline in USD has continued. The pair is looking for direction and there may be some key catalysts to watch this week. Bank of England Governor Andrew Bailey spoke on Monday at the Treasury Select Committee hearing, saying that the risk premium on UK assets after the Truss government’s policy shock in September has gone. Still, confidence remains fragile, and risks also remain from China’s chaotic exit from Zero Covid, the continued fallout from the war in Ukraine and the shrinking of Britain’s labour force. Focus will now turn to economic data, with labour market data due today, CPI on Wednesday and retail sales on Friday. Any signs that labour market is cooling or that CPI has topped out could mean the BOE could start to consider a slower pace of rate hikes going forward, and that could see the 200DMA in GBPUSD at 1.2000 get threatened. China’s population officially shrinking Official Chinese data released today showed an 850,000 drop in the Chinese population to 1.41 billion at the end of last year, the first official population drop since 1961. Births numbered 9.56 million in 2022, down just over a million from the prior year and at the lowest level since 1950, while deaths totalled 10.41 million. UK December claims data improves, November earnings data rises again The UK reported November Employment and earnings data today, with the Unemployment Rate steady for the month at 3.7%, while Employment Change rose 27k vs. 0k expected. Average Weekly Earnings rose more sharply than expected at 6.4% YoY ex Bonus vs. 6.3% expected and 6.1% in Oct. Alsot out this morning were December Jobless Claims data, which rose 19.7k vs. 16.1k in November (revised down from 30.5k, while the Payrolled Employees Monthly Change rose +28k vs. +60k expected and the November number was revised down to +70k from +107k. What are we watching next? Bank of Japan meeting tomorrow shaping up as major event risk The JPY has traded cautiously this week, ahead of the Bank of Japan meeting that has traders bracing for new policy tweaks after the Bank of Japan surprised in December with a widening of its trading “band” (de facto a “cap”) to 0.50% from 0.25%. The market has violated the band several times in recent days, requiring a heroic scale of intervention from the BoJ to enforce it. In question is whether the BoJ is willing to signal a further widening of the band and even an end to the last negative policy rate in the world of –0.10% before Governor Kuroda exits the scene in April after 10 years at the helm of the BoJ. Even if the BoJ fails to unveil new measures, the market may remain convinced that a further tightening shift is slowly under way and will arrive at latest with the arrival of a new BoJ Governor. The market is pricing a policy rate of more than +0.25% by the end of this year. Earnings to watch The Q4 earnings season continues this week, with a relatively light schedule before next week’s mother lode of mega-cap earnings reports. The key uncertainty is credit quality in 2023 as it is linked to the degree of a recession, or even whether there will be a recession at all in the US economy. Overall, the Q4 earnings season is likely going to see an extension of value and tangible companies performing better than intangible-driven companies. The two large US investment banks Morgan Stanley and Goldman Sachs are up today, not particularly good bellwethers for the US economy. On the other hand, Procter & Gamble, the consumer products giant, releases its earnings on Thursday and may offer interesting colour on the US consumer. The fast-growing French biotech lab equipment maker Sartorius Stedim reports today as well. Today: Sartorius Stedim, Morgan Stanley, Goldman Sachs, Interactive Brokers Wednesday: EQT, Charles Schwab, PNC Financial Services, Kinder Morgan Thursday: Procter & Gamble, Netflix Friday: Investor, Sandvik, Ericsson, Schlumberger Economic calendar highlights for today (times GMT) During the day: OPEC’s Monthly Oil Market Report 1000 – Germany Jan. ZEW Survey 1315 – Canada Dec. Housing Starts 1330 – US Jan. Empire Manufacturing 1330 – Canada Dec. CPI 2000 – New Zealand Dec. REINZ House Sales   Follow SaxoStrats on the daily Saxo Markets Call on your favorite podcast app: Apple  Spotify PodBean Sticher Source: Financial Markets Today: Quick Take – January 17, 2023 | Saxo Group (home.saxo)
Saxo Bank Podcast: The Bank Of Japan Meeting And More

Rates Daily: The Bank Of Japan Is Increasingly Expected To Lift The 10Y Japanese Government Bond (JGB) Yield Target Once More

ING Economics ING Economics 17.01.2023 09:56
Bond markets face a number of bearish risks today, which have to be weighed against the underlying bullish tone. Look out for a strong ZEW, bond supply, and pre-BoJ positioning Source: Shutterstock Bearish risks for a strong bond market Germany’s ZEW survey is the first potential banana skin in the European morning. As a survey of investor confidence, calling its direction is relatively straightforward: it should improve. The warmer-than-usual winter weather, reductions in gas prices, and surprising resilience of hard economic data all point in that direction. This is particularly true when compared to the gloom prevailing in the last months of 2022. Bond supply so far this year has been well absorbed Bond supply so far this year has been well absorbed by investors betting on declining inflation, and despite record-breaking volumes in the first two weeks of January (see chart below). However, occasional sovereign and corporate deals, especially the unswapped types, have tended to lead to temporary bond market weakness. Usually, these seem to have been bought into, like the morning sell-off in yesterday’s session, but there is no guarantee that investors would do so today, especially given the event risks later in the week. High bond supply so far this year hasn't caused yields to rise Source: Bond Radar, ING Last chance to position for higher JGB yields This is particularly true due to the proximity of the January Bank of Japan meeting. Today is the last European and US trading session before a meeting where the Bank is increasingly expected to lift the 10Y Japanese Government Bond (JGB) yield target once more. Back in December, when that cap was lifted from 0.25% to 0.50%, 10Y Bund and Treasuries rose by roughly 50% of the sell-off in JGBs. Assuming a 25bp sell-off, one would expect European and US yields to jump by 13bp. Consensus is increasingly shifting to a higher yen With consensus increasingly shifting to higher yen rates - see for example 10Y swap rates hovering around 1% - this means the risk around the meeting is likely two-way, however. Shorting 10Y JGBs comes with a hefty carry and roll cost so a delay in shifting the cap higher may well result in short-covering. Note also that the steady selling of US and European bonds by Japanese investors in 2022 should reduce the foreign impact of higher JGB yields. Japanese investors have sold foreign bonds over the whole of 2022 Source: Japanese Ministry of Finance, ING Economic optimism isn't always good for bonds All this has to be weighed against the underlying strength in bond (and other) markets evident since the start of the year (in fact since late October if one excludes the late December sell-off). At its heart, the ‘everything rally’ is driven by an improvement in macro conditions, especially by the belief that inflation is getting under control. There is no obvious catalyst for a change of tone on today’s calendar but note that investors could at any point wake up to the potentially inflationary consequences of some of the drivers of their economic optimism, for instance better European growth, resilient job markets, or China reopening. Two of these risks were highlighted by Bank of England Governor Andrew Bailey yesterday. Today's events and market view Germany’s ZEW survey should be a good gauge of how much investor sentiment has improved. Based on the market reaction to lower gas prices and inflation, we would guess a lot. In the US session, the Empire Manufacturing Survey is the main release. Germany is scheduled to sell €5bn 5Y bonds. Greece has mandated banks for the sale of a new 10Y benchmark, John Williams, of the Fed, is the only central banker listed on today’s calendar but the World Economic Forum, known informally as Davos after the Swiss mountain resort, is sure to produce a flurry of quotes from economic leaders. Read this article on THINK TagsRates Daily Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more
The UK Economy Looks Worse Than The Rest Of The G7 Countries

The UK Jobs Market Is Still Holding Up Fairly Well

ING Economics ING Economics 17.01.2023 10:10
While the jobs market is a lagging indicator of economic strength, the resilience of both vacancy and redundancy numbers suggest the impact of the forthcoming recession on the jobs market will be more modest than in some past recessions The UK jobs market is holding up despite the looming recession   Despite all the challenges facing the UK economy, the jobs market is still holding up fairly well. The unemployment rate is still flirting with all-time lows, while so far there are only moderate signs of deterioration in the more timely indicators. Unfilled vacancies are trending lower – and you’d expect that to continue based on another measure of online adverts – though neither measure is below pre-Covid norms. The official redundancy rate is edging higher but again is now essentially in line with past averages. The redundancy rate is edging higher, but so far is only back to pre-Covid norms Source: Macrobond   As with all jobs data, we need to remember they are lagging indicators, and indeed the redundancy rate took more than a year to go from trough to peak during the financial crisis. Nevertheless, the UK jobs market is entering the forthcoming recession from an unusually tight starting point. While Bank of England survey data shows the proportion of firms finding it ‘much harder’ to hire has begun to tumble, the root causes of worker shortages look like they will prove long-lasting. The number of people economically inactive – that are neither employed nor actively seeking a role – is no longer increasing, and the worrying upward trend in long-term sickness levels appears to have tentatively reversed. But to the extent that this vast increase in illness has been amplified by long waiting lists for treatments and delays in urgent care, the situation is, if anything, getting worse. Lower levels of inward migration from the EU also appear to have added to hiring struggles. Inactivity levels have stabilised over the past few readings Source: Macrobond, ING calculations   We therefore suspect firms will be more inclined than usual to ‘hoard’ labour, and avoid layoffs where possible to insure against potential rehiring problems when conditions improve. While we suspect the unemployment rate will rise, we think it will be more modest than during some past recessions. The clear risk here is that, with 70% of SME debt on floating interest rates and the effective rate on this lending already dramatically higher, firms are forced to make material cutbacks to their workforce regardless. A lot could hinge on whether energy prices begin to rise again later this year. For the time being though, the jobs market is the biggest argument in favour of another 50 basis-point rate hike by the Bank of England. Indeed, wage growth came in a touch higher than expected in the latest figures, and the bank's own survey data continues to point to more acute pay pressures come through. In reality, though, the February meeting rests on a knife edge, and there's a clear chance the Bank decides to mirror the Fed and slow the pace of rate hikes further now Bank Rate is well into restrictive territory. Tomorrow’s inflation data could be key. Read this article on THINK TagsUK jobs Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more
The Results Of The March Meeting Of The Bank Of Japan Are Rather Symbolic

The USD/JPY Pair Can Fall Sharply Ahead Of The Results Of The BOJ Meeting

InstaForex Analysis InstaForex Analysis 17.01.2023 10:59
USD/JPY traders are feeling nervous. The Bank of Japan will sum up the results of its 2-day monetary policy meeting on Wednesday. Now any surprise from the BOJ could have a significant effect. The culminating event of the week in the currency market should be the Japanese central bank's monetary policy meeting, which kicked off on Tuesday. With inflationary pressures intensifying in Japan and chaos reigning in the local bond market, many investors believe that the BOJ could announce a major policy shift this week, like it did last month. Recall that the BOJ tweaked its Yield Curve Control policy (YCC) in December, causing the yen to rise sharply against the dollar. Since then the pair has fallen over 6% and its future prospects are not bright at all. Investors clearly see that the BOJ is in a difficult predicament. Its decision to widen its tolerance range for 10-year bond yields was dictated by a desire to improve market functioning, as the bond market faced a liquidity problem. But the measure has made the situation even worse. By changing the YCC, the BOJ stoked the flames of market speculation about its possible surrender. This in turn provoked a massive sell-off in 10-year Japanese Government Bonds (JGB), which pushed their yields up. Since last week, the central bank has been trying its best to keep the index within the new limits by conducting daily emergency operations to buy JGBs. However the yield of 10-year JGBs is still growing above the set ceiling. That's what leads investors to think that the BOJ will be forced to further increase the permissible range of long-term bond yield fluctuations from its 0% target at the January meeting. If the BOJ makes such a decision again, it will serve as a great catalyst for the yen. In the short term, the USD/JPY risks falling below its 7-month low at 127.22. An even greater threat to the pair is the development of a radical scenario, which implies a complete abandonment of the BOJ's YCC policy. If the central bank decides to burn all bridges, USD/JPY will go into a prolonged free-fall. "The 10-year JGB yield could rise as high as 1% if the BOJ abandons yield curve control this week," according to estimates by Daiwa Securities strategist Eiichiro Tani. This negatively affects the movement of the pair. According to analysts at Goldman Sachs, the next YCC correction will help the yen strengthen against the dollar by more than 3%, to the level of 125, and an abandonment of the YCC will open a fast way to even higher levels for the Japanese currency. It's worth noting that US bank analysts don't even consider the latter scenario. Most of Goldman Sachs' analysts expect the BOJ to keep YCC in place with possible further tweaks to improve its sustainability. Financial analyst Barbara Rockefeller is of the same opinion. She believes that we should not expect the BOJ to take impulsive actions in the form of abandoning the YCC or a sharp change in the monetary course. "Allowing a giant move from 25 bp to 1% in under a month is too wild for any central bank, let alone the staid BoJ. So, abandonment is almost certainly out of the question, but that doesn't mean the market will not be expecting it and testing prices, forcing the bank to buy more bonds. We expect a whole lot of backroom arm twisting," Rockefeller said. According to ING economists, the USD/JPY pair can fall sharply ahead of the results of the BOJ meeting. They suspect USD/JPY can trade down to 126.50 before Wednesday. As for the dynamics of the dollar-yen asset after summing up the results of the BOJ meeting, everything depends on the market's reaction to the rhetoric of the Japanese officials. If it is considered hawkish, the quote will fall, as I mentioned before. If the central bank stays true to its dovish principles, in the short-term, the pair may show a steady recovery from the recent lows. By the way, this scenario is followed by all economists recently surveyed by Bloomberg. Experts expect the BOJ to refrain from any changes at its January meeting. But the probability they are wrong is quite high, because last month none of the 47 economists surveyed by Bloomberg was able to predict YCC changes   Relevance up to 08:00 2023-01-20 UTC+1 Company does not offer investment advice and the analysis performed does not guarantee results. Read more: https://www.instaforex.eu/forex_analysis/332473
Bestway Might Have Larger Designs On The UK's Second Biggest Supermarket

In UK Employers Are Starting To Lay Off Workers, Wages Are Also Reported To Have Fallen

Jakub Novak Jakub Novak 17.01.2023 11:06
Pound rallied on Monday after news emerged that average wages in the UK continued to rise at an almost unprecedented rate. However, this puts further pressure on the Bank of England in terms of interest rates, forcing it to consider another increase at its meeting scheduled for next month. Reportedly, average household income excluding bonuses was 6.4% higher in the last three months to November 2022, which is the biggest increase since records began in 2001, not counting the peak of the coronavirus pandemic. This indicates that the labor market remains too challenging for the central bank, especially since inflation could hit double-digits if wages continue to rise at the current rate.  Labor shortages in the UK pushed unemployment to fall to a record low In a bid to prevent an inflationary spiral, the central bank raised rates from 0.1% to 3.5% late last year and is expected to announce a further 50 basis point increase as early as February. However, labor shortages in the UK pushed unemployment to fall to a record low below 4%, giving workers unprecedented market power. The pressure was most acute in the private sector, where wages rose by 7.2%. In the public sector, growth was only 3.3%, well below the current inflation rate of 10.7%. The decline in living standards has triggered a wave of strikes in recent months as workers insist on wage increases to offset inflation. Wages are also reported to have fallen by 2.6% compared to last year instead of rising at the end of December. The Bank of England's latest forecast says the unemployment rate will exceed 6% According to reports, the number of new vacancies fell by 75,000 to 1.16 million in December. This suggests that employers are starting to lay off workers as the economic situation worsens. The rate has jumped to 3.4% per thousand employees in the three months to November, up 1.1% from the previous three-month period. The Bank of England's latest forecast says the unemployment rate will exceed 6% over the next three years. GBP/USD Going back to GBP/USD, attempts to get out of the horizontal channel have been unsuccessful. Now, buyers need to stay above 1.2160 in order to maintain their advantage. A breakdown of 1.2225 will push the pair to 1.2300 and then towards 1.2350. Meanwhile, sellers taking control of 1.2160 will lead to a decline to 1.2090. EUR/USD As for EUR/USD, there is a chance of further growth, but buyers have to hold above 1.0810. That will spur the pair to rise to 1.0840 and 1.0885. Meanwhile, a decline to 1.0810 will put pressure on the pair, bringing it towards 1.0755 and 1.0720, or possibly to 1.0685   Relevance up to 08:00 2023-01-18 UTC+1 Company does not offer investment advice and the analysis performed does not guarantee results. The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade. Read more: https://www.instaforex.eu/forex_analysis/332485
Despite The Improvement In The Outlook Due To Falling Energy Prices, The Economic Environment In Britain Remains Difficult

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

Craig Erlam Craig Erlam 17.01.2023 16:51
Equity markets are a little softer on Tuesday as investors await more earnings from the US and closely monitor events in Davos. Stocks have had a strong start to the year on the belief that interest rates may not go as high as feared and even move into reverse later in the year. While that is looking plausible in the US, it may not be the case in Europe where policymakers are seemingly still some way from considering the tightening cycle complete. The ECB, for example, was very late to the party and could be at least three 50 basis point hikes away from the terminal rate which we could see around the middle of the year. Inflation in the euro area declined last month but core inflation is still on the rise which is why we’re continuing to see pushback to the idea of slower hikes and cuts this year. That narrative may change once the data moves in a more positive direction. Pressure mounting on BoE In the UK, the data remains quite troubling. Labour market figures released today showed earnings growth accelerating to 6.4%, meaning while we’re still seeing negative changes in real terms, as far as the central bank will be concerned they’re still far too high to be consistent with inflation returning to target. And the longer it goes on, the more stubborn inflation will become. That should ensure the BoE continues tightening by 50 basis points next month, at which point we’ll get fresh economic projections. Encouraging figures from China The data from China overnight was broadly positive even if it confirmed one of the slowest annual growth rates in decades. The economy ended on a stronger note despite the surge in Covid infections as the leadership suddenly pivoted from a zero-tolerance approach to allowing it to run free. That was expected to take a heavy toll on the economy initially but the figures for December from retail sales to industrial production and fixed asset investment suggest a much more modest hit. That may offer hope that the opening months of the new year will not be as bad as initially feared. Bouncing back Bitcoin seems to have been one of the big winners from the new year risk rally, after struggling for much support in recent months as a result of the FTX collapse. Perhaps it’s making up for lost time as traders look to capitalize on such heavily discounted levels compared with the 2021 peak. That said, it will take a lot more than a risk revival to get traders fully back on board. For a look at all of today’s economic events, check out our economic calendar: www.marketpulse.com/economic-events/ This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds
There Are No Obvious Reversal Of GBP/USD Pair Signs Yet

The British Pound (GBP) Is Still Increasing

Paolo Greco Paolo Greco 18.01.2023 08:34
Despite the lack of any compelling explanations, the GBP/USD currency pair once again displayed an upward trend on Tuesday. In the UK, data on unemployment and earnings were released early in the morning. These numbers cannot be characterized as "strong" or "failed," but it is very tough to call them either. Simply put, the unemployment rate remained at 3.7% in November, while earnings climbed by 6.4%, which was basically in line with expectations. Remember that the UK has been experiencing a severe cost of living problem for several months. The country's population's salaries are devalued by the fast-falling value of the pound in 2022 and a strong rise in inflation. Naturally, the least socially protected groups experience the most severe pound devaluation. Simply described as low-paid, everyday laborers. They can tell that the value of the pound has decreased by 10%. 10% inflation is a lot to them. Therefore, it is difficult to describe the 6.4% growth in earnings during a time of inflation that is higher than 10%. However, traders hurried to repurchase the pound after discovering a teaspoon of honey in a barrel of tar. They are completely correct from a technical standpoint because there isn't even one sell signal at the moment. The pair is still above the moving average line on the 4-hour TF, and both linear regression channels point upward. The price is above all of the Ichimoku indicator's lines on the 24-hour TF. Therefore, anything is possible based on fundamental research, but the pound will gain in value if the market buys more of it. Since many currently anticipate that the Bank of England will reduce the "monetary pressure" on the economy, the pound can, of course, halt this process at any point. Simply put, the BA may again pause the pace of tightening monetary policy in February to prevent a serious recession. If so, one of the strongest pillars of the pound's support may be lost. The Bank of England's governor is overjoyed with confidence. On Tuesday, Andrew Bailey testified before the House of Commons Treasury Committee. It had been a while since he had spoken in public because the head of BA rarely does so. He expressed his optimism for a significant drop in inflation in 2023 as a result of reducing energy prices in his address. He thinks that the military confrontation between Ukraine and Russia in 2022 caused the sharp rise in energy prices, but gas prices have dropped by almost four times since then, suggesting that inflation can be slowed down even without the regulator's help. Additionally, Mr. Bailey informed the Committee that the financial markets had calmed following the Liz Truss board issue, which saw a dramatic devaluation of the pound and an increase in government bond yields. The BA chairman added, "However, it will take some time to convince people that the worst is over." The markets continue to anticipate a further increase in rates in early February despite Mr. Bailey's silence on the subject. Since the anticipation of lower inflation naturally entails that the regulator may slow down the pace of tightening monetary policy more, we think Bailey's comments can be viewed as a "dovish" element. And give it a total break with the possibility of several months. The pound is still increasing, though. The result is the following image: The pound is growing regardless of how quickly or slowly rates are rising; rates may even cease rising altogether. Therefore, we continue to think that the more crucial element is the slowing of the US rate rise. Based on this reason, the British pound may continue to increase for some time, but its prospects may suffer if the rate is lowered to 0.25%. In any case, you shouldn't anticipate a significant decline in the value of the pound until the price is locked below the moving average. When that occurs, it will be possible to guess whether this is just a little reversal or the start of a new, lengthy decline in the value of the pound. Over the previous five trading days, the GBP/USD pair has averaged 117 points of volatility. This figure is "high" for the dollar/pound exchange rate. Therefore, on January 18, we anticipate movement that is contained inside the channel and is constrained by the levels of 1.2151 and 1.2385. A new bout of corrective action will begin when the Heiken Ashi indicator reverses direction and moves back down. Nearest levels of support S1 – 1.2207 S2 – 1.2146 S3 – 1.2085 Nearest levels of resistance R1 – 1.2268 R2 – 1.2329 Trading Suggestions: In the 4-hour timeframe, the GBP/USD pair is attempting to advance further. Therefore, until the Heiken Ashi indicator swings down, it is still possible to hold long positions with goals of 1.2329 and 1.2385. If the price is set below the moving average, short trades can be opened with goals of 1.2085 and 1.2024. Explanations for the illustrations: Determine the present trend with the use of linear regression channels. The trend is now strong if they are both moving in the same direction. Moving average line (settings 20.0, smoothed): This indicator identifies the current short-term trend and the trading direction. Murray levels serve as the starting point for adjustments and movements. Based on current volatility indicators, volatility levels (red lines) represent the expected price channel in which the pair will trade the following day. A trend reversal in the opposite direction is imminent when the CCI indicator crosses into the overbought (above +250) or oversold (below -250) zones   Relevance up to 05:00 2023-01-19 UTC+1 Company does not offer investment advice and the analysis performed does not guarantee results. The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade. Read more: https://www.instaforex.eu/forex_analysis/332574
Czech National Bank Prepares for Possible Rate Cut in November

The Latest UK CPI Figure Is Below October’s 11.1% Peak

ING Economics ING Economics 18.01.2023 09:46
Headline inflation has peaked but pressure from the service sector continues to build. That's likely to tip the balance for Bank of England hawks in favour of one final 50 basis point hike at the February meeting   The good news, at least, is that it seems like UK headline inflation is slowing. At 10.5% in December, the latest CPI figure is below October’s 11.1% peak. We expect this headline measure to stay roughly where it is for the next couple of months before showing more dramatic signs of easing as we approach Easter, which is when electricity/gas base effects begin to become more favourable. Last year’s near-50% increase in bills won’t be matched, and if anything it looks like the Treasury will either need to lower unit prices for consumers later this year, or scrap April’s planned increase altogether, given the recent fall in wholesale gas prices. On current policy, we expect headline inflation to fall back towards 6% by summer and to 3.5-4% by year-end. UK services inflation has risen further 'Core goods' excludes food, energy and tobacco. 'Core services' excludes air fares, package holidays and education Source: Macrobond, ING calculations   The bad news, at least as far as the Bank of England is concerned, is that its favoured ‘core services’ measure of inflation has jumped, even as goods inflation slows dramatically. At 6.8%, core services CPI (which excludes volatile components like airfares and package holidays) is materially higher than the Bank had been forecasting back in November, and reflects ongoing pressure from both wages and energy bills on service sector costs. While we suspect this is nearing a peak, it provides further ammunition for the BoE’s hawks to push for one final 50 basis point rate hike at the February meeting, putting the peak at 4% for Bank Rate (or perhaps 4.25% if the Bank adds one further 25bp hike in March). The UK's somewhat unique combination of structural worker shortages, and therefore potential for persistently higher wage growth, as well as its exposure to Europe's energy crisis, suggests the Bank of England will be less quick to cut rates than in the US, where we expect cuts later this year.  Read this article on THINK Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more  
Despite The Improvement In The Outlook Due To Falling Energy Prices, The Economic Environment In Britain Remains Difficult

Yields On JGB's Fell Back Sharply, Markets May Expect To See Another 50bps Rate Hike From The Bank Of England

Michael Hewson Michael Hewson 18.01.2023 11:34
Yesterday saw another positive session for European markets, although the FTSE100 underperformed despite hitting a new 4 year high. US markets returned from their long weekend break with a choppy and somewhat mixed session, with the Dow and S&P500 struggling while the Nasdaq 100 finished slightly higher, as various earnings announcements painted a mixed picture of the US economy. Bond yields also chopped between negative and positive territory as yields ended the day little changed. BoJ tweaks bond program Asia markets have spent the day still digesting yesterday's economic numbers from China, as well as today's Bank of Japan rate decision. The Japanese yen has seen some decent gains over the past few weeks, with those gains accelerating after the Bank of Japan caught markets by surprise last month by widening the band of its yield curve control to between -0.5% and +0.5%, from +/-0.25%. It would appear that with current governor Kuroda set to leave in April that the BoJ wanted to start seeding the ground for a possible shift in the coming months, however as with everything related to monetary policy markets have already started to front run any possible change.. The 10-year JGB has consistently tested above the upper bound of the 0.5% in the past few days testing the central banks resolve in the process. The central bank has been consistent in maintaining that they aren't in any rush to make major adjustments to its yield curve control policy yet, however events appear to have overtaken them, as volatility has increased. The Bank of Japan's challenge today has been to try and reset market expectations, as well as try to avoid a further rapid appreciation in the yen, in the same way they wanted to manage the declines in their currency over the past few months. Suffice it to say they appear to have succeeded, pushing back on the recent moves that have pushed the yen higher. This morning the Bank of Japan kept monetary policy unchanged, which wasn't a surprise, but they also announced they would continue large scale bond buying and be more flexible about duration in order to keep policy settings loose. Yields on JGB's fell back sharply from the 0.5% upper bound in the wake of the announcement. Today's pushback or reset whatever you want to call it, shouldn't have been too much of a surprise given recent yen moves. Japanese central bank officials have always been particularly sensitive to sharp short term moves in either direction where the yen is concerned in the same way they were about recent yen weakness. The direction of the move is less of a concern rather than the speed of it, and in slowing the yen move lower the BoJ is merely resetting market expectations about future policy change, with the US dollar rising back above 130.00 UK inflation set to slip back in December After the peak of 11.1% in October, headline CPI fell back to 10.7% in November in a welcome sign that we could well be past the peak, when it comes to price rises.Recent falls in oil and gas prices are also likely to start to feed into the underlying numbers, while PPI inflation has also been falling in recent months, though given problems with the PPI calculations we haven't had clear visibility on that in the past couple of months, as the ONS continues to review how that is calculated. Today's December inflation numbers are expected to show that inflationary pressures continue to subside, but are only expected to fall modestly to 10.5%, with core prices also still high at 6.2%. We already know that food price inflation is trending in the mid-teens, which means that headline CPI is expected to remain above 10% for a while. It's also important to remember that RPI is even higher. With average wage growth trending at 6.4% and unemployment still low, the gap between wages and inflation is still quite wide, although it is narrowing from both directions. This probably means we can expect to see another 50bps rate hike from the Bank of England when it meets in just over 2 weeks' time, although any decision is unlikely to be unanimous, given the 3-way split last time. Headline CPI in the EU is also expected to be confirmed at 9.2% in December with core prices at 5.2%. EUR/USD – has struggled to overcome the 1.0870 area, prompting a fall to 1.0780. Could see a deeper fall towards 1.0720. The key resistance sits at 1.0950 which is a 50% retracement of the move from the 2021 highs to last year's lows at 0.9536. A move through 1.0950 opens up a move towards 1.1110. GBP/USD – ran out of steam at 1.2300 yesterday, with the risk that the move above 1.2000 level is running out of steam, despite the decent rebound from the 1.1830/35 area. The next big resistance lies at the 1.2350 area. We need to hold above the 1.2000 area for further gains to unfold. EUR/GBP – the failure at the 3-month highs at 0.8895 this week has seen a drift back towards last week's low at 0.8770/80. Below 0.8770/80 retargets the 0.8720 area. USD/JPY – has recovered off 127.20 area this week, just shy of the 126.50 area which is the 50% retracement of the up move from 101.18 to the highs at 151.95. Has squeezed back above the 130.00 area and could extend back through 132.60 on towards 134.80 without undermining the downward momentum. FTSE100 is expected to open 10 points lower at 7,841 DAX is expected to open 32 points higher at 15,219 CAC40 is expected to open 11 points higher at 7,088 Email: marketcomment@cmcmarkets.comFollow CMC Markets on Twitter: @cmcmarketsFollow Michael Hewson (Chief Market Analyst) on Twitter: @mhewson_CMC
Rising U.S. Treasury Bond Yields Have Helped The USD/JPY Bulls

The Japanese Yen (JPY) Weakened, The Aussie Pair Is Trading Above 0.70$

Kamila Szypuła Kamila Szypuła 18.01.2023 13:33
Today the US releases data on retail sales and PMI indices, which are supposed to show support for inflation fading. USD/JPY At the two-day meeting, the BOJ unanimously maintained its YCC targets, set at -0.1% for short-term interest rates and around 0% for 10-year yields. The Japanese yen weakened by more than 2 percent in the wake of the Bank of Japan's monetary policy announcement in January. If the losses continue, this will be the best one-day performance for the USD/JPY pair. To understand why the yen weakened so quickly here, one has to go back to what happened in December. Last month, the central bank shocked the markets by widening the yield curve band around 0% to plus/minus 50 basis points. It was from +/- 25 bp. The central bank also increased asset purchases to 9 trillion yen each month from 7.3 trillion previously. The markets saw this as a move by the central bank towards normalizing policy. Therefore, investors were strongly focused on further corrections today. When this did not happen, these bets were voided. The USD/JPY pair strengthened and traded above 131. After this recovery, the pair began to fall to a level around 129.10. AUD/USD The Australian and New Zealand dollars gained on Wednesday on the retreating yen. The Australian jumped 2.0% to 91.36 yen. For now, the BJ's pledge to keep yields low has provided relief to global bond markets and the Australian 10-year yield fell 8 basis points to 3.57%. The main event of the week in the country will be data from the Australian labor market, which will be released on Thursday. The Austrailan pair (AUD/USD) has broken through the 0.70 level and is trading at 0.7020 at the time of writing Read next: Un Secretary General Antonio Guterres Encouraged The Transition To Green Energy At The World Economic Forum In Davos, The Chinese Economy May Surprise You Positively| FXMAG.COM GBP/USD The British pound received support this morning after mixed inflation data. UK headline inflation fell as expected to 10.5%. UK consumer price inflation fell to a three-month low of 10.5% in December but remains close to 40-year highs. The core CPI reading, which excludes food and energy from the calculations, underscores the tense labor market conditions seen in yesterday's UK employment data, while the recent fall in energy prices has contributed to the decline in the headline figures. The BoE has raised interest rates nine times since December 2021 to try to bring down inflation, with markets currently evaluating an 82% chance of a 50 bp rate hike at its next meeting, scheduled for February 2. GBP/USD holds its gains above 1.2300 again, undisturbed by mixed UK CPI data amid fresh US dollar weakness. Today's UK employment data becomes more important for GBP/USD traders given the recent comments from Bank of England (BoE) governor Andrew Bailey, as well as the worsening conditions of the UK labor strikes. EUR/USD The EUR is one of the weakest contenders against the US Dollar, with EUR/USD pulling back sharply after testing the 1.0870 level. The rest of this week is quite sunny on the economic calendar, which tends to support existing trends. The EUR/USD pair fell sharply mid-session in the US despite significant US dollar weakness. The euro fell after market talks suggesting that representatives of the European Central Bank (ECB) are considering slowing down the pace of monetary policy tightening. Rumors suggest that CEO Christine Lagarde and company will decide to raise interest rates by 50 basis points in February. The comments of the European Central Bank's chief economist Philip Lane also influenced the euro, who said that in order to bring interest rates back to their target levels and bring inflation back to the desired level, it will be necessary to stop the tightening of monetary policy by the central bank. At the World Economic Forum EU officials have announced their intention to accelerate the energy transition with a series of fiscal measures that support technological innovation in the green energy space. The support is expected to include a state aid mobilization as well as a sovereignty fund to stop companies relocating to the US. Source: finance.yahoo.com, investing.com, dailyfx.com
UK Budget: Short-term positives to be met with medium-term caution

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

Craig Erlam Craig Erlam 18.01.2023 14:47
Equity markets are marginally higher in Europe, with the Nikkei outperforming in Asia on the back of a much weaker yen. BoJ stands firm The Bank of Japan has decided to stand its ground against market forces that have forced it to purchase huge amounts of JGBs in order to defend its yield curve control upper band. Despite mounting speculation that it could be prepared to further tweak the tool or abandon it altogether, the central bank has stubbornly dug in its heals and seemingly prepared itself for another onslaught in the bond markets. The surprise decision last month to widen the threshold in which it will allow the 10-year yield to trade has further fueled speculation that it’s planning to phase out YCC, so rather than ease the pressure on the central bank as it hoped, it has intensified. In standings its ground today, it’s effectively invited the backlash and the yen has been hammered as a result. Inflation eases but still far too high UK inflation eased slightly in December, the second month in which it has fallen, indicating that it has peaked and barring another surge in energy prices, it could now steadily decline. That will come as a relief to households and businesses suffering the cost-of-living squeeze although, with the headline CPI still above 10%, there’s still obviously a long way to go. The Bank of England now finds itself in the uncomfortable position of needing to keep raising interest rates as inflation is still more than five times its target. Even core inflation is above 6% and we haven’t really seen much progress on that front. Markets are pricing in another 1% of rate hikes in the coming months but if inflation remains stubbornly high, they may have to do more. Especially if the economy shows the kind of surprising resilience that it appeared to in the fourth quarter. Read next:The Japanese Yen (JPY) Weakened, The Aussie Pair Is Trading Above 0.70$| FXMAG.COM Steadies after huge surge It’s been a phenomenal week for bitcoin, up around 20% and looking in a far healthier position. The lack of further contagion in the aftermath of the FTX collapse and the surge in risk-appetite has seen a flurry of support for cryptos which have had a rough few months to put it lightly. Well, they’ve made up for lost time and bitcoin is now steadying above $21,000. Whether it can significantly build on this rebound is another thing but the fact that it’s trading back in the pre-FTX range will come as a huge relief to the industry that will have feared further plunges or negative headlines. For a look at all of today’s economic events, check out our economic calendar: www.marketpulse.com/economic-events/ This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.  
GBP/USD Options Market Anticipates 70 Pip Range on BoE Day

Slowdown In Inflation Is Likely To Produce A Rise In The British Pound (GBP)

Paolo Greco Paolo Greco 19.01.2023 08:23
On Wednesday, the GBP/USD currency pair resumed rising and managed to gain another 140–150 points. The UK inflation report, of course, served as the foundation for such a decision. The market reacted quite strongly and bought the pound virtually the entire day, although the actual value perfectly aligned with the prediction (10.5% in December). We have stated that a minor slowdown in inflation is likely to produce a rise in the British pound since it will force the Bank of England to hike interest rates more quickly than anticipated. The fact that it will be prepared for such a step is, however, far from certain. However, the market purchases the pound because it thinks there isn't and won't be any other option. In reality, given that all technical indicators point upward, what else can we anticipate from the British pound at this point? There isn't a single sell signal. The pound has already climbed "some" 2,100 points from its 2022 lows. However, if all technical indicators are pointing upward and we base our trading primarily on them, what difference does it make if we also consider that their growth is overly rapid and unreasonable? The first rule of trading is to always trade in the direction of the trend. Because there are no sell indications, we continue to trade for a raise while keeping in mind that the current growth is as irrational as possible. Additionally, the Bank of England's rate, which is currently 3.5%, should be mentioned. Let's assume it increases to 4% in two weeks. What will happen to inflation? It will fall by 0.5 percent. How can inflation respond to declining energy costs? Another negative 2–3%? In other words, for inflation to return to the target level within two to three years, the Bank of England needs to hike the rate to at least 5%, if not as high as 6%. They do not anticipate inflation to go below 3% this year, not even in the United States, where it has already decreased to 6.5%. What is there to say about the UK? It will take time for inflation to return to 2%. Morgan Stanley, an investment bank, has released a statement suggesting a potential future decline in inflation. The consumer price index may drop to 3% by the end of 2023, and 2% should be anticipated by the end of 2024, according to its analysts. As you can see, the inflation rise process is quick and simple, whereas the inflation fall process is difficult and drawn out. James Gorman, CEO of Morgan Stanley, thinks that a Fed rate cut this year is unlikely. Thus, the Fed's policy will continue to be "hawkish" for a very long time, something that market participants have forgotten lately. We think the dollar will bounce back, and just before the following sentence, let's not forget that we've been talking about a negative correction for nearly a month. In a report released by Standard Chartered, analysts predict that the euro and the pound will soon start to adjust. The report claims that after rapid expansion, there is no consolidation. The euro has already increased by 9%, and the pound has surged much more. A further increase is not impossible, but it is improbable without adjustment. The Fed is anticipated to boost the benchmark rate by at least 0.75%, according to Standard Chartered. And the American currency must be supported by this fact. The Fed rate's anticipated peak value may change as a result of China's strong economic recovery, which may cause a reduction in the rate of inflation's decline. As you can see, the biggest banks and research firms are similarly perplexed by the sudden and severe decline in the value of the US dollar, and the Fed hasn't even given up on tightening monetary policy yet. In the present situation, however, all we can do is wait for the market to "wake up," at which point the price will at the very least stabilize below the moving average. Remember that a fixation below the moving average is a signal for a potential trend change, but more evidence is required. Over the previous five trading days, the GBP/USD pair has averaged 138 points of volatility. This figure is "high" for the dollar/pound exchange rate. So, on January 19, we anticipate that movement that is constrained by the levels of 1.2205 and 1.2481 will occur inside the channel. A new phase of the corrective movement is indicated by the Heiken Ashi indicator turning downward. Nearest levels of support S1 – 1.2329 S2 – 1.2207 S3 – 1.2085 Nearest levels of resistance R1 – 1.2451 R2 – 1.2573 R3 – 1.2695 Trading Suggestions: In the 4-hour timeframe, the GBP/USD pair is still rising. Therefore, until the Heiken Ashi indicator turns down, it is still possible to hold long positions with objectives of 1.2451 and 1.2481. If the price is set below the moving average, you can start opening short bets with a 1.2085 objective. Explanations for the illustrations: Determine the present trend with the use of linear regression channels. The trend is now strong if they are both moving in the same direction. Moving average line (settings 20.0, smoothed): This indicator identifies the current short-term trend and the trading direction. Murray levels serve as the starting point for adjustments and movements. Based on current volatility indicators, volatility levels (red lines) represent the expected price channel in which the pair will trade the following day. A trend reversal in the opposite direction is imminent when the CCI indicator crosses into the overbought (above +250) or oversold (below -250) zones   Relevance up to 04:00 2023-01-20 UTC+1 Company does not offer investment advice and the analysis performed does not guarantee results. The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade. Read more: https://www.instaforex.eu/forex_analysis/332703
Services PMIs and Fed Minutes: Analyzing Market Focus and Central Bank Strategy

The Rebound In The British Pound Contributes To A Strongly Bid Tone Around The GBP/JPY Cross

TeleTrade Comments TeleTrade Comments 19.01.2023 10:16
GBP/JPY witnessed heavy selling on Thursday and retreats further from a three-week high. Recession fears boost demand for the safe-haven JPY and exert some downward pressure. The prospects for more BoE rate hikes underpin the GBP and should limit deeper losses. The GBP/JPY cross extends the previous day's retracement slide from the 161.50 region, or a three-week high and remains under heavy selling pressure on Thursday. Spot prices snap a three-day winning streak and drop back closer to mid-157.00s, hitting a fresh daily low heading into the European session. As investors digest the Bank of Japan's (BoJ) dovish policy decision on Wednesday, looming recession risks boost demand for the safe-haven Japanese Yen and exert pressure on the GBP/JPY cross. Investors remain concerned about the potential headwinds stemming from the worst yet COVID-19 outbreak in China. Apart from this, the protracted Russia-Ukraine war has been fueling worries about a deeper global economic downturn. The fears were fueled by Wednesday's weaker US macro data, which showed that retail sales in December fell by the most in a year and manufacturing output recorded its biggest drop in nearly two years. This, in turn, forces investors to take refuge in traditional safe-haven assets and benefits the JPY. Apart from this, a modest pullback in the British Pound contributes to the heavily offered tone surrounding the GBP/JPY cross. Despite the downfall, spot prices remain well above the weekly low amid expectations that the Bank of England will continue raising interest rates to combat stubbornly high inflation. The bets were lifted by the stronger wage growth data released on Tuesday, which is expected to keep inflation elevated. Furthermore, the headline UK CPI - though fell to a three-month low in December - is still running at levels last seen in the early 1980s. Read next: Un Secretary General Antonio Guterres Encouraged The Transition To Green Energy At The World Economic Forum In Davos, The Chinese Economy May Surprise You Positively| FXMAG.COM In the absence of any relevant market-moving economic releases from the UK, the aforementioned mixed fundamental backdrop warrants some caution for aggressive bearish traders. Hence, it will be prudent to wait for strong follow-through selling before positioning for any further depreciating move for the  GBP/JPY cross
The EUR/USD Pair Has A Potential For Drop

EUR/USD Pair Holds Gains Above 1.0800, The Aussie Pair Falls To 0.6875

Kamila Szypuła Kamila Szypuła 19.01.2023 14:16
Concerns about US growth due to recent shortages in US PPI and retail sales cast a shadow over the dollar. The Fed's hawkish speakers are being largely shunned by the markets at this point. USD/JPY The Japanese yen, long favored as a safe haven and funding currency, has become so embroiled in market speculation over central bank policy in recent weeks that Wednesday's status quo decision triggered the yen's biggest fall in nearly three years. In a bond market where the central bank battled bond bears to defend its yield cap, the BoJ bought up so many of the issued 10-year Japanese government bonds that market liquidity virtually dried up. Speculators focused on the yen instead. Until late last year, BJ's dovish stance in the face of aggressive rate hikes by the Federal Reserve and other major central banks meant the yen was cheap and weak, making it an ideal currency to borrow for investment. Today USD/JPY started the day at 128.55 but then dropped below 128. USD/JPY is now trading back at the level from the start of the day, above 128.50 AUD/USD The Australian dollar falls after the unemployment rate in December was 3.5% from 3.4%. The figures show that the labor market remains robust, even as the Reserve Bank of Australia raised the cash rate by 3% from its pandemic low. The bank has rolled back large rate hikes and the futures market has a 50-50 chance of a 25 basis point hike priced at the February 7 monetary policy meeting. Ahead of this meeting, the key CPI data for the fourth quarter will be released on Wednesday next week, January 25. The RBA said it expects growth to 8% later this year The AUD/USD pair extended an overnight sharp pullback from the 0.7060-0.7065 area, its highest level since Aug. 16, and remains under strong selling pressure for a second consecutive day on Thursday. The downward trajectory remains uninterrupted throughout the European session. The Australian pair is currently trading below $0.70 but above $0.6850. Read next: Elon Musk Is Facing Trial In Fraud Trial Over 2018 Tweets| FXMAG.COM GBP/USD GBP/USD consolidates losses below 1.2350 during Thursday's European session. GBP/USD pair is currently above 1.2330. On the UK front, inflationary pressures have eased, according to the December Consumer Price Index (CPI) report published on Wednesday. Headline inflation was lowered to 10.5% on an annualized basis and the core CPI, which excludes oil and food prices, remained stable at 6.3%. The magnitude of the drop in the inflation rate is not enough to convince market participants that inflation in the UK is falling in a promising way. Therefore, investors should prepare for the continuation of the extremely hawkish monetary policy of the Bank of England (BoE). The UK data schedule is empty on Thursday, however, and traders will have to content themselves with looking ahead until Friday, when consumer confidence figures for January and retail sales figures for December are released. Consumers are expected to be a little less optimistic than they were. EUR/USD European Central Bank (ECB) President Christine Lagarde's speech on Thursday will point investors to the likely monetary policy actions in February. Falling energy prices in the euro area have moderated inflation, but the current rate of inflation is still far from the median. Therefore, investors should prepare for a hawkish comment by Lagarde from the European Central Bank. European Central Bank (ECB) policymaker Francois Villeroy de Galhau said on Wednesday it was "too early to speculate what we will do in March". However, he believes that Lagarde's earlier forecast of 50 bp is still valid. EUR/USD holds gains above 1.0800 in European trading. The pair is supported by falling US Treasury yields. Source: investing.com, finance.yahoo.com
Services PMIs and Fed Minutes: Analyzing Market Focus and Central Bank Strategy

The Short-Term Trend Of The GBP/JPY Corss Is Bullish Now

TeleTrade Comments TeleTrade Comments 20.01.2023 09:11
GBP/JPY is approaching 160.00 as investors are still confused about forward Bank of Japan’s policy stance. Bank of England might discover a meaningful downtrend in inflation from the late spring amid tight monetary policy. Bank of Japan could look for an exit from the expansionary policy as inflation is stably rising. GBP/JPY might display a power-pack action after the release of the United Kingdom Retail Sales data. GBP/JPY has extended its recovery move above the critical resistance of 159.00 in the early European session. The cross is marching towards the round-level resistance of 160.00 ahead of the United Kingdom Retail Sales data. On Thursday, the asset rebounded from 157.70 after the Bank of Japan (BOJ) maintained the status quo by keeping the interest rates and yields target unchanged. Bank of Japan (BoJ) Governor Haruhiko Kuroda kept the interest rate at -0.10% and the 10-year Japanese Government Bonds (JGBs) around 0% steady, commented that there is “no need to further expand the bond target band.” He further added that Japan’s economy is still on the path towards recovery from the pandemic and the BoJ is aiming to achieve a 2% inflation target sustainably, stably in tandem with wage growth. BOE’s Bailey sees a sheer declining inflation trend in the late Spring Policymakers at the Bank of England (BOE) have put severe efforts for decelerating the pace of the Consumer Price Index (CPI) by accelerated interest rates. December’s CPI report has shown a consecutive decline in the inflation trend for the first time since the Covid-19 pandemic period, led by declining energy prices. The United Kingdom has been one of the laggards in slowing down the pace of inflation. On Thursday, Bank of England Governor Andrew Bailey cited “He expects that inflation will fall quite rapidly this year, probably starting in the late spring. While commenting on the terminal rate, the Bank of England Governor sees the interest rate peak near the market expectations at 4.5%. The Bank of England Governor is seeing a shallow recession than the historic ones. Earlier, Bank of England policymakers cited rising wages as responsible for escalating inflation. Bargaining power has been shifted in the favor of job-seekers due to a shortage of labor. Investors await United Kingdom Retail Sales for fresh cues For further guidance, investors will keep an eye on the United Kingdom Retail Sales data, which is scheduled for Friday. As per the projections, the annual Retail Sales (Dec) data could contract by 4.1% vs. a contraction of 5.9% reported in the prior same period. However, the monthly economic data is expected to expand by 0.5% against the contraction of 0.4%. A recovery in the retail demand on a monthly basis could be the outcome of rising employment bills due to employees’ bargaining power, which is leaving more funds in the palms of households for disposal. A better-than-projected retail demand could spurt the forward inflation expectations, which could accelerate hawkish Bank of England bets. Mixed Japan’s inflation fails to provide any boost to the Japanese Yen Bank of Japan’s unchanged monetary policy-inspired gains in GBP/JPY faded later as investors still believe that the central bank will look for an exit from its decade-long ultra-loose monetary policy. A rising trend in inflation and the administration’s effort to increase wages could end the expansionary monetary policy ahead. However, the release of the National CPI indicates that investors should wait further before reaching to a conclusion. Japan’s National headline CPI has landed at 4.0%, lower than the consensus of 4.4% but higher than the former release of 3.8%. While the core inflation that excludes oil and food prices has soared to 3.0% higher than the expectations of 2.9% and the prior release of 2.8%. National CPI that excludes fresh food has remained in line with the estimates at 4.0%. GBP/JPY technical outlook The recovery move from GBP/JPY around the upward-sloping trendline of the Ascending Triangle chart pattern plotted from January 13 low at 155.65 has pushed it above the 20-period Exponential Moving Average (EMA) at 159.22. There is no denying the fact that the short-term trend is bullish now.  The horizontal resistance of the volatility contraction chart pattern is placed from January 9 high at 160.92. Meanwhile, the Relative Strength Index (RSI) (14) has scaled above 60.00, which indicates that the upside momentum is active now. Broadly, the cross might find barricades after reaching the horizontal resistance mentioned above.
Soft PMIs Are Further Signs Of A Weak UK Economy

Recession Still Looks Like The Base Case For The UK Economy

ING Economics ING Economics 20.01.2023 09:58
Persistent falls in UK retail sales are another reminder that the UK is still entering a downturn. The good news is that lower gas prices mean the Treasury can afford to do away with April's planned increase in household energy bills, a move that would lower headline inflation by 1-1.5pp through the latter half of the year Retail sales have fallen - again British consumers spent almost 4% more on retail spending last year, but received almost 6% less for their money, accounting for the surge in UK inflation through 2022. That’s according to the latest year-on-year retail sales figures, which also showed that real-terms spending has fallen in 12 out of the last 14 months, and that December alone saw a 1% drop in expenditure. Coupled with another dip in consumer confidence released overnight, recession still looks like the base case for the UK economy. Admittedly, fourth quarter GDP is likely to come in flat, which is partly down to an artificial bounce-back in activity during October following the Queen’s funeral last September. But assuming ongoing weakness in consumer spending, coupled with some potential declines elsewhere (construction and manufacturing look vulnerable), we think first quarter GDP could see a fall in output in excess of 0.5% (Read more).  UK retail sales are down 6% year-on-year in real terms Source: Macrobond The fall in gas prices is welcome news for consumers The good news, at least, is that the squeeze on household incomes looks like it won’t be quite as bad as first feared. The recent fall in gas prices means the Chancellor can probably do away with his planned increase in energy bills in April, or failing that, can lower them again in July. Current plans would see a less generous household ‘price guarantee’ take the average annualised bill from £2500 currently (or £2100 accounting for an extra discount), to £3000 from April. When that change was envisaged last November, the average energy bill was projected to be well above that level until early 2024 in the absence of any government support. But recent falls in wholesale prices suggest that will only be the case during the second quarter. Our latest estimates, based on the regulator's pricing methodology, suggest the average annualised bill will have fallen back to roughly £2200 in the third quarter, without any government intervention at all. Energy bills should have fallen to £2200 in 3Q, without any government support The Energy Price Guarantee will currently see the average household energy bill increase from £2500 to £3000 from April Source: Macrobond, ING calculations, Ofgem   As well as improving the outlook for consumers, this is also good news for the Treasury. Suppose the government caps the average bill at £3000 in the second quarter and allows them to return to a level determined by market prices in the third. In that case, the cost in FY2023 will fall from almost £13bn to £1.5bn (excluding additional benefits/pensions payments the Treasury has committed to). If the Chancellor does away with the planned increase in unit prices altogether and keeps the average bill at £2500 in 2Q, the cost would be £4.5bn in FY2023, still well below November’s projections. Treasury looking at £11bn saving even if price guarantee is scrapped in 3Q The November figures, as well as the fixed welfare payment costings, are based on UK Treasury estimates. Our projections assume the average household energy bill increases to £3000 in April as planned, but falls back in Q3 to the standard Ofgem regulated price. Source: UK Treasury, ING calculatuons   Headline inflation should also be lower as a result. If household bills return to the default price level set by the regulator Ofgem, then we’d expect CPI to come in 1-1.5pp lower than currently forecast. For the Bank of England that’s a double-edged sword – lower headline inflation would undoubtedly please the hawks most worried about inflation expectations de-anchoring. But lower gas prices mean a less pronounced hit to economic activity, potentially justifying tighter policy. In reality, the Bank will probably lean more towards the former argument, and we still think we're close to the peak in terms of Bank Rate. That said, it looks like the combination of persistent wage pressures and higher core services inflation will unlock one more 50bp hike at the February meeting, potentially followed by a final 25bp move in March. UK inflation set to be 1-1.5pp lower if bills below £3000 government guarantee Source: Macrobond, ING calculations Read this article on THINK Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more
Bestway Might Have Larger Designs On The UK's Second Biggest Supermarket

Weak Consumer Spending And Consumer Confidence Point To Economic Problems In The UK

Kenny Fisher Kenny Fisher 20.01.2023 12:21
The British pound has edged lower on Friday. In the European session, GBP/USD is trading at 1.2360, down 0.27%. Retail sales fall sharply UK retail sales were dismal in December. The headline figure fell -1.0% m/m, missing the forecast of 0.5% and below the November read of -0.5%. The core rate declined by 1.1%, shy of the forecast of 0.4% and below the November reading of -0.3%. On an annualized basis, the numbers were downright ugly – headline retail sales came in at -5.8% and the core rate at -6.1%, which was worse than November and below the estimates. Any hopes for a surge in spending due to Christmas were dashed, as consumers cut back due to the cost-of-living crisis. Inflation has eased a bit but remains in double digits, and consumers are expected to hold tight to the purse strings, as food and energy prices remain high and wages have been eroded by inflation. Consumer confidence remains in deep-freeze, with GfK Consumer Confidence falling to -45 in December, down from -42 in November and shy of the consensus of -40. Weak consumer spending and confidence points to a struggling economy, but the Bank of England has little choice but to continue raising rates in order to curb inflation. This will be a slow process, with the BoE projecting that inflation will fall to 5% late in the year. The Federal Reserve enters a 2-week blackout period after today, ahead of the rate meeting on February 1st. This means that public comments or interviews from Fed officials will be sharply curtailed. This made Fed member Brainard’s comments on Thursday all the more important. Brainard sounded hawkish, saying that rates needed to remain high even with signs that inflation was starting to ease. The Fed dot plot indicates that rates will peak at 5.1%, while the markets have priced a peak at around 4.75%. We’ll hear from Fed members Harker and Waller later today. Read next:A Serious Security Vulnerability In T-Mobile Caused Another Hacker Attack| FXMAG.COM GBP/USD Technical 1.2352 is a weak resistance line, followed by 1.2455 There is support at 1.2255 and 1.2179 This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.  
Bank of England Faces Dilemma: Will They Raise Rates by 25bps or 50bps?

The Pound (GBP) Is Fast Increasing Once More

Paolo Greco Paolo Greco 23.01.2023 09:46
The GBP/USD currency pair started moving upward again on Friday and is currently approaching the regional high of December 14. Traders may be unable to break through the Murray level of "8/8" (1.2451), but so far, everything indicates that the British pound will continue to rise. One should only attempt to explain why the British pound has climbed by 600 points over the previous two weeks if one wants to comprehend what is going on in the market right now. The likelihood of a subsequent increase in the BA rate has not increased during this time, and the Fed has not changed its monetary policy. The US inflation report, which showed a new, significant deceleration, is the only thing that can be noted. The market quickly rejoiced and rushed to sell US dollars because it believed that the Fed's monetary policy would soon slow down again. Thus, the pound is fast increasing once more, but since it is a British currency, we can claim that this movement is at least somewhat predictable. Nevertheless, the pair corrected lower by 600 points in late December and early January. However, we are still baffled as to how the British pound can keep rising in value. The CCI indicator has entered the overbought region, which frequently heralds a reversal and movement in the other direction, even though all trend indicators are currently going upward. Although the meetings of the Bank of England and the Fed will take place in a week and a half, the market is already aware of both central banks' decisions. Of course, what the Central Bank leaders say matters as well, and there might be some surprises. However, the market can now determine those judgments that won't be made public until next week. Formally, the GDP report is the most significant report of the week. If the current week is boring for the European currency, it will be even more so for the pound. The producer price index will be released on Wednesday in the UK, and business activity indices for the manufacturing and service sectors will be released on Tuesday. Indicators of business activity are very likely to stay below the 50.0 thresholds, and the producer price index doesn't usually cause a market reaction. We are not anticipating any crucial communications from the UK. It remains only to consider the American events. Business activity indices will once more be released in the United States tomorrow, and they will also remain nearly 100% below the "waterline." A report on the fourth quarter's GDP and orders for long-term goods will be released on Thursday. Data on American citizens' spending and income, as well as the University of Michigan's consumer sentiment index, were released on Friday. The GDP report will undoubtedly garner the greatest interest. Currently, the official prediction indicates a quarterly rise of 2.6-2.7%. That is, although there is still a 50% chance that the American economy will experience a recession this year, it has not yet happened. The US economy expanded in the most recent quarter, and this development may have strengthened the dollar had the market not been generally inclined to buy the euro and the pound. As a result, we think that the dollar won't increase significantly even if the GDP report's predicted value is exceeded. Every other report is solely secondary information. Of course, in theory, the market might potentially react to them, but in practice, if it does, it will either be minimal or nonexistent. Furthermore, these data won't be able to change the market's sentiment enough to stop the dollar's upward trajectory. Additionally, there won't be any significant speeches this week because there is a "silent mode" 10 days before the next central bank meeting. We won't get any new information from the primary source because Fed officials aren't allowed to speak on monetary policy. But because nearly all of the monetary committee members spoke last week and we are aware of what to anticipate from the Federal Reserve next week, it is no longer necessary. Over the previous five trading days, the GBP/USD pair has averaged 117 points of volatility. This figure is "high" for the dollar/pound exchange rate. Thus, we anticipate movement inside the channel on Monday, January 23, with movement being constrained by levels of 1.2302 and 1.2535. A new phase of the corrective movement is indicated by the Heiken Ashi indicator turning downward. Nearest levels of support S1 – 1.2390 S2 – 1.2329 S3 – 1.2268 Nearest levels of resistance R1 – 1.2451 R2 – 1.2512 R3 – 1.2573 Trading Suggestions: On the 4-hour timeframe, the GBP/USD pair is still rising. Therefore, until the Heiken Ashi indicator swings down, it is still possible to hold long positions with goals of 1.2512 and 1.2535. If the price is locked below the moving average with targets of 1.2207 and 1.2146, short trades may be opened. Explanations for the illustrations: Determine the present trend with the use of linear regression channels. The trend is now strong if they are both moving in the same direction. Moving average line (settings 20.0, smoothed): This indicator identifies the current short-term trend and the trading direction. Murray levels serve as the starting point for adjustments and movements. Based on current volatility indicators, volatility levels (red lines) represent the expected price channel in which the pair will trade the following day. A trend reversal in the opposite direction is imminent when the CCI indicator crosses into the overbought (above +250) or oversold (below -250) zones Relevance up to 07:00 2023-01-24 UTC+1 Company does not offer investment advice and the analysis performed does not guarantee results. The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade. Read more: https://www.instaforex.eu/forex_analysis/332953
Bank of England survey highlights easing price pressures

The Bank Of England Is Forced To Act Aggressively

Marek Petkovich Marek Petkovich 23.01.2023 10:02
The second consecutive decline in retail sales in December, this time by 1%, reminded investors of bad times. It seems too early to say that the UK economy will avoid recession. Sky-high energy bills and depleted household wallets indicate that retailers are in for a tough year. This threw the pound into the murky waters of last year, when Britain was named the worst G7 economy, never fully recovering from COVID-19. The optimists, however, have not lost faith. And the retreat of GBPUSD seems to them a temporary phenomenon. The economy looks more resilient Sterling fans cannot but rejoice that the Bank of England is among those for whom the glass is half full. According to Governor Andrew Bailey, the path for the BoE in 2023 will be easier than in 2022. Inflation is showing signs of slowing down, and the economy looks more resilient than previously thought. As a result, in a favorable scenario, the cycle of tightening monetary policy can be completed earlier. Derivatives are currently seeing a rise in the repo rate from 3.5% to 4.5% by the summer, and the central bank removed the phrase in its latest accompanying statement that it does not agree with the markets. In my opinion, Bailey is disingenuous. Unlike in the USA, where inflation expectations have fallen to 2%, UK's indicator, with a period of 1.2 and 5 years, hovers near the 4% mark, which forces the Bank of England to act aggressively. We are talking about raising the repo rate by 50 bps in February, which creates a comfortable advantage for the GBPUSD. And you can say anything you want. Softer rhetoric allows the economy to feel support from the central bank. Dynamics of inflation expectations in Britain Along with the decline in retail sales, consumer confidence from Gfk fell for the first time in four months. On the other hand, according to the Recruitment and Employment Confederation (REC), 184,000 new job postings were created in January, up a quarter from a year ago. According to REC, this is encouraging. At the beginning of the year, employees usually look for new positions, so an increase in job offers is good news for the economy. The vulnerability of Britain's GDP is perhaps the main problem of the pound. On the contrary, an increase in optimism about the outlook for the global economy, an improvement in global risk appetite, and a slowdown in the Fed's monetary restriction inspire investors with confidence in the continuation of the GBPUSD upward campaign. Indeed, the latest Consensus Economics surveys show that the eurozone will avoid a recession, and JP Morgan market models indicate that the U.S. will not fall into recession either. Add to that the opening of China, and the overall picture starts to play with bright colors. GBP/USD Technically, on the daily chart, the risks of winning back the double top with the GBPUSD pair look much less than the probability of restoring the upward trend. It makes sense to continue buying the pound against the U.S. dollar in the direction of the previously indicated target at 1.256.   Relevance up to 08:00 2023-01-28 UTC+1 Company does not offer investment advice and the analysis performed does not guarantee results. The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade. Read more: https://www.instaforex.eu/forex_analysis/332957
GBP's Strong Start: Outpacing G10 Currencies Amid Elevated Risk Sentiment

John Hardy (Saxo Bank): I don’t think any single inflation print will unsettle the BoE here, just look at the huge recovery in sterling from the lows

John Hardy John Hardy 13.12.2022 14:44
Stocks go up as the US inflation print surprises market participants, but we cannot forget about other important events this week, which are three key decision of three key central banks. Even if today's US infation print seems to cement the 50bp rate hike, UK economy is still ahead of CPI inflation print. In the same time it's still not sure which variant European Central Bank is going to choose on Thursday and, what's event more important, what's beyond. Today, we're delighted to hear from John Hardy, Head of FX Strategy at Saxo Bank. BoE is expected to hike the rate by 50bp on Thursday, but the day before CPI inflation data is published - would you expect a hawkich pivot if CPI bounces back above November print? John Hardy, Head of FX Strategy at Saxo Bank: BoE: I don’t think any single inflation print will unsettle the BoE here, just look at the huge recovery in sterling from the lows, which will help stabilize inflation relative to other countries just as sterling weakness was making the situation worse until recently. Already in early November, the BoE were saying that they were unlikely to take the rate as high as the market expects next year, so given the further encouragement from a strongly recovering sterling and lower natural gas and petrol prices, I don’t expect fireworks in the guidance even if inflation proves a bit hotter then expected. Read next: An incoming cold spell in the US has seen the cost of US gas surge 27% during the past three trading session while (...) Dutch TTF gas contracts remain below €150| FXMAG.COM December Fed decision seems to be sealed, but on Friday UMich and PPI data gloomed the picture of the US Economy a little bit. Are you of the opinion Fed will permanently shift to 50bp hikes until the end of cycle? Fed: The Fed will hike by 50 basis points on Wednesday and would likely hike in smaller 25-basis point increments thereafter unless inflationary pressures re-emerge (something the market is not at all anticipating and would take considerable time to develop anyway – a “slower fall” in inflation than expected is the worst case scenario barring new shocks).  For the FOMC meeting, the market is more looking at where the Fed forecasts its policy rate will be at the end of 2023 than at the size of the hikes, as well as where the Fed expects growth/inflation/employment data will be next year for a sense of how much economic weakness would be required for the Fed to stop hiking and eventually cut. Still, the market has a strong forward view on steeply falling inflation and growth and will react the most to incoming data. That view on incoming data has the already expecting rate cuts from the Fed starting as early as Q4 of next year, which suggests it is willing to ignore much of what the Fed says if the guidance is intended for anything beyond the next two or three meetings. Read next: The handling and demise of FTX have ultimately set the ecosystem's facilitative regulatory agenda and adoption efforts back | FXMAG.COM ECB decides on interest rate this week - what do you expect from the Bank this time? When could the cycle come to an end? ECB: The ECB is set to hike 50 basis points, which will take the deposit rate to 2.00%. Whether they hike another 50 basis points or step down to 25 basis point hikes thereafter is the question. Europe is already in recession and expected to be in recession next year. I don’t expect much above 2.50% for this cycle from the ECB for the peak policy rate – getting higher would likely require a reacceleration of inflationary pressures and its too early for that to unfold in the near future, when a drop-off in inflation is on course.
Services PMIs and Fed Minutes: Analyzing Market Focus and Central Bank Strategy

The Broader Risk Sentiment Will Influence The Safe-Haven Japanese Yen (JPY)

TeleTrade Comments TeleTrade Comments 24.01.2023 09:19
GBP/JPY retreats from a nearly four-week high touched on Monday, though lacks follow-through. A combination of factors revives demand for the safe-haven JPY and exerts pressure on the cross. Expectations that elevated UK CPI might force the BoE to continue raising rates helps limit losses. The GBP/JPY cross comes under some selling pressure on Tuesday and erodes a part of the overnight gains to a nearly four-week high. The cross remains depressed around the 161.25-161.30 area through the early European session and for now, seems to have snapped a six-day winning streak. A combination of factors assists the Japanese Yen to regain some positive traction and stall its recent corrective decline, which, in turn, is seen weighing on the GBP/JPY cross. Despite the Bank of Japan's decision last week to leave its policy settings unchanged, investors seem convinced that a shirt in stance is inevitable amid stubbornly high inflation. The bets were lifted after the latest CPI report from Japan showed that consumer inflation rose to a 41-year high level of 4% in December. Apart from this, worries about a deeper global economic downturn further underpin the JPY's relative safe-haven status against its British counterpart. Read next: The Japanese Yen Fell And USD/JPY Reached Level Of 130, The EUR/USD Pair Lost Its 1.09 Level And Agian Is Around 1.0880 | FXMAG.COM The downside for the GBP/JPY cross, meanwhile, seems limited amid speculations that elevated consumer inflation will maintain pressure on the Bank of England (BoE) to continue raising interest rates. In fact, the UK Office for National Statistics reported last week that the core CPI in the UK stayed at 6.3% in December or more than three times the BoE's 2% target. Furthermore, the emergence of fresh selling around the US Dollar benefits the British Pound, which might hold back traders from placing aggressive bearish bets. This, in turn, warrants some caution before positioning for an extension of the intraday depreciating move. Market participants now look forward to the release of the flash UK PMI prints for January for some impetus. Apart from this, the broader risk sentiment will influence the safe-haven JPY and contribute to producing short-term trading opportunities around the GBP/JPY cross. Bulls, meanwhile, are likely to wait for some follow-through buying beyond the 161.75-161.80 area, above which spot prices could aim to test the late December swing high, around the 162.30-162.35 region. The momentum could get extended further towards the 163.00 mark en route to the 100-day SMA, which coincides with the 164.00 horizontal support breakpoint near the 164.00 level.
The German Purchasing Managers' Index, ZEW Economic Sentiment And More Ahead

European Markets Have Started To Lose Some Of Their Early Year Momentum

Michael Hewson Michael Hewson 24.01.2023 11:32
US markets started the week very much on the front foot yesterday, with the S&P500 closing above the 4,000 level and the Nasdaq 100 leading the way higher with its second successive 2% daily gain.   The outperformance in tech appears to point to a growing conviction on the part of investors that the Fed will soon have to look at cutting rates before the end of the year, although to look at bond markets yesterday, yields also moved higher, as money flowed out of treasury markets.   With a lot of tech companies starting to announce job cuts, as well as other measures to rein in costs, and inflationary pressures showing further signs of easing, it would appear that US investors are starting to think in terms of the next move higher, despite concerns over lower profits   Given the uncertain economic backdrop this comes across as a bit of a leap of faith, and its also notable that while US markets have started to gain momentum in the past few days, European markets have started to lose some of their early year momentum.   While US markets surged higher yesterday it is notable that today's European market open is likely to be a much more tepid affair, suggesting perhaps that investors in Europe don't share the same enthusiasm about the economic outlook, despite the reopening of the Chinese economy, which may help to provide a demand boost.   This increase in optimism is likely to be reflected in today's flash PMI numbers for January, which have already seen a pickup in economic activity in the past few months due to the sharp declines in energy prices from the peaks in August and September.   In Germany manufacturing PMI fell to 45.1 in October, but has recovered since then, albeit is still very much in contraction territory. Services have seen a similar pattern, dropping to two-year lows of 45, before showing small signs of a recovery. We expect to see a further improvement in today's January numbers to 48 for manufacturing and 49.5 in services.     In France, we've seen a similar pattern in manufacturing, although services have been more resilient due to the energy price subsidies provided by the French government to cushion French households from the worst effects of higher prices. France manufacturing is expected to improve to 49.5 from 49.2, and services to 49.8 from 49.5.   In the UK, manufacturing has struggled over the past 3 months and looks set to continue to do so, while services have been slightly more resilient. As we head into 2023 the challenges for business will be whether we see new investment, and a pick-up in economic activity, after the rising pessimism seen at the end of last year. Manufacturing is expected to remain subdued at 45.5, while services could slip back from 49.9 to 49.5.   Public sector borrowing in December is expected to remain high on the back of rising debt interest and energy price support with expectations of a small fall from November's £22bn to £18bn.   US manufacturing and services are expected to remain weak at 46 and 45 respectively.      EUR/USD – a marginal new high at 1.0927 yesterday, before slipping back again. The main resistance remains at the 1.0950 area which is 50% retracement of the move from the 2021 highs to last year's lows at 0.9536. A move through 1.0950 opens up a move towards 1.1110. Support remains back at the 1.0780 area.   GBP/USD – ran out of steam just below the 1.2450 area yesterday slipping back towards the 1.2320 area. Has managed to hold above the 1.2300 area for the last three days. Above 1.2450 could see a move towards 1.2600. A move below 1.2290 could see a move towards 1.2170.   EUR/GBP – slid back from the 0.8815 area but while above the 50- and 100-day SMA which acted as support last week the bias remains for a return to the recent highs at 0.8890. The next support below 0.8720 targets 0.8680.   USD/JPY – has squeezed back above the 130.20 area, with a move through 131.60 and last week's high potentially targeting a return to the 132.50 area in the short to medium term. Support currently at the 128.20 area as well as the lows last week at 127.20.     FTSE100 is expected to open 20 points higher at 7,804   DAX is expected to open 47 points higher at 15,150   CAC40 is expected to open 23 points higher at 7,055   Email: marketcomment@cmcmarkets.com Follow CMC Markets on Twitter: @cmcmarkets Follow Michael Hewson (Chief Market Analyst) on Twitter: @mhewson_CMC
Soft PMIs Are Further Signs Of A Weak UK Economy

Soft PMIs Are Further Signs Of A Weak UK Economy

Kenny Fisher Kenny Fisher 24.01.2023 14:15
The British pound has posted slight gains on Tuesday. In the European session, GBP/USD is trading at 1.2302, down 0.60%. UK debt hits record UK debt costs soared in December, sending the budget deficit to a record 27.4 billion pounds. This was sharply higher than the November reading of 18.8 billion pounds and the consensus of 17.3 billion pounds. The drivers behind the sharp upturn were rising interest payments and government subsidies for gas and electricity. The government’s bill for the subsidies in December was some 7 billion pounds. Despite the grim debt news, the pound remains steady, thanks to broad US dollar weakness. UK PMIs for December didn’t help matters, as both the Services and Manufacturing PMIs came in below the 50 level, which indicates contraction. Manufacturing rose slightly to 46.7, up from 45.3 in November and above the forecast of 45.0 points. The Services PMI fell to 48.0, down from the November read and the forecast, both of which were 49.9 points. The soaring debt and soft PMIs are further signs of a weak UK economy. These are clearly not ideal conditions for raising interest rates, but with inflation at 10.5%, the Bank of England doesn’t really have much choice, as entrenched inflation could cause more damage to the economy than high interest rates. The road back to low inflation promises to be a long one, with the BoE projecting that inflation won’t drop to 5% until late this year. The US will release Manufacturing and Services PMIs which are expected to remain in contraction territory. Manufacturing is expected to tick lower to 46.1 (46.2 prev.), while Services is forecast to dip to 44.5 (44.7 prev.). If the releases are softer than expected, the US dollar could lose ground as speculation will rise that the Fed may have to ease up on the pace of rates. Read next: South African Petrochemical Company Sasol Is Moving Away From Fossil Fuels, Germany Again Refused To Send Tanks To Ukraine| FXMAG.COM  GBP/USD Technical GBP/USD is testing support at 1.2335. Below, there is support at 1.2233 There is resistance at 1.2499 and 1.2601 This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.  
The GBP/USD Pair Started A New Round Of Downward Correction

The GBP/USD Pair Started A New Round Of Downward Correction

Paolo Greco Paolo Greco 25.01.2023 08:57
The GBP/USD currency pair started a new round of downward correction on Tuesday, and as a result, by the end of the day, it had fallen below the moving average line. Yesterday, we discussed the pair's inability to go over the level of 1.2451, where the latest rise in the value of the pound came to a stop, as well as the overbought CCI indicator, which frequently signals an impending negative reversal. These two technical elements were what made Tuesday successful. We want to point out right now that numerous reports have been released in the last day, all of which have been about commercial activity in the USA and the UK. However, it is impossible to categorically label these findings either positively or negatively. UK business activity increased in the manufacturing sector while marginally declining in the services sector. However, neither index rose above the "waterline" of 50.0, indicating that the trend is still downward. Based on this information, how could the pound have been declining all day? Let's take a look at it from the other angle: although the manufacturing and services business activity indices in the US increased, they both continued to be below the "waterline," and by the time they were released, the downward trend had already ended. Here, the numbers don't add up. It turns out that either the market calculated all of these statistics using its logic, or these reports have absolutely nothing to do with what occurred. Remember that we have been anticipating a significant decline in the value of both the pound and the euro for a very long time. It should not have been the only round of downward movement that we saw between December 14 and January 6. Therefore, we think it will make sense to start moving downward again after recovering to the level of 1.2450. We continue to have serious doubts that the Bank of England will hike the benchmark interest rate "to the bitter end." And if we are correct, there simply isn't any justification for the pound to increase. In just a few months, it has already gained more than 2,000 points, which is roughly half of what it lost during the most recent worldwide decline. The BA rate is expected to rise higher, according to experts. According to experts consulted by The Financial Times, the British regulator will probably keep raising the rate. There is no doubt in our minds, but how quickly will he complete it? Recall that there have been persistent reports about a further slowing in the UK's monetary policy tightening pace in recent weeks. Forecasts are more conservative due to worries over the British economy, although the UK's current inflation rate points to an increase of at least 2.0–2.5%. However, according to analysts, what matters most right now is BA's commitment to keeping the rate rising; they don't care how much higher it will go or how long it will take. They point out that the 0.1% increase in November's British GDP was a welcome surprise. Some even assert that because of this signal, we may infer that the British economy won't enter a recession in the fourth quarter, as practically predicted before by Rishi Sunak and Andrew Bailey. In addition, there have been 27,000 new jobs added, salaries are increasing at a record rate, and inflation is still at its highest point in 40 years. Everything would seem to be in favor of raising the rate by 0.5% further. And if the Bank of England does not disappoint next week, the pound may continue to rise. However, we want to remind you that the rise of the pound in recent weeks and months may have been influenced by high market expectations for interest rates. Most likely, the market has already resolved this issue. Despite the Fed's continued rate increases, the dollar has not increased since the US inflation rate first began to decline. Although only slightly, inflation in Britain has already started to slow down twice. However, if we apply the fairness principle, the pound should have already stopped gaining value if this support factor was the only one available to it. We also caution against drawing quick judgments about the UK recession, as it is highly unlikely that it can be stopped. And it won't be judged until the middle of this year, at the earliest. Over the previous five trading days, the GBP/USD pair has averaged 120 points of volatility. This figure is "high" for the dollar/pound exchange rate. Thus, we anticipate movement inside the channel on Wednesday, January 25, with movement being constrained by levels of 1.2209 and 1.2449. A potential continuation of the upward movement will be indicated by an upward turn of the Heiken Ashi indicator. Nearest levels of support S1 – 1.2268 S2 – 1.2207 S3 – 1.2146 Nearest levels of resistance R1 – 1.2329 R2 – 1.2390 R3 – 1.2451 Trading Suggestions: In the 4-hour timeframe, a significant correction in the GBP/USD pair began. Therefore, until the price is anchored above the moving average, it is possible to hold short positions with goals of 1.2268 and 1.2207. If the price is stable above the moving average line, you can start trading long with goals of 1.2390 and 1.2449. Explanations for the illustrations: Determine the present trend with the use of linear regression channels. The trend is now strong if they are both moving in the same direction. The short-term trend and the direction in which you should trade at this time are determined by the moving average line (settings 20.0, smoothed). Murray levels serve as the starting point for adjustments and movements. Based on current volatility indicators, volatility levels (red lines) represent the expected price channel in which the pair will trade the following day. A trend reversal in the opposite direction is imminent when the CCI indicator crosses into the overbought (above +250) or oversold (below -250) zone   Relevance up to 05:00 2023-01-26 UTC+1 Company does not offer investment advice and the analysis performed does not guarantee results. The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade. Read more: https://www.instaforex.eu/forex_analysis/333171
FX Daily: Upbeat China PMIs lift the mood

Chinese Have Enough Money To Temper Recession, Tesla’s Record Profit

Swissquote Bank Swissquote Bank 26.01.2023 10:56
The S&P500 was flat yesterday, as investors tried to make sense of the deluge of company earnings that hit the fan before, during and after the session. Microsoft didn’t gain on better-than-expected earnings, and Tesla announced record profits, but the share price jumped only 5% in the afterhours. Stocks Latest positive price action in stocks – which is now fading, and the positive price action in bonds suggest that the recession odds became less for stock traders, and more for bond traders since the start of this year. And that’s a risk for stock gains, besides earnings. Bank of Canada In central banks, Bank of Canada (BoC) hiked its bank rate by 25bp yesterday and announced to pause. The BoC decision spurred the expectation that the Federal Reserve (Fed) could do the same: hike by 25bp next week then pause. Bank of England For the Bank of England (BoE), investors are almost sure that the year will end with a 25bp hike due to the slowing economy. Australia But in Australia, the surprise rebound in Australian inflation, spurred the Reserve Bank of Australia (RBA) hawks yesterday. Summary In summary, investors’ hearts will continue to swing between slowing economy and easing inflation, and the bumps in inflation along the way.But the data will tell who is right and who is wrong. All eyes are on US GDP today! Watch the full episode to find out more! 0:00 Intro 0:47 Microsoft sold on slowing revenue warning 1:51 Tesla’s record profit sees limited reaction 3:34 Stock and bonds don’t price the same recession odds 5:11 FX update: USD down, euro, sterling, Aussie up 7:51 Chevron to buy back $75bn stocks! 9:01 Chinese have enough money to temper recession. They just need to spend it! Ipek Ozkardeskaya 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. #Tesla #Microsoft #earnings #Chevron #stock #buyback #US #GDP #data #Fed #ECB #BoE #RBA #BoC #expectations #recession #odds #USD #EUR #GBP #AUD #crude #oil #China #New #Year #SPX #Dow #Nasdaq #investing #trading #equities #stocks #cryptocurrencies #FX #bonds #markets #news #Swissquote #MarketTalk #marketanalysis #marketcommentary _____ Learn the fundamentals of trading at your own pace with Swissquote's Education Center. Discover our online courses, webinars and eBooks: https://swq.ch/wr _____ Discover our brand and philosophy: https://swq.ch/wq Learn more about our employees: https://swq.ch/d5 _____ Let's stay connected: LinkedIn: https://swq.ch/cH      
Rates Spark: Central banks vs economic data

Rates Spark: Central banks vs economic data

ING Economics ING Economics 27.01.2023 09:09
Next week sees the three major central banks' first policy meetings of 2023. Yet key data releases framing the meetings will mean an ongoing tug of war between the inflation and recession narratives in the market. Stretched valuations are at risk from more vocal central banks arguing that their jobs are not done Fed, ECB, BoE: High conviction on the hikes that will be delivered next week First policy meetings of the year for the Fed, European Central Bank and Bank of England are all squeezed into the next week. Each of these central banks will tell us that their job is not done yet, though some are clearly seen closer to being done than others. Central banks will tell us that their job is not done yet Markets have a pretty high conviction as to what will be delivered next week in terms of rate hikes. It is expected the Fed will slow to a 25bp hike, coming closer to its cycle end. A total of 60bp tightening is priced until summer. The BoE should still raise rates by 50bp next week, but is seen slowing thereafter with an overall 95bp of tightening by late summer. The ECB is also seen to deliver 50bp next week, but officials have signalled further sizeable hikes may be necessary and the market is pricing 140bp of tightening in total by summer. If we set this against our economists forecast the market is in line with our own view, at least for the upcoming meetings next week.   Markets are more concerned about what lies beyond But merely looking at the pricing of the next couple of hikes belies the fact that markets are more concerned with what lies beyond. The central banks signalling will be more important. It is still a tug of war between the need to rein in elevated inflation and the fear over a deepening downturn – it is central banks versus data. And next week is also packed with key data releases. Next week is also packed with key data releases The eurozone will see preliminary inflation data ahead of the ECB meeting, though the slight easing of the core inflation rate to 5.1% seen by the consensus is hardly going to change anyone’s mind on what the ECB’s next steps are. Fourth-quarter GDP is likely to see growth stalling, though avoiding outright shrinkage, which should also give the ECB more confidence to stay the course. More importantly, also for long end EUR rates is that the US the macro data could still feed recession angst with the ISM releases framing the Fed meeting. Crucially, the jobs data in the wake of the Fed could blunt any hawkish message from the meeting – the current consensus is looking for the labour market to lose further momentum. However, the weekly initial jobless claim data yesterday showed again that there is no one way narrative in the macro data. High allocation to indirect bidders in UST auctions shows strong demand Source: TreasuryDirect, ING We see the balance of risk from the meetings tilted towards higher rates That said, US Treasury auctions so far this year signal ongoing demand right along the curve – yesterday’s 7yr auction was no exception. The market appears primed for a Fed pivot and therein also lies the risk. If the Fed’s communication surprises on the hawkish side, we see the possibility that stretched valuations, especially the still deeply inverted curve, can imply a stronger pull higher of longer dated rates as well. Also keep in mind that ECB officials of late have pushed back hard against rate cut speculation that has crept into forward rates for late 2023 and 2024, spilling over from the recession angst in the US. President Lagarde may well attempt continue these efforts during the press conference. Real rates which define financial conditions have actually remained relatively stable in their positive range One consolation for the ECB is that despite market rates rallying back since the start of the year, real rates which define financial conditions have actually remained relatively stable in their positive range to which the ECB had elevated them with the December policy meeting. But the ECB has fought hard for this and will not want to risk diminishing these gains. And while tighter spreads in the periphery of the eurozone do signal easing conditions in some corners, that should give policymakers reassurance on their recent decision  to downsize the balance sheet. Real rates have remained higher despite markets rallying at the start of the year Source: Refinitiv, ING Today's events and market view We will get US data today covering personal income and spending as well as the Fed’s favoured inflation indicator, the PCE deflator, but it is doubtful that these will move the needle regarding next week’s decision. With 10Y yields having rallied back to the levels seen around mid-December, we see the risk that of profit taking as we approach the policy meetings. In particular the ECB should have an incentive to signal that the job is far from done and more tightening is still needed. Also keep in mind that long end supply in EUR has come with more concessions as opposed to the spectacular auction results in the US. Next week will see a busier acution schedule again including longer maturity bond sales out of France.   Read this article on THINK TagsRates Daily Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more
Despite The Improvement In The Outlook Due To Falling Energy Prices, The Economic Environment In Britain Remains Difficult

Four Bank of England scenarios for February’s meeting

ING Economics ING Economics 27.01.2023 12:35
Persistently high wage and service-sector price inflation points to another 50bp rate hike from the Bank of England next Thursday. If we're right, then we expect one final 25bp rate hike in March, marking the top of this tightening cycle Governor of the Bank of England, Andrew Bailey Four scenarios for the Bank of England meeting Market pricing based on spot values on 27 January Source: ING   The Bank of England looks more likely to follow the European Central Bank than the Federal Reserve next Thursday, and we expect a 50 basis point rate hike for the second consecutive meeting. While the minutes of the December meeting appeared to open the door to a potential downshift to a 25bp move in February – and this meeting looks like a closer call than markets are pricing – the reality is that the recent data has looked relatively hawkish. Wage growth is persistently high, looking both at the official numbers and the BoE’s own business surveys. Headline inflation came in a little lower than the Bank projected back in November, but services CPI – seen as a better gauge of domestically-driven inflation – has come in above expectations. Still, if we get a 50bp hike on Thursday then it’s likely to be the last. BoE officials have hinted previously that much of the impact of last year’s rate hikes is yet to hit, and cracks are forming in interest-rate-sensitive parts of the economy. Headline inflation should begin to come down more rapidly from March too, as the impact of last year's energy bill surges drop out, and core goods/food pressure begins to ease more noticeably.  We expect one final 25bp hike in March, taking the Bank Rate to a peak of 4.25%. The key question for Thursday is whether the Bank itself acknowledges its work is nearly complete. We suspect it’s more likely to keep its options open. Here's what we expect: 1 The vote split December’s meeting saw the number of policymakers voting for a 75bp hike drop from seven to one, and the committee’s two most dovish officials opted for no rate hike at all. The lesson then and throughout 2022 was that the committee tends to move by consensus, and that means that the vote split is unlikely to be particularly narrow, even if the meeting is a tough one to call. Either we’ll get a similar number of officials voting for 50bp again, or we’ll see the vast majority scale back their vote to 25bp, akin to the kind of shift we saw in December. Our base case is that we see six of the nine policymakers voting for a 50bp hike, one for 25bp and two for no change. How each official has voted on interest rate decisions since 2021 Dr Swati Dhingra joined the committee in August 2022 and began voting in September Source: Bank of England, ING 2 New forecasts Calmer markets and scaled-back rate hike expectations since the mini-Budget crisis last year mean we shouldn’t be surprised to see the Bank upgrade its growth forecasts. Lower gas prices should theoretically help too, though this is a little more awkward for the BoE given that the government hasn’t yet cancelled plans to increase household bills in April, even if such a move now looks unlikely. That also means we’ll have to take the new inflation forecasts with a slight pinch of salt, and our own view is that headline CPI will end the year 1pp lower if April's planned increase is scrapped and consumer bills return to levels consistent with market pricing from the third quarter.  Still, it's the medium-term story that matters more. Keep an eye on the so-called ‘constant rate’ inflation forecasts, where the Bank assumes the Bank rate will remain unchanged from now on. If these show inflation at, or very close to, 2% in a couple of years' time, then that would be a sure-fire sign that policymakers think we’re close to the peak for Bank Rate. 3 Guidance on future policy decisions Governor Andrew Bailey hinted recently that current market pricing, which sees a peak for Bank Rate at 4.4%, is in the right ballpark. That suggests little reason for the Bank to rock the boat too much on Thursday with new forward guidance, and we suspect it will want to keep options open. The Bank will likely repeat that it’s prepared to act ‘forcefully’ in future if required (though we learnt in December’s minutes that 50bp hikes classify as ‘forceful’). We also doubt Bailey will be willing to be drawn on whether the Bank could pivot back to a 25bp hike in March, nor indeed whether that would be the last move in the cycle. Where he may be tempted to push back is on policy easing, especially now markets are almost pricing in one 25bp rate cut by the end of this year. Chief Economist Huw Pill’s recent emphasis on the UK sharing the worst bits of the US and eurozone’s inflation problems – structural labour shortages with the former, the energy crisis with the latter – feels like a line we’ll hear a lot over the coming months as officials try to dampen expectations of policy easing. Sterling rates to tighten to euro, and a more inverted curve The sterling rates curve still trades with a remnant of the risk premium that appeared in the run-up to the September budget debacle, making it one of the few markets where we think rates are unjustifiably high. Things have changed since then, however. Markets have come around to our more benign view on the terminal rate in this cycle, now implying hikes will stop around 4.25%. Instead, the discrepancy is to be found in longer maturities where the curve implies the Bank rate will remain elevated longer than at other central banks. Read next: Ukraine Is Calling For More Sanctions Against Russia| FXMAG.COM What markets expect from the Bank of England over the coming months Source: Refinitiv, ING   That markets taking a more hawkish view of BoE policy than signalled, for instance in its forecast, is nothing new. What’s changed is the way participants look at inflation risk. This has prompted yield curves to take a much more benign view of Fed and ECB policy. Each country is different but we find the treatment of sterling rates increasingly at odds with that of the dollar and euro. As a result, we expect the differential between 5Y sterling and euro swap rates to shrink to 75bp. This convergence should also be helped by the worsening of UK economic surprise indices, just as their eurozone equivalent goes from strength to strength. The spread between euro and sterling swap rates is likely to narrow Source: Refinitiv, ING   We also think the GBP curve is due to flatten further. One likely driver is the market's growing confidence that the BoE, like the Fed, will soon be in a position to cut rates, although we wouldn’t expect this before 2024. Another less probable driver would be if the BoE feels the need to tighten policy more than expected in the coming meetings. We very much doubt that longer rates would follow the short end higher, pricing instead a growing risk of rate cuts down the line to cushion the economic hit. We think the GBP curve is due to flatten further Source: Refinitiv, ING GBP: Temporary strength The BoE’s broad trade-weighted measure of sterling has bounced around 6% since the dark days of September and will marginally ease the BoE’s fears of imported inflation. Given that a 50bp hike is not fully priced for Thursday, sterling could enjoy some limited and temporary strength should the BoE indeed hike 50bp. Depending on the post-FOMC state of the dollar, that could briefly send GBP/USD back into the 1.24/25 range and EUR/GBP back to the low 0.87s. However, the challenges facing sterling have not gone away. Large twin deficits, weak growth and what throughout the year should be building expectations that falling prices – especially from March/April onwards – will provide room for the BoE to cut rates around the turn of the year. In terms of a profile, we think a continued narrowing in GBP rates premium to the EUR can push EUR/GBP higher through the year towards the 0.90/91 area. GBP/USD should be supported by the better EUR/USD trend, but will probably struggle to hold any gains to the high 1.20s – potentially seen in the second quarter. Read this article on THINK TagsInterest rates Bank of England Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more
Bank Of England Will Probably Be Unable To Avoid A Significant Easing Of Policy

The Bank Of England Is Likely To See One Or Two More Rate Hikes In The First Half Of The Year

Kenny Fisher Kenny Fisher 27.01.2023 14:32
The British pound is slightly lower on Friday. In the European session, GBP/USD is trading at 1.2366, down 0.37%. Will US Core PCE continue to drop? There are no UK releases today, so all eyes will be on the US Core PCE, which is considered the Federal Reserve’s preferred inflation indicator. The forecast stands at 4.3% y/y for December, following 4.7% in November. If the print is in line with the forecast, it will mark a fourth straight decline in inflation. The Core PCE release, even if it misses expectations, won’t change the outcome of the Fed meeting next Wednesday. The CME’s Fed Watch has pegged the likelihood of a 25-basis point hike at 98%. Still, the meeting could have a strong impact on the US dollar, depending on the tone of the rate statement and Fed Chair Powell’s follow-up remarks. The Fed has been very consistent in its hawkish stance, reiterating that rates will stay high and there are no plans to cuts rates, in contrast to the markets, which are expecting rate cuts late in the year. If the Fed repeats its hawkish stance at the meeting, it could give a lift to the US dollar. The Bank of England holds its meeting just a day after the Fed on Feb. 2. The central bank is widely expected to raise rates by 0.50%, which would bring the cash rate to 4.0% and would be a 10th straight rate increase. Despite the significant tightening, inflation is running at a sky-high 10.5%, meaning that the BoE can’t even think about a pause in its rate-tightening cycle. The terminal rate is likely to be reached at 4.25%-4.5%, so we’re likely to see one or two more rate hikes in the first half of the year. For the BoE, the first sign of success against inflation will be to bring it back to single digits, after four straight months above 10%.   GBP/USD Technical 1.2335 and 1.2233 are providing support There is resistance at 1.2446 and 1.2499 This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.  
Long-Term Yields Soar Amidst Hawkish Fed: Will They Reach 5%?

Key events in developed markets next week - 28.01.2023

ING Economics ING Economics 28.01.2023 08:59
Next week is packed with central bank meetings. We see the Federal Reserve raising rates by 25 basis points, given inflation is moving in the right direction. For the European Central Bank, a rate hike of 50bp looks like a done deal, and we believe the Bank of England is likely to follow in the ECB's footsteps, given wage growth is persistently high In this article US: A slowdown in the pace of tightening UK: Bank of England to stick to 50bp hike following recent inflation data Eurozone: ECB to hike by 50bp; Lagarde to make hawkish statement   Shutterstock US: A slowdown in the pace of tightening Two major events in the US will shape market sentiment next week. First is the Federal Reserve policy meeting, where we expect it to raise the policy rate by 25bp. Having raised rates by 75bp on four consecutive occasions last year and then lifted the policy rate by 50bp in December, this marks a clear slowdown in the pace of tightening and appears justified given inflation is moving in the right direction and activity is slowing. However, the Fed remains wary and will again suggest that this is not the end for interest rate increases. The central bank will also be keen to dismiss the notion that it is preparing for potential rate cuts later this year. Financial conditions have loosened given movements in the dollar, Treasury yields and credit spreads and it may feel that any further loosening, fuelled by talk of potential policy easing in the second half of the year, could undermine its current actions in fighting inflation. We will then be looking at the January jobs report. Employment creation remains strong for now, but job lay-off announcements are coming in thick and fast. We are nervously watching what happens to the temporary help component, which has already experienced five consecutive monthly falls. Given the nature of the role, which is easier to be hired into and fired from, this tends to lead to broader shifts in employment. As such, we expect to see a softer non-farm payrolls increase than seen in recent months, but it is still likely to be well above 100k given the large number of job vacancies that remain. Read our full Fed preview here. UK: Bank of England to stick to 50bp hike following recent inflation data The Bank of England looks more likely to follow the European Central Bank than the Federal Reserve next Thursday, and we expect a 50bp rate hike for the second consecutive meeting. While the minutes of the December meeting appeared to open the door to a potential downshift to a 25bp move next month, the reality is that the recent data has looked relatively hawkish. Wage growth is still persistently high, both in the official numbers and the BoE’s own business surveys. Headline inflation came in a little lower than the Bank projected back in November, but services CPI – seen as a better gauge of domestically-driven inflation – has come in above expectations. Still, if we get a 50bp hike on Thursday then it’s likely to be the last. BoE officials have suggested that much of the impact of last year’s rate hikes is still to show through, and cracks are forming in interest-rate-sensitive parts of the economy. We expect one final 25bp hike in March, taking the Bank Rate to a peak of 4.25%. The key question for Thursday is whether the Bank itself acknowledges its work is nearly complete. We suspect it’s more likely to keep its options open. Read our full preview here. Read next: The Aussie Pair Is Holding Above 0.7100, The Major Currency Pairs Are Waiting For US PCE Report| FXMAG.COM Eurozone: ECB to hike by 50bp; Lagarde to make hawkish statement When the European Central Bank meets next week, all eyes and ears will once again be on communication. A rate hike of 50bp looks like a done deal, but how far and how fast the ECB will go from there is still unclear. We expect hawkish comments by ECB President Christine Lagarde in order to prevent another drop in market interest rates. Current market expectations about ECB rate cuts in 2024 are premature. Read our full ECB preview. Key events in developed markets next week Refinitiv, ING TagsUS UK Monetary policy Eurozone   Read the article on ING Economics   Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more  
Kiwi Faces Depreciation Pressure: RBNZ Expected to Hold Rates Amidst Downward Momentum

Week Ahead: The Fed, The ECB And The Bank Of England Will Make The Rate Decision

Ed Moya Ed Moya 28.01.2023 09:30
US It doesn’t get any busier than this week. Traders will focus on the FOMC decision, but they should also closely watch mega-cap tech earnings, and the nonfarm payroll report. The Fed is expected to continue slowing their rate hiking pace with a small 25 basis point rate rise.  Disinflation trends are clearly here, but Core PCE suggest price pressures are coming and the labor market refuses to break and could prompt the Fed to remain vigilant with its inflation fight. The nonfarm payroll report is still expected to show job growth of 175K, even as we hear of multiple reports of layoffs announcements across tech, finance, and real estate. Most of the layoffs will happen throughout the next couple of quarters, so we still could see another better-than-expected jobs number. Earnings season gets chaotic as Wall Street will get results from Advanced Micro Devices, Alphabet, Amazon, Amgen, Apple, Canadian Pacific Railway, Cigna, ConocoPhillips, Deutsche Bank, Exxon Mobil, Ferrari, Ford Motor, General Motors, Gilead Sciences, GSK, Hershey, Honeywell International, Humana, McDonald’s, McKesson, Merck, Meta Platforms, Novartis, Qualcomm, Samsung SDI, Sanofi, Shell, SoftBank, Sony Group, Starbucks, T-Mobile, Thermo Fisher Scientific, and United Parcel Service EU Three events stand out next week, the most obvious being the ECB meeting on Thursday. While the rate decision is what everyone will be waiting for, the flash inflation data on Wednesday and GDP on Tuesday could have some influence on whether the central bank will seek to soften its hawkish message. A 50 basis point hike is mostly priced in but what comes next is less certain at this point. UK The Bank of England has a particularly tough decision over the coming months. On the one hand, inflation is above 10% and the economy likely didn’t fall into recession in the second half of last year, to the surprise of many. On the other, inflation has decelerated in the last two months and the November GDP data probably delayed the inevitable rather than making it less likely. The outlook remains bleak, how the BoE navigates is still highly uncertain. And next week brings the monetary policy report containing the latest forecasts from the central bank. The majority of analysts expect them to raise rates by 50bp to 4.00%, while a minority are eyeing a 25bp hike. Russia Unemployment on Monday and a couple of PMI reports are the only highlights next week. That aside, focus will remain on events in Ukraine. South Africa The whole economy’s PMI is the only highlight next week. Turkey Official inflation data is the main release next week but this has become more of a political focus in recent years than an economic one, as the central bank pays very little attention to it.  Inflation is expected to slow towards low-50s, potentially making it to the 30s by the end of the year. Switzerland A few notable pieces of economic data next week including the leading indicator, retail sales and PMI survey. China China markets reopen after the Lunar Year Holiday and traders await to see how much economic activity improved last month after they began rolling back some COVID restrictions. Traders will pay close attention to the official government manufacturing PMI reading which could come close to returning to expansion territory.  The services PMI is expected to post a strong rebound from 41.6 to 51.5. India The focus will fall on the Indian government’s budget which should focus on deficit reduction.  Economic data releases include India’s fiscal deficit, eight infrastructure industries and both manufacturing and services PMIs. Australia & New Zealand China’s COVID reopening has supported both Australian and New Zealand dollars significantly. Much attention will go towards China’s PMI data readings. For Australia, the economic calendar contains the December retail sales report that should show spending is cooling, building approvals are expected to rebound, and the NAB business confidence report. The New Zealand economic calendar contains the fourth quarter employment report, the December building permits, and ANZ consumer confidence. Japan The pressure of the sharp depreciation of the yen in the past has eased somewhat and the reopening of China should support the start of a recovery in the Japan economy in the first half of this year. The next BoJ meeting in March will be the last meeting of Governor Haruhiko Kuroda’s term of office. Bank of Japan governor candidate Takatoshi Ito recently said that if the BoJ abandons yield curve control, it will need to conduct a comprehensive review of its policy framework. Next week will focus on the jobless rate, retail sales, industrial production, housing starts data, and PMI readings. Singapore It will be a busy week of data for Singapore. Economic releases include money supply data, unemployment rate, PMI data, and retail sales. Markets Energy Crude prices are poised to finish the week on a strong note as global recession fears are countered by optimism that China’s reopening momentum will continue and over economic data that suggests large parts of the US economy remains strong.  The upcoming week has two massive events; the OPEC+ virtual meeting on output and the FOMC decision. The OPEC+ meeting might be easy with a decision to keep output steady as they await what happens with the short-term global demand outlook. Traders will also pay close attention to earnings from both Exxon and Shell. Gold Gold prices are consolidating leading up to the FOMC decision. Next week, the Fed is likely to shift from a 50bp hike pace to just a quarter point rate rise, but still will say that more could come.  Gold’s outlook for the rest of the year is turning rather bullish for some investors, but a lot of that hinges inflation steadily falling back below 3.0%. Cryptos Cryptos continue to benefit from the broad risk rebound across Wall Street.  The Fed is nearing the end of its rate hiking cycle and that has helped all interest rate sensitive assets to start the New Year.  The headlines across the crypto space have not all been doom gloom as Moody’s works on a scoring system for stablecoins, Amazon has a NFT initiative, and as some firms successfully raise money.  Bitcoin has major resistance at the $24,000 level, so momentum traders will closely watch to see how prices behave post-FOMC decision.  Given where inflation stands, the Fed will likely remain hesitant that a pause is imminent and lean more towards staying hawkish. If the Fed follows the lead from the BOC and signals they are almost done with rate rises, Bitcoin could tentatively break past $24,000. This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.
Oil Could Be Ready To Pop, The Bank Of England Market Pricing Is More Mixed

Oil Could Be Ready To Pop, The Bank Of England Market Pricing Is More Mixed

Saxo Bank Saxo Bank 30.01.2023 09:33
Summary:  Critical week for markets with the Fed, the ECB, and the BOE deciding on policy interest rates. The market has priced in a downshift by the Fed to a 25bp hike, bringing the Fed Fund target to 4.50%-4.75%, while the ECB sticking to its gun of a 50bp hike. The expectation for the BOE action is mixed with a slightly higher odd assigned to a 50bp increase. US ISM and job data will be pivotal for the direction of the next market movement, in conjunction with earnings announcements from the mega-caps Apple, Alphabet, Amazon, and Meta. Investors also have their eyes on China as it returns from a week-long holiday on the back of solid traffic and consumption data during the Lunar New Year. The Fed is expected to downshift again The expectations of a soft landing have picked up since the start of the year, relative to the rising recession bets seen in H2 of last year. Meanwhile, inflation has been on a steady downtrend in the last six months, which has allowed the Fed to downshift to a 50bps rate hike in December after a spate of rate hikes in 75bps increments before that. The consensus expects the FOMC will downshift again to lift its Federal Funds Rate target by 25bps to 4.50-4.75% on February 1, although some still expect the central bank to hike rates by a larger 50bps increment. Fed speakers have also broadly guided for a smaller hike at the next meeting. With economic data remaining volatile, there is some reason to believe that Powell and team may be aiming to lengthen the hiking cycle in order to buy more time to assess both the incoming data and the impact of their previous aggressive rate hikes. This warrants a smaller rate hike of 25bps at the February 1 decision. The key risk factor, favouring another 50bps rate hike, could be the financial conditions which are the easiest since April 2022 or the risks of another shoot higher in inflation due to China’s reopening and the resulting rise in commodity prices. US ISM surveys and the jobs report to provide further input for the soft landing vs. recession fight The ISM surveys are key to watch not just for activity data but also to understand if input and output price pressures are trending in the desired direction. For the manufacturing survey, the headline is expected to soften again and slip further below the 50-mark, while the ISM services survey is expected to return above 50. The jobs data can mean significant volatility for the markets as wage pressures likely soften further but the headline nonfarm payrolls still remain pretty robust and unemployment rate remains near record lows despite unending news of layoffs in tech and other sectors. All these data points will be keenly assessed by the markets which are now pricing in a soft landing. Stronger-than-expected data on growth with sustained slowing inflationary pressures will further boost the markets, while weaker-than-expected data can ignite some caution and profit taking. China returns from buoyant Lunar New Year holiday, expecting pickups in PMIs China returns from a week-long Lunar New Year holiday, during which, sales in consumption-related industries grew by 12.2% from the same lunar calendar period last year. Estimates of passenger traffic from various sources all pointed to a strong recovery of activities. The official NBS Manufacturing PMI and Non-manufacturing PMI, scheduled to release on Tuesday, are expected to bounce back strongly to the expansionary territory. The median forecasts from Bloomberg’s survey of economists call for the Manufacturing PMI to rise to 50.1 in January from 47.0 in December and the Non-manufacturing PMI to bounce sharply to 52.0 in January from 41.6 in December. Caixin China Manufacturing PMI, which has a bigger representation of SMEs in the eastern coastal regions, is however expected to improve only moderately to 49.8 in January from 49.0 in December. Caixin China Services PMI is forecasted to bounce to 51.6, back to expansion, from 48.0 in December. The in-person service sector, which had been hard hit during the pandemic, recovered strongly as the mobility and consumption data during the Lunar New Year holiday indicated. ECB and BOE meetings likely to be pivotal this week for EUR and GBP direction The European Central Bank (ECB) is expected to hike rates by 50bps to 2.50%, with the markets pricing in a 50bps rate hike at 86% with a 14% chance of a 75bps move. ECB speakers have been broadly hawkish, but even the most hawkish ones have hinted at multiple 50bps moves rather than another 75bps. Overall, about 140bps of rate hikes are priced in from the ECB until around mid-year, keeping ECB as the most hawkish G20 central bank. That reduces the scope of a potential hawkish surprise from this week’s meeting and means that EURUSD may have risks tilted to the downside. The Bank of England market pricing is more mixed, with a 70% probability for a 50bps rate hike and 30% for a 25bps, and the potential for a split vote is also high. Therefore the bar for a surprise is higher, and will likely come from a revision in inflation forecasts. A steeper than expected cut in inflation forecasts could mean a sooner-than-expected end to the BOE’s tightening cycle, likely weighing on the GBP which seems to be ignoring the economic headwinds facing the UK economy for now. Oil supply to shrink, will oil pop or see profit taking ahead of OPEC meeting, with oil equites to follow Oil could be ready to pop with Chinese demand expected to rise, while supply concerns pick up, with the EU embargo on Russian seaborne fuel exports kicking in on February 5. However, traders may book in profits and play it safe ahead of the OPEC+ committee meeting on February 1 and ahead of the FOMC outlook on interest rates in the US on Wednesday. It is expected that the OPEC+ countries won’t boost production which could underpin prices at a time when diesel demand is rising amid travel picking up in the Asian pacific region (with aircraft travel almost back at 2019 levels). Traders have also been watching energy names such as Chevron- its share are up 27% from the September low, Occidental Petrolum is up 15%, Marathon Oil is up 35% from its September low. For more on oil’s fundamental, and other commodities, click here. The China reopening drives the biggest monthly jump in Australian stocks since 2020 Australia’s share market, the ASX200(ASXSP200.I) is outperforming the S&P500 and Nasdaq, with a gain of 16% from its low - while also recording its biggest monthly gain since November 2020, (up 6.4%). Australia’s market - a dividend and commodity play, as well as being an investment proxy for China's reopening could also continue to outperform the US this year, given its heavy in materials such as iron ore, copper and aluminium, as well as financial companies - benefiting from higher interest rates. Mining giant BHP Group expects 17% dividend growth, Fortescue Metals sees higher sales in the first half of 2023 to China. Also consider, the iron ore price hit a new 2023 on the notion demand will rise. However, the iron ore (SCOA) price could be at risk of short-term correction, given it has rallied up almost 70%. So consider potentially taking profits given BHP shares are up 46% from their July low, Rio Tinto’s up 43%, Fortescue is up 53%. Although there is a risk of a short-term correction, as supply is lower than a year ago, the price over the longer term seems underpinned. Also consider sales to China have been increasing with Fortescue reporting greater buying of port side iron ore to 4.0mt (in the prior quarter), while guiding for H1 sales to rise to 9.3mt. Lastly, consider Australian insurers, banks and financials will likely benefit from the RBA’s rate hikes - QBE and WBC are expected to report profit jumps of over 30%. Read next: A Loss Of $48 Billion In Shares Of The Indian Group Adani As A Result Of The Hindenburg Research Report| FXMAG.COM Key U.S. corporate earnings As of 27 January, 143 or 29% of the S&P 500 companies have reported Q4 earnings. Overall, 41% of those who reported results beat street estimates and 41% were in line with estimates. The information technology, healthcare, and materials sectors had the highest percentage of companies reporting positive surprises. This week, Whirlpool (WHR) on Monday, General Motors (GM) and McDonald’s (MCD) on Tuesday, Amazon (AMZN), Ford Motor (F), and Starbucks (SBUX) on Wednesday will inform us of the latest state of U.S. consumers. Among them, the focus will be on Amazon, for which, the street consensus forecasts an 88% Y/Y decline in Q4 EPS to USD0.172. The business outlook from United Parcel Service (UPS), reporting on Tuesday, will be closely monitored for a glimpse of the health of global economic activities. Also reporting on Tuesday, Advanced Micro Devices (AMD) is expected to register a 27% Y/Y decline in EPS, reflecting the headwinds faced by the semiconductor industry as indicated in the poor results and downbeat guidance from Intel (INTC) reported last week. Investors will also watch Qualcomm’s results on Thursday closely for additional insight into the semiconductor and telecommunication equipment industries. The most-watched results this week will be mega-cap names Meta Platforms (META) on Wednesday, and Alphabet (GOOGL) and Apple (AAPL) on Thursday. The median forecasts from street analysts are expecting the latest quarterly EPS to decline by 40% to USD2.22 at Meta, by 22% to USD1.20 at Alphabet, and by 7% to USD1.95 at Apple. Monday: Whirlpool (WHR), GE Healthcare Technologies (GEHC) Tuesday: Electronic Arts (EA), General Motors (GM), McDonald’s (MCD), NVR Inc (NVR), PulteGroup (PHM), Exxon Mobil (XOM), Marathon Petroleum (MPC), Phillips 66 (PSX), Amgen (AMGN), Pfizer (PFE), Caterpillar (CAT), United Parcel Service (UPS), Advanced Micro Devices (AMD), Corning (GLW) Wednesday: Meta Platforms (META), T-Mobile (TMUS), Altria (MO), Metlife (MET), Boston Scientific (BSX), Thermo fisher scientific (TMO) Thursday: Apple (AAPL), Alphabet (GOOGL), Amazon (AMZN), Qualcomm (QCOM), Ford Motor (F), Starbucks (SBUX), ConocoPhillips (COP), Intercontinental Exchange (ICE), Bristol-Myers Squibb (BMY), Eli Lilly (LLY), Gilead sciences (GILD), Merck (MRK), Honeywell (HON), Friday: Cigna (CI) Key economic releases & central bank meetings this week Monday 30 January Eurozone         Economic, industrial & services confidence (Jan) Tuesday 31 January U.S.     Employment cost index (Q4) U.S.      Chicago PMI (Jan) Eurozone GDP (Q4) Germany GDP (Q4) France GDP (Q4) JapanIndustrial production (Dec) Japan  Retail sales (Dec) Wednesday 1 February U.S.     FOMC decision U.S.      ADP private employment (Jan) U.S.      ISM manufacturing (Jan) Eurozone EU harmonized CPI (Jan) Hong Kong GDP (Q4) Thursday 2 February U.S. Unit labor costs (Q4) Eurozone ECB meeting U.K.Bank of England rate decision Friday 3 February U.S.      Non-farm payroll, unemployment rate, average hourly earnings (Jan) Singapore Retail sales (Dec)     Source: Saxo Spotlight: What’s on investors' & traders' radars this week? Fed/ECB/BOE meetings, US ISM and jobs report, China back from holiday and reports PMI, Megacap earnings | Saxo Group (home.saxo)
Despite The Improvement In The Outlook Due To Falling Energy Prices, The Economic Environment In Britain Remains Difficult

China Steps Into Bull Market, How Much The Bank Of England Will Be Raising Its Rates?

Swissquote Bank Swissquote Bank 30.01.2023 10:44
The new week kicked off with Chinese equities jumping into a bull market as traders returned from their Lunar New Year holiday. S&P500 and Nasdaq The S&P500 and Nasdaq also freed themselves from the 2022 bearish trend, while global bond markets had their best January since 1990. And if the equity rally is still on a shaky ground – due to fear that the slowing economy could hit company earnings – the future in bonds looks brighter. Policy verdicts In the macro front, the Federal Reserve (Fed), the European Central Bank (ECB) and the Bank of England (BoE) will be announcing their latest policy verdicts, between Wednesday and Thursday. Fed For the Fed, there is extremely little doubt that this week’s rate hike won’t be anything more than a meagre 25bp hike. BoE The ECB is expected to hike by 50bp this month, while we don’t know by how much the BoE will be raising its rates. In one hand, the BoE should continue fighting against inflation – which remains in the double-digit zone in Britain. On the other hand, the economic outlook for Britain is so morose – with country-wide strikes adding salt and pepper to the gloomy picture that Bailey cannot throw a series of 50bp hikes in the middle like Madame Lagarde. Stocks market Elsewhere, the Indian markets are being shaken by the Adani scandal. OPEC will meet this week, and big US companies including Amazon, Apple, Google, Meta, Exxon, Starbucks and Ford are due to announce earnings throughout this week! Watch the full episode to find out more! 0:00 Intro 0:39 China steps into bull market 1:01 S&P500, Nasdaq extend rally into bullish zone 2:04 Bonds record best Jan since 1990 & more gains are in the store 3:18 What to expect from the Fed, US jobs data this week? 6:10 50bp from ECB, and what else? 7:16 Will the BoE dare a 50bp hike? 8:53 Also this week: India shaken by Adani scandal, OPEC to hold fire, Apple, Amazon, Google & Meta to post Q4 results Ipek Ozkardeskaya  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. #Fed #ECB #BoE #OPEC #meeting #Apple #Amazon #Google #Meta #Exxon #earnings #US #inflation #NFP#data #Fed #expectations #USD #EUR #GBP #crude #oil #China #bull #market #Adani #scandal #Nifty #SPX #Dow #Nasdaq #investing #trading #equities #stocks #cryptocurrencies #FX #bonds #markets #news #Swissquote #MarketTalk #marketanalysis #marketcommentary _____ Learn the fundamentals of trading at your own pace with Swissquote's Education Center. Discover our online courses, webinars and eBooks: https://swq.ch/wr _____ Discover our brand and philosophy: https://swq.ch/wq Learn more about our employees: https://swq.ch/d5 _____ Let's stay connected: LinkedIn: https://swq.ch/cH
UK Budget: Short-term positives to be met with medium-term caution

The Bank Of England Is Anticipated To Hike Rates By 50 bp As A Result Of A Wealth Of Data

Jakub Novak Jakub Novak 30.01.2023 14:15
After the Bank of England meeting this week, the British pound is still optimistic about future growth since a sharp rise in salaries in the country is probably going to cause inflation to reach a new round and maintain its double-digit level. This decision will be extremely painful for families Investors and experts anticipate that the UK central bank will increase its benchmark interest rate on Thursday to 4%. This will be the fastest increase in three decades and the greatest rate since 2008. This decision will be extremely painful for families who are already trying to cope with the greatest cost of living increase in history. In a protest that their pay is not keeping up with inflation, which increased to a 41-year high last year, more than 1 million employees in the public sector are set to abandon their positions this week. Except for the time that followed the epidemic, politicians led by Governor Andrew Bailey are concerned that wages are rising at the quickest rate in history, raising the possibility of a spiral in which rising salaries lead to rising prices. The supply assessment Officials are currently putting the finishing touches on an annual report on pay fluctuations and an evaluation of the economy's potential for productivity. The supply assessment is likely to indicate a more competitive labor market than anticipated, while the report is likely to focus on future wage increases by businesses in 2023. These elements will cause price increases, which will make it even more necessary to boost rates even when the economy is contracting. At its meeting on Thursday, the Bank of England is anticipated to hike rates by 50 basis points as a result of a wealth of data demonstrating ongoing inflation. Although policymakers are expected to hold off on sending out overt signals that borrowing costs are about to reach their maximum, economists anticipate the action will put the central bank closer to the marginal rate in this cycle of hikes. The Bank of England will need to further cool the economy To avoid the development of a spiral in which wage growth + price growth, the Bank of England will need to further cool the economy by raising unemployment. This is true even though predictions called for a recession this year and a sharp decline in inflation compared to the level predicted in November. Many predicted a 4.8% pay gain in 2022, the highest percentage in the study's 15-year history. According to the most recent official data, average earnings, excluding incentives, rose 6.4% from a year earlier in the three months leading up to November. Since accounting began in 2001, this is the biggest rise. The regulator has few options, particularly if the government of Rishi Sunak continues to offer concessions and raise wages for the populace to ease the worst recent cost-of-living problem. GBP/USD Regarding the technical analysis of GBP/USD, the pound continues to be in demand. Purchasers must maintain their advantage above 1.2350. The only thing that will increase the likelihood of a further recovery to the area of 1.2440, after which it will be possible to discuss a more abrupt move of the pound up to the region of 1.2490 and 1.2550, is the failure of the resistance of 1.2400. After the bears seize control of 1.2350, it is possible to discuss the trading instrument's pressure returning. The GBP/USD will be pushed back to 1.2285 and 1.2170 as a result, hitting the bulls' positions. EUR/USD Regarding the technical analysis of EUR/USD, there is still demand for the single currency, and there is a potential that monthly and annual highs will continue to be updated. To do this, the trading instrument must maintain a price above 1.0850, which will cause it to surge to the area of 1.0900. Above this point, you can easily reach 1.0930 and update 1.0970 in the near future. Only the breakdown of support at 1.0850 will put more pressure on the pair and drive EUR/USD to 1.0805, with the possibility of falling to a minimum of 1.0770 if the trading instrument declines.   Relevance up to 08:00 2023-01-31 UTC+1 Company does not offer investment advice and the analysis performed does not guarantee results. The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade. Read more: https://www.instaforex.eu/forex_analysis/333588
There Are No Obvious Reversal Of GBP/USD Pair Signs Yet

The Market Does Not Now Show Any Willingness To Decrease Demand For The Pound

InstaForex Analysis InstaForex Analysis 31.01.2023 09:02
The wave analysis for the pound/dollar pair now appears rather complex, doesn't call for any clarifications, but starts to differ significantly from the analysis of the euro/dollar pair. Our five-wave upward trend section has the pattern a-b-c-d-e and is most likely already finished. Although the recent increase in the pair's quotes proved to be too powerful, wave b has developed into a form that is too long and is on the edge of cancellation. I assume that the downward section of the trend has started to form and will take at least a three-wave form. The current upward wave will cease to be regarded as wave b if the increase in quotes even somewhat persists, and the analysis for the entire wave will need to be adjusted. However, if the wave analysis is still accurate, I still anticipate the development of a falling wave, and the pair can decline by 500–600 basis points, up to a level of 1.1508, which corresponds to a 50.0% Fibonacci ratio. The validity of the current wave analysis is maintained because the peak of the proposed wave b does not yet surpass the peak of wave e. The British pound could begin a long decline. The pound/dollar exchange rate has been moving recently with horizontal dynamics. Since quotes remain close to the peaks of waves b and e, there is nothing to be said regarding changes in the exchange rate. Although wave b is about to be canceled, the market is still not in a rush to lower demand for the pair. It would be far more sensible and attractive to first develop three waves downward before beginning to develop a new upward trend section. Although the market does not now show any willingness to decrease demand for the pound or increase demand for the dollar, I do not completely rule out the start of the development of a downward wave c this week. It has no desire to participate in the preparation for the Fed or Bank of England meetings. The British economy has been the topic of much discussion recently, and most analysts concur that 2023 will be a very challenging year for the UK. Higher taxes, weaker-than-inflation wage growth, and excessive inflation that the regulator is unable to control just yet. All of this should have prompted Andrew Bailey or other Bank of England members to make new, aggressive statements, but in practice, things can go the other way. A severe recession might be avoided by the regulator's decision. He can anticipate that as energy prices decline over time, inflation will also gradually decline. The markets are uneasy because no one knows for sure what monetary policy the regulator will follow in the first part of the year. Although I believe that rates will continue to rise, I also believe that the tone will gradually shift in favor of "dovish." The pair needs this precisely to create the required downward wave. Conclusions in general The development of a new downward trend section is predicated on the wave pattern of the pound/dollar pair. Currently, sales with targets at the level of 1.1508, or 50.0% Fibonacci, might be taken into account. You can set a stop-loss order above the peaks of waves e and b. The upward section of the trend is probably over; however, it might yet take a longer form than it does right now. However, you must exercise caution while making sales because the pound tends to rise. The display is comparable to the euro/dollar pair at the higher wave scale, but differences still start to show. Currently, the upward correction portion of the trend is almost finished (or has already been completed). If this assumption is accurate, then we must wait for the development of a downward section to continue for at least three waves with the possibility of a decrease in the area of figure 15.   Relevance up to 06:00 UTC+1 Company does not offer investment advice and the analysis performed does not guarantee results. The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade. Read more: https://www.instaforex.eu/forex_analysis/333705
ECB's Tenth Consecutive Rate Hike: The Final Move in the Current Cycle

The Fed’s Likely Downshift To 25bps Rate Hikes Makes The Most Sense

Saxo Bank Saxo Bank 01.02.2023 09:32
  Summary:  A slew of key central bank meetings are on the horizon, with the Fed decision due today and the Bank of England (BOE) and European Central Bank (ECB) announcements due tomorrow. Fed Chair Powell has little reason to turn dovish at this point, with risks to inflation emanating from easing financial conditions and China reopening. But a hawkish Powell may only shift the focus back to data. ECB’s hawkishness has some more room to run, much as the BOE’s divide. Key central bank meetings are due over the next two days, presenting a host of event risks. Markets however remain rather upbeat and are showing no signs of nervousness, with VIX sitting below 20 and S&P500 staring at a key resistance of 4100. Although part of the market rally this week could be attributed to month-end flows, there is some reason to believe we are going into these central bank meetings with dovish-to-neutral assumptions. Let us consider what we can get. Fed: Powell to emphasize higher-for-longer With economic data in a Goldilocks situation in the US, the Fed’s likely downshift to 25bps rate hikes makes the most sense as it buys them more time to assess the growth and inflation trajectories. We wrote a preview for the Fed meeting here, but it is worth noting that it is becoming extremely necessary for Powell to push back on the 2023 equity rally and the easing financial conditions especially with the recent rise in commodity prices starting to lift inflation expectations. But will the market care? Despite Powell’s repeated messages on higher terminal rates, market pricing seems to continue to chart its own path. The key message at this meeting needs to move away from terminal rates to the push back against excessive easing that the market is pricing in, and an emphasis on higher-for-longer interest rates with risks to inflation skewed to the upside. There is little reason for Powell to be dovish, as he would certainly want to push back on excessive easing priced in by the markets. But a neutral-to-hawkish Powell is widely expected and may likely invoke only a knee-jerk reaction from the markets, offering some tactical opportunities. The US dollar may have some scope to make a recovery but the economic data trends are a bigger piece of the puzzle as of now, and will be a guiding the path for the USD more than the Fed itself. Only a firmer commitment from Powell in either direction, such as a 50bps rate hike or signaling a clear pause (like the BOC), would drive a market reaction that sticks. Read next: AUD/USD Pair Remains Under Strong Selling Pressure, The EUR/USD Pair Has Been Falling But Remains Above 1.08$| FXMAG.COM ECB: Still scope for upward repricing in the front-end curve The European Central Bank has surpassed its peers in the hawkishness quotient recently, and will likely repeat that this week. A 50bps rate hike is expected, along with the guidance for another 50bps in March which still has the scope to bump up front-end pricing with markets looking at 93bps of rate hikes over the next two meetings. Looking further out, about 160bps of rate hikes are priced in for the ECB until mid-year and that limits the scope to surprise on the hawkish side. If Fed proves to be more hawkish than the ECB this week, EURUSD can potentially move towards 1.07. But incoming data, including the Spanish CPI report this week, give the ECB enough ammunition to preserve its current hawkish stance this Thursday. But the 1.0920 resistance has proved tough for EURUSD, and without an upward repricing in the ECB path, that will remain difficult to overcome. EURGBP appears to be an easier pick for this week, with ECB and BOE policy and economic divergences much more evident. Bank of England: 50 and BOC? The Bank of England will likely be the trickiest given the indecisive market pricing as well as the scope for a split vote. Broader consensus hints at another 50bps rate hike this week, but a pause signal, potentially not as clear as the one from Bank of Canada (BOC), may also be on the cards. For this, investors will need to read through the Bank’s quarterly inflation forecasts which are also due to be reported this week. Downward revisions to inflation forecasts from November estimates of 1.8% for 2024-end and 0.4% for 2025-end will mean further pricing out of tightening. Growth risks for the UK economy are also more significant than the other major economies, as also highlighted by the latest IMF forecasts (see below). While the Bank’s own growth forecasts may be subject to an upward revision after a recession was highlighted previously, and data has been more hawkish since, it still seems that the market pricing of the BOE’s path from here remains prone to downside revisions. This leaves little scope of upside on the sterling.   Source: Macro Insights: Central banks on the agenda – Fed, ECB and Bank of England | Saxo Group (home.saxo)
Rates Spark: Balancing data and risk factors

Rates Spark: The end is near

ING Economics ING Economics 02.02.2023 08:36
US market rates fell after the Federal Reserve decision but this looks more like a market positioning effect than anything specific from the meeting. Expect some retracement. Both the European Central Bank and Bank of England are likely to hike by 50bp today, but the undertones could be quite different Net stand-alone outcome from the Fed meeting is an excuse for market rates to push higher The initial impact was upwards pressure on rates – mostly at the front end – and mostly in the real rates space. This fitted with the market's reading that the Fed is not impressed enough yet with the reduction in inflation risks. But that was quickly reversed, and we doubt that the reversal will be sustained. We probably need to see the payrolls report (Friday) before we get the next big move. In the meantime, the market now knows that a March hike is on. That keeps the rate hiking pressure in the mindset over the rest of the first quarter. Whether or not the Fed's view stands at the May meeting won't be known until then, which means the hawkish tilt should be sustained at least till then. A March hike is on. That keeps the rate hiking pressure in the mindset While “over-hiking” can be good for the long end, this is also a higher carry cost associated with higher front-end rates, and that’s a bond negative in a static market. In other words, if you are long bonds and yields don’t fall, you’re in a negative mark-to-market position. That’s a partial argument for further compensatory upward pressure on market rates. The other argument comes from the shape of the curve, which remains remarkably inverted. In fact, it’s unprecedented (at least in the past four decades) for long-tenor market rates to be this far below the Fed funds rate, specifically while the Fed is still hiking. The other key Fed rates have also been raised by the same amount, the full 25bp. That goes for the reverse repo facility (4.55%), the permanent repo facility (4.75%) and the rate on excess reserves (4.65%). This is all broadly as expected. And no special mention about the bond roll-off, which continues as was. There was no reference to outright bond selling either, but hard to believe this is not ever discussed; it’s just that it tends not to make the Fed minutes. US curve inversion means negative carry for holders of long-end bonds Source: Refinitiv, ING ECB meeting: a 50bp hike and guidance for more plus QT parameters While headline inflation coming down is encouraging, the ECB has expressed a focus on core inflation as a measure for underlying price pressures. That remains stubbornly high, implying the ECB is not done with its job yet. Obviously, markets are thinking beyond the next meeting(s) and have already started to price in rate cuts for 2024. ECB officials have pushed back against this notion ahead of today’s policy decision, but with modest success. By the end of 2024, the market still sees the ECB bringing down rates by 90bp from their prospective peak this year. What we will be watching today in brief (full preview here): 50bp rate hike: Markets are firmly priced for a hike of the depo rate to 2.5% today, which is also our expectation.  Rates guidance: The ECB decides on a meeting-by-meeting basis, but still provides a perspective for rates given prevailing conditions. This guidance should be the main focus today. In December the ECB signalled “rates will still have to rise significantly at a steady pace”, with President Christine Lagarde specifying in the press conference that one should expect rate increases “at a 50bp pace for a period of time”. The market largely agrees with our view of another 50bp in March, pricing in 94bp in total by then. Thereafter the pace slows, with a total of 153bp delivered by the July meeting, i.e. depo rate peaking at 3.5%.    Quantitative tightening parameters: President Lagarde promised “detailed parameters for reducing APP holdings”. We would expect the ECB to follow a proportionate reduction across the different asset portfolios, and – with regards to the public sector – sticking with the capital key split across jurisdictions. The ECB may think of shifting exposure towards supranational issuers in the context of “greening” the portfolio.   The ECB has no reason to dial down its hawkishness We think that the ECB has no reason to dial down its hawkishness. Market rates are correctly set for the next few meetings, but we think the notion of rate cuts starting in 2024 could receive more pushback given the ECB's awareness that financial conditions are not just dictated by setting their key rate, but by rates along the entire curve. The risk is that any signs of dissent – which have been notably absent from official communication, but surfaced in a “sources” story – could erode the impact of the ECB’s guidance on rates. That dissent may only show over the next couple of days, though.   Read next: USD/JPY Pair Drop Below 130.00, GBP/USD Is Trading Below 1.2330, The Australian Dollar Remains Generally Up| FXMAG.COM BoE meeting: 50bp hike with a dovish feel Our economists note that while the minutes of the December meeting appeared to open the door to a potential downshift to a 25bp move today, the reality is that the recent data has looked hawkish. Wage growth is still persistently high, and especially services inflation has come in above expectations. What we are watching in brief (for a full preview here): 50bp hike: We expect 50bp hike today, but we think the decision is a closer call than market pricing of 45bp suggests. Vote split: Our economist base case is that six of the nine policymakers will vote for a 50bp hike, one for 25bp and two for no change. New forecasts: The growth outlook looks likely to be upgraded given calmer markets and scaled-back rate hike expectations since the mini-Budget crisis. For the medium-term story, one should keep an eye on the so-called ‘constant rate’ inflation forecasts. If these show inflation at, or very close to, 2% in a couple of years' time it would signal that the Bank Rate is close to its peak. Guidance: The BoE is more likely to keep its options open. Our economist expects the Bank to reiterate being prepared to act ‘forcefully’ in future if required, but shy away from signalling a slowing of the pace in March. Markets still have a relatively hawkish take on the BoE Markets have come around to our more benign view on the terminal rate in this cycle, now implying hikes will stop around 4.25%. Though relative to what we see in other currencies, markets still have a relatively hawkish take on the BoE further out the curve, pricing more elevated rates for longer. Even if the BoE hikes 50bp today, that persistence could be challenged given the overall relatively dovish spin we expect surrounding the hike, for example in the voting split or new forecast, but also given the more general dissent voiced by some BoE officials thus far. We expect more convergence of sterling and euro swap rates after today's central bank meetings Source: Refinitiv, ING Today's events and market view The main highlights today are the ECB and BoE policy decisions. And while both central banks are expected to hike by 50bp, the undertones could be quite different. The ECB should continue to push a concerted hawkish line, while at the BoE we should see more signals of the peak in rates being close. We expect more convergence between EUR and Sterling rates, especially in the 5Y area pertaining more to the medium-term outlook. With regards to eurozone sovereign spreads we think the risks are still tilted towards wider spreads as the impact of quantitative tightening and potential shifts today are underappreciated. Among the data releases, we will see the US initial jobless claims, though they are outweighed by tomorrow's jobs data for January. In the supply space, we will get bond auctions in Spain and France.  Read this article on THINK TagsRates Daily Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more
Kiwi Faces Depreciation Pressure: RBNZ Expected to Hold Rates Amidst Downward Momentum

The MPC Is On The Horns Of A Dilemma But The ECB Will See Another 50bps Rate Hike

Michael Hewson Michael Hewson 02.02.2023 08:51
Having seen the Federal Reserve hike rates yesterday evening by 25bps and signal that they are far from done, equity markets reacted by rallying strongly with the Nasdaq 100 surging to its highest levels since early September.   For all of Fed chair Jay Powell's insistence that more rate hikes were coming, and that the Fed was not looking at cutting rates this year, his failure to push back emphatically on direct questions about market expectations of rate cuts this year, as well as the loosening of financial conditions has created an even greater divergence between market pricing on rates, and the Fed's expectations of how the economy is likely to evolve. To borrow a line from Cool Hand Luke, "what we've got here is a failure to communicate".    Long story short, the market thinks the inflation job is done, even if the Fed hasn't arrived at that conclusion yet. Consequently, this goes a long way to explaining why US markets closed strongly higher and yields and the US dollar plunged to 9-month lows, with the euro hitting 1.1000 for the first time since April last year. Last night's rally in the US looks set to translate into a higher European open as we now look towards the Bank of England and the European Central Bank to outline their messaging when it comes to the timeline of their own rate hiking cycle.   Starting with the Bank of England, the MPC is on the horns of a dilemma as the UK economy continues to struggle with double digit inflation, although the economy may well not be as bad as perhaps was thought at the end of last year, which could prompt a modest tweak to some of its economic forecasts.   The slide in energy prices in recent months has alleviated some of the pressure on wage packets, when it comes to petrol prices, however with food price inflation still at 16%, they will also be acutely aware that a weak pound will make headline inflation much sticker than it needs to be if they show any indication, they are going soft when it comes to hit its inflation target.   There will be the usual concerns about the impact on mortgage costs from another 50bps move but 5-year gilt yields have barely moved since the lows set back in November, although 2-year yields are higher.   Whatever we get today we are likely to see a split again, with the likes of Tenreyro and Dhingra likely to be the most averse to another hike given that they voted for no change in December.   The likes of Catherine Mann are likely to push for another 50bps, while the rest of the committee are expected to split between 25bps and 50bps, from the current 3.5%. If we do get 50bps will the Bank of England signal it is done, and signal a pause, or will they move by 25bps and signal there is more to come. With core prices looking sticky and wages rising at over 7% any procrastination on the MPC's part when it comes to forward guidance could well do more harm than good.   Whatever we get from the MPC today history has taught us it's unlikely to help the pound in the short term given the Bank of England's propensity to talk the pound lower whenever they meet. There is also the fact that the pound has been under pressure on the back of the belief that the Bank of England is much closer to the end of its rate hiking cycle than the ECB.     After the Bank of England, it is the turn of the European Central Bank and here there is little doubt that we will see another 50bps rate hike later today. It is what comes next that is likely to dominate the discourse today.   When the most recent ECB minutes were released, it became apparent that a raft of ECB governing council members wanted a much more aggressive approach, pushing for a 75bps move.   In the wake of the recent Davos Economic Forum ECB President Lagarde doubled down on her December messaging of multiple successive rate hikes, saying that inflation is still way too high, and markets are underestimating the ECB's resolve to drive prices back towards their 2% inflation target. This hawkish message is unlikely to be softened despite the recent fall in headline inflation to 8.5%, given core prices have remained steadfast at record highs of 5.2%.   When the ECB met in December, Lagarde more or less pre-committed the ECB to at least another 3 50bps rate hikes at the next 3 meetings, in a move that has seen the euro push higher and which has finally seen it break above the 1.1000 level, although that has mainly come about as a result of the market reaction to last night's Fed decision, rather than any intrinsic euro strength.   This would suggest that markets are still not convinced the ECB will be able to follow through on the number of hikes indicated given the risks it might pose to the borrowing costs of the more highly indebted members of the euro area.   EUR/USD – finally pushed through the 1.0930 area and the 1.0950 area which is 50% retracement of the move from the 2021 highs to last year's lows at 0.9536. Yesterday's move through 1.0950 now opens up a move towards 1.1110. Support now comes in at 1.0920.   GBP/USD – the recent lows at 1.2260 remain a key support after another failure last week at the 1.2450 resistance area. A move below 1.2250 could see a move towards 1.2170.    EUR/GBP – edging back towards the recent highs just below the 0.8900 area. A move through these highs could trigger a move towards 0.9000. Key support remains at the 50- and 100-day SMA which we saw earlier this month at the 0.8720/30 area. Below 0.8720 targets 0.8680.   USD/JPY – slipped below trend line support at 129.00 from the recent lows at 127.20, raising the prospect of a retest of those lows, and potentially on towards 126.50. Resistance now at 129.30.   FTSE100 is expected to open 30 points higher at 7,791   DAX is expected to open 102 points higher at 15,282   CAC40 is expected to open 35 points higher at 7,112   Email: marketcomment@cmcmarkets.com Follow CMC Markets on Twitter: @cmcmarkets Follow Michael Hewson (Chief Market Analyst) on Twitter: @mhewson_CMC
WTI Bulls Struggle To Cheer The Broadly Risk-On Mood

OPEC+ Recommended Keeping Crude Production Unchanged, The Fed Delivered A 25bp Rate Hike

Saxo Bank Saxo Bank 02.02.2023 09:41
Summary:  The Fed delivered a 25bp rate hike and a basically unchanged policy statement as widely expected. The remarks by Fed Chair Powell at the press conference saying that the disinflationary process had started saw stocks swing from losses to a 1.1% gain in the S&P 500 and a 2.2% advance in the Nasdaq 100. The interest rate futures market is pricing in 50 bps of rate cuts in the second half of 2023. The yield on the 10-year Treasury dropped to 3.42%.   What’s happening in markets? Positive reaction to Fed: Risk-on rally in Nasdaq 100 (NAS100.I) and S&P 500 (US500.I) The Nasdaq 100 reversed its weakness after an ISM manufacturing index print a full point lower to 47.4 during early trading and advanced to finish the session 2.2% higher after the dovish remarks from Fed Chair Powel at the post-FOMC press conference. The S&P500 climbed 1.1% to close at its highest level since August 26, 2022. Powell’s comments raised the market’s hope for rate cuts in the 2nd half of 2023. 10 of the 11 sectors within the S&P 500 gained, led by information technology which advanced by 2.3%.  Energy, falling 1.9%, was the laggard. Advanced Micro Devices (AMD:xnas) jumped 12.7% on a revenue beat and upbeat sales forecasts. Electronic Art tumbled 9.3% on a disappointing business outlook. Meta Platforms (META:xnas) kicked off major tech earnings with a bang. Perhaps a good sign of what we can expect from Apple, Amazon and Google Meta shares surged more than 19% in extended hour trading, after announcing a $40 billion boost to its share buyback, as it’s guiding for stronger revenue for Q1 this year, seeing revenue hit $26 to $28.5 billion. Q4 revenue beat expectations, falling to $32.2 billion, vs $31.7 billion expected. The business sees outgoing expenses dropping more than expected to $89-95 billion and lower capital expenditure. Also on the positive, FB’s daily users improved more than the market expected. From a technical perspective Meta shares closed above their 200-day simple moving average. It also appears, a golden cross is forming which could trigger quant trader buying. That’s something to watch, which could trigger more upside. Yields on US Treasuries (TLT:Xmas, IEF:xnas, SHY:xnas) dropped as hopes for rate cuts in H2 heightened The Fed delivered a 25bp rate hike, bringing the Fed Fund target to 4.50%-4.75% as widely anticipated and a statement largely unchanged from the previous one, reiterating that “ongoing increases” in the policy Fed Fund target “ will be appropriate in order to attain a stance of monetary policy that is sufficiently restrictive,”  The strong market reactions came from the response to Powell’s dovish comments in the post-meeting press conference. Powell said the Fed “can now say, I think for the first time, that the disinflationary process has started” though he cautioned that “the job is not fully done.”  Powell’s remarks saw the June-Dec 2023 SOFR spread widen to 54.5 bps, fully pricing in 50bps of rate cuts in the 2nd half of 2023 after only one more 25bp hike in March. The yield on the 2-year and the 10-year tumbled 9bps each to 4.11% and 3.42% respectively. The weaker ISM manufacturing and ADP private payrolls but stronger JOLTS job openings data released during the day took a backseat to the FOMC drama. The Australian share market, the first to the react to the Fed, sees a strong risk on rally Risk on assets such as tech stock are charging today, with the sector up 2.8% while gold equities are being bid after the gold price rallied 1%. Long-term investors will be watching the tech index, given it’s down 30% from its high. Also consider the overall market, the ASX200 has a PE at 15.2 times. Cheaper than Nasdaq’s 57 times earnings. And S&P500’s earnings multiple of over 19 times.  Hong Kong’s Hang Seng (HIG3) and China’s CSI300 (03188:xhkg) rallied around 1% The Hang Seng Index rallied 1.1% and the Hang Seng TECH Index surged 3.4%. Baidu (09888:xhkg) soared 9% on market chatters that the search engine platform was developing an AI-powered chatbot similar to ChatGPT. EV makers outperformed. The largest Chinese EV maker, BYD (01211:xhkg) surged 6.1%, extending gains after Tuesday’s preannouncement of the preliminary Q4 profit range. XPeng (09868:xhkg) surged 10.3% after its subsidiary received license approval for its flying cars. Geely (00175:xhkg) climbed 5.1% as the EV maker is launching its 3rd model and its Lotus unit went public via SPAC at a USD5.4 billion valuation. Macao casino stocks gained 2% to 5% on a much stronger-than-expected 82.5% growth in gambling revenues to MOP 11.6 billion (USD1.4 billion). In the mainland’s A-share market, ChatGPT concept stocks and EV names also rallied strongly. Non-ferrous metal, computing, and non-bank financials were other outperformers. CSI 300 finished the Wednesday session 0.9% higher. FX: USD bears back in action The USD was weaker across the board after the Fed Chair Powell stayed away from pushing back aggressively on the easing priced in by the markets for this year or the loosening of financial conditions. EURUSD broke above the 1.0930 resistance and was trading above 1.1000 in the Asian morning. If ECB maintains its hawkishness today, we could see these gains sustaining. USDJPY slumped back below 128.50 with focus turning to BOJ chief nominees. AUDUSD rose to 0.7150 but USDCAD was choppier as lower oil prices weighed on loonie. Crude oil (CLG3 & LCOH3) supported after the overnight slump Oil prices slid over 2% overnight with EIA inventories climbing 4.1 million barrels in the week ended Jan 27, its sixth consecutive weekly build. However, Fed’s dovish outcome came back in focus later, and expectations that demand will continue to run higher as Fed nears an end of its tightening cycle underpinned. OPEC+ recommended keeping crude production unchanged as expected, amid the volatility of Chinese demand and Russian sanctions. WTI futures were back above $77 after touching lows of $75 in the NY session. Gold (XAUUSD) broke above $1950 on dovish Fed Gold broke above the resistance at 1950, reaching fresh cycle highs, as the lack of a committal Powell at the FOMC press conference continued to allow market to price in rate cuts for this year. Next on watch will be $1963, the 76.4% retracement of the 2022 correction, following which there is no major level of resistance before the psychologically important $2000 level.  Read next: India's Adani Group May Have Passed A Key Test, Positive EU CPI Report| FXMAG.COM What to consider? Fed hikes rates by 25bps, hints at a ‘couple more’ rate hikes to come The Fed hiked rates by 25bps to 4.5-4.75% as expected, with Chair Powell giving mixed and non-committal signals at the press conference. The statement continued to use the phrase "ongoing increases" in the Fed rate being appropriate to signal more rate hikes, and there was also a hint of a “couple” more rate hikes suggesting both March and May meetings could see 25bps rate hikes again. But Powell hinted at disinflationary pressures, and did not push back enough on the easing financial conditions. US ISM manufacturing shifting the narrative to low growth/high inflation ISM manufacturing declined for a fifth consecutive month to 47.7 from 48.4, short of the consensus of 48.0. While prices paid lifted to 44.5 (exp. 39.5, prev. 39.4), suggesting upside pressures in inflation sustaining, production and new orders fell to 48.0 (prev. 48.6) and 42.5 (prev. 45.1), respectively. Employment was also softer but still remained above the 50-mark at 50.6 from 50.8 previously. JOLTS job openings in December ramped back up to 11.012mln from the prior 10.44mln, surprising expectations for a fall to 10.25mln and now at their highest level since July. Overall, inflation risks are not going away yet, while growth concerns seems to be settling as well. Eurozone inflation softens marginally January headline inflation data in the Eurozone came in softer at 8.5% YoY from 9.2% YoY mostly underpinned by softer energy inflation, which still remains high at 17.2% YoY (vs. 25.5% YoY in December). While the trend seems encouraging, inflation still remains elevated and unlikely to deter the ECB from being any less hawkish at their announcement due today. German inflation print due next week also remains on watch. Caixin China Manufacturing PMI remained in the contraction territory Caixin China Manufacturing PMI came in weaker than expected at 49.2 in January (vs consensus: 49.8; Dec: 49.0), the sixth month in the contraction territory. According to the chief economist at Caixin, optimism has improved in the manufacturing sector but both domestic and external demand, and logistics were yet to fully recover. The Caixin reading was weaker that the official National Bureau of Statistics Manufacturing PMI, which bounced back to the expansion territory. The softer Caixin survey may be a result of its larger representation of small and medium-sized private enterprises in the coastal regions, as opposed to the NBS Manufacturing PMI’s higher weight in large state-owned enterprises as well as the difference in the timing of the survey. The Caixin survey was conducted in mid-January, about a week earlier than the NBS survey conducted between January 20 to 25, and therefore the former was likely to be more severely affected by the initial “exit wave” of infection. President Xi called for moving faster to establish the new development pattern In the second study session of the Chinese Communist Party’s new Politburo, China’s President Xi called for the country to move faster toward establishing a new development pattern, a concept that he first introduced in April 2020. He emphasized the importance of boosting domestic demand and deepening supply-side structural reform. President Xi also pledged to bring forward the construction of more new infrastructure projects and focus on the real economy and new industrialization. He also called for strengthening the measures against monopoly and unfair competition, as well as guiding and supervising the healthy development of private capital according to the law. The readout from the Politburo meeting mentioned neither “preventing disorderly expansion of private capital” nor “common prosperity”. Hong Kong Q4 GDP shrank 4.2% from a year ago The decline of 4.2% in Hong Kong’s Q4 GDP improved on the downward revised -4.6% in Q3 but was much softer than the -2.9% forecasted by economists surveyed by Bloomberg. On a sequential and seasonally adjusted basis, Hong Kong’s GDP growth bounced to flat Q/Q in Q3 from a 2.6% decline in Q3. The growth in goods export plunged to -24.8% Y/Y while goods import slid to 22.8% Y/Y. Gross domestic fixed capital registered a smaller 11.2% Y/Y in Q4, against 14.4% in Q3. Private consumption picked up to +1.7% Y/Y. Earnings from Apple, Alphabet, and Amazon eyed   The most-watched U.S. corporate earnings this week are from Amazon (AMZN:xnas), Alphabet (GOOGL:xnas), and Apple (AAPL:xnas) which are scheduled to be released today. Amazon has been hard hit by its overinvestment during the pandemic. Things improved in Q3 with accelerating revenue growth but analysts remain skeptical for Q4 expecting only 6% revenue growth Y/Y and adjusted EPS of $0.53 up 10% Y/Y. With the weak outlooks from Intel and Microsoft, there is nervousness in the air ahead of these giant earnings releases. Analysts expect Apple to report the first negative revenue growth rate in three years down 2% Y/Y and a 7% decline Y/Y in EPS. The indications from memory chip manufacturers all indicate a significant slowdown in consumer electronics and it would be weird if Apple could escape those headwinds. Analysts expect Alphabet to report its second straight quarter of negative earnings growth with EPS at $1.32 down 6% Y/Y. Alphabet is the talk of the town due to Microsoft’s $10bn investment in OpenAI and its ChatGPT technology and many are saying is a threat to Google’s search business; in an equity note here, Saxo’s Head of Equity Strategy, Peter Garnry, dives into this discussion and provides our views on the matter. ECB and Bank of England meetings on the horizon After the Fed’s tone being interpreted as dovish by the markets, focus turns to ECB and BOE meetings today. The European Central Bank has surpassed its peers in the hawkishness quotient recently, and will likely repeat that this week. A 50bps rate hike is expected, along with the guidance for another 50bps in March which still has the scope to bump up front-end pricing with markets looking at 93bps of rate hikes over the next two meetings. The Bank of England will likely be the trickiest given the indecisive market pricing as well as the scope for a split vote. Read our full preview here.     For what is ahead at markets this week – Read/listen to our Saxo Spotlight. For a global look at markets – tune into our Podcast.   Source: Market Insights Today: Stocks rallied and bond yields dropped after Powell declared the disinflationary process had started – 2 February 2023 | Saxo Group (home.saxo)
Kiwi Faces Depreciation Pressure: RBNZ Expected to Hold Rates Amidst Downward Momentum

The ECB And The Bank Of England Are Both Expected To Raise The Interest Rates By 50bp

Swissquote Bank Swissquote Bank 02.02.2023 10:33
It is gratifying to see the disinflationary process now getting underway’ said the Federal Reserve (Fed) President Jerome Powell at his press conference yesterday. ‘Disinflation process is getting underway’. Stock market That was the major - and the only take - of his speech yesterday, and sent the markets rallying. The US yields fell, the S&P500 reversed course and rallied more than 1% higher, while Nasdaq jumped more than 2%. The dollar index slumped. Fed At the wake of the meeting, activity on Fed funds futures gives around 83% chance for the next FOMC meeting to deliver another 25bp hike, which would take the rates to 5% mark, as promised by Fed members. And for equities, there is no reason to think that the bullish sentiment would reverse anytime soon. What else? Apple, Amazon, Google, Ford and Qualcomm are due to announce their earnings today. The European Central Bank (ECB) and the Bank of England (BoE) are both expected to raise the interest rates by 50bp today But it won’t be the same 50bp hike. Watch the full episode to find out more! 0:00 Intro 0:31 One phrase: ‘disinflationary process is underway’ 4:31 Facebook’s Meta pops 20% after earnings 6:33 ECB to hike by 50bp 8:17 BoE to hike by 50bp, as well, but… Ipek Ozkardeskaya 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. #ECB #BoE #Fed #FOMC #meeting #Powell #disinflation #Meta #Apple #Google #Amazon #Ford #Qualcomm #earnings #USD #EUR #GBP #FTSE #SPX #Dow #Nasdaq #investing #trading #equities #stocks #cryptocurrencies #FX #bonds #markets #news #Swissquote #MarketTalk #marketanalysis #marketcommentary _____ Learn the fundamentals of trading at your own pace with Swissquote's Education Center. Discover our online courses, webinars and eBooks: https://swq.ch/wr _____ Discover our brand and philosophy: https://swq.ch/wq Learn more about our employees: https://swq.ch/d5 _____ Let's stay connected: LinkedIn: https://swq.ch/cH
Deciphering the Economic Puzzle: Unraveling Britain's Mixed Signals

The UK economy could show a good chance of a shallow recession

Jakub Novak Jakub Novak 02.02.2023 11:00
Market players are expecting another surge in pound as the Bank of England is likely to raise interest rates today due to the persistently high inflation in the UK. The bank has no other choice but to do it, especially with the current actions of the government. Rate hike Most likely, the Bank of England will raise rates by half a percentage point to 4%, which is the highest since 2008. They will also release forecasts for inflation and economic growth, possibly indicating the chances of a shallow recession. The recent strikes and demonstrations in the UK Another data to be expected is the review on wage growth, which is actually the reason for the recent strikes and demonstrations in the UK. Its figure could determine whether inflation will remain high as another record hike will force companies to raise prices and consumers to expect further increases in their incomes. GBP/USD  Of course, there is a chance that the central bank will take a different path, increasing rates by only 25 basis points. That would lead to a decline in demand, pushing GBP/USD down rather sharply. In terms of the forex market, the sideways trend in GBP/USD persists, so buyers need to return above 1.2420 to regain their advantage. Only the breakdown of this resistance level will strengthen the hope of a rise towards 1.2470, after which it will be possible for the pair to reach 1.2540. If pressure returns and sellers take control of 1.2350, the pair will fall to 1.2290 and 1.2230. EUR/USD For EUR/USD, demand has surged, but buyers need to protect 1.1000 in order to maintain the chance of rising above 1.1050. Possible price levels in such a situation are 1.1090 and 1.1125. In the event of a decline, the pair could move below 1.1000 and head towards 1.0960 and 1.0920.   Relevance up to 08:00 2023-02-03 UTC+1 Company does not offer investment advice and the analysis performed does not guarantee results. The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade. Read more: https://www.instaforex.eu/forex_analysis/333998
Worst behind us for UK retail despite fall in sales

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

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

Bank of England hikes by 50bp but hints at tightening cycle nearing its end

ING Economics ING Economics 02.02.2023 14:01
Below-target inflation forecasts, more muted language on future tightening, and a warning about the impact of past rate hikes, all signal that Bank Rate is close to peaking. We expect one further 25bp rate hike in March, though we think a rate cut is unlikely for at least a year Bank of England Governor Andrew Bailey   Further increases in both wage growth and service sector inflation were enough to convince Bank of England (BoE) policymakers to hike interest rates by a further half a percent this month. But it’s abundantly clear from both the press release and the new forecasts that the Bank is laying the groundwork for the end of the current tightening cycle. For several months now, the Bank has been warning that it expects to continue hiking and that it could do so forcefully. The minutes of the last meeting confirmed that "forcefully" can be understood as meaning 50bp rate hike increments. So the fact that the Bank has dropped this reference suggests any future rate rises are likely to be smaller – and that’s further reinforced by an admission that the impact of past rate hikes is still largely to feed through to the economy.   The Bank’s two-year-ahead inflation forecast – the time horizon over which BoE policy has the most impact – is now well below target. That's even true under an assumption that rates increase no further from here, though the impact of lower energy prices is also likely a driving factor. BoE is forecasting below-target inflation in two and three years' time Source: Bank of England   The counterpoint is that the vote split wasn’t particularly close, and seven out of nine policymakers backed today’s 50bp move. But as we warned in our preview, a large contingent of the committee has shown a tendency to act by consensus and move together. We therefore shouldn’t infer from today’s vote that a decision to slow the pace of hikes next time would necessarily be that divisive. So what next? We are sceptical that today’s rate hike will be the last. The Bank says it would continue tightening policy “if there were to be evidence of further persistence [in inflation]”. Unlike the US, there are fewer signs that either wage growth or service sector inflation has peaked, and we’re unlikely to see this story change sufficiently to stop the Bank hiking again in March, albeit this time by a more modest 25bp. An additional move in May is possible if core inflation is still showing few signs of easing, though for now that’s not our base case. Ultimately, a recession is still likely – albeit milder than first anticipated – and we think there are limits to how much higher Bank Rate can go without prompting more serious dislocations in the housing market and among corporate borrowers (SME lending is overwhelmingly done on floating interest rates). That said, we think the BoE will be less rapid to turn to rate cuts than the Federal Reserve, given core inflation is likely to prove stickier. That suggests policy easing is unlikely for at least a year. Read next: USD/JPY Pair Is Trading At 128.48 The Aussie Pair Is Above 0.71$| FXMAG.COM How our forecasts compare to market pricing Source: Refinitiv, ING Dovish BoE means further converge between GBP and EUR rates The dovish theme running through today’s BoE communication comforts us in our view that sterling yield curves should now shed the hawkish bias acquired last summer. This should also add to the reluctance of sterling rates to rise (remember the Fed also turned less hawkish yesterday) but the most visible effect should be a further narrowing of the spread with euro rates, for instance at the 5Y point. For now, expect a further inversion of 2s5s as more cuts get baked in 2024 forwards, but it will become increasingly tempting for the curve to extrapolate this and price even earlier cuts. When this occurs, the stage will be set for re-steepening in the second half of 2023. Euro and sterling swap rates to continue converging Source: Refinitiv, ING Read this article on THINK TagsBank of England Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more
Nvidia Is Rolling Out Its Own Cloud Service Together With Oracle

Australia’s Tech Sector Is Starting To Pick Up Momentum, The ECB And The BoE Took Dovish Turns

Saxo Bank Saxo Bank 03.02.2023 09:20
Summary:  The US equity markets extended their gains, underpinned by 23% surge in Meta as it announced a leaner and more decisive vision; while German and UK yields slumped after dovish tilts from ECB and the Bank of England. The NFP jobs report in focus as the next test of the US labor market strength. USD was back in gains while commodities reversed the post-FOMC rally as clear signals on China’s reopening demand are also awaited. The tech rally may start to get some jitters with Apple, Amazon and Alphabet missing their earnings forecasts in post-market.   What’s happening in markets? Nasdaq 100 (NAS100.I) and S&P 500 (US500.I) surged on Thursday, paring gains in Asia Friday morning following Apple, Google, and Amazon misses S&P500 closed at a new five-month high on Thursday, rising 1.5%, taking its move up to 19% from its October low and its 50-day moving average above the 200-day moving average, in what is usually referred as a “golden cross” in technical analysis. The Nasdaq 100 gained 3.6% after Meta shares jumped 23% on cost-cutting which paves the road for a return to profitability. Refer to Peter Garnry’s  article here for more on Meta. On the back of the dovish comments from Fed’s Powell on the previous day about disinflation having started and the optimism boosted by the surge in Meta’s share prices, Alphabet (GOOGL:xnas) and Amazon (AMZN:xnas) jumped more than 7% in the regular session and Apple (AAPL:xnas) climbed more than 3%, driving the benchmark indices higher before they reversed in the extended hour trading following reporting results missing expectations. Post results, Apple and Alphabet fell more than 3% and Amazon plunged more than 4% in after-hours trading, bringing Nasdaq 100 futures by around 1.3% lower in early Asian hours from its Thursday close. Apple, Amazon, Google, and Ford paint a bumpy picture ahead for equities Apple's profit and revenue missed, but it guided for a pickup in revenue from its iPhone this quarter, as well as its services revenues. Amazon's 4th quarter sales beat, but its outlook was on the weaker side. Google-owner Alphabet’s sales were lighter, suggesting lower demand for its core search advertising which is coming under threat. The US Department of Justice called for a breakup of the search giant’s ad-technology business over alleged illegal monopolization of the market. The company’s flagship search business, which drives most of its ad revenue, may also be under attack from new entrants, with Google declaring “code red” last year after in response to Open AI’s popular chatbot, entering the market. Ford guided for the potential of higher earnings in 2023, but missed fourth quarter earnings expectations. That said, its automotive revenue was higher than expected and it will pay a supplemental dividend of $0.65 per share reflecting the cashflow from taking a stake in Rivian. Yields on US Treasuries (TLT:Xmas, IEF:xnas, SHY:xnas) edged down, Bund and Gilt yields tumbled on dovish hikes from the ECB and BOE The yield on the 10-year Treasury dropped as much as 9bps following the massive declines in yields on German Bunds and UK Gilts before paring most of the gain (in prices, fall in yields) in the New York afternoon to finish 2bps richer at 3.39%.  Relative to European and UK bonds, the movements in the U.S. Treasuries were relatively muted ahead of the U.S. employment report today. Yields on the 10-year German Bunds dropped 21bps to 2.07%. The ECB raised policy rates by 50bps as expected and signaled another 50bps in March but indicated that the path of interest rate increases would become data-dependent afterward. Likewise, the Bank of England raised its policy rate by 50bps but commented that it had “seen a turning of the corner” and signaled that future rate hikes would be data-dependent. Yields on the 10-year Gilts tumbled a staggering 30bps to 3.01%. U.S. non-farm production improved to 3% (vs consensus 2.4%) in Q4 from 0.8% in Q3 and unit labor costs growth decelerated to 1.1% in Q4 (vs consensus 1.5%) from 2.4% in Q3. Both were good news to the Fed’s disinflation narrative. Interest rate futures are pricing in 60 bps of rate cuts by the Fed in the second half of 2023 after a 25bp hike in March. The Australian share market rallies to its highest level since April last year Australia’s tech sector is starting to pick up momentum, and the technical indicators are looking interesting, suggesting upside on the weekly and monthly charts. Today the market hit new cycle highs, and its highest leveis also reacting to PMIs rising, a sign Australia’s economy is beginning to strengthen. Next week we will receive financial results from one of Australia’s top 10 banks, Suncorp, as well as real estate tech business, REA. In the following week (the third week of February) earnings season ramps up with CBA and Fortescue reporting Feb 15, BHP on Feb 21, followed by Rio the next day, followed by Qantas. Hong Kong’s Hang Seng (HIG3) and China’s CSI300 (03188:xhkg) were mixed The Hang Seng Index pared early gains to finish the Thursday session 0.5% lower on the back of a strong rally in U.S. equities overnight and less upward pressure on domestic interest rates and currencies spilled over from higher U.S. interest rates down the road. Baidu (09888:xhkg), rising 5%, extended its strong recent gains on the ChatGPT concept and following BlackRock raised its stake to 6.6% from 5.4% in the Chinese search engine giant. Baidu was the best-performing stock on the Hang Seng Index for the second day in a row. Li Auto (02015:xhkg) climbed 1.9% after reporting delivery of 15,141 units of EV in January,  up 23% Y/Y. On the other hand, NIO (09866:xhkg) slid 5.3% following a 12% Y/Y decline in delivery to 9,652 units in January and on reports that the Chinese EV maker is cutting prices. Geely (00175:xhkg) dropped 3.3% after its high-end Zeekr brand delivered 12% fewer EVs from the year-ago period. Chinese mobile gaming stocks traded in the Hong Kong bourse soared with Forgame (00484:xhkg) leading the charge and jumping over 75%.  CSI 300 slid 0.4%. Pharmaceuticals, biotech, retailing, beverage, and coal mining advanced while defense, electric equipment, household appliances, and non-bank financials retreated. FX: USD returns to strength as global yields plunge The 30bps plunge in UK yields after the Bank of England kind of hinting at a pause saw GBPUSD back off from 1.24 to 1.2222. ECB also surprised dovish despite some very hawkish expectations being priced in by the markets, taking EURUSD back from 1.10+ to the 1.09 handle. EURGBP however still above 0.89 with ECB still guiding for another 50bps rate hike in March. Australian bonds also joined the global rally, and AUDUSD reversed back below 0.71. JPY was the clear outlier, ignoring the global bond yields plunge, and USDJPY continued to trade steady around 128.50. Crude oil (CLG3 & LCOH3) prices soften Oil prices saw a modest decline as jitters about Chinese demand and Russian sanction continued to underpin. OPEC output also saw a decline of 60kb/d amid reductions in Saudi Arabia and Libya. Meanwhile, a stronger dollar after the dovish tilts from the ECB and Bank of England weighed on the commodity complex in general. The US jobs report becomes the next test for the markets today, and for the US dollar, after Chair Powell’s comments were paid little heed. WTI futures were below $76/barrel while Brent was below $83. Gold (XAUUSD) reversed from $1960 barrier; Largest global gold ETFs sees strong fund flows Gold broke higher to fresh cycle highs in the post-FOMC euphoria, breaking past $1950, but a stronger dollar returned after ECB and BOE also took dovish turns resulting in steep drops in global bond yields. This made the yellow metal lose some of its shine, and it reversed before the test of the 76.4% retracement of the 2022 correction at $1963 to near-1910 levels. Immediate support at $1900, and the US NFP data along with the ISM surveys will continue to be the next key market movers to watch. Meanwhile also consider, the largest gold ETF fund globally GLD, has seen over $2 billion in inflows since the start of the year, suggesting retail buying is starting to ramp up.  Read next: Santander Bank Polska Shareholders Can Expect A Solid Dividend, The ETH Liquid Staking Narrative Is Already Going Strong| FXMAG.COM What to consider? Bank of England hikes 50bps, but further rate hikes see a high bar As expected, the Bank of England raised rates by 50bps to 4%, with a vote of 7-2 as two of the usual doves opted to keep the rates unchanged. The Bank eased up on its forward guidance, saying that further policy tightening “would be required”, but only “if there were to be evidence of more persistent [inflationary] pressures” and preceding all of that language touting “considerable uncertainties” in the outlook. The previous language was more direct on the need to continue hiking. The latest message with the pre-conditions set for another rate hike suggested that the bank may pause. Accordingly, market pricing moved in a more dovish manner with odds of a 25bps March falling to around 60% from 80% pre-announcement with the chance of a May 25bps move around 12% vs. around 50% pre-announcement. Inflation and growth forecasts also hinted at a dovish turn. The accompanying MPR saw a downgrade to the 2023 inflation forecast to 4.0% from 5.25% with inflation of just 1.5% next year. BoE was less pessimistic on the economy, as peak unemployment was revised down to 5.3% from 6.0% and the peak to trough GDP dip was revised up to -1% from -2.9%. UK 10-year yields saw a massive 30bps drop and the 2-year was also down ~25bps. Dovish ECB despite confirming another 50bps rate hike; German 10-year yields plunge 30bps With very hawkish expectations set in, the ECB had a high bar to surprise hawkish. And it failed to do so. While the European Central Bank raised rates by 50bps to 2.50% and committed to another 50bps rate hike in March; but the statement said that at the March meeting, the ECB will evaluate the subsequent path of its monetary policy. This sent out a message that the most hawkish G10 central bank currently may also be looking at stepping down its pace of rate hikes. Lagarde attempted to stress the longevity of reaching terminal by stating that when the level is reached, rates will need to stay there. However, there was a clear scaling back of hawkish market pricing for 2023 with around 25bps of tightening taken out. Reuters sources later noted that ECB policymakers see at least two more rate hikes, with an increase of 25bps or 50bps in May, which may thrash hopes of a May pause for now. German 10-year yields slumped by 30bps, posting its biggest decline since 2011. Today’s NFP data to be the next big test for US labor market The weekly jobless claims nudged lower again to 183k from 186k for the week ending 28 January, a surprise against the expected rise to 200k. This suggest that the labor market is still tight, as the focus shifts to nonfarm payrolls release later today. Bloomberg consensus expects a modest cooling in the headline NFP gains to 189k from 223k in December. The unemployment rate is also expected to come in a notch higher at 3.6% from 3.5% previously while wage gains may soften slightly to 4.3% YoY from 4.6% YoY previously. A larger-than-expected softness in labor market can further send dovish signals to the market that is still dealing with the post-Powell and ECB/BOE dovishness. Challenges for India’s Adani Group continue to mount The market loss for the Adani Group mounted over $100bn, once again sending concerns of a possible contagion skyrocketing. Challenges for the group continue to mount since the Hindenburg report, with a shock withdrawal of share sales, some banks refusing to take Adani securities as collaterals and then the Reserve Bank of India asking Indian banks for details of the exposure to Adani Group. Furthermore, S&P Dow Jones Indices said that it will remove Adani Enterprises from its sustainability indices effective February 7, which would make shares less appealing to sustainability-focused mutual funds as well and cause foreign outflows. Contagion concerns are widening, but still limited to the banking sector. Focus remains on further risks of index exclusions, while a coherent response on the fraud allegations from the Adani Group is still awaited. Shell beats on Q4 earnings One of Europe’s largest oil and gas majors reported Q4 adjusted profit of $9.8bn vs est. $8.3bn driven by higher-than-expected oil and gas output for the quarter. Q4 dividends are lifted to $0.2875 per share vs est. $0.285.     For what is ahead at markets this week – Read/listen to our Saxo Spotlight. For a global look at markets – tune into our Podcast. Source: Market Insights Today: Dovish tilts from ECB and BOE and Meta gains push equities higher; Post-market earnings miss from Apple, Alphabet and Amazon – 3 February 2023 | Saxo Group (home.saxo)
TikTok Bans Are Gathering Momentum In The US

Facebook’s Best Rally In Almost A Decade, BoE’s Tightening Cycle May End Soon

Swissquote Bank Swissquote Bank 03.02.2023 10:19
Yesterday was, again, a fantastic day of trading for equities, as the less hawkish than expected tone from the European Central Bank (ECB) and the Bank of England (BoE) meetings joined the optimistic vibes from the Federal Reserve (Fed) Chair Jerome Powell’s ‘disinflationary process’ mention a day before, and all that combined with Facebook’s best rally in almost a decade painted the market in the green. S&P500 The S&P500 gained around 1.50%. Nasdaq 100 jumped more than 3.5% and entered bull market as Meta jumped more than 23%. Earnings But today will probably not be as fantastic as yesterday, as Apple, Amazon and Google announced earnings after the bell yesterday, and they all disappointed. US jobs data Maybe, the again-important US jobs data could temper the earnings-triggered weakness – if of course the NFP number, and more importantly the wages growth are sufficiently soft to keep the Fed doves in charge of the market. Rates Elsewhere, the European Central Bank (ECB) and the Bank of England (BoE) raised their rates by 50bp yesterday, but Lagarde sounded much less aggressive than the December meeting. Read next: USD/JPY Pair Is Trading At 128.48 The Aussie Pair Is Above 0.71$| FXMAG.COM Euro The EURUSD sold off. But I believe that the euro’s recovery hasn’t ended just yet, as we see the end of the tunnel for the Fed – as the Fed rates approach the 5% mark, while we don’t yet see the end of the tightening tunnel for the ECB. Watch the full episode to find out more and find the link to our latest blog article : www.swissquote.com/blog 0:00 Intro 0:50 Stocks rally on dovish central bank expectations, and Facebook… 2:10 … but Apple, Amazon and Google dampen the mood. 5:38 What kind of US jobs data could cheer up investors? 6:42 BoE’s tightening cycle may end soon 8:21 ECB’s Lagarde sounded less aggressive than last December, but euro should do fine… Ipek Ozkardeskaya 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. #US #NFP #wages #jobs #data #ECB #BoE #Fed #FOMC #meeting #Powell #disinflation #Meta #Apple #Google #Amazon #earnings #USD #EUR #GBP #Bailey #Lagarde #SPX #Dow #Nasdaq #investing #trading #equities #stocks #cryptocurrencies #FX #bonds #markets #news #Swissquote #MarketTalk #marketanalysis #marketcommentary _____ Learn the fundamentals of trading at your own pace with Swissquote's Education Center. Discover our online courses, webinars and eBooks: https://swq.ch/wr _____ Discover our brand and philosophy: https://swq.ch/wq Learn more about our employees: https://swq.ch/d5 _____ Let's stay connected: LinkedIn: https://swq.ch/cH      
Rolls-Royce share price has increased by over 60% since the start of the year

The Decision Of The Bank Of England Had A Negative Impact On The British Pound (GBP)

Kenny Fisher Kenny Fisher 03.02.2023 13:13
The British pound is showing little movement on Friday, after plunging 1.2% a day earlier. In the European session, GBP/USD is trading at 1.2210. Major central bank announcements have been in the spotlight this week, including the Federal Reserve and Bank of England rate decisions. GBP/USD posted modest gains after the Fed decision, rising 0.43%. Investors liked what they heard from Fed Chair Powell, even though he warned that rates would stay high and the battle against inflation was far from over. The markets are expecting inflation to fall faster than the Fed is thinking and are counting on some rate cuts this year, even though Powell said yesterday that he does not expect to cut rates this year. Powell did acknowledge that disinflation had started, which boosted risk sentiment and helped send the dollar broadly lower. Pound slides after BoE decision The pound fell sharply after the BoE raised rates by 50 basis points for a second straight time. As with the Fed, the markets were cheered by the dovish comments of Governor Bailey who said that inflation had turned a corner and noted that members had removed the word “forcefully” from its forward guidance statement. Bailey warned that inflation pressures remained and inflation risks were tilted upwards, but investors ignored this part of his message. Besides inflation, the Fed is focussed on the strength of the labour market, so today’s US job report could be a market-mover. Nonfarm payrolls fell from 256,000 to 223,000 in December and the downturn is expected to continue, with an estimate of 190,000 for January. The ADP payroll report showed a decline in December, but unemployment claims and JOLT job openings both moved higher, so this week’s employment releases have been mixed. The markets will also be keeping a close look at hourly earnings and the unemployment rate. Read next: Japanese Startup Aerwins Technologies Will Be On NASDAQ| FXMAG.COM GBP/USD Technical 1.2184 and 1.2104 are providing support There is resistance at 1.2289 and 1.2369 This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.
Rates Spark: Balancing data and risk factors

Listen: Are we there yet?

ING Economics ING Economics 03.02.2023 14:12
In this podcast, ING's James Knightley, Carsten Brzeski and James Smith discuss whether interest rates in the US and Europe are close to a peak, what this could mean for the global economy, and whether rate cuts could be in the offing this year   Read next: Today's ECB Policymakers Comments Seem To Help The EUR/USD Pair, The Australian Dollar Fall Against Strong US Dollar| FXMAG.COM After one of the most aggressive tightening cycles in decades, the Federal Reserve and Bank of England signalled this week that their work is mostly complete. In contrast, the European Central Bank is still playing catch-up, warning that significant rate hikes lie ahead. In this podcast, ING's Rebecca Byrne asks economists James Knightley, Carsten Brzeski and James Smith what impact these decisions will have on the global economy in the year ahead. Read this article on THINK Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more
National Bank of Poland Meeting Preview: Anticipating a 25 Basis Point Rate Cut

Our view on the major central banks

ING Economics ING Economics 04.02.2023 09:05
The Fed and Bank of England are closing in on the end of their respective tightening cycles, while the ECB still has more work to do. Greater potential for an inflation pullback in the US suggests the Fed will be much earlier to cut rates than its European counterparts. Bank of Japan tightening is likely to be a gradual process In this article Federal Reserve European Central Bank Bank of England Bank of Japan   ECB President, Christine Lagarde with Croatia's Economy Minister at the World Economic Forum last month Federal Reserve After the most aggressive series of policy rate increases seen in more than 40 years, unsurprisingly, the US economy is now experiencing slower growth. Markets are now pricing recession, but Federal Reserve officials are concerned that lower Treasury yields and a softer dollar have loosened financial conditions, thereby undermining the Fed’s policy stance. They continue to warn that “unacceptably high” inflation means the economy needs to experience a “sustained period of below trend growth” for them to be confident price pressures will fade. Hence the latest 25bp hike with a further 25bp expected in March. However, job loss announcements are becoming more prevalent, and weakening price intentions, falling car prices and a clear topping out in housing rents offer encouragement that inflation will fall sharply. This should open the door to significant interest rate cuts from late in the third quarter of this year, with the Fed funds target rate potentially falling back to 2.5% next year. European Central Bank It took the ECB a while, but it seems to have got the hang of it: hiking interest rates. And as long as core inflation remains stubbornly high and core inflation forecasts remain above 2%, the ECB will continue hiking rates. The increasing probability that a recession will be avoided in the first half of the year also gives companies more pricing power, showing that selling price expectations remain elevated. The celebrated fiscal stimulus, which has eased recession fears, is an additional concern for the ECB as it could transform a supply-side inflation issue into demand-side inflation. These are two factors that could extend inflationary pressures in the eurozone, albeit at a lower level than we see at the moment. As a consequence, we expect the ECB not only to continue hiking into late spring but also to keep interest rates high for longer than markets have currently pencilled in. Bank of England The Bank of England has given its strongest hint yet that the tightening cycle is nearing an end - and perhaps even that February's 50bp hike was the last. In practice we're probably not quite there yet. UK headline CPI may have peaked, but the same can’t yet be said for wage growth or service-sector inflation. We therefore expect the BoE to pivot back to a 25bp rate hike in March but that's likely to be it. However unlike the Fed, it’s unlikely that the BoE will begin cutting rates later this year. The Bank's Chief Economist, Huw Pill, recently noted that the UK has the worst bits of the US inflation story (structural labour shortages) and the eurozone (energy crisis), arguing that core inflation could stay stickier as a result. That’s a line we’re likely to hear a lot of over the coming months and suggests a rate cut is unlikely for at least a year. Bank of Japan The Bank of Japan attracted the attention of market participants around the world after it surprised with an unexpected adjustment in the yield curve control policy in December. Governor Kuroda reiterated at the January meeting that the economy still needs easy monetary policy, and the BoJ’s sustainable inflation target of 2% has yet to be achieved. We think that it is highly unlikely that Kuroda will make another move in March, just before his retirement in early April. Indeed, markets are paying more attention to who will be the next governor, hoping the new leader may change the BoJ’s policy stance. We agree, but “Shunto”, the spring wage negotiations, will be key to watch. If wage growth is not strong enough to offset recent inflation, it will take longer than expected to normalise policy. We predict that the BoJ will keep its negative policy rate and yield curve control policy until the end of 2023 for now. TagsCentral banks Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more
The UK Economy Expects A Decline And Is Gearing Up For Recession

The UK Economy Expects A Decline And Is Gearing Up For Recession

Kamila Szypuła Kamila Szypuła 04.02.2023 10:41
The UK is expected to be the only major industrialized country whose economy will contract this year. GDP forecast After UK economic output QoQ declined by 0.3% in Q3, many economists expected a similar contraction in Q4. The decline in the third quarter of last year was, according to the Office for National Statistics, partly due to an extra day off in September 2022 for the state funeral of Her Majesty Queen Elizabeth II as some businesses were closed or operating differently that day. The pause in economic activity on September 19, the day of the funeral, contributed to a monthly fall in GDP of 0.8% in September. This was followed by a rebound in October when the UK economy grew by 0.5% month on month. The economy grew a further 0.1% m/m in November, beating expectations of a 0.1% decline as the football world cup in Qatar boosted the UK services sector which grew by 0.2% compared to October. The customer services sector, which includes pubs and other food outlets, recorded an increase of 0.4%. Given the positive GDP growth in October and November and the fact that the World Cup lasted until December 18, it is possible that the UK narrowly avoided a decline in GDP in the fourth quarter, keeping the country from falling into recession. Source: investing.com Read next: Domination Of Fast Food Restaurants - McDonaldization| FXMAG.COM When comparing the 2022 quarter to the 2021 quarter, the UK economy is estimated to contract from 1.9% to 0.4% in the fourth quarter. GDP YoY Chart Source: investing.com UK in recession? According to the Office for Budget Responsibility, the UK is already in recession. Moreover, manufacturing fell by 0.2%, suggesting that while the fourth quarter as a whole may now show modest growth, the outlook for the future remains challenging, especially given that a reduction in service consumption is expected as the cost of living crisis intensifies this year. The trajectory of the central bank's aggressive monetary policy tightening appears to hold in the short term as inflation continued to hit double digits in November, albeit declining slightly from its 41-year high in October. Combined with the cost of living crisis caused by soaring food and energy prices, widening industrial action and unprecedented pressure on the nation's health service, consumers' purchasing power is unlikely to survive beyond the Christmas treat. The increased cost of credit is likely to put further downward pressure on activity. The Bank of England predicts that the British economy will experience at least four quarters of recession. The bank now predicts that the economy will contract by 1% from 3% and that inflation will fall back to 8% in June before dropping to 3% at the end of the year. The forecast comes as interest rates were raised to 4% from 3.5%, the highest level in more than 14 years. On Thursday, the Bank hinted that interest rates may be approaching a peak, indicating that it will only raise them if it sees signs that inflation will remain high. Bank governor Andrew Bailey said inflation appeared to be coming down but warned that there were still "big risks" that could still affect the economy. Higher interest rates are designed to encourage people to save more and spend less, helping to stop prices from rising as rapidly. Thursday's increase in the cost of credit is the tenth in a row and will add pressure on many households already struggling with the cost of living. The impact will be felt by borrowers through higher mortgage and credit costs, although this should also mean better returns for savers. Source: investing.com
Euro's Rally Stalls as Focus Turns to Inflation and Data Disappointments

Forex Weekly Summary: EUR/USD, GBP/USD And AUD/USD Fell Sharply, USD/JPY Ended Above 131.00

Kamila Szypuła Kamila Szypuła 04.02.2023 12:45
The dollar jumped on Friday after data showed that US employers created many more jobs in January than economists had expected, potentially giving the Federal Reserve more leeway to hold interest rate hikes. The dollar recently rose 1.12% to 102.92 on the day against a basket of currencies, the highest since Jan. 12 and is on track for its best day since Sept. 23. USD/JPY USD/JPY started the trading week at 130.4790. For a day and a half, the pair traded in the range of 129.80-130.45. Subsequently, the USD/JPY pair started its decline below the lower limit and dropped below the 129.00 level. Trading below 129.00 lasted until Friday where in the US session the USD/JPY pair sharply rebounded to above 131.00 and thus ended the trading week at 131.15. The final level was just below the week's high of USD/JPY at 131.1940. The difference between the highest and the nanny level of trading is quite large, because the pair reached the lowest level at 128.1160. EUR/USD The EUR/USD pair started the trading week at 1.0875. For a day and a half, the pair traded below 1.0900. After that, the EUR/USD pair rose above 1.0900 and reached a weekly high of 1.1030. Trading above 1.0900 continued until Friday, where in the US session the EUR/USD pair fell sharply below 1.0800 and thus ended the week of trading at the week's low at 1.0798. The European Central Bank (ECB) raised its key interest rates by 50 basis points as expected and said it intends to make another 50 basis point hike in March, comments from ECB President Christine Lagarde weighed on the euro. Early Friday, ECB policymakers Gediminas Simkus and Peter Kazimierz said an interest rate cut this year was not likely. Read next: The UK Economy Expects A Decline And Is Gearing Up For Recession| FXMAG.COM GBP/USD The Cable Pair started the week at 1.2404. For the next two days, the GBP/USD pair traded around 1.2300 until it broke out at 1.2400, after reaching the weekly high, the pair traded just below this level. The drop below 1.2300 came closer to Friday where the GBP/USD pair plummeted below 1.2100. GBP/USD ended the week at 1.2056, which is the lowest trading level of the week, the lowest since Jan. 6 and its worst day since Dec. 15. The Bank of England, as widely expected, raised its key rate by a further 50 basis points to 4%, its highest level since autumn 2008, indicative of more sustained price pressures. However, the BoE removed the wording that "they will respond with force if necessary." Moreover, BoE President Andrew Bailey said that inflation will continue to fall this year and faster in the second half of 2023. In fact, the central bank forecast that the annual CPI inflation in the UK will fall from the current 10.5% to around 4% in toward the end of the year. This, in turn, has fueled speculation that the current cycle of rate hikes may be coming to an end and weakening the pound sterling. AUD/USD The AUD/USD pair started trading at 0.7111. The pair then traded in the 0.7000-0.7075 range. On Thursday, the pair managed to break above 0.7100 and record a weekly high of 0.7156. Closer to Friday, the couple began their decline. The Aussie Pair ended the week at its lowest level of trade for the week, at 0.6924. The Australian awaits the RBA's interest rate decision on Tuesday 7 February. With the December quarter 2022 CPI print showing headline inflation is still running strong at 7.8 per cent, expectations are for a further increase in the cash rate. Source: finance.yahoo.com, investing.com
Worst behind us for UK retail despite fall in sales

Lower gas prices point to a more modest recession in the UK

ING Economics ING Economics 05.02.2023 11:00
Lower gas prices should herald a fall in consumer energy bills by the summer. A recession is still the base case, but the reduced squeeze on household incomes suggests the peak-to-trough fall in GDP could now be less than 1% In this article Lower gas prices are good news for UK consumers The UK doesn't look like it will be a notable outlier on GDP   The British Prime Minister, Rishi Sunak, is facing major economic headwinds Lower gas prices are good news for UK consumers Lower gas prices are as much of a boon for the UK as they are for the rest of Europe. It’s true that Britain has considerably less gas storage than its peers, making it more vulnerable on days of low temperatures and wind. But in general, lower prices point to lower consumer bills – and that means the hit to GDP this year is likely to be less than feared. April’s planned increase in unit prices can probably be cancelled, and in fact, the average annual household bill is likely to fall from £2,500 under the government guarantee, to £2,000 over the summer. Such a move would shave roughly 1 percentage point off headline inflation later this year and means it would end the year only modestly above the Bank of England’s 2% target. Admittedly, business support is still set to become less generous, though with wholesale gas prices so much lower, this looks less consequential than it once did. The average annual household energy bill should fall by the summer Macrobond, ING calculations The UK doesn't look like it will be a notable outlier on GDP With the hit to household incomes diminished, we now think the peak-to-trough fall in UK GDP is likely to be less than 1%. Most of the hit is likely to fall in the first quarter. But while this still places the UK towards the bottom of the pack on growth (again), we think it’s an exaggeration to say it will be a notable outlier. For instance, while higher mortgage rates are likely to weigh on 2023 growth, the UK doesn’t look any more exposed than much of Europe to a house price correction. Unlike somewhere like Sweden, which has so far seen a 15% fall in house prices, the UK has a very low share of variable rate mortgages and ranks in the middle-of-the-pack on household indebtedness, as well as on increases in price-to-income ratios over recent years. The situation is trickier for businesses, particularly smaller corporates where floating rate lending makes up 70% of outstanding debt. Survey data suggests that’s a particular issue in consumer services and real estate. The latter, combined with weaker homebuyer demand, unsurprisingly points to a fall in construction this year.  For now, the Bank of England is more focused on persistently strong wage growth and service-sector inflation. While it looks like we’re close to the top of this tightening cycle, we think the UK’s somewhat unique combination of structural labour shortages and exposure to Europe’s energy crisis points to somewhat sticky core inflation. That suggests the UK is likely to be slower than the US Federal Reserve to cut rates, and we don't expect policy easing before next Easter. TagsUK fiscal policy Read the article on ING Economics   Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more
Saxo Bank Podcast: The Bank Of Japan Meeting And More

Bank Of Japan’s Nominees For The New Chief Will Likely Continue To Send Market Jitters, Disney Is Expected To Report Revenue Growth

Saxo Bank Saxo Bank 06.02.2023 09:12
Summary:  This week, markets will be digesting the slew of central bank meetings from last week, along with the bumper jobs report, as more Fed speakers including Chair Powell take stage. The Reserve Bank of Australia may likely stay in the chorus and hike rates by 25bps as well, but focus will be on guidance. Bank of Japan’s nominees for the new chief will likely continue to send market jitters, while UK GDP is expected to dodge a recession. China’s inflation and credit data may throw further light on the economic momentum, but US-China tensions will also be on watch. Earnings calendar stays in full force with reports due from Disney, PepsiCo, Toyota as well as Adani Green. Powell’s speech, more Fed speakers on watch as the US dollar jumps After a hotter-than-expected US jobs report on Friday, equities and the VIX index, and the US dollar are on notice. Fed Chair Powell and several Fed speakers are due to speak this week and they could disagree with the Fed’s dovish tilt last week, which could spark a reversal of the risk-off rally we have seen since the start of the year. Powell will be speaking in Washington on Tuesday (1am SGT on Wednesday for Asia), followed by Barr, Williams, Cook, Kashkaru, Waller and Harker over the course of the week. Flight to safety could take the US dollar higher, and shave down broad indices. USD is also likely to find some support this week amid the rising US-China tensions after a suspected Chinese spy balloon was shot down over the weekend. RBA meeting ahead, putting AUDUSD and EURAUD on watch for a potential whipsaw The Melbourne Institute Inflation gauge for Australia rose more than expected MoM & YoY, while Australian retail sales beat expectations. These indicators, coupled with building approvals seeing one of their biggest jumps in a decade, gives the RBA power to keep hiking rates. The RBA is expected to hike by 25bp on Tuesday, with the market pricing in another 25bp hike. However there is a small chance the RBA could keep hiking before pausing in July. The jury is still out. We are watching the AUDUSD and the EURAUD with the AUD having nose-diving as commodity prices fell from their highs, while the USD gathers strength. While the ECB hiked by 50bps last week. However, there is a risk the RBA could be aggressive in its commentary (more than prior meetings), which may perhaps trigger an AUD knee-jerk rally up. For more on FX, click here. Bank of Japan’s nominee submissions and expectations for a policy pivot Monday morning reports from Nikkei that the government has approached Bank of Japan Deputy Governor Masayoshi Amamiya as a possible successor to central bank chief Haruhiko Kuroda sent jitters. The week was supposed to bring possible BOJ chief nominations, as the nominees list has to be presented to parliament on February 10. However, FM Suzuki refused to confirm Amamiya’s nomination. Amamiya has helped Kuroda since 2013 on monetary policies, and is considered the most dovish among the contenders, which is thrashing hopes that BOJ policy normalization could progress under the new chief. As more names are likely floated this week, there will potentially be some volatility in the Japanese yen and equities, with markets continuing to weigh up the possibility of a shift in Bank of Japan’s yield-curve control policy. German inflation on watch; Riksbank rate hike; UK GDP may confirm a delay in recession After a technical delay last week, Germany’s inflation prints for January will be due this week. Spain and France printed higher-than-expected CPI for the month, while the region-wide printed was softer last week. This suggests Germany’s inflation likely eased due to energy price increases being more subdued than previously expected. Meanwhile, adjustments in the CPI basket could also likely result in a softer print. Riksbank meeting next week is also likely to bring a 50bps rate hike, after a similar-sized hike by the Fed, ECB and Bank of England last week. While inflation still remains entrenched, the Governor has recently hinted at financial stability risks, limiting the scope of another 75bps rate increase this month. Lastly, the key in UK will be the preliminary GDP report for the fourth quarter which is likely to dodge a recession. Bloomberg consensus expect GDP growth to be flat QoQ in Q4 after a negative 0.3% QoQ print in the third quarter, underpinned by a strong labor market and fiscal easing. However, it is still hard to conclude that UK could avoid a recession, but only likely suggest a potential delay. If growth comes in weaker than expected, pressure on sterling could start to mount. China’s new loans expected to rise as banks frontloading lending Chinese banks typically deploy proportionally a larger part of their annual loan targets at the beginning of the year. According to Bloomberg’s survey, economists are forecasting new RMB loans jumped to RMB 4,200 billion in January from RMB 1,400 in December which represent around 11% Y/Y growth in outstanding RMB loans, marginally below the 11.1% in December. While mortgage lending likely remained slow, corporate and government bond issuance increased in January. As corporate lending and bond insurance picked up, new aggregate financing is expected to rise to RMB 5,400 billion in January from RMB 1,310 billion in December, but the implied 9.3% Y/Y growth in total outstanding aggregate financing was below the 9.6% in December. China inflation is expected to inch up China’s Inflation may have accelerated as the headline CPI is forecasted to bounce to 2.2% Y/Y in January from 1.8% in December. A surge in in-person service consumption after the reopening may have underpinned some price increases but the upward pressure on the general level of inflation has remained moderate. Rises in vegetable and fruit prices were likely damped by a decline in pork prices. The decline in producer prices is expected to narrow to -0.4% in January from -0.7% in December as industrial metal prices bounced offsetting a decline in coal prices. This week’s earnings focus: Walt Disney, Siemens, and Toyota The Q4 earnings season is not over yet with 243 companies in the S&P 500 Index having reported earnings. This week’s earnings calendar will provide plenty of information for investors to chew on. The list below highlights the absolute most important earnings to watch and out of those the three most key earnings are from Walt Disney, Siemens, and Toyota. The entertainment giant Disney is expected to report revenue growth of 7% y/y and EPS of $0.76 up 21% y/y and a lot of focus will be on Nelson Peltz, the activist investor that has gone into the company, and his quest for higher streaming profitability and potentially changing the asset portfolio of Disney. Siemens, one of Europe’s largest industrial companies, is expected to show revenue growth of 11% y/y and unchanged operating income compared to a year ago as cost pressures remain a key challenge for Siemens. Last quarter the order book and net new orders looked healthy, so the question is whether this will flow through into the outlook for 2023. Toyota is expected to report revenue growth of 19% y/y as demand for cars have come back, but the real interesting focus point on Toyota is further details on the new CEO’s aggressive move towards offering many more fully electric vehicles rather than hybrids. Toyota has recently indicated that they have made errors in their technology bet and looking to aggressively invest in battery EVs. Toyota, Honda and Volvo company earnings are on watch and could disappoint like Ford A bevy of EV and motor companies report this week including Toyota Motor, Honda Motor and Volvo Car. We think there could be a risk they report weaker than expected results, similar to Ford; which sent Ford shares 8% lower on Friday. Ford is struggling to make money on its EV business and blamed supply shortages. Metal commodities are a large contributor to car manufacturers costs. And we’ve seen components of EVs rise significantly in price, amid limited supply vs the expectation China will increase demand.  For example consider the average EV needs about 83 kilos of copper- and its price is up 26%, 250 kilos of aluminium are needed - and its price is up 20% from its low. These are some headwinds EV makers are facing, in a market where consumer demand is restricted amid rising interest rates. Australian reporting season ramps up; banks and property groups results are on watch Financial results kick off with Suncorp reporting 8th Feb- this could be a good indication of what we can expect from big banks such as CBA that reports next week. Data last year showed loan growth in regional banks grew slightly more than the big four banks, so we could see earnings surprises in Suncorp and Bank of Queensland. The market expects 25% earnings growth from Suncorp, and flat growth from CBA next week. The Telco giant, Telstra reports on Tuesday, with a flood of property groups reporting such as Centuria on Tuesday, BWP Trust – the Bunnings landlord, as well as Dexus on Wednesday, followed by Mirvac and Charter Hall Long WALE REIT reporting Thursday. For defensive plays; the plastics giant Amcor reports Tuesday. While interest rate sensitive Australian Tech companies, which are not traded very much at Saxo; start to report this week with Megaport reporting Thursday, and real estate-tech business REA on Friday. Adani Group companies start to report earnings this week After over $100 billion in losses over the last two weeks, focus will remain with the Adani Group stocks this week in India as some of the companies start to report earnings. Adani Green Energy reports earnings this week, and investors will be looking out for comments on corporate governance, response to Hindenburg’s fraud allegations as well as the company’s financial position and debt trajectory. Adani Green is one of the most highly indebted companies in the group, and a big player for India’s net zero ambitions. Macro data on watch this week: Monday 6 February New Zealand, Malaysia Market Holiday Australia Retail Trade (Q4) Germany Industrial Orders (Dec) Germany Consumer Goods (Dec) Eurozone S&P Global Construction PMI (Jan) Germany S&P Global Construction PMI (Jan) Eurozone Sentix Index (Feb) United Kingdom S&P Global/CIPS Construction PMI (Jan) Eurozone Retail Sales (Dec) Germany CPI (Jan, prelim) Indonesia GDP (Q4) Tuesday 7 February Japan All Household Spending (Dec) Australia Trade Balance (Dec) Australia RBA Cash Rate (Feb) Malaysia Industrial Output (Dec) Germany Industrial Output (Dec) United Kingdom Halifax House Prices (Jan) Taiwan Trade (Jan) United States International Trade (Dec) Canada Trade Balance (Dec) Wednesday 8 February Japan Current Account Balance (Dec) India Repo and Reverse Repo Rate United States Wholesale Inventories (Dec) Thursday 9 February Taiwan CPI (Jan) United States Initial Jobless Claims Friday 10 February Australia RBA Monetary Policy Statement (Feb) China (Mainland) CPI and PPI (Jan) United Kingdom monthly GDP, incl. Manufacturing, Services and Construction Output (Dec) United Kingdom GDP (Q4, prelim) United Kingdom Goods Trade Balance (Dec) Canada Unemployment Rate (Jan) United States UoM Sentiment (Feb, prelim) Taiwan GDP (Q4, revised) India CPI Inflation (Jan) China (Mainland) M2, New Yuan Loans, Loan Growth (Jan) Earnings on watch this week: Monday: Activision Blizzard, IDEXX Laboratories Tuesday: Carlsberg, BNP Paribas, Siemens Energy, SoftBank Group, Nintendo, BP, Linde, Vertex Pharmaceuticals, KKR & Co, Fortinet, DuPont, Illumina, Enphase Energy Wednesday: A.P. Moller – Maersk, Vestas Wind Systems, TotalEnergies, Societe Generale, Deutsche Boerse, Adyen, Equinor, Yara International, Walt Disney, CVS Health, Uber Technologies Thursday: KBC Group, Brookfield, Thomson Reuters, L’Oreal, Vinci, Credit Agricole, Siemens, Toyota Motor, NTT, Honda Motor, AstraZeneca, Unilever, British American Tobacco, ArcelorMittal, DNB Bank, Volvo Car, Zurich Insurance Group, Credit Suisse, AbbVie, PepsiCo, Philip Morris, PayPal, Cloudflare Friday: Enbridge, Constellation Software Source: Saxo Spotlight: What’s on the radar for investors & traders this week? Powell’s speech, RBA meeting; Bank of Japan’s nominee submissions; UK GDP; and more earnings from Disney, Toyota, PepsiCo, Adani Green | Saxo Group (home.saxo)
According to InstaForex analyst, demand for British pound may not increase soon

Several Technical Indicators Are Signaling The Pound's Decline

Paolo Greco Paolo Greco 07.02.2023 08:44
M5 chart of GBP/USD GBP/USD managed to avoid sharp losses on Monday, but still fell several dozens of points. In general, it moved mostly sideways than downward, so we can say that the market "recovered" from the events of the previous week, which triggered the fall of the British currency by more than 300 pips. There was almost no macro data yesterday. The only thing worth mentioning was the UK construction PMI, which fell by 0.4 points to 48.4 in January. The pound lost about 40 points after this report, but globally it did not influence the alignment of forces between the pound and the dollar. This week, fundamentals and macroeconomics might be weak, so we will probably witness a flat or movement with just a short trend in the coming days. Speaking of trading signals, they were also quite dull. The first and only trading signal was formed in the middle of the US trading session, when the price rebounded from 1.2007. After that it managed to go up about 20 pips, but anyway the signal was formed too late to work it out. Therefore, there were no deals on Monday. After the pair's fall, lines of the Ichimoku indicator have not yet had time to "catch up" to the price, so they are much higher and almost do not participate in the process of forming a signal. COT report The recent COT report on the pound sterling unveiled that the bearish sentiment became weaker. During the week, non-commercial traders closed 6,700 buy contracts and 78,500 sell contracts. Thus, the net position of non-commercial traders increased by 800. During the last few months, the net position was increasing quite stably. The sentiment of big traders could become bullish in the near future. It is still very hard to explain why the pound sterling increased so much against the US dollar. In the mid-term, the British pound could drop as it needs correction. In general, the recent COT reports have been corresponding to the pound's movement. Since the net position is not bullish anymore, traders may buy the asset in the next few months. By the moment, non-commercial traders have opened 35,000 longs and 59,000 shorts. We do not expect long-lasting growth in the pound sterling. Although it has technical reasons for that, the fundamental and geopolitical factors do not presuppose a strong and fast increase. H1 chart of GBP/USD On the one-hour chart, GBP is still moving downward and it is difficult to say what can support the British currency this week. Of course, a purely technical pullback might start and we are likely to see it this week. But at the same time, several technical indicators are signaling the pound's decline. In particular, the Double Top and consolidation below the critical line on the 24-hour chart. For February 7, here are the following important levels: 1.1760, 1.1874, 1.1974-1.2007, 1.2106, 1.2185, 1.2288, 1.2342. Senkou Span B (1.2354) and Kijun-Sen (1.2202) lines can also be sources of signals. Pullbacks and breakouts through these lines may produce signals as well. A Stop Loss order should be set at the breakeven point after the price passes 20 pips in the right direction. Ichimoku indicator lines may move during the day, which should be taken into account when determining trading signals. In addition, the chart does illustrate support and resistance levels, which could be used to lock in profits. On Tuesday, several members of the Bank of England's Monetary Committee will deliver speeches in the UK and Federal Reserve Chairman Jerome Powell will be speaking in the US. We are not expecting any important information from these officials since we've already heard everything from the central banks last week. What we see on the trading charts: Price levels of support and resistance are thick red lines, near which the movement may end. They do not provide trading signals. The Kijun-sen and Senkou Span B lines are the lines of the Ichimoku indicator, moved to the one-hour chart from the 4-hour one. They are strong lines. Extreme levels are thin red lines from which the price bounced earlier. They provide trading signals. Yellow lines are trend lines, trend channels, and any other technical patterns. Indicator 1 on the COT charts reflects the net position size of each category of traders. Indicator 2 on the COT charts reflects the net position size for the non-commercial group   Relevance up to 06:00 2023-02-08 UTC+1 Company does not offer investment advice and the analysis performed does not guarantee results. The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade. Read more: https://www.instaforex.eu/forex_analysis/334329
Asia Morning Bites - 23.05.2023

The RBA Sees GDP Slowing To Around 1.5% This And Next Year

Saxo Bank Saxo Bank 07.02.2023 11:05
Summary:  The S&P 500 index toyed with pivotal support yesterday around 4,100 without breaking down through it as the market absorbs the fresh surge in treasury yields in the wake of Friday’s strong US jobs report. The US dollar remains well bid, although the JPY came in stronger overnight on hotter than expected wage growth data, while a far more hawkish than expected RBA boosted the Aussie. Fed Chair Powell will sit for an interview late today. Copper and gold meanwhile have seen no follow-through selling following Friday's breakdown. What is our trading focus? Equities (US500.I and USNAS100.I): Short-term strength is still intact S&P 500 futures continued to roll over from their weak Friday performance with the 4,100 level almost coming into play, but instead of extending downside momentum the index futures turned around from the lows. This morning S&P 500 futures are trading around the 4,130 level, and if they can close above yesterday’s close it will signal the short-term strength in equities, and if not the 4,100 level is in play again opening the range from the 4,000 level. The VIX Index is well behaved these days and the US 10-year yield is already retreating a bit from the recent surge suggesting a quiet day ahead. FX: USD firm, but Japan’s wage data boosts JPY, RBA hawkishness powers AUD overnight The US dollar remained firm on Fed member Bostic’s comments on a potentially higher peak in the Fed Funds rate supported the US dollar overnight. Market pricing has seen an upward revision to terminal rate to 5-5.25% and Treasury yields continued to surge higher. The Japanese yen, being the most yield sensitive, was weak yesterday on the double-whammy of higher US yields and chatter of a dovish new Governor at the Bank of Japan, but the JPY rose overnight on December wage data showing the strongest rise in wage growth in 25 years.  AUDUSD pushed well below 0.6900 but then bounced hard on a far more “hawkish” (less dovish) RBA than expected – see below. EURUSD is stil mired below 1.0750 this morning and GBPUSD avoided a move below 1.2000 as BOE’s Mann noted that the next step in the Bank Rate is still more likely to be another hike than a cut or hold. Crude oil (CLH3 & LCOJ3) supported by supply concerns and Saudi price hike Crude oil trades higher for a second day following last week's long-liquidation-driven slump. The turnaround was given further support after Turkey halted around 1m b/d of flows from Northern Iraq to the Ceyhan export terminal following a major earthquake in the region. In addition, Saudi Aramco instead of a cut increased its official selling price for its flagship Arab Light grade to Asia in March, suggesting confidence in the demand outlook. Focus turning to the US where the EIA will publish its monthly Short-term Energy Outlook and later the API its weekly inventory report. Weeks of bigger-than-expected inventory rises in the US has been one of the reasons, together with a slow pickup in demand from China, have been the main reasons why speculators were forced to exit recently established longs. The Brent prompt spread meanwhile has risen to 33 cents, signalling increased tightness. Brent support at $79 and resistance at $84.30. Gold (XAUUSD) sees no follow-through selling ahead of Powell comments Gold’s long overdue correction which accelerated on Friday below support-turned-resistance at $1900, did not see any follow-through selling on Monday despite continued dollar and yield strength. The yellow metal remains up 16% from the November low and even a further drop to $1829 would still be categorised as a weak correction within a strong uptrend. So far, it has managed to find support around $1860 as the market awaits comments from Fed chair Powell today at the Economic Club of Washington. Atlanta Fed’s Bostic - a non-voting member this year - meanwhile said the FOMC may have to raise rates by more than expected, thereby supporting the hawkish narrative the bank is trying to convey. Copper awaiting Chinese demand recovery Copper led the base metals sector lower as the impact of the strong US jobs report last week lingered. Spot copper currently trades at a discount in China as stockpiles have continued to rise while a price measuring demand for imports has dropped to a nine-month low. However, while the market awaits the expected pickup in China, supply disruptions in Peru have so far prevented the price from challenging key support in the $3.95 to $4 area. Aluminum briefly spiked after the reports suggesting the US was preparing to slap a 200% tariff on Russian aluminum imports. Russia is the world’s second largest producer of the metal and traditionally has accounted for 10% of US imports. However, imports fell to virtually zero in October last year. As a result, the tariff is expected to have limited impact on supply. Yields on US Treasuries (TLT:Xmas, IEF:xnas, SHY:xnas) jumped further to reprice the Fed’s rate path Treasuries extended the post-job report sell-off, seeing yields on the 2-year soaring 18bps to 4.47% and those on the 10-year rising 12bps to 3.64% before easing back slightly. Peak Fed rate expectations for this summer reached as high as 5.15% yesterday, a new high. Hawkish comments from the Fed’s Bostic, ECB officials, and Bank of England officials added additional pressure to the market which was already in motion to decline in price and rise in yields. Atlanta Fed President Bostic (voter 2024) said the strong job report would probably mean that the Fed have to raise rates more than he had projected. Earlier in the day, the weakness in Treasuries started from spill over selling pressure on U.K gilts on hawkish comments from Catherine Mann, external member of the BOE’s Monetary Policy Committee and Huw Phill, chief economist of the BOE, suggest more rate hikes. ECB Governing Council member Robert Holzmann added to the hawkish pushback from central banks, saying “the risk of over-tightening seems dwarfed by the risk of doing too little”. For today, all eyes are on Powell’s scheduled interview. Read next: Adani Group Company's Crisis Is Gaining Momentum, Finland Is The Happiest Country| FXMAG.COM What is going on? Japan’s wage growth strongest in 25 years The December wage growth data released overnight blew past estimates, posting a 4.8% gain versus expectations of a rise of 2.5%. This was the strongest rise in wages since 1997 and could allow the Bank of Japan to move more rapidly toward some semblance of normalization after soon outgoing Governor Kuroda long touted wage growth as the key to reviving sustained inflation in the Japanese economy. Nationwide strike in France today After a successful demonstration all over France on 19 January, trade unions are calling for new nationwide strike today against the government’s plan to push back the minimum retirement age to 64 and to accelerate a previous reform, called the Touraine reform, which provides for the extension of the required contribution period to 43 years by 2035. Before Covid, the government also tried to implement a pension reform which caused a massive wave of demonstrations across the countries – there was basically almost no public transport in main cities for weeks. This is still uncertain how long the strike will last. But the trade unions are planning to keep fighting as long as needed. Expect a blockage in several sectors (refineries, metro, rail transport, education). Now, we don’t think the strike will have a noticeable negative impact on GDP growth this quarter. We are confident France will avoid a recession this year – with a GDP growth forecast around 0.6-0.7%. This is not high, but it is better than in many other eurozone countries. RBA hikes by 25 bps to 3.35% as expected, guiding for further hikes in the “months ahead” The RBA forecasts slowing spending and economic growth, with unemployment set to rise even as it acknowledged inflation picking up more than expected. Australian 2-year yields jumped 13 basis points from the prior day’s close as the decision was read as hawkish and the peak policy rate this year was revised sharply higher to 3.90% by mid-summer. Still, the RBA sees price rises falling from 6.9% in underlying terms, to 4.75% this year, before ending near the top of its 2-3% target by mid-2025. It sees the jobless rate rising from 3.5% to 3.75% by year-end, and rising to 4.5% by mid-2025, reflecting the lag effect of tightening on corporations. All in all, with the services sector already in contraction, the RBA sees GDP slowing to around 1.5% this and next year as it sees household spending pulling back amid tightening financial conditions, with the post-pandemic spending rush easing. BP misses on Q4 earnings; increases CAPEX in FY23 The European oil and gas major missed on Q4 earnings but remains confident about the near-term future increasing dividends by 10% and planning a further share buyback of $2.75bn. BP is also saying it will grow investments into the energy transition. BP is targeting $16-18bn in capital expenditures for FY23 which is a significant increase from the $12bn in FY22. Nintendo outlook misses Switch estimates The Japanese game console developer announced total Switch unit outlook of 18mn missing estimates of 19mn, but the outlook still reflects a strong underlying growth in the game console. The FY net income outlook is JPY 480bn vs est. JPY 500bn. Hawkish remarks from Fed’s Bostic; Chair Powell due to speak today Atlanta Fed president Bostic (non-voter) spoke on Bloomberg, noting that jobs data from Friday raises the possibility of a higher peak rate, and his base case is still for two more hikes. Bostic also said the Fed could consider moving back to a 50bps hike if it needed to. Chair Powell will be speaking in Washington on Tuesday (1am SGT on Wednesday for Asia), followed by Barr, Williams, Cook, Kashkari, Waller and Harker over the course of the week. What are we watching next? Swedish Riksbank the next G10 in the spotlight Thursday after krona’s recent weakness The Riksbank will meet this Thursday and is expected to hike 50 basis points to bring its policy rate to 3.00%, but is then expected to guide for a more cautious approach of smaller hikes or even a pause on further tightening after the new Riksbank governor Erik Thedeen recently spoke on high inflation and rising interest rates testing the resilience of the Swedish financial system. Yesterday, EURSEK posted its highest level since the heart of the financial crisis back in 2009, making the Riksbank’s task of bringing down inflation a difficult one due to krona weakness, but 2-year EU-Sweden yield spreads have risen to their highest in years on the anticipation that the Riksbank is set to take a relatively more cautious path from here. The Riksbank may add active quantitative tightening (selling holdings rather than merely allowing maturing assets to roll off) to its policy arsenal on Thursday. It looks to be key test for the new Governor and the Swedish krona. Earnings to watch Today’s US earnings focus is Fortinet which is expected to continue its high growth in the cyber security industry with revenue growth expected at 34% y/y and EBITDA margin expected to expand. With higher interest rates there is also a lot of focus on the private equity industry and thus KKR’s outlook is a must watch for understanding the dynamics in risk capital. Tuesday: Carlsberg, BNP Paribas, Siemens Energy, SoftBank Group, Nintendo, BP, Linde, Vertex Pharmaceuticals, KKR & Co, Fortinet, DuPont, Illumina, Enphase Energy Wednesday: A.P. Moller – Maersk, Vestas Wind Systems, TotalEnergies, Societe Generale, Deutsche Boerse, Adyen, Equinor, Yara International, Walt Disney, CVS Health, Uber Technologies Thursday: KBC Group, Brookfield, Thomson Reuters, L’Oreal, Vinci, Credit Agricole, Siemens, Toyota Motor, NTT, Honda Motor, AstraZeneca, Unilever, British American Tobacco, ArcelorMittal, DNB Bank, Volvo Car, Zurich Insurance Group, Credit Suisse, AbbVie, PepsiCo, Philip Morris, PayPal, Cloudflare Friday: Enbridge, Constellation Software Economic calendar highlights for today (times GMT) 0810 – ECB's Klaas Knot to speak0900 – UK Bank of England’s Ramsden to speak1000 – ECB's Villeroy to speak1015 – UK Bank of England’s Pill to speak1330 – Canada Dec. International Merchandise Trade1330 – US Dec. Trade Balance1700 – ECB’s Schnabel to Speak1700 – US Fed Chair Powell interview1700 – EIA's Short-term Energy Outlook (STEO)1730 – Canada Bank of Canada Governor Macklem to speak2000 – US Dec. Consumer Credit2130 – API's Weekly Crude and Fuel Stock Report     Source: Financial Markets Today: Quick Take – February 7, 2023 | Saxo Group (home.saxo)
If The Bank Of England Hike Interest Rates Again Later This Month Will Exert Downward Pressure On The EUR/GBP Cross

The EUR/GBP Pair Is Pressing Through The Support Level

TeleTrade Comments TeleTrade Comments 08.02.2023 10:01
EUR/GBP is hovering around the 0.89 support. However, economists at ING doubt that the pair is to sustain more losses.  Don’t read too much into a weaker EUR/GBP “EUR/GBP is pressing through the 0.8900 support, but we doubt this is the start of a longer downtrend in the pair.” “The Bank of England’s pushback against dovish rate speculation is happening in tandem with the ECB and we don’t see a key catalyst for the two currencies to dramatically diverge in the current environment.”  
The GBP/USD Pair Is Expected The Consolidation To Continue

The Downward Trend Of The GBP/USD Pair Is Likely To Continue

Paolo Greco Paolo Greco 09.02.2023 08:25
Analysis of GBP/USD, 5-minute chart On Wednesday, the pound/dollar pair was mainly trading sideways. Traders priced in all the events of the previous week, including the key interest rate decisions and possible changes in them. The downward inertial movement also stopped. Now, the market needs a new impulse. This could become possible only on Friday when the UK will disclose its GDP data for the fourth quarter. However, the likelihood is really low. In this light, the pair may continue trading sideways and show a slight movement within the channel. Under such conditions, it will be difficult to trade. The volatility is low, which causes additional problems for traders. Yesterday, neither the UK nor the US published a report that could attract traders. Although officials of the Fed and the BoE provide speeches from time to time, they do not give any new information. Traders clearly understand the stance of both regulators. Yesterday, we saw three sell signals near the level of 1.2106. All the signals were accurate. Since the signals were very much alike, it was possible to open only one position. The third attempt allowed the pair to drop by more than 20 pips. Those who closed the position manually received 20-30 pips of profit. COT report The recent COT report on the pound sterling unveiled that the bearish sentiment became weaker. During the week, non-commercial traders closed 6.7 thousand BUY contracts and 7.5 thousand SELL contracts. Thus, the net position of non-commercial traders increased by 0.8 thousand. During the last few months, the net position was increasing quite stably. The sentiment of big traders could become bullish in the near future. It is still very hard to explain why the pound sterling increased so much against the US dollar. In the mid-term, the British pound could drop as it needs correction. In general, the recent COT reports have been corresponding to the pound's movement. Since the net position is not bullish anymore, traders may buy the asset in the next few months. By the moment, non-commercial traders have opened 35 thousand buy positions and 59 thousand sell positions. We do not expect long-lasting growth in the pound sterling. Although it has technical reasons for that, the fundamental and geopolitical factors do not presuppose a strong and fast increase. Analysis of GBP/USD, 1-hour chart On the hourly chart, the pound/dollar pair is trying to rise, but all in vain. The price is located below the critical line, which is acting as strong resistance. Thus, bulls may fail to break it. The downward trend is likely to continue. However, before that, the price may trade sideways for some days. On February 9, there are the following important levels: 1.1760, 1.1874, 1.1974-1.2007, 1.2106, 1.2185, 1.2288, 1.2342. The Senkou Span B (1.2218) and Kijun-sen (1.2111) lines can give signals. Rebounds and breakouts of these levels could also act as signals. It is recommended to place the stop loss level at the breakeven when the price covers 20 pips in the right direction. The lines of the Ichimoku indicator could move during the day, which should be taken into account when determining trading signals. There are also support and resistance levels that could be used to fix profits. On Thursday, the UK and the US will hardly provide traders with important information. The US will disclose only its unemployment claims report, which may attract attention only if real data seriously contradicts forecasts. What we see on the trading charts: Price levels of support and resistance are thick red lines, near which the movement may end. They do not provide trading signals. The Kijun-sen and Senkou Span B lines are the lines of the Ichimoku indicator, moved to the one-hour chart from the 4-hour one. They are strong lines. Extreme levels are thin red lines from which the price bounced earlier. They provide trading signals. Yellow lines are trend lines, trend channels, and any other technical patterns. Indicator 1 on the COT charts reflects the net position size of each category of traders. Indicator 2 on the COT charts reflects the net position size for the non-commercial group   Relevance up to 06:00 2023-02-10 UTC+1 Company does not offer investment advice and the analysis performed does not guarantee results. The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade. Read more: https://www.instaforex.eu/forex_analysis/334596
Bank of England survey highlights easing price pressures

Bank of England: Two data points that will make or break a March rate hike

ING Economics ING Economics 09.02.2023 08:46
In their hunt for signs of 'inflation persistence', policymakers will be paying particular attention to the service sector. They will also want to see further changes in wage and price-setting behaviour in the Bank's own survey of businesses. One final 25 basis point rate hike in March still looks likely 'Inflation persistence' - what does it actually mean? The Bank of England might be done with rate hikes – or at least that was one possible interpretation of the abrupt change in the Bank’s forward guidance last week. Officials said they would now closely monitor indicators of inflation “persistence” to judge whether further tightening is needed. Our own view is that the Bank has one more 25bp hike to come in March. The choice of the word 'persistence' is interesting. It implies policymakers aren’t going to be as beholden to month-to-month swings in headline, or perhaps even overall core, inflation. Instead, the Bank is trying to isolate trends in prices – or price-setting behaviour – that will still be relevant for inflation over a two- or three-year horizon. Our analysis shown in the chart below shows that, unsurprisingly, it is the service-sector components of the inflation basket which are typically less volatile and tend to experience more persistent trends. It's these price categories that policymakers are going to be most focused on. And if we strip out the main exception to that rule, ‘travel services’ (which fluctuate because of airfares), then we end up with a measure of ‘core services’ – something we know the Bank of England closely watches. Service-sector inflation is less volatile and more persistent than goods categories Analysis based on seasonally-adjusted month-on-month changes in various sub-components of the CPI index since 2005. Volatility is measured using the coefficient of variation (standard deviation divided by the mean). Persistence is measured by calculating a simple autoregression on lagged data-points, and taking the sum of the lagged coefficients. This follows similar analysis by the ECB in 2022 Source: Macrobond, ING calculations   Indeed, the fact that core services inflation outpaced the Bank of England’s November forecasts – and indeed is showing little sign of peaking – was probably a major factor in the decision to hike rates by another 50bp this month, rather than following the Federal Reserve into a more modest 25bp move. The Bank's most recent forecasts see core services inflation climbing from 6.5% to 7%, where it’s expected to linger for some time. Core services inflation has continued to edge higher Source: Bank of England Bank's own Decision Maker Panel will be a key dataset to watch We’ll have a couple more inflation readings before the Bank’s March meeting, and any further upside surprises in core services would almost certainly unlock another 25bp rate hike in March (even if the choice of language at last week’s meeting suggests the bar is high for another 50bp move). But ultimately, this is a backward-looking measure – or at least, it doesn’t tell us a great deal about the likely trajectory over coming months. For that, the Bank will be closely monitoring its Decision Maker Panel, a survey of businesses - something we know policymakers appear to place a lot of weight on, much more so than investors perhaps realise. We’ll get the next instalment on 2 March. This is arguably a more forward-looking gauge of pricing behaviour, and at the margin, the most recent data contains hints that the inflation story may be turning. Expected rates of wage growth and three-year-ahead inflation expectations both came down in January, while the proportion of firms experiencing “much harder” recruitment conditions has also tumbled over recent months. The proportion of firms saying it's 'much harder' to recruit has been falling Source: Macrobond (Bank of England Decision Maker Panel)   We think these are trends that are likely to continue. Admittedly, the structural issues in the jobs market – worker illness and lower inward EU migration through Covid – are unlikely to reverse imminently, and that suggests employee availability will remain an issue, even as hiring demand cools. Wage growth, though probably at a peak, is unlikely to cool rapidly. But wages aren’t the only driver of core inflation, and in fact, energy prices are a more commonly cited factor than labour costs as a reason for raising prices in the service sector, according to successive ONS business insight surveys. That suggests the recent collapse in wholesale gas prices should alleviate a key source of pressure on firms and their pricing decisions. The caveat is that some corporates will have locked into electricity/gas hedges at elevated levels, though an ONS survey from the autumn suggested firms with expiring energy fixes before April 2023 were in the minority. The lesson here is that we shouldn’t ignore the impact of falling gas prices on the outlook for medium-term service-sector inflation, even if ordinarily we’d strip out the impact of electricity/gas along with petrol prices when looking at core CPI. Together with the widely-anticipated fall in goods-price inflation, overall core inflation should ease gradually as the year wears on. Energy prices are a common factor in service-sector decisions to raise prices Source: ONS Business Insights Survey wave 74 Data points to one final 25bp rate hike in March What does this mean for the near-term policy outlook? The Bank will want to see more evidence that the trends in pricing behaviour are persisting, and in reality, it’s unlikely to have enough concrete information by the time of the March meeting. Policymakers are clear that the burden of proof is on inflation showing signs of easing, not the other way around.  That suggests we should still expect a 25bp rate hike next month, though we think the Bank will become more relaxed about inflation by the time of the May meeting. However assuming the downtrend in core services inflation is a gradual one, we suspect a rate cut will be less forthcoming in the UK than in the US, where we think policy easing will arrive by year-end. We don’t expect the first BoE rate cut for at least a year. Read this article on THINK Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more
Worst behind us for UK retail despite fall in sales

UK economy avoids technical recession - for now

ING Economics ING Economics 10.02.2023 10:22
A poor December GDP figure makes a first-quarter contraction in output look fairly inevitable. But these figures are undoubtedly noisy, and that means the Bank of England will be much more focused on wage and price data due next week Source: Shutterstock Recession dodged - just about The UK economy flatlined in the fourth quarter, though in truth it’s a quarter where the underlying picture was particularly noisy. Indeed, December’s 0.5% contraction in monthly GDP, which was worse than expected, can be largely blamed on either strikes (visible most clearly in transport and health, both of which shrank by close to 3% on the month) or, more bizarrely, a lack of Premier League football games in December due to the World Cup. That was enough to drive the recreation/entertainment category down almost 8%, though admittedly this is a volatile series. In short, following a couple of months of distortion surrounding the Queen’s funeral last September, it’s hard to discern the true underlying trend in the economy from this data. The reality is probably a very gradual deterioration in activity levels. The fact that the fourth quarter’s weakness was heavily concentrated in December means the starting point for the first quarter is pretty low, and means we’ll almost certainly get a contraction in the first quarter – even if activity effectively stagnates. Following this data, we’re pencilling in a 0.3-0.4% decline in GDP over that period, and this will probably be followed by a very modest hit in the second quarter too. Read next: Twitter Co-Founder Jack Dorsey Comments New Twitter's Owner| FXMAG.COM Recession is still narrowly the base case for the first half of this year That suggests recession, or at least a technical one, remains the base case, especially if we include the contraction in the third quarter of last year. But this looks like it is going to be very mild by historical standards, helped of course by the collapse in wholesale gas prices. We think the UK government will most likely scrap the planned increase in household energy prices in April, and current wholesale gas/electricity costs suggest the average annual bill will have fallen by 15-20% by the summer from current levels. That should help the economy avoid a deeper output hit through the spring/summer. What does all of this mean for the Bank of England? Honestly, probably not a great deal. The noisy picture presented by the GDP figures just means that policymakers will put more emphasis on the wage and price data we’ll get next week. Read more on what we think officials are looking for here. Read this article on THINK Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more
Kenny Fisher talks British pound against US dollar. UK economy declined 0.3% in March, Bank of England chose the 25bp variant

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

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

Key events in developed markets next week - 12.02.2023

ING Economics ING Economics 12.02.2023 11:01
Next week's UK data will be important for the March rate decision. We expect headline inflation to edge lower due to the 4% drop in petrol/diesel prices, and core inflation should ease too on the back of lower demand. US January activity data is going to be strong throughout given the warmer weather and we expect core inflation to rise to 0.4% month-on-month In this article US: Not yet the start of a new upward trend UK: data to help determine whether Bank of England hikes rates in March   Shutterstock US: Not yet the start of a new upward trend Next week will be an interesting one with US inflation, retail sales and industrial production all released. The first thing to say is that January activity data is going to be strong throughout. The contrast between the weather in mid-late December, where it was incredibly cold, versus a very mild January couldn’t be more stark. This means there will be delayed consumption plus better weather means more people out and about, which in all likelihood will lift January spending. We already know auto sales were very strong and that will lift retail sales mightily on its own. The shock January employment jump also implies robust demand. Manufacturing, mining and construction may also look better given warmer temperatures make it easier to work and will lift output. I wouldn't class this as the start of a new upward trend though - more noise in what is generally a softening trend given business confidence is on a par with where we were during the Global Financial Crisis all those years ago. Note too, February has experienced a return to colder temperatures which could lead the correction back to more normal patterns. Nonetheless, with the Fed minded to keep hiking to ensure inflation comes down, it makes the likelihood of a May rate hike in addition to a March hike look more plausible. Inflation could also boost the case for a May rate hike. Rising energy costs through January will lift the headline rate, but used car prices will boost the core, too. The jump in auto sales saw dealers raise their profit margins with car auction prices jumping 2.5%, according to Mannheim data. Given the high weighting of used vehicles within the basket of goods and services used to calculate CPI, this could add 0.15pp to the MoM rate on its own. Shelter, which accounts for a third of the overall inflation basket, is also likely to remain firm given the time house prices and then new rental agreements take to show up in the data. A 0.4% MoM core CPI print (or possibly even 0.5%) would give the Fed near-term ammunition to argue for a May rate hike. Nonetheless, we think that these two components (shelter and cars) will contribute to inflation slowing sharply from mid-second quarter, with weakening corporate pricing power also contributing to getting inflation down to 2% by year-end. UK: data to help determine whether Bank of England hikes rates in March The Bank of England has entertained the possibility that February’s 50bp rate hike might have been the last. In practice, we think we’ll get one more 25bp rate hike in March, though next week’s data will be important. The key words here are “inflation persistence”, which is what BOE officials have said they’re monitoring (read more here on what we think this means). Here’s what we expect over the next week: Jobs/wages: Wage growth has shown little-to-no sign of easing, at least in the official numbers. Quarter-on-quarter annualised changes in weekly regular pay have been eclipsing 7% recently, so we’ll be looking for any signs that this is slowing. The latest Bank of England Decision Maker survey, which we know officials pay close attention to, has hinted wage growth might have peaked. Inflation: Headline CPI should edge lower on a near-4% fall in petrol/diesel prices in January. Core inflation should ease too, though less dramatically. We’re seeing ‘core goods’ inflation come off quite rapidly as demand fades and supply chains improve – effectively a mirror image of what helped drive inflation higher during the pandemic. But the BoE will be watching ‘core services’ inflation most closely, given that it’s less volatile and tends to experience more persistent trends than goods categories. We expect this measure to edge higher, though the recent fall in gas prices suggests the peak could be near. Energy prices have been a commonly cited reason among corporates for raising prices over recent months. Retail sales: Real-terms spending has fallen in 12 out of the last 14 months, and we don’t think January was an exception. If so, it would point to a modest fall in GDP through the first quarter. Key events in developed markets next week Refinitiv, ING TagsUnited States UK jobs Read the article on ING Economics   Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more
Lithium Imports To China And USA Are Surging This Year

Lithium Imports To China And USA Are Surging This Year

Saxo Bank Saxo Bank 13.02.2023 08:28
Summary:  WATCH video or read text. US inflation volatility risk picks up amid uncertain of the new methodology. Fed speakers and retail sales also key. Japanese yen may have trouble finding direction. UK data is key for the next BOE meeting. Oil markets look wobbly with Russia’s cut, monthly oil reports from OPEC and EIA due. Eyes on lithium companies with Ford and CATL to build a mega battery plant, while Albemarle reports results. 60 S&P500 companies report quarterly earnings this week, across most sectors, while some of the ASX200’s biggest companies declare full year results. US inflation volatility risks with uncertain impact of new methodology, Fed speakers and retail sales also key While investors firmly believe inflation is on a downward trajectory, month-on-month variations still remain on watch. More importantly, this month brings a change in methodology, which adds further uncertainty to the release. If we take the last few month’s revisions for core CPI into account based on the new methodology, there is reason to believe that the new weights could mean an upward push to inflation. Average core CPI for the last three months of 2022 has gone up from 3.1% to 4.3% with the new seasonal factors released by the BLS. Moreover, milder weather in January compared to December, as well as an upward swing in jobs, could mean demand pressures picked up further traction. Bloomberg consensus expects headline CPI to soften to 6.2% YoY from 6.5% YoY in December, while the MoM picks up to 0.5% from a revised +0.1% previously. Retail sales is also expected to pick up momentum again in January amid sustained consumer strength. This will be an important input for market watchers that continue to weigh up the recession vs. soft landing scenarios. Several Fed officials are due to make appearances during the week and will be key to watch after central bank rhetoric took a hawkish shift again last week. New York Fed President John Williams, St. Louis Fed head James Bullard, Philadelphia Fed President Patrick Harker and Cleveland Fed head Loretta Mester will be on the wires this week. Japanese yen may have trouble finding direction this week Japan PM Kishida in a shocking announcement on Friday nominated a dark horse candidate Kazuo Ueda as the next governor for the Bank of Japan after Kuroda steps down in April. BOJ executive director (in charge of monetary policy) Shinichi Uchida and former Financial Services Agency commissioner Ryozo Himino were also nominated as deputy governors. Ueda is an academic and a former member of the BOJ policy board, and digging his prior speeches has revealed that he has more of a neutral stance, compared to the dovish Amamiya who was reportedly offered the role but rejected it. In July 2022, Ueda wrote an article for the Nikkei entitled "Japan, Avoid Hasty Tightening", but in August 2022, he also questioned if the Fed was too late to raise rates. His appointment suggests we could see some tweaks in BOJ’s ultra-easy monetary policy, but expecting an outright removal of yield curve control policy appears aggressive now. Other reasons to expect potential volatility in the Japanese yen include the surge in global yields again and US CPI due in the week, along with a sharp increase in oil prices after Russia’s decision to announce a cut in production by a half million barrels per day. Read next: Campbell Bought A $100,000 Plane To Live In It| FXMAG.COM UK data key for next Bank of England meeting The Bank of England hinted at the February meeting that the 50bps rate hike may have been their last. This week’s inflation, jobs and retail sales data will however be key to determine if another hike may be seen in March. Labor data is out on Tuesday, and expected to continue to show a tight labor market. January CPI comes out on Wednesday, and it is expected to remain in double digits. Bloomberg consensus expects headline CPI to only cool marginally to 10.3% YoY from 10.5% YoY in December. Finally, retail sales data on Friday is expected to show that consumer spending remains under pressure. But with the GDP data out last week showing a likely delay in the start of recession, the BOE may have room to look past the weakening economic momentum for now and keep its focus on price pressures. However, market pricing already suggests a near certain case for another 25bps rate hike in March, so scope for GBP appreciation remains minimal. Oil market wobbly with Russia’s cut, monthly oil reports from OPEC and EIA due In its latest move to use energy as a weapon in the war, Russia announced a unilateral cut in its March crude oil output by 500,000 barrels a day on Friday, apparently without consulting with its OPEC+ partners first. Since the introduction of EU and G7 sanctions on crude oil from December and fuel products from early February, Russia has increasingly been forced to cut its selling price, given its client base continues to dwindle. And now Russia plans to limit its discount on Urals oil to Brent at $34 a barrel in April, $31 in May, $28 in June and $25 in July. That said, some oil supply returned to the market with Tanker loadings of Azeri crude docking at Turkey's Ceyhan terminal. All in all, if oil prices continue to move higher, OPEC may need to fill the gap by ramping up production, especially in light of the expected pickup in Chinese demand this year. So far, OPEC+ are signalling that they won’t boost production to offset Russia’s supply shortages. Monthly reports from EIA and OPEC are due in the week ahead, and will likely keep the energy markets bumpy. As mentioned in the Quarterly Outlook, we expect Brent Oil to remain around the $80 levels this quarter and move to the $90s in the second quarter, and beyond.   Lithium companies on watch with the battery market heating up. Ford and CATL building a battery plant Lithium imports to China and USA are surging this year, ahead of car makers ramping up production with some of the IEA countries planning to end the sale of fuel engines in seven years. The world's biggest lithium company Albemarle reports earnings this week - and will be a lithium proxy to watch - for what we may expect from lithium companies this year. In other news, Ford and CATL are reportedly planning to build a $3.5 billion mega battery plant in Michigan, across 1,900 acres - and employ 2,500 workers. Meaning, they will need to buy industrial metals to produce batteries. This narrative illustrates demand is likely to continue to grow, while supply remains limited. This supports Saxo’s bullish view on battery metals; copper, aluminium and lithium. Click the link, for a look at stocks to watch this week across these sectors. Alternatively refer to Saxo's Equity baskets under Research, Stocks.  Big stakes this week for earnings with 60 S&P500 companies reporting and ASX reporting season ramping up So far, this quarterly US earnings season, 346 S&P500 (US500.I) companies reported results and average earnings growth for the quarter is down 2.3%. Although quarterly earnings growth is in the red again, it’s slightly better than expected. That’s one of the major themes again this US earnings season - margin/profit squeezes are continuing, while the most earnings growth is continuing to come from the Energy sector  - which is benefiting from rising free cash flow growth. Meanwhile, for the first time since covid, we’ve seen the biggest earnings declines in Materials – with mining companies reporting falling earnings amid production slipping amid weather issues. That said, Australian commodity companies are reporting that production has started to turn around in the industry, with mining employment improving. For companies to watch this week who are reporting quarterly or full year earnings  - see our calendar below. Highlights include results from Glencore (GLEN:xlon) that will provide insights about global commodity markets. Sales trends and management’s comments on the business outlook from Coco-Cola (KO:xnys), Kraft Heinz (KNC:xnas) will inform investors about the state of consumers and margin trends in consumer staples. Australian equites (ASXSP200.I) could wobble, if employment data is hotter than expected and commodities pair back with a higher US dollar This week investors and traders will be focused firstly – on Australian employment data out for January, due on Thursday, expected to show employment improved, with 20,000 jobs gained last month, which will market a recovery from the prior drop - while the unemployment rate is expected to remain unchanged at 3.5%. Also importantly, consider the Aussie share market may be potentially vulnerable of pairing back - as the Australian 10 year bond yield has moved up aggressively to 3.81%- its highest level since January. This is because the market is still playing defensive - following hawkish RBA comments and the RBA increasing its inflationary forecast. Plus the market expects the RBA to make ~78.6bps of hikes before pausing in August. Meaning, unprofitable tech companies and businesses that don’t pay a dividend yield are vulnerable here. From a technical perspective, it also looks like the ASX200 is running out of steam. Click here for our technical analyst's views    Macro data on watch this week   Monday 13 February Singapore Q4 (F) GDP India Jan CPI Fed’s Bowman speaks Tuesday 14 February Singapore Budget Australia Feb Westpac Consumer Confidence Japan Q4 (P) GDP Australia Jan NAB Business Conditions/Confidence NZ Q1 2yr Inflation Expectations UK Dec Labor Market US Jan CPI Fed’s Barkin, Harker, Logan, Williams speak US Jan NFIB Small Business Optimism Index Wednesday 15 February Australia RBA’s Lowe Senate Hearing China 1yr Medium-Term Lending Facility Rate UK Jan CPI India Jan Trade US Feb Empire State Manufacturing US Jan Retail SalesUS Jan Industrial Production Thursday 16 February Japan Jan Trade Australia Jan Employment US Jan Building Permits/Housing Starts US Weekly Initial Claims US Jan PPI Fed’s Mester, Bullard, Cook speak ECB’s Lane, Panetta and Nagel speak UK BOE’s Huw Pill speaks Friday 17 February Australia RBA’s Lowe Testimony Singapore Jan Non-oil Domestic Exports UK Jan Retail Sales ECB’s Villeroy speaks Fed Bowman, Barkin speak US Jan Leading IndicatorCompany earnings to watch Company earnings to watch Tuesday 14 February Consumer: Coca-Cola Blood therapy and vaccines; CSL Travel: AirBNB, Marriott International Wednesday 15 February  Oil: Devon Energy Iron ore: Fortescue Therapeutics: Biogen Banking: Commonwealth Bank of Australia Consumer: Kraft-Heinz, Shopify Travel: Corporate Travel Thursday 16 February Lithium:Albemarle Aluminium: South32 Copper: South Tech: Cisco Fertilizers: CF Industries Coal: Whitehaven Coal Gold: Newcrest Mining, Evolution Mining Healthcare: Sonic Healthcare Stock exchanges: ASX Nuclear: NRG Energy Electricity: Southern Co, Origin Energy Friday  17 February Luxury spending: Hermes International Auto and EV maker: Mercedes-Benz Agriculture: Deere   Source: Saxo Spotlight: What’s on investors & traders radars this week? New CPI method, Oil to wobble, Lithium on watch, FX & earnings | Saxo Group (home.saxo)
Market Insights with Nour Hammoury: S&P 500 and Bitcoin Projections for H2 2023

UK Economy Has Suggested That Inflation Will Drop

Kamila Szypuła Kamila Szypuła 12.02.2023 11:46
Next week will be important for investors. US releases inflation data. Also the British economy will share inflation data. What's more, this will be an important week for futna investors as not only inflation data will be released, but also PPI, unemployment rate and retail sales. CPI forecast Each month's inflation data shows how much these prices have increased since the same day last year. The CPI inflation report, one of the most important sets of financial data coming from the UK, will be published on February 15th. Economists suggest that headline inflation recorded a small drop (-0.3%), reaching 10.2% (y/o/y) in January. Inflation in the UK is still close to a 40-year high and five times the BoE's target of 2%. Source: investing.com Bank of England expectations There are several reasons why we expect a rapid drop in inflation this year. First, wholesale energy prices have fallen significantly. In Europe, they have halved in the last three months. You may not have felt the impact of this on your bills yet. But this change will help bring inflation down. Secondly, BoE expect a sharp drop in the prices of imported goods. That's because some of the production difficulties that companies have faced are starting to subside. Third, as people have less money to spend, we expect less demand for goods and services in the UK. All of this should mean that the prices of many things will not rise as fast as they did. Thus, the Bank of England expects that inflation will start to fall from the middle of this year and will amount to around 4% by the end of the year. BoE expect it to continue to decline towards our 2% target after this period. Interest rates The pace of price growth has slowed slightly, but inflation remains close to its 40-year high. In response, the Bank of England raised interest rates to 4%, the highest level in 14 years. Higher interest rates make it more expensive for people to borrow money to buy things. Higher interest rates also encourage people who can save to save instead of spend. Together, these factors mean there will be less spending in the economy overall. When people generally spend less on goods and services, the prices of those things tend to rise more slowly. Slower price growth means a lower rate of inflation. The increase in interest rates means that many people will face higher costs of credit. And some companies will face higher interest rates on loans. We know this will be difficult for many people. Other data Ahead The Office for National Statistics (ONS) is expected to publish its ILO unemployment rate report on Tuesday, February 14th. Analysts suggest that the UK’s unemployment rate remained steady at 3.7% in the three months to December. On Friday February 17th, market analysts will focus on the ONS report regarding January retail sales in the UK. Economists forecast a 1.8% growth on a yearly basis, but zero growth on a month-to-month basis. A better than expected figure could boost the UK pound, whilst a lower than anticipated figure could weaken the currency. UK GDP According to the GDP report published by the ONS on February 10, the UK economy recorded zero growth in the final quarter of 2022, in line with analysts' expectations. Source: investing.com
Deciphering the Economic Puzzle: Unraveling Britain's Mixed Signals

The Bank Of England Has To Strike A Balance Between Suppressing The Highest Prices In 10 Years And The Recession Of Its Own Economy

Marek Petkovich Marek Petkovich 13.02.2023 11:43
There will be no recession! Or will there be a recession, but later? Britain's economic growth of 0.1% in the fourth quarter, thanks to the activity of fans during the World Cup, allowed the country to avoid a technical recession. Nevertheless, most Wall Street Journal experts believe that GDP will contract in the first six months of 2023, followed by a sluggish growth. The Bank of England predicts that the economy will return to pre-pandemic levels no earlier than 2026, which is five years later than in the United States. The IMF calls Britain the weakest link in the G7. How can GBPUSD not fall in such conditions? You can try to solve problems, or you can postpone the solution in the hope that over time the difficulties will disappear by themselves. Even though the Bank of England raised the repo rate 10 times since the beginning of the monetary restriction cycle and brought it to the highest level since 2008, investors constantly felt that it is watching its back. A weak economy, which may deteriorate further due to aggressive tightening of monetary policy. As a result, the cost of borrowing in Britain rose only to 4%, and in the U.S. to 4.75%. Inflation in the United States slowed down from a peak of 9.1% to 6.5%, and in the UK, from 11.1% to 10.5%. The Fed is doing its job more efficiently than the BoE, and the latter is facing the same difficulties as before. Dynamics of British inflation The central bank has to strike a balance between suppressing the highest prices in 10 years and the recession of its own economy. Its indecision doesn't change the situation. Maybe they should follow the path of the Riksbank, which turned a blind eye to the recession in Sweden and accelerated the process of tightening monetary policy? Read next: Amazon Is Slowly Dismantling Tony Hsieh’s Version Of Zappos, Louisa Vuitton Doubled Sales| FXMAG.COM Moreover, along with high inflation in the UK, the average wage continues to grow. Bloomberg experts predicted that the figure accelerated to 6.5% in the fourth quarter. If we exclude 2021 with its recovery from the pandemic, it will be the highest value in history. Dynamics of average wages in Britain And the situation is unlikely to change dramatically in the near future: according to a survey by the Chartered Institute of Personnel Development (CIPD), 55% of recruiters planned to raise salaries in 2023 as they struggle to find and retain staff in a tough job market. The expected average salary has risen to 5%, the highest level since the beginning of record keeping. Against such a backdrop, the futures market's expectation of a repo rate ceiling of 4.25%, that is only 25 bps higher than its current value, looks more than modest. With CME derivatives giving a 90% chance of a federal funds rate hike above 5%, sterling's fall against the U.S. dollar looks logical. Technically, on the eve of important inflation releases in the U.S. and the UK, the GBPUSD pair took refuge in a consolidation in the 1.195–1.22 range. It makes sense to hold and increase short positions formed on growth to 1.2135 in the event of a breakthrough of the 1.195-1.1965 convergence zone.   Relevance up to 07:00 2023-02-18 UTC+1 This information is provided to retail and professional clients as part of marketing communication. It does not contain and should not be construed as containing investment advice or investment recommendation or an offer or solicitation to engage in any transaction or strategy in financial instruments. Past performance is not a guarantee or prediction of future performance. Instant Trading EU Ltd. makes no representation and assumes no liability as to the accuracy or completeness of the information provided, or any loss arising from any investment based on analysis, forecast or other information provided by an employee of the Company or otherwise. Full disclaimer is available here. Read more: https://www.instaforex.eu/forex_analysis/334873
US Inflation Slows as Spending Stalls: Glimmers of Hope for Economic Outlook

Tesla Believes That Revenue Will Grow 28% To A New Record, The Bank Of England Hinted That The 50bps Rate Hike May Have Been Their Last

Saxo Bank Saxo Bank 14.02.2023 08:48
Summary:  Today is the U.S. CPI day which may set the near-term directions of the stock, bond, and forex market. Investors are cautious about the additional uncertainties from the impact of the new CPI compilation methodology and seasonality. U.S. equities rallied and bond yields slipped modestly. Oil prices were lower as US announced plans to sell more crude from its strategic reserves. Japanese Yen extends weakness awaiting the official announcement of the nomination of Ueda as the new BOJ governor. Hong Kong’s Hang Seng was dragged by rights offering from Link REIT.   What’s happening in markets? US equities (US500.I and USNAS100.I) rallied as inflation expectations dropped After S&P500 made its biggest weekly drop in 2023 last week, US stocks started the week in positive territory, with the S&P500 gaining 1.1% and Nasdaq 100 advancing 1.6%, supported by the New York Fed Survey of Consumer Expectations that showed expectations for household income expectations falling from 4.6% to 3.3%. That’s the largest one-month drop in the nearly 10-year history of the series. We’ve seen investors cautious ahead of US inflation data being released on Tuesday and that may be hotter than expected, with a new CPI weighting being used. All but energy within the 11 S&P 500 sectors gained on Monday, led by information technology, consumer discretionary, and consumer staple. Microsoft was one of the best performers, up 3% on Monday as analysts were upbeat on the tech giant’s growth potential. Twilio gained 2.1% following the announcement to cut 17% of its workforce. Tesla flashes red signals after a record rally; meaning some of its gains could be unwound Tesla was one of the weakest in mega caps on Monday, while suffering its biggest two-day fall since January, losing 6.1%. Tesla shares have been bouncing off their lows and were up as much as 100% from their January 2023 lows, but now investors are trimming gains and Tesla is trading 93% above its low. The market believes the Fed will pause rate hikes in Q2 which supported buying in Tesla, while the company pledged to roll-ahead with scaling up production targets. Consensus believes in 2023 Tesla’s revenue will grow 28% to a new record, with EBITDA expected to swell 20% also to a new record, with 12.5% EPS growth. But, from a technical perspective, Tesla’s relative strength index (RSI) is showing the stock is now in the overbought territory - that could signal a potential reversal. The last time Tesla was this overbought was in November 2021 amid tech enthusiasm. The long end of US Treasuries (TLT:Xmas, IEF:xnas, SHY:xnas) was well bid In a quiet and choppy session, yields on the 2-year finished unchanged while yields on the 10-year were 3bps richer. The terminal Fed Fund rate, as being priced in by the market, edged up to 5.23%. Fed Governor Michelle Bowman said the Fed is “still far from achieving price stability” and she expects that “it will be necessary to further tighten monetary policy”.  Traders are cautiously waiting for the much-anticipated CPI report today. Hong Kong’s Hang Seng (HIG3) pared losses and China’s CSI300 (03188:xhkg) gained on consumer stock strength Hang Seng Index slipped 0.1%, as shares of Hong Kong local property developers tumbled across the board dragged by a 12.8% collapse in Link REIT (00823:xhkg). The largest REIT in Hong Kong that operates shopping centers and real estate retail spaces announced a rights offering for HKD19.3 billion at a 30% discount to its previous close. New World Development (00017:xhkg) plunged 6.7%; Henderson Land Development (00012:xhkg) declined 4.8%; Wharf Real Estate (01997:xhkg) lost 2.9%. The benchmark index clawed back most losses as Chinese consumer names rallied, with China Resources Beer (00291:xhkg) up 4.9%, Haidilao (06862:xhkg) up 4.7%, Budweiser Brewing ( 01876:xhkg) up 3%, and Li Ning (02331:xhkg) up 2.4%, China Mengniu (02319:xhkg) up 2.2%. Chinese hotpot restaurant chain, Xiabuxiabu (00520:xhkg) surged 8.6%. In A-shares, CSI300 advanced by 0.9% led by Chinese white liquor, beverage, beauty care, marine equipment, and construction materials. Kweichow Moutai (600519:xssc) gained 2.6%. FX: Yen weakness extends despite yields cooling off, commodity currencies gain Dollar gains cooled off slightly on Monday as traders positioned for US CPI release due today, and risk assets rallied with gains in US yields cooling off after the recent run higher. Michelle Bowman added to the Fed chorus insisting on more rate increases to rein in inflation, saying "we are still far from achieving price stability. But the Japanese yen was still pressured lower, and USDJPY took a look above 132.50 as expectations of BOJ governor candidate Ueda altering the policy stance retreated. Upbeat risk sentiment lifted NZDUSD to 0.6360 from sub-0.63 levels earlier in the day, while AUDUSD drifted towards the key 0.70 level as well but calls for RBA governor Lowe’s resignation may keep the gains in check. GBPUSD back higher to 1.2150 and labor market data is on tap today. EURUSD back above 1.0720. Aussie dollar moves back toward 0.70 with commodities moving up The Aussie moved up 0.7% after the US dollar fell back, while commodity prices rose - also supporting the Aussie dollar. Notably, metal prices have been declining for week but moved up overnight, with Copper up 1%. The next catalyst for the AUDUSD pair will be if business confidence out today, is strong expected - it could trigger more upside. Plus the market would want to see stronger than expected Australian employment data for January- on Thursday, to also support the risk-on rally. But there is a risk, AU jobs data won’t be as strong as expected by the market, given the lag interest rates effects in Australia. 20,000 jobs are forecast to have been added, with steady unemployment rate. The Australian bond market suggest less caution is in the air, with the Australian 10-year bond yield down to 3.74% (highest levels since January). But the major catalyst will be the strength of the USD - that could change direction for the AUDUSD pair. Crude oil (CLH3 & LCOJ3) prices choppy as supply fears ease Crude oil prices started the day trying to move higher as traders assessed the impact of Russia’s supply cuts. However, the importance of Russia’s energy supplies has gone down over the last year as Europe has diversified its energy sources and Russia’s oil and gas has continued to flow around the world at discounts of well over 30%. This helped ease fears of a supply shock, also helped by US planning to sell 26mn barrels of oil from its strategic reserves. WTI prices dropped from over $80/barrel to ~$79 while Brent was below $87. The UAE said markets remain balanced and OPEC+ producers don't need to intervene. Elsewhere, the US shale industry remains reluctant to ramp up drilling activity despite strong cash flows.  Read next: GBP/USD Started The New Week In A Calm Way, EUR/USD Is Waiting For US CPI Report| FXMAG.COM What to consider? Japan’s Q4 GDP comes in below expectations Japan's economy grew an annualised 0.6% in the final three months of 2022, bouncing back from the previous quarter's revised contraction of -1.0% but still coming in below expectations of a 2% gain. The return of inbound tourists offset a slowdown in capital expenditure and exports. With economic momentum still weak, new BoJ governor Ueda will continue to face a challenging task in shifting away from the ultra-loose monetary policy. US CPI on the radar - volatility risks higher with uncertain impact of new methodology While investors firmly believe that inflation is on a downward trajectory, month-on-month variations still remain on watch. More importantly, this month brings a change in methodology, which adds further uncertainty to the release. If we take the last few month’s revisions for core CPI into account based on the new methodology, there is reason to believe that the new weights could mean an upward push to inflation. Average core CPI for the last three months of 2022 has gone up from 3.1% to 4.3% with the new seasonal factors released by the BLS. Fed whisperer Nick Timiraos, a WSJ reporter, is warning of a potential upside surprise in January US CPI data due to seasonality. Moreover, milder weather in January compared to December, as well as an upward swing in jobs, could mean demand pressures picked up further traction. Bloomberg consensus expects headline CPI to soften to 6.2% YoY from 6.5% YoY in December, while the MoM picks up to 0.5% from a revised +0.1% previously. January CPI data will be out today at 2130 SGT. UK labor market data due today The Bank of England hinted at the February meeting that the 50bps rate hike may have been their last. This week’s inflation, jobs and retail sales data will however be key to determine if another hike may be seen in March. Labor data is out on Tuesday, and expected to continue to show a tight labor market. The unemployment rate over the last quarter is likely to remain unchanged at 3.7% as per Bloomberg consensus while the employment gains are expected to pick up to 43k from 27k previously. Wage pressures are also expected to sustain with average weekly earnings up 6.2% YoY in the December quarter from 6.4% before. Singapore’s budget today may look at post-Covid fiscal strategy Singapore’s annual budget will be presented today and measures may be taken to phase out Covid-era stimulus as the economy looks to re-balance spending towards longer-term goals. Still, inflation remains high and the low-income groups will likely continue to get support. Still, long-term focus on green transition and digitization is likely to be a key theme. This could bring companies like Sembcorp and Keppel Corp into favor due to their push to reduce carbon emissions. EV adoption push is also likely, helping ComfortDelGrow due to their increasing fleet of EVs. Lithium giant Albemarle earnings ahead This week, the world's biggest lithium company, Albemarle reports earnings. Given its size and scale - with it selling to most EV makers including - Toyota, Ford, Mercedes, GM, Hyundai, Kia, Nissan, Tesla and Renault – we think Albemarle will be a proxy for what we can expect from lithium companies' earnings. Consensus expects operating profits to have improved and rise to $1.05 billion. EBITDA is expected to grow to $1.22 billion, while net debt is expected to drop, with adjusted EPS forecast to grow to 8.19. Coco-Cola reports today Investors can get more information about the state of U.S. consumers and margin trends in consumer staples from the results and management’s comments on the business outlook from Coco-Cola (KO:xnys) today.   For what is ahead at markets this week – Read/listen to our Saxo Spotlight. For a global look at markets – tune into our Podcast.       Source: Market Insights Today: All eyes on US CPI today – 14 February 2023 | Saxo Group (home.saxo)
Bank of England is expected to hike the rate by 25bp. Kelvin Wong talks Euro against British pound

The EUR/GBP Cross-Currency Pair Remains On The Buyer’s Radar

TeleTrade Comments TeleTrade Comments 14.02.2023 09:18
EUR/GBP reverses bounce off key support confluence on strong UK employment data. UK Unemployment Rate stays unchanged but Claimant Count Change drops. Divergence between ECB and BoE policymakers may recall pair buyers if EU Q4 GDP improves. EUR/GBP reverses from intraday high while declining nearly 20 pips to 0.8830 on the upbeat UK jobs report during early Tuesday. In doing so, the cross-currency pair reversed the early-day run-up from the key 0.8830 support confluence. UK’s Unemployment Rate matches market forecasts and reprints the 3.7% figure for three months to December. However, a slump in January’s Claimant Count Change to -12.9K versus -3.2K prior, as well as strong prints of the  Average Earnings Excluding Bonus for the said month seemed to have favored EUR/GBP bears of late. In contrast to the upbeat UK data, a comparatively more hawkish bias at the European Central Bank (ECB) versus the Bank of England (BoE) joins the upbeat European Commission (EC) economics forecasts to underpin the regional currency’s bullish bias. On Monday, the European Commission (EC) released its quarterly economic projections for the Eurozone wherein it revised up the economic growth forecast to 0.9% for 2023 from 0.3% previously expected, projecting 2024 growth unchanged at 1.5%. The EC, however, lowered the Eurozone inflation forecast for 2023 to 5.6% YoY from 6.1% earlier expected. Further, the EC also cut 2024 inflation predictions to 2.5% for 2024, versus 2.6% previously anticipated. That said, European Central Bank (ECB) Vice-President Luis de Guindos said on Monday, “Rate increases beyond March are to depend on data.” On the same line, ECB policymaker Mario Centeno said, “Inflation is going down faster than we expected,” while adding that smaller hikes would need mid-term inflation nearing 2%. On the other hand, Bank of England’s (BoE) policymaker Jonathan Haskel cited a rise in inactivity in the UK labor market and challenged the British Pound (GBP) buyers previously. BoE’s Haskel also mentioned, “I would prefer to make policy with much more attention on the data flow over the next few months.” On a broader front, the cautious mood ahead of the top-tier data/events joins softer US Treasury bond yields to favor the mild optimism in the market, which in turn seems to favor the Euro (EUR). Having witnessed the initial reaction to the British data and EU fundamentals, EUR/GBP pair traders should wait for the preliminary readings of the fourth quarter (Q4) Gross Domestic Product (GDP) data for the Eurozone for clear directions. Given the recently upbeat economic projections from the European Commission and the ECB’s hawkish bias, the EUR/GBP pair is likely to remain firmer unless the EU GDP disappoints. Technical analysis Unless breaking 0.8830 support confluence comprising the 21-DMA and a one-month-old ascending trend line, the EUR/GBP remains on the buyer’s radar.
UK Budget: Short-term positives to be met with medium-term caution

UK wage growth points to another rate hike in March

ING Economics ING Economics 14.02.2023 10:21
There's little sign that UK wage growth has reached a peak, and the jobs market looks reasonably healthy. A 25bp rate hike at the March meeting seems likely The UK job market looks health   UK wage growth has come in higher than expected in the latest jobs report, and this will be a concern for the Bank of England’s hawks. The headline year-on-year change in regular pay (measured as a three-month moving average) came in at 6.7%, up from 6.5% and above expectations. Admittedly, the fact this beat consensus was mainly down to revisions, and in level terms, December's pay level was only marginally above November's. But these numbers are volatile month-to-month, and that’s why the Bank of England favours looking at the annualised change over the past three months, relative to the prior three months. This measure is running over 7% and has been for a few months now. The alternative, payroll-based measure is running at 11% now on the same annualised basis. UK wage growth doesn't seem to have peaked 3M/3M annualised change = the annualised change over the past three-months, relative to the prior three-months Source: Macrobond, ING calculations   Read next: Poland’s President Andrzej Duda Said The Decision To Send Fighter Jets To Ukraine Was “Not Easy To Take”| FXMAG.COM In short, there's little sign that wage growth is slowing, as some recent surveys have suggested. And the rest of the report shows the jobs market in reasonable health too. The unemployment rate remains well below 4%, close to all-time lows. Redundancy rates have been gradually rising, though only to pre-Covid levels from an unusually low base. Encouragingly, the number of people neither employed nor actively seeking a role (economically inactive) has inched lower recently, though mainly due to lower student numbers rather than a decline in levels of long-term sickness. The number of EU workers in the UK also inched higher in the latest quarterly data, though remain 6% below pre-Covid levels. Higher inactivity levels and a net outflow of EU workers through the pandemic have been key contributing factors to skill shortages. UK redundancy levels are rising but remain low by historical standards Source: Macrobond, ING   Today’s data is one of a few key releases the Bank of England will be watching ahead of its March meeting, and so far the dial is pointing towards a 25bp rate hike. But with the BoE putting greater emphasis on the lagged impact of past tightening, and with inflation likely to show signs of improvement by spring, we suspect a March rate hike will be the last. Read more on what data the BoE is watching to decide its next move Read this article on THINK Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more
Deciphering the Economic Puzzle: Unraveling Britain's Mixed Signals

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

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

Surprise UK services inflation dip bolsters case for rate hike pause

ING Economics ING Economics 15.02.2023 10:21
Services inflation is the bit of the CPI basket that the Bank of England cares most about right now, and January data saw a surprise dip. While it may not be enough to talk the committee out of a 25bp hike in March, if this trend continues, it probably points to a pause from May   The latest UK inflation numbers certainly throw in a curveball for the Bank of England’s March meeting. Headline CPI ticked lower to 10.1%, which was partly down to a near-4% fall in petrol/diesel prices across January. But core inflation was also much lower than expected, and slipped below 6% for the first time since last June. Some of this is linked to ongoing disinflation in goods categories, and unsurprising consequences of improving supply chains and lower consumer demand. But the Bank of England has said it is most interested now in “inflation persistence”, which is code for identifying trends in the inflation data that might still be relevant over a two-year horizon. Our recent analysis showed that it’s the services indices that are typically less volatile and show more persistent trends. And contrary to Bank of England forecasts for core services inflation to continue notching higher, we saw a surprise dip, partly as a result of a month-on-month fall in various hospitality categories. Updated weights have probably also played a role, albeit a pretty minor one. Core services inflation in a surprise dip Core services inflation excludes air fares, package holidays and education. Core goods excludes food, energy, alcohol and tobacco. Series vary slightly from BoE estimates, partly due to lack of VAT adjustment Source: Macrobond, ING calculations   Read next: Airbnb Posted A Profit Of $1.9. Billion, Air India And Largest Commercial Aircraft Deal In Aviation History| FXMAG.COM A word of caution: one month does not make a trend. By definition, the Bank of England’s focus on “persistence” suggests policymakers are going to be less fazed by month-to-month gyrations in this data. That said, our view is that services inflation has probably peaked. While wage growth has shown only very limited signs of slowing in recent surveys/official data, lower gas prices are a potential boon for the service sector. Successive ONS Business Insight surveys have indicated that higher energy prices have been a more commonly cited reason for raising prices in the service sector than labour costs. Will today’s data be enough to cast serious doubt over a potential March rate hike? The Bank dropped a firm hint in February that its latest 50bp rate hike might have been the last, though recent comments have suggested that committee members are still minded to hike a little further. We are therefore still pencilling in a 25bp hike next month for the time being - and the Bank's own Decision Maker Survey in early March is the next big data point to watch. But if this trend in services inflation persists, then it would be a strong argument in favour of pausing in May. Read this article on THINK Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more  
Deciphering the Economic Puzzle: Unraveling Britain's Mixed Signals

UK Inflation Must Please Bank Of England, Crude Oil Down

Swissquote Bank Swissquote Bank 15.02.2023 10:29
Looking at the market pricing, you could’ve hardly guessed, but yesterday’s US inflation report was not brilliant. US stocks But US stocks gave a mixed reaction. Why?! Why did people buy equities on strong inflation data yesterday, is the main topic of today’s Market Talk.Still, treasury markets seemed more down to earth, as the US 2-year yield ticked to the highest levels since last November, activity on Fed funds futures gave a little more than 12% probability for a 50bp hike at the next FOMC meeting, versus around 9% at the start of the week. USD index But the dollar index remained stuck below its 50-DMA. Gold Gold extended losses to $1843 on the back of stronger yields and firmer US dollar. EUR/USD The EURUSD found support above the 50-DMA, which stands around the 1.0715 mark. USD/JPY The dollar-yen cleared resistance near its own 50-DMA level, but the risks are still tilted to the downside in USDJPY. Read next: Airbnb Posted A Profit Of $1.9. Billion, Air India And Largest Commercial Aircraft Deal In Aviation History| FXMAG.COM UK CPI and Crude Oil In the UK, inflation in January still eased more than expected to 10.1%. Crude oil remains offered into the 100-DMA, on a massive 10 mio barrel build in US oil inventories last week, while Biden Administration announced there would be further releases from the strategic petroleum reserves of 26 million barrels earlier this week.  Warren Buffett In individual stocks, Warren Buffett sold 86% stake in TSM. Shares plunged more than 4% in Taipei. Watch the full episode to find out more! 0:00 Intro 0:28 US inflation eased less than expected in January 2:55 But who cares? 5:35 FX & yields update 7:05 UK inflation must please BoE, but not sterling 7:36 Crude oil down on massive US inventory build 8:27 Buffett sells TSM. Ouch. Ipek Ozkardeskaya  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. #USD #GBP #inflation #data #Fed #BoE #BoJ #expectations #EUR #JPY #XAU #US #crude #oil #F13 #TSM #Ford #SPX #Dow #Nasdaq #investing #trading #equities #stocks #cryptocurrencies #FX #bonds #markets #news #Swissquote #MarketTalk #marketanalysis #marketcommentary _____ Learn the fundamentals of trading at your own pace with Swissquote's Education Center. Discover our online courses, webinars and eBooks: https://swq.ch/wr _____ Discover our brand and philosophy: https://swq.ch/wq Learn more about our employees: https://swq.ch/d5 _____ Let's stay connected: LinkedIn: https://swq.ch/cH
FX Markets React to Rising US Rates: Implications and Outlook

The Trend Remains Positive But It May Be Stalling

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

UK Inflation Continues To Fall, But Also British Pound (GBP) Too

Kenny Fisher Kenny Fisher 15.02.2023 14:08
UK inflation falls but remains above 10% The British pound is sharply lower on Wednesday. In the European session, GBP/USD is trading at 1.2069, down 0.88%. UK inflation continues to fall, although it clearly has a long way to go. January’s inflation dropped to 10.1%, down from 10.5% in December and below the consensus of 10.3%. The core rate dropped to 5.8%, down from 6.3% in December and lower than the consensus of 6.2%. These numbers offer room for a bit of optimism, as does the drop in wage growth on Tuesday. Still, inflation is a bumpy road that will feature highs and lows and market participants would be wise not to make decisions based on one release. With headline inflation still in double digits, the Bank of England will have to continue raising rates, with the most likely scenario being a 25-basis increase at the Mar. 22 meeting. In the US, inflation in January ticked lower to 6.4%, down from 6.5% but higher than the forecast of 6.2%. It was a similar story for the core rate, which dropped from 5.7% to 5.6% and was above the forecast of 5.5%. Inflation is still falling but the trend may be stalling, which will provide support for the Federal Reserve’s hawkish stance. After the US inflation release, several Fed members reiterated the “higher for longer” theme. Fed members Barkin, Logan and Harker all had a similar message that the Fed would likely raise rates if inflation did not fall fast enough. The Fed has projected a federal funds rate of 5% to 5.5% by the end of the year, but given the strong economy and high inflation levels, there have been forecasts of a terminal rate as high as 6%.   GBP/USD Technical 1.2180 has strengthened in resistance as GBP/USD is down sharply. 1.2304 is the next resistance line 1.2071 and 1.1947 are providing support This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.  
Ipek Ozkardeskaya: BoE will certainly leave the door open for further hikes

The Markets Are Braced For Bad News Form UK Report

Kenny Fisher Kenny Fisher 16.02.2023 14:22
The British pound has steadied on Thursday. In the European session, GBP/USD is trading at 1.2053, up 0.25%. This follows a sharp drop of 1.2% a day earlier. UK inflation continues to fall but remains disturbingly high. Headline inflation fell to 10.1% in January, down from 10.5% in December and below the consensus of 10.3%. The drop in inflation is welcome news, but food prices, a key driver of inflation, surged by 16.8% in January. With inflation still in double digits, the Bank of England will have to continue raising rates, with the most likely scenario being a 25-basis increase at the Mar. 22 meeting. The market probability of a 25-bp hike rose as high as 73% on Wednesday before dipping to 66% today, according to Refinitiv data. In the US, retail sales delivered an impressive gain of 3% in January, above the estimate of 1.8%. This was a strong rebound from the December reading of -1.1% and marked the largest gain since January 2022. This positive release follows the January inflation report that ticked lower to 6.4% but was higher than expected. These strong numbers translated into strong gains for the US dollar on Wednesday, as the Fed will likely raise rates even higher in order to put the brakes on the strong economy. The UK wraps up the week with retail sales on Friday. The markets are braced for bad news, with an estimate of -5.5% y/y for the headline figure (-5.8% prior) and -5.3% for the core rate (-6.1%). A weak retail sales report could sour investors on the pound and send the currency lower.   GBP/USD Technical GBP/USD tested resistance at 1.2071 earlier in the day. The next resistance line is 1.2180 1.1958 and 1.1838 are providing support This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.  
Rishi Sunak, The British Prime Minister, Claimed That By Opting For Brexit In 2016, The Majority Of Britons Made A Mistake

Rishi Sunak, The British Prime Minister, Claimed That By Opting For Brexit In 2016, The Majority Of Britons Made A Mistake

Paolo Greco Paolo Greco 17.02.2023 09:25
The GBP/USD currency pair kept moving downward on Thursday, eventually reaching the Murray level of "0/8," or 1.1963. Thus, a "double bottom" of the local scale was created in addition to the "double top" of the senior scale. If a second rebound occurs from the level of 1.1963, this might result in a fairly considerable upward movement, but the "double top" will not be seen as fully worked out, so we should anticipate another round of the British pound's decline. Since there is no justification for the pound to increase, we continue to anticipate a decline. The market has already factored in the BA and Fed's decisions to raise rates once more, as well as the most recent inflation statistics and, in the case of the US, information on the labor market and unemployment. In other words, the majority of the most critical and relevant studies have already been released this month. And for the British currency, we can draw discouraging conclusions. In the United Kingdom, inflation is initially declining slowly. If the BA rate was no longer 4%, this might imply that the Bank of England would continue to adopt an aggressive monetary policy for a considerable period. Hence, the regulator can continue to slow down the rate of interest rate growth even with significant inflation (over 10%). Especially given Andrew Bailey's prediction of a significant reduction in the consumer price index this year. The inflation response to tighter monetary policy probably occurs with a longer lag than in the US. Then, Mr. Bailey's statements make perfect sense. We may be putting a stop to BA's efforts to reduce inflation early as the rate of inflation in Britain started to drop three months ago. To be certain that Chairman Bailey is correct or incorrect, it may be prudent to wait a few more months. Read next: USD/JPY Is Trading Close To 134.00, EUR/USD Is Remaining Above $1.07| FXMAG.COM Rishi Sunak is working to improve relations with the European Union. Yesterday, Rishi Sunak, the British prime minister, delivered a crucial message. He claimed that by opting for Brexit in 2016, the majority of Britons made a mistake, which the UK government will now attempt to right. Despite the referendum results, the administration plans to pursue a course to mend fences with the EU. Mr. Sunak observed that although his country has taken some steps since 2017 to reap the benefits of its non-aligned status, all of these steps have been detrimental to it. They will be canceled repeatedly and gradually. "I believe that the British people have completely recognized over the past seven years that the 2016 choice was incorrect. It's time to move on and forget about this, even if I can't hold him responsible for his choice. We'll carry on as usual with our relationships with our European brothers. Such damaging choices are in no way justified," according to Sunak. As we previously stated, recent opinion surveys of the British population have been repeated, and the results are crystal clear. If only 51.9% of residents backed Brexit in 2016, then the percentage of people in favor of leaving the EU has been progressively declining each year. Far more people regret their decision to leave the EU and desire to return to it. Although a scenario in which Britain rejoins the Alliance is unlikely to occur in the near future, both the EU and the former can gain from this if Britain once more pursues rapprochement with the latter. Additionally, if the Kingdom resumes the process of integrating with the Union, Scotland might reconsider having its vote. From our perspective, this one will take years, but in the long run, it is good news and a sign of the right way for Britain and the British pound, which has lost two times as much value against the dollar since 2007. We are anticipating a further decline because the pound is currently trading below the moving average. It is too early to consider the "double bottom" pattern established. Tomorrow's reduction in quote marks will end it. The overbought or oversold territory for the CCI indicator has not recently been reached. The pair is confidently advancing to the range of 1.1800-1.1850 on the 24-hour TF. Over the previous five trading days, the GBP/USD pair has experienced an average volatility of 139 points. This figure is "high" for the dollar/pound exchange rate. So, on Friday, February 17, we anticipate movement that is limited inside the channel and is constrained by levels 1.1886 and 1.2154. A cycle of corrective movement begins when the Heiken Ashi indicator reverses upward. Nearest levels of support S1 – 1.1963 S2 – 1.1902 S3 – 1.1841 Nearest levels of resistance R1 – 1.2024 R2 – 1.2085 R3 – 1.2146 Trade Suggestions: Over the 4-hour timeframe, the GBP/USD pair reversed the downward trend. So, until the Heiken Ashi indicator turns up, it is possible to hold short positions with targets of 1.1963 and 1.1902. If you consolidate above the moving average with targets of 1.2146 and 1.2207, you can start buying. Explanations for the illustrations: Determine the present trend with the use of linear regression channels. The trend is now strong if they are both moving in the same direction. Moving average line (settings 20.0, smoothed): This indicator identifies the current short-term trend and the trading direction. Murray levels serve as the starting point for adjustments and movements. Based on current volatility indicators, volatility levels (red lines) represent the expected price channel in which the pair will trade the following day. A trend reversal in the opposite direction is imminent when the CCI indicator crosses into the overbought (above +250) or oversold (below -250) zones.   Relevance up to 01:00 2023-02-18 UTC+1 This information is provided to retail and professional clients as part of marketing communication. It does not contain and should not be construed as containing investment advice or investment recommendation or an offer or solicitation to engage in any transaction or strategy in financial instruments. Past performance is not a guarantee or prediction of future performance. Instant Trading EU Ltd. makes no representation and assumes no liability as to the accuracy or completeness of the information provided, or any loss arising from any investment based on analysis, forecast or other information provided by an employee of the Company or otherwise. Full disclaimer is available here. Read more: https://www.instaforex.eu/forex_analysis/335380
Deciphering the Economic Puzzle: Unraveling Britain's Mixed Signals

UK retail sales bounce on January discounting

ING Economics ING Economics 17.02.2023 09:53
January's increase in retail sales wasn't enough to reverse a steep fall around Christmas, and the big picture is that sales have been on a downward trend. Signs of discounting in January will be welcome news for the Bank of England January's numbers – online and non-food sales – were bolstered by discounting   UK retail sales were better than expected in January, rising by 0.4% on an ex-fuel basis. However these are volatile numbers, and that increase only partly offsets the steep 1.4% decline we saw in December. More importantly, sales have been on a gradual downtrend since October 2021 and are down 7% since then, and indeed now lie below pre-Covid levels. What’s interesting is that the ONS has said the brighter spots in January’s numbers – online and non-food sales – were bolstered by discounting. This is only anecdotal evidence admittedly, but it does support the trend we’re seeing in core goods inflation, which has been easing rapidly on lower consumer demand, improved supply chains and rising retail inventories. Goods prices aren’t the main area of focus for the Bank of England, but it does help the overall inflation story. UK shoppers have been spending more and getting much less Source: Macrobond   What next for retail and consumer spending more generally? We suspect we’ll see the downward path of retail sales continue for at least a couple more months, but the outlook should begin to turn brighter. Our rough calculations suggest the average household energy bill will no longer rise to £3,000 as planned in April, and in fact should have fallen to £2,100-2,200 by the summer, from £2,500 currently. That’s still high by historical standards, but the lack of a further increase should help limit the fallout in consumer activity. There are two main areas of uncertainty. On the positive side, there’s potential for consumers to dip into savings. Interestingly consumers have, in general, continued to build cash savings at a higher rate than pre-pandemic over recent months, and there is roughly 8% of GDP worth of these ‘excess savings’. The counterpoint is that this is highly skewed to higher earners, but it could yet provide some support to spending if consumer confidence improves. Consumers have continued to build savings more quickly than pre-Covid Household deposits based on M4 data, which is a broad money aggregate and a measure of UK money supply Source: Macrobond, ING calculations   The housing market is probably the main negative risk, and a price correction is clearly underway. The vast majority of UK mortgages are on fixed interest rates which means the passthrough of higher rates is pretty gradual. And in general, the UK housing market looks less vulnerable than in some other countries. But buying activity is clearly very weak, and more aggressive price declines (if they come) would undoubtedly have a knock-on effect on spending. Overall, we’re expecting a very mild recession through the first half of this year. Read this article on THINK TagsRetail sales Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more
Bank of England is expected to hike the rate by 25bp. Kelvin Wong talks Euro against British pound

The Bank Of England's (Boe) Current Rate-Hiking Cycle Might Be Nearing The End And This Acts As A Tailwind For The EUR/GBP Cross

TeleTrade Comments TeleTrade Comments 17.02.2023 10:01
EUR/GBP gains positive traction for the third straight day and climbs to over a one-week high. The upbeat UK Retail Sales for January fail to impress the GBP bulls or provide any impetus. Bets for additional jumbo rate hikes by the ECB support prospects for further near-term gains. The EUR/GBP cross builds on this week's goodish bounce from the 0.8800 mark and edges higher for the third successive day on Friday. Spot prices hold steady above the 0.8900 round figure through the early European session and react little to the latest UK macro data. The UK Office for National Statistics reported that domestic Retail Sales grew 0.5% in January against consensus estimates for a 0.3% fall. Furthermore, sales excluding fuel also surpassed market expectations and rose by 0.4% during the reported month. The better-than-expected prints, however, were offset by a downward revision of the previous month's already weaker readings. This, in turn, fails to provide any meaningful impetus to the British Pound or move the EUR/GBP cross. That said, the softer UK consumer inflation figures released earlier this week fueled expectations that the Bank of England's (BoE) current rate-hiking cycle might be nearing the end. This continues to weigh on the Sterling and acts as a tailwind for the EUR/GBP cross. That said, broad-based US Dollar strength exerts some follow-through downward pressure on the shared currency. This, in turn, holds back bulls from placing aggressive bets and caps the upside for the cross, at least for now. Meanwhile, bets for additional jumbo rate hikes by the European Central Bank (ECB) might contribute to the Euro's relative outperformance against its British counterpart. This, in turn, supports prospects for a further near-term appreciating move for the EUR/GBP cross. Hence, some follow-through strength back towards the 0.8975-0.8980 region, or the highest level since September 2022 touched earlier this month, looks like a distinct possibility. Technical levels to watch remaining time till the new event being published U.S.: Leading Indicators
Deciphering the Economic Puzzle: Unraveling Britain's Mixed Signals

Watch: The future of UK rate hikes

ING Economics ING Economics 18.02.2023 08:53
Could a surprise dip in UK services inflation be enough for the Bank of England to finally reach the end of its hiking cycle? We're not convinced it'll be entirely sufficient to fend off a 25bp move next month – but a pause could very well be on the cards from May   The future of UK rate hikes A recent drop seen in January's data could signal a potential pause ahead for the Bank of England. But one month does not make a trend, warns Developed Markets Economist James Smith, and we think that one more hike can still be expected   Read this article on THINK TagsUK Monetary policy Inflation Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more
The UK Economy Looks Worse Than The Rest Of The G7 Countries

The UK Economy Looks Worse Than The Rest Of The G7 Countries

Marek Petkovich Marek Petkovich 20.02.2023 11:15
2023 can safely be called a year of pleasant surprises. In January, thanks to warm weather and falling gas prices, the eurozone economy cheered, allowing us to say that there will be no recession. At the beginning of February, investors were reeling from strong macrostatistics in the USA, which made markets put aside the idea of a soft or hard landing and start speculating about a new takeoff. Finally, in the middle of the last month of winter, it was Britain's turn. A faster-than-expected slowdown in inflation, a still strong labor market and a 0.5% MoM spike in retail sales increase the likelihood of a minor recession. Will GBPUSD be able to launch a counterattack? The United Kingdom is following the path of the United States. Despite the increase in unemployment from 3.5% to 3.7%, the figure remains at its lowest point in recent decades. Employment growth accelerated in October–December, and the slowdown in inflation and average wages indicates that the Bank of England is doing its job effectively. Thanks to a strong labor market, consumers feel confident and spend money, which is confirmed by the positive dynamics of retail sales. At the same time, the UK economy looks worse than the rest of the G7 countries because Brexit and the energy crisis, with its crazy household bills for electricity, are added to the general problems in the form of high inflation, the cost of living crisis, and tightening monetary policy. Not surprisingly, Britain is the only major economy that has yet to recover to pre-pandemic levels. Dynamics of economic recovery of the G7 countries However, Britain's problems have been known for a long time, the recession factor is already embedded in sterling quotes, so any positive becomes a reason for it to rebound upwards. In this regard, strong statistics on employment and retail sales, and a faster decline in consumer price growth, allowed the GBPUSD bulls to find the bottom. Read next: Twitter And Elon Musk Faced A Growing List Of Claims| FXMAG.COM They might develop a counterattack if the data on British business activity proves to be better than expected and representatives of the Bank of England choose a hawkish rhetoric in their speeches. On the other hand, politics may add to the pound's problems. London is on the verge of signing an agreement on the Northern Ireland protocol as part of Brexit, but its terms may not please the ardent supporters of a British and EU divorce in Parliament, which will negatively affect the position of Prime Minister Rishi Sunak. His shattered credibility is one of the reasons why GBPUSD fell to 1.1, according to Credit Agricole's forecast. Bank of America is not such a bloodthirsty bear. It recommends selling the pair on the rise, but believes that sterling's cyclical bottom has been passed, and 2023 will be a year of expectation. GBP/USD Technically, the GBPUSD rebound from the 1.196 pivot level and the formation of a pin bar with a long lower shadow signal a bearish counterattack. It makes sense to start short-term buying on a break of resistance at 1.205 Relevance up to 07:00 2023-02-22 UTC+1 This information is provided to retail and professional clients as part of marketing communication. It does not contain and should not be construed as containing investment advice or investment recommendation or an offer or solicitation to engage in any transaction or strategy in financial instruments. Past performance is not a guarantee or prediction of future performance. Instant Trading EU Ltd. makes no representation and assumes no liability as to the accuracy or completeness of the information provided, or any loss arising from any investment based on analysis, forecast or other information provided by an employee of the Company or otherwise. Full disclaimer is available here. Read more: https://www.instaforex.eu/forex_analysis/335539
The Pound Should Keep Losing Ground Versus The Dollar

The Decrease Of The GBP/USD Pair Will Persist

Paolo Greco Paolo Greco 21.02.2023 08:15
The GBP/USD currency pair failed to get a foothold above the moving average line on Monday, and it adjusted on Friday. The downward trend so persists, but on Monday there were no changes in general. For the pound, the volatility for the day was only about 40 points. You may simply forget about yesterday because neither macroeconomics nor technology offered anything noteworthy. The pound has not yet fallen below its most recent short-term local low, which is 1.1841. Hence, we anticipate that the decrease will persist. As is the case with the EUR/USD pair. It is excellent that the macroeconomic context has caused expectations for both major pairs to decline. When this isn't the case, it creates some cognitive dissonance because the euro and the pound are traded similarly most of the time. The pound has been in a long-awaited correction, much like the euro. Even though there were no compelling reasons for it, the pound managed to increase by 2,100 points in the second half of 2022. In actuality, a retracement away from the worldwide decline was seen. But the surge of 2,100 points also calls for a correction. The British currency has now changed by almost 600 points. This indicates that it is acceptable to drop by 400 points below the previous local minimum. Of fact, the Bank of England's representatives more forceful language could help the bulls in resuming the upward trend. But, the pair has been modified thus far, and we think that this is completely rational and sensible. Under the "Northern Ireland Protocol," the European Union and the United Kingdom can resolve all disputes. Recently, central banks and rates have received all of the market's attention. And in the previous year, geopolitics. The "Northern Ireland protocol," Brexit, and Scotland's desire to leave the United Kingdom all seemed to be forgotten in the shadow of these events. Yet, it should be noted that the new Rishi Sunak government is expressing its intention to start a rapprochement with the European Union while blatantly disregarding the outcomes of the 2016 referendum. Since it becomes more and more obvious that Brexit was a mistake every year, we believe that this is a positive development for the entire UK. What advantages London has gotten from this is still up for debate. The breakdown of long-standing economic and trade connections with the EU costs the UK economy tens of billions of euros per year. The UK economy has the highest likelihood of experiencing a recession, no new trade agreements with other nations have been reached, and inflation in the UK is greater than in the EU and shows no signs of slowing down. London itself is gradually losing its position as a major financial center. Also, Boris Johnson was actively talking with Donald Trump on this matter and was banking on a trade agreement with the United States. Johnson is no longer the British prime minister, and Trump is no longer the US president. Yet, it was recently revealed that the "Northern Ireland protocol" dispute between the EU and Britain would soon be resolved after several years of negotiations. The majority of the unresolved issues, including various customs inspections, have reportedly been agreed upon by the parties, according to unnamed individuals close to the negotiating groups. But, sources also claim that several difficulties, particularly those connected to politics, have not yet been settled. Yet there has been considerable progress, so there is every reason to believe that this issue will be resolved within the next several weeks. Although it is difficult for us to predict if the pound will increase as a result (likely not), this is still good news for the UK. We think it's more crucial for the pound and the British economy to integrate as rapidly as possible with the EU economy. And it will already be important to carefully watch what Rishi Sunak does in this subject. Sunak still needs to collect support to start implementing his plans because not every member of the UK Parliament will be in favor of moving towards the Alliance in the past. But among the British, the desire to rejoin the EU is growing stronger. Over the previous five trading days, the GBP/USD pair has experienced an average volatility of 126 points. This figure is "high" for the dollar/pound exchange rate. So, on Tuesday, February 21, we anticipate movement that is held inside the channel and is limited by levels 1.1894 and 1.2146. The Heiken Ashi indicator's downward turn indicates that the downward movement has resumed. Nearest levels of support S1 – 1.2024 S2 – 1.1963 S3 – 1.1902 Nearest levels of resistance R1 – 1.2085 R2 – 1.2146 R3 – 1.2207 Trade Suggestions: Over the 4-hour timeframe, the GBP/USD pair reversed the downward trend. Hence, in the event of a downward reversal of the Heiken Ashi indicator, we can now consider additional short positions with targets of 1.1963 and 1.1902. If you consolidate above the moving average with targets of 1.2146 and 1.2207, you can start buying. Explanations for the illustrations: Determine the present trend with the use of linear regression channels. The trend is now strong if they are both moving in the same direction. Moving average line (settings 20.0, smoothed): This indicator identifies the current short-term trend and the trading direction. Murray levels serve as the starting point for adjustments and movements. Based on current volatility indicators, volatility levels (red lines) represent the expected price channel in which the pair will trade the following day. A trend reversal in the opposite direction is imminent when the CCI indicator crosses into the overbought (above +250) or oversold (below -250) zones Relevance up to 05:00 2023-02-22 UTC+1 This information is provided to retail and professional clients as part of marketing communication. It does not contain and should not be construed as containing investment advice or investment recommendation or an offer or solicitation to engage in any transaction or strategy in financial instruments. Past performance is not a guarantee or prediction of future performance. Instant Trading EU Ltd. makes no representation and assumes no liability as to the accuracy or completeness of the information provided, or any loss arising from any investment based on analysis, forecast or other information provided by an employee of the Company or otherwise. Full disclaimer is available here. Read more: https://www.instaforex.eu/forex_analysis/335627
Bank of England is expected to hike the rate by 25bp. Kelvin Wong talks Euro against British pound

Bears Of The EUR/GBP Pair Keep The Reins For The Third Day

TeleTrade Comments TeleTrade Comments 21.02.2023 09:34
EUR/GBP retreats from intraday high to extend Friday’s U-turn from two-week high. Full market’s return, cautious mood probe Euro bulls ahead of Eurozone ZEW Sentiment data, monthly PMI. The British Pound braces for UK PMI amid mixed concerns surrounding Brexit. EUR/GBP holds lower ground around 0.8870, after recently reversing from the daily top, as bears keep the reins for the third consecutive day to early Tuesday in Europe. In doing so, the cross-currency pair portrays the broad retreat in the Euro, as well as the recovery in the British Pound (GBP), ahead of the key data for the bloc and Britain. That said, a fresh run-up in the US Treasury bond yields, and the fears emanating from China, North Korea and Russia seemed to have underpinned the market’s rush for the US Dollar as traders from Washington return after a long weekend. As a result, the Euro witnesses a pullback in the demand due to its contrast with the greenback. It’s worth noting that the recent statistics from the Euro area have been firmer while those from the UK have been mixed, which in turn keeps the pair buyers hopeful ahead of the key numbers. Additionally teasing the EUR/GBP buyers are the hawkish comments from the European Central Bank (ECB) official. That said, ECB governing council member and Finnish central bank Chief Olli Rehn recently said, per Reuters, “ECB should keep raising interest rates beyond March and the rate peak, which should be stuck to for some time, could be reached over the summer.” On the same line, upbeat prints of Eurozone Consumer Confidence matched the market forecasts of -19 versus -20.9 prior. Further, Germany's Bundesbank released its monthly report and noted that the economic outlook was somewhat brighter with the short-term outlook turning more favorable than seen just a few months ago. Alternatively, fears of no imminent Brexit deal should have weighed on the British Pound (GBP) as the UK’s Conservative Members of the Parliament (MPs) dislike the deal with the European Union (EU) on Northern Ireland (NI). Some of them are threatening to resign, per The Times, amid fears of the compromised deal. The news also mentioned that UK Prime Minister Rishi Sunak spent notable time in the House of Commons to convince the MPs that no deal had yet been agreed and talks were continuing. “He was told he ‘hasn’t got a hope’ of succeeding without the support of the Democratic Unionist Party,” per The Times. Amid these plays, stock futures are down and the Treasury bond yields, as well as the US Dollar, are firmer, which in turn weigh on the Euro amid a sluggish start to the key day. Looking forward, Eurozone ZEW sentiment figures for February will precede the preliminary readings of the bloc’s, as well as the UK’s, Purchasing Managers Index (PMI) data for the said month to direct short-term pair moves. Given the cross-currency pair’s latest retreat, backed by the market speculations that the Euro rally is about to end amid the European Central Bank’s (ECB) inability to offer higher rates, the sellers may keep the reins unless the scheduled data mark any surprise. Technical analysis EUR/GBP fades bounce off the 50-day Exponential Moving Average (EMA), around 0.8815 by the press time, which in turn joins bearish MACD signals and failure to cross the 0.8915-10 horizontal hurdle to keep bears hopeful.
Central Banks and Inflation: Lessons from History and Current Realities

The Bank Of Japan (BoJ) Concerns Seem To Exert Downside Pressure On The GBP/JPY Prices

TeleTrade Comments TeleTrade Comments 22.02.2023 09:39
GBP/JPY holds lower grounds as it pares the biggest daily gains in a week. Firmer UK PMIs bolster hawkish BoE bets but Brexit, wage talks probe buyers. Mixed Japan data, BoJ concerns join a retreat in yields to weigh on prices. GBP/JPY bulls take a breather around 163.30, after rising the most in seven days during early Wednesday. The cross-currency pair’s latest gains could be linked to the upbeat UK data and hawkish concerns surrounding the Bank of England (BoE). However, sluggish yields and the Bank of Japan (BoJ) concerns seem to exert downside pressure on the GBP/JPY prices. Also likely to challenge the pair’s moves are the mixed data from the UK and Japan. Earlier in the day, Reuters Tankan Manufacturing Index for Japan came in as -5.0 for February versus -6.0 in January. On the same line, Tankan Non-Manufacturing Index eased to 17 for the said month versus 20.0 prior. Elsewhere, Brexit woes loom as the Eurosceptic Conservatives challenge UK Prime Minister’s talks with the European Union (EU) over the Northern Ireland (NI) border issue. The leader of Northern Ireland's largest unionist party (Jeffrey Donaldson, leader of the Democratic Unionist Party) said on Tuesday there was still work to be done to find a resolution to a dispute between Britain and the European Union over their post-Brexit trading arrangements with the province, per Reuters. Alternatively, the preliminary readings of the UK S&P Global/CIPS data for February reported that the Manufacturing PMI rose to 49.2 versus 46.8 expected and 47.0 prior while Services PMI jumped to a seven-month high of 53.3 compared to 48.3 market forecasts and 48.7 previous readings. Further, Japan’s wage talks and signals for higher payments to workers in Tokyo seem to underpin the need for hawkish Bank of Japan (BoJ) action even if the latest chatters favor Governor Haruhiko Kuroda’s one last shot at the ultra-easy monetary policy before he retires in April. It should be noted that the expectations of stronger Fed bets and strong US data also underpin the US Treasury bond yields and propel the GBP/JPY prices. Amid these plays, the US 10-year and two-year treasury bond yields seesaw around the three-month highs marked the previous day while S&P 500 Futures print mild gains despite Wall Street’s negative closing. Looking ahead, a light calendar and cautious mood ahead of the Federal Open Market Committee’s (FOMC) Monetary Policy Meeting Minutes may restrict immediate GBP/JPY move. However, the hopes that BoJ Governor Haruhiko Kuroda will play one last shot before his retirement seem to underpin the bullish bias. Technical analysis A downward-sloping resistance line from late October 2022, close to 163.85 by the press time, challenges GBP/JPY buyers amid overbought RSI (14)
Worst behind us for UK retail despite fall in sales

The Likelihood Of An Economic Recession In The UK Has Greatly Lessened

Jakub Novak Jakub Novak 22.02.2023 10:33
Yesterday, the British pound gained significantly against the US dollar, although the UK economy is undergoing the most severe cost-of-living crisis in several generations. Yet, as it turned out, it is handling things better than economists and the Bank of England's policy had anticipated, which improves the likelihood that the nation will escape entering a recession. PMI index  According to PMI index figures released yesterday, private sector output increased for the first time in seven months, accompanied by significant increases in tax collections and higher-than-expected retail sales. All of this suggests that the economy remains stable, defying official and expert predictions. Difficult task Prime Minister Rishi Sunak and his Conservative Party, who have a difficult task ahead of them to win the general election, might take solace in this kind of news. The resulting number, however, might force the Bank of England to keep up the sharpest rate increase in the last three decades to bring inflation back to the target level of roughly 2.0%. Recession The facts to date only show that the likelihood of an economic recession has greatly lessened when compared to before, but the heightened inflationary pressure has not subsided and unquestionably continues to be the regulator's top concern. Bank of England As mentioned above, yesterday's statistics showed a substantial rise in activity in the service sector, which caused the pound to rise and the weekly maximum to be updated. The Bank of England had previously revised and improved its prediction earlier this month, anticipating a contraction of less than 1% over the following five quarters. In actuality, this is a protracted period of stagnation rather than a full-blown recession. Energy demand The Treasury's demand for cash has decreased as a result of lower-than-anticipated interest payments on debt and the highest-ever income tax receipts. A warmer winter lowers energy demand, enabling government subsidies for citizens to pay their electricity and natural gas bills to be reduced. Remember, though, that the British Finance Minister rejected calls for a significant tax cut and declined to grant the unions' requests for salary rises, both of which, in theory, would have reduced inflationary pressure and limited future inflationary pressure. Hunt's statement "Given that debt is at its highest level since the 1960s, we must stick to our plan to reduce it in the medium term. Debt reduction will require some difficult decisions, but it is extremely important to reduce the amount that will be spent on debt interest so that we can protect our public services," Hunt said in a statement. Inflation Inflation is not declining as quickly as anticipated, even if some indicators show a significant improvement. The most recent value of 10.1% is far from the Bank of England's targets, although being one percentage point lower than the peak in October. GBP/USD Regarding the GBP/USD's technical picture, the bulls were able to halt the bear market. The bulls must ascend above 1.2140 to stabilize the situation. The only way to increase the likelihood of a subsequent recovery to the area of 1.2215, after which it will be feasible to discuss a more abrupt movement of the pound up to the area of 1.2265, is if this resistance fails to hold. After the bears seize control of 1.2065, it is feasible to discuss the return of pressure on the trading instrument. The bulls' positions will be hit if this range is broken, which could push the GBP/USD back to 1.1980 with a potential return of 1.1920. EUR/USD  Regarding the EUR/USD technical picture, the pair's pressure was maintained. Breaking above 1.0660 will cause the trading instrument to snap to the 1.0720 level and halt the bear market. Above this point, you can easily reach 1.0760 and update 1.0800 in the near future. I anticipate some activity from significant purchasers if the trading instrument only declines in the vicinity of 1.0615. It would be preferable to wait until the 1.0565 low has been updated if no one is there before initiating long positions   Relevance up to 08:00 2023-02-23 UTC+1 This information is provided to retail and professional clients as part of marketing communication. It does not contain and should not be construed as containing investment advice or investment recommendation or an offer or solicitation to engage in any transaction or strategy in financial instruments. Past performance is not a guarantee or prediction of future performance. Instant Trading EU Ltd. makes no representation and assumes no liability as to the accuracy or completeness of the information provided, or any loss arising from any investment based on analysis, forecast or other information provided by an employee of the Company or otherwise. Full disclaimer is available here. Read more: https://www.instaforex.eu/forex_analysis/335768
If The Bank Of England Hike Interest Rates Again Later This Month Will Exert Downward Pressure On The EUR/GBP Cross

The EUR/GBP Cross Pair Is Expected To Display More Weakness

TeleTrade Comments TeleTrade Comments 23.02.2023 08:32
EUR/GBP looks vulnerable around 0.8800 as hawkish BoE bets soar after a recovery in UK preliminary PMI data. UK’s Hunt is facing calls from within his Conservative Party to cut taxes and raise pay for public service workers. ECB Lagarde is set to continue its policy tightening spell of 50 bps to March. The EUR/GBP pair is struggling to find any direction in the Tokyo session amid the absence of a potential trigger. The cross is juggling around 0.8800 and is expected to display more weakness as an economic recovery in the United Kingdom and a shortage of labor is demanding the continuation of policy tightening by the Bank of England (BoE). Investors were in a dilemma whether the Bank of England (BoE) should pause policy contraction as the economic outlook was expected extremely bleak or continue pushing rates higher to tame stubborn inflation. Shortage of labor and escalating food inflation is continuously maintaining havoc that the inflation could be underpinned anytime to new highs. No doubt, the UK Consumer Price Index (CPI) has eased in the past few months, however, the headline CPI figure is still in double-digit and sufficient to trouble households. Meanwhile, a recovery in the economic activities shown by the preliminary S&P Global PMI (Feb) data, released this week, indicates that labor demand could be fueled further and BoE Governor Andrew Bailey should consider continuation of policy tightening. A figure below 50.0 for the preliminary Manufacturing activities indicates contraction, however, the pace of decline in activities has squeezed significantly. BoE panel sees the interest rate peak around 4.5% and the continuation of the rate hike in the March monetary policy meeting looks warranted. Meanwhile, UK Finance Minister (FM) Jeremy Hunt is facing calls from within his Conservative Party to cut taxes in his March 15 budget and from trade unions to raise pay for public service workers, as reported by Reuters, which could propel inflationary pressures further. On the Eurozone front, clarity on the extent of the rate hike by the European Central Bank (ECB) President Christine Lagarde has eased some uncertainty. ECB Lagarde has announced a continuation of 50 bps rate hike spree for March to keep the downside momentum in Eurozone inflation intact.
Analysis Of The GBP/USD Pair Over 6- 10.03 Week

The GBP/USD Currency Pair Resumed Its Bearish Trend

Paolo Greco Paolo Greco 24.02.2023 08:17
On Thursday, the GBP/USD currency pair resumed its downward trend and once more consolidated under the moving average line. We specifically covered this in earlier articles. Although the pound does not yet have the basis for significant growth, it may occasionally adjust fairly sharply. This causes consolidation above the moving average, which some people may misinterpret as a change in trend. Remember that the UK released a package of rather optimistic, but not noteworthy, statistics this week. The British pound experienced a considerable increase in February across all three business activity indicators. This growth is what caused the price to consolidate above the moving average. The very following day, however, traders forgot about business operations and focused on the technical picture and overall fundamental background, which indicated that the pound should decrease rather than increase. Recall that, following a long and strong downward trend, the value of the British pound has also increased significantly in recent months. It was therefore required to make a technical correction upward in global terms. The question of why the pound will keep growing occurred after the pair had adjusted (like the euro currency) by 50%. Since there was no response, at least now a downward correction is required before it can be observed. Now, a lot will depend on the BA and the Fed's monetary policy, which in turn will depend on the dynamics of inflation in 2023. On the 24-hour TF, however, the movement over the past few months appears to have been more of a flat than a trend. The pair alternately determines the upper border of the channel and then the lower one as they move between 1.1900 and 1.2440. As a result, the long-term flat rate for the pound is already official. Although we still anticipate its conclusion and the restart of the downward movement, we first need to clear the level of 1.1900. The pound is generally in an unfortunate position and does not appear to want to keep declining. Perhaps the UK's high inflation rate is to blame, which leads market players to anticipate more and more rate increases from the Bank of England. It is still the case. Can BA keep up with inflation? As we've already mentioned, inflation is still the most crucial indicator for the foreign exchange market, and it often has a unique significance in the UK. This is so because despite raising the rate to 4%, the Bank of England was unable to significantly limit the rate of increase in consumer prices. The rate of inflation remained above 10%. However, some economists and government representatives are already concerned about a new global acceleration of inflation in 2023. It should be kept in mind that oil and gas, whose prices have dropped dramatically over the past six months, played a big influence in the collapse of this indicator. Thus, if energy costs start to increase once more, this might very well catalyze a new rise in inflation. Moreover, the rate has already been increased by the Bank of England ten times. Theoretically, they could raise it to at least 10% and ruin its economy, but it seems improbable that they would do so. It turns out that the crucial concern right now is how far the regulator can tighten monetary policy, if at all. And the pound will change in 2023 based on the response to this query. In the UK, wages are another major issue because they keep going up as a result of a labor shortage in many sectors. We previously reported that many migrant workers decided to leave the UK after Brexit because the process of acquiring work documents was difficult. There is a labor shortage in Britain as a result of their covert work in other European nations. Because of the shortage, workers now have a choice in which company they want to work for. Therefore, businesses are compelled to provide more enticing terms to recruit an employee for themselves. All of this raises salaries, which raises inflation. According to Catherine Mann's statement from yesterday, some companies will raise salaries by 6-7% only to keep employees. She also pointed out that even for the following year, inflation estimates are significantly higher than the desired 2%. Hence, Britain may have been caught in an inflation trap for a long time, and getting out of it will be very challenging. If the Bank of England is unable to consistently tighten monetary policy, the pound may sooner or later start to weaken again globally. We anticipate a decline in the following days to a level of 1.1900, which is just below the recent local minimum on the 4-hour TF. Over the previous five trading days, the GBP/USD pair has experienced an average volatility of 104 points. This value is "average" for the dollar/pound exchange rate. As a result, on Friday, February 24, we anticipate movement that is limited by the levels of 1.1890 and 1.2098. The upward reversal of the Heiken Ashi indicator will signal a new round of upward correction. Nearest levels of support S1 – 1.1963 S2 – 1.1902 S3 – 1.1841 Nearest levels of resistance R1 – 1.2024 R2 – 1.2085 R3 – 1.2146 Trade Suggestions: In the 4-hour timeframe, the GBP/USD pair once again stabilized under the moving average. So, until the Heiken Ashi indication turns up, it is still possible to hold short positions with targets of 1.1902 and 1.1890. If you consolidate above the moving average, you can start trading long with targets of 1.2098 and 1.2146. Explanations for the illustrations: Determine the present trend with the use of linear regression channels. The trend is now strong if they are both moving in the same direction. The short-term trend and the direction in which to trade right now are determined by the moving average line (settings 20.0, smoothed). Murray levels serve as the starting point for adjustments and movements. Based on current volatility indicators, volatility levels (red lines) represent the expected price channel in which the pair will trade the following day. A trend reversal in the opposite direction is imminent when the CCI indicator crosses into the overbought (above +250) or oversold (below -250) zones.     Relevance up to 01:00 2023-02-25 UTC+1 This information is provided to retail and professional clients as part of marketing communication. It does not contain and should not be construed as containing investment advice or investment recommendation or an offer or solicitation to engage in any transaction or strategy in financial instruments. Past performance is not a guarantee or prediction of future performance. Instant Trading EU Ltd. makes no representation and assumes no liability as to the accuracy or completeness of the information provided, or any loss arising from any investment based on analysis, forecast or other information provided by an employee of the Company or otherwise. Full disclaimer is available here. Read more: https://www.instaforex.eu/forex_analysis/335988
Bank of England is expected to hike the rate by 25bp. Kelvin Wong talks Euro against British pound

The EUR/GBP Cross Pair Is Expected Further Downside Movement

TeleTrade Comments TeleTrade Comments 24.02.2023 08:46
EUR/GBP retreats from intraday high, snaps two-day rebound from monthly low. One-week-old resistance line, key Fibonacci retracement level challenge immediate upside. 0.8840 appears a tough nut to crack for the EUR/GBP bulls. Multiple levels surrounding 0.8760 can probe bears afterward. EUR/GBP bears return to the table, after a two-day absence, as the quote eases from the intraday high to 0.8815 during the initial hour of Friday’s European session. In doing so, the cross-currency pair fades bounce off the lowest levels since January 31 while retreating from the convergence of the one-week-long descending trend line and 61.8% Fibonacci retracement level of January 19 to February 03 upside, close to 0.8820 at the latest. Adding strength to the pullback moves is the sluggish RSI (14) near the 50 levels, as well as the pair’s previous downside break of the support lines from late January. As a result, the EUR/GBP bears are all set to revisit the latest trough surrounding 0.8780. However, multiple levels marked during late January could challenge the pair sellers near 0.8760 then after. Should the quote remains weak past 0.8760, the odds of witnessing a fresh low of the year 2023, currently around 0.8720 can’t be ruled out. On the contrary, a successful break of the 0.8820 resistance confluence isn’t an open welcome to the EUR/GBP bulls as the previous support line from January 30, around 0.8830 by the press time, could challenge the upside moves. It’s worth noting that the support-turned-resistance from January 19 joins the 200-Simple Moving Average (SMA) to highlight the 0.8840 as the key upside hurdle. EUR/GBP: Four-hour chart Trend: Further downside expected
The Pound Should Keep Losing Ground Versus The Dollar

The Pound Should Keep Losing Ground Versus The Dollar

Paolo Greco Paolo Greco 02.03.2023 08:15
During the past few weeks, the GBP/USD currency pair has been in "swing" mode. This is readily obvious on the 4-hour TF, and on the 24-hour TF, we generally have a flat in the channel with a width of 500 points. As a result, we are now dealing with a "swing" inside a higher-order flat. Given how challenging it is to resolve frequent pair reversals, the situation is not ideal. It is advisable to trade right now on the lower timeframes because these movements appear to be fairly successful on the lower timeframes. But we also need to examine what is occurring in the older ones. At the very least, you must comprehend what is happening. This is what is now taking place. After a protracted downturn, the pair corrected by 50% and then really stopped moving. The downward correction wasn't strong enough to satisfy us. We think that the euro and the pound should keep losing ground versus the dollar. If certain growth factors begin to emerge in the case of the euro, then there are no such factors in the situation of the pound. We've already stated in recent publications that Bank of England officials hardly ever discuss monetary policy or reveal the regulator's goals. Of course, this kind of information is occasionally obtained, but it is extremely uncommon. As a result, nobody in the market knows what to anticipate from the British regulator at this time. As a result, the pound is not increasing but neither does it tend to decrease. In general, the situation is virtually at a standstill. Moreover, we would argue that since the pair is in a flat, they still need to be able to escape, and technical considerations are now more important. Yet, we will most likely receive some information from Andrew Bailey, who is not pessimistic. The UK's inflation rate is still not expected to fall as quickly as the regulator anticipates, and ECB official Nagel stated yesterday that the drop in energy costs did not affect the inflation slowdown. Hence, the decline in oil and gas prices may be making us wait in vain for the CPI to decline. If this is the case, lowering inflation to 2% will be even more challenging because, even at a 4% pace, it has slowed down by a total of 1%. The effects of the change in monetary policy are undoubtedly long-term, but if they were to occur at all, they would already be evident. The Senkou Span B line is rising on its own, but the pair haven't yet been able to break out of the Ichimoku cloud on the 24-hour TF. The important level is 1.1841, which is the side channel's bottom limit. It is unlikely that Andrew Bailey will use hawkish rhetoric. Leading experts from across the world have already started to evaluate the speech that BA Chairman Andrew Bailey is scheduled to give this week. Commerzbank, for instance, thinks that Mr. Bailey won't set himself out with "hawkish" rhetoric and that as a result, the pound may once more experience sales. The bank thinks that a smaller-than-anticipated slowdown in the British economy could release some of the regulator's restrictions. The signature of an agreement between the EU and the UK on the "Northern Ireland Protocol" also raises certain expectations. Experts warn that this process won't completely take into account all of the effects of Brexit on the Kingdom. According to Commerzbank analysts, Bailey won't live up to the market's expectations given the rigidity of the rhetoric surrounding the rate. We predict that BA will increase rates by 0.5% again in March before carefully considering each additional tightening. If the British regulator does not tighten monetary policy at the same rate when inflation is above 10%, it will face a barrage of criticism. As a result, we think we're in for at least one more significant rate increase. Yet once more, it's crucial to comprehend what the Fed will do in the coming months. To determine whether the January figure was an accident, you must view the next inflation report. If so, then the pound will have a significant advantage over the dollar since BA will raise the rate more quickly. If not, the pound could decline as a result of the Fed's potential decision to speed up tightening once more. Absolute "swing," in both technical and fundamental terms. Over the previous five trading days, the GBP/USD pair has experienced an average volatility of 118 points. This value is "high" for the pound/dollar pair. As a result, on Thursday, March 2, we anticipate channel movement that is limited by the levels of 1.1876 and 1.2112. A new upward round of movement within the "swing" will be indicated by the Heiken Ashi indicator moving upward. Nearest levels of support S1 – 1.1993 S2 – 1.1963 S3 – 1.1932 Nearest levels of resistance R1 – 1.2024 R2 – 1.2054 R3 – 1.2085 Trade Suggestions: In the 4-hour timeframe, the GBP/USD pair has once again stabilized below the moving average. The pair is currently in a "swing" movement, which allows you to trade on a recovery from the levels of 1.1932 and 1.2115. Alternately, trade on the lower TF, where it is simpler to spot moves using shorter-term and more precise signals. Explanations for the illustrations: Determine the present trend with the use of linear regression channels. The trend is now strong if they are both moving in the same direction. Moving average line (settings 20.0, smoothed): This indicator identifies the current short-term trend and the trading direction. Murray levels serve as the starting point for adjustments and movements. Based on current volatility indicators, volatility levels (red lines) represent the expected price channel in which the pair will trade the following day. A trend reversal in the opposite direction is imminent when the CCI indicator crosses into the overbought (above +250) or oversold (below -250) zones   Relevance up to 01:00 2023-03-03 UTC+1 This information is provided to retail and professional clients as part of marketing communication. It does not contain and should not be construed as containing investment advice or investment recommendation or an offer or solicitation to engage in any transaction or strategy in financial instruments. Past performance is not a guarantee or prediction of future performance. Instant Trading EU Ltd. makes no representation and assumes no liability as to the accuracy or completeness of the information provided, or any loss arising from any investment based on analysis, forecast or other information provided by an employee of the Company or otherwise. Full disclaimer is available here. Read more: https://www.instaforex.eu/forex_analysis/336491
Bank of England survey highlights easing price pressures

Bank of England survey highlights easing price pressures

ING Economics ING Economics 02.03.2023 12:09
Firms expect to raise prices and wages less aggressively, according to the latest Bank of England business survey. While this data alone is unlikely to stop a 25bp rate hike in March, if these trends continue through the spring, it suggests that this will mark the end of the current tightening cycle The Bank of England New Bank of England data suggests selling price expectations are easing Bank of England Governor Andrew Bailey hinted pretty strongly this week that financial markets are overestimating the amount of tightening that’s still to come. While he wouldn’t be drawn on what policymakers will do next, the emphasis is no longer on the size of future rate hikes, and instead, the question is whether the Bank needs to hike any more full stop. In the short term, the Bank is back to old-fashioned “data dependency”, and February’s meeting made it clear that future hikes will hinge on indicators of “inflation persistence”. We read that to mean policymakers are now less focused on month-to-month swings in inflation data and are looking more closely at price-setting behaviour in general. And the latest news here is encouraging. The BoE’s latest Decision Maker Panel – a survey of CFOs across the UK – supplies further evidence that price pressures are easing. This survey, which we know factors heavily into the policymaking process, shows companies now expect price growth to average 5.4% over the next year, down from a peak of 6.7% last summer. It’s a similar story when firms are asked about expected unit cost growth and CPI expectations. Key metrics from the BoE's Decision Maker Panel Source: Bank of England A March rate hike is likely, but that could be the last Importantly, it also suggests wage growth is peaking. The survey shows that firms expect wage growth of 5.7% over the next year, down from 6.3% in December. Time will tell whether this feeds into the official regular pay data, which has continued to run hot – something Governor Bailey remarked upon in a speech yesterday. Is there enough here to cast doubt over a March rate hike? We don’t think so. Despite a surprise downward move in core services inflation last month, the latest wage data probably suggests the Bank has a little further to go on rate rises. But if the trends displayed in this latest survey continue over the next couple of months, then our base case is that the March rate hike will be the last. We don’t rule out a final 25bp hike in May if the inflation data proves more persistent than expected between now and then. But markets are pricing a further 70-80bp of tightening by the summer, which we think looks excessive. Recruitment difficulties increased last month Source: Bank of England   Whatever happens, it looks like rate cuts aren’t likely to come through for at least year. One caveat to the generally positive story in the latest BoE survey was that recruitment difficulties worsened last month. The proportion of firms finding it “much harder” to recruit rose to 44%. Though that’s still well down on the level seen last summer, it is a reminder that structural worker shortages remain an issue. While wage growth is probably at, or close to, it’s peak, this suggests any decline will be pretty gradual. Read this article on THINK Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more
What are the possible scenarios for EUR/USD? Euro against US dollar - inidicator analysis

Despite The Decline Euro Remains Above 1.06, GBP/USD Is Trading Below 1.20

Kamila Szypuła Kamila Szypuła 02.03.2023 12:52
An improvement in risk sentiment after the publication of upbeat macroeconomic data from China made it difficult for the US dollar to find demand on Wednesday. USD/JPY The USD/JPY pair in the Asian session recouped losses and rose towards 136.80. At the beginning of the European session, the yen dropped significantly to 136.2540, but quickly began to recover. At the time of writing, USD/JPY is trading at 136.7450 So far, the Japanese yen has been stable this week in a period where the US dollar has weakened significantly against most of its G-10 peers. The yen's lack of strength may reflect the belief that the new Governor of the Bank of Japan (BoJ) Kazuo Ueda will maintain the very loose monetary policy of his predecessor. EUR/USD The euro pair is in a downtrend. It started the day high above 1.0670 but dropped to trade around 1.0620. The euro fell against the dollar on Thursday after data showed inflation in the euro zone was not as high as investors had feared based on national readings in recent days. Eurozone inflation eased to 8.5% in February from 8.6% a month earlier on lower energy prices. The core inflation rate in the Euro Area rose for a third successive month hitting a fresh record high of 5.6% in February. The core CPI which excludes prices of energy, food, alcohol and tobacco went up 0.8%. The core number reinforces the idea that without decreases in energy prices inflation remains sticky and adding credence to the recent hawkish rhetoric from ECB policymakers. Investors now see the ECB's 2.5% deposit rate rising by a combined 100 basis points in March and May, then to around 4.1% at the turn of the year. Read next: Tesla Intends To Cut Assembly Costs, The White House Released The National Cyber Strategy | FXMAG.COM GBP/USD The pound pair against the euro is down today. GBP/USD traded below 1.20 again. GBP/USD extended its decline and dropped below 1.2000 on Thursday after failing to capitalize on Wednesday's US dollar (USD) weakness. The couple looks delicate. The British pound loses against the US dollar this Thursday as the dollar finds some support. Last night, Fed officials (Kashkari and Bostic) maintained their hawkish stance. From the UK's perspective, the Brexit deal between the Prime Minister and the EU. Trade disputes with Northern Ireland have now been resolved, but the most surprising aspect of the deal was the favorable reception from some senior Brexiteers who praised the new concessions. While this is positive for the overall UK economy, the currency remains driven by central bank policy. The Brexit deal could bring short-term relief to the pound against the USD. AUD/USD The Australian movement is similar to its European counterparts. The AUD/USD pair remains above 0.67 despite a significant drop from 0.6767 to 0.6730. Source: finance.yahoo.com, investing.com
The GBP/USD Pair Is Expected The Consolidation To Continue

There Are No Solid Foundations For The Pound's Growth

Paolo Greco Paolo Greco 03.03.2023 09:42
During the past few weeks, the GBP/USD currency pair has been in "swing" mode. On the 4-hour TF, this is very evident, and on the 24-hour TF, we have a flat in a channel that is 500 points wide. As a result, the technical picture as it stands now is not the best for trading. Although there were no fundamental or macroeconomic foundations for either the dollar or the pound sterling, yesterday ended up being another failure for the pound sterling. Nonetheless, we cautioned that the pair might move rather actively in the side channel even in the absence of reports and events. The pair fell to a level of 1.1932 during the day, which is regarded as the lower limit of the side channel on the 4-hour TF. Now the pair must confidently pass through this level if traders are to anticipate further declines in the quotes. A further decline in quotes may be limited by the fact that on the 24-hour TF, the side channel's border passes a bit lower, at the level of 1.1841. The pair left the Ichimoku cloud on the 24-hour TF yesterday, but as previously stated, the decline in quotes can only continue if the level of 1.1841 is overcome. As a result, this victory has no meaning. In the very long term, the pound continues to be unchanged. It appears as a "swing" on a 4-hour TF. But keep in mind that the pair still tends to drop further because the price is taking its time returning to the channel's upper limit. At the moment, there are no solid foundations for the pound's growth. In recent months, it has increased by more than 2,000 points, while just 500 points have been lost or gained. As a result, we still support continuing the downward trend. A lot now depends on the Bank of England, among other things, and a lot of contradictory information keeps coming from behind. The Bank of England's governor has not changed his rhetoric. The next performance by Andrew Bailey took place this week, despite not even being mentioned in the news calendars. It should be emphasized that while Mr. Bailey rarely conducts interviews or delivers speeches, each of them is given more attention. Even less frequently, Mr. Bailey speaks out in a loud manner. There was no exception the day before yesterday. No one will sacrifice the economy, as the Bank of England chairman made clear to the market. And this can only indicate that the regulator is on the verge of another slowdown in the rate of tightening monetary policy. It's hard to say with certainty how many rate increases traders already factored in when purchasing the pound between September and December 2022. At that time, the pound was quickly increasing, plainly anticipating a future tightening of monetary policy. After all, it was only last fall when US inflation started to decline and rumors of a slowdown in the Fed's crucial rate hikes first emerged. This is where the pattern changed because the Bank of England was late in responding to the Fed. Right now, the situation is the exact opposite. First off, the pound has reacted pretty sharply to the two-year downward trend. Second, the market has legitimate concerns about the British regulator's willingness to continue tightening after it has already increased the key rate 10 times. All of this suggests that a downward correction is already necessary. For all currencies, the rate problem is still present and quite complicated. The fact is that nobody knows what the rate increase in the UK or the EU will be at its highest point. Both central banks have adopted the most covert stance and are keeping the impending tightening a secret. As a result, estimating peak rates is quite challenging. And the answer to this question determines how both of the major currency pairs behave. Nevertheless, since the market itself lacks an answer to this query, it must rely on the information at hand to make decisions. And there isn't much of it right now. Everything now just comes down to whether the market believes that the ECB and BA will be willing to tighten policy as far as is necessary. We don't think so. Yet, there is confidence in the Fed, so we will continue to support the dollar's rise in the near term. When all central banks meet regularly in the middle of March, perhaps the situation will slightly improve. There can be some surprises or crucial remarks. Yet, it is now simply impossible to draw any further conclusions. Over the previous five trading days, the GBP/USD pair has experienced an average volatility of 124 points. This value is "high" for the dollar/pound exchange rate. So, we anticipate movement inside the channel on Friday, March 3, with movement being limited by levels of 1.1815 and 1.2063. A new upward round of movement within the "swing" is indicated by the Heiken Ashi indicator's upward reversal. Nearest levels of support S1 – 1.1932 S2 – 1.1902 Nearest levels of resistance R1 – 1.1963 R2 – 1.1993 R3 – 1.2024 Trade Suggestions: In the 4-hour timeframe, the GBP/USD pair once again stabilized under the moving average. The pair is currently in a "swing" movement, which allows you to trade on a recovery from the levels of 1.1932 and 1.2115. Alternately, trade on the lower TF, where it is simpler to spot moves using shorter-term and more precise signals. Although there is a chance of going beyond 1.1932, the following negative impulse can already be weak. Explanations for the illustrations: Determine the present trend with the use of linear regression channels. The trend is now strong if they are both moving in the same direction. The short-term trend and the current trading direction are determined by the moving average line (settings 20.0, smoothed). Murray levels serve as the starting point for adjustments and movements. Based on current volatility indicators, volatility levels (red lines) represent the expected price channel in which the pair will trade the following day. A trend reversal in the opposite direction is imminent when the CCI indicator crosses into the overbought (above +250) or oversold (below -250) zones.     Relevance up to 01:00 2023-03-04 UTC+1 This information is provided to retail and professional clients as part of marketing communication. It does not contain and should not be construed as containing investment advice or investment recommendation or an offer or solicitation to engage in any transaction or strategy in financial instruments. Past performance is not a guarantee or prediction of future performance. Instant Trading EU Ltd. makes no representation and assumes no liability as to the accuracy or completeness of the information provided, or any loss arising from any investment based on analysis, forecast or other information provided by an employee of the Company or otherwise. Full disclaimer is available here. Read more: https://www.instaforex.eu/forex_analysis/336624
Bank Of England Will Probably Be Unable To Avoid A Significant Easing Of Policy

Bank Of England Will Probably Be Unable To Avoid A Significant Easing Of Policy

Jakub Novak Jakub Novak 03.03.2023 11:30
The pound tested a key support level in the area of 1.1920 for the third time, a breach of which will result in the resumption of the bear market and another significant drop in the pair. But before we discuss the technical picture of the GBP/USD pair, I'd want to draw attention to some recent remarks made by Michael Saunders, a former Bank of England official who was known for being one of the most hawkish individuals in the institution. We are all aware that the Bank of England will probably be unable to avoid a significant easing of policy in the near future due to the inflation situation. In a recent interview, Saunders, a former committee member, shocked everyone by declaring that he would vote to slow the rate of an interest rate increase. Raising Rates? If he were still a member of the nine-member Monetary Policy Committee, the economist said he would favor raising the key rate by a quarter point to 4.25%. Saunders asserts that it would be incorrect at this time to raise rates by 0.5%, as was done at the last two sessions. Saunders According to Saunders, the economy is starting to suffer from the fastest cycle of monetary policy tightening in the past three decades, and there is not much more that can be done by policymakers to accomplish the desired effect of containing inflation. "Based on the evidence that we have at the moment, and with only a couple of weeks until the next MPC meeting, I would vote for a rise, but by 25 basis points rather than the 50 and 75 that we have seen in the last couple of quarters," Saunders said in an interview. "I don't believe we need to take any further action." Bank of England Recall that the Bank of England increased the base rate by 390 basis points to 4% at the end of 2021, the highest level since 2008. At the upcoming meeting on March 23, investors are very likely to predict an increase of another quarter point, with a top of 4.75% by the end of September. Although Bank of England Governor Andrew Bailey stated this week that the bank should terminate its strong monetary policy soon, it is clear that traders have lowered their expectations for further, more aggressive rate hikes. "We are seeing signals that interest rates are impacting many areas of the economy considerably harder than we expected - especially the housing market," said Saunders, who is currently a senior economic consultant at Oxford Economics. In light of this, the pound continues to decline since the Federal Reserve System's policy is anticipated to be more aggressive than previously thought in the near future. GBP/USD Regarding the technical analysis of the GBP/USD, the bulls have even more difficulties. Buyers must rise above 1.2000 to regain control of the situation. The only way to increase the likelihood of a subsequent recovery in the area of 1.2030 and 1.2070, after which it will be able to discuss a more abrupt movement of the pound up to the area of 1.2220, is if this resistance fails to hold. The breakdown of this range, which would occur if the bears took control of 1.1950, would strike the bulls' positions and drive the GBP/USD back to 1.1920 with potential growth to 1.1870. EUR/USD Regarding the EUR/USD's technical picture, the pair is still under pressure, although today there is a potential for an upward correction. To restart the bull market, 1.0600 must be held and 1.0630 must be broken. You can easily move from this level to 1.0660 and 1.0730, with the chance of doing so soon. If the trading instrument declines, I only anticipate activity from significant buyers around 1.0600. If no one is present, it would be preferable to hold off on initiating long positions until the 1.0565 low has been updated   Relevance up to 08:00 2023-03-04 UTC+1 This information is provided to retail and professional clients as part of marketing communication. It does not contain and should not be construed as containing investment advice or investment recommendation or an offer or solicitation to engage in any transaction or strategy in financial instruments. Past performance is not a guarantee or prediction of future performance. Instant Trading EU Ltd. makes no representation and assumes no liability as to the accuracy or completeness of the information provided, or any loss arising from any investment based on analysis, forecast or other information provided by an employee of the Company or otherwise. Full disclaimer is available here. Read more: https://www.instaforex.eu/forex_analysis/336656
Saxo Bank Podcast: A Massive Collapse In Yields, Fed's Tightening Cycle And More

Our latest major central bank calls

ING Economics ING Economics 04.03.2023 10:36
We now expect the Fed funds rate to peak at a higher level, but still think rate cuts are likely by year-end. The European Central Bank is likely to slow the pace of hikes beyond March, while the Bank of England looks very close to the end of its tightening cycle In this article Federal Reserve European Central Bank Bank of England   Shutterstock Governor of the Bank of England Andrew Bailey, ECB President Christine Lagarde, US Federal Reserve Board Chairman Jerome Powell Our major central bank forecasts Macrobond, ING forecasts Federal Reserve Having implemented four consecutive 75bp rate hikes, the Federal Reserve switched to 50bp in December and then 25bp in February. The data since then has been strong with the economy adding 517,000 jobs in January, retail sales jumping 3% month-on-month and inflation re-accelerating at the core level. Several Fed officials have since commented that they would have considered a 50bp move in February had they known. But those giving this message are all non-voters this year and with borrowing costs rising broadly throughout the economy and banks tightening lending standards, we think the Fed will stick with 25bp increments. Nonetheless, given the current situation, we think the Fed will now hike in March, May and June. Inflation is still slowing and this process will likely accelerate over the summer months, and with job loss announcements on the rise we still anticipate rate cuts before year end – we look for a 50bp cut in December.  European Central Bank As long as core inflation remains stubbornly high in the eurozone, the ECB will continue hiking rates and will not consider future rate cuts. A 50bp rate hike at the March meeting has been pre-announced and looks like a done deal. Beyond the March meeting, the ECB seems to be entering a new game in which further rate hikes will not necessarily get the same support within the governing council, as hiking deep into restrictive territory increases the risk of adverse effects on the economy. The main question beyond the March meeting will be whether the ECB will wait to see the impact of its tightening on the economy or whether it will continue hiking until core inflation starts to substantially come down. We currently expect a compromise: two additional rate hikes of 25bp each in May and June, before pausing the hiking cycle and entering a longer wait-and-see period.  Bank of England The Bank of England's February meeting saw a stark change in communication, with policymakers signalling that the end of the tightening cycle is near. It said further hikes were contingent on signs of additional “inflation persistence”, which suggests policymakers are less beholden to month-to-month swings in data and are more focused on longer-term term trends. In truth, the news here is mixed. The Bank’s own survey has hinted both that recruitment difficulties are easing and price/wage expectations might have peaked. That can’t yet be said for the official wage data, though core services inflation did take a surprise nose-dive in the most recent numbers. Officials have hinted strongly that any future hikes will be in 25bp increments, and they have stressed that much of the impact of past hikes is yet to feed through. Barring inflation/wage data becoming more worrisome, we think a 25bp March hike is likely to be the last.  TagsCentral banks Read the article on ING Economics   Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more
Despite The Improvement In The Outlook Due To Falling Energy Prices, The Economic Environment In Britain Remains Difficult

Despite The Improvement In The Outlook Due To Falling Energy Prices, The Economic Environment In Britain Remains Difficult

Marek Petkovich Marek Petkovich 06.03.2023 12:33
Unlike the Fed, whose officials are pretty clear about what they are going to do, the Bank of England prefers to be dramatic. It was the first among the world's major central banks to predict a recession in Britain's economy, and now it is trying to put a barrier in the way of the futures market, expecting to raise the repo rate to 4.6%. Before Andrew Bailey's speech, the peak forecast was even higher, at 4.8%, but the BoE head added drama. Bailey believes that the futures market is overestimating the expected repo rate peak. The Bank of England, at its last meeting, abandoned the presumption of the need for further increases, and now it would be a mistake to talk about both the end of the cycle of tightening of monetary policy, and that the cost of borrowing will necessarily rise. Everything will depend on the data, and the situation in Britain is fundamentally different from the U.S. Indeed, although consumer prices in the UK are still measured in double digits, core inflation slowed substantially in January from 6.3% to 5.8%. Dynamics of repo rate ceiling expectations Despite the mixed macro statistics for the UK, the futures market raised the anticipated repo rate ceiling on the assumption that the BoE would follow the Fed. Central banks usually move in packs, massively tightening or loosening monetary policy following their leader, the Fed. Nevertheless, history shows it is a mistake to count on the BoE blindly copying the actions of their U.S. counterparts. If the monetary restriction cycle in Britain comes to an end in March and continues in the U.S. until June, GBPUSD risks falling. In this regard, the Reuters consensus forecast of its growth to 1.22, 1.23 and 1.26 in 3.6 and 12 months looks too optimistic. Moreover, according to the results of three months, ending in January, the UK economy is expected to stagnate due to high inflation and the impact of high interest rates on household finances and business activity. According to Investec, despite the improvement in the outlook due to falling energy prices, the economic environment in Britain remains difficult. The service sector was unable to fully recover the December losses in January, including due to strikes. However, there are always two currencies in any pair, and no matter what problems the pound is experiencing, the weakening of the U.S. dollar against the background of disappointing U.S. employment statistics for February may become the basis for GBPUSD purchases. According to Bloomberg experts, the indicator will increase by 215,000, which is close to the late 2022 figures. According to FOMC member Christopher Waller, if all goes well, the federal funds rate will not exceed 5.5%. GBP/USD Technically, there is consolidation in the range of 1.194–1.214 on the GBPUSD daily chart. A breakout of its upper limit will increase the risks of growth to 1.22 and 1.23. On the contrary, a successful assault on support at 1.194 will be the basis for sales with a target of 1.182. Relevance up to 08:00 2023-03-11 UTC+1 This information is provided to retail and professional clients as part of marketing communication. It does not contain and should not be construed as containing investment advice or investment recommendation or an offer or solicitation to engage in any transaction or strategy in financial instruments. Past performance is not a guarantee or prediction of future performance. Instant Trading EU Ltd. makes no representation and assumes no liability as to the accuracy or completeness of the information provided, or any loss arising from any investment based on analysis, forecast or other information provided by an employee of the Company or otherwise. Full disclaimer is available here. Read more: https://www.instaforex.eu/forex_analysis/336799
China’s Foreign Minister Qin Gang Downplayed Russia’s Invasion Into Ukraine

China’s Foreign Minister Qin Gang Downplayed Russia’s Invasion Into Ukraine

Saxo Bank Saxo Bank 08.03.2023 08:29
Summary:  Equities tumbled as 2-year Treasury yields surged above 5% and dollar reached its YTD high on Powell opening the door for a bigger rate hike and a higher terminal rate. As risk sentiment deteriorated, AUD was a notable underperformer with RBA also going for a dovish hike. CAD in focus today with Bank of Canada expected to pause. China import data also remained mixed, and oil prices slumped by over 3% while Copper broke below the key $4 mark.   What’s happening in markets? S&P fell below 4000 after Powell’s testimony The Nasdaq 100 (NAS100.I) and S&P 500 (US500.I) retreated following Jerome Powell’s testimony to the Senate. Powell warned that the FOMC would probably hike rates more and possibly faster than previously anticipated, given the latest data has come in stronger than expected. The S&P 500 fell 1.50% to 3986, below the 4000-handle and the benchmark’s 50-day moving average, while the Nasdaq 100 lost 1.2%. Rivian (RIVN:xnas) plunged 14.6% after the EV maker announced a private offering of USD1.3 billion convertible notes. Tesla (TSLA:xnas) shares fell over 3.2% and Apple (AAPL:xnas) lost 1.5%. Facebook’s parent Meta Platforms (META:xnas) closed almost steady after it was reported the social media giant plans another round of layoffs that could affect thousands of workers. Meanwhile, in Europe, stock markets also closed in the red - the benchmark Euro Stoxx 600 fell 0.8% with Santander being one of the worst performers, losing 2.4% most despite the business moving to target institutional clients. 2-year US Treasury yield jumped above 5%, for the first time since July 2007 Following Fed Chair Powell opening the door for a 50bp rate hike at the March FOMC meeting, investors sold the front-end of the Treasury curve and saw the 2-year finishing the session at 5.01%, the highest level since July 2007. The longer end of the curve, however, recovered from their intraday lows with the 10-year yield closing only 1bp cheaper at 3.96% and the 30-year yield 2bps richer at 3.87%. The 2-10-year yield curve flattened to -105bps, the deepest inversion since September 1981. The interest rate futures are pricing an over 60% chance for a 50bp rate hike at the next FOMC and a terminal rate at around 5.64% by September this year. The USD 40 billion 3-year auction went well with strong demand. Hang Seng Index and China’s CSI 300 dropped as SOE telcos rally faded to reverse lower After the follow-through rally, n central-government-owned enterprises in Hong Kong and mainland bourses in the telecommunication space lost steam, and the Hang Seng Index and CSI 300 dropped 0.3% and 1.5%. China Telecom (00728:xhkg) slid 4% and China Mobile (00941:xhkg) retreated 2.7%. China Tower came down 2.1%, paring some of the strong gains yesterday. On the other hand, SOE oil and gas giants managed to sustain gains and finish Tuesday higher with PetroChina (00857:xhkg) up 4.4%, Sinopec (00386:xhkg) up 4.2%, and CNOOC (00883:xhkg) up 3.3%, Chow Tai Fook (01929:xhkg) plunged 6% following the departure of the jeweller’s mainland operation chief. SJM (00880:xhkg) slid 4.1% after the loss widened to HKD7.8 billion in FY22. Australian equities slide after Powell’s comments Despite the RBA today suggesting it is at a closer point of pausing rate hikes, the Australian share market’s benchmark, the ASX200 has fallen 0.93% - taking it below its 50-day moving average. The pressure on Aussie market comes after Fed Chair Powell gave hawkish remarks to the US Senate – the FOMC would possibly hike rates faster than previously anticipated. Some of the day’s laggard on the ASX include Woodside (WDS) which has fallen 1.8% after going ex-dividend. BHP and Rio Tinto down by 0.5% ahead of going ex-dividend tomorrow. For what ex-dividend means for investors and traders, click here for possible implications. Despite the overall tone being negative today – as set by the Fed - the best performing companies are those that are benefiting and are likely to continue to benefit from China’s reopening  - with Qantas and Webjet trading over 1.4% higher, with Webjet hitting a 52-week high of $7.01. US dollar notches its biggest gain in a month. The Aussie dollar sinks over 2% After Powell said the US central bank is likely to raise rates higher than previously thought, the US dollar index surged to a fresh cycle high, moving back to levels not seen since December. That resulted in the Aussie dollar tumbling over 2%. Compounding on the AUD pressure, the RBA Governor said today, it is closer to where it's appropriate to pause rate rises. This comes just a day after Australia’s central Bank hiked interest rates for the 10th straight meeting, taking the cash rate to 3.6%. The RBA said monthly inflation had ‘peaked’, goods prices were expected to moderate in the months ahead, and the Bank alluded to services inflation being only temporary. Futures markets now suggest Australia’s cash rate could peak at 4% in September. The Aussie dollar against the US (AUDUSD) trades at 0.6585. Further declines could see the pair move to the next support level, at perhaps the 0.649 level. FX: JPY descent continues; CAD in focus With Powell’s hawkish remarks, 2-year Treasury yields jumped over 5% after a 12bps gain and the USD was pushed to fresh YTD highs. AUD and NZD were hurt by the deterioration in risk sentiment, with the former also pressured by a dovish turn from the RBA. Widening yield differential between US and Japan weighed on the yen, and USDJPY was seen testing 137.50 in the Asian morning session despite volatility risks from the Bank of Japan meeting scheduled on Friday. GBPUSD broke below the 200DMA to reach YTD lows, with BOE’s Mann commenting that sterling could weaken further. EURUSD dropped below 1.06 paring some of the hawkish ECB Holzmann reaction earlier in the week. CAD could be in focus today with a potential pause coming from BOC (read below), with USDCAD likely to take a look at 1.38+ levels. Crude oil drops over 3% on hawkish Powell After touching the top of the recent range, crude oil prices slid on Tuesday as Powell hinted at bigger and longer rate hikes, raising concerns of demand weakness. This comes along with a weaker-than-expected growth target from China for this year which continues to limit the optimism on Chinese demand recovery. Meanwhile, short-term supply concerns are subdued. OPEC Chief Haitham Al-Ghais also said that slowing oil consumption is US and Europe poses a concerns for the market, despite strong growth from Asia. EIA also released its short-term energy outlook and lowered its crude oil production forecasts for US supply for both this year and next amid signs of subdued growth and higher costs. WTI prices touched lows of $77 while Brent was back at $83 from $86+ earlier. Copper broke below $4 mark Base metals were broadly pushed lower on Tuesday as dollar surged to fresh YTD highs on remarks from Powell’s testimony opening the door for a bigger hike in March and a higher terminal Fed funds rate. China import data also gave mixed signals on the first two months of the year, with mined copper ore imports increasing but inflows of refined copper declining. Supply constraints from Peru also seemed to ease as the Peruvian government expects shipments of copper and zinc will normalise with days, following months of social unrest prompted by the impeachment of former President Pedro Castillo. Copper prices fell 2.8% to close below the $4 mark, bringing last week’s low of $3.93 and the 100DMA at $3.86 into focus. What to consider? Powell’s testimony opens the door to a 50bps rate hike in March Fed Chair Powell, in his prepared remarks to Congress, said if incoming data indicates faster tightening is required, the Fed is prepared to increase the pace of rate hikes, warning that the ultimate level of interest rates is likely to be higher than previously anticipated given the string of hot January data. This is another signal that March dot plot could see an upward shift. Not just that, but Powell has also opened the door to a 50bps rate hike in March and market pricing has shifted more in favor of a bigger hike on March 22. Terminal rate expectations have shifted higher to 5.63% from 5.48% previously. Remarks brought the 2-year yields above 5% and the deepest inversion in the 2-10 year yield curve. China’s exports and imports dropped further in February China’s exports fell 6.8% Y/Y and imports dropped 10.2% in February. The larger-than-expected decline in imports was partially due to the fall in commodity prices while commodity import volume grew. China to establish the Ministry of Science and Technology and the National Data Bureau At the National People’s Congress, China announced the establishment of the Ministry of Science and Technology to promote innovation in technology, the National Financial Regulation Bureau to replace the China Banking and Insurance Regulatory Commission (CBIRC) and take over from the People’s Bank of China the regulation of financial holding companies and from the China Securities Regulatory Commission investor protection, and the National Data Bureau to promote the development of the digital economy. The overhaul of the financial regulatory authorities, as we noted in our Two Sessions preview, is to strengthen the Chinese Communist Party’s leadership in the institutional setup, the division of functions, governance. China’s Foreign Minister reaffirmed the strategic partnership with Russia In a press conference on the side-line of the Two Sessions, China’s Foreign Minister Qin Gang reiterated the “China-Russia comprehensive strategic partnership of coordination for a new era” and downplayed Russia’s invasion into Ukraine to that the “Ukraine cries has complex historical fabrics and practical reasons with the underlying nature being the eruption of the conflicts in the security governance of Europe”. The pro-Russian stance, as opposed to the more conciliatory-leaning stance in recent months toward the West, added to investors’ concern over the Sino-American relationship. The Bank of England (BoE) worries about core inflation Yesterday, BoE’s Catherine Mann, former Global Chief Economist at Citibank, expressed concerns about the persistence of core inflation in the United Kingdom. It is currently running at 5.80% year-over-year versus a long-term average of 1.84%. Mann embraced a hawkish tone, highlighting the need for further interest rate hikes. She indicated that the terminal rate is beyond forecast horizon now. The monetary market forecasts it will be at 4.75 %. This implies three consecutive hikes of 25 bp in March, May and June. She also mentioned that the evolution of the sterling plays a very important role for monetary policy due to the high levels of imports. Despite worries about the state of the UK economy, the sterling has been rather resilient this year. It is down only 0.47% against the euro YTD. Most economists still expect the UK economy will go through a period of recession in 2023 (drop of GDP estimated at 0.6%). But a minority of them even expect the UK economy could avoid a recession if the decrease in energy prices continues. This is quite a change compared to forecasts initially released at the end of 2022. Iron ore price steady ahead of peak Chinese construction season Iron ore  - the steel-ingredient is trading slightly lower today, down 0.2% at $126.75, but holds around 2023 highs, after its price rose 2.1% yesterday. China is expected to increase demand - as it usually does ahead of China’s peak construction season. Around this time of year, steel mills typically start restocking iron ore, ahead of building work ramping up amid supportive weather. Adding to sentiment, yesterday Rio Tinto (RIO) said it’s seeing good demand from China - with the country shaking off pandemic restrictions. BHP and Rio go ex-dividend tomorrow, March 9. For implications of ex-dividends click here.   Bank of Canada meets next After RBA’s dovish hike, the stage is set for the Bank of Canada to pause on its tightening cycle at the meeting today. In light of the weaker-than-expected data and BOC’s signal from the January meeting, market is not expecting any rate hikes today although the message is likely to convey policy flexibility. Read our full preview here to know what it means for the CAD as the divergence of BOC to the Fed widens. Investing with a Gender Lens Gender Lens Investing is a strategy which puts weight on gender-based considerations in your investment decisions, so you can in some way contribute towards efforts to close the “gender gap”. As today is the International Women’s Day, we explore why and how we can invest with a gender lens in this video. We also look at some ETFs and Saxo's Women in Leadership equity theme basket which can help you get exposure to this theme. Here’s wishing everyone a very happy International Women’s Day from Saxo   For what to watch in the markets this week – read or watch our Saxo Spotlight. For a global look at markets – tune into our Podcast.   Source: Global Market Quick Take: Asia – March 8, 2023 | Saxo Group (home.saxo)
Hawkish Fed Minutes Spark US Market Decline to One-Month Lows on August 17, 2023

Testimony From Fed Chair Powell Was Indeed Hawkish

Saxo Bank Saxo Bank 08.03.2023 08:35
Summary:  Powell’s testimony to the Congress started with a hawkish message. Market is now tilting in favor of a 50bps Fed rate hike this month and a terminal rate expectation of over 5.6%. Friday’s jobs data and next Tuesday’s CPI print will be key tests for whether a 50bps March rate hike gets cemented, but what is clear is that Powell’s shift to disinflation narrative in February was premature. Risk assets may remain under pressure if data stays hot, while the path of least resistance for the dollar is higher. Powell’s credibility at risk The semi-annual testimony from Fed Chair Powell was indeed hawkish, despite a political stage being set up. Instead of being relieved by incoming growth indicators, Powell still seemed worried about inflation despite his relaxed stance at the February FOMC meeting where he started the chatter on disinflation. Powell increased the prospect of a return to larger rate hikes, saying, “If the totality of the data were to indicate that faster tightening is warranted, we would be prepared to increase the pace of rate hikes”. The resulting increase in the probability of a 50bps rate hike at the March 22 FOMC meeting is shown in the chart below. He also added that with the latest economic data having “come in stronger than expected”, it “suggests that the ultimate level of interest rates is likely to be higher than previously anticipated”. This change in stance, after just one month of strong data, is proof that Powell took comfort in disinflation prematurely. High stakes for the next set of data The reaction to Powell’s testimony remains at risk of reversal, unless upcoming data supports it. Friday’s jobs report or next Tuesday inflation print will be key to watch to make or break the expectations of a 50bps rate hike in March. Hotter-than-expected prints can also bring the terminal rate pricing closer to the 6% mark, making the Fed’s lag to the market ugly. Moreover, shifting to a 50bps rate hike after just one go at the 25bps rate hike pace will be an embarrassment for Fed and its models. Bloomberg consensus expectations point to another strong jobs report after the blowout report of January. Headline jobs are expected to come in again at 200k+, but risk of disappointment remains given the scope of correction from +517k in January. The unemployment rate is expected to remain unchanged at 3.4%, while wage growth is projected to accelerate. Most early indicators such as the business surveys from S&P pointed to an acceleration in hiring, while applications for unemployment benefits remained historically low. Overall message, despite a potentially softer headline print, is likely to be that US labor market is still tight and there are millions of open positions even as layoffs continue to ramp up in some of the sectors. Risky assets to remain under pressure Along with a higher probability of a 50bps rate hike in March, the shift in tone from Powell has also seen the terminal rate pricing for the Fed Funds target rate to rise to 5.65% from 4.9% at the end of 2022 and the 5-5.25% hinted in the December dot plot. A brutal sell off in Treasuries followed the remarks, with the yield on 2-year Treasuries rising over 12bps to over 5% for the first time since July 2007 and rising further to 5.05% in Asian session. The longer end of the curve, however, recovered from their intraday lows with the 10-year yield closing only 1bp cheaper at 3.96% and the 30-year yield 2bps richer at 3.87%. This made the 2-10-year yield curve flatten to -105bps, the deepest inversion since September 1981. But something seems amiss with the higher-for-longer message not moving the 10-year yields. Either the 10-year yield will need to move higher or the 2-year will need to revert back lower to give a consistent message. This means higher interest rate volatility will remain in the cards, also suggesting higher risk premium for equities. This keeps diversification beyond US equities in favor. We expect European and Asian equities to outperform this year. China also appears poised for an upswing in growth as economic momentum picks up, but the recovery can remain bumpy in light of regulatory and geopolitical risks. Dollar’s path of least resistance is higher The US dollar is now back at its YTD high with potential for another leg higher after a minor correction. For the DXY index, key levels to watch are the 200DMA and 76.4% retracement at 106.45. The dollar is benefitting from a host of tailwinds including: elevated short-end rates a restrained rise in long-end yields suggesting a bid for safety China’s lower-than-expected growth target for 2023 dovish turns from some central banks such as RBA, and BOC likely to pause this week excessive pricing in for ECB and BOE rates remaining at risk of a correction Even if the Fed was to go for a 25bps rate hike again at the March meeting, there is enough reason to believe that that the dot plot will shift higher. That will also be sufficient for the USD to stick to its current range. Source: Saxo   Source: Macro Insights: Bumpy inflation or bumpy Powell? | Saxo Group (home.saxo)
Bank of England Faces Dilemma: Will They Raise Rates by 25bps or 50bps?

The Likelihood That The GBP/USD Pair Will Continue To Decline Will Increase

Paolo Greco Paolo Greco 08.03.2023 10:41
The GBP/USD currency pair also began a decline on Tuesday, which few predicted. In addition, we anticipated that the decrease would occur gradually rather than rapidly. The pair had been in "swing" mode for several weeks, but yesterday it managed to break through the level of 1.1932, which served as the bottom border of the side channel in which the "swing" was realized. If you look closely at the chart above, you will note that even in flat conditions, each succeeding price peak was lower than the one before it. The price attempted to break through the 1.1932 level at least three times, each time rebounding off it by a smaller distance. That is why we have consistently stated that we expect the pair to collapse again. The British pound is still overbought, as seen by its 2,100-point increase in just three months towards the end of the previous year. The British pound frequently increased irrationally and too rapidly reversed a two-year decline by 50%. There aren't many reasons right now that could help the pound rise and the ones that did earlier have long since been figured out by traders. Hence, a new decline in the value of the pound was inevitable. The only uncertainty was the exact commencement time. Although we could not fully rule it out, we did not anticipate it to begin yesterday. Jerome Powell didn't mention anything fundamentally new in Congress. The mood of market participants is undoubtedly affected whenever the head of the Fed publicly states his willingness to speed up the tightening of monetary policy once more, but as we previously stated, everything has been leading up to this for a very long time. If the market did not understand this, then everything makes sense, because it received grounds for additional dollar purchases "straight in the forehead" yesterday. The pair fell to the crucial Fibonacci level of 38.2% (1.1842) on the 24-hour TF. The likelihood that the pair will continue to decline will increase with a confident passing of this level, which from our perspective would be quite rational. Additionally, near the level of 1.1842, the Senkou Span B line ran for a while, which had only recently moved higher. As a result, overcoming 1.1842 will allow bears to fall further. Then, the targets will fall between 1.13 and 1.15. What is the British pound currently capable of? This week in the UK, there won't be many particularly significant publications. Of course, we're referring to the GDP and industrial output numbers that will be released on Friday. These are viewed in the same way as Jerome Powell's congressional speeches. If there is no "surprise" or outright surprise, there will almost certainly be no reaction. It is a fact that the GDP data will be released monthly rather than quarterly, and that the report on industrial production has not recently piqued the curiosity of traders. It is also challenging to anticipate support for the pound from US news and events. Powell is unlikely to modify his rhetoric today when he speaks in the same Congress but before a different committee. What else is in store for us this week? Only the nonfarm and unemployment reports from Friday. It is doubtful that unemployment will increase, at least not much. Therefore, a 0.1% increase will not justify selling the dollar. The Nonfarm data for February might even fall short of expectations, but all will depend not on the actual number but rather on the projection and how closely the actual figure corresponds to it. Consequently, even if the projection is overly optimistic, it will still cause the dollar to increase. The British pound can only increase if Non-Farm Payrolls have a dreadful value. And not for long, because the market is already expecting the Fed to tighten its monetary policy or accelerate rate hikes. And this is the most "bullish" aspect that can exist, negating all the others. Thus, we do not anticipate significant growth of the pair in the foreseeable future. When Andrew Bailey releases a "hawkish" report, perhaps something will change. We do not currently see any way that the "bearish" market sentiment can change to "bullish," whether it is before or after the Fed and BA's next meetings. You need to make a small adjustment after yesterday's collapse, but the Heiken Ashi indicator should identify the corrective and not try to predict when it will start. Over the previous five trading days, the GBP/USD pair has experienced an average volatility of 124 points. This value is "high" for the dollar/pound exchange rate. As a result, on March 8 we anticipate movement that is contained inside the channel and is limited by levels 1.1719 and 1.1967. A round of upward corrective is indicated by the Heiken Ashi indicator's upward reversal. Nearest levels of support S1 – 1.1841 S2 – 1.1780 S3 – 1.1719 Nearest levels of resistance R1 – 1.1902 R2 – 1.1963 R3 – 102024 Trade Suggestions: In the 4-hour timeframe, the GBP/USD pair once more stabilized under the moving average. Unless the Heiken Ashi indication turns up, you can continue to hold short positions with targets of 1.1780 and 1.1719. If the price is stable above the moving average, long positions with targets of 1.2024 and 1.2085 may be taken into account. Explanations for the illustrations: Determine the present trend with the use of linear regression channels. The trend is now strong if they are both moving in the same direction. The short-term trend and the direction in which to trade right now are determined by the moving average line (settings 20.0, smoothed). Murray levels serve as the starting point for adjustments and movements. Based on current volatility indicators, volatility levels (red lines) represent the expected price channel in which the pair will trade the following day. A trend reversal in the opposite direction is imminent when the CCI indicator crosses into the overbought (above +250) or oversold (below -250) zones.   Relevance up to 01:00 2023-03-09 UTC+1 This information is provided to retail and professional clients as part of marketing communication. It does not contain and should not be construed as containing investment advice or investment recommendation or an offer or solicitation to engage in any transaction or strategy in financial instruments. Past performance is not a guarantee or prediction of future performance. Instant Trading EU Ltd. makes no representation and assumes no liability as to the accuracy or completeness of the information provided, or any loss arising from any investment based on analysis, forecast or other information provided by an employee of the Company or otherwise. Full disclaimer is available here. Read more: https://www.instaforex.eu/forex_analysis/337002
UK Public Sector Borrowing Sees Decline in July: Market Insights - August 22, 2023

AUD/USD Rose Above 0.66, USD/JPY Drop Below 137.00

Kamila Szypuła Kamila Szypuła 09.03.2023 11:40
The dollar held near a three-month high on Thursday, backed by a message from Federal Reserve Chairman Jerome Powell that interest rates will need to go higher and possibly faster. On the second day of his testimony before Congress on Wednesday, Powell confirmed his message, though he made a cautious point, saying that the debate over the scale and path of future interest rate hikes is still ongoing and will depend on the data. USD/JPY The yen pair has been in a downtrend since the beginning of the day. During the day, USD/JPY dropped from 137.2360 to 136.2230. Concerns about a deeper global economic downturn continue to weigh on investor sentiment, which in turn favors a safe haven for the Japanese yen (JPY) and puts some downward pressure on the major currency. Market concerns were further fueled by the latest Chinese inflation data, which showed that domestic demand remains weak and weakened hopes for a strong recovery in the world's second largest economy. However, any significant pullback in USD/JPY still seems elusive amid expectations that the Bank of Japan (BoJ) will remain dovish to support a fragile domestic economy. In fact, the new BoJ governor, Kazuo Ueda, recently stressed the need to maintain ultra-loose policy settings and said the central bank is not aiming for a quick turnaround from a decade of massive easing. Bets were further raised after the release of the final GDP print, which showed Japan's economy narrowly avoided a technical recession in the final months of 2022. EUR/USD The euro pair started the day with a drop from 1.0556 to 1.0542. After this decline, the EUR/USD pair started an upward move towards 1.0570. After this move, the EUR/USD pair fell to the level of 1.0562. EUR/USD remains close to monthly lows after the recovery faded near 1.0570 during the US session. The US dollar failed to pick up a new leg, but maintained its recent gains. The dollar looks solid as markets are priced at "higher for longer" US interest rates. Data released on Wednesday helped consolidate expectations. Market participants also see a more hawkish European Central Bank (ECB) as recent research points to a higher final rate. Thursday's economic report does not include first-tier reports for the eurozone and preliminary claims for US unemployment benefits. Markets will continue to weigh Powell's message as they prepare for non-farm payrolls. GBP/USD The beginning of trading in the GBP/USD pair started trading with the application to the euro. Then, still in the Asian session, it rose slightly. The cable pair recorded a significant increase at the beginning of the European session and exceeded 1.1880. Currently, the level of the GBP/USD pair is above 1.1870. A permanent rebound seems unlikely as buyers refrain from betting on sterling further strengthening due to policy divergence between the US Federal Reserve and the Bank of England, although BoE expectations are hawkish. AUD/USD The Australian pair traded in the 0.6580-0.6595 range at the beginning of the Asian session. Still in the Asian session there was a significant increase above 0.6610. After this surge, AUD/USD traded in the 0.6610-0.6615 range. At the time of writing, the Aussie pair is trading at 0.6612. The Australian dollar is trying to bounce back this Thursday after Tuesday's decline. The morning started with weak economic data from Australia in the form of building permits and private home permits for January. Both sets of data printed in line with estimates but reached levels last seen in January 2022. This deterioration in the housing and construction sectors is a reflection of the high interest rate environment created by the Reserve Bank of Australia (RBA). Source: investing.com, finance.yahoo.com
The British Pound Continues To Trade In A Swinging Mode

The British Pound Continues To Trade In A Swinging Mode

Paolo Greco Paolo Greco 10.03.2023 08:15
5M chart of GBP/USD GBP/USD continued its bullish correction on Thursday, and by the end of the day, it had worked off the critical line. It did not manage to overcome this line, which gives hope for restoring the fall on Friday. However, keep in mind that today almost everything will depend on the U.S. macro data. As a whole, the British pound continues to trade in a "swinging" mode. While earlier it was a swing in the horizontal channel, now it is a swing with a downward bias. If the U.S. data turns out to be weak today, the pair might go up, which will lead us to a "swing". Reminder: the pair managed to get out of the horizontal channel (on the 4H-chart, not on the 24H-chart), because of Federal Reserve Chairman Jerome Powell's speech on Tuesday. Apart from that, there was nothing to support the dollar this week. That said, in my opinion, the dollar should continue to rise, as most of the fundamentals are working in its favor. Speaking of trading signals, they weren't great at all. Two buy signals were formed near 1.1874, and traders could open a position on them. After that, the price reached the next target, the critical line and 1.1927, where it could make a profit. However, the target was very close, so it was not possible to make much profit. However, for a completely empty day in terms of macroeconomics and fundamentals, this result was quite good. COT report: The latest COT report on GBP/USD dates back to February 7. Due to a technical glitch, there have been no fresh reports for about a month. Naturally, analyzing outdated reports is of no use. Anyway, that is better than nothing at all. According to the latest data, non-commercial traders opened 10,900 long positions and 6,700 short ones. The net position grew by 4,200. The net non-commercial position has been bullish in recent months although sentiment remains bearish. The pound has been on the rise against the greenback for some unknown reason. We should not rule out the possibility of a strong decline in price in the near term. Technically, it has already started to decline although it seems to be a flat trend. In fact, the movement of GBP/USD is now akin to that of EUR/USD. At the same time, the net position on EUR/USD is positive, signaling the upcoming end of the bullish impulse. Meanwhile, the net position on GBP/USD is negative. Non-commercial traders now hold 61,000 sell positions and 47,000 long positions. There is still a gap. We are still skeptical that the pair will be bullish in the long term and expect a steep drop. 1H chart of GBP/USD On the one-hour chart, GBP/USD collapsed on Tuesday, but it is already recovering. A new downtrend line has been formed and the price is located below the Ichimoku indicator lines. That's why so far everything says that the downward movement will continue. However, today's macroeconomic background might have a strong influence on the market mood, so by the end of the day the pair might be anywhere. On March 10, it is recommended to trade at the key level of 1.1486, 1.1645, 1.1760, 1.1874, 1.1927, 1.1965, 1.2143, 1.2185, 1.2269. The Senkou Spahn B (1.2030) and Kijun Sen (1.1930) lines can also generate signals. Rebounds and breakouts from these lines can also serve as trading signals. It is better to set the Stop Loss at breakeven as soon as the price moves by 20 pips in the right direction. The lines of the Ichimoku indicator can change their position throughout the day which is worth keeping in mind when looking for trading signals. On the chart, you can also see support and resistance levels where you can take profit. On Friday, the UK will publish not the most important Industrial Production and GDP reports for January. In America, we have the important NonFarm Payrolls and unemployment data. The market might show a significant reaction to the data, but there could be some movement in the morning as well. Indicators on charts: Resistance/support - thick red lines, near which the trend may stop. They do not make trading signals. Kijun-sen and Senkou Span B are the Ichimoku indicator lines moved to the hourly timeframe from the 4-hour timeframe. They are also strong lines. Extreme levels are thin red lines, from which the price used to bounce earlier. They can produce trading signals. Yellow lines are trend lines, trend channels, and any other technical patterns. Indicator 1 on the COT chart is the size of the net position of each trader category. Indicator 2 on the COT chart is the size of the net position for the Non-commercial group of traders.   Relevance up to 01:00 2023-03-11 UTC+1 This information is provided to retail and professional clients as part of marketing communication. It does not contain and should not be construed as containing investment advice or investment recommendation or an offer or solicitation to engage in any transaction or strategy in financial instruments. Past performance is not a guarantee or prediction of future performance. Instant Trading EU Ltd. makes no representation and assumes no liability as to the accuracy or completeness of the information provided, or any loss arising from any investment based on analysis, forecast or other information provided by an employee of the Company or otherwise. Full disclaimer is available here. Read more: https://www.instaforex.eu/forex_analysis/337201
InstaForex's Irina Manzenko talks British pound amid latest events

The GBP/USD Pair Continues To Be In A Side Channel

Paolo Greco Paolo Greco 10.03.2023 08:21
The GBP/USD currency pair returned to the moving average line on Wednesday and Thursday, as expected after a sharp drop on Tuesday. The most important thing is to avoid continuing the "swing" that we have seen in recent weeks. To accomplish this, the price must be below the moving average at the end of today; otherwise, the process will restart. And for this to happen, the dollar must receive local support from today's solid American statistics. But, the pair might theoretically resume falling even without the support of the macroeconomic backdrop. How many times has it happened that strong data or the foundation triggered movement in both directions in a short period, only for the market to settle down and return to its previous positions? We anticipate a decline for both the pound and the euro over the next few months. After increasing by more than 2,100 points in a short period, we continue to think that the pound sterling has not adjusted sufficiently. The best view of this is on the 24-hour TF. Sadly, it is also plainly obvious on the same 24-hour TF that the pair continues to be in a side channel with a width of 600 points. It has been inside of it for a while. Consequently, it is quite challenging to predict that the downward trend will continue until the 1.1841 level is crossed. But, there are still no particular causes for the pound to increase. Thus, it is extremely harder to plan for long-term growth. Much, as before, is now dependent on the monetary policies of the Bank of England and the Fed, and things are not looking good for the pound. We have often stated that we have serious doubts about the ECB and BA's capacity to stay up with the Fed on the issue of rates. As of now, our expectations are perfectly warranted because the UK consistently sends out indications that the rate of tightening monetary policy will slow down once again and that the cycle of rate hikes is quickly coming to an end. The Fed, however, is simultaneously raising the rate and will do so for as long as necessary. Given this fundamental background, the dollar may increase by another 500–600 points. American statistics are both significant and empty. Today in the UK, completely worthless data on the GDP and industrial production will be made public. They might be followed by a minor market reaction, but even that won't mean much. Merely because monthly GDP data has never been essential for the market, and industrial production is no longer that important. Regrettably, only the Bank of England can prevent the pound from falling further. Yet, given that the rate has already been raised 10 times and inflation is still at 10%, what can we expect from the Bank of England at this point? There will undoubtedly be a recession in the UK economy, and the higher the interest rate, the more likely it is that this recession will be protracted and severe. Like the Fed, the British regulator simply does not possess the justifications for an endless rate hike. Hence, even if the rate in Britain goes to 5%, it will not fundamentally change anything. The Fed's rate will remain higher, and a drop in inflation to 2% will not be possible with just 5%. As a result, we think that the pound will eventually collapse. The pound is currently holding on with all of its remaining strength, but this will not continue forever. In his last speech, Andrew Bailey did not endorse the pound; rather, his rhetoric was rather inconsistent. It is not expected by the market for BA to act aggressively again, making it very difficult to think that rates will continue to rise. What else, in theory, could now sustain the pound? A falling economy - no, high inflation with a weak BA ability to maintain tightening - no, strong GDP and business activity - no. So, we think that the market will gradually push the pound down. Because the ECB rate is currently even lower than the BA rate, the British pound is currently holding slightly better than the euro. Nevertheless, we are now comparing the pound to the dollar rather than the pound to the euro. The pound's stronger resistance to the US dollar does not guarantee that it will not decrease in the future. Over the previous five trading days, the GBP/USD pair has averaged 114 points of volatility. This value is "high" for the dollar/pound exchange rate. As a result, on Friday, March 10, we anticipate movement that is limited by the levels of 1.1803 and 1.2031. The Heiken Ashi indicator's downward turn will indicate that movement towards the south has resumed. Nearest levels of support S1 – 1.1902 S2 – 1.1871 S3 – 1.1841 Nearest levels of resistance R1 – 1.1932 R2 – 1.1963 R3 – 1.1993 Trade Suggestions: On a 4-hour timeframe, the GBP/USD pair is still trading below the moving average. In the case of a downward reversal of the Heiken Ashi signal or a price recovery from the moving average, it is currently viable to take into account new short positions with targets of 1.1841 and 1.1810. If the price is fixed above the moving average, long positions with targets of 1.1993 and 1.2024 may be taken into account. Explanations for the illustrations: Channels for linear regression - allow us to identify the present trend. The trend is now strong if they are both moving in the same direction. Moving average line (settings 20.0, smoothed): This indicator identifies the current short-term trend and the trading direction. Murray levels serve as the starting point for adjustments and movements. Based on current volatility indicators, volatility levels (red lines) represent the expected price channel in which the pair will trade the following day. A trend reversal in the opposite direction is imminent when the CCI indicator crosses into the overbought (above +250) or oversold (below -250) zones.     Relevance up to 01:00 2023-03-11 UTC+1 This information is provided to retail and professional clients as part of marketing communication. It does not contain and should not be construed as containing investment advice or investment recommendation or an offer or solicitation to engage in any transaction or strategy in financial instruments. Past performance is not a guarantee or prediction of future performance. Instant Trading EU Ltd. makes no representation and assumes no liability as to the accuracy or completeness of the information provided, or any loss arising from any investment based on analysis, forecast or other information provided by an employee of the Company or otherwise. Full disclaimer is available here. Read more: https://www.instaforex.eu/forex_analysis/337205
Bank of England is expected to hike the rate by 25bp. Kelvin Wong talks Euro against British pound

Analysis Of Price Movement Of The EUR/GBP Cross Pair

TeleTrade Comments TeleTrade Comments 10.03.2023 09:02
EUR/GBP takes offers to refresh intraday low, prints three-day downtrend. UK GDP improved in January, Industrial Production, Manufacturing Production deteriorated. Hopes of Britain’s economic rebound due to the latest reshuffle in governing policies, Brexit allow GBP to remain firmer. BoE versus ECB drama could check pair sellers as the key data begins in London. EUR/GBP slides 10 pips to refresh intraday low near 0.8860 as the UK’s Office for National Statistics releases the monthly Gross Domestic Product (GDP) on early Friday. It should be noted that the optimism surrounding the British economic transition and mixed sentiment, as well as likely challenges for the Euro, seem to exert additional downside pressure on the cross-currency pair. UK GDP grew 0.3% MoM in January versus 0.1% expected and -0.5% previous, which in turn pushes back the recession woes and propels the British Pound (GBP) despite mixed readings on the other fronts. That said, UK Industrial Production figures reversed the 0.3% previous expansion with -0.3% MoM marks whereas the Manufacturing Production growth dropped to -0.4% compared to -0.1% market forecasts and 0.0% prior. Also read: UK Manufacturing Production declines 0.4% MoM in January vs. -0.1% expected Elsewhere, hopes of economic recovery and more stock market listings seem to help the Cable pair amid a light calendar during the week. “The country's economy is on track to shrink less than expected this year and avoid the two-quarters of negative growth which mark a technical recession,” the British Chambers of Commerce (BCC) forecast on Wednesday per Reuters. Further, Britain’s finance ministry said on Wednesday it will launch a review into how investor research on companies could be improved to attract more listings, a step that follows a decision by UK chip designer Arm Ltd to only list in New York, reported Reuters. On the same line, Britain's revamped financial market rules will largely be aligned with U.S. and European Union regulations to minimize disruption to global companies, its financial services minister Andrew Griffith said on Thursday per Reuters. It should be noted that Bank of England (BoE) policy maker Swati Dhingra warned against interest rate hikes on Wednesday while saying that overtightening poses a more material risk at this point. On the other hand, fears of more economic pain for the bloc amid geopolitical tensions with Russia and sticky inflation, as well as higher rates, seem to drag the Euro. It should be noted that the risk-off mood underpins the US Dollar’s haven demand and reduces the demand of its major rival, namely the EUR. Having witnessed the initial market reaction to the UK’s data dump, EUR/GBP pair traders may concentrate on European Central Bank (ECB) President Christine Lagarde for clear directions. Also important to watch will be a slew of top-tier data from the US and Canada that can entertain the momentum traders across the board. Technical analysis Failure to overcome the 0.8930 horizontal hurdle joins the EUR/GBP pair’s clear downside break of a one-week-old ascending trend line, around 0.8895 by the press time, to direct bears towards the 100-DMA support of 0.8765.
Listen: Higher for longer

Listen: Higher for longer

ING Economics ING Economics 11.03.2023 10:03
In this podcast, ING's James Knightley, Carsten Brzeski and James Smith discuss where interest rates may be heading in the US, Europe and UK while Chris Turner explains what this could mean for global markets   Federal Reserve Chair Jerome Powell cautioned this week that the central bank may need to raise interest rates higher and faster than expected to tame inflation. European Central Bank member Robert Holzmann has called for another four rate hikes of 50bp a piece while in the UK, Bank of England policymaker Catherine Mann has also signalled further tightening ahead. In this podcast, ING's Chris Turner, Carsten Brzeski, James Knightley and James Smith reflect on this hawkish commentary and discuss what it means for monetary policy, economic growth and global markets. Read this article on THINK Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more
Analysis Of The GBP/USD Pair Over 6- 10.03 Week

Analysis Of The GBP/USD Pair Over 6- 10.03 Week

Paolo Greco Paolo Greco 12.03.2023 10:27
Long-term outlook. During the current week, the 4-hour TF side channel's lower limit has been broken by the GBP/USD currency pair. The lower border of the side channel for the 24-hour TF, which is plainly shown in the image above, runs 100 points lower. The price, which had dropped by 200 as a result of Jerome Powell's speech to the US Congress, was resting at this limit on Tuesday. Remember that Powell openly acknowledged that the rate of monetary policy tightening might be increased once again and that the key rate might rise for a longer period than anticipated. Consequently, with such a spike in "hawkish" rhetoric, there could be no other option except for the dollar to rise again. On the 24-hour TF, however, it was not possible to break out of the channel, so a rebound from its lower border and new growth of the pair on Wednesday, Thursday, and Friday followed. The pair continues to be inside the side channel even though the minimal downward slope is still present. As a result, we must wait till the level of 1.1841 (38.2% Fibonacci) has been overcome. The Ichimoku indicator's lines are now largely irrelevant. We're still waiting for the British pound to fall since there aren't any other options right now. Remember that the pair increased by 2,100 points in a short period or 50% of the entire downward trend that lasted for two years. There has been a frank flat in the last three months, so generally speaking, nothing long-term interesting is happening right now. Like the Fed, the Bank of England will keep raising interest rates, but nobody is certain of the extent or upper bound. And the answer to this issue will determine the future of the British pound. From a fundamental standpoint, we think the dollar has a greater justification for growth. Likewise with technical. COT evaluation. The most recent COT report for the British pound, which hasn't been accessible for over a month, shows developments for February 21. Undoubtedly, the significance of these reports has decreased over the years, but they are still better than nothing. The Non-commercial group opened 3.3 thousand buy contracts and 4.9 thousand sell contracts during the most recent reporting week. Therefore, there was a 1.6 thousand fall in the net position of non-commercial traders. The net position indicator has been increasing gradually over the past few months, but the major players' outlook is still "bearish," and even though the pound sterling is strengthening against the US dollar (in the longer term), it is quite challenging to determine the basic reasons why. We utterly do not rule out the possibility that the pound may start to decline more rapidly in the near future. Although it has officially started, so far it seems more like a flat. Furthermore take note that both main pairs are currently moving quite similarly, but that the net position for the euro is positive and even suggests that the upward momentum will soon come to an end, while the net position for the pound is negative. A total of 67 thousand sales contracts and 46 thousand purchase contracts have now been opened by the non-commercial group. We continue to be pessimistic about the British pound's long-term growth and anticipate further declines. Analysis of important events. This week in the UK, there was essentially nothing interesting. Reports on the GDP and industrial production were only made public on Friday. Yet, considering the current circumstances and fundamental backdrop, industrial production had no possibility of attracting traders, and the GDP report was not quarterly, but monthly. Consequently, despite the pound's continuous growth on Friday, these numbers had essentially little impact on the pair's movements. But how can we connect the strengthening of the pound on Friday with UK data when industrial production turned out to be worse than expected and even negative, and GDP in January was only slightly above expectations? In general, something can no longer be considered reasonable if there was a reaction. We recall that the Wednesday growth of the pair was triggered by a rebound from the level of 1.1841, which was considerably more significant. As we've already mentioned, Powell's speech took place in the States, which was very beneficial to the dollar, and reports on unemployment and nonfarm payrolls were released, which collectively caused the dollar to fall "from heaven to earth." As a result, we once again have a flat, a "swing," or any movement other than a trend. Trading strategy for the week of March 13–17: 1) The pound/dollar pair is presently in the side channel between 1.1840–1.2440. Short positions are therefore more pertinent right now, although it's unlikely that the pair will emerge from the side channel anytime soon. Thus, we suggest delaying additional sales until the 1.1840 level is broken. Then, taking short positions with a target 300–400 points lower will make sense. 2) Purchases won't be important unless the price is fixed above the crucial line or there is another powerful signal. Yet, given the flat market, even fixing above Kijun-sen does not ensure the rise would resume. Also, purchases are conceivable with recovery from the side channel's lower border with the aim of the higher border, but even in this scenario, things are not always simple because the price may not reach the upper border. After all, the minimal downward trend is still intact. Explanations for the illustrations: Fibonacci levels, which serve as targets for the beginning of purchases or sales, and price levels of support and resistance (resistance/support). Take Profit levels may be positioned close by. Bollinger Bands, MACD, and Ichimoku indicators (standard settings) (5, 34, 5). The net position size of each trading category is represented by indicator 1 on the COT charts. The net position size for the "Non-commercial" category is shown by indicator 2 on the COT charts     Relevance up to 14:00 UTC+1 This information is provided to retail and professional clients as part of marketing communication. It does not contain and should not be construed as containing investment advice or investment recommendation or an offer or solicitation to engage in any transaction or strategy in financial instruments. Past performance is not a guarantee or prediction of future performance. Instant Trading EU Ltd. makes no representation and assumes no liability as to the accuracy or completeness of the information provided, or any loss arising from any investment based on analysis, forecast or other information provided by an employee of the Company or otherwise. Full disclaimer is available here. Read more: https://www.instaforex.eu/forex_analysis/337340
Bank of England Confronts Troubling Inflation Report; Fed Chair Powell's Testimony Echoes Expected Path

The British Economy Is Looking Better Than Previously Expected

Marek Petkovich Marek Petkovich 13.03.2023 10:58
In Forex, it is not a frozen picture—static—that is important, but dynamics. How do investors see the economy? Does it meet their expectations? What difference does it make that Britain's GDP is still 0.2% below the pre-pandemic level, and the American counterpart has long exceeded it, if this factor has already been taken into account in GBPUSD quotes? Another thing is when the latest data show that the UK economy looks better than expected, and the labor market and the U.S. banking system are cooling down. Then it's time to buy the pound against the U.S. dollar. Due to the forecasts of the IMF, the Bank of England, and other reputable organizations, investors are used to seeing Britain in the black. Unlike other G7 countries, its economy has not returned to pre-pandemic levels. Along with the pandemic, it has taken hits from the armed conflict in Ukraine, the energy crisis, and Brexit. However, what once appeared to be a negative may end up as support. The agreement between London and Brussels on the terms of trade in Northern Ireland and the fall in gas prices in Europe by 90% from the peaks of summer 2022 have a stimulating effect on UK's GDP. Dynamics of G7 economies The figure rose 0.3% in January, exceeding Bloomberg's forecast, which along with accelerating business activity, allowed Prime Minister Rishi Sunak to declare that things were better than people had expected. That the basic fundamentals of the economy are strong. It remains to strengthen fiscal discipline, which Chancellor Jeremy Hunt is sure to do in an updated budget plan. Importantly, Britain is likely to avoid a recession, even though the Bank of England predicted a five-quarter recession. This allowed the futures market to raise the expected repo rate ceiling from 4.6% to 4.75%, which helped strengthen the sterling. The expected peak of the federal funds rate after the publication of statistics on the U.S. labor market for February and the announcement of the bankruptcy of the Silicon Valley Bank (SVB), on the contrary, fell sharply from 5.5% to 5%, which weakened the U.S. dollar. Despite the growth in employment by 311,000, the unemployment rate increased from 3.4% to 3.6%, and the growth rate of average wages slowed down to 0.2% MoM. Dynamics of U.S. Non-Farm Employment Thus, the British economy is looking better than previously expected, allowing investors to expect higher rates from the Bank of England. In contrast, the U.S. economy is not doing as well as expected based on January statistics. This may lead to a recession and a "dovish" reversal of the Fed. Divergences in economic growth and central bank monetary policy paint an optimistic future for the GBPUSD. Technically, on the daily chart of the pair, due to the implementation of the reversal patterns Three Indians and False breakout, conditions have been created for the recovery of the upward trend. While GBPUSD is holding above fair value at 1.202, the recommendation is to buy the pound in the direction of $1.235 and $1.26.   Relevance up to 08:00 2023-03-18 UTC+1 This information is provided to retail and professional clients as part of marketing communication. It does not contain and should not be construed as containing investment advice or investment recommendation or an offer or solicitation to engage in any transaction or strategy in financial instruments. Past performance is not a guarantee or prediction of future performance. Instant Trading EU Ltd. makes no representation and assumes no liability as to the accuracy or completeness of the information provided, or any loss arising from any investment based on analysis, forecast or other information provided by an employee of the Company or otherwise. Full disclaimer is available here. Read more: https://www.instaforex.eu/forex_analysis/337382
UK Budget: Short-term positives to be met with medium-term caution

UK Budget: Short-term positives to be met with medium-term caution

ING Economics ING Economics 13.03.2023 12:25
Wednesday’s Spring Statement from the UK Chancellor will be the third fiscal event since last September but hopefully the least dramatic. Lower gas prices are good news for the public finances, but potential revisions to the medium-term outlook offer little-to-no room for the Chancellor to shelve plans for tighter public spending this decade UK Chancellor Jeremy Hunt will deliver his Spring Statement on 15 March The near-term fiscal outlook looks brighter The collapse of Silicon Valley Bank last week forced the Chancellor and Bank of England to spend the weekend looking at ways to prevent contagion. But the private purchase of SVB UK announced at the start of the week means much of the focus of this week’s Budget can now switch back to domestic policy issues. Cast your mind back to November when Chancellor Jeremy Hunt was under a lot of pressure to present a fiscal plan which stabilised the public finances across the medium term. In truth, markets had already begun to stabilise by the time of the Autumn Statement, and Hunt was able to strike a balance between offering some modest support to the economy in the near term while promising some fairly aggressive restraint on public spending further down the line. The good news for the Chancellor is that the fall in wholesale gas prices has drastically reduced the cost of supporting household energy bills. By our calculations, the estimated cost of the Energy Price Guarantee in FY2023 has fallen from £13bn in November to less than £2bn now. That should allow the Chancellor to scrap the planned increase in unit electricity/gas prices in April. Projections for household energy bills have fallen with wholesale gas prices Source: Ofgem, Refinitiv, ING   That would keep bills at £2500 on an annual basis for the average household, instead of rising to £3000 as planned. In practice households will still pay more, as a fixed £400/household discount expires this month, though this will be partly offset by planned one-off payments to low-income/vulnerable households. We assume these payments will continue, even if the average energy bill will no longer rise. More importantly, by July the government probably won’t be supporting energy bills at all, with wholesale prices pointing to a fall in the average annualised bill to roughly £2000-2100. To be clear that’s still roughly double the pre-2022 level, but the fact that it isn’t several multiples of that should help the UK avoid a deeper recession – and may mean it avoids one altogether in the first half of the year. The near-term fiscal situation is also helped by lower headline inflation projections (thereby lowering debt interest). Borrowing over recent months has also undershot the Office for Budget Responsibility’s forecast by roughly £22bn. Borrowing has come in lower than expected through this fiscal year Source: Macrobond, ING, OBR Lower growth and higher inflation in the medium-term offer no wiggle room for giveaways Unfortunately, that’s probably where the good news will stop for the Chancellor this week. The medium-term fiscal picture, which will help determine how much “headroom” (if any) the government has against its target for debt to eventually fall as a percentage of GDP, won’t change much. That target is heavily influenced by forecasts from the Office for Budget Responsibility. Here, we could begin to see downgrades to medium-term growth forecasts, which previously have looked much too optimistic. We’d also expect upgrades to inflation forecasts beyond this year, with the OBR having previously forecast negative CPI in 2024/2025. In short, there’s little – if any – room for the Chancellor to water down some of his plans for fiscal restraint later this decade. And the reality is that these plans still look like they'll be difficult to implement. With day-to-day spending already under heavy pressure due to inflation, reducing capital investment is likely to be the path of least resistance (at least politically) when it comes to curbing government expenditure. The decision to scale back the High Speed Two rail project is a timely reminder of that, and November’s budget already projected Public Sector Net Investment to fall from 3% of GDP this year to 2.2% later this decade. Market rates and 2023-24 issuance: higher borrowing and skew to shorter bonds When it comes to borrowing, the Debt Management Office (DMO) will be busy over the next fiscal year. We’re expecting a jump in gross gilt issuance to £250bn in FY2023-24, which will translate to £133bn of net supply after redemptions are taken into account. Regular readers know that this is not our preferred measure of the draw on private investors, however. Instead, we like to look at this net supply corrected for BoE buying/selling, and here the picture is slightly more alarming. Private investors will be required to increase their holdings of gilts by £210bn next fiscal year. For reference, we estimate this is only £92bn in this fiscal year. There's a lot of gilt supply for private investors to absorb next fiscal year Source: Bank of England, DMO, ING   This begs the question of where will all this extra demand come from. Clearly, a greater draw on private investors should make the DMO more cautious when it comes to its borrowing strategy. A lot of the extra weight, we expect, will be coming from yield-sensitive investors. In other words, investors who after years of being side-lined by low interest rates should aim for a greater allocation into gilts. For the same reason, we think investors who were forced to buy longer-dated bonds when rates were low on shorter ones, will now return to the short end of the curve. The differential between gilt and swap rates has been narrowing Source: Refinitiv, ING   This is partly why we expect short and medium-maturity bonds to make up a greater proportion of the DMO’s issuance next year, while the amount of long-dated and index-linked gilts are less likely to scale up in proportion to overall gilt issuance. We’ve been flagging this sharp increase in issuance for some time now, and indeed, it was a key factor behind the September 2022 mini-Budget ‘doom loop’ that saw gilt yields soar. Since then, the rate differential between gilts and swaps has increasingly been reflecting the wall of gilts about the hit the market over the next fiscal year. These so-called swap spreads are now back above 0bp at the 10Y point, and we think greater short and medium issuance in the coming year will also help bring that spread closer to 0% at shorter maturities. Read this article on THINK Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more
Deciphering the Economic Puzzle: Unraveling Britain's Mixed Signals

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

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

The Pound Has Not Reacted To The Release Of Data

Kenny Fisher Kenny Fisher 14.03.2023 14:27
The British pound has reversed directions after an impressive rally that saw GBP/USD climb 370 points. In the European session, GBP/USD is trading at 1.2154, down 0.24%. US dollar recovers The collapse of the Silicon Valley Bank (SVB) on Friday sent the financial markets into turmoil on Monday. US bank stocks declined sharply, while safe-haven gold powered higher. The US dollar retreated against the major currencies and the 2-year Treasury yield fell almost a full point. Tuesday has brought better news, as the markets appear to have settled down. The US dollar has regrouped and is higher against the majors. There is an uneasy calm in the air, but that doesn’t necessarily mean that this latest crisis is behind us. Investors are on alert and will be very sensitive to new developments and any negative news could renew market volatility. The Fed and Treasury Department acted quickly to protect depositors and President Biden sent a reassuring message at an impromptu television address, but the collapse of the 16th largest lender in the US means it’s unlikely to be “business as usual” for some time. It was just a week ago that Fed Chair Powell’s hawkish testimony on the Hill raised expectations of the Fed delivering a 50-bp increase at the March 22 meeting. Those expectations have vanished into smoke, with the markets now expecting a 25-bp hike, with an outside chance of a pause.  We could see further market repricing after today’s CPI report, with headline CPI expected to fall to 6.0%, down from 6.4%. In the UK, the employment report was within expectations. The unemployment rate remained at 3.7%, shy of the estimate of 3.8%. Hourly earnings fell to 5.7%, as expected, down from an upwardly revised 6%. The pound hasn’t reacted to the release and the data is unlikely to change minds at the Bank of England, which is expected to raise rates by 25 bp at the March 23 meeting.   GBP/USD Technical GBP/USD tested resistance at 1.2113 earlier in the day. Above, there is resistance at 1.2294 There is support at 1.1984 and 1.1854 This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.  
Would Federal Reserve (Fed) go for two more rate hikes this year? Non-voting Bullard say he would back such variant

Coinbase gets Wells notice from the U.S. Securities and Exchange Commision

Saxo Bank Saxo Bank 23.03.2023 12:21
Summary:  The Fed delivered a rate hike as most expected and largely failed to adjust forward projections for policy, but did note that credit conditions are likely to weigh on the economy. The market thoroughly ignored the Fed’s rhetoric and forecasts and continues to look for rate cuts later this year. While Fed Chair Powell spoke at the post-meeting press conference, US Treasury Secretary Yellen unsettled markets by indicating no comprehensive depositor insurance. What is our trading focus? US equities (US500.I and USNAS100.I): it is all about deposits, recession, and credit S&P 500 futures are rallying from yesterday’s lows post the FOMC rate hike despite the Fed’s action will increase the pressure on smaller banks and increase the likelihood of a recession. Today’s focus is how banking stocks will react to the FOMC decision and especially how deposits will develop from here. The rate hike will increase the incentive for depositors to move money from deposits to money market funds adding potentially further funding stress. We remain cautious on equities as the economy will likely move closer to a recession due to yesterday’s rate decision. European equities (EU50.I): focus is back on banks post FOMC rate hike STOXX 50 futures have turned around in early trading after being lower on the open as equities initially responded negatively to the FOMC rate decision of hiking the policy rate by 25 bps. The consensus is that higher policy rates at a high speed coupled with many bonds in the held-to-maturity were causing the problems for smaller banks so the reaction in equities today seems odd. We remain cautious on the banking sector and the real estate sector in the coming weeks. Read next: Yesterday's UK inflation prints have undermined previous MPC narrative| FXMAG.COM Hong Kong equities advance as Tencent’s solid results and upbeat outlook Hang Seng Index rallied for the third day in a row, led by Tencent (00700:xhkg) and pear internet names. Tencent surged nearly 7% after reporting stronger-than-expected online adverting revenues. The tech giant’s upbeat outlook of 2023, citing a broad-based recovery in consumer activities in China added to the market optimism. Orient Overseas (00316:xhkg) soared 16% after the container shipping liner beat earnings estimates. Lenovo (00992:xhkg) jumped 11% on its plan to develop new products based on the Nvidia Drive Thor chip. In A-shares, CSI300 advanced nearly 1%, led by semiconductors and financials. FX: Dollar weakens with EUR and JPY as winners on Powell/Yellen shocks The Fed hiked rates by 25 bps and inserted new language into the policy statement noting forward concern (more below) and the market thoroughly ignored the “dot plot” that largely maintained the December policy forecasts. The dollar fell, but it was Treasury Secretary Yellen’s statements deny a blanket backstopping of all bank deposits that spooked markets and changed the tone far more than the Fed, with US banks and rates under huge pressure and the USD lower again overnight after a mixed close yesterday, with EURUSD well above 1.0900 this morning and USDJPY slumping below 131.00. Focus shifts to BOE today after re-acceleration in inflation yesterday, although sterling has weakened again sharply, possibly in recognition that the BoE may stick to its forecasts on inflation as Governor Bailey seems a reluctant inflation fighter. Crude oil dips on Powell/Yellen double blow to sentiment Crude oil prices trade lower following a three-day bounce that saw both WTI and Brent retrace more than 38.2% of their recent drop. Earlier on Wednesday the market received a boost from a mixed EIA stock report with rising production and rising crude stocks being offset by big draws in fuel products as US total oil and fuel exports reached a record 12.3m b/d. However, risk sentiment received a fresh setback after an expected 25 bps rate hike was followed up by comments from Yellen that the government was not considering “blanket” deposit insurance to stabilize the banking system. Macro-economic developments remain firmly in the driving seat and will continue to dictate the short-term direction, but the combination of a weaker dollar and most of the selling/long liquidation already done the downside risk may be limited. Gold rallies with bonds on hike less, cut later focus The Fed’s 25bps rate hike came in-line with market expectations, but the push back on market expectations of about 100bps of rate cuts for this year failed to materialize, and together with a softer dollar and Yellen’s message that the government is unlikely to unilaterally expand deposit insurance, they added fresh upside momentum to gold, climbing to $1983. The fact gold earlier in the week managed to find support already at $1933, the 38.2% retracement of the recent surge, suggests gold remains in a strong uptrend. However, until the FOMC’s and the markets year-end rate expectations get in line - currently apart by almost one percent - golds upside potential towards a fresh record high may take longer to achieve. ETF buying continues with total holdings up another 12 tons this week on top of the 21 tons that was bought last week. Treasury yields plummeted and may have much more to go The treasury market ignored Fed forecasts and focused on the Fed’s shift in forward concern on credit conditions, but especially Yellen’s statement on bank deposit guarantees (more below). Yields on the 2-year tumbled more than 25 bps to below 3.9% in early trading and the 10-year yield fell 18 bps to 3.43%. What is going on? US risks widespread bank runs from vulnerable banks starting today With US Treasury Secretary Yellen’s commenting "I have not considered or discussed anything having to do with blanket insurance or guarantees of deposits”, the risk of a stampede-like bank run from smaller regional lenders and even some mid-tier and larger banks has risen sharply, one that the Silicon Valley Bank situation shows can happen with alarming speed, given the ease of digital transfers. JP Morgan analyst estimates that some $1 trillion of deposits have already left the most vulnerable banks, about half of that since the SVB collapse of two weeks ago. Certainly, a situation of sufficient severity will trigger the inevitable official response to ensure that no systemic crisis is allowed to balloon and drive dramatic market dysfunction, but the follow-on impact into the economy could be severe on the disruption of credit flows (as alluded to in the Fed’s monetary policy statement last night, even as it touted the solidity of the system). Fed raised rates by 25bps but considered a pause The FOMC lifted the Federal Funds Rate target by 25bps to 4.75-5.00% and the updated economic projections left the terminal rate forecast unchanged at 5.1% while the 2024 rate view was adjusted higher to 4.25% from 4.125% earlier. Chair Powell in his comments later also said that they considered a pause but the consensus was for a rate hike, and that no participants had rate cuts in their base line scenario for this year. The market completely ignored this and redoubled its anticipation of rate cuts during the evening, particulary after US Secretary Treasury Yellen spoke (see below). The new FOMC statement removed reference to ‘ongoing increases in the target range will be appropriate’, though added that ‘some additional policy firming may be appropriate’. The Fed expressed confidence in the banking system, stating that it was ‘sound’ and ‘resilient’, but added that the “recent developments” were likely to result in tighter credit conditions and will weigh on economic activity, hiring and inflation. Janet Yellen says Treasury unlikely to unilaterally expand deposit insurance Treasury Secretary’s comments hit the wires during Fed Chair Powell’s press conference. She said that regulators are unlikely to provide “blanket” deposit insurance to stabilize the US banking system. This brought back concerns on the US banking sector, especially the smaller banks, and risks of more bank runs arise as the US opens on Thursday. The KBW regional bank index slumped 5.7% while the broader KBW bank index was down 4.7%. Economic risks also escalated amid tighter bank lending standards. Tencent’s small growth improvement excites investors Tencent shares rally 7% in Hong Kong trading after the company announced Q4 earnings yesterday after the close reporting Q4 revenue of CNY 145bn vs est. CNY 144.5bn driven by stronger than expected gains in online advertising revenue suggesting underlying improvement in the economy. On the conference call management says that advertisers in China are getting optimistic about the economy recovery and this was the piece investors were looking for. Coinbase gets Wells notice from the SEC Coinbase, the biggest publicly traded cryptocurrency exchange, says it has got a Wells notice from the SEC which means that the SEC will bring an enforcement action against the exchange. Coinbase says it could relate to its spot market or Coinbase Prime (its institutional offering). Coinbase shares are down 10% in extended trading on this news. What are we watching next? Bank of England – hike and guidance expectations justified The very hot February CPI numbers yesterday relative to consensus expectations have the market pricing very high odds for a 25-bp rate hike from the Bank of England today despite the most guidance suggested the Bank is hoping that it can shift to a pausing its rate hike cycle, and Governor Bailey out in recent weeks suggesting there is no guarantee further rate hikes are needed. Observant economists note that at least one measure of the inflation level of most concern – core Services CPI – is still actually slightly below the BoE’s own forecasts even if it rose sharply in YoY terms in February. Interestingly, sterling is heading into this meeting on its back foot and traders should tread carefully here as the Bailey BoE has been difficult to pin down in terms of likely policy moves. Last night was likely the last rate hike of the cycle We suspect that the credit contraction unfolding in the banking system will force the hands of the Fed and we may have seen the last rate hike in this cycle yesterday. U.S. banks, according to the latest survey done by the Fed in January, have already been tightening lending standards sharply before the recent turmoil. Given what has been happening over these two weeks, banks will refrain further from making loans and may cause credit growth to slow or even to contract, especially if deposits are flighty. U.S. Treasury yields, especially in the 2-year to the 5-year segment may fall further. Historically, when the Fed pauses, the short end of the curve performs better than the longer end and the yield curve will steepen. Earnings to watch Today’s key earnings reports are Accenture and Darden Restaurant, both are reporting before the market open, with the latter being a good barometer for US discretionary spending. Darden has a strong same-store network of restaurants and has so far lifted menu prices less than inflation, which has kept customers coming. Analysts expect FY23 Q3 (ending 28 Feb) revenue growth at 11% y/y and EBITDA of $435mn, up from $392mn a year ago. Accenture is expected to report FY23 Q2 (ending 28 Feb) revenue growth of 3% y/y, which is a significant slowdown from 25% y/y from a year ago, as corporate consultancy and technology spending slows on cost cutting. This week’s earnings releases: Thursday: China Mobile, Accenture, General Mills, Darden Restaurants Friday: China Merchants Bank, Meituan, China Petroleum & Chemical Economic calendar highlights for today (times GMT) 0830 – Swiss National Bank Rate Decision 0900 – Norway Norges Bank Rate Decision 1100 – Turkey Central Bank Rate Decision 1200 – UK Bank of England Rate Decision 1230 – US Weekly Initial Jobless Claims 1400 – US Feb. New Home Sales 1400 – Sweden Riksbank Governor Thedeen to speak 1430 – EIA's Weekly Natural Gas Storage Change 1500 – Eurozone Mar. Consumer Confidence 2330 – Japan Feb. National CPI 0001 – UK Mar. GfK Consumer Confidence Source: Global Market Quick Take: Europe – March 23, 2023 | Saxo Group (home.saxo)
Expect the ECB to keep increasing rates at the short-term, at least until the summer

Bank of England, Fed, ECB - Are we going to see a quite long break of rate hiking after next round?

Michael Hewson Michael Hewson 24.04.2023 10:40
As we look ahead to the rest of the year and look back at Q1, there's been a sizeable shift in sentiment from the cautious optimism of January and February to the banking shock in March, which prompted some sharp volatility in both share and bond markets. Against that backdrop, there is much to ponder as we look toward the rest of the year, especially around the prospects of future rate hikes, and the outlook for stock markets. In the space of a few weeks, we've gone from pricing in the prospect of further rate hikes in the coming months, to the prospect of rate cuts before the end of this year, and in some cases as soon as this summer. Whatever your thoughts on the economic outlook the prospect of rate cuts as soon as the summer comes across as wishful thinking when core inflation is still well above the central bank's 2% target rate. While we've seen some sectors of the economy come under pressure due to the sharp rise in inflation pressures, inflation continues to look sticky, with core prices showing little signs of coming down. Before the recent sell-off, there was little sign that markets were overly concerned about the risks of central banks aggressively hiking interest rates.  While the subsequent collapse of Silicon Valley Bank in the US, has prompted some contagion that has spread to the rest of the US regional banking sector, there is thus far little evidence that it is systemic, which is reassuring. That doesn't mean we won't see further stresses emerge in the coming weeks and months given the sharp rise in rates we've seen in the past 12 months.  The uncertainty in the US was quickly followed by the collapse in confidence in Credit Suisse which prompted Swiss authorities to step in with a bailout package from UBS, as concerns about the viability of the business got bigger after one of the bank's largest shareholders, decided not to inject fresh capital into it. The resulting fallout saw a temporary pullback in some sectors of the European and US equity market, however, while recession risks have risen there is little evidence thus far of a notable rise in unemployment, which would signal the prospect of a sustained economic slowdown. So far equity markets have managed to get off to a solid start to Q2 with steady gains for markets in Europe, even though certain parts of the US stock market might start to struggle. Earlier this month the IMF chimed in with its own forecasts for the global economy, painting the bleakest outlook for global growth in over 30 years. The fund went on to warn of significant risks to the global banking system as higher rates squeeze credit conditions. Coming on top of multiple shocks to the global economy in the form of the aftermath of the Covid pandemic and Russia's invasion of Ukraine the outlook for a return to normal is replete with risks. Throw in the risk of further geopolitical turmoil between the US and China and it's hard to see an imminent return to any semblance of normality, although, after 15 years of dealing with the aftermath of the 2008 financial crisis, it's hard to determine what normal looks like. One could argue that 15 years of ultra-low and in some cases negative interest rates isn't normal and we are merely returning to where rates were pre-2008. On a historical basis, rates at current levels aren't particularly high, however, the risk comes from how much higher debt levels are, and the risks entailed in rolling over that debt. This is why central banks now need to be careful how they proceed from here on in and could determine how the rest of the year pans out, however, given all of the talk of a transition to a greener global economy it's hard to see how inflation can return to the levels we saw throughout most of the previous decade. The zealous pursuit of net zero and the transition to renewables will mean demand for commodities will only head in one direction as countries around the world vie for security of supply for the likes of copper, cobalt, lithium, and other metals used in the construction of batteries, solar panels, and wind turbines.  Read next: US Flash, that is to say preliminary, PMI for April came in at a better-than-expected 50.4 versus a downwardly revised 49.2 in March and a forecast 49| FXMAG.COM Given the misguided determination to discourage the pursuit of more transitional capacity, the price of oil and gas is likely to remain high. That is likely to mean keeping a lid on prices will become more difficult in the face of a continued increase in global demand, which means the prospect of inflation coming down quickly becomes much more daunting. A changing climate also presents challenges for global food supply and with food price inflation already in some cases at well over 15% it's quite likely that inflation is likely to remain sticky for quite some time. This is likely to mean interest rates will have to remain at or close to current levels in the short term at the very least and while we might start to see gradual reductions in 2024 it's unlikely, we'll see a return to pre-Covid levels. That is likely to entail a painful wake-up call for some of those in the market who think the Fed will pivot and start cutting rates later this year. For now, we can probably expect to see one more hike of 25bps from the Federal Reserve as well as the Bank of England, while the European Central Bank may well have to pump in another 50bps. After that rates are likely going to have to stay at current levels until well into 2024. For US markets that might present a problem for the more highly valued areas of the market, however, it shouldn't present the same sort of headwind for markets in Europe, which should remain resilient.
FX Daily: Resuming the Norm – Dollar Gains Momentum as Quarter-End Flows Fade

BIST100 index increased by almost 8% yesterday. BoE Bailey left the door open for further rate hikes

Ipek Ozkardeskaya Ipek Ozkardeskaya 12.05.2023 12:22
As expected, the Bank of England (BoE) raised the rates by 25bp for the 12th time yesterday, and Governor Bailey left the door open for further rate hikes.   Bailey said that the lagging effects of the past rate hikes will weigh more on the economy in the coming quarters, that the BoE expects inflation to fall quickly this year, but reckoned that 'inflation remains too high' and that 'repeated surprises' pointed to the resilience of the economy and added to price pressures. As a result, the BoE will 'stay the course' to bring it down with further rate increases, he said.   British policymakers also made the biggest upgrade to their growth projections since the BoE gained independence since1997 – added Bloomberg.   Cable fell, and tipped a toe below the 1.25 mark, but the selloff was mostly driven by a broadly stronger US dollar.   Even though the US PPI data came in softer than expected, and US jobless claims reached the highest since October 2021 and PacWest slumped 22% after announcing that its deposits fell nearly 10% last week, and the US 2-year yield fell - all these factors normally being bearish for the dollar -, the US dollar jumped above a two-month bearish trend top.   Was yesterday's move just a flight to safety, is it sustainable?   Looking at the EURUSD chart, it looks like the failure to clear the 1.10/1.11 offers now leads to a toppish sentiment, and that we could see a further downside correction in the EURUSD before a rebound to bring us to the 1.12 medium term target area.  In equities, the S&P500 was little changed yesterday, the S&P500 was slightly downbeat on renewed bank selloff, but Nasdaq100 extended gains to fresh highs since last summer. The falling yields clearly boost appetite in Big Tech stocks.  Decision Time for Turkey!  In Turkey, the BIST100 rallied almost 8% yesterday, as Muhammer Ince, one of the candidates to the presidential election, withdrew from the race, a day after he denied the 'authenticity of an alleged sex tape and claims that he took bribes to run for president and split the opposition vote'.   His votes will still count – because there is also a parliamentary election happening simultaneously, but Mr Ince leaving the presidential race ramps up the chances for a defeat for the running President Erdogan, although Ince didn't favour a candidate when he retreated.   On the currency front, the USDTRY continues gently to push higher.   Note that despite the ultra-lose monetary policy, abnormally low interest rates and deeply negative real rates, a massive FX intervention program from the Central Bank of Turkey kept the Turkish lira at levels significantly above the fair market value against major currencies.   It is a timebomb ready to explode in any misstep.   And a misstep could be an eventual Erdogan defeat – which would smash the castle of cards.   Read next: Ipek Ozkardeskaya: BoE will certainly leave the door open for further hikes| FXMAG.COM Right now, the actual President Erdogan's defeat is being priced in as the base case scenario. No one knows what that means for the lira, but if the lira is left to move free, it would certainly face a significant devaluation.  In the base case scenario, the formation of a new government is expected to end Turkey's ultra-loose monetary policy, halt heavy FX intervention, and readjust interest rates significantly higher to restore an understandable and orthodox monetary policy. In this case, not only that we would see a wild volatility in lira which could send the USDTRY all the way up to the 35/45 range, but we would also see Turkish policy rate lifted to 40/45% in the months following the election to match the official inflation level, while inflation would pop higher due to a potentially devastating devaluation in the lira.   Elsewhere, the Turkish equities would jump, not because investors are happy with higher rates, but because the valuation of the companies should also readjust to a new exchange rate - a significantly more expensive US dollar, hence a significantly higher valuation for Turkish stocks in terms of Turkish liras.  On a personal note, for me and my generation who have never seen Turkey ruled by anyone else than Mr. Erdogan, and any government other than his AKP party, the shock of a change would go well beyond what we could see in the markets. 
Central Banks, Inflation, and the Ongoing Battle: Insights from ING's Webinar

Central Banks, Inflation, and the Ongoing Battle: Insights from ING's Webinar

ING Economics ING Economics 14.06.2023 08:25
Listen: Central banks, inflation and why the battle isn’t over In a live webinar event this week, ING's James Knightley, Carsten Brzeski, and James Smith discussed the outlook for inflation, economic growth and monetary policy around the world, while Chris Turner explained what it could all mean for markets.   Central bankers from the US and Europe meet again this week while the Bank of England will decide next week on whether to continue raising interest rates in the ongoing battle to contain inflation. The market’s view on the Federal Reserve has shifted markedly in the past few weeks, with investors now more convinced about a rate hike in July and far less convinced of rate cuts later this year. Meanwhile, investors are pricing in another four rate hikes by the BoE, and two more by the European Central Bank.   In this podcast, a replay of our live webinar event, ING's Chief International Economist James Knightley, Global Head of Macro Carsten Brzeski, Developed Markets Economist James Smith, and Global Head of Markets Chris Turner discuss what they expect from the forthcoming meetings and how markets may respond.
US Inflation Eases, Fed Holds Rates; BoE Faces Dilemma Amid Strong Jobs Data; China Implements Stimulus Measures

US Inflation Eases, Fed Holds Rates; BoE Faces Dilemma Amid Strong Jobs Data; China Implements Stimulus Measures

Ipek Ozkardeskaya Ipek Ozkardeskaya 14.06.2023 08:32
US inflation data gave investors a good reason to cheer up yesterday. The headline number fell more than expected to 4%, and core inflation met analysts' expectations at 5.3%. The biggest takeaway from yesterday's CPI report was, again, that easing in inflation was mostly driven by cooling energy prices, but shelter costs remained sticky – up by more than 8% on a yearly basis.   Yet because these shelter costs represent more than 40% of the core CPI, and private sector data is pointing at cooling housing costs, investors didn't see the sticky core inflation as a major issue. The producer price inflation data is due today, before the Federal Reserve's (Fed) policy decision, but the latter will unlikely change expectations for today's announcement. A softer-than-expected PPI number – due to soft energy and raw material prices, could, on the contrary, further soften the Fed hawks' hand.     In numbers, the expectation of a no rate hike at today's decision jumped past 90%, while the expectation of a no rate hike in July meeting rose from below 30% to above 35%. The S&P500 extended its advance to 4375, while Nasdaq 100 rallied past the 14900 level. Small companies followed suit, with Russell 2000 jumping to the highest levels since the mini banking crisis.     Tough accompanying talk?  The Fed's decision for today is considered as done and dusted with a no rate hike. But the chances are that Fed Chair Jerome Powell will sound sufficiently hawkish to let investors know that the war is not won just yet, because 1. Core inflation remains well above the Fed's 2% target, 2. US jobs market remains too strong to call victory on inflation, and 3. Equity valuations point at an overly optimistic market, at the current levels, the S&P500 trades at around 18 times its earnings forecast over the next year, and these levels are typically associated with times of healthy economic growth and rising corporate profits. But we are now in a period of looming recession odds, and falling profits.     Ouch, BoE!  Yesterday's jobs data in Britain printed blowout figures for April and May. The employment change rocketed to 250K in April, while the expectation was a fall from 180K to 150K. The unemployment rate unexpectedly dropped to 3.8%, and average earnings excluding bonus rose from 6.8% to 7.2%. Then, the jobless claims fell by more than 13K – while analysts expected a surge of more than 20K – hinting that the British job market will likely print solid figures for May as well.     While these are excellent news for Brits who could at least see their purchasing power partly resist to the terrible cost-of-living crisis – where eggs, milk and bread for example saw their prices rise by a whooping 30-and-something per cent, it makes the end of the BoE tightening look impossible for now.     The market prices in another 125bp hike this year, which will take the British policy rate to 5.75%, and there is around 20% chance for an additional 25bp by February next year.     And all this in a market where mortgage rates rise unbearably, and house prices tumble. The 2-year gilt yield took a lift yesterday and is preparing to flirt with the 5% mark. We are now at levels above the mini-budget crisis of Liz Truss, while the spread with the 10-year yield is widening, suggesting that the UK economy will hardly come out of this unharmed. On top, the FTSE 100 index has fallen well behind the rally recorded by the US and European stocks this month because of falling energy and commodity prices due to a disappointing Chinese growth. The only good news for the Brits is that the pound is being boosted by hawkish BoE expectations. Cable rallied past the 1.26 level and is slowly drilling above a long-term downtrending channel top. The trend and momentum indicators remain tilted to the upside, and the divergence between the Fed – preparing to call the end of its tightening cycle sometime in the coming meetings, and the BoE – which has no choice but to keep raising rates – remains supportive of further gains in Cable. We could see the pair regain the 1.30 level, last seen back in April 2022.      China cuts.  The People's Bank of China (PBoC) lowered its 7-day reverse repurchase rate by 10bp to 1.9% yesterday, a week after asking the state-run banks to lower their deposit rates. These are signals that the PBoC is preparing to lower its one-year loan rate tomorrow to give a jolt to its economy that has been unable to gather a healthy growth momentum after Covid measures were relaxed by the end of last year.     Copper futures jumped above their 200-DMA yesterday, though they remain comfortably within a broad downtrending channel building since the second half of January, while US crude rebounded from a two-week low yesterday but remains comfortably below its 50-DMA.     Final word.  Because the rally in tech stocks now looks overstretched and China is getting serious about boosting growth, we will likely start seeing investors take profit on their Long Big Tech positions and return to energy and mining sector to catch the next train which could be the one that leads to profits on an eventual Chinese reopening.   
Why the Bank of England is Cautious about Endorsing a 6% Bank Rate: Assessing the Impact on Homeowners and the Mortgage Market

Why the Bank of England is Cautious about Endorsing a 6% Bank Rate: Assessing the Impact on Homeowners and the Mortgage Market

ING Economics ING Economics 16.06.2023 15:50
We doubt the BoE would endorse a 6% Bank Rate at this stage But not pushing back against rate expectations is not the same thing as validating them. And we have strong doubts that the BoE will take rate hikes as far as markets expect. Admittedly there’s no hard-and-fast rule that tells a central bank how high is too high. The BoE’s models have suggested that inflation will be well below target if rates were to go to the 5% area – let alone 6% – although policymakers have made it clear that they’re sceptical of these forecasts right now. But if we look at the mortgage market – the main transmission mechanism for interest rates – then 6% rates would mean a homeowner with a 75% loan-to-value ratio would, on average, be paying close to 40% of their disposable income on repayments. That compares to roughly 30% at the peak going into the 2008 financial crisis. The difference between now and then is that the share of households with a mortgage has fallen, and more people own their home outright now. And more importantly, around 90% of mortgages are fixed – predominantly for five years – a huge sea change compared to 10+ years ago when most were on variable rates. The result is that the length of time rates stay elevated is now arguably more important than the level, and the impact of 5%+ mortgage rates for a prolonged period would be large. The BoE is also right to highlight that the impact of past rate hikes is only now beginning to bite as a greater number of mortgage holders refinance.   Homeowners will be paying close to 40% of their average disposable income on repayments after refinancing    
Senior Fed Officials Signal Rate Hike Pause as Key Economic Indicators Awaited

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

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

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

Craig Erlam Craig Erlam 20.06.2023 13:05
Stock markets remain slightly in the red on Tuesday but activity should pick up with the return of Wall Street from the long bank holiday weekend. The focus this week remains on the central banks and whether we are as close to the end of the tightening cycle as everyone wants to believe. While there is the temptation to take what the Fed and others say with a small pinch of salt given their record over the last couple of years and the fact that any pivot was always likely to come late, they have been proven more accurate recently on their assertion that rates need to keep rising.   Markets have been overly optimistic this year and there may be an element of luck on the central bank side – keen to not underestimate inflation again, they were always going to remain hawkish as long as feasibly possible – but the data simply hasn’t justified changing course yet.   That may change over the next couple of months but so far, especially in the UK, the turnaround in inflation has been more akin to a container ship performing a U-turn than a speedboat as many hoped. That may not dramatically increase the terminal rate but it may ensure it remains there much longer. Rate cuts this year look more fantasy than reality now.   The BoE will be hoping for some good news from the UK inflation data tomorrow but I’m guessing policymakers are approaching it with a sense of dread rather than hope. We’re not likely to see any significant progress from the May data but avoiding another nasty surprise may be viewed as a win, allowing the MPC to proceed with 25 basis points rather than 50 which markets are pricing in a 30% chance of at this stage.   Bitcoin’s recent trend remains against it despite recovery Bitcoin drifted a little higher at the start of the week and is continuing to do so today. The move back toward $25,000 may have worried some but it’s recovered relatively well since then. The recent trend remains against it and until it breaks the pattern of lower highs – recovery rallies that fall short of recent peaks before falling again – it will continue to look vulnerable. A break below $25,000 could be another blow although gains this year would still remain extremely healthy.  
Summer 2023: A Cool Down on the Inflation Front and Implications for Fed Policy

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

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

Bank of England Confronts Troubling Inflation Report; Fed Chair Powell's Testimony Echoes Expected Path

Ipek Ozkardeskaya Ipek Ozkardeskaya 22.06.2023 08:07
BoE decides after another bad inflation report.     Federal Reserve (Fed) Chair Powell didn't say anything we didn't know, or we wouldn't expect in the first day of his semiannual testimony before the American lawmakers yesterday. He said that the Fed will continue hiking rates, but because they are getting closer to the destination, it's normal to slow down the pace. He repeated that two more hikes are a good guess, and that the economy will suffer a period of tight credit conditions, below-average growth, and higher unemployment to return to lower inflation.   The US 2-year yield pushed higher. The 10-year yield was flat given that higher short term yields point at higher recession odds for the long term. The gap between the 2 and the 10-year yield is again at 100bp.  In equities, the S&P500 gave back some field, but not all sectors suffered. Tech stocks pulled the index lower, financials and real estate were down, but energy stocks led gains as US crude jumped past $72pb on news that the US inventories dipped by around 1.2 mio barrel last week. Industrial, materials and utilities were up, as well, as a sign that a rotation toward the laggards could be happening rather than a broad-based moody selloff.  In currencies, the US dollar fell and is now testing the April-to-date ascending base - not because the Fed's Powell sounded more dovish, but because what's happening beyond the US borders makes the Fed look more dovish than what it really is.     By Ipek Ozkardeskaya, Senior Analyst | Swissquote Bank
RBI's Strategic INR Support: Factors Behind India's Stable Currency Amidst Global Challenges

BoE Faces Inflation Challenge, Expected to Hike Rates; Central Bank of Turkey's New Leadership Takes Action; Swiss National Bank Set to Raise Rates

Ipek Ozkardeskaya Ipek Ozkardeskaya 22.06.2023 08:08
BoE decides after another bad inflation report  The Bank of England (BoE) meets after another shocker inflation report, and is broadly expected to hike the rates by another 25bp points.   The BoE is the first major central bank that started hiking the rates to fight inflation. It proved to be the least efficient bank doing this job; British inflation is the worst among developed economies at nearly 9%. Consequently, the BoE will certainly be the last to finish hiking. The bank is expected to hike six more times, by 25bp, to reach a peak rate above the 6% by the end of this year, or the beginning of the next.   And I don't see how the UK will avoid recession in this morose macroeconomic setting.   The British pound didn't find an army of buyers after the UK inflation report yesterday. After an initial attack on the 1.28 resistance, Cable came back to pre-data levels and even traded at five-session lows. The EURGBP made a sharp U-turn from a nearly oversold market and jumped above 0.86. There is room for a hawkish surprise from the BoE (a 50bp hike?), and if not today, in one of the next meetings. The latter should keep Cable on path for more gains, in the actual environment of softening US dollar.    Let's see what's the new Team is worth!  The new leadership team of the Central Bank of Turkey (CBT) will give the first policy verdict of its new mandate today. The bank is expected to hike the rates from 8.5% to 20%. It looks like a big hike – and it is a big hike – but the Turkish Central Bank will have to   1. regain its credibility that has been shattered   2. repeat a similar operation in the next few meetings to bring the Turkish rates to where they should be in accordance with the economic fundamentals, and not where the government wants them to be.   3. if all goes well, get rid of the expensive and ineffective side measures – like FX interventions and FX protected savings – that served to keep the lira afloat while the monetary policy was no longer.   The USDTRY is again put to sleep near the 1.23 level after a tentative relaxation of FX interventions at the start of this month. Hiking interest rates, regaining credibility, then relaxing FX interventions sounds like a plan, but it will take ZERO verbal intervention from the government to conduct a healthy policy normalization.   Note that, in no case, do I expect the selloff in lira to stabilize or the reverse – without external intervention – below the 30/35 range – if left free.    Swiss will hike as well The Swiss National Bank (SNB) is about to announce a 25bp hike at today's meeting taking the Swiss policy rate to 1.75%. The dollar-franc sees resistance into the 0.90 psychological level, but most of the price action is driven by USD appetite. Given the sharp fall in Swiss inflation toward the 2% target, the SNB will unlikely let the franc run too strong from here. 0.88 seems to be a floor to franc appreciation.    
Euro-dollar Support Tested Amidst Rate Concerns and Labor Strikes

Gold under pressure as central banks signal more rate hikes, Bitcoin surges on financial giants' crypto commitments

Ed Moya Ed Moya 22.06.2023 08:22
Gold Gold remains under pressure as Fed Chair Powell stuck to the hawkish script.  It is not just the Fed, but also the BOE and the risk of many more rate hikes that are making non-interest bearing gold less attractive.  If the BOE ends up needing to do supersized hikes, that could suggest more aggressive tightening could be seen with all the other major central banks.  Gold tentatively breached the $1930 region and remains vulnerable to a plunge towards $1900 level. If the BOE decision ends up being more hawkish than expected, momentum gold selling might get ugly.         Bitcoin The cryptoverse is alive.  Bitcoin is surging after a few financial giants have made commitments to crypto. It started with BlackRock’s Bitcoin ETF filing and now others are following.  Who needs regulatory clarity if you see BlackRock making a move. Bitcoin rose 6.8% to above the $30,000 level.  The SEC has been playing hardball with a Bitcoin ETF and crypto watchers are speculating that BlackRock knows something.  Bitcoin momentum may last a little longer, but it will need to hear good news from the SEC to see a sustained rally target in the mid-$30,000 region.        
Eurozone Producer Prices Send Signals of Concern: Impact on Consumer Inflation and ECB's Vigilance - 03.08.2023

UK Core Inflation Rises, BoE Likely to Raise Rates as Powell Testifies Before Congress

Kenny Fisher Kenny Fisher 22.06.2023 08:36
UK core inflation rises in May BoE likely to raise rates on Thursday Fed Chair Powell testifies before House Committee The British pound has edged lower on Wednesday. GBP is trading at 1.2724 in Europe, down 0.3%. GBP/USD spiked after today’s inflation release but in currently in negative territory.   UK inflation disappoints The UK released the May inflation report today, and the results were a major disappointment, to put it mildly. With inflation falling for two straight months, there were hopes that the Bank of England’s rate policy was slowly working and the downtrend would continue. The monthly readings showed that headline and core CPI eased, but the annualized readings were worse than expected. Headline CPI remained at 8.7%, above the consensus of 8.4%. Core CPI rose from 6.8% to 7.1%, above the consensus of 6.8%, the highest level since March 1992. The core rate, which excludes food and energy prices, is considered more important, and the 0.3% gain is a huge disappointment for the BoE. The Bank of England won’t have much time to mull over the inflation figures, as it announces its rate decision on Thursday. There’s little doubt that the BoE will have to raise rates for a 13th consecutive time, and today’s inflation numbers mean there is a strong possibility of an oversize 0.50% increase. The BoE finds itself between a rock and a hard place, as it struggles to contain inflation without causing a recession. The resilient labor market has complicated the BoE’s attempts to cool the economy, and the markets are projecting that the Bank Rate, currently at 4.5%, won’t peak until 6%. High inflation has already caused a cost-of-living crisis, and more rate hikes will only exacerbate the pain.   Powell on the hot seat? Fed Chair Powell begins two days of testimony before Congress on Wednesday. Lawmakers are expected to grill Powell about the Fed’s rate policy. The Fed paused at this month’s meeting but is expected to raise rates at the July meeting. Powell has said that he can pull off a soft landing that will avoid a recession and a jump in unemployment, but he’ll likely have to answer pointed questions from lawmakers who are concerned that higher rates will damage the economy. . GBP/USD Technical 1.2719 remains under pressure in support. Next, there is support at 1.2645 There is resistance at 1.2848 and 1.2950    
EU Investigates Chinese Electric Vehicle Subsidies, Impact on the EV Market

Central Banks Navigate Rate Hikes and Market Expectations

ING Economics ING Economics 22.06.2023 09:26
Rates Spark: No pushback Central banks continue to signal that their work is not done. The Bank of England is set to hike rates today, but more importantly, it is unlikely to push back against aggressive market pricing given its own uncertainty about near-term inflation. These circumstances add to the persistence of the curve's flattening bias, even around record inversions.   No change in message means no change in curve flattening bias for now The spillover into other markets was limited in the end, but the higher-than-anticipated UK inflation data yesterday is a reminder of what drives the current hawkish stance of central banks. The focus on current (core) inflation to determine policy success will also mean that the flattening bias for yield curves will not pass quickly. Just as EUR and Sterling curves have moved to record inversions, a similar test of previous lows looks imminent in the US as well. Market circumstances such as the still punitive carry on steepening positions and declining liquidity going into summer only add to the persistence of the bias.   Fed Chair Jerome Powell reiterated the Fed’s “strong” commitment to bring inflation back to the 2% target, even though the prepared remarks of his testimony to the House broadly stuck to the script of last week’s FOMC meeting.   Policy rates were held to give time to assess the impact of past policy tightening while "nearly all FOMC participants expect that it will be appropriate to raise interest rates somewhat further by the end of the year." Recall that the Fed's dot plots had been adjusted to see two more rate hikes this year. At the same time, with the messaging not going beyond what was said earlier, market pricing of the near-term Fed path was little changed - one hike is close to being fully discounted. If anything, there was a tendency to further price out cuts from the peak policy rate.   The BoE is unlikely to push back against market pricing The Bank of England will make its decision today against a backdrop of inflation data continuing to surprise on the upside. The consensus is unanimously looking for a 25bp rate hike today, though likely most replies came ahead of yesterday’s data and some might now at least highlight growing risks of a 50bp move today. And indeed, the BoE itself might see one or two of its members voting for a larger move today. Our economist thinks the bar for a 50bp hike remains high, but a 25bp hike today and another one in August now look like a given.    
EUR: German IFO Data and Central Bank Hawkishness Impact Euro/USD Range Trade

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

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

Central Bank Surprises: BoE Hikes, SNB and Norges Bank Follow Suit - Analysis and Outlook

Ipek Ozkardeskaya Ipek Ozkardeskaya 23.06.2023 11:36
Keeping up with the central banks.  There were three major surprises from three central banks yesterday.     BoE hikes 50bp, peak rate seen unchanged past 6%.  The Bank of England's (BoE) decision to step up the pace of rate hikes at the 13th meeting since the start of the tightening policy has been broadly unwelcomed from households, to bond and stock investors, and to FX traders.   The 2-year gilt yield stabilized above the 5% mark, yet didn't take a lift on doubt that the BoE could hike by another full percentage point without wreaking havoc across the British economy, especially in the property market. The 10-year yield fell on the morose economic outlook. At this point, it would be a miracle for Britain to avoid recession, and even a property crisis.   The FTSE 100 slumped below its 200-DMA, and tipped a toe below the 7500 mark. Trend and momentum indicators are negative, and the index is now approaching oversold conditions. It is worth noting that falling energy and commodity prices due to a softish Chinese reopening didn't play in favour of the British big caps this year. The rising rates step up the bearish pressure. The outlook remains neutral to negative until we see a rebound in global energy prices - which is not happening for now.   The pound fell as a reaction to the 50bp hike. You would've normally expected the opposite reaction, but the bears remained in charge of the market, pricing the fact that the dark clouds that are gathering over Britain will destroy more value than the higher rates could create.   In summary, it was a disastrous week for Britain. But at least one person didn't get discouraged by the data and the BoE hike, and it was Rishi Sunak who said that the British economy is 'going to be ok' and that he is '100% on it'.     He is not scared of being ridiculous.  Moving forward, the Gilt market will likely remain under pressure, the longer end of the yield curve will do better than the shorter end. The British property market will be put at a tougher test, and could crack under the pressure at any time, in which case the economic implications would go far beyond the most pessimistic forecast. And any government help package to help people go through higher mortgage costs would further fuel inflation and require more rate hikes. The outlook for pound weakens and the FTSE100's performance is much dependent on China, which is struggling with low inflation and sluggish growth on the flip side of the world. Long story short, there is not much optimism on the UK front.  Elsewhere, the Swiss National Bank (SNB) raised by 25bp as expected, Norges Bank surprised with a 50bp hike, said that there will be another rate hike in August, while Turkey hiked from 8.5% to 15% vs 20% expected, raising worries that Turkey's new central bank team could not shrug off the low-rate-obsessed goventment influence. The dollar-try spiked above the 25 level, the highest on record, but not the highest on horizon.       Consume less!  The US existing home sales came in better than expected, adding to the optimism that the US real estate market could be doing better after months of negative pressure. The surprising and unexpected progress in US home data is welcomed for the sake of the economic health, but a strong housing market, along with an unbeatable jobs market hint that the Federal Reserve (Fed) will keep hiking rates. Powell confirmed that there could be two more rate hikes in the US before a pause at his semiannual testimony before the Congress, while Janet Yellen said she sees lower recession risks, but that consumer spending should slow.   The US dollar rebounded on hawkish Fed expectations. 
Stocks Rebound Amid Rising Volatility: Analysis and Outlook

Global Stocks Slide on Fears of Recession Triggered by Monetary Tightening

Ed Moya Ed Moya 26.06.2023 08:13
Stocks tumble on fears monetary tightening will trigger a recession Fed rate hike bets still only pricing in one last rate increase European bond yields plunge on downbeat global sentiment   US stocks are sliding as the global growth outlook continues to deteriorate following soft global PMI readings.  The risk of a sharper economic downturn is greater for Europe than it is for the US, so that could keep the dollar supported over the short-term.  This has been an ugly week for stocks and that is starting to unravel a lot of the mega-cap tech trades. The Nasdaq is getting pummeled as the AI trade is seeing significant profit taking.      Europe Brief: European stocks got rattled after France posted a surprise contraction with their Services PMI.  Almost all the European PMI readings disappointed and that is bursting the euro trade. Stubborn UK inflation is forcing the BOE to become a lot more aggressive with their rate hiking campaign, which will pile on significantly more pain on people with mortgages. UK Chancellor Hunt needed to do something for homeowners and this year-long break before repossessions is a step in the right direction. Over 2 million UK mortgage holders are going to see skyrocketing monthly mortgage bills and right now it seems it will steadily get worse.     Bostic The Fed’s Bostic delivered a dovish message today after favoring no more rate hikes for the rest of the year. Bostic is optimistic that the Fed will bring down inflation without tanking the job market.  Bostic is in the minority as other members will need to see a significant deterioration in the data.  Today, the service sector PMI declined not as much as expected and is still trading near pre-pandemic levels. The June preliminary Services PMI fell from 54.9 to 54.1, a tick higher that 54.0 consensus estimate. The economic resilience for the US will likely keep the majority of Fed officials with a hawkish stance.       
In-Depth Analysis of GBP/USD 5M: Volatile Trading within a Sideways Channel

Fed Chair's Dot Plots and Energy Reports: Unveiling Commodities' Reactions

Ed Moya Ed Moya 29.06.2023 08:24
Commodities were tested after Fed Chair Powell triple downed on the Fed’s dot plots.  The dollar initially caught a bid but that was short-lived.  At the end of the forum, traders really didn’t learn anything new.   Oil Before the EIA report, crude prices were wavering after a larger than expected drop in inventories, countered fears that several banks will be sending the global economy into recession. Yesterday, the API report showed crude stocks declined by 2.4m bpd. Energy traders however turned bullish quickly the EIA energy report showed a 9.6 million bpd draw and robust demand signs everywhere.  US crude exports rose above the 5 million bpd level, jet demand rose to highest level since 2019, and the 4-week average gasoline demand surged to the best levels since December 2021.  The oil outlook was too pessimistic and this report reset the market.   Gold Gold remains in the house of pain, falling to a 3-month low as investors grapple with FOMO and as central banks send global bond yields higher. The peak of tightening cycles keeps getting pushed higher and that has been bad news for gold. Gold did not get any favors from Fed Chair Powell as the pushback of more tightening saw rate cut bets pushed deeper into next year.  The precious metal also got some hawkish signals from the ECB and BOE, while the BOJ noted that there are signs inflation will pick up next year and that the BOJ is ready to shift policy, potentially even as soon as this year. All eyes are on gold’s $1900 level, as a breach could trigger some technical selling.  Gold is above where it was trading before the ECB forum, so it might continue to stabilize here.  
Australia Retail Sales Rebound with 0.5% Gain; AUD/USD Sees Volatility - 28.08.2023

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

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

BoE's Waning Confidence in Surveys: Shifting Focus to CPI and Average Earnings

ING Economics ING Economics 06.07.2023 14:03
The BoE is losing confidence in these surveys But June’s decision to lift rates by 50 basis points, having been hiking more gradually over recent months, showed that the wider BoE committee is losing patience and confidence in these forward-looking measures. The hawks would point to the survey question on "price growth", which shows firms consistently predicting inflation to be lower than what is actually realised, as the chart below demonstrates. The Bank has also produced interesting research showing that firms are resetting prices more regularly than in the past, which the hawks could argue shows that inflation is more ingrained than it once was. The reality is that the Bank is likely to pay less attention than usual to these surveys, and we think the next few policy decisions will be guided by CPI inflation, and to some extent average earnings, and not a lot else. We’ll get fresh data on the latter next week, and it looks like regular pay growth (which excluded volatile bonuses) will stay either flat or a touch lower on a year-on-year basis. The key question is whether the recent re-acceleration in pay growth is largely a function of the higher National Living Wage, or whether it reflects renewed underlying momentum in wage setting.   Realised price growth has typically been higher than what firms had expected   When it comes to CPI, we expect to see the headline rate dip to 8% in June’s numbers from 8.7% currently, and down again to 6.5-7% in July. But that’s mainly a function of lower electricity/gas prices and a reflection of the sharp rise in petrol prices we saw at the same time last year. We’d expect services inflation to notch slightly lower over the summer, but probably not enough to prompt another change in strategy among committee members. We therefore expect a 25 basis point rate hike in August and another in September – and we certainly wouldn’t rule out more. But ultimately we think the surveys, including the Decision Maker Panel, do contain some useful signals. And by November, we think the committee will have more confidence that inflation is indeed easing, to enable it to pause its rate hike cycle.
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FX Volatility Expected to Return as Central Bank Policies Diverge"

Ed Moya Ed Moya 12.07.2023 09:53
FX volatility might be returning given Wall Street is seeing some exhaustion with several key currency trades.  The end of tightening for the advance economies keeps getting delayed and sooner than later it will deliver a major blow to growth.  FX volatility should pick up as diverging policies from the Fed, BOE, and PBOC could trigger some significant moves in H2.   USD/JPY A lot of macro traders were expecting dollar strength to intensify against the Japanese yen as interest rate differentials appear likely to widen further over the next few months.  The carry trade isn’t making a comeback given the rising prospects of a recession coming to the US.  Everyone also remains on intervention watch from Japan’s Ministry of Finance, but expectations are for action if dollar-yen tests the 150 region.  The consensus on Wall Street is that Japan will probably act, but it might not happen until after the summer.  A tweak to yield curve control could trigger yen strength but that won’t happen until the BOJ’s price goal is achieved.  BOJ Governor Ueda has been clear that no tweaks will occur until the prospects heighten for inflation to sustainably reach its 2% target. USD/JPY weakness towards 140 has triggered some buyers and that might gain momentum if risk appetite can remain throughout tomorrow’s US inflation report (Wednesday 830am est).  Further upside could eye a return to the 145 zone if risk aversion does not run wild post both Wednesday’s CPI reading and Friday’s bank earnings.        
The Pound's Rally at Risk: GBP/USD Faces Bearish Reversal Pattern

The Pound's Rally at Risk: GBP/USD Faces Bearish Reversal Pattern

Ed Moya Ed Moya 12.07.2023 09:54
GBP/USD GBP/USD (4-hour chat) has been in a general rally for the past two days, but that could be coming to an end if a bearish butterfly pattern forms. The headlines have been mostly bullish for the pound, but that could be reaching an inflection point. Inflation is forcing the BOE to be extremely hawkish and that could soon lead to a significant economic downturn.  Many traders are focusing on today’s UK wage growth, as it posted the biggest rise outside the pandemic period, but jumps in jobless claims suggest the labor market is cooling. If the pound-dollar bullish trend respects the psychological 1.3000 resistance, some bullish bets might get taken down.  The four-hour GBP/USD is displaying a potential bearish butterfly pattern.  If this technical reversal pattern holds, a moderate decline could see downward momentum target the 1.2800 region. If a dramatic move triggers a rally above the 1.3000 level, the bearish reversal pattern could be invalidated.  Further upside targets include the 1.3250 region.  
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GBP/JPY: Pound-Yen Rally Faces Exhaustion and Potential Pullback

Ed Moya Ed Moya 12.07.2023 10:02
GBP/JPY The British pound has appreciated over 18% to the Japanese yen this year as stubborn inflation has bolstered the odds of aggressive central bank tightening by the BOE.  Pound-yen has steadily gathered strength in the first half of the year but exhaustion could be settling in.  The pound initially rallied earlier in London after weekly hourly earnings came in scorching hot, which should raise the prospects of a half-point rate hike at the August 3rd BOE meeting. The pound may get a major boost against the dollar if it can extend above the 1.30 level, but for some traders it is looking toppish against the yen. GBP/JPY may have a decent pullback if continued bearishness takes price below the bullish trendline that has been in place since March.  Pound downside momentum could target 176.50 against the yen if the bullish trend line (around the 179.75 ) is invalidated. Key resistance currently resides around the 184.20 level.  
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Examining Macroeconomic Indicators: Insights into the British Economy and the Role of the Bank of England

Antreas Themistokleous Antreas Themistokleous 13.07.2023 13:57
Recent macroeconomic readings, including wages, GDP, and industrial production, have provided valuable insights into the current state of the British economy. These key indicators have prompted discussions about the depth of the potential recession and the future actions of the Bank of England (BoE). To gain a better understanding of these developments, we turn to Antreas Themistokleous, an expert in the field. The release of major economic data from the UK this week shed light on the condition of the British economy. The unemployment rate for May saw a 0.2% increase, reaching 4%, and the number of unemployment claims surpassed expectations, indicating a higher demand for unemployment benefits. On the other hand, average earnings experienced a 0.2% growth, while year-over-year GDP showed a decline of -0.4%. Although the GDP figure was not as dire as anticipated, it still reflects a subpar performance compared to the same period last year. Industrial production also fell by 2.3%, aligning with market forecasts.     FXMAG.COM: What do this week's macroeconomic readings - wages, GDP, industrial production - tell us about the state of the British economy? Will the recession be deep? Will the BoE continue to raise rates?   Antreas Themistokleous:  This week we saw major economic data from the UK being released that could help in determining the state of the British economy. Unemployment rate for the month of May increased by 0.2% pushing the figure to 4% while the Claimants came out to be worse than expected, missing expectations of negative 22,000 claims to a positive 25,700. This means more people claimed for unemployment benefits in May and that was reflected in the official unemployment rate.  On the other hand average earnings have increased by 0.2% while the year over year GDP growth came out at -0.4%. Even though the GDP was expected to be worse , at -0.7% , it still shows that the British economy did not perform very well compared to the same month last year. Industrial production recorded a negative 2.3% perfectly aligned with market expectations.    Inflation rate for the month of June is expected to be published on the 19th where the market expects a further decline of around 0.4%. If this is confirmed it would be the yearly low and could potentially boost the quid against its pairs, especially USD and the Euro at least in the short term.    Even though inflation might be coming down, it does so at a very slow pace so the Bank of England could still have a hawkish stance at their next meeting on the 3rd of August. In June, the Bank of England increased interest rates for the 13th time in a row, by 50 basis points to 5% while some analysts argue that they could peak around 5.75% by the end of this year.    By paying attention to the labor market and the economic growth we will be able to gauge the consequences of the rate hikes by the central bank and how it could affect the overall economy. Recession fears are still hovering above the heads of the British since they are not “out of the woods” just yet but the stance of the central bank in regards to their monetary policy will be closely monitored by market participants.       
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GBP Faces Re-pricing Pressure amid BoE Rate Cycle Shift and Fed Meeting Expectations

ING Economics ING Economics 24.07.2023 10:23
GBP: BoE re-pricing might have come far enough for the time being Sterling has been under pressure over the last week on the back of the re-pricing of the Bank of England (BoE) rate cycle. Here, expectations for the Bank Rate at the end of this year have dropped from a 6.35% peak to now 'just' 5.88%. Given the lack of top-tier UK data this week and what could be a slightly hawkish Fed meeting on Wednesday, it may well be that the repricing of the BoE rate cycle and sterling softness have come far enough for the time being. This could see EUR/GBP correct back towards the 0.8600 area. GBP/USD could correct to the 1.2670/2700 area this week if the dollar correction does run a little further on the Fed story.
Key Economic Events and Corporate Earnings Reports for the Week Ahead – September 5-9, 2023

Oil Prices Surge and Canadian Dollar Soars on Strong Demand Outlook; Gold Eyes Bullish Breakout Amid Central Banks' Easing Stance; Bitcoin Slides After Curve Finance Breach

Ed Moya Ed Moya 01.08.2023 13:30
Oil poised for best monthly performance since early 2022 Net-long positions in WTI  rise to highest levels in 3 months Goldman says global oil demand has surpassed peak set just before COVID-19 USD/CAD   Canadian dollar Oil and the loonie are flying high again as global growth prospects improve and on optimism the Fed is done tightening.  The Canadian dollar was weakening last week on fears that the BOC’s tightening cycle is starting to weigh on the economy.   That outlook might change if China delivers massive stimulus and if global disinflation trends remain in place.  The 1.3100 level remains key support for USD/CAD, while 1.3250 provides resistance. Oil Crude prices are finishing a solid month on a high note as demand prospects remain impressive and no one doubts that OPEC+ will keep this market tight.  The oil market is seeing the best month since early 2022 as most of the major central banks appear at the tail end of their tightening cycles.  Also supporting oil was the Goldman Sachs note that suggested we are not at peak demand.  The crude demand outlook is getting a boost on soft landing hopes for the US and Europe.  The ace up the sleeve of oil bulls is that the energy market is still awaiting massive stimulus from China that should boost global growth prospects.  WTI crude has rallied above the $80 level and is trying to make a run towards the $84.50 level.  Exhaustion might settle in until we get beyond Friday’s NFP report.    Gold Gold prices are attempting a bullish break out as optimism grows that the major central banks are all approaching the end of their tightening cycles.  The RBA might be one-and-done this week and the BOE might be done after a couple more.  The Fed is clearly waiting on the data, but they might be done if inflation plays nice.    Gold’s rally could extend if growth prospects turn sour.  If Wall Street starts aggressively in rate cuts by the first quarter of 2024, gold could easily find a home above the $2000 level.  It seems gold will need to wait for Apple’s earnings and the NFP report, before it delivers its next big move.  Bitcoin Bitcoin prices softened after Curve Finance announced they suffered a breach.  $50 million have been drained, which led to the over 10% drop with the Curve stablecoin.  This is a blow for Ethereum’s DeFi ecosystem, but not likely to trigger a massive selloff for Bitcoin.      
Europe's Economic Concerns Weigh as Higher Rates Keep US Markets Cautious

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ING Economics ING Economics 16.08.2023 12:32
GBP: Sterling enjoys a temporary lift from the wage data Sterling is rallying this morning after wage growth data surprised on the upside. Here is what our UK economist, James Smith, says about the data: "Private sector wage growth is now running at 8.1%, up from 7.9% previously. These figures have been backwardly revised, so not all the upside surprise is in the latest month. But still clearly running much too fast for the BoE's liking and will help cement a September hike. The flip side is that unemployment is clearly rising now and employment on the "single month" measure was down by 360k vs three months ago." James had thought that the wage growth could surprise on the upside, but equally, he feels that tomorrow's release of July CPI could see services inflation surprise on the downside. If he's right, today's EUR/GBP dip below 0.86 should prove temporary. The 0.8550/80 area may well hold in EUR/GBP ahead of tomorrow's CPI release.
Detailed Analysis of GBP/USD 5-Minute Chart

Market Update: UK Bond Yields Surge, Pound's Rebound, and Retail Sales Outlook

Ed Moya Ed Moya 18.08.2023 10:07
UK 10-year government bond yield surges to a 15-year high US 10-year real yields approach 14-year high Dollar also lower on rebounding yen and yuan The British pound is still rallying from the latest inflation that suggests sticky core inflation will keep the BOE in tightening mode.  With the global bond market selloff being the dominant theme on Wall Street, traders are noticing Gilt yields are standing out.  With FX traders pricing in three more rate hikes by the BOE, it seems that could be the trigger to allow the pound to continue its rebound. Today’s the UK benchmark 10-year bond yield rose 7.7 bps to 4.716%, the highest levels since August 2008.  If we see a further vicious cycle here with Gilt yields, this will suggest BOE rate hike wagers are not cooling.       The GBP/USD daily chart is displaying a Dragonfly doji pattern has identified a bullish reversal that is currently respecting the 50-day SMA.  Price action is also tentatively breaking above the downward sloping trendline that has been in place since mid-July.  If bullishness remains intact, further upside could target the  1.2825 level, followed by the 1.2920 region.  The psychological 1.30 level could remain an elusive target as expectations remain for the US economy to outperform most advanced economies.       Looking Ahead: The UK July retail sales report will show spending declined, impacted by the unseasonable wet weather.  If the mortgage crisis is hitting the economy more harder than expected, we will see that reflected in this report.  Any better-than-expected spending figures could send the pound surging higher.  An-line or worse-than-expected report might trigger some profit-taking from the pound bulls    
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New Inflation Methodology Sparks Hope for BoE as GBPUSD Faces Resistance

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

ING Economics ING Economics 25.08.2023 09:29
GBP: Broadbent speaks tomorrow at Jackson Hole Ben Broadbent is the only Bank of England member speaking at Jackson Hole, but his remarks are scheduled for tomorrow, so we’ll need to wait for Monday to see any impact on sterling. The recent volatility in the BoE peak rate expectations on the back of data releases (wages, inflation, retail sales, PMIs) means the return of some BoE comments after a long period of silence can definitely move the market. It’s worth noting, however, that UK markets are closed on Monday for a national holiday so volumes will be thinner. For today, the pound will be moved by Powell and Lagarde. We think Cable should find good support around 1.2500 in the event of more USD strength, while EUR/GBP can extend its rally beyond 0.8600 if we are right about Lagarde sounding hawkish today.
Bank of England's Rate Dilemma: A September Hike and the Uncertain Path Ahead

Bank of England's Rate Dilemma: A September Hike and the Uncertain Path Ahead

ING Economics ING Economics 01.09.2023 09:30
Bank of England The Bank of England looks poised to hike rates again in September, but November is less certain. Private sector wage growth is at a cycle high and looks unlikely to slow dramatically by the end of the year, and certainly not before November. Meanwhile, services inflation has risen higher again. And while we think the impact of lower gas prices should start to show through here with a lag, progress is likely to be limited by the time of the November meeting. That said, the wider economy is showing signs of slowing amid higher interest rates, and the jobs market is also noticeably cooling. We’re likely to see more evidence of this over the next couple of months. We’re erring on the side of a pause in November, but we don’t rule out another hike. Bigger picture, the BoE is clear that it wants to keep rates high for a prolonged period. We’ve pencilled in the first cut for the second quarter of next year but we acknowledge that may end up being delayed.  
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Dovish BoE Comments Drive EUR/GBP Rally

ING Economics ING Economics 08.09.2023 11:00
GBP: BoE dovish comments hit the pound EUR/GBP has experienced a good rally in the past two sessions, now trading at around 0.8580 on the back of dovish comments by Bank of England members. Yesterday, BoE Governor Andrew Bailey stressed the downside potential of UK inflation and said that rates were likely near the top of the cycle. He was joined by two other MPC members at the Parliament testimony, Jon Cunliffe and Swati Dhingra, who also stressed inflation is at a turning point and gave few reasons to suggest multiple more hikes are on their way. It appears that the BoE may be transitioning to a higher-for-longer narrative. Markets are now for the first time starting to cast some doubts about whether the BoE will hike rates at all at the 21 September meeting, with pricing having dropped below 20bp after yesterday’s Parliament testimony. For now, our base case is that they will go ahead with a hike but that it will be the last one, meaning markets will have to price out the additional hike still priced for later this year. EUR/GBP upside potential remains decent in our view. Today, keep an eye on the BoE decision-making panel survey and on any evidence of abating inflationary pressure.
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The British Pound Hits a 3-Month Low Against the US Dollar as UK House Prices Decline

ING Economics ING Economics 08.09.2023 13:42
British pound falls to 3-month low against US dollar UK house prices fall sharply BoE’s Bailey is non-committal about September rate decision The British pound has extended its losses on Thursday. In the North American session, GBP/USD is trading at 1.2472, down 0.28%. Earlier, the pound touched a low of 1.2445, its lowest level since June 8th. The pound has been unable to find its footing and has posted five losing sessions in the past six, falling 250 basis points during that span. UK housing data disappoints UK house prices continue to fall and posted a decline of 1.9% in August, the steepest drop since November 2022, according to the Halifax Bank of Scotland. The Halifax report noted that house prices have been resilient this year in the face of rising interest rates, but the lag effect of rate hikes may be making itself felt through higher mortgage costs. This week’s UK PMI releases highlighted the weakness of the UK economy and have pushed the wobbly pound lower. The Services PMI for August was revised higher to 49.5 from 48.7, following a July reading of 51.5 points. This marked the first decline in services business activity since January. This was followed by the Construction PMI, which decelerated and barely remained in expansion territory at 50.8, down from 51.7 in July. The manufacturing sector has been woeful, and last week’s PMI dipped to 43.0 in August, down from 45.3 in July.   With the struggling UK economy as the background, Governor Bailey said on Wednesday that it was “much nearer” to ending the current tightening cycle, but added that the BoE might have to raise rates further due to persistently high inflation. Bailey remained non-committal about the September 21st meeting, but the markets are confident that the Bank will deliver a quarter-point hike, with a probability of 82%. . GBP/USD Technical GBP/USD pushed tested support at 1.2449 earlier. Below, there is support at 1.2335  There is resistance at 1.2519 and 1.2633      
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UK Home Prices Drop 4.6% in Year to August, Weakest Since 2009, Adding Pressure on GBP

Kenny Fisher Kenny Fisher 08.09.2023 13:43
UK home prices plunge 4.6% in the year up to August, worst y/y drop since 2009 UK businesses expected to deliver smallest price rise since February 2022 GBP underperforms as BOE rate hike expectations shrink; implied rate peak at 5.699%  vs 5.671% on Sept 1st GBP/USD (a daily chart of which is show) has steadily weakened this month, now falling below the 1.25000 level.  This occurs within the context of a strong accelerated downtrend extending originally from the 1.3140 area highs in July.  The UK inflation outlook is for pricing pressures to continue to ease as business prepare to raise prices at the slowest pace since 2021.  The latest report from the BOE’s Decision Maker Panel (DMP) survey showed one-year ahead inflation expectations improved from 5.4% in July to 4.8% in August.  The three-year outlook improved a tick to 3.2%. With BOE rate hike expectations starting to come down, the focus is shifting to how weak is the economy.  Britain’s residential property market woes are not getting any better as a couple of the top lenders signal prices are falling at the worst pace since 2009.  Questions are growing about how strong the consumer is and if the debt situation will significantly worsen.     Inflation is still too high and that seems to have markets convinced that the BOE will deliver one more rate hike.  Divide is brewing amongst policymakers, but it should easily be justified to deliver one more rate hike in this cycle.  If the softer trend emerges with inflation, the BOE might be done hiking and that could pave the way for pound weakness towards the 1.2350 region.  Major support resides at the 1.2000 and 1.2090 zone.    
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BoE Hints at Balanced Debate for Next Meeting as Weakness Looms

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

GBP: Dovish Wage Developments Lead to Lower Sterling Prices

ING Economics ING Economics 13.09.2023 08:56
GBP: Rolling lower As we discussed in yesterday's FX Daily, the market did read the latest wage developments slightly dovishly and re-priced both the Bank of England tightening cycle and sterling lower. It is quite incredible to see the Bank Rate now priced just above 5.50% next February. This terminal rate had been priced close to 6.50% just a few months ago. If we are right with our call for an ECB rate hike tomorrow, EUR/GBP could edge up towards the 0.8670 area. And given that we like a continued strong dollar in the short term, expect GBP/USD to press the 200-day moving average at 1.2430. Recall that based on speculative positioning data, both the euro and sterling look the most vulnerable to further dollar strength.
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Paring Back of BoE Hike Expectations Weakens GBP Gains

FXMAG Team FXMAG Team 14.09.2023 10:01
GBP: Paring back of BoE hike expectations encouraging reversal of GBP gains The pound has continued to trade at weaker levels overnight after selling off yesterday following the release of the latest labour market report from the UK. It has resulted in EUR/GBP rising back above the 0.8600-level while cable is continuing to hold just above support from the 200-day moving average that comes in at around 1.2430. The pound has been undermined recently by the paring back of BoE rate hike expectations as we highlighted in our latest FX Weekly report (click here). The UK rate market has become less confident that the BoE will deliver multiple further rate hikes in the current tightening cycle. There are 19bps of hikes priced in for next week’s MPC meeting and 39bps of hikes by February of next year. It implies that the UK rate market is currently attaching around a 50:50 probability to the BoE delivering one final hike after next week’s 25bp hike which is viewed as almost a one deal. The main trigger for the paring back of BoE rate hike expectations have been comments from BoE officials including Governor Bailey and Chief Economist Pill who have signalled that the rate hike cycle is close to an end and that keeping rates higher for longer is preferred to the alternative of hiking rates further towards 6.00%. Next week’s updated forward guidance from the MPC meeting will be important in determining whether the BoE plans to deliver one final hike or is becoming more confident that it has raised rates enough   At the same time the recent data flow from the UK is helping to dampen BoE rate hike expectations as well. While yesterday’s labour market report did show average weekly earnings hitting a new high of 8.5% in July, the details of the report provided more encouragement that labour demand continues to weaken and wage growth is beginning to slow. Employment dropped by 207k and the unemployment rate ticked up further to 4.3% as it moved further above the cycle low of 3.5% from las August. Back in the August MPR the BoE had forecast the unemployment rate would rise to only 4.4% by the end of next year. Job vacancies also continued to fall and moved below 1 million. After stripping out more volatile bonuses, regular pay growth in the private sector has slowed in recent months coming. The HMRC’s median pay measure even declined by -0.5%M/M suggesting the peak has been reached for pay growth.   Furthermore, it has just been revealed that services sector growth was much weaker than expected at the start of Q3. After expanding by 0.5%M/M in June, service sector output contracted by -0.5% in July. It has reinforced the pound’s downward momentum  
Asia Morning Bites: China's Data Deluge, ECB Rate Hike, and US Retail Sales Surprise

Asia Morning Bites: China's Data Deluge, ECB Rate Hike, and US Retail Sales Surprise

ING Economics ING Economics 15.09.2023 08:23
Asia Morning Bites China's data deluge draws near. ECB hikes rates while US retail sales surprise on the upside.   Global Macro and Markets Global markets:  We will start today with FX, given the ECB meeting yesterday, and the response of the market to what our Head of Global Macro is describing as a dovish hike. EURUSD has dropped sharply to 1.0640, and this has taken the GBP lower too, now trading at just over 1.24. The BoE meets next week and is also expected to hike  - also perhaps its last. The AUD has not been much impacted by this move, though despite the stronger-than-expected labour data yesterday, markets seem relaxed and are expecting no further tightening. We are not so relaxed. The JPY was also a little softer, rising to 147.50 . Other Asian FX was fairly quiet yesterday. The CNY is still hovering below 7.28 ahead of today’s big data release. European bond yields dropped after the ECB decision. The yield on the 10Y bond fell 5.8bp to 2.588%. US Treasury yields were not affected by the European news and had to contend with another stronger-than-expected macro release in the form of retail sales. The US 10Y Treasury yield rose 3.8bp to 4.286%, while yields on 2Y USTs rose 4.2bp to 5.011%. Equity markets seemed to like the sense that rates aren’t going any higher (if you believe the central bankers, and it's not like they have a great track record!). The S&P 500 rose 0.84% while the NASDAQ rose 0.81%. The NASDAQ is up 33.05% year-to-date, just in case you’d lost track. Triple witching today, so it may be volatile. Chinese stocks didn’t do a lot yesterday. The Hang Seng rose 0.21%, while the CSI 300 fell 0.08%. Volumes were fairly low.   G-7 macro:  The US economy is still refusing to roll over. August retail sales rose 0.6% MoM, much higher than the 0.1% expected. The control group growth rate was slower at 0.1%, but this was still more than had been expected. Markets are still not even 50% expecting another Fed rate hike. But you have to wonder how long they can keep this up after the recent upside inflation miss. US August PPI data also came in above expectations. It’s a quieter day today, except for US existing home sales and the University of Michigan consumer confidence figures.   China:  The data deluge kicks off at 09:20 this morning (HKT/SGT) with the 1Y medium-term lending facility rate, which given the PBoC’s struggles to support the CNY, and yesterday's RRR cut, seems likely to be left unchanged at 2.5%. New home prices come out at 09:30, and will likely show further month-on-month decline. Other property-related data today is unlikely to offer much sign of life. But at 10:00, the activity data emerges, and here, we think there may be some slightly less negative news. Recent export data and new CNY loan figures could indicate that production and retail sales numbers may increase slightly in year-on-year terms from last month. To be sure, we aren’t expecting them to look strong, but a positive direction of travel could provide some support for markets. We will know soon enough.     India:  August trade figures come out later this afternoon. The slide in exports has been fairly consistent, but we are now reaching a point where year-on-year declines may start to shrink from double digits to low single digits. That is also likely on the import side, and the trade deficit is likely to remain close to last month’s -USD20.67bn.   Indonesia:  Indonesia reports trade numbers today.  The market consensus suggests that we'll have another month of contraction for both exports and imports as global trade remains subdued.  The trade balance is forecast to settle in surplus but at a less substantial level of roughly $1.5bn.  Fading support from the trade surplus could be one reason for the IDR's struggles recently, and we could see the currency stay under pressure until we see this trend reversed.     What to look out for: China data deluge China medium term lending rate (15 September) Indonesia trade balance (15 September) China retail sales, industrial production (15 September) US University of Michigan sentiment and existing home sales (15 September)
Sterling Slides as Market Anticipates Possible Final BOE Rate Hike Amidst Weakening Consumer and Housing Market Concerns

Sterling Slides as Market Anticipates Possible Final BOE Rate Hike Amidst Weakening Consumer and Housing Market Concerns

Ed Moya Ed Moya 15.09.2023 08:38
Markets leaning towards possibly one last BOE rate hike (implied rate peak of 5.527% at Feb 1st 2024 meeting) UK house prices tumble to lowest levels since 2009 Doji pattern possibly invalidated as bearish momentum remains   The British pound is declining as expectations grow that for the BOE to deliver one last hike as the consumer is quickly weakening.  Stagflation risks are here as housing market concerns worsen and are now accompanied with a cautious consumer who is battling rising inflation expectations. Any lessons learned from the ECB could be that the BOE will have a much worse growth outlook. The latest update from retailer, John Lewis and Waitrose signaled a tough environment as the consumer struggles with inflation and becomes cautious with big-ticket goods.  John Lewis was expected to deliver a major overhaul, but a 4% drop with online sales means they won’t be turning profitable anytime soon.  If they have to wait till 2028 to turn a profit, investors might become more skeptical about the UK consumer spending trends. Housing Woes A key UK house price index fell to a 14-year low reinforced the belief that the property slump will not be improving anytime soon given how high mortgage rates have risen and over a deteriorating outlook. Both Halifax and Nationwide are highlighting falling house prices and that trend will likely continue.   GBP/USD Daily Chart   The GBP/USD (daily chart) as of Thursday (September 14th 2023) has made a significant breakdown below multiple support levels, indicating a potential acceleration for the pair.  Price action has fallen below the 200-day SMA and could target the June low at around the 1.2310 level.  Given the recent string of upbeat US economic data points, king dollar might have one major rally before exhaustion settles in. To the upside, the downward sloping trendline that started in the middle of July provides major resistance. If price is able to close above the 1.2550, further upside could be targeted if Wall Street is convinced that the Fed has a peak in place for rates.    
GBP: ECB's Dovish Stance Keeps BoE Expectations in Check

GBP: ECB's Dovish Stance Keeps BoE Expectations in Check

ING Economics ING Economics 18.09.2023 09:06
GBP: ECB helped BoE expectations stay low Sterling followed the euro lower against a backdrop of broad-based dollar strengthening yesterday, and Cable has heavily tested the 1.2400 support in the past 24 hours. The dovish tilt by the ECB likely added fuel to the ongoing dovish re-pricing of Bank of England rate expectations, and markets now price in only 34bp to a peak, a 40bp correction over the past month.   EUR/GBP moved back below the 0.8600 level after the ECB dovish hike, and may stay under some mild pressure into the BoE, but looks more likely to struggle finding much direction in the near term. This morning, the BoE will release a 12-month-ahead inflation expectation survey, which came in at 3.5% last month, although it is not likely to move the market substantially. Both investors and policymakers will still get the chance to look at a CPI print (on Wednesday) before the BoE announcement (on Thursday), which has a good chance of tilting market pricing.
Pound Sterling: Short-Term Repricing Complete, But Further Uncertainty Looms

Pound Sterling: Short-Term Repricing Complete, But Further Uncertainty Looms

ING Economics ING Economics 25.09.2023 11:09
GBP: Most of the short-term repricing is done It was not our baseline view, but we did warn that EUR/GBP could hit 0.8700 yesterday if the Bank of England paused, and that is what happened. As our UK economist, James Smith, discusses in his BoE review comment, we think the terminal rate has been reached now at 5.25%. However, given that it was such a close vote yesterday (5-4) there is still a chance of one final hike at the 2 November BoE meeting. This means that the market pricing of around a 50% chance of one last hike may largely stay with us until that meeting. Pricing of the BoE curve has been a big driver of sterling this year and we suspect EUR/GBP can now drift in a 0.86-0.87 range into that meeting. A leg higher to 0.88/89 probably requires some news of a serious UK slowdown and the market moving on to pricing the 2024 easing cycle. GBP/USD is another matter, however. If EUR/USD trades down to 1.05, GBP/USD could be trading near 1.21.
The British Pound Faces Further Breakdown Amidst Dollar Strength and Government Shutdown Risks

The British Pound Faces Further Breakdown Amidst Dollar Strength and Government Shutdown Risks

Kenny Fisher Kenny Fisher 27.09.2023 13:41
UK Mortgage approvals expected to continue to drop No major revisions expected with Q2 GDP report BOE overnight index swaps price in a peak rate of 5.369% at the Feb 1st meeting US Government Shutdown risk remains as Senate negotiators propose stopgap solution The British pound looks like it is heading for a further breakdown as dollar strength appears to be resuming.  Technical traders trying to find a bottom are getting frustrated as oversold conditions deepen and on doubts that a DeMark Buy countdown might yield a meaningful rebound.  The bearish trend has steadily broken below several key technical levels and weekly support from 1.2114 seems to be the next target.         The recent surge with the dollar was also supported by safe-haven flows from rising American government shutdown fears, so a potential stopgap solution could allow for the dollar rally to pause.  After the NY close a tentative proposal between Senate Republicans and Democrats would keep agencies functioning through mid-November. The potential solution fund federal agencies at current levels for another 45 days, with little support given towards Ukraine or disaster relief.  It isn’t clear if they have enough votes to avert an October 1st showdown, but momentum is growing for a band-aid solution. If risk aversion remains the dominant theme of the week, it will be hard for the British pound to find key support.  Unless Treasury yields tumble and disinflation signs grow, short-term dollar strength seems likely.    
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Holding Pattern: ECB's Dovish Stance Sets the Tone Amidst Global Rate Uncertainty

ING Economics ING Economics 27.10.2023 14:57
Rates Spark: We’re now in a holding pattern The ECB keeping rates on hold reflects what will likely be a common theme at next week's Fed and BoE meetings, and its dovish tone will find affirmation in upcoming inflation and growth data. But longer-end rates remain under the spell of US Treasuries, where supply is also a key driver.   The ECB delivers a dovish hold The European Central Bank kept interest rates on hold as widely anticipated but struck a slightly more dovish tone than expected. Importantly, the ECB refrained from shifting the focus to the balance sheet now rates are deemed sufficiently high. According to President Christine Lagarde, both the PEPP and the minimum reserve requirement were not even discussed.   Lagarde highlighted again that data dependency also means rate hikes could not be excluded, but she said any discussion about cuts was “totally premature”. That said, the undertone regarding the economy has become more cautious. Also, with regard to a potential spike in energy prices, she highlighted the uncertainty of their medium-term impact on inflation. Overall, market reaction in outright rates is more difficult to disentangle given the release of US data just ahead of the press conference. Very front-end rates, which should be less influenced by US spillovers, reflected the somewhat more dovish take and a firming notion that the ECB has reached peak rates already. The already minimal hike speculation reflected in ECB-dated OIS forwards for December was further trimmed, and the strip is downward sloping from then onwards to fully discount a rate cut by June next year.    Sovereign spreads initially reacted with relief, with the key spread of 10Y Italian government bonds versus Bunds briefly narrowing back below 200bp. Obviously, it is unlikely to be the end of the story, and the ECB could pick up the discussion at some point. Indeed, Reuters later reported that policymakers agreed to postpone the debate until the winter. and a discussion on minimum reserves was reported to come as part of the operational framework review.  
The December CPI Upside Surprise: Why Markets Remain Skeptical About a Fed Rate Cut in March" User napisz liste keywords, oddzile je porzecinakmie ChatGPT

BoE Faces Dilemma Amid Hawkish Fed and Economic Challenges: Analyst Insights

ING Economics ING Economics 02.11.2023 12:56
BoE between a rock and a hard place.  By Ipek Ozkardeskaya, Senior Analyst | Swissquote Bank   As widely expected, the Federal Reserve (Fed) maintained its interest rates unchanged at this week's meeting and President Jerome Powell cited that the recent surge – especially in the long end of the US yield curve – helped tightening the financial conditions in the US. Powell repeated that the Fed is proceeding carefully but that they are 'not confident that inflation is on path toward 2%' target'. US policymakers redefined the US economic outlook as being 'strong', from being just 'solid'.  In summary, the latest Fed decision was not dovish, unsurprisingly hawkish, and did not impact appetite in US bonds which got a boost from the Treasury's announcement of a slightly lower-than-expected quarterly refunding auction size for the 3, 10 and 30-year maturity bonds next week. Cherry on top, the US Treasury said that they now expect one more step up in quarterly issuances for the long-term debt, whereas the expectation was multiple more step ups.   The US 10-year yield sank to 4.70% after the Fed decision and Treasury's much-awaited issuance calendar reveal, the 30-year yield fell to 4.90%. The fact that the US will borrow slightly less than previously thought and slightly less on the long-end of the curve doesn't mean that the fiscal outlook improved. Though lower-than-expected, the $776bn that the US Treasury is planning to borrow this quarter is a record for the last 3 months of a year. And the net interest payments on the US federal debt are rising at an eye-watering speed. In numbers, the federal debt rose more than a third since the end of 2019, and the interest expenses on that debt rose by almost 40%. That's a detail for Janet Yellen who thinks that the surge in US yields is explained by the positive economic outlook, but the market won't allow the Treasury to borrow like its pockets have no bottom if the Fed is not part of it.   Bad news, good news the sharp decline in October ISM manufacturing PMI and the softer-than-expected ADP read helped boosting sentiment in US Treasuries, as they somehow softened the otherwise strong US economic outlook. The JOLTS data unexpectedly rose but no one was out looking for reasons to sell Treasuries yesterday, so that basically went unheard. The official US jobs data is due Friday and any strength in NFP, or wages could reverse the optimism that the US economic growth will... slow. And as bad news is sometimes good news for the market, the S&P500 rebounded more than 1% and closed the session at a spitting distance from the all important 200-DMA, while the rate-sensitive Nasdaq jumped almost 1.80%.   AMD, Qualcomm gain, Apple to report On the individual level, AMD jumped almost 10% yesterday. Even though the company gave a soft guidance for Q4, they said that they expect to sell more than $2bn worth of AI chips next year. That's a lot, that's more than a third of the actual revenue they make. Qualcomm jumped nearly 4% in afterhours trading, as the world's largest seller of smartphone chips gave a better-than-expected prediction for this quarter, saying that the inventory glut in mobile-phone industry may be receding.   Today, Apple will post its Q3 earnings, after the bell. We have reservations regarding the results as the iPhone15 sales are not as brilliant as investors hoped they would be, and Huawei is apparently eating Apple's market share in China. Apple's overall revenue is seen down by around 3%. Ouch. The good news is that the morose expectations could be easier to beat. Otherwise, we could see Apple tank below the $170 per share, into the bearish consolidation zone, and become vulnerable to deeper losses.  BoE not to raise rates, but its inflation tolerance The Bank of England (BoE) is the next major central bank to announce its rate decision today, and the Brits are not expected to raise the interest rates at today's MPC meeting, but they are expected to increase their tolerance faced with above 2% inflation, instead. That's not good for central bank credibility, even less so when the BoE's credibility is not at its best since the start of this tightening cycle. If investors sense that the BoE will let inflation run hot, by lack of choice, sterling could take a significant hit.   Gold and oil  Appetite in gold eases as Israelian attacks are perceived as being less aggressive than what they could be. De-pricing of Mid-East risks could send the price of an ounce to, or below the 200-DMA, near the $1933 level. Upside risks prevail, but fresh news should gradually lose their shocker impact and the $2000 per ounce level will likely attract top sellers more than anything else.   US crude rebounded near the $80pb yesterday, as the decline toward the psychological $80pb level brought in dip buyers. We could reasonably expect the US crude to correct toward $85pb as geopolitical tensions loom, and supply remains at jeopardy.    
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BoE Maintains a Firm Stance: Rates Expected to Stay High for an Extended Period

ING Economics ING Economics 02.11.2023 14:46
GBP: BoE to keep rates high for 'sufficiently long' "Monetary policy will need to be sufficiently restrictive for sufficiently long to return inflation to the 2% target sustainably in the medium term" should be the key phrase to look out for in today's Bank of England (BoE) policy statement. The Bank Rate is widely expected to be left unchanged at 5.25%. The focus will also be on the vote split. 6-3 would seem to be the most likely as James Smith explains in our BoE preview.  Assuming that the BoE does not soften its tone today – i.e., it does not provide fresh ammunition to pricing of rate cuts next year – we would expect sterling to stay relatively well supported. This could see GBP/USD push up the 1.2250 area, while EUR/GBP could press support at the 0.8670/80 area.
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GBP: BoE Chief Economist Fuels Rate Cut Expectations, Sterling Faces Headwinds

ING Economics ING Economics 07.11.2023 15:52
GBP: Not quite the BoE pushback we were expecting Having re-introduced forward guidance last week, we thought the Bank of England (BoE) might have pushed back against market pricing for rate cuts in the second half of 2024. Instead, BoE Chief Economist Huw Pill yesterday said that expectations for rate cuts from next summer looked reasonable. We think these comments are a mild sterling negative and given the risk that Fed-speak puts equities on the back foot again, risk-sensitive sterling could hand back some of its recent gains. For example, EUR/GBP could trade back up to 0.8710/20 and GBP/USD could drop back to 1.2290 perhaps 1.2250. Additionally, Pill's warnings of soft UK CPI releases coming through over the coming months could hold sterling back.
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Hunt's Autumn Statement: Tax Cuts, Political Maneuvers, and Economic Stability in the Spotlight

Ipek Ozkardeskaya Ipek Ozkardeskaya 22.11.2023 14:57
Hunt in the spotlight  British Chancellor of Exchequer Jeremy Hunt will make his Autumn Statement today and he will do his best to try to please British voters by announcing tax cuts amid slowing inflation, try to make the Tories – who lost a lot of support over the past year-and-so and fell around 20 points behind Labour in the latest polls - look good again, while pursuing a hard-won economic and financial stability after the Liz Truss mini-budget crisis, and keep the country's finances together to avoid another Truss-style bond meltdown.   Happily, for him, the Gilt yields have been falling along with other major economies' bond yields since the October peak. The British 10-year yield tested the 4% level to the downside last Friday. Households are happy to see inflation slow, Rishi Sunak is living up – with a bit of luck – to his promise to halve inflation by year-end, and investors think that the Bank of England (BoE) is done hiking the interest rates. The BoE is also expected to start cutting its rates by May next year - to which the BoE Governor Bailey replies saying that if the market conditions loosen too fast, they may have to raise interest rates again. But that's a detail. Cable advanced to 1.2560 yesterday on the back of a broadly softer US dollar. A too generous Autumn Statement – in terms of pleasing voters – could revive the inflation expectations for the UK hence tame the BoE doves. The latter could trigger a selloff in gilts, push yields higher and help sterling extend its gains against the greenback and pave the way for a further advance to the 1.27 level.   Yet, Cable's upside potential also depends on the dollar's downside potential. The US dollar – which came under a decent bearish pressure since the beginning of the month – is near the oversold territory. And the selloff in the dollar could soon bottom out given the Fed's cautious tone faced with the significant decline in the US long-term bond yields.   Elsewhere the EURUSD sees resistance above a major Fibonacci resistance, near the 1.0955 mark, gold is testing the $2000 per ounce this morning as investors chose safety into the long Thanksgiving holiday in the US while US crude sees resistance at the 200-DMA and Bitcoin is down from recent highs on news that Binance CEO was pleaded guilty as his company prioritized growth over compliance and violated anti-money laundering and unlicensed money transmitting to finance terrorists, cyber criminals and child abusers. The Binance verdict will hardly impact the recent appetite in Bitcoin, which is expected to get a boost thanks to potential spot ETF approvals.   
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GBP: ECB vs. BoE Story Dominates as Dovish Sentiment Sparks Rate Cut Expectations

ING Economics ING Economics 04.12.2023 14:11
GBP: ECB vs. BoE story dominates Dovish commentary from the ECB has now seen investors pricing ECB rate cuts several months ahead of the Bank of England (BoE) next year and expectations build of a deeper easing cycle in the Eurozone than in the UK. We disagree with that pricing and think the BoE will deliver more hikes than the ECB next year. This probably means that EUR/GBP does not need to spend too much time below 0.8600. Indeed, 0.8500 represents very strong support and we remain happy with our forecasts of EUR/GBP edging up to the 0.88/0.90 area into next year. The UK data calendar is very quiet this week, with just Friday's release on inflation expectations of note. The bigger driver of EUR/GBP this week will be any ECB pushback against dovish pricing of their 2024 policy cycle.
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Tectonic Shift: Unexpectedly Dovish Fed Sparks Market Dynamics

ING Economics ING Economics 14.12.2023 13:57
Surprise dovish twist By Ipek Ozkardeskaya, Senior Analyst | Swissquote Bank   The Federal Reserve (Fed) wraps up the year with a resounding finale. The Fed is not bothered to see the US yields fall in preparation for a rate cut. On the contrary, they endorsed the idea of a policy pivot thanks to an encouraging fall in inflation and sounded way more dovish than everybody expected at their announcement yesterday – which clearly exposed that the policy pivot is coming. This is the major take of the final FOMC meeting of the year, and it was totally unexpected. Jerome Powell still said – just for the sake of saying – that 'it is far too early to declare victory' over inflation, but the committee lowered their inflation forecasts for this year and the next, and the so-called dot plot – which plots where the Fed officials see the interest rates going – plotted a 75bp cut in Fed funds rate next year. The median expectation now suggests that the Fed rate will be lowered to 4.6% by the end of next year. And that's quite a big change compared to last time the Fed President spoke to say that the rates would stay high for long. It now appears that the rates won't stay high for so long. The first Fed rate cut is now expected to happen in March, with more than 85% probability.  As a result, the US 2-year yield – which captures the Fed rate bets – sank to 4.33% yesterday, and with the dovish message that the Fed sent to the market, the 4.50% level that I saw as a support at the start of this week should now act like a resistance. The US 10-year yield sank below 4%, reflecting the idea that the policy pivot suggests some meaningful slowdown in the US economy. The falling yields sent the S&P500 above the 4700 mark, to the highest levels in almost two years and the Dow Jones Industrial Index hit a record high. There is no reason to stop believing that the S&P500 will soon renew record as well, unless there is a meaningful decline in earnings expectations.   The dovish Fed echoed loudly across the FX markets as well. The US dollar was sharply sold, the EURUSD rebounded back above the 1.09 level, Cable extended gains to 1.2650 and the USDJPY fell almost 1.80% yesterday and slipped below the 141 level this morning. Trend and momentum indicators are comfortably negative, the fundamentals – meaning the narrowing divergence between the more dovish Fed and the more hawkish Bank of Japan (BoJ) – are comfortably positive for the yen, hence price rallies in the USDJPY are now seen as opportunities to strengthen the short USDJPY positions.  Now today, it's the European Central Bank (ECB) and the Bank of England's (BoE) turn to give their final policy verdict for this year. And both Mme Lagarde and Mr. Bailey are certainly annoyed to see the Fed go so soft yesterday, as Christine Lagarde had said herself that no reduction in rates should be expected in the next few quarters. It will be interesting to see if ECB and BoE officials feel comfortable about giving up their tough stance. I still believe that Lagarde will repeat that it's too early to talk about rate cuts, in which case we could see the EURUSD jump above the 1.10 level and finish the year above this level.   Across the Channel, the situation is less obvious. The UK economic outlook is not bright, and wages show signs of slowing. One big argument is that inflation has more than halved in the UK since the start of this year. Yes. But inflation in the UK – though halved – stands at 4.6% which is more than twice the BoE's 2% target. The latter makes the BoE less inclined to initiate rate cuts compared to the other two major central banks.   
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Rates Puzzle: Powell's Silence and Central Banks' Divergence

ING Economics ING Economics 14.12.2023 14:00
Rates Spark: Does the Fed know something we dont? The surprise from the FOMC was partly the extra 25bp implied cut added to 2024, but it was more the lack of pushback from Chair Powell on the 2024 rate cut narrative. He almost endorsed it, which leads us to question whether he knows something of significance that we don't. Today's focus is on the ECB and BoE policy meetings.   Chair Powell validates the move from 5% to 4% on the 10yr yield Such was Federal Reserve Chair Jerome Powell's phraseology at the press conference that one must suspect that he knows more than we know. And its not about the macro data. We can see that. It's more about what the Fed might be seeing under the hood. Perhaps in commercial real estate, or single family residential rentals or private credit, or another other area of the system that might find itself overexposed to rate hikes delivered, under water and vulnerable to breaking. We don't know of course, but a Fed chair that stands up asserts that he understands the dangers they run by keeping rates too high for too long is one that looks like he's ringing alarm bells. Along with the Fed, the market too has added an additional 25bp rate cut for 2024, now at 150bp cumulative. The entire curve has shifter lower, led by real rates. The 2/10yr curve has gapped steeper too. This is a meaningful outcome. The question now is whether the 2yr can really break free and head lower as a driver of the yield curve, steepening it out from the front end. That traditionally happens on a three month run in ahead of an actual rate cut. We’re on the cusp if this, but not quite there just yet. It’s been a remarkable ongoing market move, especially as it has been interlaced with some tailed auctions, indicative of resistance to the falling market rates narrative (in the long end). But there’s been little from Chair Powell and the FOMC to stand in the way of this. Recent data has not really validated the dramatic fall in yields. But today the Fed has helped to do so. A far more hawkish Fed had been anticipated. The question ahead is where is fair value for the 10yr. We think it’s 4%. It’s premised off the view that the funds rate gets to 3% and we are adding a 100bp curve to that. We are about to sail below 4% though as a theme for 2024, with 3.5% the target. But the move below 4% towards 3.5% will be an overshoot process. If something breaks, we fast track all of that and jump to a new environment. That has not happened as of yet, but we think the stakes have risen.   ECB to push back against early cut expectations With a first rate cut more than fully discounted by April and on overall anticipated easing of 135bp over 2024, the market’s expectations of European Central Bank policy stand in stark contrast to the official line of rates having to remain high for longer. But since the last meeting in particular the inflation data has surprised to the downside, which even influential ECB officials like Isabel Schnabel had to acknowledge. The prospect of further hikes is clearly off the table, but she warned that central banks will have to be more cautious. That also meant that the ECB should be more careful with regards to making statements about what will happen in the next six months. The ECB’s new growth and inflation forecasts will have to be lowered, the crucial question is just by how much. Also taking it from Schnabel, the ECB is unlikely to give any longer rate guidance, which would only mean a truer meeting-by-meeting and data dependent approach. Still, the ECB is unlikely to endorse the aggressive market pricing, especially that of cuts already early in the year. So far the communication has been that one is particularly concerned about the development of upcoming wage negotiations which makes pricing for March rate cuts look premature. But how can the ECB still convey a hawkish tilt? One possibility is using communication about plans to shrink the balance sheet. We do not think there will be concrete decisions yet, but the ECB could state that it has begun discussing to potentially end PEPP reinvestments earlier than planned.   BoE likely reiterate rates will stay restrictive for an extended period Expectations of policy easing have further deepened ahead of today’s Bank of England monetary policy committee meeting. A first rate cut is now fully discounted by June with an overall expected easing of close to 100bp over 2024. One reason for growing expectations was a downside surprise in wage growth which saw private sector regular pay growth fall to 7.3% year-on-year from 7.8% YoY. Another trigger was yesterday’s disappointing GDP growth for October which means we are potentially on track for a fractionally negative overall fourth quarter figure. The BoE is likely to reiterate the guidance from November, where it said it expected rates to stay restrictive for “an extended period.  A hold is also widely anticipated by the market, but the recent data could convince some of the three MPC’s hawks who had still voted for a hike in November to back down from that position toward a ‘no change’.    Today's events and market view The central bank meetings are clearly the focus today given how far market expectations of policy easing have come. There may well be some disappointment in store for pricing of rate cuts as early as March. But further out we must acknowledge that the shift lower in rates is also driven by a drop in inflation expectations. The 10Y EUR inflation swap for instance has come down all the way from levels closer to 2.6% in October to currently 2.15%. Even central banks themselves have become more positive about the disinflationary tendencies taking hold. On the heels of the FOMC meeting rates markets in the US will look out for the initial jobless claims as well as retail sales data today. we will also get import and export prices.
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Tidings of Comfort and Joy: Fed's Surprising Move Spurs Reflationary Sentiment in FX Markets

ING Economics ING Economics 14.12.2023 14:15
FX Daily: Fed brings tidings of comfort and joy In a somewhat surprising move, the Fed has acknowledged recent disinflation trends and poured gasoline on the fire of easing expectations for 2024. The news has understandably been greeted by global asset markets, where stagflationary bets are being replaced by reflationary ones. This is broadly dollar negative. Look out for the ECB, BoE and SNB today.   USD: Fed softens stance earlier than we thought Last night's FOMC release, dot plots and press conference surprised us and the markets. Instead of the Federal Reserve pushing back against the 100-125bp of rate cuts priced by the market for 2024, the overall message was a softer one. In effect, it welcomed disinflation trends and fed into the narrative that if inflation is under control, why does the US economy need very restrictive monetary policy in the form of a real policy rate above 2%?  Asset markets responded very well to the prospect of the Fed releasing the handbrake on the US and global economy, with both bond and equity markets rallying broadly. For us in FX, we had not expected it this early but last night's dovish Fed shift triggered a massive bull steepening in the US curve – a move that is the centre piece of our call for a broadly lower dollar next year. US two-year Treasury yields fell 30bp and the 2-10 year Treasury curve bull-steepened by 12bp. As discussed in our 2024 FX Outlook, we think this shift towards a more reflationary policy setting stands to see outperformance of the undervalued commodity currencies, and again, overnight the under-valued Australian and New Zealand dollars led the pack. We are also pleased to see EUR/AUD 3% lower over the last month, a move we highlighted in our outlook. Looking ahead, the focus switches to four rate meetings in Europe and to what degree the likes of the European Central Bank or the Bank of England do a better job than the Fed in pushing back against easing expectations for next year. If indeed they do a better job, it will only add to rallies in EUR/USD and GBP/USD. And the Fed's dovish turn last night continues to trigger an unwind in yen short positions as USD/JPY falls further. Next Tuesday's Bank of Japan policy meeting is eagerly awaited. Even though we do not look for any material adjustment in BoJ policy next week, USD/JPY may still well drop to 140 beforehand. Away from policy rate meetings in Europe, today sees US November retail sales and the weekly initial claims. Given the market firmly has the easing bit between the teeth, any signs of weakness in this data could trigger another leg lower in the dollar.  DXY has support at 102.50/65 below which the 100.80/101.00 area looms large.
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Tidings of Comfort and Joy: Fed's Surprising Move Spurs Reflationary Sentiment in FX Markets - 14.12.2023

ING Economics ING Economics 14.12.2023 14:15
FX Daily: Fed brings tidings of comfort and joy In a somewhat surprising move, the Fed has acknowledged recent disinflation trends and poured gasoline on the fire of easing expectations for 2024. The news has understandably been greeted by global asset markets, where stagflationary bets are being replaced by reflationary ones. This is broadly dollar negative. Look out for the ECB, BoE and SNB today.   USD: Fed softens stance earlier than we thought Last night's FOMC release, dot plots and press conference surprised us and the markets. Instead of the Federal Reserve pushing back against the 100-125bp of rate cuts priced by the market for 2024, the overall message was a softer one. In effect, it welcomed disinflation trends and fed into the narrative that if inflation is under control, why does the US economy need very restrictive monetary policy in the form of a real policy rate above 2%?  Asset markets responded very well to the prospect of the Fed releasing the handbrake on the US and global economy, with both bond and equity markets rallying broadly. For us in FX, we had not expected it this early but last night's dovish Fed shift triggered a massive bull steepening in the US curve – a move that is the centre piece of our call for a broadly lower dollar next year. US two-year Treasury yields fell 30bp and the 2-10 year Treasury curve bull-steepened by 12bp. As discussed in our 2024 FX Outlook, we think this shift towards a more reflationary policy setting stands to see outperformance of the undervalued commodity currencies, and again, overnight the under-valued Australian and New Zealand dollars led the pack. We are also pleased to see EUR/AUD 3% lower over the last month, a move we highlighted in our outlook. Looking ahead, the focus switches to four rate meetings in Europe and to what degree the likes of the European Central Bank or the Bank of England do a better job than the Fed in pushing back against easing expectations for next year. If indeed they do a better job, it will only add to rallies in EUR/USD and GBP/USD. And the Fed's dovish turn last night continues to trigger an unwind in yen short positions as USD/JPY falls further. Next Tuesday's Bank of Japan policy meeting is eagerly awaited. Even though we do not look for any material adjustment in BoJ policy next week, USD/JPY may still well drop to 140 beforehand. Away from policy rate meetings in Europe, today sees US November retail sales and the weekly initial claims. Given the market firmly has the easing bit between the teeth, any signs of weakness in this data could trigger another leg lower in the dollar.  DXY has support at 102.50/65 below which the 100.80/101.00 area looms large.
Unraveling the Dollar Rally: Assessing the Factors Behind the Surprising Rebound and Market Dynamics

Fed's Surprise: Three Rate Cuts in 2024 Propel Dow to Record Highs

Kenny Fisher Kenny Fisher 14.12.2023 14:36
Fed signals three rate cuts in 2024 ECB and BoE to announce decisions shortly Dow hits record highs after the Fed The most hotly anticipated central bank meeting of the year did not disappoint on Wednesday, with the Fed potentially delivering this year’s Santa rally. I don’t think many will have expected the Fed to go as far as it did in forecasting three rate cuts next year only three months after suggesting the tightening cycle is not over. But clearly, it’s not just investors that have been impressed with the data we’ve seen so far in the fourth quarter and now they’re getting more carried away than before. There’s been a lot of debate in recent weeks about whether investors are getting ahead of themselves, too optimistic about how quickly the Fed will cut rates but the message from the central bank is that is not the case. And in typical fashion, investors have now gone further, pricing in six rate cuts next year starting in March. That’s also forced investors to reassess whether they’re in fact too pessimistic with other central banks too, with the ECB now expected to cut rates by 150 basis points over the next 12 months and the BoE between 100 and 125 basis points. Both now have a lot to live up to today and Christine Lagarde, in particular, may not be thanking her US counterparts for whipping investors up into a frenzy right before their announcement and press conference. A repeat performance from the ECB could leave investors going into the end of the year in a much more festive mood.   New record highs in the Dow Markets got an early festive treat from the Fed, with the Dow hitting fresh record highs on the back of the Fed announcement almost two years after it last achieved that feat. US30 Daily Source – OANDA Now that it’s in uncharted territory, momentum indicators will be much more useful as we don’t have past levels to look to. And we are seeing some sign of exhaustion occurring in the MACD histogram, although not yet in the moving averages or stochastic.    
GBP: Services Inflation Expected to Persist Above 6%, BoE's Dovish Stance Unlikely to Shift

GBP: Services Inflation Expected to Persist Above 6%, BoE's Dovish Stance Unlikely to Shift

ING Economics ING Economics 16.01.2024 12:22
GBP: Services inflation to stay above 6% The data flow picks up this week in the UK, with labour (Tuesday), CPI (Wednesday) and retail sales (Friday) statistics for the month of December being released. Services inflation is what matters the most for the Bank of England at the current stage and we expect to see it at 6.1% this week, considerably below the Bank of England's estimates. Despite the improvement in services disinflation, 6%+ remains too high and is unlikely to make the BoE endorse dovish rate expectations just yet. EUR/GBP can retest the 0.8573 lows, but we expect it to find a bit more support this week as the euro may benefit from some hawkish comments by Lagarde in Davos. Our medium-term view on the pair remains bullish.

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