federal reserve news

The situation in the crypto market has been difficult since the end of August. However, there are more and more reasons to expect a local upward trend in cryptocurrencies on the market. And there is no doubt that ETH will be one of the main beneficiaries of the bullish move.

The main reason for the likely upward movement of the crypto market is the start of a protracted correction of the US dollar index. In addition, there were rumors on the financial markets about a possible curtailment of the Fed's aggressive policy. Market players attribute this to the European crisis and the bankruptcy of Credit Suisse.

Exchange Rates 04.10.2022 analysis

If the combination of these factors works, then the cryptocurrency and Ethereum market is waiting for a local upward trend and a gradual fading of the liquidity crisis. For the main altcoin, this is especially good in light of recent negative events.

Negative background around Ethereum

Recently, an article was released where the future of Ethereum is being questioned after the

Rate Hike Announcements Throughout This Week

Beating Inflation: Are The Fed’s Dreams Gold’s Worst Nightmare?

Przemysław Radomski Przemysław Radomski 14.04.2022 16:28
While investors remain happy-go-lucky, fundamental data for gold and silver is now worse than in 2021. Is this the last chance to come back to earth? As another week comes to a close, the winds of change are blowing across the financial markets. However, while many investors and analysts can see only sunny days ahead, fundamental storm clouds should rain on their parade over the medium term, and it’s quite possible that it’s going to happen shortly. To explain, this week culminated with the USD Index soaring above 100, the U.S. 10-Year real yield hitting a new 2022 high, and Goldman Sachs’ Financial Conditions Index (FCI) hitting its highest level since the global financial crisis (GFC). However, the PMs paid no mind yet. In fact, investors across many asset classes continue to ignore the implications of these developments. So far. With sentiment poised to shift when the economic scars begin to show, the “this time is different” crowd may regret not heeding the early warning signs. For example, the Bank of Canada (BoC) announced a 50 basis point rate hike on Apr. 13., and with the Fed likely to follow suit in May, the domestic fundamental environment confronting the PMs couldn’t be more bearish. Please see below: Source: BoC Moreover, BoC Governor Tiff Macklem (Canada's Jerome Powell) said: "We are committed to using our policy interest rate to return inflation to target and will do so forcefully if needed." Furthermore, while he added that the BoC could "pause our tightening" if inflation subsides, he cautioned that "we may need to take rates modestly above neutral for a period to bring demand and supply back into balance and inflation back to target." However, with the latter much more likely than the former, the BoC's decision is likely a preview of what the Fed should deliver in the months ahead. Please see below: Source: Reuters To that point, while investors continue to drown out officials’ hawkish cries, I warned on Apr. 13 that the Fed knows full well about the difficulty of the task ahead. I wrote: Fed Governor Lael Brainard said on Apr. 12: “Inflation is too high, and getting inflation down is going to be our most important task.” She added: “I think there’s quite a bit of capacity for labor demand to moderate among businesses by actually reducing job openings without necessitating high levels of layoffs.” As a result, she’s telling you that Fed officials will make it their mission to slow down the U.S. economy.  With phrases like “capacity for labor demand to moderate” and “reducing job openings” code for what has to happen to calm wage inflation, the prospect of a dovish 180 is slim to none. As such, this is bullish for real yields and bearish for the PMs. More importantly, notice her use of that all-important buzzword? Source: Reuters And: Source: Reuters Moreover, where do you think she got it? Source: Reuters Echoing that sentiment, Chicago Fed President Charles Evans (a relative dove) said on Apr. 11 that more than one 50 basis point rate hike could be on the horizon. "Fifty is obviously worthy of consideration; perhaps it's highly likely even if you want to get to neutral by December." As a result, with the USD Index and the U.S. 10-Year real yield already soaring, what do you think will happen if the Fed pushes the U.S. federal funds rate "to neutral by December?" Please see below: Source: Reuters Even more hawkish, Fed Governor Christopher Waller said on Apr. 13: “I think we’re going to deal with inflation. We’ve laid out our plans. We’re in a position where the economy’s strong, so this is a good time to do aggressive actions because the economy can take it.” He added: “I think we want to get above neutral certainly by the latter half of the year, and we need to get closer to neutral as soon as possible.” As a result: Source: CNBC Now, if we presented these quotes to the permabulls, they would say: "So what? We already know that the Fed is going to raise interest rates."  However, while a higher U.S. federal funds rate is now the worst-kept secret, the impact on U.S. economic growth is far from priced in. With investors assuming the Fed will normalize inflation without hurting the U.S. economy, they are positioned for an unrealistic outcome. Stagflation, anyone? Moreover, with the gold and silver prices ignoring everything the Fed throws at them, they're attempting to re-write the history books. However, with Brainard and Waller telling you that their goal is to create a bullish environment for the USD Index and the U.S. 10-Year real yield, the PMs have fought this battle before and lost this battle before. To explain, I wrote on Apr. 6: Please remember that the Fed needs to slow the U.S. economy to calm inflation, and rising asset prices are mutually exclusive to this goal. Therefore, officials should keep hammering the financial markets until investors finally get the message. Moreover, with the Fed in inflation-fighting mode and reformed doves warning that the U.S. economy “could teeter” as the drama unfolds, the reality is that there is no easy solution to the Fed’s problem. To calm inflation, it has to kill demand. As that occurs, investors should suffer a severe crisis of confidence. To that point, Fed officials aren’t even pretending anymore. Waller said on Apr 13: “All we can do is kind of push down demand for these products and take some pressure off the prices that people have to pay for these products. We can’t produce more wheat, we can’t produce more semiconductors, but we can affect the demand for these products in a way that puts downward pressure and takes some pressure off of inflation.” Likewise, Waller was even more realistic when he spoke on Apr. 11: He said: “With housing, can we cool off demand for housing without tanking the construction industry? Can we cool down the labor demand without causing employment to fall? That’s the tricky road that we’re on.” As a result, while Fed officials understand how difficult it will be to normalize inflation, investors remain in la-la land. However, when the “collateral damage” eventually unfolds, the shift in sentiment should result in the profound re-pricing of several financial assets. Please see below: Source: Bloomberg Thus, investors’ uninformed state of denial will likely seem obvious in the months ahead. (Yes, I know, it’s difficult to remain rational while surrounded what’s irrational, and that’s the very thing that makes investing “simple, but not easy”). Moreover, while Macklem cautioned that the BoC could “pause our tightening” if inflation subsides, the same rule applies to the Fed. However, with inflation still raging, the Fed and the BoC are unlikely to change their hawkish tones anytime soon. Case in point. The U.S. Bureau of Labor Statistics (BLS) released the Producer Price Index (PPI) on Apr. 13.,and with outperformance across the board, green lights were present for all of the wrong reasons. For context, the gray figures in the middle column were economists’ consensus estimates. Please see below: Source: Investing.com Likewise, the NFIB released its Small Business Optimism Index on Apr. 12. The report revealed: “The NFIB Small Business Optimism Index decreased in March by 2.4 points to 93.2, the third consecutive month below the 48-year average of 98. Thirty-one percent of owners reported that inflation was the single most important problem in their business, up five points from February and the highest reading since the first quarter of 1981. Inflation has now replaced ‘labor quality’ as the number one problem.” How about this divergence? “Owners expecting better business conditions over the next six months decreased 14 points to a net negative 49%, the lowest level recorded in the 48-year-old survey.” “The net percent of owners raising average selling prices increased four points to a net 72% (seasonally adjusted), the highest reading recorded in the series.” Moreover, “a net 50 percent plan price hikes (up 4 points).” Please see below: Source: NFIB On top of that, “a net 49 percent reported raising compensation, down 1 point from January’s 48-year record high reading. A net 28 percent plan to raise compensation in the next three months, up 2 points from February.” Please see below: Source: NFIB Thus, while the Fed hopes to rein in inflation, U.S. small businesses plan more price hikes and wage increases than in February. Therefore, officials’ hawkish intentions are not nearly hawkish enough. As a result, the medium-term outlook for the U.S. federal funds rate, the USD Index and the U.S. 10-Year real yield couldn’t be more bullish. As mentioned, let’s not forget how optimism often turns to pessimism when the drama unfolds. The bottom line? Investors lack the foresight to see how the Fed’s rate hike cycle will likely unfold. Moreover, with Fed officials warning of the “collateral damage” that occurs when they curb demand to reduce inflation, the permabulls have simply closed their eyes and covered their ears. However, when sentiment is built on a foundation of sand, it often collapses when reality re-emerges. In conclusion, the PMs rallied on Apr 13 as momentum remains the name of the game. However, while sentiment remains robust, gold, silver, and mining stocks’ fundamentals are worse now than at any point in 2021. As a result, history shows that not only are the current prices unsustainable, but profound drawdowns are required for the PMs to reflect their intrusive values.   What to Watch for Next Week With more U.S. economic data to be released next week, the most important ones are as follows: Apr. 21: Philadelphia Fed manufacturing index With the regional data providing early insight into April’s inflation dynamics, continued price increases will put more pressure on the FOMC. Apr. 22: S&P Global’s U.S. manufacturing and services PMIs Unlike the Philadelphia Fed’s index, S&P Global’s data covers the entire U.S. As a result, the performance of growth, employment, and inflation will be of immense importance. All in all, economic data releases impact the PMs because they impact monetary policy. Moreover, if we continue to see higher employment and inflation, the Fed should keep its foot on the hawkish accelerator. And if that occurs, the outcome is profoundly bearish for the PMs. 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 AUD/USD Lost After RBA Governor Remarks, The End Of An Era For The UK

Fed Vs. ECB! Market Shocker Is Here! EUR/USD Plunged! (EUR) Shows Its Strength Amid ECB Rhetoric

Conotoxia Comments Conotoxia Comments 15.04.2022 14:51
Summary: After yesterday's press conference by Christine Lagarde, head of the European Central Bank, the exchange rate of the main currency pair EUR/USD fell below the level of 1.08 The pressure on the single currency may continue until the second round of the French elections The market is currently pricing two consecutive 50-basis-point rate hikes in the United States After yesterday's press conference by Christine Lagarde, head of the European Central Bank, the exchange rate of the main currency pair EUR/USD fell below the level of 1.08 for the first time since May 2020. Investors may have felt let down by the ECB's attitude. Prior to the April meeting of the bank's policymakers, the market priced that interest rates in the Eurozone would rise by 70 basis points this year. After yesterday's announcement and the press conference of the head of the ECB, the valuation dropped to 60 points. Related article: DAX, EUR/GBP And EUR/USD Recovered Thanks To ECB Interest Rate Decision!? European Central Bank Makes European Indices Gain The ECB is reluctant to... The ECB's statement implies that interest rate adjustments in the euro area will be gradual and will start "some time after" the end of the APP net asset purchase program, which is expected in Q3 this year. The fall of the euro and investor sentiment may also be affected by the war unleashed by Russia, rising commodity prices, concerns about slowing economic growth, as well as doubts about the outcome of the presidential elections in France. In the first round, the current President Emmanuel Macron won, but the far-right candidate Marine Le Pen came in second with a small loss and a chance to win the presidential seat in the second round on 24 April. EUR/USD: the specter of the 1.00 level All of the above factors may have contributed to EUR/USD falling back towards 1.080 during Thursday's session in an attempt to rebound on Friday. The pressure on the single currency may continue until the second round of the French elections, and if Le Pen wins it could push EUR/USD to the 1.0000 level. The war in Ukraine could makes Europe more vulnerable to economic slowdown than the US, which may also leave its mark on the major currency pair. Another asset of the dollar here seems to be the tendency of the Federal Reserve to raise interest rates faster. The market is currently pricing two consecutive 50-basis-point rate hikes in the United States, which may keep the divergence in monetary policy high and translate into EUR/USD exchange rate. Daniel Kostecki, Director of the Polish branch of Conotoxia Ltd. (Forex 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. 80.77% 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.
Price Of Gold (XAUUSD) Hitting $3000!? Gold almost reached $2000! Russia-Ukraine Conflict Doesn’t Hold Back. Will The Price Of Gold Go Any Higher?

Price Of Gold (XAUUSD) Hitting $3000!? Gold almost reached $2000! Russia-Ukraine Conflict Doesn’t Hold Back. Will The Price Of Gold Go Any Higher?

Mikołaj Marcinowski Mikołaj Marcinowski 18.04.2022 18:24
According to Reuters, Lviv has been attacked today and some people were killed what brings out another increase of prices around the world. Of course the safe haven has risen as well and we’re wondering what will be this week’s high of the yellow precious metal. Price Of Gold To Rise Further? Today’s price is as high as it was in March - the precious metal is back soaring, but it’s not sure, how long will the bullish trend last. As we see gold has been trading that high a few times in the last 3 months. The first appearance of definitely bullish gold is the beginning of the warfare so February 24th and March 8th when it was known, that negotiations didn’t took us to Russia-Ukraine ceasefire. Related article: Deutsche Bank Shook DAX! French Election, Inflation And ECB Are Factors Which Shaped DAX (GER 40), CAC40, FTSE 100 And IBEX35 - Top Gainers, Top Losers   Fed To Put The Gold Price Down!? Another factor which has been shaping price of gold over last months is Fed of course. Interest rate was raised by 100bps and hawkish rhetoric may suggest the tightening is not over! The influence of monetary policy is visible on the chart on the left hand side as on January 26th the interest rate was kept on the level of 0.25% and then on March 16th when the huge rate hike was “applied”. Article on Crypto: Hot Topic - NEAR Protocol! Terra (LUNA) has been seeing a consistent downward price trend, DAI Should Stay Close To $1   Price Of Gold (XAUUSD) – 3 Months Chart Source/Data: Reuters, Investing.com Charts: Courtesy of TradingView.com
Greenback Skyrockets! Record-Breaking US Dollar (USD)!? Is It Possible For Dollar Index (DXY) To Reach 112 As In Early 2000s? Fed Decision Incoming!

Greenback Skyrockets! Record-Breaking US Dollar (USD)!? Is It Possible For Dollar Index (DXY) To Reach 112 As In Early 2000s? Fed Decision Incoming!

Alex Kuptsikevich Alex Kuptsikevich 19.04.2022 10:34
The dollar index passed 101, which we last saw for just over a week at the height of the lockdowns. But history suggests that this rally has roughly passed the halfway point. DXY is unlikely to stop near 103-104 as it has done in the last six years Except for a brief period of stock market panic in March 2020, the last time the dollar was at this level against a basket of the six most popular currencies was in April 2017. The Dollar Index peaked in the 103-104 area in both cases and has not traded consistently higher for the past 20 years. Read next: (UKOIL) Brent Crude Oil Spikes to Highest Price For April, (NGAS) Natural Gas Hitting Pre-2008 Prices, Cotton Planting Has Begun The past two times, the dollar’s rise has been halted by the Fed, easing its policy or tone of commentary, as we have seen stock and commodity markets crash along with the USD rally. That is not the case this time, so the DXY is unlikely to stop near 103-104 as it has done in the last six years. For USDJPY, it could spike to 140, which has not been seen since 1998 We are now seeing a rise in the dollar, mainly on the Fed’s switch to monetary tightening mode. We saw that the last three such impulses of dollar growth, which started in 2014, 1998, and 1992 caused the DXY to appreciate by about 25%. For you: Forex Rates: British Pound (GBP) Strengthening? Weak (EUR) Euro? GBP, NZD And AUD Supported By Monetary Policy? Applying this pattern to the current case, we get that the dollar has exhausted just over half of its upside potential and could strengthen as much as 110-112 on the DXY in the next few months. For EURUSD, this scenario sets up a plunge towards parity, the lows of the last 20 years. For USDJPY, it could spike to 140, which has not been seen since 1998. And for GBPUSD, a return to 1.2000, the lows of the Brexit-fear era.
Chaos And Rising Volatility Are Present In Market Mood

Japanese Yen (JPY) Weakens Against The Dollar, USD/CAD Stable And The Inevitable Strengthening Of The USD, IMF/World Bank Events

Rebecca Duthie Rebecca Duthie 19.04.2022 09:50
Summary: Analysis of; EUR/USD, EUR/GBP, USD/CAD, USD/JPY. Japanese Yen weakens as Bank of Japan fights against increasing Treasury Yields. USD Strengthening as the Fed remains hawkish. The EUR and GBP future prices awaiting the IMF and World Bank Events later this week. EUR/USD, Strengthening USD putting pressure on the EUR. EUR/USD market sentiment is currently reflected as bearish for this currency pair as the graph shows the declining price over the past week. In the past weeks, the Euro has been underperforming as a result of the Russia-Ukraine war causing fears of Eurozone stagflation. The ECB is stuck at the moment with increasing inflation and slow growth, the likelihood of the ECB’s capacity to match the aggressiveness of the Fed is low. Perhaps toward the end of the week we will see the EURO bounce against the USD inlight of the talks at the IMF/World bank events. EUR/USD Price Chart Read next: (UKOIL) Brent Crude Oil Spikes to Highest Price For April, (NGAS) Natural Gas Hitting Pre-2008 Prices, Cotton Planting Has Begun   The Value EUR/GBP Awaits Changes in Light of Major Appointments This Week The Euro seems to be strengthening against the GBP after it depreciated late last week. Since the market opened this morning, the investor sentiment for this currency pair has become bullish. There is suspicion that the sharp fall in the value of the EUR/GBP last Thursday may have come out of China in an attempt to stop any more strengthening in the Renminbi. The future value of this currency pair is important to watch in the coming days, with major appointments on talks about finances coming up, especially both the ECB and BoE governors talks at the IMF/World Bank events later this week. EUR/GBP Price Chart USD/CAD Currency Pair holding Stable amidst Current Market conditions The USD/CAD currency pair price is remaining relatively stable given the current risk-averse market sentiment. The USD/CAD currency pair is considered to be volatile, both the CAD and USD reacts quickly to the release of economic data and current market conditions. Despite investors being risk averse, the market sentiment seems to be bullish for the USD inlight of the Fed's hawkish attitude, growing concerns on inflation increases and US rising benchmark yields all leading to a strengthening USD. USD strengthening against the Japanese Yen The USD strengthened against the Yen this past week as a result of the increasing US Treasury yields and the expectation of positive economic data. The price of this currency pair reached the highest since March 2002. The Bank of Japan has been working hard to keep the Treasury yield below 0.25%, the opposite approach the Fed has taken in the fight against inflation, causing the yen to weaken. The Japanese finance minister raises concerns on the damaging effect the weakening yen could have on the weakening economy For you: Forex Rates: British Pound (GBP) Strengthening? Weak (EUR) Euro? GBP, NZD And AUD Supported By Monetary Policy?   USD/JPY Price Chart Sources: Finance.yahoo.com, Teletrade.eu.
Chart of the Week - Gold Miners vs Energy Producers - 20.04.2022

You Should Follow These Events And Assets! Saxo Bank's QuickTake: NAS100, S&P 500, Stoxx 50, EURUSD, USDJPY, XAUUSD, Crude Oil, Russia-Ukraine War - And More

Saxo Bank Saxo Bank 19.04.2022 10:16
Macro 2022-04-19 08:34 6 minutes to read Summary:  Markets are trying to maintain an even keel as bond yields and oil prices continue to press higher. Europe returns from its long holiday weekend today as the war in Ukraine is heating up in the east and the hawkish Fed voter Bullard says he would not rule out a 75-basis-point hike at the May 4 FOMC meeting. Gold failed a bid to take the 2,000 dollar per ounce threshold yesterday.   What is our trading focus? Nasdaq 100 (USNAS100.I) and S&P 500 (US500.I)  - US equities have been weak over the past week with negative reactions to earnings from US financials with JPMorgan Chase’s unexpected increase in credit provisions indicating credit conditions will worsen. This week major earnings releases in the US will dominate the reaction function and set the direction for the S&P 500 futures which are trading around the 4,400 level this morning with yesterday’s low at 4,355 being the key level to watch on the downside. Read next: (UKOIL) Brent Crude Oil Spikes to Highest Price For April, (NGAS) Natural Gas Hitting Pre-2008 Prices, Cotton Planting Has Begun   Hong Kong’s Hang Seng (HSI.I) and China’s CSI300 (000300.I)  Hang Seng Index retreated more than 2% after investors found the 25 bp reserve requirement ratio cut by the People’s Bank of China last Friday disappointing as they had been expecting a more typical 50 bp reduction and a 10 bp cut in the policy Medium-term Lending Facility (MLF) rate as well.  E-commerce names declined on report that the Chinse authority had asked e-commerce companies to a meeting and called on the latter to improve on practices on pricing and delivery of necessities to consumers during lockdowns. Alibaba and Meituan fell 3% to 5%. China Merchant Bank fell 11% following the abrupt departure of the Chinese bank’s president. CSI300 saw a modest decline with coal miners, agricultural chemicals and fertilizer producers, and energy sector seeing demand. Stoxx 50 (EU50.I)  – Stoxx 50 futures are stuck in the mud ahead of a critical week with US Q1 earnings releases and Russia’s new offensive in Donbass marking the beginning of the next and more critical phase of the war in Ukraine. Stoxx 50 futures are trading around the 3,750 level this morning and is boxed into a tight trading range from 3,710 to 3,800. EURUSD  – the euro traded and closed below the prior cycle low of 1.0800 after an initial sell-off through that level in the wake of last week’s ECB meeting failed to stick. Yield spreads at the short end of the curve, relative to the US, have generally trended sideways for nearly a month, although longer yields have risen more aggressively in the US since late March. USD liquidity concerns as risk sentiment is poor and the market fears more aggressive Fed quantitative tightening may be the key driver here. Watching the next chart level at 1.0636, the low from early 2020. USDJPY and JPY crosses.  The JPY continues to run away to the downside, with USDJPY hitting 128.00 for the first time since 2002, as long US treasury yields notched a new cycle peak yesterday and will soon threaten the 3.00% level if they continue to rise, underlining the policy divergence with the Bank of Japan, that continues to stick with its yield-curve-control policy that caps 10-year JGB yields at 0.25%. Both the Bank of Japan and the Japanese Ministry of Finance have stepped up their verbal interventions against JPY volatility as recently as overnight, but until a policy shift is spotted, or real intervention is mobilized, the market is content to continue driving the JPY lower. The next major chart point is the early 2002 high near at 135.00. AUDJPY has also surged to fresh record highs of 94.50+ as the AUD was slightly firmer following the hawkish tilt in RBA minutes. Suzuki is heading for a bilateral meeting with the US and comments would be on watch. For you: Forex Rates: British Pound (GBP) Strengthening? Weak (EUR) Euro? GBP, NZD And AUD Supported By Monetary Policy? Gold (XAUUSD) attempted but failed to reach $2000, more a psychological than technical resistance level during Monday’s low liquidity session. Leveraged funds (futures) and asset managers (ETFs) both bought gold in the week to April 12, a sign the technical and fundamental outlook have – for now - aligned in support of the yellow metal. The World Bank cut its forecast for global economic growth while Fed’s Bullard talked up the prospect for a 75 basis point rate hikes given the need to raise rates to around 3.5% this year. While higher interest rates may weigh, worries about inflation, growth, and increased market volatility together with the geo-political uncertainties have maintain the upper hand. Support at $1965. Crude oil (OILUKJUN22 & OILUSMAY22) has extended its pre-Easter rally after Libya shuts its largest oil field amid protest, thereby draining an already undersupplied market further. Chinese fuel demand, currently estimated to be down 2 million barrels per day is likely to recover swiftly once lockdowns are lifted after China vowed to repair the economic damage. More than 500,000 barrels per day is currently offline in Libya and together with the EU attempts to phase out Russian oil imports, the market is expected to remain tight despite the announced release from strategic reserves held by the US and IEA members. Brent finding some resistance around $113.75 with a break potentially signaling a fresh push towards $120 per barrel. Copper (COPPERUSJUL22) reached its second highest ever close on Monday, as global mining disruptions continued to weigh on a market where exchange-monitored inventories are already at alarmingly low levels. Around 20% of Peru’s exports are out of action following local community protests. In addition, a Chinese government pledge to support the economy once lockdowns are lifted, and the increased urgency to reduced dependency on fossil fuels via electrification are likely to underpin the price further. Resistance at $4.86, a local high, and support at $4.65, the 50-day moving average. US Treasuries (IEF, TLT) and European Sovereign Debt. Despite the fresh hawkish talk from St. Louis Fed president Bullard, who is a voter at FOMC meetings this year, the short end of the US yield curve remains relatively steady, while long yields have continued to test higher as the US yield curve steepens. The next major obvious test for the long end is the 2018 high for the 10-year Treasury benchmark at 3.25% What is going on? World Bank downgrades global growth estimates. The World Bank cut its 2022 outlook to 3.2% from 4.1%, dragged down by Europe and Central Asia amid the Russian invasion of Ukraine. World Bank Chief Economist Carmen Reinhart said there is “exceptional uncertainty” in global markets and further downgrades cannot be ruled out. Get ready for more hawkish Fed talk this week. We had James Bullard on the wires yesterday, and he planted the seeds of a 75-basis points rate hike given that the Fed needs to get to neutral rate very soon. The base case for the May meeting is still a 50-basis points rate hike, and a final word on that should be watched from Fed Chair Powell on Thursday as he speaks at the IMF conference. Still, brace for more volatility in yields and further gains in the US dollar as Fed continues to raise the bar of its hawkishness. The Bloomberg Grains Subindex (AIGG:xlon) has returned to challenge to the March record high with the near month corn contract (CORNJUL22) exceeding $8 per bushel for the first time in almost a decade while wheat (WHEATJUL22) has also resumed its recent strong rally. Catalysts being the war in Ukraine, potentially reducing this year's corn crop by 40%, as well as drought and heat damage to crops in the US Midwest. In addition, the recent strong surge in US natural gas prices has further lifted the cost of fertilizer, thereby potentially seeing US farmers switch more acreage to less nutrient intensive soybeans from wheat and corn. What are we watching next? JPY intervention?  The verbal intervention from the Bank of Japan and the Japanese Ministry of Finance have failed to impress the market. At some point the Japan’s MoF may feel it is necessary to mobilize an actual intervention in the market, something it has a long history of doing, though in the past, ironically in the direction of avoiding further JPY strength, not weakness. These interventions may not achieve more than temporary success if the underlying policy and market dynamic don’t shift (I.e., the Bank of Japan sticking to its current policy while inflationary pressures and yields elsewhere continue higher). But the risk of tremendous two-way, intraday volatility should be appreciated. War in Ukraine developments as Ukrainian president Zelenskiy said that Russia is initiating an effort to take the Donbas region in Easter Ukraine. An isolated force of Ukrainian forces in Mariupol continues to hold out against Russian efforts to take the city. Earnings Watch.  The Q1 earnings season started last week with EPS beating in all cases but Schwab indicated that earnings momentum is intact among US financials. JPMorgan Chase’s earnings release showed higher than expected credit provisions which may be early signs that the credit cycle is moving into its next phase. This week the key focus is on Johnson & Johnson (today), Netflix (today), Lockheed Martin (today), Halliburton (today), ASML (Wed), Sandvik (Wed), Tesla (Wed), Procter & Gamble (Wed), CATL (Thu), Nidec (Thu), ABB (Thu), NextEra Energy (Thu), Snap (Thu). Tuesday: Shenzhen Mindray Bio-Medical, Johnson & Johnson, Netflix, Lockheed Martin, IBM, Halliburton,  Wednesday: China Mobile, China Telecom, ASML, Heineken, ASM International, Sandvik, Tesla, Procter & Gamble, Abbott Laboratories, Anthem, CSX, Lam Research, Kinder Morgan, Baker Hughes Thursday: Contemporary Amperex Technology (CATL), Sartorius Stedim Biotech, Nidec, Investor AB, ABB, Danaher, NextEra Energy, Philip Morris, Union Pacific, AT&T, Blackstone, Intuitive Surgical, Freeport-McMoRan, Snap, Dow, Nucor Economic calendar highlights for today (times GMT) 0800 – Switzerland SNB Weekly Sight Deposits 1215 – Canada Mar. Housing Starts 1230 – US Mar. Housing Starts and Building Permits 1605 – US Fed’s Evans (non-Voter) to speak 1630 – Switzerland SNB’s Jordan to speak 2350 – Japan Mar. Trade Balance 0115 – China Rate Decision Follow SaxoStrats on the daily Saxo Markets Call on your favorite podcast app:    
Walt Disney Results Are Beyond  All Expectations. Large Chinese Company Fires More Than 9K Employees!!! Market Newsfeed - 11.08.2022

British Pound (GBP) Power! Will GBPUSD Go Down Anymore!? (Australian Dollar To US Dollar) AUD/USD Is Volatile, GER 40 (DAX) To Pause Longer?

Jing Ren Jing Ren 19.04.2022 08:42
Summary: GBPUSD tests critical floor AUDUSD breaks support GER 40 seeks support GBPUSD tests critical floor The RSI’s oversold situation may cause a temporary bounce towards 1.3060. The US dollar continues upward as markets wager a 50 bp Fed hike next month. The pound’s latest rally came to a halt in the supply zone around 1.3150 which coincides with the 30-day moving average.   Read next: (UKOIL) Brent Crude Oil Spikes to Highest Price For April, (NGAS) Natural Gas Hitting Pre-2008 Prices, Cotton Planting Has Begun   As the pair gives up its recent gains, the bears still retain control of the direction and seem to be ready to double down at rebounds. A drop below 1.3000 would attract momentum selling and push the pair to November 2020’s lows near 1.2860. The RSI’s oversold situation may cause a temporary bounce towards 1.3060. AUDUSD breaks support As the RSI recovers into the neutral area, the pair may face stiff selling pressure around the support-turned-resistance at 0.7400. The Australian dollar remains under pressure after dovish RBA minutes. A fall below the demand zone between 0.7380 and 0.7400, which sits on the 30-day moving average, has put the bulls further on the defensive.   For you: Forex Rates: British Pound (GBP) Strengthening? Weak (EUR) Euro? GBP, NZD And AUD Supported By Monetary Policy?   As the short-term prospect turns bearish, depressed offers compound the lack of bids, driving the Aussie even lower. 0.7300 would be the next target. As the RSI recovers into the neutral area, the pair may face stiff selling pressure around the support-turned-resistance at 0.7400. GER 40 seeks support The bulls need to push above 14320 in order to turn the cautious mood around. The Dax 40 retreats as risk appetite remains subdued across equity markets. The index is still under pressure after it struggled to hold above the psychological level of 14000. The current pennant may turn out to be another distribution phase. Additionally, a break below 13900 would make the index vulnerable to a new round of sell-off. 13600 would be the next support. The bulls need to push above 14320 in order to turn the cautious mood around. Then 14600 will be the final hurdle before an extended recovery could materialize.
EUR/USD: US Dollar (USD) Supported By A 75bp Rate Hike!? EUR Influenced By Last Week's Activities, Price Of Gold (XAUUSD) May Not Stop Below $1980

EUR/USD: US Dollar (USD) Supported By A 75bp Rate Hike!? EUR Influenced By Last Week's Activities, Price Of Gold (XAUUSD) May Not Stop Below $1980

Jing Ren Jing Ren 20.04.2022 08:12
EURUSD consolidates post-sell-off The US dollar rallies as a 75bp rate hike by the Fed could be on the table. The single currency remains under pressure after last week’s sell-off. 1.0920 has become an important supply area after buyers’ failed attempts to push higher. Further above, the psychological level of 1.1000 is another support-turned-resistance, suggesting that the path of least resistance is down. Bearish trend followers could be waiting to fade the next rebound. The pair is treading water above 1.0760 as the RSI rises back to the neutrality area. Article on Crypto: Altcoins Showing Promising Growth - Take a Look at Solana (SOL), POLKADOT (DOT) and SHIBA INU (SHIB-USD)| FXMAG.COM XAUUSD keeps high ground Gold slipped as the greenback rallied across the board amid the Fed’s increasingly hawkish stance. The previous rally cleared the resistance at 1990 but struggled to grind to the psychological level of 2000. A drop below 1961 revealed underlying weakness and caused a liquidation of leveraged buyers. 1940 at the base of a previous breakout is the next stop to gauge the bulls’ commitment. An oversold RSI may trigger a buy-the-dips behavior and lead to a limited rebound. 1980 is now the closest resistance. Read next: (UKOIL) Brent Crude Oil Spikes to Highest Price For April, (NGAS) Natural Gas Hitting Pre-2008 Prices, Cotton Planting Has Begun SPX 500 breaks channel The S&P 500 recoups losses as the quarterly earnings season heats up. The index has been sliding down in a bearish channel, which indicates a cautious mood in the short term. The latest rally above the upper band (4420) and resistance at 4460 could prompt sellers to cover their positions, paving the way for a potential reversal towards 4590. 4360 is a fresh support. In fact, a series of higher lows would show buying interest and convince followers to jump in with both feet. Otherwise, 4300 would be the next support.
The AUD/USD Currency Pair Trading At Its Lowest Level Since Two Years, Hang Seng Index Was Flat

$2000 Level Of Gold Price (XAUUSD) Noted But Not Yet Present! Awaiting Fed Vs. Gold Battle!

Alex Kuptsikevich Alex Kuptsikevich 20.04.2022 10:27
Gold is falling fast, having lost about 3% to $1940 from Monday's peak. On Monday, the bulls are locally capitulating after an unsuccessful attempt to push the price above $2000. It would be a mistake to attribute gold's fall to an expensive dollar. Since the start of the year, the dollar index and gold have had a more than 80% correlation versus -0.34% in 2021, reflecting that investors see gold and the dollar as defensive assets amid the Russia-Ukraine conflict. Yesterday the dollar index slowed its rise towards the end of the day. It reversed to a decline on Wednesday morning, while gold has been actively declining since the beginning of the week, reinforcing their close correlation. Read next: Monetary Policy Drives EUR/USD, The Future of the EUR/GBP Awaits the Bank Of England's Speech - Good Morning Forex| FXMAG.COM With EURUSD near 1.08, GBPUSD near 1.30 and USDJPY one step away from 130, the dollar is near historical extremes Gold's recent retreat could be a sign of hope for a détente in the European conflict and a desire to lock in profits from the powerful movement of recent days. As it is difficult to find signs of de-escalation in the news, we are leaning towards the second option. With EURUSD near 1.08, GBPUSD near 1.30 and USDJPY one step away from 130, the dollar is near historical extremes. The same can be seen in the Dollar Index, which since last week has been trading above 100, a psychologically crucial round level. Read next: Altcoins' Rally: Solana (SOL) Soars Even More, DOT and SHIBA INU Do The Same! | FXMAG.COM Since the beginning of February, gold has found support on the declines toward its 50-day moving average in the last rally. If a test of this level in the coming days also confirms the resilience of this support, we could see a new high soon. On the long-term gold chart, the pullback from the highs in 2020 and the subsequent smooth recovery is a handle in a "cup-and-handle" pattern, whereby a cup has formed over eight years since 2012. This pattern will gain strength should gold consolidate above $2000 with a final target near $3000.
Cautious optimism

Breaking: Gold Price (XAUUSD) To Decrease Shortly? Bear Market Coming?

Przemysław Radomski Przemysław Radomski 20.04.2022 14:02
Despite increased war tensions, gold failed to break above $2,000. What’s worse, rising USDX and interest rates are already lurking on the horizon. The precious metals just performed exactly as they were likely to. Despite the increase in war tensions, PMs and miners reversed instead of rallying, which indicated that the rally has probably run its course. Since the tensions can now (most likely) either decline or stabilize, gold and silver prices will presumably fall right away, or after a while, as the market starts paying attention to gold’s two key fundamental drivers: the USD Index the real interest rates. Let’s not forget that while gold moved above its 2011 highs, silver and miners are well below the 50% retracement from their respective 2011 highs. Both are inversely correlated with the price of gold, and both are on the rise. It’s therefore most likely only a matter of time before gold declines, and the same goes for silver and mining stocks. In fact, silver and mining stocks are likely to fall harder than gold, as they’ve been very weak in recent years anyway. Let’s not forget that while gold moved above its 2011 highs, silver and miners are well below the 50% retracement from their respective 2011 highs. Let’s check what gold did yesterday. The gold price declined substantially, and it closed below its late-March 2022 high, thus invalidating the breakout above it. Instead of the breakout above $2,000, we saw the above. Instead of a bullish sign, we got a sell signal. We also got another from the stochastic indicator that not only moved below its signal line, but also below the 80 level. Moreover, let’s not forget that it all happened in tune with what we saw back in 2020, after gold’s major top. Back then, gold retraced slightly more than 61.8% of the decline. Although this time it retraced slightly less, both cases are still very similar. Just as gold reversed on Monday, so did silver. Consequently, this month’s recent upswing was not really bullish – it was a natural part of a bigger bearish pattern. Just as gold reversed on Monday, so did silver. It also outperformed gold on a very short-term basis, which served as another bearish confirmation. Silver’s outperformance of gold is often a sell signal, especially when it’s accompanied by mining stocks’ weakness, and we saw the latter too.   Consequently, the current outlook for the precious metals market appears bullish in the long run but bearish in the medium- and short term. During yesterday’s trading, silver and junior miners were down rather similarly, but the latter had also been down on Monday, while silver had ended the session in the green. Also, miners just invalidated their breakout above the March 2022 high in terms of the closing prices. No wonder here – the attempt to rally above the previous highs was accompanied by rather weak volume, suggesting that it would fail. It did, and that’s a sell sign on its own. Consequently, the current outlook for the precious metals market appears bullish in the long run but bearish in the medium- and short term. 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.
(TSLA) Tesla And Elon Musk Continue to Outperform the Market! What About Elon Musk-Twitter Negotiations' (TWTR) Influence?

(TSLA) Tesla And Elon Musk Continue to Outperform the Market! What About Elon Musk-Twitter Negotiations' (TWTR) Influence?

Rebecca Duthie Rebecca Duthie 21.04.2022 15:08
Since the market opened this morning, the price of Tesla’s stock has increased largely, this surge came after the earnings announcement for Tesla that took place late one Wednesday, which showed large increases in earnings and profits, reflecting unexpected growth for Q1. Tesla share price has surged in the past 24 hours as a result of musks earning announcement that took place late on Wednesday (CET) Read next: (XAGUSD) Price of Silver Vs. U.S Yields, Lumber and Corn Futures Dependent on Demand and Supply | FXMAG.COM The stock price was also affected by Musk’s determination to take over Twitter (TWTR) The price of Tesla's stock has shown very volatile price movements over the past week as a result of market sentiment and current market conditions. In addition, the stock price was also affected by Musk’s determination to take over twitter, an announcement that took place just over a week ago, since then the price has been rising again in general. Read next: Unexpectedly Gold Price (XAUUSD) Falls, Canada And Chicago - Weather Makes Wheat Futures Fluctuate. The Price Of Palladium - Industrial Activity Is Taking Strain | FXMAG.COM Research has shown that the value of Tesla's stock has a correlation between stock movements in the near term and earnings estimates. Currently the market sentiment for the stock is mixed as investors in general are unsure where the markets will go at this point and investors are seemingly more risk-averse amid the rising inflation and possibility of a looming recession. Tesla Stock Price Chart Sources: Finance.yahoo.com, investors.com  Read next: ECB Announcements to Possibly Tighten Monetary Policy Strengthens the Euro. EUR/USD, EUR/GBP, AUD/NZD and EUR/CHF All Increased | FXMAG.COM  
Powell signals Fed needs to be nimble, Canada Inflation hits near 40-year high, bitcoin tries to hold USD20k

What Moves Forex Rates? Strong US Dollar Affects British Pound (GBP), Japanese Yen (JPY) And CNH

Alex Kuptsikevich Alex Kuptsikevich 22.04.2022 13:32
The world's major currencies continue to surrender to the dollar one after another. Since the start of March, the yen has lost 11.5% and fallen to a 20-year low. But just as we saw the third world economy currency stabilise, the currency of the second one went on the move. Chinese currency had previously successfully resisted the strengthening of the USD since the middle of last year, but The dollar has added over 2% to the renminbi since the start of the week, the most significant move since 2015. It is also noteworthy that the Chinese currency had previously successfully resisted the strengthening of the USD since the middle of last year, but in an abrupt move, entered the area of the extremes of the last 12 months. Read next (FxPro): Still Going Up The Price Of Crude Oil (WTI/BRENT) When Energy Stocks Will Start To Soar? | FXMAG.COM We see an equally impressive attack on the Pound. The GBPUSD broke the support at 1.3000 on Friday, and it is already losing more than 1% so far today. USDCHF reached its highest point since June 2020, exceeding 0.9550. Read next (FxPro): Want To Exchange 100 GBP To USD? GBP/USD Below 1.3000! (GBP) British Pound Weakens! GBP To USD - 17-Months-Low! | FXMAG.COM The New Zealand and Australian dollars have been declining steadily since early April, despite hawkish action and comments from respective central banks. Moreover, the export-oriented economies of these countries should benefit from the emerging commodity prices. EURUSD is trading below 1.0800, near 2020 reversal levels and maintaining a very moderate trading range The USDCAD went back to month highs in less than two days, reversing Wednesday's sharp rally and earlier gains from hawkish comments by the Bank of Canada. EURUSD is trading below 1.0800, near 2020 reversal levels and maintaining a very moderate trading range. However, the swing in GBPUSD today and USDCNH throughout the week and the USDJPY drama since early March suggests that EURUSD could be the next victim of dollar bulls.
Fluctuations Of Forex Pairs! US Dollar's Strength Against Japanese Yen Performance (USD/JPY), Jason Sen Comments On Euro To Japanese Yen (EUR/JPY) And NZD/JPY Forex Rate

Fluctuations Of Forex Pairs! US Dollar's Strength Against Japanese Yen Performance (USD/JPY), Jason Sen Comments On Euro To Japanese Yen (EUR/JPY) And NZD/JPY Forex Rate

Jason Sen Jason Sen 25.04.2022 10:11
USDJPY running out of steam in severely overbought conditions as predicted but there is no sell signal yet so I cannot suggest shorts. A break above 129.50 however targets 129.90/95 then 130.25/35, perhaps as far as 130.75/85. First support again at 127.80/70. Expect strong support at 127.10/126.90. Longs need stops below 126.70. A break lower can target 126.00. EURJPY no sell signal yet despite overbought conditions but less than positive candles for the last 3 days probably signal a consolidation ahead. Having held the next target of 139.95/99 perfectly, if we do continue higher look for 140.40/50 & 140.85/95. Minor support at 138.70/50 but below 138.30 can target 137.70/50. ON further losses look for 137.20/10 with best support at 136.50/30 this week. Longs need stops below 136.10. Read next (By Jason Sen): Can (XAUUSD) Gold Price Plunge To $1800!? Silver Price (XAGUSD) To Decrease As Well? | FXMAG.COM NZDJPY holding below 8540 is a sell signal for today targeting 8500 & perhaps as far as strong support at 8450/30. Longs need stops below 8410. First resistance at 8545/65. Shorts need stops above 8485. EURUSD holds 37 YEAR TREND LINE SUPPORT AT 1.0760/20. Longs need stops below 1.0670. Obviously there is nothing more important than this level this week. Again we must beat 1.0840/20 to target 1.0920/40. A break above 1.0960 is a buy signal targeting 1.1030/50. USDCAD messy as we trade sideways for 9 months. We are back above the February lows & the sideways 100 & 200 day moving averages. Further gains test the strongest resistance for this week at 500 day & 100 week moving average at 1.2775/85. Shorts need stops above 1.2800. A break higher should be a medium term buy signal. Read next (By Jason Sen): Euro To US Dollar (EUR To USD): That's An Amazing USD Performance, Will USDCAD (Canadian Dollar) Stay Close? USDJPY (Japanese Yen) Beats Records! | FXMAG.COM First support at 1.2660/40. Longs need stops below 1.2620 GBPCAD support at the April low of 1.6293/81 held again. Strong resistance at 1.6400/20. Shorts need stops above 1.6450. A break higher is a buy signal initially targeting 1.6530/50. A break below 1.6265 is a sell signal. Look for 1.6190/80. Please email me if you need this report updated or Whatsapp: +66971910019 – To subscribe to this report please visit daytradeideas.co.uk or email jason@daytradeideas.co.uk
(NVDA) Nvidia Stock Price Plunged! Meme Stocks' Performance Seems To Be Surprisingly Good

US Yields Have Declined! Gold Price (XAUUSD) Is Back In The Game! Gold Trades Near $1900, COVID In China Leave Investors Unsure

Conotoxia Comments Conotoxia Comments 26.04.2022 10:25
The price of gold appears to be back above $1,900 per ounce on Tuesday, after a 3-day decline. The rise seems to have taken place with a slight weakening of the US dollar and a drop in US Treasury bond yields, which may have made bullion more attractive. Investors may be monitoring the deteriorating Covid virus situation in China after authorities in Beijing expanded testing to a larger part of the city The U.S. dollar appears to have retreated today from a two-year high reached during the previous session, while the 10-year bond yield may have fallen from a three-year high, retreating to around 2.8 percent. Given the growing uncertainty about the outlook for global economic growth, the market may be gauging the Federal Reserve's willingness to tighten monetary policy quickly. Additionally, investors may be monitoring the deteriorating Covid virus situation in China after authorities in Beijing expanded testing to a larger part of the city, raising fears of a shutdown of the capital. In addition, Russia told the world not to underestimate the significant risk of nuclear war, which it says it wants to reduce, and warned that conventional Western weapons are a target in Ukraine. Gold can be seen as a store of value during economic and political crises. Read next: Conotoxia - Who's Gonna Stop Dollar (USD)!? EUR/USD Plunging Below 1.00? What A Surprise! Crude Oil Price Goes Down!| FXMAG.COM European buyers have refused to buy millions of barrels of Urals crude from Rosneft PJSC Meanwhile, in the oil market, WTI crude futures appear to have risen to around $99.5 a barrel on Tuesday, after a two-day decline that took prices below $100. However, the supply situation appears to remain tight. There is still a risk that the EU could join the U.S. and U.K. in banning Russian oil imports as the war in Ukraine continues. European buyers have refused to buy millions of barrels of Urals crude from Rosneft PJSC, while Asian refiners have given up on Russian oil because of sanctions imposed on the company that carries the cargoes. As a result, the world on the one hand may be reducing oil demand by the prospect of weaker economic growth and lower demand from China due to the epidemic. On the other hand, there are still chances of reduced oil supply in Europe due to war and sanctions, which may put upward pressure on production. Thus, the price of WTI crude oil, due to the opposing factors, may remain in a consolidation of $92-114. Read next: Conotoxia - (USD) Dollar Index - Fed Floors It! Hawkish Rhetoric And Interest Rate Hike? British Pound In Crisis? GBP/USD Affected By Weak Retail Sales Data!| FXMAG.COM   Daniel Kostecki, Director of the Polish branch of Conotoxia Ltd. (Forex 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. 80.77% 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.
Rates Spark: Following the US data cues

Oh No! EUR/USD Hit 5-Year-Low! Probably Euro Is Not That Week, But US Dollar... Oh My It's A Monster!

Conotoxia Comments Conotoxia Comments 27.04.2022 15:36
The common currency does not seem to have a very successful time behind it. Only since the beginning of the year to the US dollar, the euro could lose almost 7%, and today we can observe the lowest EUR/USD exchange rate since 2017. Russia has stopped the flow of gas to Poland and Bulgaria and said it will remain cut off until those countries agree to pay in rubles The euro weakened to $1.065 and could be at its lowest level since April 2017. It seems that the Euro may be weakened by growth concerns and risks related to energy supplies from Russia. Russia has stopped the flow of gas to Poland and Bulgaria and said it will remain cut off until those countries agree to pay in rubles. Read next: Who's Gonna Stop Dollar (USD)!? EUR/USD Plunging Below 1.00? What A Surprise! Crude Oil Price Goes Down!| FXMAG.COM The latest data also showed that consumer sentiment in Europe's largest economy fell to a record low (the GfK consumer climate index in Germany fell to -26.5 by the end of April). Risk sentiment remains shaken by the war in Ukraine, rising inflation and policy tightening by central banks, which could translate into slowing global growth. French President Macron was re-elected with over 58% of the vote Money markets expect the Fed to raise interest rates by half a point at its next two meetings and the European Central Bank to raise rates by 25 basis points in July in an effort to tame inflation, which is currently hitting record levels in Europe and 40-year highs in the U.S. Meanwhile, incumbent French President Macron was re-elected with over 58% of the vote. His rival Marine Le Pen received over 41% of the vote, the highest share of the far-right in an election to date, which could also be a bit of a risk going forward for Europe. Read next: US Yields Have Declined! Gold Price (XAUUSD) Is Back In The Game! Gold Trades Near $1900, COVID In China Leave Investors Unsure| FXMAG.COM A weakening Eurozone currency could have the effect of importing inflation Later in the day, the market may still be waiting for Christine Lagarde's speech from the European Central Bank, which could also have a potential impact on the Euro. A weakening Eurozone currency could have the effect of importing inflation, which could make it harder to fight rising prices, so the market may be wondering to what level the EUR can still lose before the ECB intervenes. Daniel Kostecki, Director of the Polish branch of Conotoxia Ltd. (Forex 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. 80.77% 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.
The EUR/USD Pair Showed Local Speculative Interest In Short Positions Yesterday

(EUR/USD) US Dollar Continues To Strengthen, BoEs Inflation Forecast and Economic Outlook Due On Thursday - Good Morning Forex!

Rebecca Duthie Rebecca Duthie 03.05.2022 12:22
Summary: EUR/USD breaks below 1.05. BoE’s and Fed monetary policy decisions due on during the trading week. GBP relying on the Fed’s quantitative tightening decisions. EURO is under pressure. The EURO lost more ground to the USD during the trading day on Tuesday, the price is sitting below 1.05. The first quarter of 2022 has not been positive for the EURO, with the Russia-Ukraine conflict still raging, the post-covid world, the hawkish Fed and lockdowns in China, are all putting pressure on the already weakening EURO. The market sentiment for this currency pair is mixed. EUR/USD Price Chart Read next: GBP: BoE Expected to Raise Yields, US Dollar (USD) Strengthens across the board - Good Morning Forex!  GBP sees strength against the EUR The GBP has strengthened against the EUR since the market opened this morning, however market sentiment is showing bullish signals. The strengthening of the GBP comes in anticipation of the Bank of Englands (BoEs) announcements due on Thursday, the market expectation is to see a hawkish BoE. If the BoE remains dovish, we could see the EURO bounce back. EUR/GBP Price Chart USD/CAD beats March high on Tuesday. The USD strengthened against the CAD on Tuesday, it's a busy week for the USD, the Federal Reserve is due to announce its monetary policy decision. The market sentiment for this currency pair is showing bullish signals, however, investor sentiment and confidence could easily be swayed in the coming days. USD/CAD Price Chart GBP shows strength against the USD. The Bank of Englands (BoE) monetary policy is the key driver for its small recovery against the USD, however the future of this currency pair lies in the decision of the Fed. The Fed is expected to begin the balance sheet reduction process through quantitative tightening could have adverse effects on the GBP. The market sentiment for this currency pair is bullish. GBP/USD Price Chart Read next: US Dollar (USD) Continues To Trump The EUR, BoE Expected To Increase Interest Rates, SNB Remains Dovish, South African Rand (ZAR) Performance  Sources: finance.yahoo.com, dailyfx.com, poundsterlinglive.com
The EUR/USD Pair Showed Local Speculative Interest In Short Positions Yesterday

Key events in developed markets next week - ING Economics - 9/05-13/05

ING Economics ING Economics 08.05.2022 22:15
The Fed will continue with 50bp rate hikes throughout this year despite the fall in CPI figures expected next week. However, the lack of activity in the UK may put a dent in the Bank of England's plans In this article US: Inflation may be past its peak UK first quarter bounce to mask weaker performance in March We expect further rate increases from the Bank of England in June and August before the committee presses the pause button US: Inflation may be past its peak Consumer price inflation is the key number out of the US next week and it should hopefully show inflation has passed the peak with the year-on-year rate slowing from 8.5% to 8.3%, and core inflation edging down to 6.1% from 6.5%. Lower gasoline prices will be a big help, as will a drop in second-hand car prices as heralded by data from the Mannheim car auctions. However, it will be a long slow descent to get to the 2% target. China’s zero-Covid strategy will continue to pressure supply chains as production and distribution of inputs remain disrupted. Geopolitical tensions add to the problems, while the incredibly tight labour market is also putting upward pressure on wages and labour costs more broadly. In an environment of strong corporate pricing power, these costs are being passed onto customers, meaning inflation will be sticky and slow to fall. As such, the Fed will continue to hike rates swiftly with 50bp rate hikes expected in June, July and September. Consumer confidence will also be published by the University of Michigan and equity market weakness coupled with anxiety over the rising cost of living looks set to keep sentiment subdued.  UK first quarter bounce to mask weaker performance in March A strong bounce in UK activity during January should be enough to put in a quarterly growth figure just shy of 1%. But this masks less exciting performance as the quarter went on, and we expect the monthly GDP figure for March to show no growth in economic activity overall. Retail sales fell for the second consecutive month, while health output probably fell again ahead of the end of free Covid testing at the end of that month. That latter factor, combined with early signs of the cost of living squeeze, as well as an extra bank holiday, suggest we should brace for a negative second-quarter GDP figure and indeed weak activity for the rest of 2022. Increasing concerns surrounding growth likely means the Bank of England will hike fewer times than markets expect this year. We expect further increases in June and August before the committee presses the pause button. Developed Markets Economic Calendar Source: Refinitiv, ING, *GMT TagsUnited States Inflation 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
Stocks Market: What Can We Expect From Shopify Stock Price?

Bitcoin Price (BTC/USD) Plunges, Is Crude Oil Endangered!? Awaiting Disney, AMC And Rivian Earnings | Soft US inflation could reverse risk appetite this week! | MarketTalk: What’s up today? | Swissquote

Swissquote Bank Swissquote Bank 09.05.2022 11:05
Last week closed on a negative note, as US NFP data came in stronger-than-expected, revived Federal Reserve (Fed) hawks, and sent the major US indices lower. And the new week starts on a negative note, as well, after the Chinese Li Keqiang warned that the jobs situation in China is getting ‘complicated and grave’ as the government’s zero Covid policy is taking a heavy toll on the country’s economy, and impacts the rest of the world negatively, as well. But US inflation print due Wednesday could help improving investor sentiment this week, if the data confirms a slow down in US inflation from multi-decade high levels. The next natural target for Bitcoin bears is the $30K psychological support Oil is up this Monday on G7 commitment to ban Russian oil, but Saudis cut the price of their oil due to the Chinee slow down. The US 10-year yield gains field above 3% mark, and US dollar consolidates near two-decade highs. Bitcoin dived to the lowest levels since January over the weekend. The next natural target for Bitcoin bears is the $30K psychological support. The only thing that could reverse the dollar appreciation against majors, and Bitcoin is a soft inflation read on Wednesday! Watch the full episode to find out more! 0:00 Intro 0:33 Week starts moody 1:12 Oil up 3:00 Strong jobs revive Fed hawks, but soft CPI could calm them down! 5:06 Macro events of the week 6:46 Bitcoin hits lowest since January 8:03 Earnings calendar: Lordstown, AMC, Disney, Occidental Petroleum & Rivian 8:51 End of Rivian’s lockup period, beginning of new challenge 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.
Pound rises despite Boris turmoil

Is JPY Idle? British Pound To US Dollar (GBPUSD) And EUR/USD Have Decreased. "Risk-aversion lifts (USD) US dollar in Asia" | Oanda

Kenny Fisher Kenny Fisher 09.05.2022 12:54
China concerns boost the US dollar The US dollar booked some modest gains post-Non-Farm Payrolls on Friday, but the dollar index resistance zone at 104.00 held once again. The dollar index finished 0.11% higher at 103.66 having traded in a wide range intra-day. The risk aversion China slowdown price action seen in equities has spilt into currency markets today, lifting the US dollar after US 10-year yields closed comfortably above 3.0% on Friday. The dollar index has risen 0.34% to 104.00 and is, once again, making a determined test of resistance here. Support at 102.50 remains intact. A close above 104.00 will signal rapid gains to 105.00 and in the bigger picture, the technical picture still says a multi-month rally to above 120.00 is possible. EUR/USD and GBP/USD have fallen by 0.35% today to 1.0508 and 1.2290. EUR/USD support at 1.0470 is in jeopardy, while GBP/USD is threatening the Friday lows of 1.2275, having closed on support at 1.2325 last week. EUR/USD rallies above 1.0650 will be challenging to sustain now, with the 45-year trendline at 1.0800 now distant. Similarly, GBP/USD will run into headwinds between 1.2400 and 1.2500. The technical picture signals much lower levels for both and a formal declaration of war from Mr Putin against Ukraine today will signal a test of 1.0300 and 1.2000 in the coming days, if not sooner. USD/JPY has crept higher over the past few sessions, rising 0.30% today to 130.95. With the Bank of Japan showing no signs of adjusting its 0.25% JGB yield cap, and US rates continuing to climb as the Fed gets busy fighting inflation, downside pressure on the yen seems inevitable. Support lies at 128.50, but a rally by USD/JPY through 131.35 sets the stage for a move to the 135.00 area. Plummeting stock markets in Asia appear to be prompting heavy outflows from Asian currencies today, with USD/CNH and USD/CNY over 0.50%, as are the USD/THB and USD/INR. Elsewhere across the region, the US dollar has booked 0.30% plus gains versus the IDR, SGD, MYR, and KRW. Chinese officials have still not made overt noises about the pace of the CNY sell-off to 6.7050, despite setting a slightly stronger fixing today. USD/INR has traded at all-time highs around 77.255 today and has fallen around 1.80% since the RBI’s last week. That does leave the RBI in somewhat of a bind, and it is an issue the Bank Indonesia and others around Asia will be feeling sooner, rather than later. In the first instance, thanks to Asia’s huge FX reserves, I expect some judicious “smoothing” to be the first strategy. Indonesia, the Philippines, and South Korea have already taken this route, I suspect. If international sentiment continues to fall and the US dollar continues to gain, those noises may get louder, but ultimately, regional central banks will fight a losing battle if China remains comfortable with yuan depreciation. This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.
Podcast: BoJ losing control. Geopolitical risks for Tesla

Skyrocketing US Dollar (USD) Can Be Even More Boosted! US CPI Preview: Hard core inflation to propel dollar to new highs, and two other scenarios

FXStreet News FXStreet News 10.05.2022 16:50
Economists expect core US inflation to have risen by 0.4% MoM in April, a dollar-supportive figure. A repeat of March's 0.3% gain would sink the greenback on talk of "peak inflation." Conversely, an increase of 0.5% in underlying prices would put a 75 bps rate hike firmly on the table. Is that the peak over there? That question for mountain climbers resonates with investors, who are eager to see where inflation reaches its limits. The longer the fog continues, the longer the bloodbath in markets. For the dollar, it is a boon. The greenback's next significant moves hinge on the Core Consumer Price Index (Core CPI) which is projected to have risen by 0.4% in April and 0.3% in March. That surprisingly low figure in the previous month fuels hopes for a lower read this time and a light at the end of the tunnel for stock traders. I will argue that this light is only a fleeting glimpse. Why it matters First, why is Core CPI more important than headline CPI? While Americans undoubtedly consume gasoline and food, these items' prices are volatile and the Federal Reserve has little impact on them. These are mostly supply-side issues driven by global forces such as Russia's war in Ukraine and OPEC+ petrol output. The dollar moves to the tune of the Fed's interest rates. What the Fed can significantly impact is demand – if it raises interest rates, consumers are motivated to save money rather than take loans to make big purchases. It has vowed to bring inflation down with higher borrowing costs – and it can afford to do so. The latest jobs report showed a tight labor market. Employment has room to climb down from the highs. Why are monthly figures more important than yearly ones in the upcoming release? In the upcoming annual calculation, April 2021 will be omitted to include changes seen in April 2022 – and that month was different. Stimulus bump: Source: FXStreet At this time last year, inflation jumped due to the one-off effects of the rapid reopening of the economy and stimulus checks, while April this year was already a normal month. Core CPI leaped by 0.9% in April 2021 and no economist expects a similar rise this time. That is why annual figures are set to fall significantly, putting the focus on monthly data. Expectations and reactions 1) Core CPI at 0.4% as expected: As I have mentioned, estimates stand at a 0.4% increase in Core CPI MoM and every tenth of a percent matters. This is the most likely scenario and is a dollar-positive one. The 0.4% estimate comes after economists had missed last month's figure by 0.2%, so they are likely more cautious this time around. On an annualized basis, it would reflect a rise of almost 5%, substantially above the Fed's 2% target. It would also be higher than the 0.3% level recorded in March and would label that figure as a one-off slow down in price rises. In other words, peak inflation would remain a mystery. At the time of writing, bond markets foresee a 95.9% chance of a 50 bps hike. That may change. Source: FXStreet For the dollar, it would extend the greenback's rise – give it a green light to move higher after the pause in recent days. This scenario has a high probability. 2) Core CPI at 0.3%, below expectations: This scenario is based on the fact that persistently high energy prices have left less money in Americans' pockets for other goods and services, alleviating price pressures. It is also backed by the slowdown in monthly Average Hourly Earnings for April– 0.3% vs. 0.4% expected – but these monthly changes are prone to revisions. March's wage figure was revised up. Nevertheless, if America records two consecutive months of 0.3% underlying inflation rises, it would strengthen the Fed's conviction of raising rates by only 50 bps in June, lowering the chances of a bigger 75 bps increase. That would hurt the dollar and this scenario has a medium probability. An even bigger downfall with 0.2% would already put "peak inflation" high on the agenda, but the chances are low. 3) Core CPI at 0.5%, above expectations: This figure beat estimates in three of the past six releases, so an upside surprise cannot be ruled out. I will stress again, that it is only a tenth of a percentage point, but one that can make a big difference in the dollar's direction. Latest Core CPI outcomes: Source: FXStreet Such an outcome could represent a catch-up in price rises after the relative slowdown or could be boosted by one-off factors. For the dollar, it would represent a considerable shot in the arm, propelling it higher. Bond vigilantes would begin circling around a 75 bps hike once again. This scenario has a lower probability. Final thoughts The Fed is focused on inflation, not employment, and every tick in underlying prices would have an outsized impact on markets. The base case scenario is of ongoing high inflation – an ongoing hawkish approach by the world's most powerful central bank – and a driver of further dollar gains.
ECB stuck in sequencing | ING Economics

The Dollar is King! | MarketTalk: What’s up today? | Swissquote

Swissquote Bank Swissquote Bank 10.05.2022 20:53
The selloff in stocks, bonds, and Bitcoin deepened on Monday. Even commodities sank and crude oil tumbled more than 8% on the back of mounting worries of a seriously tighter, and potentially ineffective Federal Reserve (Fed) policy that would, to fight back the skyrocketing inflation, pull back support aggressively enough to cause recession. Goldman says the S&P500 could fall to 3600 in case of contraction. Another worry is that, even with a significantly tighter monetary policy, the Fed may not be able to tame inflation as much as desired. This is what the inflation expectations tell us. The S&P500 dive another 3.20% yesterday, as Nasdaq tanked another 4.30%. And money doesn’t flow to ‘safer’ US sovereign bonds, as investors are rapidly unloading the US treasuries as well, given the Fed is now letting its holdings mature to reduce the size of its balance sheet which went through the roof since the 2007 subprime crisis. The US 10-year yield hit 3.20% yesterday, the highest level since November 2018. Read next: Tech Stocks Plunging!? Trade Desk Earnings Announcement Pushes Tech Giant Stock Down, Russian Ruble Strengthening and Ford Motor Co. | FXMAG.COM Gold lost more than 1.50% along with the everything rout yesterday and Bitcoin slipped shortly below the $30K level. The yen and the Swiss franc depreciated against the US dollar, as well. So, where does the money go? To the US dollar – the safest of the safe haven assets. But, there is one potential catalyzer this week, that could eventually slow down the market selloff: US inflation data due Wednesday. The consumer price index is expected to have eased to 8.1% in April from 8.5% printed a month earlier. A softer inflation is the only thing that could give hope to investors. Here is the link to the Medium blog article: https://medium.com/swissquote-education Watch the full episode to find out more! 0:00 Intro 0:25 Market selloff intensifies 3:03 Gold & Bitcoin fall along with traditional risk assets 4:29 Safe haven currencies fall, as... 4:55 ...the US dollar is the safest safe-haven 7:32 Goldman cuts its S&P500 price forecast 8:42 Soft US inflation could reverse sentiment in the short-run 9:09 ... but perhaps not for Rivian. 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.
S&P 500 And Nasdaq Declined | The US Data Triggered Some Members Of Fed

Rising Inflation In The US Means Rising US Dollar (USD), Chinese COVID Policy Seems To Be Almost Impossible | US inflation, a make-or-break moment for investors! | MarketTalk: What’s up today? | Swissquote

Swissquote Bank Swissquote Bank 11.05.2022 11:12
It’s D-day of the week: we will see whether inflation in the US started easing in April after hitting a four-decade high in March, and if yes, by how much. A soft inflation read will come as a relief that the Federal Reserve’s (Fed) efforts to tame inflation start paying off, but any disappointment could send another shock wave to the market. In the FX, the US dollar extended gains, despite the easing yields yesterday, as the risk-off flows continued supporting the greenback For now, activity on Fed funds futures give almost 90% chance for a 50-bp hike in FOMC’s June meeting; there is a lot left to be priced for a 75bp hike, if the data doesn’t please. To avoid pricing in a 75bp hike at next FOMC meeting, we must see an encouraging cooldown in inflation. In the FX, the US dollar extended gains, despite the easing yields yesterday, as the risk-off flows continued supporting the greenback.   The barrel of US crude tipped a toe below the $100 level on news that the Europeans softened their sanctions proposal against the Russian oil The levels against the majors like euro, yen and sterling remained flat, but the positive pressure in the dollar, combined with Turkey’s unconventional monetary policy start giving signs of exhaustion. The dollar-try advanced past the 15 mark, and the government asked institutions to make their FX operations within the most liquid trading hours. Two weeks ago, the bank had revised its regulations on banks' reserve requirements, applying them to the asset side of balance sheets in order to strengthen its macroprudential policy toolkit. The latter required reserves now pressure the overnight rates to the upside – suggesting that the unconventional policy is near limits. Energy are up and down… but mostly up. The barrel of US crude tipped a toe below the $100 level on news that the Europeans softened their sanctions proposal against the Russian oil, but oil is already above the $100 this morning. The upside potential is fading due to slower global growth prospects, and the Chinese lockdown. Read next: Stablecoins In Times Of Crypto Crash. What is Terra (UST)? A Deep Look Into Terra Altcoin. Terra - Leading Decentralised And Open-Source Public Blockchain Protocol | FXMAG.COM Watch the full episode to find out more! 0:00 Intro 0:24 All eyes on US inflation data! 2:30 Market update 3:50 Strong US dollar threatens lira stability 5:50 Risks in energy markets remain tilted to the upside 6.35 Why Chinese zero Covid policy won’t work 8.07 Coinbase hit hard by crypto meltdown 8:39 Energy, still the best option for investors 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.  
The Euro To The US dollar Pair May Move Upward

Here Is Why US Inflation Data (CPI) Is That Important Not Only For US Dollar (USD) Its Index (DXY), But Also For Stocks, Bonds And Other Assets | Conotoxia

Conotoxia Comments Conotoxia Comments 11.05.2022 15:28
Today at 14:30 important macroeconomic data for the US economy will be published, which may also affect asset valuations outside the United States - we are talking about inflation data. In March 2022, inflation in the United States rose to 8.5 percent, which was the highest reading in 40 years. The rise in prices, in turn, may have affected several market measures. First, it forced the Fed to act, as the Federal Reserve is supposed to care about price stability and should raise interest rates if prices rise. This in turn could have influenced expectations of higher USD interest rates in the future and a strengthening of the dollar to levels last seen 20 years ago. Further expectations of rising rates could lead to an increase in bond yields, where for 10-year bonds they are in the region of 3%. The increase in bond yields, expectations of further tightening of monetary policy, and shrinking of the Fed's balance sheet, in turn, are information that could adversely affect the stock market, which in the case of the Nasdaq 100 index found itself in bear market territory. This spiral seen in many markets may continue until investors fully discount inflation, rising yields, and expectations of interest rate hikes. Interestingly, the latter had already begun to fall earlier in the week as recession fears increased. Currently, based on the federal funds rate contracts, the market is assuming a peak for hikes in mid-2023 at 3.00-3.25 percent. That's lower than the 3.5-.375 percent assumed as recently as the beginning of the month. The determinant, in turn, of whether there is a chance of full pricing for U.S. rate hikes may be where inflation will be. If this one peaks this six months and starts to fall, the market may stop assuming very aggressive Fed action. This, in turn, could bring relief to the bond market, the stock market, and also lead to the US dollar being close to its cyclical peak. Hence, today's and subsequent data on price growth in the U.S. economy could be so important. Daniel Kostecki, Director of the Polish branch of Conotoxia Ltd. (Forex 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. 80.77% 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.
Forex: GBP/USD. The Support Has Been Rejected 3 Times. Uptrend!

Inflation (US CPI) Rises, So Does US Dollar (USD)! (SPX) S&P 500 And Nasdaq Have Decreased! Is Hawkish Fed Going To Hunt Again? | FxPro |

Alex Kuptsikevich Alex Kuptsikevich 11.05.2022 15:36
The dollar got a fresh boost, with stocks coming under renewed pressure after a new batch of US inflation data. The annual inflation rate slowed from 8.5% to 8.3% The US consumer price index rose 0.3% in April after 1.2% a month earlier. The annual inflation rate slowed from 8.5% to 8.3% but was higher than the expected 8.1% y/y. Particularly worrying for markets is the development of core inflation. The corresponding index added 0.6% m/m and 6.2% y/y last month, higher than the expected 0.4% and 6.0%, continuing the sprawl of inflation. Higher-than-expected inflation is now positive for the dollar and weighs on equities as it suggests a more robust Fed response While the annual rate of core and core inflation seems to have peaked, higher-than-expected inflation is now positive for the dollar and weighs on equities as it suggests a more robust Fed response. With inflation far from the 2% target, the Fed will be inclined to act faster (raise rates more than 50 points at a time) or stop hiking at a higher level. A significant risk demand indicator, bitcoin, has already moved out of the range with a lower boundary in January 2021 Locally, we see a tug-of-war around the dollar against the euro and yen near the lows of the past two weeks and swings against the pound and the franc near this week’s extremes. However, a significant risk demand indicator, bitcoin, has already moved out of the range with a lower boundary in January 2021. The S&P500 and Nasdaq futures were also pushed back to this week’s lows, indicating continued bearish pressure.
The Forex Market Is Under Strong Pressure From Geopolitical Events And Statistics

Gold $1200 Scenario? After Higher US CPI Release, Fed Is Expected To Tackle Inflation, So Gold Price (XAUUSD) May Plunge Again | FxPro

Alex Kuptsikevich Alex Kuptsikevich 11.05.2022 15:38
Gold dipped to $1832 on Wednesday morning, pulling back to a critical support line in the form of the 200-day moving average, losing more than 11% from the peak levels reached in early March. Gold has been losing buyers amid a jump in US government bond yields Gold has been under systematic pressure for the past month and a half amid a rally in the dollar. In addition to this increase in the underlying price, gold has been losing buyers amid a jump in US government bond yields. However, it is too early to talk about a break in the uptrend in gold, but only a retreat into deep defences ahead of essential data. Most of the time, the correlation between inflation expectations and long-term bond yields governs the dynamics in gold. Weak real bond yields lead to a pull in the precious metal as investors look to protect the purchasing value of capital.  A significant event for the gold outlook is today’s US inflation release With high interest rates and inflation control, investors prefer to earn yields in bonds by selling off gold. A significant event for the gold outlook is today’s US inflation release. The market reaction to this event could be decisive for gold in the coming days or weeks. If gold manages to develop a pullback from current levels, we could see a sharp increase in buying over the next few days Consolidation below $1830 on the day would be an essential bearish signal that could rapidly decline towards $1800. Moreover, there would be an immediate question of double-top formation through 2020 and 2022 peaks as an early signal of a long-term downward trend with a potential of $1200. If gold manages to develop a pullback from current levels, we could see a sharp increase in buying over the next few days, as we did in early February and late November. But unlike those episodes, this time, the bears might not wait for a quick reversal, and a further rally would be an important signal that gold continues to claw its way out of the prolonged correction. In this case, the nearest stops might be the levels near $1900, and further, the market might quickly target a renewal of the historic highs above $2075 before the end of the year. 
Forex: Could Incoming ECB Decision Support Euro?

Although US Bonds Yields May Be Higher, Current Circumstances Are Not Clear As US CPI Release And Correlated Fed Interest Rate Decision In June Are To Shape Markets | ING Economics

ING Economics ING Economics 11.05.2022 17:15
The inflation concerns are easing ahead of today’s US CPI reading. We doubt central bankers will back down so soon, however. Markets are coming around to our view that a peak is near in yields, but we think it might still be a couple of months away In this article US 10yr edges back below 3% on remarkable easing in inflation expectations The inflation scare is easing but beware of circular reasonings Global growth gloom means holding psychologically important levels will be more difficult Today’s events and market views The peak in yields may be near US 10yr edges back below 3% on remarkable easing in inflation expectations The juxtaposition between rising real rates and falling inflation expectations remains, and over the past 24 hours the fall in inflation expectations has been dominant. And that’s why the US 10yr yield has dipped back below 3%. Right now, US 10yr inflation expectations are in the region of 2.65%. They were in excess of 3%, albeit briefly, a few weeks back, at which point talk of a 75bp hike in June were sounding like a solid call. Now that inflation expectations are well down, the 50bp promised looks fine. "10yr real rate in the area of 1% would not look out of whack" Meanwhile the 10yr real yield is now above 30bp. Add that to the inflation expectation and we get the sub-3% 10yr Treasury yield. The move higher in the real yield has been spectacular. Back in March it was deeper than -100bp. The move to 30bp is a sign that the economy has morphed away from the need for ultra-loose policy. And a continued move higher takes it towards a more normal footing. In fact a 10yr real rate in the area of 1% would not look out of whack. If we got there, inflation expectations would fall far more. The adjustment higher in real yields is a threat to risk asset valuations Source: Refinitiv, ING   Today’s US CPI number will be important, but not determinative. In other words it should not have a material impact on the 10yr inflation expectation. That said, if it’s an outsized / surprise number, it’s then more likely to have an impact out the curve. Our central view is in line with the market view, where we do see a fall in contemporaneous inflation, consistent with the recent tendency for inflation expectations to ease lower. We’ve been surprised by this though, and think it’s too early to call it a trend. The inflation scare is easing but beware of circular reasonings The ‘peak inflation’ narrative should receive a boost from slowing US annual headline and core inflation readings today but we would be cautious about chasing the move lower in rates. As always, forward-looking markets could apply a heavy discount to central bank rhetoric but an acceleration in monthly core CPI means Fed officials are unlikely to change tack just yet. One should also remember that the decline from the inflation peak will be very slow indeed, keeping pressure on the Fed to act. Swaps show inflation is no longer the market's only concern Source: Refinitiv, ING   US CPI and Eurozone HICP swaps have dropped significantly this month Further afield, inflation compensation offered by US CPI and Eurozone HICP swaps has dropped significantly this month. Should markets conclude that central banks can now afford to be less hawkish? Only up to a point. To some extent, the drop in inflation swaps is owing to a deteriorating global macro environment, but the post-FOMC timing of this drop also suggests that it has at least as much to do with expectations that central banks will deliver on expected tightening. We would be careful with such circular reasonings. Global growth gloom means holding psychologically important levels will be more difficult For an example of the doubt setting in investors’ mind about central banks’ ability to tighten policy, look no further than yesterday’s better-than-expected German (Zew) and US (National Federation of Independent Business) sentiment indicators. None of the readings was enough to alleviate global growth gloom but the NFIB details in particular could have brought inflation fears back to the fore. We suspect it is too early to call the end of the hawkish re-pricing, with central bankers still very much on their front-foot when it comes to delivering monetary tightening. Bonds risk failing a psychologically important test Source: Refinitiv, ING   We have sympathy with the growing view that there is a short time limit to this tightening cycle We think a better candidate for a peak in yields in this cycle is during the third quarter of this year, after the ECB’s expected first hike and after the couple of additional 50bp hikes the Fed has committed to. This being said, turning points are notoriously difficult to pick and we have sympathy with the growing view that there is a short time limit to this tightening cycle. Should 10Y bonds fail to hold on to their recent jump above the psychologically important levels of 3% for Treasuries and 1% for Bunds, it may take a lot of good news to test these levels again. Today’s events and market views Germany (10Y) and Portugal (8Y) make up today’s Euro sovereign supply slate. This will come on top of a dual tranche NGeu syndicated deal in the 3Y (new issue) and 30Y (tap) sectors. In the US session, the Treasury will auction 10Y notes. The main release of note in the afternoon will be the April CPI report. Consensus is for the annual readings to cool down from the previous month but a monthly acceleration in core could muddy the picture for rates. There is also an extensive list of ECB speakers on the schedule, culminating with interventions from Christine Lagarde and Isabel Schnabel. 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
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It's Not The End Of US Inflation, Hawkish Fed And Tight Monetary Policy | US inflation has peaked, but it will be a long slow descent | ING Economics

ING Economics ING Economics 11.05.2022 22:13
US inflation has slowed marginally in April thanks to a fall in used car prices and gasoline. Fed rate hikes will bring demand into better balance with supply, but in the absence of major improvements in supply chains, labour shortages and geopolitical tensions the descent back to the 2% target will be slow In this article Inflation finally slows Past the peak? Housing will make inflation especially sticky Fed has a lot more work to do Rental prices continue to remain elevated 8.3% Annual rate of inflation for April 2022   Inflation finally slows In the immediate aftermath of the pandemic amid plunging energy, air fare and hotel prices, inflation bottomed at 0.1% year-on-year in May 2020 and has been on a rapid climbed to 8.5% ever since. Today though, the annual rate of US consumer price inflation has slowed from 8.5% in March to 8.3% in April. The core rate, which excludes food and energy prices slowed marginally more to stand at 6.2% versus 6.5% in March. While this was in line with our forecasts, the market had been looking for a larger moderation with consensus forecasts of 8.1% for headline CPI and 6.0% for core. The details show energy prices fell 2.7% month-on-month on lower gasoline costs, but this will be fully reversed next month given gasoline is back at all-time highs. Used car prices fell 0.4% MoM, not as much as hoped given the Mannheim car auction data, while apparel fell 0.8% after a strong series of price hikes. Everything else was firm though with food prices rising 0.9% MoM, new vehicles up 1.1% and primary rents (0.6% MoM) and owners' equivalent rent up 0.5% MoM. Airline fares jumped another 18.6% MoM! The chart below shows the contributions and clearly shows there is a moderation in core goods prices (orange bars), but this is being offset to a large extent by the service sector (yellow). Contributions to annual US inflation Source: Macrobond, ING Past the peak? We think that March 2022 will have marked the peak for annual inflation. Mannheim used car auction prices are down 6.4% over the past three months so used vehicle prices should fall further and they have quite a heavy weight of 4.1% of the total basket of goods and services within CPI. The shift in consumer demand from goods, whose availability has been significantly impacted by supply chain issues, towards services should also contribute to a gradual moderation in the rate of inflation. Nonetheless, we remain nervous about the impact from gasoline and the growing price pressures within services. Moreover, substantial declines in the annual rate of inflation are unlikely to materialise until there are significant improvements in geopolitical tensions (that would get energy prices lower), supply chain strains and labour market shortages. Unfortunately, there is little sign of any of this happening anytime soon – The Russia-Ukraine conflict shows no end in sight, Chinese lockdowns will continue to impact the global economy while last Friday’s jobs report showed a decline in the labour force participation rate leaving the economy with 1.9 job vacancies for every unemployed person in America. At the moment consumer demand is firm and businesses have pricing power, meaning that they can pass higher costs onto their customers. This was highlighted by yesterday’s National Federation of Independent Businesses survey reporting that a net 70% of small businesses raised prices over the past three months, with a net 46% expecting to raise prices further. We haven’t seen this sort of pricing power for the small business sector before and we doubt it is any weaker for larger firms. NFIB survey shows firms can continue to pass higher costs onto customers Source: Macrobond, ING Housing will make inflation especially sticky Furthermore, the housing market remains red hot and this feeds through into primary rents and owners’ equivalent rent (OER) components of inflation with a lag of around 12-18 months. Rent contracts are typically only changed once a year when your contract is renewed so it takes time to feed through while OER is a based on a survey question for what you would rent the house you own out for. Homeowners may not necessarily closely follow the month-to-month changes in the housing market so there is a delayed response. As the chart below shows, the housing components, accounting for more than 30% of the CPI basket, are not likely to turn lower soon. No reason to expect an imminent turn in rent components Source: Macrobond, ING Fed has a lot more work to do This situation intensifies the pressure on the Fed to hike interest rates. The central bank wants to take some of the heat out of the economy and bring demand back into better balance with the supply capacity of the US economy. This potentially means aggressive rate hikes and the risks of a marked slowdown/recession. This message was re-affirmed by several officials over the past couple of days and we look for 50bp rate hikes at the upcoming June, July and September FOMC meetings. With the Fed running down its balance sheet we expect the Fed to revert back to 25bp from November onwards with the target rate peaking at 3.25% in early 2023. Even with this Fed action and hopefully some improvements in the supply side story we have doubts that CPI will get back to 2% target before the end of 2023. TagsUS Recession Inflation Federal Reserve   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 US Has Again Benefited From Military Conflicts In Other Parts Of The World, The Capital From Europe And Other Regions Goes To The US

Fast rising U.S. CPI data adds to equity market woes | Saxo Bank

Saxo Bank Saxo Bank 12.05.2022 16:22
Summary:  The larger than expected April U.S. CPI and core CPI reversed the attempt of the equity market to rebound and brought major U.S. equity indices firmly back onto their down trends. The surprising strength in services is particularly worrying and the money market is pricing in 143 bp hikes (i.e. almost three 50 bp hikes) in the next three FOMC meetings. What’s happening in markets? What spooked markets overnight was US inflation rose more than expected, which gives the Fed more ammunition to rise rates (more than they mapped out). Rising rates will cause further carnage, as when rates rise, bond yields tend to rise, which may trigger the US 10-year bond yield, to rise back over 3%,  (which is a better yield than the Nasdaq and S&P500 combined – just think about that for a second). As such the Nasdaq (with an average dividend yield of 0.9%) continued to fall and lost 3.2%. The Tech heavy index is down 28% from its high, and the technical indicators suggest it will likely continue to fall on a weekly and monthly basis, which supports our bearish fundamental view. The S&P500 lost 1.7% on Wednesday, (it has an average dividend yield of 1.66%). The U.S. treasury yield curve flattened 13 bps since yesterday’s CPI release.  The 10-year yield fell 10 bps to 2.89% while the 2-year yield rose 3 bps to 2.64%. It is worthwhile to note that the 10-year yield has fallen 30 bps in just three days from its May 9 high of 3.20%.  The treasury market is sending signals of investors being worried about a sharper slow-down in the U.S. economy.  In Australia, the Aussie share market fell 1% and hit a support level 6,991 points, but energy companies hit new highs. If the ASX200 falls further bellow this level, it could fall 2.2% to the next support (at 6,837 points). The technical indicators, suggest this could occur, with the MACD and RSI suggesting a weekly and monthly could pull back. We ideally need to see better than expected news to break the cycle. All in all though, it’s worthwhile continuing to back those stocks that are outperforming and are likely to outperform this trajectory, with rising cashflow and earnings growth. Just take a look at today’s best performing stocks as an example. In Energy there is Ampol (ALD) up 3.5% with its shares hitting a 2-year high, and Viva Energy (VEA) up 3% to its highest level since 2019. China and Hong Kong equity markets rebounded from their lows. After a weak opening, stocks traded in Hong Kong, Shanghai and Shenzhen rebounded from their lows.  Hang Seng Index (HSI.I) was down  1% and CSI300 (000300.I) recouped all its early loss to close the morning session flat.  Infrastructure related A share, in particular county seat modernization names rallied.  Sunac China, China’s 4th largest property developer, failed to make a coupon payment of a dollar bond.  The news pushed down the shares of other Chinese developers traded in Hong Kong. Asia stocks follow Wall Street down. Japan’s Nikkei (NI225.I) was down 1% in the Asian morning following US CPI release overnight and the slide in US indices overnight. Steel makers like Japan Steel (5631) and Kobe Steel (5406) surged in a big way after earnings results and profit outlook was better than expected. Singapore’s STI Index (ES3) was also in the red. Singtel (Z74) was up over 1% leading on the index as it broadened its 5G network to underground metro line. Chinese electric car maker Nio (NIO) is going to start trading on the Singapore stock exchange form May 20. FX range trading continues. The USD had a hard time reacting to the US inflation print, suggesting range trading patterns may continue for now. While USDJPY slipped below 130 on lower real yields, EUR was still unable to overcome inflation and growth worries even with Lagarde hinting at a rate hike for July on stickier inflation, it dipped slightly to remain above 1.05 support. AUDUSD’s move above 0.7000 was not sustained and NZDUSD returned to sub-0.6300. GBPUSD is making a steadier move below 1.2300 ahead of UK GDP release. What to consider? US inflation may have peaked but the descent will be slow and painful. April U.S. CPI came at 8.3% YoY.  Core CPI, which excludes food & energy,  was 6.2% higher from a year ago.  Reiterating what we said in this piece, while headline inflation may be showing signs of peaking as base effects turn, it is likely to stay at these elevated levels. It was important to note that the 0.6% monthly increase of Core CPI  has brought inflation back to the uncomfortably high 0.5%-0.6% range from October 2021 to February 2022, after a temporary moderation in March.  Another worrying sign was the +0.7% core service price, which was the highest since 1990. Regular rents and owner-equivalent rents rose faster than expected and prices of reopening related spending, such as airfares and hotel lodging rose sharply. The US consumer remains very strong, which gives pricing power to companies. Services inflation will also broaden further, suggesting we are in for a higher-for-longer mode. Take into the mix, a prolonged war, sustained disruptions from China and still-tight labor market. This means Fed’s hawkish rhetoric is set to stay. The money market has moved towards pricing in a 50bp hike in the Sept FOMC on top of the two 50bp moves anticipated for June and July. Oil bulls pin their ears back: Both the Saudi oil Chief and UAE have warned that all energy sectors are running out of capacity, which supports our view that the oil price will hit higher levels over the longer term and also once China is out of lockdown. That being said, Saudi Aramco (ARAMCO) has strengthened regardless, along with many other oil companies, as their cashflows are rising at record paces. ARAMCO has now overtaken Apple as the world’s most valuable company. As we have been saying for some time now, it’s wise to consider revisiting oil stocks and oil ETFs. For instance, the ETF OOO that tracks the oil price, looks like it could break above a key trigger level and re-enter another uptrend, so that’s worth consideration. Also have a look at your favorite large oil stocks with rising earnings growth. Malaysia’s rate hike will be a signal for the region. Bank Negara Malaysia started the rate hike cycle yesterday as we had expected, turning away from its patient stance in April. This comes on the back of a similar rate increase decision from the Reserve Bank of India last week in an out-of-cycle meeting. Ringgit interest rate swaps are now pricing in over 75-basis points of rate hikes over the next 6 months. This similar surge in hawkish pricing is being seen across emerging Asia, suggesting more pain for EM bonds. Potential trading ides that could be worth your consideration? US dollar and US dollar ETFs move higher. As mentioned last week the USD dollar is supported higher along with US dollar ETFS. The Invesco USD Index Bullish Fund ETF closed at a brand new record high overnight. BetaShares USD ETF is also hitting higher levels and looks like. As previously mentioned, also as our head of FX Strategy also said, we are bullish on the USD, as higher volatility and bond yield are expected. This supports the USD and USD ETFs. BTC s in a bearish long term downtrend pressured by long term yield rising. For investors it could be worth considering shorting Bitcoin given rates are likely to continue to rise for now. Buy USDHKD 12-month forward. HKD interest rates are set to rise towards or even go above those of the USD as the Hong Kong Monetary Authority (HKMA) withdraw HKD liquidity in its move to buy HKD against USD.  As the USDHKD spot rate touches 7.85, which is the weak-side convertibility undertaking of the HKMA, the HKMA intervened by buying HKD versus the dollar this morning.  Given the strength of the US dollar and the weak economic sentiment in Hong Kong and the mainland, it is likely that the HKMA will have to continue to intervene and withdraw HKD liquidity further.  Given the ample ammunition that the HKMA has in defending HKD’s Linked-exchange Rate Regime, investors who are interested in betting on persistent weakness in the HKD would be better off to take a long position of USDHKD 12-month forward (currently at around 7.83) which can go up as HKD interest rate rise even when the spot being capped at 7.85.  Key economic releases this week: Thursday: India April CPI, US April PPI Friday: US Univ of Michigan sentiment, US import price index   Key earnings release this week: Thursday: Verbund, KBC Group, Brookfield, Fortum, Siemens, Allianz, Merck, Hapag-Lloyd, RWE, Atlantia, Snam, NTT, SoftBank Group, Aegon, Naturgy Energy, Motorola Solutions Friday: Deutsche Telekom, KDDI, Honda Motor, Alibaba   For a global look at markets – tune into our Podcast.  Source: Saxo Bank
Crypto Crash Shocked Many, The Most Sensational Bit Was The Terra (LUNA) Plunge. Is (USD) US Dollar's Rally About To End? BP Has Decreased Slightly, So Does GBP/USD. This Week Has Been Full Of Events | Swissquote

Crypto Crash Shocked Many, The Most Sensational Bit Was The Terra (LUNA) Plunge. Is (USD) US Dollar's Rally About To End? BP Has Decreased Slightly, So Does GBP/USD. This Week Has Been Full Of Events | Swissquote

Swissquote Bank Swissquote Bank 13.05.2022 10:35
The dust seems to be settling in cryptocurrencies. Terra and Luna are now worth almost nothing but Bitcoin returned past the $30K, which is a sign that the confidence in the broader sector may have not been damaged as much as we first feared. European stocks opened in the green and US futures are pointing to the upside, yet volatility remains high, warnings that the wind could change direction rapidly, and the high volatility environment is more favourable for further losses than sustainable gains. European gas futures gained another 13% yesterday, and the pressure on energy prices remain clearly tilted to the upside   On the geopolitical front, the Europeans are going around their own sanctions against Russia by opening accounts with Gazprom bank to pay the Russian gas in exchange of rubles (!!), but the latest news suggest that Russia is now cutting the German gas as a retaliation to its sanctions. Of course, the Europeans have been quite bad in this poker game - they showed too openly how scared they were to lose the Russian gas that now, Russia is gaining the upper hand. European gas futures gained another 13% yesterday, and the pressure on energy prices remain clearly tilted to the upside. Saudi Aramco has surpassed Apple in terms of market capitalization this week, to become the world’s most valuable company, and the US dollar index extended gains to a fresh 20-year high. Everyone is now wondering when the dollar rally will end! Read next: Altcoins: What Is Polkadot (DOT)? Cross-Chain Transfers Of Any Type Of Asset Or Data. A Deeper Look Into Polkadot Protocol | FXMAG.COM   Watch the full episode to find out more! 0:00 Intro 0:32 The dust settles in cryptocurrencies 2:22 Market update 3:13 Energy remains upbeat... 4:21 ... and Aramco is now the world's biggest compagny 5:00 High vol hints at further headache 6:34 Meme pop up 7:28 Dollar extends gains, raising bets that it's soon time for correction! 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.
Czech Inflation Hits Lower Than Expected Level. Could Czech National Bank Hike Again?

Gold Price (XAUUSD) Nears 3-Month Low, The US Dollar (USD) Performance Agains (EUR) Euro Makes EUR/USD Decrease 2016's Lows And (BTC) Bitcoin Price Is Back Above $30K | Conotoxia

Conotoxia Comments Conotoxia Comments 13.05.2022 11:43
Gold held near three-month lows near 1,825 USD per ounce on Friday and is falling for the fourth week in a row from 1990 USD. One factor for the decline in gold prices could be the strengthening U.S. dollar, which seems to have stabilized near the 20-year high reached on Thursday. The USD strengthening may have followed the release of US consumer and producer inflation data, which seems to reinforce expectations of aggressive interest rate hikes by the Federal Reserve. This, in turn, may raise concerns about a weaker global economic outlook, helping to boost USD demand. The recent strengthening of the USD may also be related to the divergence in monetary policy on both sides of the Atlantic Recall that the U.S. core CPI remained near a 40-year high of 8.3 percent in April, while the core CPI also exceeded expectations at 6.2 percent, fueling fears that high price levels may persist. Thus, markets are anticipating increases of 50 basis points at each of the next two Fed meetings in June and July. Read next: Altcoins: What Is Polkadot (DOT)? Cross-Chain Transfers Of Any Type Of Asset Or Data. A Deeper Look Into Polkadot Protocol | FXMAG.COM This could also be significant for the EUR/USD major pair, which approached the 1.0350 level this week, its lowest level since December 2016. The recent strengthening of the USD may also be related to the divergence in monetary policy on both sides of the Atlantic. The Fed is moving towards aggressive hikes, while the European Central Bank may raise interest rates by 50-75 basis points in total by the end of the year. Thus, the scale of divergences seems to be very large. Bitcoin rebounded yesterday from its lowest level in almost 17 months and crossed the $30,000 mark today In addition to gold and the dollar, attention should again turn to the cryptocurrency market and towards stock market indices, where in both cases an attempt to defend against possible further declines may be underway. Bitcoin rebounded yesterday from its lowest level in almost 17 months and crossed the $30,000 mark today. Despite this, the world's most popular and widely used cryptocurrency is at this point on its way to its worst week in four months, falling more than 10 percent. Yesterday, the market additionally saw a likely panic as the tether to USD exchange rate departed at 1:1. At the apogee of fears for the collapse of the largest stablecoin, the cryptocurrency market seemed to have reached its weekly lows. Currently, USDT is trying to get back to the 1:1 exchange rate, and the rest of the market seems to be stabilizing. Read next: (BTC) Bitcoin’s Price Tanks Along With Equities. U.S. Stock Market Awaits CPI Report, Poor Performance From The FTSE 100. Daniel Kostecki, Director of the Polish branch of Conotoxia Ltd. (Forex 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. 80.77% 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.
Central Banks - What's Ahead?| Federal Reserve (USD), European Central Bank (EUR), Bank Of Japan (JPY), Bank Of England (GBP) | ING Economics

Central Banks - What's Ahead?| Federal Reserve (USD), European Central Bank (EUR), Bank Of Japan (JPY), Bank Of England (GBP) | ING Economics

ING Economics ING Economics 13.05.2022 18:57
Our team outline their forecasts for central banks, as policymakers continue to make changes in interest rates amid global inflation concerns In this article Federal Reserve European Central Bank Bank of England Bank of Japan Bank of Canada Reserve Bank of Australia Riksbank Norges Bank Swiss National Bank National Bank of Hungary Czech National Bank National Bank of Poland National Bank of Romania Central Bank of Turkey People's Bank of China Reserve Bank of India Bank of Korea Bank Indonesia Central banks around the world are grappling with high inflation Learn more on ING Economics Developed markets: Our calls at a glance Source: ING Federal Reserve Our call: 50bp rate hikes in June, July and September before switching to 25bp in November, December, and February 2023 as quantitative tightening (QT) is felt. Rate cuts in 2H 2023. Rationale: Domestic demand remains strong and in this environment businesses are able to pass higher energy, commodity, labour and supply chain-related costs onto their customers. The Fed is seeking to bring demand into better balance with the supply capacity of the economy. But moving into restrictive territory means slower growth and the risk of an adverse reaction and we expect the Fed to move to a more neutral position in late 2023. Risk to our call: Domestic demand is resilient with wage rises accelerating amid ongoing labour shortages, risking higher, more prolonged, inflation. Conversely, the economy reacts badly to rate hikes (the housing market is vulnerable) and recession prompts a more rapid reversal in Fed policy. James Knightley European Central Bank Our call: Rate hike in July and September plus a possible third hike at the turn of the year before pausing. Rationale: Uncertainty surrounding the economic outlook remains high but higher inflation for longer, additional inflationary pressure still in the pipeline, and fears that the window to act could be closing rather soon pushes the ECB to act earlier. Official comments since the late April ECB meeting suggest that there is growing consensus to normalise monetary policy, i.e. ending net asset purchases and the era of negative deposit rates. Only the timing is still under discussion. Looking beyond normalisation, however, high government debt, the need for investments, a potential loss in competitiveness, and prospects of easier monetary policy elsewhere argue against a series of rate hikes.  Risk to our call: A strong economic rebound after any end to the war in Ukraine and wage pressures building on the back of reshoring and labour shortages could keep the hawks at the ECB in the lead and push for further rate hikes in 2023. Carsten Brzeski Bank of England Our call: Rate hike in June and August before a pause. Rationale: With four rate rises under its belt, the committee has become more cautious and has hinted that markets are overestimating future hikes. Its latest forecasts showed that, if it hiked roughly six further times, inflation would be well below target in two to three years' time. While markets have been assuming the BoE’s hike profile will look similar to the Fed’s, the UK’s more ‘European’ growth outlook in the near term suggests a less imminent need for aggressive tightening. Risk to our call: Wage pressures continue to build, so if the growth story turns out to be less lacklustre than feared, the hawks on the committee may well push for a higher terminal rate by early 2023. Like our Fed call, that would also inevitably bring forward the date of the first rate cut. James Smith Bank of Japan Our call: Bank of Japan will maintain an accommodative policy stance. Rationale: CPI will rise up and stay above 2% for a while, but BoJ will downplay it as cost-push driven inflation that will prove temporary. Market expectations on a possible policy change were killed after last month’s BoJ meeting, and no action change before year-end is expected. Risk to our call: If a weak Japanese yen hurts the economy, then the bank may revisit its monetary policy stance, but that's more likely once Governor Haruhiko Kuroda retires next April. Min Joo Kang 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
Chart of the Week : An ECB rate hike is imminent

How Is Euro Performing Against US Dollar (EUR/USD)? (EUR) Euro under pressure, falls below 1.04 | Oanda

Kenny Fisher Kenny Fisher 13.05.2022 16:15
The euro has stabilized on Friday, after a dreadful Thursday in which EUR/USD fell 1.26%. Russian announces sanctions The euro continues to struggle and is trading at lows last seen in January 2017. The Ukraine war has taken a bite out of the eurozone economy and sent the euro tumbling. The latest development weighing on the euro was Russia’s announcement of sanctions on some European gas importers, at a time when the EU is trying to garner support for a ban on Russian oil. Germany has said that it could manage without Russian oil, but the main stumbling block to the ban appears to be Hungary, which is very dependent on Russian energy supplies. The euro has broken through major support lines at 1.08 and 1.05, and if it breaches the 1.03 line, we could see move towards parity with the dollar. Read next: Altcoins: What Is Polkadot (DOT)? Cross-Chain Transfers Of Any Type Of Asset Or Data. A Deeper Look Into Polkadot Protocol | FXMAG.COM The wobbly euro hasn’t received any support from the ECB, which has been slow to shed its dovish policy. After years of monetary easing, ECB members are becoming more vocal about the need for tighter policy, and ECB President Christine Lagarde said earlier this week that QE would end in the third quarter, and a rate hike would follow “some time” after that. We could see a rate increase as early as July, although it’s unclear if the ECB will launch a rate cycle with a hike of 25 or 50 basis points. Read next: Stablecoins In Times Of Crypto Crash. What is Terra (UST)? A Deep Look Into Terra Altcoin. Terra - Leading Decentralised And Open-Source Public Blockchain Protocol | FXMAG.COM The US dollar has shined against the majors, buoyed by an aggressive Federal Reserve. The April US inflation report indicated that expectations of an inflation peak were premature, as CPI fell only slightly, from 8.5% to 8.3%. Fed Chair Powell has signalled that the Fed will deliver 0.50% rate increases in June and July, as the Fed is focused on lowering inflation, which has hit a 40-year high. There has been some talk of a 0.75% hike, but it is far more likely that the Fed will stick with 0.50% moves, hoping that they can do the trick and wrestle down inflation. EUR/USD Technical 1.0398 has switched to resistance. It is a weak line and could see further action during the day. Above, there is resistance at 1.0473 There is support at 1.0321 and 1.0246     This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.
Economic Calendar For July 21st. EUR/USD And GBP/USD - Trading Ideas

(GBP) British pound’s woes continue | Oanda

Kenny Fisher Kenny Fisher 13.05.2022 15:29
The British pound can’t seem to find its footing. GBP/USD hasn’t had a daily winning session since May 4th and closed on Thursday below the 1.22 line, for the first time since May 2020. In the European session, the pound is trading quietly at the 1.22 line. Recession fears, negative growth weighing on sterling The UK treated the markets to a data dump on Thursday, but the news was not positive. UK growth for Q2 showed a 0.8% gain, down sharply from 1.3% in Q4 of 2020 and missing the 1.0% estimate. In March, the economy contracted by 0.1%, compared to a 0.1% gain in February and shy of the estimate of 0.0%. Investors never like to hear the phrase ‘negative growth’ and the March GDP report pushed the pound lower on Thursday.  There was more bad news as Industrial Production, Manufacturing Production and Business Investment all slowed down and posted negative readings. Read next: Altcoins: What Is Polkadot (DOT)? Cross-Chain Transfers Of Any Type Of Asset Or Data. A Deeper Look Into Polkadot Protocol | FXMAG.COM The UK continues to grapple with spiralling inflation, and the BoE has warned that things could get even worse. CPI hit 7%  The BoE has raised rates to 1.0%, a 13-year high, but it will take time for higher interest rates to take a bite out of inflation. At last week’s policy meeting, the central bank warned that inflation could top 10% and there was the danger of a recession. The pound tumbled over 2% in response and has fallen another 125 points since then. Risk is tilted to the downside for the pound, which has tumbled about 7% since the beginning of April. Fed’s Powell confirmed by Senate Fed Chair Powell was overwhelmingly nominated for a second term on Thursday by the US Senate. Powell appears committed to delivering 0.50% rate hikes at the next two meetings, although there has been talk of a super-size 0.75% hike in order to curb soaring inflation. US inflation finally slowed in April, but the reading of 8.3% (8.5% prior) was hardly what the markets were looking for, and talk of an “inflation peak” proved to be premature. Read next: Stablecoins In Times Of Crypto Crash. What is Terra (UST)? A Deep Look Into Terra Altcoin. Terra - Leading Decentralised And Open-Source Public Blockchain Protocol | FXMAG.COM GBP/USD Technical 1.2199 remains under pressure in support. Below, there is support at 1.2056 GBP/USD faces resistance at 1.2272 and 1.2418 This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.
(SPX) S&P 500 Trades Near $4000 And Dow Jones (DJI) Is Not Very Far From $32K. Some May Say US Stock Markets Make Their Minds Flash Back To 2008 | FxPro

(SPX) S&P 500 Trades Near $4000 And Dow Jones (DJI) Is Not Very Far From $32K. Some May Say US Stock Markets Make Their Minds Flash Back To 2008 | FxPro

Alex Kuptsikevich Alex Kuptsikevich 16.05.2022 10:07
US stock markets closed last Friday with a substantial and widespread gain. Do we see a dead cat bounce or the beginning of a recovery? So far, there are more reasons to suspect the former. Technically, the S&P500 has managed to bounce back from a bear market territory and has temporarily returned to levels above 4000, while Dow is above 32000 The CNN Fear & Greed Index was down to 7 last week, rebounding to 12 by Monday. Current levels are still in extreme fear territory, but a rebound from multi-month lows often heralds a return of buyers who think the emotional sell-off has gone too far. Technically, the S&P500 has managed to bounce back from a bear market territory and has temporarily returned to levels above 4000, while Dow is above 32000. However, in our view, we saw positional profit-taking on Friday, but not the end of a downward trend. The weekly chart’s S&P500 and Dow Jones indices have not yet reached the oversold area where they appeared attractive for buying in March 2020. Read next: (TRX) TRON USD Decentralised Blockchain Platform That Focuses On Entertainment And Content Sharing. Altcoins: A Deep Look Into The TRON Network | FXMAG.COM Particularly worrying is the comparatively quiet nature of the sell-off. The market volatility index VIX remains the only one of the seven “Fear and Greed” components in neutral territory. The latter signals a systematic sell-off of assets rather than a panic flight. This is not a straightforward approach for the market to change. Treasury and Fed officials are often willing to flood the markets with liquidity in cases of extreme volatility. Still, without it, they see what is happening as a natural process in which it is harmful to interfere. So far, we can see the intention of a 50 point hike in the next two meetings in June and July after a similar move in May at the same time as the asset sales from the balance sheet The technical picture in the US indices now more closely resembles the first half of 2008. That means that the climax of the panic (October 2008) and the bottom (March 2009) are yet to come. This is also supported by the Fed’s rhetoric that hopes to avert an economic recession through policy tightening is prevented. So far, we can see the intention of a 50 point hike in the next two meetings in June and July after a similar move in May at the same time as the asset sales from the balance sheet. Read next: Altcoins: What Is Polkadot (DOT)? Cross-Chain Transfers Of Any Type Of Asset Or Data. A Deeper Look Into Polkadot Protocol | FXMAG.COM Monetary tightening locally looks like a breeding ground for bears, who might target the area below 30000 in the Dow Jones, trying to close the gap near 28300 from November 2020. For the S&P500, the bears’ ultimate target might be the 3300-3400 area, where the pre-pandemic peak and the starting point of the rally in November after the Biden victory are concentrated. Perhaps only by zeroing in on all the coronavirus and retail-associated gains in equities and taking inflation into negative territory could we see an inflow of long-term capital into equities.
The US Labour Market...

Solid US retail sales point to growth rebound and more Fed hikes | ING Economics

ING Economics ING Economics 17.05.2022 22:13
The US retail sales report for April is very solid and points to a willingness amongst households to run down accumulated savings to maintain lifestyles at a time when inflation is hurting real income growth. It fully backs the case for a sharp recovery in GDP growth in 2Q and a series of 50bp rate hikes from the Federal Reserve Learn more on ING Economics Restaurants and dining contributed positively to US April retail sales 29% Increase in US retail sales since January 2020   Households happy to spend US retail sales rose 0.9% month-on-month in April, not quite as strong as the 1% consensus expectation, but there were substantial upward revisions for March to 1.4% MoM growth from the 0.5% rate initially reported. Moreover, the "core" figures that better match up with broader consumer spending trends were much better than expected. The control group that excludes volatile food, gasoline, food service and building material rose 1% (consensus 0.7%) after a 1.1% increase in March (originally reported as -0.1%). The details show motor vehicle and parts sales rose 2.2%, which is quite disappointing given unit auto sales data posted a 7.2% MoM rise to 14.29mn in April and prices were significantly higher. Maybe we will see more upward revisions down the line or timing issues may mean they feed through into May’s figure. Gasoline station sales fell 2.7% due to slightly lower prices – remember the retail sales report is a nominal dollar value figure. Food & beverage stores, building materials and sporting goods all saw modest falls, but this was more than offset by a 4% increase in miscellaneous stores, a 2.1% increase in non-store retailers, a 1.1% increase at department stores and a 2% increase in eating and drinking place. US retail sales performance by component Source: Macrobond, ING Households are prepared to run down some savings This is an impressive outcome given consumer confidence has been hit hard by the fact wages are not keeping pace with the increases in the cost of living. Nonetheless, employment is rising and household wealth has increased substantially during the pandemic thanks to accumulated savings (in part down to huge fiscal support) and soaring asset prices. Today’s report suggests household appear content to run down some of those savings to maintain lifestyles. People movement has fully recovered after Omicron wave Source: Macrobond, ING 3%+GDP growth on the cards for 2Q 2022 This is also borne out by data showing big improvement in people movement around retail and recreation areas (see chart above on google mobility data), surging restaurant dining and a recovery in air passenger numbers following the Covid Omicron wave. This gives us more confidence in our 2Q GDP forecast of 3-3.5% annualized growth. In an environment of 3.6% unemployment and 8.3% inflation this supports the case for a series of 50bp rate hikes from the Federal Reserve. TagsUS Spending Retail sales GDP 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
Norges Bank And Another Hike Rate To Propel The Krone?

(WMT) Walmart Price Dropped Down As The Earnings Turned Out To Be Quite Low. Jerome Powell (FED) Seems To Be Ready To Get His Foot Down Regarding Monetary Policy And Boost US Dollar (USD) Further | Saxo Bank

Saxo Bank Saxo Bank 18.05.2022 09:10
Summary:  Risk sentiment remained strong in the US yesterday, as the major indices closed strongly at a more than one-week high on a day that saw both a strong US Retail Sales report for April and largest US retailer Walmart’s stock punished by the most in a single day since 1987 on a weak profit forecast. Fed Chair Powell said that the Fed won't hesitate to raise rates above neutral if necessary, helping to lift the entire US yield curve and perhaps helping to cool sentiment overnight.   What is our trading focus? Nasdaq 100 (USNAS100.I) and S&P 500 (US500.I) - S&P 500 futures pushed higher yesterday closing the recent short-term selloff cycle that started last Monday but are trading a bit softer this morning around the 4,075 level. US retail sales yesterday showed that the US consumer is still alive and comments from Home Depot’s CEO suggest that the US housing market is still strong despite recent higher mortgage rates with tight supply of homes to last several years. Overall, the dynamics are still the same with tighter financial conditions ahead and hawkish comments yesterday from several Fed members suggest our defensive stance on US equities is correct. Stoxx 50 (EU50.I) - Stoxx 50 futures closed above its 50-day moving average that we highlighted as the key focus point for the market in yesterday’s quick take. This is the first time since 20 April when technology stocks were staging a comeback with risk appetite before everything turned lower again. If Stoxx 50 futures can manage to stay above this moving average, there might be enough energy for a test of the 3,800. European car sales figures are out this morning and they are still weak which might add a bit of negative pressure among carmakers and car parts suppliers. EURUSD – strong risk sentiment and a weaker US dollar clearly go hand in hand, as yesterday’s market action demonstrated, but the euro got an extra boost from ECB governing council member Klaas Knot saying that the ECB shouldn’t exclude 50-basis point hikes from the menu of options. This drove a strong boost in ECB rate expectations, with end-2022 now priced for a +0.45% policy rate, 10 bps higher than the previous day. EURUSD traded up through 1.0500, a bullish reversal as that was a sticking point on the way down. Still, very heavy lifting would be needed to turn the bearish tide, with next resistance at the prior pivot higher near 1.0640, while more like 1.0800-1.0850+ would be needed to suggest a structural reversal. A new sell-off in risk sentiment will test the degree to which the latest hawkish tile from a growing number of ECB members weighs on the EURUSD exchange rate. USDJPY and JPY pairs – watching JPY crosses and USDJPY closely after US treasury yields jumped yesterday, especially at the long end of the curve, to which the JPY is traditionally most sensitive. Japan’s Q1 GDP estimate out overnight was better than anticipated as nominal GDP rose +0.1% and the economy (in real terms) contracted less than expected. In the JPY crosses, we have seen a wild ride on the recent swings in risk sentiment that now have pairs like EURJPY, AUDJPY and GBPJPY back near important retracement levels after steep sell-offs last week. These will likely tilt lower if bond yields stay calm and we see renewed risk aversion. Otherwise, the Bank of Japan will likely only come under fresh pressure to alter its policy if the USDJPY rate jumps to strong new highs and, for example, if global oil prices do likewise, increasing cost-of-living in Japan, etc. Gold (XAUUSD) trades lower after Fed chair Powell said the Fed will keep raising rates until inflation is brought under control. His comments helped lift inflation adjusted US Treasury yields with the 10-year real yield rising to 0.25%. The weaker dollar yesterday also helped boost risk appetite with stocks being the main recipients of these flows. For now, the bears remain in control, especially after the rejection yesterday at $1838, the 200-day moving average on XAUUSD. Silver (XAGUSD) meanwhile enjoyed some tailwind from recovering industrial metals with the XAUXAG falling to 83.90 after hitting a 22-month high of 88.5 last week. Crude oil (OILUKJUL22 & OILUSJUN22) tried but failed to break higher on Tuesday after the tailwind from a potential pickup in Chinese demand, as lockdowns begin to lift, was being offset by hawkish comments on interest rates from Fed chair Powell, and news that the US may ease some economic sanctions on Venezuela, a 2m b/d producer in 2017 reduced to just 0.7m b/d at present. The bid, however, returned late in the day when the API published a bullish inventory report that pointed to a continued and worsening tightness in the US crude and gasoline market after they saw stocks falling by 2.4m barrels and 5.1m barrels, respectively. The EIA will release its official report later Wednesday. Dutch TTF benchmark gas (TTFMM2) remains rangebound within a €85 to €110 range despite the fact Europe's gas inventories are rebuilding at the fastest rate on record as the region's buyers outbid competitors from Asia to acquire as much gas as possible at any price. According to Gas Infrastructure Europe total stocks have since the March low climbed by 202 TWh to 446 TWh, and at this rate will surpass the five-year average within the next few weeks. Asia’s LNG buyers have been less active than normal, driven by a combination of stocks being allowed to run down due to soaring prices and lower Chinese demand as its coronavirus outbreaks and lockdowns take its toll on demand for gas. US Treasuries (TLT, IEF) - sold off yesterday and took the 10-year Treasury benchmark yield sharply back higher toward 3.00% in the wake of strong US Retail Sales data and amidst positive risk sentiment. If the 10-year yield continues higher after yesterday’s 10 basis point jump, it is worth nothing that the recent top of 3.2% was within a few basis points of the 2018 high for the cycle at 3.26%. Meanwhile, the 30-year T-bond yield closed at 3.185, the second-highest daily close for the cycle, with an intraday cycle high of 3.31%. The US Treasury is set to auction 20-year T-notes later today. What is going on? Fed Chair Powell says “won’t hesitate at all” to take Fed Funds rate above neutral after saying that “what we need to see is inflation coming down in a clear and convincing way, and we’re going to keep pushing until we see that.” Powell admitted that taking levels above neutral could bring some pain and a rise in the unemployment rate. End-2022 Fed expectations rose about 10 basis points yesterday and sit at 2.82”, just shy of the 2.88% cycle highs from before the May 4 FOMC meeting, at which Powell discouraged the idea of hiking more than 50 basis points at a time. UK Apr. CPI out this morning in line with expectations. The headline year-on-year reading was 9.0% vs. 9.1% expected and 7.0% in March, while the Core CPI was 6.2% as expected and vs.5.7% in Mar. The month-on-month headline CPI was 2.5% vs. 2.6% expected and 1.1% in March. Walmart, the world’s largest retailer, suffers worst single-day price drop since 1987 as it cut its profit forecast, citing margin pressure concerns due to inflation, and the CEO vowing that “price leadership is especially important right now.” Home Depot gains on strong Q1 and better than expected Q2 outlook. The US home improvement retailer gained yesterday on a surprise Q1 comp sales of +2.2% y/y vs est. -2.4% y/y and saying on the conference call that Q2 was off to a strong start; the company says it is not seeing the consumer holding back and sees tight housing inventory lasting for five years. Japan Q1 GDP contracted less than expected. Japan’s Q1 GDP showed a contraction of 1% q/q sa following a 3.8% expansion in Q4, but it was still better than expected. The omicron wave and supply drags created pressures, but the outlook for Q2 is appears to be improving as the economy reopens and pent-up demand boosts consumer spending. UK unemployment drops to a 50-year low of 3.7%. For the first time since records, job openings (1.3 million) outnumber those out of work. In addition, the number of payrolled employees grew by 121,000 between March and April, to 29.5 million. A lot of people have chosen salaried employment over self-employment due to fear of recession and higher cost of living. Wages continue to move upward. But this is not enough to cope with inflation. Pay, excluding bonuses, rose by 4.2 % between January and March while cost of living was at 7 % in March and is expected to jump to 9 % in April. The situation is becoming unbearable for many households. We believe that the Bank of England will have no other choice but to speed up the interest rate hike cycle before pausing perhaps after the summer. As expected, U.S. April retail sales show the U.S. domestic economy is very resilient. Retail sales were out at 0.9 % versus the expected 1 %. After adjusting for monthly inflation, it was at 0.6 %. This is still very solid. There is no sign of imminent recession in the United States when we look at the U.S. consumer. Peloton sees twice the demand for its $750 bond offering. The struggling health company has seen strong demand for its bonds in a sign that risk appetite is still intact in the high yield debt market in the US. Australian wage growth in Q1 slightly softer than expected. The report showed Australian wages rising only +0.7% QoQ and +2.4% YoY vs. +0.8%/+2.5% expected, respectively and vs. +2.3% YoY in Q4. What are we watching next? Earnings Watch. Today’s focus is Tencent given the latest support from the Chinese government including comments yesterday from the Vice Premier signaling support for platform companies. Consensus is looking for Q1 revenue of CNY 141.1bn up 4% y/y and EPS of CNY 2.77 down 5% y/y. SQM is also reporting today and is one of the world’s leading lithium miners earning 41% of its profits from lithium and 59% from fertilizers and plant nutrients including potassium, and as well as other agricultural sector products. Both lithium and fertilizers are seeing high prices due to tight supply-demand situation. Today: Tencent, Experian, Burberry, Singapore Airlines, Cisco, Lowe’s, Target, Analog Devices, TJX, Synopsys, Copart, Trip.com, SQM Thursday: Xiaomi, Generali, National Grid, Applied Materials, Palo Alto Networks, Ross Stores, DiDi Global Economic calendar highlights for today (times GMT) 0800 – South Africa 1230 – US Apr. Housing Starts and Building Permits 1230 – Canada Apr. CPI 1230 – Canada Apr. Home Price Index 1430 – EIA's Weekly Crude and Fuel Stock Report 2000 – US Fed’ Harker (Non-voter) to speak 2350 – Japan Apr. Trade Balance 0130 – Australia Apr. Employment Data Follow SaxoStrats on the daily Saxo Markets Call on your favorite podcast app: Apple  Spotify PodBean Sticher Source: Saxo Bank
Podcast: BoJ losing control. Geopolitical risks for Tesla

Fed hawks may not let the equity rally extend! | MarketTalk: What’s up today? | Swissquote

Swissquote Bank Swissquote Bank 18.05.2022 10:58
The US equity markets rallied yesterday after taking over a positive session from the Europeans. However, the US retail sales data didn’t necessarily hint at slowing spending, and Jerome Powell didn’t say things that investors would normally like to hear. Powell’s words didn’t hit the investor appetite immediate, but mixed activity in US futures hint that appetite may not remain as strong in the coming sessions. In the FX, the US dollar eased from two-decade highs. Gold trades around the $1800 mark and crude oil bumps into solid topsellers approaching above the $115pb   The EURUSD rebounded past the 1.05 and Cable traded past 1.24. Yet, prospects of higher US rates, and the positive divergence between the Fed and other central banks should prevent the dollar from falling significantly. Eurozone’s final inflation data is due today, and should confirm a rise to 7.5% in April, an eye-watering number which should keep the European Central Bank (ECB) hawks and the euro bulls alert, and help the single currency consolidate its latest gains against the US dollar. Gold trades around the $1800 mark and crude oil bumps into solid topsellers approaching above the $115pb. On the earnings front, the US retailers reveal mixed earnings but they all agree on one thing: inflation impacts activity. Watch the full episode to find out more! 0:00 Intro 0:22 Market update 2:06 Jerome Powell is decided to bring inflation down! 2:48 High EZ inflation to keep euro bulls alert 3:41 ...but the dollar may not ease much! 4:42 Gold under the pressure on rising rates 5:31 Crude oil bumps into topsellers past $115pb 6:47 US retailers reveal mixed results, but agree that inflation is an issue Read next: Altcoins: What Is Monero? Explaining XMR. Untraceable Cryptocurrency!? | FXMAG.COM 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 Stocks: S&P 500 Decreased By 0.21%, Nasdaq Gained 0.25%

What are investors afraid of? | Conotoxia

Conotoxia Comments Conotoxia Comments 18.05.2022 15:42
As it does every month, Bank of America conducts a survey of fund managers with nearly $900 billion AUM. Its results in the May edition seem very interesting, indicating the risks and actions of institutional investors. According to the survey, investors appear to be hoarding cash as the outlook for global economic growth falls to an all-time low and fears of stagflation increase. Cash holdings among investors have reached their highest level since September 2001, according to the report. A survey this month of investors managing $872 billion also found that hawkish central banks are seen as the biggest risk to financial markets. A global recession came in second, and concerns about stagflation rose to their highest level since 2008. The findings could show an uninspiring outlook for global equities, which are already on track for their longest weekly losing streak since the global financial crisis, as central banks turn off the tap on money at a time of stubbornly high inflation. The BofA report said the stock market may be in a bear market, but the final lows have not yet been reached. More interest rate hikes by the Federal Reserve are still expected, and the market is not yet in full capitulation. The BofA survey also found that technology stocks are under the most pressure since 2006. Overall, investors were most attuned to holding cash, and are least inclined to go for: emerging market stocks, eurozone stocks and bonds at the moment. The report also found that the so-called most crowded trades at the moment are long positions on oil (28%), short positions on U.S. Treasury bonds (25%), long on technology stocks (14%), and long on bitcoin (8%). According to the respondents, the value to which the S&P 500 index would have to fall for the Fed to start refraining from further monetary policy tightening falls at the level of 3529, i.e. about 12% below the current level. Daniel Kostecki, Director of the Polish branch of Conotoxia Ltd. (Forex 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. 80.77% 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.
Powell Touched On The Topic Of The Digital Dollar And The Crypto Industry

S&P 500 (SPX), Dow Jones (DJI), Nasdaq And Walmart (WMT) Falled, But Probably Not In Love | Conotoxia

Conotoxia Comments Conotoxia Comments 19.05.2022 12:27
Fear of a recession may be one of the reasons pushing risky asset prices lower. Yesterday alone, the Dow Jones fell 3.57 percent and the S&P 500 fell 4.04 percent, its biggest one-day drop since June 2020. The Nasdaq Composite was off 4.73 percent. The U.S. economy is mainly spinning thanks to consumption and largely living on credit Another turnaround on Wall Street came after the release of the results of U.S. big-box retail chains such as Wal-Mart and Target. The share price of the former fell by almost 25 percent from its April peak, and the latter by about 40 percent. Why is this important? The U.S. economy is mainly spinning thanks to consumption and largely living on credit. Decrease in consumption by higher inflation, as shown by the results of companies and their comments to the results, can therefore be a wake-up call that the US economy will no longer grow so rapidly. As a result, there has been an even greater fear of recession, which in the current inflationary environment brings to mind the stagflation of the 70s-80s in the United States. Add to that rising lending rates through interest rate hikes, broken supply chains and an expensive U.S. dollar eroding export profits. According to some, this is the perfect set of factors that could push the market further into the embrace of a waking bear market. Investors also might be looking for the point at which they believe the dollar and U.S. bonds have priced in a full cycle of rate hikes before the Fed In a more optimistic scenario, however, they may predict that inflation will peak in the second or third quarter of this year and then begin to decline starting in the fourth quarter of 2022. At that point, consumers could breathe a sigh of relief as prices would still rise, but no longer as fast as before. The same could be true for the stock market, which statistically, in cycles of interest rate hikes, seemed to create corrections in the first reaction and then continued earlier trends. Investors also might be looking for the point at which they believe the dollar and U.S. bonds have priced in a full cycle of rate hikes before the Fed. At that point, they could switch from the dollar to bonds or stocks, which could also put the brakes on the declines currently seen. Read next: Altcoins: What Is Monero? Explaining XMR. Untraceable Cryptocurrency!? | FXMAG.COM Since the beginning of the year alone, the Nasdaq index has fallen by 27 percent, the S&P 500 by more than 18 percent, and the Dow Jones by less than 15 percent. U.S. 10-year bonds have shrunk by 8 percent, and gold has fallen by 0.5 percent. Meanwhile, the U.S. dollar has gained about 8 percent. This could quite clearly show that the cash phase of the cycle may be underway. It may be followed, according to theory, by the bond phase of the cycle and only the equity phase of the cycle. Daniel Kostecki, Director of the Polish branch of Conotoxia Ltd. (Forex 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. 80.77% 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.
The Japanese Yen Has The Worst Performer Among The G-10 Currencies

(EUR/USD, EUR/GBP) Market Participants Betting On A More Hawkish ECB, A Dovish BoJ Weighs On The Safe-Haven Currency (USD/JPY) - Good Morning Forex!

Rebecca Duthie Rebecca Duthie 19.05.2022 12:39
Summary: The market sentiment for the EUR/USD currency pair turns mixed. Inflation and economic data weighing on the GBP. BoJ continues to fight rising interest rates. AUD strengthens amidst favourable unemployment data. The market seems to be favouring the Euro for a change The market is signalling mixed market sentiment for this currency pair. The U.S dollar lost ground to the EUR during Thursdays early trading, however, the demand for the safe-haven asset remains steady due to investor risk sentiment still being fragile. Earlier this week the Fed announced they would push interest rates as high as necessary to fight the surging inflation. On Thursday the market is waiting for the minutes from the latest European Central Bank (ECB) meeting to be released, hoping there will be an indication of a tightening in monetary policy. Read next: (EUR/USD) Hopes Of A Hawkish ECB Shows Favour To The Euro, (EUR/GBP) UK CPI Inflation Data Knocks The Pound Sterling - Good Morning Forex!  This begs the question: despite the Fed's already hawkish monetary policy, why is the market not pricing in much for the hawkish Fed, but pricing in a lot for the European Central Bank (ECB) ? EUR/USD Price Chart BoE and ECB expected to raise interest rates The market is reflecting a mixed market sentiment on Thursday. Earlier in the trading week, UK economic data releases weighted on the value of the Pound Sterling, global investor sentiment and the current equity bear market are both aspects that could mean further losses for the GBP. Earlier on in the trading week, the GBP gained on both the Euro and the US Dollar, but a midweek sentiment turn around has bought the Pound Sterling back down. Both the ECB and the Bank of England (BOE) are expected to raise interest rates. EUR/GBP Price Chart Follow FXMAG.COM on Google News! USD continues to beat the JPY The Japanese yen seems to be an underperformer in the past week, perhaps this is due to the rising U.S yields by the Fed amidst the Bank of Japan (BoJ) fighting against tightening their monetary policy. Should the market face a big risk-off sentiment, the JPY might see some gains, however in this currency pair, it may not be noticeable due to the USD also being seen as a safe-haven currency. USD/JPY Price Chart AUD regains some investor confidence Market sentiment for this currency pair is bullish. Investor confidence has increased in the Australian Dollar after the unemployment rate for April came in at 3.9% which not only exceeded market expectations but is also the lowest rate since the 1970s. AUD/JPY Price Chart Read next: (EUR/USD, EUR/GBP) Euro Strengthens In The Wake Of Villeroys Comments On Monday, (AUD/JPY), (GBP/USD) Pound Sterling Showing Strength - Good Morning Forex!   Sources: finance.yahoo.com, dailyfx.com, poundsterlinglive.com
The Japanese Yen Has The Worst Performer Among The G-10 Currencies

FX Daily: Activity currencies remain under pressure | ING Economics

ING Economics ING Economics 19.05.2022 09:56
Wednesday was another bad day for equities where the MSCI World equity index fell another 3%. The fact that expectations for Fed policy tightening remain intact is a sign that investors appreciate that tackling inflation is now the priority for central banks. This continues to favour the anti-cyclical dollar, but also now the Japanese yen Source: Shutterstock USD: The cavalry ain't coming Yesterday saw the S&P 500 sell off 4%, led by consumer stocks. The fact that some of the biggest main street names are under pressure on the back of profit warnings is a reminder that the squeeze on real incomes is starting to hit home. Over prior decades, decades associated with very dovish Fed policy, one might have expected this magnitude of an equity market sell-off to put a dent in Fed tightening expectations - or expectations that the Fed would come to the equity market's rescue. In fact, the Fed funds futures strip barely budged yesterday. We read this as a sign that investors now appreciate that tackling inflation is the number one priority of the Fed - and the Fed will not easily be blown off course. At the same time, we are still only hearing concerns from Chinese policymakers about the slowdown, rather than any promise of major fiscal support. And one could argue what would be the use of major fiscal support if workers and residents remain trapped in Covid lockdowns? For that reason, it seems very difficult to argue that renminbi depreciation has run its course and we cannot rule out USD/CNY pushing through the 6.80 area over coming weeks and months. This all leaves the anti-cyclical dollar quite well supported. We had made the case on Tuesday for a bounce in the oversold dollar. That bounce did not last long and again it is hard to rule out the dollar edging back to recent highs. Not until the Fed blinks on policy tightening or the rest of the world's growth prospects start to look attractive - neither of which seem likely over coming months - will the dollar put in an important top.  For today, the US calendar is light with just initial claims and existing home sales for April. Housing looks to be one of the most vulnerable sectors of the US economy, but its slowdown (and its effect on dragging core inflation lower) looks a story for much later in the year. DXY has seen a modest bull market correction this week, but can probably edge higher to 104.10 today. Read next: Altcoins: What Is Monero? Explaining XMR. Untraceable Cryptocurrency!? | FXMAG.COM EUR: ECB will have to talk a good game Providing the euro a little support this week has been even more hawkish commentary from the European Central Bank. We had felt that the market would struggle to price in more than 75bp of ECB tightening this year, but central bank hawks such as Klaas Knot have introduced the idea of the ECB moving in 50bp increments. This has helped narrow the two-year German Schatz-US Treasury spread to 225bp from recent wides at 250bp and provided some modest support for the dollar. This can be seen as verbal intervention from the ECB to support the euro. An important policy paper from the ECB a few years ago concluded that two-year rate differentials were the most significant driver of EUR/USD and the ECB's best hope of stablising EUR/USD may indeed be to talk up prospects of the forthcoming tightening cycle. For today, look out for the minutes of the April ECB meeting, where again it might choose to emphasise the more hawkish elements. EUR/USD has had its oversold bounce to 1.0550 and with the global environment remaining challenged, EUR/USD could today drift back through 1.0450/60 to 1.0400. Elsewhere, we note some short-term similarities between both the Swiss franc and the Czech koruna. The central banks behind both currencies would prefer stronger currencies to play their role in delivering stable/tighter monetary conditions. We conclude that EUR/CHF upside may be more limited - and the downside more open - than most believe. While for EUR/CZK, the Czech National Bank (CNB) will want EUR/CZK to continue trading under 25.00 and perhaps lower still - until at least 1 July when a new CNB governor takes over.  GBP: One month realised volatility at 8%! EUR/GBP one month realised volatility is back at 8% - which is very high for a European FX pair. Expect this volatility to continue given much uncertainty about the policy path for both the Bank of England (BoE) and the ECB. Here, we happen to think that tightening cycles in both are over-priced and one would probably think that the BoE cycle gets repriced lower first. Expect EUR/GBP to continue to trade in a very wide 0.8400-0.8600 range, while cable looks more one-way traffic. We have seen the bear market bounce to 1.2500 this week and the difficult external environment would favour a break of 1.2330 support in a move back to the 1.22 lows.  Read next: Altcoins: What Is Polkadot (DOT)? Cross-Chain Transfers Of Any Type Of Asset Or Data. A Deeper Look Into Polkadot Protocol | FXMAG.COM ZAR: SARB expected to hike 50bp today The South African Reserve Bank (SARB) is widely expected to hike 50bp to 4.75% today. The policy rate is quite low by emerging market standards, but that is because core inflation is only running at 3.9% year-on-year. A 50bp hike looks unlikely to generate much support to the rand, which is currently being re-priced off of the Chinese growth cycle. With $70bn of portfolio capital having left emerging markets since Russia invaded Ukraine - and with South Africa having large weights in emerging market debt and equity benchmarks - we expect the rand to stay under pressure for the time being.  16.35 is big resistance for USD/ZAR, above which 17.00 beckons for later in the year. Rising US real yields and the China slowdown continue to make the bear case for emerging 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
The AUD/USD Currency Pair Trading At Its Lowest Level Since Two Years, Hang Seng Index Was Flat

US stocks snap 7-day downtrend. Commodity stocks in wheat, energy and lithium brighten | Saxo Bank

Saxo Bank Saxo Bank 24.05.2022 14:34
Summary:  A technical rally occurred overnight, seeing the S&P500 gain after 7 days of declines, while Agriculture and Energy stocks shone the most, gaining even more momentum proving they are an inflation hedge. In quality tech, Apple shares rose 4% with long-term investors dripping in buy orders. Meanwhile, in big banks JPMorgan gained 6% upon forecasting net interest income to rise, which supported gains in Bank of America, Citigroup. We don’t think the market is at breaking point yet. However see Commodity gains intensifying and offering further upside, as the world worries global wheat supplies could run out in 10 weeks, while demand for lithium batteries rises seeing lithium companies upgrade their earnings and rally. What’s happening in markets that you need to know Big picture themes? Of the Equity Baskets we track across different sectors, we can see select risk appetite is starting to come back in to the market; China’s little giants are up the most month-to-date, supported by China’s fresh interest rate cut. Meanwhile, Cybersecurity stocks were up overnight (but are still down 24% YTD). Year-to-date though, our high conviction asset class, Commodities continues to see the most growth, followed by Defence. In the S&P500 oversold Ag and Bank stocks shine; Agri and Farm Tech stocks were up the most overnight, followed by Diversified Banks. In terms of standout stocks; Ross Stores and Deere (DE) rose the most (9%, 7%), after being two of the most oversold stocks last week. In S&P500 Deer was THE most oversold member. Deer makes 65% of its revenue from Agricultural equipment and selling turf. Earnings are expected to grind higher in 2022 and Deer pays a small dividend yield (1.25%). Asia Pacific’s stocks are trading mixed following more Tech disappointment in the US. While risk sentiment was upbeat overnight on Wall Street, Asia Pac’s markets turned most lower following Snap’s warning that it is unlikely to meet revenue and profit forecasts. Tech sentiment eroded again and further consumer staples earnings results this week are keeping investors cautious. Australia’s ASX200 trades flat, weight by tech falling,  with Block (SQ) down 6% after Bitcoin trades under $30k (Block makes most of its money from BTC transactions). Meanwhile, ASX lithium stocks continue to surge, supported by the new Australian government’s EV stimulus, seeing Liontown (LTR), Allkem (AKE), MinRes (MIN), Pilbara (PLS) dominate the leaderboard and rise 3-4%. Japan’s Nikkei (NI225.I) is down 0.3% led by Recruit (6098) which operates the popular HR engine “Indeed” and company information website “Glassdoor”. Singapore’s STI index (ES3) was however up 0.2% despite a record high inflation and a potential chicken-price shock. Read next: Stablecoins In Times Of Crypto Crash. What is Terra (UST)? A Deep Look Into Terra Altcoin. Terra - Leading Decentralised And Open-Source Public Blockchain Protocol | FXMAG.COM Chinese and Hong Kong equites see lackluster trading despite incremental stimulus measures from the State Council and Biden’s remarks on reviewing tariffs on goods from China.   The attempt to rally in the opening hour in response to positive news of 33 stimulus measures from China’s State Council failed.  Overnight news that Biden will discuss with Treasury Secretary Yellen about reviewing tariffs on goods from China as part of the Biden administration’s effort to ease U.S. inflationary pressures did not incur much excitement. Hang Seng Index (HSI.I) fell 0.8% and CSI300(000300.I) was 0.3% lower. Among the 33 measures was a reduction of RMB60 billion in the purchase tax on passenger cars Great Wall.  Great Wall Motor (02333), Geely (00175) and Guangzhou Automobile (02238) rose 3% to 10% while shares of EV makers fell 3%-9%.  Although reporting a larger than expected 159% YoY increase in revenues and a 30bp improvement of gross margins to 10.4% in Q1, XPeng’s (09868) share fell almost 9% on cautious Q2 guidance.  What to consider? Fed speakers remaining flexible. Fed’s Bostic backed a series of 50bps rate hike moves overnight but hinted at a pause in September if inflation comes down but also opened doors to more aggressive moves if inflation doesn’t cool. Fed’s George said she expects the central bank to raise interest rates to 2% by August (which also means about 100-125bps of rate hikes from the current 0.75-1% rates or 2-3 50bps rate hikes). While the base effects may make headline inflation appear to be softening into the summer, real price pressures aren’t going anywhere and Fed’s hiking pace is likely to continue to prove to be slow. AUD and NZD unable to sustain gains. A fresh slide was seen in NZD this morning following the unexpected decline in retail spending reported today. RBNZ decision is due tomorrow  (in early Asian hours) and it is still a close call between 25 and 50bps rate hike. But it’s more important to note that RBNZ is way ahead of other central banks and getting close to neutral faster than others, which means room for further upside in NZD is limited. AUDUSD is also back below 0.7100 and remains prone to a reversal in risk sentiment more than any domestic developments. While the AUDUSD rose to a 3-week high yesterday, supported by the Australian Labor Government being sworn in after winning the election and bringing in an EV policy ($2k tax incentives), vowing to keep Defense Spending at over 2% of GPD and pledging to offer more childcare support to keep employment high. The USD will likely remain favored for now as risk aversion returns and cut the rally of the AUD.  ECB getting ready to move to exit negative rates. ECB President Lagarde’s comment that the central bank is likely to exit negative rates by the end of the third quarter put a massive bid into the EUR overnight but the pair turned lower from 1.0700 with focus on Fed Chair Powell and PMIs due today. With Fed comments getting repetitive, there is room for ECB’s hawkishness to support the EUR even as Lagarde continues to downplay the possibility of a 50bps rate hike. Germany’s economy shows signs of unexpectedly strengthening in May. Germany’s IFO reading was out at 93.0 versus prior 91.9 in April. The increase is mostly explained by an improved current assessment. The expectations component is almost unchanged and close to levels last seen at the start of the pandemic. Several factors are pushing respondents to be careful regarding the future: supply chain frictions, the Shanghai lockdown, persistent inflationary pressures and lower real disposable incomes of households etc. The German economy will not plunge as it did at the start of the pandemic, of course. But we think that risks of a stagflation are clearly titled on the upside. We will watch closely the first estimate of the May PMIs this morning to have a better assessment of the economic situation in Germany and in the rest of the eurozone.  Potential trading ideas to consider? Singapore’s inflation pain is rising. Core CPI was at a decade high in April at 3.3%, and this is still not a peak. Singapore’s national lunch meal chicken rice is set to get expensive as Malaysia is halting exports of chicken. About 34% of Singapore's chicken imports come from Malaysia. While alternate sources of fresh chicken and options such as frozen chicken may be possible, this is not the last inflation shock to hit the island economy. Vegetable prices are also on the rise due to shortages of supply and the high fertilizer prices. In times like this, we would reiterate the possible inflation hedges remain gold, REITs and commodities. In summary, it is important to look for value investments or stocks that have a solid cash flow generation ability and pricing power but still priced below their fair value. The plot for investing in Lithium thickens.Lithium remains one of our preferred metal exposures for 2022 for upside. Albemarle Corp, the world’s largest lithium producer upgraded its outlook for the second time this month expecting higher lithium prices and demand to further boost their sales. We’ve seen many EV companies sell out of some of their electric vehicles, and this highlights the lack of supply in battery metals, which is also pushing up the lithium price. Albemarle Corp, expects sales to now be as high as $6.2 billion this year, up from its previous estimate of up to $5.6 billion. Read next: Altcoins: What Is Litecoin (LTC)? A Deeper Look Into The Litecoin Platform| FXMAG.COM If have a long time horizon for investing, you could consider dripping money into the market (this is called dollar cost averaging). Remember Shelby Davis said you can make most of your money in a bear market, you just don’t realize it at the time. But the key is to look at quality names that are in a position to return cash to shareholders. So if you want to be in tech for example, you could look at names like Apple, Microsoft and Google, who lead the S&P500 and Nasdaq indices and are growing their earnings and this is likely to continue over the next several years and longer term. The idea is that names like these, will likely lead a secular bull market, once the Market eventually begins to recover. And you ideally want to be in names with growing earnings, rather than throwing darts at some of those names with patchy results that are akin to Ark innovation ETF for example. China’s State Council announced 33 stimulus measures.  An additional VAT credit refund of RMB140 billion brings the overall target of tax refunds, tax cuts and fee reductions to RMB2.64 trillion in 2022.  China is also introducing a reduction of RMB60 billion (equivalent to about 17% of auto purchase tax last year) in tax on passenger car purchases.  The Government is increasing its supports to the aviation industry and railway construction via special bond issuance and loans and is rolling out a series of energy projects.  It is doubling the lending quota for banks to lend to SMEs and allow certain borrowers to postpone repayments.  The State Council also reiterates its support to promote legal and compliant listings of platform companies in domestic as well as overseas markets. Key company earnings to watch this week: Tuesday: Kuaishou Technology, Intuit, NetEase, AutoZone, Agilent Technologies Wednesday: Bank of Nova Scotia, Bank of Montreal, SSE, Acciona Energias Renovables, Nvidia, Snowflake, Splunk Thursday: Royal Bank of Canada, Canadian Imperial Bank of Commerce, Lenovo, Alibaba, Costco, Medtronic, Marvell Technology, Baidu, Autodesk, Workday, VMware, Dell Technologies, Dollar Tree, Zscaler, Farfetch Friday: Singapore Telecommunications   For a global look at markets – tune into our Podcast.  Follow FXMAG.COM on Google News Source: Saxo Bank
Powell Touched On The Topic Of The Digital Dollar And The Crypto Industry

USD May Continue Its Rally In The Near Future! How High Can Dollar Index (DXY) Jump After Next Anticipated 50bps Rate Hike!? What About Bank Of Korea Decision?| FOMC minutes settle nerves | Oanda

Jeffrey Halley Jeffrey Halley 26.05.2022 12:54
FOMC to stick to 50bps moves The FOMC Minutes, released overnight, settled a few nerves temporarily, signalling another couple of 50bps rate hikes in June and July before a pause in September. The dreaded 75bps hike threat was off the agenda and with some slowdowns in recent US data, notably in the housing market, it was enough to spur a relief rally of sorts in US equities and the US dollar. Once again, that is translating to an uneven response by Asian markets thanks to China nerves. Although Shanghai seems to be emerging from its covid zero restrictions at a faster pace, Chinese Premier Li warned of economic headwinds and that the economy, in some respects, is faring worse than in 2020. Bank Of Korea - Monetary Policy This morning, the Bank of Korea hiked policy rates by 0.25% as expected. There has been zero impact on either the Kospi or the Korean won, suggesting the move was well priced in already by markets. The Reserve Bank of New Zealand’s Governor Orr was also on the wires today testifying before a parliamentary committee. Governor Orr was very hawkish and suggested that policy rates would need to remain elevated for an extended time to tame inflation. It’s a pity he didn’t think the same thing 9 months ago when he had rates at zero and was quantitatively easing into a clearly overheating economy. Once again, the New Zealand dollar has barely reacted and has come off its highs since yesterday’s 0.50% rate hike. That implies that it is a US dollar story and not a New Zealand dollar story. Either that or markets are concerned New Zealand is heading for a recession. Australia And RBA, Will Australian Dollar (AUD) Exchange Rate Change? Australian data this morning was mixed. Building Capital Expenditure for Q1 QoQ fell by 1.70%, while Plant Machinery Expenditure rose by 1.20% for the same period. To a certain extent, it is old news with markets more focused on the RBA policy trajectory, the new government’s fiscal policy, and whether the employment of housing markets start to show cracks. Singapore releases Industrial Production for April this afternoon with the YOY number for April expected to slow to 3.40%. A softer number will increase slowdown fears in the city-state and weigh on local equities. Thailand’s Balance of Trade should continue to show a post-covid rebound as its borders reopen for tourism. Read next: Altcoins: Tether (USDT), What Is It? - A Deeper Look Into The Tether Blockchain| FXMAG.COM There are a number of holidays in Europe today for Ascension Day. Heavyweights Germany and France are closed, as is all of Scandinavia. Indonesia is closed today as well. That is likely to mute activity in Europe this afternoon with the data calendar understandably, strictly second-tier. In the US, Pending Home Sales will be closely watched given the weakness of recent existing and new home sales. That will overshadow second estimate of Q1 GDP and initial jobless claims. Another ugly number will put the recession word back on Wall Street’s lips and we could see another rush for the exit. Soft results from Gap and Dollar Tree could reinforce that sentiment. Overall, though, it looks as if today will be a day of consolidation for financial markets as they await fresh inputs, and ahead of personal income and expenditure data out of the US tomorrow evening. This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds. Follow FXMAG.COM on Google News
The Gold Market Is Volatile, There Are Two Possible Developments

Gold Price Analysis: XAU/USD holds above 200-DMA near $1,850 as focus turns to Friday’s US inflation data

FXStreet News FXStreet News 26.05.2022 16:43
Gold Price is holding above its 200-DMA in the $1,850 area and is back to nearly flat on the week. Traders are weighing the tailwinds of a softer USD and US yields versus strong US equities, as key Friday inflation data looms. How Fed And USD May Affect Gold? Gold Price (XAU/USD) is for now holding just above its 200-Day Moving Average at $1,839 and trading near the $1,850 level, though still with a slight downside bias on the day, despite Thursday’s worse-than-expected US GDP figures and Wednesday’s not as hawkish as feared Fed minutes release. Indeed, in wake of the weak data and modest paring back of hawkish Fed bets, the US dollar is a tad weaker and US yields are nudging lower, a combination that would normally be a tailwind for gold. Stronger Stocks - E.G. S&P 500 But US equities are rallying, with the S&P 500 last trading up around 1.4% on the day and eyeing a test of its 21-Day Moving Average for the first time since mid-April. On the week, the index is trading with gains of more than 3.0% and this appears to be weighing on the safe-haven precious metal. Traders are attributing stock market gains to weak GDP data reducing the need for aggressive Fed tightening and to strong earnings from a few US companies, including retail giant Macy’s. Read next: Altcoins: Tether (USDT), What Is It? - A Deeper Look Into The Tether Blockchain| FXMAG.COM Either way, the better tone to risk appetite is for now keeping XAU/USD on the back foot. Having been as high as the $1,870 level earlier in the week, spot gold’s gains on the week have been eroded back to only about 0.2% from around 1.2%. But the recent pullback towards the 200-DMA might prove a good opportunity for the gold bulls to add to long positions if they think that hawkish Fed bets will continue to be pared in the weeks ahead and, as a result, the buck and US yields continue softening. If it contributes to the strengthening narrative that US inflation has peaked, Friday’s US April Core PCE report could lead to a further reduction of Fed tightening bets and gold could well end the week back at highs in the $1,870 area. Follow FXMAG.COM on Google News
The Bullish Trend Is Currently Very Strong For The EUR/USD Pair

(USD) US Dollar - First Days Of June May Bring A New Stimulus, Forex Traders Keep An Eye On Mexican Peso (MXN), Hawkish ECB May Turn EUR/USD Upside Down! Looking Forward To Changes In PLN And HUF Exchange Rates | ING Economics

ING Economics ING Economics 30.05.2022 09:47
A holiday-shortened week starts with risk assets in demand as China marginally softens lockdown curbs and the pricing of a Fed pause allows interest to return to FX carry trades. That could see the dollar hand back a little more of its recent strength, although strong US data later in the week should limit the extent of the dollar's downside Source: Shutterstock USD: Interest in dollar-funded carry emerges The dollar is now about 3% off its highs in early May. Driving that correction has certainly been the view that the Fed could pause its tightening cycle after hiking 50bp in both June and July. The Fed funds rate for the 21 September meeting is now priced at 2.15%. At the start of May, it was priced at 2.35%. Clearly, US data and Fed speak will have a big say in the pricing of that Fed cycle. Today US markets are closed for the US Memorial Day public holiday, but the big data point of the week, Friday's release of May nonfarm payrolls, will have an important say for the Fed. Here James Knightley looks for another strong set of numbers, which should prove supportive for both US yields and the dollar. Until then, the dollar remains subject to corrective forces on the back of renewed interest in carry trades. Here, one month USD/JPY implied volatility has sunk back below 10% to signal calmer market conditions and for us, Friday's standout move was the huge rally in the Mexican peso. The peso is the big beast in the emerging market FX space and the USD/MXN drop to 19.50, the lowest level since early 2020, represents some confidence returning to the emerging market FX space. Indeed, some brave investors may be making the play that the dollar has topped and that putting money to work in EM local currency bonds can help cement the top in EM local rate cycles and trigger a virtuous cycle of gains in both the currency and the bond. For example, Mexican 10-year local currency bond yields have recently topped out at 9% and now trade at 8.50%. We think it is too early for those trades since both US yields and the dollar may well have another leg higher later this year, but this is a trend that certainly bears watching. US holiday-thinned trading should keep FX subdued today, but some modest reopening in China and some healthy equity gains should maintain the slightly softer dollar bias for the next few days. DXY is undertaking a slightly deeper correction than we thought and can continue to drift down to the 101.00 area. EUR: Another high German CPI to keep hawks in the ascendancy EUR/USD continues to nudge higher as the Fed pause, marginally better risk environment and ECB hawkishness all combine. Recent reports suggest the speculative community has been cutting its short euro positions. Yet we do not think there are strong arguments for EUR/USD to move back to and above 1.10. After all, the surge in energy prices is being more keenly felt in Europe and the deterioration in Europe's terms of trade has damaged the euro's medium-term fair value. Our preference would be for this EUR/USD correction to top out near 1.08. But for the short term, the external environment will keep EUR/USD supported. For today, we will get the first look at German inflation data for May. This is expected to push up to a new cycle high at 7.6% year-on-year and keep the hawks in the ascendancy at the ECB. That said, the recent narrowing in the two-year Germany-US sovereign spread seems to have run its course and unless one expects the ECB to sound even more hawkish (four to five ECB hikes are already priced this year) or the Fed to turn decisively less hawkish, EUR/USD looks unlikely to get too much more support from the yield spread side. GBP: Quiet week for the sterling story The UK data calendar is quite light this week. That leaves sterling mildly bid after last week's £15bn fiscal stimulus provided some support to otherwise fragile pricing of the BoE tightening cycle. The GBP/USD bounce has certainly been slightly stronger than we thought (we had thought 1.2600/2650 would be the corrective top) and a slightly negative dollar environment at the start of this week could see GBP/USD extend to 1.2730/2770. Longer term, we can still see GBP/USD heading back to the low 1.20s later this summer. EUR/GBP looks set to gravitate around 0.8500 for a while. CEE: Return of a hawkish tone to tame inflation In central and eastern Europe, the main event this week will be the Hungarian central bank meeting. This, in our view, will bring a 60bp hike in the base rate to 6% and a 30bp increase in the deposit rate to 6.75%. However, the weak forint may force the central bank to make a bolder move. Across the region, a breakdown of 1Q GDP growth will be released, which surprised positively in the flash estimate, so the market will be watching the reason behind this and indications for the second quarter. A piece to the puzzle will also come from the PMI for May, which like the eurozone should stagnate or fall just slightly. As always, Poland will be the first in the region to show the way for inflation. We expect it to rise from 11% to above 12.5% YoY, which should reignite the hawkish tone from the central bank, supporting higher rates and prompting the FX market to erase the losses of recent days. Of course, the biggest focus this week will be on forint, which is within reach of all-time lows following recent government decisions. A possible market disappointment would thus bring a move towards the magic level of 400 EUR/HUF, but we assume that this is not the central bank's intention. The zloty reached its strongest levels since the start of the Ukrainian conflict at the end of the last week and a strong CPI number and higher rates should ensure that it holds onto its gains at least. The koruna remains under central bank control and despite the currency's weakening last week, we do not expect the Czech National Bank to allow a move towards EUR 25/CZK territory. Read this article on THINK
Fed And US Dollar (USD) Are All About Mixed Feelings, Christine Lagarde And ECB In General May Support Euro Even In July. BoE's Bailey Also Teases A Rate Hike. XAU, XAG And Crude Oil Went Higher As USD Weakened | OneRoyal

Fed And US Dollar (USD) Are All About Mixed Feelings, Christine Lagarde And ECB In General May Support Euro Even In July. BoE's Bailey Also Teases A Rate Hike. XAU, XAG And Crude Oil Went Higher As USD Weakened | OneRoyal

OneRoyal Market Updates OneRoyal Market Updates 30.05.2022 10:14
Weekly Recap It was another bearish week for the US Dollar as the greenback continued to sell off from YTD highs. The FOMC meeting minutes, released mid-week, did little to inspire a fresh rally in the Dollar. While the minutes confirmed the Fed’s hawkish stance and reinforced expectations for further 50bps hikes in June and July, there was little in the way of exciting details to get bulls reinvigorated. Additionally, with the Fed having seemingly turned more hawkish since that meeting, the minutes felt a little outdated. Christine Lagarde, ECB And Rate Hikes On the data front, a string of weaker-than-expected indicators out of the eurozone heightened growth concerns. With ECB’s Lagarde essentially confirming a July rate-hike, recession fears weighed on European asset markets though EUR itself remained well bid. Elsewhere, equities markets generally saw a choppy week though most indices ended the week in the green, benefitting from the weaker US Dollar. Read next: Altcoins: What Is Polkadot (DOT)? Cross-Chain Transfers Of Any Type Of Asset Or Data. A Deeper Look Into Polkadot Protocol | FXMAG.COM BOE’s Bailey warned that further rate hikes will likely be necessary in the face of rising inflation. The new fiscal package announced by the UK government this week, aimed at helping households fight rising energy bills, has further increased the likelihood of BOE rate hikes in the near-term. Weaker Dollar, Stronger Crude, Gold And Silver Commodities prices were higher over the week also. Gold, silver and oil all rallied on the back of a weaker US Dollar. With monetary policy divergence between the Fed and other central banks drying up, USD pressure has helped commodities stay afloat recently. Coming Up This Week Australian GDP Australian GDP will be closely watched this week on the back of the recent RBA rate hike. With the bank lifting rates and sounding firmly hawkish in its outlook and assessment, this week’s data might further support growing RBA rate hike expectations. With the country having emerged from one of the longest lockdowns of the pandemic, the economy has been on the bounce-back. However, as we have seen elsewhere, the economy has still been rocked by rising inflation and supply constraints. Traders will be keen to see the extent to which these factors weighed on the economy over the last quarter. BOC Rate Decision The BOC is widely expected to raise rates when it convenes for this month’s meeting mid-week. All 30 economists polled by Reuters ahead of the event are looking for a .5% hike. With this in mind, the focus will be on the bank’s forward guidance. If the BOC gives a clear signal that further hikes are coming in the near future, this should drive CAD higher near-term. However, if there is any indication that the BOC might look to hold off on any further rate hikes near-term, this will likely see cad dragged lower. Read next: Altcoins: Cardano (ADA) What Is It? - A Deeper Look Into Cardano (ADA) | FXMAG.COM US Non-Farm Payrolls The latest set of US labour market indicators this week will be closely watched as we head to the June meeting. Recent Fed commentary has been decidedly hawkish and it would likely take a major downside shock to change this narrative. Even then, it certainly wouldn’t impact the June rate hike and would likely only factor in forward guidance issued by the Fed. Still, with slowdown fears building, any weakness would no doubt act as a headwind to risk sentiment in the short-term. Forex Heat Map Technical Analysis Our favourite chart this week is the Dollar Index (DXY) The DYX has pulled back from recent multi-year highs and is now sitting on a make-or-break level at 101.94. This level was the 2020 closing high price. While the level holds as support, DXY is likely to recover and continue the longer-term bull trend. Below here, however, there is room for the correction to develop further towards next support at 100.37 Economic Calendar Plenty of key data releases to keep an eye on this week including Australian GDP, BOC rate decision and US Non-Farm Payrolls to name a few. Please see full calendar below for the complete schedule . Follow FXMAG.COM on Google News
Investors Are Awaiting US CPI Print. Earnings Season Is Here! PepsiCo (PEP) And Delta Airlines (DAL) Earnings Are Released This Week!

Striking US Stocks Performance, Crude Oil (BRENT) Nearing $120, Chinese Covid-Zero Influences Markets And More Highlighted In Market Insights Podcast (Episode 335) | Oanda

Jeffrey Halley Jeffrey Halley 30.05.2022 10:37
Jonny Hart speaks to APAC Senior Market Analyst Jeffrey Halley about news impacting the market and the week ahead. It’s June already and a blockbuster week for data releases around the world. First of all, we take a look back at last Friday’s impressive US equity close. Jeff discusses its drivers, its threats, and potentially, its longevity. Then it’s over to Asian equity markets today which are also enjoying a banner day. US Stocks And China   The US Friday session and also covid-zero developments in China over the weekend are driving “most” stock markets higher. Potential banana skin is looming though, with Brent crude rising above $120.00 a barrel in Asia today. Jeff looks at the oil market, what’s driving the price increase, and its potential impact on market sentiment this week. Read next: Altcoins: What Is Monero? Explaining XMR. Untraceable Cryptocurrency!? | FXMAG.COM Holidays And US Non-farm Payrolls There are a number of holidays this week, starting with US markets today, then Greater China is dragon boating on Friday, and the UK has two days off at the end of the week. Happy Jubilee Your Majesty. We discuss how holidays can impact markets. Finally, it’s a wrap of the heavy-duty data calendar across Asia and the US this week, culminating in the US Non-Farm Payrolls. Jeff highlights also, something that markets have been ignoring up until now, the start this week, of Federal Reserve Quantitative tightening. This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds. Follow FXMAG.COM on Google News
Crypto: Oh My! Look How Many US Dollars (USD) Has Tornado Cash Laundered!

Banning Russian Crude Oil In Progress - Will Hungary Join The EU? Fed's Quantitative Tightening, Chinese PMI Is Released This Week. What Will Eurozone Inflation Bring On To The Markets? | Oanda

Jeffrey Halley Jeffrey Halley 30.05.2022 11:11
Asian markets are mostly positive this morning as Shanghai announced a raft of stimulus measures and both Shanghai and Beijing eased Covid-19 restrictions. The devil is in the detail of course, and corkers in both cities still face challenges either going to work, or even being allowed to leave the house. Nor has the reality that the virus only has to get lucky once, prompting the reimposition of tightened covid-zero restrictions, in the minds of investors. Such minutiae are usually ignored by markets when it doesn’t suit the preferred narrative, and so it is today. Asia is pricing in peak virus in China and a recovery in growth. Wall Street Another tailwind was the strong performance by Wall Street on Friday, which closed out a banner week prompting the usual “maybe this is the bottom” response from the financial press and FOMO investors. That was assisted by US data on Friday. Personal Income and Expenditure for April were still robust, but eased from March’s numbers, and Michigan Consumer Sentiment retreated from 65.2 in April to a still-healthy 58.4 for May. Lower data equalling reduced need for Fed tightening equals buy everything. Simple really. Although I must say, I’m struggling to see how a slowing US economy is good for equities, I don’t want to spoil the party though. Crude Oil - EU Banning Russian Crude Another negative headwind being completely ignored by markets is oil prices. Brent crude has edged above USD 120.00 a barrel this morning as the European Union continues its efforts to get Hungary on board for a proposed EU ban on Russian crude imports. The underlying driver though is the massive squeeze on refined products we are seeing around the world, which is lifting the base ingredient for all that diesel and petrol that has got very expensive. The world would have been flapping and wringing its hands about the end of days if we had said Brent crude was above USD 120.00 a barrel a month or two or three or four ago; now it is being ignored. By the way, if China recovers, oil prices will as well; just saying. Read next: Altcoins: Cardano (ADA) What Is It? - A Deeper Look Into Cardano (ADA) | FXMAG.COM Non-farm Payrolls - Fed's Sell-off Also being ignored by markets completely in Non-Farm Payroll week is that the Federal Reserve also starts quantitative tightening this week. The Fed will start to sell USD 47.50 billion of bonds and MBS’ per month, scaling up to USD 95 billion per month by September. Meanwhile, the ECB is still quantitatively easing while talking about hiking rates to errrr, zero per cent. And there is a war in Eastern Europe. Long EUR/USD above 1.0800 anybody? Despite being less than impressed with either the Fed’s guidance or overall performance over the past year or so, at least they’re not the Reserve Bank of New Zealand. I find it highly unlikely they will abruptly swing to less a hawkish stance between now and September, meaning three more 0.50% hikes into September and fewer jokes being made about their credibility. Additionally, the USD 8.5 trillion balance sheet needs to reduce is carb and saturated fat intake, so quantitative tightening it is. From my position as a pilot fish cleaning the teeth of the capital markets sharp on the periphery, none of this is being priced in, although I acknowledge that markets can remain irrational, longer than you can stay solvent. Read next: Altcoins: Tezos (XTZ) What Is It? - A Deeper Look Into The Tezos Platform | FXMAG.COM Chinese PMI Now that I have fulfilled my role as the voice of reason on a Monday, it is time to have a look at what the week ahead brings. Asia’s calendar is dead today with the week’s highlights being China’s Official and Caixin PMIs coming out tomorrow and Wednesday. Wednesday and Thursday also see a swath of manufacturing and services PMIs from the rest of Asia, while Australia releases its April Trade Balance on Thursday. China’s data will have a very binary impact this week if peak-covid is here. Soft data will likely ramp up fears of a slowdown, with a decent showing likely to see hot money flowing in looking for the bottom. Soft data from the rest of Asia will raise fears of spreading China contagion. Watch also for Indonesian Inflation on Wednesday. A high print will increase the pressure on Bank Indonesia to finally hike this month. Holidays Holidays will play their part this week. US markets are closed for Memorial Day today, although electronic trading is open in Asia. Indonesia is closed Wednesday while mainland China and Hong Kong and Taiwan are closed on Friday for the International Dragon Boat Festival. Thursday and Friday see United Kingdom markets closed for a bank holiday and Her Majesty’s Platinum Jubilee. Activity in Asia will likely be muted from Thursday. Follow FXMAG.COM on Google News Eurozone Inflation Today features German May Inflation with Eurozone, French and Italian Inflation tomorrow. High prints will likely increase the hiking noise around the ECB and could extend the euro’s recent gains. The ECB should probably stop quantitatively easing first though. Eurozone and US Manufacturing PMIs are released on Wednesday, along with US ADPO Employment that forecasters will pointlessly use to extrapolate Friday’s data. We also have a Bank of Canada policy decision which should feature a 0.50% hike. Falling NFP? Finally, on Friday, we will see May’s US Non-Farm Payrolls data. Market expectations are a moving target this week, but as of today, markets are expecting a fall from 428,000 in April to a still robust 320,000 for May. Trading the data in the hour after its release has always been a sure-fire way to lose money. But if pushed, I would say a lower number will have the market pricing in less Fed tightening, while a higher number might dish out a cold dose of reality to the bottom-fishers in equity, bond, and currency markets ahead of the mid-month FOMC meeting. This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.
So S&P 500 (SPX) Seems To Be Ready To Really, Can US Bond Yields And US Dollar (USD) Go Any Higher? | Monica Kingsley

So S&P 500 (SPX) Seems To Be Ready To Really, Can US Bond Yields And US Dollar (USD) Go Any Higher? | Monica Kingsley

Monica Kingsley Monica Kingsley 30.05.2022 15:13
S&P 500 turned the corner, yields peaked for now, and dollar likewise. Risk-on sentiment is ruling the day, with value outperforming tech – but at least the latter is also recovering. Stocks though haven‘t turned the corner in earnest, no matter the gains they‘re still about to clock in. Enjoy the rally while it lasts (long entry is a matter of individual trade‘s risk reward ratio – more than a few good percent are still ahead before the fresh downleg strikes. Fed You can look forward for tomorrow‘s extensive analysis, where I‘ll examine the Fed and macroeconomics in the weeks and months ahead vs. the turnaround sequence discussed three weeks ago – unfolding like clockwork. Here‘s a quote from tomorrow‘s article: (…) I don‘t think we‘re looking at a fresh uptrend, there is still much stress (to be reflected in stock prices) in the consumer arena. VIX For now, the key question is the degree to which VIX calms down – would it be able to keep below 23-24 to extend the shelf life of this rally? And for how long would the lull in volatility last? I think the answer is a few short weeks, before it becomes obvious that the fundamentals haven‘t changed. The consumer remains in poor shape, inflation would remain stubbornly high (even as it had indeed peaked), and the credit default swaps for quite a few (consumer sensitive) companies are rising relentlessly, which isn‘t yet reflected in underlying stock prices. I‘m talking financials too – this broad stock market rally has more than a couple of percent higher to go before the weight pulls it back down, and earnings estimates get downgraded again. Stayed tuned for more, enjoy and profit along! Read next: Altcoins: Tether (USDT), What Is It? - A Deeper Look Into The Tether Blockchain| FXMAG.COM Happy extended weekend. 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. Follow FXMAG.COM on Google News
S&P 500 Trades 10% Higher Than On May 20th, But Hawks Are About To Hunt Shortly, Probably Bringing Bear Market And People's Unwillingness To Spend Their Money | FxPro

S&P 500 Trades 10% Higher Than On May 20th, But Hawks Are About To Hunt Shortly, Probably Bringing Bear Market And People's Unwillingness To Spend Their Money | FxPro

Alex Kuptsikevich Alex Kuptsikevich 30.05.2022 15:18
US stock indices developed a strong rebound all last week. The S&P500 spot index reached 4200, gaining more than 10% from the lows of May 20. Such a rapid recovery has raised the question of whether we are seeing a brief bear market rally or whether the markets have passed the “bottom” of the correction. The situation looks like touching bear market territory was a red rag for the bulls, who have since turned to aggressive action. Fundamental factors are now on the side of the former, while technical analysis favours the latter scenario. Fighting With Inflation Or Supporting Economic Growth Monetary authorities in the USA and other developed economies are increasing the pace of monetary policy tightening, focusing on fighting inflation rather than supporting economic growth. We continue to get bearish signals from this perspective, as the economy and markets have yet to feel the brunt of rates not seen in over ten years. Meanwhile, inflation and a slowdown in consumer demand due to high rates promise to eat into real corporate profits in the coming months. The tipping point in consumer activity is unlikely to come before we hear from the Fed that there will be no further rate hikes. Read next: Altcoins: What Is Polkadot (DOT)? Cross-Chain Transfers Of Any Type Of Asset Or Data. A Deeper Look Into Polkadot Protocol | FXMAG.COM The S&P500 index has perfectly touched 61.8% of the rally from the lows of March 2020 to January 2022. We have seen some rallies in a falling market during the five-month decline. But so far, touching the formal bear market area (20% decline from the peak) in the S&P500 has attracted buyers. Moreover, by the time the lows were touched earlier this month, the market was already oversold, but there were also signs of divergence between the RSI on the daily timeframes and the index level. This is a clear indication that the selling was not as fierce as before. Read next: Altcoins: What Is Monero? Explaining XMR. Untraceable Cryptocurrency!? | FXMAG.COM S&P 500 The very fact that the S&P500 took a 7-week-long losing streak, one of the longest in history, and has now shown a sharp rebound, is setting a positive mood. The last time we saw such a bullish awakening was in November 2020, after which the stock market added for more than a year, even though there seemed to be no room for growth. Follow FXMAG.COM on Google News
The Euro Will Strengthen, But Questions Remain About What To Do Next

Supporting EUR, USD And Others - What Is Interest Rate? What Is A Negative Interest Rate | Binance Academy

Binance Academy Binance Academy 01.06.2022 16:55
TL;DR It doesn’t make much sense to lend money for free. If Alice wants to borrow $10,000 from Bob, Bob will need a financial incentive to loan it to her. That incentive comes in the form of interest – a kind of fee that gets added on top of the amount Alice borrows. Interest rates profoundly impact the broader economy, as raising or lowering them greatly affects people’s behavior. Broadly speaking: Higher interest rates make it attractive to save money because banks pay you more for storing your money with them. It’s less attractive to borrow money because you need to pay higher amounts on the credit you take out. Lower interest rates make it attractive to borrow and spend money – your money doesn’t make much by sitting idle. What’s more, you don’t need to pay huge amounts on top of what you borrow. Learn more on Binance.com Introduction As we’ve seen in How Does the Economy Work?, credit plays a vital role in the global economy. In essence, it’s a lubricant for financial transactions – individuals can leverage capital that they don’t have available and repay it at a later date. Businesses can use credit to purchase resources, use those resources to turn a profit, then pay the lender. A consumer can take out a loan to purchase goods, then return the loan in smaller increments over time. Of course, there needs to be a financial incentive for a lender to offer credit in the first place. Often, they’ll charge interest. In this article, we’ll take a dive into interest rates and how they work.   What is an interest rate? Interest is a payment owed to a lender by a borrower. If Alice borrows money from Bob, Bob might say you can have this $10,000, but it comes with 5% interest. What that means is that Alice will need to pay back the original $10,000 (the principal) plus 5% of that sum by the end of the period. Her total repayment to Bob is, therefore, $10,500. So, an interest rate is a percentage of interest owed per period. If it’s 5% per year, then Alice would owe $10,500 in the first year. From there, you might have: a simple interest rate – subsequent years incur 5% of the principal or  a compounded interest rate – 5% of the $10,500 in the first year, then 5% of $10,500 + $525 = $11,025 in the second year, and so on.   Why are interest rates important? Unless you transact exclusively in cryptocurrencies, cash, and gold coins, interest rates affect you, like most others. Even if you somehow found a way to pay for everything in Dogecoin, you’d still feel their effects because of their significance within the economy. Take a commercial bank – their whole business model (fractional reserve banking) revolves around borrowing and lending money. When you deposit money, you’re acting as a lender. You receive interest from the bank because they lend your funds to other people. In contrast, when you borrow money, you pay interest to the bank. Commercial banks don’t have much flexibility when it comes to setting the interest rates – that’s up to entities called central banks. Think of the US Federal Reserve, the People’s Bank of China, or the Bank of England. Their job is to tinker with the economy to keep it healthy. One function they perform to these ends is raising or lowering interest rates. Think about it: if interest rates are high, then you’ll receive more interest for loaning your money. On the flip side, it’ll be more expensive for you to borrow, since you’ll owe more. Conversely, it isn’t very profitable to lend when interest rates are low, but it becomes attractive to borrow. Ultimately, these measures control the behavior of consumers. Lowering interest rates is generally done to stimulate spending in times when it has slowed, as it encourages individuals and businesses to borrow. Then, with more credit available, they’ll hopefully go and spend it. Lowering interest rates might be a good short-term move to rejuvenate the economy, but it also causes inflation. There’s more credit available, but the amount of resources remains the same. In other words, the demand for goods increases, but the supply doesn’t. Naturally, prices begin to rise until an equilibrium is reached. At that point, high interest rates can serve as a countermeasure. Setting them high cuts the amount of circulating credit, since everyone begins to repay their debts. Because banks offer generous rates at this stage, individuals will instead save their money to earn interest. With less demand for goods, inflation decreases – but economic growth slows.   ➟ Looking to get started with cryptocurrency? Buy Bitcoin on Binance!   What is a negative interest rate? Often, economists and pundits speak of negative interest rates. As you can imagine, these are sub-zero rates that require you to pay to lend money – or even to store it at a bank. By extension, it makes it costly for banks to lend. Indeed, it even makes it costly to save. This may seem like an insane concept. After all, the lender is the one assuming the risk that the borrower may not repay the loan. Why should they pay?  This is perhaps why negative interest rates are something of a last resort to fix struggling economies. The idea comes from a fear that individuals may prefer to hold onto their money during an economic downturn, preferring to wait until it recovers to engage in any economic activity.  When rates are negative, this behavior doesn’t make sense – borrowing and spending appear to be the most sensible choices. This is why negative interest rates are considered to be a valid measure by some, under extraordinary economic conditions.   Closing thoughts On the surface, interest rates appear to be a relatively straightforward concept to grasp.  Nevertheless, they’re an integral part of modern economies – as we’ve seen, adjusting them can fundamentally alter the behavior of individuals and businesses. This is why central banks take such a proactive role in using them to keep nations’ economies on track. Do you have more questions about interest rates and the economy? Check out our Q&A platform, Ask Academy, where the Binance community will answer your questions.
Cyberpunk: Edgerunners Premiere Date & New Trailer Revealed!

Can Apple Stock Plunge Today!? Fed Decision May Affect US Dollar (USD), S&P 500, Gold (XAUUSD) And Crypto (e.g. Bitcoin Price & ETHUSD) | Swissquote

Swissquote Bank Swissquote Bank 15.06.2022 10:28
The Federal Reserve (Fed) will announce its latest rate decision today, but most of the wild ride is certainly done by now; the market fully prices in a 75bp hike at today’s decision. The aggressive rise in hawkish Fed expectations pushed the US 2-year yield to 3.45% on Tuesday. The 10-year yield flirted with 3.50%. The S&P500 lost another 0.38%, while Nasdaq eked out a small 0.20% gain, but after hitting a fresh low since November 2020. The US futures are in the positive this morning, but the market will likely remain tense until the Fed breaks the news that it hikes by 75bp. The updated economic projections and the dot plot have an important weight for future expectations. Bigger rate hikes from the Fed, and the soaring US dollar are certainly not a gift for other central banks. The US dollar is a base currency, and the rapid appreciation in the greenback increases the cost of the goods that the other countries negotiate in terms of US dollars on international markets, starting from oil and commodities. As a result, a stronger US dollar is a bigger inflation threat for the world. This is why, the hawkish Fed expectations have a bigger domino effect power on the rest of the world. The German 10-year yield continues pushing higher, and the EURUSD sees a decent support near the 1.04 threshold after the European Central Bank (ECB) announced an unscheduled meeting to discuss the market turmoil. Cable slipped below the 1.20 mark, and a 25bp hike from the Bank of England (BoE) may not suffice to compensate the hawkish Fed, and the renewed Brexit fears.   Watch the full episode to find out more! 0:00 Intro 0:27 The Fed decision 4:26 Market update 5:32 Gold, Bitcoin down 6:43 FedEx jumps & dividend paying stocks see higher interest 7:41 Expensive dollar threatens ECB, BoE 8:52 FTSE to feel the pinch of engdangered Brexit deal 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 #decision #dotplot #ECB #unscheduled #meeting #BoE #USD #EUR #GBP #CHF #Bitcoin #MicroStrategy #crude #oil #gold #market #selloff #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 Fed Plans To Address The Regulation Of Unattended Wallets

It smells like a peak in US market rates

ING Economics ING Economics 24.06.2022 16:07
When we hit 2% on the US 10yr we asked what next, and laid out a path to 3%. On hitting 3% we asked the same, and postulated the possiblilty of approaching 4%. A little over a week ago we hit 3.5%. Various signs suggest that could be the peak. That does not mean we can't get back there, as real rates are still too low and will rise. But if that was not it, we're not far off Real rates are still too low and will rise Real rates should still rise, and might just take the 10yr Treasury yield back towards the previous high We are at a point now where the peak seen at 3.5% in the 10yr US Treasury yield a little over a week ago is seeming more and more like a turning point. That does not mean we can’t get back there. But it does mean that indicators are pointing to a scenario where a dramatic break above that level is looking less likely. Nothing is impossible, but here’s the logic: First, the 5yr has been quietly decompressing on the curve over the past few days. It is now trading at 8.5bp cheap to an interpolated line between the 2yr and the 10yr, and so still in line with a bond bear market. But it is far less cheap than it was (15bp a few weeks back), and it looks like it's on a journey of decompression. It's an early call, but we're paying close attention to the journey it looks to be on. As it decompresses it typically signals a change in the cycle. Now that could change, for example should we see a surprisingly big inflation number and/or an outsized payrolls outcome in the coming weeks. But based on the developing discount, market expectations are pushing against that. Second, the 10yr breakeven inflation rate has fallen to 2.5%. That was at 3% only a month or so ago. That’s a big change in expectations. The real yield is still too low at 60bp. But even if that rises to the 1% area that we target, that would bring the 10yr Treasury yield back up to its previous high, without taking it out. For it to break above, inflation expectations would need to rise as well. It could happen of course. But then again that’s not the journey that inflation expectations are currently on. In fact, inflation expectations could even fall, muting the impact of higher real yields. As we’ve said countless times, turning points are difficult to predict, and we’ve identified the third quarter as when the turning point is likely to be. We still think we will have seen one by then, but we’d also note that it might just be from a level not too dissimilar from the 3.5% area seen on the 10yr a little over a week ago.  Watch the system risk. It's fine for now, but there are warning signs At the same time, it's important to note that price action in the past few days has been remarkable. In fact, it was astonishing in the week or so before that when 20bp moves in both directions were occurring. The move from 3.5% down to 3.1% in the 10yr must be contextualised against that, in the sense that we could journey back up again should we enter a period of "risk-on" in the weeks ahead, or on upsize data surprises. For the latter, we’d watch June payrolls on Friday week, and June CPI the following Thursday. And a final point on the system. It’s holding up fine here. Forget the elevation in the Ted spread (3mth bills spread to Libor), as that reflects a collapse in bills yields, in turn reflective of a repo market that is being strained to the downside (SOFR now at 6bp below the Fed funds floor as a record USD $2.3tr goes into the Fed's reverse repo window at 1.55%). More importantly, banks are printing 3mth commercial paper at just 15bp over the risk-free rate. This is still quite tight, compared to a long-term average at around 25bp. Hence the system is holding up quite well. But credit spreads are at stressed levels, signaling an elevation in default rates ahead of us, which is typical of recessionary periods. That in turn will result in a rise in system pressure, elevating bank funding rates relative to the risk-free rate. The market discount is no doubt factoring this, as is the Fed, which needs to get the tightening in before the system creaks. Another reason to suggest we're on the eve of a cycle change. Read this article on THINK TagsRates Federal Reserve 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 Choose Between 50 and 75bp, Ethereum Arouses More And More Discussions As Merge Is Around The Bend

The US Inflation - What Are The Predicted Prints?

InstaForex Analysis InstaForex Analysis 12.07.2022 13:05
Relevance up to 10:00 2022-07-13 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. Markets are currently focused on the US CPI report for June, which will be released on Wednesday, July 13. Forecasts show that inflation will continue to grow, where headline inflation, which includes changes in the cost of food and energy, will increase by 1.4% month-over-month and by 8.7% year-over-year. Seeing that prices have accelerated even more, inflation has every chance of reaching 8.7%. Statistics Austria reported that in addition to the increase in fuel and heating oil prices, there has also been significant growth in restaurant and food prices. If CPI turns out as expected, the Fed will most likely make another 75 basis point rate hike at the FOMC meeting later this month, especially given last week's employment report. They may also announce a fourth increase this year. The central bank began raising rates last March, the first time since 2018. The increase back then was 25 basis points, followed by a 50 bp increase in May and a 75 bp increase in June. The CME FedWatch tool sees the same scenario, indicating a 93% chance that the Fed will raise rates again by 75 basis points this month. This outlook weighs heavily on US equities, pushing the USD index up and lowering gold prices.   Read more: https://www.instaforex.eu/forex_analysis/315917
GBP/USD Could Be Turned Upside Down Shortly As The Pair Is Ahead Of UK GDP Release

US Stocks: Walt Disney (DIS) Releases Its Earnings This Week! Record-Breaking Unemployment Rate And Possibility Of 75bps Rate Hike!

Saxo Bank Saxo Bank 08.08.2022 11:44
Summary:  Equity markets were churned by the July US jobs report on Friday, first falling sharply as treasury yields jolted higher on the day, but later rallying back to close the day only modestly lower. The US yield curve is about 10 basis points from its most dramatic inversion since 1982 as the market eyes an incoming recession despite the strong US jobs data and July ISM Services data last week. This week’s chief data focus is the Wednesday US July CPI data release.   What is our trading focus? Nasdaq 100 (USNAS100.I) and S&P 500 (US500.I). US equity markets saw a very choppy session on Friday as interest-rate sensitive growth stocks dipped sharply on the strong July US jobs report. The broader market recovered most of the lost ground intra-day, but performance across themes was very mixed, with our Energy Storage basket the best performer among our “theme baskets”, likely on the passage of the climate bill by the US Senate (more below). Earnings season is winding down for the quarter, but a few prominent names are set to report this week, including Walt Disney on Wednesday. Hong Kong’s Hang Seng (HSI.I) and China’s CSI300 (000300.I) Alibaba (09988:xhkg) -4%, Tencent (00700:xhkg) -2% and Meituan (03690:xhkg) -2% dragged the Hang Seng Index 0.8% lower.  Semiconductors names retraced lower after three days of outperformance, SMIC (00981:xhkg) -2%.  Cathay Pacific (00293:xhkg) claimed 2% following Hong Kong’s announcement of cutting inbound travelers’ hotel quarantine to 3 days from 7 days.  In the mainland, the lockdown of Hainan, a southern resort island, triggered some buying of traditional Chinese medicine and Covid-treatment related names. CSI300 was flat in midday.  USD pairs after the strong US jobs data Friday. The USD was jolted higher by the strong July jobs report on Friday, taking EURUSD, for example, sharply back lower after its attempt the prior day to push up toward 1.0250+ resistance. That pair has traded in an impossibly constricted range for nearly three weeks between 1.0100 and 1.0300, perhaps waiting for a more determined signal from risk sentiment or the longer end of the US yield curve for a sustained directional move. The action is similar elsewhere, save for USDJPY, which has traded in a wider range on the swings in treasury yields and heavy positioning. The jobs data drove a sharp rally from 133.00 before the Friday US jobs data to close the day above 135.00. The 61.8% retracement of the sell-off from the 139.39 to comes in a 135.91. Gold reversed lower on Friday ... after the strong US job report brought the risk of another 75 basis-point rate hike back on the table. During the past couple of weeks, the metal sector, both precious and industrial, has managed to recoup some of the steep losses seen in recent months. However, investor participation remains weak with total holdings in bullion-backed ETFs seeing continued declines while speculators in the futures market holds the smallest long exposure since early 2019. Both signs that the market still believe central banks will be successful in bringing inflation under control without causing too much damage to the economic outlook. Resistance at $1795 and support at $1752. An attempted China-led recovery in industrial metals will be watched closely by silver which continues to find resistance at the 50-day moving average, today at $20.33. Crude oil steadying near six-month low (OILUKOCT22 & OILUSSEP22). Brent crude oil has started the week trading around $95/b while WTI remains below $90/b driven by expectations for softer demand into the autumn months and a general economic slowdown concern. Key crude oil spread differentials have narrowed in recent weeks, suggesting less tightness in the market while refinery margins have tumbled from the record levels seen in June. Overall, worries about the supply outlook from major producers are likely to keep prices supported at or near current levels. With the peak holiday season upon us liquidity will remain low, thereby raising the prospect of outsized market reactions to the news. Focus this week on monthly oil market reports from the EIA tomorrow followed by OPEC and the IEA on Thursday. US Treasuries (IEF, TLT) The July employment report was exceptionally strong with payroll, unemployment rate and hourly earnings all surprising to the upside and jolted US treasury yields sharply higher right after the data hit the wires.  The front-end sold off the most as 2-year yield soared 18 basis points to 3.23%. 10-year yields climbed 13 basis points to 2.83.  The 2-10 year yield curve inverted further inverted to negative 40 basis points. The front-end treasury curve and money market rates have repriced the September FOMC with a likely 75 basis point hike.   What is going on? US Senate passes large tax and spending bill on climate, health care and taxes. The original bill discussed all year was on the $3 trillion scale, but was too large for centrist Democrats, who helped to whittle down the bill to some $370 billion on new climate-related spending initiatives, new measures that allow the US government to negotiate with drug-makers on pricing, and 15% minimum tax on large corporations, and a 1% tax on stock buybacks. Among the climate-related initiatives are $10 billion in investment tax credits for manufacturers who build EV-production or renewable energy-production facilities, and tax credits of up to $7,500 for EV purchases and even $4,000 for the buying of used EV’s. The House will have to pass the bill and President Biden will then have to sign it for the bill to become law. A 75-basis point hike back to the table for the September FOMC following Friday’s job data. The nonfarm payroll report surprised to the upside and showed that the U.S. added 525k jobs in July, more than double the 250K consensus while the unemployment rate fell to 3.5% in July, the lowest level since 1965.  Average hourly earnings rose 0.5% in July, above market expectation of 0.3% and June average hourly earnings were revised up 0.1 percentage point to 0.44%.  The strong hourly earnings data rebuts the peak inflation thesis and points to upside risks in inflation. Over the weekend, Fed Governor Michelle Bowman reiterated the Fed’s duty to bring inflation down to the 2% target and said that “similarly-sized increases should be on the table until…inflation declining in a consistent, meaningful, and lasting way.” China’s trade surplus hit a record $101 billion last month... ... as exports grew a surprisingly robust 18% YoY. The data showed how exports have given a much-needed boost to an economy currently struggling with weak domestic demand amid a weak property sector and China’s zero Covid tolerance causing continued lockdowns. The jump in exports was broadly based: +18.5% with Japan, 32% with ASEAN, +22.9% with the EU and +10.9% with the US. In commodities, crude oil imports rose while soybeans, copper and natural gas declined on a monthly basis. France approved a €20bn inflation relief package The main measures are : an increase in pensions and welfare payments by 4 % (this is still lower than inflation, however), a cap on rent increases at 3.5 %, pay rise of 3.5 % for civil servants, private companies will be encouraged to offer employees an annual tax-free bonus of up to €6,000, raised from a previous limit of €1,000 and the state-funded fuel price rebate worth 18 cents a liter will be increased to 30 cents in September and October. In addition, French lawmakers approved an updated budget to pay for the renationalisation of the utility company EDF. Emerging markets update On Friday, the Reserve Bank of India hiked its repo rate by 50 basis points to 5.4 %. Expect more hikes to come. But the pace of tightening may be diminishing as inflation looks set to fall. There have been several signs indicating that inflation will likely moderate in the short-term: gasoline prices have been lowered by the state petroleum companies and global agricultural prices are much lower than a few months ago. In Egypt, the country’s funding problem is becoming more acute. By end-2023, the country will need to pay $41b covering both the current account deficit and maturing debt. International reserves can only partially cover these (currently standing at $33b). There are no real other sources of financing. Only a currency devaluation could be helpful. This would cut the trade deficit (making exports more competitive and imports more expensive). On the downside, it is likely to increase inflation. However, there is certainly no better option. What are we watching next? The U.S. July CPI report is out on Wednesday This should be a low energy report (due to the recent decrease in energy prices), but a strong upside surprise could generate a considerable reaction. The economist consensus looks for headline and core CPI to increase by 0.1 % month-over-month and 0.6 %, respectively. The retracement in energy prices should provide some relief, at least at the headline level. The first estimate of the U.S July PPI report is out on Thursday. Earnings to watch Q2 earnings have jumped to a new all-time high in the MSCI World Index highlighting how inflation is lifting all boats. The energy sector is the big winner with earnings jumping 279% y/y due to surging oil and gas prices. This week, the pace of earnings releases is set to slow, but the list below highlights the most important earnings to track. The names in bold are those that can move sentiment overall or in the company’s respective industry. Monday: Barrick Gold, Siemens Energy, Nippon Telegraph & Telephone, SoftBank Group, Tokyo Electron, Dominion Energy, BioNTech, AIG, Tyson Foods, Palantir Technologies, Take-Two Interactive Tuesday: Alcon, Globalfoundries, Roblox, Trade Desk, Coinbase Global, Akamai Technologies, Plug Power, Unity Wednesday: Commonwealth Bank of Australia, Vestas Wind Systems, Genmab, E.ON, Honda Motor, Prudential, Aviva, Walt Disney, Coupang, Illumina Thursday: KBC Group, Brookfield Asset Management, Orsted, Novozymes, Siemens, Hapag-Lloyd, RWE, China Mobile, Antofagasta, Zurich Insurance Group, NIO, Rivian Automotive Friday: Flutter Entertainment, Baidu Economic calendar highlights for today (times GMT) 0800 – Switzerland Weekly SNB Sight Deposits 0830 – Eurozone Aug. Sentix Investor Confidence 0030 – Australia Aug. Westpac Consumer Confidence 0030 – Australia Jul. NAB Business Conditions/Confidence Follow SaxoStrats on the daily Saxo Markets Call on your favorite podcast app: Apple  Spotify PodBean Sticher Source: Financial Markets Today: Quick Take – August 8, 2022 | Saxo Group (home.saxo)
USD/JPY Reaching 130-135? It Seems It Maybe Not Impossible

The US Inflation Is Lower Than Expected, But Does It Mean Fed Will Stop?

ING Economics ING Economics 11.08.2022 08:52
A rare pleasant surprise from the CPI report with headline inflation dropping to 8.5%YoY from 9.1% on lower fuel prices, airline fares, clothing and education costs. Ongoing falls in gasoline will mean the headline rate falls further in August, but core inflation is likely to be stickier due to labour costs and will keep the Fed firmly in tightening mode US food prices continue to rise but there's better news elsewhere on inflation 8.5% US inflation rate July Better than expected US inflation slows more than expected We don’t often get pleasant surprises surrounding the US inflation data so July’s numbers are something to be cherished. Both the headline and core (ex food & energy) rates reported monthly increases that were 0.2pp lower than expected. Headline CPI was flat on the month (consensus 0.2%), resulting in the YoY rate dropping to 8.5% from 9.1% while the core rate rose "just" 0.3%MoM (consensus 0.5%). The Year-on-Year rate, therefore, stays at 5.9%. Developments within core are primarily responsible for the surprise with the housing rental components within shelter posting more moderate increases than anticipated while airline fares fell 7.8%MoM and used cars fell 0.4%. Apparel prices dropped 0.1% with education and communication also experiencing a 0.2%MoM fall. Gasoline fell 7.1%, but bigger falls will occur next month. On the upside, food prices rose 1.1%MoM/10.5%YoY Contributions to annual CPI rate (YoY%) Source: Macrobond, ING Core inflation still subject to upside risks Today’s report should provide support to the notion that the US has now passed the peak for headline inflation with lower gasoline prices, down a dollar a gallon nationally on their June 13 peak, set to have a more substantial impact in the August inflation print. We are forecasting the YoY rate dropping to 8.3%. However, core inflation remains on an upward trajectory due to rising housing rental costs and service sector inflation pressures.  Wages are the biggest cost input for the service sector. The latest jobs report showed that they continue to push higher, but with productivity having fallen through the first half of the year, unit labour costs are surging. In an environment where decent demand means companies can pass higher costs onto consumers, we don’t see core inflation peaking until around September/October time with the core rate up at around 6.5%YoY by then Headline & core inflation with ING forecasts Source: Macrobond, ING Much more data to come ahead of September 21st Fed meeting It is important to remember that there is another jobs report and another inflation report ahead of the September 21st FOMC meeting. But inflation remains far from target, the economy has added more than half a million jobs last month and third-quarter GDP is set to rebound based on consumer movement data. Add to all that a positive contribution from net trade and a less negative drag from inventories then the case for a third consecutive 75bp Federal Reserve rate hike in September remains strong. Read this article on THINK TagsUS Inflation Federal Reserve 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
US Dollar's (USD) And Stock Market's Reaction To The US Labour Market Data | EUR/USD After The Release

USA: Fuel Is Cheaper! Forex: Get Ready! US Dollar May Skyrocket Shortly! Could Euro To British Pound (EUR/GBP) Reach 0.85!?

ING Economics ING Economics 12.08.2022 09:41
Softer-than-expected US price data this week has lifted risk assets around the world, especially in the emerging market space. The highlight of today's relatively quiet session will be US August consumer sentiment data, which is expected to pick up after the big drop in gasoline prices. This should be good for US growth and the dollar US gasoline has fallen from $5/gallon to $4 over the last month USD: Rising consumer confidence should be good news all round Softer-than-expected US July price data this week (both CPI and PPI) have been good news for risk assets around the world. Investors have read it as reducing the Fed's urgency to tighten policy. That said, Fed rhetoric has been consistent all week. Namely, the policy rate is heading toward 3.25/3.50% later this year (roughly priced by the markets) and then possibly 4% next year (not priced).   The latest US consumer sentiment readings from the University of Michigan – out today – will feed into this story. James Knightley looks for an upside surprise in consumer sentiment after US gasoline's fall to $4 from $5/gallon over the last month. We also get fresh inflation expectations data. Here the 5-10 year expectations peaked at 3.10% earlier this summer, were 2.9% in July and today are expected to fall to 2.8%.  How will markets read the data? A drop in inflation expectations may suggest the Fed can be more relaxed on inflation. But there are no signs of that coming through in its rhetoric. Instead, the bigger impact may be the bounce in consumer sentiment, reduced fears of a 2023 recession, and the pricing out of some of the 50bp of easing expected in 2H23. This should be a dollar-positive development. As we discussed yesterday, we like the dollar against the low yielders (euro and yen), but feel that declining levels of volatility will see renewed interest in the carry trade. Yesterday, we picked out long MXN/JPY as a pair that could rally in this environment. Mexico's central bank Banxico did hike 75bp yesterday to 8.50% and even though it omitted language talking about 'more forceful' rate hikes in the future, we think Banxico will match the Fed hike-for-hike. 6.80 remains our target for MXN/JPY. Heavily weighted to the low yielders, DXY should be able to edge a little higher today. A break above 105.50 would go a long way to stabilising it after the heavy losses suffered on Wednesday's US CPI release. Chris Turner EUR: Gas developments remain worrying European industry must be watching with growing concern as European natural gas prices continue to edge higher. Higher costs are a given, but winter rationing probably remains the bigger threat. For FX markets, 2022 has been the year of watching terms of trade developments – the price of exports over imports. These have moved very negatively for the eurozone this year and delivered a negative income shock. This week's move in gas prices has sent eurozone terms of trade towards the worst levels of the year and is a clean euro negative. Given that we are slightly bullish on the dollar today, we think that the recent EUR/USD correction has stalled in the 1.0350/0400 resistance area and would favour a move back to 1.0275 today. Elsewhere, some softer-than-expected July Swedish CPI data released today may pour cold water on calls for a massive Riksbank rate hike in September. After a good run in July, we doubt the Swedish krona pushes on too much further against the euro. Chris Turner GBP: 2Q22 UK GDP data not quite as bad as expected UK 2Q22 GDP data came in marginally better than expected, where the extra bank holiday in June did not have quite as large a negative impact as analysts thought. The data can probably keep expectations alive that the Bank of England (BoE) will hike 50bp on 15 September. And ever-rising expectations for how much higher the UK energy price cap will be adjusted (and what it means for the peak of UK inflation) will probably mean the BoE stays hawkish all year. EUR/GBP is slightly stronger than we thought and could edge up to the 0.8485 area. But given the challenges faced on the continent, we would not chase EUR/GBP higher. Chris Turner CEE: Hungary rating review tonight In the Central and Eastern Europe (CEE) region, industrial production in Romania, the final estimate of inflation in Poland, Czech National Bank (CNB) minutes, and current account data across the region will close the busy calendar this week. The final CPI reading in Poland is unlikely to differ markedly from the flash estimate of 15.5% year-on-year. However, given that gas prices at the pump continued to decline in the final week of July, we do not rule out a downward revision to 15.4% YoY. In the long term, we expect the summer months to be marked by relatively stable, albeit very high, inflation. Inflationary pressure is projected to re-emerge with the beginning of the heating season in autumn and at the beginning of 2023 due to the upswing in regulated prices. CNB minutes should reveal the details of the new board's discussion from the last meeting when the central bank left rates unchanged for the first time since May 2021. In addition to the minutes, the full forecast will be released, including alternative scenarios. Hungary's rating review by S&P will also be published later today. We do not expect a change in the rating outlook (BBB, stable), but a downgrade is in play, mainly due to energy dependence and uncertain access to EU money. For today, we do not see many impulses from the regional calendar and the main issue remains the current level of EUR/USD, which is playing positively into the hands of the CEE currencies for now. We see the Polish zloty and Hungarian forint fairly priced, but it is hard to be bullish in this part of the region given the energy risks and the escalating conflict with the European Commission over access to EU money. The koruna shook off another batch of short positions yesterday and we believe EUR/CZK should gradually start to return to higher levels, given that with the region's most dovish central bank on its back, it is hard to find justification for the current EUR/CZK levels. Frantisek Taborsky Read this article on THINK TagsGasoline FX Daily FX Dollar CEE region 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 EUR/USD Pair Showed Local Speculative Interest In Short Positions Yesterday

Forex Market May Surprise Us Today! EUR/GBP May Rally, What GBP/USD Traders Have To Do To Make The Pair Increase?

InstaForex Analysis InstaForex Analysis 12.08.2022 12:17
Relevance up to 09:00 2022-08-13 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. Although the US inflation data has been very encouraging lately, Fed officials said the central bank is unlikely to change its stance on interest rates this year and the next. Minneapolis Fed President Neil Kashkari noted that the benchmark rate could reach 3.9% by the end of this year and rise to 4.4% by the end of 2023.   Chicago Fed President Charles Evans had the same view, mentioning that although inflation eased, it is still unacceptably high. He said they will ensure that inflation returns to 2%. At the moment, inflation has fallen below estimates, prompting investors to lower bets that the Fed will go for another three-quarters of a percentage point rate hike in September. But San Francisco Fed President Mary Daly said in a recent speech that it is too early to declare victory in the central bank's fight against inflation, so it is likely that the Fed will still implement another 75 basis point hike in the next policy meeting.     In another note, the US released the latest data on jobless claims, which showed an increase for the second week in a row. It remained at the highest level since November, indicating continued moderation in the labor market, which is what the Federal Reserve is trying to achieve. Initial jobless claims rose by 14,000 to 262,000, slightly lower than the expected 265,000. The reason why jobless claims is on the rise is the layoffs and suspended hiring in companies, especially in the technology sector. Demand for new workers is also declining as the Federal Reserve raises interest rates. The four-week moving average, smoothing out the fluctuations, rose to 252,000. Another important report was the US producer price data, which unexpectedly fell in July due to lower energy prices. It dipped 0.5% from the previous month, but rose 9.8% from last year. There was also data on producer prices, which rose 0.2% from June and 7.6% from a year earlier. The numbers suggest that inflationary pressures are beginning to ease, which could eventually lead to a slowdown in consumer price growth.     In terms of the forex market, EUR/USD is trading above 1.0300 and has good chances for further growth. Consolidating beyond 1.0320 will give buyers an excellent chance to return to 1.0370, then go to 1.0430 and 1.0500. But if pressure returns around 1.0270, the pair could fall to 1.0230 and 1.0200. In GBP/USD, buyers need to stay above 1.2180 because only that can push the quote to 1.2220, 1.2260 and 1.2345. If pressure return around 1.280, the pair will fall to 1.2130 and 1.2100.   Read more: https://www.instaforex.eu/forex_analysis/318788
Waiting game ahead of Jackson Hole, King Dollar, bitcoin edges higher

Today (USD) US Dollar May Skyrocket And Stock Market May Do The Opposite! | What's Possibly Ahead Of EUR/USD And GBP/USD?

InstaForex Analysis InstaForex Analysis 12.08.2022 12:23
Relevance up to 09:00 2022-08-14 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. According to the latest data, Dow lost its previous gains, while the S&P 500 and Nasdaq moved into negative territory The rally in equity markets is beginning to slow down amid growing fears that the Fed may still take advantage of the situation and continue raising rates because of high inflation. According to the latest data, Dow lost its previous gains, while the S&P 500 and Nasdaq moved into negative territory. Positive sentiment is also decreasing in Europe and Asia, while dollar and Treasury yields show growth. The recently-released jobless claims data in the US, albeit lower than expected, indicated an increase against the previous value, which probably convinced market players that the Fed will not miss a chance to continue actively raising interest rates. San Francisco Fed President Mary Daly said it is still necessary to raise rates in September, not by 0.25%, but by 0.50% or even 0.75%. This is why market players should closely follow the economic statistics coming in today, as that could signal what can be expected next week. There is a huge chance that dollar will resume growth, while the stock markets will end their rally. Forecasts for today:         EUR/USD The pair is trading above 1.0300. Increased selling pressure will push the quote to 1.0210. GBP/USD Although the pair is trading above 0.7100, an increase in selling pressure will bring the quote to 1.2080.   Read more: https://www.instaforex.eu/forex_analysis/318790
Powell Touched On The Topic Of The Digital Dollar And The Crypto Industry

Dollar (USD) Became Stronger, Not Enough Yet. Fed Better Meet Expectations!

John Hardy John Hardy 12.08.2022 14:23
Summary:  US treasury yields at the long end of the yield curve jumped higher yesterday to multi-week highs, a challenge to widespread complacency across global markets. The USD found a modicum of support on the development, though this was insufficient to reverse the recent weakening trend. It will likely take a more determined rise in US yields and a tightening of financial conditions, possibly on further Fed pushback against market policy expectations, to spark a more significant USD comeback. FX Trading focus: US yields jump, not yet enough to reverse recent USD dip A very interesting shift in the US yield curve yesterday as long yields jumped aggressively higher, with the 30-year yield getting the most focus on a heavy block sale of US “ultra” futures and a softer than expected 30-year T-bond auction from the US treasury. The 30-year benchmark yield jumped as much as 15 basis points from the prior close, with the 10-year move a few basis points smaller. We shouldn’t over-interpret a single day’s action, but it is a technical significant development and if it extends, could be a sign of tightening liquidity as the Fed ups its sales of treasuries and even a sign that market concern is growing that the Fed will fail to get ahead of inflation. As for the market reaction, the USD found some support, but it was modest stuff – somewhat surprisingly in the case of the normally very long-US-yield-sensitive USDJPY. Overnight, a minor shuffle in Japanese PMI Kishida’s cabinet has observers figuring that there is no real determined pushback yet against the Kuroda BoJ’s YCC policy, with focus more on bringing relief to lower income households struggling with price rises for essentials. Indeed, BoJ policy is only likely to come under significant pressure again if global yields pull to new cycle highs and the JPY finds itself under siege again. As for USDJPY, it has likely only peaked if long US yields have also peaked for the cycle. Chart: EURUSD EURUSD caught in limbo here, having pulled up through the resistance in the 1.0275+ area after a long bought of tight range trading, but not yet challenging through the next key layer of resistance into 1.0350+. It wouldn’t take much of a further reversal here to freshen up the bearish interest – perhaps a dip and close below 1.0250 today, together with a bit of follow through higher in US yields and a further correction in risk sentiment. Eventually, we look for the pair to challenge down well through parity if USD yields retest their highs and beyond. Source: Saxo Group Elsewhere – watching sterling here as broader sentiment may be at risk of rolling over and as we wind our way to the conclusion of the battle to replace outgoing Boris Johnson, with Liz Truss all but crowned. Her looser stance on fiscal prudence looks a sterling negative given the risks from UK external deficits. Her instincts seem pro-supply side on taxation, but the populist drag of cost-of-living issues has shown her to be quick to change her stripes – as she has often been, having reversed her position on many issues, including Brexit (was a former remainer). Today’s reminder of the yawning trade deficit (a current run rate of around 10% of GDP) and the energy/power situation together with dire supply side restraints on the UK economy have us looking for sterling weakness – a start would be a dip below 1.2100 in GBPUSD, which would reverse the reaction earlier this week to the US July CPI release. The week ahead features an RBNZ on Wednesday (market nearly fully priced for another two meetings of 50 basis points each). NZDUSD has looked too ambitious off the lows – there is no strong external surplus angle for the kiwi like there is for the Aussie – might be a place to get contrarian to the recent price action if global risk sentiment is set to roll over again finally now that the VIX has pushed all the way to 20 (!).  A Norges Bank meeting on Thursday may see the bank hiking another 50 basis points as it continues to catch up to inflationary outcomes. The US FOMC minutes are up next Wednesday and may be a bit of a fizzle, given that the bulk of the easing financial conditions that the Fed would like to push back against came after the meeting. Table: FX Board of G10 and CNH trend evolution and strength. The US dollar hasn’t gotten much from the latest development in yields – watching the next couple of sessions closely for direction there, while also watching for the risk of more sterling downside, while NZD looks overambitious on the upside. Source: Bloomberg and Saxo Group Table: FX Board Trend Scoreboard for individual pairs. The EURGBP turn higher could follow through here – on the lookout for that development while also watching GBPUSD status in coming sessions and whether the EURUSD move higher also follows through as per comments on the chart above. Source: Bloomberg and Saxo Group Upcoming Economic Calendar Highlights (all times GMT) 1400 – US Fed’s Barkin (non-voter) to speak 1400 – US Aug. Preliminary University of Michigan sentiment Share Source: FX Update: US yield jump brings USD resilience if not a reversal.
In The US Q3 GDP May Reach 3%, But The Question Is What To Expect From Q4

In The US Q3 GDP May Reach 3%, But The Question Is What To Expect From Q4

ING Economics ING Economics 17.08.2022 09:03
A rebound in manufacturing and industrial output, coupled with a decent performance from the consumer sector and net trade and inventories being less of a drag support our view of 3%+ GDP growth in 3Q. However, the housing market, a weaker external environment, higher rates and deteriorating business surveys suggest tougher times ahead US industrial production for July exceeded consensus Industrial output bounces back on strong manufacturing The US July industrial production report has posted a very respectable 0.6% month-on-month gain versus the 0.3% consensus. Manufacturing led the way with a 0.7% increase as auto output jumped 6.6%, but even excluding this key component output was up 0.3%. Mining also rose 0.7% with oil and gas output jumping 3.3% MoM as high prices spurred drilling activity. Meanwhile utilities were a surprise drag, falling 0.8% MoM. US industrial output levels Source: Macrobond, ING Strong 3Q, but outlook for 4Q looks tougher This report provides more evidence that 3Q GDP should be good. We strongly suspect that consumer spending will be lifted by the cash flow boost caused by the plunge in gasoline prices and decent employment gains, trade will be supportive too, inventories less of a drag and now we know that manufacturing is rebounding. Putting this altogether we think 3% annualised growth is firmly on the cards. The worry is what happens in 4Q. Yesterday’s NY Empire manufacturing survey was awful and points to much weaker orders and activity later in the year.  We will be closely looking to see if this is replicated in the Philly Fed (Thursday), Richmond Fed (August 23rd) and others later in the month. Even if it is seen as an aberration there are plenty of reasons to expect weaker activity towards year end. A China slowdown and recession in Europe will weigh heavily while ongoing increases in interest rates and a deteriorating outlook for the housing market will also act as a major headwind. Residential construction worries mount... In that regard, today’s other main macro report, US housing starts, fell 9.6% MoM in July to 1,446k annualised versus the 1,527k consensus. This is the weakest reading since February 2021 with yesterday's plunge in NAHB home builder confidence suggesting further falls in construction activity is likely. Housing starts and home builder sentiment Source: Macrobond, ING   We will get existing and new home sales numbers over the next seven days with further weakness expected in both due to high prices and a doubling of mortgage rates hurting affordability and crushing demand. We also expect supply to continue increasing, which will put downward pressure on prices at a time when home builders continue to struggle to find workers and the legacy of high material costs. Direct residential construction will provide a major headwind for economic growth over the next 6-12 months, but it will also have knock-on effects for key retail sectors such as furniture, furnishings and building supplies given the strong correlation with housing transactions. Read this article on THINK TagsUS Recession Manufacturing Housing Construction 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 The Morning US Dollar (USD) Was Up, British Pound And Euro Down | US Stocks: S&P 500 Gained Almost 2% Yesterday, Dow Jones Added 1.88%, Nasdaq Increased By 2%

FOMC Minutes And Retail Sales Are Released Today! US Dollar (USD) May Be Trading Sideways!

ING Economics ING Economics 17.08.2022 09:14
Bonds quickly reversed their gains and look under further pressure from the goldilocks state of play across financial markets. There are risks to these not too hot nor too cold markets, however. A more hawkish Fed in today’s minutes is one. Hard US economic data point to a healthy 3Q but things should worsen in 4Q Source: Shutterstock Banking on a dovish Fed carries risks Bunds have tested the 1% yield level again after a 9bp round trip in two days. This is the proof that market moves in illiquid summer months, even more so due to bank holidays in some parts of Europe on Monday, should be taken with a pinch of salt. Bonds more broadly continue to trade weak with a bias toward higher yields evident since the start of the month. We attribute some of the move to better risk sentiment across developed markets, but risks to these goldilocks, neither too hot that central banks need to keep hiking nor too cold that the economy falls off a cliff, state of play abound. Hawkish FOMC minutes and strong retail sales could bump up the US yield curve Source: Refinitiv, ING   Tonight’s Fed minutes might well jar with the upbeat tone evident in financial markets The first and most obvious challenge is that central banks can ill afford a loosening of financial conditions as they still grapple with record high inflation. The Fed is clearly one example but by no means an isolated one. Tonight’s Fed minutes might well jar with the upbeat tone evident in many financial markets. Even if investors might be tempted to discount any hawkish concerns as ‘pre-CPI peak’, the tone of Fed comments since the July FOMC meeting leaves no doubt about their mood. This in turn should result in higher treasury yields, reaching above 3% again, and a softer tone in risk assets. Both economic optimism and tighter spread look at risk The discrepancy between soft and hard data in the US continues to drive some of the whipsaw in bond yields. Industrial production yesterday cemented our expectations for a solid 3Q GDP growth, and July retail sales, to be published today, should look equally solid. The contrast with sentiment indicators might only be a matter of timing however, with 4Q growth prospects looking a lot less healthy. It is difficult to imagine markets extrapolating this good stint of positive US numbers for long, with other corners of the economy, most notably housing, heading south. Risk of profit-taking in fixed income into the September supply window are rising Source: Refinitiv, ING   There is a looming risk of a profit-taking into the September/October supply window Another risk is coming from the rise in government bonds themselves. Independent of the tone of central banks, rising core yields bring about wider sovereign spreads. This has been evident in the underperformance of peripheral bond markets this week with greater volatility in core yields also affecting demand for spread products. There is also a looming risk of a profit-taking into the September/October supply window after the gains registered over the summer months. This may not be the case yet but, in the case of sovereign spreads, some investors may well decide that they do not want to go into the last month of Italian election campaign with too much exposure. Today's events and market view Eurozone 2Q GDP sees its preliminary release today. Consensus is for a print in line with the advanced 0.7% MoM/4% YoY first reading but the focus in financial markets is much more on the energy crunch facing the eurozone economy over the winter months. The main item on the economic calendar in the US is the July retail sales report. A fall in gasoline prices will depress the headline figure but this should free up cash for other goods and services according to our economics team. This could add to upward pressure on bond yields into the FOMC minutes. The US Treasury will also sell $8bn worth of 20Y T-bonds. The main potential market-mover will be later in the session however, in the form of the July FOMC minutes. The majority view is that the Fed can ill afford a further easing of financial conditions if it is to get inflation under control. This argues in favour of an overall hawkish tone coming out of the minutes. Michelle Bowman will also be on the wires. 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
Forex: GBP/USD - New, Fresh Low. The Next Target For Bulls

Sterling (GBP) And Dollar (USD) Are At The Top Of The World!!! What To Consider Next?

John Hardy John Hardy 17.08.2022 17:04
Summary:  The stronger US dollar is beginning to dominate across FX, and we haven’t even seen risk sentiment roll over badly yet, although this time it could be the US dollar itself that defines and drives financial conditions across markets. Elsewhere, we have seen an interesting fundamental test of sterling over the last couple of sessions, as sterling has begun rolling over today, even as a ripping increase in rate tightening bets in the wake of another hot CPI print out of the UK this morning. FX Trading focus: USD dominating again, GBP rate spike impact fading fast and indicating danger ahead for sterling. RBNZ hawkishness fails to impress the kiwi. The US dollar rally is broadening and intensifying, and US long yields are threatening back higher, which is finally pushing back against the recent melt-up in financial conditions/risk sentiment. The US July Retail Sales report looks solid, given the +0.7% advance in “ex Autos and Gas” sales after the June spike in average nationwide gasoline price to the unprecedented 5 dollar/gallon level. Yes, July gasoline prices were lower than June’s, but there wasn’t a huge delta on the average price for the month, and the impact of lower gas prices will likely be more in the August full month of vastly lower prices – presumably averaging closer to 4/gallon, together with the psychological relief that the spike seems in the rear view mirror, even if we can’t know whether a fresh spike awaits in the fall, after the draw on strategic reserves is halted. A strong US dollar, higher US yields and a fresh unease in risk sentiment are a potential triple whammy in which the US dollar itself is the lead character, as USDJPY has reversed back above 135.00 even before the US data, suggesting a threat back toward the cycle highs. AUDUSD has entirely reversed its upside sprint above 0.7000, refreshing its bearish trend after a squeeze nearly to the 200-day moving average there. Elsewhere, EURUSD and GBPUSD are a bit stuck in the mud, watching 1.0100 and 1.2000 respectively. The most important additional aggravator of this USD volatility in coming sessions would be a significant break higher in USDCNH if China decides it is tiring again of allowing the CNH to track USD direction at these levels. The pressure has to be building there after the PBOC’s rate cut at the start of the week. The UK July CPI release this morning raised eyebrows with another beat of expectations across the board, the day after strong earnings data. The 10.1% headline figure represents a new cycle and the month-on-month figure failed to moderate much, showing +0.6% vs. +0.4% expected. Core inflation also rose more than expected, posting a gain of 6.2% YoY and thus matching the cycle high from  April. The Retail Price Index rose 12.3% vs. 12.1% expected. The market reaction was easily the most interesting, as we have seek UK yields flying higher but failing to impress sterling much after a bit of a surge yesterday and into this morning. Now, sterling is rolling over despite a 40 basis point advance(!) in the 2-year swap rate from yesterday’ open, much of that unfolding in the wake of the CPI release today. Chart: GBPUSD Not that much drama at the moment in the GBPUSD chart, but that is remarkable in and of itself, as the soaring UK yields of yesterday and particularly today in the wake of a higher than expected CPI release are not doing much to support sterling. When rate moves don’t support a currency, it is starting to behave somewhat like an emerging market currency, a dangerous signal for the sterling, where we watch for a break of 1.2000 to usher in a test of the cycle lows below 1.1800, but possibly even the pandemic panic lows closer to 1.1500. The Bank of England hikes will only a accelerate the erosion of demand and slowdown in the UK economy that will lead to a harsh recession that the Bank of England itself knows is coming, but may have to prove slow to react to due to still elevated inflation levels, in part on a weak currency. Source: Saxo Group The RBNZ hiked fifty basis points as expected overnight and raised forward guidance for the Official Cash Rate path to indicate the expectation that the OCR will peak near 4%, a raising and bringing forward of the expected rate peak for the cycle. In the press conference, RBNZ Governor Orr spelled out the specific guidance that he would like to get the rate to 4% and take a significant pause to see if that is enough. “Our view is that sitting around that 4% official cash rate level buys the monetary policy committee right now significant comfort that we would have done enough to see inflation back to our remit.” NZ short rates were volatile, but hardly changed by the end of the day, meaning that NZD direction defaulted to risk sentiment, with a fresh dip in AUDNZD erased despite a weak AUD, and NZDUSD confirming a bearish reversal. Table: FX Board of G10 and CNH trend evolution and strength. Note the big shift in USD momentum, the most notable on the chart, although the absolute value of the SEK negative shift has been even larger over the last few days as EU woes and the growth outlook weigh even more heavily on SEK, which is often leveraged to the EU outlook, also as EURSEK has now failed to progress lower after a notable break below the 200-day moving average. Note the AUD negative shift as well, with sluggish wage growth data overnight for Q2 offering no helping hand. Source: Bloomberg and Saxo Group Table: FX Board Trend Scoreboard for individual pairs. USDJPY looks to flip back to a positive trend on a higher close today or tomorrow, the recent flip negative in GBPUSD looks confirmed on a hold below 1.2000, and AUDUSD looks a matter of time before flipping negative as well, while USDCAD has beaten it to the punch – although a more forceful upside trend signal there would be a close above 1.3000 again. Source: Bloomberg and Saxo Group Upcoming Economic Calendar Highlights (all times GMT) 1800 – US FOMC Minutes 1820 – US Fed’s Bowman (Voter) to speak 2110 – New Zealand RBNZ Governor Orr before parliamentary committee 0130 – Australia Jul. Employment Change (Unemployment Rate)   Source: FX Update: GBP in danger as rate spike fails to support. USD dominating.
The US Yields And The US Dollar Likely Can Move In The Same Direction

Fed Reptesentatives Are Committed To Holding Back Price Growing And Control The Inflation According To Expectations

Conotoxia Comments Conotoxia Comments 18.08.2022 13:17
Last night's publication of the minutes of the last Fed meeting, which took place at the end of July, may have affected the US dollar's trading. The policymakers touched on the regulation of the digital asset market for the first time at such a meeting. According to the published minutes, Fed officials remain very attentive to inflation risks and are committed to lowering price growth and keeping inflation expectations under control. A commitment to tightening monetary policy can take place, even if it comes at the expense of economic growth, the FOMC minutes show. The July discussion touched on the possible risks of too many and too large interest rate hikes. There was also talk that the Fed may be pursuing too much restrictive monetary policy than is necessary to restore price stability in the economy. The Fed, for the moment, seems unconcerned about GDP data and the risk of a sustained slowdown or official recession, as officials said the economy is stable for now, pointing to strong job growth, a low unemployment rate and elevated wage growth. Moreover, there was also discussion of the possibility of a later upward revision of earlier GDP readings, which are revised over time. There was also a statement regarding possible further action by the Federal Reserve. Policymakers discussed the possibility of slowing the pace of interest rate hikes at some point, but this will require data readings that can be considered satisfactory in terms of the impact of current hikes on slowing inflation. Meanwhile, for the moment, it may be crucial to maintain a restrictive stance to avoid a loosening of inflation expectations. Initially, after the release of the minutes, the EUR/USD exchange rate rose to 1.0200, before retreating to the region of 1.0150 this morning. The reaction thus appears to be mixed, without leading to a major impulse, and the exchange rate of the main currency pair has remained in consolidation since the morning of August 16. On Wall Street, on the other hand, indexes were down after the publication. The S&P500 fell 0.3 percent and the Nasdaq 100 fell 0.6 percent. The committee also turned its attention to the world of digital assets. Participants recognized the growing importance of digital assets and their increasing interconnectedness with other segments of the financial system, underscoring the need to establish a robust supervisory and regulatory framework for the sector to adequately mitigate potential systemic risks. Several participants mentioned the need to strengthen supervision and regulation of certain types of non-bank financial institutions, according to published minutes. 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. 82.59% 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.   Source: Highlights from the Fed minutes
Will Bank Of Japan Remain Committed To Its Easy Policy?

Apple Concentrated On Vietnam Productions As China Having Problems With Energy Supply

Marc Chandler Marc Chandler 18.08.2022 14:03
Overview: The sell-off in European bonds continues today. The 10-year German Bund yield is around four basis points higher to bring three-day increase to about 22 bp. The Italian premium over Germany has risen by almost 18 bp over these three sessions. Its two-year premium is widening for the fifth consecutive session and is above 90 bp for the first time in almost three weeks. The 10-year US Treasury yield is a little softer near 2.88%. Most of the large Asia Pacific equity markets fell, with India a notable exception. Europe’s Stoxx 600 snapped a five-day rally yesterday with a 0.9% loss. It is slightly firmer today, while US futures are hovering around yesterday’s closing levels. The greenback is firm against most of the major currencies. The Australian and Canadian dollars  and Norwegian krone and sterling are the most resilient today. The Philippines, like Norway hiked 50 bp but unlike Norway, the currency has not been bought. Most emerging market currencies are softer today. Gold is trying to break a three-day slide after approaching $1760. It settled last week at $1802. October WTI found a base a little below $85.50 and is around $88.50 near midday in Europe. The week’s high was set Monday by $91.50. US natgas is up 1.1% to recoup yesterday’s loss in full. Europe’s benchmark is extended this week’s run. It finished last week near 205.85 and now is around 232.00, a 12.7% gain after 6% last week. Iron ore ended a four-day 8% slide. September copper is recovering from the early drop to near two-week lows ($354.20) and is now near 362.00. A move above yesterday’s high (~$365) would be constructive. The sell-ff in September wheat has accelerated. It is off for the fifth consecutive session and is at its lowest level since January. After falling around 3% in three days from last Friday, it is off more than 5% between yesterday and today. Asia Pacific For good reasons, Beijing and Washington suspect the other of trying to change that status quo over Taiwan  The visits by US legislators may be only the initial efforts by Congress to force a more aggressive US position. It could come to a head in the fall when a bill that wants to recognize Taiwan as a major non-NATO ally and to foster Taiwan's membership in international forums will draw more attention. Meanwhile, US-Taiwan trade talks will begin later this year that was first aired a couple of months ago. At the same time, the Biden administration has been considering lifting some of the tariffs levied by the previous administration, but China's militaristic response to the visits makes it more difficult. Biden wants to lift the tariffs not to reward Beijing but to ease the costs to Americans. The Consumer Technology Association, an industry group, estimated that the tariffs have boosted the bill for American consumer technology companies by around $32 bln. The tariffs are paid to the US government. It seems that in lieu of lifting the tariffs, a broad exclusion process is possible. Related but separately, the Nikkei Asia reported that Apple is in talks to produce its watches and computers in Vietnam for the first time  Two suppliers have been producing Apple Watches in northern Vietnam. A couple of months ago, reports indicated that Apple would more some production of its tablets to Vietnam. Apple's ecosystem is establishing a presence in Vietnam, with nearly two dozen suppliers have factories now, almost doubling since 2018. As a result of these forces and the movement of capacity outside of China, Vietnam's trade surplus with the US is exploding. The $33 bln surplus in 2016 ballooned to $91 bln last year and was nearly $58 bln in the first half. For the past five years, the dollar has traded in a roughly 2% band around VND23000. The greenback is near the upper end of the range. Australia's July jobs report was disappointing  It lost almost 87k full-time positions after gaining nearly 53k in June. Part-time positions increased (46k), leading to a 40.9k loss of overall jobs. The median forecast (Bloomberg survey) was for a gain of 25k jobs. The unemployment rate slipped to a new record low of 3.4% (from 3.5%) but this was due to a sharp drop in the participation rate (66.4% from 66.8%). Ostensibly, this could give the central bank space to be more flexible at its September 6 meeting. However, the futures market as taken it in stride that has left the odds of a 50 bp hike next month essentially unchanged around 57%. This is essentially where it was at the end of last week and the week before. Many are now familiar with China's rolling lockdowns to combat Covid and the implosion of property market, a key engine of growth and accumulation  A new threat has emerged. The extreme weather has seen water levels in Sichuan's hydropower reserves as much as 50% this month, according to report, prompting the shuttering of factories (hub for solar panels, cement, and urea). Dazhou, a city of nearly 3.5 mln people, imposed a 2 1/2-hour power cuts this week that were expanded to three hours yesterday. Office buildings in Chengdu, the provincial capital, were barred from using air conditioning. Many areas in central and northern China imposed emergency measures to ensure the availability of drinking water. The heat and drought threaten summer crops and risk greater food-driven inflation. At the same time, Shanxi, which provides about a quarter of China's coal is worried about floods, it has suspended the operation of more than 100 mines since June. The government-imposed measures to boost output and Shanxi coal output rose by around 16% in H1.  The dollar is confined to a narrow range, straddling the JPY135 area  It has held `below last week's high around JPY135.60 and above the JPY134.55, where options for $700 mln expire today. The Australian dollar has been sold aggressively this week. It began near $0.7115 and tested $0.6900 today, meeting the (50%) retracement objective of the rally from the mid-July low (~$0.6880). It was only able to make a marginal new low today, suggesting that the selling pressure has abated. The next retracement (61.8%) is closer to $0.6855. Initial resistance is seen around $0.6950. After slipping a little yesterday, the greenback returned to its recent highs against the Chinese yuan around CNY6.7960. This year's high was set in May near CNY6.8125. Between Covid lockdowns, the weather disruptions, and the continued unwinding of the property bubble, a weaker yuan may the path of least resistance. The PBOC set the dollar's reference rate at CNY6.7802 compared with expectations from Bloomberg's survey of CNY6.7806. The yuan is falling for the sixth consecutive month against the dollar. Europe The eurozone may not have completed its banking and monetary union, but the ECB said that it would harmonize how banks offer crypto assets and have sufficient capital and expertise  Crypto companies have negotiated with national authorities in several EMU member countries, but common EU licensing rules are unlikely any time soon. There is a patchwork of differing national rules, and in some countries, some types of crypto activity may require a banking license, for example. Norway's central bank hiked its deposit rate by 50 bp and indicated it would "most likely" lift rates again next month What makes today's move somewhat more aggressive that it may appear is that the hike took place at a meeting that did not include an economic update and projections for the future path of policy. Norges Bank acknowledged that the policy rate trajectory would be faster than projected in June and the inflation risks being higher for longer. The deposit rate now sits at 1.75%. Another 50 bp hike next month (September 22) seems likely followed by a 25 bp move in November, the last meeting of the year. The euro briefly popped a little above $1.02 on what was initially seen as dovish FOMC minutes in the North American afternoon yesterday  However, it returned to yesterday's lows low near $1.0145 before finding a bid. The week's low was set Tuesday slightly below $1.0125, which is ahead of the retracement objective we identified near $1.0110. The euro is consolidating as the US two-year premium over Germany falls to its lowest level in a nearly a month (2.54%), and almost 25 bp below the peak seen after the US jobs data on August 5. Labor disputes are crippling UK trains, buses, subways, and a key container port today. Sterling slipped to $1.1995, its lowest level since July 26. The nicking of the neckline of a possible double top was not a convincing violation and sterling has recovered to the $1.2060 area in the London morning. If this is not the peak in sterling, it seems close. Tomorrow, the UK is expected to report a decline in July retail sales, excluding gasoline. This measure of retail sales rose by 0.4% in June, the first increase since last October. The median forecast (Bloomberg survey) is for a 0.3% fall. The swaps market is pricing in a 50 bp hike at the mid-September BOE meeting and about a 1-in-5 chance of a 75 bp move. America US interest rates softened and dragged the dollar lower following the release of the FOMC minutes  The market seems to have focused on the concern of "many" members that it could over-tighten but there was no sign that this was going to prevent them for raising rates further. Indeed, it suggest that the risk of inflation expectations becoming embedded was greater. More hikes were appropriate, the minutes said, and a restrictive stance may be required for "some time". The minutes also played the recent pullback in commodity prices as an indicator of lower inflation, which it still says the evidence is lacking. When everything was said and done the September Fed funds futures were unchanged for the fourth consecutive session. Autos and gasoline held by retail sales in July, but excluding them, retail sales rose by 0.7%, matching the June increase  The core measure, which also excludes building materials and food services rose a solid 0.8%. Retail sales account for around 40% of personal consumption expenditures. The July PCE is due next week (August 26) and picks up service consumption too. The early call is for it to rise by 0.5%. However, it too is a nominal report, and in real terms, a 0.3%-0.4% gain would be a strong showing. The retail sales report lent credence to anecdotal stories about department stores discounting prices to move inventory. Amazon's Prime Day (July 12-13) was claimed to be the biggest so far. Online sales overall surged 2.7%. Today's data includes weekly jobless claims, the Philadelphia Fed survey, existing home sale, and the index of Leading Economic Indicators  Th four-week average of weekly jobless claims rose to 252k in the week ending August 5. Recall the four-week moving average, used to smooth out some of the noise bottomed in the week ending April 1 at 170.5k. They averaged around 238k in December 2019, which was the highest since the first half of January 2018. Continuing claims have edged higher in recent weeks, but at 1.428 mln, they are roughly 20% below the peak at the start of this year. The Philadelphia Fed survey is particularly interesting today because of the disastrous Empire State survey. The median forecast in Bloomberg's survey is for a -5 reading after -12.3 in July. Meanwhile, existing home sales have fallen for five months through June. In fact, new home sales have been fallen every quarter since the end of 2020, with the exception of Q3 21. They fell by an average of 1.7% in Q1 22 and 3.8% in Q2 22. The median forecast is for a nearly 5% decline in July. The market tends not to get excited about the leading economic index series. Economists expected the fifth consecutive decline. The only month it rose this year was February. The US dollar extended its recovery against the Canadian dollar to reach almost CAD1.2950, its highest level since August 8 today  It was pressed lower by new offers in the European morning that drove it back to almost CAD1.2900. The market may take its cues from the S&P 500 and the general risk appetites in the North American session. With the intraday momentum indicators stretched, yesterday's post-FOMC minutes low near CAD1.2880 may offer sufficient support. The greenback rose to a five-day high against the Mexican peso yesterday around MXN20.09. It is consolidating and straddling the MXN20.00 area. Our reading of the technical condition favors the dollar's upside, and the first important target is near MXN20.20. The US dollar gapped higher against the Brazilian real yesterday and approached the BRL5.22 area, where the 20-day and 200-day moving averages converge. The opening gap was closed late on the pullback spurred by the reading of FOMC minute headlines. The price action is similar to the peso, where the dollar has traded heavily since last month but appears to have found a bottom. A break above BRL5.22 would target the month's high near BRL5.3150.       Disclaimer   Source: Fed Minutes were Not as Dovish as Initially Read
Crude Oil Price Probably Not Reach 100$(USD) Shortly

Crude Oil Price Probably Not Reach 100$(USD) Shortly

Swissquote Bank Swissquote Bank 18.08.2022 15:56
The equity rally in the US didn’t pick up momentum after the Federal Reserve (Fed) released its latest meeting minutes, which sounded more hawkish-than-expected, or more hawkish-than-what-was-needed-to-give-another-boost to the US stock markets. The biggest take was that the Fed will continue tightening its policy until it sees that inflation is ‘firmly on path back to 2%’. The S&P500 fell 0.72% as Nasdaq gave back 1.20%, although the jump in the US 2-year yield was relatively soft, and the Fed funds futures scaled back the expectation of a 75 bp hike in the next meeting. Crude price completed an ABCD pattern, and it is more likely than not we see the price rebound to the $100 level in the medium run. In China, Tencent announced its first ever revenue drop as government crackdown continued taking a toll on its sales, and the pound couldn’t gain even after the above 10% inflation data boosted the Bank of England (BoE) hawks and the call fall steeper rate hikes to tame inflation in the UK. Watch the full episode to find out more! 0:00 Intro 0:28 As expected, Fed minutes were more hawkish-than-expected 3:39 Crude oil has more chance to rebound than to fall 6:02 Tencent posts first-ever revenue drop 7:14 Apple extends gains, but technicals warn of correction 8:38 Pound unable to extend gains despite rising Fed hawks’ voices 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 #minutes #USD #GBP #inflation #Tencent #Alibaba #earnings #crude #oil #natural #gas #coal #futures #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
In The Morning US Dollar (USD) Was Up, British Pound And Euro Down | US Stocks: S&P 500 Gained Almost 2% Yesterday, Dow Jones Added 1.88%, Nasdaq Increased By 2%

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

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

The Peak Of Inflation May Be Yet To Come? ECB Takes Steps

Conotoxia Comments Conotoxia Comments 19.08.2022 12:38
Inflation in the Eurozone appears to be rising steadily, which may be influenced by the rising cost of electricity and energy carriers. Today's release of producer prices in Germany suggests that the peak of inflation in the Eurozone may be yet to come. Germany is the eurozone's largest economy, so published readings for that economy could heavily influence data for the community as a whole. Energy for businesses rose by 105 percent. Today we learned that in July producer prices (PPI inflation) rose in Germany at the fastest pace on record. PPI inflation on an annualized basis was as high as 37.2 percent. A month earlier, price growth stood at 32.7 percent, while the market consensus was for inflation of 32 percent. Energy prices still seem to remain the main driver of producer costs. The cost of the aforementioned energy for businesses rose 105 percent compared to July 2021. Had it not been for this factor, producer prices could have risen much more slowly, by only 14.6 percent. - according to the published data. Entrepreneurs could translate such a significant increase in costs into their products, which could also raise consumer CPI inflation as a result. Hence, it is not impossible that a possible peak in inflation in the eurozone is yet to come. It could fall in the last quarter of this year, or early next year, assuming that energy prices begin to stabilize or fall. Otherwise, the eurozone economy could plunge into a deep crisis. EUR/USD near parity again The rate of the EUR/USD pair fell today to 1.0084 (yesterday it was around 1.0200) and again approached parity at 1.0000. Concerns about the eurozone economy may be reflected in the exchange rate. However, it seems that the reaction to negative data is becoming less and less, as if the market has to some extent already discounted some of the bad news that may come in the near future. The European Central Bank's forthcoming actions may put the brakes on the euro's sell-off. According to the interest rate market, the ECB may opt for two rate hikes of 50 basis points each this fall. The market assumes that the ECB will raise the main interest rate to 1.5 percent throughout the cycle. Unlike the Fed, which may reduce the pace of hikes at the end of the year, the ECB may only move with a rapid increase in interest rates. 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. 82.59% 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. Source: PPI inflation in Germany highest on record. Euro under pressure
The Bank Of England (BoE) Chasing The Inflation. Forex: GBPUSD, CNHJPY, EURUSD And Others

The Bank Of England (BoE) Chasing The Inflation. Forex: GBPUSD, CNHJPY, EURUSD And Others

John Hardy John Hardy 19.08.2022 13:41
Summary:  The USD is breaking higher still, with important levels falling versus the Euro and yen yesterday. But the pain in sterling is most intense as presaged by the lack of a response to surging UK rates. Can the Bank of England do anything but continue to chase inflation from behind, caught between the Scylla of inflation and the Charybdis of a vicious recession? Also, USDCNH lurks at the top of the range ahead of another PBOC rate announcement on Monday. FX Trading focus: USD wrecking ball swinging again. UK faced with classic ugly choice between taking the pain via inflation or a severe recession The US dollar strength has picked up further after yesterday saw the breakdown in EURUSD below 1.0100 and a shot through 135.50 in USDJPY as longer US yields pushed to local highs. GBPUSD has been a bigger move on sterling weakness as discussed below.  A bit of resilient US data (especially the lower jobless claims than expected and a sharp revision lower of the prior week’s data taking the momentum out of the rising trend) has helped support the USD higher as longer US yields rose a bit further, taking the 10-year US treasury yield benchmark to new local highs, although we really need to see 3.00% achieved there after a few recent teases higher with no follow through higher. Looking forward to next week, the market will have to mull whether it has been too aggressive in pricing the Fed to pivot policy next year on disinflation and an easy-landing for the economy. The steady drumbeat of Fed pushback against the market’s complacency, together with a few of the recent data points (ISM Services, nonfarm payrolls, yesterday’s claims, etc.) has seen some of the conviction easing. But the key test will come next Friday, when Fed Chair Powell is set to speak on the same day we get the July PCE inflation data. Keep USDCNH on the radar through the end of today on the risk of an upside break above the range and Monday as the PBOC is set for a rate announcement (consensus expectations or another 10 bps of easing).   Chart: GBPUSD Lots at stake for sterling as discussed below, as it is a bit scary to see a currency weaken sharply despite a massive ratcheting higher in rate expectations from the central bank. The fall of 1.2000 has set in motion a focus on the 1.1760 cycle low, with an aggravated USD rise here and tightening of global financial conditions possibly quickly bringing the spike low toward 1.1500 from the early 2020 pandemic outbreak panic into focus. It is worth noting that the lowest monthly closing level for GBPUSD since the mid-1980’s is 1.2156. Without something dramatic to push back against USD strength next week from Jackson Hole, it is hard to see how this month may set the new low water mark for monthly closes. Source: Saxo Group GBPUSD slipped below 1.1900 this morning after breaking below the psychologically important 1.2000 level yesterday. As noted in the prior update, it’s remarkable to see the marked weakness in sterling despite the marking taking UK short rates sharply higher – with 2-year UK swaps over 100 basis points higher from the lows early this month. The Bank of England has expressed a determination to get ahead of the inflation spike and the market has priced in a bit more than a 50-basis-points-per-meeting pace for the three remaining BoE meetings of 2022. But is that sufficient given the UK’s structural short-comings and external deficits? Currency weakness risks adding further to spike in inflation this year. The BoE can take a couple of approaches in response: continue with the 50 bps hikes while bemoaning the backdrop and trotting out the expectation that eventually, economic weakness and easing commodity prices will feed through to drop inflation back into the range. Or, the BoE can actually get serious and super-size hikes even beyond the acceleration the market has priced, at the risk of bringing forward and increasing the severity of the coming recession. Until this week, the BoE’s anticipated tightening trajectory had prevented an aggravated weakness in sterling in broader terms, but the currency’s weakness despite a massive mark-up of BoE expectations has ratcheted the pressure on sterling and the BoE’s response to an entirely new level. Turkey shocked with a fresh rate cut yesterday of 100 basis points to take the policy rate to 13.00%. This with year-on-year inflation in Turkey at 79.6% and PPI at 144.6%, and housing measured at 160.6%. The move took USDTRY above 18.00, though it was a modest move relative to the size of the surprise. Turkish central bank chief Kavcioglu said that the bank would also look to “further strengthen macroprudential policy” by addressing the yawning difference between the policy rate and the rate commercial banks are charging for loans (more than double the official policy rate), as the push is to continue a credit-stimulated approach, inflation-be-darned.   Table: FX Board of G10 and CNH trend evolution and strength Note: a new color scheme for the FX Board! Besides changing the green for positive readings to a more pleasant blue, I have altered the settings such that trend readings don’t receive a more intense red or blue coloring until they have reached more significant levels – starting at an absolute value of 4 or higher. So far, most of the drama in sterling is the lack of a response to shifts in the UK yield curve, the broad negative momentum has only shifted a bit here, but watching for the risk of more. Source: Bloomberg and Saxo Group Table: FX Board Trend Scoreboard for individual pairs AUDNZD is crossing back higher, AUDCAD back lower, so NZDCAD….yep. Note the CNHJPY – if CNH is to make more waves, need to see more CNH weakness in an isolated sense, not just v. a strong USD. And speaking of a strong USD, the last holdouts in reversing, USDNOK and USDCHF, are on the cusp of a reversal. Source: Bloomberg and Saxo Group Upcoming Economic Calendar Highlights (all times GMT) 1230 – Canada Jun. Retail Sales 1300 – US Fed’s Barkin (Non-voter) to speak   Source: FX Update: USD surging again, GBP spinning into abyss
Mexican Gold - Peso Is Climbing Up. Russia Is Building Nuclear Plant In Turkey!?

Mexican Gold - Peso Is Climbing High. Russia Is Building Nuclear Plant In Turkey!?

Marc Chandler Marc Chandler 19.08.2022 14:26
Overview:  The dollar is on fire. It is rising against all the major currencies and cutting through key technical levels like a hot knife in butter. The Canadian dollar is the strongest of the majors this week, which often outperforms on the crosses in a strong US dollar environment. It is off 1.5% this week. The New Zealand dollar, where the RBNZ hiked rates this week by 50 bp, is off the most with a 3.5% drop. Emerging market currencies are mostly lower on the day and week as well. The JP Morgan Emerging Market Currency Index is off for the fifth consecutive session, and ahead of the Latam open, it is off 2.1% this week. Asia Pacific equities were mostly lower, and Europe’s is off around 0.4%. It was flat for the week coming into today. US futures are lower, and the S&P and NASDAQ look poised to snap its four-week advance. Gold, which began the week near $1800 is testing support near $1750 now. Next support is seen around $1744.50. October WTI is consolidating in the upper end of yesterday’s range, which briefly poked above $91. Initial support is pegged near $88. US natgas is softer for the third successive session, but near $9.04 is up about 3.2% for the week. Europe’s benchmark is up 1.7% and brings this week’s gain to almost 20%. Demand concerns weigh on iron ore. It was off marginally today, its fifth loss in six sessions. It tumbled 8.8% this week after a 1.15% gain last week. Copper is up fractionally after rising 1.3% yesterday. September wheat is trying to stabilize. It fell more than 4% yesterday, its fifth loss in a row. It is off around 8.5% this week. Asia Pacific Japan's July CPI continued to rise  Th headline now stands at 2.6%, up from 2.4% in June, up from 0.8% at the start of the year and -0.3% a year ago. The core measure that excludes fresh food accelerated from 2.2% to 2.4%. It is the fourth consecutive month above the 2% target. Excluding both fresh food and energy, Japan's inflation is less than half the headline rate at 1.2%. It was at -0.7% at the end of last year and did not turn positive until April. The BOJ's next meeting is September 22, and despite the uptick in inflation, Governor Kuroda is unlikely to be impressed. Without wage growth, he argues, inflation will prove transitory. With global bond yields rising again, the 10-year, the market may be gearing up to re-challenge the BOJ's 0.25% cap. The yield is finishing the week near 0.20%, its highest since late July. Separately, we note that after divesting foreign bonds in recent months, Japanese investors have returned to the buy side. They have bought foreign bonds for the past four weeks, according to Ministry of Finance data. Last week's JPY1.15 trillion purchases (~$8.5 bln) were the most since last September.  China surprised the markets to begin the week with a 10 bp reduction in the benchmark 1-year medium-term lending facility rate  It now stands at 2.75%. It was the first cut since January, which itself was the first reduction since April 2020. Before markets open Monday, China is expected to announce a 10 bp decline in the 1- and 5-year loan prime rates. That would bring them to 3.60% and 4.35%, respectively. These rates are seen closer to market rates, but the large banks that contribute the quotes are state-owned. There is some speculation that a larger cut in the 5-year rate. The one-year rate was cut in January, but the 5-year rate was cut by 15 bp in May. The dollar is rising against the yen for the fourth consecutive session  It has now surpassed the JPY137.00 area that marks the (61.8%) retracement of the decline from the 24-year high set-in mid-July near JPY139.40. There may be some resistance in the JPY137.00-25 area, but a retest on the previous high looks likely in the period ahead. The Australian dollar is off for the fifth consecutive session and this week's loss of 3% offset last week's gain of as similar magnitude and, if sustained, would be the largest weekly decline since September 2020. The Aussie began the week near $0.7125 and recorded a low today slightly below $0.6890. The $0.6855-70 area is seen as the next that may offer technical support. The PBOC set the dollar's reference rate at CNY6.8065 (median in Bloomberg's survey was CNY6.9856). The fix was the lowest for the yuan (strongest for the dollar) since September 2020. Yesterday's high was almost CNY6.7960 and today's low was a little above CNY6.8030. To put the price action in perspective, note that the dollar is approaching the (61.8%) retracement of the yuan's rise from mid-2020 (~CNY7.1780) to this year's low set in March (~CNY6.3065). The retracement is found around CNY6.8250. Europe UK retail sales surprised to the upside but are offering sterling little support  Retail sales including gasoline rose by 0.3% in July. It is the second gain of the year and the most since last October. Excluding auto fuel, retail sales rose by 0.4%, following a 0.2% gain in June. It is the first back-to-back gain since March and April 2021. Sales online surged 4.8% as discounts and promotions drew demand, and internet retailers accounted for 26.3% of all retail sales. Separately, consumer confidence, measured by GfK, slipped lower (-44 from -41), a new record low. Sterling is lower for the third consecutive session and six of the past seven sessions. The swaps market continues to price in a 50 bp rate hike next month and about a 1-in-5 chance of a 75 bp move. Nearly every press report discussing next month's Italian elections cited the fascist roots of the Brothers of Italy, which looks likely to lead the next government  Meloni, who heads up the Brothers of Italy and has outmaneuvered many of her rivals, and may be Italy's next prime minister, plays the roots down. She compares the Brothers of Italy to the Tory Party in the UK, the Likud in Israel, and the Republican Party in the US. The party has evolved, and the center-right alliance she leads no longer wants to leave the EU, it is pro-NATO, and condemns Russia's invasion of Ukraine. The center-right alliance may come close to having a sufficient majority in both chambers to make possible constitutional reform. High on that agenda appears to transform the presidency into a directly elected office. The Italian presidency has limited power under the current configuration, but it has been an important stabilizing factor in crisis. Ironically, the president, picked by parliament, stepped in during the European debt crisis and gave Monti the opportunity to form a technocrat government after Berlusconi was forced to resign in 2011. Fast-forward a decade, a government led by the Conte and the Five Star Movement collapsed and a different Italian president gave Draghi a chance to put together a government. It almost last a year-and-half. Its collapse set the stage for next month's election. The center-left is in disarray and its inability to forge a broad coalition greases the path for Meloni and Co. Italy's 10-year premium over German is at 2.25%, a new high for the month. Last month, it peaked near 2.40%. The two-year premium is wider for the sixth consecutive session. It is near 0.93%, more than twice what it was before the Draghi government collapsed. Some critics argue against the social sciences being science because of the difficulty in conducting experiments  Still an experiment is unfolding front of us. What happens when a central bank completely loses its independence and follows dubious economic logic?  With inflation at more than two decades highs and the currency near record lows, Turkey's central bank surprised everyone by cutting its benchmark rate 100 bp to 13% yesterday. Governor Kavcioglu hinted this was a one-off as it was preempting a possible slowdown in manufacturing. Even though President Erdogan promised in June rates would fall, some observers link the rate cut to the increase in reserves (~$15 bln) recently from Russia, who is building a nuclear plant in Turkey. The decline in oil prices may also help ease pressure on Turkey's inflation and trade deficit. The lira fell to new record-lows against the dollar. The lira is off about 7.5% this quarter and about 26.4% year-to-date. Significant technical damage has been inflicted on the euro and sterling  The euro was sold through the (61.8%) retracement objective of the runup since the mid-July two-decade low near $0.9950. That retracement area (~$1.0110) now offers resistance, and the single currency has not been above $1.01 today. We had suspected the upside correction was over, but the pace of the euro's retreat surprises. There is little from a technical perspective preventing a test on the previous lows. Yesterday, sterling took out the neckline of a potential double top we have been monitoring at $1.20. It is being sold in the European morning and has clipped the $1.1870 area. The low set-in mid-July was near $1.1760, and this is the next obvious target and roughly corresponds to the measuring objective of the double top.  America With no dissents at the Fed to last month's 75 bp hike, one might be forgiven for thinking that there are no more doves  Yet, as we argued even before Minneapolis Fed President Kashkari, once regarded as a leading dove, admitted that his dot in June was the most aggressive at 3.90% for year-end, hawk and dove are more meaningful within a context. Kashkari may be more an activist that either a hawk or dove. Daly, the San Francisco Fed President does not vote this year, suggested that a Fed funds target "a little" over 3% this year would be appropriate. She said she favored a 50 bp or a 75 bp move. The current target range is 2.25%-2.50%. and the median dot in June saw a 3.25%-3.50% year-end target. St. Louis Fed President Bullard says he favors another 75 bp hike next month. No surprise there. George, the Kansas, Fed President, dissented against the 75 bp hike in June seemingly because of the messaging around it, but it's tough to call her vote for a 50 bp hike dovish. She voted for the 75 bp move in July. She recognizes the need for additional hikes, and the issue is about the pace. George did not rule out a 75 bp hike while cautioning that policy operates on a lag. Barkin, the Richmond Fed President, also does not vote this year. He is the only scheduled Fed speaker today.  The odds of a 75 bp in September is virtually unchanged from the end of last week around a 50/50 proposition.  The October Fed funds implies a 2.945% average effective Fed funds rate. The actual effective rate has been rocksteady this month at 2.33%. So, the October contract is pricing in 61 bp, which is the 50 bp (done deal) and 11 of the next 25 bp or 44% chance of a 75 hike instead of a half-point move. Next week's Jackson Hole conference will give Fed officials, and especially Chair Powell an opportunity to push back against the premature easing of financial conditions  The better-than-expected Philadelphia Fed survey helps neutralize the dismal Empire State manufacturing survey. The median from Bloomberg's survey looked for improvement to -5 from -12.3. Instead, it was reported at 6.2. Orders jumped almost 20 points to -5.1 and the improvement in delivery times points to the continued normalization of supply chains. Disappointingly, however, the measure of six-month expectations remained negative for the third consecutive month. Still, the plans for hiring and capex improved and the news on prices were encouraging. Prices paid fell to their lowest since the end of 2020 (energy?) and prices received were the lowest since February 2021. The Fed also asked about the CPI outlook. The median sees it at 6% next year down from 6.5% in May. The projected rate over the next 10-years slipped to 3%. Canada and Mexico report June retail sales today  Lift by rising prices, Canada's retail sales have posted an average monthly gain this year of 1.5%. However, after a dramatic 2.2% increase in May, Canadian retail sales are expected (median in Bloomberg' survey) to rise by a modest 0.4%. Excluding autos, retail sales may have held up better. Economists look for a 0.9% increase after a 1.9% rise in May. Through the first five months of the year, Mexico's retail sales have risen by a little more than 0.5% a month. They have risen by a 5.2% year-over-year. Economists expected retail sales to have slowed to a crawl in June and see the year-over-year pace easing to 5.0%. The greenback rose the CAD1.2935 area that had capped it in the first half of the week. It settled near CAD1.2950 yesterday and is pushing closer to CAD 1.2980 now. Above here, immediate potential extends toward CAD1.3035. The US dollar is gaining for the third consecutive session against the Canadian dollar, the longest advancing streak in a couple of months. Support is seen in the CAD1.2940-50 area. The Mexican peso is on its backfoot, and is falling for the fourth session, which ended a six-day rally. The dollar has met out first target near MXN20.20 and is approaching the 20-day moving average (~MXN20.2375). Above there, the next technical target is MXN20.32. The broader dollar gains suggest it may rise above the 200-day moving average against the Brazilian real (~BRL5.2040) and the (38.2%) of the slide since the late July high (~BRL5.5140) that is found near BRL5.2185.    Disclaimer   Source: The Dollar is on Fire
The Euro In The Last Few Months Clearly Reflect What Is Happening In The Euro/Dollar Pair

Everyone Is Dissapointed In Euro (EUR). Japanese Officials Have To Face Discontests From Yields Rise

Marc Chandler Marc Chandler 21.08.2022 23:14
For many, this will be the last week of the summer. However, in an unusual twist of the calendar, the US August employment report will be released on September 2, the end of the following week, rather than after the US Labor Day holiday (September 5).   The main economic report of the week ahead will be the preliminary estimate of the August PMI  The policy implications are not as obvious as they may seem. For example, in July, the eurozone composite PMI slipped below the 50 boom/bust level for the first time since February 2021. It was the third consecutive decline. Bloomberg's monthly survey of economists picked up a cut in Q3 GDP forecasts to 0.1% from 0.2% and a contraction of 0.2% in Q4 (previously 0.2% growth). Over the past week, the swaps market has moved from around 80% sure of a 50 bp hike next month to a nearly 20% chance it will lift the deposit rate by 75 bp.  The UK's composite PMI fell in three of the four months through July  However, at 52.1, it remains above the boom/bust level, though it is the weakest since February 2021. The Bank of England's latest forecasts are more pessimistic than the market. It projects the economy will contract by 1.5% next year and another 0.3% in 2024. It has CPI peaking later this year at around 13% before falling to 5.5% in 2023 and 1.5% in 2024. Market expectations have turned more hawkish for the BOE too. A week ago, the swap market was pricing in a nearly 90% chance of another 50 bp hike. After the CPI jump reported in the middle of last week, the market fully priced in the 50 bp move and a nearly 30% chance of a 75 bp hike.   Japanese officials have successfully turned back market pressure that had driven the benchmark three-month implied volatility to 14% in mid-June, more than twice as high as it was at the start of the year  It slipped below 10% in recent days. The BOJ was forced to vigorously defend its 0.25% cap on the 10-year bond. It has spent the better part of the past three weeks below 0.20%. The BOJ has not had to spend a single yen on its defense since the end of June. However, with the jump in global yields (US 10-year yield rose 20 bp last week, the German Bund 33 bp, and the 10-year UK Gilt nearly 40 bp) and the weakness of the yen, the BOJ is likely to be challenged again.   The economy remains challenging  The composite PMI fell to 50.2 in July from 53.2 in June. It is the weakest reading since February. It has averaged 50.4 through July this year. The average for the first seven months last year was 49.0. The government is working on some support measures aimed at extending the efforts to cushion the blow of higher energy and food prices. Japan's Q2 GDP deflator was minus 0.4%, which was half of the median forecast in Bloomberg's survey, but it shows the tough bind of policy. Consider that the July CPI rose to 2.6%, and the core measure, which the BOJ targets, excludes fresh food, rose to 2.4% from 2.2%. The target is 2%, and it was the third month above it. Tokyo will report its August CPI figures at the end of the week.   Australia's flash PMI may be more influential as the futures market is nearly evenly split between a 25 bp hike and a 50 bp move at the September 6 central bank meeting  The minutes from the RBA's meeting earlier this month underscored its data dependency. However, this is about the pace of the move. The target rate is currently at 1.85%, and the futures market is near 3.15% for the end of the year, well beyond the 2.5% that the central bank sees as neutral. The weakness of China's economy may dent the positive terms-of-trade shock. The Melbourne Institute measure of consumer inflation expectations fell in August for the second month but at 5.9%, is still too high.  Through the statistical quirkiness of GDP-math, the US economy contracted in the first two quarters of the year  A larger trade deficit did not help, but the real problem was inventories. In fairness, more of the nominal growth resulted from higher prices than economists expected rather than underlying activity. Still, it does appear that the US economy is expanding this quarter, and the high-frequency data will help investors and economists assess the magnitude. While surveys are helpful, the upcoming real sector data include durable goods orders (and shipments, which feed into GDP models), July personal income and consumption figures, the July goods trade balance, and wholesale and retail inventories.   Consumption still drives more than 2/3 of the economy, and like retail sales, personal consumption expenditures are reported in nominal terms, which means that they are inflated by rising prices  However, the PCE deflator is expected to slow dramatically. After jumping 1% in June, the headline deflator is expected to increase by 0.1%. This will allow the year-over-year rate to slow slightly (~6.5% from 6.8%). The core deflator is forecast (median, Bloomberg's survey) to rise by 0.4%, which given the base effect, could see the smallest of declines in the year-over-year rate that stood at 4.8% in June. Given the Fed's revealed preferences when it cited the CPI rise in the decision in June to hike by 75 bp instead of 50 bp, the CPI has stolen the PCE deflator's thunder, even though the Fed targets the PCE deflator. Real consumption was flat in Q2, and Q3 is likely to have begun on firmer footing.   The softer than expected CPI, PPI, and import/export prices spurred the market into downgrading the chances of a 75 bp hike by the Fed next month  After the stronger than expected jobs growth, the Fed funds futures priced in a little better than a 75% chance of a 75 bp hike. It has been mostly hovering in the 40%-45% range most of last week but finished near 55%. It is becoming a habit for the market to read the Fed dovishly even though it is engaged in a more aggressive course than the markets anticipated. This market bias warns of the risk of a market reversal after Powell speaks on August 26.   At the end of last year, the Fed funds futures anticipated a target rate of about 0.80% at the end of this year. Now it says 3.50%. The pace of quantitative tightening is more than expected and will double starting next month. There is also the tightening provided by the dollar's appreciation. For example, at the end of 2021, the median forecast in Bloomberg's survey saw the euro finishing this year at $1.15. Now the median sees the euro at $1.04 at the end of December. And even this may prove too high.    The FOMC minutes from last month's meeting recognized two risks. The first was that the Fed would tighten too much. Monetary policy impacts with a lag, which also acknowledges that soft-landing is difficult to achieve. The market initially focused on this risk as is its wont. However, the Fed also recognized the risk of inflation becoming entrenched and characterized this risk as "significant." The Jackson Hole confab (August 25-27) will allow the Fed to help steer investors and businesses between Scylla and Charybdis.  Critics jumped all over Fed Chair Powell's claim that the Fed funds target is now in the area the officials regard as neutral. This was not a forecast by the Chair, but merely a description of the long-term target rate understood as neither stimulating nor restricting the economy. In June, all but three Fed officials saw the long-term rate between 2.25% and 2.50%. To put that in perspective, recall that in December 2019, the median view of the long-term target was 2.50%. Eleven of the 18 Fed officials put their "dot" between 2.25% and 2.50%. The FOMC minutes were clear that a restrictive stance is necessary, and the Fed clearly signaled additional rate hikes are required. The discussions at Jackson Hole may clarify what the neutral rate means.  Barring a significant downside surprise, we expect the Fed will deliver its third consecutive 75 bp increase next month. The strength and breadth of the jobs growth while price pressures remain too high and financial conditions have eased encourages the Fed to move as fast as the market allows. However, before it meets, several important high-frequency data points will be revealed, including a few employment measures, the August nonfarm payroll report, and CPI.   The market is also having second thoughts about a rate cut next year  At the end of July, the implied yield of the December 2023 Fed funds futures was 50 bp below the implied yield of the December 2022 contract. It settled last week at near an 8 bp discount. This reflects a growing belief that the Fed will hike rates in Q1 23. The March 2023 contract's implied yield has risen from less than five basis points more than the December 2022 contract to more than  20 bp above it at the end of last week.   Let's turn to the individual currency pairs, put last week's price action into the larger context, and assess the dollar's technical condition  We correctly anticipated the end of the dollar's pullback that began in mid-July, but the power for the bounce surprises. Key technical levels have been surpassed, warning that the greenback will likely retest the July highs.   Dollar Index: DXY surged by more than 2.3% last week, its biggest weekly advance since March 2020. The momentum indicators are constructive and not over-extended. However, it closed well above the upper Bollinger Band (two standard deviations above the 20-day moving average), found near 107.70. Little stands in the way of a test on the mid-July high set around 109.30. Above there, the 110-111.30 area beckons. While the 107.50 area may offer some support now, a stronger floor may be found closer to 107.00.   Euro:  The euro was turned back from the $1.0365-70 area on August 10-11 and put in a low near $1.0030 ahead of the weekend. The five-day moving average slipped below the 20-day moving average for the first time in around 3.5 weeks. The MACD is trending lower, while the Slow Stochastic did not confirm the recent high, leaving a bearish divergence in its wake. The only caution comes from the euro's push through the lower Bollinger Band (~$1.0070). Initially, parity may hold, but the risk is a retest on the mid-July $0.9950 low. A convincing break could target the $0.96-$0.97 area. As the euro has retreated, the US two-year premium over Germany has trended lower. It has fallen more than 30 bp since peaking on August 5. We find that the rate differential often peaks before the dollar.   Japanese Yen: The dollar will begin the new week with a four-day advance against the yen in tow. It has surpassed the (61.8%) retracement objective of the pullback since the mid-July high (~JPY139.40) found near JPY136.00. The momentum indicators are constructive, and the five-day moving average has crossed above the 20-day for the first time since late July. It tested the lower band of the next resistance bans seen in the JPY137.25-50 area at the end of last week. But it appears poised to re-challenge the highs. As volatility increases and yields rise, Japanese officials return to their first line of defense: verbal intervention.  British Pound: Sterling took out the neckline of a possible double top we have been monitoring that came in at $1.20. It projects toward the two-year lows set in mid-July near $1.1760, dipping below $1.18 ahead of the weekend. As one would expect, the momentum indicators are headed lower, and the five-day moving average has fallen below the 20-day moving average for the first time in four weeks. It has closed below its lower Bollinger Band (~$1.1910) in the last two sessions. A convincing break of the $1.1760 low clears the way to the March 2020 low, about 3.5-cents lower. Initial resistance is now seen around $1.1860 and, if paid, could signal scope for another 3/4 to a full-cent squeeze.  Canadian Dollar:  The Canadian dollar was no match for the greenback, which moved above CAD1.30 ahead of the weekend for the first time in a month. The momentum indicators suggest the US dollar has more scope to advance, and the next target is the CAD1.3035 area. Above there, the CAD1.3100-35 band is next. The high since November 2020 was recorded in the middle of July around CAD1.3225. After whipsawing in Q1, the five- and 20-day moving averages have caught the big moves. The shorter average crossed above the longer moving average last week for the first time since July 21. Initial support will likely be encountered near CAD1.2935.   Australian Dollar:  The Aussie was sold every day last week. It is the first time in a year, and its 3.4% drop is the largest since September 2020.   The rally from the mid-July low (~$0.6680) to the recent high (~$0.7135) looks corrective in nature. Before the weekend, it tested the rally's (61.8%) retracement objective. The momentum indicators are falling, and the Slow Stochastic did not confirm this month's high, creating a bearish divergence. A break of the $0.6850-60 area may signal follow-through selling into the $0.6790-$0.6800 band, but a retest on the July low is looking increasingly likely. Initial resistance is now seen near $0.6920.   Mexican Peso:  The peso's four-day slide ended a six-day run. The peso lost about 1.6% last week, slightly better than the 2.25% slide of the JP Morgan Emerging Market Currency Index. This month, the US dollar peaked around MXN20.8335 and proceeded to fall and forged a base near MXN19.81. It has met the (38.2%) retracement objective around MXN20.20 before the weekend. The next (50%) retracement is near MXN20.3230. The 200-day moving average is closer to MXN20.41. The dollar is probing the 20-day moving average seen a little below MXN20.24. The momentum indicators have only just turned up for the greenback. We suspect there may be potential to around MXN20.50 in the coming days.   Chinese Yuan:  The yuan was tagged with more than a 1% loss against the dollar last week, its biggest decline in three months. A combination of poor Chinese data, its small rate cut, and a resurgent US dollar spurred the exchange rate adjustment. At the end of July, China's 10-year yield was about 11 bp on top of the US. However, it switched to a discount after the US jobs data (August 5), and the discount grew every day last week, reaching 35 bp, the most since late June. After gapping higher before the weekend, the greenback reached nearly CNY6.8190, its highest level since September 2020. The next target is around CNY6.85, but given the divergence of policy, a move back toward CNY7.00, last seen in July 2020, maybe a reasonable medium-term target. The PBOC's dollar fix ahead of the weekend showed no protest of the weaker exchange rate.     Disclaimer   Source: Flash PMI, Jackson Hole, and the Price Action
Dollar (USD) Waits For The Jackson Hole Symposium Results. Nvidia With Good Earnings

Dollar (USD) Waits For The Jackson Hole Symposium Results. Nvidia With Good Earnings

Saxo Strategy Team Saxo Strategy Team 22.08.2022 11:41
Summary:  The dollar story will face a fresh test this week as the central bankers gather for the Jackson Hole symposium from August 25 to 27. We can expect some more push back on the 2023 easing expectations, and this could also mean some upside in US Treasury yields. July PCE due at the end of the week will likely be side-lined by the event, and any gasoline-driven easing should have little relevance. In Europe, the gas situation remains on watch and the July PMIs will likely spell more caution. China’s LPR cuts this morning have signalled a stronger support to the property markets, but the Covid situation and the power curbs continue to cloud the outlook. Earnings pipeline remains robust, key ones being Palo Alto, Nvidia and Intuit, followed by a few discount retailers like Dollar General and Dollar Tree in the U.S., and China Internet companies, JD.COM, and Meituan.   US dollar awaiting its next signals from the Jackson Hole There is a considerable tension between the market’s forecast for the economy and the resulting expected path of Fed policy for the rest of this year and particularly next year, as the market believes that a cooling economy and inflation will allow the Fed to reverse course and cut rates in a “soft landing” environment (the latter presumably because financial conditions have eased aggressively since June, suggesting that markets are not fearing a hard landing/recession). Some Fed members have tried to push back against the market’s expectations for Fed rate cuts next year it was likely never the Fed’s intention to allow financial conditions to ease so swiftly and deeply as they have in recent weeks. The risks, therefore, point to a Fed that may mount a more determined pushback at the Jackson Hole forum, the Fed’s yearly gathering at Jackson Hole, Wyoming that is often used to air longer term policy guidance. This will have further implications for the US dollar, which is threatening the cycle highs versus sterling, the euro and on the comeback trail against the Japanese yen as well. The US dollar is a barometer of global liquidity, and a continued rise would eventually snuff out the improvement in financial conditions we have seen since the June lows in equity markets, particularly if longer US treasury yields are also unmoored from their recent range and rise back to 3.00% or higher. Europe and UK PMIs may spell further caution The Euro-area flash composite PMI and the UK flash PMI for August are both due to be released on Tuesday. Following a slide in ZEW and Sentix indicators for July, the stage is set for a weaker outcome on the PMIs too. July composite PMI for the Euro-area dipped into contractionary territory at 49.9, while the UK measure held up at 52.1. The surge in gas and electricity prices continue to weigh on GDP growth outlook, with recession likely to hit by the end of the year. More price pressures to come to Asia Singapore's inflation likely nudged higher in July, coming in close proximity to 7% levels from 6.7% y/y in June. While both food and fuel costs continue to create upside pressures on inflation, demand-side pressures are also increasing as the region moves away from virus curbs. House rentals are also running high due to high demand and delayed construction limiting supplies. The Monetary Authority of Singapore has tightened monetary policy but more tightening moves can be expected in H2 even as the growth outlook has been downwardly revised. We also get Japan's Tokyo CPI for August, which is likely to suggest further gains above the Bank of Japan's 2% target. Consensus expectations point toward another higher print of 2.7% y/y for the headline measure and 2.5% y/y on the core measure, signalling inflationary pressures will continue to question the Bank of Japan's resolve on the ultra-easy policy stance. Malaysia’s July inflation is also due at the end of the week, and likely to go above the 4%-mark from 3.4% previously. Softer July US PCE print would not derail Fed’s tightening After a softer CPI report in July, focus will turn to the PCE measure – the version of the CPI that is tracked by the Fed to gauge price pressures. Lower gasoline prices mean that PCE prints could also see some relief, although we still upside pressures to inflation given that energy shortages will likely persist and easing financial conditions mean that inflation could return. We would suggest not to read too much into a softer PCE print this week, as the stickier shelter and services prices mean that the 2% inflation target of the Fed remains unachievable into then next year. This suggests that the aggressive tightening by the Fed will likely continue, despite any likely softness in the PCE this week. Housing markets, Covid-19 cases, and power curbs are key things to watch in China this week The data calendar is light in China this week with only July industrial profits data scheduled to release on Saturday.  This morning, China’s National Interbank Fund Center, based on quotes from banks and under the supervision of the PBoC, fixed the 1-year loan prime rate (“LPR”) 5 bps lower at 3.60% and the 5-year loan prime rates (“LPR”) 15 basis points lower at 4.30%.  The larger reduction in the 5-year LPR, which is the benchmark against which mortgage loan rates in China are set, may signal stronger support from the PBoC to the housing market.  Last Friday the Housing Ministry, the Ministry of Finance, and the PBoC, according to Xinhua News, jointly rolled out a program to make special loans through policy banks to support the delivery of presold residential housing projects which are facing difficulties in completion due to lack of funding.  Investors will monitor closely this week to gauge if there is additional information about the size of the program and if the PBoC will print money to fund it.  As daily locally transmitted new cases of Covid-19 in China persistently surged and stayed above 2,000 since August 12, 2022, the market will watch the development closely and how it will affect the economy.   In addition to the pandemic, power shortage in the Sichuan province and some other areas in China due to unusually high temperature (higher power consumption for air-conditioning) and drought (which affects hydropower output), investors are assessing the impact of the government-imposed power rationing for industrial users on production, in particular the auto industry and consumer electronics industry in the affected areas. Key earnings this week On Monday, investors will scrutinize the results from Palo Alto Networks (PANW:xnas) in the U.S. to gauge the latest business development in the security software industry, which has drawn much attention this year as cybersecurity has become a focus. Intuit (INTU:xnas) is scheduled to report on Tuesday and its results may provide information about the small and medium-sized businesses that the company focuses in it business.  After a disappointing preannouncement earlier in the month, the bar for Nvidia (NVDA:xnas)’s earnings release this Wednesday may be low.  In HK/China, the results from the Postal Savings Bank of China may provide the market with some insights into the state of the Chinese banking system, especially situations outside the top-tier cities. JD.COM (09618:xhkg/JD:xnas) on Tuesday and Meituan (03690:xhkg) on Friday will be the focus of investors monitoring the business trend of eCommerce and delivery platforms in China.  Key economic releases & central bank meetings this week Monday, Aug 22 South Korea: Exports (Aug, first 20 days)Hong Kong: CPI (Jul)   Tuesday, Aug 23 United States: S&P Global US Manufacturing PMI (Aug, preliminary)United States: S&P Global US Services PMI (Aug, preliminary)Eurozone: PMI Manufacturing (Aug)Eurozone: Consumer Confidence (Aug)United Kingdom: PMI Manufacturing (Aug), PMI Services (Aug)Japan: PMI Manufacturing (Aug)Singapore: CPI (Jul) Wednesday, Aug 24 United States: Durable Goods Orders (Jul, preliminary)United States: Pending Home Sales (Jul) Thursday, Aug 25 United States: GDP (Q2, second)United States: Initial Jobless Claims (Aug)United States: Kansas City Fed Manufacturing Activity (Aug)United States: Jackson Hole Symposium (Aug 25 to 27)Germany: IFO Survey (Aug)France: Business Confidence (Aug)South Korea: Bank of Korea Policy Meeting Friday, Aug 26 United States: Personal Income, Personal Spending, PCE Deflator & PCE Core Deflator (Jul)United States: U of Michigan Sentiment Survey (Aug, final)United States: Fed Chair Powell’s speech at the Jackson Hole SymposiumFrance: Consumer Confidence (Aug)Eurozone: M3 (Jul)Italy: Consumer Confidence (Aug)Italy: Economic Sentiment (Aug)Tokyo: Tokyo-area CPI (Aug)Singapore: Industrial Production (Jul) Saturday, Aug 27 China: Industrial Profits (Jul) Key earnings releases this week Monday: Postal Savings Bank of China (01658:xhkg), Palo Alto Networks (PANW:xnas) Tuesday: Medtronic (MDT:xnys), Intuit (INTU:xnas), JD.COM (09618:xhkg/JD:xnas), JD Logistics (02615:xhkg), Kingsoft (03888:xhkg), Kuaishou (01024:xhkg) Wednesday: PetroChina (00857:xhkg), Ping An Insurance (02318:xhkg), Nongfu Spring (09633:xhkg), LONGi Green Energy Technology (601012:xssc), Pinduooduo (PDD:xnas), Nvidia (NVDA:xnas), Salesforce (CRM:xnys), JD Health (06618:xhkg) Thursday: AIA (01299:hkgs), Wulinagye Yibin (000858:xsec), China Life Insurance (02628:xhkg), CNOOC (00883:xhkg), Dollar General (DG:xnys), NIO (09866:xhkg/NIO:xnas) Friday: Meituan (03690:xhkg), China Shenhua (01088:xhkg), Sinopec (00386:xhkg)    Source: Saxo Spotlight: What’s on investors and traders radars this week?
What Happened In Jackson Hole Besides The Fed's Powell Speech?

All Eyes On Fed Chair Powell's Speech. Latest Natural Gas Developments

Saxo Bank Saxo Bank 22.08.2022 12:52
Summary:  The US dollar wrecking ball is in full swing, taking even USDCNH to new highs for the cycle after another rate cut in China overnight. Longer US treasury yields are also pressuring financial conditions and risk sentiment as the 10-year benchmark yield threatens 3.00% again. The chief event risk for the week will be the Jackson Hole, Wyoming speech from Fed Chair Powell. We also discuss the latest natural gas developments in Europe, speculative positioning in the commodities markets, the long term perspective for tangible vs. intangible stock returns over the last couple of decades, upcoming earnings, & more. Today's pod features Peter Garnry on equities, Ole Hansen on commodities and John J. Hardy hosting and 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: Podcast: USD and US yields brewing up trouble ahead of Jackson Hole
The Outlook Of Some Stocks Around The World: Will IAG Continue To Outperform?

What's On Asian Market? Find Out Now! Samsung, Hyundai, Covid And More...

InstaForex Analysis InstaForex Analysis 22.08.2022 20:07
Company does not offer investment advice and the analysis performed does not guarantee results. Asian stock markets were mixed on Monday. The Shanghai Composite and the Shenzhen Composite gained 0.57% and 0.64% respectively, while the Hang Seng Index went up by 0.12%. The Nikkei 225 decreased by 0.55%, the S&P/ASX 200 fell by 0.96%, and the KOSPI lost 1.15%. Investors are awaiting new information from Fed chairman Jerome Powell regarding the further monetary policy course of the US central bank. Powell is set to give a speech this week. Furthermore, market players took note of the Chinese central bank decreasing two of its key interest rates. The People's Bank of China cut its one-year loan prime rate to 3.65% from 3.7%. The five-year rate was cut to 4.3% from 4.45%. The move was not unexpected – earlier, the PBoC decreased its medium-term lending facility loan rate by 10 basis points to 2.75%. The Chinese central bank's rate cuts are aimed at boosting the country's economic growth, which has slowed down due to rising energy prices, weak property market, and COVID-19 lockdowns. On the Hang Seng Index, the biggest movers were Agile Group Holdings, Ltd. (+6%), CIFI Holdings (Group), Co. (+7%), Country Garden Holdings, Co., Ltd. (+3%), and China Resources Land, Ltd. (+2%) Shares of Sinopec Engineering (Group), Co. gained 4% after the company reported that its net profit increased by 0.6% in the first half of 2022. In Japan, the worst-performing stocks on the Nikkei 225 were Hino Motors, Ltd. (-3.5%), CyberAgent, Inc. (-3.1%), and Nippon Sheet Glass Co., Ltd. (-2,9%). The share price of Ai Holdings, Corp. advanced by 5%, thanks to the company's net profit jumping by 32% in the previous fiscal year. In South Korea, Samsung Electronics, Co. and Hyundai Motor, Co. lost 1.6% and 0.5% respectively. In Australia, BHP shed 0.2%, while Rio Tinto declined by 0.53%. Shares of NIB, Ltd. gained 6.6% thanks to the company's operating profit exceeding market expectations. Source: Forex Analysis & Reviews: Asian markets close mixed on Monday
China's Plan For Dying Property Markets. Nasdaq 100 And S&P 500

China's Plan For Dying Property Markets. Nasdaq 100 And S&P 500

Saxo Strategy Team Saxo Strategy Team 23.08.2022 08:37
Summary:  Equities were sold off on Monday, continuing a slide from their summer rally high, in the midst of position adjustments ahead of the Jackson Hole central banker event later this week. U.S. 10-year yields returned to above 3%. China cut its 5-year loan prime rates and plans to extend special loans to boost the ailing property markets. What is happening in markets?   Nasdaq 100 (USNAS100.I) and S&P 500 (US500.I)  U.S. equities lost ground and continued to retrace from the high of the latest rally since mid-June.  The market sentiment has become more cautious ahead of Fed Chair Powell’s speech this Friday at the Jackson Hole symposium and a heavy economic data calendar, S&P 500 – 2.1%, Nasdaq 100 -2.7%.  The rise of U.S. 10-year bond yield back to above 3% added to the selling pressures in equities.  Zoom Video (ZM:xnas) fell 8% in after-hours trading as the company reported Q2 revenues and earnings missing estimates and cut its full year revenues guidance. U.S. treasuries (TLT:xnas, IEF:xnas, SHY:xnas) Bonds were sold off as traders adjusted positions ahead of the Jackson Hole.  The treasury yield curve bear flattened with 2-year yields surging 8bps to 3.30% and 10-year yields climbing 4bps to 3.01%, above the closely watched 3% handle.  Hong Kong’s Hang Seng (HSIQ2) and China’s CSI300 (03188:xhkg) Hang Seng fell 0.6% while CSI300 climbed 0.7% on Monday. Chinese developers gained on today’s larger-than-expected cut in the 5-year loan prime rate and the Chinese authorities plan to provide special loans through policy banks to support the delivery of stalled residential housing projects, CIFI (00883:xhkg) +11.5%, Country Garden (02007:xhkg) +3.2%.  China extended EV waivers from vehicle purchase tax and other fees to the end of 2023, but the share price reactions of Chinese EV makers traded in Hong Kong were mixed.  Great Wall Motor (02333:xhkg) soared 11%, benefiting from launching a new model that has a 1,000km per charge battery while Nio (09866:xhkg) and Li Auto(02015:xhkg) fell 4.2% and 1.4% respectively. Xiaomi (01810:xhkg) dropped 3.3% after Q2 revenues -20% YoY and net profit -67% YoY, on lower smartphone shipments (-26% YoY).  Smartphone parts suppliers, AAC Technologies (02018:xhkg) and Sunny Optical (02382:xhkg) declined 5.6% and 4.2% respectively.  The share price performance of the four companies that will be added to the Hang Seng Index was mixed, Baidu (09888:xhkg) +0.9%, China Shenhua Energy (01088:xhkg) +2.1%, Hansoh Pharmaceutical (03692:xhkg) +3.2% but Chow Tai Fook Jewellery (01929:xhkg) -0.6%.  SenseTime (00020:xhkg) gained 4.2% as the company will replace China Pacific Insurance (02601:xhkg) -2.8% as a constituent company of the Hang Seng China Enterprises Index.  ENN Energy (02688:xhkg) plunged more than 14% after reporting H1 results below market expectations.  China retailer Gome (00493) collapsed 20% after resuming trading from suspension and a plan t buy from the controlling shareholder a stake in China property assets.  EURUSD falls below parity, eyes on 0.9500 The latest concerns on the European energy crisis weighed on the Euro which was seen sipping below parity to the US dollar. Higher US yields and gains in the US dollar also underpinned, taking EURUSD to lows of 0.9926. The European recession is coming hard and fast, and the PMIs today will likely signal increasing pressure on the region. Also on the radar will be Fed Chair Powell’s speech at the Jackson Hole later this week, with a fresh selloff in the pair likely to target 0.9500 next. USDCNH heading to further highs After PBOC’s easing measures on Monday, the scope for further yuan weakness has increased. USDCNH broke above 6.8600 overnight and potentially more US dollar strength this week on the back of a pushback from Fed officials on easing expectations for next year could mean a test of 7.00 for USDCNH. Still, the move in yuan is isolated, coming from China moving to prevent the yuan from tracking aggravated USD strength rather than showing signs of desiring a broader weakening. EURCNH has plunged to over 1-month lows of 6.8216 on the back of broader EUR weakness. Crude oil prices (CLU2 & LCOV2) Crude oil prices made a recovery overnight despite the strength in the US dollar. A global shift from gas to oil, from Europe to Asia, has taken a deeper hold amid gas shortage fears accelerating in the wake of another upcoming maintenance of the Nordstream pipeline. Diesel and refinery margins have also been supported as a result, with Asia diesel crack rising to its previous high of $63 amid low inventory levels. WTI futures reversed back to the $90/barrel levels and Brent were back above $96. Comments from Saudi Energy Minister threatening to dial back supply also lifted prices, but these were mis-read and in fact, focused more on the mismatch between the tightness in the futures and the physical market. Gold (XAUUSD) and Silver (XAGUSD) Gold broke below the key $1744 support and is now eying $1729, the 61.8% retracement of the July to August bounce. Dollar strength and a run higher in US yields weighed on the shine of the yellow metal, which has seen downside pressures since last week after touching the critical $1800-level. Hawkish Fed talk this week could further weigh on the short-term prospects for Gold. Silver also dipped below the key 19 handle, erasing most of the gains seen since late July.   What to consider?   German year-ahead power prices hit a fresh record high German year-ahead power prices surged to EUR 700/MWh with Dutch TTF gas prices close to EUR 300/MWh. The surge came on the back of another leg higher in natural gas prices which rose over 8% in Europe amid concerns around the next scheduled 3-day maintenance of the Nordstream pipeline. It appears that demand destruction remains the most obvious but painful cure right now, along with a longer-term focus on ensuring a broad-based supply of energy from coal, gas, nuclear, solar, hydrogen, and more.  Australia and Japan services PMIs plunged into contraction Australia saw its services PMI drop to 49.6 in August in a flash print, from 50.9 in July. Manufacturing PMI, however, held up at 54.5, just weakening slightly from last month’s 55.7. The spate of rate hikes seen from Reserve Bank of Australia is likely taking its toll on demand and manufacturing. Meanwhile, prices remain elevated amid the persistent supply chain issues, and more rate hikes are still on the cards. Japan’s flash manufacturing PMI for August came in lower at 51.0 from 52.1 previously, nut stayed in expansion territory. Services PMI however plunged into the contraction zone below 50, coming in at 49.2 for a flash August print from 50.3 in July. The fresh COVID wave in Japan, although comes without any broad-based new restrictions, is impeding the services demand and will likely weigh on Q3 GDP growth. Europe and UK PMIs may spell further caution The Euro-area flash composite PMI and the UK flash PMI for August are both due to be released on Tuesday. Following a slide in ZEW and Sentix indicators for July, the stage is set for a weaker outcome on the PMIs too. July composite PMI for the Euro-area dipped into contractionary territory at 49.9, while the UK measure held up at 52.1. The surge in gas and electricity prices continue to weigh on GDP growth outlook, with recession likely to hit by the end of the year. China’s plan to provide loans to ensure delivery of presold residential projects is said to be of the size of RMB 200 billion Last Friday, Xinhua News reported that the PBoC, jointly with the Housing Ministry and the Ministry of Finance rolled out a program to make special loans through policy banks to support the delivery of stalled residential housing projects but the size of the program was not mentioned.   A Bloomberg report yesterday, citing “people familiar with the matter”, suggested the size of the support lending program could be as large as RMB 200 billion.  Beijing municipal government rolled out initiatives to promote hydrogen vehicles The municipal government of Beijing announced support for the construction of hydrogen vehicle refueling stations with RMB500 million for each station, aiming at building 37 new stations by 2023 and bringing the adoption of fuel-cell cars to over 10,000 units in the capital. Earlier in the month, the Guangdong province released a plan to build 200 hydrogen vehicle refueling stations by 2025. Since last year, there have been 13 provinces and municipalities rolling out policies to promote the development of the hydrogen vehicle industry.  Earnings on tap Reportedly there have been shorts being built up in Dollar Tree (DLTR:xnys) as traders are expecting that discount retailer missing when reporting this Thursday.   On the other hand, investors are expecting Dollar General (DG:xnys) results to come in more favourably, , which also reports this Thursday.  Key earnings scheduled to release today including Medtronic (MDT:xnys), Intuit (INTU:xnas), JD.COM (09618.xhkg/JD.xnas), JD Logistics (02615:xhkg), Kingsoft (02888:xhkg), and Kuishaou (01023:xhkg). Singapore reports July inflation figures today Singapore's inflation likely nudged higher in July, coming in close proximity to 7% levels from 6.7% y/y in June. While both food and fuel costs continue to create upside pressures on inflation, demand-side pressures are also increasing as the region moves away from virus curbs. House rentals are also running high due to high demand and delayed construction limiting supplies. The Monetary Authority of Singapore has tightened monetary policy but more tightening moves can be expected in H2 even as the growth outlook has been downwardly revised.     For a week-ahead look at markets – tune into our Saxo Spotlight. For a global look at markets – tune into our Podcast   Source: APAC Daily Digest: What is happening in markets and what to consider next – August 23, 2022
What Should We Expect Before Winter? Will Energy Crisis Come?

What Should We Expect Before Winter? Will Energy Crisis Come?

Peter Garnry Peter Garnry 22.08.2022 18:44
Summary:  Financial conditions loosening over the past six weeks were a natural evolution of the US economy improving in July, but the Fed is poised to hike potentially 75 basis points at the September meeting to tighten financial conditions even more as the nominal economy is still running too hot to get inflation meaningfully lower. The most likely scenario is weaker equities as winter approaching as the energy crisis will hurt. Financial conditions will soon begin tightening again S&P 500 futures are trading 3.4% lower from their high last week touching the 200-day moving average before rolling over again. Sentiment has shifted as the market is slowly pricing less rate cuts for next year with Fed Funds futures curve on Friday (the blue line) has shifted lower compared to a week ago (the purple line) as inflationary pressures are expected to ease as much as betted on by the market over the past month. Fed member Bullard recently said that he was leaning towards 75 basis points rate cut at the September FOMC meeting to cool the economy further. If the Fed goes with 75 basis points while the real economy is seeing lower activity it will mean that financial conditions will begin tightening more relative to the economic backdrop. Financial conditions have been loosening since June but expectation is that we will see another leg of tightening to levels eclipsing the prior high and with that US equities will likely roll over. S&P 500 futures are now well below the 4,200 level and currently in the congestion zone from before the last leg higher. The next gravitational point to the downside is the 4,100 and below that just above 4,000. December put options on the S&P 500 are currently bid around $208 which roughly a 5% premium for getting three-month downside protection at-the-money. S&P 500 futures | Source: Saxo Group   Fed Funds futures forward curve | Source: Bloomberg   US financial conditions | Source: Bloomberg The US is headed for a recession, but when? US financial conditions eased in July lifting equities and with good reasons we can see. The Chicago Fed National Activity Index (the broadest measure of economic activity) rose to 0.27 in July from -0.25 in June suggesting a significant rebound in economic activity. The rebound was broad-based across all the four major sub categories in the index with the production index rising the most. The three-month average is still -0.09 with -0.7 being the statistical threshold for when this indicator suggests that the US economy is in a recession. The probability is therefore still elevated for a recession but the slowdown in the US economy has eased which is positive factor for US equity markets. Predicting the economy is difficult but our thesis going into the winter months on the Northern hemisphere is that it is very difficult to avoid a recession, at least in real terms, when the economy is facing an energy crisis. The most likely scenario is that the US economy will slide into a nominal recession but continue at a fast clip in nominal terms.          China is facing a 2008-style rescue of its real estate sector We have written earlier this year about the downfall of Evergrande and the other Chinese real estate developers. The stress in China’s real estate sector was a big theme earlier this year but has since faded, but recently the Chinese central bank has eased rates and today the government is planning a $29bn rescue package of special loans for troubled developers. Tensions in Chinese real estate are weighing down on the economy through lower consumer confidence and investors are increasingly reducing exposure to China has we have highlighted in our daily podcast. The PBoC (central bank) is urging banks to maintain steady growth of lending, but with the market value of banks relative to assets having declined for many years the market is no longer viewing the credit extension as driven by sound credit analysis, but more as an extended policy tool of the government with unknown but likely less good credit quality.   Source: Equities are rolling over as conditions are set to tighten
Powell Touched On The Topic Of The Digital Dollar And The Crypto Industry

Fears About The Imminent Recession In The US Economy Will Force The Fed To Put On The Brakes

InstaForex Analysis InstaForex Analysis 24.08.2022 23:55
Relevance up to 12:00 2022-08-29 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. A bad example is contagious. In the first half of August, gold rose following the US stock market, which required the Fed to slow down the pace of tightening monetary policy in response to the slowdown in US inflation. Thus, stock indices put spokes in the wheels of the Fed, weakening financial conditions. This could not continue indefinitely, and the S&P 500 began to plummet, fearing Jerome Powell's hawkish rhetoric at Jackson Hole. Following this, the precious metal closed in the red zone for the first time in the last five weeks. Weekly dynamics of gold What difference does it make to XAUUSD if China increased its gold imports from Switzerland to 80 tonnes in July, which is twice as much as in June and eight times as much as in May, if the fate of the precious metal is in the hands of the Fed? For a long time, it ignored comments from FOMC officials about the continuation of the monetary restriction cycle, including calls from St. Louis Fed President James Bullard to raise the federal funds rate by 75 bps in September, but this could not continue indefinitely. It is unlikely that Powell's speech at Jackson Hole will be radically different from his colleagues. The same as Minneapolis Fed President Neel Kashkari, who, against the backdrop of low unemployment and high inflation, sees only one way for rates—up. Another thing is that the chairman of the Fed is the chairman of the Fed. A figure of a different scale, whose speech is more expensive not to react to. To fight inflation, the Fed needs higher Treasury yields and a strong dollar to slow wage and import price increases, and it will get them. With consumer prices at 8.5% and the federal funds rate at 2.5%, there is little doubt that the cycle of monetary tightening is not over. The Central Bank is far from doing its job. Borrowing costs can rise to 4–4.5%, and this is a completely different story for all financial markets, as well as for the US dollar and gold. Dynamics of gold and US dollar Should we expect a decrease in XAUUSD quotes to 1600 or 1500 against such a background? In my opinion, the last figure is difficult to achieve. Recent business activity statistics show a slowdown in indicators around the world, from Australia to North America. Some countries have seen Purchasing Managers' Indices drop below the critical 50 mark, signaling that a recession is near. Under such conditions, the old scheme may start to work: fears about the imminent recession in the US economy will force the Fed to put on the brakes, which will reduce the yield of Treasury bonds and weaken the US dollar. The question is, when exactly will this happen? Technically, on the daily chart, gold is trying to return to the limits of the fair value range of $1740–1800 per ounce. If it works out, we will sell it on the rebound from resistance at $1775–1780. No—let's increase the short positions formed from $1765 with targets at $1695 and $1665 per ounce.   Source: Forex Analysis & Reviews: Gold flees from the Fed's wrath  
US President Cancels Up To $20,000 Student Debt (Before The Elections). It Will Cost ~$300 Bilion Over 10 Years!

US President Cancels Up To $20,000 Student Debt (Before The Elections). It Will Cost ~$300 Bilion Over 10 Years!

Saxo Strategy Team Saxo Strategy Team 25.08.2022 10:22
Summary:  A quiet session yesterday for equities, even as US treasury yields jumped higher once again ahead of a highly anticipated speech tomorrow from US Fed Chair Jerome Powell at the Fed’s annual Jackson Hole conference. In Europe, the focus remains on the dire natural gas and power prices as prices seem to ratchet perilously higher every day. That taken into consideration, EURUSD trading near parity doesn’t rate as such a weak performance from the single currency.   What is our trading focus? Nasdaq 100 (USNAS100.I) and S&P 500 (US500.I) Despite a shocking low PMI services figures for August, signs that financial conditions are beginning to tighten again, and surging US 10-year yield closing at 3.1%, S&P 500 futures pushed higher after initially trading to new lows in yesterday’s session. S&P 500 futures are extending their short-term momentum this morning trading around the 4,158 level which is still in the heart of the trading range of 4,100-4,170 which was established earlier this month. Hong Kong’s Hang Seng (HSI.I) and China’s CSI300 (000300.I) After having been closed in the morning due to a typhoon, Hong Kong resumed trading in the afternoon and the Hang Seng Index rallied 1.5% on new incremental stimulus measures from the Chinese Government to boost the economy. A-shares fluctuated between gains and losses and edged up as much as 0.2%. Coal miners, oil and gas, and crude tankers stocks gained. China internet stocks rallied, Alibaba (09988:xhkg) +4.3%, JD.COM (09618:xhkg) +5.1%, Baidu (09888:xhkg) +5.4%, Bilibili (09626:xhkg) +4.3%. US dollar edges back lower ahead of Jackson Hole After a feint higher yesterday, the US dollar generally closed lower yesterday across the board despite a solid new surge higher in US treasury yields as traders eye the Jackson Hole conference speech tomorrow from Fed Chair Powell. EURUSD continues to bob back toward the obvious psychological pivot level at parity, teasing that level this morning, while China played its part in helping the USD lower overnight with a surprisingly strong fixing for USDCNY after it hit a two-year high yesterday amidst reports from Reuters (citing unnamed sources) that dealers in China were warned from official sources against aggressively selling the yuan. JPY crosses Global bond yields are pulling back higher, with the Japanese government bond yields from 10 years and shorter on the yield curve frozen in their tracks due to the Bank of Japan’s yield-curve-control (YCC) policy, meaning that further upside in yields may be absorbed by the yen itself. USDJPY trades sideways as the USD is a bit softer, but other JPY crosses have pulled back higher, as AUDJPY threatens the top of the range soon (high in Jul. Near 95.70 vs. 95.05 this morning) and EURJPY bounced strongly after threatening a look at local support yesterday. The reaction in the US treasury market and Friday close after Fed Chair Powell’s speech at Jackson Hole will prove critical for whether a fresh aggravated rise in yields once again challenges the BoJ commitment to its YCC policy. Crude oil prices (CLV2 & LCOV2) Crude oil prices extended their gains following a volatile Wednesday that initially saw prices dip after the EIA reported a smaller than expected drop in US crude stockpiles. However, the report also showed a second week of lower production together with record exports of crude oil and products to energy-starved economies looking for alternative supplies to those from Russia. Diesel exports hit a record with an increased amount of gas-to-fuel switching underpinning demand. Not least from Europe where Dutch TTF gas touched $500 per barrel of crude oil equivalent (€300/MWh), and German power $1,100 per barrel (€646/MWh). In our latest update we highlighted the increased risk of short covering from funds who in anticipation of an economic slowdown had cut their net long exposure in WTI and Brent to a 28-month low. In Brent, the next level of upside interest can be found at $102.50. U.S. corn (CORNDEC22) U.S. corn trades higher for a seventh day, hitting a two-month high, supported by concerns that hot and dry weather in the Midwest during the final crop development period may limit the production outcome. A poor US harvest will likely exacerbate the food inflation that’s already been gripping the world this year with dwindling global grain stockpiles being driven by war, drought and the overall impact of climate change. The US is the biggest producer and exporter of corn which is used in everything from animal feed to biofuels and sweeteners. Above $6.64/bu, the December contract may take aim at $6.88/bu next. US Treasuries (TLT, IEF) US treasury yields rose again yesterday as demand at the 5-year US treasury auction was at the weak end of the range. The 10-year benchmark closed above 3.10% for the first time since late June. A 7-year auction is up today ahead of Fed Chair Powell’s Jackson Hole conference speech tomorrow, the most significant event risk for the treasury market until the next CPI release in September and then the September 21 FOMC meeting. What is going on? Emerging countries dominate in terms of nuclear capacity under construction According to the latest data released by the World Nuclear Association, the countries with highest nuclear capacity under construction are: China (23.3K MG), India (6.6K MG), Turkey (4.8K MG) and South Korea (4.2K MG). The United Kingdom is the first developed country in the list with 3.4K MG. France lags with only 1.6K MG, for instance. Nuclear energy is the subject of intense debate in several European countries. In our view, this is certainly one of the best options to support green transition and avoid a surge in the energy bill which will lead to lower purchasing power for longer. China’s State Council rolled out 19 new supportive measures to boost the economy The crux of the new stimulus package consists of an incremental RMB300 billion financing from policy banks to provide equity-like capital for infrastructure projects and urges issued to local governments to utilize unused quota balances carried over from previous years to issue RMB500 billion special bonds by the end of October this year.  The package includes a plan to facilitate state-owned electricity generating companies to issue RMB200 billion bonds.  Nvidia provides a weak outlook Investors already knew that Q2 would be a weak quarter given the profit warning earlier this month, but underlying demand continues below estimates with Q3 revenue guidance of $5.9bn +/- 2% is well below estimates of $6.9bn, but on a positive note the chipmaker is guiding gross margin of 65% which means that it expects profitability to remain in line with recent history. On the conference call management says that China has been the disappointment in terms of demand. Shares fell 4% in extended trading. US President Biden cancels up to $20,000 student debt ... with $10k in forgiveness for any borrower making less than $125k/year and $20k for holders of Federal Pell grants. The move affects tens of millions of Americans (and possible voters in the mid-term elections) and will cost an estimated $300 billion over 10 years. Salesforce growth is slowing down Q2 operating income was better than expected while revenue of $7.7bn up 22% y/y was in line with estimates. The FY revenue outlook of $30.9-31bn was below estimates of $31.7-31.8bn suggesting IT spending is slowing down amid uncertainty over the economy with July seeing a particular shift in customer attitude. Shares were down 4% in extended trading. Snowflake post strong guidance Q2 revenue was $497mn vs est. $468mn and updated its fiscal year operating margin guidance to 2% from previously 1% suggesting the company is able to maintain high growth while lowering its spending growth. The revenue beat was driven by an inflow of new customers. Shares were up 17% in extended trading. Coffee prices surge on Brazil and Vietnam supply worries Both Arabica (KCZ2) and Robusta (RCX2) coffee futures extended their three-day surge on signs of a deteriorating supply outlook. Stockpiles in Vietnam, the world’s top supplier of the Robusta variety, are expected to halve by the end of September from a year earlier while stocks of the Arabica bean monitored by the ICE exchange has slumped to a 23-year low. Freak weather in South America during the past year has decimated the production outlook for Brazil, Colombia and Central America, while recent dryness has already started to raise concerns about next year’s crop. The June high at $2.42 in Arabica being the only level standing in the way for a push towards the 11-year high at $2.605 reached in February. Natural gas has become the biggest component in the Bloomberg Commodity Index (BCOM) The index tracks the performance of 23 major commodity futures targeting a one-third exposure in energy, metals and agriculture. The target weights are set once a year every January and if prices shift significantly during the year, a reweighting will occur the following January. The 160% year-to-date surge in US natural gas futures has more than doubled its weight to 17% from 8%, and in the process made it the biggest component in the BCOM index, more than double that of WTI and Brent combined. What it means? The index has become more volatile and if maintained throughout the year a major rebalancing (selling of natural gas) will occur this January. What are we watching next? The Kansas City Fed hosts its annual symposium in Jackson Hole This year’s theme is “Reassessing Constraints on the Economy and Policy”. The symposium will last until 27 August. Fed Chair Jerome Powell will speak tomorrow. Given the loosening of financial conditions since the June FOMC meeting, the market has been concerned that Powell will echo the pushback against the notion that the Fed knows that it is set to materially slow its pace of policy tightening after the September 21 FOMC rate decision (majority looking for another 75 basis points). Data dependency will likely be underlined in his speech, but any guidance on the Fed’s approach to QT could also garner considerable attention as longer treasury yields pull back higher toward the cycle highs from June. Japan’s Tokyo CPI for August to show more price pressures Japan's Tokyo CPI for August is due on Friday morning, and it is likely to suggest further price pressures above the Bank of Japan's 2% target. Consensus expectations point toward another higher print of 2.7% y/y for the headline measure and 2.5% y/y on the core measure, signalling inflationary pressures will continue to question the Bank of Japan's resolve on the ultra-easy policy stance. Earnings to watch Today’s earnings focus is Fortum, Delivery Hero, and NIO. Europe’s energy crisis is putting immense pressure on utility companies and consumers. Fortum is not normally a company we find interesting but given the current crisis management’s assessment of the outlook is important to read. Delivery Hero sits inside the consumer economy and especially on the discretionary spending side with delivery of take-away orders; 1H revenue growth is expected at 76% y/y. NIO is in focus following the weaker than expected result from XPeng. Today: South32, Toronto-Dominion Bank, Fortum, Delivery Hero, AIA Group, China Life Insurance, CNOOC, CRH, Dollar General, Vmware, Marvell Technology, Workday, Dollar Tree, Dell Technologies, NIO Friday: Meituan, China Shenhua Energy, China Petroleum & Chemical Economic calendar highlights for today (times GMT) 0800 – Germany Aug. IFO Business Climate Survey 1130 – ECB Meeting Minutes 1230 – US Weekly Initial Jobless Claims 1230 – US Q2 GDP Revision 1430 – EIA Natural Gas Storage Change 1500 – US Aug. Kansas City Fed Manufacturing survey 2200 – New Zealand Aug. ANZ Consumer Confidence 2230 – New Zealand RBNZ Governor Orr to speak 2330 – Japan Aug. Tokyo CPI Follow SaxoStrats on the daily Saxo Markets Call on your favorite podcast app: Apple  Spotify PodBean Sticher   Source: Financial Markets Today: Quick Take – August 25, 2022
The Elasticity On Supply Of Fossil Fuels Is Low And The Green Transformation Is Accelerating Electrification

Green Transformation Being Inflationary In The Years To Come

Peter Garnry Peter Garnry 25.08.2022 13:44
Summary:  Central banks have been very late to the inflation game as the they have underestimated the effects from the stimulus during the pandemic. Supply chains and generally the supply side of the economy were expected to normalise much faster than what has been the case and our main thesis now is that if central banks focus too much on the core inflation a big mistake might be the outcome. Food and energy will be at the center of our crisis years with climate change and the green transformation being inflationary in the years to come. Investors should increasingly invest in the tangible world to offset these inflationary risks. The energy crisis will drive everything Around 30 central banks around the world have adopted inflation targeting using the headline inflation indices which in the US is the US Personal Consumption Expenditures Index and was officially announced in January 2012. The official targeting is the headline inflation indices, but many central banks and economist are often putting more weight on the core inflation indices. These indices remove energy and food from the price index. This practice is likely what made central banks react to slowly to current inflation impulse; remember, at Jackson Hole one year ago Jerome Powell said: “We have much ground to cover to reach maximum employment, and time will tell whether we have reached 2% inflation on a sustainable basis”. At that point US CPI and core CPI stood at 5.4% y/y and 4.3% y/y respectively. Core inflation indices remove the energy and food items because they are seen as volatile and mainly not driven by the trend change in overall prices, and the key assumption is also that they have temporary factors behind that will reverse later on (see quote below from Federal Reserve Bank of San Francisco). This argument was the same for our disrupted supply chains although in reality it has taken much longer than expected. “However, although the prices of those goods may frequently increase or decrease at rapid rates, the price disturbances may not be related to a trend change in the economy’s overall price level. Instead, changes in food and energy prices often are more likely related to temporary factors that may reverse themselves later.” Food and energy will add to inflation going forward Our team has written a lot about the physical world and lately we introduced indices of tangibles- vs intangibles-driven industry groups. We have shown many times how the world underinvested in the global energy and mining industry, and why this will haunt the world for years. Food and energy are also intertwined and connected which we have seen today with Yara International reducing its ammonia production in Europe to just 35% of potential production due to elevated natural gas prices. Lower ammonia production will lead to less fertilizer for farmers and thus lower food production, which again can lead to higher food prices. It should be clear by now, that ignore food and energy could be a grave mistake by central banks. Climate change will make global food production more volatile and push up prices, and the green transformation will for years keep energy prices elevated. Our main thesis is that the coming decade will in many ways be a replay of the 1970s as politicians will intervene in the economy to mitigate the pain from higher prices, but these decisions will only keep the nominal economy growing fast and thus keeping inflation and the readjustments going for longer. The Fed’s core inflation measure is currently at 0.4% m/m measured over six months suggesting a core inflation rate annualized at around 5% which means that short-term interest rates must be set much higher to tame inflation. The headline inflation is currently twice as high as the core inflation. PCE core CPI m/m | Source: Bloomberg Nominal wages will underpin inflation for a lot longer In this ECB paper from August 2002, the authors conclude that central banks should give substantial weight to the growth in nominal wages when monitoring inflation. If we look at nominal wage growth in the US the chart below shows the three-staged acceleration we have observed in the US economy since 2009. The first phase during 2009-2015 saw only 2% annualized wage growth as the economy was suffering from low demand in the subsequent years after the Great Financial Crisis. The second phase was the period 2015 to early 2020 where years of loose monetary policy and slowly healing economies lifted US nominal wage growth to 2.9% annualized. The third phase is the period from early 2020 until today and is driven by the extraordinary monetary and fiscal stimulus that were put in place after the global Covid pandemic broke out. The combined stimulus was on par with the post-WWII years and were unleashed into a global economy that in hindsight was much closer to a hard physical supply limit than understood at the time. Subsequently demand has been running much stronger than trend growth and as a result nominal wages have accelerated to 5.2% annualized growth rate. Indeed, it seems we have a serious problem on our hands where inflation become unanchored from 2%. US hourly earnings index | Source: Bloomberg Invest in the tangible world In an inflationary environment the tangible world must increase dramatically, so investors should invest in the tangible world to offset the inflation risk in order to preserve wealth in real terms. In our note from yesterday about the Tangible world is fighting back we highlight the industry groups that are part of the tangible world, but our theme basket performance overview also show which tangible parts are doing well which this year has been commodities, defence, renewable energy, logistics, and energy storage. Saxo clients can find the companies in each of these theme baskets on our trading platforms. Source: Core inflation is unofficially dead
Fed: Action Will Have Already Begun At The Beginning Of The Symposium

Fed: Action Will Have Already Begun At The Beginning Of The Symposium

InstaForex Analysis InstaForex Analysis 25.08.2022 15:32
Relevance up to 10:00 2022-08-26 UTC+2 Company does not offer investment advice and the analysis performed does not guarantee results. Today the dollar began to weaken its position around the entire perimeter of the market. The question arises, what happened: a small respite before the storm, or was Federal Reserve Chairman Jerome Powell's hawkish rhetoric completely invested in the US currency these days as part of the Jackson Hole symposium? If so, then it turns out that the dollar index has exhausted its growth, at least for the current moment. Now traders are hiding and will not make large bets until the event itself.The reaction will already be on the symposium factor itself. Further dynamics of the dollar will depend on Powell's statements. If they remain within expectations, the dollar will remain within the current range. In order for the indicator to touch again or break through the high of the current year above 109.00, new factors or unexpected announcements are needed that will push the rate up. However, there is a risk that the speech will not be considered hawkish enough. With such a development of the scenario, the US currency will lose positions earned in recent sessions. Part of the points scored will go if the head of the Fed expresses concern about the consequences of tightening monetary policy. Traders will carefully study Powell's speech for signs of further rate hikes. The federal funds rate is expected to peak at 3.80% in March 2023, up from 3.62% two weeks ago. Interest rate futures suggest a 60% chance of a 75 basis point Fed rate hike in September. Today, dollar traders will focus on data on the country's GDP, which may well increase pressure on the dollar, as market players' attitude to the expected recession has become aggravated. Most market players are still betting on the strengthening of the US currency against the hawkish message of the Fed. The upward trend should continue until the end of the year. Since the peak of inflation and rate hikes are just around the corner, so is the reversal of the dollar index. The US dollar may peak in the fourth quarter of 2022, after which a period of cyclical weakness against most currencies will begin next year, when the economy enters a recession and the Fed stops the process of raising rates. The euro certainly took advantage of the current pause in the growth of the dollar, but the single currency has nothing to count on. EUR/USD is at risk of further losses in the next few weeks, according to UOB FX strategists. For now, the downward pressure has eased, with the quote expected to trade between 0.9920 and 1.0010. This is what the short term looks like. On the horizon of two to three weeks, UOB sees an opportunity for further weakening. Only a breakthrough of 1.0035 would indicate that the euro's decline that began last week is over. However, one important nuance must be taken into account here. Oversold conditions can result in there being several days of consolidation first. Support levels in the future are at 0.9870 and 0.9830. The German IFO and the ECB minutes are in focus on Thursday. The 1.0015 area is a key intraday resistance. On a break higher, there is a risk of a short squeeze up to 1.0135. Whether it happens will depend on the incoming data. Notably, yield spreads have moved in favor of EUR/USD this week. But whether they will play any role is a big question. Serious gas related problems and the Fed's continued hawkish stance suggest that this month one should not count on the recovery of EUR/USD, whose growth may stall around 1.0100-1.0200. The German business climate index from the IFO Institute fell slightly in August to 88.5 against 88.7 in July and the market forecast of 86.8. The index for assessing the current economic situation dipped to 97.5 compared to the July value of 97.7 and the forecast of 96.0. The IFO expectations index, which reflects the forecasts of companies for the next six months, fell to 80.3 from 80.4, but turned out to be much better than the 78.6 expected by the market. Following the release of IFO's German Business Activity Survey, market players concluded that a recession is still on the agenda. The euro was not inspired by the results, the growth of 0.3% is solely due to the declining dollar. Source: Forex Analysis & Reviews: Euro fights windmills
How Do Most Influential Banks In The World Perform? JPMorgan Chase (JPM), Bank of America (BAC) And Goldman Sachs (GS)

How Do Most Influential Banks In The World Perform? JPMorgan Chase (JPM), Bank of America (BAC) And Goldman Sachs (GS)

Conotoxia Comments Conotoxia Comments 25.08.2022 16:45
Leading investment and commercial banks are vital to the international financial system. They are responsible for money transfers, investments, currency exchange, hedging corporate exposures, etc. Banks may be exposed to potential risks in an environment of changing interest rates, or it may be a potential opportunity for them to improve their profits. Given the volume of lending activities, commercial banks' performance seems most sensitive to a change in interest rates. Investment banks, meanwhile, through their handling of investment projects and trading activities, have the potential to profit when interest rates change significantly. How did the banks perform? JPMorgan Chase (JPM), Bank of America (BAC) and Goldman Sachs (GS) are among the largest and most influential banks in the world. In the second quarter, they generated revenues of $31.6 bln, $22.8 bln and $11.9 bln, respectively. Out of them, only JPM failed to beat Wall Street analysts' expectations in terms of revenue. JPM and BAC expect some borrowers to default through the difficult economic situation in the US. As a result, the former has set aside reserves of  $428 million to cover non-performing loans. Figures from leading banks seem to indicate that, after a record 2021, the number of mergers and acquisitions (M&A) and IPOs is declining significantly. BAC reported a decline in investment banking deal volumes in Q2 after last year's historic highs of a whopping 47%. However, the impact on books was offset by a 22% growth in net interest income, most likely driven by rapidly rising interest rates.  Moreover, rising interest rates due to the popularity of fixed-rate lending in the US do not seem to translate as strongly as one would expect into corporate profits. Irresponsible credit policies seem to be hitting the sector's performance hard, as can be seen in the share prices of JPM and BAC. They have already fallen 28.4 and 25.3% respectively this year. However, the announcement of the suspension of buybacks is also not a good sign and may indicate that management might consider the current share price too high. Goldman Sachs, which shares have lost 13.5% this year and surprised positively relative to expectations on Wall Street, appears to be a peculiar exception. Historically, GS has been relatively immune to periods of crisis, in which the company has taken advantage of high volatility to boost earnings. Nonetheless, the current situation is probably unsuitable due to its high vulnerability to declining transaction revenues (M&A) and share issues.  In contrast to the mixed and less-than-ideal performance of JPMorgan Chase and Bank of America, Goldman surprised the market with a significant increase in high-margin sales of securities to companies (especially those looking to hedge in a challenging macro environment). Income from these rose by a staggering 55% to $3.61 bln against the $2.89 bln estimated by Wall Street. Income from the sale of shares also rose more than estimated to 2.86 bln against a forecast of $2.67 bln. Finally, JPM, BAC and GS profits were 8.6 bln (-28% year-on-year), 6.25 bln (-32% year-on-year) and $2.79 bln (-48% year-on-year) respectively. This significant decline may shatter the stereotype that a high-interest rate environment can only be beneficial for banks.   Rafał Tworkowski, Junior Market Analyst, 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. 82.59% 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.   Source: Banks' earnings summary - do rising interest rates benefit financial institutions?
US Stocks: S&P 500 Decreased By 0.21%, Nasdaq Gained 0.25%

USA: Altough Jackson Hole Matters, CPI And Jobs Data Released Next Week Are Crucial As Well

ING Economics ING Economics 26.08.2022 09:19
Jerome Powell's in the spotlight, but equally important for the immediate Fed outlook will be the upcoming job report next week and the CPI print that follows. He may strive to endorse the market's recently rediscovered hawkishness, but also needs confirmation in the data. The ECB minutes pointed to more tightening ahead, with a hint at the balance sheet   Jerome Powell's speech at Jackson Hole today is the main event Powell to speak against an already hawkish-leaning backdrop Many will have marked Fed Chair Jerome Powell’s speech today as the highlight of the week. Whether he will prove as market-moving as some expect is still to be seen. A likely scenario is that he will endorse the retightening of financial market conditions and thus also the trend towards higher market rates of late, given that the Fed still is a stretch away from getting inflation under control. Emphasis on the terminal rate may be an attempt to shift the focus away from a slowing hiking pace Recent Fed speakers have indeed provided a more hawkish backdrop, confirming the market leaning toward such an outcome. The Fed’s Esther George assessed that the Fed still needed to raise rates further to slow demand and bring inflation down, highlighting the importance of clear communication of the destination the Fed is headed – and that could even be above 4%. She pushed back against the notion of cuts following on the heels of the tightening cycle, where the market is currently seeing the peak in the Fed funds rate at close to 3.8% in the first quarter of next year, before pricing in first rate cuts again. Putting the emphasis on the terminal rate may be seen as an attempt to shift the focus away from the Fed slowing its hiking pace soon. Whether that happens already in September will be determined by the data – 300k, as is currently the consensus for next week’s payrolls increase, would leave a 75bp hike still on the table. We suspect that the next CPI release and whether it can confirm the notion of peak inflation will be more relevant. Here our economists see the risk of the core inflation reading still heading higher. The Fed has European markets to thank for a tightening of financial conditions Source: Refinitiv, ING ECB still has more tightening to do – could the balance sheet be next? The main takeaway from the European Central Bank minutes was the signalling of more hikes to come as the outlook for inflation worsened. The larger increase of 50bp in July should be understood as a frontloading of the normalisation process, but not as a change of the end-point of the cycle. This end-point will only crystallise once interest rates get closer to it, and – as also our economists have noted – it probably remains a moving target.       While data continues to point lower, even if not as bad as feared as was the case with yesterday’s German Ifo, the ECB appears reluctant to use the word recession. The ECB minutes suggested the central bank continues to hold on to a more optimistic view of the economy, at least at the last July meeting. Abandoning the rates guidance has provided much-needed flexibility, but balance sheet guidance remains The minutes also foreshadowed a discussion that could add upward pressure to longer-dated rates. Abandoning the rates forward guidance has provided much-needed flexibility in setting monetary policy. But there still remains guidance in place for the balance sheet, or more precisely the reinvestment of the QE portfolios. For now, the ECB intends to reinvest maturities of the Asset Purchase Programme portfolio “for an extended period of time past the date when it started raising the key interest rates”. Pandemic Emergency Purchase Programme maturities will be reinvested at least until the end of 2024. No direct conclusions were drawn just yet in the minutes, but already earlier, the ECB’s Isabel Schnabel and Bundesbank’s Joachim Nagel hinted that the balance sheet would have to be considered at some point. Next week the ECB will have to contemplate another CPI print, and given the underlying rise in energy (gas) prices the trend continues to point higher – our economists do not exclude a peak in the double digits. Adjusting the reinvestment guidance may offer the ECB another lever on monetary policy, though we would caution that at a time where flexible reinvestments are used to contain sovereign spreads, talking about reducing reinvestments could prove counterproductive. Today's events and market view Powell's Jackson Hole speech is the day's highlight. Although rates have eased a little lower with the 10Y UST almost touching the 3% mark again, the market is leaning hawkish into this event. Other Fed speakers have already sounded hawkish tones, such as Esther George just yesterday, setting the backdrop for Powell. In these turbulent markets, investors will also have to contend with a resurgence in supply as September draws near. We're expecting €25bn of European government bond supply next week, to which the EU will add a €4bn tap. Other releases of note today are the personal income and spending data. Consumer spending should be OK with lower gasoline prices boosting household spending power, supporting consumption elsewhere. The PCE deflator, the Fed's preferred inflation measure, will reflect the earlier flat CPI release. The University of Michigan Consumer sentiment release is a final reading but might be revised a tad higher given a further slide in gasoline prices.  Read this article on THINK TagsRates Daily Jerome Powell Jackson Hole Federal Reserve 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 Has The Worst Performer Among The G-10 Currencies

Forex: USD/JPY Has Risen By Almost 3% In August | US Dollar (USD) To Japanese Yen (JPY)

Kenny Fisher Kenny Fisher 26.08.2022 14:25
The Japanese yen is in negative territory today. USD/JPY is trading at 136.90 in the European session, up 0.34%. It has been a relatively quiet week for the yen, which is trading exactly where it started the week, around the 137 line. The month of August has not been kind to the yen, with USD/JPY soaring 2.75%. The US dollar is again in favor as the markets have tapered down their excitement that the Fed plans a dovish pivot. Does the Fed plan to let up or remain aggressive in its fight against inflation? We will certainly be smarter after Jerome Powell’s speech at Jackson Hole later today. A hawkish message from Powell should boost the US dollar unless investors zero in on any dovish remarks or projections, which could reignite speculation that the Fed will ease up on rate hikes. Tokyo Core CPI rises The Tokyo Core CPI index rose 2.6% in August, above the forecast of 2.5% and higher than the 2.3% gain in July. This marked the highest gain since October 2014. Policy makers in other major economies can only dream about inflation below 3%, but for Japan, rising inflation is a new phenomenon after decades of deflation. Inflation has exceeded the Bank of Japan’s target of 2% for four successive months and inflation is finally on the Bank’s agenda. Still, it is very unlikely that the BoJ will do anything more than tweak monetary policy, as its number one goal is to stimulate Japan’s fragile economy. The rise in inflation and the BoJ’s rigorous control of its yield curve has caused a steep deprecation of the yen, and an exchange rate of 140 may not be far off. There has been speculation in recent months that the Ministry of Finance could intervene to support the yen, but this has not happened until now and there is no indication that the 140 level is a magical ‘line in the sand’ that would trigger intervention.  For now, the main driver of USD/JPY remains the US/Japan rate differential, leaving the yen at the mercy of the movement of US Treasury yields. USD/JPY Technical USD/JPY is testing resistance at 137.03. Above, there is resistance at 137.03 1.3615 and 1.3504 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. USD/JPY hits 137, Powell speech eyed - MarketPulseMarketPulse
Risk Appetite Across Markets Taking A Hit After Fed Chair Powell's Hawkish Speech

Bitcoin And Crypto Market In General Most Probably Some Dovish Signs

Craig Erlam Craig Erlam 26.08.2022 14:30
The day we’ve all been waiting for has finally arrived as Jerome Powell prepares for his keynote speech at Jackson Hole. I have no doubt Powell will have chosen his words very carefully today, all too aware of the consequences of even the smallest deviation in his intended message. It’s a little ridiculous that markets put so much weight on such things but that is the situation we are in and I expect the Fed Chair will be very clear in the message he wants to send. The difficulty for Powell stems from the fact that there’s the message investors desperately want to hear and the one they’ve repeatedly ignored since the July Fed meeting. The “dovish pivot” played nicely into the hands of the perma-bulls that have waited impatiently for the stock market to recover this year. Despite policymakers’ best efforts, attempts to correct this narrative have been brushed aside and the view today is that Powell may try to address this in a more forceful and convincing way. If he fails or gives the slightest impression that there is any substance to the dovish pivot narrative, we could see yields slip and stock markets end the week on a high. That could come intentionally, or otherwise, but investors will be clinging to his every word for even the slightest hint. Especially in light of the recent inflation reading. No pressure. Plenty of US economic data ahead of Powell’s speech While I’m sure that would be enough excitement for one day, there’s plenty of economic data due from the US later that will have a big role to play as well. Ahead of the speech, we’ll get income, spending and core PCE price index data, the latter of which is the Fed’s preferred inflation measure. The timing couldn’t be better. The UoM consumer sentiment survey is also released around the time his speech starts which will also be interesting, given that it’s languishing near its lowest level in decades even as actual spending remains strong. Sterling slips after eye-watering energy price cap rise and forecasts The pound fell this morning after it was confirmed by Ofgem that the energy price cap will rise by 80% in October, taking the average annual household energy bill to £3,549. It’s the moment many have feared for months and to make matters worse, the eye-watering hike was accompanied by a warning that prices are continuing to rise ahead of the next revision in January, with Cornwall Insight suggesting the cap could hit £6,616.37 next year. While looking that far ahead leaves enormous room for error if this year is anything to go by, that is devastating for so many and will require immense government support. It will also make the job of the Bank of England horrifically hard, with its previous projection of inflation this year peaking at 13.3% now looking unrealistically optimistic. Five quarters of contraction may also start to look like the optimistic scenario at this rate. Japanese inflation rises but BoJ to remain calm Contrast that with inflation in Japan, where the Tokyo CPI rose to 2.9% y/y in August and only 1.4% ex-fresh food and energy. It’s no surprise the central bank is pushing back against the need to tighten monetary policy at this point in time. Of course, it’s easy to say that when the pressure on the currency and bond yields have eased to the extent they have over the last six weeks. That could well change if Powell strikes a hawkish tone today and triggers another jump in yields and the dollar. Crypto hoping for dovish Powell Everything I write about at the minute seems to require the need to reference back to Jackson Hole and Fed Chair Powell and bitcoin is no different. Last Friday’s sell-off has left bitcoin vulnerable ahead of today’s speech and crypto bulls will be hoping for anything dovish that could help it get back on its feet. The opposite could see $20,000 come under pressure. For a look at all of today’s economic events, check out our economic calendar: www.marketpulse.com/economic-events/ This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds. All eyes on Jackson Hole - MarketPulseMarketPulse
Poland: Manufacturing PMI (Purchasing Managers' Index) Decreased

S&P 500 And Nasdaq Plunged, Stocks Linked With Commodities Catch Wind In The Sails

InstaForex Analysis InstaForex Analysis 26.08.2022 16:09
Futures on US stock indices were trading in the red on Friday. Treasury bonds retreated from their highs as many US politicians from the Federal Reserve System have already begun preparing the ground for the long-awaited speech by Chairman Jerome Powell. The statements of the Fed's head will help form an opinion on the pace of tightening monetary policy. Futures for the S&P 500 and Nasdaq 100 declined 0.2% and 0.3%, respectively. The yield on 10-year Treasury bonds rose by about five basis points to 3.08%. In addition to Powell's speech later on Friday, traders will get acquainted with various fundamental statistics, including personal expenses of citizens and the Fed's preferred inflation indicator, where a decrease in price pressure is expected to be recorded.   Mining stocks continued to rise on Friday as prices of iron ore, copper, and other industrial metals rose following China's latest efforts to boost its flagging economy. Returning to Powell, who can confirm the Fed's determination to continue raising interest rates to combat high inflation, the desire to raise them and the pace of further tightening should be noted. Many experts have already announced the development of a hawkish scenario, rejecting expectations of moderate tightening. Against this background, there is a rebound in stocks and a decline in bonds. Another question is whether Powell will try to reset market expectations to ensure a further slowdown in economic activity. A dovish reversal would play well into the hands of buyers of risky assets looking forward to further stock market recovery. But if the Fed now departs from the set goals, the fight against inflation may drag on for many years. Then the economy has a chance not only to plunge into recession, but everything will flow into a full-fledged crisis, starting with the housing market and ending with the labor market and the stagnation of the manufacturing and service sectors. If Powell gives up the hope of a dovish reversal, we may see yields fall, and stock markets end the week at a high. Imagine other central banks have already stressed the need for further rate hikes. The president of the Federal Reserve Bank of Kansas City, Esther George, said that it is impossible to exclude the level of interest rates even above 4%.   Relevance up to 13:00 2022-08-27 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/320028
Fed May Hike The Rate By 75bp, Oracle (ORCL) And Adobe (ADBE) To Release Their Earnings Shortly

What A Drop! S&P 500 (SPX) And Nasdaq Almost Crashed!

ING Economics ING Economics 29.08.2022 08:03
Powell's tough message on inflation upsets equities - bonds more resilient  Source: shutterstock Macro outlook Global Markets: Fed Chair, Jerome Powell did what he needed to do last Friday at Jackson Hole, and that was to make it clear that the Fed’s over-riding priority was to get inflation down…not give assurances that they would be gentle with markets, not hint that rates might come quickly down once they’d peaked. All these things might be true, but he would have been shooting himself and the economy in the foot if he had undermined his comments on inflation fighting, with remarks that would have loosened, not tightened financial conditions. So at least as far as this author is concerned, he gets full marks for the message. Equities were less impressed. The S&P500 fell 3.37%, and the NASDAQ came off 3.94%. Their gains last week look ill-judged through the prism of history. Further sharp losses look likely at the start of trading today judging by equity futures. The rise in US Treasury yields was less dramatic, but the bond market has, as is often the case, had a more realistic assessment of the economy and the Fed than the equity markets for some time. 2Y US Treasury yields went up only 3.1bp, though they were up closer to 6bp at one point before easing back.  10Y yields rose only 1.5bp to take them to 3.041%. Despite a spike to 1.009, EURUSD went with higher UST yields and falling risk sentiment and declined to 0.9937 and looks to be heading lower in early Asian trading. The AUD has followed the EUR lower and is 0.6863 now, down from about 0.6970 this time on Friday. Cable has plunged to 1.1691, and the JPY has pushed up above 138. There were some small gains from the KRW and MYR on Friday, but on the whole, the rest of the Asia pack was softer against the USD and the CNY still seems as if it is headed higher over the short-term despite some defensive-looking fixings last week. G-7 Macro: A quick backcast to last Friday, when the US released personal income and spending figures for July, both of which came in weaker than market expectations. However, the price measures of PCE inflation and core PCE were also weaker. Both came in 0.1pp below expectations. That resulted in a 0.2pp decline in core PCE inflation taking it to 4.6%YoY. Headline PCE inflation fell to 6.3% from 6.8% in June. There’s nothing of note on today’s G-7 calendar. Australia: July retail sales are expected to post a slight increase on the 0.2%MoM reading for June. An online retail sales survey for July released at the end of last week showed sales declining, though at the same pace as June, so we could be looking at a similar figure for overall sales growth in July What to look out for: Regional manufacturing and US non-farm payrolls Australia retail sales (29 August) Malaysia CPI inflation (29August) Japan labour data (30 August) Australia building approvals (30 August) US Conference board consumer confidence (30 August) South Korea industrial production (31 August) Japan industrial production (31 August) China manufacturing and non-manufacturing PMI (31 August) Hong Kong retail sales (31 August) South Korea GDP and trade (1 September) Regional PMI manufacturing (1 September) China Caixin PMI manufacturing (1 September) Indonesia CPI inflation (1 September) US initial jobless claims and ISM manufacturing (1 September) South Korea CPI inflation (2 September) US non-farm payrolls and factory orders (2 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
The US 2-year Treasury Yield Reached The Highest Since 2007!

The US 2-year Treasury Yield Reached The Highest Since 2007!

Saxo Strategy Team Saxo Strategy Team 29.08.2022 10:20
Summary:  Equity markets plunged on Friday in the wake of Fed Chair Powell’s speech, in which he invoked famed Fed inflation fighter Volcker and warned against a premature easing of policy. While US yields are only modestly higher in the wake of the speech, the US dollar is soaring, bringing a new unwelcome tightening on global liquidity. Particularly intense focus on USDJPY as the Bank of Japan faces a new challenge from JPY weakness as it insists on maintaining its maximum easing policy.   What is our trading focus? Nasdaq 100 (USNAS100.I) and S&P 500 (US500.I) US equities posted their worst session since at least June in the wake of Fed Chair Powell’s Jackson Hole speech on Friday, with the S&P 500 losing over 3% on the session and trading lower still overnight to start the week, with the psychologically key 4,000 level looming into view. The Nasdaq sliced over 4% lower and traded near its 55-day moving average overnight, in the 12,400 area. Sentiment looks fragile, with any further rise in treasury yields and the US dollar the key risk for driving a possible worsening of sentiment this week. Hong Kong’s Hang Seng (HSIQ2) and China’s CSI300 (03188:xhkg) After having staged an impressive bounce from the trough of a 2-month losing streak last week on the back of reports that the U.S. and China regulators were reaching a deal to avoid the delisting of Chinese companies from U.S. bourses, Hang Seng Index fell nearly 1% on Monday following the post-Jackson Hole selloff in U.S. equities. In addition, in statements from the U.S. and China regulators last Friday regarding access to audit work papers, the interpretations looked rather different in some key aspects. According to the Public Company Accounting Oversight Board (PCAOB), the agreement gives the U.S. regulator, “complete access to the audit work papers, audit personnel, and other information”. On the other hand, in its announcement and Q&As with reporters, China Securities Regulatory Commission emphasized that audit work papers and other information will be “obtained by and transferred through Chinese regulators”. Meituan (03690:xhkg) outperformed, +3.7% after reporting a solid Q2 and continuous order growth in June and August. CSI 300 dropped 0.7%.  US dollar and especially USDCNH in the wake of Fed Chair Powell’s speech A forceful new USD rally was set in motion in reaction to Fed Chair Powell’s speech on Friday, with more aggravated strength versus Asian currencies on Monday as yields rose and the JPY weakened (more on USDJPY below), but also as China allowed its currency to drop versus the US dollar, a key development in cementing the impact of this USD move globally. The most salient potential driver for further USD strength this week would be strong US data (especially on Friday’s August US jobs and earnings report) that drives Treasury yields higher. USDJPY While the focus is generally on the US dollar this week already and the broader fallout should the greenback continue its aggravated ascent, the stakes are very high for USDJPY, which risks a new upward spiral that will challenge the Kuroda-led Bank of Japan as it insists on maintaining it accommodative policy in the face of rising yields elsewhere.  A massive bout of volatility may lie ahead if market participants decide to take on the BoJ, which will eventually likely cave at some unknown level higher, perhaps 150 in USDJPY if it rises that far? Crude oil prices (CLV2 & LCOV2) Crude oil trades higher extending last week’s gain with supply concerns more than offsetting the potential negative growth/demand impact of Powell’s higher-for-longer interest rate speech on Friday at Jackson Hole. An Iran nuclear deal has yet to be reached with a breakthrough unlikely to add much in terms of additional barrels before next year. Libya, one of OPEC’s most volatile producers saw deadly clashes in the capital over the weekend sparking fears over supply to an energy starved Europe. In a addition high gas prices in Europe and Asia will continue to underpin demand and prices for diesel and heating oil. Brent is currently stuck in a range around $100 with resistance around $103 and support at $98. Gold (XAUUSD), silver (XAGUSD), platinum (XPTUSD) and copper (COPPERUSDED22) ... have tumbled the most since Friday after Fed’s Powell signaled that interest rates would keep rising and remain elevated for longer. The US 2-year Treasury yield reached the highest since 2007 with additional headwinds seen from the stronger dollar. The markets belief in the Fed’s ability to combat inflation helped drive the one-year inflation swap down to 3.06%, a one-year low. We maintain the view of gold being a hedge against the belief the Fed will be successful in lowering inflation without hurting economic growth to the point where the focus returns to central bank support but given the renewed breakdown on Friday and continuation today, the price may in the short term once again look at critical support below $1700. US Treasuries (TLT, IEF) US treasury yields rose across the board on Friday, actually quite modestly relative to the attention given to Fed Chair Powell’s speech, but the move followed through further in the Asian session Monday as the US dollar also rose, a toxic combination for risk sentiment. The US 10-year benchmark yields trades near the highs last week above 3.10% this morning, with the chief focus on the 3.50% area high established in mid-June if yields continue to rise. This week features important US data through Friday’s US jobs report. What is going on? Powell’s message at Jackson Hole gets serious While Powell still stayed away from clearly defining a rate path or the expected terminal rates for the Fed, his strong message did suggest that the fight against inflation is far from over. Powell reiterated that the decision on September 21st on whether the Fed will lift rates by 50bps or 75bps will be driven by the “totality” of data since the July meeting. That puts a great deal of emphasis on the US jobs report due on September 2nd, and the US CPI report due September 13th. There was also some emphasis on rates being held at the peak rate for some time, but there isn’t a substantial change to the market’s expectation of the Fed path yet, with cuts still seen for next year by the money markets. Other Fed speakers still see higher terminal rates Inflation remains the overarching theme in all the Fed talk, and no comfort is being taken from the softening in July inflation. Mester (2022 voter) accepted that the Fed hasn’t reached neutral rates yet and said that rates need to go above 4% and held there for some time. Bostic (2024 voter) also suggested a higher terminal rate of 3.5-4.75% compared to what was reflected in the June dot plot, and said rates need to be held there for some time and rate cut talks are premature. Soft US July PCE inflation confirms the dip in the CPI data Lower petrol prices cooled price pressures in July, and this has been re-confirmed by the PCE print on Friday. The headline came in at 6.3% YoY (vs. 6.8% expected) while core was at 4.6% YoY (vs. 4.7% expected). The market reaction to these softer numbers was however restrained as the hawkish message from Powell at Jackson Hole took the limelight. The magnitude of the September rate hike still remains a coinflip, but the Fed members have refused to take comfort with the softer CPI print and continue to push for an aggressive fight against inflation. ECB speakers remain committed to inflation fight despite recession risks A host of ECB speakers at the weekend continued to push for aggressive rate hikes to fight inflation. Schnabel, speaking at Jackson Hole, said rates must be raised, even into a recession. Kazaks also emphasised the need for further front-loading of rate hikes after the 50bps rate hike announced by the central bank in July. In fact, there were hints of a 75bps rate hike. There were also some concerns on a weaker EUR, as that fuels further inflationary pressures and the benefit of cheaper exports is diminished by supply chain disruption. Villeroy said that the neutral rate should be reached before the end of the year while Kazaks said he would get there in the first quarter of next year. Energy prices continue to climb in France Last Friday, the French 1-year electricity forward was close to €1,000 per MWh (versus €900 per MWh for Germany). This represents an increase of +1000 % compared with the long-term average of 2010-2020. Since Autumn 2021, the French government has capped electricity and gas prices (electricity price increase was capped at +4 % this year). But this is very costly for public finances (about €20bn so far this year). The cap on energy prices will expire at the end of the year for gas and in February 2023 for electricity. The government is not planning to extend it further. More targeted measures to help the poorest part of the population to cope with higher energy prices is the most likely scenario. The risk of electricity shortage is real in France this winter. During the summer, electricity demand is around 45 GWh. During the winter, higher consumption will push electricity demand around 80-90 GWh. This will put under tension all the electricity infrastructure, thus increasing the risk of shortage. We think that France is certainly in a worse position than Germany when it comes to energy supply (in the short-term). The world's fourth largest iron ore miner, Fortescue releases 2nd highest profit on record Fortuecue Metals (FMG) posted a 40% drop in full-year profits, mirroring the steep declines in iron ore prices. Despite iron ore shipments hitting a record, Fortescue posted a A$6.2 billion profit, down from the A$10.35 billion last year. So what’s next? It’s pledged another record year of iron ore shipments (187-192mt) and wants to accelerate its push into clean energy, aiming to produce an initial 15 million tons a year of green hydrogen by 2030, to help its heavy industry and long-distance transport decarbonize. It will spend $600-$700 million to do so this financial year. As we covered last week in our BHP interview, iron ore demand is likely to slow over the coming 30 years (that’s where Fortescue’s income comes from). Meanwhile, the world requires double the amount of green metals. So the question remains; can Fortescue diversify its business in time? Fortescue’s shares are up 21% from their July low, with investors hoping China infrastructure stimulus will support iron ore demand and boost the company’s earnings.  What are we watching next? The US dollar is the wrecking ball here for risk sentiment – any rise in US yields would make things worse The rising US dollar is bad enough for global markets as the greenback is a financial condition unto itself, but if US treasury yields continue to rise this week, this could prove double trouble for global markets and potentially aggravate the sudden downside momentum tilt set in motion on Friday by Fed Chair Powell’s speech at the Jackson Hole conference.   China manufacturing PMIs, scheduled to release this week, are expected to decelerate in the midst of power curbs The median forecasts of economists surveyed by Bloomberg expect China’s official NBS manufacturing PMI to edge up to 49.3 in August from 49.0 in July but remains firmly in the contractionary territory and the Caixin manufacturing PMI to slide to 50.1 in August from 50.4 in July, approaching the threshold between expansion and contraction. The heatwaves and drought-induced power curbs caused Sichuan and Chongqing to shut-down manufacturing activities for six days and eight days in August, respectively. The median forecast for the August official NBS non-manufacturing PMI is 52.2, down from last month’s 53.8 but remains in the expansionary territory.  Earnings to watch This week’s earnings will tilt towards a Chinese focus, but from a macro perspective we are watching Lululemon on Thursday to get an update on the US consumer. Expectations are still looking for a +20% y/y revenue growth in the current quarter so the bar is set high on the outlook. Monday: Haier Smart Home, Foshan Haitian Flavouring, Agricultural Bank of China, BYD, Pinduoduo, Trip.com, DiDi Global, CITIC Securities Tuesday: Woodside Energy, ICBC, China Yangtze Power, Muyuan Foods, SF Holdings, Shaanxi Coal, Midea Group, Tianqi Lithium, Ganfeng Lithium, Bank of Montreal, China Construction Bank, Bank of China, Great Wall Motor, COSCO Shipping, Partners Group, Baidu, Crowdstrike, HP Wednesday: MongoDB, Brown-Forman, Veeva Systems Thursday: Pernod Ricard, Broadcom, Lululemon Athletica, Hormel Foods Friday: BNP Paribas Fortis Economic calendar highlights for today (times GMT) 0800 – Switzerland SNB Weekly Sight Deposits 1300 – ECB Chief Economist Lane to speak 1430 – US Aug. Dallas Fed Manufacturing survey 1815 – US Fed Vice Chair Brainard to speak 2330 – Japan Jul. Jobless Rate 0130 – Australia Jul. Building Approvals Follow SaxoStrats on the daily Saxo Markets Call on your favorite podcast app: Apple  Spotify PodBean Sticher   Source: Financial Markets Today: Quick Take – August 29, 2022
Speech At Jackson Hole Triggered Masacric Slide In Equities! US Treasury Yields Reaction

Speech At Jackson Hole Triggered Masacric Slide In Equities! US Treasury Yields Reaction

Saxo Bank Saxo Bank 29.08.2022 10:46
Summary:  Fed Chair Powell's Jackson Hole speech was credited with triggering the ugly slide in equities and broader risk sentiment on Friday, but the modest reaction in US treasury yields suggests that the Fed was only moderately more hawkish than anticipated. Regardless, the market slide has already developed ugly momentum and could test next supports if US data this week continues to support higher yields and a stronger US dollar, an important financial condition in its own right. We also discuss the latest commodity price developments and weak precious metals on the stronger US dollar and remarkably persistent view that hefty disinflation is just around the corner. Today's pod features Ole Hansen on commodities and John J. Hardy hosting and 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: Podcast: Markets stumble after Powell's Jackson Hole speech
Dollar Reaches 20 Years High And Still Gaining! Cryptocurrency Market's Reaction

Dollar Reaches 20 Years High And Still Gaining! Cryptocurrency Market's Reaction

Conotoxia Comments Conotoxia Comments 29.08.2022 11:04
The speech by Fed Chairman Jerome Powell, expected by investors, may have shaken the markets. During his address, markets could have seen more volatility, leading to a sell-off in risky assets and another wave of dollar appreciation. On Friday afternoon, when the Fed Chairman spoke in Jackson Hole, the U.S. dollar seemed to strengthen, and again to levels last seen 20 years ago. The U.S. Dollar Index is also attempting today to continue its rise from Friday, surpassing the 109-point level, which could result in the establishment of a new peak in the recent uptrend. Jerome Powell, in his speech, indicated that the Fed is committed to lowering inflation by raising interest rates and keeping them higher for a longer period of time. This, in turn, may have influenced the market's valuation of the Fed's actions on September 21, where investors seem to assume a rate hike of 75 basis points to 3.00-3.25 percent with a 70 percent probability. Before Jackson Hole, this probability was around 50 percent. In Powell's view, the right thing for the Fed to do is to continue the monetary tightening cycle until inflation is within the 2 percent target. The Fed seems to be looking more broadly at the data than a horizon of one or two months, and a possible peak in inflation may not change anything here for the moment. The Federal Reserve chairman also warned against loosening monetary policy prematurely. This may have dashed the market's hopes for a so-called Fed pivot, a 180-degree change in attitude. According to Jerome Powell, fighting inflation may be "painful" for the economy to some extent, but it is better than letting inflation get even more out of control. Such statements may have been followed by a retreat from risky assets in the financial markets. On Friday, major U.S. stock indexes took a dive and erased all potential gains from August. The Dow and S&P 500 lost 3.03 percent and 3.37 percent, respectively, while the Nasdaq Composite lost 3.94 percent, its biggest drop since mid-June. This morning, futures also seemed to show potential losses, dropping between 0.7 percent and 1.3 percent. The cryptocurrency market was also not indifferent to the Fed chairman's words. Bitcoin, which cost $25,000 as recently as mid-August, slipped below the $20,000 level at the end of the month and appears to be approaching its June low. Ethereum, which recently cost $2,000, is now priced below $1,500. Thus, one can see that the market has begun to depend on events in the real economy and on the actions of the Fed, much like the traditional financial markets, to which, after all, it was supposed to be an alternative. 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. 82.59% 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.   Source: Dollar hits 20 years high. Stock market tumbled
Forex: Finally Bank Of Japan (BoJ) Intervened! Euro: Could Today's Speeches Support Euro?

Jerome Powell (Fed) Introduces Bank's Strategy. Elizabeth Warren Speaks Its Mind

InstaForex Analysis InstaForex Analysis 29.08.2022 11:04
Fed's Jerome Powell's testimony The US Federal Reserve will remain hawkish and focus on inflation, Chairman Powell said on Friday, adding that US economic growth will slow down and unemployment will rise. It comes as no surprise as rate hikes have always triggered a cooling effect on the economy. Still, not all US officials agree with such an approach. In the European Union, they are trying to balance between maintaining economic growth and fighting inflation. In the United States, however, their primary concern is to bring inflation to the 2% target, with little attention paid to economic growth. The Federal Reserve reckons that a decrease in GDP is not a recession because the latter is always followed by a wave of bankruptcies, rising unemployment, contraction in the jobs market, and other sad events. Right now, there is just a fall in GDP, which could be interpreted as a correction after strong growth. Nevertheless, business activity is slowing down as well as industrial production, and things are only getting worse. Elizabeth Warren Senator Elizabeth Warren said on Sunday that she is concerned about the regulator's plans to further tighten monetary policy as recession risks are increasing. In her view, high prices and millions of unemployed are worse than high prices and a strong economy. She believes, the Federal Reserve's actions are likely to lead to high unemployment and negative economic growth rather than to low inflation. "I just want to translate what Jerome Powell just said. What he calls 'some pain' means putting people out of work, shutting down small businesses, because the cost of money goes up, because the interest rates go up," Warren said on Sunday. Elizabeth Warren may be partially right. The Bank of England, for example, has raised the benchmark rate six times in a row but inflation is still on the rise. Of course, the situation in the UK is somewhat different because the country has recently been through Brexit. Governor Andrew Bailey sees the United Kingdom sliding into a recession in the last six months of the year. Meanwhile, US inflation might be declining rather slowly, not in line with the central bank's expectations. Moreover, consumer prices have so far fallen just once. There is no guarantee that the slowdown will continue. It might be a drop of as much as 0.1-0.2% a month, taking the Federal Reserve several years to bring inflation to the 2% target. All this time, the American economy would be under tremendous pressure. The inflation report due on September 14 will clear things out. It will be released a week before the next rate hike and show whether Mr. Powell and the Committee are right in their pledge to forcefully and rapidly act against inflation. Relevance up to 06:00 2022-08-30 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/320117
In The Morning US Dollar (USD) Was Up, British Pound And Euro Down | US Stocks: S&P 500 Gained Almost 2% Yesterday, Dow Jones Added 1.88%, Nasdaq Increased By 2%

Powell Signals Goals Of Fed, Dollar Index Nears 110 Level, Bitcoin And Gold Trade Lower

Swissquote Bank Swissquote Bank 29.08.2022 11:23
Federal Reserve (Fed) Chair Jerome Powell’s speech at the Jackson Hole meeting wreaked havoc across the equity markets on Friday. His message was crystal clear: inflation must come down even if it means pain for households and businesses in the process. Major US indices tumbled, the US yields advanced, and the US dollar gained. What about Bitcoin and Gold? Gold and Bitcoin were sold. In energy, European gas futures continue their spike and crude oil kicked off the week higher. Due this week, the European flash CPI and the US jobs data will be in focus. For the US, another strong jobs data would further back the Fed hawks, whereas in Europe, even a scary inflation figure, and revived ECB hawks, may not suffice to throw the single currency above parity against the US dollar.   Watch the full episode to find out more! 0:00 Intro 0:27 Powell shows no pity, says the Fed will fight inflation despite costs 2:04 US indices tumble 3:10 Another strong jobs read could further revive Fed hawks 6:35 USD rallies, euro retreats 8:20 Energy prices push higher 9:13 XAU and Bitcoin cheaper post-Powell 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. #Jackson #Hole #Powell #speech #inflation #hawkish #energy #crisis #crude #oil #natural #gas #USD #EUR #XAU #Gold #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  
Look How Much Have JPY, British Pound, Euro And New Zealand Dollar (NZD) Lost Against USD In 2022 So Far

Fed Is Determined To Fight Inflation! Forecasts For USD/JPY And AUD/USD - 29/08/22

InstaForex Analysis InstaForex Analysis 29.08.2022 11:48
Federal Chairman Jerome Powell, speaking at a symposium in Jackson Hole, did everything to make the market finally realize that the central bank will stop at nothing in its plan to curb inflation in America. In the last article, we suggested that if the head of the Fed did not throw a surprise at the markets, then it would be possible to observe another local rally in the stock and other asset markets with a simultaneous increase in demand for government bonds and a weakening of the US dollar. And that would very likely have been the case if Powell hadn't made a targeted statement pointing out that while controlling inflation through higher interest rates, slower growth and softer labor market conditions would hurt households and businesses , "failure to restore price stability will mean much more pain" in the long run. It seems that weak hopes have finally collapsed, and this largely confirms the recovery in the growth of treasury yields amid falling demand for them. The yield of the 10-year T-Bond benchmark is already confidently staying above the 3% level and, after a slight downward correction, resumed growth. It is likely that a further sell-off in the government debt market will push it up to an immediate high of 3.5%. How will the US dollar behave in the context of continued aggressive rate hikes and growth in Treasury yields? We believe that it will have to further strengthen against major currencies, despite the fact that rates will also rise in other economically developed countries of Europe, Canada, Australia, and so on. Here it will be supported by the growth of Treasury yields and the flight of capital from Europe, as well as from countries with emerging economies, with the exception of Russia and China. In this case, we can expect the growth of the dollar index ICE to the mark first at 110, and then to 111 points. In fact, it will be possible to say that the dollar exchange rate against major currencies will linger for a long time at the level of the beginning of this century. As for the possible dynamics of the markets this week, the release of data on inflation in the eurozone, which is expected to rise again, and, of course, the latest figures on unemployment in America, will play a leading role here. Considering the Fed's general position regarding rates, we believe that if the data on the number of new jobs comes out no worse than expected, the US central bank will once again be confident that it is on the right course, fighting inflation and using the still strong labor market for this, trying to bring down the economy before serious problems arise, like a high temperature with aspirin, by aggressively raising interest rates. It is likely that after local consolidation, the smooth strengthening of the dollar will continue, and the markets will remain between the hammer of Fed rates and the anvil of inflation. Forecast of the day:     AUDUSD pair The pair is trading below 0.6865. Consolidation below this mark may be the basis for the pair's fall to 0.6800. USD/JPY pair The pair is at the level of 138.90. If it does not settle above it, it may correct down to 138.45, and then again rush to 139.40. Relevance up to 09:00 2022-08-31 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/320143
European Central Bank - There Is A Need To Strengthen Measures That Curb Inflation

Global Recession Is Coming. Central Banks Want To Rein In Prices

Marc Chandler Marc Chandler 29.08.2022 12:26
The poor preliminary PMI readings, the ongoing European energy crisis, and the recognized commitment of most major central banks to rein in prices through tighter financial conditions are risking a broad recession. These considerations are weighing on sentiment and shaping the investment climate. Most high-frequency data due in the days ahead will not change this, even if they pose some headline risk.   What we have seen among some central bankers applies to market participants too  It is not so much that these central bankers are congenitally doves or hawks, but they are simply activists. Whether conditions warrant tighter or easier monetary policy, the activists lead the charge and are more aggressive than most of their colleagues in both directions. Similarly, some market participants are just extreme in their views. On the one hand, given that market returns are often characterized by fat tails, it makes sense that market views are not normally distributed. Hugging the median (there is rarely truly a consensus, despite the market jargon) draws little attention and is unlikely to promote sales of research products and newsletters.   On the other hand, depending on the corporate culture, there may be little incentive to take the risk of standing out from the crowd  It is as if some take Keynes to heart: "Worldly wisdom teaches that it is better for reputation to fail conventionally than to succeed unconventionally." Sometimes, corporate culture is broad enough to accept either approach, allowing the idiosyncrasies of the economist/analyst wider latitude. However, some are conditioned to fear being wrong that they do not let themselves be right. For them, being part of the crowd is safe. Being part of the consensus nearly always gets less pushback than being an outlier.   II Three high-frequency economic prints next week will likely move the markets whether they meet expectations or not: China's PMI, the eurozone's CPI, and the US employment report  These are the three biggest economies, and each is struggling to put it mildly. The data are unlikely to change this view but could impact the policy outlook. In addition, extreme weather aggravates existing challenges, including the energy crisis, supply chain disruptions, and inflation pressures.   The US, Japan, the eurozone, and Australia's preliminary composite PMIs fell below the 50 boom/bust level  Ironically, the UK's held slightly above, though the Bank of England of a recession that will extend into 2024. Where is China?   Its July composite stood at 52.5. It had been below 50 due to the lockdowns associated with its zero-Covid policy from March through May. It reached a 15-month high in June of 54.1.    In the US, we argued that back-to-back quarterly declines in output were a bit of a statistical quirk stemming from the challenge of managing inventories in the current economic environment and trade, to a lesser extent  While recognizing that a sustained economic contraction was likely, we did not think it actually had begun and expected policymakers to act accordingly.   In China's case, the economic data is consistent with growth  The median forecast in Bloomberg's survey sees the world's second-largest economy expanding by 3.4% quarter-over-quarter after a 2.6% contraction in Q2. However, Chinese officials are acting as if it were in a recession or will be shortly. It unexpectedly shaved its benchmark one-year medium-term lending facility rate and allowed lending prime rates to be cut. The larger (15 bp) cut in the five-year rate clearly reflected the ongoing concerns about the housing market. Beijing is using command functions and coordinating capabilities to push lending from banks to the property sector and new local government borrowing for infrastructure projects. It has accepted a weaker yuan against the US dollar. It fell to a new two-year low last week. The softer the PMI, the more the market will look for further easing, including reducing required reserves.   On August 31, the eurozone publishes its preliminary estimate of the month's CPI  Headline inflation accelerated to 8.9% in July, surpassing the US 8.5% pace. The median forecast in Bloomberg's survey is for the pace to tick up slightly to 9.0%. In addition, the core rate is seen edging up to 4.1% from 4.0%.  Many EMU members are helping struggling households by cutting the VAT on energy or other subsidies, but the price of energy is rising even quicker  While there is some debate over whether US inflation has peaked, there is less debate in Europe. Prices are still rising. Seasonal patterns may be distorted, but July's monthly change has been less than June since 2003. August's monthly CPI has increased more than July's since 2000, with the one exception of 2020 when it matched July's 0.4% decline. This month's inflation is expected to rise by 0.4% after the 0.1% increase in July. The weakness of the euro also risks boosting prices. The single currency is off about 2.5% this month after falling roughly 4.8% in the previous two months.  The European Central Bank meets on September 8  The swaps market is confident that even though the flash PMI warns that output is contracting, the ECB will continue to hike rates. Following the half-point increase in July, the market expects another 50 bp hike next month. More than that, the swaps market has about a 50% chance of a 75 bp move. Press reports confirmed that several ECB officials want to discuss a three-quarter point hike. That said, they do not appear in the majority. Not to get too far ahead of the game, but the market is pricing in around 85 bp of tightening in Q4 (two meetings, October 27 and December 15). The latest Bloomberg survey found a median forecast for the euro to finish the year at $1.02. This seems increasingly optimistic. A one-standard-deviation band around the year-end forward suggests a mathematical range of about $0.9430 to $1.0675. While the median is in the upper third of the range, our subjective idea would put it in the bottom third.  That brings us to the US August employment report on September 3, just before the long holiday weekend (Labor Day, US markets closed)  Recall that nonfarm payrolls rose about twice as much as expected in July, 528k. That the average growth in the first seven months was slightly above 470k. In the Jan-July period last year, the US grew about 555k jobs a month on average. However, that appears to have underestimated US job growth. In the benchmark revisions announced last week. The US added 571k more private sector jobs in the year through March, which translates into around 47.6k more a month.   The median forecast in Bloomberg's survey has crept up in recent days to 300k  The unemployment rate, which slipped to a new low of 3.5%, is expected to remain unchanged, while a 0.4% rise in average hourly earnings could see the year-over-year pace ticked back to 5.3% year-over-year. It was at 5.2% in June and July. By nearly any reckoning, that would still be a solid report and one that will likely encourage the Fed to deliver another 75 bp hike when it meets in late September.    Market sentiment has swung back and forth a bit over the likelihood of a third consecutive 75 bp hike  Despite the poor housing sector data and the dismal PMI, the Fed funds futures market finished last week discounting a little more than a 2/3 chance of a 75 bp instead of 50 bp. Such a move would lift the target to 3.00%-3.25%. The pricing suggests that Fed will likely slow the hikes going forward. The market is pricing in a year-end rate between 3.50% and 3.75%. The market is pricing in a strong probability of a hike in Q1 23 (~80% chance). This was unchanged from before Powell's speech at Jackson Hole. In the middle of last month, the Fed funds futures market had priced in 60 bp of cuts next year. That was the gap between the implied yield of the December 2022 Fed funds futures and the December 2023 contract. It finished last week near seven basis points., about two basis points less than before Powell's speech. III The dollar's two-week rally that began August 10-11 may not be over despite the volatility spurred by position adjusting around Powell's Jackson Hole speech Powell specifically warned that some pain will be associated with efforts to rein in inflation, which the Fed is committed to doing. That seems to suggest some economic weakness will not interfere with its course until inflation convincingly moves back towards its target. Other major central banks, but the Bank of Japan, have implied pretty much the same thing.   Dollar Index:  DXY rallied from a six-week low near 104.65 on August 10 to slightly above 109.25 on August 23. However, it stopped short of the mid-July high of almost 109.30. The sell-off before the weekend took it briefly through 107.60 to set a new low for the week before recovering to almost 108.90. The MACD is rising albeit more gently, but the Slow Stochastic is overextended and suggests that this leg up is getting long in the tooth. Still, the prospect of another healthy job report at the end of next week may deter a significant retreat. The pre-weekend low approached the minimum (38.2%) retracement of the leg up (~107.50).  Euro:  The euro recorded a new 20-year low near $0.9900 on August 23, seeming to complete the leg down that began on August 10 at around $1.0370. However, the Jackson Hole-related position adjustment saw it recover to $1.0090, which marginally surpassed the (38.2%) retracement objective (~$1.0080). The next retracement (50%) and the 20-day moving average are found in the $1.0135-40 area. Yet, the euro continues to struggle and settled nearly cent off its session highs before the weekend. The MACD descent has slowed, and the Slow Stochastic is moving sideways in oversold territory. Selling into upticks continues to be the preferred strategy. A significant low does not appear to be in place. Potential next week to toward $0.9800, maybe.   Japanese Yen:  The greenback reached JPY137.70 on August 23 and settled into a narrow range in dull dealing for the remainder of the week. Although the dollar traded on both sides of Thursday's range ahead of the weekend, it remained mired in the range established on August 23 (~JPY135.80-JPY137.70). The MACD looks constructive, but the Slow Stochastic is poised to turn lower. The US 2- and 10-year yields reached their highest level in two months, which underpins the dollar. Above the JPY137.70 area, the next resistance may be encountered near JPY138.20-40, but there is little standing in the way of another run at the JPY140 area.   British Pound:  Sterling posted a bearish outside down the day before the weekend by trading on both sides of Thursday's range and settling below Thursday's low. The Jackson Hole-related position adjustment stalled at $1.19, shy of the $1.1930 (38.2%) retracement target. It reversed low and fell to $1.1735, just above the two-year low on August 23 (~$1.1720). The MACD is trending lower, but the Slow Stochastic is moving sideways in oversold territory. The 2020 low slightly above $1.14 beckons, and there is little on the charts to prevent it. Sterling cannot sustain upticks even though its discount to the US on two-year yields has fallen from around 135 bp on August 9 to 45 bp in the middle of last week before finishing around 60 bp.   Canadian Dollar:  The US dollar had given back about half of the gains scored since August 11 (~CAD1.2730 to almost CAD1.3065) before Powell spoke at Jackson Hole. That retracement and the 20-day moving average converged around CAD1.2895. The sharp sell-off of US equities ahead of the weekend saw the greenback jump to almost CAD1.3045. The MACD is rising gently, while the Slow Stochastic has begun moving sideways near its highest level in two months near overbought. The poor price action in the S&P 500, with the upside gap on the weekly charts left unfilled before the breakdown to the lowest level since August 2, warns that the US dollar could challenge the CAD1.31 area in the coming days. The nearly two-year high was set on July 14 at around CAD1.3225. That may be the next important chart area.   Australian Dollar:  Like the Canadian dollar, the Australian dollar has recovered half of the losses seen in the latest leg down that began from the August 11 high near $0.7135 and bottomed on August 23 around $0.6855. The Aussie staged a key reversal from that low and closed above the previous day's high. That retracement objective was near $0.7000 and the next (61.8%), and it was briefly surpassed before the weekend and Aussie's reversal back to $0.6900 to take out the previous session's low.   The MACD is not generating a strong signal, while the Slow Stochastic is curling higher after dipping into oversold territory. A return to the $0.6855 area looks likely, and below that could see $0.6800, though a return to the two-year low set in mid-July near $0.6680 cannot be ruled out.   Mexican Peso:  The dollar forged a bottom against the peso in mid-August around MXN19.81-82. That is also roughly where the dollar bottomed in late June. The greenback bounced to MXN20.2665 and retreated last week to around MXN19.85. The momentum indicators are not generating strong signals, but the floor looks strong. In the face of the sharp US equity losses, and the broader risk-off mood, the peso was surprisingly resilient.  It rose by about 0.65% last week. Initial resistance may be near MXN20.06 and then MXN20.11-13. Latam currencies generally outperformed within the emerging market space last week. Four of the top five emerging market currencies were from Latam, led by the Chilean peso's 5.9% rally. The current intervention program runs out on September 30 but could be extended. The intervention to support the Chilean peso after it fell to record lows last month has given the currency a reprieve but could exacerbate the current account deficit, which reached 8.5% of GDP in Q2.   Chinese Yuan: The Chinese yuan slumped to two-year lows last week as policy divergence grew more acute with the latest Chinese rate cuts. More easing of monetary policy is expected, and there is some speculation that another cut in required reserves could materialize in early Q4. China's discount to the US on 10-year bonds rose for the fourth consecutive week, and at 37 bp, was the largest weekly close since June. The PBOC has fixed the dollar weaker than expected over the last few sessions, and the magnitude seems sufficient to suggest a warning from Chinese officials not to get too carried away. That seems similar in spirit to the reports that the State Administration of Foreign Exchange called a few banks last week and warned them about large speculative yuan sales. We suspect the message is that while a weaker yuan is acceptable, the current pace is not. The next objective is around CNY6.90, but the risk of a move to CNY7.0, which did not seem so likely a couple weeks ago, seems more so now.      Disclaimer   Source: The Week Ahead: Dollar Bulls Still in Charge
Oh Wow! S&P 500 Went Up By 2.59%, Nasdaq Increased By 2.27%

US Stock Market Strongly Recovers Without Any Predispositions!

InstaForex Analysis InstaForex Analysis 29.08.2022 12:46
Relevance up to 05:00 2022-08-30 UTC+2 Key US stock market indexes, the Dow Jones, the NASDAQ, and the S&P 500, dropped sharply on Friday and closed in negative territory. Over the past month, the US stock market strongly recovered from its decline of the previous several months. This was a rather paradoxical recovery, as there was nothing that could have triggered it. Now, everything falls into place. Friday's only key event on the economic calendar was a speech by Fed chairman Jerome Powell at the meeting in Jackson Hole. The US personal spending and income data, which was slightly below expectations, could not have caused Friday's slump. Powell assured the market that monetary tightening would continue and that a period of high interest rates would be longer than previously expected. He did not give any new information, and it was clear that one single monthly decrease of inflation could not indicate a downtrend. For example, the CPI decreased in May, only to surge in the following months. It remains unclear why investors went long on US stocks. It might have been a capital outflow from the EU to the US - the EU is also expected to enter a recession. However, the recession has already begun in the US - investors might have found the US economy to be more stable amid the difficult geopolitical situation in the EU. In addition, the Federal Reserve is actually taking steps to fight inflation, unlike the ECB. Jerome Powell noted on Friday that the regulator would be closely following macroeconomic data, indicating that the pace of interest rate increase could be slowed down in the near future. However, interest rates would still be hiked from the current level of 2.5%. The Fed funds rate is expected to reach 3.5% at the very least, which would weigh down on US risky assets. The strange upsurge in the US stock market could have possibly been a bull trap, deliberately triggered by major market players to sell their stocks at higher prices. Now, equities and US stock indexes are likely to drop once again and hit new yearly lows. In the meantime, the Fed is likely to increase interest rates at least until the end of 2022. 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. Source: Forex Analysis & Reviews: Jerome Powell triggers slump in US stock market  
Forex: Finally Bank Of Japan (BoJ) Intervened! Euro: Could Today's Speeches Support Euro?

A Quick Look At Jerome Powell's (Fed) Key Statements At Jackson Hole Meeting

InstaForex Analysis InstaForex Analysis 29.08.2022 12:54
Details of the economic calendar of August 26 Last week ended with a triumphant speech by Federal Reserve Chairman Jerome Powell at the annual economic symposium in Jackson Hole. What was said? Jerome Powell did not say anything new, but only confirmed everything that was said at the July meeting. Main theses: - The central bank will keep the interest rate at high levels, despite a possible recession. - Lowering the inflation rate is good. But not enough to change its monetary policy (MP) now, or give hints about a rate cut in 2023. - History warns against premature easing of policy. - The longer the current period of high inflation continues, the more likely it is that higher inflation expectations will take hold. - We must continue until the job is done. - At the upcoming Fed meeting Fed meeting (21.09.22), the decision will depend on inflation data for August. - Slowing down the pace of rate hikes literally - at some point. Also, Powell did not deny hints that in September there will be a significant increase in interest rates, it all depends on the statistics and the situation. The rhetoric has not changed here. Conclusion Based on the material, it becomes clear that the bearish mood in the US stock market, as well as the bullish mood for the dollar. Analysis of trading charts from August 26 The EURUSD currency pair during Friday's speculations locally jumped above the control mark of 1.0050, but the market participants failed to hold on to the given level. Almost immediately, a reversal occurred, where speculators began to actively increase the volume of dollar positions throughout the Forex market. The GBPUSD currency pair fell by more than 200 points during the inertial downward movement. As a result, the medium-term trend was prolonged, where the quote fell below 1.1650. Such an intense speculative move is caused by the general market mood.     Economic calendar for August 29 Monday is traditionally accompanied by a blank macroeconomic calendar. Important statistics in Europe, the UK and the United States are not expected. It is also worth considering that today is a public holiday in the UK. In this regard, investors and traders will be guided by the information flow of last Friday. Trading plan - EUR/USD August 29 Further weakening of the euro, which will lead to a continuation of the trend, is expected after keeping the price below 0.9900 in a four-hour period. Until then, the risk of a price rebound remains, following the example of August 23 and 24.     Trading plan - GBP/USD August 29 In this situation, there is a characteristic signal that the pound is oversold in short-term time periods. This may lead to a technical rollback towards the previously passed level of 1.1750. At the same time, we cannot rule out a scenario of a further decline in the quote, where technical signals are ignored by speculators. In this case, the inertial course will continue to form in the direction of the local low of 2020.     What is shown on trading charts? The candlestick chart type is white and black graphic rectangles with lines at the top and bottom. With a detailed analysis of each individual candle, you can see its characteristics relative to a particular time period: opening price, closing price, high and lowest price; Horizontal levels are price coordinates, relative to which a stop or a price reversal can occur. In the market, these levels are called support and resistance; Circles and rectangles are highlighted examples where the price of the story unfolded. This color selection indicates horizontal lines that may put pressure on the quote in the future; The up/down arrows are landmarks of the possible price direction in the future. Relevance up to 09:00 2022-08-30 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/320153
What Happened In Jackson Hole Besides The Fed's Powell Speech?

What Happened In Jackson Hole Besides The Fed's Powell Speech?

John Hardy John Hardy 29.08.2022 14:14
Summary:  Rates markets suggested that there was little new in the way of guidance from Fed Chair Powell’s speech at Jackson Hole, but the US dollar ripped higher as the backdrop remains the same: this Fed has confirmed that it will continue tightening until something breaks, so what we are seeing is the further progress toward that breaking point. In an interesting twist, a paper delivered on Saturday at Jackson Hole suggests that the Fed may have a hard time executing shrinking its balance sheet as intended. FX Trading focus: Jackson Hole wasn’t just Powell’s speech… If we have a look at the reaction in Fed expectations from Friday’s Fed Chair Powell speech at Jackson Hole, there was no major market takeaway. During the speech, there was a trivial marking down of expectations as Chair Powell emphasized the “totality” of data in setting the appropriate rate at the September meeting. (And 90 minutes before his speech, the July PCE inflation data was out a tad softer than expected, while the final University of Michigan sentiment survey for August saw longer inflation expectations 0.1% lower). But for that September 21 FOMC rate decision, the payrolls and earnings data this Friday and the Sep 13th CPI release will weigh more heavily. Somewhat more importantly, Powell underlined the importance of ensuring that The Fed’s policy remains persistent enough to ensure that the inflationary cycle has abated. One of the key passages worth highlighting is “Restoring price stability will likely require maintaining a restrictive policy stance for some time. The historical record cautions strongly against prematurely loosening policy.” Powell then went on to invoke Paul Volcker and his fight with recurring bouts of high inflation in the 1970’s and early 1980’s. This did see the market adjusting Fed rate expectations higher for mid next year and later, although that was largely reversed by the end of the day Friday on a (suggesting a difficult to manage reflexivity dissonance: more Fed tightening means worse financial conditions, which means the Fed might back off, which is supportive of financial conditions/sentiment? Argh…). One very important factor to note is that Fed rate expectations were marked sharply higher from the outset overnight, perhaps as a paper delivered at Jackson Hole on Saturday that suggests that any Fed attempt to go full force with quantitative tightening will prove difficult (requiring an emphasis on using the Fed funds rate as the primary mechanism for policy adjustments?). A Bloomberg article discusses the paper. If the Fed has to soft-pedal balance sheet management from here, could we suddenly find that peak anticipated Fed tightening (QT and rate hikes taken in aggregate) is already in the rear view mirror? Intriguing proposition, but way too early hours/days to make any determination, as the Fed may try forging ahead on QT, paper or none. Chart: USDJPYWatching USDJPY closely this week to see if US data takes US treasury yields higher still – especially at the longer end of the US yield curve, which could serve to renew the pressure on the Bank of Japan as it insists on maintaining the yield-curve-control policy. Arguably, as long as the longer end of the US yield curve is anchored below the June highs, the pair doesn’t have particularly cause to run higher unless there is a USD liquidity problem not connected to yield volatility. And if we get weak US data this week through Friday’s jobs and earnings report, we might be instead looking at a “double top” scenario. The 139-140.00 zone looks important this week. Source: Saxo Group For Europe, any little helps, and we have natural gas prices backing off sharply today, with Germany ahead of target in rebuilding its storage and the German economy minister called for an overhaul of the EU power market to drop prices (meaning rationing and price fixing?? In the first instance, helps to ease the shock, but not in the longer run if investment in the capacity needed to bring long term real energy prices down is scared away by the risk of public interference.) Elsewhere, besides natural gas prices coming off, we have also seen a few ECB officials talking tough enough to pull ECB yield expectations sharply higher since Friday, with the ECB’s Isabel Schnabel speaking at the Fed’s Jackson Hole conference at the weekend, exhorting her colleagues “to signal their strong determination to bring inflation back to target quickly.” The meeting next Thursday is priced for over 60 basis points, with almost another 100 basis points (!) on top of that priced through the December ECB meeting. ECB Chief Economist Lane, usually one of the more cautious voices on the ECB, will speak this afternoon. Table: FX Board of G10 and CNH trend evolution and strength.USD strongest among G-10 currencies – no surprise there, but really needs to stick this move to remain so across the board (below parity in EURUSD, above 137.50 in USDJPY, above 1.3000 in USDCAD, below perhaps 0.6900 in AUDUSD, etc… Note the big swing higher in EUR momentum, with a few thoughts on individual EUR pairs below. Source: Bloomberg and Saxo Group Table: FX Board Trend Scoreboard for individual pairs.EURCAD and EURAUD are two euro crosses that have turned sharply higher as risk sentiment wears harder on the smaller currencies – too early to tell if this is the beginning of something, but the moves come at interesting levels. Note Also EURGBP following through higher Friday and following through today. Source: Bloomberg and Saxo Group Upcoming Economic Calendar Highlights (all times GMT) 1300 – ECB Chief Economist Lane to speak 1430 – US Aug. Dallas Fed Manufacturing survey 1815 – US Fed Vice Chair Brainard to speak 2330 – Japan Jul. Jobless Rate 0130 – Australia Jul. Building Approvals Source: FX Update: Jackson Hole was more than Powell’s speech.
The Tightening Of Monetary Policy Will Continue For Some Time

How Powell's Speech Affected On Euro (EUR) And Pound Sterling (GBP). Let's See!

InstaForex Analysis InstaForex Analysis 29.08.2022 16:40
Relevance up to 10:00 2022-08-30 UTC+2 Both the euro and the pound sterling dropped after Jerome Powell announced that the Fed would continue raising the key interest rate. What is more, the US regulator is planning to keep interest rates high for some time in order to combat inflation. Jerome Powell is absolutely sure that the Fed will not change its monetary policy in the near future. "Restoring price stability will likely require maintaining a restrictive policy stance for some time. The historical record cautions strongly against prematurely loosening policy," Powell stated. It is obvious that the Fed's key aim is to lower inflation to the targeted level of 2% regardless of the negative influence on consumers and enterprises and a possible recession. The US dollar began actively gaining in value amid the possibility of another significant rate hike in the next month. It is obvious that traders take decisions amid expectations, trying to price in the event before it takes place. "Our decision at the September meeting will depend on the totality of the incoming data and the evolving outlook," Powell pinpointed. Against the backdrop, the yield of two-year Treasury bonds increased to 3.44%. Investors foresaw such announcements and priced in the hike of at least 0.5% at the meeting on September 20-21. The highest possible raise was seen at 0.75%. After the speech, the likelihood of both variants remained the same. In other words, the regulator's zero intention to cut the key interest rate in 2023 considerably supported the greenback.After such confident statements, Jerome Powell will have to prove his intention by another hike of 75 basis points. Otherwise, traders may think that the Fed is gradually switching to a looser policy, which may make it more challenging to return inflation to 2.0%. "Restoring price stability will take some time and requires using our tools forcefully to bring demand and supply into better balance," Fed's chair said. "Reducing inflation is likely to require a sustained period of below-trend growth. Moreover, there will very likely be some softening of labor market conditions. While higher interest rates, slower growth, and softer labor market conditions will bring down inflation, they will also bring some pain to households and businesses," he added. Notably, according to the Fed's forecasts, the key interest rate will be hiked to 3.4% by the end of the year and to 3.8% by the end of 2023. Jerome Powell also reminded us that in September, the regulator would hardly change its plans. Some other Fed representatives are also backing up the monetary policy tightening. Federal Reserve Bank of Kansas City President Esther George emphasized that the key interest rate could be higher than markets expected. "We have to get interest rates higher to slow down demand and bring inflation back to our target," she said. She neither excludes a jump to 4.0%. From the technical point of view, the euro/dollar has every chance to slump even deeper. Bulls should protect 0.9949. Otherwise, the trading instrument will hardly recover. If the price goes above 0.9949, buyers will become more confident, thus allowing the pair to return to the parity level and then climb to 1.0030. The farthest target is located at 1.0070. If the euro continues falling, buyers are likely to become active near 0.9900. However, if they fail to protect this level, the upward correction will hardly become possible. Since whispers about the continuation of the downtrend may push the price to 0.9860 or even to 0.9820. The pound sterling continues losing value against the US dollar very rapidly. It does not have reasons for an upward correction. Buyers should do their best to consolidate above 1.1630, the nearest support level. Otherwise, we will see a new massive sell-off that will push the price to 1.1570 and 1.1490. A breakout of these levels will allow the pair to slide to 1.1420. A correction will become possible if the price settles above 1.1680 to jump to 1.1730 and 1.1790. 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. Source: Forex Analysis & Reviews: Fed may raise benchmark rate to 4.0%
PLF: Platinum Will Remain Trading In A Narrow Range

Bullish And Bearish Experts Voted. The Result Is Here!

InstaForex Analysis InstaForex Analysis 29.08.2022 16:54
Relevance up to 09:00 2022-08-31 UTC+2 The Fed's monetary policy remains aggressive, putting pressure on gold following the long-anticipated speech by Fed chairman Jerome Powell at the central bank symposium in Jackson Hole, Wyoming. Powell reiterated that interest rates hikes must continue as inflation remains the biggest threat to the economy. However, some analysts believe that falling inflationary pressure could prompt markets to price in less aggressive moves from the Federal Reserve, which would weaken the US dollar and give support to gold. According to the data released by the US Commerce Department on Friday, its core Personal Consumption Expenditures Index (PCE) increased by 4.6% in July, down from June's annual increase of 4.8%. The CME FedWatch Tool is showing that markets are currently split 50/50 on whether the Federal Reserve would increase interest rates by 50 or 75 basis points in September. A weekly survey by Kitco indicates that Wall Street is largely mixed on gold. Out of 16 surveyed experts, 6 (38%) were bullish, 6 were bearish, and 4 (25%) were neutral. Retail investors were more optimistic, with 53% of respondents seeing gold prices rise. 27% expected gold to drop, while 20% were neutral. In total, 561 votes were cast. Although market sentiment doesn't create a clear path for gold, US interest rates remain the most important factor for the precious metal. If inflation continues to decline, the Federal Reserve will begin to slow down the pace of interest rates hikes. Falling gold prices at the end of last week have led to mixed sentiment in the market. Colin Cieszynski, chief market strategist at SIA Wealth Management Inc, said he is bullish on gold next week as Powell's comments didn't add anything new to the current outlook. "He didn't really say much that was new and noteworthy enough to push treasury yields or USD higher in the short term," Cieszynski said. "The US dollar is looking exhausted technically as it is and due for a correction, which could take some of the recent pressure off of gold." 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.   Source: Forex Analysis & Reviews: Gold faces difficulties after Jerome Powell's remarks in Jackson Hole
Why Stock Investing Is Not That Easy At The Moment?

After The Speech Global Equity Markets Are Not Risking Anymore! Nasdaq 100 Below Its 50-day Average!

Saxo Strategy Team Saxo Strategy Team 30.08.2022 09:06
Summary:  The rise in U.S. treasury yields pressured growth stocks with the Nasdaq 100 falling below its 50-day average, which puts it back in a precarious position. Fed Kashkari said he was glad to see the markets fell after Chair Powell’s Jackson Hole speech to tighten financial conditions. Global equity markets have certainly got the message and are in a risk-off mood. What is happening in markets?   Nasdaq 100 (USNAS100.I) and S&P 500 (US500.I)  US Stocks fell for the second day, but modestly compared to Friday’s sell-off that was triggered by Fed Chair Powell vowing rates will stay higher for longer to cool runaway inflation while suggesting there will be no pivot to cutting rates in 2023, S&P 500 -0.7%, Nasdaq 100 -1%.  Minneapolis Fed president Kashkari said that “he certainly was not exited to see the stock market rallying” after the last FOMC meeting and “people now understand the seriousness of our commitment to getting inflation back down to 2%.” Tech stocks dragged the markets lower, Nvidia -2.8%, Tesla -1.1%.  Twitter (TWTR:xnys) dropped 1.1% after Elon Musk ad subpoenaed a Twitter whistleblower to share information.  Meanwhile, gains in value stocks somewhat held up the market last night, with the oil, gas, and agricultural sectors rising 1-2%. It comes as Oil prices rose 4% on Monday as potential OPEC+ output cuts and conflict in Libya helped to offset a strong U.S. dollar. While the Ag sectors were supported higher after the wheat price jumped 4.9% and corn rose 2.2% (at its highest level in 2 months) after heat damage worsened US crops more than expected. As such it appears markets are back to their risk off modus operandi, selling down growth names (which are based on future earnings which gets diminished amid higher rates), and instead, buying value (commodities), with rising cashflows. U.S. treasuries (TLT:xnas, IEF:xnas, SHY:xnas) US treasury yield rose across the curve.  The 2-year yield rose to as high as 3.48% during the day, the highest level since November 2007, before paring the rise to settle 3bps higher at 3.42%.  The 10-year yield rose 7bps to 3.11%,  taking the 2-10 year curve steepened by 3bps to -32bps.  Hong Kong’s Hang Seng (HSIQ2) and China’s CSI300 (03188:xhkg) Hong Kong and mainland China equities traded relatively calm in the midst of a large post-Jackson Hole selloff in the U.S., Hang Seng Index -0.7%, CSI 300 -0.4%.  The deal made between the U.S. and China regulators last Friday regarding access to audit work papers did not trigger much new buying in China internet stocks on Monday as it had already been well wired before the official announcement.  Further, there is much remained to be seen if the agreement will be implemented to the satisfaction of both sides as the U.S. and China regulators seem to differ in their interpretation.  Meituan (03690:xhkg) gained 2.6% after reporting solid Q2 results, which Hang Seng Tech Index dropped 1.2%. China’s industrial profits slumped to contracting 14.5% YoY from (v.s. +1.1% in June) and a fall of 11.3% sequentially from June.  The weakness was mainly driven by upstream sectors.  Coal mining stocks initially slumped but rallied later in the days and finished higher in Hong Kong and mainland bourses.   Geely (00175:xhkg) rose 1.7% as the automaker’s Zeekr line of EVs will be the first to use a new battery from CATL that provides over 1,000km range per charge.  SMIC (00981:xhkg), -2.1%, announced spending USD7.5 billion to build a plant in Tianjin to make 12-inch wafers. Chinese banks traded weak as Reuters reported that China’s central bank and bank regulators had been making calls to banks to push them to make more lending to support the real economy than put their funds in financial investments.  USDJPY weakness to bring back pressure on Bank of Japan USDJPY is back to testing its record July highs despite little change in money market pricing of the Fed rate path following Powell’s hawkish speech at Jackson Hole. The peak Fed funds rate is still priced in at 3.8%, while some of the Fed speakers have started to suggest 4%+ levels that may be needed to combat inflation. This brings the September dot plot in focus, but we get the jobs and CPI data before that as well. Any further upward re-pricing of the Fed path, if resulting in gains in US 10-year yields, could very well take USDJPY to new highs with Japanese yields still remaining capped due to the Bank of Japan’s yield curve control policy. If however, US data underwhelms, the room on the downside for USDJPY is tremendous. USDCNH made a new high at 6.9327 Wider interest rate differentials between the U.S. dollar and the renminbi and a weaker economic outlook in China continued to pressure the renminbi weaker. USDCNH surged to as high as 6.9327 on Monday during Asian hours before paring it as the greenback fell against most of the G10 and emerging market currencies in London hours.  In Asia this morning, USDCNH is trading at 6.9066. Crude oil prices (CLU2 & LCOV2) Crude oil prices saw their best day in a month amid threats of a decline in supply from OPEC cuts and production outages in Libya. Brent futures rose above $105/barrel although some softening was seen in the Asian morning, while WTI rose to $97/barrel. This follows news from last week that Kazakhstan’s exports of crude may be impacted for months because of damage to its port facility. Meanwhile, negotiations between Iran and the US over the revival of the 2015 nuclear deal could drag on for weeks, easing fears of an imminent surge in supply. What to consider? The volatility index rises to its highest level in 9 weeks, suggesting more volatility is coming. And the fundamentals back this up with US yields spiking After the Fed’s 8-minute Jackson Hole speech, the volatility index surged to its highest level in 9-weeks, forming an uptrend pattern, suggesting more market volatility is ahead. We believe the market is only just beginning to price in higher for longer interest rates and inflation. The bond market is affirming this with yields spiking again. But what is also alarming, is that the futures market is still pricing in that the Fed will cut rates in 2023. This is despite the Fed suggesting it won’t pivot to cutting rates. The other issue is keeping markets on notice is that; if the Fed makes more hawkish remarks and hikes rates more than expected, then the market will face further volatility, and selling in growth sectors and names that are interest rate sensitive, are likely to come under pressure. Shell CEO cautions against a prolonged European gas crisis Shell CEO Ben van Beurden gave comments from Norway’s ONS conference, suggesting that Europe could face gas shortages for a number of winters. This disproves reports suggesting that Europe has already built reserves for the winter demand, and reaffirms our belief that a move to broad-based energy supply will continue to be top of mind in the long run. In the near term, demand destruction appears to be the only possible solution, and Van Beurden stressed need for efficiency savings as well as rationing. Eurozone inflation and Nord Stream maintenance will be key for the ECB There is no question on the direction in Eurozone inflation, given the extensive reports on gas prices and power costs in the region over the last few days. However, some softening may be warranted after an all-time high of 8.9% was reached on the Eurozone inflation print in July, given the easing in pump prices in August. Still, gas supply concerns continue to remain top-of-mind for Germany with Gazprom announcing another leg of maintenance for the Nord Stream pipeline this week. Food prices are also seeing another pickup, and further gains in the headline print in Q4 cannot be ruled out. Calls for a 75 basis points rate hike by the European Central Bank have already picked up, and these could gain further traction if we see a strong CPI print this week. However, if Nord Stream supply comes back on time after its 3-day scheduled maintenance, and with some potential increases in capacity as has been hinted, that could mean a substantial decline in European gas prices and relief in utility costs in the months to come. ECB Lane tones dials back on jumbo rate hike expectations ECB chief economist Lane was on the wires on Monday, and hinted at a more steady pace of rate hikes in a “step-by-step” manner rather than jumbo rate hikes. This appears to be a pushback against calls for a 75bps rate hike at the September meeting, as he made the case to allow the financial system to absorb the rate changes. Moreover, on inflation, Lane said long-term inflation expectations remain close to the two per cent target, while near-term inflation expectations are quite elevated. BYD reported 1H earnings at the high end of the preannounced range Chinse auto maker BYD (01211) reported 1H revenues growing 66% YoY to RMB 151 billion.  In terms of segments, auto revenues surged 130% YoY while mobile handset revenues contracted 4.8% YoY. Net profits jumped 206% to rMB3.595 billion, at the top end of the preannounced range of CNY2.8-3.6 billion. Volume growth (353K new energy passenger vehicles in 2Q, +265% YoY) beat market expectations despite two rounds of price increases in 2022 and supply chain disruptions.  The company’s EV market share rose to 29% (vs 17% in 2021).  Pinduoduo delivered Q2 results showing stronger than peer sales growth Pinduoduo (PDD:xnas), a leading eCommerce platform with strong penetration into agricultural products and online shoppers from rural areas., reported 1H total revenue growing at 36% YoY, far exceeding the 3% YoY consensus estimate.  The company attributed the revenue growth to a recovery in consumption since mid-May, successful promotion campaigns, and 48-hour daily necessity supply packs for people facing lockdown.  The company’s strong market position in rural areas and agriculture-related products also help it stand out from its rivals.  In Q2, the company achieved a 20 percentage point improvement in margins, reaching 33.5%, but the management cautioned investors that the margin compression was attributed to temporary cost savings early in the quarter and spending had increased since mid-May.  Non-GAAP EPS came in at Rmb7.54, +161% Uranium companies and other nuclear-related companies are back in the spotlight  Elon Musk said countries should not shut down existing nuclear power plants as Europe grapples with an energy crisis “If you have a well-designed nuclear plant, you should not shut it down - especially right now”, said Musk during an energy conference in Norway. That resulted in the Global X Uranium ETF climbing 7.4% on Monday to its highest level since June 8, supported by US uranium stocks rising. Uranium stocks in the Asia-Pacific region to watch include Australia’s Paladin, Deep Yellow and Boss Energy, as well Japan’s Kansai Electric Power and Tokyo Electric Power, as well as Mitsubishi Heavy Industries. In South Korea watch Doosan Enerbility, Kepco. And in Europe, monitor Yellow Cake and Kazatomprom.      For a week-ahead look at markets – tune into our Saxo Spotlight. For a global look at markets – tune into our Podcast.   Source: APAC Daily Digest: What is happening in markets and what to consider next – August 30, 2022
Risk Appetite Across Markets Taking A Hit After Fed Chair Powell's Hawkish Speech

Euro (EUR) May Be Skyrocketing Soon! Jackson Hole Meeting Wasn't Only About Fed's Hawks

ING Economics ING Economics 30.08.2022 12:57
We will remember Jackson Hole not just for Powell's hawkish speech, but also for the ECB gearing up its own hawkishness – 75bp hikes are not just for the Fed. Even if just an attempt to invoke the market's help to do the heavy lifting of tightening financial conditions, near term it means more curve flattening. Accelerating inflation still justifies the means  Hawkish ECB communications shift bear flattens the curve... EUR money markets have clearly set their sights on a 75bp hike at the September meeting after the string of hawkish comments over the weekend. The ESTR OIS (euro short-term rate overnight indexed swap) forward for the September reserve period is now at 65bp, implying a 60% probability for a larger move. It was the European Central Bank’s Robert Holzman, Martins Kazaks and Klaas Knot who all hinted more-or-less explicitly at a 75bp hike being on the table while others have called for more forceful action. France’s François Villeroy appears to suggest more frontloading with a call for showing determination now to avoid “unnecessarily brutal” hikes at a later stage. The significance of that hawkish communications shift was underscored by the ECB’s Isabel Schnabel who warned that greater sacrifices may be needed to bring inflation under control. And indeed the ECB’s current official economic outlook certainly still looks overly optimistic against the backdrop of a deepening energy crunch. This all spells further yield curve flattening as the ECB looks more prepared to hike even into a downturn.    The barrage of hawkish ECB comments means more EUR curve flattening is on the cards Source: Refinitiv, ING ...but may signal more reliance on the market to do the heavy lifting While acknowledging further normalisation is appropriate, the ECB’s chief economist Philip Lane struck a more balanced tone. In light of high uncertainty, he argued for a steady pace of hikes to the terminal rate. Smaller hikes would be less likely to cause adverse side effects and make it easier to correct course. Under the current circumstances, we suspect that 50bp would fit his idea of “steady” and “small”. He also notes that policy works through its influence on the entire yield curve. After the July rate hike, higher market rates have meant that the monetary tightening that has already occurred is far greater than just the first policy rate increase. In particular, he notes that mid and longer-end segments of the yield curve are most important for determining financing conditions in the economy and that these are more sensitive to expectations of the terminal rate than the precise path of policy rates towards it. That insight leads us back to one possible aim of the more hawkish communications twist: let the market do the heavy lifting of tightening financing conditions. As long as inflation risks are skewed to the upside, hawkish talk is likely to persist. And as long as the market plays ball, it may not necessarily translate into an even larger 75bp hike. However, one can also argue that when relying on hawkish talk it is even easier to eventually correct course than it is with a strategy of “smaller hikes". At this point, we still think that the ECB will significantly underdeliver compared to what markets are pricing. The crucial question is just when this notion will dawn on markets. The EUR swap curve prices front-loaded hikes in 2022 Source: Refinitiv, ING ECB quantitative tightening on the back burner? It appears that a discussion on quantitative tightening might not be as imminent, which should also come as a relief for periphery bonds. Accelerated ECB rate hikes and political uncertainty in Italy have already brought the benchmark 10Y spread of Italian bonds over German Bunds back towards 230bp. Bringing quantitative tightening to the table could tip the fragile balance towards more widening, even after the introduction of the Transmission Protection Mechanism. But it is quite notable that amid the latest hawkish push on rates, Italy's spreads have actually managed to eke out a small tightening versus Bunds. The Council's views on quantitative tightening seem not quite as aligned as their view on rates. After being brought up last week by the Bundesbank's Nagel and also by subtle hints in the ECB meeting minutes, the ECB’s Olli Rehn now said it was too early to publicly discuss quantitative tightening. While Kazaks said it could be discussed, he added it was too early to implement. Today's events and market view The reason for the ECB's hawkish turn will become more obvious today. As markets are looking for a further acceleration in inflation, all eyes are on the German and Spanish readings today ahead of tomorrow's eurozone flash CPI release which the consensus sees heading to 9%. The core rate is seen accelerating to 4.1%. Also to watch are the business climate indicators today, economic sentiment and consumer confidence, all of which are expected to come in softer. The 1y1y ESTR forward is back to 2.13%, though that is still short of the peak seen in June when it topped 2.5%. It might still push higher from here, but the long end should increasingly lag. In primary markets, Italy will reopen the 5Y, 8Y and 10Y sectors as well as a floating rate bond for a total of up to €8bn. Read this article on THINK TagsRates Daily Federal Reserve ECB 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 Unchanging Situation Of Bitcoin And Yesterday's The Fed Decision

Fed Announced It Will Have No Pity For The Markets!

Swissquote Bank Swissquote Bank 30.08.2022 12:58
The US futures look better after the post-Powell selloff, but the market sentiment will likely remain morose after Powell’s clear declaration that the Federal Reserve (Fed) will have no pity for the markets, and continue tightening its policy until it puts inflation on a sustainable path toward its 2% policy target. At this point, it’s difficult to get a pricing that goes against the Fed. Happily for oil bulls, the Fed drama doesn’t concern the energy stocks, which had a good session yesterday thanks to firmer oil prices. The barrel of US crude advanced past the 200-DMA. The European nat gas futures however slumped 20% yesterday, as Germany said its gas stores are filling up faster than planned. But energy prices remain exorbitantly high, and governments are increasingly frustrated with the skyrocketing energy prices that hammer economies and households, while putting a lot of money in energy companies’ pockets. As a result, the European policymakers are now cooking new measures to stop the excessive rise in energy prices and decouple the price of gas from electricity. Investors will be watching how the energy companies will react to the measures. On the data front, Germany and Spain will release the latest inflation update today. The euro is making a great effort to throw itself above parity against the US dollar, and stronger than expected inflation figures could help boosting the European Central Bank (ECB) hawks, but the topside should remain limited. Special focus on Uber: is the company a good play in the long run, what are the short-term risks? Watch the full episode to find out more!   0:00 Intro 0:27 Equities under pressure 1:37 But energy stocks do well 2:17 European nat gas drops 20% on encouraging German news 2:48 European leaders will step in to bring energy prices lower 5:00 Eurozone inflation data in focus 7:59 Focus: Uber 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. #Energy #crisis #natural #gas #prices #crude #oil #energy #stocks #Exxon #OccidentalPetroleum #USD #EUR #inflation #ECB #hawks #Uber #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   Source: Europeans preparing to intervene in energy markets! | MarketTalk: What’s up today? | Swissquote
"Fight Against Inflation Is Our Primary Concern..." Central Banks Predicate

"Fight Against Inflation Is Our Primary Concern..." Central Banks Predicate

Craig Erlam Craig Erlam 30.08.2022 16:05
Stock markets are bouncing back on Tuesday following a rocky couple of weeks as investors grew nervous about the economic impact of tightening. Fed Chair Jerome Powell could not have been more clear on Friday on the central bank’s tightening stance and unlike the warnings from his colleagues, the message appeared to have finally gotten through. Which makes today’s move all the more curious. It’s not the fact that we’re seeing a rebound as equity markets don’t move in straight lines, rather it’s the strength of it that is interesting. Prior to Friday’s speech, investors appeared determined to cast aside warnings in favour of the dovish pivot narrative and today’s moves may suggest the same could still be true after a brief pullback. With a 75 basis point rate hike now viewed as the more likely outcome from the Fed in a few weeks and ECB officials putting a similar move on the table ahead of its meeting next week, how strong of a recovery can we really expect in equity markets? Central banks have made it perfectly clear now that the fight against inflation is their primary concern and a hard landing may just be the price to pay. While that may change if we see any significant improvement on the inflation front over the coming months, the risks still appear more tilted to the downside for the economy. A big moment for bitcoin Bitcoin is enjoying a slight recovery today after surviving a brief dip below $20,000 over the weekend. The hawkish sentiment by Powell took its toll at the end of the week but crypto bulls are fighting back to defend what could be a key level. We may need to see more of the resilience displayed in recent months as a failure to do so could quickly see bitcoin retesting the June 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.   Source: A curious rebound
Forex: USD/CHF Is Growing For The Third Day In A Row!

Forex: USD/CHF Is Growing For The Third Day In A Row!

Kenny Fisher Kenny Fisher 30.08.2022 16:22
USD/CHF is up for a third straight day. In the European session, the pair is trading at 0.9717, up 0.36%. The US dollar continues to show strength against most of the majors. The Swiss franc has fallen sharply, with USD/CHF climbing 360 points since August 16th. KOF Economic Barometer falls again The KOF Economic Barometer continued its downward trend, declining for a fourth straight month in August. The index dropped to 86.5, down from 90.1 in July and shy of the estimate of 89.0. Much of the August decline was related to consumer consumption, but the manufacturing sector is also showing weakness. Similar to the situation in other major economies, manufacturing activity has been hurt by supply chain disruptions and a lack of employees. Switzerland will release the August inflation report on Thursday. The estimate for August CPI is 0.2% MoM, after a 0.0% reading in July. The Swiss central bank (SNB), which is not shy about intervening in currency markets, will be watching carefully. Higher inflation means the Swissie has less purchasing power, which suits the SNB as it has a paramount interest in the Swiss currency remaining weak so that Swiss exports are competitive. In the US, the markets continue to digest Fed Chair Powell’s hawkish speech on Friday. The “read my lips” speech in which Powell firmly stated that there would be no pivot in policy appeared to have hit its mark, as equity markets took a tumble on Friday and again on Monday, although we are seeing a rebound today. The Federal Reserve holds its next policy meeting on September 21st and we can expect plenty of discussions as to whether the Fed will hike by 50 or 75 basis points. CME’s FedWatch has pegged the likelihood of a 75bp move at 66.5%, with a 33.5% likelihood of a 50bp move. These numbers are sure to change in the coming weeks, as the markets hunt for clues as to the Fed’s plans. . USD/CHF Technical USD/CHF is testing resistance at 0.9720. Next, there is resistance at 0.9760 There is support at 0.9642 and 0.9524 This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.   Source: Swiss franc falls to 5-week low
Risk Appetite Across Markets Taking A Hit After Fed Chair Powell's Hawkish Speech

Risk Appetite Across Markets Taking A Hit After Fed Chair Powell's Hawkish Speech

Ole Hansen Ole Hansen 31.08.2022 14:10
Summary:  Crude oil’s bounce from a six-month low has faded fast with risk appetite across markets taking a hit after Fed chair Powell's hawkish speech once again raised concerns that the central banks aggressive stance towards combatting runaway inflation will drive down growth and demand for crude oil and fuel products. In addition, the energy market has to deal with long liquidation into a low liquidity market, reduce gas-to-fuel focus as EU gas prices drop as well as Iraq, Libya and Iran developments. Crude oil’s bounce from a six-month low has faded fast following Friday’s hawkish message from Jerome Powell, the Federal Reserve Chairman, which once again raised concerns that the central banks aggressive stance towards combatting runaway inflation would mean lower growth and with that lower demand for crude oil and fuel products. The battle between these macro concerns continues to battle with micro developments, the majority of which still point to tightness during the coming months. In Europe, the gas and power crisis continue with punitively high prices attracting substitution demand into fuel products like diesel and heating oil. In the short-term the price of gas into the autumn month will continue to be dictated by Russian flows, and not least whether Gazprom (and Putin) as announced will resume flows on the Nord Stream 1 pipeline following the three-day maintenance shutdown that ends at 0100 GMT on September 3. Other developments currently impacting the market: China’s continued battle with Covid infections which is currently found in 31 provinces, and which has led to fresh curbs being implemented, among others in two of southern China’s most economically vibrant areas. Deadly turmoil in Baghdad after Moqtada Al-Sadr, a prominent cleric, decided to resign from politics, thereby deepening a political crisis that has left the country without a government since last October’s election. For now, the clashes have not spread to oil-rich area and exports from one of OPEC’s biggest producers remain uninterrupted. Clashes in Libya’s capital Tripoli over the weekend which left at least 32 people dead have raised risks of a civil war in Libya, a very volatile producer which has seen its output swing between 0.7 and 1.2 million barrels per day during the past year. On the supply side, the market will be watching the impact of the EU embargo on Russian oil which will begin impacting supply from December and the 180-million-barrel release, at a rate of one million barrel per day, from US Strategic Reserves that look set to run until October 21. In the following months the US government plans to buy back 60 million barrels, a decision that is likely to be delayed given the prolonged war in Ukraine. Finally, an Iran nuclear deal has yet to be reached, but if successful it could lead to millions of barrels of on and offshore stored oil being released into the market. WTI Crude Oil: Following Monday’s short squeeze the subsequent sell-off has forced recently established longs to reduce their exposure. Developments that from a technical perspective have opened the risk of a return towards key support around the mid-August low at $85.5/b. Source: Saxo Group Lack of liquidity and speculative positions being wrongfooted have both added to the latest gyration which saw the biggest jump in six weeks on Monday being  followed by a near 9% two-day drop. In the week to August 23, hedge funds added 80k lots of crude oil and fuel exposure, the biggest weekly increase since January, and the latest tumble may have forced many too hastily exit those recently established and now loss-making positions.            With the summer holiday driving season winding up we are seeing gasoline refinery margins trading sharply lower while demand for diesel as a substitute for expensive gas has supported diesel margins, both in the US and especially in Europe. However, since Friday’s peak in EU gas prices we have seen softer but still elevated margins there as well.              The weekly oil and fuel stock report from the US Energy Information Administration will be watched closely given its frequency and with that the ability to provide an up-to-date snapshot of the current supply and demand situation across crude oil and fuel. Last night the API reported a 600k barrels increase in oil stocks and a combined 5.1 million barrels drop in gasoline and distillates stocks. The report will also provide the EIA’s assessment of production, which has been adjusted lower for the past two weeks to 12 million barrels a day, and somewhat short of the EIA’s latest end of year forecast of 12.45 million. Crude and distillates exports will also be watched after the combined figure hit a record last week. As per usual I will post the charts and tables on Twitter once the report has been released at 14:30 GMT.               Source: Oil drops as hawkish Fed drives fresh demand concerns
US Stocks: S&P 500 Decreased By 0.21%, Nasdaq Gained 0.25%

There Are Some Reasons Why The US GDP May Reach Ca. 3% | ISM Manufacturing Index Reached 52.8

ING Economics ING Economics 01.09.2022 20:22
Decent manufacturing activity, improved trade and inventory contributions and the cashflow boost from falling gasoline prices mean the US is set for a strong third-quarter GDP reading of around 3%, but another decline in residential construction reinforces the worries about what might happen later in the year The ISM manufacturing index held up better than expected in August, which should give a boost to strong third quarter GDP ISM holds up as rising orders and falling prices offer hope for the sector The ISM manufacturing index held up better than expected in August, coming in at 52.8, unchanged from July and better than the 51.9 consensus. Mixed regional indicators and a softer China PMI had raised warning flags, but instead new orders moved back into positive territory at 51.3 from 48 while employment rose to a five-month high of 54.2, boosting hopes of a decent manufacturing contribution to Friday's jobs number. Regarding jobs, the ISM reported that “companies continued to hire at strong rates in August, with few indications of layoffs, hiring freezes or head-count reductions through attrition. Panelists reported lower rates of quits, a positive trend”. US and Chinese manufacturing purchasing managers' indices Source: Macrobond, ING   There was also a rise in the backlog of orders which suggests that the dip in the production component to 50.4 from 53.5 is just a temporary blip and that manufacturing output can continue growing at a firm pace over coming months. Indeed, the ISM cite the better lead time for supplier deliveries and the falling prices paid component as factors that “should bring buyers back into the market, improving new order levels” The Fed will also take some comfort from the prices paid component declining to 52.5. This index was above 80 as recently as May and reflects the steep falls in energy and key commodity prices. Putting it together, with the better trade and inventory numbers and the massive support to consumer spending power and confidence from the falls in gasoline prices we look for 3% annualised GDP growth in the third quarter after the technical recession in the first half of the year. This should be supportive of our Fed funds call of 3.75-4% rates for year end. Construction highlights the weakening medium-term outlook There was less positive news in the construction data, which fell 0.4% month-on-month  in July after a 0.5% fall in June. Residential construction was the main reason with the slowdown in housing activity set to translate into falling home building over at least the next six months. Annualised US residential and non-residential construction spending ($bn) Source: Macrobond, ING   Declining housing transactions implies big declines in residential construction and weakness in some retail sales components such as building supplies, furniture and home furnishings. Falling house prices would compound the downside risk for confidence and spending so while 3Q activity overall looks pretty good, 4Q will be much more challenging, especially with China under pressure and Europe facing an energy catastrophe. Read this article on THINK TagsUS Orders Manufacturing Construction 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
Gold Price: The Tendency May Be Caused By Hawkish Fed

Gold Price: The Tendency May Be Caused By Hawkish Fed

Alex Kuptsikevich Alex Kuptsikevich 01.09.2022 20:24
The gold price dipped below $1700 on Thursday, approaching the lower boundary of its trading range since May 2020. Gold has been finding buyers after emotional dips towards the lower boundary throughout this period. Perhaps the main reason for the long-term bearish sentiment is the hawkish US monetary policy. A sharp tightening of policy and the Fed's promises to raise interest rates have pushed 2-year government bond yields to levels last seen in 2007. High short-term bond yields push investors away from alternatives such as gold, equities and emerging market currencies, raising the risk-free interest rate level - an informal benchmark for risk assessment. So far, gold has behaved in a frighteningly similar way to the dynamics of 2010-2013, when we saw a comparable bump at the top after a multi-year rally. Now, this period of consolidation after the rally has been longer. However, we should be prepared for a "dam break" if we see a decisive move down from the established corridor over the next few weeks. If the price breaks below $1680 this week or next, the market could see an absolute surrender of position traders, who have been betting on another bounce from the lower boundary. In that case, we should be prepared for gold to go into the same multi-year bearish trend as it did in 2012-2015. Just below, through $1670 passes the 200-week moving average, a fixing under which could trigger the capitulation of the most resilient long-term betting bulls. In that case, a decline towards $1300 would be a working scenario until the end of 2023. If the gold finds support, as it has done so many times in the past two-plus years, we could see a new upside surge after a two-year consolidation, and the 200-week average retains the long-term support it has enjoyed for the past five years.
In The Morning US Dollar (USD) Was Up, British Pound And Euro Down | US Stocks: S&P 500 Gained Almost 2% Yesterday, Dow Jones Added 1.88%, Nasdaq Increased By 2%

The US NFP (Non-Farm Payrolls) - There Are Two Sides Of The Same Coin

Craig Erlam Craig Erlam 02.09.2022 22:06
Investors appear relatively pleased with the jobs report despite some initial choppy trade following the release. Nonfarm payrolls nudges above forecast The headline NFP figure was a little larger than expected at 315,000 which may have created that initial unease as a knockout report could have effectively paved the way for a 75 basis point rate hike this month. But once you dig a little deeper, there are aspects of the report that will please the Fed and support the case for easing off the brake. While we can’t put too much weight on one report, a surprise spike in participation from 62.1% to 62.4% will undoubtedly be welcomed, lifting unemployment to 3.7% from 3.5% along with it. As will hourly earnings rising by 5.2% against expectations of a small increase to 5.3%. All of this will be a relief to policymakers but I’m not sure it will be enough to change their minds at this point. There’s been such an effort to put 75 basis points on the table in recent weeks, to change their mind on the back of this would seriously undermine their guidance in future. If paired with another decent drop in inflation in a couple of weeks, more may be convinced. We’re seeing some relief in equity markets after what has been a pretty dire week until now. US futures have added half a percent since the release while the dollar and US yields are slightly lower, albeit after some very choppy trade initially. Gold is breathing a huge sigh of relief, up around 0.75% on the day, with $1,680 support potentially safe for now. This is a really significant area of support for the yellow metal and while it didn’t get too close on this occasion, a move below could see gold trading at two-year lows which could be a major blow. Bitcoin is another instrument that is displaying some relief having spent the week desperately defending $20,000 support. The report isn’t enough in itself to overly excite traders, not even the crypto crowd I would have thought, but it could reinforce that support which is important. A break of $20,000 could be painful for bitcoin and today’s data may enable it to hold above here for a while longer yet. For a look at all of today’s economic events, check out our economic calendar: www.marketpulse.com/economic-events/ This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds. A welcome US jobs report - MarketPulseMarketPulse
Has US Dollar Index (DXY) Potential To Reach 120.00?

Fed's Jerome Powell Speaks On Thursday, Apple Presents iPhone 14 Soon! Wow! There Are A Lot Of Events Next Week!

Craig Erlam Craig Erlam 02.09.2022 22:09
US The countdown to the September 13 inflation report begins as investors fixate over a wrath of Fed speak, with special attention going towards Chair Powell’s Thursday discussion on monetary policy. It is a slow start to the trading week as US markets are closed on Monday for Labor Day. Tuesday contains the release of the August ISM services index. Service sector activity is expected to show a modest decline but remain in expansion territory. US trade data will be released on Wednesday, but most of the attention will fall on Lael Brainard’s speech on the economic outlook and the release of the Fed’s Beige Book. Michael Barr will also speak on financial system fairness.  Powell’s speech on Thursday could be massive as it will be his first time speaking since the Jackson Hole Symposium.  Wall Street is keeping a close eye on initial jobless claims as we still have yet to see any signs of trouble with the labor market as layoffs remain low.  Friday’s Fed speak contains appearances by Charles Evans and Christopher Waller.   Earnings season is finishing up, but stocks will definitely remain in focus as more investors are becoming bearish.  Apple’s launch event could be huge as they will unveil the iPhone 14 lineup and the next round of smartwatches.    EU  There’s no doubt about what the focus next week will be; the only question on everyone’s mind is will it be 50 basis points or 75? Markets are increasingly favouring the latter despite the ECB previously hinting at the former. That said, prior to the July meeting they effectively told everyone the first hike would be 25 basis points before opting for 50 so we can probably take things with a pinch of salt for now. Other than that, there’s a selection of tier two and three data including final services PMIs, retail sales and revised GDP. UK  The UK is heading for a recession, one the Bank of England has seen coming for a long time. When it released its forecasts in August, they looked quite shocking. Since then, expectations have lowered further which will make the Monetary Policy Report Hearing on Wednesday all the more interesting. That aside, we’ll hear from Catherine Mann on Monday and then it’s mostly tier two and three data including final services PMI, construction PMI and consumer inflation expectations. Russia Swift action by the CBR after the invasion meant that not only is inflation not the problem many expected it to be, but the central bank has actually been able to cut interest rates below where they were before in order to try and support the economy. CPI data next week could tell us how much further room the central bank has to cut and ease pressure on the currency. South Africa A relatively quiet week with GDP data on Tuesday the only major release. Regardless of the number, a large rate hike, perhaps 75 basis points, is likely on the cards in a few weeks. Turkey Inflation is expected to surpass 80% shortly after the CBRT decided to continue its easing cycle with a 1% rate cut to 13%. With the central bank refusing to accept responsibility for soaring inflation, the sky’s the limit. Switzerland Data last week showed inflation accelerating faster than expected, increasing pressure on the SNB to hike more forcefully. Barring an inter-meeting hike, the focus next week will be on the GDP and unemployment data. China This will be a busy week in China as investors keep a close eye on the Chengdu shutdowns and a wrath of economic data that could confirm the trend of weakening economic activity.  FX traders are also closely monitoring the yuan and the possible breach of the 7-handle.  China’s trade data could provide more information on how quickly demand is weakening. Both imports and exports are expected to soften, while government stimulus should provide a boost for aggregate social financing.   India Next week brings the services PMI reading for August. Strong economic data releases will allow the RBI to hike rates even further.     Australia & New Zealand The greenback’s relentless rally has taken the Australian dollar and kiwi to seven-week lows. The global bond market selloff is being led by a surge in Treasury yields and that’s kept the interest rate differential widely in the greenback’s favour. This week a wrath of economic releases will take a backseat to the RBA rate decision. The RBA may downshift to a slower pace of tightening with only a 25 basis point rate increase.  The bank has raised rates by 175 basis points over the last four meetings, but given the grim outlook, a smaller rate hike could be justified. At the beginning of the week, Australia will release services PMI data, inflation readings, ANZ job advertisements, and current account data.  Second quarter GDP is expected to show a slight improvement and will be released after the RBA decision.   Economic releases and speeches will be limited for New Zealand.  RBNZ Assistant Governor Silk will speak on Wednesday. The ANZ commodity price index for August will be released on Monday.  A few other third-tier economic releases will also come out in the latter part of the week.     Japan The divergence in monetary policy between the Fed and the Bank of Japan may continue to drive the yen’s depreciation against the dollar.  The Japanese yen has been struggling as central banks globally remain very hawkish in fighting inflation.  The BOJ may need a slight change to their policy which could eventually lead to the abandoning of Yield Curve Control (YCC), but that would require a major reversal of BOJ Gov Kuroda’s decade-long stance of super loose policy.   Several important economic indicators will be released over the next week including the services PMI, household spending, the final reading of second-quarter GDP, current account, bank lending, and the eco watchers survey.   Singapore There are no major data or risk events in Singapore next week. The Singapore dollar is gaining a lot of attention on Wall Street as many big banks anticipate that Singapore’s central bank (MAS) will extend policy tightening.   Economic Calendar Saturday, Sept. 3 Economic Events Global energy crisis in focus as the Nord Stream 1 gas pipeline is scheduled to reopen after Russia’s unscheduled maintenance Sunday, Sept. 4 No major economic events scheduled Monday, Sept. 5 Economic Data/Events US markets closed for Labor Day New UK PM is announced Thailand CPI  Singapore global PMI, retail sales India services PMI Australia inflation gauge, job advertisements, inventories, services PMI China Caixin services PMI Eurozone retail sales, services PMI Japan PMI New Zealand commodity prices Switzerland GDP Taiwan foreign reserves OPEC+ meeting on output Ukrainian PM Shmyhal attends the EU-Ukraine Association Council meeting in Brussels BOE Monetary Policy Committee member Mann speaks UK Finance publishes its quarterly household finance review of activity Tuesday, Sept. 6 Economic Data/Events RBA rate decision: Expected to raise interest rates by 50bp to 2.35% Australia BoP Germany factory orders Japan household spending Mexico international reserves South Africa GDP US primary elections scheduled in Massachusetts Wednesday, Sept. 7 Economic Data/Events US trade Fed Vice Chair for Supervision Barr speaks at an event hosted by the Brookings Institution Cleveland Fed President Loretta Mester speaks on Market News International webcast The Fed releases its Beige Book of regional economic activity Eurozone GDP Australia GDP, foreign reserves Canada rate decision: Expected to raise interest rates by 75bps to 3.25% Poland rate decision: Expected to raise interest rates by 25bps to 6.75% Germany industrial production China trade, foreign reserves Singapore reserves Japan leading index, coincident index Apple event, dubbed “Far Out” is expected to feature new iPhones and Apple watches BOE Governor Bailey appears before the Treasury Committee Thursday, Sept. 8 Economic Data/Events ECB rate decision: Expected to raise rates by 50bps to 1.00% US initial jobless claims Fed’s Powell speaks at Cato Institute Mexico CPI  Australia trade France trade Japan GDP, BoP New Zealand manufacturing activity South Africa current account, manufacturing production Thailand consumer confidence Chicago Fed President Evans President speak at College of DuPage economic forum Federal Reserve Bank of Minneapolis President Kashkari speaks at the “Toward an Inclusive Recovery” virtual event RBA Governor Lowe speaks at the annual Anika Foundation lunch in Sydney EIA crude oil inventory report Friday, Sept. 9 Economic Data/Events US wholesale inventories Russia CPI, GDP  France industrial production Mexico industrial production Canada unemployment China CPI, PPI, aggregate financing, money supply, new yuan loans Japan money stock New Zealand truckometer heavy traffic index, card spending Thailand foreign reserves, forward contracts EU energy ministers extraordinary meeting to tackle energy crisis in Brussels President Biden travels to the new Intel facility in Ohio to discuss the Chips Act Sovereign Rating Updates Finland (Fitch) Netherlands (Fitch) Norway (S&P) Portugal (S&P) Ukraine (S&P) This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds. Week Ahead - Rate Hikes Keep Coming - MarketPulseMarketPulse
Fed May Hike The Rate By 75bp, Oracle (ORCL) And Adobe (ADBE) To Release Their Earnings Shortly

ING Economics Team Expects Fed And ECB To Change Their Strategy A Bit As Recession Could Be More Acute Than Forecasted

ING Economics ING Economics 04.09.2022 10:43
Different shades of recession are spreading across the globe at record speed as soaring inflation, geopolitical tensions, and astronomical gas prices show no signs of abating. As central banks grapple with working out how to balance inflation and growth, there's one thing we're sure of: tough times lie ahead In this article A return to reality for Europe The colours of recession Out with the old, in with the new Looking ahead Recession’s coat of many colours ING's Carsten Brzeski on the different shades of recession spreading across the globe.   A return to reality for Europe Returning from the summer break always helps when looking at the bright side of the world's economic prospects. An often heard truism is that relaxed economists make fewer pessimistic forecasts. But when you're tracking the European and, specifically, German economies, no summer break is long enough to make short-term economic forecasts more optimistic. On the contrary, returning to Europe’s economic reality after the summer means returning to a recessionary environment, as gas prices are moving from one astronomic high to the other and will lead to unprecedentedly high energy bills over the winter. Even without a complete stop to Russian gas, high energy and food prices will weigh heavily on consumers and industry, making a technical recession – at least – inevitable. The colours of recession No two recessions, however, are the same. In fact, we are currently seeing different colours of recession across the world. The US economy has actually been in a technical recession – defined as two consecutive quarters of negative growth – but it feels nowhere close to a recession. Our chief international economist in New York, James Knightley, says weaker global growth, the strong dollar and the slowdown in the housing market on the back of higher interest rates, will make it feel like a ‘real’ recession at the turn of the year, however. In other regions of the world, we are not currently seeing fully-fledged recessions, but given that China and emerging markets need higher growth rates than the Western hemisphere, the expected sub-potential growth rates can easily feel recessionary. As a consequence, even if Europe currently remains the epicentre of geopolitical tensions, it almost looks as if recession and recessionary trends are a new export item. Out with the old, in with the new With different shades of recession spreading across the global economy, but inflation still stubbornly high as a result of post-pandemic mismatches of demand and supply as well as energy price shocks, the dilemma for major central banks is worsening: how to balance inflation and growth. In the past, the answer would have been clear: most central banks would have shifted towards an easing bias. Not this time around. We are currently witnessing a paradigm shift, recently illustrated at the Jackson Hole conference. A paradigm shift that is characterised by central banks trying to break inflation, accepting the potential costs of pushing economies further into recession. This is similar to what we had in the early 1980s. Back then, higher inflation was also mainly a supply-side phenomenon but eventually led to price-wage spirals and central banks had to hike policy rates to double-digit levels in order to bring inflation down. With the current paradigm shift, central banks are trying to get ahead of the curve. At least ahead of the curve of the 1970s and 1980s. Whether the paradigm shift of central bankers is the right one or simply too much of a good thing is a different question. What strikes me is that central bankers have implicitly moved away from measuring the impact of their policies by medium-term variables and expectations towards measuring it by current and actual inflation outcomes. This could definitely lead to some overshooting of policy rates and post-policy mistakes. Looking ahead We still think that the paradigm shift will not last that long and looming recessions will bring new pivots, forcing the Fed to stop hiking rates at the end of the year and eventually cutting rates again in 2023, and stopping the ECB from engaging in a longer series of rate hikes. Reasons for this out-of-consensus view are that we expect a more severe recession than the Fed and ECB do, and a faster drop in US inflation, in particular, than the Fed expects. Also, in a recession, any neutral interest rate is lower than in a strong growth environment. Finally (and a bit meanly), central banks have not had a good track record with their inflation predictions over the past few years. In any case, we are back from the summer break and looking ahead to a very exciting autumn. Enjoy reading and stay tuned. TagsMonthly Update   Source: ING Monthly: Recession’s coat of many colours | Article | ING 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
US Dollar's (USD) And Stock Market's Reaction To The US Labour Market Data | EUR/USD After The Release

US Dollar's (USD) And Stock Market's Reaction To The US Labour Market Data | EUR/USD After The Release

Conotoxia Comments Conotoxia Comments 04.09.2022 20:02
After 2:30 pm, the long-awaited US labor market report came out, showing mixed readings. The market in the first moment seems to have reacted to the publication with a weakening of the dollar and a rise in stock index contracts. Non-farm Payrolls hits 315K The U.S. Labor Department reported that non-farm sectors added 315,000 new jobs in August against a market consensus of 300,000 the smallest increase in new jobs in the U.S. economy since April 2021. The data for July, on the other hand, was revised slightly downward from 528,000 to 526,000. Last month's significant job gains were noted in professional and business services (68,000), which includes computer systems design and related services, healthcare (48,000) and retail trade (44,000). Manufacturing added 22,000 jobs, and leisure and hospitality added 31,000. Unemployment rate reaches 3.7% The BLS report shows that the U.S. unemployment rate rose to 3.7% in August 2022, the highest since February. The market consensus was for an unemployment rate of 3.5%. It seems that it was the rise in the unemployment rate to its highest level since March 2022 that the market may have reacted to. Investors in the interest rate market, according to Bloomberg, reduced bets on a quick interest rate hike by the Fed, which could have been reflected in the dollar, gold, stock indexes or cryptocurrencies. The U.S. labor market saw a slowdown in hourly earnings growth, to 0.3% for the month, from 0.5% in July, which may be the right direction for the Fed, but wages could still grow faster than policymakers would like. Wage growth is still a possible inflationary pressure, hence it seems that the next important publication may be the one on the change in price level, and it will be announced on September 13th. EUR/USD Following the release of the US data, the rate of the main EUR/USD pair seems to have risen above parity. Gold, on the other hand, is trying to turn back from under the $1,700 level to $1,705, and bitcoin is oscillating in the $203 region. ETH, on the other hand, is holding in the region of $1,600 before 15:00 GMT+3. 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. 82.59% 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. Source: Mixed labor market data. EUR/USD above parity? (conotoxia.com)
Forex: Finally Bank Of Japan (BoJ) Intervened! Euro: Could Today's Speeches Support Euro?

EUR/USD Is Vigilant To The Highly Awaited Jerome Powell's (Fed) Speech. Rise Of Monthly Bond Sales Could Make Stock Market Decrease By Over 20%!

Alexander Boltyan Alexander Boltyan 06.09.2022 14:21
The head of the Federal Reserve (Fed) Jerome Powell is expected to deliver a speech on Friday at Jackson Hole annual symposium. Investors are completely focused on Powell’s testimony mostly ignoring incoming macroeconomic data. However, some economic data was a matter of concern. Shocking PMI Prints PMI indexes in the United States and in some other countries came out shocking as Services PMI in the U.S. dropped in august to 44.1 points, while Production PMI in the United Kingdom fell to 46.0 points. The3se are worst reading since 2020. PMI’s in other countries with a minor exclusion are pointing to a global economic slowdown. Some positive tunes were brought by the Q2 2022 second GDP estimate in the U.S. and Germany. Estimates were upgraded to -0.6% from the previous -0.8% in America and to 0.1% from 0.0% in Germany. This could hardly comfort investors, but together with lower Initial Jobless Claims in the U.S. it leveled up the market before the weekend. Read next: Interest rates hiked. The most important indicators continue their downward trend| FXMAG.COM Stock Market Could Plunge! S&P broad market index lost around 2% this week. Major investment houses are warning its clients that a rise of monthly bond sales by the Fed to $95 billion in September would plunge the stock market by another 25-30%. Technical picture of the S&P 500 index demonstrates a downside patter of the index with primary target at 3900-4000 point. The U.S. stock market benchmark fell below the support at 4220 points close to the gap of the beginning of this week. It is quite possible this gap could be closed after Powell’s testimony. . During two previous week short positions for the 70% of targeted amount for S&P 500 index were opened at the average price at 4285-4290 points. The rest of the targeted volume would be used once new technical signals would emerge. The target area is located at 2100-2300 points that is expected to be reached by the end of 2022. Technical Analysis Suggest Brent Crude Oil Could Even Hit $50-60 Oil market is short of time to active an upside scenario with targets at $135-145 per barrel of Brent crude benchmark. There are no triggers for such a scenario to become real at the moment. Moreover, if Brent prices would close this week below $106 per barrel an aggressive downside formation could pressure prices to $75-85 per barrel, and even to the extreme targets at $50-60 per barrel by the end of November. So, the Powell’s speech at Jackson Hole could be the last chance for bulls to avoid this scenario. What Are Gold's Downisde Targets? Gold prices slightly rebounded from the support at $1700-1730 per troy ounce to $1760. However, it does not change much as the decision to open short positions has to be made in the first half of September either from $1800-1820 per ounce, or after prices drop below the support at $1700-1730. Both scenarios have downside targets at $1350-1450 per ounce.  Powell's Can Make EUR/USD Go Much Below Parity! EURUSD met its primary target at 0.99500-1.00500, and has missed a chance for a rebound. The pair is likely to continue diving deep below after it tested 0.99500 support level several times this week. Next week the euro may fell to 0.98500 is Powell’s speech would be disappointing. GBP/USD - It Seems It's Not The Best Moment To Start GBPUSD continues aggressive downside with the completed primary target at 1.18000-1.19000 with the remaining secondary targets at 1.15000-1.16000 that are becoming more as the Euro goes down. However, there are no good entry points to open any trade positions so far. Read next: ECB Will Continue To Hike Rates To Slow Inflation? | FXMAG.COM
In The Morning US Dollar (USD) Was Up, British Pound And Euro Down | US Stocks: S&P 500 Gained Almost 2% Yesterday, Dow Jones Added 1.88%, Nasdaq Increased By 2%

US Dollar (USD) May Rise Further As The Labour Market Data Shows It's Strong Enough To Withstand Fed's tightening

Alexander Boltyan Alexander Boltyan 06.09.2022 14:43
The U.S. dollar, measured by the DXY index, retreated on Friday following the August nonfarm payrolls report. The greenback weakened as a knee-jerk reaction to a mixed employment report. Still, the bigger picture supports the bullish case for the dollar once the dust settles as the labor market keeps showing resilience to Fed’s aggressive tightening policy. Non-farm Payrolls Exceeded Forecast Hitting 315K At the time of writing, the DXY trades at the 109.50 area, 0.1% below its opening price, having bottomed in at a daily low of 108.93 after posting on Thursday a fresh cycle high just a couple of pips shy from the 110 level. The US Bureau of Labor Statistics reported the US economy added 315,000 jobs in August, beating the market's consensus of 300,000 but down from the stunning July reading of 526,000. On the other hand, wage inflation, measured by the average hourly earnings, slowed to 0.3% MoM, below the market's expectations of 0.4%. In addition, the unemployment rate jumped to 3.7% from its previous reading of 3.5%, coming higher than expected. The Fed’s tightening plan probably won’t change as Chair Powell made it clear at Jackson Hole that the committee needed to see “substantial” evidence that inflation is slowing down and that they are willing to see some economic pain. Robust Labour Market Data Supports Idea Of Potential Further Tightening In contrast, the jobs report shows that the labor market can handle tighter financial conditions as it beat the market’s expectations for a fifth consecutive month. As an immediate reaction, for the Sept. 20-21 meeting, markets are betting on higher odds of a 75 bps hike of 64% and 36% probabilities of a 50 bps increase. According to the weekly chart, the technical outlook for the DXY remains bullish as the index posts the third weekly gain in a row. Read next: Interest rates hiked. The most important indicators continue their downward trend| FXMAG.COM DXY weekly chart.   What Do We Learn From US Dollar Index (DXY) Daily Chart? The positive outlook is also seen in the daily charts, although indicators suggest a deceleration of the bullish momentum. The daily RSI pulled back from overbought territory, while the MACD printed a lower green bar. On the upside, the next resistances are seen at the cycle high of 109.97, followed by the 2003 highs at the 112.00 and 115.00 levels. On the other hand, supports could be faced at the 109.00 zone, followed by the 108.80 area, and then the weekly lows at the 108.30 regions. DXY daily chart.
Price Of NASDAQ Remains Inside The Medium-term Downward Sloping Channel

The US Stock Market Has Been Bearish For Three Weeks Now

InstaForex Analysis InstaForex Analysis 07.09.2022 09:24
The main US stock indices – DOW Jones, NASDAQ, and S&P 500 – closed lower on Tuesday. Overall, the US stock market has been bearish for three weeks now, in line with our expectations. The upward correction of stock indices a month ago raised a lot of questions. The current movement, however, makes sense. The Fed will remain hawkish and will be hiking rates for a longer period of time than expected previously. It remains to be seen whether inflation slows down further. Under the QT program, almost $100 billion will be withdrawn from the US economy every month. Naturally, in light of all these factors, demand for risk assets decreases but increases for safe havens. That is why bitcoin and other cryptocurrencies cannot show any growth. In our view, the latest macro reports were quite strong. Thus, the ISM Services PMI and NonFarm Payrolls exceeded market forecasts. Meanwhile, unemployment somewhat increased, but the overall situation remains quite stable to sound the alarm. Although a recession in the United States seems inevitable, the state of the economy is not as bad as it might seem. Anyway, positive macro results are not enough to keep the stock market from falling. We see the main US indices hitting yearly lows by the end of 2022. What happens afterward will depend solely on the FOMC's rhetoric. US inflation for August is due on September 14. In case of a significant slowdown, monetary pressure on the economy could be eased. The Fed does not want the economy to slide into a recession but its main priority now is fighting inflation. If recession risks could be minimized, the regulator would not miss a chance to do that. If inflation keeps going down, there will be no need for 0.75% rate hikes as well as for more aggressive actions. For the stock market, inflation results for August mean almost nothing because the Fed still remains hawkish. We suggest that the bear market will stop when the regulator starts to hint at the end of the rate hike cycle, that is as early as December 2022. As for the tightening cycle itself, it may end in the first six months of next year. In other words, indices still have plenty of time to fall.       Relevance up to 06:00 2022-09-08 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/321003
The Unchanging Situation Of Bitcoin And Yesterday's The Fed Decision

Can The Fed Funds Rate Peak At a 4% Range By The End Of The Year?

ING Economics ING Economics 04.09.2022 09:11
The Federal Reserve looks set to raise interest rates to 4% by year-end as officials signal a clear intent to deal with inflation. But with the global backdrop deteriorating and higher interest rates and a strong dollar set to weigh on an economy already experiencing a housing market downturn, we expect rate cuts will come next year In this article A recession that isn't a recession Fed pushes back against market pricing Real recession risks are rising with inflation set to fall sharply Odds continue to favour 2023 rate cuts   A recession that isn't a recession The trade and inventory-induced technical recession in the first half of the year failed to dent the Federal Reserve’s appetite for hiking interest rates. After all, it wasn’t what we might term a “proper” recession given rising consumer spending and the fact that 3.3mn jobs were created between January and July. Moreover, third-quarter GDP should bounce back nicely with trade and inventories moving much more favourably while the recent decline in gasoline prices has boosted consumer spending power. At the same time, core inflation is likely to rise back above 6% Year-on-Year on September 13th, while the upcoming August jobs employment should be decent given the surprise rise in job vacancies. Fed pushes back against market pricing Despite 225bp of interest rate hikes so far and the strong dollar, financial conditions have actually loosened in recent months. This came via tightening credit spreads and falling longer-dated yields as markets increasingly doubted the Fed’s intentions and predicted a pivot to rate cuts next year. The Fed fought back at the recent Jackson Hole symposium as officials ratcheted up the hawkishness, affirming that policy will be tightened further - and kept tight - to ensure inflation comes down.  The robustness of the Fed’s language seems to have changed perceptions somewhat and it now appears likely it will implement a third consecutive 75bp interest rate increase on September 21st. With more rate hikes at the November and December policy meetings we now see the Fed funds rate peaking at a 3.75-4% range by the end of the year. Another key message from Chair Powell’s Jackson Hole speech was that the market shouldn’t get carried away with the pricing of rate cuts next year, which we suspect was part of the push intended to get longer-dated yields higher to tighten financial conditions to get inflation lower. Unfortunately, we have far less conviction than Powell that there won’t be the need for a loosening of policy in 2023. Real recession risks are rising with inflation set to fall sharply Residential investment is already a drag on growth due to the rapid downturn in the housing market while the global backdrop is deteriorating due to Europe’s energy crisis and China’s apparent slowdown. A strong dollar and higher-for-longer interest rates will only intensify the downside risks for growth in 2023 with the potential for what might be termed a “real recession” with rising unemployment and falling spending looking increasingly likely for late 2022/early 2023. Inflation will stay high through the rest of this year. However, we remain hopeful that inflation can get back to 2% by the end of 2023. Housing and cars account for nearly half of the core CPI basket of goods and services, and the downturn in demand and rising supply will weigh on prices and be a major driver of lower CPI from April onwards. We also expect the weaker growth environment to result in a squeeze on corporate profit margins which will help depress inflationary pressures while a weaker growth environment translating into stagnant payrolls will take the heat out of wage inflation. Housing demand and transactions continue to fall, prices will follow     Odds continue to favour 2023 rate cuts Our base case for next year is a broad downturn in economic activity with the labour market losing jobs and inflation falling more quickly than the market and the Fed anticipate. This will open the door to rate cuts in summer 2023. In order for the Fed not to cut rates, we need to see an environment where inflation stays stickier and the economy doesn’t experience as much of a slowdown as we expect. This most likely scenario would be via ongoing falls in gasoline prices (and perhaps food prices on top) spurring consumer demand with inflation pressures rising in other areas in what is a continually supply-constrained world. Additionally, while worker demand slows there continues to be worker shortages and the fight for talent remains strong, particularly in leisure and hospitality.  We would also probably need to see financial conditions remaining loose, which could come via the dollar weakening and longer dates' yield declining, dragging borrowing costs lower more broadly - basically, the market not believing the Fed. In the topsy turvy world of market behaviour, we would also need credit spreads to stay narrow with equities proving resilient. While not implausible, we do not see this as the most likely path ahead, hence our forecast for rate cuts.   US Interest rates Federal Reserve   Source: https://think.ing.com/articles/monthly-us-the-harder-you-push-the-worse-it-gets/?utm_campaign=September-01_monthly-us-the-harder-you-push-the-worse-it-gets&utm_medium=email&utm_source=emailing_article&M_BT=1124162492 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
Can We Expect Better Movements In The European Currency (EUR)?

More Rate Hikes Are Coming. The Increase In The USD/JPY Will Not Change The Political Position Of The Bank Of Japan

ING Economics ING Economics 03.09.2022 09:39
Expect more big rate hikes in September from the major central banks, even if many of them are closing in on the end of their respective tightening cycles In this article Federal Reserve European Central Bank Bank of England Bank of Japan   Federal Reserve Our call: A third consecutive 75bp rate hike in September with Fed funds hitting 3.75-4% in December. Rate cuts from summer 2023. Quantitative tightening (QT) to continue until rate cuts begin. Rationale: While there was a technical recession in the first half of the year this was attributed to volatility in trade and inventories. Consumer spending, business capex and job creation are firm, and with inflation remaining stubbornly high and financial conditions not tightening as much as the Fed would like, more rate hikes are coming. But the 2023 global outlook is deteriorating while higher interest rates and the strong dollar are set to weigh on domestic activity, which is already facing a steep downturn in the housing market. We expect rate cuts next summer. Risk to our call: Two-way. If the labour market remains tight and inflation doesn't fall as quickly as we expect then rate hikes will continue for longer.  Conversely, if the economy reacts badly to rate hikes a deep recession will likely prompt a more rapid reversal in Fed policy. James Knightley European Central Bank Our call: A 50bp rate hike in September and another 25bp in October, followed by a long pause.  Rationale: The eurozone is facing a longer recession and financing conditions have already tightened significantly in recent weeks. The ECB will try to bring its policy rate to the lower end of the range for neutral rates as quickly as possible. However, we think that the ECB is still underestimating the risk and severity of a recession. As soon as the recession becomes more evident, the ECB will also turn more dovish. Any neutral policy rate is much lower in a recession than in a strong growth environment.  Risk to our call: The paradigm shift in many central banks and a high acceptance of a worsening recession is the price to pay to fight inflation. The risk is that the ECB will continue hiking way into the recession and would deliver a total of 150bp rate hikes until Spring 2023. Carsten Brzeski Bank of England Our call: A 50bp rate hike in September and November Rationale: For the same reasons as the ECB, we think the Bank of England is closer to the end of its tightening cycle than the beginning. That said, there is scope for further aggressive action in the near term. While core inflation should fall throughout next year, the jobs market remains tight and the Bank is worried about the risk of persistent wage inflation. We also think a large government energy support package looks increasingly inevitable, and we think that could provide further impetus for the BoE to keep hiking in the near term. The recent weakness in sterling will bolster the hawks' case, even if in practice this isn’t likely to move the needle for inflation all that much. Risk to our call: Two-way. A lack of government support could force the Bank to stop hiking sooner. Equally a 75bp rate hike in September shouldn’t be totally ruled out given other central banks' actions, and neither should the risk of Bank Rate hitting 3% later this year. However, that would make rate cuts more likely in 2023 James Smith Bank of Japan Our call: Bank of Japan will maintain an accommodative policy stance. Rationale: CPI will likely stay above 2.5% till the end of 2022, but the BoJ will downplay it as 'cost-push' driven inflation that will prove to be temporary. Labour conditions are expected to become tighter as labour shortages persist, but it is still questionable that this will lead to meaningful wage increases over the coming months. Even if USD/JPY rises above 140, it won’t be a reason for the BoJ to change its policy stance. Risk to our call: If signs of wage growth are detected then the BoJ may reconsider its policy stance, but that will become more likely when Governor Haruhiko Kuroda retires next April. Min Joo Kang    Source: https://think.ing.com/articles/monthly-central-banks-our-main-calls/?utm_campaign=September-01_monthly-central-banks-our-main-calls&utm_medium=email&utm_source=emailing_article&M_BT=1124162492 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 Unchanging Situation Of Bitcoin And Yesterday's The Fed Decision

The US Jobs Report Could Be A Negative Catalyst

Kenny Fisher Kenny Fisher 02.09.2022 13:35
Stock markets in Europe opened positively on Friday after what has been an otherwise rotten week, while Asia was fairly mixed ahead of the US jobs report. It will be interesting to see whether Europe can maintain the rebound today considering we’re heading into the weekend not certain that gas will start flowing through Nord Stream 1 again tomorrow. Grid data suggests it will but until the gas starts actually flowing, it remains a risk. That weekend risk may make investors a little nervous as we progress through the session and could lead to more caution as we approach the close. The US jobs report could also be a negative catalyst later in the session if it’s deemed strong enough to warrant more aggressive tightening from the Fed. We’ve seen a lot more risk aversion in the markets recently as Fed commentary has finally gotten through to investors. We’re still seeing remarkable resilience in the US data, particularly the labour market, even if some cracks are appearing elsewhere. While the NFP and unemployment will naturally attract the most attention initially, it’s the wages that could tip the balance at the central bank, with policymakers concerned about inflation becoming entrenched. Will Japan intervene as the yen hits a 24-year low? The yen has been back in focus in recent days, having fallen to a 24-year low against the dollar on Thursday, breaking above 140 in the process. This level has been speculated a lot about in recent months as being the point at which Japanese officials may be tempted to intervene in the markets and comments overnight could further fuel that, with one spokesperson warning moves are being watched with a high sense of urgency. That doesn’t appear to have happened yet and we’re not likely to see any shift from the Bank of Japan either if recent commentary is anything to go by. While inflation is currently above its target, that’s not expected to last and there’s seemingly little appetite to change course. That could mean further declines in the yen until intervention is deemed necessary, although the threat of such action could slow the decline as we’ve already seen. Treading water ahead of the jobs report Bitcoin has been treading water around $20,000 over the past week, perhaps with one eye on today’s jobs report. This is clearly a major level of support and a significant break of it could see further losses, with $17,500 the next major test being the level it bottomed at in June. Risk appetite in the markets has not been positive recently which has weighed heavily on bitcoin and other risk assets. The jobs report today could compound that if it feeds inflation fears and raises the odds of another 75 basis point Fed hike this month. 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 AUD/USD Lost After RBA Governor Remarks, The End Of An Era For The UK

The AUD/USD Lost After RBA Governor Remarks, The End Of An Era For The UK

Saxo Bank Saxo Bank 09.09.2022 09:11
Summary:  U.S. Treasury yields rose 6-7bps after the ECB hiked 75bps and Fed Chari Powell’s speech. U.S. equity markets were quiet and managed to finish the session moderately higher. Reserve Bank of Australia Governor Lowe said interest rates were not on a “pre-set path” as the economic outlook was uncertain. Crude oil bounced by 1%. In Japan, a meeting between the MOF, BoJ, and FSA sent signals that FX intervention remains on the cards. The European Union is holding an emergency meeting to discuss measures to tackle the energy crisis in Europe and China is scheduled to release CPI and PPI today. What is happening in markets?   Nasdaq 100 (USNAS100.I) and S&P 500 (US500.I)  U.S. stock markets closed higher in a choppy session, S&P 500 +0.7%, Nasdaq 100 +0.5%.  Trading was quiet after the well-anticipated ECB 75bp hike and Powell’s now consistent hawkish script.  The 6-7bp rise in bond yield did not move stocks.  VIX edged down further to 23.6. On the corporate front, T-Mobile (TMUS:xnas) announced a buyback program authorization for 7.5% of the company’s market cap and expected to complete the buyback by Sep 2023. U.S. treasuries (TLT:xnas, IEF:xnas, SHY:xnas) Following a 75bp hike by the ECB and Fed Chair Powell sticking to his hawkish stance in a speech yesterday, U.S. treasury yield jumped 6 to 7 bps across the curve.  Money market rates are pricing in a 85% chance of a 75bp hike on September 22.  Chicago Fed President Evans said the Fed “could very well do 75 in September” but his mind “is not made up” yet. The Treasury Department announced the size of next week’s 3/10/30-year auction at a total size of USD91 billon.  Hong Kong’s Hang Seng (HSIU2) and China’s CSI300 (03188:xhkg) Hang Seng Index underperformed its major Asian peers which advanced more than 1% across the board to continue its multi-session decline since the beginning of September and finished the day 1% lower.  The weakness in Tencent (00700.xhkg), -3.1%, Chinese developers, and energy stocks dragged down the benchmark index in Hong Kong.  According to filings to the stock exchange, about USD7.6 billion worth, or 2% of the market cap, of Tencent shares have been transferred to CCASS, the Stock Exchange of Hong Kong’s clearing and settlement system.  Prosus, Tencent’s largest shareholder holding 27.99% of shares outstanding, confirmed that it has transferred 192 million shares of Tencent to CCASS and is selling Tencent shares.  In June, Prosus (PRX:xams) announced that the company was going to offload its stake in Tencent to raise cash to buy back its own shares and Naspers’ (NPN:xjse) shares (Prosus’ parent) at a discount to NAV. The Chinese developer space was once again under selling pressure.  CIFI (00884:xhkg) tumbled 13.6% following credit agency S&P downgraded the long-term rating of the company’s senior unsecured debts by 1 notch to BB- from BB. Country Garden (02007:xhkg) plunged by 6.8%.  Energy stocks declined on sharp fall in crude oil price, CNOOC (00883:xhkg) -3.6%, PetroChina (00857:xhkg) -1.9%.  The Chinese automaker space was sold, Great Wall Motor (02333:xhkg) -4.7%, Geely (00175:xhkg) -3.1%, BYD (01211:xhkg) -3.0%, Li Auto (02015:xhkg) -3.0%, XPeng (09868:xhkg) -2.6%. After the Hong Kong market close, Bilibili (09626:xhkg/BILI:xnas) reported a larger than expected loss in 2Q2022 on the deterioration of gross and operating margins.  The company’s ADR plunged 15%.     USDJPY paid little heed to Japan’s three-party meeting USDJPY stuck close to 144-levels on Thursday despite stronger signs of concern from the Japanese authorities. The meeting between Japan’s MOF, central bank and FSA ended with some strong verbal signals that direct intervention remains on the cards, but even if that was to happen, it will only increase the volatility in the yen and cannot possibly reverse the move as long as the monetary policies of the US and Japan continue to diverge. EURUSD gained some bids in early Asian morning to rise to 1.002, but the move remains fragile especially with the emergency meeting scheduled for today. GBPUSD reversed the overnight weakness to rise to 1.1540 with dollar losing some momentum in early Asian trading hours.  Crude oil prices (CLU2 & LCOV2)  A slight recovery was seen in crude oil prices overnight despite the hawkish Fed rhetoric and a further surge in the dollar. Supply side dynamics remained in focus, with the EIA saying that crude inventories rose by 8.85 million barrels last week, while supplies dropped in the largest storage hub of Cushing. Gasoline inventories also gained, but there was no change to oil production. Putin warned that Russia will not supply energy to any nation that backs a US-led price cap on its crude oil sales. However, with WTI futures now priced at ~$83/barrel and Brent futures below $90, eyes are again on OPEC+ which hinted earlier this week the intention was to keep crude oil prices around the $100-mark. Demand concerns have picked up since the OPEC meeting due to widening China lockdowns and more aggressive central bank rate hikes.   Copper (HGc1) Copper is showing signs of stabilizing despite demand concerns from China as Covid restrictions continue to be tightened. Copper rose above $3.50 per pound overnight, as supply concerns remain top-of-mind with mining companies continued to struggle to meet their production targets with top producer Chile has seen its exports slump to a 19-month low due to water restrictions and lower ore quality - while demand from China, surprisingly is showing signs of strengthening as infrastructure push ramps up. Having found support last week at $3.36/lb, after retracing 61.8% retracement of the July to August rally, copper is currently staring at resistance in the $3.54 area where recent lows and the 55-day moving average merges. For a real upside and trend reversal to occur the price needs to break above $3.78/lb while a break below $3.36/lb could see the metal take aim at $3/lb.  What to consider? The Queen of England has passed away and Charles has taken the throne  It’s the end of an era for the UK with the passing of Queen Elizabeth, age 96. Some of the Queen’s key moments since reigning from the 1980s to today include: in 1986 Elizabeth became the first monarch to visit China. It was an important piece of Britain’s diplomatic effort as it prepared to return Hong Kong to Chinese control. In 2011, The Queen became the first British monarch to set food in Ireland in 100 years, with the trip being widely praised as a historic moment of reconciliation. In 2012 the Queen celebrated 60 years on the throne and in 2022 Elizabeth became the first and only British monarch to reach 70 years on the throne. Politicians from the Commonwealth and across the world paid tribute to the Queen. UK Parliament will pay tribute to Queen Elizabeth on Friday and Saturday. Australian Parliament will not sit next week.   ECB’s 75bps rate hike As was generally expected, the European Central Bank went ahead with a 75bps rate hike on Thursday, taking the deposit rate to 0.75%. President Lagarde said risks to inflation are on the upside and growth are on the downside, but did not rule out further tightening. The ECB raised projections for inflation (5.5% in 2023 now vs 3.5% earlier), lowered growth for 2023 (0.9% vs 2.1%), and 2024 (1.9% vs 2.1%) while raising growth for 2022 by a notch. Lagarde said that 75 bps was not the norm, but “moves will not necessarily get smaller” as policy was dependent on data and on a meeting by meeting basis, echoing Lane’s comments from last week. ECB’s Lane was however noted to be more hawkish yesterday than what his previous comments suggested. This keeps the door for another 75bps rate hike still open.  Fed Chair Powell stays in the chorus Fed Chair Jerome Powell stuck to the tune that the Federal Reserve members have been singing, suggesting a 75bps rate hike at the September meeting as inflation reins. He noted that the labor market is “very, very strong” and wages are elevated, while also signaling that growth will likely fall below trend. On inflation expectations, a key concern for Fed officials, the Fed chair said that today they are well anchored over the long-term, but the clock is ticking and the Fed has more concerns that the public will incorporate higher inflation expectations in the short-term. Fed’s Evans also hinted at a 75bps rate hike for September. With the chorus on inflation getting louder and market pricing for September being very close to a 75bps rate hike, a softer headline inflation print next week likely has the potential to usher in a relief rally. If, however, inflation remains high, we could see another leg down in equities.   Australia’s trade surplus halves as coal and iron ore exports fall from record highs. What next? Australia’s trade surplus almost halved in July, plunging from A$17.1b to an A$8.7b surplus, when the market expected the surplus balance to fall to just A$14.5b. It comes as exports of coal and iron ore fell from their record highs, dragging down total exports by 10%. Coal export earnings fell 17% with the northern hemisphere in peak summer, while iron ore export earnings fell 15% tarnished by China’s slowdown. Australian imports (covering outbound tourists) rose 5% with Aussies escaping the record cold winter to enjoy the European sun. The market responded to the drop in exports, with the Coal futures price falling to a 3-day low, losing 1.7%, taking the two-day loss to 7%, which pulls the price away from its record. For investors it’s a timely reminder, energy commodity prices are seasonally impacted, and could remain volatile before picking up later this year when we think peak buying is expected. Australian bonds and equities price in the RBA will be less aggressive, so it’s risk-on again RBA Governor Phillip Lowe sees a slower pace of rate hikes while conceding a sharp slowdown in global growth will make it hard to avoid a soft landing. The AUDUSD lost 0.4% after his remarks. While short-term rates as measured by the 3-year Australian bond yield fell 0.17% - supporting the risk assets rally. As such, the Australian Technology Sector surged to its highest level in a week. But sophisticated Australian investors seem skeptical that the RBA will slow the pace of hikes. Australian interest rate futures suggest rates could peak at 3.6% by mid-next year. We think the market would also be especially rate rises will slow as Australia’s Resources Minster was tapped for the second time to restrict Australian energy exports, as the nation is tipped to run out of energy in 2023. EU proposes five measures to curb gas demand and prices Ahead of Friday’s emergency energy meeting, European Commission President Ursula von der Leyen proposed five radical steps to curb costs and demand: 1) Smart savings of electricity by mandatory targets to reduce peak hour demand for electricity; 2) Cap on revenues of companies producing electricity with from low-cost sources such as wind and solar with profits being re-channeled to vulnerable people and companies; 3) Solidarity contribution from fossil fuel companies; 4) Liquidity support for energy utility companies in order for them to cope with elevated market volatility; 5) Cap on Russian gas revenues on the remaining 9% Russia supplies to Europe, down from a pre-war level around 40%. China’s PPI is expected to have risen as CPI remained stable in August PPI is expected to fall sharply to 3.2% (Bloomberg consensus) in August from 4.2% in July.  Base effect and a decline in coal prices in August could be factors contributing to the deceleration in producer price inflation.  CPI, however, is expected to edge up to 2.8% in August from 2.7% in July.  Analysts suggest that favourable base effect was offset by vegetable price increases amidst the heatwave. Bilibili reported below expectation earnings on margin compression   Bilibili (09626:xhkg/BILI:xnas) reported a worse than expected adjusted loss per share of RMB4.98 (Bloomberg consensus: loss per share RMB4.37, 2Q2021: loss per share RMB2.23). Revenue came in at RMB4.91 billion, largely in line with analyst estimates. The larger-than-expected loss came from disappointing margins.  Gross margin contracted to 15.3% from 16.4% in 1Q2022 and 22.4% in 2Q2021 due to the weak performance of the mobile game business (segment revenue -15% YoY).  Operating margin deteriorated to -39.4% in 2Q2022 from -33.9% in 1Q2022 and -20.9% in 2Q2021 which are attributable to higher general and administrative expenses +44% YoY) as well as research and development expenses +68% YoY).   The company’s revenue guidance of RMB5.6bn-5.8bn for 3Q was below market expectations.  A lender appointed receivers to siege Evergrande’s Hong Kong headquarters premises The Financial Times said that a lender had appointed receivers to siege the headquarters building of China Evergrande (03333:xhkg, suspended) and looked to force a sale of the premises.  The distressed developer’s Hong Kong headquarter has been pledged to secure a loan from a syndicate of lenders led by China Citic Bank International.  Evergrande has previously been served a winding-up petition and is scheduled to have a hearing on the petition at the High Court on 28 Nov 2022. Separately, the Wall Street Journal reports that a consortium of Chinese state-owned banks and private enterprises agreed to pay USD1.05 billion in a court-arranged auction for Evergrande’s 14.6% in Shengjing Bank, a regional bank based in Shenyang, Liaoning province. For a week-ahead look at markets – tune into our Saxo Spotlight. For a global look at markets – tune into our Podcast.     Source: APAC Daily Digest: What is happening in markets and what to consider next – September 9, 2022 | Saxo Group (home.saxo)
Has US Dollar Index (DXY) Potential To Reach 120.00?

USD (US Dollar): According To ING Economics It Seems To Be No Signs Of Fed Changing Its Approach

ING Economics ING Economics 09.09.2022 10:01
There is nothing in Fed Chair Jerome Powell's comments to suggest an imminent moderation in the pace of rate hikes. The need to 'act now' to get a grip on inflation in an environment where the economy is experiencing decent growth, strong job creation, and a likely rise in core inflation next week points to a third 75bp hike on 21 September Jerome Powell's comments clearly support a third consecutive 75bp interest rate hike Another 75bp in an environment of strong growth and rising core price pressures Federal Reserve Chair Jerome Powell’s comments to the Cato institute’s conference today on monetary policy are clearly supportive of a third consecutive 75bp interest rate hike on 21 September. There is no hint that he supports moderation, arguing that “we need to act now, forthrightly, strongly as we have been doing and we have to keep at it until the job is done”. There is also the usual mention of inflation expectations and the need to anchor them in order to ensure inflation doesn’t become ingrained. The latest data certainly backs the case for 75bp with business surveys looking robust, the labour market continuing to create jobs in significant numbers, and next week’s inflation numbers set to show core CPI accelerating to 6.1% from 5.9%. Moreover, the third quarter is shaping up to be quite a strong one, fully reversing the declines seen in GDP in the first half of the year. Inventories and net trade are swinging back and set to make decent positive contributions to headline growth. Meanwhile, consumer spending is being boosted by the lift in spending power from lower gasoline prices. High-frequency data over the Labor Day holiday show restaurant dining at record levels, while air passenger travel over the past weekend exceeded that of 2019 for the first time, so 3% growth looks to be on the cards. High-frequency data point to strong 3Q consumer spending Source: Macrobond, ING   Nonetheless, the deteriorating global outlook and weakening domestic housing market combined with the cumulative impact of policy tightening and the strong dollar means we think the Fed will moderate its hiking to 50bp in November and 25bp in December. Weaker wage pressure and more limited month-on-month increases in CPI thanks to lower import and other input costs would certainly help this argument. Rate cut chances remain high for 2023 Chair Powell has also reiterated the view that the market shouldn’t get too excited about pricing rate cuts next year, saying “history cautions strongly against prematurely loosening policy”. However, as the chart below shows, over the past 50 years, there is typically only a six-month gap between the last rate hike in a cycle and the first rate cut – not exactly a long gap. It seems to us to be more of an effort to nudge the longer end of the Treasury yield curve higher to ensure financial conditions remain tight. Fed funds rate: timeframe between last rate hike and first rate cut Source: Macrobond, ING   With recessionary forces intensifying, we expect inflation to fall relatively swiftly next year thanks to lower gasoline prices feeding through more broadly, weaker wage pressures and declining input costs combined with falling house prices depressing the rental components of CPI. We are currently pencilling in a rate cut in June with further easing through the second half of 2023. Read this article on THINK TagsUS Interest rates Federal Reserve 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 Fed Is Considering A Virtual Dollar (CBDC) And The Downward Trend Remains In The Bitcoin

Bitcoin: What's Next For The Leader Of The Cryptocurrency?

InstaForex Analysis InstaForex Analysis 09.09.2022 13:02
The calm in the financial markets is deceptive. Those who lost interest in bitcoin because it fell into the 5.4% trading range, the narrowest since October 2020, can eat their hearts out. The nature of the market is such that consolidations are replaced by trends, and vice versa. And the longer this or that asset is traded in a narrow range, the more explosive its further rally promises to be. Or, conversely, collapse. In the case of BTCUSD, the pendulum could have swung either way, but the fall in the US dollar inspired the token to surge. Looking at the peak of the leader of the cryptocurrency sector to the very bottom since mid-June, the "bears" rubbed their hands. In their opinion, the decline in miners' incomes to the lowest level in the last two years due to increased competition, increased electricity costs, and the crypto winter should have forced them to sell tokens to cover the costs. On the contrary, BTCUSD bulls pointed to the rise in the ratio of open interest in perpetual swap contracts for crypto assets to the number of coins held in reserves on exchanges, or the so-called leverage ratio, to record peaks. Despite bitcoin's 70% drop from its November highs, interest in it is still high. So, prices will rise, you just need to wait for the right moment. Dynamics of Bitcoin and Leverage Ratio The problem is that no matter how much the fans of crypto assets would like to live an independent life, it will not work. Big money has long entered the market, which perceive bitcoin as a risky instrument, and the fate of such assets depends on the Fed and its monetary policy. In this regard, the fall of BTCUSD against the backdrop of Jerome Powell's hawkish rhetoric in Jackson Hole and the growth of the pair's quotes on expectations of a slowdown in US inflation look logical. Comments from FOMC officials, determined to fight the highest prices in decades and willing to sacrifice the labor market and the economy to do so, raised the chances of a federal funds rate hike by 75 bps in September to 86%. Large banks added fuel to the fire. Goldman Sachs and Nomura have changed their forecasts for the trajectory of borrowing costs. They see them up 75 bps in September and by 50 bps in November, up 25 bps higher than previous ratings. The cycle of monetary restriction will certainly not end there. However, according to the market, the figure of 86% is too high. It will certainly fall if US inflation continues to slow down in August from 8.5% to 8.1%, as Bloomberg experts predict. This circumstance makes it possible to sell the US dollar and buy risky assets, including US stocks and bitcoin. The markets are again going against the Fed, which they managed to do momentarily in the summer. I believe that history will repeat itself, so the potential for a BTCUSD rally seems limited. Technically, on the daily chart, consolidation above fair value at 20,000 amplifies the risks of a pullback. Start selling the token on the rebound from resistances at 21,500, 22,300 and 23,150.       Relevance up to 10:00 2022-09-14 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/321276
In The Oil Market  Prices Are Rising Again And Gold Is Also Gaining

Crude Prices Are Rallying On Supply Risks, Gold Is Higher

Kenny Fisher Kenny Fisher 10.09.2022 15:00
As the world mourns the death of Her Majesty Queen Elizabeth II, world leaders pay tribute for her incredible service and leadership. The UK enters a 10-day mourning period that will see some events delayed or suspended. ​ The BOE announced they will push back their interest rate decision to September 22nd. UK train strikes will be delayed as three British trade unions will suspend their scheduled strike action. ​ The Office of National Statistics confirmed the upcoming economic publications are due to go ahead. ​ That includes UK trade, GDP, unemployment, inflation, housing, and retail sales data. Wall Street is finishing the week on a positive note as the dollar’s rally has run out of steam as optimism grows for inflation to continue to come down. Economists are slightly lowering their inflation forecasts and that could mean the Fed won’t have to take rates above 4%. Another round of hawkish speak from both the Fed’s Bullard and Waller was not able to derail today’s stock market rally. ​ ​ It is looking like traders are growing confident they will soon see the end of the Fed’s interest rate hiking cycle. ​ Supporting the risk-on narrative was softer-than-expected Chinese consumer and producer inflation data that could pave the way for more easing by the PBOC. Oil Crude prices are rallying on supply risks and as the dollar has tentatively peaked. Lately it has been mostly bad news for oil prices as demand concerns worsened given China’s deteriorating COVID situation, a surprise jump in stockpiles, and on expectations world leaders will continue to exhaust emergency measures to send energy prices lower. Energy Secretary Granholm said President Biden is considering the new releases from the US Strategic Petroleum Reserve (SPR). Russia President Putin’s threat to cut off all energy supplies is a growing risk as Ukraine recaptures territory. ​ The risk of some supply disruptions over the next few months remains elevated and that should help oil prices stay above the $90 a barrel level. Gold Gold is higher as the historic run higher in the dollar appears to have run out of steam. It seems Wall Street is getting comfortable with the idea of another 75-basis point rate hike by the Fed. ​ Fed’s Bullard supports a third straight 75-bp interest rate hike even if next week’s inflation reports show price pressures continued to ease. ​ Fed’s Waller also supports another significant rate hike this month. Gold is finding a home above the $1700 level and that could continue if investors continue to look beyond hawkish central bank speak. Gold’s fate could be determined after this next inflation report. ​ If consumer prices come in hotter-than-expected, gold might see selling pressure target the $1680 region. ​ A sharp deceleration with pricing pressures might only provide a modest boost higher for gold as policy makers. Bitcoin Bitcoin is welcoming the return of risk appetite and a falling US dollar. ​ The broad market rally has rejuvenated cryptos and that could continue if investors continue to look beyond hawkish central bank overtures and lingering recession risks. ​ ​ This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.
Summary Of The Week On Financial Markets

Summary Of The Week On Financial Markets

Ed Moya Ed Moya 11.09.2022 09:18
This week suddenly ends on a positive note as the S&P 500 broad market index, which started to climb on Wednesday, has lead the major stock market indicator to 4032 points, the highest since August 30. This is very strange considering all the negative news that could have affected the stock market this week. The European Central Bank (ECB) raised all interest rates by 75 basis points. This is the second time in the history of the single currency that such a move has been performed. The Federal Reserve’s (Fed) Chairman Jerome Powell confirmed the central bank will continue to do everything needed to bring inflation down to the 2.0% target. This kind of rhetoric is also being echoes by ECB President Christine Lagarde who has assured markets that the Bank is likely to take further bold steps to raise interest rates over the coming months. The message from these two bank leaders may enforce stocks to continue to move down.  However, investors found a reason to pull on the breaks and stop markets from another sell-off. Chicago Fed Bank President Charles Evans supported investors by saying that the next inflation report next week may point to how much the Fed could raise its interest rates this month. "If I saw inflation maybe cooling a little bit that's not going to change the fact that I still think we are going to need to top out at something like 3.5% to 4%, it's just that maybe we don't have to do it that soon," Evans said. Some investors were flooded with euphoria after crude prices fell by 16% over the last two month. It is clear that inflation may slow down significantly in August and perhaps prompt a less-than-expected Fed interest rate move.  It sounds more like wishful thinking as inflation is considerably above the existing level of interest rates for the Fed to pull the breaks on, even if prices slowed down in August. However, many investors are seen to support the idea and hope for stocks to recover. Even though some investors are holding onto hope, we should not exclude the possibility that a downside path of stock indexes could be a bit bumpy. The technical picture for the S&P 500 index is still negative as it is moving within an aggressive downside formation after it failed to climb above 4020 points on Thursday. This has now become a strong resistance level that may send the index back to the downside targets at 3850-3950 points. More negative drivers may send the index further down to the extreme secondary targets at 3600-3700 points, and even further down to heartbreaking 3000-3100 points.  In recent weeks, short positions at 70% of the targeted volume were opened at the average price of 4285-4290 points. The rest of the 30% could be opened once strong reliable downside signals emerge. The final downside target in the long-term is located at 2100-2300 points that could be reached by the end of 2022. The oil market made a huge step to the downside towards $75-85 per barrel of the Brent crude benchmark. Crude prices dipped down amid new anti-covid measures in China, unwinding global recession fears and a sharp rise of oil inventories in the United States. Brent prices slipped down to $87-88 per barrel, the lowest since January 2022, and are likely to continue down to the extreme targets at $50-65 per barrel that could be hit by November. In the short-term crude prices are less predictable making any entry points unreliable at the moment.  Gold prices are on a downside slide and they may last until the end of October. The primary scenario suggests prices may reach $1350-1450 per ounce by November. So, it would be reasonable to open short or small-short positions considering the current price movement at $1730 per ounce. The Euro was cheered on by the ECB’s decision to sharpen its interest rates hike, changing its formation to the aggressive upside with a primary target at 1.02500-1.03500. A reasonable correction to 1.00500-1.00800 is needed to open long positions. Once this correction is made the EURUSD could be interesting for long trades. GBPUSD also changed its formation to the aggressive upside with a target at 1.18000-1.18500. The pair needs to step back to 1.15300-1.15800 to be interesting to open long positions.
Will Bank Of Japan Remain Committed To Its Easy Policy?

Power Producers Need To Buy Carbon Permits, In China Loans To Households Remained Sluggish

Saxo Bank Saxo Bank 12.09.2022 10:01
Summary:  Ukrainian success in taking back significant territory from Russia over the weekend has driven a cautious further recovery in the euro and sterling at the open of trade this week. Elsewhere, yields have jumped higher, helping drive new yen weakness and taming risk sentiment as the US 10-year treasury benchmark trades near the cycle highs since June. Focus this week is on tomorrow's US August CPI release, the most important data point ahead of next week’s FOMC meeting.   What is our trading focus? Nasdaq 100 (USNAS100.I) and S&P 500 (US500.I) US equities Friday on a strong note up 1.5% and S&P 500 futures have extended their gains overnight touching the 4,100 level because before receding to around the 4,085 level in early European trading hours. The US 10-year yield continues to move higher trading at 3.34% and if it sets a new high for the recent cycle it will probably cause headwinds for US equities so watch the US bond market. Next big macro event is tomorrow’s US August CPI report which is expected to print –0.1% m/m suggesting inflation is beginning to cool. Hong Kong’s Hang Seng (HSIU2) and China’s CSI300 (03188:xhkg) Hong Kong, Shanghai, and Shenzhen are closed today for the mid-autumn festival holiday. Last Friday, Hang Seng Index soared 2.7%, snapping a six-day losing streak following China’s August inflation data surprising to the downside and raising hope for more monetary easing to come from the Chinese policymakers. Chinese property names rallied on market chatters about unconfirmed stimulus measures from policymakers to boost the ailing property sector. Ahead of the mid-autumn festival, catering stocks gained. CSI 300 climbed 1.4%, led by property, dental services, infrastructure, and digital currency.  Northbound inflows into A-shares reached USD2.1billion equivalent last Friday, the largest inflow in a single day since the beginning of the year. Ukrainian success on the battlefield drives EUR and GBP strength The surprise offensive and the re-capture of a key transport hub in the northeastern sector of the front after recent focus on operations in the south caught the market by surprise and has seen the euro and sterling rebounding versus the US dollar in early trading this week, with EURUSD trading to new local highs well clear of 1.0100 briefly overnight before edging back lower. Likewise, GBPUSD pulled north of 1.1650 before treading water back toward 1.1600. It will take some time and further developments to assess whether Ukraine can capitalize on its gains and this in turn triggers a new stance from Russia on its energy policy. JPY crosses back higher as yields rise The USDJPY correction on Friday inspired by somewhat stern language from Bank of Japan Governor Kuroda has mostly faded, as USDJPY bobs back above 143.00 overnight on US treasury yields challenging cycle highs. EURJPY pulled back close to the cycle high well above 144.00 overnight on hopes that the war in Ukraine is turning in the Ukrainians favour. New highs in USDJPY may bring more two-way volatility again if Japanese officialdom backs up its concern on the situation with market intervention (buying JPY). Crude oil (CLV2 & LCOX2) Crude oil starts the week in defensive mode with the focus staying with demand concerns amid continued lockdowns in China hurting demand from the world's top importer and a rapid succession of interest rates from major central banks negatively impacting the global economic outlook. Into the mix a US-backed plan to cap prices on Russian oil sales from December 5, a stranded Iran nuclear deal, strong demand for fuel products such as diesel at the expense of punitively high gas prices and a softer dollar. In addition, the collapse of Russian defenses in Ukraine and the response from Moscow will be watched closely. Monthly oil market reports from OPEC tomorrow and IEA on Wednesday should provide some further guidance on the supply/demand outlook. Brent’s current range: $92.75 and $87.25 US Treasuries (TLT, IEF) The 10-year US Treasury benchmark edged higher toward the local range high north of 3.3% overnight, with only the June peak at 3.50% remaining as the focus to the upside (this was the highest yield for the cycle since early 2011 and the run higher in yields in June coincided with the major low of the equity bear market this year. Tomorrow’s US August CPI number is the next key test for sentiment and yield direction, while the US Treasury will also auction both 3-year and 10-year treasury notes today and will auction 30-year t-bonds tomorrow. What is going on? France’s manufacturing production contracted in July According to the latest estimate released by the French Institute of National Statistics (INSEE), the manufacturing production decreased by a stunning 1.6 % month-over-month in July. It remains in expansion on a yearly basis (+0.2 %). Without much surprise, the drop is mostly explained by higher prices, especially higher energy prices. The INSEE does not forecast a recession in France this year. Nonetheless, growth is likely to decelerate very sharply in the coming quarters. The institute forecasts that growth will be around 0.2 % in Q3 and will be stagnant in Q4 2022. India’s rice export ban risk aggravating global food crisis After a ban on wheat exports earlier this year, India has now announced restrictions on rice exports, aggravating concerns of a global food crisis. Bloomberg reported India imposed a 20% duty on white and brown rice exports and banned shipments of broke rice. The new curbs apply to about 60% of India's rice exports and go into effect Friday. India’s rice output has been depressed due to the severe heatwaves, but also possibly to cap domestic price pressures. If these measures are duplicated by other key rice exporting countries like Thailand and Vietnam, there could potentially be a severe grain shortage globally, especially weighing on poor rice importing nations. We continue to see a threat of climate change to global agricultural output, which along with a prolonged energy crisis, suggested price pressure will stay in the medium-to-long term despite some cooling off from the recent highs. European carbon price drops as EU considers sale of permits from reserves The December ECX emissions contract (EMISSIONSDEC22) has fallen by around one-third since hitting a record high last month above €99 per tons. Given the current energy crisis, EU energy ministers are moving towards a deal to sell surplus permits from its Market Stability Reserve (MSR) in order to support a reduction in the cost of producing power and heating within the region. Power producers need to buy carbon permits to offset the polluting impact of using coal and gas over renewables. Occidental Petroleum shares rise on Berkshire accumulation In a filing on Friday, Berkshire Hathaway announced that it has lifted its stake to 26.8% in Occidental Petroleum. The move comes after the investment firm got regulatory approval for increasing the stake to over 50%. Berkshire’s move in Occidental Petroleum shares is seen as a move of confidence in the oil and gas industry as a much-needed industry for bridging the gap during the green transformation. Semiconductors are in focus as the US is expected to announce more curbs on exports The US Commerce Department is expected to publish new regulations curbing exports of semiconductors to China with companies such as KLA, Lam Research, and Applied Materials likely being impacted by the upcoming regulation. The move by the US further confirms the deglobalisation under the rule of self-reliance applied by increasingly more countries. China’s medium to long-term corporate loans picked up in growth  Over the past months, Chinese policymakers instructed policy banks and gave window guidance to commercial banks to extend credits to support infrastructure construction and key industries of the economy. Some results showed up in the August loan data which recorded a growth of 16% m/m annualized in the outstanding medium to long-term loans to the corporate sector. The amount of new medium to long-term loans to corporate was RMB 735bn in August versus RMB 346bn in July and RMB 522bn in August 2021. Loans to households remained sluggish. PBoC issues a list of 19 systemically important banks The People’s Bank of China and the China Banking and Insurance Regulatory Commission issued a list of 19 systematically important banks.  These 19 banks will face between 0.25% and 1% higher minimum capital requirements and additional leverage requirements. They are also asked to prepare contingency plans for major risk events. These 19 banks are Industrial and Commercial Bank of China, Bank of China, China Construction Bank, Agricultural Bank of China, China Minsheng Bank, China Everbright Bank, Ping An Bank, Hua Xia Bank, Ningbo Bank, China Guangfa Bank, Jiangsu Bank, Bank of Shanghai, Bank of Beijing; China CITIC Bank, China Postal Savings Bank, Shanghai Pudong Development Bank, Bank of Communications, China Merchants Bank, and Industrial Bank. The CPC is set to amend the party constitution at its upcoming national congress The Political Bureau of CPC Central Committee said in a readout last Friday that the Communist Party of China (CPC) is set to “work out an amendment to the Party Constitution that facilitates the innovative development of Party theories and practices and meets the need of advancing the great new project of Party building in the new era” at the CCP’s national congress to convene starting on October 16.  It further elaborates that “the latest adaption of Marxism to China's context and new circumstances will be fully epitomized and so will the new ideas, new thinking and new strategies of governance developed by the CPC Central Committee since the Party's 19th National Congress in 2017. What are we watching next? The Bank of England (BoE) will need to go big on 22 September The meeting initially scheduled for this week is postponed following the Queen Elizabeth II. Last week, both the Bank of Canada and the European Central Bank hiked their benchmark interest rate by 75 basis points. All eyes are turning to the BoE now. Pressure is mounting for the BoE to go big this week – meaning a 75-basis points hike. In August, the central bank hiked rates by 50 basis points to 1.75 %. Despite prime minister Liz Truss’s new anti-inflation plan (which will likely lower the peak in inflation), we think the BoE will need to show its commitment to fight inflation. The Bank forecasts that UK CPI will increase to 13.3 % year-over-year in Q4 2022. But the peak in inflation is only expected in 2023. This means that the cost of living will continue increasing in the short term, anyhow. Fed speakers stay hawkish before the blackout period begins and ahead of US CPI release tomorrow Fed rate hike expectations have picked up strongly since Jackson Hole, and we have heard an extremely unanimous voice from the Fed speakers since then. Some of them have clearly made the case for a 75bps rate hike in September, with Bullard on Friday even saying that Tuesday’s CPI report is unlikely to alter the incoming 75bps rate hike in September. Governor Waller leaned hawkish as well, but did not specify the size for September’s decision, but a “significant” hike still points to that. Esther George stayed away from guiding for individual meetings but made the case for sustained rate hikes. Ethereum merge The second-largest cryptocurrency, Ethereum, is scheduled to undergo a major upgrade this week (estimated on Thursday) which, if successful, will fundamentally change the way the cryptocurrency is working. It will go from the computationally intensive proof-of-work consensus to the more energy-friendly proof-of-stake, as well as introducing a mechanism to limit the inflation in Ethereum. The crypto community is looking very much forward to this upgrade, although some are concerned about the security in the new framework. Earnings to watch Today’s key earnings release is Oracle which a better-than-expected earnings result on 13 June surprising the market on EPS by 12% as the legacy database and software maker is gaining momentum in its cloud offering. Analysts expect FY23 Q3 (ending 31 August) revenue growth to accelerate to 18% y/y, which includes its recent acquisition of Cerner in the health care sector, which is impressive for the previously low growth company despite some of the growth being driven by acquisitions. If the outlook remains strong a longer-term repricing of the company’s valuation could be in the making. Today: Oracle Tuesday: DiDi Global Wednesday: Inditex Thursday: Polestar Automotive, Adobe Economic calendar highlights for today (times GMT) 0730 – ECB's Guindos to speak 0800 – Switzerland Weekly SNB Sight Deposits 1200 – ECB’s Schnabel to speak 1530 – US 3-year Treasury auction 1700 – US 10-year Treasury auction 2100 – New Zealand Aug. REINZ House Sales 0030 – Australia Sep. Westpac Consumer Confidence 0130 – Australia Aug. NAB Business Conditions/Confidence Follow SaxoStrats on the daily Saxo Markets Call on your favorite podcast app: Apple  Spotify PodBean engraver Source: https://www.home.saxo/content/articles/macro/market-quick-take-sep-12-2022-12092022
The US Yields And The US Dollar Likely Can Move In The Same Direction

The US Economic Data Has Been Holding Up Strongly, Risk Of Stagflation In Europe And UK

Saxo Bank Saxo Bank 12.09.2022 10:10
Summary:  While the USD momentum has ruptured in the last few days due to increasing hawkishness of the European Central Bank and a strong verbal intervention by the Japanese authorities, there is potentially more room for the US dollar to run higher as Fed’s hawkishness can still outpace other global central banks. We need risks on Europe and China become more manageable, or a stronger opposition from non-US officials, or the Fed’s acceptable of a higher inflation target to really call it a top in the US dollar. It is no surprise that the US dollar hit a fresh record high on the back of aggressive tightening by the Fed as well as safe-haven flows from global economic deceleration concerns. The greenback reached post-Plaza highs, with the DXY index rising above 110, the highest levels since June 2002. However, the tide turned at the end of last week, possibly as other major global central banks upped the ante on rate hikes as well. The European Central Bank (ECB) raised rates by 75bps despite clear risks of a recession, and there was also chatter that the ECB could consider quantitative tightening by year-end. Meanwhile, Japanese authorities grew concerned about the weakness in the yen, and gave out stronger verbal guidance in yen’s defence. On the geopolitics as well, there were reports that Ukraine surprisingly recaptured a key northeastern city from Russia and is also making advances in the south, so there are talks that this could be a turning point in the war. That potentially reduced safe-haven flows to the dollar, and boosted the EUR and GBP. This week, however, brings the focus back on the US and the Fed. Tuesday’s US CPI data is the last data point of note before the Fed meets next week. A 75bps rate hike is baked in for the decision due on September 22. A positive surprise on US CPI may mean further upward repricing of Fed’s expectations with the terminal rate pushing above the 4% mark next year and easing expectations being pushed out further to late next year or 2024. That will support further gains in the dollar, with US yields running higher. But a strong USD is not always favourable. Corporate earnings take a direct hit from the rising dollar, given that most US companies generate a substantial part of their earnings outside the US. While most companies apply some FX hedging strategies, historically large upward swings in the USD have led to negative earnings revisions with a 9-12 months lag. The US also has a broader strategic objective to expand its manufacturing sector, and a strong US dollar could bite into the competitiveness of the sector. But for now, we do not see enough reasons for the dollar rally to cease or turn. The macro environment where the Fed acknowledges and is ready to take action further to slow US demand and bring inflationary pressures into balance suggests further gains for the dollar remain in store, atleast into the end of 2022 or into early 2023. A few things need to change before we can call it a top in US dollar: Fed has to slow down the pace of rate hikes, with possible recession on the cards or a capitulation in equities. The US economic data has been holding up strongly and there is no sign yet of a capitulation in equities even as the sentiment turned overly bearish last week. On a relative basis, there is still more reasons to believe that the tightening cycles for ECB and BOE may be repriced lower, while the Fed will need some more upward repricing. Risk of stagflation in Europe and UK needs to ease. The EU emergency summit did not see consensus build on securing energy supplies and a tough winter is still ahead. There has been some respite on the military front, but that can remain volatile and likely to result in further pressure from Russia on European gas supplies. Meanwhile, China needs to part with its zero covid policies, which is unlikely to happen before next year at least. In addition to the covid policies, China’s property sector overhang and resultant confidence deficit suggests more CNY pressures in the pipeline that defers to a further bullish USD trend. The People’s Bank of China seems to be happy with a controlled CNY depreciation. Other non-US officials need to start getting concerned about the weakness in their currencies. The biggest loser on the G10 board this year has been the Japanese yen. Japanese authorities have shown some concern about the weakness in the yen, but we only saw a mild recovery in the Japanese yen. The yield differentials between US and Japan will continue to underpin further gains in USDJPY. Even if the Japanese authorities were to directly intervene, it will only increase the volatility. The only catalysts for the yen to reverse its losses is lower US yields or Bank of Japan tweaking its yield curve control policy. A change in Fed’s inflation target to 2-3% in the medium-term. That could make the USD turn stick better without the need for quantitative easing. How to get exposure to the US dollar? To get exposure to the US dollar, one can consider the following instruments: Directly getting exposure to the Dollar Index through futures (DXU2) or CFDs (USDINDEXSEP22) Through ETFs such as WisdomTree Bloomberg U.S. Dollar Bullish Fund (USDU:arcx) or Invesco DB USD Index Bullish Fund (UUP:arcx) or BetaShares US Dollar (USD:xasx)     Source:https://www.home.saxo/content/articles/forex/us-dollar-is-it-time-to-call-a-top-12092022
The Unchanging Situation Of Bitcoin And Yesterday's The Fed Decision

Expectations Of Fed Actions And Their Impact On The Currency Market

InstaForex Analysis InstaForex Analysis 12.09.2022 10:59
World markets closed higher last week, indicating that sellers are inactive ahead of incoming US news and Fed meeting next week. The main reason was the ECB meeting, at which the key interest rate was raised by 0.75% to 1.25%. Another factor could be the statements of both Christine Lagarde and Jerome Powell, which once again hinted that central banks would act aggressively when raising rates. However, some believe that the Fed will not be able to withstand pressure, so they will take a pause in rate increases. They said the central bank will act only when consumer inflation in the US slows down. Forecasts already say CPI is likely to decline from 8.5% to 8.1% y/y, then from 0% to -0.1% m/m. If the data comes out lower than expected, the Fed will raise rates by only 0.25% in October. In this case, a slowdown in the sale of government bonds and a continuation of the weakening of dollar can be expected. Also, the rally in stocks that began last week may continue, which will spur the growth of risky assets, including euro. Forecasts for today: EUR/USD The pair is trading below 1.0110. Overcoming this mark may push the quote towards 1.0200. USD/JPY The pair is rising, thanks to positive market sentiment. This may lead to a further increasefrom 143.65 to 145.00.   Relevance up to 08:00 2022-09-14 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/321372
The US Dollar Keeps Growing And Is It Thanks To Fed's Policy?

The US Dollar Keeps Growing And Is It Thanks To Fed's Policy?

InstaForex Analysis InstaForex Analysis 12.09.2022 11:17
Former US Treasury Secretary Lawrence Summers said dollar has more room to grow given a number of fundamentals behind it. He expressed skepticism over the effectiveness of any intervention to turn the tide for yen. In a statement, Summers stressed that the US has a huge advantage in not being dependent on "outrageously expensive foreign energy." He noted that Washington has taken a stronger macroeconomic response to the pandemic, and that the Federal Reserve is now tightening monetary policy faster than its counterparts. So far, the Bloomberg Dollar Spot Index is up about 11% year-to-date, hitting a record high this week. Dollar reached its highest level against euro since 2002 on Tuesday - 0.9864, while it reached the highest level since 1998 against yen on Wednesday - 144.99. Yen has depreciated faster than euro, causing a more-than-19% fall against dollar this year. This prompted increased warnings from Japanese officials, with Bank of Japan Governor Haruhiko Kuroda meeting with Prime Minister Fumio Kishida to discuss latest concerns on Friday. Japanese officials are not ruling out options as market participants discuss the chances of intervention to buy yen and sell dollars. Japan hasn't done this since 1998, when it teamed up with the US - while Summers was deputy treasury secretary - to help stem the yen's fall. For its part, the US Treasury Department insisted on its unwillingness to support any potential intervention in the forex market to stop the depreciation of yen. Summers stressed that the more fundamental issue for yen is the interest rate adjustments in Japan, both short-term and long-term. The Bank of Japan maintained a negative short-term interest rate, as well as a 0.25% yield cap on 10-year bonds.  Go to dashboard       Relevance up to 14:00 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/321348
Has US Dollar Index (DXY) Potential To Reach 120.00?

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

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

Can Prices Of The EUR/USD And The GBP/USD Pairs Stay Steady?

InstaForex Analysis InstaForex Analysis 13.09.2022 10:10
The only thing investors are worried about right now is the extent of the European Central Bank and Federal Reserve's rate hikes. That was the reason for the noticeable growth of the euro, which, due to its scale, pulled up other currencies as well—firstly, the pound. The reason for this was the words of ECB Vice President Luis de Guindos, who almost directly stated that the refinancing rate will be raised again by 75 basis points at the next board meeting. The reason for such aggressive actions of the European Central Bank is the growing inflation. Most likely, the dollar will continue to lose its positions today. The reason for this will be inflation. According to forecasts, US inflation should slow down from 8.5% to 8.1%. That is, inflation is slowing down for the second month in a row, which gives the Fed a reason to reduce the rate of interest rate growth. So there may be a situation where interest rates are rising quite strongly in Europe but much slower in the United States, if the American regulator does not stop this process at all. Just a few months ago, the situation was diametrically opposite, and it was the Fed that was actively raising the rate, and the ECB was only considering the possibility of tightening monetary policy. And this led to a serious rise in the dollar. Now it is quite possible to talk about a U-turn. Inflation (United States): The EURUSD currency pair locally jumped to 1.0200 during an intense upward movement. This move resulted in overheating of long positions in the short term, resulting in a technical pullback in the market. A stable holding of the price above 1.0150 allows the subsequent growth of the euro with a breakout of 1.0200. The GBPUSD currency pair has a similar dynamics, where the quote has firmly fixed above the level of 1.1650. With the upward mood on the market, a subsequent increase in the value of the pound sterling in the direction of 1.1800 is not excluded, where stagnation/pullback is already possible.   Relevance up to 20:00 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/321509
Switch Splatoon 3 Broke All Previous Sales Records, The Closer To Winter The More Visible Crisis

Switch Splatoon 3 Broke All Previous Sales Records, The Closer To Winter The More Visible Crisis

Saxo Bank Saxo Bank 13.09.2022 13:42
Summary:  Equities extended their gains yesterday closing a winning streak over four trading sessions as we see clear signs that the market across equities, bonds, and currencies are positioning itself for a weaker than estimated inflation print in August. If the market gets want it wants in the form of a lower core inflation rate compared to July and hourly wages are not surprising to the upside, then there is enough room and energy for US equities to push even higher with the 4,200 level in S&P 500 futures being the big level to watch. In today's equity note we also cover Nintendo's record sales of its newest Switch game Splatoon 3 pushing its shares 6% higher in Japanese trading. US equities extend momentum ahead of CPI print S&P 500 futures gained another 1.5% yesterday extending the winning streak to four sessions and the good mood continues today ahead of the US August CPI print later today at 12:30 GMT with the index futures trading around the 4,145 level. It is very clear that the market is positioning itself for risk-on in the expectation that August inflation came in lower than current consensus by economists. The current estimates for the headline and core CPI m/m are -0.1% and +0.3% respectively telling the story of food and especially energy costs coming down from their peaks, but the core CPI will continue to tell a story of sustained inflationary pressures outside the volatile commodity markets. If US inflation indeed was lower than consensus in August then our best guess is that there is enough room and momentum to extend S&P 500 futures to around the 4,200 level. The medium outlook for inflation will not change today regardless of the inflation figure. The US will not be able to continuously releasing their oil reserves and as the winter approaches the energy crisis will continue to haunt the US, European, and Chinese economies. Outside the inflation figure today we also get hourly wages figures for August and central bank literature indicates that nominal wage growth is a key driver of inflation dynamics in the future, so we could get a situation today with a weaker than estimated inflation print, but higher than estimated hourly wages causing the market to price a more hawkish policy rate trajectory for 2023. In any case, today’s inflation and wage reports will be key for sentiment in equities in the weeks ahead. Nintendo is running ahead of forecasts The gaming industry has had a tough 2022 with our Saxo gaming theme basket covering the industry being down 27% year-to-date driven by many factors such as reopening of the economy after the pandemic, iOS change policy on privacy limiting online advertising targeting, cost-of-living crisis, and higher interest rates compression equity valuations in the gaming industry. But inside the dark clouds there is one bright story and that is Nintendo. The Japanese gaming and console developer announced today that its newest game to its Switch console Splatoon 3 has beaten all previous records selling 3.45mn units in its first week. Shares reacted in today’s session gaining 6%. Nintendo’s performance is continuing a long series of successes for the company exceeding analysts estimates. It looks like the company can defy the economic and market gravity extending its gains to a new all-time time high. Time will tell whether investors are agreeing about the positive outlook. Analyst estimates on revenue at 0.7% revenue growth in the current fiscal year ending 31 March 2023 might be too negative. Nintendo has been one of the most successful gaming companies over the past 10 years with a total return of 21.5% annualized over this period. Source: https://www.home.saxo/content/articles/equities/us-cpi-print-to-dictate-sentiment-nintendo-shines-with-splatoon-3-launch-13092022
The Federal Reserve (Fed) Is Facing The Consequences Of The Rising Inflation

USA: Core Inflation Print Plays In Favor Of A 75bp Fed's Move

ING Economics ING Economics 14.09.2022 10:10
Gasoline prices pulled headline inflation down to 8.3% YoY, but it was a smaller decline than hoped as housing, medical costs and vehicle prices lifted the core rate to 6.3% from 5.9%. This firmly backs a 75bp rate hike next week and the market now anticipate a terminal rate in the 4-4.25% range, but there are still strong reasons for inflation to fall sharply Medical costs helped to lift core inflation in the US 8.3% Annual US inflation   Housing, medical and autos keep core pressures elevated US consumer price inflation has certainly surprised on the upside and heighted the chances of the Federal Reserve hiking to an even higher terminal interest rate. The market (and ourselves to be fair) were looking for headline inflation to slow from 8.5% to 8%, but for lagged effects of house price gains to push up rents and move core inflation to 6.1% from 5.9%. Instead we got readings of 8.3% and 6.3% respectively. Housing costs were indeed strong with the rental components rising 0.7%, but utility payments also increased 1.5% while new car prices rose 0.8% and used car prices fell “only” 0.1%. There had been some talk that new models and promotions would have generated a lower figure while second-hand auction prices had pointed to a larger decline. Other goods and services were also firmer than anticipated, rising 0.7% month-on-month with medical care services rising 0.8%. The 4.6% month-on-month decline in airline fares and the 10.6% drop in gasoline prices were the main area of softness, reflecting broader energy cost declines. US consumer price inflation with ING's forecasts Source: Macrobond, ING The Fed has more work to do Clearly this outcome throws out any talk of the Fed potentially surprising with a 50bp hike next week, but it isn't calamitous enough to see a big push for 100bp – at the time of writing the market is pricing 80bp, up from around 72bp before the report’s publication. We are sticking with the 75bp call. It also means the Fed won't be particularly explicit in any guidance following next week's Federal Open Market Committee (FOMC) meeting. Nonetheless, the breadth and stickiness of inflation pressures has seen the market shift its expectations for the terminal rate up to 4-4.25% from the 3.75-4% range before the release. We are going to stick with the 3.75-4% call for December – a 50bp hike in November and a final 25bp move in December. But price pressures will subside On the activity side the external environment of a European energy crisis, a China slowdown and a strong dollar combined with ongoing interest rate hikes domestically and a slower housing market raise concerns about the growth story heading into year end. On the inflation side we feel that the weaker activity backdrop will dampen corporate pricing power and lead to a squeeze on profit margins. Indeed, the National Federation of Independent Businesses (NFIB) survey released this morning suggests, in the small business sector, that inflation pressures are already softening with a clear drop in the proportion of companies looking to raise their prices further. NFIB prices and price plans point to lower CPI readings ahead Source: Macrobond, ING   Furthermore, the drop in both market and consumer inflation expectations is clearly a positive development as it suggests confidence in the Federal Reserve’s ability to get inflation back to target next year and helps to diminish fears of a 1970s style wage-price spiral. Officials repeatedly state that expectations remain anchored and there are clear signs of success here. Inflation expectations are normalising Source: Macrobond, ING Still targeting 2% CPI by end-2023 With the outlook for the housing market deteriorating, we expect to see home prices move lower over the next 6-12 months, which will help to depress the rental components (that make up a third of the inflation basket). Meanwhile, supply chain improvements and lower used car prices will also be key factors that contribute to slower inflation next year. Add in weaker commodity prices, squeezed margins and the effects of dollar strength and we still see a strong chance that inflation hits 2% by the end of 2023. Read this article on THINK
Podcast: US Dollar (USD) Keeps Rising | A look At The 10-year US Treasury

As A Result Of The Fight Against Inflation, The Appetite For Risk Has Decreased

InstaForex Analysis InstaForex Analysis 14.09.2022 11:59
Euro and pound collapsed as inflationary pressure in the US jumped again. Risk appetite noticeably fell because the Federal Reserve is likely to continue its aggressive increase of interest rates in order to curb inflation. This may occur as early as next week, during the September meeting of the central bank. In fact, in the most recent speech of Fed Chairman Jerome Powell, another 75 basis point rate hike is said to be possible, following the increases in June and July. He said the decision will depend on the data collected. Chicago Fed chief Charles Evans, who in the past has been dovish, also noted that a soft landing could be achieved for the economy without triggering a recession. He reasoned that unemployment is now 3.7%, so the central bank will be able to meet the targets and keep it at about 4.5% by the time the fight against high inflation is finished. He added that the danger of excessive tightening of policy will increase only when rates reach 3.5%. Of course, rising inflation is not only a concern for the Federal Reserve, but also for the Biden administration as his Democratic Party moves closer to the midterm congressional elections. High gas and food prices earlier in the year have seriously undermined the president's popularity and the Democrats' prospects for maintaining control of Congress. Talking about the forex market, a collapse was seen in EUR/USD, which forces buyers to cling to 1.0010. Only its breakdown will lead to a rise towards 1.0040 and 1.0090, or to 1.0120. In case of a further decline, sellers will become more active in the market, which will result in a price decrease towards 0.9880 and 0.9810. In terms of GBP/USD, quotes fell below the 15th figure, indicating the sellers'persistence to return to the September lows. Only the return to 1.1560 will prompt a rebound towards 1.1610 and 1.1660, or possibly 1.1720. If pressure continues, the pair will drop below 1.1460 and head towards 1.1405.     Relevance up to 09:00 2022-09-15 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/321656
The Situation Around The World Force  Investors To Keep Precious Metals In Portfolios

The Gold (XAU/USD) Has The Wrost Conditions, The Bulls Can Show Weakness

InstaForex Analysis InstaForex Analysis 14.09.2022 12:17
The "believe it or not" game ended badly for most financial assets, which turned a blind eye to the "hawkish" rhetoric of Fed officials. Yes, most of them did not indicate how much the Central Bank is going to raise the federal funds rate in September, by 50 or 75 bps, but the words that the work has not been done yet deserve attention. Stock markets and gold did not believe the Fed and paid the price. Only the Treasury market turned out to be right—the Fed does not throw words into the wind. The slowdown in consumer prices from 8.5% to 8.3% in August was more modest than the 8% predicted by Bloomberg experts. Core inflation, on the other hand, accelerated faster than their estimates, which was the main driver of the worst peak in XAUSD since mid-August. Then, too, the inflation data knocked out the bulls. History doesn't repeat itself, it rhymes. The slowdown in inflation expectations from the New York Federal Reserve for the coming year from 6.2% to 5.7%, for three years from 3.2% to 2.8% and for five years from 2.3% to 2%, coupled with an increase in nominal rates on US Treasury bonds, lead to an increase in real yields to the maximum levels from 2018. Dynamics of real yields of US bonds If four years ago, after several increases in the federal funds rate, the Fed found financial conditions too tight and marked a dovish turn, now it will not do this. "Don't let inflation fool you," FOMC member Christopher Waller said ahead of the CPI data release. In order to reset the rate of monetary restriction, several reports are required to convince the underlying indicator to confidently head towards the 2% target. The August statistics show the opposite. High inflation is taking hold in the US economy, requiring new firepower from the Fed. CME derivatives give a 35% chance of a 100 bps increase in the federal funds rate in September, finally discarding the idea of 50+ bps. The market believes borrowing costs will rise to 4.3% in early 2023. The 4.5% level, which previously seemed unrealistic, is now widely discussed among investors. Previous FOMC forecasts included 3.8% at the end of 2022, but it is likely to rise in September, which will be good news for the US dollar and bad news for gold. The Fed's aggressive monetary tightening, leapfrogging nominal and real Treasury yields, and the USD index near 20-year highs are the worst environment imaginable for XAUUSD. The inability of the precious metal to cling to $1,700 an ounce will be evidence of the weakness of the bulls and will open the way for it in the direction of $1,600. Technically, on the daily chart, quotes for the third time in a row over the past couple of weeks have approached the lower limit of the fair value range of $1,692–1,754 per ounce. A break of support at $1,692 will increase the risks of implementing the target by 161.8% according to the AB=CD pattern and will become the basis for building up previously formed shorts.   Relevance up to 09:00 2022-09-19 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/321660
Bulls Again Pushed The US Dollar To Japanese Yen (USD/JPY) Pair

The USD/JPY Pair Retreated From The High, Awaiting For PPI Report

TeleTrade Comments TeleTrade Comments 14.09.2022 12:52
USD/JPY flirts with daily low, around 143.00 mark amid chances of BoJ intervention   USD/JPY meets with a fresh supply and retreats sharply from the 145.00 neighbourhood. Jawboning by Japanese authorities points to an imminent intervention and boosts the JPY. The emergence of some selling around the USD also contributes to the intraday downfall. The USD/JPY pair faces rejection near the 145.00 psychological mark and retreats from the vicinity of a 24-year high retested earlier this Wednesday. The downward trajectory extends through the first half of the European session, though the pair manages to rebound a few pips from the daily low and is currently placed just above the 143.00 mark. A combination of factors fails to assist the USD/JPY pair to capitalize on the previous day's post-US CPI strong rally of over 300 pips. The Japanese yen strengthens across the board amid jawboning by Japanese officials and chances that the Bank of Japan (BoJ) may step in to arrest a freefall in the domestic currency. This, along with the emergence of some US dollar selling, exerts downward pressure on the major. That said, a recovery in the global risk sentiment - as depicted by a generally positive tone around the equity markets - could cap gains for the safe-haven JPY. Apart from this, a big divergence in the monetary policy stance adopted by the Japanese central bank and the Federal Reserve supports prospects for the emergence of some dip-buying around the USD/JPY pair. The BoJ remains committed to continuing with its monetary easing. In contrast, the US central bank is expected to keep raising interest rates at a faster pace to tame inflation. The bets were reaffirmed by the stronger US CPI report on Tuesday. The markets quickly started pricing in the possibility of a full 1% rate hike at the next FOMC meeting on September 20-21. This is evident from a fresh leg up in the US Treasury bond yields, which favours the USD bulls and should lend support to the USD/JPY pair. Nevertheless, the fundamental backdrop remains tilted firmly in favour of bullish traders. Hence, any subsequent decline could still be seen as a buying opportunity and remain limited. Market participants now look forward to the US Producer Price Index (PPI), due for release later during the early North American session. Apart from this, the US bond yields and the broader risk sentiment should provide some impetus to the USD/JPY pair.
Report Results And Their Impact On The Market And Decisions Of The Fed And Bank Of Japan

Report Results And Their Impact On The Market And Decisions Of The Fed And Bank Of Japan

Saxo Bank Saxo Bank 14.09.2022 13:28
Summary:  The core US August inflation data shocked the market as prices reportedly rose at twice the expected rate in August at the core. This triggered a massive spike back higher in the US dollar, with the market caught on the wrong foot and suddenly forced to entertain the risk of a 100 basis point rate hike from the Fed at next week’s FOMC meeting. Overnight, the Bank of Japan and Japanese Ministry of Finance upped the ante on intervention risks, tempering the rise in USDJPY. FX Trading focus: Core CPI shocker from the US resets the USD. Beware the BoJ. The headline US CPI data came in slightly above expectations, with a year-on-year reading of 8.3% vs. 8.1% expected and a month-on-month reading of +0.1% vs. -0.1% expected, the latter a solid surprise given sharp drops of late in gasoline prices. But the real shock was the core Ex Food and Energy inflation reading of +0.6% month-on-month, twice what was expected. This triggered an enormous slide in risk sentiment as the market rushed to price the risk that the FOMC might hike as much as 100 basis points next week. As of this morning, nearly 85 basis points of tightening are priced in the market for next meeting. The Fed doesn’t like to surprise the market, so if that builds a bit higher rather than receding back closer to 75 basis points on its own accord by early next week, the Fed will need to send out the WSJ’s Timiraos to pen an article guiding for 75 basis points if it wants to avoid shocking the market. There are a number of good reasons that the market was looking for a softer print yesterday, and this one data point is not enough to suggest that inflation will continue at the run-rate suggested by the August CPI data point, but as is readily evident, it had changed the odds on the size of next week’s hike, the guidance in the wake of that hike in terms of the monetary policy statement and the Fed’s own macro-economic projections. To get follow-on USD strength here, the next data points of note are tomorrow’s US August Retail Sales and weekly US initial jobless claims. I lean for the risk of a stronger than expected Retail Sales data point due to the psychological boost of gasoline prices having dropped so precipitously from their June highs and as millions of US consumers saw their student debt loads drastically reduced by the Inflation Reduction Act that was passed mid-month. As for the weekly claims, these seem to be in a new declining trend after rising into the early summer period from record lows (adjusted for population) earlier in the year. The Bank of Japan and Japanese Ministry of Finance, as I discuss below, may make life difficult for FX traders. Chart: AUDUSDInteresting to note that the USD reaction was most violent against some of the traditional risk-correlated currencies like AUD and NZD, with AUDUSD suddenly poking down close to cycle lows this morning, or at least below the lowest daily close of the cycle at one point this morning. To get new lows, we’d likely need to see the weak risk sentiment persisting her and a test of the June market lows, together perhaps with the Fed delivering a 100 basis point hike next week and US 10-year yields moving above the 3.50% cycle high from June (this morning trading at3.43%.) The recent price action cemented the 0.6900+ area pivot high as the key tactical resistance of note. Australia reports employment data tonight. The Bank of Japan carried out a “rate check” in the FX market, which is widely seen as a precursor for actual market intervention. This tamed the USDJPY move higher from sub-142.00 levels to nearly 145, as the gains were pared back below even 143.00 this morning, with the JPY also firmer broadly. Finance Minister Suzuki said nothing could be ruled out in response to the weakening JPY and that if the current trend persisted, stepping into markets is an option. But as past experience has shown, intervention often only creates temporary volatility if the underlying issue is not addressed - in this case, the Bank of Japan's insistence on maintaining very low rates and capping yields out to 10 years. If yields continue to rise globally, Japanese officialdom will have an enormous and likely unwinnable fight on its hands if the Bank of Japan fails to change its policy. In the meantime, history shows that determined intervention can make for very choppy markets, even for other USD pairs as USDJPY volatility spikes back and forth. Table: FX Board of G10 and CNH trend evolution and strength.The USD has leaped back higher – watching for the degree to which the price holds and follows through if the 100 basis point FOMC move scenario next week solidifies amidst a supporting cast of data. Note the marked NOK weakening, a theme discussed yesterday. And note the CHF Strength – an interesting test for the EURCHF pair next week over the SNB meeting, given EU plans to cap energy prices as the pair trades near multi-year lows. Will there be a bit more caution from the SNB than before? Table: FX Board Trend Scoreboard for individual pairs.We noted many pivotal USD pairs yesterday: well the USD provided a pivot and then some yesterday – now about seeing whether the action remains choppy a la USDJPY or reasonably smooth new USD trend can develop. Note USDNOK trading up against a big resistance line, NZDUSD toying with 0.6000 this morning and AUDUSD not far from the cycle lows, while USDCAD has poked near the cycle top. Also, very interesting signs of possible exhaustion of weak GBP sentiment as the currency is rolling higher against a growing cast of the smaller G10 currencies (GBPNOK, GBPNZD, GBPAUD on the cusp, etc.) Upcoming Economic Calendar Highlights 1230 - US Aug. PPI  1230 - Canada Jul. Manufacturing Sales 1430 - ECB's Villeroy to speak 2245 - New Zealand Q2 GDP 2350 - Japan Aug. Trade Balance 0120 - China Rate Announcement 0130 - Australia Aug. Employment Data Source: https://www.home.saxo/content/articles/forex/fx-update-us-august-cpi-triggers-a-landslide-beware-the-boj-14092022  
The Federal Reserve (Fed) Is Facing The Consequences Of The Rising Inflation

Markets Look Like Battlefields After The US Inflation Print. S&P 500, Dow Jones And Nasdaq All Plunged. Forex: Will BoJ Intervene?

Conotoxia Comments Conotoxia Comments 14.09.2022 15:22
Yesterday's presentation of inflation data in the United States shook financial markets. Investors, looking by the reaction in many markets, seemed to expect inflation to fall faster than the estimation presented. The markets were shaken. US inflation - a powerful blow to financial markets The August consumer price index report showed that inflation rose 0.1 percent on a monthly basis, despite forecasts for a 0.1 percent decline, while the annual rate of consumer inflation fell less than expected in August to 8.3 percent (consensus 8.1 percent). The higher-than-expected U.S. inflation reading and slower pace of decline may have given rise to speculation that the Fed may deliver a larger interest rate hike than 75 bps. The game may now be on for a 100 bp hike next week. Read next: Great Britain’s CPI Lower Than The Expected, Eyes On US PPI| FXMAG.COM At the end of Tuesday's session, the Dow Jones index was down 3.94 percent, the S&P 500 down 4.32 percent, and the Nasdaq Composite down 5.16 percent. All three major indexes broke a four-day streak of gains and posted their biggest one-day decline in more than two years. All sectors in the S&P index ended the session in negative territory, with communications services, technology and consumer products falling more than 5 percent.  Bitcoin had already fallen at one point, in a move initiated after the US data, to levels below $20000. This could mean a drop of more than 10 percent. The EUR/USD pair price, in turn, retreated below parity, recording a cumulative drop of more than 2 percent after the data. Such large changes in many markets could be fears of faster and larger interest rate hikes in the US. Source: Conotoxia MT5, US100 m30 How is the Fed's action priced in? According to the interest rate market, the chances of a 100bp hike on September 21 have risen to 34 percent. Previously, the market had not considered such a large US interest rate hike at all, and was considering a rate hike between 50 and 75 bp. The current pricing could lead to an increase in the range for the federal funds rate to between 3.25 and 3.5 percent, which in turn could mean that the market is pricing the end of the hike cycle no longer in the 3.9 percent region, but in the 4.2 percent region, which could also contribute to the strengthening of the USD. In the bond market, on the other hand, the yield on 2-year U.S. Treasury securities rose to its highest level since 2007, exceeding 3.7 percent. In the past, the level of 2-year bonds may have coincided with the target level of the federal funds rate for the hike cycle. Source: Conotoxia MT5, USDIndex D1 Yen struggles against dollar strength It seems that this morning only the Japanese yen is trying to fight the strength of the USD. This  might have to do with further news of possible intervention. Japan's Finance Minister Shunichi Suzuki said on Wednesday that currency intervention is among the options to combat the decline of the country's currency, the BBN news service reported.  "We are talking about taking all available options, so it is right to think that way," he said. - Suzuki told reporters after being asked if currency intervention in the form of yen buying was on the table. "Recent moves have been quick and one-sided, and we are very concerned. If such moves continue, we must respond, and we are not ruling out any options." - He added. A break of the 145 level by USD/JPY would   lead to intervention by Japanese authorities, David Forrester, senior FX strategist at Credit Agricole CIB, told Bloomberg. The problem facing the Ministry of Finance in the event of any FX intervention is that the upward movement of USD/JPY reflects the divergence between the Fed and BOJ, so the impact of any intervention would only be temporary, the Credit Agricole representative added. 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.
Crude Oil And USD: Most Probably Many Will Keep An Eye On This Week's OPEC+ Meeting And The US Jobs Data

ING Economics Expects US 10yr Treasury Yield To Range Between 3.50-3.75%

ING Economics ING Economics 14.09.2022 15:45
US inflation remains comfortably above 8%, placing implied pressure on the Federal Reserve to stay tough. In consequence, the market discount for the funds rate peak has extended to 4.25%. This is important for the 10yr Treasury yield, as there is a path there now to target 3.75%. It can get to 4%, but does not have to, as inflation expectations are at c.2.5% How we got to here - Our calls Back in June we called a peak for the US 10yr yield when it hit 3.5%. We premised this on quite a rapid change in the structure of the curve, where the 5yr moved from a state of trading quite cheap to the curve to one where it traded outright rich. That switch is a classic turning point signal. And it worked. The 10yr shot back down towards 2.5%. As it approached 2.5% we argued that it should not break any lower, and in fact called for it to turn higher, and for it to re-target 3%. The rationale was that the 10yr yield should not trade too far through the funds rate, at least until the funds rate had actually peaked. Along that journey back towards 3% we also noted that the prior fall in market rates (and tighter credit spreads) had loosened financial conditions far too much, which laid the groundwork for a subsequent break back above 3%. And since then we consolidated this view against a backdrop where evidence began to grow that the US economy was refusing to lie down (re-firming of many macro data through July and August) and called for a re-hit of 3.5%. This has been topped off by an August CPI reading that shows US inflation still running with a solid 8% handle, down but not by enough. Where now? We're suggesting 3.75% (highest since 2011). If the funds rate gets to 4.25% the 10yr is heading to 3.75% The combination of financial conditions not being tight enough and the resoluteness of stubbornly robust US macro conditions (excluding the housing market) places pressure on the Federal Reserve to continue to tighten rates. The market discount now has the funds rate hitting 4.25%. That same discount was 3.5% about a month ago. And even though we’ve had a notable elevation in the market discount, the risk remains that the market continues to edge the likely terminal rate higher still. The 5yr is now neutral to the curve (bp) - No particular signal here Source: Macrobond, ING estimates   For bonds this is crucial. The messaging from the curve structure, which sees the 5yr currently trading neutral to the curve, is not pointing in any particular direction (chart above). So we look at the funds rate for key guidance. If the funds rate gets to 4.25%, in all probability the 10yr Treasury yield heads for 3.75%. At 50bp through the funds rate there is room for it to get higher. It just depends on the conviction the market attaches to the funds rate getting to above 4%. The 10yr Treasury yield can trade through the funds rate at this phase of the cycle, but not by more than 50bp (chart below). Direction comes from terminal funds rate discount - And that's still up! Source: Macrobond, ING estimates   And in fact anything more than 25bp through for the 10yr Treasury yield versus the funds rate has been unusual historically. Once the peak for the funds rate is in, then the 10yr yield can sail up to 150bp through the funds rate. But we need to see the peak first, and the market can’t say with certainty that the 4% area will be the peak. So we need the actual peak to be delivered before we can say for sure that the peak is in. That’s what keeps the pressure up. What about 4%? We need more to call for that That would suggest that a funds rate peaking at 4% or higher can easily drag the 10yr yield up to 3.75% (a level last seen in 2011). And what about the possibility of a 4% handle for the 10yr Treasury yield? It’s possible, but not probable based on what we know. We look to the virtual collapse in the 2yr breakeven inflation rate in recent months (albeit up post CPI) as evidence that the inflation battle can be won, as the market thinks it will be. That's in the 2.5% area, which can help at the very least tame any potential route towards 4%. Hence 3.5% to 3.75% is our target range for the 10yr Treasury yield. 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
Macroeconomics: Eurozone Economic Sentiment Went Down! Let's Check How Much

What Do We Learn From European Central Bank's Philip Lane's Rhetoric?

ING Economics ING Economics 15.09.2022 12:37
Into next week’s Fed meeting, bond markets will take heart from a slowdown in supply. It seems there are only hawks left at the European Central Bank, and collateral scarcity is here to stay Markets left to their own bearish devices, but supply abates With US inflation reports out of the way, and little by way of events until then, focus is turning to next week’s Federal Open Market Committee meeting. Hard data from the US, in the form of August retail sales and industrial production, are the exception. They could dispel the impression that the US economy is going from strength to strength if, as expected, they show a slowdown from July. Our economics team expects a strong 3Q, however, which should in turn be of little help for bond markets trading mostly on macro drivers. Thankfully, technicals might lend a helping hand. The end of this week’s supply slate should help bonds regain their poise after a bruising week. We may have seen this at play already with the long-end bond rally late in yesterday’s session. Today sees auctions from Spain and France but they are mostly short duration, hence adding to the flattening theme. Bonds should take a breather before next week's FOMC meeting Source: Refinitiv, ING Lane joins the hawks, and collateral scarcity remains unaddressed In Euroland, European Central Bank Chief Economist Philip Lane seemingly endorsing the hawks’ narrative in a speech is another clue that the central bank has experienced a significant shift in its reaction function. This is no guarantee of ever-increasing interest rates, but this means that the hawkish skew in the market reaction to future economic releases should be stronger than in the past months. Realistically, we won't get much evidence of that before the European PMI releases at the back end of next week. Until then, EUR markets will be at the mercy of moves in their USD and GBP peers. Lane’s speech was also a reminder that collateral scarcity issues will remain despite the ECB offering a delay to governments in finding alternative avenues to place their liquidity. Until April 2023, they will continue to earn the euro short-term rate on their deposits at the central bank, which at least delays the time when more demand emerges for already scarce collateral. What the ECB has not addressed, however, is the initial collateral shortage, which Lane blamed in part on interest rate uncertainty and rates volatility. Rates volatility has boosted demand for already scarce collateral Source: Refinitiv, ING Today's events and market view Spain and France conclude this week’s supply slate with auctions in the 3Y/5Y/8Y and 5Y/6Y/7Y sectors. Their short duration should add to the cuve-flattening theme. The Bank of England inflation expectations survey is likely to gather some attention one week ahead of its policy meeting, and as inflation fever grips markets. Other European data, eurozone trade and final French August inflation appear less market-moving to us. Luis De Guindos and Fabio Centeno of the ECB are on the speakers list. This is just as well because there is a full schedule in the US. Jobless claims are expected to edge up, while Empire manufacturing and Philly Fed indices should offer an early peek into business sentiment in September. Retail sales and industrial production are expected to slow down in August. 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
Ray Dalio's Perspective On The Economic Situation And The Fed's Future Actions

Auto Sales Up! US Economy: Although Retail Sales In General Rose Slightly, Gasoline Stations, Electronics Health/Personal Core Sales Declined

ING Economics ING Economics 15.09.2022 15:59
US retail sales, despite beating expectations today, appear to be on a softening trend. The core figure that better matches broader consumer trends was flat and revisions were unfavourable. Consumer spending is more than retail and there is scope for rebalancing towards services, but the report still favours a 75bp hike from the Fed next week over 100bp Auto sales rose 2.8% in August Core retail activity hints at a softening trend US retail sales rose 0.3% month-on-month in August, much better than the 0.1% fall that was expected, but there have been quite a few revisions to the history that hint of a softer trend in spending. Moreover, the control group, that excludes volatile items such as autos, building supplies and food service, which better matches broader consumer trends as measured within GDP, was considerably softer than predicted. Spending was flat on the month rather than rising 0.5%, while July’s figure was revised down to growth of 0.4% having initially been reported as +0.8%. US retail sales levels versus pre-pandemic Source: Macrobond, ING   The detail show gasoline station sales falling 4.2% given the steep price falls, but the furniture (-1.3%), electronics (-0.1%) health/personal care (-0.6%) and non-store retail (-0.7%) also fell. On the positive side, eating and drinking out rose 1.1%, in line with restaurant dining data, while building materials rose 1.1% and miscellaneous stores posted a 1.6% gain. Auto sales rose 2.8%, despite lower volumes numbers, underscoring what we saw within the CPI report that vehicle pricing remain robust. Consumer spending is broader than retail, but 75bp still favoured next week Looking at the report it is a mixed picture and is likely to see GDP growth expectations for the third quarter revised down a little. Nonetheless, we must remember that consumer spending isn't just retail. Consumer services are a bigger component of overall spending and total spending should outperforming retail. After all retail sales are currently 48% of consumer spending versus 43% before Covid so there is scope for a rebalancing. Retail sales as a proportion of total consumer spending Source: Macrobond, ING Expectations Stay The Same Still, with consumer confidence remaining weak as a result of the squeeze on spending power from inflation, falling equity markets and surveys suggesting growing nervousness on the state of the property market, we continue to favour a 75bp hike from the Federal Reserve rather than 100bp. Read this article on THINK TagsUS Spending Retail Federal Reserve Consumer 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
A Look At Today's Decisions And Comments On Yesterday's Events

China Is Ready To Work With Russia, Ethereum Merge Successfully Completed

Saxo Bank Saxo Bank 16.09.2022 09:58
Summary:  U.S. equity markets declined again on the economic good news which added to investors’ worries about more and for longer rate hikes from the Fed. The Chinese Yuan weakened and broke the 7-handle. China's August activity data is scheduled to release today. What is happening in markets?   Nasdaq 100 (USNAS100.I) and S&P 500 (US500.I) face further pressure as US eco news brightens        US equities closed lower on Thursday with the S&P500 losing 1.1% taking its weekly loss to almost 4%, while the Nasdaq fell 1.4%, losing 4.6% across the week, with both major indices eroding last week’s gain. Investors are growing cautious, as new economic data gives the Fed room to raise rates, and keep them higher for longer to control inflation. Retail sales unexpectedly rose in August, showing consumer spending is far from collapsing and jobless claims fell for the fifth straight week, suggesting employers worker demand remains healthy despite an uncertain outlook. For the market to turn around, it will need to see earnings multiples expand, as that supports share price growth. And we need to see earnings per share move up from a decline, to growth. But if the Fed keeps hiking rates, and the energy crisis continues, this scenario means tech stock earnings multiples are likely to see earnings per share (EPS) growth pressure. On the flip side, EPS in energy continues to gain momentum. Big movers in US shares Adobe shares fell 17%, weighing on the Nasdaq and S&P 500 after the software giant announced $20 billion deal to buy design start up Figma. The weakness flowed through to other tech stocks, with Apple shedding 1.9% and Salesforce sliding 3.4%. Meanwhile oil stocks also copped selling after the WTI oil price fell below $86 after the US announced it would restock oil reserves but without a trigger price. Bank stocks were a bright spot, with Goldman Sachs and JPMorgan rising more than 1% apiece. U.S. treasuries (TLT:xnas, IEF:xnas, SHY:xnas) The U.S. short-end yields continued to charge higher, 2-year yields up 7bps to finish the session at 3.86%, flattening the 2-10 year curve to -42bps, as the 10-year yields up 5bps to 3.44%.  The 30-year yields, however remained well anchored at 3.47%, up only 1bp and not far from the pre-CPI release levels. Hong Kong’s Hang Seng (HSIU2) and China’s CSI300 (03188:xhkg) Hang Seng Index edged up by 0.4%, helped by the rise in Chinese developers, while the CSI 300 dropped by 0.9%.  Securities Times reported that more than 120 cities have relaxed providence fund policies to boost the local property markets and other media reported that a large number of cities had loosened home purchase restrictions.  Country Garden (02007:xhkg) surged by 8.7% followed by Guangzhou R&F (02777:xhkg) up 8.6%, CIFI (00884:xhkg) up 7%, China Resources Land (01109:xhkg) up 4.9%, and China Overseas Land & Investment (00688:xhkg) up 4%. Catering names gained on news that Chengdu was relaxing its lockdown, Xiabuxiabu (00520:xhkg) up 5.5%.  Li Auto (02015:xhkg) fell 2.3% as the President of the company reduced his shareholding. EV names overall were also pressured by the news that China’s ambassador to the U.S. warned against the potential risks of the US trying to cut China off the EV supply chains.  Solar names were down following reports about the European Union was going to ban manufactured goods with forced labour in them and raised concerns about much of China’s solar products originated from Xinjiang. Australia’s ASX200 The ASX200 is on tracking lower this week, after losing 0.7% Monday to Thursday with the technical indicators suggesting the market is likely to head lower from here and it could retest the lows set in June. However, it’s not all doom and gloom. We saw commodity stocks march up this week, with coal companies Coronado Global rising 13%, New Hope up 5%. It’s also worth noting these are some of this year’s best performing stocks on the ASX, with Coronado up 82%, New Hope up 182%, while the coal giant Whitehaven is up 266% YTD, supported by the coal price hitting new highs this week, as well as the coal futures price. Meanwhile, with crop prices likely to go higher amid La Nina, Agri business Elders rose 4%. Elsewhere, technical buying picked up in oil and gas companies including Woodside, supporting its shares rise ~4%, with Beach Energy following. USDCNH breaks above 7 handle USDCNH broke 7.00 and the markets is expecting little reactions from the PBOC given the latest state-owned media’s effort to downplay the importance of the 7-handle. Crude oil (CLU2 & LCOV2) Crude oil prices slumped overnight as demand concerns came back into the focus. The International Energy Agency said that China faces its biggest annual drop in demand in more than three decades as COVID-19 lockdowns weigh on growth. Oil demand could fall by 420kb/d, or 2.7% this year. This led to the IEA trimming its estimate of global demand. It now sees consumption rising by only 2mb/d. Further, supply situation also seemed to fluctuate with the US Department of Energy walking back on its SPR refill stance by saying that it didn’t include a strike price (that was said to be around $80/barrel) and it isn’t likely to occur until after fiscal 2023. WTI futures fell below $85/barrel while Brent futures touched lows of $90/barrel. Oil technical levels to watch For traders and investors, for WTI to reverse its downtrend, it needs to close above resistance at $97.66, which is what our technical analyst pointed out here. So the next level for you to watch, is if it breaks above $90.40, it would signal an uptrend, for this to occur, the market will need good news, perhaps even bright news from China, the biggest oil consumer. Regardless, right now, oil is in a bear trend and if it closes below $81.20 the bear run-lower could be extend to $78.48-$74.27. Gold (XAUUSD) The yellow metal saw a drop to $1,660/oz down more than 2% to over 2-year lows, amid expectations of more aggressive rate hikes by the Fed as strong US economic data underpinned. Markets are now pricing in a more than 75bps rate hike by the Fed at the September meeting, and a terminal rate of ~4.5%. What to consider? Mixed US data, but further upward pricing of the Fed rate path US retail sales saw the headline rising 0.3% m/m in August (exp -0.1%, prev -0.4%) but the core retail sales print was weaker than expected at -0.3% m/m (exp 0%, prev 0.0%). The slower retail spending does reflect the current slowdown in goods spending despite services remining strong and supporting the overall consumer strength in the US. Meanwhile, initial jobless claims were lower than expected at 213K (exp 226K, prev 218K). That is the lowest since early June and the 5th consecutive decline (the high reached 262K), suggesting that labor markets still remain tight. Regional Fed indices offset each other The regional Fed indices on manufacturing gave contrasting signals with the Philly Fed index falling -9.9 vs +2.8, but the Empire improving markedly to -1.5 vs -13.0 estimate. For both indices, the prices paid components did fall and has moved markedly lower over the last few months, but still remains with a positive number (i.e., more businesses reporting higher prices vs lower prices). For the Philly Fed, the price paid came in at 29.8 v 43.6. For the Empire, the prices paid came in at 39.6 vs 55.5. Australia’s latest economic news shows employment growth is slowing with the jobless rate rising for the first time in 10 months; giving the RBA less room to hike rates Australia’s unemployment rate unexpectedly rose in August, rising from 3.4% to 3.5% with less jobs being added to economy than expected (33,500 instead of the 35,000). Given employment has fallen from its 50-year peak, and job growth is slowing, the RBA effectively has a solid barrier in its way preventing it from rapidly rising rates over the coming months, with room of a 0.5% hike being taken off the table. For equity investors, this supports risk-appetite slightly increasing in the banking sector, given employment nears its peak and credit might not be squeezed as hard as feared, thus property price growth also might not continue to fall as rapidly as forecast. For currency traders, the AUDUSD sharply fell from its intraday high (0.6769) and now faces pressure back to two-year lows, where support is at 0.61358, implying it may fall 10%. Further to that, the currency pair faces downside simply as the market is pricing in 0.25% RBA hike next month, versus the more aggressive US Fed Reserve’s hike potentially being 100bps (or 1%) next week. Slower export growth, power shortage, and pandemic controls would probably have taken their toll on China’s August activity data China’s activity data for August, scheduled to release today, would probably be at risk of missing the median forecasts in the Bloomberg survey, which has industrial production at 3.8% YoY in August (vs 3.8% YoY in July), retail sales at 3.2% YoY in August (vs 2.7% YoY in July), and fixed asset investment year-to-date 5.5% YoY (vs 5.7% YoY). The heatwave-induced power shortage caused disruption to industrial production in Sichuan. The heatwave might have also caused delays in infrastructure construction which was largely outdoor and offset some of the positive impacts of accelerated credit extension. The pandemic control measures affected the manufacturing and export hub of the city of Yiwu in Zhejiang province in August. The much weaker expected export growth data for August released last week and the continuously weak data in the property market also pointed to potentially downside surprises to these forecasts.  While a favourable base effect and stronger auto sales in August could have boosted retail sales, tightened pandemic control measures might have damped catering and other services and dragged down retail sales growth.  Russian President Putin said he appreciated China’s “balanced position” on Ukraine President Xi and President Putin met on the sidelines of the Shanghai Cooperation Organization summit held in Uzbekistan.  The Russian president said he values China’s “balanced position” on Ukraine and he backs the latter’s “One China” principle and opposes “provocations” by the U.S. on the issue of Taiwan.  On the other hand, the readout released by China only did not touch on Ukraine.  As in the readout, Xi told Putin that “China is ready to work with Russia in extending strong support to each other on issues concerning their respective core interests”. China’s State Council reiterated support for the economy and opening up trade and investment In a meeting chaired by Premier Li Keqiang, China’s State Council rolled out an additional RMB200 billion relending quota to support key industries in the real economy and pledged to support international trade and open up to foreign investment. Ethereum Merge – a new chapter in crypto Yesterday, the second-largest cryptocurrency Ethereum successfully underwent its merge from proof-of-work to proof-of-stake. From consuming around 0.2% of the world’s electricity, Ethereum now consumes a fraction of that. Our Crypto analyst calls it a new chapter not only for Ethereum but crypto in general. Read more here.    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/apac-daily-digest-16-sept-2022-16092022
Chaos And Rising Volatility Are Present In Market Mood

The Markets Are Concentrated On Inflation, Crude Oil Is Down

Swissquote Bank Swissquote Bank 16.09.2022 10:24
US railroad companies and the unions representing their workers reached a tentative agreement early Thursday to prevent a rail strike in the US. Avoiding a rail strike is good news, but not good enough to give a smile to investors. The markets remain too focused on inflation. Increases and decreases The S&P500 closed the session more than 1% lower, as US retail sales and jobless claims – which both hinted that the US economy remains relatively resilient to the Federal Reserve (Fed) rate hikes - didn’t help keeping the Fed hawks at bay. The US 2-year yield spiked to 3.90%, the mortgage rates in the US topped 6%, the US dollar consolidated a touch below the 110 level, Ethereum lost 10% and gold dived to $1660 per ounce. US crude took a good 4% dive. But this time, it wasn’t just the recession talk, it was because the Americans rectified a beginner’s mistake that they have made earlier this week, saying that they will refill their strategic oil reserves if prices fall below $80 per barrel. Waiting For Reports We will likely close this week on a sour note. Next on the economic calendar are the final European CPI read, which will confirm that inflation spiked to 9.1% in August, and the University of Michigan Consumer Sentiment, which will hopefully not print a significantly positive number, because the Fed hawks got strong enough the week before the Fed decision. Watch the full episode to find out more! 0:00 Intro 0:25 US rail strike will likely be avoided! 2:08 But sentiment remains sour on strong US data 3:57 World Bank points at recession 5:04 Crude oil down as Americans understand their mistake 6:41 Strong dollar weighs on major peers 6:55 Joke of the day 7:09 Ethereum down 10% post Merge upgrade 7:51 Adobe dives 17% on Figma acquisition 8:44 Watch EZ final CPI & UoM Consumer Sentiment 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. #US #rail #strike #inflation #USD #EUR #GBP #Gold #XAU #crude #oil #natgas #energy #crisis #Bitcoin #Ethereum #Merge #update #Bitcoin #Adobe #Figma #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
Crude Oil And USD: Most Probably Many Will Keep An Eye On This Week's OPEC+ Meeting And The US Jobs Data

US Dollar, British Pound (GBP), SEK (Swedish Krona) And Other Currencies May Be Fluctuating Next Week As Central Bank Decides On Rates!

ING Economics ING Economics 16.09.2022 15:02
Next week is packed with central bank meetings. The Fed is likely to match the European Central Bank in hiking rates by 75bp, while the Bank of England and Norges Bank are expected to make 50bp moves In this article US: 75bp is our favoured call, however there's a chance for the Fed to go even further UK: Bank of England to stick to 50bp rate hike despite Fed and ECB doing more Sweden: Riksbank to match ECB’s 75bp hike – and there’s a risk of more Norway: Norges Bank to repeat August’s 50bp rate hike Switzerland: SNB will follow the lead of other central banks and hike rates by 75bp Eurozone: PMIs expected to remain below 50 Source: Shutterstock      US: 75bp is our favoured call, however there's a chance for the Fed to go even further All eyes will be on the Federal Reserve meeting next Wednesday. The market was favouring a 75bp hike ahead of the August CPI report, but the much higher-than-expected inflation print has seen the market price in a 20% chance that the Fed will go over and above that by opting for 100bp. A 75bp hike is still our favoured call, but we acknowledge the risk that with inflation proving to be stickier than we had suspected, the subsequent meetings in November and December could see more aggressive action from the Fed than we are currently pencilling in. While the geopolitical backdrop, the China slowdown story, the potential for energy rationing in Europe, the strong dollar and fragile-looking domestic equity and housing markets argue for a more moderate path of tightening in the coming months, if inflation momentum doesn’t slow the bank will hike by a further 75bp in November and possibly 50bp in December. The message from the Fed next week is likely to emphasise data dependency, but its updated economic forecasts are likely to show the end-2022 Fed funds rate at 4.125% rather than 3.4% (July forecast) and we suspect it will be kept at that for 2023, before dropping back to a long-term average rate of 2.5%. UK: Bank of England to stick to 50bp rate hike despite Fed and ECB doing more 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. The announcement of an energy price cap from the government will drastically lower near-term CPI, reducing concerns about consumer inflation expectations becoming de-anchored and reducing the urgency to act even more aggressively. However, the hawks will be worried about the recent independent sterling weakness, and will also argue that the government’s support package could increase medium-term inflation given it reduces the risk of recession. That means it’s a close meeting to call, but if we’re right and the committee does move more cautiously than the Fed and ECB next week, then we expect another 50bp move in November and at least another 25bp in December. That would take Bank Rate to the 3% area. Read our full Bank of England Preview here. Sweden: Riksbank to match ECB’s 75bp hike – and there’s a risk of more With only two meetings left this year, and facing higher-than-expected inflation and a tight jobs market, we expect the Riksbank to hike rates by at least 75bp on Tuesday. We expect a repeat move in November. Norway: Norges Bank to repeat August’s 50bp rate hike Norway’s central bank stepped up the pace of rate hikes in August, and core inflation has continued to push higher than Norges Bank’s most recent forecasts in June. The message from the August meeting was that the central bank is keen to continue front-loading tightening, and we expect another 50bp hike next week. That would take the deposit rate to 2.25%, and we’d expect another 50bp move in November. Switzerland: SNB will follow the lead of other central banks and hike rates by 75bp The Swiss National Bank (SNB) meets next week and is ready to raise its key interest rate for a second time, after the 50bp increase in June. Inflation in Switzerland stood at 3.5% in August, still above the SNB's target of 0-2%, although well below the inflation rate in neighbouring countries. The fact that the Swiss franc is relatively strong against the euro is no longer a problem for the SNB, as it reduces imported inflation. The SNB focuses much more on the real exchange rate, which takes into account the inflation differential and has remained very stable in recent months. With no fears of too much appreciation and with inflation above target, there is little reason for the SNB not to follow the lead of other central banks, especially as it only meets once every quarter, so the next meeting will be in December, while the ECB and the Fed will meet in between. We expect a 75bp rate hike next week. Eurozone: PMIs expected to remain below 50 In the eurozone, we get the first look at economic activity in September with PMIs due on Friday. After two months below 50, we expect another one to follow as manufacturing production cuts due to high energy prices and the end of the tourist season are set to impact business activity. Consumer confidence will also be released next week, where we expect confidence to remain near historical lows for the moment as the cost-of-living crisis continues. Key events in developed markets next week Source: Refinitiv, ING TagsRiksbank Norges Bank Federal Reseve 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
Fed Decides On Interest Rate, So Does BoE - The Coming Week Is Simply Action-Packed

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
Known Indices - S&P 500, Nasdaq And Dow Jones Fluctuated On Thursday's Morning. What Can We Expect From SPX?

US Dollar To Crush Other Currencies This Week? Even A 125bp Rate Hike? Let's Check Four Possible Scenarios For Fed's Decision!

ING Economics ING Economics 19.09.2022 09:48
We expect a third consecutive 75bp hike. High inflation means 100bp is a risk, but inflation expectations and corporate price plans look less threatening and the growth outlook is more uncertain so we don’t see it. Still, a more hawkish message surrounding sticky inflation will see the Fed dots closer reflect the market pricing of a 4.25-4.5% terminal rate Fed Chair, Jerome Powell 75bp remains the call The market was favouring a 75bp hike ahead of the August CPI report, but the higher-than-expected inflation numbers, that saw the core rate accelerate to 6.3% from 5.9%, have led the market to price a 20% chance that the Fed go over and above that and opt for a 100bp move. 75bp is still our favoured call and the overwhelming majority of economists appear to think the same. Inflation does indeed appear to be stickier than we'd first thought and it remains broad-based. That said, there isn’t a great deal the Fed can do about current inflation so its response will depend on where it sees inflation heading. The jobs market remains strong, and near-term activity data has been holding up, but there are encouraging signs on both market and household inflation expectations, and also corporate price plans which suggest inflation may not be as embedded as some in the market fear. Consumer inflation expectations heading lower Source: Macrobond, ING Corporate pricing power shows signs of weakening Indeed, the National Federation of Independent Businesses reports that the proportion of companies looking to raise prices over the next three months has fallen from 51% in May to 32% in August. This is a sizeable turn which, given the strong relationship over the past 40+ years, offers a signal that inflation rates could soon start to slow. After all, in the current environment, there has been a strong argument that consumers flush with stimulus cash have been able to tolerate higher prices. Also, households have been expecting more price rises to come which had effectively given many companies some 'cover' to raise them still further.  But the lagged effects of rate rises, weak equity market performance and concerns over the state of the housing market suggest that consumer spending is plateauing; retail sales, for example, are down 0.7% since March in volume terms. A more competitive environment means less corporate pricing power and fewer inflation pressures. NFIB points to weakening corporate pricing power Source: Macrobond, ING Fed forecasts set to change Nonetheless, we acknowledge that higher near-term inflation prints are not welcome and hurt the Fed’s credibility. The subsequent meetings in November and December could therefore see more aggressive action from the Fed than we are currently pencilling in. We could see more aggressive Fed action Our current 50bp call for November looks on very shaky ground with 75bp probably more likely right now,  while the 25bp we have been forecasting for December could easily become 50bp. As such, depending on what the Fed says, we will be looking to formally change our house view from a 3.75-4% terminal rate in December 2022 to a 4.25-4.5% call. Key to this will be the Fed’s forecasts. Below is a table of what they forecast in June versus what we think they will say on Wednesday. Expectations for the Federal Reserve forecasts Source: Federal Reserve, ING Four alternative scenarios In the graphic below, you can see how we've been exploring different scenarios and their potential impact on the FX and Treasury markets. The forecast levels for EUR/USD and 10Y yields are based on the assumption that both trade at current levels on the morning of the Federal Reserve meeting. The market is currently assuming a 75bp hike as the bare minimum and it would probably be seen as the Fed taking a level-headed, data-dependent approach. A more cautious growth assessment could see yields move a touch lower following their recent sharp increase.  Anything less than 75bp would be perceived very dovishly. A 50bp move would be the catalyst for an initial downward move in the 10Y yield of perhaps 10bp and the dollar weakening with some further follow-through over subsequent days since it would be interpreted as an earlier end to tightening with a lower terminal rate.  On the hawkish side, a 100bp hike would signal a clear intent from the Fed, and in some quarters could be interpreted as a sign of panic. The knee-jerk reaction would be a stronger dollar and a 10bp+ move in Treasury yields with the market pricing a higher terminal rate, especially if inflation forecasts are revised up for 2023 and 2024. A 125bp hike would not just be a signal of panic, it could be an outright risk to market stability with risk assets crumbling. On the one hand, it could prompt a safe haven bid for bonds in subsequent days, but the initial reaction is likely to be a big gap higher in 10Y yields of the order of 25bp. Scenario analysis: The Federal Reserve's alternatives Source: ING 2023 still the year of rate cuts Looking further ahead, we are not in the camp expecting ongoing rate hikes in 2023. The geopolitical backdrop, the China slowdown story, the potential for energy rationing in Europe, the strong dollar and fragile-looking domestic equity and housing markets point to rising recession risks. A more aggressive Federal Reserve rate hike profile and tighter monetary conditions will only intensify the threat. We already expect inflation to fall sharply We already expect inflation to fall sharply on a weaker housing market translating into lower home rental components in CPI. Falling second-hand car prices will also contribute while less aggressive corporate pricing plans amid weaker demand in a recessionary environment will also drive inflation lower. We also should remember that the average period of time between the last rate hike in a cycle and the first Federal Reserve rate cut has averaged just six months over the past fifty years. Given the risks to growth and the potential for lower inflation, we are still forecasting rate cuts throughout the second half of 2023.    If the funds rate breaks above 4%, the 10yr yield gets pulled higher too For market rates, their prognosis is tied up with the terminal Fed Funds rate (i.e. where the Funds rate peaks). When it does peak, the likes of the 10yr Treasury yield will feel unshackled and can go ahead and discount future cuts, with yields capable of trading well through the Funds rate. But we are not at that point just yet; we’re still in the Fed Funds up-move phase. For as long as that’s the case, long tenor market rates will tend to be pulled higher. Should the Fed hike by 75bp in September and by another 75bp in November, that would pitch the Funds rate ceiling at 4%. Against that backdrop, and given the likelihood that the rate pushes above 4%, the 10yr Treasury yield is likely to target the 3.75% area (versus 3.45% currently). One clear consequence is a likely further yield curve inversion Once clear consequence in a likely further inversion of the yield curve. The Federal Reserve will not want to see this become too pronounced, as it would open a gap between the longer-term implied subsequent rate cut discount versus the nearer-term objective to get the Funds rate up. Balance sheet roll-off, which is now running at USD 95bn per month, will slowly address this issue, as the bid for longer tenor bonds is no longer being supported by Fed buying. This also helps to tighten conditions. The Fed has not had a whole lot to say about this in recent months, preferring to let the process play out quietly in the background. But in any case, it is pushing in the same direction as rate hikes and should help to coax longer tenor rates higher. FX Markets: Hawkish Fed takes us a step closer to Plaza 2.0 The dollar goes into the September FOMC meeting on the highs for the year. The story is quite a simple one. Aggressive Fed tightening and US yield curve inversion have taken their toll on the currencies of the more open economies outside of the US – especially those on the wrong side of the energy war. On a year-to-date basis, this leaves the dollar stronger by as little as 5% against the Canadian dollar and as much as 20% against the Japanese yen. The dollar's going to stay at these strong levels Driving the most recent leg higher in the dollar has been the August US CPI data, which has inverted the curve still further and prompted money markets to price Fed Funds close to 4.50% next spring. Could the market shift to pricing a 5% Fed Funds rate? That cannot be ruled out over the coming months were the market to second-guess the meaning of ‘restrictive’ policy and US price data were to continue to deliver some nasty surprises. As such we see the dollar staying at these strong if not stronger levels for the rest of the year. The dollar hitting its highest levels since 1985 has also raised some questions as to whether global policymakers are close to discussing a Plaza 2.0 agreement – or a revised version of the 1985 G5 agreement for an orderly dollar reversal lower. We feel it is far too soon for such an agreement in that for it to be successful the Fed would need to be ready to cut rates – consistent with any coordinated FX intervention to sell dollars probably against euros and yen. Equally the Bank of Japan would need to be ready to hike rates, just as they were in 1985. Neither of these is a given. That said we do have a G20 meeting of Central Bank governors and Finance Ministers coming up on October 12th in Washington. Were dollar strength to be causing collective anguish, a G20 Communique could express some concern with disorderly moves – and provide some more credibility to Japanese threats to intervene to sell USD/JPY. In reality those, FX moves have not been disorderly and we very much doubt US authorities are yet prepared to sanction a weaker dollar – not until the inflation battle is won. Read this article on THINK TagsUSD US Powell Interest rates Federal Reserve 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
A Gloomy Outlook For The Global Economy, Do We Have To Prepare For The Worst?

Only Turkey And Japan Are Expected To Keep Rates Unchanged?

Saxo Bank Saxo Bank 19.09.2022 11:01
Summary:  Markets trade nervously ahead of the FOMC meeting this week, as a minority consider it likely that last week’s hotter-than-expected US August CPI data could see the Fed hiking 100 basis points at Wednesday’s FOMC meeting, driving further painful USD strength. Other notable central bank meetings this week include the Bank of Japan, Swiss National Bank, Norges Bank and Bank of England meetings, all on Thursday.   What is our trading focus? Nasdaq 100 (USNAS100.I) and S&P 500 (US500.I) US equities were lower on Friday but managed to stage a pullback in the later part of the trading session with S&P 500 closing at 3,890. Sentiment remains weak this morning with US equity futures trading lower and Friday’s low in S&P 500 futures at the 3,853 level is the key critical downside level to watch. Financial conditions are still tightening, VIX curve is flattening, and the US 10-year yield is trending higher pointing to weaker equities ahead., The next big level in S&P 500 futures is the 3,800 level. This week the key event risk for US equities is naturally the FOMC meeting which will provide another tightening of policy rates and potentially a hawkish tilt on the guidance due to the latest inflation figures in the US. Hong Kong’s Hang Seng (HSIU2) and China’s CSI300 (03188:xhkg) Hang Seng Index dropped nearly 1%, dragged by technology stocks, with Hang Seng Tech Index (HSTECH.I) declining 2%, Alibaba (09988:xhkg) falling 3.3%, Tencent (00700:xhkg) down 1%. EV makers underperformed, with NIO (0986), Li Auto (02015:xhkg), and Xpeng (09868:xhkg) declining 4% to 6%. Following the news that the Hong Kong Government is reviewing and considering plans to end the hotel quarantine requirements for inbound travellers, tourism and retail stocks rallied, Cathay Pacific Airways (00293:xhkg) up nearly 2%, travel agent EGL surging 11.5%, Chow Tai Fook Jewellery (01929:xhkg) rising 6.6%. CSI 300 was little charged, with coal, and beverage names outperforming. USD traders mull FOMC meeting this Wednesday The US dollar has remained rangebound in most pairs ahead of this Wednesday’s FOMC meeting, but did break higher recently versus GBP, CAD, and NZD. Whether the Fed hikes 100 basis points (a minority looking for this after the hot CPI print for August last week) may prove less important than the Fed’s guidance on its forecasted “terminal rate” in the quarterly refresh of its accompanying “dot plot” forecasts for the Fed rate and as the market reads the tone of the statement and draws conclusions from the latest economic projections. The June PCE inflation forecasts, for example, still see 2023 inflation falling back to 2.7% and 2024 inflation to 2.3%. That latter forecast has only been raised 0.2% from the year-earlier level, suggesting that the Fed still sees the inflationary threat as something that its current path of tightening will make a transitory phenomenon. Gold (XAUUSD) Gold remains below $1680 and may struggle ahead of Wednesday’s FOMC rate decision given its potential impact on the dollar and Treasury yield as well as its impact on the terminal rate, currently priced around 4.5% by next March.  Speculators flipped their gold position to a net short in the week to September 13 and it highlights the upside risk should the price manage to break above the twice rejected support-turned-resistance level at $1680. Strong short covering from speculators in silver, supported by copper market tightness, has seen its relative value as seen through the XAUXAG ratio rise to a three-month high. Below $1854, last week's low in gold, the market may target the 50% retracement of the 2018 to 2020 rally at $1618.    Crude oil (CLV2 & LCOX2) Crude oil remains rangebound with Brent continuing to find support ahead of $90 and WTI around $84.50. Prices are being supported by the reopening of Chengdu in Sichuan, boosting the outlook for demand. Overall, however, the potential negative impact on demand from a global economic slowdown will not go away, and the market will be watching central bank decisions from the US to Europe and Asia and their overall impact on the dollar. Production from the OPEC+ alliance fell 3.6 million barrels/day short of its target level in August according to delegates and with Russia’s production at risk of falling by 1.9 million barrels per day once the EU embargo starts in December, the risk to supply remains equally high and price supportive. US Treasuries (TLT, IEF) US treasury yields trade near the cycle highs ahead of the FOMC meeting on Wednesday, with focus on the 10-year benchmark at 2.50%, the cycle high from June and on guidance from the Fed, as a minority are looking for a 100 basis point hike this week, while the terminal rate for next spring has risen almost to 4.50% recently, up more than 100 basis points from early August. What is going on? Dreadful UK retail sales in August There is no other word to qualify the latest retail sales report in the UK. Retail sales (important to note: UK Retail Sales are reported in volume, not price) contracted by minus 5.4 % year-over-year versus expected minus 4.2 %. Excluding fuel bills, it was out at minus 5 %. Just for the sake of comparison, UK retail sales fell 3.8 % year-over-year at the worst point of the Global Financial Crisis. High inflationary pressures coupled with the upcoming recession will certainly pose a serious challenge to the Bank of England (BoE). The market participants expect the central bank will hike rates by at least 50 basis points later this week (a stronger hike of 75 basis points is possible on cards). But we wonder how long the tightening cycle can last in the UK given the rapid deterioration of the situation on the growth front. On a flip note, the EZ CPI for August was confirmed at 9.1 % year-over-year. This is painfully high. Expect the ECB to hike interest rates by at least 50 basis points at its October meeting. In her last appearance last Friday, ECB president Christine Lagarde did not give much clue about the pace of the tightening cycle in the eurozone. She only mentioned that “hikes should send a signal that we’ll meet price goals”. US University of Michigan survey remains optimistic The preliminary September University of Michigan sentiment survey saw the headline rise to 59.5 from 58.5, just short of the expected 60, but nonetheless marking a fourth consecutive rise. Notably, the rise in forward expectations was starker than in current conditions, with the former also coming in above consensus expectations. Also, key were the inflation expectations, which echoed what was seen in the Fed surveys last week. The 1yr slowed to 4.6% from 4.8% and the 5yr expectations slowed to 2.8% from 2.9%.  EU recommends withholding EUR 7.5B from Hungary on rule of law violations The specific accusation is one of corruption in Hungary’s awarding of public contracts. The amount of budget funds to be withheld represents some one-third of the budget for Hungary during the current 7-year budget period. A majority of EU member states will have to approve the recommendation for the funds to be withheld. Hungary has scrambled recently to address the EU’s concerns, with new laws to be debated next week as the country has until November 19 to make changes and inform the commission. What are we watching next? Japan’s CPI and central bank decision to signal concerns on yen weakness Japan has key data on August inflation due Tuesday followed by the Bank of Japan decision a day after the FOMC on Thursday. Consensus estimates for August CPI are touching close to 3% levels, with core higher as well at 1.5% YoY from 1.2% previously. Upside pressures continue to persist from high food and energy prices, while the soft year-ago base also means mobile phone charges are likely to pick up. While it is still hard to expect a pivot from the Bank of Japan this week, given that Governor Kuroda remains focused on achieving wage inflation, the meeting will still likely have key market implications. Raft of central bank meetings this week It isn’t just FOMC week, we also have a bevy of other central banks up with rate decisions this week, including Sweden’s Riksbank tomorrow, which is expected to hike 75 basis points to take the policy rate to 1.50%. The FOMC meets Wednesday, followed by a historic Thursday in which the Bank of Japan, Norges Bank of Norway, Swiss National Bank and Bank of England meet among G-10 currencies, with the Central Bank of Turkey and South Africa’s Reserve Bank also meeting that day. Of those, only Turkey and Japan are expected to keep rates unchanged, with all others looking to continue tightening policy. Porsche IPO set for €70-75bn valuation The Porsche brand is set to be spun out from the Volkswagen group on September 29, with 12.5% of the shares to be floated. VW shareholders will be awarded a special dividend on half of the proceeds from the IPO, with the remaining half targeted for investing in the transition to EVs. The IPO comes with a greenshoe option of 10-15% dilution. Earnings calendar this week This week our earnings focus is on Lennar on Wednesday as US homebuilders are facing multiple headwinds from still elevated materials prices and rapidly rising interest rates impacting forward demand. Later during this week, we will watch Carnival earnings as forward outlook on cruise demand is a good indicator of the impact on consumption from tighter financial conditions. Today: AutoZone Tuesday: Haleon Wednesday: Lennar, Trip.com, General Mills Thursday: Costco Wholesale, Accenture, FactSet Research Systems, Darden Restaurants Friday: Carnival Economic calendar highlights for today (times GMT) 0800 – Switzerland Swiss National Bank Sight Deposits 0900 – ECB’s Guindos to speak 1200 – ECB's De Cos to speak 1245 – ECB's Villeroy to speak 1400 – US Sep. NAHB Housing Market Index 2330 – Japan Aug. National CPI 0115 – China Rate Announcement 0130 – Australia RBA Minutes of Sep. Policy Meeting  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-sep-19-2022-19092022
Price Of Gold Is Right On Top Of The Lower Boundary

The Sale Of Gold From Last Week Is A Continuation Of The Trend

InstaForex Analysis InstaForex Analysis 19.09.2022 11:45
There is a lot of doom and gloom in the gold market as prices ended the previous week at their lowest level since April 2020. For many analysts, a break below $1,675 would spell the end of gold's three-year upward trend. Along with the fall in gold prices, Wall Street analysts and retail investors turned bearish, highlighting the downside risks in the near term. Last week's gold sell-off is a continuation of a trend that began in early March as markets react to the Federal Reserve's aggressive monetary policy moves to curb inflation, which remains stubbornly high. Markets are almost ready for a 75 basis point rate hike; however, surprisingly resilient inflation in August, with the US CPI rising to 8.3% from an expected 8.1% gain, has left markets priced in at a slim chance of a full 1% move. Rising hawkish expectations supported the US dollar near its 20-year high and lifted 10-year bond yields to 3.5%, the highest level since April 2011. Under these conditions, many analysts say that gold prices have suffered a lot of technical damage and it will be difficult for the precious metal to find any bullish momentum anytime soon. Last week, a total of 22 market specialists took part in a Wall Street survey. Fourteen analysts, or 63%, said they are bearish this week. At the same time, four analysts, or 18%, were optimistic or neutral. In the retail sector, 1,045 respondents took part in online surveys. A total of 395 voters, or 38%, called for gold to rise. Another 489, or 47%, predicted a fall in gold. The remaining 161 participants, or 15%, voted for a sideways trend. Bannockburn Global Forex Managing Director Mark Chandler said his next gold price target is between $1,615 and $1,650 and does not rule out a fall to $1,500 by next year. It is unlikely that the Fed will raise interest rates by 1% this week, the markets still expect further aggressive actions before the end of this year. Chandler noted that markets now see the final federal funds rate at 4.50%.     Relevance up to 09:00 2022-09-22 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/322017
The Same Time In 2021 S&P 500 And Nasdaq Amounted To Ca. 25% And 32% More Respectively

What Can We Expect From Standard&Poor 500 (S&P 500)?

Conotoxia Comments Conotoxia Comments 19.09.2022 16:42
Today, U.S. stock index contracts seem to indicate the possibility of a cash market opening on the downside. Investors may be estimating the possibility of Fed action, and not just this week, but for the rest of the year. Currently, the market may believe that the Federal Reserve will not end the cycle of hikes below the 4 percent level, but above it. This could put pressure on company valuations on Wall Street. Have low-interest rates helped the Wall Street stock market? Since 2008, the US stock market has been able to enjoy the ongoing bull market that followed the Great Financial Crisis. Back then, both the financial markets and the economy were supported by very low-interest rates or asset purchase programs. From 2008 until the beginning of 2022, the average federal funds rate was 0.58 percent, and the average price-to-earnings P/E ratio for the entire S&P 500 index had a value of 25. Currently, the P/E for the S&P 500 is 21.49, according to wsj.com, and the federal funds rate rose to 2.33 percent in September. The market, in turn, seems to expect that it could rise above 4 percent in the next two quarters. Source: Conotoxia MT5, US500, W1 Current valuations on Wall Street According to data from wsj.com, the forward P/E ratio, which is the one showing the future earnings of companies in relation to the current stock price, is 17.48 for the S&P 500, while the Nasdaq 100 has a value of 22.57. The current values are 21.49 and 24.97, respectively. This may mean that the market expects that the earnings of U.S. companies may increase next year, which may be good news, but on the other hand, interest rates may rise at the same time. This, in turn, could have a negative impact on company valuations and could cause rates to potentially be lower than they were during a period of low-interest rates. If investors can choose between the U.S. dollar soon at 4.5 percent interest, or riskier stocks with a P/E ratio of 17, it seems that some of them may choose the U.S. dollar over stocks and thus demand for them may be lower. Another group of investors, on the other hand, may forgo risk in favor of safety until valuations become more attractive relative to interest rate levels. This, in turn,  could  happen in one of two ways, either U.S. companies will begin to rapidly expand earnings (which may be difficult in an environment of a slowing economy) or stock prices will find lower levels. Forecasts for the S&P500 at the end of 2022 According to analysts surveyed by Reuters, the S&P 500 could end this year at 4280 points. This is the median forecast of nearly 50 strategists surveyed by Reuters in the second half of August 2022. The median forecast for 2022 is down from 4400 points in a Reuters survey conducted in late May. Survey respondents, therefore, seem to be optimistic about the index's year-end result after all. This could mean a return to the peaks of August this year.   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. Are valuations on Wall Street currently attractive? (conotoxia.com)
The Major Currency Pairs On The Forex Market And Their Move Ahead Of Important Decisions

The Major Currency Pairs On The Forex Market And Their Move Ahead Of Important Decisions

TeleTrade Comments TeleTrade Comments 20.09.2022 10:35
Here is what you need to know on Tuesday, September 20: Major currency pair trade in familiar ranges on Tuesday as investors move to the sidelines ahead of key central bank policy decisions. The US Dollar Index (DXY), which closed virtually unchanged on Monday, moves sideways slightly above 109.50 and the market mood improves modestly with US stock index futures rising between 0.2% and 0.3%. Later in the day, Building Permits and Housing Starts data for August will be featured in the US economic docket. Consumer Price Index (CPI) figures from Canada will also be watched closely by market participants. Wall Street Journal author Nick Timiraos, who correctly leaked the 75 basis points (bps) rate hike in July, published an article late Monday and refrained from suggesting that the Fed could raise its policy rate by 100 bps on Wednesday. The greenback lost some interest after this development and the DXY erased its daily gains. The benchmark 10-year US Treasury bond yield stays relatively quiet near 3.5% on Tuesday. Federal Reserve Preview: Forecasting 5% interest rates? Dollar to move on dot-plot, Powell's pledges. Earlier in the day, Sweden's central bank, Riksbank, announced that it raised its policy rate by 100 bps to 1.75%, compared to Reuters' estimate for a rate increase of 75 bps. With the initial reaction, EUR/SEK fell to a fresh daily low of 10.7305 but managed to recover to the 10.8000 area. During the Asian trading hours, the Reserve Bank of Australia's (RBA) September monetary policy meeting minutes showed that policymakers saw a case for a slower pace of rate increases as becoming stronger. AUD/USD's reaction to the RBA's publication was largely muted and the pair was last seen trading flat on the day at around 0.6730. Annual CPI in Canada is expected to decline to 7.4% in August from 7.6% in July. Ahead of this data, the USD/CAD pair trades in a tight range near the mid-1.3200s. EUR/USD managed to stage a rebound in the second half of the day on Monday and closed in positive territory above parity. The pair was last seen posting small daily gains near 1.0030. GBP/USD clings to modest daily gains at around 1.1450 early Tuesday. “There aren’t currently any negotiations taking place with the US and I don’t have any expectation that those are going to start in the short to medium term," British Prime Minister Liz Truss said regarding a potential trade deal with the US but these comments were largely ignored by market participants. The data from Japan revealed on Tuesday that the National CPI climbed to 3% in August from 2.6% in July. Although this print came in stronger than the market expectation of 2.6%, USD/JPY managed to hold its ground and was last seen rising 0.2% on the day at 143.50. Gold is having a tough time attracting buyers and trading in negative territory slightly above $1,670. The resilience of the 10-year US T-bond yield makes it difficult for XAU/USD to gather recovery momentum. Bitcoin shook off the bearish pressure late Monday but it's yet to reclaim $20,000. Ethereum gained nearly 3% on Monday but failed to preserve its bullish momentum early Tuesday. At the time of press, ETH/USD was down 1% on the day at $1,360.
Rate Hike Announcements Throughout This Week

Rate Hike Announcements Throughout This Week

Swissquote Bank Swissquote Bank 20.09.2022 14:03
FOMC begins its two-day policy meeting today, and is expected to deliver the third 75-bp hike tomorrow. Activity on Fed funds futures gives more than 80% chance for a 75bp hike this morning, and less than 20% chance for a 100bp hike. Although the probability of a full percentage point hike spiked up to 35% after last week’s disappointing inflation reports, we still believe that the Fed has nothing to gain by surprising the market with a bigger than expected rate hike. The strength of the US dollar is too threatening for the Fed to pull out the bazooka. Banks will announce their latest decisions  Therefore, a 75bp hike at tomorrow’s announcement has the potential to give some relief to the US dollar and the equity markets, as it would help de-pricing the scenario of 100bp hike. Yet, the size of an eventual relief, or whether we would see a relief or not will also depend on the economic projections and the dot plot. And the global tightening winds will continue to blow beyond the US this week. The Bank of Japan, Sweden, Norway, Brazil, South Africa, Philippines, Indonesia, Taiwan, Turkey, the Bank of England and the Swiss National Bank will announce their latest decisions throughout this week. Most of these banks are expected to raise their interest rates, and/or sound hawkish in an effort to slow the depreciation of their currencies against the Fed-boosted US dollar. The Swiss National Bank (SNB) is one of them. We discuss why the SNB should follow the Fed with a 75pp hike, and what would be the impact on the Swiss markets. Watch the full episode to find out more! 0:00 Intro 0:32 Market update 1:25 Fed will likely hike by 75bp this month… 4:05 The Swiss National Bank will likely follow! 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 #meeting #SNB #rate #decision #jumbo #hikes #USD #CHF #EUR #SMI #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
US Dollar (USD) May Be Skyrocketing! Fed Decides On Interest Rate Shortly. Why 75bp Variant Is More Likely Than The 100bp Hike?

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

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

Today’s Federal Reserve (Fed) Decision, And The Market After Riksbank Shocked

Swissquote Bank Swissquote Bank 21.09.2022 11:08
Risk appetite is poor into today’s Federal Reserve (Fed) decision, and after Riksbank shocked the market with a 100bp hike yesterday. The announcement couldn’t get the SEK appreciate against the US dollar; it rather got many investors more uncomfortable, and worried that the Fed would do the same today: deliver a 100bp hike. But it may not. The expectation for the decision Activity on Fed funds futures still assesses less than 20% probability for a 100bp hike from the Fed today. So, the expectation is that the Fed will deliver a 75bp hike today. We could see a relief rally in equity and bond markets, if, of course, the dot plot doesn’t show projections going above market expectations. One good news in all this is that inflation in Canada eased more than expected last month, both the headline and the core inflation softened. But the data obviously revived the BoC doves and sent the Loonie lower against a broadly stronger US dollar. The USDCAD spiked to 1.3375 as a result. And cheaper oil didn’t help. The market is under pressure Crude oil fell below $85 per barrel, as the US announced it would sell 10 million barrels more from the Strategic Reserves for delivery in November to help keeping a negative pressure on oil prices. The EURUSD consolidates below parity, as Cable slipped below 1.14 mark. Bitcoin is testing the $19K support this morning and gold remains under a decent selling pressure due to strong dollar and rising US yields. Watch the full episode to find out more! 0:00 Intro 0:27 Riksbank raised by 100bp 1:16 Could the Fed do the same? 3:12 Market update 4:15 Betting against treasuries is fructuous, but risky 6:28 Oil down as US announced more strategic reserve sale 7:25 EUR, GBP, Gold and Bitcoin under pressure into Fed decision 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. ___ 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
What Is The Situation Of The Euro To Us Dollar (EUR/USD) Pair Today

What Is The Situation Of The Euro To Us Dollar (EUR/USD) Pair Today

InstaForex Analysis InstaForex Analysis 21.09.2022 11:21
Technical Market Outlook: After making the local high at the level of 1.0050, EUR/USD reversed lower, broke the intraday technical support at 0.9950 and is heading lower. The market participants await the FED interest rate decision and press conference scheduled at 8:00 PM tonight. The nearest technical support is seen at 0.9934 and 0.9901. In the longer term, the key technical resistance level is located at 1.0389 (swing high from August 11th), so the bulls still have a long road to take before the longer term down trend is reversed. Please watch the USDX as the correlation between this two is directly opposite. Weekly Pivot Points: WR3 - 1.01231 WR2 - 1.00595 WR1 - 1.00262 Weekly Pivot - 0.99959 WS1 - 0.99626 WS2 - 0.99323 WS3 - 0.98687 Trading Outlook: Despite the recent relief rally towards the short-term support, the EUR is still under the strong bearish pressure and as long as the USD is kept being bought all across the board, the down trend will continue. In the mid-term, the key technical resistance level is located at 1.0389 and only if this level is clearly violated, the down trend might be considered terminated. Relevance up to 08:00 2022-09-22 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/293561
Pressure On The Euro Is Rising And The Dollar Is More Attractive

Pressure On The Euro Is Rising And The Dollar Is More Attractive

InstaForex Analysis InstaForex Analysis 21.09.2022 12:24
The US currency is still holding steady, gaining momentum before the Federal Reserve meeting, which cannot be said about the European one. The latter tries to gain a foothold in the positions won, but these efforts often do not meet expectations. Constantly rising inflation and unstable geopolitical background keep market participants and world central banks in suspense. Recently, many of them expected the Fed to raise interest rates by 50-75 bps at the next meeting. However, now the situation has worsened, so traders and investors expect the rate to rise by 75 bps and higher, that is, by 100 bps. Market participants expect that the Fed will announce its final decision on the rate on Wednesday, September 21. According to preliminary estimates, it is expected to increase by 75 bps, up to 3-3.25% per annum. At the same time, the central bank will present macroeconomic forecasts, followed by a press conference by Fed Chairman Jerome Powell. Against this background, the markets are in suspense about the Fed's future strategy. According to analysts, the central bank will continue to raise interest rates until it gets inflation under control. At the moment, futures show the probability of a rate hike above 4% by the end of 2022, which implies a further increase at two meetings of the Federal Open Market Committee (FOMC), which are scheduled for early November and mid-December. Against this background, the pressure on the euro is increasing and the dollar's appeal as a protective asset is growing. On the morning of Wednesday, September 21, the greenback remained near a two-decade high against most currencies, primarily the euro. At the same time, the EUR/USD pair was trading at 0.9952, almost without going beyond the current range. According to analysts, the Fed's interest rate decision will set the tone in the financial markets for the coming months. At the moment, the topic of quantitative tightening remains in the focus of the markets' attention. Central banks are withdrawing liquidity from the financial system and reinvesting less and less of the income received from the repayment of state bonds. It should be noted that the Fed, whose balance sheet reaches $9 trillion, has reduced the volume of reinvestments by $47.5 billion per month, starting in June 2022. According to preliminary calculations, by the end of September, this figure will increase to $95 billion. Market participants expect the European Central Bank to take similar actions, that is, to reduce its balance sheet, which is 8 trillion euros. However, in this matter, the ECB also falls behind the American one. According to ECB President Christine Lagarde, at the moment the introduction of quantitative tightening is impractical. However, despite such statements, the central bank is expected to consider this issue at the next meeting, which is scheduled for October. Against this background, the euro has lost part of its gains. Unlike the greenback, it is difficult for the single currency to gain a foothold in the current positions. As a result, the euro is constantly slipping into a downward spiral. The situation was not changed even by decisive measures on the part of the ECB, which sharply raised rates (by 50 bps and 75 bps) at the last two meetings. Thanks to these steps, high inflation does not put too much pressure on the euro, analysts believe. However, the US central bank began to raise interest rates earlier than the European one, having gained a head start in this matter. Currently, the Fed is raising interest rates more aggressively than other central banks. As a result, a sharp increase in Fed rates contributed to a significant strengthening of the greenback, which continues to grow. At the same time, the rise in the price of USD exacerbates inflation in other countries, since the lion's share of international settlements is made in the US currency. In the event of a fall in other currencies against the greenback, imports in most countries sink, as goods denominated in dollars become more expensive. The noticeable strengthening of the US currency worsens the prospects for the global economy, experts emphasize. First of all, developing countries suffer from this, whose economic growth opportunities are severely limited. In addition, the strong USD and the global economic downturn have a negative impact on the income of American companies abroad. The further expansion of the global crisis is pushing the authorities of a number of countries to introduce measures to curb the dominance of the USD, experts summarize. Relevance up to 08:00 2022-09-24 UTC+2 Company does not offer investment advice and the analysis performed does not guarantee results. Read more: https://www.instaforex.eu/forex_analysis/322242
US Dollar (USD) And Fed Decision: ING Economics Team Thinks 75bp Rate Hike Is Enough

US Dollar (USD) And Fed Decision: ING Economics Team Thinks 75bp Rate Hike Is Enough

ING Economics ING Economics 21.09.2022 10:58
So here we are. Another FOMC meeting, and another 75bp hike. But there is a rump going for 100bp, so 75bp could be positive for risk assets (albeit briefly). The dot plot will be watched, as the terminal rate is key for where market yields peak. A 75bp hike takes the effective funds rate up to 3.08%, but leaves the Fed with more to do as the 2yr heads for 4%. Expect a 75bp hike, although there is a rump positioned for 100bp Ahead of the Federal Open Market Committe (FOMC) meeting there has been some market flows positioning for a 100bp hike, but the dominant discount as we head into the meeting is for 75bp to be delivered. A 100bp hike would be an over-reaction, in our view, while 75bp would be enough to solidify a market discount that is already projecting a terminal funds rate north of 4.25%. Chair Powell's Humphrey-Hawkins testimony followed by a re-acceleration in core CPI inflation has been enough to push the market discount up by some 100bp in the space of a month. At this juncture the Fed does not need to do much more than deliver the 75bp hike, and maintain a hawkish bias. The Fed does not need to do much more than deliver the 75bp hike The dot plot will be important, but not critical, as the dots do move over time. We think the median dot will print above 4% for 2022 (to be read as end year), and the Fed may well choose to keep it above 4% for 2023. The Fed's dot plot does print a longer-run rate at 2.5%, which is deemed to be their neutral rate, and is broadly where the funds rate is now. So the 75bp hike, when delivered, moves the policy rate into a tightening stance for the first time in this cycle. The calls for 100bp area partly premised on the notion of pitching the funds rate 1% tight versus neutral in one go. But 75bp also tightens policy reasonably aggressively, and avoids unnecessary market consternation with respect to future intentions. The Fed's message is finally delivering tighter financing conditions Source: Refinitiv, ING The terminal funds rate remains key for the bond market Beyond this meeting, where the funds rate peaks is critical for pitching bond yields. Once the funds rate is hiked, the new reference for market rates is north of 3% (with the effective fund rate set to settle at 3.08%). A similar hike in November would then have the ceiling at 4%, an area that the 2yr Treasury yield is currently targetting. History shows that the 2yr will anticipate moves in the funds rate well in advance, but as we get towards the end of the rate hiking cycle, reaction from the 2yr yield becomes smaller. Based off the price action of the past few weeks we are not quite there yet. But if the funds rate peaks at 4.25% to 4.5%, we'd be surprised if the 2yr yield were to get much above 4.25%. Further out the curve the 10yr yield has more capacity to trade through the funds rate sooner than the 2yr. This is typical as the curve has moved into a state of inversion. In that sense longer tenor rates are being pulled higher by higher short tenor rates at this stage of the cycle. This is the opposite to what happened before rate hikes were discounted, as the curve steepened from the long end. Now the long end is waiting for the funds rate to come up and hit it. From there, likely around the 2 November meeting, the 10yr can trade flat to the funds rate (at around 3.75%, or slightly higher), and that would anticipate a peak in the fund rate at around 4.25% (actually 4.33%). Right now the Fed does not want any focus on a rate hike discount Once the peak in the fund rate is in with a reasonable degree of certainty, the 10yr can free itself from the shackles of terminal rate uncertainty, and can begin to trade well through the funds rate (anticipating cuts). Right now the Fed does not want any focus on a rate hike discount, but in fairness the market will tend not to aggressively discount a top until it actually sees it. This is where the value of a hawkish tone comes to the fore, as it helps to sustain that link with upward pressure on market rates generally. That said, with the 10/30yr spread now on the verge of inversion, expect any future peaking and fall in market rates to come earliest from the 30yr. The Treasury 10s30s slope is on the verge of inversion Source: Refinitiv, ING Today's events and market view Italy will exchange short-end bonds for issues in the 10Y and 15Y sectors worth up to €2bn. Germany will auction €4bn 10Y bonds. Austria mandated a new 4Y bond yesterday, which should be today's business. Luis de Guindos is the only European Central Bank official on the schedule. Both UK CBI prices and orders are expected to decline in September.. The FOMC meeting this evening looms large in an otherwise quiet session. The tone of the conference and quarterly economic and rates projections will be closely watched to shape future hike expectations. The thought leadership taken by the Fed, and the continued dollar rally, mean read-across to other rates markets is even greater than usual. Ahead of the FOMC, US releases to watch will comprise mortgage applications and existing home sales. 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