foreign exchange

Today's core PCE the next key signpost ahead of next weeks Fed meeting
By Michael Hewson (Chief Market Analyst at CMC Markets UK)
 
European markets managed to eke out a small gain yesterday after the ECB kept rates unchanged but left the door ajar to the prospect of a rate cut before the summer.
ECB President Christine Lagarde did push back strongly on speculation that policymakers had discussed anything like that insisting that such talk was premature, echoing her comments made earlier this month. It was noteworthy however that the possibility of a cut before June wasn't ruled out completely, and it was that markets reacted to yesterday as yields declined sharply, which does keep the prospect of an earlier move on the table given how poor this week's economic data has been.
 
US markets also managed to finish the day higher with the S&P500 and Nasdaq 100 putting in new record closes, after US Q4 GDP came in well above expectations at 3.3%.
The core PCE price index also remai

Decarbonizing Hard-to-Abate Sectors: Key Challenges and Pathways Forward

EUR/CHF about to pop higher?

Fawad Razaqzada Fawad Razaqzada 10.02.2021 02:00
The EUR/CHF is a forgotten currency pair and rightly so because it hardly moves. So why bother writing about it? Well, I think it is about to start trending higher again and become more active. Don't expect it to behave like Bitcoin or the Dow, but it should provide a good, stable, trade for the bulls given the ongoing "risk-on" sentiment. I have recently written bullish forecasts on the GBP/CHF due to Brexit being avoided etc., and the private group ledges have benefitted from this pair already, as you can see from the following before/after charts: Source: TradingCandles.com and TradingView.com Source: TradingCandles.com and TradingView.com Source: TradingCandles.com and TradingView.com But like the pound, the euro could now also climb higher, especially against haven currencies like the franc and yen as we hopefully head towards more normal times ahead later this year. Anyway, straight to the point: the EUR/CHF monthly is looking bullish to me: Source: TradingCandles.com and TradingView.com The monthly chart shows the long-term bullish trend has been defended for several months now and rates have broken above the bearish channel. The path of least resistance is to the upside again. It is a very slow-moving pair, so if you do trade it long, make sure you don't expect the moon, and too quick. But the key takeaway point from this article is that the forgotten currency pair could be about to pop higher and become mainstream for FX traders again.
November Monthly

November Monthly

Marc Chandler Marc Chandler 03.11.2021 15:17
Three main forces are shaping the business and investment climate:  Surging energy prices, a dramatic backing up of short-term interest rates in Anglo-American countries, and the persistence of supply chain disruptions.  The US and Europe have likely passed peak growth.  Fiscal policy will be less accommodative, and financial conditions have tightened. Japan appears to be getting a handle on Covid and after a slow start.  Its vaccination rate has surpassed the US.  The lifting of the formal state of emergency and a hefty dose of fiscal stimulus is expected to be delivered in the coming months. Many developing economies have already lifted rates, some like Brazil and Russia, aggressively so.  They will likely finish earlier too.      US light sweet crude oil rose nearly 12% last month, even though US inventories rose last month for the first time since April.   The price of WTI rose almost 10% in September.  Statistically, the rise in oil prices is strongly correlated with the increase in inflation expectations.  OPEC+ will boost supplies by another 400k barrels a day at the start of November and is committed to the same monthly increase well into 2022.   At the same time, new Covid infections in several Asia-Pacific countries, including China, Singapore, and Australia, warn of the risk of continued supply-chain disruptions.  In Europe, Germany and the UK recently reported the most cases since the spring. Belgium is tightening curbs.  Bulgaria is seeing a rise in infections, and Romania was at full capacity in its intensive care facilities.  The fact that Latvia lags the EU in vaccination at about 50% leaves it vulnerable.  The US may be lagging behind Europe, and the next four-six weeks will be critical.  Roughly 40% of Americans are not fully vaccinated.   The rise in price pressures and the gradual acknowledgment by many central bankers that inflation may be more persistent have helped spur a significant backing up of short-term rates in the Anglo-American economies. The ultimately deflationary implications of the surge in energy prices through demand destruction and the implications for less monetary and fiscal support still seem under-appreciated. Yet, the market has priced in aggressive tightening of monetary policy over the next 12 months.   The focus of the foreign exchange market seems squarely on monetary policy.  From a high level, the central banks perceived to be ahead in the monetary cycle have seen stronger currencies. The likely laggards, like the Bank of Japan, the Swiss National Bank, and the ECB, have currencies that underperformed.  Norway and New Zealand have already raised rates and are expected to do so again in November.    Of course, as you drill down, discrepancies appear.  In October, the Australian dollar was the top performer among the major currencies with a 4% gain.  It edged out the New Zealand dollar and the Norwegian krone, whose central banks are ahead of the Reserve Bank of Australia.  The RBA has pushed against market speculation that has 90 bp of tightening priced into 12-month swaps.  The Australian dollar outperformed sterling by about 2.5% in October even though the Bank of England has been so hawkish with its comments that the market had little choice but to price in a high probability of a hike as early as the November meeting.  In fact, the market has the UK's base rate above 50 bp by the end of Q1 22.  This is important because in its forward guidance that BOE has identified that as the threshold for it to begin unwinding QE by stopping reinvesting maturing issues.  Interestingly enough, when the BOE meets on March 17 next year, it will have a sizeable GBP28 bln maturity in its portfolio.   In an unusual quirk of the calendar, the Federal Reserve meets before the release of the October jobs report.  All indications point to the start of the tapering process.  It is currently buying $120 bln a month of Treasuries ($80 bln) and Agency Mortgage-Backed Securities.  The pace of the reduction of purchases is a function of the duration, and the Fed has clearly indicated the tapering will be complete around mid-year. That suggests reducing the purchases by about $15 bln a month.  Chair Powell indicated that unlike the Bank of England, the Fed will stop its bond purchases before raising rates. A faster pace of tapering would be a hawkish signal as it would allow for an earlier rate hike.  The gap between when the tapering ends and the first rate hike does not appear predetermined. Powell has talked about the economic prerequisites, which emphasize a full and inclusive labor market in the current context. The Fed funds futures entirely discount a 25 hike in July, with the risk of a move in June.  Comments by several officials hint that the Fed may drop its characterization of inflation as transitory, which would also be understood as a hawkish development.   Partly owing to the extended emergency in Japan, it is marching to the beat of a different drummer than the other high-income countries. Inflation is not a problem.  In September, the headline rate rose to 0.2% year-over-year, the highest since August 2020.  However, this is a function of fresh food and energy prices, without which the consumer inflation stuck below zero (-0.5%).  In December 2019, it stood at 0.9%.  In addition, while fiscal policy will be less accommodative in Europe and the US, a sizeable supplemental budget (~JPY30 trillion) is expected to be unveiled later this year.   After expanding by 1.3% quarter-over-quarter in Q2, the Chinese economy slowed to a crawl of 0.2% in Q3, which was half the pace expected by economists. Some of the decline in economic activity resulted from the virus and natural disasters (floods). Still, some of it stemmed from an effort to cut emissions in steel and other sectors.  The problems in China's property development space, accounting for a large part of its high-yield bond market,  unsettled global markets briefly.  Talk of a Lehman-like event seems a gross exaggeration. Still, given the sector's importance to China's economy (30% broadly measured) and the use of real estate as an investment vehicle, it may precipitate a structural shift in the economy.   The Communist Party and the state are reasserting control over the economy's private sector and the internet and social network.  It has also weighed in on family decisions, like the number of children one has, how long a minor should play video games, the length of men's hair, what kind of attributes entertainers should have, and appropriate songs to be played with karaoke.   It seems to be reminiscent of part of the Cultural Revolution and a broader economic reform agenda like Deng Xiaoping did in the late 1970s and Zhu Rongji in the 1990s.  At the same time, Beijing is wrestling with reducing emissions and soaring energy prices, which also dampen growth. Even though consumer inflation is not a problem in China (0.7% year-over-year in September), Chinese officials still seem reluctant to launch new stimulative fiscal or monetary initiatives. Moreover, new outbreaks of the virus could exacerbate the supply chain disruptions and delays fuel inflation in many countries.  The aggressiveness in which investors are pricing G10 tightening weighed on emerging market currencies in October.  The JP Morgan Emerging Market Currency Index fell by almost 0.8% last month after falling 2.9% in September, the largest decline since March 2020.  The continued politicization of Turkey's monetary policy and the aggressive easing saw the lira tumble nearly 7.5% last month, which brings the year-to-date depreciation to 22.5%.   On the other hand, Brazil's central bank has aggressively hiked rates, and the 150 bp increase in late October brought this year's tightening to 575 bp and lifting the Selic to 7.75%.  Yet, it is still below the inflation rate (10.34% October), and the government has lost the confidence of domestic and international business.  The Brazilian real fell nearly 3.5% last month to bring the year-to-date loss to almost 7.8%.   Our GDP-weighted currency basket, the Bannockburn World Currency Index, snapped a two-month decline and rose by 0.35%.  The rise in the index reflects the outperformance of the currencies against the dollar.  The currencies from the G10 countries, including the dollar, account for about two-thirds of the index, and emerging markets, including China, the other third.  The yen was the weakest of the majors, falling 2.3%.  It has a weighting of 7.5% in the BWCI.   Among the emerging market currencies in our GDP-weighted currency index, the Brazilian real's 3.4% decline was the largest, but its 2.1% weighting minimizes the drag.  It was nearly offset by the Russian rouble's 2.5% advance.  It has a 2.2% weighting in our basket.  The Chinese yuan, which has a 21.8% share, rose by 0.6%.      Dollar:   The market is pricing in very aggressive tightening by the Federal Reserve.  As recently as late September, only half of the Fed officials anticipated a hike in 2022.  The December 2022 Fed funds futures are pricing in a little more than two hikes next year. More than that, the market is discounting the first hike in June next year, implying a transition from completing the bond-buying to raising rates with no time gap.  The disappointing 2% Q3 GDP exaggerated the slowing of the world's largest economy.  We note that the supply-side challenges in vehicle production halved the growth rate.  Growth is likely to re-accelerate in Q4, but we continue to believe that the peak has passed.  While inflation is elevated, the pace of increase slowed in Q3.  Consider that the PCE deflator that the Fed targets rose at an annualized rate of 4.0% in Q3 after a 5.6% pace in Q2.  The core rate slowed to an annualized pace of 3.3% last quarter, half of the speed in the previous three months.  The infrastructure spending plans have been reduced, and some of the proposed tax hikes, including on corporations, appear to be dropped as part of the compromise among the Democratic Party.   Euro:  For most of Q3, the euro has been in a $1.17-$1.19 trading range.  It broke down in late September, and was unable to recapture it in October.  Instead, it recorded a new low for the year near $1.1525.  A convincing break of the $1.1500 area could signal a move toward $1.1300. The single currency drew little support because growth differentials swung in its favor in Q3:  the Eurozone expanded by 2.2% quarter-over-quarter while the US grew 2% at an annualized pace.  The ECB is sticking to its analysis that the rise in inflation is due to transitory factors while recognizing that energy prices may prove more sticky.  That said, news that Gazprom may boost gas sales to Europe after it finishes replenishing Russian inventories after the first week in November, natural gas prices fall at the end of October.  After the Pandemic Emergency Purchase Program ends next March, decisions about the asset purchases next year will be announced at the December ECB meeting along with updated forecasts.   (October indicative closing prices, previous in parentheses)   Spot: $1.1560 ($1.1580) Median Bloomberg One-month Forecast $1.1579 ($1.1660)  One-month forward  $1.1568 ($1.1585)    One-month implied vol  5.1%  (5.1%)         Japanese Yen:  The dollar rose 2.3% against the yen in October to bring the year-to-date gain to nearly 9.5%.  The Bank of Japan will lag behind most high-income countries in the tightening cycle, and the higher US yields are a crucial driver of the greenback's gains against the yen.  Japan's headline inflation and core measure, which only excludes fresh food, may be rising, but they are barely above zero and, in any event, are due to the surge in energy prices. In response to the weakening yen, Japanese investors appear to have boosted their investment in foreign bonds, while foreign investors increased their holdings of Japanese stocks.  The LDP and Komeito maintained a majority in the lower chamber of the Diet. A sizeable stimulus supplemental budget is expected to help strengthen the economic recovery now that the formal emergencies have been lifted.  In Q3, the dollar traded mainly between JPY109 and JPY111.  It traded higher in the second half of September rising to nearly JPY112.00.  The dollar-yen exchange rate often seems to be rangebound, and when it looks like it is trending, it is frequently moving to a new range.  We have suggested the upper end of the new range may initially be the JPY114.50-JPY115.00.  The four-year high set last month was about JPY114.70.  A move above JPY115.60 could target the JPY118.50 area.     Spot: JPY113.95 (JPY111.30)       Median Bloomberg One-month Forecast JPY112.98 (JPY111.00)      One-month forward JPY113.90 (JPY111.25)    One-month implied vol  6.4% (5.6%)   British Pound:  Sterling rallied around 4 1/3 cents from the late September low near $1.34.  The momentum stalled in front of the 200-day moving average (~$1.3850).  After several attempts, the market appeared to give up.  We anticipate a move into the $1.3575-$1.3625 initially, and possibly a return toward the September low. The implied yield of the December 2021 short-sterling interest rate futures rose from 22 bp at the end of September to 47 bp at the end of October as the market.  It was encouraged by Bank of England officials to prepare for a hike at the meeting on November 4, ostensibly while it is still providing support via Gilt purchases.  If there is a surprise here, it could be that, given the unexpected softening of September CPI and the fifth consecutive monthly decline in retail sales, rising Covid cases, that the BOE chooses to take the more orthodox route.  This would entail ending its bond purchases, as two MPC members argued (dissented) at the previous meeting and holding off lifting rates a little longer.        Spot: $1.3682 ($1.3475)    Median Bloomberg One-month Forecast $1.3691 ($1.3630)  One-month forward $1.3680 ($1.3480)   One-month implied vol 6.8% (7.1%)      Canadian Dollar:  The three drivers for the exchange rate moved in the Canadian dollar's favor in October and helped it snap a four-month slide against the US dollar.  First, the general appetite for risk was strong, as illustrated by the strength of global stocks and the record highs in the US.  Second, the premium Canada pays on two-year money more than doubled last month to almost 60 bp from 25 bp at the end of September.  Third, commodity prices in general and oil, in particular, extended their recent gains.  The CRB Index rose 3.8% last month, the 11th monthly increase in the past 12, to reach seven-year highs.  The Bank of Canada unexpectedly stopped its new bond purchases and appeared to signal it would likely raise rates earlier than it had previously indicated.  The swaps market is pricing 125 bp of rate hikes over the next 12 months, with the first move next March or April.  Still, the US dollar's downside momentum stalled near CAD1.2300.  There is scope for a corrective phase that could carry the greenback into the CAD1.2475-CAD1.2500 area.     Spot: CAD1.2388 (CAD 1.2680)  Median Bloomberg One-month Forecast CAD1.2395 (CAD1.2580) One-month forward CAD1.2389 (CAD1.2685)    One-month implied vol 6.2% (6.9%)      Australian Dollar:  The Aussie's 4% gain last month snapped a four-month, roughly 6.5% downdraft.  Despite RBA Governor Lowe's guidance that the central bank does not anticipate that the condition to hike rates will exist before 2024 is being challenged by the market.  Underlying inflation rose above 2% in Q3. The central bank's failure to continue defending the 10 bp target of the April 2024 bond spurred speculation that it would be formally abandoned at the November 2 policy meeting.  The RBA's inaction unsettled the debt market.  The two-year yield soared almost 70 bp last month, and the 10-year yield rose nearly 60 bp.  Although the RBA could have handled the situation better, New Zealand rates jumped even more.  Its two-year yield jumped 80 bp while the 10-year yield surged by 58 bp.  Last month, the Australian dollar's rally took it from around $0.7200 to slightly more than $0.7550, where it seemed to stall, just in front of the 200-day moving average.  We suspect the October rally has run its course and see the Aussie vulnerable to a corrective phase that could push it back toward $0.7370-$0.7400.  The New Zealand dollar has also stalled ($0.7220), and we see potential toward $0.7050.       Spot:  $0.7518 ($0.7230)        Median Bloomberg One-Month Forecast $0.7409 ($0.7290)      One-month forward  $0.7525 ($0.7235)     One-month implied vol 9.1  (9.0%)        Mexican Peso:  The peso eked out a minor gain against the dollar last month.  However, the nearly 0.4% gain understated the swings in the exchange rate last month.  The dollar's recovery seen in the second half of September from almost MXN19.85 to nearly MXN20.40 at the end of the month was extended to a seven-month high around MXN20.90 on October 12.  It then proceeded to fall to almost MXN20.12 before the greenback was bought again.  A move above the MXN20.60 area now would likely signal a test on last month's high and possibly higher. Recall that the dollar peaked this year's peak set in March was near MXN21.6350. The economy unexpectedly contracted in Q3  by 0.2% (quarter-over-quarter).  Nevertheless, with the year-over-year CPI at 6% in September, Banxico will see little choice but to hike rates at the November 11 meeting. The market expects a 25 bp increase.  A 50 bp hike is more likely than standing pat.       Spot: MXN20.56 (MXN20.64)   Median Bloomberg One-Month Forecast  MXN20.42 (MXN20.41)   One-month forward  MXN20.65 (MXN20.74)     One-month implied vol 9.6% (11.0%)      Chinese Yuan: Our starting point is the yuan's exchange rate is closely managed.  The fact that the yuan rose to four-month highs against the dollar and a five-year high against the currency basket (CFETS) that the PBOC tracks imply a tacit acceptance.  While it is tempting for observers to link the appreciation to securing an advantage as it secures energy supplies and other commodities, we note that the yuan's gains are too small (0.6% last month and less than 2% year-to-date) to be impactful.  We suspect that the dollar's recent weakness against the yuan will be unwound shortly.  The US government continues to press its concerns about the risk for investors in Chinese companies listed in the US and American companies operating in China. At the same time, the FTSE Russell flagship benchmark began including mainland bonds for the first time.  China's 10-year government bond is the only one among the large bond markets where the yield has declined so far this year (~16 bp).  On the other hand, Chinese stocks have underperformed.  That said, some investors see this underperformance as a new buying opportunity.  The NASDAQ Golden Dragon Index that tracks Chinese companies listed in the US fell by 30% in Q3 and gained 5% in October, its best month since February.  Lastly, the Central Committee of the Chinese Communist Party meets November 8-11 this year, a prelude to the important National Party Congress in 2022 that is expected to formally signal the third term for President Xi.     Spot: CNY6.4055 (CNY6.4450) Median Bloomberg One-month Forecast  CNY6.4430 (CNY6.4470)  One-month forward CNY6.4230 (CNY6.4725)    One-month implied vol  3.5% (3.4%)    Disclaimer
Covesting

Covesting

Prime XBT Prime XBT 15.11.2021 09:47
The decentralised oracle network ChainLink works by connecting contracts with data from around the world. Now one of the most popular cryptocurrencies, it can make you wonder where the next big cryptocurrency will be coming from and, more importantly, how to get on board before it explodes in popularity. It is time to introduce you to Coversting. What Is Covesting? Covesting is an international fintech corporation which offers an array of software solutions for customers across the world. Recognising the importance of being based in a country where the government fully supports what the company is about, Covesting is based in Gibraltar. Quickly becoming one of the first companies in the world to receive a Distributed Ledger Technology License, also referred to as DLT, from the authorities in the British Overseas Territory, Covesting has its own token; COV. Developing their own platform, Covesting connects traders with a variety of followers, a little similar to social media, allowing for both the follower and the trader to make profitable gains. Traders earn a small fee from the equity of their followers, while the followers benefit from hassle free trading by following the trader’s most successful strategies. This process is known as ‘copy trading’. Partnership with PrimeXBT Now available to everyone via PrimeXBT, the Covesting platform allows traders to make profit from each other as well as their own followers. To make capital, transparency is key. Traders create funds with their best strategies which users can then easily verify, along with the track record of the trader and how much money has been invested into each fund. If traders are able to build and maintain a good reputation, they will be able to generate a second income by attracting new followers. Users can view traders objectively, looking at their results and only invest when they are comfortable they have selected the right trader for them. This way, capital can be generated passively without knowledge of the market or any trading skills. PrimeXBT Offering services such as foreign exchange and stock indices, PrimeXBT is a Bitcoin based trading platform. With trading volumes over $1 billion (USD), in 2020 the company won ‘Best Bitcoin Margin Trading Platform’ at the International Financial Awards. As a platform, PrimeXBT can provide up to one hundred times leverage for cryptocurrencies, a wide range of technical analysis tools and extra security for efficient and safe trading. Why Will COV Be Popular? With a limited supply of tokens, only 18 million COV tokens are in circulation and half of these are held in ‘strong hands’. Holders of the tokens gain access to benefits and COV utilities will be divided up between Secondary and Core token utilities. Moving forward, Covesting plans to partner with other third parties to increase the utilities offered to token holders. So what will a COV token be used for? Well, it will be integrated into PrimeXBT and will be used for a number of functions. These include: Trading Fee Reduction Fee reduction tiers will range from between 10% and 100%, and the level of reduction permitted will depend on the amount of COV tokens held. The number of tokens required for each level reduction will be announced at a later date though there are a variety of options and benefits available. Improving Success Fee Percentage Followers can favourably increase the percentage of success fees by staking tokens and taking advantage of its utility. At the moment, Covesting takes a percentage of success fees on closed profitable trades. Determined by the corresponding offer, Covesting then distributes the remaining percentage between the follower, the strategy manager and the platform. Offers are subject to change depending on the current market conditions. By staking a certain amount of COV tokens, Covesting has a smaller percentage, with a larger share going to the follower on profits made by the strategy manager. Increasing Following Limits In order to keep token utility levels high, Covesting implements limitations on the maximum number of unique followers permitted, in addition to imposing limitations on capital. Staking COV tokens unlocks followers and raises capital limits. Token Burns Covesting will burn a portion of fees generated at regular intervals throughout the year. Calculated fees will exclude affiliate earnings, fee discounts and various other revenue impacts. COV tokens have a lot of potential in a relatively short time frame, being traded on KuCoin and Inter Alia. Covesting is surrounded by a very supportive community with the price reaction to Covesting’s module launch on PrimeXBT being extremely positive. In Summary The best piece of advice you can get is to visit the Covesting website and carry out your own research about the token before deciding whether or not to invest. You may also wish to try your hand at trading cryptocurrency on PrimeXBT. If you follow this link, you will receive a welcome bonus of $50 when you sign up. When you start to follow traders, it is important to remember that their past results are not a guarantee of any future results. You should also look at how long a certain strategy has been live on the platform. For example, the newer the strategy the more risk it involves and following some strategies can result in financial losses. This said, if you cannot afford to lose capital, do not invest until you are prepared to accept the risk of loss. Reasons for Holding COV Main reasons for holding COV tokens include: Trusted, licensed company Limited token supply Under the radar at the moment Future utility plans Top TradingView analyst recommendations Token burns Strong sense of community
Euro Bounces Back, but The Turkish Lira Remains Unloved

Euro Bounces Back, but The Turkish Lira Remains Unloved

Marc Chandler Marc Chandler 18.11.2021 15:17
Overview:  The US dollar's sharp upside momentum stalled yesterday near JPY115 and after the euro met (and surpassed) a key retracement level slightly below $1.1300.  Led by the Antipodean currencies today, the greenback is mostly trading with a heavier bias.  Among the majors, helped by a steadying of US yields, the yen is soft.  In the emerging market space, the Turkish lira continues its headlong plunge while the yuan softened and the Mexican peso is off.  Hungary's central bank surprised with a 70 bp hike in the one-week deposit rate.  The JP Morgan Emerging Market Currency Index is posting a small gain through the European morning.  Disappointing tech results in China (Baidu and Bilibili) weighed on Chinese shares, but most markets in the region fell but Australia and Taiwan.  Europe's Stoxx 600 is struggling to extend the six-day advance.  US futures are also a little firmer.  After yesterday's four basis point pullback, the US 10-year yield is little changed near 1.58%.  European yields are 1-2 bp lower.  Gold remains within Tuesday's range (~$1850-$1877), but the moment seen earlier last week has faded, and the yellow metal is trading choppily in a consolidative phase.  The prospect of a coordinated sale of oil after China's announced it would tap its reserves for the second time saw the January WTI contract fall to $76.45, its lowest level since early October. Still, the price has stabilized in the European morning around $77 a barrel.  The benchmark European natural gas contract (Netherlands) has extended yesterday's pullback.  It settled a little below 75 euros last week, and after two days of declines, it is above 92 euros.  Iron ore is also falling for a second session and is now lower on the week.  Note that it settled October a little above $104 and is now around $86.40. Copper is lower for the fourth consecutive session.  It is trading around $424, off $20.5 this week.   Asia Pacific  Japan is expected to unveil the much-awaited supplemental budget tomorrow.  Prime Minister Kishida will get one bite of the proverbial apple, and he is expected to go big.  Talk of the size of the overall package has risen in recent days.  The Nikkei seemed to suggest a JPY79 trillion (~$690 bln) effort, while others report something on the magnitude of JPY56 trillion.  Still, it is recognized that part of the budget will include funds that were earmarked under previous budgets, which have not been spent.  The clear water is seen around JPY32 trillion.  Japan is one of the few countries that will provide new fiscal support.   New Zealand's central bank meets next week.  It is widely expected to hike rates for the second time in the cycle.   The swaps market has 200 bp of tightening priced in for the next 12 months.  The cash rate stands at 50 bp.  Earlier today, the central bank reported that the two-year inflation expectations (business survey)  rose to 2.96% in Q4 from 2.27% in Q3.  It is the highest in a decade.  The one-year expectation rose to 3.7% from 3.02%.  Still, with other countries slower to raise rates, a 50 bp move may not be necessary.  The Kiwi rose almost 4% last month and has given back nearly half so far in November.  Separately, the Philippines and Indonesia central banks met and left rates steady as expected.   The dollar posted a key reversal against the yen yesterday.  It made a new high for the move, a few pips below JPY115.00, and proceeded to sell-off and close (slightly) below Tuesday's low.  However, follow-through selling has been limited, and the greenback is trading firmly but may be absorbing sales related to the $1.34 bln in options in the JPY114.20-JPY114.25 area that expire today.  The Australian dollar initially extended its losses to almost $0.7250, where a A$575 mln option expires today. However, since early in the Asian session, it has posted corrective upticks and looks set to challenge yesterday's high and five-day moving average a little above $0.7300.   The Chinese yuan appears to have begun consolidating.  It remains in the range set on Tuesday that saw the dollar trade roughly between CNY6.3670 and CNY6.3965.  The small gain is the third this week.  The PBOC fix was at CNY6.3803, a bit firmer compared with expectations (CNY6.3786 in the Bloomberg survey) than seen recently.  Note that there is a $1 bln option at CNY6.3830 that expires today.   Europe The auto industry in Europe remained under pressure last month, though the US reported its first increase in sales in six months.  New car registration in Europe, including the UK, is a proxy for sales.  They tumbled by slightly more than 30% year-over-year in October.  This is considerably weaker than expected and is the poorest since May 2020.  The shortage of semiconductors is the likely culprit, and there are some signs of improvement.  The EC will propose modest tweaks in rules about how funds outside of its borders (UK) can be managed while avoiding more dramatic changes.   Draft proposals call for at least two full-time senior managers in the EU and for regulators to be notified when most of their assets are managed outside the EU.  These seem quite minor and unlikely to disrupt the UK fund business.  Earlier this month, the EU Commissioner for Financial Services indicated that temporary waivers would be granted to allow EU banks and money managers to clear trades in the UK. Meanwhile, the dispute over fishing appears to be worsening (Denmark complaining, not just France), and the UK continues to threaten to invoke Article 16.  Former Prime Minister Blair says he will propose a solution to the dispute over the Northern Ireland Protocol in the coming days.  Hungary delivered a 30 bp hike in the base rate earlier this week, which now stands at 2.10%.  It warned that it could make a separate decision on its one-week deposit rate.  It did so today, hiking it 70 bp to 2.50%.  It is a hawkish move that sent the forint higher.  Separately, as widely expected, the Central Bank of the Republic of Turkey cut the one-week repo rate 100 bps to 15%. As a result, the lira is weaker for the eighth consecutive session.  The lira's weakness not only fuels inflation but also will challenge companies and banks with foreign exchange exposure.  The dollar finished last month near TRY9.60 and after the rate hike, pushed above TRY10.97 before stabilizing.   The euro overshot the (61.8%) retracement target of the rally that took it from near $1.0640 in March 2020 to high on January 6, around $1.2350.  That retracement target was about $1.1290, and the euro fell to around $1.1265 yesterday. It recovered to new session highs early in North America yesterday (~$1.1330), leaving bullish hammer candlestick, and follow-through buying lifted it to $1.1345 today.  The combination of higher inflation and stronger retail sales this week have helped sterling to recover.  It had traded near $1.3350 at the end of last week and has barely traded below $1.34 this week.  Indeed, sterling is rising today for the fifth consecutive session, the longest advance in nearly seven months.  It poked above $1.35, where an option for about GBP345 mln will expire today.  A convincing move above $1.3515 could signal another cent advance.  The euro slipped to below GBP0.8385 today before recovering.  It is testing the GBP0.8400, which holds options for 1.1 bln euros that also expires today.   America Leave aside the gaffes by President Biden over Taiwan.  Bloomberg counts four such verbal blunders that have required official walk back or explanation or clarification.  Reports indicate that Biden probed Xi about oil sales.  China has intervened in the commodities (industrial metals) and crude oil market recently.  Today it indicated it will provide more oil from its strategic reserves.  The September is action 7.1 mln barrels, according to reports, and privately sold more.  It is unclear whether today's sales were planned or grew out of the "virtual summit."  Still, it puts the ball back into the US court.  If the US does not sell or lend oil from its strategic reserves, it will look bad after China's move.  On the other hand, its own agency (EIA) projects that it may not be needed as oil will be in oversupply shortly.  Moreover, the pain for consumers is coming from gasoline prices, not oil per se.  Drawing down strategic reserves may not help the gasoline market.  Apparently, Japan has been approached by the US about coordinating the release of oil, though Europe was not.  The US reports weekly initial jobless claims today.  They have fallen for six consecutive weeks, and at 267k, it is the lowest since the pandemic struck.   That said, at the end of 2019, there were below 220k.  The Philadelphia and Kansas City Feds publish their November survey results.  Both surprised last month, with the former on the downside and the latter on the upside.  This time it may be the other way around, with the Philly survey showing strength and the KC survey softer.  Canada reports its monthly portfolio flow data ahead of tomorrow's retail sales report.  Mexico and Brazil have light economic calendars.   Canada's Prime Minister Trudeau and Mexico's President AMLO visit Washington today for the North America's Leaders Summit.  There is tension among the "three amigos."  The Build Back Better US initiative contains several elements that favor American producers. A key one is that substantial tax break for Americans buying electric vehicles if they are made in the US.  This would seem to put Canada and Mexico at a disadvantage, given the integration of the auto sector on a continental basis. Mexico and Canada are also concerned that the Biden Administration's interpretation of the domestic content requirement in the USMCA treaty is also narrow and puts them at a disadvantage.   Canada is also concerned about the pipelines after Biden nixed the Keystone Pipeline in one of his first acts in office, and the Line 5 pipeline is being challenged by Michigan.  The US, and to a less extent, Canada, is worried about the efforts by AMLO to increase the power of the state sector energy companies (oil and electricity), deterring private sector efforts.  The US may try pressing against this on environmental grounds.  Climate and immigration are reportedly on the top of today's agenda.  The US dollar reversed higher against the Canadian dollar on Tuesday, posting an outside up day.  Follow-through buying yesterday lifted the greenback a little above CAD1.2620.  It ticked ever so slightly higher today but has come back offered.  Support is seen in the CAD1.2555-CAD1.2575 area.  The $1.04 bln option at CAD1.25 that expires today is too far away to be impactful. Meanwhile, the US dollar remains within Tuesday's range against the Mexican peso (~MXN20.56-MXN20.85).  This range looks set to hold today.   Disclaimer
Covid Wave Knocks Euro Down and to new 6-year Lows Against the Swiss Franc

Covid Wave Knocks Euro Down and to new 6-year Lows Against the Swiss Franc

Marc Chandler Marc Chandler 19.11.2021 13:58
Overview:  Concerns about the virus surge in Europe cut short the euro's bounce and sent it back below $1.1300 and are also weighing on central European currencies, including the Hungarian forint, despite yesterday's aggressive hike of the one-week deposit rate.  Austria has reintroduced a hard 20-day lockdown.  Germany's health minister warned that the situation deteriorated and vaccines were not enough to break the wave.  He was explicit that a lockdown cannot be ruled out.  The US dollar is trading broadly higher.  Only the yen is resilient on the day, but sterling is the only major currency that has edged higher this week.  The Scandis and euro are off more than 1%.  Speculation that Turkey may announce measures over the weekend to stabilize the lira may be helping to deter new sales today after yesterday's rout.  In the nine-day drop through today, it is depreciated by almost 15%.  The JP Morgan Emerging Market Currency Index is off for the fourth consecutive session to bring this week's loss to more than 2%, the most in five months.  Equities do not know of the consternation in the foreign exchange market.  Disappointing Alibaba results weighed on the Hang Seng (~-1%), while most other large regional bourses but Taiwan and India closed the week on an up note.   Europe's Stoxx 600 snapped a six-day advance yesterday. It was only the second loss since October.  It began firmer today but has reversed lower, putting at risk the six-week rally.   US futures are mixed, with the NASDAQ outperforming.  Bond markets are in rally mode as well.   The US 10-year yield is off three basis points to approach the week's low near 1.53%.  European bonds are off mostly 3-5 basis points, even in the UK, where retail sales surprised on the upside.  Gold is steady, finding support near $1850.  Oil initially extended yesterday's recovery but is reversing lower, leaving the January WTI contract set to test yesterday's low near $76.45.  This is the fourth consecutive weekly fall in crude oil.  European natural gas (Netherlands benchmark) is off 4.4% today, the third drop in a row, and pares the week's gain to almost 19%.  In Singapore, iron ore prices jumped 5.7% to break a five-week slide that saw prices tumble by about 28%.   Copper is firmer and paring this week's loss to around 2%.   Asia Pacific There were two developments in Japan to note.  First, October CPI was largely in line with expectations.  Surging gasoline prices (seven-year highs) helped keep the headline rate positive for the second month (0.1% year-over-year).  Excluding fresh food, the core rate was steady at 0.1%.  However, the deflationary forces are evident when fresh food and energy are removed.  The measure deteriorated to -0.7% from -0.5%, the most since June (-0.9%).    Second, Prime Minister Kishida unveiled an overall package of JPY78.9 trillion (~$690 bln). It is larger than the previous two pandemic packages. "Fiscal measures" refer to spending, investment, and loans, and this is seen worth about JPY55.7 trillion.  It is not clear yet, how much represents new spending as opposed to the reallocation of funds from earlier budgets that were not used. However, it appears to be about JPY32 trillion of new spending.   The Chinese yuan, up a modest 2.1% for the year, is the strongest currency.   Against a trade-weighted basket (CFETS), the yuan is pulling back from a six-year high set earlier this week as the euro recovers a cent.  Consider that the yuan has appreciated by more than 9% against the euro and 11.5% against the yen this year.  That means that investment in China has the same tailwind as the dollar and is compensated a bit for the relative lack of transparency and liquidity.  The Financial Times estimates that foreign holdings of Chinese bonds and stocks rose to around $1.1 trillion at the end of September, about a 13% increase this year.  China's stock market has underperformed this year, and the CSI 300 is off around 7% this year.  On the other hand, China's bonds have fared well.  It is the only 10-year bond that has not weakened this year.  China's figures show foreign direct investment has risen by almost 18% this year through October to nearly $142 bln.   The dollar is posting an outside down day against the Japanese yen by first rising above yesterday's high before reversing and taking out yesterday's low. It is approaching the week's low near JPY113.75 in the European morning.  Below there, support is seen around JPY113.60.  A break would warn of a return to JPY113.00.  The Australian dollar has been sold to its lowest level since October 6, when it recorded a low of almost $0.7225.   It has broken the trendline that connected the August and September lows (~$0.7250).  The September low was around $0.7170 and maybe the next important technical target.  The dollar is trading with a firmer bias against the Chinese yuan, but the greenback remains in the range set on Tuesday (~CNY6.3670-CNY6.3965).  The dollar gained on the yuan four sessions this week, the most since July, but the net gain of less than 0.2% still shows an extraordinarily steady exchange rate.   With the yuan near six-year highs against its trade-weighted basket (CFETS), the PBOC warned against one-way moves and encouraged financial institutions to bolster fx risk management.  It set the dollar's reference rate at CNY6.3825, slightly above expectations (Bloomberg survey) for CNY6.3822.   Europe The stronger than expected October retail sales capped the week's data that points to a rebounding economy and boosts the chances of a rate hike next month.  A strong jobs report was followed by a larger than expected rise in CPI and PPI.  Retail sales jumped 0.8% in October, and the September series was revised to flat from -0.2%. It was the first increase since April.  Pre-Xmas sales were reported.  Separately, the UK government reported that the cost of servicing the national debt has risen more than three-fold over the past year, leaving the budget deficit higher than anticipated.  It appears that the swaps market is pricing in a 15 bp hike at the December 16 BOE meeting, though some are talking about a bigger move.    Several ECB officials, including President Lagarde, have successfully pushed back against expectations of a 20 bp rate hike next year that had appeared discounted by the swaps market earlier this month. The market has pushed it into early 2023.  The implied yield of the December 2022 Euribor futures contract has fallen 20 bp this month.  The December 2022 Eurodollar futures contract is moving in the opposite direction.  The implied yield has risen by about 4.5 bp this month.  The net result is the US premium has increased to over 125 bp, the highest since last March.  In late 2019, the premium was around 180 bp.  This is recognized as a factor helping lift the dollar against the euro, and it appears to have become more salient recently.   The euro's bounce yesterday, its first gain in seven sessions (since the US CPI shocker), stalled near $1.1375, where a 780 mln euro option expires today.   The euro traded quietly in Asia before being sold aggressively as news of the virus hit the wires.  The euro traded through $1.1285 before catching a bid.  Resistance now will likely be encountered around $1.1320.  The euro is posting its first back-to-back weekly of more than 1% since March 2020.  Sterling is also sliding back toward the week's lows, just above $1.3400.  A break could signal a test on the $1.3350 area, but it appears stretched on an intraday basis.  While the euro-sterling cross is practically flat, the euro has punched below CHF1.05 for the first time in six years.  It would not be surprising to learn that the SNB has been intervening.  There appears to be little chart support until closer to CHF1.0250. America The nonpartisan Congressional Budget Office offered its evaluation of the Biden administration's Build Back Better initiative.  It sees $1.636 trillion in spending over the next decade and almost $1.27 trillion in revenue.  That leaves a deficit of $367 bln.  A notable difference between it and the administration is how much more revenue will be generated by increasing the number of IRS agents.  Even if it passes the House of Representatives, it will likely be marked up in the Senate.  The jockeying for position and spin around it will likely dominate the session, which sees no US economic reports outside of the rig count later today.  The Fed's Clarida and Waller speaker today.  It seems that most market participants still see the Fed behind the curve and disagree with our idea that to secure the ability to respond to a wide range of possible outcomes, the Federal Reserve may accelerate its tapering starting in January.   It is not clear exactly when the debt ceiling will be reached, but it is being played.  The Democrats do not want to lift it through the reconciliation process, though they have forced the Republicans to do so in the past.  The Republicans appear to have the discipline and will to oppose.  No one seems to think the US will really default, and getting even this close seems undignified.  Yet, the desire to avoid being caught out encouraged investors to demand a high yield on the four-week bill sold.  Yesterday's auction saw the yield more than double to 11 bp (annualized).  It is the highest yield since July 2020.  In contrast, the eight-week bill, which is thought to be beyond the shenanigans, yield slipped to 4.5 bp from six previously and a higher bid-cover ratio.   Canada reports September retail sales figures today.  After a 2.1% rise in August, some weakness is expected.  Ahead of it, the Canadian dollar is trading at new lows for the week, though it is faring better than the other dollar-bloc currencies.  The US dollar is approaching the (61.8%) retracement objective of the decline since the CAD1.29 level was tested on September 20.  The retracement level is near CAD1.2665, and a break would target CAD1.2700-CAD1.2750.  The upper  Bollinger Band is found near CAD1.2655 today.   The Mexican peso is also under pressure.  It, too, has fallen to a new low for the week today.  The greenback looks set to test the eight-month high set earlier this month near MXN20.98.  Note that the central bank's Deputy Governor warned that inflation was accelerating, and it could rise to 7% this month and 7.1%-7.3% next month.  In October, the CPI stood at 6.24% year-over-year.  Banxico meets next on December 16, the day after the FOMC meeting.  Lastly, we note that the Brazilian real is off for four consecutive sessions coming into today.  The dollar closed above its 20-day moving average against it yesterday and looks poised to probe above BRL5.60 today. The high for the month was closer to BRL5.70.   Disclaimer
Covid Strikes Back

Covid Strikes Back

Marc Chandler Marc Chandler 26.11.2021 12:44
November 26, 2021  $USD, Covid, Currency Movement, Hungary, Mexico, South Korea Overview: Concerns that a new mutation of the Covid virus has shaken the capital markets.  Equities are off hard, and bonds have rallied.  In the foreign exchange market, the Japanese yen and Swiss franc have rallied.  While there may be a safe haven bid, there also appears to be an unwinding of positions that require the buying back of the funding currencies, which is also lifting the euro.  The currencies levered from growth, the dollar-bloc and Scandis are weaker.   Oil has been knocked back by around  6.7%, with January WTI trading near $73. Led by 2%+ losses in Japan, Hong Kong, and India, and 1%+ losses in South Korea, and Taiwan, the MSCI Asia Pacific Index has slumped to its lowest level since July.   Europe's Stoxx 600 gapped lower and is off around 2.4% near midday.  US futures are sharply lower (1.25%-2.5%).  The US 10-year yield has dropped around 12 bp to nearly 1.50%.  While UK Gilts have kept pace with US Treasuries, continental benchmark yields are off 6-8 bp.  The US 2-year yield is about 15 bp lower (~0.49%), while European 2-year yields are mostly 2-5 bp lower.  The 2-year Gilts yield has shed about 12 bp, as the market unwinds some of the chances of a rate hike next month.   Key Development: A new variant of the Covid virus was found.  It is thought to have the most mutations to date.  The EU, UK, Israel, and Singapore have quickly banned travel from South Africa and five neighboring countries.  This is coming on top of and is separate from the outbreak in Europe, where Germany has reported a record number of new cases and several other countries have introduced new restrictions.  Almost a third of Shanghai flights were canceled as three local cases were found.  US infections are also on the rise.  Asia Pacific  As widely expected, South Korea hiked its key 7-day repo rate by 25 bp to 1.0% yesterday.   It follows a 25 bp hike in August.  Consumer inflation rose 3.2% year-over-year in October, while the core rate rose 2.8%.  Growth in Q3 was 4.0%.  With today's roughly 0.3% decline, it brings this year's loss to almost 9%.  Only the yen (~-9.4%) and the Thai baht (~-11%) have performed worse in the region.   Australia reported stronger than expected October retail sales.  The 4.9% month-over-month surge was more than twice the Bloomberg median forecast (2.2%) and follows September's 1.3% gain.  It underscores the recovery that is taking place. The preliminary PMI showed the recovery continuing into November.  The composite rose to 55.0, its highest reading since June.   The dollar was fraying the upper end of the range we anticipated against the yen, pushing against JPY115.50.  The momentum looked to have been at risk of stalling when the news struck.  The dollar was sold to almost JPY113.65.  An option for $710 mln at JPY113.70 expires today.  The price action appears to be stabilizing a bit in the European morning, and the greenback is hovering around JPY114.00.    The trendline connecting the September and the previous two November lows comes in today near there today.  The JPY114.50 area looks to offer initial resistance.  The Australian dollar had been leaking through $0.7200, and the risk-off move sent it slightly through $0.7115, just above the low for the year set on August 20, closer to $0.7105.  A break could spur a move toward $0.7050, which is the (38.2%) retracement of the Australian dollar's recovery since March 2020, when it hit a low near $0.5500.  The $0.7140 area may provide the initial cap for the bounce.   The Chinese yuan is a rock.  It has hardly moved despite the broader developments.  The greenback is slightly (less than 0.05%) firmer and still a little below CNY6.39.  The PBOC set the dollar's reference rate at CNY6.3936, a touch above the CNY6.3934 median projection (Bloomberg survey).   Europe Part of the limited reaction short-end of the European debt market derives from the fact that investors had not expected a change in ECB's monetary policy until the very end of next year, at the earliest.  The surge in the delta strain had already emerged as a weight on the euro.  We had put emphasis on the divergence with the US and saw it captured in the two-year interest rate differential between the US and Germany.  The US premium had risen from around 90 bp in mid-September to 140 bp in the middle of this week.  It has fallen back to about 128 bp today.  Some observers had focused on the year-end adjustments of European banks and the shifting of liquidity through the cross-currency swap basis.   The new German coalition has been announced, and it will have its work cut out.  A record number of new cases have been reported in Germany, and many countries are introducing new social restrictions.  Portugal will try something a bit different.  It is set to require people to work from home in early January for a week to avoid a spike in the virus after the holidays.   Hungary was more aggressive than expected yesterday.  It raised its one-week deposit rate by 40 bp to 2.90%.  Recall that on November 18, it had hiked the one-week deposit rate 70 bp to 2.50%.  Two days earlier, it lifted the base rate 30 bp to 2.10%.  The forint had fallen to a record low against the euro on November 23.   The euro's high was just shy of HUF372, and it fell back to about HUF364.80 yesterday before jumping back to almost HUF369.50 today.  It has steadied around HUF368 in the European morning.   The euro's downside momentum had begun easing as bids below $1.12 were being filled.  The virus developments have spurred what appears to a be short-covering rally that has lifted the single currency thought $1.1280, where a 460 mln euro option expires today.  Nearby resistance is seen near $1.1300 and then last week's high near $1.1375.  Sterling recorded a new low for the year near $1.3280 in late Asian turnover before finding support.  It recovered to about $1.3335 so far.  A move above yesterday's high (~$1.3355) could spur a move to $1.3400-$1.3425.    America The dollar's rally has been fueled by the prospect of a divergence of monetary policy that favored the Fed over the ECB and BOJ.  Indeed, since the November 10 surprise jump in the October CPI to above 6%, we had emphasized the likelihood that the Fed would have to taper quicker to give it the flexibility to lift rates earlier if needed.  Since then, 4-5 Fed officials and several large banks have also underscored this possibility. However, this scenario is being called into question today, which is evident in the swaps markets and the Fed funds futures.  The implied yield of the June 2022 Fed funds futures contract is 7.5 basis points lower, and the December 2022 contract implied yield is down 14.5 bp.  The US dollar rallied to CAD1.2775, its highest level since late September.  It tests a downtrend line connecting the August (~CAD1.2950) and September (~CAD1.2900) highs. A convincing break of the trendline would signal a test on those earlier highs.   We are inclined to see it hold but cannot be confident until CAD1.2720 yields.   The Mexican peso was trampled before today amid concerns about the implications of President AMLO pulling Herrera's nomination for central bank head.  Herrera is a seasoned hand, and although he worked closely with AMLO from the finance ministry, his appointment did not seem to jeopardize the independence of the central bank.  Perhaps the market has been influenced by developments in Turkey, but the nomination of a less experienced and less known candidate has weighed on sentiment.  The dollar, already bid, jumped to MXN22.1550, at its best level since September 2020.   It has pulled back to around MXN21.83, which leaves it up around 1.2%.  This would be the seventh consecutive decline in the peso.  Support is seen around MXN21.60.  Disclaimer
The Dollar Moves Back to the Fulcrum between the Funding and Higher Beta Currencies

The Dollar Moves Back to the Fulcrum between the Funding and Higher Beta Currencies

Marc Chandler Marc Chandler 29.11.2021 10:46
November 28, 2021  $USD The new covid variant injected a new dynamic into the foreign exchange market.  The World Health Organization cautioned against the need to impose travel restrictions, but policymakers, by and large, do not want to be bitten by the same dog twice.  To err on the side of caution is to minimize one's biggest regret.  The risk is that the uncertainty is not lifted quickly but lingers, which would likely unpin volatility.   US and European benchmark 10-year yields fell sharply ahead of the weekend.  In the US, the market unwound some of its aggressive pricing in of Fed policy.  This is reflected in the commensurate drop at the short-end.  In Europe, the decline in 10-year yield reflected a slowing of growth/inflation as its short-end was largely unchanged.   There are three areas in which market participants cannot be as confident as they were in the middle of last week.  First, the odds of a Bank of England hike next month were diminishing and fell further at the end of last week.  Second, an acceleration in the Fed's tapering seemed increasingly likely given the strength of recent data and the jump in price pressures.  However, the emergence of this new strain makes an aggressive rate hiking campaign less likely.  Third, the prospects for stronger world growth diminished on the margins.  This undermines risk appetites and weakens those currencies that often appear to do better in robust growth phases (e.g., dollar bloc, Scandis, and most emerging market currencies).   Dollar Index:  The Dollar Index put in a new high for the year on November 24, slightly below 97.00. It was confined to a narrow range when the US markets were closed on November 25 and sold off on news of the new variant and imposition of travel controls by several countries.  The setback was sufficient to turn the MACD lower from over-extended territory, though the Slow Stochastic hasn't and remains stretched.  If we assume a correction has begun, a key question is what move is being retraced.  A conservative but logical assumption is that the last leg up, since the November 10 CPI, is in play.  The first (38.2%) target is near 95.75, and then the (50%) retracement is around 95.40.  A break of 95.00 could signal another cent decline.  Euro:  Interest rate differentials and the surge in delta variant cases had sent the euro to almost $1.1185 in the middle of the last week, the lowest since July 2020.  When news of the new variant broke, what appears to be a short-covering rally lifted the euro to almost $1.1325.  The (38.2%) retracement of the leg down since November 10 is near $1.1340.  A more formidable resistance area is in the $1.1375-$1.1400 band.  As was the case with the Dollar Index, the MACD is turning, but the Slow Stochastic is lagging.  Initial support now is seen near $1.1260. With the old and now new variant, the surge accelerated inflation expected to be reported next week may not be the fodder for the ECB has that some anticipated.   Japanese Yen:  We have suggested that the dollar was in a JPY113-JPY115 range.  Earlier this month, it had dipped briefly below JPY112.75 and snapped back.  Indeed, in the first part of last week, it was fraying the upper end of the range and traded slightly through JPY115.50.  However, the pre-weekend turmoil saw the greenback drop back to the lower end of the range (~JPY113.05).  The trendline connecting the August low and the two November lows, found near JPY114.10 ahead of the weekend, was taken out with determination. The MACD is turning down but never recovered from the mid-October-mid-November decline.  The Slow Stochastic is edging back into over-extended territory. British Pound:   As the December short-sterling futures contract rallied, implying a less likely chance of a BOE hike before year-end, the pound fell.  The interest rate futures contract will begin next week with a seven-day rally intact.  Sterling, itself has fallen for six sessions, and a new low for the year was set near  $1.3320 before the weekend.  Here, both the MACD and Slow Stochastic are falling while being over-extended on the downside.   A move above $1.3350 would help stabilize the tone,  but it requires a push above $1.3400 to be notable.  On the downside, we continue to see a risk of a test on the  $1.3165, the first retracement (31.8%) of sterling's rally since Mach 2020.     Canadian Dollar:  Talk about trending currencies; the Canadian dollar fell for the fifth consecutive week following a five-week rally.  Net-net,  it is little changed.  The US dollar settled near CAD1.2765 on September 17, which was between the Bank of Canada meeting and the FOMC.  The greenback reached CAD1.28 ahead of the weekend before settling back near CAD1.2760.  There is little chart resistance until closer to CAD1.29.  As one would expect, the momentum indicators are stretched and frayed the upper Bollinger Band (~CAD1.2770).  It requires a break of the CAD1.2630-CAD1.2640 area to be meaningful.   Australian Dollar:  In the pre-weekend carnage, the Australian dollar came within a whisker of the year's low set in August near $0.7100.  The Aussie, like the Canadian dollar, has been streaking.  Its four-week decline comes are a four-week rally.  The move was underway before the new variant was announced.  The next target is around $0.7050, the (38.2%) retracement of the rally from the March 2020 low (~$0.5500).  Below there is the $0.7000 area, which caught the lows in September and October 2020.   The MACD continues to fall, while the Slow Stochastic has begun to flatline in the trough.  The 25 bp hike by the Reserve Bank of New Zealand, which was fully expected, and disappointed those that looked for a larger move, did little to support the New Zealand dollar.  Indeed, it was the worst-performing major currency last week, losing about 2.5%, more than twice as much as the Canadian dollar and two-thirds more than the Australian dollar.  It also tested the year's low set in August (~0.6800). A break would open the door to steeper losses, but the next area of support may be found in the $0.6760-$0.6780 area.   Mexican Peso:  The peso was the second weakest currency in the world last week (after the Turkish lira), falling around 4.3% to a new low for the year.  It had three strikes against it last week.  First, emerging market currencies broadly are out of favor.   The JP Morgan Emerging Market Currency Index has fallen for 10 of the past 12 weeks.  Second, the new variant and the dramatic risk-off saw the peso's losses accelerate.  Third are domestic considerations.  AMLO's nomination to head the central bank starting next year did not bolster the market's confidence, which was on the heels of the Turkish debacle.  Also, domestic economic conditions have worsened.  The data have been softer than expected, including a downward revision in Q3 GDP showing a contraction of 0.4% rather than 0.2%. At the same time, the bi-weekly CPI rose above 7%.   Ahead of the weekend, the dollar rose to MXN22.1550, and although it pulled back, it found support above the previous session's high (~MXN21.60).  Nearly all the emerging market currencies fell against the dollar (The Brazilian real was a notable exception.  It eked out ~0.5% gain).  However, Mexico seems particularly vulnerable.  The credibility of the central bank may be called into question.  The economic challenge of surging inflation and weak economic activity would seem to require fiscal support, for which AMLO shows little interest.  In April 2020, the greenback reached nearly MXN25.7850, and the MXN22.47 area corresponds to the halfway mark of its subsequent decline.   Chinese Yuan:  Chinese officials appear to have expressed mild displeasure with the foreign exchange market, cautioning against a one-way market and checking prop positions.  Officials would seem to think that the banks are short dollars, while many outside observers, trying to reconcile the large current account surplus with little currency movement and stable reserves, think the large banks are accumulating dollars ostensibly on behalf of officials (hence the talk of stealth intervention). In fact, the one-way market has been broken.  On November 16, the dollar traded between CNY.3670 and CNY6.3965 and has not moved out of that range.  We suspect the risk is for an upside break for the dollar and initially see a move toward CNY6.42.   Disclaimer
Animal Spirits Roar Back

Animal Spirits Roar Back

Marc Chandler Marc Chandler 07.12.2021 16:47
December 07, 2021  $USD, Canada, China, Currency Movement, Germany, Hungary, Japan, Mexico, RBA, Russia, US Overview:  A return of risk appetites can be seen through the capital markets today, arguably encouraged by ideas that Omicron is manageable and China's stimulus.  Led by Hong Kong and Japan, the MSCI Asia Pacific rose by the most in three months, while Europe's Stoxx 600 gapped higher, leaving a potentially bullish island bottom in its wake.  US futures point to a gap higher opening when the local session begins.  The bond market is taking it in stride.  The US 10-year Treasury is slightly firmer at 1.44%, while European yields are 1-3 bp higher.  The dollar-bloc currencies and Norway are leading the move higher among most major currencies.  The yen and euro are softer.  Sterling struggles to sustain upticks. Among emerging markets currencies, the Turkish lira is bouncing, while most central European currencies are being dragged lower by the weaker euros.  The JP Morgan Emerging Market Currency Index is slightly higher after four consecutive losses.  Gold is trading within yesterday's narrow range.  Oil continues to recover, and the January WTI contract is up around 2.5% (after yesterday's 4.9% advance) and is above $71.50 a barrel.  US natgas prices dropped 11.5% yesterday and have come back firmer today, while the European benchmark (Dutch) is up 7% today (~+0.5% yesterday) to near last week's highs.  Iron ore prices jumped 7.7% today after 2.5% yesterday, perhaps encouraged by strong Chinese import figures.  Copper prices are also firm.    Asia Pacific The Reserve Bank of Australia stuck to its stance. It may take two years to reach the 2-3% inflation target, and the uncertainties surrounding the Omicron variant also favor a cautious approach. This was in line with expectations.  The swaps market still has about 75 bp of higher rates discounted next year.   The Australian dollar's gains reflect the risk-on mood.   Japan's economy is on the mend.  Household spending rose 3.4% month-over-month in October.  Paradoxically, outlays on medical care actually fell (-5.7%) year-over-year in October.  Meanwhile, Labor cash earnings rose by 0.2% year-over-year, the same as in September, but less than expected.  Households headed by a worker rose 0.5% year-over-year.   China's trade surplus fell to $71.7 bln in November from $84.5 bln in October.  The US accounted for a little more than 50% of the surplus (~$37 bln).  Exports rose by 22% year-over-year, less than the 27.1% increase in October.  But, what really stood out were China's imports.  They surged, jumping 31.7% from a year ago after a 20.6% increase in October.  Commodity imports were robust.  The 35 mln tons of coal imported was the most this year. Oil imports were at three-month highs.  Iron ore imports reached a 13-month high,  Gas purchases were the highest since January.  Copper imports appear to be a record.  Separately, China reported that the value of its foreign exchange reserves rose by a minor $4.7 bln to $3.222 trillion.  Economists (Bloomberg survey median) had expected around an $11 bln decline.   The dollar has forged what appears to be a solid base now around JPY112.55.  So far, today is the first session since November 26 that the greenback has held above JPY113.00.  It has been confined to a narrow range between JPY113.40 and JPY113.75.  The dollar looks poised to move higher but may stall around JPY114.00, where an option for around $865 mln expires today.  The Australian dollar rose about half of a cent yesterday and is up around another half-cent today to test $0.7100.  An option for A$1.04 bln expires today there ($0.7100).  It is also the (61.8%) retracement objective of last week's drop.  A move above there would target the $0.7130 area and possibly $0.7200.  The reduction in Chinese banks' reserve requirements and the divergence with the direction the Fed appears headed did not deter the yuan from strengthening.  The dollar held CNY6.38 yesterday and is near CNY6.3660 now.  The low for the year was set at the end of May near CNY6.3570.  The dollar's reference rate was set at CNY6.3738, a touch higher than the models (Bloomberg survey) projected of CNY6.3734.   Europe According to the proverb, for want of a nail, a kingdom was lost.  US intelligence warns that Russia is poised to invade Ukraine.  Beijing continues to act as a bully in the South China Sea.  US President Biden is hosting a "Summit for Democracy" December 9-10.   Reportedly 110 countries will be represented, even Taiwan, which the US officially does not recognize as a country.  All of the EU members have been invited but Hungary.  Hungary, like Poland, is in a serious fight with the EC over the rule of law.  It is being fined for failing to comply with the European Court of Justice over its harsh treatment of asylum seekers.  Poland, which is invited to the summit, is also being fined a record 1 mln euros a day for deviations from the EU standards of the rule of law.   Yet Hungary's exclusion is needlessly antagonistic.  Hungary will hold parliamentary elections in April (though possibly May), and the opposition is united behind the center-right Marki-Zay.  Most polls show him ahead of Orban.   It is an insult to the EU, and Orban used his veto to block the EU from formally participating and prevented it from submitting a position paper.  It is a vulnerable position for the US to be the judge and jury about democracy and the rule of law.   Laura Thorton, director of the Alliance for Securing Democracy of the German Marshall Fund of the United States, expressed shock and dismay in a recent Washington Post op-ed over developments in Wisconsin. She wrote, "If this [where the GOP is seeking to replace the bipartisan oversight of elections with just its party's control] occurred in any of the countries where the US provides aid, it would immediately be called out as a threat to democracy.  US diplomats would be writing furious cables, and decision-makers would be threatening to cut off the flow of assistance."  Separately, the US embassy in Tokyo warned Japan about "racially profiling incidents" following the closure of its borders to new foreign entries into the country.   The US response to the Russian aggression in Georgia in 2008 and the annexation of Crimea in 2014 was soft.  Despite bringing NATO to Russia's door in the Baltics, the US recognized by its actions that it is difficult to defend what Russia calls its near-abroad. Ukraine is different.  When Ukraine gave up its nuclear weapons, the Budapest Memorandum  (1994), Russia, the US, and the UK committed to respecting its independence and territorial integrity.  Russia clearly violated the agreement, but the US says it is not legally binding.  Nevertheless, reports indicate that the Biden administration is contemplating new sanctions against Russia and Putin's inner circle.  Reportedly under consideration is removing Russia from the SWIFT payment system and new sanctions of Russia's energy companies, banks, and sovereign debt.  In late April, the European Parliament approved a non-binding resolution to exclude Russia from the SWIFT if it attacked Ukraine.  Russia is a heavy user of SWIFT, as few foreign banks, including the Chinese, are willing to use Russia's own payment system.  After a dismal factory orders report, the market had been prepared for a poor industrial output report today.  Instead, Germany surprised with its strongest gain for the year.  Industrial output surged 2.8% in October.   It is only the third monthly gain this year.  Moreover, September's decline of 1.1% was halved to 0.5%.  It appears auto production (capital goods) may be behind the improvement in activity.  Separately, the ZEW survey was mixed.  The expectations component was stronger than expected, but still, at 29.9, lower than November's 31.7 reading.  The assessment of the current situation deteriorated sharply to -7.4 from 12.5.  It has been declining since September, but this is the lowest since June.  On November 30, the euro spiked higher and has subsequently worked its way lower.  Today, it reached almost $1.1250, its lowest level since November 30, low near $1.1235. The 20-day moving average (~$1.1320) continues to block the upside.  It has not closed above it for a little more than a month.  The low for the year so far was recorded on November 24 near $1.1185.  For its part, sterling remains in its trough. The low for the year was set on November 30, slightly below $1.32.  Before the weekend, it was in a roughly $1.3210-$1.3310 range and remains well within that range yesterday and today.  It has been blocked ahead of $1.3300.  There is an option for about GBP450 mln at $1.3250 that expires today.   America The US is expected to report that productivity fell in Q3 by 4.9% rather than the 5% that was initially reported.  Productivity increased by 2.4% in Q2 and 4.3% in Q1.  It averaged 2.6% last year and 2.3% in 2019.  Unit labor costs are the most holistic measure, including wages, benefits, and output.  Looking at a four-quarter moving average, unit labor costs rose 1.6% in 2018 and 1.45% in 2019.  They jumped to 6.25% last year and fell by an average of 0.85% in H1 21.  The initial estimate for Q3 was an 8.3% surge.   The US also reports the October trade balance.  The preliminary goods balance signaled a likely improvement from the $80.9 bln deficit in September.  The median forecast (Bloomberg) sees a deficit of slightly less than $67 bln.  Through September, the monthly average was nearly $71 bln, up from $53.3 bln in the same period last year and less than a $50 bln average in the first nine months of 2019. Late in the session, the US reports October consumer credit, and another substantial increase is expected.  It jumped almost $30 bln in September.  It has averaged $20.275 bln a month through September.  Last year was too distorted, but in the first three quarters of 2019, consumer credit rose by an average of $15.3 bln a month.    Canada reports its October merchandise trade figures today, ahead of the Bank of Canada meeting tomorrow  The median forecast in Bloomberg's survey call for a C$2.08 bln surplus, which, if accurate, would the be third largest surplus since 2008.  The June surplus was larger at C$2.26, as was the December 2011 surplus of C$2.12 bln.   Canada's goods trade balance through September swung into surplus with an average of C$703 mln.  In the same period in 2020, the monthly deficit averaged C$3.1 bln and  C$1.4 bln in 2019.  The merchandise surplus may be sufficient to lift the current account too.  Canada has been running a current account deficit since 2009.   The OECD forecasts a surplus this year of 0.3% of GDP and projects it to be in balance next year.  Canada and Mexico have expressed concerns about the credits for electric vehicles in the Build Back Better US initiative.  They claim it violates the USMCA.  Europe has expressed similar problems, and the EU Trade Commissioner Dombrovskis has reportedly sent a formal letter warning that the Biden administration's efforts may also violate WTO rules.  Meanwhile, there is talk that the initiative may be blocked this year.  If this is the case, the odds of passage next year seem even slimmer.  On a different front, Mexico's controversial energy reforms, which expand the state sector, over some objections by US energy companies, look to be delayed due to lack of support.  The US dollar posted an outside up day against the Canadian dollar before the weekend, despite Canada's strong employment report.  There was no follow-through yesterday, and the greenback recorded an inside day and settled on its lows.  The US dollar has been sold to around CAD1.2700 today.  Initial support is around CAD1.2675, but the more significant test is near CAD1.2640.  A break would strengthen the conviction that a high is in place.  Meanwhile, the greenback continues to consolidate against the Mexican peso.  It remains within the range set last Wednesday (~MXN21.1180-MXN21.5150).  Thus far today, it is holding above yesterday's low (~MXN21.1720), which was- above the pre-weekend low (~MXN21.1625).            Disclaimer
Market Quick Take - December 8, 2021

Market Quick Take - December 8, 2021

Saxo Bank Saxo Bank 08.12.2021 09:06
Macro 2021-12-08 08:30 6 minutes to read Summary:  Equity markets blasted sharply higher yesterday as the market rushed to erase the concerns triggered by the omicron virus outbreak, as well, perhaps as due to the recent clear shift into a more hawkish stance from the US Federal Reserve. Overnight, the Chinese renminbi strengthened to match its strongest level this year versus the US dollar as China has been sending stronger signals that it is set to stimulate growth next year. What is our trading focus? Nasdaq 100 (USNAS100.I) and S&P 500 (US500.I) - global equities were significantly lifted yesterday due to more positive evidence over the Covid-19 variant Omicron with Nasdaq 100 futures up 3.1% and extending the momentum today in early European trading hours. This was the biggest single day rally in US technology stocks in nine months. The key resistance level is at the 16,435 level which was the local resistance level a couple of times back in late November. USDCNH – The USDCNH rate has plunged to match the lows of the year just above 6.35 after yesterday saw the USD weakening sharply on a resurgence of risk sentiment. A break of the lows would shift the focus to the post-2015 foreign exchange regime shift lows of 2018. It is notable that China has maintained a strong renminbi policy even as the USD has strengthened recently amidst the more hawkish Fed shift and despite weak EM currencies elsewhere. The stronger price action since yesterday may be on hopes that China’s growth is set to pick up on its new apparent shift toward more stimulus and as omicron covid news has eased some of the initial uncertainties. USDCAD – the USD has turned lower on the resurgence of risk appetite after initial blows from the omicron variant news, that particularly hit oil prices hard, taking CAD and other oil-sensitive currencies down with it. The last two sessions have seen a sharp repricing of USDCAD from above 1.2800 to well below 1.2700 yesterday, ahead of today’s Bank of Canada meeting (previewed below). Whether USDCAD can continue to erase the rally off the sub-1.2300 lows will likely depend on the degree to which global markets can get back on track with pricing a stronger economic outlook and a full return of the commodities bull market, led by oil prices. The Bank of Canada will likely fulfill market expectations of hawkish guidance as it is likely warming up for a January hike. Gold (XAUUSD) trades higher for a second day but has so far found resistance at the 200-day moving average, currently at $1792.50. A general improvement in risk appetite has supported a steady but so far unimpressive recovery from last week’s slump. Focus on silver (XAGUSD) which is also trying to establish support at $22 following its recent 13% drop. Focus on omicron developments through its indirect impact on bonds and the dollar. Copper (COPPERUSMAR22) meanwhile remains stuck in a relatively tight range, but supported by Chinese trade data which showed a strong pickup last month. The metal’s loss of momentum during 2H-21 has seen the speculative long being cut to near an 18-month low. Crude oil (OILUKFEB22 & OILUSJAN22) trades lower after an industry report pointed to the biggest gain in US stockpiles of oil and products since February. Overall, the market has put in a strong performance since last week's slump in the belief the omicron variant is unlikely to derail the global recovery. Flare-ups around the world resulting in temporary lockdowns is however likely to prevent the market from returning to pre-omicron levels at this point. The API last night reported a 3.1-million-barrel build in oil stocks with a 2.4 million rise at Cushing helping send the WTI prompt spread down to just $0.2/b after trading close to $2 in early November. The EIA in its Short-term energy outlook lowered its 2022 Brent average price to $70 as the agency still sees a surplus emerging next year. US Treasuries (IEF, TLT). The front part of the US yield curve rose yesterday, with 3-year yields breaking above 1% ahead of the US treasury auction. The move helped to attract high demand from investors. The 3-year note sale was priced at 1%, the highest auction yield since February 2020. Following the auction, yields fell slightly with news concerning the debt ceiling contributing to this trend. The house passed a bill that makes the debt ceiling faster to raise, it will be necessary to have a simple majority vote at the senate. It decreases the chances of default in mid-December easing the compressing forces on long-term yields. However, the expectations of tighter monetary policies continue to put upward pressure on short-term yields, while long-term yields remain compressed by Covid distortions. Therefore, we continue to see scope for a bear flattening of the yield curve. Today, the focus is going to be on the 10-year US Treasury auction. What is going on? Pfizer covid vaccine offers partial protection from omicron variant, according to early study. Researchers in South Africa saw a very large reduction in the production of antibodies for patients who had received two doses of the Pfizer vaccine who were infected with the omicron variant of covid, suggesting that immune protection is far lower, but not completely lost. US President Biden warns Russian President Putin on Ukraine attack – in a video conference call lasting some two hours yesterday, Biden said that the US and its allies would support Ukraine with “strong” measures if attacked, both in the form of “defensive material” and economic measures while Putin blames NATO and its overtures to Ukraine for the tense situation. Sources indicate that the US could push to have the Nord Stream 2 pipeline shut off if Russia invades Ukraine. US House Approves Bill that would allow Senate to raise debt ceiling with a simple majority vote. This avoids the prospect of brinksmanship over the debt ceiling issue, as the Democrats can pass the vote in the Senate without Republican help. The debt ceiling issue was set to hit crunch time as early as next week and could theoretically have raised the specter of a US default. How high the Democrats could raise the debt ceiling via this process is not yet known. HelloFresh warns of lower operating profit in 2022. The fresh meal-kit company says that it sees FY22 adjusted EBITDA of €500-580mn vs est. €630mn expected by analysts driven by rising input costs. What are we watching next? Today’s Bank of Canada meeting, which is likely to tilt hawkish. With the US Fed having made a clear switch to focusing on inflation fighting, and after Bank of Canada governor Macklem penned an op-ed in the Financial Times on the need for a being ready to respond with the appropriate tools if inflation proves more sustained, the market is leaning for more hawkish Bank of Canada guidance at today’s meeting at minimum, with a minority of observers actually looking for a rate hike at today’s meeting, though most expect a “set-up” meeting for a rate hike in January. This week’s earnings: Today’s focus is UiPath which is part of the bubble stocks segment and the meme stock GameStop as both stocks are a good barometer on risk sentiment. Analysts expect UiPath to deliver 42% revenue growth in Q3 (ending 31 October). Wednesday: Huali Industrial Group, GalaxyCore, Kabel Deutschland, Dollarama, Brown-Forman, UiPath, GameStop, RH, Campbell Soup Thursday: Sekisui House, Hormel Foods, Costco Wholesale, Oracle, Broadcom, Lululemon Athletica, Chewy, Vail Resorts Friday: Carl Zeiss Meditec Economic calendar highlights for today (times GMT) 0815 – ECB President Lagarde to speak0830 – ECB’s Guindos to Speak1310 – ECB's Schnabel to speak1500 – Canada Bank of Canada Rate Decision1500 – US JOLTS Job Openings survey1530 – US Weekly DoE Crude Oil and Product Inventories2130 – Brazil Selic Rate Announcement2205 – Australia RBA Governor Lowe to speak0001 – UK Nov. RICS House Price Balance0130 – China Nov. CPI / PPI   Follow SaxoStrats on the daily Saxo Markets Call on your favorite podcast app: Apple Spotify Soundcloud Sticher
Can Dollar Bears Resist the Fed? Can Yuan Bulls Shrug-Off the PBOC?

Can Dollar Bears Resist the Fed? Can Yuan Bulls Shrug-Off the PBOC?

Marc Chandler Marc Chandler 13.12.2021 10:56
December 12, 2021  $USD US yields and the dollar softened after the release of the November CPI figures before the weekend.  The data were in line with expectations showing the headline rate accelerated to 6.8% and the core rate to 4.9%.  The price action likely reflected positioning rather than a reassessment of the outlook for next week's FOMC meeting.  Nearly everyone recognizes the likelihood that the pace of tapering is quickened, and the individual forecasts reflect a more aggressive tightening path than anticipated in September.  With the diverging monetary policy impulses are evident in the shifting two-year interest rate differentials in the US favor, it is increasingly expensive to resist a stronger greenback.  A critical part of the backdrop is that market participants feel more comfortable that the Omicron variant may not be as disruptive as feared in Europe and the US (where the current surge is notable in its own right). As a result, those major currencies that tend to do well when risk appetites are strong, namely the dollar bloc and Scandis, are outperforming.  At the same time, the traditional funding currencies, the yen, and Swiss franc, were out of favor.  The euro falls in the latter camp.  A return to working from home, the evaporation of speculation that the BOE would raise rates in the week ahead, and a disappointing October GDP report pinned sterling in its trough.   It is difficult to see the market getting significantly more aggressive about the next year's outlook for the Fed.  The futures market is pricing in two hikes entirely and around two-thirds of a third hike.  A similar logic has turned us more cautious about the Canadian dollar.  There the market has discounted 125 bp of hikes over the next 12-months, which seems too aggressive.   Dollar Index:  The Dollar Index has been moving broadly sideways, though it rose for the seventh consecutive week.  For the first eight sessions of December, it has traded within the range set on November 30 (~95.50-96.65).   The momentum indicators have trended lower but appear to be stabilizing near mid-range.  The next big target is slightly below 97.75, which is the high from June-July 2020, and the (61.8%) retracement target of the decline since the March 2020 high near 103.00.   Euro:  The single currency briefly traded below the November 30 low (~$1.1235) last Tuesday before short-covering lifted it to the week's high ($1.1355) the following day.  It finished the week on a firm note after wobbling initially after the US CPI report.  With a brief exception, the euro has chopped between $1.12 and $1.14 since mid-November.   The broad sideways movement has seen the momentum indicators correct from over-extended territory.  Since November 10, when the US reported the jump in CPI to 6.2%, the US 2-year premium over Germany rose by roughly 18 bp to 1.40%,  to set the year's high.  It stalled.  The consolidative phase may continue ahead of the FOMC meeting.  Given what the market is pricing in, it may be difficult for the Fed to get ahead of market expectations for next year when it meets on December 15.   Japanese Yen: After testing support near JPY112.55 to start last week, the dollar recovered to almost JPY114.00 in the middle of the week before moving sideways.  It continued to track the movement of US 10-year yields.  As yields rose in the first part of the week, the dollar traded higher against the yen, and when yields slipped min the second half of the week, so did the greenback.  The MACD has flatlined, while the Slow Stochastic is trending higher.  A break of JPY113.00 retargets the lows.  On the topside, the JPY114.00-JPY114.30 area offers nearby resistance. British Pound:  Little is going sterling way.  Support for the Prime Minister has fallen, and polls show Labour opening its largest lead in years.  It has opted for "Plan B," with people returning to working from home, though no new government support was offered.  The economic growth slowed more than expected in October, which was before the Covid wave intensified and the Omicron variant was detected.  The rate hike that looked so likely in November now seems off the table until at least February.  Meanwhile, the fishing row and the attempt to change the Northern Ireland Agreement remain unresolved but causing enough consternation to deter the US from lifting the steel and aluminum tariffs that Trump imposed, let alone discussing a free-trade agreement.  Sterling made a marginal new low for the year last week (slightly below $1.3165, which met the (38.2%) retracement objective of the rally from the March 2020 low.  The next retracement (50%) is around $1.2830.  The momentum indicators are not generating a strong signal presently.  It finished last week on a firm note but a move above $1.3300-$1.13350 is needed to signal anything important.   Canadian Dollar:  The Canadian dollar's recovery fizzled after the central bank failed to provide fresh encouragement to the market, with 125 bp of hikes priced into the swaps market over the next 12 months.  The US dollar, which had rallied and closed above CAD1.28 on December 3 despite the diverging jobs reports, fell nearly CAD1.26 before catching a good bid.  Ahead of the weekend, it had recovered to the middle of the week's range (~CAD1.2730).  A move above the CAD1.2760 area could signal another run at the highs. The MACD pulled back, but it looks like it may try turning higher, while the Slow Stochastic is still falling.  The five-day moving average is set to slip below the 20-day moving average for the first time in a month.  Canada reports November CPI figures on December 15, and the year-over-year pace is set to accelerate from the 4.7% 12-month clip seen in October.  Inflation is also likely rising even faster this month.   Australian Dollar: The Australian dollar rose almost 2.5% last week to end a five-week slide that shook a nickel from it.  The Aussie recovered from the year's low slightly below $0.7000 (December 3), the measuring objective of the potential head and shoulder pattern traced out in H1 21. However, the recovery stalled shy of $0.7190.  The initial retracement of the leg lower that began in late October was closer to $0.7210. Still, the anticipation of a strong employment report (December 15) could help underpin the Aussie.  Provided it holds above the $0.7120 area, the Australian dollar can work its way higher.  The MACD and Slow Stochastic are trending higher.   Mexican Peso: While the Australian dollar was the strongest of the major currencies, the Mexican peso led the emerging market currencies a nearly 2% gain.  Last week, Latam provided three of the four strongest emerging market currencies (Colombian peso +1.25%) and the Brazilian real (0.95%).  The Thai baht was in third place with a 1.25% gain.  Banixco meets on December 16.  It is widely expected to hike by another 25 bp.  The central bank of Chile meets on December 14 and is expected to hike 125 bp to 4.0%.  The last move in October was also for 125 bp.    The Colombian central bank meets on December 17.  Most anticipate a 50 bp hike to 3.0% after initiating the tightening cycle with a 75 bp move in October.  Mexico's central bank appears to be a laggard in this cycle, but the peso's 4.5% loss this year makes it the top performer in the region.  The US dollar fell to a new three-week low slightly below MXN20.85 before the weekend.  The momentum indicators are trending lower, and the five-day moving average crossed below the 20-day for the first time since mid-November.  Initial support is seen in the MXBN20.70-MXN20.75 band. Chinese Yuan:  Chinese officials have delivered verbal warnings and cautioned banks and businesses to adopt good foreign exchange hedging practices and avoid a one-way market.  It signaled displeasure as the yuan rose to new three-year highs against the dollar by setting the daily reference rate.  It cut reserve requirements ahead of the expected FOMC decision next week to accelerate its tapering and bring forward its first rate hike.  The PBOC also raised the reserve requirement for foreign currency deposits.  Yet, the yuan rose in all but one session last week and eked a small gain on the week.  This month, the dollar's high was set ahead of the weekend near CNY6.3835,  but the positive greenback momentum was not sustained.  The dollar finished around CNY6.3700.  In the grand scheme of things, these are small moves, yet this is where the lines are being drawn.  Some observers have argued that state-owned banks in China have operated on behalf of the central bank (stealth intervention).  If this is true,  one must ask what happened to them now or why is that channel not working?  Still, with policy divergence on the PBOC's side, the risk-reward does not seem to favor fighting it now.  If the PBOC wants to drive home its message, the dollar needs to rise above CNY6.40.  Portfolio inflows and the large trade surplus need to be offset by increased capital outflows if officials want to remove the upside pressure on the currency.  That said, if there is an escalation ladder here, officials dominate nearly every rung.  In the long game, officials cannot be seen as losing, and if the carrots do not work, the will appears to be there to use the stick.   Disclaimer
Dollar Starts the Week Bid ahead of the FOMC

Dollar Starts the Week Bid ahead of the FOMC

Marc Chandler Marc Chandler 13.12.2021 13:44
December 13, 2021  $USD, Australia, Canada, China, Currency Movement, FOMC, Japan, Mexico, South Korea, Switzerland, Turkey, UK   Overview: Equities, bonds, and the dollar begin the new week on a firm note.  Japanese, Chinese, Australian, and New Zealand equities advanced in the Asia Pacific region.  Europe's Stoxx 600 is snapping a three-day decline, and US futures are 0.25%-0.35% higher.  The US 10-year yield is a little softer at 1.48%. European benchmark yields are mostly 1-2 bp lower, and near 0.71%, the UK Gilt's yield is at a three-month low.  The dollar is rising against all the major currencies and is 0.3%-0.45% higher against most.  The Canadian dollar and sterling are the most resilient.  Among emerging market currencies, the Chinese yuan continues to defy official signals to eke out a small gain.  The Turkish lira is off more than 2%, after having dropped 4% initially. Intervention at the end of last week failed to have a lasting impact, and the central bank is expected to cut rates again later this week.  The JP Morgan Emerging Market Currency Index is giving back last week's 0.2% gain plus more today.  It was the first weekly gain in five weeks.  Gold is quiet in the upper end of the pre-weekend range, holding above $1780.  January WTI is firm but capped near the 20-day moving average (~$72.80).  US natgas is firm after falling 5% last week.  Dutch gas is up 8% to new two-month highs.  It has a six-week rally in tow, during which time it has gained a little more than 60%.  Industrial metals are higher too.  Iron ore snapped a three-day air pocket and gained it all back and more with its 6.5% rally today.  Copper has steadied after falling almost 2.5% in the last two sessions.   Asia Pacific The results of Japan's Tankan survey were in line with the talk we have picked up that while the new government, vaccination efforts, and fiscal stimulus are helping fuel the economic recovery, businesses are not yet convinced that significant change is taking place.  Sentiment among large manufacturers was steady at 18, and the outlook ticked lower.  The improvement in sentiment among the large non-manufacturers was more pronounced (9 vs. 2). However, the outlook was subdued at 8 (from 3).  Capex plans from the large businesses were softer than expected at 9.3% (from 10.1%).  Sentiment among the small companies improved, but the diffusion index and the outlook remained negative.  South Korea reported strong traded numbers for the first ten days of December (exports 20.4% and imports 42.3% year-over-year).  Seoul was busy.  Its foreign minister met with high Japanese counterpart on the sidelines of the G7 meeting and struck a cooperative tone. South Korea's President Moon met with Australia's Prime Minister Morrison and struck a A$1 bln weapon deal for self-propelled howitzers (which have already been purchased by other countries, including India and Turkey).  South Korea, however, will not be participating in the diplomatic boycott of the Winter Olympics, citing the need for Beijing's cooperation to denuclearize the peninsula.   The US dollar remains within its recent range against the Japanese yen (~JPY113.20-JPY113.95).  The 20-day moving average is at the top of the range, and it has not traded above it this month yet.  An option for almost $400 mln at JPY114.00 expires today.  It is the fifth session that the dollar has not traded below JPY113.20.  The Australian dollar's rally stalled near $0.7185 last week and is testing the lower end of its three-day range (~$0.7130) in the European morning.  Support is seen in the $0.7090-$0.7115 area.  The highlight of the week is the November jobs report, which is expected to show a strong bounce after three months of Covid-related declines.  More problems among China's property developers and activity in the manufacturing hub in Zhejiang were suspended due to an outbreak of the virus that failed to trigger a retreat in the yuan.  The dollar spent most of the local session below the pre-weekend low (~CNY6.3615).  The PBOC set the dollar's reference rate at CNY6.3669.  The market (Bloomberg survey) expected CNY6.3649.   Europe The UK appeared to make two concessions over the weekend.  First, it signaled that it was no longer seeking to exclude a role for the European Court of Justice in enforcing the Northern Ireland protocol.  Second, new fishing licenses were made available to the EU and French fishers. Jersey and the UK issued another 23 licenses, and although Paris was seeking more, it seemed sufficient to de-escalate the situation.   The UK government is under pressure from many sides.  The "partygate" scandal is a culmination of miscues by the Prime Minister, who has struggled with a Peppa Pig speech and a Kermit the Frog speech at the UN.  Several petty sleaze scandals have also marred the government.  Recent polls put Labour ahead of the Conservatives. This Thursday, the special election could see the Tories defeated in a traditional stronghold (ie Lib-Dems a protest vote for disenchanted Tories?).  The UK's stance toward the EU and the risk to the Good Friday Agreement have estranged the US government to some extent, which has not lifted Trump's steel and aluminum tariffs and put much energy into a free-trade agreement between the two special allies.   Turkey reported a large than expected October current account surplus ($3.16 bln) current account surplus.  While the currency's sharp depreciation would be expected to help the trade account, it also scares international investors.  It reported a net outflow of $2.2 bln portfolio capital in October.  Industrial output surprised on the upside in October, rising by 0.6%.  Economists (Bloomberg survey) expected a 0.1% decline after a 1.5% fall in September.  Turkey appeared to intervene in the foreign exchange market at the end of last week.  The dollar held below TRY14 but jumped to almost TRY14.76 today before pulling back.  The Swiss National Bank also looks like it intervened last week.  The euro held above CHF1.04 after having been sold to about CHF1.0375 earlier this month, its lowest level since July 2015.  Swiss domestic sight deposits rose by CHF1.12 bln, the biggest increase in three weeks.  Note that after buying euros against the franc, the SNB is believed to sell euros for dollars to maintain the allocation of its reserves.  The euro peaked last week near $1.1355.  It has been sold to a four-day low of $1.1260 today.    There is an option for 1.44 bln euros at $1.1250 that expires today.  The low for the year was set on November 24 near $1.1185, while last week's low was slightly below $1.1230.  With diverging impulses expected from the Fed and ECB this week, the euro looks vulnerable.  Sterling closed on its highs before the weekend and is on the defensive today.  The market appears to be absorbing bids that might be related to the expiration of a couple of options today (~GBP500 mln at $1.3235 and ~GBP560 mln at $1.3200).  The low for the year was set last week (December 8) near $1.3165, but initial support today is around $1.3220.  The odds of a BOE rate hike later this week have fallen to less than a 1 in 5 chance.   America The highlight of the week is the FOMC meeting.  Nearly everyone expects the Fed to accelerate its tapering and for individual forecasts to shift, matching the more hawkish rhetoric seen since the October CPI print jumped above 6% (November 10).  November's CPI, reported at the end of last week, accelerated to 6.8%.  Before we get to the FOMC meeting, though, this US reports PPI (the heading is expected to accelerate above 9% and the core above 7%) and November retail sales (a solid gain is anticipated of around 0.8% but off the heady 1.7% pace seen in October).  After the mid-week FOMC meeting conclusion, the US reports November housing starts, industrial production, and the Philly Fed's December survey.  The preliminary December PMI estimates are also due Thursday.  The week's data highlight for Canada is the mid-week estimate of November CPI.  Prices may have edged up by 0.2% on the month, but the year-over-year rate is expected to be little changed from the 4.7% pace seen in October.  The underlying measures may have edged up a little.  Price pressures are elevated but do not appear to be accelerating, as seen in the US.  Tomorrow, the new central bank mandate will be announced.  The mandate is reviewed every five years.  The press reports that the 2% inflation target will be retained, but the mandate may include a component of the labor market as it takes what is expected to be a small step toward a dual mandate like the Fed's.   Mexico's central bank meets on Thursday.  It is widely expected to lift the overnight rate target by 25 bp to 5.25%. In Bloomberg's survey of  17 economists, three forecast a 50 bp hike.  It would be the fourth hike in the cycle that began in August.  Chile and Colombia's central banks also are expected to hike rates this week.  Chile, which hiked by 125 bp in October after a 75 bp increase in August, is expected to make another 125 bp adjustment tomorrow.  It would lift the policy rate to 4%. It holds the second round of its presidential election on December 19.  Colombia's central bank meets on December 17.  A 50 bp increase would lift the repo rate to 3.0%.  The first increase in the cycle was 75 bp in October (to 2.5%).  November's CPI was a little above 5.25%.   The US dollar is rising against the Canadian dollar for the fourth consecutive session.  It is poking above CAD1.2750 in the European morning, where an option for almost $450 mln expires today (and another for $515 mln expires tomorrow).  A convincing move above CAD1.2760 could retarget the month's high (~CAD1.2855).  The market has 125 bp of hikes discounted over the next 12 months, but little new encouragement from the central bank.  The greenback fell against the peso in four of last week's five sessions.  It is little changed today, trading above the pre-weekend low (~MXN20.8430).  The next support area is seen closer to MXN20.70.  Still, the market is likely to be cautious extending short US dollar positions ahead of the Fed.   Disclaimer
USDRUB Went Up To A Really High Level. Will USD To RUB It Reach $90?

USDRUB Went Up To A Really High Level. Will USD To RUB It Reach $90?

Alex Kuptsikevich Alex Kuptsikevich 24.02.2022 08:57
The end of trading on Wednesday indicated growing concern as the ruble went into a sharp dive and the early start of trading marked increased sales. We saw 95.2425 for the euro and 84.075 for the dollar. After that, trading was halted as stock prices hit the lower limits set by the exchange, and there were no buyers in the stock order books - only sellers. The Moscow Exchange has suspended trading on all markets, including the currency and stock sections. SPB Exchange has suspended trading from 08:10 Moscow time for all types of securities and all trading modes. The ruble in indicative trading lost more than 10% against the dollar and the euro, the rate of which exceeds 90 and 101 rubles, respectively. Practically all financial instruments traded at the morning session are resting on the lower bars set by the exchange. Everything happened after the special operation announced by President Putin in the Donbass and reports of the shelling of military airports throughout Ukraine. The Bank of Russia announced the start of interventions in the foreign exchange market in order to slightly restrain the panicky unilateral fall of the ruble, which at the moment allowed the exchange rate to retreat from extremes. However, in such situations, it is pointless to wait for a reversal. The actions of central banks always only soften the blow but do not reverse the market. Despite the interventions and suspension of trading, extreme pressure on the Russian market promises to persist in the coming days. This is truly a new reality that we have not seen throughout our lives. The situation with Ukraine is developing according to the most dramatic scenario and will inevitably entail the most severe consequences that Russia has threatened in recent days. It is difficult to talk about some levels where the Russian currency or the market as a whole can stabilize. Recent events have pushed the ruble into uncharted territory. The latest quotes of the ruble on the Moscow Exchange show a price of 84 per dollar, and in indicative trading, it is already reaching 90. It looks like the ruble will slide very quickly down to 110 per dollar in the coming days and weeks. And near these levels, it will be necessary to look at the situation. In general, the fall of the ruble promises to carry on in the near future, while the shelling continues and the most severe sanctions are imposed on Russia. Hopes for stabilization now we can get only from politicians. The Ukrainian hryvnia, like the ruble, is trading below the levels from which it has repeatedly turned to growth since 2014. Here, too, the market has crossed the line of the conventional norm of the last eight years. From the current levels near 30 hryvnias per dollar, the outcome of this fall should be looked for, perhaps, at about 40.
Trade Zone Week Ahead with Boris Schlossberg (BK Forex): 28th February – 4th March

Trade Zone Week Ahead with Boris Schlossberg (BK Forex): 28th February – 4th March

8 eightcap 8 eightcap 26.02.2022 19:00
As we head into a new month, Boris Schlossberg of BKForex takes over the reins for our Trade Zone Trading Week Ahead for the month of March. Amidst an increasingly volatile background driven by geopolitical tensions, Boris gives his take on the assets that matter this week, looking at current short-term positions for Gold and Oil, as well as potential setups for indices and forex from both a technical and fundamental perspective. Watch the video below to get all the insight ahead of market open today. Boris Schlossberg is Managing Director of FX Strategy for BK Asset Management, Co-Founder of BKForex.com, and Managing Editor of 60secondinvestor.com. Widely known as a leading foreign exchange expert, Boris has more than three decades of financial market experience. In 2007, while still at FXCM, Boris started BKForex with Ms. Kathy Lien. A year later, Boris joined Global Futures & Forex Ltd as director of currency research where he provided research and analysis to clients and managed a global foreign exchange analysis team with Kathy Lien. Since 2012 Boris has focused exclusively on running BKForex.com where he generates trade ideas and designs algorithms for the FX market in partnership with Ms. Lien. He is the author of “Technical Analysis of the Currency Market” and “Millionaire Traders: How Everyday People Beat Wall Street at its Own Game”, both of which are published by Wiley. In 2020 Mr. Schlossberg started www.60secondinvestor.com a free website that distils the best of institutional investment research for retail investors. Important Data Releases & Events this Week Tuesday CNY Manufacturing PMI AUD RBA Interest Rate Decison Wednesday EUR German Inflation Rate, Unemployment Rate EUR Eurozone CPI CAD GDP USD Markit Manufacturing PMI AUD GDP Thursday CAD BoC Interest Rate Decision EUR ECB Monetary Policy Meeting Friday USD ISM Non-Manufacturing PMI Saturday USD Non-Farm Payrolls, Unemployment Rate The post Trade Zone Week Ahead with Boris Schlossberg (BK Forex): 28th February – 4th March appeared first on Eightcap.
Trade Zone Week Ahead with Boris Schlossberg (BK Forex): 28th February – 4th March - 27.02.2022

Trade Zone Week Ahead with Boris Schlossberg (BK Forex): 28th February – 4th March - 27.02.2022

8 eightcap 8 eightcap 27.02.2022 19:00
As we head into a new month, Boris Schlossberg of BKForex takes over the reins for our Trade Zone Trading Week Ahead for the month of March. Amidst an increasingly volatile background driven by geopolitical tensions, Boris gives his take on the assets that matter this week, looking at current short-term positions for Gold and Oil, as well as potential setups for indices and forex from both a technical and fundamental perspective. Watch the video below to get all the insight ahead of market open today. Boris Schlossberg is Managing Director of FX Strategy for BK Asset Management, Co-Founder of BKForex.com, and Managing Editor of 60secondinvestor.com. Widely known as a leading foreign exchange expert, Boris has more than three decades of financial market experience. In 2007, while still at FXCM, Boris started BKForex with Ms. Kathy Lien. A year later, Boris joined Global Futures & Forex Ltd as director of currency research where he provided research and analysis to clients and managed a global foreign exchange analysis team with Kathy Lien. Since 2012 Boris has focused exclusively on running BKForex.com where he generates trade ideas and designs algorithms for the FX market in partnership with Ms. Lien. He is the author of “Technical Analysis of the Currency Market” and “Millionaire Traders: How Everyday People Beat Wall Street at its Own Game”, both of which are published by Wiley. In 2020 Mr. Schlossberg started www.60secondinvestor.com a free website that distils the best of institutional investment research for retail investors. Important Data Releases & Events this Week Tuesday CNY Manufacturing PMI AUD RBA Interest Rate Decison Wednesday EUR German Inflation Rate, Unemployment Rate EUR Eurozone CPI CAD GDP USD Markit Manufacturing PMI AUD GDP Thursday CAD BoC Interest Rate Decision EUR ECB Monetary Policy Meeting Friday USD ISM Non-Manufacturing PMI Saturday USD Non-Farm Payrolls, Unemployment Rate The post Trade Zone Week Ahead with Boris Schlossberg (BK Forex): 28th February – 4th March appeared first on Eightcap.
What to do with your free capital in Russia

What to do with your free capital in Russia

Alex Kuptsikevich Alex Kuptsikevich 01.03.2022 13:30
The main question that ruble traders ask themselves is whether the Central Bank managed to prevent a collapse in the exchange rate? At the moment, the euro is officially worth 104.4, and the dollar is 93.5.According to a leading analyst at FxPro, the ruble is recovering from the second shock wave that hit on Monday, when the Central Bank was unable to use foreign exchange reserves to stabilize the exchange rate. The dollar and the euro declined somewhat, but these levels still can hardly be called sustainable. An increase in the interest rate has a relatively long-term effect, while a liquidity crisis affects quotes "here and now".A steady reversal to growth in the Russian currency should be expected no earlier than when we receive reliable signals from the EU and the US. Until then, downward impulses may alternate with relatively short pullback periods. In our opinion, some stabilization of the exchange rate may occur in the range of 100-110 since this is a low enough level for traders to start picking up the ruble in the short term. Of course, this is only if we exclude the scenario of further tightening of sanctions.There is another issue that worries the consumers who are now in Russia. We are talking, among other things, about foreign citizens who came to Russia to do business or for personal reasons. Many of them have free balances in the region of 100 thousand rubbles in their bank accounts. As a rule, businesspeople short-term invest capital or acquire their own currency. The question arises of what to do with this capital now.In our opinion, it is better to save free money for force majeure, since in the current circumstances, it is worth increasing the capital and abandoning all unplanned purchases. If you are in Russia, then it is better to keep your savings in rubbles since it is not profitable to buy currency in banks now, as the exchange rate difference is too large.Of course, in the coming weeks and months, equipment, and all imported goods in the territory of the Russian Federation will rise in price significantly. At the same time, the value of cash soon may manifest itself more than ever. This is confirmed by queues at ATMs and multiple increases in cash in the hands of Russians.Many right now are looking towards buying a new car from a showroom with the prospect of selling it in a few months at a higher price (considering the sanctions).If your capital is even larger, it perhaps remains only to wait since the withdrawal to foreign accounts is limited. Thus, Russian residents will not be able to credit foreign currency to their accounts and deposits in foreign banks and brokers. The ban takes effect today.
The Swing Overview - Week 9

The Swing Overview - Week 9

Purple Trading Purple Trading 07.03.2022 20:22
The Swing Overview - Week 9 The war in Ukraine continues, and although we all want this tragic event to be ended immediately, but unfortunately, according to last statements of Russian officials, it looks like the war will drag on for a longer period of time. Investors have reacted to this development by selling risk assets, including the Czech koruna. Stock indices are losing ground and the DAX in particular has been under heavy pressure. On the other hand, commodities such as oil, gold, and coal are strengthening strongly. Somewhat surprising is the development in the Australian dollar, which usually weakens in the events of geopolitical uncertainties. However, there is a reason for its current rise. More on this in our article. Conflict in Ukraine   Vladimir Putin probably did not expect to encounter such a brave resistance from Ukraine and that  almost the whole world would send Russia into isolation through significant sanctions. The list of companies and actions that have cut ties with Russia is growing day by the day and Western companies are leaving Russia. Thus, for Russians, foreign goods (food, clothing, furniture, electronics, cars) will gradually become very rare. Probably the strongest sanction that Russia has felt so far, was the freeze of the Russian Central Bank's foreign exchange reserves. In response, the Russian ruble began to depreciate significantly on February 28, 2022, and has already lost more than 30% of its pre-invasion value. In response, the Russian Central Bank intervened by raising the interest rate to 20%, which temporarily halted the ruble's fall.    Figure 1: The Russian ruble paired with the USD and the euro Meanwhile, Western countries have not exhausted all options to stop Russia in this war through economic sanctions in case of further escalation of the conflict yet. The fact that European countries might stop taking Russian gas is also at stake. This would, of course, have a very significant impact on the entire European economy. However, these are still just some economic losses, which can not be   compared at all with the losses of lives experienced by the unprecedentedly attacked Ukraine. In any case, this crisis seems to have the potential to surpass in its consequences the crisis that occurred in Russia in 1998, which led to inflation exceeding 80% and central bank interest rates reaching 150%.   Data from the US economy The ISM manufacturing sentiment indicator for February came in at 58.6 which is better than expected and points to an optimistic development of the US economy. In the labour market sector, the ADP (non-farm job change) indicator was reported, which showed that 475 thousand jobs were created in America in February (compared to 509 thousand in January). The number of unemployment claims reached 215 thousand last week, which was less than expected 226 thousand. Thus, the data show that the US economy is doing well so far and the US Fed is going to raise interest rates at its next meeting on March 16, 2022. Jerome Powell said that he would support a 0.25% rate hike. Powell also said that the war in Ukraine means significant uncertainty for monetary policy.   The US dollar and bond yields The US dollar continues to strengthen, as the USD index shows. In addition to the expected US interest rate hike, the US dollar bullishness is explained by demand for US government bonds in times of uncertainty. Demand for these bonds then pushes down their yields, which continue to fall. Figure 2: 10-year government bond yield on the 4H chart and USD index on the daily chart Index SP500 The US SP 500 index moved in a consolidation range last week. This shows that investors have so far viewed the conflict in Ukraine as an event that is more or less a regional event and therefore saw cheap stocks as a buying opportunity.  However, the sanctions adopted by Western countries will of course also have an impact on the global economy, especially if the conflict deepens further. This concern was then reflected at the end of the week when the index started to weaken. Figure 3: The SP 500 on H4 and D1 chart   Resistance according to the H4 chart is in the region of around 4,410 - 4,420. The nearest support according to the H4 chart is at 4255 - 4284. Significant support is at 4,100 - 4,113. German DAX index In contrast to the SP 500 index, there was a big sell-off in the DAX, showing that investors are worried, among other things, that a further escalation of the conflict could lead to a disruption in the supply of Russian gas, on which Germany is heavily dependent.  According to the daily chart, it looks like the DAX index is now in free fall and is breaking through support barriers as if they did not exist. It looks like the market is starting to show signs of panic selling by inexperienced investors.  If you are speculating in the short term, then bear in mind that short term speculation against such a strong downtrend is very disadvantageous and risky.   Figure 4: DAX on H4 and daily chart     Current resistance is in the area of 13,655 - 13,756. The price is now at support at 13,400, which is already slightly broken, but the closing of the whole session will be crucial. The next support is then at 13 000 - 13 100.   The Czech koruna is losing significantly The Czech koruna has long benefited from the interest rate differential, which has been very favourable for the koruna against the euro and has been the reason why the koruna has appreciated strongly since November 2021. But the Czech koruna, along with other Central European currencies, is a currency that is losing ground heavily in the current conflict.   Figure 5: The EURCZK on the daily chart   Firstly, there is the concern that the Czech Republic is geographically quite close to Ukraine, even though the Czech Republic does not have very significant exports directly with Ukraine nor Russia (in total, around 3% of total Czech exports). At the same time, there is concern about the Czech Republic's dependence on Russian gas. If the taps are closed, then the koruna could shoot above  CZK 27 per euro. Currently, the EURCZK pair is trading at the resistance level of 25. 80 - 25.90.   The Australian dollar The Australian dollar is a currency that tends to weaken during major global crises. In particular, the AUDJPY pair is correlated with the SP 500 index in the short term. Currently, however, the Australian dollar is strengthening.  This is because the Australian economy is export-oriented and exports commodities such as gold, iron ore, coal and gas.  All these commodities are now in high demand. Europe, for example, is realising that dependence on Russian gas is not paying off and is looking for alternatives. A temporary solution will be to rebuild coal-fired power stations. Germany and Italy have already started to buy coal stocks, which are therefore appreciating strongly. As a result, the price of coal has sky-rocketed, with one tonne reaching a record price of the USD 400. Figure 6: The coal price   The gold, traditionally seen as a safe haven in times of uncertainty, is also strengthening. The gold has also been helped by a fall in US bond yields.   Figure 7: The gold on H4 and D1 charts   In terms of technical analysis, the gold stopped at the resistance of $1,973 per ounce. The nearest support according to the daily chart is  $1,870 - 1,878 per ounce. The rise in commodity prices then resulted in the strengthening of the Australian dollar.     Figure 8: The AUDJPY currency pair on D1 chart   The AUDJPY broke the resistance in the range of 0.8400 - 0.8420, which became the new support. The next resistance is then at the level of 85.90 - 86.20.  
Trade Zone Week Ahead with Boris Schlossberg (BK Forex): 14th – 18th March

Trade Zone Week Ahead with Boris Schlossberg (BK Forex): 14th – 18th March

8 eightcap 8 eightcap 13.03.2022 19:00
It’s a big week for the US Fed this week, as it meets to push through its first increase in interest rates since the pandemic, against an increasingly volatile situation in Ukraine. Last week, the markets witnessed parabolic moves for both oil and gold as risk-off sentiment increased, however, those moves didn’t last long and soon reversed. As the trading bell tolls this week, the headlines will continue to be driven by fundamental factors, which will no doubt drive even further volatility if things seemingly get worse. In today’s Trade Zone Trading Week Ahead, we examine those severe moves in Oil and Gold, while also looking ahead at a few pertinent forex pairs, as well as the Nasdaq and Bitcoin. Watch the video below to get this week’s insights ahead of the market open. https://youtu.be/zifdtVdCcK0 Join us this Wednesday at 10PM AEDT (11AM GMT) as Boris and Kathy take you through another live market update, focusing on how price action is shaping up into the weekend. It’s the perfect session to get valuable insight into what’s hot in the financial markets, as well as give you the opportunity to ask the experts your questions in the live Q&A. Click the banner below to register. Registration is free. Boris Schlossberg is Managing Director of FX Strategy for BK Asset Management, Co-Founder of BKForex.com, and Managing Editor of 60secondinvestor.com. Widely known as a leading foreign exchange expert, Boris has more than three decades of financial market experience. In 2007, while still at FXCM, Boris started BKForex with Ms. Kathy Lien. A year later, Boris joined Global Futures & Forex Ltd as director of currency research where he provided research and analysis to clients and managed a global foreign exchange analysis team with Kathy Lien. Since 2012 Boris has focused exclusively on running BKForex.com where he generates trade ideas and designs algorithms for the FX market in partnership with Ms. Lien. He is the author of “Technical Analysis of the Currency Market” and “Millionaire Traders: How Everyday People Beat Wall Street at its Own Game”, both of which are published by Wiley. In 2020 Mr. Schlossberg started www.60secondinvestor.com a free website that distils the best of institutional investment research for retail investors. Important Data Releases & Events this Week Tuesday AUD RBA Meeting Minutes USD PPI Wednesday JPY Balance of Trade CAD CPI USD Core Retail Sales Thursday USD Fed Interest Rate Decision, FOMC Economic Projections, Fed Press Conference NZD GDP AUD RBA Bulletin, Unemployment Rate GBP BoE Interest Rate Decision Friday JPY Inflation Rate, BoJ Interest Rate Decision The post Trade Zone Week Ahead with Boris Schlossberg (BK Forex): 14th – 18th March appeared first on Eightcap.
Trade Zone Week Ahead with Boris Schlossberg (BK Forex): 21st – 25th March

Trade Zone Week Ahead with Boris Schlossberg (BK Forex): 21st – 25th March

8 eightcap 8 eightcap 20.03.2022 21:19
As expected, The Fed came out last week and approved a quarter percentage point interest rate rise,  its first since December 2018 and possibly one of many more to come as the U.S. faces up to rampant inflation. With that big decision now priced into the markets, all eyes will be on whether stocks will be able to sustain last week’s fresh gains into a second week. There are still many headlines to be written and with the Ukrainian conflict entering its second month, there may be many more twists and turns. In today’s Trade Zone Trading Week Ahead, we look ahead at potential moves in equities, oil, gold, Bitcoin and also discuss why forex might now be an interesting play. Watch the video below to get this week’s latest insights. REGISTER FOR THIS WEEK’S LIVE MARKET UPDATE WITH BORIS AND KATHY Join us at 10 PM AEDT (11 AM GMT) this Wednesday as Boris and Kathy once again take you through another midweek live market update, discussing the key assets and price points to be looking at as the weekend approaches. It’s the perfect session to get valuable insight into what’s currently hot in the financial markets, as well as an opportunity for you to ask your own questions to the experts in a live Q&A. Registration is free. Click below to secure your seat. Boris Schlossberg is Managing Director of FX Strategy for BK Asset Management, Co-Founder of BKForex.com, and Managing Editor of 60secondinvestor.com. Widely known as a leading foreign exchange expert, Boris has more than three decades of financial market experience. In 2007, while still at FXCM, Boris started BKForex with Ms. Kathy Lien. A year later, Boris joined Global Futures & Forex Ltd as director of currency research where he provided research and analysis to clients and managed a global foreign exchange analysis team with Kathy Lien. Since 2012 Boris has focused exclusively on running BKForex.com where he generates trade ideas and designs algorithms for the FX market in partnership with Ms. Lien. He is the author of “Technical Analysis of the Currency Market” and “Millionaire Traders: How Everyday People Beat Wall Street at its Own Game”, both of which are published by Wiley. In 2020 Mr. Schlossberg started www.60secondinvestor.com a free website that distils the best of institutional investment research for retail investors. Important Data Releases & Events this Week Monday EUR ECB President Lagarde Speaks Tuesday USD Fed Chair Powell Speaks Wednesday EUR ECB President Lagarde Speaks GBP CPI GBP BoE Gov Bailey Speaks USD Fed Chair Powell Speaks Thursday USD Crude Oil Inventories CHF SNB Interest Rate Decision, Monetary Policy Assessment, SNB Press Conference EUR German Manufacturing PMI GBP Composite, Manufacturing and Services PMI EUR EU Leaders Summit USD Core Durable Goods Orders USD Initial Jobless Claims Friday GBP Retail Sales EUR German Ifo Business Climate Index EUR EU Leaders Summit The post Trade Zone Week Ahead with Boris Schlossberg (BK Forex): 21st – 25th March appeared first on Eightcap.
The Interest Rate Cut Will Not Affect The Ruble (RUB)

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

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

Trade Zone Week Ahead: Non-Farm Payrolls in the Spotlight as Risk Turns Positive

8 eightcap 8 eightcap 27.03.2022 19:55
We wrap up this month’s Trade Zone Week Ahead coverage with a final look ahead at what’s in store this week as markets open. Last Friday ended on a positive note as Wall Street finished on a high, with both the Nasdaq and S&P500 posting positive gains for one of the best weeks of the year so far. All eyes this week will be whether this turn in sentiment continues. With the Ukraine conflict heading into new territory with talks of Russia wanting to divide the country in two, there are still plenty of headlines to keep traders on their toes, not to mention another Non-Farm payroll reading looming this coming Friday. With the Fed now pushing for further interest rate rises in the coming months, against a backdrop of a buoyant job market and rampant inflation, Friday’s result might just shed some further light on what Fed policy might look like in the months to come. In today’s Trade Zone Trading Week Ahead, we discuss the present scenarios in FX, indices, oil and gold. Watch the video below to get this week’s latest insights. REGISTER FOR THIS MONTH’S FINAL LIVE MARKET UPDATE WITH BORIS AND KATHY Join us at 10 PM AEDT (11 AM GMT) this coming Wednesday as Boris and Kathy complete their monthly takeover of our Trade Zone series. Register to attend the final midweek live market update for March, as we analyse the key moves of the week and look ahead at all the potential trade set up as the weekend approaches. It’s the perfect compact session to give you valuable pointers into what you should be watching out for as the month ends, and you also get the opportunity to ask experts the questions you have on your mind right now in a live Q&A. Registration is free. Click below to secure your seat. Boris Schlossberg is Managing Director of FX Strategy for BK Asset Management, Co-Founder of BKForex.com, and Managing Editor of 60secondinvestor.com. Widely known as a leading foreign exchange expert, Boris has more than three decades of financial market experience. In 2007, while still at FXCM, Boris started BKForex with Ms. Kathy Lien. A year later, Boris joined Global Futures & Forex Ltd as director of currency research where he provided research and analysis to clients and managed a global foreign exchange analysis team with Kathy Lien. Since 2012 Boris has focused exclusively on running BKForex.com where he generates trade ideas and designs algorithms for the FX market in partnership with Ms. Lien. He is the author of “Technical Analysis of the Currency Market” and “Millionaire Traders: How Everyday People Beat Wall Street at its Own Game”, both of which are published by Wiley. In 2020 Mr. Schlossberg started www.60secondinvestor.com a free website that distils the best of institutional investment research for retail investors. Important Data Releases & Events this Week Monday GBP BoE Governor Bailey speech Tuesday AUD Retail Sales, Wednesday EUR Inflation Rate USD JOLTs Job Openings, ADP Non-Farm Employment Change, GDP Thursday USD Crude Oil Inventories, Initial Jobless Claims GBP GDP CAD GDP Friday EUR CPI USD Non-Farm Payrolls, Unemployment Rate, ISM Manufacturing PMI The post Trade Zone Week Ahead: Non-Farm Payrolls in the Spotlight as Risk Turns Positive appeared first on Eightcap.
Romanian GDP Slows Beyond Expectations: Revised Forecast and Economic Outlook

EUR/USD Drops Below 1.07?!, GBP Weakens Against the EUR For The Third Consecutive Month, SNB Showing No Sign Of Tightening Monetary Policy

Rebecca Duthie Rebecca Duthie 27.04.2022 10:17
Summary: The US Dollar continues to strengthen. The SNB shows no intention of tightening their monetary policy to fight inflation. GBP weakens amidst a slowing economy. EURO continues to weaken against the USD. Since the market opened today, the Euro has weakened by a further 0.15%, this continuing weakening comes as a result of strong U.S interest rates with little indication of the European Central Bank (ECB) attempting to play catch up. This interest rate differential between the United States and the Euro continues to favor the US Dollar. The likelihood of us seeing the EURO strengthen against the US Dollar will probably depend on the future decisions of the Federal Reserve. The market sentiment on this currency pair remains bearish. EUR/USD Price Chart   Read next: US Dollar (USD) Continues To Trump Euro (EUR) And British Pound (GBP). EUR Fails To Get Boost Post Macron Election Victory - Good Morning Forex!    GBP Weakens against most major currencies. As of the market open this morning market sentiment for this currency pair is showing bullish signals. The GBP continues to weaken against the Euro for the third consecutive month. The weakening of the GBP comes in the middle of a sharp fall in the global stock markets, this is heavily impacting foreign exchange markets. In addition, the slowing of the UK economy is not helping the currency to recover. It is concerning that the GBP is weakening against most major currencies. EUR/GBP Price Chart CHF weakens against the Euro. Market sentiment for this currency pair is showing bullish signals as the Euro strengthens against the Swiss Franc. The inflation rate in Switzerland reached a 13 year high but the Swiss National Bank (SNB) is showing no indication of swaying from their loose monetary policy to fight against this inflation. EUR/CHF Price Chart USD/CHF The market sentiment for this currency pair is showing bearish signals since the market opened this morning. The USD has been strengthening against the CHF, this comes as a result of the hawkish Fed amidst their fight against inflation at the same time the SNB is showing no intention of increasing interest rates due to the belief that this high inflation period is temporary. In addition, the SNB said it would limit the Swiss Franc’s currency appreciation after reaching a 7 year high against the Euro after the Russia-Ukraine war. USD/CHF Price Chart   Read next: Bitcoin Price Back on The Rise, Consumer Spending In The UK Falls In Light Of Inflation And The US Dollar Continues to Strengthen    Sources: Finance.yahoo.com, dailyfx.com, tradingeconomics.com  
Australian CPI Expected to Rise to 5.2%: Impact on AUD/USD and RBA's Rate Hike Dilemma

US Dollar (USD) Continues To Trump The EUR, BoE Expected To Increase Interest Rates, SNB Remains Dovish, South African Rand (ZAR) Performance

Rebecca Duthie Rebecca Duthie 29.04.2022 09:52
Summary: The US Dollar strengthens further. EUR/GBP investor sentiment has not changed regardless of the BoE’s expected announcement on interest rates. CHF weakens due to SNB dovish approach to monetary policy. A short look into the ZAR. The Euro has spent the past week trying to recover against the USD. Over the past week the Euro has been weakening against the USD. This comes from the continuous strengthening of the US Dollar, the hawkish Federal Reserve Bank (Fed) ended last week announcing they would push interest rates up for the 7th consecutive week in their fight against inflation. The Euro has been struggling to fight against the strengthening USD, the European Central Bank (ECB) has not tightened their monetary policy to fight inflation, because of the risk averse sentiment of investors in the current market, many are fleeing the Euro and turning to the stronger USD. However, since the market opened this morning, the EUR has slightly strengthened against the USD, whether or not this will continue is uncertain, the market sentiment is mixed for this currency pair. EUR/USD Price Chart Read next: Euro (EUR) Continues To Weaken Against The US Dollar (USD), Euro Under Pressure Amidst Russia’s Decision To Tighten Gas Supplies. GBP Strengthens Against the JPY.  GBP Weakens against the EURO during the past trading week. Since the market opened this morning, market sentiment for this currency pair is bullish, this means that investors are expecting the EUR to strengthen against the GBP. Over the past week, the overall trend is showing the EURO strengthening against the GBP, however, the rise of the EUR has not been smooth, the chart below shows the volatility this currency pair has felt this week. The Bank of England (BoE) is expected to announce a rise in interest rates on Thursday in the fight against inflation, perhaps the GBP will start to see some strengthening against the EURO. EUR/GBP Price Chart Swiss National Bank As of the market open this morning the CHF has strengthened against the USD, however, the market sentiment for this currency pair is showing bullish signals. Over the past week the USD has been strengthening consistently against the CHF. As the Fed continues their hawkish approach to the fight against inflation through tightening monetary policy, the US Dollar continues to trump most of its currency counterparts. The Swiss National Bank (SNB) believes this rise in inflation is only temporary and continues to stand by their loose monetary policy stance. USD/CHF Price Chart South African Rand (ZAR) weakens against the USD. The ZAR is the National Currency of South Africa and is used by Swaziland, Namibia and Lesotho, in general the ZAR tends to strengthen when investors are willing to take on more risk in developing countries' economies. Given the current economic pullback, the ZAR has been weakening against the current aggressively strengthening US Dollar. USD/ZAR Price Chart Read next: EUR/USD Drops Below 1.07?!, GBP Weakens Against the EUR For The Third Consecutive Month, SNB Showing No Sign Of Tightening Monetary Policy  Sources: Finance.yahoo.com, poundsterlinglive.com, dailyfx.com.
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
USD/CHF - US Dollar Is Awaiting Jobs Market Data, While Swiss Inflation May Trigger SNB To Hike The Interest Rate, Boosting Swiss Franc In Consequence

US Dollar (USD) Expected To Strengthen As Investors Await Fed’s Interest Announcement (EUR/USD, AUD/USD), BoE are Expected To Raise Their Interest Rates (EUR/GBP), (AUD/USD) Showing Mixed Market Sentiment Signals, USD/CHF Is Bullish

Rebecca Duthie Rebecca Duthie 04.05.2022 11:50
Summary: The Fed is expected to tighten monetary policy further. BoE is expected to raise interest rates. RBA raises interest rates for the first time since 2010. SNB remains dovish in their fight against inflation. EURO expected to weaken further against the USD. Market sentiment is bearish for this currency pair, the market sentiment comes as market participants await the Fed’s interest rate announcement, investors expect a further 50 bp rise in interest rates which will result in a stronger US Dollar. Prices are continuing to rise despite the hawkish Fed, if this continues after the next interest rate increase, there could be trouble for the USD. EUR/USD Price Chart   Read next: (EUR/USD) US Dollar Continues To Strengthen, BoEs Inflation Forecast and Economic Outlook Due On Thursday - Good Morning Forex!    GBP showing further strengthening potential against the EUR. The EUR has been weakening against the GBP since the market opened this morning. The GBP strengthening against the EUR comes with expectations that the Bank of England (BoE) is expected to increase the interest rate yields by 25bps. The European Central Bank (ECB) is still behind the United Kingdom when it comes to tightening monetary policies, causing the EUR to weaken. The current market sentiment for the currency pair is bearish. EUR/GBP Price Chart The Reserve Bank of Australia raises interest rates for the first time since 2010. Since the market opened this morning, the price of the AUD/USD has increased by more than 0.3%. Market sentiment for this currency pair is mixed. The AUD is not giving the USD more opportunity to strengthen. The Reserve Bank of Australia raised their interest rates for the first time since 2010, the tightening of monetary policy comes in an attempt to fight the rising inflation. The AUD is a risk asset, which means its price is levered to commodities. The US Dollar is expected to pull back against the AUD as the world slows down and the hawkish Fed continues its war against inflation. AUD/USD Price Chart CHF Weakens as SNB remains dovish. The US Dollar is expected to strengthen against the Swiss Franc with the market sentiment showing bullish signals. The continuing hawkish attitude of the Fed and the dovish attitude of the Swiss National Bank (SNB), means the strengthening of the USD against the CHF is likely to continue. USD/CHF Price Chart   Read next: GBP: BoE Expected to Raise Yields, US Dollar (USD) Strengthens across the board - Good Morning Forex!    Source: finance.yahoo.com, dailyfx.com
EUR/USD Faces Pressure Amid PMI Releases: Is More Downside Ahead?

(EUR/USD) ECB Reveals The Possibility Of Interest Rate Increases In July, Negative Investor Sentiment Towards The GBP, Investor Sentiment Turns Bullish For The AUD/JPY Pair - Good Morning Forex!

Rebecca Duthie Rebecca Duthie 05.05.2022 10:53
Summary: Market sentiment turns bullish for the EUR/USD currency pair. Pound Sterling is facing selling pressure. Investor sentiment for the AUD changes. CHF/JPY finding a new trading range. Read next: US Dollar (USD) Expected To Strengthen As Investors Await Fed’s Interest Announcement (EUR/USD, AUD/USD), BoE are Expected To Raise Their Interest Rates (EUR/GBP), (AUD/USD) Showing Mixed Market Sentiment Signals, USD/CHF Is Bullish  ECB reveals the possible increase in interest rates in July The market sentiment on Thursday for this currency pair is showing bullish signals. On Wednesday the Federal Open Market Committee (FOMC) announced that there is a strong possibility that another 50bp hike in interest rates is possible, as the hawkish Fed continues in their fight against inflation. The bullish market sentiment comes with increasing investor confidence in the EUR after the European Central Bank (ECB) revealed that an increase in the interest rates could be possible in July. EUR/USD Price Chart Pound Sterling losing ground on the forex market The EUR/GBP currency pair is currently showing mixed market sentiment. The GBP is facing pressure against the EUR, this comes hours before the Bank of England (BoE) is set to announce interest rate hikes and the possibility of quantitative tightening plans (process of selling some of the bonds purchased under quantitative easing). The GBP has lost ground against most other currencies, reflecting the negative investor sentiment towards the Pound Sterling. In addition, investor confidence in the EUR has improved. EUR/GBP Price Chart AUD gains on JPY overnight Investor sentiment is currently showing bullish signals. The price of this currency pair strengthened since Wednesday as a result of the Reserve Bank of Australia (RBA) deciding to tighten their monetary policy. Investor sentiment for the AUD has turned positive, despite the recent losses faced by this currency. AUD/JPY Price Chart CHF/JPY signalling bullish market sentiment Both of these currencies are viewed as safe-haven currencies, due to their financial properties and low interest rates. Market sentiment is still bullish for this currency pair. The CHF/JPY tend to trade within similar ranges, which is unsurprising due to their similar fundamental characteristics, right now the currency pair is finding a new range to trade in. CHF/JPY Price Chart Read next: (EUR/USD) US Dollar Continues To Strengthen, BoEs Inflation Forecast and Economic Outlook Due On Thursday - Good Morning Forex! Sources: Finance.yahoo.com, poundsterlinglive.com, dailyfx.com
The EUR/JPY Pair Is Expected To Start A New Zig-Zag Correction

(EUR/USD) Wall Street Tanks, Allowing the Euro To Slightly Recover, (EUR/GBP) Goldman Sachs Betting Against GBP, JPY Gets The Better Of The US Dollar And EUR - Good Morning Forex!

Rebecca Duthie Rebecca Duthie 10.05.2022 11:58
Summary: Euro gained slightly against the USD after the poor performance of the US markets on Monday. Goldman Sachs placing their confidence in the value of the EURO. JPY gains slightly against the EUR and USD on Tuesday. Read next: (EUR/USD) US Dollar Continues To Trump the EUR, (EUR/GBP)(GBP/JPY) Pound Sterling Unlikely To Recover Anytime Soon.  EUR gains some ground against the USD. Markets turned around on Monday with the EUR/USD currency pair with market sentiment showing bullish signals. The Euro is gaining value despite the surging US Dollar, at the end of the trading day on Monday Wall Street has tanked with the Nasdaq down 4.29%. As investors turn away from risky assets such as forex, and move to safer investments such as treasuries, the value of the US Dollar is facing potential pressure. Investors are concerned around the Feds shrinking balance sheet as liquidity dries up. EUR/USD Price Chart Pound Sterling losing value against the Euro. On Tuesday, Goldman Sachs bet the EUR will continue to gain against the GBP, as the market for the EUR/GBP currency pair continues to reflect a bullish sentiment. The European Central Bank (ECB) seems intent on raising interest rates by the summer, showing a more hawkish attitude than the Bank of England (BoE) who believe that inflation will return to normal levels on its own. This BoE attitude is causing investors to lose confidence in the Pound Sterling and causing its value to decrease. EUR/GBP Price Chart JPY receives momentary relief from the USD Although the JPY has gained on the US Dollar on Tuesday, the USD/JPY currency pair is reflecting a bullish market sentiment. The strengthening against the USD comes after the carnage the US markets saw on Monday. Whether or not this strengthening will continue is unlikely as the Bank of Japan (BoJ) continues their monetary easing in their attempt to boost the economy. USD/JPY Price Chart JPY markets best performer on Monday The EUR is losing ground to the JPY during the trading day on Tuesday, the EUR/JPY currency pair is reflecting a mixed market sentiment. As risk averse investors fled to safety assets given the US markets performance, the Japanese Yen was the forex markets top performer on Monday, which gave it the chance to strengthen against the EUR and the USD. EUR/JPY Price Chart Read next: (EUR/USD) All Eyes On The US Bureau Of Labour Statistics’ Results Due On Friday, (EUR/GBP) Bleak Economic Outlook For the UK Sends GBP Spiralling - Good Morning Forex!  Sources: finance.yahoo.com, dailyfx.com, poundsterlinglive.com
WTI Oil Shows Signs of Short-Term Uptrend Amid Medium-Term Uptrend Phase

Despite The Year The Stock Market Has Seen, One Asset Has Succeeded: The US Dollar.

Rebecca Duthie Rebecca Duthie 10.05.2022 14:37
Summary: The US Dollar's resilience in the current economic world. The future of the greenback is unknown.   Read next: (DOGE) Dogecoin and Musk - How Elon Musk Has Single Handedly Created Price Changes In This Memecoin.    Whilst almost all other assets on the stock market have lost value this year, there is one asset that has done well; the US Dollar. Since the start of the year the USD has strengthened continually against most other currencies, this is demonstrated in the graph below, where we see the gradual strengthening of the US Dollar over the past five months. This year in the stock markets has been challenging, with the conflict between Russia and the Ukraine, the adverse weather conditions all over the world, the lockdowns in China as the Chinese government works toward the zero-Covid goal, the rising inflation and prices, the concerns over a looming recession and more. Despite these factors, the US Dollar has still seen strength, this indicates the confidence that market participants have in the US economy to overcome these challenges. Where the currency will go in the future is uncertain, the volatility of the forex market is always keeping investors on their toes. The next big possible turning point is the U.S CPI report due on Wednesday, this will indicate whether the hawkish fed have been successful in their fight against rising prices and inflation. EUR/USD Price Chart   Read next: Shell (SHEL) Stock Price Soars Along With The Rest Of The Industry.    Sources: finance.yahoo.com
ECB's Dovish Shift: Markets Anticipate Softer Policy Guidance

(EUR/USD) German Inflation Meets Forecasts, Pound Sterling Continues To Weaken (EUR/GBP, GBP/USD), (EUR/JPY) Japanese Yen Strengthens As Investors Seek Safe-Haven Assets - Good Morning Forex!

Rebecca Duthie Rebecca Duthie 11.05.2022 13:27
Summary: US Dollar sentiment awaits CPI report. EUR continues to strengthen against the Pound Sterling. JPY safe-haven is attractive to investors. Read next: (EUR/USD) Wall Street Tanks, Allowing the Euro To Slightly Recover, (EUR/GBP) Goldman Sachs Betting Against GBP, JPY Gets The Better Of The US Dollar And EUR - Good Morning Forex!  EUR gains slightly on the US Dollar For the trading day on wednesday, the EUR/USD currency pair is reflecting mixed market signals. The Euro remained stable today after Germany announced their April inflation amount was 7.4%, which was inline with forecasts. The German announcements have investors hoping the European Central Bank (ECB) comments today will come with a more hawkish tone. The market sentiment remains mixed as investors await the U.S CPI report due later today. EUR/USD Price Chart GBP not seeing price relief against the Euro Market sentiment for this currency pair is reflecting bullish signals. Investors are tending to go net long on this currency pair as they expect the Euro to continue to strengthen. The Pound sterling value does not seem to be receiving any relief from its current price fall. Despite the Bank of Englands (BoE) 1% increase in interest rates in May, the other economic forecasts made spooked investors away from the currency. EUR/GBP Price Chart JPY safe-haven currency becomes more attractive The market is reflecting bearish signals for this currency pair. As the adverse wider economic conditions continue, investors are turning away from riskier assets, the Japanese Yen is considered a safe-haven currency, making it an attractive investment for risk averse investors. Hence, the investor sentiment is driving the price of the JPY upwards and therefore the price of this currency pair downwards. EUR/JPY Price Chart Bearish sentiment for the Pound Sterling continues The market is reflecting bearish signals for this currency pair. The USD continues to get stronger and the GBP continues to weaken in the overall market. The GBP has seen some relief against the USD on Wednesday, but the longevity of this trend is unlikely. GBP/USD Price Chart Read next: (EUR/USD) US Dollar Continues To Trump the EUR, (EUR/GBP)(GBP/JPY) Pound Sterling Unlikely To Recover Anytime Soon.  Sources: dailyfx.com, finance.yahoo.com, poundsterling.com
The Swing Overview - Week 19 2022

The Swing Overview - Week 19 2022

Purple Trading Purple Trading 16.05.2022 10:59
The Swing Overview - Week 19 Stock indices continued to weaken strongly last week, while the US dollar has already surpassed the mark 104 and is at 20-year highs. However, a set of important data is behind us, which could bring some temporary relief to the equity markets. The Czech koruna weakened sharply after the appointment of the new CNB Governor Ales Michl, who is a proponent of a dovish approach. Thus, the rise in interest rates in the Czech Republic appears to be close to its peak.   Macroeconomic data The US consumer inflation for April was reported on Wednesday, which came in at 8.3% on year-on-year basis. Analysts were expecting inflation to be 8.1%. Although the figure achieved was higher than expectations, it was still lower than the 8.5% inflation figure achieved in March. On a month-on-month basis, the price increase in April was 0.3%, significantly lower than in March when prices rose by 1.5%.   On Thursday, industrial inflation was reported at 8.8% year-on-year and 0.4% month-on-month for April.   The positive thing about this data is that inflation declined from previous readings. However, it is important to note that the year-on-year comparison is based on data where inflation was also higher in the previous year due to the recovery from the Covid-19 pandemic.   The Fed chief reiterated that he expects another 0.50% point rise in interest rates at the next two Fed meetings. He also mentioned that a higher rate hike cannot be ruled out if necessary.   The US 10-year bond yields came down from their peak and made a slight correction. However, the US dollar continued to strengthen and broke the resistance at 104. The dollar is thus at 20-year highs. Figure 1: US 10-year bond yields and USD index on the daily chart   Equity indices heavily oversold The strong dollar, rising US bond yields, the war in Ukraine and the effects of the lockdown in China were the main reasons for the decline in equity indices. The SP 500 index hit 3,860, the lowest level since March 2021. This is also where long-term support is. However, the important macro data is behind us and the market has processed all the available fundamental information. This could bring temporary relief to the markets and the index could make an upward correction. The fall in 10-year bond yields, gives this move some boost as well.   Figure 2: The SP 500 on H4 and D1 chart However, from a technical analysis perspective, the US SP 500 index remains in a current downtrend as the markets have formed lower low and is also below both the SMA 100 and EMA 50 moving averages on the H4 and daily charts. The nearest resistance is 4040 - 4070. The next resistance is at 4,140 and especially 4,293 - 4,300. The support is at 3,860 - 3,900.   German DAX index In macroeconomic data, the German ZEW Economic Sentiment for May was reported last week and showed a reading of -34.3, an improvement from the previous month's reading of -41.0. Inflation in Germany for April is at 7.4% on year-on-year basis and up 0.8% from March (the previous month's increase was 2.5%). Figure 3: German DAX index on H4 and daily chart The index continues to move in a downtrend along with the major world indices. The price has reached the SMA 100 moving average on the H4 chart, which tends to signal resistance in a downtrend. The price is moving below the SMA 100 on both the daily chart and the H4 chart, confirming the bearish sentiment. The nearest support according to the H4 is 13,600 - 13,650. The resistance is 14,300 - 14,330. The next resistance is 14,592 - 14,632.   The big sell-off in the euro continues The euro fell to 1.0356 against the dollar, the lowest value since January 2017. This value is also an area of significant support where price could stall. Fundamentally, the euro's depreciation is due to the strong dollar and the Fed's hawkish policy, which contrasts with the ECB's policy of not raising rates yet.    Figure 4: The EURUSD on H4 and daily chart Eurozone inflation data will be reported next week, which could be an important catalyst for further movement. The significant support is priced around 1.0350 - 1.040. The current resistance is at 1.05.   Czech koruna weakened strongly on the new governor appointment The President Miloš Zeman surprised with the appointment of Ales Michl for the governor of the CNB. Michl is known for his dovish views, having spoken out against raising interest rates at recent meetings. His appointment was welcomed in the markets by a strong depreciation of the Czech koruna. However, the bank later intervened in the markets by selling part of its foreign exchange reserves to prevent further depreciation of the Czech koruna.   It is important to know that the Bank's monetary policy is decided by the seven-member Bank Board. So far, the proportion for voting on rate hikes has been 5:2. But by the end of June, the president must appoint 3 new board members. This could significantly change the voting ratio on the board and set a new course for the bank's policy, which would mean a halt to the rise in interest rates. However, it is likely that at the June board meeting the board, still with the old composition, will decide on further interest rate increases. Figure 5: The USD/CZK and the EUR/CZK on the daily chart The Czech koruna has reached 24.36 against the dollar and 25.47 against the euro, from which it started to descend after the CNB interventions.  
Energy and Metals Decline, Wheat Rallies Amid Disappointing Chinese Growth

(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!

Rebecca Duthie Rebecca Duthie 18.05.2022 13:55
Summary: The Euro claws back marginally against the USD. UK CPI inflation data knocks the Pound Sterling against both the Euro and The USD. USD/CAD bearish. 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!  EUR showing signs of potential recovery Market sentiment for this currency pair is showing bullish signals on Wednesday. The Euro gained 1.1% on the USD overnight, however it lost more than 0.3% during the trading day on Wednesday. In general, investor confidence has been returning to the market, this has been helped by the fact that U.S retail sales rose in April. It seems as though the Fed will continue to tighten monetary policy in conjunction with expectations that the European Central Bank (ECB) will turn hawkish after representative Klaas Knot suggested an interest rate hike is on the table. EUR/USD Price Chart UKs CPI Inflation knocks the Pound Sterling The market sentiment for this currency pair is showing bearish signals. The Euro has gained on the GBP after UKs headline CPI inflation rate came out at 9% for April, which beat market expectations, however is still up 2% from March. The most recent data for the UK economy did not shock the markets, therefore, the long-term effect of this data is unlikely to have a big effect on the Pound Sterling. At the last policy-setting meeting, the Bank of England (BoE) pushed interest rates up by 1%, the recent CPI inflation data suggests that the BoE will likely need to continue tightening their monetary policy. EUR/GBP Price Chart USD/CAD currency pair The USD/CAD currency pair is signalling bearish market sentiment, this bearish sentiment is not expected to continue for long in the future. With the hawkish Fed fighting inflation, the USD is expected to get stronger going forward. USD/CAD Price Chart Pound Sterling loses to the US Dollar The market sentiment is showing bullish signals for this currency pair, however the GBP has weakened against the USD on Wednesday. The weakening of the Pound Sterling comes after the release of CPI inflation data. GBP/USD Price Chart Read next: (EUR/USD, EUR/GBP, EUR/CHF) ECBs Hint To Raise Interest Rates Offers Some Relief For The Euro - Good Morning Forex!  Sources: finance.yahoo.com, dailyfx.com, poundsterlinglive.com
Market Trends and Currency Positioning: USD Net Short Position, Euro and Pound Analysis - 22.08.2023

(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
Serious liquidity crisis? According to Franklin Templeton, a massive, but unlikely deposit flight from Credit Suisse would have to happen

US Dollar Is Likely To Experience Volatility In The Coming Weeks (EUR/USD), UK Retail Data Exceeds Market Expectations (EUR/GBP), SNB Turns Hawkish Causing the CHF To Rally (EUR/CHF) - Good Morning Forex!

Rebecca Duthie Rebecca Duthie 20.05.2022 15:22
Summary: Euro showing upside potential. UK economic data exceeds market expectations. SNB turns hawkish, which acts in favour of the CHF. Investors turning to JPY in times of market uncertainty. Read next: (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!  The US Dollar is likely to experience volatility during the next trading week. Market sentiment for this major currency pair is reflecting a bullish market sentiment. The next trading week is full of economic data releases which are likely to impact the US Dollar, on Thursday the Fed’s preferred inflation reading PCE will give the market an indication of the growing pressures in the U.S. The Euro is also showing upside potential as investors expect the European Central Bank (ECB) will tighten their monetary policy during the summer. EUR/USD Price Chart UK retail data exceeds market expectations. Market sentiment for this currency pair is showing mixed signals. The GBP saw a positive market turn around on Friday after a positive market turnaround. UK sales volume data raised by 1.4% in April following a fall of 1.2% during March. The data release exceeded the market expectation of -0.2%. The data shows that UK households are showing resilience in the current economic environment. EUR/GBP Price Chart CHF rallies on Friday Market sentiment is showing bearish signals for this currency pair. On Thursday the Swiss Franc began to rally after the president of the Swiss National Bank (SNB) announced that they are ready to act on the rising inflation which is currently at 2.5%. EUR/CHF Price Chart GBP/JPY currency pair Market sentiment is showing bearish signals for this currency pair. This currency pair is sensitive to risk appetite, as investors begin to turn away from risky investments, the JPY tends to strengthen due to its safe-haven asset. GBP/JPY Price Chart Read next:Major Index NASDAQ (IXIC) Sell Off After Equities Fall, Will the ECB Turn Hawkish?  Sources: finance.yahoo.com, dailyfx.com, poundsterlinglive.com
Sustainability-Linked Products: Navigating Growth and Challenges for the Future

ECB Offering The Euro Support (EUR/USD), Strengthening Of The Renminbi Supporting The EUR and GBP, SNB Turns Hawkish (EUR/CHF) - Good Morning Forex!

Rebecca Duthie Rebecca Duthie 23.05.2022 10:29
Summary: ECB offering support to the EUR, whilst easing lockdowns in China aids in the weakening US Dollar. Euro and GBP are likely to strengthen with the Renminbi. SNB and ECB hawkishness offers support to their respective currencies. GBP/CAD Read next: US Dollar Is Likely To Experience Volatility In The Coming Weeks (EUR/USD), UK Retail Data Exceeds Market Expectations (EUR/GBP), SNB Turns Hawkish Causing the CHF To Rally (EUR/CHF) - Good Morning Forex!  Easing lockdowns in China dragging down the US Dollar Market sentiment for this currency pair is reflecting bullish signals. On Monday the European Central Bank (ECB) announced that it is likely that July would be the starting period for raising interest rates. At the same time, the easing of lockdowns in China has aided in weakening the US Dollar. The trading week is full of US events along with some European Central Bank events, all of which will be watched closely. EUR/USD Price Chart Euro and GBP both showing signs of strengthening Market sentiment for this currency pair is reflecting mixed signals. The prospect of the Chinese Renminbi rebounding is likely to have a positive impact on the value of both the Pound Sterling and the Euro. In addition the market believes that the Bank of England (BoE) is likely to continue raising interest rates in the coming months along with the increased likelihood of the European Central Bank (ECB) raising the interest rates. EUR/GBP Price Chart SNB and ECB hawkishness caused mixed sentiment for this currency pair. On Thursday last week the president of the Swiss National Bank (SNB) said that they were ready to act on the rising inflation, the hawkishness of the SNB caused the Swiss Franc to rally. The potential hawkishness of the European Central Bank (ECB) is also causing the Euro to strengthen, leaving the market sentiment for this currency pair showing mixed signals. EUR/CHF Price Chart GBP rallies against the CAD The strengthening of the GBP against the CAD throughout last week has come in the wake of increasing UK government bond yields. The strengthening came in the wake of the release of UK employment data, inflation and retail data all which support further increases in the UK government bond yields. GBP/CAD Price Chart Read next: (FTSE) FTSE 100 Rallies In Response To Positive Economic Data, US Dollar Expected To See More Volatility  Sources: finance.yahoo.com, poundsterlinglive.com, dailyfx.com
Energy and Metals Decline, Wheat Rallies Amid Disappointing Chinese Growth

Hawkish ECB Bodes Well For The Euro, UK PMI Data Disappoints (EUR/GBP), Hawkish SNB Offers Swiss Franc Still Support (USD/CHF), AUD/JPY - Good Morning Forex!

Rebecca Duthie Rebecca Duthie 24.05.2022 13:23
Summary: The ECB turning hawkish is causing the Euro to strengthen. Disappointing PMI data caused the GBP to weaken. Hawkish SNB offers CHF support. Read next: ECB Offering The Euro Support (EUR/USD), Strengthening Of The Renminbi Supporting The EUR and GBP, SNB Turns Hawkish (EUR/CHF) - Good Morning Forex!  Euro trumps US Dollar Market sentiment for this currency pair is reflecting bullish signals, which means investors are confident in the Euro. The strengthening of the Euro comes after the European Central Bank’s (ECB) President Christine Lagarde confirmed market expectations that the ECB would raise interest rates in July. The hawkish sentiment of the ECB has instilled investor confidence in the Euro, despite the continuing hawkish Fed, investors are still turning to the Euro due to concerns around the US economy falling into a recession. EUR/USD Price Chart Pound Sterling Weakens after PMI data release The Release of PMI data showed that the UK economy was close to contracting in May, the results came in well below expectations, a figure that is out of the ordinary. The Pound Sterling weakened based on this news and JP Morgan has flagged the UK economy as the “poster child” for stagflation. The market sentiment for the EUR/GBP currency pair is reflecting bullish signals. EUR/GBP Price Chart Swiss Franc continues to trump US Dollar Market sentiment for this currency pair is reflecting a bearish sentiment. Late last week and this week the Swiss Franc began strengthening against the US Dollar, this comes in the wake of both the concerns around the slowing US economy and in conjunction the hawkish attitude from the Swiss National Bank (SNB). USD/CHF Price Chart AUD/JPY currency pair Market sentiment for this currency pair is reflecting bullish signals. This currency pair has experienced a lot of volatility over the past week. In addition there is a temporary pause in the growth of the JPY as investors are starting to be less weary about taking on some risk. AUD/JPY Price Chart Read next: (DJIA) Dow Jones Index Rising, Investors Confidence In The Euro Is Looking Bullish As ECB Confirm Interest Rate Increases  Sources: finance.yahoo.com, dailyfx.com, poundsterlinglive.com
Steel majors invest in green steel, but change might be driven by contenders

EUR Falls To US Dollar (EUR/USD), Pound Sterling Due To Weaken As UK Recession Looms (EUR/GBP), Market Awaits Fed Meeting Minutes (USD/CHF, GBP/USD)

Rebecca Duthie Rebecca Duthie 25.05.2022 18:27
Summary: EU PPI inflation data caused the Euro to weaken on Wednesday. Investor sentiment looks poor towards the GBP going into summer. Pound Sterling recovers against the US Dollar. Read next: Hawkish ECB Bodes Well For The Euro, UK PMI Data Disappoints (EUR/GBP), Hawkish SNB Offers Swiss Franc Still Support (USD/CHF), AUD/JPY - Good Morning Forex!  A rise in PPI inflation data causes Euro weaken Market sentiment is reflecting mixed signals for this currency pair. Looking at the value of the Euro in terms of PPI and CPI data: the rise in PPI inflation in the euro area reduced the Euros fair value estimate, whereas the European CPI inflation data remains close to that of the US CPI inflation. Therefore, it is the release of PPI inflation data that has caused the Euro to lose more than 0.6% to the US Dollar on Wednesday. EUR/USD Price Chart GBP weakens as concerns of a recession looms The market is reflecting mixed market sentiment for this currency pair. Investors expect the Pound Sterling to have a tough summer period. The slowing UK economy and disappointing PMI data are both aspects that will likely cause the GBP to weaken not only against the Euro but against other currencies too. The market is defaulting to buying Euros and selling Great British Pounds in the wake of changing European Central Bank (ECB) policy. EUR/GBP Price Chart Swiss Franc The market sentiment for this currency pair is reflecting mixed market signals. During the trading week last week, the US Dollar weakened against the Swiss Franc due to the hawkish attitude shown by the Swiss National Bank (SNB) and investors desire for safe-haven assets. This sentiment has continued into the current trading week. USD/CHF Price Chart GBP recovers against the USD The GBP strengthened against the US Dollar on Wednesday as the market awaited the Federal Reserve’s latest meeting minutes. Investors are eager to see how aggressively the Fed will raise interest rates going forward in an attempt to tackle rising inflation. Investor sentiment is negative toward the US Dollar at the moment, which has given some currencies, such as the GBP, an opportunity to recover. The market sentiment for this currency pair is reflecting bullish signals. GBP/USD Price Chart Read next: ECB Offering The Euro Support (EUR/USD), Strengthening Of The Renminbi Supporting The EUR and GBP, SNB Turns Hawkish (EUR/CHF) - Good Morning Forex!  Sources: finance.yahoo.com, poundsterlinglive.com, dailyfx.com
Britain's Rishi Sunak And EU's Ursula Von Der Leyen Will Meet Today To Finalize The Northern Ireland Drama

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

Rebecca Duthie Rebecca Duthie 26.05.2022 11:58
Summary: Investor confidence in both the Euro and US Dollar causing mixed sentiment for the EUR/USD currency pair. GBP beats Euro and USD despite poor PMI data released on Tuesday. RBA June policy meeting will determine the AUD strength Read next: Hawkish ECB Bodes Well For The Euro, UK PMI Data Disappoints (EUR/GBP), Hawkish SNB Offers Swiss Franc Still Support (USD/CHF), AUD/JPY - Good Morning Forex!  Mixed sentiment for the EUR/USD The market is reflecting mixed market signals for this major currency pair. In the Wake of the FOMC meeting minutes, the US Dollar has found some stability. The market can expect a 50bp interest rate hike at the next two Fed meetings, with a possible pause in the hikes later on in the year. The Euro is also on an upward streak with the strong possibility of the European Central Bank (ECB) tightening monetary policy in July. EUR/USD Price Chart GBP strengthens The market is reflecting bearish market sentiment for this currency pair. On Thursday the GBP recovered some of its losses against the Euro after the UK PMI report on Tuesday. Improved market attitude acted in favour of the Pound Sterling against the Euro on Thursday. However, the outlook for the GBP still looks challenging going forward with an overly cautious Bank of England, high-inflation and global risk aversion. EUR/GBP Price Chart GBP/USD reflecting bullish sentiment Market sentiment for this currency pair is reflecting bullish signals. On Thursday the GBP recovered some of its losses against the US Dollar. Improved market attitude acted in favour of the Pound Sterling against the US Dollar on Thursday. GBP/USD Price Chart Future of the AUD waits the RBA monetary policy decision The market is reflecting bullish signals for this currency pair. The Reserve Bank of Australia (RBA) June policy meeting will likely see a future hike in interest rates. If the RBA tightens their monetary policy the Australian Dollar could strengthen. If the RBA chooses a dovish approach, the Aussie Dollar could struggle. AUD/USD Price Chart Read next: EUR Falls To US Dollar (EUR/USD), Pound Sterling Due To Weaken As UK Recession Looms (EUR/GBP), Market Awaits Fed Meeting Minutes (USD/CHF, GBP/USD)  Sources: finance.yahoo.com, dailyfx.com, poundtserlinglive.com
Fed's Bowman Highlights Potential for More Rate Hikes; German Industrial Production Dips to 6-Month Low

Strong Investor Sentiment Toward The Euro Continues (EUR/USD), EUR/GBP Currency Pair, As China Ease Lockdowns The AUD Outlook Seems Positive (GBP/AUD, AUD/USD)

Rebecca Duthie Rebecca Duthie 30.05.2022 16:37
Summary: Expectations for the ECB to raise interest rates grow. GBP doing well in the wake of HM Treasury’s Thursday announcement of the stimulus package. As China eases lockdowns, the AUD strengthens. Read next (COST) (Retail Stores) Costco Stock Beats Market Expectations  Euro still gaining on the US Dollar Market sentiment for this currency pair is reflecting bullish signals. The current combination of a strong Euro and a weak US Dollar is giving room for the Euro to bounce back to a level almost equal to that of 5 weeks ago. The market expectations for the European Central Bank (ECB) to raise interest rates have been growing over the past few weeks, whilst the expectations for the US Dollar have weakened as market price out some of the Feds hawkish decisions. EUR/USD Price Chart Market sentiment toward the Pound Sterling remains strong Market sentiment for this currency pair is reflecting bearish signals. On Tuesday, Eurostat is expected to release their estimate for May inflation, which could have an impact on the Euro. The move made late last week by HM treasury to implement a stimulus package to struggling households has the markets favouring the Pound Sterling over the EURO. EUR/GBP Price Chart Australian Dollar benefitting from the opening Chinese economy The Australian Dollar is performing well against the Pound Sterling amidst China continuing with the phased re-opening of the economy in the wake of its most recent Covid-19 lockdowns. It is well known that what is good for the Chinese economy is normally good for the Australian Dollar. If the global economic outlook continues to improve (especially in China), the AUD could outperform. GBP/AUD Price Chart AUD/USD reflecting mixed market signals The market is reflecting mixed market sentiment signals. The Australian Dollar is strengthening as the Chinese economy outlook seems positive in conjunction with the weakening US Dollar, giving the AUD a chance to strengthen against the USD. AUD/USD Price Chart Sources: finance.yahoo.com, dailyfx.com
Economic Calendar For July 21st. EUR/USD And GBP/USD - Trading Ideas

EuroZone Inflation Exceeds Market Expectations (EUR/USD) (EUR/GBP), New Zealand Economy Will Benefit From China’s Lockdown Easing (GBP/NZD), GBP Bullish (GBP/USD)

Rebecca Duthie Rebecca Duthie 31.05.2022 14:39
Summary: Euro Zone inflation rose to 8.1% in May. Both the BoE and the ECB are expected to tighten monetary policy. The easing of lockdowns will benefit not only China’s economy but economies that rely on China for trading. The GBP may continue its strengthening streak against the USD going into the third quarter of this year. Read next:Strong Investor Sentiment Toward The Euro Continues (EUR/USD), EUR/GBP Currency Pair, As China Ease Lockdowns The AUD Outlook Seems Positive (GBP/AUD, AUD/USD)  EUR/USD maintains bullish sentiment Market sentiment is reflecting bullish signals for this currency pair. Euro Zone inflation rose to 8.1% in May, this rate is around 0.4% higher than expectations, which reaffirms the European Central Banks (ECBs) case for tightening monetary policy in quarter 3. The risk of slower growth is a reality, which may favour the US Dollar going forward. Whether the current strength in the Euro against the USD is going to continue may depend on which economy slows faster, the ECBs interest rate hike and the war in the Ukraine. EUR/USD Price Chart EUR/GBP reflecting mixed market sentiment The market sentiment for this currency pair is reflecting mixed signals. There have been concerns about the UK economic outlook which have grown in response to rising inflation, which can be mainly attributed to rising energy prices. The Bank of England (BoE) is still expected to continue raising interest rates. In addition, the European Central Bank (ECB) is expected to tighten monetary policy which is instilling confidence in the Euro. EUR/GBP Price Chart NZD to benefit from China's strengthening economy The NZD benefitted of Monday in the wake of China’s easing of COVID-19 lockdowns, strengthening against the Pound Sterling. The easing of lockdowns will benefit not only China’s economy but economies that rely on China for trading, New Zealand's economy is one of those who will benefit. GBP/NZD Price Chart US Dollar taking hits on the forex markets The market is reflecting bullish signals for this currency pair. Seasonal factors may be able to aid the GBP continue to strengthen against the US Dollar. The recent macroeconomic data that has been released has been underwhelming for the market and therefore the US Dollar has taken a hit, in addition the market expectations of the Fed to slow or stop tightening monetary policy is also affecting the US Dollar negatively. The GBP may continue its strengthening streak against the USD going into the third quarter of this year. GBP/NZD Price Chart Read next: S&P 500 Sees Good Start To The Week, UK Economy Not Performing As Well As Its Major Economy Counter Parts  Sources: finance.yahoo.com, poundsterlinglive.com, dailyfx.com
The Euro Opened Strong On Wednesday Against The US Dollar (EUR/USD), Euro Could Continue Gaining On The GBP (EUR/GBP), Australia’s Trade Balance Beats Market Expectations (AUD/USD), EUR/JPY

The Euro Opened Strong On Wednesday Against The US Dollar (EUR/USD), Euro Could Continue Gaining On The GBP (EUR/GBP), Australia’s Trade Balance Beats Market Expectations (AUD/USD), EUR/JPY

Rebecca Duthie Rebecca Duthie 02.06.2022 18:31
Summary: The euro opened strong on Wednesday in the wake of U.S treasury yields surging. Inflation for the eurozone hit record levels in April. The Australian Dollar has been unmoved by an outstanding trade balance that beat market expectations. EUR/JPY Read next: EuroZone Inflation Exceeds Market Expectations (EUR/USD) (EUR/GBP), New Zealand Economy Will Benefit From China’s Lockdown Easing (GBP/NZD), GBP Bullish (GBP/USD)  Euro and US Dollar The market is reflecting mixed market signals for this currency pair. The euro opened strong on Wednesday in the wake of U.S treasury yields surging. The U.S economic data that has been released this week has been strong, which has given the market confidence around the hiking cycle. This sentiment comes in contrast to last week's sentiment of an overconfident Federal Reserve. The eurozone is under pressure in the wake of the Russian oil embargo with the possibility of Russia retaliating by potentially cutting off gas from the region, which may aggravate an already bad inflation situation and risk downside potential for the euro. EUR/USD Price Chart Eurozone inflation hit record highs The market is reflecting mixed market signals for this currency pair. Inflation for the eurozone hit record levels in April, this means that it may be more likely that the European Central Bank (ECB) may implement a 50 basis point rate hike before the year-end. If this were to go through, it could underscore the Euro’s already steady rebound against the US Dollar and the Pound Sterling. EUR/GBP Price Chart Australian Dollar benefitting from a trade balance that beat expectations The market is reflecting bullish market signals for this currency pair. The Australian Dollar has been unmoved by an outstanding trade balance that beat market expectations. In addition, the Reserve Bank of Australia (RBA) published their commodity price index (CPI) that accounts for the composition of Australian commodity exports yesterday. AUD/USD Price Chart The Japanese Yen weakened The market is reflecting mixed market signals for this currency pair. The Japanese data revealed a jobless rate that exceeded market expectations, but retail sales stayed at 0.8% for April. The mood was then turned bad with a miss in industrial production. It was anticipated at -0.2% but came in at -1.3% for the month of April. The Japanese Yen weakened on this news as well as the higher oil price taking its toll on the energy importing economy. EUR/JPY Price Chart   Sources: finance.yahoo.com, poundsterlinglive.com, dailyfx.com
Market Trends and Currency Positioning: USD Net Short Position, Euro and Pound Analysis - 22.08.2023

Saudi Arabia Indicates Plans To Increase Their Oil Output (EUR/USD), ECB Plans To Start Tightening Monetary Policy Still Set For July (EUR/GBP), (USD/JPY, USD/CHF)

Rebecca Duthie Rebecca Duthie 03.06.2022 13:37
Summary: OPECs plans to increase their oil output favours the Euro. ECBs window for tightening monetary policy seems to be narrowing. The market is reflecting mixed sentiment for the USD/CHF currency pair. Read next: The Euro Opened Strong On Wednesday Against The US Dollar (EUR/USD), Euro Could Continue Gaining On The GBP (EUR/GBP), Australia’s Trade Balance Beats Market Expectations (AUD/USD),   German PMI declined for the 3rd month in a row The market is reflecting bullish signals for this currency pair. The US Dollar weakened overnight in the wake of data that showed US payroll rose less than expected in May. The European Union finalised the ban on Russian seaborne oil, with the hope of reaching a 90% decline in imports by the end of 2022. Oil prices rose in the wake of this news, however OPEC indicated its plans to compensate their western allies for the oil lost through the embargo. In addition, the German PMI fell for the third consecutive month. EUR/USD Price Chart Post-lockdown growth is slowing in even the largest EU economy. The market is reflecting bullish signals for this currency pair. With German PMI declining for the third consecutive month, rising stagflation and a pessimistic economic outlook within the European Union. Hence, the European Central Banks (ECB) window for tightening monetary policy seems to be narrowing. Originally plans for increasing rates were to begin in the third quarter of this year, however, given the current circumstances, it could be justified to start earlier than originally planned. Although it may be justified, it is unlikely given the ECB president has tried to set out the EU monetary policy plan from the start, despite increased pressure. EUR/GBP Price Chart USD/CHF Reflecting mixed signals The market is reflecting mixed sentiment for this currency pair. The expectation for the month of June for this currency pair is bearish, the US Dollar may be weakening, however, this forecast is based on the trends of the past. With the Swiss National Bank (SNB) expected to turn hawkish and the fears of the US economy heading into a recession, perhaps the reality will be different from the forecast. USD/CHF Price Chart USD/JPY Pair As the US Dollar weakens, investors are turning to the Japanese Yen safe-haven asset. The market sentiment for this currency pair is reflecting bearish signals. USD/JPY Price Chart Sources: finance.yahoo.com, dailyfx.com
Crucial Upcoming PMI Data and High-Stake Meetings Shape China's Economic Landscape

Euro Enters The Week Strong As The Market Awaits ECB Announcements Due Later This Week (EUR/USD, EUR/GBP, EUR/CHF), Focus On The RBA Announcement On Tuesday (GBP/AUD)

Rebecca Duthie Rebecca Duthie 06.06.2022 15:22
Summary: ECB interest rate decision due to occur later this week. Confidence vote being held for Boris Johnsson later on Monday. Investor confidence could be returning to the markets. On Tuesday the Reserve Bank of Australian (RBA) is due to announce its decision regarding tightening of monetary policy. Read next: Altcoins: Decentraland (MANA), What Is It? A Deeper Look Into The Decentraland Platform  EUR strong entering the week On Monday market sentiment for this currency pair turned bearish. The Euro opened stronger on Monday as the market awaits the European Central Banks (ECB) interest rate decision, which is due to occur later this week. If the European Central Bank shows any signs of dovish intentions, the effects could be heavy on the Euro's downside, however, if a hawkish attitude is shown (which seems to be more likely), the upside effect on the euro may be minimal as the expected hike is already priced into the market. U.S CPI data is expected to close off this week, if there is another undershoot regarding the CPI data, it will just confirm that inflation has reached its peak and add to dovish pressure. EUR/USD Price Chart Both Euro and Pound sterling entered the week strong The market is reflecting mixed signals for this currency pair. As the market awaits the European Central Bank's (ECB) announcement regarding the decision for interest rates in July and September, the Euro entered the week strong. In addition, the pound sterling also entered the week strong despite a confidence vote being held this evening to determine Prime Minister Boris Johnssons future as leader. The pound sterling holding strength, shows its resilience to political tensions. EUR/GBP Price Chart EUR/CHF bullish The market is reflecting bullish signals for this currency pair. Amidst the expected announcements from the European Central Bank this week, the Euro has entered the week strong, even against the safe-haven Swiss Franc. During times of economic stress, investors normally turn to safe-haven assets, however investor confidence seems to be returning to the markets. EUR/CHF Price Chart RBA due to make an announcement The Australian Dollar entered its third week of gains this week in the wake of China’s easing of Covid-19 lockdowns and stronger than expected GDP data. However, on Tuesday the Reserve Bank of Australian (RBA) is due to announce its decision regarding tightening of monetary policy. The price of the GBP/AUD currency pair is sensitive to the price changes of the GBP/USD currency pair. GBP/AUD Price Chart Sources: finance.yahoo.com, dailyfx.com, poundsterlinglive.com
The Japanese Yen Retreats as USD/JPY Gains Momentum

ECB On Track To Hike Interest Rates In July (EUR/USD), (EUR/GBP), RBA Hikes Interest Rates (AUD/USD), EUR/CHF

Rebecca Duthie Rebecca Duthie 07.06.2022 15:19
Summary: Inflation reaches its highest level since the formation of the euro single currency. The pound sterling lost value to the Euro, US Dollar and other major currencies. RBA hikes interest rates. Read next: (XAUUSD) Gold Should Be Bullish, NGAS Reaches Highest Price Since August 2008, Cotton Crop Planting Is Ahead Of Schedule  ECB putting themselves under pressure The market is reflecting bearish signals for this currency pair. The European Central Bank (ECB) has repeated the message of ending their asset purchasing early in July, and will follow that with a 25 basis point hike in interest rates in the ECB meeting in July. By reiterating that they will stick to their timeline, the ECB has allowed themselves little flexibility to turn hawkish through tightening of monetary policy before July, despite inflation reaching its highest level since the euro was formed. The market awaits the ECB’s release of macroeconomic projections which will occur on Thursday. EUR/USD Price Chart Pound Sterling falls on Thursday The market is reflecting bullish sentiment for this currency pair. On Monday U.K Prime Minister Boris Johnsson won the vote of no confidence, inlight of this, the pound sterling lost value to the Euro, US Dollar and other major currencies. The pound sterling rallied on Monday in the wake of the news of Borris Johnssons vote of no confidence, some analysts drew the conclusion that the gain in the pound was linked to the prospects of a new leader whilst others said the outcome would not affect the market. EUR/GBP Price Chart AUD gains in the wake of RBA hikes The market is reflecting bearish signals for this currency pair. The Reserve Bank of Australia (RBA) showed the market that they are committed to the fight against inflation and turned hawkish by hiking interest rates by 0.5%. However, the gains felt in the wake of this decision for the AUD were short lived. AUD/USD Price Chart EUR/CHF The market is reflecting mixed signals for this currency pair. As risks for the Euro rise amidst rising inflation and the interest rate hikes from European Central Bank likely to only begin in July, the Euro has faced some mixed sentiment on Tuesday, making the safe-haven Swiss Franc more desirable. EUR/CHF Price Chart Sources: finance.yahoo.com, dailyfx.com, poundsterlinglive.com
Serious liquidity crisis? According to Franklin Templeton, a massive, but unlikely deposit flight from Credit Suisse would have to happen

ECB Interest Rate Announcement Due Tomorrow Offers Euro Support (EUR/USD, EUR/GBP), JPY Facing Negative Outlook (USD/JPY), Potential For A Hawkish SNB Offers CHF Support (USD/CHF)

Rebecca Duthie Rebecca Duthie 08.06.2022 16:22
Summary: Markets are becoming more optimistic around hopes of a more hawkish European Central Bank (ECB). Firmer oil prices adding to downward pressure on JPY. Strong market expectations of a more hawkish Swiss National Bank (SNB). Read next: DOW 30 Turbulent In The Wake Of Targets (TGT) Profit Warning, Japanese Yen Suffering From BoJ Monetary Easing  Euro holds steady The market is reflecting mixed signals for this currency pair. The markets are becoming more optimistic around hopes of a more hawkish European Central Bank (ECB) tomorrow after adding a couple more basis points to the yearly forecasts. There has been talk of a 50bps hike in July and rumors of a possible hike on Thursday, it is likely that the market could see a change in ECB tone which has allowed the Euro to remain resilient against the US Dollar. On Wednesday, the market opened with strong economic Q1 data for the eurozone. The euro did not react instantly to the release of this data, likely due to its delay. EUR/USD Price Chart Anticipation of ECBs announcement offers Euro support The market is reflecting mixed signals for this currency pair. The Euro has gained against the pound sterling ahead of the market awaiting the European Central Banks (ECB) interest rate announcement, which is due tomorrow. Earlier in the trading week the pound sterling rallied in response to the news of Boris Johnssons vote of no confidence. If the ECB announces an interest rate hike in July, the pound sterling currency could be under pressure against the Euro. EUR/GBP Price Chart Negative outlook for Japanese Yen is likely to continue The market is reflecting bullish signals for this currency pair. In addition to the Bank of Japan (BoJ) continuing its monetary easing, firmer oil prices have added to the downward pressure on the Japanese Yen and both of these factors will continue to add to the negative outlook for the safe-haven currency. USD/JPY Price Chart CHF holding its position in the market The market is reflecting bullish signals for this currency pair. The Swiss Franc has recovered against the US Dollar in comparison to the lows experienced in mid-May when the US Dollar was at its strongest, the recovery comes in the wake of market expectations of a more hawkish Swiss National Bank (SNB). the expectations come from indications from policy makers that the SNB will increase its interest rates for the first time since the 2008 financial crisis. USD/CHF Price Chart Sources: finance.yahoo.com, poundsterlinglive.com, dailyfx.com
Market Trends and Currency Positioning: USD Net Short Position, Euro and Pound Analysis - 22.08.2023

US CPI Data Due On Friday Offers USD Support (EUR/USD, USD/JPY, USD/CHF), Pound Sterling Rallies Against Euro Due To The ECB Press Conference Ambiguity (EUR/GBP), USD/GBP

Rebecca Duthie Rebecca Duthie 10.06.2022 12:55
Summary: The ECB turned hawkish and announced its plans to increase all interest rates in July by 0.25%. The ECB press conference started, the path forward became ambiguous again. Markets awaiting US CPI data offer support to the US Dollar. US Dollar strengthening ahead of US CPI data release, The market is reflecting bearish signals for this currency pair. On Thursday the European Central Bank (ECB) turned hawkish and announced its plans to increase all interest rates in July by 0.25% and left open possibility for further hikes in September. However, the ECB press conference made clear to the market that there are circumstances in play that could struggle to keep up with the recently escalating market expectations, which could potentially explain the weakening of the Euro. The US CPI data for May is on schedule to be released during the trading day on Friday, which is offering support for the US Dollar. EUR/USD Price Chart GBP rallies in response to ECB ambiguity The market is reflecting bearish signals for this currency pair. The Euro tumbled on Thursday when the European Central Bank's (ECB) president Christine Lagarde sent the market mixed messages regarding the future policies. The written statement signaled a 0.25% increase in all interest rates in July, however, once the press conference started, the path forward became more ambiguous again, causing the Euro to lose against the Pound sterling and the US Dollar. EUR/GBP Price Chart US CPI data offers USD support. The market is reflecting bullish signals for this currency pair. The US Dollar is being supported by strong market expectations for US CPI data. In addition the Bank of Japan (BoJ) is continuing its dovish approach through quantitative easing, causing the safe-haven asset to weaken across the board. USD/JPY Price Chart USD/CHF The market is reflecting bullish signals for this currency pair. The US Dollar is being supported by strong market expectations for US CPI data, despite prospects of the Swiss National Bank turning hawkish. USD/CHF Price Chart Sources: finance.yahoo.com, pounsterlinglive.com, dailyfx.com
Britain's Rishi Sunak And EU's Ursula Von Der Leyen Will Meet Today To Finalize The Northern Ireland Drama

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

Rebecca Duthie Rebecca Duthie 14.06.2022 12:19
Summary US Dollar supported by prospects of a hawkish Fed. The Pound sterling remains vulnerable to further losses against the Euro. Read next: US CPI Inflation Acceleration Likely To See Hawkish Fed Retaliation (EUR/USD), On Thursday The Market Expects The BoE Monetary Policy Decision (EUR/GBP)  Expectations of a hawkish Fed is driving the dollar up. The market is reflecting bearish signals for this currency pair. As expectations for the Federal Reserve to continue on its hawkish path, and raise interest rates even higher at the next FOMC heighten, the US Dollar is strengthening. A hawkish move from the Fed will likely drive the US Dollar higher as it will gain a yield advantage over its G10 peers. Uncertainty around driving the US economy into a recession also brings about the appeal for the US Dollars liquidity. EUR/USD Price Chart Pound Sterling tumbles in the wake of investor sell-off sentiment The market is reflecting bullish signals for this currency pair. The Pound sterling remains vulnerable to further losses against the Euro following the losses experienced in the last 24 hours which was driven by the strong risk-off sentiment that has been seen by the global markets, which is also linked to the strong expectations for larger interest rate hikes at the US Federal Reserve. EUR/GBP Price Chart US Dollar/Swiss Franc (USD/CHF) Bullish The market is reflecting bullish signals for this currency pair. With expectations for the US Federal Reserve to further tighten monetary policy, the US Dollar is strengthening against most of its counterparts, including the Swiss Franc. USD/CHF Price Chart UK employment data released UK jobs data was released early on Tuesday, which reflected an employment change for March beating estimates whilst the employment statistic missed expectations. The initial reaction to this data saw the pound sterling weaken against the US Dollar as the ease in the labor market could be a signal towards the start of an economic shift. GBP/USD Price Chart Sources: finance.yahoo.com, dailyfx.com, poundsterlinglive.com
Credit Suisse case: Western Assets expects Swiss authorities to act if sentiment doesn't improve

Data Showed A Slowing Eurozone Economy (EUR/USD, EUR/CHF), UK PMI Data Came In Stronger Than Expected (EUR/GBP), NZD Was The Top Performing Currency On Thursday (GBP/NZD)

Rebecca Duthie Rebecca Duthie 23.06.2022 15:44
Summary: Eurozone data showed a slowing European economy for June. Pound sterling offered support from strong UK PMI data. NZD was Thursday's top performing currency. Read next: Fears Of Recession Loom (EUR/USD), UK CPI Inflation Data 9.1% For May (EUR/GBP), Surprisingly Strong Canadian Inflation Data (USD/CAD), EUR/JPY  Euro weakened in the wake of slowing economy data The market is reflecting mixed signals for this currency pair. The Euro fell sharply on Thursday in the wake of data that showed that the Eurozone economy had slowed during June and undermined the expectations for a series of rapid interest rate hikes from the European Central Bank (ECB) that are due to start in July. The fall in the Euro helped reinforce a bid for the US Dollar against all major pairs as investors continue to bet on a global economic slowdown. ` EUR/USD Price Chart UK PMI data beat market expectations The market is reflecting mixed market sentiment for this currency pair. The UK economy continued to grow during June as UK PMI data came in stronger than the market expected. At the same time UK wage pressures remained strong at firms that were increasingly willing to pass on price increases to customers, which is likely to continue to place pressure on the Bank of England (BoE) to raise interest rates. EUR/GBP Price Chart GBP/NZD upside risk The New Zealand Dollar was one of the top performing major currencies on Thursday when the NZD/USD pair seemed to be drawing dip-buyers from the market. The Pound to NZD has been contained over the past month, but with the NZD/USD pair testing major support levels, it is possible that the breakout risk for the GBP/NZD is on the upside. GBP/NZD Price Chart EUR/CHF The market is reflecting bearish signals for this currency pair. As the Swiss Franc continues to strengthen in the wake of the Swiss National Banks (SNB) interest rate hike, the Euro is weakening due to unfavourable economic data. EUR/CHF Price Chart Sources: finance.yahoo.com, dailyfx.com, poundsterlinglive.com
Sustainability-Linked Products: Navigating Growth and Challenges for the Future

Concerns Of A Global Recession Continue To Weigh On Markets - Take A Look At The EUR/USD, EUR/GBP, GBP/AUD And EUR/JPY Currency Pairs

Rebecca Duthie Rebecca Duthie 24.06.2022 13:32
Summary: ECB expected to increase rates at a faster pace. CBA thinks the AUD is at risk of trading at its lowest levels against the GBP since the start of the pandemic.\\ Read next: Data Showed A Slowing Eurozone Economy (EUR/USD, EUR/CHF), UK PMI Data Came In Stronger Than Expected (EUR/GBP), NZD Was The Top Performing Currency On Thursday (GBP/NZD)  EUR/USD currency pair The market is reflecting bullish signals for this currency pair. At this point, the market expects to see a continuing hawkish Federal Reserve, pushing both interest rates and long-term rates up even further, thus, the USD is likely to remain strong for most of the remainder of 2022. The European Central Bank (ECB) is expected to raise interest rates further and at a faster pace, the ECB has already communicated hikes in both July and September, as it tries to contain the Eurozone inflation narrative. As concerns around a global recession tighten, the aggressive 75 basis point rate hike made by the Fed has caused investors to be more cautious across the board. EUR/USD Price Chart Eurozone and UK economy slowing. The market is reflecting bearish signals for this currency pair. UK retail sales declined in May as consumers felt the pain of rising prices which in turn did not allow the pound sterling a boost heading into the weekend. In addition the retail data from the UK came after the data revealved by France and Germany also missed market expectations. The markets are expecting economic slowdown in both the UK and Eurozone economies. EUR/GBP Price Chart CBA outlook on AUD According to the Commonwealth Bank of Australia (CBA), the Australian Dollar is at risk of trading at its lowest levels against the British pound since the start of the Covid-19 pandemic. The CBA sees the AUD as being amongst the most vulnerable currencies to the recent souring of the global economic outlook. GBP/AUD Price Chart EUR/JPY The market is reflecting mixed signals for this currency pair. As the Japanese Yen (JPY) continues to weaken in the wake of a dovish Bank of Japan (BoJ), the Euro is also experiencing troubles in the wake of disappointing economic data released from France and Germany, which indicates a slowing of the Eurozone economy. EUR/JPY Price Chart Sources: finance.yahoo.com, dailyfx.com, poundsterlinglive.com
The Upside Of The EUR/USD Pair Remains Limited

EUR/USD Currency Pair Bullish, KPMG Cuts Growth Forecast For Pound Sterling (EUR/GBP, GBP/USD), RBC Capital Markets Recommend Selling GBP/SEK

Rebecca Duthie Rebecca Duthie 27.06.2022 13:38
Summary: RBC are so confident in this they recommended selling the GBP/SEK currency pair. Euro’s concerns lie in the rising energy prices and possible supply chain disruptions. KPMG cut UK economic growth forecasts for 2022 and 2023. Recession concerns are weighing on the US dollar. Read next: Concerns Of A Global Recession Continue To Weigh On Markets - Take A Look At The EUR/USD, EUR/GBP, GBP/AUD And EUR/JPY Currency Pairs  EUR and USD facing economic concerns The market is reflecting bullish signals for this currency pair. Federal Reserve Chairman, Jerome Powell reiterated in congress that it will be tough for the Fed to bring inflation down without harming the economy or disrupting the labour market, this began a downward revision to market expectations for US interest rates. The biggest concern for the Euro lies in the economic hit in the wake of rising energy prices and possible supply disruptions. Hence, the European Central Bank (ECB) views this as a medium-term source of disinflation, which is yet another reason to take a slower, more cautious approach to normalising monetary policy that has been priced in over the past months. EUR/USD Price Chart EUR/GBP currency pair The market is reflecting bullish signals for this currency pair. KPMG cut UK economic growth forecasts for 2022 and 2023, the cut comes from the expectation of a “mild” recession in the UK economy in 2023, in the wake of surging commodity prices and China's Covid outbreak. News of the downgrade in expectations is driving the Euro to strengthen against the pound sterling. EUR/GBP Price Chart Strong Sell recommendations for the GBP/SEK RBC Capital Markets’ foreign exchange strategists are warning that the pound is likely to suffer losses in the near-term against the Swedish Krona. They are so confident in this they recommended selling the GBP/SEK currency pair. The GBP is expected to take a hit at the end of the Month due to the release of important economic data. GBP/SEK Price Chart US recession concerns weighing on the US Dollar The market is reflecting bullish signals for this currency pair. During last week's trading week, the narrative changed from inflation concerns to recession concerns which are weighing on the US Dollar via lower treasury yields. The UK PM Borris Johnson is looking to hold onto his PM status and run for a 3rd term. GBP/USD Price Chart Sources: finance.yahoo.com, dailyfx.com, poundsterlinglive.com
ECB's Knot: July Rate Hike Necessary, Beyond July Uncertain; Canadian CPI Supports Rates on Hold; Global Crypto Market at $1.2 Trillion; Oil Market Tightens with Russian Shipments Drop and China's Support Measures

A Global Economic Slowdown Is Causing Risk-Off Sentiment, The US Dollar Remains Strong and AUD Expected To Be Currency Most Affected (EUR/USD, EUR/GBP, GBP/AUD, AUD/JPY)

Rebecca Duthie Rebecca Duthie 04.07.2022 16:40
Summary: During the trading week last week the EUR/USD currency pairs price fell back to near five-year lows. It is expected that the global economic slowdown will affect the Australian Dollar more than the Pound Sterling. Investors looking out for ECB announcements and EU retail data this week. AUD/JPY bearish. Read next: Concerns Over Tight Supplies Is Driving Brent Crude Oil Prices Up, Silver Prices Falling, Favourable Weather, Weak Demand & Tight Supplies - Factors Driving Corn Prices  Euro’s left at the mercy of market sentiment The market is reflecting mixed signals for this currency pair. During the trading week last week the EUR/USD currency pairs price fell back to near five-year lows and may be at risk of remaining under pressure to those levels in the coming days unless the U.S currency falters further in the wake of its stumble on Friday. The Euro is under pressure from the strong US Dollar and neither currencies benefitted last week despite central banks claiming their determination to fight inflation. There was not much activity over the weekend regarding events that could move the market, thus, the global market including the Euro has been left at the mercy of market sentiment. EUR/USD Price Chart EUR/GBP currency pair The market is reflecting mixed sentiment for this currency pair. Investors will be watching the European Central Bank’s (ECB) policy announcements this week as well as the EU retail sales data that is due to be released. The Euro got no support when ECB president Christine Lagarde spoke last week and emphasised the importance of optionality in relation to the size and timing of interest rate changes after the 0.25% uplift in July that was pre-announced last month. EUR/GBP Price Chart AUD expected to be more affected by the economic slowdown than the GBP The Australian Dollar is one of the biggest losers amongst the major currency pairs over the past month and analysts predict this week's Reserve Bank of Australia (RBA) policy update mixed with souring global investor sentiment should keep the currency under pressure from the pound sterling. In addition, it is expected that the global economic slowdown will affect the Australian Dollar more than the Pound Sterling. GBP/AUD Price Chart AUD/JPY currency pair The market is reflecting bearish signals for this currency pair. It is expected by the market that the global economic slowdown will affect the Australian Dollar. The Bank of Japan (BoJ) is currently defiantly maintaining yield curve control despite speculators attacks that are betting that the BoJ will be unable to hold yields down if prices continue to rise. AUD/JPY Price Chart Sources: finance.yahoo.com, poundsterlinglive.com, dailyfx.com
The Collapse Of The Silicon Valley Bank Weakened The Dollar And USD/JPY But Supported EUR/USD, AUD/USD, And GBP/USD

US Dollar Hitting 19-year Highs (EUR/USD, GBP/USD), Russia Cuts Off Gas Taps (EUR/GBP), GBP/AUD Currency Pair & RBA Policy Decision

Rebecca Duthie Rebecca Duthie 05.07.2022 17:21
Summary: The US Dollar is hitting 19 year highs on Tuesday. Russia turns gas taps off Europe, plunging the Euro. UK strikes over pay began on Tuesday. RBA policy decisions lacked hawkish rhetoric. Read next: A Global Economic Slowdown Is Causing Risk-Off Sentiment, The US Dollar Remains Strong and AUD Expected To Be Currency Most Affected (EUR/USD, EUR/GBP, GBP/AUD  US Dollar Continues on its strengthening path The market is reflecting bearish signals for this currency pair. The US Dollar is hitting 19 year highs on Tuesday, this has been helped by a plunging EUR/USD currency pair, which has set its own 19-year low. Whilst there has been no particular event that has sparked the plunging of the Euro, the combination of a multiple of things has driven its downfall. Hence, the events include Russian gas deliveries for June which was 40% shorter than expected, this has caused European gas prices to remain elevated. In addition, Nord stream is set to close completely for annual maintenance, where it shuts down completely during July 11-21st, the risk, however, is that the pipeline may not come back online. In addition European Central Bank (ECB) representative Nagel did little to help the Euro as he cautioned against using monetary policy to limit risk premia of indebted states, he also stated that an Anti-Fragmentation tool could only be used during exceptional circumstances. Although Bundesbank’s Nagel is part of the minority, this does raise the risk of a watered-down Anti-Frag tool, which has ultimately disappointed the market expectations. EUR/USD Price Chart Russia turns the gas taps off to a pipeline. The market is reflecting bearish signals for this currency pair. The Euro is on its backfoot against the pound sterling in the wake of surging Eurozone energy prices after Russia cut off the taps to a key pipeline. The Euro has been aggressively sold during the Tuesday trading day, starting from 8am London time. This is putting pressure on the Euro. EUR/GBP Price Chart Strikes in the UK began on Tuesday The market is reflecting bearish signals for this currency pair. Strikes in the UK over salaries began on Tuesday and could cut the country's gas output by almost a quarter and could exacerbate supply shortages in the wake of the war in the Ukraine. There is a possibility that around 15% of Norway's oil output could also be cut by Saturday, this is according to a Reuters calculation and is based on the plans of union members to gradually escalate their action over the coming days. Amidst these facts, the US Dollar remains strong. GBP/USD Price Chart GBP/AUD The pound sterling to Australian Dollar currency pair has been volatile, but may still struggle to rise if the US Dollar doesn't hold onto its Tuesday highs in the coming days. The AUD tumbled before most of its currency counterparts on Tuesday in the wake of the Reserve Bank of Australia (RBA) July policy decision, which saw the cash rate lifted by 0.5% for a second time, taking it up to 1.35% for the time being. Despite this move, the decision was widely expected by the markets, however, the statement that came with the policy decision indicated to the markets that the hawkish rhetoric from the RBA was lacking. GBP/AUD Price Chart Sources: finance.yahoo.com, poundsterlinglive.com, dailyfx.com
Sustainability-Linked Products: Navigating Growth and Challenges for the Future

Pound Sterling Offered Support After News That Boris Johnson Is Set To Step Down (EUR/GBP, GBP/USD), FED FOMC Meeting Minutes (EUR/USD), Japan’s Upper House Elections (USD/JPY)

Rebecca Duthie Rebecca Duthie 07.07.2022 16:36
Summary: ECB and FOMC meeting minutes release. UK Prime Minister set to step down. GBP is little changed. Japan’s upper house elections. Read next: Bearish Outlook For The EUR/USD Currency Pair, Euro & GBP Are Only Two Currencies Dominated By The US Dollar’s Strength (EUR/GBP, USD/JPY, EUR/JPY)  ECB & Fed FOMC meeting minutes. The market is reflecting bearish signals for this currency pair. The Euro has been under big pressure in the wake of global recessionary fears gripping the markets and causing its price to break below multi-decade lows. Earlier in Thursday's trading day, the Euro had managed to recover from some of the lows seen on Wednesday after the Federal Reserve's FOMC meeting minutes were released. Later on Thursday the meeting minutes of the last European Central Bank (ECB) meeting are due to be released and almost any hawkish rhetoric could benefit the Euro. EUR/USD Price Chart Boris Johnson set to step down The market is reflecting mixed signals for this currency pair. Boris Johnson is set to resign in the wake of many high-profile resignations within his government in protest of Boris Johnson’s continuing leadership, the current Prime Minister is set to address the media later on Thursday. This news has aided the EUR/GBP currency pair in its downward momentum. In addition, the Euro itself isn’t faring well amidst economic concerns, the potential for widening periphery bond spreads as the European Central Bank raises rates, and ofcourse the possibility of complications in restoring Russian gas inflows to Germany via Nord Stream 1 which is also due to undergo routine maintenance from next Monday until the 21st July. EUR/GBP Price Chart Strong US Dollar. The market is reflecting mixed signals for this currency pair. The US Dollar continues to strengthen in the wake of the Fed FOMC meeting minutes released late on Wednesday, and the continuing hawkish rhetoric. The GBP is little changed in most corresponding currency pairs. GBP/USD Price Chart Rising cost-of-living in Japan The market is reflecting bullish sentiment for this currency pair. The rising cost-of-living in Japan continues to squeeze domestic households' income ahead of Japan's upper house election on Sunday. The release of the Fed's FOMC meeting minutes has offered the US Dollar more support on Thursday whilst inflation is currently showing signs of becoming more politically based in Japan in the wake of the continuing cost-of-living squeeze. USD/JPY Price Chart Sources: finance.yahoo.com, dailyfx.com, poundsterlinglive.com  
GBP Inflation Surprise: Pound Faces Downward Pressure as Rate Hike Expectations Shift

ZEW Economic Index Economic Readings (EUR/USD, EUR/GBP), Many Currencies Have Come Under Pressure As The US Dollar Continues To Strengthen

Rebecca Duthie Rebecca Duthie 12.07.2022 17:02
Summary: The Euro expectedly reacted poorly to the ZEW indexes economic readings. EUR/GBP GBP/AUD came in softer on Tuesday. GBP/NZD Read next: EUR/USD Attempts Parity (EUR/USD), Noord Stream Maintenance Is Underway (EUR/GBP), BoC Policy Decision Due Wednesday (GBP/CAD), USD/JPY  US Inflation Data will be released on Wednesday The market is reflecting bearish signals for this currency pair. The Euro expectedly reacted poorly to the ZEW indexes economic readings and is now seeing the EUR/USD currency pair testing parity. The EU region print came in at -53.8, the lowest since November 2011, reiterating the already lowering optimism in the Eurozone. Further events that could negatively affect the Euro further include an increasingly hawkish Federal Reserve, the potential energy crisis lingering over the Eurozone and recessionary fears. Focus during Wednesday's trading day will be on the US Inflation data release which will give the market further guidance around the U.S economy. EUR/USD Price Chart Euro faces more risks The market is reflecting mixed signals for this currency pair. The Pound sterling continues to be weighed down by the market's woes around the Euro. The Euro/US Dollar currency pair is testing parity. The pound was supported by the news of Prime Minister Boris Johnson stepping down in the wake of many government officials resigning. The Euro still faces risks going forward. EUR/GBP Price Chart GBP/AUD Currency pair The pound sterling to Australian Dollar entered the trading week on its front foot with the AUD coming under pressure from numerous other currencies whilst the US Dollar strengthened even against China's Renminbi and risk aversion controlled both the stock and commodity markets. Although the GBP/AUD was softer on Tuesday, it closely resembles the USD pairing against both the GBP and AUD. GBP/AUD Price Chart GBP/NZD The GBP/NZD currency pair has had a volatile start to the trading week and could see the pound sterling strengthen even more in the coming days if the Reserve Bank of New Zealand (RBNZ) surprises the markets and encourages the NZD to outperform other currencies. GBP/NZD Price Chart Sources: finance.yahoo.com, poundsterlinglive.com, dailyfx.com
Trading Signals For The New Zealand Dollar To Swiss Franc Pair (NZD/CHF)

Euro Remains Under Pressure As European Gas Crisis Persists (EUR/USD, EUR/GBP, EUR/CHF), RBNZ Increased Cash Rate (GBP/NZD)

Rebecca Duthie Rebecca Duthie 13.07.2022 17:26
Summary: US inflation at 9.1%. Retreating USD and buoyant commodity prices offered NZD support. UK GDP data beat market expectations. EUR remains under pressure due to gas crisis. Read next: US Inflation Reaches Nearly 41 Year High, RBNZ & BoC Increase Their Cash Rates  EUR/USD The market is reflecting bearish signals for this currency pair. Early on Wednesday the EUR/USD currency pair hit parity, a level not seen in 20 years. US inflation data for June was released on Wednesday and came in at 9.1%, a level that had increased since the May reading of 8.6%. Inflation has risen further despite the Fed’s continuous effort to drive inflation rates down through aggressive interest rate increases. The Euro will continue to remain under pressure amidst the European gas crisis which is far from over. EUR/USD Price Chart UK GDP Data beat expectations The market is reflecting mixed signals for this currency pair. With the UK GDP data coming in surprisingly strong in the mid-trading week has led Goldman Sachs to lower their expectations for a looming recession in the UK economy. All components of the UK economy played their part in contributing to the better than expected data: manufacturing production increased 2.3% in May against a consensus forecast for 0.2%. Industrial production grew 0.9% against expectations for flat output and construction output increased 4.8% against the 4.4% expected. EUR/GBP Price Chart EUR/CHF Currency pair The market is reflecting bearish signals for this currency pair. The Swiss National Bank (SNB) surprised the markets in June with a 50 bps hike in interest rates. The SNB hosts quarterly meetings to discuss monetary policy, the next meeting is due in September whereas the European Central Bank (ECB) will make its decision regarding monetary policy at the end of the month. EUR/CHF Price Chart GBP/NZD pushing downwards The Reserve Bank of New Zealand increased their cash rate by 50 bps on Wednesday in an attempt to reign in persistent inflation. Although the move from the reserve bank was fully priced-in to the financial markets, the retreating US Dollar and buoyant commodity prices allowed room for the NZD to a number of currencies downward, including the pound sterling. GBP/NZD Price Chart Sources: finance.yahoo.com, dailyfx.com, poundsterlinglive.com
MSFT Stock Price Analysis: Bearish Signals Point to Potential Decline

EUR/USD Falls Below Parity, Eurozone Energy Crisis Concerns Persist (EUR/GBP), Hawkish BoC (USD/CAD), USD/JPY

Rebecca Duthie Rebecca Duthie 14.07.2022 17:34
Summary: The Eurozone energy crisis persists. Potentially more hawkish BoE could be on the horizon. BoC 1% raise in interest rates offers CAD support. Read next: Platinum Prices Touchine 22-month Lows, RBOB Gasoline, Wheat Consumption Expected To Decrease  Stock Markets weighing an even more aggressive Fed The market is reflecting bearish signals for this currency pair. The Euro to US Dollar exchange rate has fallen below parity in the wake of a surge in US Dollar demand. Looking at the combination of events leading to the fall of the EUR/USD, we observe that the stock markets are in the red as they attempt to anticipate the potential effects from a potential 100 basis point hike from the Federal Reserve. The Euro is still struggling as concerns around the seemingly unwavering energy crisis in the Eurozone persists. EUR/USD Price Chart Potentially more hawkish BoE could be on the horizon The market is reflecting bearish signals for this currency pair. The most recent commentary suggests to the market that the Monetary Policy Committee at the Bank of England (BoE) is only one employment report or one inflation number away from a step change in the pace the Bank Rate is being lifted, and that a change of this sort could come as soon as August. This move could offer the pound support going forward. EUR/GBP Price Chart BoC hawkish moves offering CAD support The market is reflecting bearish signals for this currency pair. The US Dollar had a strong start to Thursday's trading day as investors priced in the growing expectations for a 100 basis point increase in interest rates from the Fed in the wake of the 9.1% US inflation data that was released on Wednesday. On Wednesday the Bank of Canada (BoC) shocked markets with their largest interest rate hike since 1998. The hawkish move from the BoC has offered the Canadian Dollar support and has thrown a curveball at investors, leaving a range of responses from analysts. USD/CAD Price Chart USD/JPY The market is reflecting bearish signals for this currency pair. The US Dollar has reversed yesterday's pullback which occurred in the wake of US inflation data being released. The BoJ continues on their dovish monetary policy path. USD/JPY Price Chart Sources: finance.yahoo.com, dailyfx.com, poundsterlinglive.com
The EUR/USD Pair Could Resume Its Larger Degree Downtrend

ECB Upcoming Policy Rate Decision Offers Euro Support (EUR/USD, EUR/GBP), Higher Than Expected NZ CPI Inflation Data (GBP/NZD), (USD/CAD)

Rebecca Duthie Rebecca Duthie 18.07.2022 16:49
Summary: EUR recovering against the USD. ECB interest rate decision due on Thursday. UK economic data to be released this week. NZ CPI inflation rose 1.7%. Read next: Hawkish Fed Is Driving Gold’s Value Down , Corn Prices At 5-week Lows, Brent Crude Oil Prices Falling  Euro attempting to recover against the USD The market is reflecting bullish signals for this currency pair. The Euro has been attempting to recover against the US Dollar during the Monday trading day and could continue to rise in the coming days if all goes well for Eurozone economies on Thursday after the European Central Bank (ECB) announces their policy decision. In addition there is still market uncertainty around whether Russian gas flows will continue through the Noord Stream 1 after its maintenance ends on July 21st, this remains one of the greatest risks to the Euro. EUR/USD Price Chart Pound sterling could weaken more against the EUR The market is reflecting bullish signals for this currency pair. The EUR/GBP currency pair could strengthen more in the coming days as the market awaits the ECB’s interest rate decision. There is however, some UK economic data that is due to be released which could offer the pound sterling support against the Euro and other currencies. EUR/GBP Price Chart NZ inflation data weakening the NZD. A rise in New Zealand inflation data shocked investors and raised bets for a faster and more hawkish response from the Reserve Bank of New Zealand (RBNZ). However, fears of a ‘hard landing’ for the Kiwi economy have grown as investors are fearing that the combination of rising interest rates and high inflation will negatively impact economic expansion, which may aid in explaining the NDZ’s negative reaction to the data. According to Stats NZ, CPI inflation in NEw Zealand rose 1.7% quarter on quarter, surpassing the markets expectation of a 1.5% increase/ GBP/NZD Price Chart USD/CAD The market is reflecting bearish signals for this currency pair. The Canadian Dollar has continued its rally against the US Dollar after the Bank of Canada (BoC) surprised markets last Wednesday with a 100 basis point hike in interest rates. USD/CAD Price Chart Sources: finance.yahoo.com, dailyfx.com, poundsterlinglive.com  
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Euro Remains Supported Ahead Of ECB Policy Decision, Netflix & Tesla Q2 Earnings Reports

Rebecca Duthie Rebecca Duthie 20.07.2022 23:49
Summary: EUR/USD, EUR/GBP currency pairs Netflix earnings report Tesla earnings report Read next: S&P 500 Amongst Major Indexes That Are Rising, Markets Are Waiting For Thursdays ECB Policy Decision  Euro stole headlines on Wednesday The EUR/USD currency pair ended the Wednesday trading day showing mixed market sentiment as the market awaits the European Central Bank’s (ECB) monetary policy decision due on Thursday. The Euro is still facing uncertainty regarding high inflation in the Eurozone and how the ECB plans to tackle it, in addition as the Noord Stream 1 opens after its routine maintenance period, there are still concerns as to whether Russia will open the gas taps. The recovery of the Euro against the dollar could be reflecting a possible market inflection point. The Euro has recovered half of its July losses so far, this could mean a turn around against the Dollar for many other major currencies aswell. The Euro stole the headlines on Wednesday as both Bloomberg News and Reuters reported that the market could see an outsized interest rate yield rise from the European Central Bank on Thursday. EUR/USD Price Chart EUR/GBP currency pair The market is reflecting mixed signals for this currency pair. According to a number of new reports, it is predicted that UK inflation could reach up to 12% by October, the report also showed that the inflation rate was growing at its fastest rate in 40 years. The Euro remains supported ahead of the ECB’s policy decision on Thursday EUR/GBP Price Chart Netflix Earnings Report Netflix's earnings report on Wednesday indicated they lost around 970,000 subscribers, beating the 2 million that was predicted last quarter, thus causing the company's stock price to jump. Its EPS beat market expectations. The company also warned that the rallying US Dollar would have an impact on international revenue. The streaming giant also indicated they had more time to understand and address the issues that have been impacting their streaming, revenue and other major indicators. NFLX Price Chart Tesla earnings report Tesla’s quarter 2 earnings report indicated the company beat market expectations with regards to adjusted EPS. Automotive margins came in at 27.9% down from the 32.9% seen in the first quarter, impacted by inflation, increased competition for battery cells and other components that are required for electric vehicles. In addition the invasion of Russia in the Ukraine and in conjunction with covid-19 lockdown measures in China caused supply chain issues and parts shortages. TSLA Price Chart Sources: finance.yahoo.com, dailyfx.com, poundsterlinglive.com, cnbc.com
Fed Interest Rate Announcement Due Wednesday (EUR/USD), 50bp Hike From BOE Expected (EUR/GBP, GBP/NZD)

Fed Interest Rate Announcement Due Wednesday (EUR/USD), 50bp Hike From BOE Expected (EUR/GBP, GBP/NZD)

Rebecca Duthie Rebecca Duthie 26.07.2022 19:37
Summary: Federal reserve interest rate announcement Wednesday. Barclays updated their expectations for the next BOE interest rate hike. NZD was a poor performer on Tuesday. Read next: NGAS Prices Rising, Cotton Demand Falling, Gold Prices Rising As Recession Fears Rise  Euro at risk of weakening The market is reflecting bearish signals for this currency pair. The euro is at risk of falling as prospects of a weaker economic outlook and restricted gas flows through the Noord Stream 1 pipeline. The threat of Russian oil exports through the Noord Stream pipeline being reduced to 20% could contribute even further to the energy crisis in Europe and drive gas prices even higher. The market is awaiting the Federal Reserve's interest rate hike announcement which is due tomorrow. EUR/USD Price Chart EUR/GBP bearish The market is reflecting bearish signals for this currency pair. Barclays bank has increased expectations to 50bps hikes from the Bank of England (BOE). A 50bp increase is now anticipated for August 4th, according to the UK economic team at Barclays after evaluating incoming UK data and signals from the Bank of England. EUR/GBP Price Chart GBP/NZD currency pair The Pound to New Zealand Dollar exchange rate may be at risk of another decline below the 1.92 level due to a full calendar of event risks in the next few days, making it difficult for it to rise. On Tuesday, the U.S. Dollar recovered from 10-day lows vs the majority of its G20 counterparts, causing the GBP/NZD to increase for a third day in a row. The New Zealand Dollar performed worse than the other major currencies and Sterling. GBP/NZD Price Chart Sources: dailyfx.com, finance.yahoo.com, poundsterlinglive.com
Federal Reserve Raises The Interest Rates By 75bps

Federal Reserve Raises The Interest Rates By 75bps

Rebecca Duthie Rebecca Duthie 27.07.2022 20:04
Summary: Fed chooses a 75 basis point rate hike. Central Banks all around the world are raising interest rates. Federal Reserves On Wednesday the Federal Reserve made their interest rate decision to raise interest rates on Wednesday, they chose to raise interest rates by 75 basis points. The market expectations were elevated to 100 basis points in the wake of June CPI inflation data that reflected that, despite the Fed’s efforts to reign in and control the soaring inflation, inflation was stubborn in its moves upward. The Feds move is likely to cause the US dollar to rally and strengthen against all its major currency pairs and hopefully will aid in bringing down the already soaring inflation rate. Over the past couple weeks the European Central Bank (ECB), Bank of Canada (BoC) and the Bank of England (BoE) amongst others, have all rasied their interest rates in an attempt tio reign in the soaring inflation rates around the world. The Fed has been periodically raising interest rates at every meeting since May, the first rate hike in may was 50 basis points, which shocked the markets and caused the US Dollar to rally and strengthen across the board. The second interest rate hike by the fed was in June of 75 basis points and was one which shocked the market, thereafter the 75 basis point hike decision today, a further 75 basis points. The market had priced in a 75 basis point hike but experts raised their expectations to a 100 basis point rate hike, as the Fed continued to reiterate to the market their commitment to reigning in the sky high inflation rates, rates that have not been seen since the 1980s. In a unanimous vote, the Federal Open Market Committee raised the policy rate to a range between 2.25 percent and 2.50 percent, noting that "inflation remained elevated, reflecting supply and demand imbalances connected to the pandemic, increased food and energy prices, and broader pricing pressures." The FOMC continued by stating that it is "very sensitive" to inflation risks. Officials observed in the new policy statement that "recent measures of spending and production have weakened," despite the fact that job growth has remained "strong," a pointer to the reality that the substantial rate hikes they have implemented since March are starting to take effect. The Fed has increased its policy rate by 225 basis points in total this year, on top of a 75-basis-point increase last month and smaller increases in May and March, as it fights an inflation breakout on a par with the 1980s with monetary policy modeled after the 1980s. As a result, the epidemic era attempts to promote household and corporate spending with cheap money have effectively come to an end. The policy rate is currently at the level that the majority of Fed officials believe has a neutral economic impact. The rate was also achieved in just four months, matching the peak of the central bank's previous tightening cycle, which lasted from late 2015 to late 2018. Little concrete information about the next actions the Fed might take was provided in its most recent policy statement. The Fed's decision will be greatly influenced by whether or not incoming data indicates that inflation is starting to decline. Investors anticipate the U.S. central bank to increase the policy rate by at least half a percentage point at its September meeting in light of the most recent data showing consumer prices rising at a rate of more than 9% annually. Sources: investing.com, reuters
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US ISM Data Defied Market Expectations (EUR/USD), GBP Strengthened Ahead of BOE Policy Decision (EUR/GBP, GBP/AUD),

Rebecca Duthie Rebecca Duthie 04.08.2022 02:09
Summary: The US Dollar made intraday gains on Wednesday. Markets awaiting BOE policy decision. GBP/AUD attempting recovery. Read next: Palladium Prices Touching Two-Week Highs, OPEC+ Increasing Crude Supply Of WTI Crude Oil, Coffee Supply Outlook Seemingly Poor  USD supported by US ISM data The market is reflecting bearish signals for this currency pair. After the Institute for Supply Management (ISM) Services PMI defied market expectations by increasing for the month of July in contrast to the alternative barometer compiled by S&P Global, the U.S. Dollar recovered earlier losses to make intraday gains over various other major currencies. The sharp increases in new orders and overall business activity within the biggest and most significant sector of the U.S. economy's largest and most important sector led to Wednesday's release of the ISM services sector index rising from 55.3 to 56.7 for last month, surprising the currency and bond markets. The Fed will decide in September whether to lower the size of the increments in which it is raising U.S. interest rates. Chairman Jerome Powell indicated last Wednesday that they would take a range of economic indicators into account, causing a significant decline in the value of the dollar. EUR/USD Price Chart BoE Policy rate decision due The market is reflecting mixed signals for this currency pair. The Pound sterling has strengthened ahead of the Bank of England (BoE) interest rate decision. Following the Bank of England report on Thursday, Barclays' foreign exchange analysts predict that the British Pound would likely decline; however, Goldman Sachs is more optimistic about the UK currency's prospects, particularly when compared to the Euro. Before announcing its most recent inflation and economic growth projections, the Monetary Policy Committee of the Bank of England is anticipated to announce another interest rate increase.Through the later part of July and the beginning of August, the Pound strengthened against both the Euro and the U.S. Dollar. The main test for the currency will be the size of the hike announced and the nature of those expectations. EUR/GBP Price Chart GBP/AUD attempting recovery The GBP/AUD currency pair is attempting recovery of the declines experienced in July. In the first few days of August, the Pound to Australian Dollar exchange rate further reversed its July decline, but it may find it difficult to move much further than the nearby 1.76 level in the absence of further support from the Bank of England (BoE) this Thursday. Following the latest Reserve Bank of Australia (RBA) monetary policy announcement on Tuesday, which helped push GBP/AUD to one-month highs, the Australian Dollar was one of the major currencies that underperformed for the week ending on Wednesday. GBP/AUD Price Chart Sources: finance.yahoo.com, dailyfx.com, poundtserlinglive.com
The EUR/USD Pair Maintains The Bullish Sentiment

FOREX: U.S Inflation Data Due Wednesday (EUR/USD), BoE Economic Forecasts Downgrades (EUR/GBP), Potentially Hawkish BoC (GBP/CAD)

Rebecca Duthie Rebecca Duthie 08.08.2022 20:30
Summary: The euro is battling to mount significant gains against the USD. BoE’s economic downgrades. Market expectations for a hawkish BoC. Read next: Meme Stocks Amongst Monday’s Top Performers  EUR/USD suffered defeats this week The market is reflecting mixed signals for this currency pair. The Euro to Dollar exchange rate suffered defeats this week from both near and distant, but if this Wednesday's U.S. inflation data further incenses a still-hawkish Federal Reserve (Fed), it might send the rate back into its laws from July. In the first session of last week, the Euro got dangerously close to the 1.03 handle versus a declining Dollar, but an attempt at a rebound was again thwarted by what appear to be escalating concerns to energy supplies in Germany and several other European nations. The euro has stabilized versus the U.S. dollar in recent weeks following a large sell-off earlier this year, but has been unable to mount a significant comeback due to a dearth of supportive fundamentals. In this aspect, the common currency has faced challenges that have limited its upward performance versus the dollar, including the oil crisis in Europe, regional economic instability, and the ECB's unwillingness to raise rates fast. EUR/USD Price Chart BoE shocked the market with sharp economic downgrades The market is reflecting bullish signals for this currency pair. The Bank of England (BoE) shocked the market last week with sharp downgrades to its economic forecasts, which put Sterling on the back foot and put it at risk of slipping into a cluster of technical support levels around 1.18 in the coming days. As a result, the Pound to Euro exchange rate was muted. The pound sterling was a little firmer this morning against the U.S. dollar and the euro, respectively. The new leader of the British Conservative Party and the British Prime Minister, both named Sunak and Truss, have been the subject of much discussion (tax cuts). Tax cuts may increase already high inflationary pressures, which could lead to additional interest rate increases from the Bank of England. Tax cuts are intended to promote economic growth inside the UK (BoE). EUR/GBP Price Chart GBP/CAD currency pair Last week, U.S. economic data, the U.S. Dollar, and a strong Loonie combined to drag the Pound to Canadian Dollar rate down toward 1.55 and a level that may continue to exert a gravitational pull in the days to come. This prevented the rate from rising above near 10-year lows. Although the unemployment rate in Canada remained at 4.9 percent and wages continued to grow at an annualized rate of 5.2 percent in July, the economy still lost jobs for a second consecutive month. This may have led the market to believe that the Bank of Canada (BoC) will likely maintain the more aggressive monetary tightening and interest rate policy implemented in recent months. GBP/CAD Price Chart Sources: finance.yahoo.com, dailyfx.com, poundsterlinglive.com
Fed is expected to hike the rate by 50bp, but weaker greenback and Treasury yields don't play in favour of the bank

The Market Awaits US Inflation Report (EUR/USD), EUR/GBP Bullish, Canadian Dollar “skewed to the downside”

Rebecca Duthie Rebecca Duthie 09.08.2022 17:19
Summary: Market awaits US inflation reports on Wednesday. Fed and ECB will continue to hike interest rates. The Bank of Canada may decide to scale down its plans to raise interest rates. Read next: Will Tesla’s (TSLA) Stock-Split Boost Interest In Company Shares?  USD is expected to remain supported The market is reflecting bullish signals for this currency pair. As the market awaits the US inflation report on Wednesday, the Euro has remained stable on Tuesday. So far today, the EUR/USD has fluctuated only slightly, around 1.0190. In the North American session, Treasury rates decreased; today in Asia, they were flat throughout the curve. At about 106.36, the US Dollar (DXY) index is unchanged. However, Analysts at Rabobank, a Dutch-based worldwide lender and investment bank, predict that the Euro to Dollar exchange rate (EUR/USD) will decline down below the 1.0 level during the upcoming weeks. In contrast to some analysts' predictions that the Dollar's multi-month surge is coming to an end, new analysis reveals the currency will likely continue to be well supported long into 2023. EUR/USD Price Chart EUR/GBP Bullish The market is reflecting bullish signals for this currency pair. On August 4, the Bank of England increased interest rates by 50 basis points as it stepped up its campaign against inflation. "Having stepped up the pace of rate hikes, it would look odd to throttle back straight away. The Fed and ECB are likely to continue to hike at a rapid pace, and a desire to support sterling will likely drag the BoE along with them," says Goodwin. "Given the fragile backdrop, this makes rate cuts in 2023 more likely," says Goodwin. They anticipate 75 basis points of rate reductions in 2023 when it becomes apparent that the BoE overreacted. Forecasts for a weaker Pound relative to the Euro reflect this anticipation; Oxford Economics predicts that the Pound to Euro exchange rate will be at 1.16 from the end of the third quarter of 2022 through the end of the first quarter of 2023. EUR/GBP Price Chart Canadian dollar “skewed to the downside” According to foreign exchange strategists at Barclays, the forecast for the Canadian Dollar in the near term is "skewed to the downside." The Bank of Canada may decide to scale down its plans to raise interest rates, according to Barclays in its normal weekly currency strategy briefing paper. The bank also notes that the prolonged decrease in oil prices may have an impact. With a reading of -30.6k in July, according to official figures released last week, Canada experienced its second straight loss in employment, falling short of the average estimate of +15k new positions. Despite this, the unemployment rate stayed close to long-term lows at 4.9 percent, while pay growth held steady at 5.4 percent annually. GBP/CAD Price Chart Sources: finance.yahoo.com, dailyfx.com, poundsterlinglive.com
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US CPI Inflation Data For July Was 8.5%, Beating Expectations

Rebecca Duthie Rebecca Duthie 10.08.2022 14:38
Summary: US Inflation data is expected to be released on Wednesday. EUR/USD & GBP/USD currency pairs. Volatility in the markets. 8.5% consumer inflation. Later today, high volatility is likely to be caused by US inflation data, which is anticipated to show a modest decline in the headline measure (8.7 percent exp vs 9.1 percent prior). The US PPI data is due out on Thursday, but it is unlikely to have a significant impact on the markets given that the Fed would need to observe a significant decline in prices in order to alter its present course of temporary tightening. The US CPI Inflation data for July came in at 8.5%, declining from the 9.1% June high and beating the markets expectations of 8.7%. The fall in inflation was likely aided by a reduction in both food and gasoline prices. The result could indicate to the markets that the Federal Reserve Bank has been successful so far in their interest rate hikes to fight inflation. A stronger result would have likely increased the chances of another interest rate hike of 75 bps in the following months and would have boosted the USD, whilst a weaker result could cause the Fed to drop to a 50 bps interest rate hike next month. EUR/USD The market is reflecting mixed sentiment for this currency pair. The markets have been in a lethargic state recently with a 7-week slide in the VIX volatility index. The current state of lethargy is most likely a result of the medium-term decline in market activity. The seven-week decline in the VIX was mentioned, but there are many other noteworthy episodes from recent history where important events, some with high surprise quotients, failed to significantly move the markets. The PCE deflator, which uses the same data used to calculate the quarterly GDP statistics, is really the Federal Reserve's preferred inflation indicator. Despite this, the markets have consistently shown a strong preference for the CPI, presumably because it is released earlier and has a full week to be incorporated into market views because it is released on a Wednesday. The headline basket's annual inflation growth rate had increased to an astounding 9.1 percent pace at the time of the previous release. That is the highest reading in forty years, and it is not just due to the biggest economy in the world. This reading might meet, miss, or beat the consensus expectation (8.7%), but it is thought that a "beat" would carry the most weight. EUR/USD Price Chart GBP/USD An expert at Société Générale claims that the Pound is "in peril" and that a new decrease in the value of the Dollar is imminent. In the very near future, GBP/USD has a risk of declining below 1.20 once more "Olivier Korber, a Soc Gen strategist, states in a memo dated August 2009. The underlying rationale for the trade, according to Korber, is compelling given the unsettling predictions made by the Bank of England last week, which indicated that UK inflation was expected to peak at "an incredible 13 percent. In addition, according to economists at the Bank of England, a four-quarter recession will begin in this year's fourth quarter. According to Korber, the difference with the forecast for the U.S. economy is currently striking. Last Friday's unexpectedly upbeat US job report stands in stark contrast to the pessimistic UK economic forecast. The likelihood of a second consecutive 75bp Fed rate hike is being discussed as recession fears in the US are gradually subsiding. GBP/USD might retest 1.20 in the very near future if there is potential for more sterling short positions, warns Korber. More than doubling the 250K jobs that the market had anticipated, the U.S. economy added 528K jobs in July, which helped the U.S. dollar recover. GBP/USD Price Chart Sources: poundsterlinglive.com, finance.yahoo.com, dailyfx.com
Franc Records 11th Consecutive Daily Decline Against the Dollar as US Economic Concerns Mount

Euro Could Be Boosted In Coming Days (EUR/USD), UK Economic Data To Be Released This Week (EUR/GBP), CAD Fell In The Wake Of The PBoC’s Announcement (GBP/CAD)

Rebecca Duthie Rebecca Duthie 15.08.2022 23:52
Summary: EUR/USD recently hit 6-week highs. CAD proves its sensitivity to risk appetite. Could UK inflation hit double figures? EUR/USD recently reached 6 week highs. The market is reflecting bearish signals for this currency pair. A stagnant U.S. Dollar and more accommodating Chinese monetary policy may continue to boost the single euro currency in the days ahead. The Euro to Dollar exchange rate recently hit six-week highs. However, its recovery was halted by resistance on the charts. Last week, when a slew of data from the Bureau of Labor Statistics suggested that a significant slowing of U.S. inflation pressures may have started to move through the pipeline last month, the euro rose to its highest level since the first days of July. Furthermore, The unexpected decision to cut interest rates, announced by the People's Bank of China (PBoC), on Monday could help the euro this week if the PBoC permits the managed-floating Renminbi to weaken in order to boost the regional economy. EUR/USD Price Chart UK major economic data to be released this week The market is reflecting bullish signals for this currency pair. The market is unconvinced that the current trading week will aid the pound sterling in recovering against major currencies with major economic data such as the latest jobs, wages, inflation and retail sales all set to be released. Although the labor market is currently strong, there is a good likelihood that headline UK inflation will reach double digits this week. The Bank of England has already issued a warning that this year's inflation could reach 13% while the economy experiences a five-quarter slump. The UK is experiencing drought-inducing heatwaves, sky-high energy prices, and a political void in No. 10, so any more bad economic news will enrage the already irate populace. EUR/GBP Price Chart CAD fell in the wake of PBoC announcement to cut interest rates. The Pound sterling to the Canadian Dollar rallied from August lows, but could climb further if the Loonie is able to build on Monday declines, which is a busy period for both the U.S and Canada regarding economic data. After the People's Bank of China (PBoC) unexpectedly lowered interest rates in reaction to alarming local economic statistics, the Canadian Dollar fell on Monday along with other currencies that are highly sensitive to risk appetite, commodity prices, and changes in the outlook for global growth. But in light of the aforementioned, it's possible, if not likely, that the directional risk for GBP/CAD is now tilting a little more to the upside than it is to the downside. The Loonie and Sterling must now each navigate a series of domestic economic event risks that are lurking along the path ahead. GBP/CAD Price Chart
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Euro Under Pressure As A Result Of Events In The Energy Market (EUR/USD, EUR/GBP), RBNZ Due To Announce Policy Update (GBP/NZD)

Rebecca Duthie Rebecca Duthie 16.08.2022 22:29
Summary: Eurozone's common currency depreciated. Euro currency is threatened by economic growth concerns. RBNZ midweek policy update. Euro under pressure amidst rising gas prices The market is reflecting bearish signals for this currency pair. According to economists, recent developments in the energy markets of the Eurozone support the argument for additional euro weakness. Due to events in the energy market, which revealed that European benchmark power costs had risen above €500 for the first time, the Eurozone's common currency depreciated further in comparison to recent highs against the Dollar and the Pound. Over the next months, the developments pose a potential of piling on further pressure on the businesses in the area. According to Ole S. Hansen, Head of Commodity Strategy at Saxo Bank, the gas and power situation in the EU is getting worse, which is hurting the euro. In spite of persisting supply constraints from Russia, European countries kept up the pressure on demand to fill their storage tanks before the winter, driving up gas prices. EUR/USD Price Chart Euro is threatened by economic growth concerns. The market is reflecting bullish signals for this currency pair. The European Central Bank has succeeded so far in preventing further significant downside in the EUR-crosses by maintaining its difficult balancing act of raising interest rates to combat multi-decade highs in price pressures while preventing fragmentation of sovereign bond markets (preventing peripheral debt yields from widening out relative to their core counterparts). But because energy inventories in the Eurozone are still low before the winter months, fears about growth are growing. The likelihood that the ECB will only be able to raise rates a few more times before the emphasis shifts to preventing a serious economic downturn is growing. Although the Euro's flaws have been contained, they nevertheless exist and pose a threat to the single currency. EUR/GBP Price Chart RBNZ midweek policy update Following the Reserve Bank of New Zealand's (RBNZ) midweek policy update, analysts at investment banks Goldman Sachs and HSBC are watching for NZD depreciation. Markets anticipate that the RBNZ will increase interest rates by another 50 basis points to 3.0%, but any significant changes in the currency are more likely to be caused by the RBNZ's tone in its guidance. The meeting, according to Goldman Sachs, is expected to be one of the major developments for the foreign exchange markets this week, and the results are most likely to support their bearish NZ Dollar thesis. GBP/NZD Price Chart Sources: finance.yahoo.com, dailyfx.com, poundsterlinglive.com
Only Ugly US Data Could Reverse Sentiment | Gilt Yields In UK Were Steady To Lower

Disappointing July FOMC Meeting Minutes (EUR/USD), Euro Under Pressure (EUR/GBP), RBNZ Policy Update Caused NZD Sell-off (GBP/NZD)

Rebecca Duthie Rebecca Duthie 17.08.2022 22:02
Summary: NZD Sell-off. July FOMC minutes gave no hawkish surprises. Euro under pressure. FOMC meeting minutes for July The market is reflecting bearish signals for this currency pair. The much awaited release of the minutes from the July FOMC meeting turned out to be somewhat disappointing, at least for the US Dollar (via the DXY Index). The minutes contained no hawkish surprises, with one sentence standing out in particular: “Participants judged that, as the stance of monetary policy tightened further, it likely would become appropriate at some point to slow the pace of policy rate increases while assessing the effects of cumulative policy adjustments on economic activity and inflation.” Recent data indications, like the US economy's growth trajectory and the July US inflation report's reading of 0% m/m, indicating that recent Federal Reserve policy tweaks are certainly having the desired impact on aggregate demand and inflation. Rate expectations for the September Fed meeting were slightly lowered as a result of the July FOMC minutes. The likelihood of a rate increase of 75 basis points decreased from 51% yesterday to 46% today, indicating that market players are seeing the Fed's most recent statement as a confirmation of what was already known: the rate of rate increases is expected to decelerate over the upcoming months. EUR/USD Price Chart EUR/GBP currency pair The market is reflecting mixed signals for this currency pair. The European Central Bank has succeeded so far in preventing further significant downside in the EUR-crosses by maintaining its difficult balancing act of raising interest rates to combat multi-decade highs in price pressures while preventing fragmentation of sovereign bond markets (preventing peripheral debt yields from widening out relative to their core counterparts). But because energy inventories in the Eurozone are still low before the winter months, fears about growth are growing. The likelihood that the ECB will only be able to raise rates a few more times before the emphasis shifts to preventing a serious economic downturn is growing. Although the Euro's flaws have been contained, they nevertheless exist and pose a threat to the single currency. EUR/GBP Price Chart NZD sell-off in the wake of RBNZ policy update The market's reaction to the Reserve Bank of New Zealand's (RBNZ) August policy update and guidance led to a sell-off of the New Zealand Dollar. The Reserve Bank of New Zealand (RBNZ) signaled it will raise interest rates to levels higher than they had previously been expecting. On paper, the RBNZ did everything it could to back NZD bulls: it said that the economy was in good shape, that inflationary pressures were widespread, and that it would continue to raise interest rates. As the RBNZ suggested they will need to raise rates higher than they had previously thought, short-term New Zealand bond yields increased. Two additional rises of 50 basis points are now likely to occur throughout the course of 2022, and a smaller hike may occur in early 2023. The Pound to New Zealand Dollar fell by two thirds of a percent in the 15 minutes following the decision. GBP/NZD Price Chart Sources: finance.yahoo.com, dailyfx.com, poundsterlinglive.com
The British Pound Is Showing Signs Of Exhaustion Of The Bullish Force

Euro Fundamentals Unchanged (EUR/USD), Pound Sterling In Trouble In The Wake Of Disappointing Economic Data (EUR/GBP, GBP/USD)

Rebecca Duthie Rebecca Duthie 19.08.2022 16:48
Summary: Euro fundamentals appear to be unchanged. Positive US economic data. Poor U.K economic data. Markets Focused of Fed officials - EUR/USD The market is reflecting bearish signals for this currency pair. Markets focused on a variety of Fed officials as they remain unanimous in the direction of future rate hikes but divided on the terminal rate because the fundamentals of the euro appear to be unaltered for the time being. Isabel Schnabel, a member of the ECB's board, was also questioned by Reuters yesterday. In the interview, she expressed concern over the continued threats to the forecast for long-term inflation and the euro's depreciation. The ECB typically doesn't comment on currency exchange rates, but there are times when a broad trend of appreciation or depreciation can influence monetary policy goals. EUR/USD Price Chart Poor economic news putting pressure on GBP - EUR/GBP The market is reflecting bullish signals for this currency pair. After a run of dismal economic news, the British pound is in trouble: growth is lower, the labor market is slowing down, and inflation is still raging. Rates of GBP/USD have reversed their recent upward trend, while rates of GBP/JPY are sliding below multi-month trendline support and rates of EUR/GBP are rising from multi-month trendline support. Retail trader stance has recently changed, indicating a bullish bias for the EUR/GBP and GBP/JPY rates and a bearish bias for the GBP/USD rates. EUR/GBP Price Chart Positive economic data supporting USD - GBP/USD The market is reflecting bearish signals for this currency pair. Prior to the weekend, the Pound to Dollar exchange rate retreated under the 1.20 handle and was close to its yearly lows after positive U.S. economic data and hawkish remarks from Federal Reserve (Fed) officials were followed by a Dollar rally that sent Sterling and a number of other currencies into freefall. While the U.S. dollar got the better of the Pound late on Thursday and had left it trading as an underperformer by Friday even after July's UK retail sales figures came in stronger than expected by the market, Sterling had better resisted the clutches of a strengthening Dollar throughout much of the week, resulting in a resilient performance against other currencies. EUR/USD Price Chart Sources: finance.yahoo.com, dailyfx.com, poundsterlinglive.com
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EUR/USD Falls Below Parity, Investor Expectations For BoE Spiked (EUR/GBP), GBP/USD At Risk Of Further Losses

Rebecca Duthie Rebecca Duthie 22.08.2022 17:27
Summary: EUR/USD could be moving toward a potential further fall. EUR/GBP. GBP/USD may see further losses this week. EUR/USD falls below parity The market is reflecting bearish signals for this currency pair. Testing below the parity handle, the EUR/USD is moving toward a potential further fall. Sellers have pushed hard to allow for another move-below since this level came back into play just after the Euro start this morning. Whether it can go on is the key question. Euro bears have returned for another battle at the parity handle of EUR/USD, drawing like moths to a flame. It took almost six months for this price to finally give way when it was last in action, in the second half of 2002. This is a significant psychological level. This really illustrates the influence of psychological factors as well as the significance of emotion in the market. Inflation is rampant in the Eurozone, and the ongoing conflict in Ukraine makes problems of economic policy, notably in the area of energy, more complicated. The question is whether we're approaching an abnormal market climate. EUR/USD Price Chart Pound sterling loses against the Euro The market is reflecting bullish signals for this currency pair. Late last week, despite official data that suggested retail spending held steady in the face of high inflation in the UK and another spike in investor expectations for Bank of England (BoE) interest rates, the pound lost ground against the euro. Friday's losses occurred as a result of the Dollar gaining and investors' declining risk appetite putting significant pressure on Sterling and other currencies. This prevented the Pound from benefiting from a sharp increase in UK government bond yields that was happening in the background. EUR/GBP Price Chart GBP/USD could fall further this week The market is reflecting mixed signals for this currency pair. A busy U.S. economic calendar or comments from Federal Reserve (Fed) officials might cause U.S. bond yields and the Dollar to rise even further on a burgeoning comeback, further damaging the Pound to Dollar exchange rate, which collapsed last week. Better than anticipated UK economic data and a sharp rise in market expectations for interest rates at the Bank of England (BoE) last week did not help the pound sterling, and it frequently appeared to be the most vulnerable among major currencies to rising U.S. bond yields and a rally in the dollar. GBP/USD Price Chart Sources: finance.yahoo.com, poundsterlinglive.com, dailyfx.com
USD Outlook: Fed's Push for Higher Rates and Powell's Speech at Jackson Hole Symposium

EUR/USD Expected To Remain Below PArity, UK Economy Grew In August (EUR/GBP, GBP/USD)

Rebecca Duthie Rebecca Duthie 23.08.2022 18:50
Summary: ECB may turn more hawkish. The US economic downturn may have increased in August. EUR/USD still below parity The market is reflecting mixed sentiment for this currency pair. Will the European Central Bank (ECB) adopt a more hawkish stance this week given the pressure the Euro is still under and its recent breach of parity with the dollar? For the meeting on September 8th, the market anticipates a 54 bp rate increase. If the ECB wants to support the EUR/USD, may it start talking about the possibility of more drastic rate increases? Joachim Nagel, the head of the Bundesbank said, “Given high inflation, further interest-rate hikes must follow,the past few months have shown that we have to decide on monetary policy from meeting to meeting.” Investment firm Nomura's strategists have increased their confidence in a wager that the Euro to Dollar exchange rate (EUR/USD) is likely to experience a few "large figure" movements below parity. EUR/USD Price Chart EUR/GBP currency pair The market is reflecting bearish signals for this currency pair. In August, the UK economy grew, according to a closely-followed assessment of activity. Although consumers and businesses were struggling with rising inflation levels, the monthly S&P Global PMI series did reveal a slowdown in activity continued. Looking ahead, the trend is consistent with negative growth. The Euro is under pressure from the Eruozone energy crisis as market participants are expecting further interest rate hikes from the ECB. EUR/GBP Price Chart EUR/USD The release of data on Tuesday that suggested that the U.S. economy's downturn may have increased in August caused the Dollar to revert in value relative to the Euro and the British Pound. The service PMI score for the U.S. economy was 44.1, much below the 49.2 markets had projected and the 47.3 from July, according to S&P Global's PMI survey. According to S&P Global, the output decline was the sharpest since May 2020 and was the fastest since the first pandemic outbreak since the series' start almost 13 years ago. The numbers indicate that despite elevated inflation and rising interest rates at the Federal Reserve, the U.S. economy is slowing down. Another indication of a slowdown may dampen investor expectations for the amount of interest rate increases the Fed is prepared to make in the upcoming months, at least from the standpoint of the currency market. Cooling rate hike expectations can cause bond rates to fall, which is negative for the U.S. dollar. EUR/USD Price Chart Sources: finance.yahoo.com, dailyfx.com, poundsterlinglive.com
Euro Remains Below Parity Against The US Dollar (EUR/USD), Risk Of UK Stagflation Continues To Rise (EUR/GBP, GBP/NZD),

Euro Remains Below Parity Against The US Dollar (EUR/USD), Risk Of UK Stagflation Continues To Rise (EUR/GBP, GBP/NZD),

Rebecca Duthie Rebecca Duthie 25.08.2022 21:00
Summary: EUR trading below parity against the USD. UK at risk of energy crisis. Kiwi outperforms on Thursday. EUR/USD trading below parity The market is reflecting mixed signals for this currency pair. Policymakers at the European Central Bank have been relatively silent on the lecture circuit lately, but that may soon change as the summer comes to an end. There was disagreement about the 50-bps rate increase even as inflation pressures in the Eurozone had risen, according to the minutes of the ECB meeting in July. The ECB may ultimately disappoint in the upcoming months as fears turn back to weak growth, even as rates markets are discounting a more aggressive course going forward. Powell might exert pressure on the market to raise expectations for the Fed's September rate hike to 75 basis points because the markets now expect the Fed to deliver approximately 65 basis points of increases. This may provide short-term support for the Dollar and maintain pressure on the Euro into the next month. EUR/USD Price Chart Risk of UK Stagflation rises The market is reflecting bearish signals for this currency pair. The energy crisis in the Eurozone is still putting the Euro under pressure. As the economy slows and inflation pressures increase, the risk of stagflation in the UK is continuing to rise. However, given the developing energy crisis that threatens to drive UK inflation rates further higher into double digit territory over the coming few months, traders feel that the Bank of England is currently focusing on the latter of these two crises. In terms of odds on a BOE raise, markets are currently at their most aggressive levels of the year. EUR/GBP Price Chart GBP/NZD - Kiwi outperforms GBP This week saw the start of the short-lived mid-month recovery in the Pound to New Zealand Dollar exchange rate. If the Kiwi continues to excel and Sterling continues to underperform among the major currencies, the exchange rate is likely to unravel even more in the days to come. After profiting from a general easing of the U.S. Dollar ahead of Friday's visit by Federal Reserve Chairman Jerome Powell at the annual Jackson Hole Symposium for central bankers, the New Zealand Dollar outperformed on Thursday in a booming market for Asia Pacific currencies. GBP/NZD Price Chart Sources: finance.yahoo.com, poundtserlinglive.com, dailyfx.com
Market Trends and Currency Positioning: USD Net Short Position, Euro and Pound Analysis - 22.08.2023

Euro Under Pressure From Rising Prices (EUR/USD, EUR/GBP), Fed Chair Jerome Powell Address On Friday (USD/JPY)

Rebecca Duthie Rebecca Duthie 26.08.2022 15:44
Summary: EUR/USD back above parity. Risk of UK stagflation increases as inflation pressures rise. Jerome Powell to address on Friday. EUR/USD trading above parity on Friday The market is reflecting mixed signals for this currency. Yesterday, we learned more about the Governing Council of the European Central Bank (ECB), who voted to raise interest rates by 50 basis points last month despite having talked up the increase by 25 bps in the months before the vote. The inclusion of the anti-fragmentation mechanism known as the "transmission protection instrument," which serves as additional firepower in the case of a jump in sovereign yields of the EU's riskier member states, was supported by a unanimous vote of the Council. However, the decision to raise interest rates by 50 basis points was not unanimously supported. In my opinion, this shouldn't be an issue in future meetings because the risk of embedded inflationary expectations over the medium term is increased by the inflation rate's close proximity to double digits. Following the announcement by Russia's national gas monopoly that it would cut off supplies through a crucial pipeline for three days in September, the already constrained market for gas saw substantial double-digit percentage increases during the past week. In the absence of convincing supply-side responses from European capitals to the ongoing Russian gas diplomacy, the economic difficulties these price increases entail may continue to be a barrier for the single currency. EUR/USD Price Chart EUR/GBP The market is reflecting mixed signals for this currency pair. After slipping back below parity with the dollar during the Monday session, the euro enjoyed some reprieve for the majority of the following week, but European gas prices continued to soar after a week-long stretch of astronomical gains. The soaring energy prices in the Eurozone continue to weigh on the Euro single currency. As the economy slows and inflation pressures increase, the risk of stagflation in the UK is continuing to rise. However, given the developing energy crisis that threatens to drive UK inflation rates further higher into double digit territory over the coming few months, traders feel that the Bank of England is currently focusing on the latter of these two crises. In terms of odds on a BOE raise, markets are currently at their most aggressive levels of the year. EUR/GBP Price Chart USD/JPY The market is reflecting mixed signals for this currency pair. When Tokyo CPI came in above forecasts for August, USD/JPY yawned. Instead of the expected 2.5%, the core CPI increased 2.6% year over year. The national CPI statistic that is due in three weeks can be inferred from the Tokyo CPI number. FX markets have been relatively quiet over the last 48 hours. The reason for this is the lack of summer liquidity, which prevents traders from taking large positions before Friday's address by Fed Chair Jerome Powell at the Jackson Hole Economic Policy Symposium. USD/JPY Price Chart Sources: finance.yahoo.com, dailyfx.com, poundsterlinglive.com
The Main Scenario Of The EUR/USD Pair Is Still A Downtrend

Jackson Hole Economic Symposium Gave Guidance On Future Monetary Policy Decisions From Major Central Banks (EUR/USD, EUR/GBP, GBP/USD)

Rebecca Duthie Rebecca Duthie 29.08.2022 15:00
Summary: Fed anticipates that tightening will cause growth to decelerate. ECB indicate a hawkish outlook. Both Fed and ECB holding a hawkish outlook The market is reflecting bullish signals for this currency pair. He made it clear in his speech at the Jackson Hole conference that the Fed anticipates that tightening will cause growth to decelerate and that households would experience some pain as a result. His comments that the present rate is neutral appear to have cleared up any doubt. The Jackson Hole Economic Symposium confirmed what the majority of attendees had anticipated before the event even began: that inflation does not appear to be slowing down, necessitating sustained resolve on the part of the Fed in the form of unrelenting interest rate increases.   Not only the Fed, though; ECB members also contributed to the narrative by speaking about the approaching rate decision with a heightened feeling of urgency and proposing increases of 50 or 75 basis points. After the unexpected 50 bps rate increase in July, the interest rate meeting on September 8th could result in a second rate increase. Villeroy, Schnabel, Kazak, Knot, and Holzmann all agreed that the rate increase in September should have been significant (by ECB criteria). It is action time, according to Oli Rehn, one of the ECB's slightly more dovish members, and the next move will be "important." EUR/USD Price Chart   Euro rallied against the GBP on Monday The market is reflecting bullish signals for this currency pair. Entering the new week, the Euro was supported by the hawkish outlook from the ECB that was indicated at the Jackson Hole Symposium on Friday. Risk of a UK recession still remains high. EUR/GBP Price Chart   Hawkish fed weighs on GBP/USD The market is reflecting mixed signals for this currency pair. The exchange rate between the pound and the dollar initially increased on Friday, but it quickly lost those gains when Federal Reserve Chairman Jerome Powell warned that businesses and individuals would struggle more if the bank raised interest rates in a bid to lower U.S. inflation.    Following last week's hawkish remarks by Fed Chair Powell at the Jackson Hole Economic Symposium, the pound sterling continued to decline this past Monday. Markets had anticipated this outcome in large part, but confirmation revealed the differences between the economies of the US and UK. Goldman Sachs reported the decrease in UK economic data this morning, reiterating the Bank of England (BoEopinion )'s from a few weeks ago that a UK recession is anticipated in the fourth quarter - a significant change from their earlier prediction. GBP/USD Price Chart Sources: finance.yahoo.com, dailyfx.com, poundsterlinglive.com
ECB press conference brings more fog than clarity

A Hawkish ECB Is Supporting The Euro (EUR/USD, EUR/GBP), Poor Investor Sentiment Toward The UK (GBP/USD)

Rebecca Duthie Rebecca Duthie 31.08.2022 16:48
Summary: ECB turns hawkish in the wake of high eurozone inflation. Pound sterling appears poised to test new lows against the euro, the dollar, and other major currencies. Euro supported by hawkish ECB The market is reflecting mixed signals for this currency pair. August saw a new high for inflation in the eurozone, and future months are predicted to see an increase. According to data from Eurostat, the increase in inflation in August was caused by a faster increase in the cost of food, alcohol, and cigarettes, which increased by 10.6% on a yearly basis compared to a 9.8% increase in July. Given the continuing rise in natural gas costs, it is anticipated that inflation in the Eurozone would rise further in the upcoming months, possibly reaching double digits. The reversal of several German subsidies and skyrocketing energy prices even before the start of the heating season indicate that inflation will continue to rise and surpass 10% before peaking around the turn of the year. Since US Federal Reserve Chair Jerome Powell's aggressive address at the Jackson Hole Symposium last Friday, there has been a noticeable change in tone among many European Central Bank (ECB) Members. The figures released today will undoubtedly strengthen arguments in favor of raising jumbo interest rates at the European Central Bank meeting next week. The central bank meeting next week is crucial since markets are heavily pricing in hawkishness; now, 70 bps are put in for September and 160 bps by year's end. EUR/USD Price Chart GBP is quickly becoming the worst performing currency of 2022 The market is reflecting bullish signals for this currency pair. Despite the fact that the money markets have upped their interest rate bets for the September meeting by about 4 basis points since Monday, the Bank of England (BoE) still confronts a difficult struggle as Q4 recession fears build. Since I don't see the BoE acting aggressively over the winter, front-loading now might be essential, thus a 75bps hike is still an option. The hawkish attitude from the ECB offers the Euro support. EUR/GBP Price Chart GBP testing new lows against USD and Euro The market is reflecting bearish signals for this currency pair. In light of the negative investor sentiment toward the UK and the ongoing weakness in the global equity markets, the pound sterling appears poised to test new lows against the euro, the dollar, and other major currencies. The Pound has already lost 1.33% of its value against the Euro this week, and if these declines continue, it will experience its biggest weekly decline against the euro since May. The UK pound is still losing ground versus the US dollar, having dropped another 0.83% since the week's beginning. The current loss for 2022 is 14%. As August draws to a close, it is clear that the British pound had the worst month of any major currency, losing value relative to all of its G10 competitors. Further losses are likely since the drop of the pound indicates a pervasive and unshakeable unfavorable attitude among investors worldwide. The UK currency is on track to become the worst performing major currency of 2022 within a matter of weeks given its present performance and tendencies. GBP/USD Price Chart Sources: finance.yahoo.com, dailyfx.com, poundsterlinglive.com
GBP Inflation Surprise: Pound Faces Downward Pressure as Rate Hike Expectations Shift

US Dollar Driven By Hawkish Fed (EUR/USD), Pound Sterling Struggled Throughout August (EUR/GBP, GBP/AUD)

Rebecca Duthie Rebecca Duthie 01.09.2022 17:56
Summary: The USD strengthened by a hawkish Fed. GBP struggled in August. Euro value declined against USD on Thursday The market is reflecting mixed signals for this currency pair. Thursday sees a decline in the value of the Euro as markets are swept by a steadfast US Dollar following additional hawkish remarks from Fed speakers. Despite the market leaning toward a 75 basis-point increase at the European Central Bank (ECB) meeting next week as a result of yesterday's higher than expected CPI, the EUR/USD was unable to gain traction. The US dollar's ascent is unabated, and it appears that it will soon reach highs last seen in 2002 as the preferred safety play. This week, a new wave of risk-off trading sent USD pairings higher and equity markets lower across a number of markets. US Treasury yields have reached multi-year highs as US interest rate expectations continue to rise. EUR/USD Price Chart EUR/GBP touching June lows The market is reflecting bullish signals for this currency pair. One analyst said there is little reason to expect an improvement over the upcoming weeks or months as the value of the pound relative to the euro has dropped substantially over the past few days and is currently at levels last seen in June. The Pound suffered in August, with analysts attributing its poor performance to worries that the UK's debt load will rise as the next administration tries to mitigate the effects of the cost of living problem. This occurs as the Bank of England raises interest rates, driving up the yield paid on gilts, the name for UK government debt. The Bank of England gave historically low interest rates during the Covid crisis and actively purchased government debt as part of its quantitative easing program. As a result, the government was able to increase borrowing without any problems. However, the Bank will now actively sell government debt and may raise rates by an additional 50 basis points in September, significantly restricting the government's ability to borrow money as the nation grapples with yet another crisis. EUR/GBP Price Chart GBP/AUD Despite a great August making the Australian Dollar one of the better performing currencies of 2022, experts at investment bank Goldman Sachs said they remain concerned on the currency on a "tactical basis." The announcement that one of China's major cities has been placed on lockdown as the government of the nation pursues a "zero covid" strategy to combat the coronavirus raises doubts about the near-term prospects for Australia's top export market. GBP/AUD Price Chart Sources: finance.yahoo.com, dailyfx.com, poundsterlinglive.com
The Complex Factors Influencing Gold Prices in 2023: From Interest Rates to China's Impact

Euro To US Dollar Index Falls - Touching Levels Not Seen In 20 Years

Rebecca Duthie Rebecca Duthie 06.09.2022 00:01
Summary: Thursday's European Central Bank (ECB) meeting during this crucial week for the euro. Russia cuts off Nord Stream gas supply. A crucial week for the Euro. But is still at risk as energy issues become more apparent. Euro Index suffers in the wake of Russia Turning off the gas taps Monday saw a new 20-year low for the euro as concerns about a worsening energy crisis in the area increased as Russia cut off gas supplies to Europe through its main pipeline. In recent months, there has been an increase in the correlation between the euro and natural gas prices, with the latter declining as energy prices rise. Before the chilly winter months, Europe is frantically trying to wean itself off Russian supply and build up reserves, but many predict a significant economic damage. Invoking an oil leak in a turbine, Russia postponed a Saturday deadline for the Nord Stream pipeline to begin carrying oil. It happened at the same time that the Group of Seven finance ministers announced a limit on Russian oil prices. Early in European trading, the euro fell to $0.9876, its lowest level since 2002, before bouncing back to $0.9939, but down 0.2% on the day. "Gas flows have been curtailed even more than expected and we have already seen evidence of demand destruction weighing on activity," said Michael Cahill, a strategist at Goldman Sachs. "We now expect the Euro to fall further below parity ($0.97) and remain around that level for the next six months," he added. Investors are gearing up for Thursday's European Central Bank (ECB) meeting during this crucial week for the euro, as markets have priced in a nearly 80% possibility of a massive 75 basis point (bp) interest rate hike. The stabilization of the euro, which has lost over 8% of its value over the last three months, will be welcomed by ECB policymakers. That will fuel the desire to tighten policy in an effort to control inflation. EUR/USD Price Chart Sources: finance.yahoo.com, reuters.com
EUR/USD Dropped To New Multi-year Lows, Truss Delivers A Convincing Package To Beat The Cost Of Living Crisis (EUR/GBP), RBA Interest Rate Decision (GBP/AUD)

EUR/USD Dropped To New Multi-year Lows, Truss Delivers A Convincing Package To Beat The Cost Of Living Crisis (EUR/GBP), RBA Interest Rate Decision (GBP/AUD)

Rebecca Duthie Rebecca Duthie 06.09.2022 22:12
Summary: U.S. economy is doing well despite tighter monetary policy. Truss - The new UK prime minister as of Tuesday. RBA interest rate decision. EUR/USD hits multi-year lows on Tuesday The market is reflecting mixed signals for this currency pair. On Tuesday due to negative sentiment, the EUR/USD dropped to new multi-year lows, briefly touching 0.9865 in choppy trading after U.S. markets resumed trading after the Labor Day holiday on Monday. Even while the euro was able to somewhat recoup some of its losses during the day, broad U.S. dollar rise in the early afternoon hampered the currency's sentiment. As a result of a rise in U.S. Treasury rates, which drove both short-term and particularly long-dated yields considerably higher, DXY rose as much as 0.85% at one point. Bond prices rose in part as a result of better-than-expected statistics from the U.S. services sector. The non-manufacturing PMI for August rose to 56.9 versus 55.1 predicted, according to the Institute for Supply Management, which indicates that the economy is still very robust. The fact that the U.S. economy is doing well despite tighter monetary policy suggests that the central bank will likely move forward with its plans to raise interest rates a few more times in the upcoming months, keeping them there for longer than initially anticipated to reduce inflation, which would be bullish for the dollar. However, for the time being, a dovish pivot will not materialize. EUR/USD Price Chart GBP supported by Truss’ policies The market is reflecting mixed signals for this currency pair. The British pound has had a terrible year, but if the incoming prime minister can present a convincing package of policies to address the cost of living crisis, the pound may recover in the remaining months of the year. According to a number of media publications, Truss, who became prime minister on Tuesday, may implement a plan to cap energy costs at £130 billion. She's also expected to make a major tax cut announcement as part of one of her major campaign promises. According to sources, the UK's incoming Prime Minister is thinking about freezing energy prices for millions of homes this winter, a move that may reduce the country's inflation rates by as much as four percentage points. According to Capital Economics, an independent research firm, core inflation would nevertheless continue to be stubbornly high and attract additional Bank of England interest rate increases. EUR/GBP Price Chart RBA decided on 50bps interest rate hike The Reserve Bank of Australia (RBA), which raised interest rates by another 50 basis points, together with indications that the central bank is reaching the conclusion of its tightening cycle, left the Australian Dollar floundering. By raising rates by 50 basis points, the RBA satisfied market expectations and promised additional rate increases in its outlook. Sterling pounds According to Live's RBA preview, the currency would be more affected by the direction of future raises than by a 50 basis point increase, which would provide little support to the Australian dollar. We warned that the Australian dollar might suffer from a "dovish" hike, in which the Bank sought to curb expectations for additional assertive action. The RBA brings Australia's basic lending rate into a range of 2-3% that it views as the "neutral" position by raising the Cash Rate to 2.35%. As a result, it holds that interest rates are neither restrictive nor stimulatory, which lends support to the idea that the RBA may start to contemplate easing back. GBP/AUD Price Chart Sources: finance.yahoo.com, poundsterlinglive.com, dailyfx.com
Bank of Canada (BoC) Interest Rate Policy Decision - Met Market Expectations

Bank of Canada (BoC) Interest Rate Policy Decision - Met Market Expectations

Rebecca Duthie Rebecca Duthie 07.09.2022 16:03
Summary: Bank of Canada interest rate decision. BoC met market expectations. Bank of Canada meets market expectations The Bank of Canada (BoC) met the market expectations on Wednesday by hiking their interest rates by 75bps up to 3.25% from 2.5%. Their Ivey PMI beat market expectations which were set at 48.3, but came in at an actual value of 60.9. Bank of Canada increases policy interest rate by 75 basis points, continues quantitative tighteninghttps://t.co/YXW4npzhVA#economy #cdnecon — Bank of Canada (@bankofcanada) September 7, 2022 Bank of Canada In order to safeguard the economy by limiting the amount that interest rates might need to increase over the medium term, the BoC increased its cash rate from 1.75% to 2.5% in July. This was done as part of a strategy to move monetary policy to an economically restrictive level sooner rather than later. Despite the fact that interest rate derivative market pricing implies that investors already expect the benchmark to climb further and as far as 3.75% by year's end, the BoC considers that restrictive threshold to involve a cash rate that is a place above the 3% level. “The Bank's commitment to front-loading rate hikes in the face of red-hot inflation means an even bigger 100 bps increase (matching July's hike) can't be ruled out. Canadian employment (Friday) is expected to rise 5K in August following two consecutive monthly declines. The unemployment rate is expected to increase to 5.0%, which is still very low,” says Alvin Tan, head of Asia FX strategy at RBC Capital Markets. With the approaching Bank of Canada rate decision expected today and the European Central Bank meeting on Thursday, we will undoubtedly use expectations to our advantage. Expectations play a significant part in the market impact of major event risk. In this meeting, both are expected to raise their respective benchmark rates by 75 basis points, but the former is doing so based on a 100-basis-point increase at its last meeting and the discount of a hawkish central bank. Sources: dailyfx.com, poundsterlinglive.com, investing.com
Market Trends and Currency Positioning: USD Net Short Position, Euro and Pound Analysis - 22.08.2023

US Dollar’s Unwavering Strength (EUR/USD), EUR/GBP, USD/JPY Falls To Lowest Level Seen Since 1998

Rebecca Duthie Rebecca Duthie 07.09.2022 16:25
Summary USD/JPY hitting lowest levels in 24 years. USD still strong. Expectations of the next interest rate hike from BoE fell. EUR/USD currency pair The market is reflecting bearish signals for this currency pair. Since the US Dollar continues to rise and shows little sign of slowing, it has been a wrecking ball for the foreign exchange markets. I would exercise caution in pursuing this upside, though, given that the most recent US CPI is right around the horizon. The inclination would be to downplay US dollar declines. The 0.99 handle serves as support for the euro, and although there has been a breach below it, there hasn't yet been a close below it. The language used, such as expressing a willingness to enter restrictive territory as opposed to merely front-loading policy to play catch-up, will be crucial in determining whether the Euro can find a floor, even though the ECB is preparing to raise interest rates by 75 basis points at its meeting tomorrow. EUR/USD Price Chart GBP declines The market is reflecting mixed signals for this currency pair. The Bank of England enters the scene and hits the already weak pound just as the market was concentrating on the new prime minister, Liz Truss. Following comments made by members of the Bank's Monetary Policy Committee (MPC), markets quickly reduced their expectations for a 75 basis point interest rate hike at next week's policy decision, causing a steep decline in the value of the pound. The panel's comments show that the Bank is still hesitant to hike interest rates in order to combat inflation and instead is betting that prices would decline as the economy weakens. EUR/GBP Price Chart USD continues to strengthen Today, the Japanese Yen's value against the US Dollar fell to its lowest level since 1998. In order to keep bond yields low, the Bank of Japan (BoJ) reaffirmed its yield curve control (YCC) program on Wednesday, despite the Fed's unambiguous indication that rates will rise. Today, the 10-year Japanese government bond (JGB) traded close to the 0.25% upper limit set by the central bank. The bank then declared that they would increase their bond buying as part of their planned operations. The 2-year note currently trades at 3.75%, with Treasury rates continuing to fly higher. Everywhere it has increased, the US dollar has. USD/JPY Price Chart Sources: finance.yahoo.com, dailyfx.com, poundsterlinglive.com
The Markets Still Hope That The Fed May Consider Softer Decision

The ECB Interest Rate Decision - Met Market Expectations

Rebecca Duthie Rebecca Duthie 08.09.2022 14:25
Summary: ECB policy rate decision. ECB met interest rate expectations. ECB Decision Met Expectations The ECB on Thursday hiked interest rates by 75bps - meeting market expectations. Deposit Facility rate of the ECB exceeded market expectations, by 25bps, coming in at a 75bps rate hike. ECB Interest rate Decision The European Central Bank (ECB) policy announcement on Thursday may have some potential effects on the foreign exchange market, according to a "crib sheet" published by ING Bank. The market is anticipating a 75 basis point increase as the ECB looks to take swift action against inflation before the Eurozone's growth slows and a recession takes hold. However, ING economists believe that the market is mistaken in using 75 basis points, which might be the day's first significant source of volatility for the Euro. "Policymakers in Frankfurt will likely have to choose between a 50bp or 75bp rate hike this week. We think that a 75bp move would be too hard to digest for the dovish front within the Governing Council, and our call is for a 50bp move," says Francesco Pesole, a foreign exchange strategist at ING. According to ING's base case scenario, a 50bp would fall short of market expectations, causing the Euro to Dollar exchange rate (EUR/USD) to decline. In this base scenario, the ECB also projects weaker growth rates for the Eurozone, anticipating a wintertime recession. While high inflation will continue, it will start to decline over the outlook horizon, according to ECB predictions. If the ECB took an even more "dovish" posture, they would raise interest rates by 25 basis points as they assessed the severity of the impending economic slowdown, which would be reflected in their revised GDP projections. Inflation forecasts that indicate prices drop down to the 2.0% target over the forecast horizon would also be part of this dovish scenario. According to this call, the EUR/USD is expected to trade close to 0.96. However, the ECB will be keenly aware of the effects their decisions will have on the Euro because a weak Euro itself is an inflationary phenomenon because it drives up the price of importing commodities. This is especially detrimental during a crisis brought on by high gas and oil import prices. Sources: investing.com, poundtserlinglive.com
The EUR/USD Pair Is Still In A High Position On The 1H Chart

ECB Interest Rate Decision (EUR/USD), UK Government Plans To Cap Gas Prices (EUR/GBP, GBP/AUD)

Rebecca Duthie Rebecca Duthie 08.09.2022 15:45
Summary: ECB raised all 3 major interest rates by 75bps. UK Government capping gas prices for next 2 years. RBA nearing the end of its interest rate hiking cycle. ECB interest rate hikes The market is reflecting bullish signals for this currency pair. To combat record-high inflation in the Euro Area, the ECB increased each of the three major interest rates by 75 basis points. Markets and experts had generally anticipated the decision to raise interest rates by 75 basis points, thus the first impact on the Euro has been muted so far. The ECB also noted that the governing council anticipates raising rates during the coming sessions, which is consistent with money market pricing, which projects a further 92 basis points of tightening by year's end. Looking ahead, attention will primarily be on ECB President Lagarde's news conference, where she is expected to discuss the necessity to raise interest rates into restrictive territory (above neutral rates) in order to support the euro in the short term. The energy crisis, which continues to put pressure on the Euro through parity, is the major story, though. EUR/USD Price Chart UK Government to cap gas prices The market is reflecting mixed signals for this currency pair. Following the announcement that the UK government would cap annual UK gas prices at £2500 for the next two years, the likelihood of a stronger finish to 2022 for the British Pound moved closer. An influential economist claims that the action effectively keeps UK inflation at current levels and averts the possibility of a recession. Investors have dumped sterling in recent months due to concerns that the UK would be among the nations worst affected by a confluence of rising inflation and slowing economic growth. Therefore, Truss' intervention refutes this claim, stating that the changes will probably reduce inflation's predicted peak by 5 percentage points. EUR/GBP Price Chart RBA nearing the end of their interest rate hiking cycle The Reserve Bank of Australia (RBA) is reaching the conclusion of its interest rate hike cycle, according to Governor Philip Lowe, which will cause the Australian Dollar to weaken. In the meantime, data indicating the nation's outstanding trade surplus shrank in July put additional pressure on the Australian dollar. According to Lowe, disparities between Australian and American pay setting practices allow the RBA to afford to slow pace. GBP/AUD Price Chart Sources: finance.yahoo.com, poundsterlinglive.com, dailyfx.com
ECB press conference brings more fog than clarity

Euro Shows Strength On Monday (EUR/USD), UK Inflation Data Ahead (EUR/GBP), USD Gains Against The JPY(USD/JPY)

Rebecca Duthie Rebecca Duthie 12.09.2022 14:25
Summary: Ukrainian resistance in the country's east boosted the Euro. EUR/GBP may struggle in the wake of UK inflation data release. USD had a rough start to the week against the euro. Euro strengthened during Monday’s session The market is reflecting bullish signals for this currency pair. The news of Ukrainian resistance in the country's east as Ukrainian soldiers launched a counteroffensive caused the euro to rally by a significant 1.4% this morning. Bringing our attention back to the ECB, there was evident unhappiness among the board members after the significant 75 basis point increase was fully anticipated by the markets and had little to no impact on them. The infamous ECB "sources" said shortly after President Lagarde's address that rate increases could reach 2% (restrictive territory) to fight inflation and hinted in some way that the 2023 growth prediction was a bit on the "rosy" side. Finally, sources claimed that QT was imminent, with negotiations set to begin in October and a likely announcement to be made at the October ECB meeting. EUR/USD Price Chart EUR/GBP risk could increase The market is reflecting mixed signals for this currency pair. In the days ahead, when the market will likely be most interested in UK inflation data that could further increase the already elevated risk of aggressive interest rate action from the Bank of England (BoE) next week, the Pound to Euro exchange rate may struggle to get off the ground after falling last week. When the Bank of England (BoE) announces its interest rate decision for September on September 22 after delaying it to accommodate the nation's day of mourning for Her Majesty Queen Elizabeth II, the new fiscal package might have a substantial impact on the BoE's monetary policy. EUR/GBP Price Chart USD/JPY currency pair The market is reflecting bearish signals for this currency pair. The US Dollar had a mixed week to start, falling versus the Euro but rising once more against the Japanese Yen. The EUR/JPY moved closer to Friday's 8-year high as a result. Other currency combinations were generally quiet. Despite further browbeating from Japanese officials—this time from Deputy Chief Cabinet Secretary Seiji Kihara—the Yen weakened. He mentioned that excessively one-sided currency movements are being watched. In order to take advantage of the depreciating Yen and stimulate the economy, Japan recently announced a relaxation of travel regulations for visitors traveling domestically. USD/JPY Price Chart Sources: finance.yahoo.com, dailyfx.com, poundsterlinglive.com  
Tokyo Raises Concerns Over Yen's Depreciation, Considers Intervention

US Dollar Rallies In The Wake Of CPI Inflation Data

Rebecca Duthie Rebecca Duthie 13.09.2022 18:17
Summary: U.S. inflation is running hotter than markets anticipated. Core inflation reading is the one that concerns the Fed the most. Core CPI increased by 0.6% in Augus US CPI Inflation Missed Market Expectations Data that showed U.S. inflation is running hotter than markets anticipated caused the Dollar to rise dramatically, giving the Federal Reserve more confidence to hike interest rates. After U.S. headline CPI inflation rose 8.3% year-over-year in August, defying expectations for a reading of 8.1%, stocks dropped and the safe-haven high-yielding Dollar surged, though it was still lower than July's 8.5%. But contrary to forecasts for a decline, the month-over-month metric increased by 0.1%, the BLS reported, up from July's reading of 0%. The core inflation reading will be the one that concerns the Fed the most. Core CPI increased by 0.6% in August, exceeding both the 0.3% market expectation and the 0.3% result in July. Core CPI inflation is the form of inflation that the Fed may be able to control through higher interest rates because it is domestically based and therefore excludes external factors like energy prices. Core CPI inflation increased by 6.3% on an annual basis, exceeding both July's 5.9% and the market's expectations of 6.1%. LISTEN NOW: Inflation rose 8.3% year-over-year — we discuss the hotter-than-expected CPI number. Listen and follow the @SquawkStreet podcast here or on your favorite podcast platform: https://t.co/BoklbeW3jy pic.twitter.com/v2SxAuQfsh — CNBC (@CNBC) September 13, 2022 With a 1.40% increase against the New Zealand Dollar and a 0.84% increase against the Euro, the dollar advanced versus all the major currencies. "In response to the data, all G10 currencies weakened against the US dollar, with the largest losses seen in currencies that had recently benefited from the improvement in risk conditions. The pound, euro, yen, Kiwi dollar, Aussie dollar, and Swedish krona have now recorded losses in excess of one percent against the greenback, while the Norwegian krone posted the largest decline as it is down 2% on the day," says Jay Zhao-Murray, Market Analyst at Monex Canada. Even though gasoline prices were down significantly, the U.S. inflation surprise still occurred, suggesting that the energy shock is still having an impact. However, everyone is still surprised by the lag. In the event that workers seek greater wage agreements and businesses increase their prices, the Fed will be eager to boost rates. Sources: poundsterlinglive.com
Thursday's Bank's of England decision may be record-breaking!

UK CPI Inflation Data Reflected The First Drop In 1 Year

Rebecca Duthie Rebecca Duthie 14.09.2022 15:28
Summary: UK CPI inflation beat market expectations. UK CPI Inflation fell from its 40-year high reached in July. UK CPI Inflation Data Beat Market Expectations In August, the Bank of England and households experienced an unexpected - and presumably transitory - decrease in consumer price inflation for the first time in almost a year. Following a 40-year high of 10.1% in July, annual consumer price rise fell to 9.9% on Wednesday, according to the Office for National Statistics. This was the first decline since September 2021 and fell short of the 10.2% increase predicted by a Reuters poll. However, experts cautioned that inflation was anticipated to peak at approximately 11% in October, when a new home energy tariff cap begins, and that it might be difficult to decline because of underlying pressures and a new fiscal stimulus from the government. ⚠️BREAKING:*UK CPI INFLATION RISES 9.9% IN AUGUST, DOWN FROM 40-YEAR HIGH OF 10.1% 🇬🇧🇬🇧 pic.twitter.com/Lc5in4fnrW — Investing.com (@Investingcom) September 14, 2022 Following the passing of Queen Elizabeth, the British central bank decided to postpone raising interest rates until next Thursday. On September 22, the BoE is expected to increase rates by 0.75 percentage points to 2.5%, according to financial markets. With the exception of a temporary attempt to support sterling during a 1992 exchange rate crisis, this would be its largest rate increase since 1989. Despite a slowing economy at risk of recession, the majority of economists surveyed by Reuters believe a half-point increase is more plausible, and they also anticipate the BoE to keep raising rates into next year. A severe pressure on living standards has been brought about in Britain by the rise in European natural gas prices brought on by Russia's invasion of Ukraine, which has been compounded by post-COVID labor shortages and supply-chain bottlenecks. Inflation is lowest in several European nations, notably Spain and the Netherlands, but it is the highest among the G7's major advanced economies in the UK. Prime Minister Liz Truss's capping household energy costs The incoming Prime Minister Liz Truss's decision to cap household energy costs, which will increase by 25% rather than 80% in October, has made it marginally easier for the BoE to achieve its goal of returning inflation to its 2% objective, at least in the short term. Before the cap, analysts predicted that inflation may reach 15% or higher early the following year. In addition to promising other help and tax cuts, the government is anticipated to employ public borrowing to make up for the lower rates charged by energy providers. This is anticipated to cost approximately 100 billion pounds ($116 billion). According to experts, this additional stimulus for an economy that is nearly at full employment and experiencing the lowest unemployment rate since 1974 would prolong domestic inflation pressures and force the BoE to raise rates further in order to bring inflation back to its 2% objective. Sources: Reuters.com
The British Pound Is Showing Signs Of Exhaustion Of The Bullish Force

US Dollar Rose In The Wake Of US CPI Inflation Reports (EUR/USD), UK CPI Inflation Data Exceeded Market Expectations (EUR/GBP, GBP/AUD)

Rebecca Duthie Rebecca Duthie 14.09.2022 17:11
Summary: Money market pricing indicates that the Fed will raise rates by 75 basis points. UK CPI inflation rate was lower in August than it was in July. According to economists, the Australian Dollar will fare better than any other major currency in 2022. USD rose, gold futures fell & stocks dropped sharply The market is reflecting mixed signals for this currency pair. The US Dollar rose, gold prices fell, and US stocks dropped sharply on Tuesday as a result of the August US CPI report's substantial effect on the financial markets. Headline Inflation in the US gained +0.1% m/m and +8.3% y/y, above expectations of no gain m/m and an increase of +8.1% y/y. Also hotter than anticipated, the core reading came in at +0.6% m/m versus a projection of +0.3%, while the y/y stood at +6.3% versus +6.1% anticipated. Money market pricing indicates that the Fed will raise rates by 75 basis points, but the tail-risk surprise has changed from a 50 to a 100 basis point increase. This reveals where the momentum is: more rate increases will result in the Fed Funds rate peak being higher than anticipated before the inflation report. EUR/USD Price Chart Has UK Inflation hit its peak? The market is reflecting mixed signals for this currency pair. Pound Sterling increased the day after the news broke. The UK CPI inflation rate was lower in August than it was in July, indicating that the price increase's peak may have already passed. This would be a favorable development for the outlook of the UK economy and, consequently, the Pound. However, the Bank of England's decision on September 22 looms large, and the final position of Sterling at the end of September may depend on whether they choose to raise interest rates by 75 or 50 basis points. According to analysts at certain large investment institutions, the market is expecting a 75 basis point increase from the Bank, which it must provide to maintain stable Pound exchange rates. The pound would decline if the Bank of England disappointed markets with a modest increase. EUR/GBP Price Chart GBP/AUD currency pair According to recent research from BMO Capital Markets, the Australian Dollar is a "quality" currency that is expected to increase in value against the U.S. Dollar and all other major currencies in the upcoming months. According to a BMO analysis of the Aussie Dollar, it is one of the best-performing currencies in 2022 because of a strong set of underlying reasons that support it. According to economists, the Australian Dollar will fare better than any other major currency in 2022 thanks to the nation's strong export market and sound domestic fundamentals. Australia's foreign exchange revenues have increased due to rising commodity prices, which has supported its currency. GBP/AUD Price Chart Sources: finance.yahoo.com, dailyfx.com, poundsterlinglive.com
Navigating the Inverted Yield Curve: Implications for Currencies and Central Banks      User

Strong US Dollar Index Driving EUR/USD Down & USD/JPY Up, economists predict that the Pound will continue to decline (EUR/GBP), USD/JPY

Rebecca Duthie Rebecca Duthie 19.09.2022 18:57
Summary: Early trading saw the EUR/USD falling below parity once more. The British Pound dropped to its lowest level against the Dollar on Friday and hit lows against the Euro that haven't been seen since February 2021. Strong US Dollar index driving USD/JPY down. EUR/USD falls below parity once more The market is reflecting bearish signals for this currency pair. Early trading saw the EUR/USD falling below parity once more while failing to surpass Friday's peak. While markets look apprehensive after US President Joe Biden said the US military would defend Taiwan in the case of an invasion by China, we witnessed the USD index open higher and push on, supporting a +/-60 pip loss on EUR/USD and other currency pairs. The downward movement in the EUR/USD rate this morning appears to be driven by the dollar index. Despite numerous investment banks and the World Bank reducing their growth projections for the US economy and issuing a global recession warning, the index kept moving higher. EUR/USD Price Chart Economists predict that the Pound will continue to decline. The market is reflecting mixed signals for this currency pair. Although there is a remote chance the currency would recover by the end of the upcoming week when a Bank of England rate hike and the "mini budget" are announced, economists predict that the Pound will continue to decline. The British Pound dropped to its lowest level against the Dollar on Friday and hit lows against the Euro that haven't been seen since February 2021 before the monetary and fiscal double-header. Following the publication of poor UK retail sales statistics that led economists to warn that the country is already in recession, the pound's losses for 2022 increased. Contrary to estimates, retail sales declined 1.6% in the month of August instead of a somewhat smaller -0.5%. EUR/GBP Price Chart USD/JPY The market is reflecting bearish signals for this currency pair. After failing to break over 145, USD/JPY is still in an ascending trend channel. 144.95 may continue to act as resistance because it is the 161.8% Fibonacci Extension of the late-July decline from 139.39 to 130.39. It has recently been tested, reaching peaks of 144.97 and 144.99, the latter of which is a 24-year high. This region might be crucial for the next significant USD/JPY movement. The Bank of Japan called banks in Tokyo last week as 145 approached, requesting a rate review. The market has interpreted this to mean that the central bank may be considering intervening should the price rise above 145. Of course, if the price trades over that level and they do not act, an aggressive move might be observed. The following potential resistance level to watch could be the ascending trend line that now splits around 145.90. USD/JPY Price Chart Sources: finance.yahoo.com, poundsterlinglive.com, dailyfx.com
Hawkish Fed Minutes Spark US Market Decline to One-Month Lows on August 17, 2023

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

Rebecca Duthie Rebecca Duthie 20.09.2022 17:34
Summary: EUR/USD exposed to risks related to the Fed interest rate decision on Wednesday. The BoE interest rate decision on Thursday will be crucial. GBP/CAD may now be on the verge of lurching toward all-time lows. Euro is still stronger than some other currencies The market is reflecting mixed market signals for this currency pair. The EUR/USD has been able to maintain its stability recently by simply remaining stable, which isn't really saying much for it. The Euro to Dollar exchange rate began the new week near parity and exposed to risks related to the Federal Reserve's (Fed) interest rate decision on Wednesday, however there is an admittedly remote chance that the latter could spark a firecracker surge by the single currency later this week. The Euro is still stronger than some of the other currencies, but it is expected to keep falling against the Dollar and reach new cycle lows. EUR/USD Price Chart BoE interest rate on Thursday The market is reflecting bullish signals for this currency pair. The exchange rate between the pound and the euro has fallen for seven straight weeks, but it might go considerably further this week and possibly to record lows if the market panics about a probable Bank of England (BoE) decision to sharply raise Bank Rate on Thursday. With the scale of the most recent Bank Rate increase and any hints or guidance regarding the outlook for the benchmark, the BoE interest rate decision on Thursday will be crucial, yet there is a risk that the bank will feel pressured to literally knock the Bank Rate ball out of the park. EUR/GBP Price Chart GBP/CAD How the market could be likely to react to any particularly substantial interest rate rise from the Bank of England (BoE) this Thursday, the Pound to Canadian Dollar exchange rate may now be on the verge of lurching toward all-time lows. Although there is a chance it might fall further if the BoE smashes the Bank Rate ball out of the park on Thursday, sterling crept higher versus the Canadian Dollar to start a holiday-shortened week and remained safely above the 12-year lows reached over a fortnight earlier. A recent increase in core inflation, the BoE's most recent Inflation Attitudes Survey, and the new UK Prime Minister's proposal to freeze or cap household energy costs through public subsidy are reasons to believe it might as well. These factors could influence policymakers to view this as a medium-term inflation risk. GBP/CAD Price Chart Sources: finance.yahoo.com, dailyfx.com, poundsterlinglive.com
Hawkish Fed Minutes Spark US Market Decline to One-Month Lows on August 17, 2023

The Fed Interest Rate Decision, Stock/Bond Portfolios, ECB’s Determination To Reach Price Stability

8 eightcap 8 eightcap 20.09.2022 21:12
On Wednesday the Fed is due to make their interest rate decision. A US portfolio that is split 60/40 between stocks and bonds is headed for its worst year since 1937. ECB is determined to deliver price stability through rising interest rates.   In this article: The Fed’s Interest rate hike tomorrow. US Stock/Bond portfolio down. The ECB is determined to fight inflation through rising interest rates. The Fed due to make their interest rate decision on Wednesday The SwissQuote tweeted about the expectations the market has ahead of the Fed’s interest rate hike decision on Wednesday. Fed will likely hike by 75bp ; SNB will likely follow! ▶️ Discover today's market highlights on our #MarketTalk with @IpekOzkardeskay: https://t.co/Lzfate1wod pic.twitter.com/ZnOfnyHVvM — Swissquote (in English) (@Swissquote) September 20, 2022 On Wednesday the Fed is due to make their interest rate decision, this interest rate decision came in the wake of the US CPI inflation results which were released during last weeks trading week. US Stock/Bond portfolio is suffering According to Charlie Bilello a US Stock/Bond portfolio is likely to experience its worse financial performance in 86 years. A 60/40 Portfolio of US Stocks/Bonds is down 16.2% in 2022, on pace for its worst calendar year since 1937. pic.twitter.com/d6gnbohRLw — Charlie Bilello (@charliebilello) September 20, 2022   A US portfolio that is split 60/40 between stocks and bonds is headed for its worst year since 1937. European central bank (ecb) determined to fight inflation The president of the ECB Christine Lagarde makes it clear that the ECB is determined to fight inflation through rising interest rates. We are determined to deliver price stability, and expect to raise interest rates further to achieve 2% inflation, says President @Lagarde. We must settle at a rate that ensures inflation returns durably to our target, as the economic environment evolves https://t.co/d5HvwVEiR0 pic.twitter.com/mCXxS1yk1f — European Central Bank (@ecb) September 20, 2022   The ECB is determined to deliver price stability through rising interest rates. The ECB is willing to settle the rate of inflation at its target.    Sources: twitter.com
The Fed Interest Rate Decision, Stock/Bond Portfolios, ECB’s Determination To Reach Price Stability  - 20.09.2022

The Fed Interest Rate Decision, Stock/Bond Portfolios, ECB’s Determination To Reach Price Stability - 20.09.2022

Rebecca Duthie Rebecca Duthie 20.09.2022 23:00
On Wednesday the Fed is due to make their interest rate decision. A US portfolio that is split 60/40 between stocks and bonds is headed for its worst year since 1937. ECB is determined to deliver price stability through rising interest rates. In this article: The Fed’s Interest rate hike tomorrow. US Stock/Bond portfolio down. The ECB is determined to fight inflation through rising interest rates. The Fed due to make their interest rate decision on Wednesday The SwissQuote tweeted about the expectations the market has ahead of the Fed’s interest rate hike decision on Wednesday. Fed will likely hike by 75bp ; SNB will likely follow! â–¶ï¸Â Discover today's market highlights on our #MarketTalk with @IpekOzkardeskay: https://t.co/Lzfate1wod pic.twitter.com/ZnOfnyHVvM — Swissquote (in English) (@Swissquote) September 20, 2022   On Wednesday the Fed is due to make their interest rate decision, this interest rate decision came in the wake of the US CPI inflation results which were released during last weeks trading week. US Stock/Bond portfolio is suffering According to Charlie Bilello a US Stock/Bond portfolio is likely to experience its worse financial performance in 86 years. A 60/40 Portfolio of US Stocks/Bonds is down 16.2% in 2022, on pace for its worst calendar year since 1937. pic.twitter.com/d6gnbohRLw — Charlie Bilello (@charliebilello) September 20, 2022   A US portfolio that is split 60/40 between stocks and bonds is headed for its worst year since 1937. European central bank (ecb) determined to fight inflation The president of the ECB Christine Lagarde makes it clear that the ECB is determined to fight inflation through rising interest rates. We are determined to deliver price stability, and expect to raise interest rates further to achieve 2% inflation, says President @Lagarde. We must settle at a rate that ensures inflation returns durably to our target, as the economic environment evolves https://t.co/d5HvwVEiR0 pic.twitter.com/mCXxS1yk1f — European Central Bank (@ecb) September 20, 2022   The ECB is determined to deliver price stability through rising interest rates. The ECB is willing to settle the rate of inflation at its target. Sources: twitter.com
US Dollar Pushed Upwards Ahead Of The Fed’s Interest Rate Decision, Russia Not Showing Signs Of Slowing Down On The War (EUR/GBP), GBP/NZD

US Dollar Pushed Upwards Ahead Of The Fed’s Interest Rate Decision, Russia Not Showing Signs Of Slowing Down On The War (EUR/GBP), GBP/NZD

Rebecca Duthie Rebecca Duthie 21.09.2022 19:03
Summary: Euro fell back to its lows from early September below parity with the US Dollar. ECB hawkish tone. Thursday may cause the GBP/NZD to drop to some of its lowest points since the months immediately following the Brexit referendum. Euro weakens as Putin dashed hope for an end to the Russia/Ukraine conflict The market is reflecting bearish signals for this currency pair. On Wednesday, the Euro fell back to its lows from early September below parity with the US Dollar as Russian President Vladimir Putin appeared to dash any remaining hope for a quick resolution to the war in Ukraine. Markets anticipate additional rate increases even if there is optimism that, at least in the US, inflation may finally be under control. The Fed is projected to increase rates by a full percentage point. The war in Ukraine is continuing to drive up the cost of energy and raw materials on a continent that is still recovering economically from the Covid epidemic, so the European Union cannot resort to such solace. EUR/USD Price Chart BoE interest rate decision due on Wednesday The market is reflecting mixed signals for this currency pair. Although the European Central Bank has recently adopted a more hawkish tone, the Fed continues to have significantly more monetary firepower and flexibility to use it, according to the market. This opinion can only be strengthened by indications that the Ukrainian conflict will continue to rage. Great hopes: The markets are anticipating the Bank of England to raise interest rates twice in a row by 75 basis points, which might lead to a massive letdown for the British pound. As of right now, money markets are pricing in 200 basis point increases over the next three decisions, which means the Bank will need to raise rates by 75 basis points at two of those sessions. This is more than any other developed market central bank has requested. EUR/GBP Price Chart GBP/NZD currency pair During the midweek session, the New Zealand Dollar extended a 15-month downtrend against the U.S. Dollar and appeared to be headed for March 2020 lows. However, it may have better chances against Sterling, which could experience significant losses in the wake of Thursday's Bank of England (BoE) policy decision. If the author is correct in believing the BoE will actually raise rates much farther than all forecasts anticipate on Thursday, sterling's historically unfavorable reaction to Bank Rate rises could be doubly relevant for GBP/NZD this week. If this obviously improbable prediction comes true, then the BoE's decision on Thursday may cause the GBP/NZD to drop to some of its lowest points since the months immediately following the Brexit referendum. The decision on Thursday will be made just over a week after the Office for National Statistics reported a new increase in core inflation for August, and shortly after the Bank of England's Inflation Attitudes survey indicated that households' expectations for medium-term inflation remained at potentially alarming levels in July. GBP/NZD Price Chart Sources: finance.yahoo.com, dailyfx.com, poundsterlinglive.com
Did The Federal Reserve Beat Market Expectations During Their Wednesday Interest Rate Announcement?!

Did The Federal Reserve Beat Market Expectations During Their Wednesday Interest Rate Announcement?!

Rebecca Duthie Rebecca Duthie 21.09.2022 20:04
Summary: The markets expected a 75bps hike from the Fed. Fed met expectations with a 75 bps rate hike. Chances of an economic recession persists. The Federal Reserve chose to hike their interest rates The Fed met market expectations by hiking interest rates by 75bps on Wednesday. In the wake of the August US CPI inflation numbers, the market priced in a 75bps rate hike from the Fed. As the Federal Reserve continues on its rate hiking cycle, the markets become increasingly concerned around the likelihood of a global economic recession. The effect of the interest rate hike on the US Dollar and the economy On the strength of another significant Federal Reserve rate hike this Wednesday, the Dollar is anticipated to remain sustained. The August inflation report reaffirmed expectations for another 75 basis point raise and language indicating the Fed will retain a solid commitment to bringing prices down, convincing investors that the Fed cannot yet wind down its rate-hiking cycle. The next "big moment" for the currency markets, and really all financial assets, will be when the Fed finally changes course and indicates the cycle of rate hikes is about to come to an end. The recent trends of Dollar strength and equity market downturn are anticipated to continue up until that point. When members of the Federal Open Market Committee (FOMC) present their forecasts for where they believe interest rates will go in the future, there won't likely be any indications of a pivot (the infamous Dot Plot chart). However, the idea of general resilience in the US economy should continue to be the baseline scenario. Revisions to other economic estimates are anticipated to indicate some signals of a worsening economic outlook. Investors discounting a drop in future corporate earnings and fearing a deeper global recession through the latter part of 2022 and into 2023 would certainly put pressure on global stock markets. Sources: poundsterlinglive.com, investing.com
Did The Bank of England Miss, Meet or Beat Market Expectations?!

Did The Bank of England Miss, Meet or Beat Market Expectations?!

Rebecca Duthie Rebecca Duthie 22.09.2022 13:11
Summary: BoE interest rate decision. Any post-decision gains are expected to be sold into and prove fleeting. The BoE missed market expectations on Thursday regarding their interest rate hike decision. The BoE Missed market expectations The Bank of England (BoE) announced they would raise their central bank interest rate 50bps, missing the market's expectation of 75bps. The effect of the BoE interest rate hiking decision It is unclear what the effect of the BoE rising interest rates will have on the pound sterling currency. The exchange rate might increase if the Bank increases interest rates by 75 basis points, which would be the greatest increase since 1989, and shifts its prognosis for the economy. But for a central bank that has a history of falling short of market expectations and emphasizing the downside risks to the economy, this is a huge ask. The most plausible worst-case scenario would involve the Bank raising rates by less than anticipated (say, 50 bps) and cautioning that the economic outlook is still uncertain and subject to downside risks. The odds favor a downside reaction, according to currency market observers, and any post-decision gains are expected to be sold into and prove fleeting. A worldwide energy crisis, deteriorating domestic balance of payments, declining stock markets, an unrelentingly strong dollar, and an uncooperative Bank of England have all contributed to the Pound's bad year. The Bank of England's monetary policy is the one area where decision-makers have the power to provide the Pound with some short-term comfort, despite the fact that many of these challenges are medium- to long-term concerns and global in scope. Some of the pessimism and negative positioning may be challenged if the Bank shocks the markets with a more "hawkish" tone, allowing for a short-term leg upward. A rate increase of 75 basis points plus any improved commentary from the Bank may help the pound that day. Sources: poundsterlinglive.com
EUR/USD Touch 19-year Lows, BoE Interest Rate Decision (EUR/GBP), SNB Signals End Of Its Interest Rate Hiking Cycle (EUR/CHF)

EUR/USD Touch 19-year Lows, BoE Interest Rate Decision (EUR/GBP), SNB Signals End Of Its Interest Rate Hiking Cycle (EUR/CHF)

Rebecca Duthie Rebecca Duthie 22.09.2022 16:16
Summary: The SNB increased its interest rate for a second time on Thursday. BoE increased interest rates on Thursday by 50 basis points. Fed 75bps interest rate hike. EUR/USD touching 19 year lows The market is reflecting bearish signals for this currency pair. In the wake of the Federal Reserve's 75bps interest rate hike the falling wedge, which was keeping the door open for bullish reversal possibilities, is invalidated as the EUR/USD has dropped to a new 19-year bottom and is currently clinging to the swing-low from earlier in September, which is located between.9862 and.9876. As a result, the bearish side of the coin is once again in focus for the EUR/USD pair. Resistance is possible around the previous support level of.9950 as well as at parity if bulls can produce a stronger pullback. EUR/USD Price Chart GBP plummeted in the minutes after BoE interest rate announcement The market is reflecting bearish signals for this currency pair. The Bank of England increased interest rates on Thursday by 50 basis points, which was less than the 75 basis points the market was anticipating, and the British Pound plummeted in the minutes that followed. The pound had a sell-off in response to the boost that was lower than expected, and economists predict greater losses for the UK currency. The exchange rate between the pound and the euro dropped by 0.5 percent to 1.1434 in the 15 minutes after the decision, but it had recovered to 1.1470 by the time the U.S. stock market opened, bringing bank transfer rates to roughly 1.1240 and payment specialist rates to roughly 1.1440. EUR/GBP Price Chart SNB signals the end of their interest rate hiking cycle The market is reflecting bullish signals for this currency pair. The Swiss National Bank (SNB) increased its interest rate for a second time on Thursday, which caused the Swiss Franc to weaken. However, the SNB also warned against expecting future rate hikes through its inflation projections. After the SNB hiked its cash rate from -0.25% to 0.5% in a monetary policy move that echoed the Federal Reserve's on Wednesday, the Swiss Franc fell against a number of other currencies. Even while the Swiss central bank did not rule out future interest rate hikes, September's updated predictions suggested that, given the two increases in borrowing costs announced to date, the Swiss inflation rate will likely return to, if not fall below, 2% at the end of the forecast horizon. This suggests that Swiss authorities may already have done enough to bring inflation back in line with their concept of price stability. EUR/CHF Price Chart Sources: finance.yahoo.com, dailyfx.com, poundsterlinglive.com
Tokyo Raises Concerns Over Yen's Depreciation, Considers Intervention

US Dollars Momentum Supported By Fed Interest Rate Hiking Road Map (EUR/USD, USD/CAD), UK & Europe Could Already Be In A Recession (EUR/GBP)

Rebecca Duthie Rebecca Duthie 23.09.2022 19:01
Summary: EUR/USD is close to 20 years lows. The UK and the Eurozone may have already entered recession in the third quarter of the year. Canadian Dollar plunged to its lowest level against the U.S. Dollar since July 2020. US Dollar remains supported The market is reflecting bearish signals for this currency pair. A day after the Federal Reserve approved another sizable hike and promised to keep tightening monetary policy firmly in order to control inflation, the EUR/USD lacked confidence on Thursday, fluctuating between tiny gains and losses. This is probably due to rising U.S. Treasury yields. The exchange rate is very close to one of its lowest points in more than 20 years, having fallen dramatically from the overnight session high of 0.9907 and trading mostly flat on the day at 0.9843. The Fed's hawkish roadmap, which anticipates 150 basis points of additional tightening up to the terminal rate of 4.6% in 2023, as well as its commitment to maintaining a restrictive stance for an extended period of time, should keep U.S. rates biased to the upside and support the dollar's momentum in the FX market. EUR/USD Price Chart Europe & the UK may have already entered recession The market is reflecting bullish signals for this currency pair. According to analyst and economist readings of the data, the latest round of S&P Global PMI Surveys of the manufacturing and services sectors revealed on Friday that the economies of the UK and the Eurozone may have already entered recession in the third quarter of the year. Energy markets and developments in Ukraine, where Russian occupation troops are anticipated to be strengthened following substantial recent setbacks for the invading army at the hands of Ukrainian forces, also attracted attention in Europe. EUR/GBP Price Chart USD/CAD The market is reflecting bullish signals for this currency pair. This week, during another turbulent time for risky assets, the Canadian Dollar plunged to its lowest level against the U.S. Dollar since July 2020; however, updated BMO Capital Markets forecasts suggest that it may be due for one of the most significant recoveries if and when the dollar reaches its peak. The Canadian Dollar lost ground to the Swiss Franc on Friday as it dropped close to 73 cents versus the U.S. Dollar, but it still made significant gains over other currencies, several of which hit new multi-decade lows against the U.S. unit. USD/CAD Price Chart Sources: finance.yahoo.com, dailyfx.com, poundsterlinglive.com
The GBP/USD Pair Did Not Reach The Nearest Target Level Of 1.2259

US Dollar Dictating Marker Movements (EUR/USD, GBP/USD), BoE Introduce Further Tax Cuts (EUR/GBP)

Rebecca Duthie Rebecca Duthie 26.09.2022 20:17
Summary: The Euro remains a weak currency and appears to be headed for additional declines. GBP attempted to stabilize and recover the majority of its losses from the flash crash. BoE current monetary policy will probably lead to escalating inflation pressures. EUR/USD at lowest level in more than 20 years The market is reflecting mixed signals for this currency pair. According to their most recent research, the German Ifo institute is the latest organization to issue a warning that the nation is likely to experience a recession in the upcoming quarters due to businesses' elevated level of pessimism for those months. The figures released today fell short of forecasts and numbers from the previous month. The Ifo report is the first of many German publications scheduled for this week that will provide a clearer picture of the status of the German economy. Earlier in the session, the US dollar's strength led to the Euro falling to its lowest level versus the US dollar in more than 20 years. The Euro remains a weak currency and appears to be headed for additional declines, while market movements are being dictated by the dollar across the board. EUR/USD Price Chart EUR/GBP bearish The market is reflecting bearish signals for this currency pair. According to a top economic research agency, the Bank of England must take the initiative and raise UK interest rates significantly if the collapse of the British Pound is to be stopped. The Pound has declined in value relative to every other currency in the globe, with the Pound to Euro exchange rate falling below 1.10. The British pound is currently stabilizing and recovering the majority of its losses from the flash crash. The projections for the British pound have been drastically cut by investment firm Goldman Sachs, indicating that additional losses against the Euro and a revisit of recent lows against the Dollar are possible. EUR/GBP Price Chart GBP lost 4.8% The market is reflecting bullish signals for this currency pair. This morning's Asian trading, which is often characterized by low transaction volume and little price volatility, saw an unusually steep decline in the British pound of over 4.8%. The big price change may have been influenced by the low transaction volume (reduced liquidity), but the main driver was the UK's new Chancellor Kwasi Kwarteng's announcement of more tax cuts, the largest in 50 years! Looking at the Bank of England's (BoE) current monetary policy, it is clear that the institution wants to raise interest rates to combat the inflation issue; however, a lax fiscal policy, such as energy price caps, which may benefit consumers in the short term, will probably lead to escalating inflation pressures in the medium and long terms once the fiscal support is removed. The local currency's decline, which makes inflation prone to increases, is a further contributor to the issue. GBP/USD Price Chart Sources: finance.yahoo.com, dailyfx.com, poundsterlinglive.com
Hawkish Fed Minutes Spark US Market Decline to One-Month Lows on August 17, 2023

EUR/USD Close To 20-year Lows, IMF Criticizes The UK Government (EUR/GBP, GBP/USD)

Rebecca Duthie Rebecca Duthie 28.09.2022 19:15
Summary: The Euro is looking down at a 20-year low against the US Dollar. A BoE statement said that it would interfere in the bond markets. Federal Reserve could be obliged to speed up the rate at which it raises interest rates. US Treasury 10-year note exceeds 4% The market is reflecting mixed signals for this currency pair. As a result of a mix of Fed and White House rhetoric that puts the brakes on a shift in market conditions, the Euro is looking down a 20-year low against the US Dollar. Overnight, St. Louis Federal Reserve President James Bullard reiterated the determination of the Fed to stare down price pressures when he said, “There’s a lot of tightening in the pipeline,” and “we have a serious inflation problem in the US.” Evans and Kashkari, two additional Fed board members, backed up his aggressive remarks. Treasury rates in some areas of the curve have increased to levels unseen in decades as a result of all this talk. For the first time since 2008, the yield on the 10-year note exceeded 4%. Government bond yields in developed markets around the world are escalating. The probable disruption of three Russian gas pipelines has made the situation in the Euro worse and driven up prices. EUR/USD Price Chart British pound to dropped quickly on Wednesday The market is reflecting mixed signals for this currency pair. The UK government's fiscal stimulus program, which was revealed last Friday and over the weekend, has received harsh criticism from the International Monetary Fund. Huw Pill, the chief economist at the Bank of England, said that the monetary policy should react appropriately to the fiscal policy. The Bank of England's statement that it would interfere in the bond markets caused the British pound to drop quickly, but a recovery later in the day indicated that markets are generally supportive of the central bank's decision to settle the bond markets. The Bank said unexpectedly that it would purchase long-dated UK assets in order to limit their yields. EUR/GBP Price Chart Pound has a strong inverse relationship with risk The market is reflecting mixed signals for this currency pair. The publication of better-than-expected statistics out of the U.S. overnight caused a decline in global markets, which in turn led investors to wager that the Federal Reserve could be obliged to speed up the rate at which it raises interest rates. Stock markets were affected by expectations of rising rates, which also helped the dollar and put pressure on other weaker currencies like the pound. The Pound has a strong inverse relationship with risk and tends to decline as the world markets decline. The announcement of new orders for durable goods data, which showed a dip of 0.2% in August but was better than the average expectation for a decline of 0.3%, was what first caused the decline in Sterling and other risk-sensitive assets. GBP/USD Price Chart Sources: finance.yahoo.com, poundsterlinglive.com, dailyfx.com
US Dollar May Strengthen As A Result Of The US PCE Update (EUR/USD, USD/CAD) GBP Seeks To Strengthen Against The Euro

US Dollar May Strengthen As A Result Of The US PCE Update (EUR/USD, USD/CAD) GBP Seeks To Strengthen Against The Euro

Rebecca Duthie Rebecca Duthie 29.09.2022 19:06
Summary: Consumer confidence figures from the Eurozone decreased by 3.8 points. GBP seeks to continue strengthening against the Euro. Eurozone forecast looks dismal The market is reflecting bullish signals for this currency pair. The final consumer confidence figures from the Eurozone decreased by 3.8 points to -28.8 in September 2022, which was in line with initial projections and the lowest reading since the series' inception in 1985. The majority of factors, such as householders' appraisals of their past financial situations, outlooks on their future financial situations, plans to make significant purchases, and expectations regarding the state of the economy as a whole, all had a role in the sharp fall. A minor improvement in industrial mood could be fleeting given the future energy issues. The eurozone's forecast for the remaining months of the year is still dismal. The geopolitical tension surrounding the alleged sabotage of Nord Stream has made matters worse, and the eurozone is currently debating its ninth round of penalties as a result. However, restrictions on Russian gas continue to be a divisive matter inside the EU, with the commission advising countries that a combination of measures is needed rather than merely market intervention. The eurozone would have wanted to avoid this additional anxiety as it gets ready for an uncertain winter. EUR/USD Price Chart Markets awaiting German inflation release The market is reflecting bearish signals for this currency pair. In spite of easing pressures on UK bond markets and ongoing weakness in the Euro-Dollar exchange rate, the British Pound seeks to continue strengthening against the Euro. The inflation rate in North Rhine Westphalia, the most populated state in Germany, increased by 10.1% year over year in September, marking the highest increase since the early 1950s. This caused a decline in the value of the euro. The information raised concerns that German inflation data, which would be released later in the day, would confirm that the UK's stagflationary crisis is gripping Europe's largest economy as well. Separately, Germany’s network authority said gas use was well above average last week and urged homes and companies to make greater savings to avert a shortage this winter. EUR/GBP Price Chart US PCE update due The market is reflecting bullish signals for this currency pair. As the Relative Strength Index (RSI) retreats from an extreme reading, the recent rally in USD/CAD appears to be coming to an end after clearing the high of July 2020 (1.3646). The core reading, the Fed's preferred measure of inflation, is forecast to increase to 4.7% in August from 4.6% per year in July, and signs of persistent price growth may force the Federal Open Market Committee (FOMC) to maintain its approach to combating inflation as the central bank pursues a restrictive policy. This could cause the US dollar to strengthen as a result of the US PCE update. As a result, the US Dollar may continue to perform better than its Canadian counterpart because the Summary of Economic Projections (SEP) show a steeper path for the Fed Funds rate, and USD/CAD may show a bullish trend for the rest of the year because the Bank of Canada (BoC) appears to be on track to implement smaller rate hikes in the upcoming months. USD/CAD Price Chart Sources: finance.yahoo.com, dailyfx.com, poundsterlinglive.com
Analysis Of The AUD/JPY Currency Pair Scenarios

RBA Missed Market Expectations With Their Interest Rate Decision

Rebecca Duthie Rebecca Duthie 04.10.2022 12:59
Summary: AUD declines in the wake of the RBA interest rate decision. 25bps interest rate hike from the RBA. AUD weaker. RBA 25bps interest rate decision The Australian Dollar fell when the Reserve Bank of Australia (RBA) announced a 25 basis point increase in interest rates, indicating that the peak in Australian interest rates was approaching. Markets anticipated another 50bp increase, but the action caught them off guard. The RBA stated in a statement that additional interest rate hikes were still necessary to reduce inflation, although economists now believe only one more increase is now expected. The 'dovish' outcome resulted in a weaker Australian Dollar relative to the bulk of G10 currencies. The Pound to Australian Dollar rose by a third of a percent to 1.7480, its highest level since early August. "AUD is a significant underperformer after the RBA hiked 25bp against a consensus for a 50bp move," says Adam Cole, Chief Currency Strategist at RBC Capital Markets. Effect of interest rate hiking on the AUD The cash rate has now increased six times in a row by the RBA, reaching 2.60%, which Governor Philip Lowe described as a "substantial" rate of tightening. The Australian Dollar may no longer receive rate support as a result of the RBA's rate hike cycle, but one expert claims that the prognosis for the currency is actually positive. According to ANZ, in order to guarantee that inflation does reach its goal level, the cash rate will need to increase to obviously restrictive territory above 3%. "The slower pace of rate hikes now points to the tightening cycle extending into 2023," says Plank. Plank observes that the 25bp decision and overall tone of the statement have significantly reduced market expectations for future interest rate increases. In the wake of the decision, three-year ACGB futures are trading at an implied yield of 3.3%, which is over 40 bps lower than Monday's closing. Sources: investing.com, poundsterlinglive.com
USD Falls 3.3% From Wednesday's High (EUR/USD), UK Chancellor Moves Up Fiscal Plan (EUR/GBP), RBA Missed Market Expectations (GBP/AUD)

USD Falls 3.3% From Wednesday's High (EUR/USD), UK Chancellor Moves Up Fiscal Plan (EUR/GBP), RBA Missed Market Expectations (GBP/AUD)

Rebecca Duthie Rebecca Duthie 04.10.2022 20:40
Summary: The US dollar has fallen by as much as 3.3%. GBP supported in the wake of Kwarteng plans to move up the publishing of his fiscal plan. RBA interest rate announcement. Investors wonder if the USD has peaked The market is reflecting bullish signals for this currency pair. Since the high of last Wednesday, the US dollar has fallen by as much as 3.3%, and many are wondering if the USD has peaked. Given how severely overbought the dollar had been, this retreat appears to be a trend correction without any indication of anything bigger. Price is getting close to some important support, though, and how it performs around those levels will be crucial for deciding on a short-term course of action. EUR/USD Price Chart GBP supported on Tuesday In an effort to restore market confidence, Chancellor of the Exchequer Kwasi Kwarteng announced he was moving up the publishing of his fiscal plan, which gave the British Pound another lift. Originally slated for distribution on November 23, the plan will instead be given later this month, according to a story published late Monday. Importantly, a complete set of estimates from the Office for Budget Responsibility will be included with the proposal (OBR). The developments ensured a late-session rise in the pound sterling on Monday, resulting in a 1.15% increase in the pound's value relative to the euro. The improvements coincide with the pound's larger resurgence as markets restore their faith in UK assets after a turbulent time. EUR/GBP Price Chart RBA weaker in the wake of interest rate announcement The Australian Dollar fell when the Reserve Bank of Australia (RBA) announced a 25 basis point increase in interest rates, indicating that the peak in Australian interest rates was approaching. Markets anticipated another 50bp increase, but the action caught them off guard. The RBA stated in a statement that additional interest rate hikes were still necessary to reduce inflation, although economists now believe only one more increase is now expected. GBP/AUD Price Chart Sources: finance.yahoo.com, poundsterlinglive.com, dailyfx.com
U.S Dollar Remains Supported (EUR/USD), High Inflation Could Drive UK Economy Into A Recession (EUR/GBP, AUD/GBP)

U.S Dollar Remains Supported (EUR/USD), High Inflation Could Drive UK Economy Into A Recession (EUR/GBP, AUD/GBP)

Rebecca Duthie Rebecca Duthie 06.10.2022 18:55
Summary: Ongoing devaluation of other currencies by the U.S. Dollar. Decreased predictions for UK economic growth. Australia's trade surplus decreased in August despite an increase in imports. U.S Dollar remains in high demand The market is reflecting mixed signals for this currency pair. According to International Monetary Fund (IMF) data, the ongoing devaluation of other currencies by the U.S. Dollar consumed more than $500BN of official reserves in the second quarter, and it can be inferred reasonably from this that the reserve cost of the Dollar rally exceeded $1 trillion in September. The dollar was again in demand throughout the trading afternoon on Wednesday, but noticeably more so after the Institute for Supply Management (ISM) Services PMI for September tended to portray the key sector of the American economy as being more resilient than forecasts had predicted. EUR/USD Price Chart Predictions for UK economy looks poor The market is reflecting mixed signals for this currency pair. According to economists, a worse recession would result in larger losses for the pound. They are also decreasing their predictions for UK economic growth. Economic experts predict that high inflation will cause the UK economy to enter a recession, but rising interest rates due to external reasons and the market's response to the "mini budget" will widen the extent of the slump. "The cost of living crisis will be exacerbated by a cost of borrowing crisis," explains Capital Economics in a new note in which they say they now expect a deeper recession than previously forecast. EUR/GBP Price Chart Australian Trade Surplus decreased Another data release confirming Australia's continued trade surplus helped the Australian dollar gain strength, but analysts warn that a peak in commodity prices and challenges to the global economy raise the possibility of underperformance. According to the ABS, Australia's trade surplus decreased in August despite an increase in imports. A positive trade surplus suggests that a nation is generating more foreign currency than it is spending, which provides a fundamental source of support for a currency. Australia's trade surplus has increased over the past few months as the value of its commodities exports has soared and amid a fall in demand for imports brought on by the Covid-induced economic slowdown. However, the trade surplus is shrinking due to indications that commodity prices have peaked, a continued post-covid recovery, the increase in the price of other significant imports, and these factors together. AUD/GBP Price Chart Sources: finance.yahoo.com, dailyfx.com, poundsterlinglive.com
Hawkish Fed Minutes Spark US Market Decline to One-Month Lows on August 17, 2023

Eurozone Confidence Declining (EUR/USD), GBP Under Pressure (EUR/GBP)

Rebecca Duthie Rebecca Duthie 11.10.2022 16:38
Summary: The Euro continues its battle with the US Dollar. UK's trillion-pound debt markets are buckling under the weight of further Bank of England interventions. Sterling found support early in the new week against the CAD. Euro on the decline as recession fears persist The market is reflecting bearish signals for this currency pair. The Euro's battle with the dollar continued into the new week as a risk-off mindset and increasing yields put the dollar in the lead. We witnessed a spike in geopolitical tensions between Russia and Ukraine as a result of a number of missile attacks that Russian President Vladimir Putin said were in response for the bombing of a bridge that connects Russia to the Crimean Peninsula. As recession fears persist, confidence in the Eurozone keeps declining. Another 75bp increase from the European Central Bank (ECB) is still anticipated later this month, which is necessary given the most recent double-digit inflation reading. Regarding the rate hike path required to control inflation, US Fed policymakers last week seemed to be singing from the same hymn book. Lael Brainard and Charles Evans, two well-known doves, yesterday broke with the rhetoric and used a tad more dovish language. EUR/USD Price Chart GBP is under pressure The market is reflecting mixed signals for this currency pair. The British pound is under pressure amid indications that the UK's trillion-pound debt markets are buckling under the weight of further Bank of England interventions. The Bank of England said on Tuesday that index-linked gilts will now be a part of its expanded gilt purchasing program. Given that UK RPI inflation was 12.3% in August, these gilts (UK government bonds) are understandably becoming more expensive for the government. But considering that the new administration decided to spend a lot of money on subsidizing family energy costs while simultaneously lowering taxes, the UK's bond market has suffered more than others. EUR/GBP Price Chart GBP supported against the CAD The rise in the Pound to Canadian Dollar exchange rate that began in the month of October has since experienced a corrective decline, but Sterling found support early in the new week just above the 1.51 handle and may now be expected to temporarily consolidate its recovery. If Sterling continues to accept the most recent developments in the UK government bond market, where the Bank of England (BoE) has been providing emergency liquidity to address issues related with some pension funds, it may find more support this week around the latter level. GBP/CAD Price Chart Sources: finance.yahoo.com, dailyfx.com, poundsterlinglive.com
Both The US CPI & Core CPI Inflation Beat Market’s Forecasted Figures

Both The US CPI & Core CPI Inflation Beat Market’s Forecasted Figures

Rebecca Duthie Rebecca Duthie 13.10.2022 15:19
Summary: US CPI inflation beat market expectations. US Core CPI inflation beat market expectations. Initial market reaction. US CPI & Core CPI Inflation beat market expectations After breaking out last week, the US dollar is maintaining its recent highs. The primary US catalyst for this week is the release of CPI data today. According to economists surveyed by Reuters, the CPI is anticipated to have risen by 8.1% in September compared to the same month a year prior, which is only slightly less than the 8.3% annual increase seen in August. The actual US CPI inflation (YoY) came in at 8.2%, beating market expectations. For the White House and legislative Democrats, the continued high inflation has been a major political concern, overshadowing the coronavirus pandemic's quick recovery and the creation of millions of jobs since Joe Biden took office. The Core CPI is anticipated to rise for a second consecutive month, with the rate rising to 6.5% in September from 6.3% in August. Additionally, the Summary of Economic Projections (SEP) shows a higher path for US interest rates, which could fuel anticipation for another 75bp Fed rate hike. The actual US Core CPI inflation (MoM) came in at 6.6%, also beating market expectations. Effect on the markets The market will probably jerk in either direction after the September CPI report is released. The bar remains very high to change the perception surrounding a 75 basis point rate hike from the FOMC in November, despite the possibility of volatility across asset classes. The Federal Reserve may face pressure to maintain its approach to battling inflation if the core CPI increases once again, according to the minutes from the September meeting that revealed “many participants emphasized that the cost of taking too little action to bring down inflation likely outweighed the cost of taking too much action.” The initial reaction from the EUR/USD was bearish, USD/JPY was bullish as the dollar strengthened in the wake of the news, the S&P500 also jumped and Bitcoin remained on a downward trend. Sources: investing.com, financialtimes.com, finance.yahoo.com, dailyfx.com
Federal Reserve Remains Hawkish (EUR/USD), Political Uncertainty In Westminster Circus (EUR/GBP, GBP/USD)

Federal Reserve Remains Hawkish (EUR/USD), Political Uncertainty In Westminster Circus (EUR/GBP, GBP/USD)

Rebecca Duthie Rebecca Duthie 17.10.2022 20:24
Summary: Fedspeak is back in the spotlight this week. EUR/GBP reached one-month highs last week. Fedspeak is back in the spotlight after strong CPI inflation The market is reflecting bearish signals for this currency pair. As markets process the strong CPI number from last week, Fedspeak is back in the spotlight this week. Given the lack of significant new data this week, market players will probably give Fed speech and corporate earnings more weight. Recent Federal Reserve speakers have kept up the "hawkish drum," with the majority seeing the lack of inflation progress as justification for continuing with aggressive rate hikes. Since recent remarks suggest the Fed is seeking some pain in both housing and employment in order to reduce inflation, the persistent tightness in the domestic labor market continues to be a talking topic for Federal Reserve officials. Chair Jerome Powell's hawkish comments at Jackson Hole, when Powell threw a warning shot across the financial markets' bow, abruptly shifted the atmosphere surrounding a soft landing. Market investors are still firm in their desire to price in a Fed policy reversal, but with inflation where it is, such a turnabout for the central bank is all but unthinkable. EUR/USD Price Chart EUR/GBP reached one month highs The market is reflecting bearish signals for this currency pair. The exchange rate between the pound and the euro reached one-month highs last week, but it may now find it difficult to rise much further in the days to come and even be at risk of new selling as the Westminster Circus once again devolves into the type of farce most typical of one of those vintage Carry On movies. With political instability and uncertainty once again at the top of the agenda, the pound surged strongly last week amid rumors that HM Treasury would withdraw some of the spending commitments made in the late-September budget. EUR/GBP Price Chart GBP/USD recovered slightly The market is reflecting bullish signals for this currency pair. The Pound to Dollar exchange rate has recently recovered significantly, but it may take a setback for the Dollar to advance further this week, in part because Sterling faces dangers related to the possibility of another Prime Minister in the Banana Republic of Westminster being booted from power. The news that HM Treasury would be able to postpone some of the spending promises made public in the late-September budget statement helped the value of the pound last week. However, political instability and uncertainty are once again at the forefront of this week's events. GBP/USD Price Chart Sources: finance.yahoo.com, dailyfx.com, poundsterlinglive.com
Solid Wage Growth in Poland Signals Improving Labor Market Conditions

ECB Seems To Have Limited Options (EUR/USD), Concerns In UK Bond Market (EUR/GBP), JPY Drops To 1990 Lows (USD/JPY)

Rebecca Duthie Rebecca Duthie 18.10.2022 15:31
Summary: Markets are betting on a 90% chance that ECB will enforce another 75bp hike. GBP's impressive run came to an abrupt end. JPY dropped to lows last seen in August 1990. ECB seems limited in their options The market is reflecting bullish signals for this currency pair. The European Central Bank (ECB)'s are limited in their options in light of the most recent CPI reading. The ECB's case for continuing to raise rates in pursuit of its 2% target may be strengthened by today's stronger ZEW statistics. The concern is that by doing this, the central bank could risk sending the economy back into a recession, which would be indicated by the dropping ZEW current conditions print. On the other hand, if the central bank does nothing, the euro may lose further ground to the dollar. The final CPI report on Wednesday and today's data print will be crucial as the ECB begins its pre-meeting blackout period on Thursday. As the central bank works to achieve its 2% target, markets are putting in a 90% chance that there will be another 75bp increase at the meeting next week. We will hear from ECB policymaker Isabel Schnabel later in the day. She is anticipated to maintain the rhetoric of rate increases despite the fragility of the Eurozone economies. EUR/USD Price Chart Concerns in UK bond markets The market is reflecting mixed sentiment for this currency pair. Following some fresh concern in the UK bond markets on Tuesday, the British Pound's impressive run came to an abrupt end. Following the Bank of England's forced denial that it would further delay its program of quantitative tightening, UK gilts declined and the yield they offered increased. After the recent instability in the bond market, The Financial Times reported on Tuesday that the Bank was prepared to postpone the program. After reaching a high of 1.1576 earlier in the day, the exchange rate between the British pound and the euro dropped to 1.1490. This brings the rates for bank transfers to around 1.1260 and the prices provided by payment specialists to around 1.1450. EUR/GBP Price Chart JPY continues to lose against the USD The market is reflecting bullish signals for this currency pair. Earlier in the session, the Japanese Yen dropped to lows last seen in August 1990 as it continues to lose value against the US dollar. Little has changed for the Yen as Japanese authorities appear ready to allow the currency to continue to decline by controlling bond yields. The yield on 10-year JGBs is restricted to 0.25%. In contrast, as the Fed keeps raising interest rates, US Treasury yields continue to trade at or close to multi-year highs. The benchmark 10-year UST is quoted with a yield of 4.00%, which is approximately 375 basis points higher than the comparable JGB. The rate-sensitive 2-year UST trades with a yield of about 4.45%. USD/JPY Price Chart Sources: finance.yahoo.com, poundsterlinglive.com, dailyfx.com
The GBP/USD Pair Did Not Reach The Nearest Target Level Of 1.2259

GBP CPI Inflation (YoY) Came In Hotter Than Expectations

8 eightcap 8 eightcap 19.10.2022 08:25
Summary: GBP September 2022 YoY inflation, beat market expectations. Affect on the GBP. GBP CPI Inflation The market has predicted a CPI YoY inflation figure of 10%, the actual data came in at 10.1%, which was hotter than expected by the market. The inflation reading is likely to set off expectations on the future interest rate hiking path of the Bank of England (BoE). The higher than expected inflation reading is likely to set investor confidence in the direction of a continuing hawkish BoE interest rate hiking cycle, causing investor confidence in the GBP to increase and therefore strengthening the pound sterling currency. Following some fresh concern in the UK bond markets on Tuesday, the British Pound's impressive run came to an abrupt end. Following the Bank of England's forced denial that it would further delay its program of quantitative tightening, UK gilts declined and the yield they offered increased.  This is the procedure through which it sells the gilts it acquired as part of its quantitative easing strategy back to the market. A crucial element of the Bank's strategy for normalizing monetary policy as it battles inflation is quantitative tightening. After the recent instability in the bond market, The Financial Times reported on Tuesday that the Bank was prepared to postpone the program. Effect of the CPI reading on the GBP It is no secret that the pound sterling has had a tough year on the forex markets. The near-term outlook for the pound has significantly improved, according to foreign exchange strategists at BMO Capital, and more gains are possible if the UK leadership is changed in the next two weeks. The Kwarteng catastrophic "mini-budget" in September, which offered the largest tax cuts in 50 years at a time when the U.K. economy is already experiencing significant inflation, is blamed by the government for the turmoil the pound sterling is currently experiencing. The Bank of England had to step in to prevent the collapse of a significant portion of the U.K. pension system after Kwarteng's actions drove the pound to an all-time low against the dollar and set off a sell-off in government bonds. The initial market reaction showed a weakening in the GBP/USD currency pair, and a strengthening in the EUR/GBP currency pair as investors weigh GBP prospects. Sources: poundsterlinglive.com, investing.com
TEST

Dow Jones Increased Overnight, GBP Could Rally If UK Leadership Changed

Rebecca Duthie Rebecca Duthie 19.10.2022 11:27
Summary: Dow Jones futures all increased overnight as investors focused on Netflix (NFLX). The near-term outlook for the pound has significantly improved. Dow Jones Index Rally The S&P 500, Nasdaq, and Dow Jones futures all increased overnight as investors focused on Netflix (NFLX) subscriber growth and anticipated Tesla earnings. The effort at a stock market rally extended advances on Tuesday, but the session ended well below highs. Although the market rise is still going strong, nothing yet has been proven. Investors should exercise caution and pay great attention. In Q3, Netflix's subscriber growth was substantially stronger than anticipated, and the leader in streaming TV is optimistic about Q4 subscribers. Earnings also exceeded expectations. The rise in Netflix's shares suggested a breakout. Overnight, Roku (ROKU) and Disney (DIS) both increased. In comparison to fair value, Dow Jones futures gained 0.6%, with DIS stock contributing a slight gain. Futures for the S&P 500 rose 0.7%. Futures for the Nasdaq 100 rose 1.4%. United Airlines and NFLX stock both make up the S&P 500 and Nasdaq 100. DJI Price Chart GBP could rally in the wake of UK leadership change The near-term outlook for the pound has significantly improved, according to foreign exchange strategists at BMO Capital, and more gains are possible if the UK leadership is changed in the next two weeks. They claim that such a development is very plausible. The call follows the dramatic about-face in UK fiscal policy that newly-installed Chancellor Jeremy Hunt revealed. In order to fully restore market confidence in the UK government and finances, Hunt undid all of his predecessor's tax cuts. This was followed by a decline in UK gilt yields and a rise in the value of the pound. The reversal was unavoidable given that the world markets recoiled at the generosity of the new prime minister Liz Truss' economic plans, which called for large tax cuts that would be paid for by borrowing.
ECB Likely To Remain Hawkish (EUR/USD), U.K CPI Inflation Returns To Double Digits (EUR/GBP), BoJ Unbothered By Weak Yen (USD/JPY)

ECB Likely To Remain Hawkish (EUR/USD), U.K CPI Inflation Returns To Double Digits (EUR/GBP), BoJ Unbothered By Weak Yen (USD/JPY)

Rebecca Duthie Rebecca Duthie 19.10.2022 18:54
Summary: Eurozone CPI inflation missed double digits. UK inflation increased from 9.9% to 10.1%. USD/JPY has positive carry. Eurozone inflation beat market expectations The market is reflecting mixed signals for this currency pair. The data, which narrowly avoided the 10% inflation mark as compared to September of last year, would undoubtedly support the recent hawkish stance taken by senior ECB members. Centeno and Visco, two ECB members, will get the chance to comment on the most recent inflation data later today as ECB talk is expected to slow down before the required blackout period prior to Thursday's rate decision. There is a new significant market driver in town as the US is currently in earnings season. This will highlight a variety of subjective factors because what US company executives say can start to shape expectations for future quarters' results. The key question at this time is how the sudden and sharp spike in rates has affected businesses. EUR/USD Price Chart EUR/GBP limped temporarily The market is reflecting bullish signals for this currency pair. After Office for National Statistics data indicated that inflation increased more than anticipated in September, the Pound Sterling temporarily limped against the Dollar and the Euro. However, this outcome does little to deter the Bank of England (BoE) from raising interest rates aggressively in November. In September, UK inflation increased from 9.9% to 10.1%, defying the expectation of economists who had expected the annual rate of price growth to exceed 10% for the previous month. EUR/GBP Price Chart USD/JPY remains positive The market is reflecting mixed signals for this currency pair. The carry is still positive for the USD/JPY currency pair, and it will continue to be so as long as US interest rates are still rising and Japanese monetary policy is as it is. A weak Yen isn't all that awful for Japan, and it doesn't seem to be causing much concern at the central bank, according to BoJ Governor Kuroda. However, since the intervention was requested by the Ministry of Finance late last month, the same cannot be stated there. There is a new significant market driver in town as the US is currently in earnings season. This will highlight a variety of subjective factors because what US company executives say can start to shape expectations for future quarters' results. USD/JPY Price Chart Sources: finance.yahoo.com, dailyfx.com, poundsterlinglive.com
ECB's Tenth Consecutive Rate Hike: The Final Move in the Current Cycle

Rising Fed Fund Rates Offer US Dollar Support (EUR/USD), UK Retail Sales Data Came In Hotter Than Expected (EUR/GBP, GBP/JPY)

Rebecca Duthie Rebecca Duthie 21.10.2022 19:30
Summary: Rising Fed funds rate estimates have benefited the dollar. U.K retail sales data. JPY rallied on Friday. USD supported by hawkish fed The market is reflecting bullish signals for this currency pair. Throughout the past week, the EUR/USD pair has struggled to find any definitive direction, and this morning was no exception. As bulls and bears continue their conflict, the pair has stayed largely range bound because next week will bring a number of important data events. Since last week's US CPI reading, the pair had experienced a rally, but this week's return of the dollar bulls has stopped any effort at an upward rise. Rising Fed funds rate estimates have benefited the dollar, with markets now projecting a peak rate of roughly 5%, up from 4.75% last week. As a result of this as well as rising Treasury yields, investors have continued to view the dollar as their favorite haven, keeping it strong. EUR/USD Price Chart GBP struggles as UK Retail Data misses market expectations The market is reflecting bullish signals for this currency pair. After Office for National Statistics (ONS) statistics revealed that UK retail sales collapsed in September, the pound fell into the week's final session, effectively wiping out more than two years of gains made since the first coronavirus-inspired closure of the economy in 2020. When measured by the number of products purchased, retail expenditure declined by 1.4% in September. This was a far worse decline than the -0.5% consensus estimate and came along with a downward revision to the ONS estimate for August sales growth, which was restated as -1.7%. EUR/GBP Price Chart JPY rally supporting GBP The market is reflecting bullish signals for this currency pair. A stunning Japanese Yen surge that seemed to be the catalyst for a market-wide decline in Dollar exchange rates, which was then followed by rumors of direct involvement from the Tokyo government and Bank of Japan (BoJ). The Yen appreciated by over five huge figures versus the dollar, which had previously run roughshod over all other currencies, while the Pound Sterling, which had been mired in the red, saw a notable rally against it late on Friday. GBP/JPY Price Chart Sources: finance.yahoo.com, dailyfx.com, poundsterlinglive.com
The Markets Still Hope That The Fed May Consider Softer Decision

ECB Expected To Raise Interest Rates By 75bps On Thursday (EUR/USD, EUR/GBP), UK & US Have Conflicting Economic Outlooks (GBP/USD)

Rebecca Duthie Rebecca Duthie 24.10.2022 18:55
Summary: The ECB interest rate decision is unlikely to have much impact on the Euro. The markets Reaction to the ECB interest rate decision on Thursday, could be positive for the GBP. Sterling increased significantly from the market's opening. Global Eurozone PMI Composite Output Index decreased The market is reflecting bullish signals for this currency pair. According to the 'flash' figure, the seasonally adjusted S&P Global Eurozone PMI Composite Output Index decreased from 48.1 in September to 47.1 in October. The indicator indicated that business activity in the eurozone has fallen for a fourth time in a row. The most recent result was the lowest since April 2013 when pandemic numbers were excluded. A 75bp increase is already anticipated by the market for the meeting on Thursday, although it is unlikely to have much of an impact on the euro. The Eurozone's generally dismal outlook is unlikely to change as today's data strengthen recessionary fears. It is highly challenging to argue for a halt in rate increases as long as inflation stays high, with ECB Chief Economist Phillip Lane saying the bank views the neutral rate as being just above the 1-2% range. If Lane is right, more rate increases would be coming for the zone, which theoretically might hasten a recession. EUR/USD Price Chart GBP supported by Boris Johnson being turned away from PM The market is reflecting bullish signals for this currency pair. The Pound to Euro exchange rate started the new week on a positive note, but it might find it difficult to maintain Monday's gains far beyond the 1.15 level unless this Thursday's European Central Bank (ECB) decision causes the market to turn even further away from the euro. On Monday, the pound gained significantly from the opening price after a faction of the ruling Conservative Party was successful in preventing former Prime Minister Boris Johnson from taking part in the most recent process for choosing a new Prime Minister. The market's reaction to the European Central Bank's interest rate decision on Thursday, which is widely anticipated to increase its benchmark interest rate by three quarters of a percentage point for a second consecutive time, will likely have a significant impact on the Pound's performance this week. EUR/GBP Price Chart UK & US contrasting economic outlook The market is reflecting bearish signals for this currency pair. The pound to dollar exchange rate has experienced a recent surge and may increase further in the near future, but it runs the risk of falling as the week progresses and attention shifts back to the increasingly contrasting economic outlooks of the UK and the US. After some members of the governing Conservative Party were successful in preventing former Prime Minister Boris Johnson from taking part in the most recent selection process for the position of Prime Minister, sterling increased significantly from the market's opening, including versus the dollar. GBP/USD Price Chart Sources: finance.yahoo.com, dailyfx.com, poundsterlinglive.com
Solid Wage Growth in Poland Signals Improving Labor Market Conditions

ECB Expected To Raise Interest Rates By 75bps (EUR/USD), Rishi Sunak Becomes Next U.K Prime Minister (GBP/AUD, EUR/GBP)

Rebecca Duthie Rebecca Duthie 25.10.2022 18:44
Summary: The European Central Bank is predicted to boost rates by 75 basis points. Rishi Sunak warns of a difficult economic outlook ahead. USD retreated on Tuesday The market is reflecting bullish signals for this currency pair. In order to control the high inflation that was shown to be 9.9% year-over-year last week, the European Central Bank is predicted to boost rates by 75 basis points. A channel that dates back to February is putting a major barrier in the way of the EUR/USD. Since its creation, it has proven to be a very trustworthy structure, and until it is no longer useful, it will be the major reference. After the dollar reached its peak, equities appear to have bottomed out on the basis of CPI, and now bonds appear to have reached the end of their capitulation phase. This should temporarily deflate the dollar and place some of its energy into other assets. Since it is just being used as a recovery trade, there is a chance that it could collapse suddenly. EUR/USD Price Chart GBP lost early gains in wake of new prime minster The market is reflecting bearish signals for this currency pair. This week saw a solid start for the pound, but it was unable to continue its upward trend when former chancellor Rishi Sunak was named the next prime minister-designate after the Conservative Party leadership contest, which will have a major impact on the pound and the UK economy going forward. After former Prime Minister Boris Johnson withdrew from the race for the position of Prime Minister, leaving former Chancellor Rishi Sunak on course for a coronation that is expected to produce the UK's fifth Prime Minister in the past six years on Tuesday, sterling increased against most major currencies to start the new week. The Pound, however, quickly lost its early gains as newly-elected Prime Minister Rishi Sunak warned of impending economic hardship and difficult choices involving the public finances in a speech to parliament. The S&P Global PMI surveys that indicated a deepening recession in the UK's manufacturing and services sectors in October followed closely behind all of this. EUR/GBP Price Chart Tuesdays market was favorable for riskier assets A thicket of technical resistances that could keep Sterling contained below roughly the 1.8000 level in the coming days has slowed the recovery from the post-referendum lows plumbed in late September, despite the Pound to Australian Dollar exchange rate remaining close to six-month highs in recent trade. Tuesday's market was favorable for riskier assets, as sterling outperformed all other major currencies. However, the Pound to Australian Dollar rate was unable to move through a Fibonacci retracement level at 1.7962 on the charts and its 100-week moving average at 1.8047. GBP/AUD Price Chart Sources: finance.yahoo.com, poundsterlinglive.com, dailyfx.com
Hungary's Central Bank to Maintain Base Rate at 13%, Eyes on Effective Rate Amid Forint's Performance

ECB Interest Rate Decision Due Tomorrow (EUR/USD, EUR/GBP), BoC Cash Rate Boost Missed Market Expectations (GBP/CAD)

Rebecca Duthie Rebecca Duthie 26.10.2022 18:00
Summary: The euro has been steadily strengthening against the dollar over the past few weeks. The Pound has recovered from all of its post-budget losses. Pound to Canadian Dollar exchange rate rose to a four-month high. EUR/USD back above parity The market is reflecting bullish signals for this currency pair. The euro has been steadily strengthening against the dollar over the past few weeks as dovish wagers against the Fed have increased, supported by weaker natural gas prices and U.S. economic statistics. The ECB meeting tomorrow, when they will release their interest rate, will be the main event for the EUR this week. Although a 75 bps rate hike is presently priced in by the financial markets with about 93% certainty, the post-announcement press conference will be crucial for determining the short-term directional bias. Any hawkish slant that may be there in the ruling could put parity to another test. The euro increased by more than 5.3% from its yearly low, and a breach of the 2022 downtrend now raises the possibility of a greater rise in the coming days. However, the advance is now getting close to the first significant resistance barrier, which will be the first true test of the bulls' tenacity in this rebound from multi-decade lows. Prior to the European Central Bank's (ECB) interest rate announcement, these updated objectives and invalidation levels are what matter on the technical price charts for the EUR/USD. EUR/USD Price Chart Pound sterling slightly recovered The market is reflecting mixed market signals for this currency pair. The Pound has recovered from all of its post-budget losses, but some strategists believe it could still fall apart before the year is out. They have advised clients to sell Sterling against the Dollar after it rises back above 1.15 because there is potential for it to drop as low as 1.08 in the coming months. Following the parliamentary installation of former chancellor Rishi Sunak as prime minister, which ended the Conservative Party's leadership election, and as risk appetite seemed to increase on global markets, the pound gained versus a number of other currencies throughout the first half of the week. The problem for the pound is that none of this does anything to change the bleak picture for the UK economy, and risk appetite would quickly decline if the Fed confirmed next Wednesday that its hawkish policy position will not change. EUR/GBP Price Chart BoC boosted cash rate The Bank of Canada (BoC) boosted its cash rate less than economists and markets had anticipated for October, but it nonetheless issued a warning that additional interest rate hikes are likely in the months ahead. As a result, the Pound to Canadian Dollar exchange rate rose to a four-month high. In light of downgrades from prior expectations of 3.5% and 1.75%, respectively, the BoC revised its forecasts for Canadian GDP growth, which is now estimated to come in around 3.25% this year before slipping below 1% next year. The projection for 2024 remained at 2%. The annual consumer price index inflation rate is anticipated to decline back to 3% by the end of next year before reverting to the 2% objective by the end of 2024, according to the BoC's inflation estimates, which have remained virtually unaltered. GBP/CAD Price Chart Sources: finance.yahoo.com, dailyfx.com, poundsterlinglive.com
The EUR/USD Pair Maintains The Bullish Sentiment

ECB Interest Rate Decision Met Market Expectations At 75 Bps

Rebecca Duthie Rebecca Duthie 27.10.2022 14:31
Summary: Markets expected a 75bps increase from the ECB. ECB continues to follow hawkish rhetoric. Initial effect of the decision on the market. ECB interest rate decision re-instils market confidence The ECB decision was released today, and another 75bps increase was anticipated. The widely anticipated increase in the ECB's once-negative deposit rate to 1.25% on Thursday may favor the Euro at the expense of the Pound, the Dollar, and other currencies, according to some analysts. Although these statements and the ECB's other recent interest rate increases have not directly benefited the Euro, policymakers have emphasized in recent appearances that interest rates will need to rise further in the months ahead as double-digit inflation rates become more prevalent in the Eurozone. The ECB met market expectations by rising their interest rates by 75 basis points to 2.00% on Thursday. The ECB have reiterated their intentions to gain control over the soaring inflation rate. Effect of the decision on the market In recent trade, the Pound to Euro exchange rate defied gravity and reached levels close to one month highs. However, this week's recovery will be difficult unless the European Central Bank (ECB) interest rate decision on Thursday convinces the market to abandon its recently increased appetite for the single currency. They cited the UK economy's worsening outlook and risks related to Bank of England (BoE) interest rate policy, despite the fact that ECB policy is also relevant and the bank's interest rate guidance, balance sheet, and prospects for the Eurozone's economy will be more crucial for the pound sterling ahead of the weekend. The EUR/USD pair has already risen over parity and the downtrend from 2022, doing so with a respectable rally. The initial market reaction in the wake of the release of the ECB interest rate decision showed the EUR/USD strengthening and continuing the bullish market sentiment, the EUR/GBP weakened slightly followed by signs of strengthening, The FTSE 100 showed signs of declining. Sources: poundsterlinglive.com, dailyfx.com
Agriculture: Russia's Exit from Black Sea Grain Deal Impacts Grain Prices

USD GDP (QoQ) (Q3) Beat The Markets Expectations by 0.2%

Rebecca Duthie Rebecca Duthie 27.10.2022 14:38
Summary: Markets expected a 2.4% US Q3 GDP. Will the Fed continue its hawkish rhetoric? Market reactions in the wake of the GDP figure. US GDP hit its first positive figure in two quarters The market is expecting US GDP in the third quarter to rise from -0.6% (September release) to 2.4% in the October release. This is the first positive number in two quarters. The actual US Q3 GDP data came in at 2.6%, beating market expectations by 0.2%. The US GDP has beaten the 2.4% GDP value that was forecasted, thus the USD should be supported by this figure. With GDP being the broadest indicator of the economy and the primary indicator of the economy’s health, the US Dollar would benefit from beating the forecasted figure. The market will learn how recent rate hikes have affected the US economy in the third quarter from today's advanced look at US Q3 GDP. Any miss or beat of estimates will change the Fed's narrative regarding future rate hikes. A dismal Meta Platforms forecast is expected to weigh heavily on the tech-heavy Nasdaq as U.S. equities began in a mixed manner on Thursday, ahead of earnings from Apple (AAPL) and Amazon (AMZN) and the first estimate of third-quarter GDP domestic product. Effect on the markets The figures on weekly unemployment claims are also due at the same time and are anticipated to increase slightly from last week as the labor market begins to experience pressure. Hence, the initial market reaction in the wake of the release of the US GDP data is likely to be as a result of the combination of information being released by the United States on Thursday. A GDP figure that beats market expectations is bullish for the currency in question.The initial market reaction showed the movement of the EUR/USD decline, the NASDAQ rose slightly and GBP/USD currency pair weakened as the USD showed signs of strengthening. Sources: investing.com, dailyfx.com,
Hawkish Fed Minutes Spark US Market Decline to One-Month Lows on August 17, 2023

European Economy Likely To Be Under Pressure In The Wake Of ECB’s Interest Rate Decision (EUR/USD, EUR/GBP), CAD Suffered Losses This Week (GBP/CAD)

Rebecca Duthie Rebecca Duthie 27.10.2022 17:14
Summary: Fed representative speaks regarding the hazards of potential overtightening. EUR/GBP rose in the wake of ECB interest rate decision. On Thursday, the Canadian Dollar was still the second-best performing currency. European economy likely to experience pressure The market is reflecting mixed signals for this currency pair. The European economy will experience extra pressure from the ECB's interest rate decisions once they rise above this point because firms and families are already feeling the effects of the excessive increases in energy prices. The dollar index (DXY) also formed a double top as a result of comments made by Mary Daly of the Fed regarding the hazards of potential overtightening and the likely transition from 75 bps raises to 50 or 25 boosts in the future. As a result, the index is currently trading approximately 3.5% lower. EUR/USD Price Chart EUR/GBP rose in the wake of ECB interest rate decision The market is reflecting mixed signals for this currency pair. Thursday saw a rise in the exchange rate between the pound and the euro as the European Central Bank (ECB) announced another unusually substantial increase in interest rates and warned that the changing monetary policy settings could soon start to hurt the Eurozone economy. After the ECB increased all of its key interest rates by three quarters of a percentage point for the second time in a row and issued a warning that additional hikes would still be required in the months to come, the euro moved lower against other major peers, notably the pound. EUR/USD Price Chart CAD suffered significant losses Following the Bank of Canada (BoC) decision to decrease the rate at which it raises interest rates in October, which stunned the market and caused many forecasters to reevaluate their prognosis for the Loonie, the Canadian Dollar fell behind other major currencies during the following week. On Thursday, the Canadian Dollar was still the second-best performing currency in the G10 group for the year, but it had suffered significant losses this week against all other currencies save the U.S. Dollar as a result of Wednesday's interest rate decision. GBP/CAD Price Chart Sources: finance.yahoo.com, poundsterlinglive.com, dailyfx.com
The Euro May Attempt To Resume An Upward Movement

Dovish Comments From ECB President Christine Lagarde Sparked Speculation (EUR/USD, EUR/GBP), PCE Missed Market Expectations (GBP/USD)

Rebecca Duthie Rebecca Duthie 28.10.2022 16:48
Summary: USD's decline has been substantially exaggerated. Weak UK economic fundamentals once again take center stage. The Pound to Dollar exchange rate stayed robust near the week's highs. EUR left weak against USD The market is reflecting mixed signals for this currency pair. Italian inflation for October topped forecasts, while Spanish GDP underperformed on all YoY and QoQ indicators, leaving the euro weak against the USD. Italy and France started the morning. German GDP came in at 1.2% and 0.3%, respectively (see economic calendar below), giving the euro a modest boost. The country's strong performance, according to the GDP report, was primarily ascribed to private consumption spending, although I think decreasing energy prices may have had some positive impact on the final result. Following the decision, ECB President Christine Lagarde's comments sparked speculation that future large rate increases from the bank would not be final. According to her, the rate change will be decided "meeting by meeting." This is true even while inflation is quite high. If the past 24 hours give any indication, the US Dollar's decline has been substantially exaggerated. During the Asian session, there has been a minor easing. EUR/USD Price Chart Euro heavily sold in the wake of ECB announcement The market is reflecting bearish signals for this currency pair. Although the Pound to Euro exchange rate has recovered from September's losses, Rabobank estimates indicate that as weak UK economic fundamentals once again take center stage in the months to come, recent gains may be partially reversed. The euro was heavily sold after the European Central Bank's policy announcement on Thursday, but the pound sterling held close to its October high against the euro on Friday. However, the most recent forecast review from Rabobank implies that this rebound may already be on borrowed time. EUR/GBP Price Chart GBP/USD remained near weeks highs The market is reflecting mixed signals for this currency pair. After the Federal Reserve's (Fed) preferred gauge of inflation fell short of expectations and did nothing to convince the market to start bidding again for the greenback ahead of next Wednesday's interest rate decision, the Pound to Dollar exchange rate stayed robust near the week's highs. Since the Fed prefers PCE price indices as an indicator of inflation, it might be significant to Federal Open Market Committee members next week since the Core PCE price index increased at an annualized rate of 5.1% last month rather than the 5.2% experts had predicted. GBP/USD Price Chart Sources: finance.yahoo.com, dailyfx.com, poundsterlinglive.com
The Bank Of England Can Tighten Monetary Policy Considerably More Gradually Than It Is Now Doing

Eurozone Inflation Touched Record Highs (EUR/USD, EUR/GBP), RBA Interest Rate Decision Due On Tuesday (GBP/AUD)

Rebecca Duthie Rebecca Duthie 31.10.2022 17:39
Summary: Eurostat stated that prices rose by a record 10.7% in October. Uncertainty around BoE interest rate decision. RBA raised interest rates by 25 basis points, and the market is expecting a similar action on November 1. ECB under pressure to raise interest rates further The market is reflecting bearish signals for this currency pair. Eurostat stated that prices rose by a record 10.7% in October, setting a new record for inflation in the Eurozone. Separate figures also revealed that the bloc's economy expanded more quickly than anticipated in the third quarter. The European Central Bank (ECB) is under more pressure to raise interest rates as the inflation data was higher than the market's expectation of 10.3%, despite predictions from some economists that the ECB will soon slow the rate at which it does so. With the energy component of fuel costs rising by an alarming 41.9% year-over-year, rising fuel prices continue to be the main source of inflationary pressures. The EUR/USD is still in a significant macrodowntrend, and even while this picture might not change much in the short term, there may yet be some upside before selling resumes. The euro broke out of a channel it had been trapped in since the beginning of the year last week. EUR/USD Price Chart Markets awaiting BoE interest rate decision The market is reflecting mixed market signals for this currency pair. Due to the uncertainty surrounding the Bank of England's decision on Thursday and the possibility that the BoE will raise interest rates less than markets anticipate, the Pound to Euro exchange rate has continued its recovery from September's lows to reach two-month highs in recent trade. However, this week's gains may be vulnerable to profit-taking. The U.S. dollar weakened last week, which benefitted riskier currencies, and financial markets cheered the appointment of former chancellor Rishi Sunak as prime minister. However, market focus soon shifted to Thursday's interest rate decision and the release of October inflation data from the Eurozone on Monday. Economists and the financial markets anticipate that the BoE will increase the Bank Rate by three quarters of a percentage point to 3%. If delivered, this would be the biggest interest rate increase the BoE has ever made, however it may not be as certain or as done as many people think. EUR/GBP Price Chart RBA expected to remain dovish On Tuesday, the Reserve Bank of Australia is expected to increase interest rates once more, but the size of the increase is uncertain, with potential consequences for the Australian Dollar. On October 4, the RBA raised interest rates by 25 basis points, and the market is expecting a similar action on November 1. However, as inflation picks up speed, the central bank may be compelled to make a U-turn According to the ABS, Australian CPI increased 7.3% in the twelve months leading up to the September 2022 quarter. The announcement occurred just a few days after the Reserve Bank of Australia stunned the markets by raising interest rates by 25 basis points; the Australian Dollar fell as a result. GBP/AUD Price Chart Sources: finance.yahoo.com, dailyfx.com, poundsterlinglive.com
The British Pound Is Showing Signs Of Exhaustion Of The Bullish Force

Fed Fully Expected To Raise Interest Rates By 75bps (EUR/USD, EUR/GBP), BoE Interest Rate Decision Due On Thursday (GBP/CAD)

Rebecca Duthie Rebecca Duthie 01.11.2022 16:41
Summary: The Fed’s Wednesday's anticipated 75 basis point hike may be the last of its sort. The likelihood of a recession in the Euro Area has grown. The BoE decision on Thursday is the most significant event of the week for the Pound. Markets anticipate the Fed’s policy rate decision The market is reflecting bearish signals for this currency pair. With the Federal Reserve's policy announcement on Wednesday and the crucial U.S. jobs data on Friday, this is a crucial week for global FX. Therefore, the Dollar side of the equation will be the driving force behind the Euro to Dollar exchange rate (EUR/USD), especially now that the European Central Bank's October policy meeting is over. The possibility of a "pivot" by the Federal Reserve, whereby they signal that Wednesday's anticipated 75 basis point hike will be the last of its sort and that hikes will proceed at a slower rate starting in December, is particularly exciting for investors in the financial markets. According to some analysts, this could support the idea that the U.S. Dollar has reached its top, or the "pivot," as it is known in the financial community. EUR/USD Price Chart Likelihood of Eurozone recession has increased The market is reflecting mixed signals for this currency pair. According to a new report, the decline in UK home prices has just started. Capital Economics researchers predict falls of about 12% by 2024 on the same day Nationwide announces the first drop in home values in 15 months. The likelihood of a recession in the Euro Area has grown, according to ECB President Christine Lagarde, who also stated that while uncertainty is still high, "a central bank has to focus on its duty." The destination is clear, but we are not there yet', said President Lagarde. EUR/GBP Price Chart GBP at risk due to UK economy The Pound to Canadian Dollar exchange rate recently hit four-month highs, but numerous technical barriers are standing in the way of its ascent on the charts, and Thursday's Bank of England (BoE) interest rate decision carries risks that could further thwart its recovery in the days and weeks to come. Since hitting record lows near 1.40 in late September, the value of the pound has increased by more than 10% against the Canadian dollar. Last Friday, it reached a high of 1.5811, but it has been unable to hold that level due to a number of technical resistances that are scattered across the chart around the 1.57 handle. The BoE decision on Thursday is the most significant event of the week for the Pound and comes before Friday's release of Canada's September employment report. However, Sterling is at risk due to the UK economy's deteriorating performance and prospects, which are at odds with widely held beliefs about the outlook for bank rates. GBP/CAD Price Chart Sources: finance.yahoo.com, dailyfx.com, poundsterlinglive.com
Saxo Bank Podcast: Natural Gas On Colder Weather, Wheat And Coffee Under Pressure, JPY Weaker And More

Platinum Futures, Efforts To Slow Gas Prices Continue, Wheat Futures Down 6%

Rebecca Duthie Rebecca Duthie 02.11.2022 16:34
Summary: Platinum futures are down 1.11% during 2022. Russia declared that, once its requests have been satisfied by Ukrainian counterparts, it is willing to continue the trade agreement that ensures a safe passageway for grain-carrying vessels. EU efforts to lower high energy prices are slowing down the adoption of renewable energy. Platinum Futures According to trading on a contract for difference (CFD) that monitors the benchmark market for this commodity, platinum has dropped 10.67 USD/t oz. or 1.11% since the start of 2022. Platinum Jan ‘23 Futures Price Chart Wheat futures fell 6% on Wednesday Following news that trade for ships transporting grain out of Ukrainian Black Sea ports may resume operations, Chicago wheat futures plunged more than 6% to $8.5 per bushel on Wednesday, dropping considerably from the three-week high of $9 reached the prior session. Russia declared that, once its requests have been satisfied by Ukrainian counterparts, it is willing to continue the trade agreement that ensures a safe passageway for grain-carrying vessels. The action was taken after Moscow abruptly chose to terminate the agreement's participation at the end of October, citing security concerns that Kyiv refuted. The continuance of shipments from Ukraine will boost global supplies in addition to freeing up essential storage space for the upcoming harvest, increasing concerns about a global food crisis that drove wheat prices to a record-high $12.8 in May. Prior to February's Russian invasion of Ukraine, sales from both nations made up about 30% of all exports. Wheat Futures Price Chart RBOB Gasoline futures The CEO of one of the biggest wind turbine manufacturers in the world cautioned that EU efforts to lower high energy prices are slowing down the adoption of renewable energy just as the area wants to boost it up. “Every indication is that the EU and governments have spent more time in finding taxation methods or trying to limit energy prices, which has actually slowed the process and project accruals,” Henrik Andersen, chief executive of Danish wind turbine manufacturer Vestas, told the Financial Times. In an effort to slow the growth in energy costs across Europe brought on by high gas prices, European energy ministers decided in September to set a $180 per megawatt-hour cap on earnings from the production of wind, solar, and nuclear energy. RBOB Gasoline Dec ‘22 Futures Price Chart Sources: finance.yahoo.com, ft.com, tradingeconomics.com
ADP Non-farm payrolls jobs market data show a growth of 127K, much less than the previous print

FOMC Interest Rate Decision In The Spotlight (EUR/USD), HSBC Claims GBP Is Close To Long-term Base (EUR/GBP, GBP/ZAR)

Rebecca Duthie Rebecca Duthie 02.11.2022 16:34
Summary: A big increase in monetary policy is unlikely to assure a rise in the value of the US dollar. Markets already struggling with the UK's long-standing and well-known structural problems. BoE interest rate decision due Thursday. Fed interest rate decision in the spotlight The market is reflecting bearish signals for this currency pair. At 18:00 GMT, the biggest central bank in the world is expected to make a controversial monetary policy announcement, and the markets are certainly focused on it. The market's reaction may be biased because speculation through Fed Fund futures and other channels has made a further 75 basis point rate hike from the group almost certain. It's crucial to remember that no single aspect of this well-publicized incident should be seen as a firm indication for speculation. A big increase in monetary policy, such as a rate hike of 75 basis points, is therefore unlikely to assure a rise in the value of the US dollar and send US indices into a downward spiral. EUR/USD Price Chart GBP appears to be finding some balance The market is reflecting bearish signals for this currency pair. The largest bank in the UK, HSBC, claims that the British pound is close to a long-term base. HSBC analysts state that "after showing signs of vertigo, GBP appears to be finding some balance" in a briefing on foreign exchange research. Declines followed the market's reaction to tax cut proposals made by the former prime minister Liz Truss that were to be paid for by further borrowing, alarmed investors who questioned whether the UK's debt condition would prove to be sustainable. Markets were already struggling with the UK's long-standing and well-known structural problems, especially the budget deficit and the current account deficit, when the "mini budget" fiasco broke out. EUR/GBP Price Chart ZAR almost worst performing currency in G20 The Pound to Rand rate has more than made up for its September losses in a recovery that has most recently plateaued near 2022 highs, but if the Dollar stays weak or if Sterling is hurt by Thursday's Bank of England (BoE) decision, it will be at risk of a corrective setback later this week. The total result was an almost 12% comeback from a late September low, which saw GBP/ZAR erase much of the year's previous losses in the process. South Africa's Rand was nearly the worst performing currency in the G20 grouping for October while the Pound was among the strongest. The Rand's underperformance occurred during yet another strong month for the Dollar and a stretch of unusually marked weakness for China's Renminbi. Local data that showed the manufacturing sector as virtually the only bright spot in an otherwise cooling South African economy may also have contributed to the Rand's underperformance. GBP/ZAR Price Chart Sources: finance.yahoo.com, dailyfx.com, poundsterlinglive.com
The GBP/USD Pair Did Not Reach The Nearest Target Level Of 1.2259

USD Continued On Its Strengthening Path (EUR/USD), BoE Hiked Interest Rates By 75bps (EUR/GBP, GBP/AUD)

Rebecca Duthie Rebecca Duthie 03.11.2022 16:28
Summary: The US Dollar continued to strengthen overall on Thursday. Another action by the Bank of England has the Pound taking a beating. Sterling dropped significantly, including against the Australian Dollar. Euro is lacking monetary backing The market is reflecting bearish signals for this currency pair. On Thursday, the US Dollar continued to strengthen overall as a result of the US Federal Reserve's decision to change its monetary policy earlier in the day. This made the Euro continue to struggle against the US Dollar. In terms of interest rates, the markets received the well-predicted three-quarter point hike that was punctually provided. However, there were a lot of people hoping that Fed Chair Jerome Powell would formally reverse his aggressive monetary tightening policy. In the end, he refrained from doing so and instead warned the markets that if inflation is to be contained, borrowing prices may still need to increase significantly. This weakness was forewarned by Christine Lagarde, president of the European Central Bank, that interest rates in the Eurozone must also continue to rise. Well, may she do so, with the currency bloc's consumer price inflation hitting historic highs. The Euro lacks monetary backing in the global market because markets anticipate more of the same. It lacks fundamental support as well, with a cost-of-living issue that is eroding consumer confidence throughout the Eurozone. Of course, Germany is the center of the currency zone. As the conflict in Ukraine drags on, it is now struggling with the necessity to wean itself off of its dependency on Russian gas. As a result, the third quarter of this year saw a significant slowdown in Eurozone growth. EUR/USD Price Chart GBP declines in the wake of BoE interest rate decision The market is reflecting bullish signals for this currency pair. Another action by the Bank of England has the Pound taking a beating. The Bank of England increased the Bank Rate by 75 basis points to 3.0%, but it made it apparent that a jump to 5.0% or above was not likely, sending the Pound into a reflexive sell-off. According to a statement issued by the Bank, the Monetary Policy Committee (MPC) decisively voted 7-2 to raise interest rates by 75 basis points, but this exceptionally significant increase appears to be an outlier. However, significantly for the foreign exchange markets, the Bank won't be delivering as many rate increases as investors anticipate. The Bank's decision and financial calculations are based on market expectations that the Bank Rate will increase to a top of 5.25% in 2023, which is why the Pound has reacted in this way. In such a case, the Bank's economists predict that inflation will return to zero in three years, significantly below the target of two percent. EUR/GBP Price Chart AUD beating the GBP The Bank of England (BoE) appeared to rule out the possibility of indulging in derivative market pricing, hinting that Bank Rate could reach five percent in the months ahead, which hampered the Pound to Australian Dollar rate and put it at risk of further losses in the last session of the week. The Bank of England announced its largest increase in the Bank Rate in decades on Thursday, but said financial markets were barking up the wrong tree when they bet that borrowing costs could still rise significantly further down the road. As a result, sterling dropped significantly, including against the Australian Dollar. GBP/AUD Price Chart Sources: dailyfx.com, poundsterlinglive.com, finance.yahoo.com
The Collapse Of The Silicon Valley Bank Weakened The Dollar And USD/JPY But Supported EUR/USD, AUD/USD, And GBP/USD

Dollar lost ground to the Euro & GBP on Friday, US Jobs report missed expectations

Rebecca Duthie Rebecca Duthie 04.11.2022 15:42
Summary: The US Dollar weakens in the wake of the US jobs report. The British Pound may be headed for significant losses this November against the Dollar, the Euro. USD/JPY wedge continues to grow. USD loses ground against the EUR The market is reflecting mixed signals for this currency pair. Following the release of U.S. labor market data that, while still positive, reaffirmed a pattern of decreasing employment gains and pay growth, the Dollar dropped 1% against the Pound and 1.20% against the Euro. In October, the economy added 261K jobs, much exceeding the consensus estimate of 193K, while September's number was impressively raised up to 315K. Overachieving forecasts of 0.3%, average hourly earnings increased by 0.4%, suggesting persistent wage pressures that will support future domestic inflationary pressures. This information supports the Federal Reserve's statement from mid-week that it is too early to think about stopping its rate hike cycle, which raised exchange rates for the Dollar globally. Since the data do not indicate that the themes of previous months are likely to abruptly change, the Dollar's decline could instead be the result of profit-taking after Wednesday's gains. EUR/USD Price Chart BoE predict a UK economic slump The market is reflecting bullish signals for this currency pair. As investors respond to the Bank of England's most recent gloomy economic forecasts, the British Pound may be headed for significant losses this November against the Dollar, the Euro, and a variety of other major currencies. The Bank hinted that the UK economic slump, which it has been anticipating for some time, may now be considerably severe than initially anticipated in its November Monetary Policy Report. EUR/GBP Price Chart The wedge between the USD & JPY The market is reflecting mixed signals for this currency pair. Due to recent currency interventions, USD/JPY has been an interesting pair, with downmoves unable to gather significant organic impetus. However, a dollar bid continues to put the majority of currencies under pressure, making it challenging to dismiss gains as durable given the wider technical context. The rising wedge that had developed over the previous few months indicated that at some point we would either have a breakdown that would lead to an unwinding that would cause USD/JPY to plummet by a significant amount or a shot higher that would conclude the run upward. EUR/GBP Price Chart Sources: finance.yahoo.com, poundsterlinglive.com, dailyfx.com
Construction Activity in Poland Contracts in May: Focus on Building Decline and Infrastructure Investment

The US dollar index decreased on Monday, BoE November interest rate decision caused significant losses for the GBP

Rebecca Duthie Rebecca Duthie 07.11.2022 17:48
Summary: The US data released on Friday was mostly encouraging as job growth exceeded expectations. Friday's release of UK GDP statistics, it might go even further and return to lows from early October. EU economy produced 0.2% growth The market is reflecting bullish signals for this currency pair. In Q3, the EU economy demonstrated that it could produce growth of 0.2% Q/Q. The tiny gain in Q3 depicts the same larger picture, which is that growth has slowed and a recession is still in effect, despite the fact that it appears to be rather hopeful. One of the key indications from a nationwide survey demonstrates how manufacturing has been under tremendous strain as a result of the crisis of rising energy prices. The US data released on Friday was mostly encouraging as job growth exceeded expectations. The decrease in the dollar index, which has persisted into today's European session, was not justified by the minor increase in unemployment statistics. The market's forecast of a 50 bp increase from the Federal Reserve's December meeting is the only thing that has changed. EUR/USD Price Chart BoE November interest rate decision resulted in losses for the GBP The market is reflecting mixed signals for this currency pair. The Bank of England (BoE) interest rate decision in November resulted in significant losses for the Pound to Euro exchange rate, but if the market is still wary of Sterling going into Friday's release of UK GDP statistics, it might go even further and return to lows from early October. After the BoE stated, based on its most recent forecasts, that it believes it has likely already done enough with interest rates to ensure that inflation returns to the 2% target in the coming years, sterling suffered significant losses against most major currencies last week and fell almost 2% against the Euro. In an open conflict with market bets that borrowing costs could climb to 4.7% or more in the coming months, the BoE additionally stated that investors would be foolish to anticipate Bank Rate to rise from November's recently boosted level of 3%. EUR/GBP Price Chart AUD is weaker on monday The Australian Dollar is weaker at the beginning of a new week that may focus on events in China, where officials are showing a willingness to fight rumors that they are likely to reevaluate their zero-Covid policy. The National Health Commission (NHC) of China reaffirmed its commitment to eradicating Covid-19 during a news conference on Saturday, cautioning that the situation was likely to worsen and become "more complex" as the nation entered the winter flu season. The Australian lagged behind. The GBP/AUD currency rate experienced its biggest weekly decrease since the week of February 28 as investors bet on a Chinese economic revival, falling 2.83% for the week. GBP/AUD Price Chart Sources: finance.yahoo.com, poundsterlinglive.com, dailyfx.com
GBP: BoE Stands Firm on Bank Rate and Mortgage Interest Relief, EUR/GBP Drifts Lower

US Dollar rally seems to be coming to an end, GBP rebounded on Monday

Rebecca Duthie Rebecca Duthie 08.11.2022 18:18
Summary: Many ECB policymakers have reiterated the central bank's stance on interest rates and inflation. The British Pound is weaker on Tuesday after making a good rebound on Monday. ECB remaining hawkish The market is reflecting bullish signals for this currency pair. Many ECB policymakers have reiterated the central bank's stance on interest rates and inflation, contending that higher rates must be maintained for a longer period of time in order to contain double-digit price pressures. The financial wires are awash in hawkish ECB language in what appears to be a coordinated effort to reassert the central bank's authority and will on the rates market. At the end of October, the ECB raised interest rates by 75 basis points to 1.50%, its third straight increase and the highest level since 2009. At its meeting on December 15, the central bank is anticipated to increase rates by an additional 50 basis points. The US dollar is under pressure as speculators start to look past rising US rate predictions and instead focus on when the Fed may pause its tightening cycle, while the Euro has benefited from expectations of higher rates. The fact that the markets are already anticipating a turnaround, even though this may be months away, is putting pressure on the dollar. EUR/USD Price Chart GBP supported by general market uptrend The market is expecting bullish signals for this currency pair. The British Pound is weaker on Tuesday after making a good rebound on Monday, and price movement suggests that the UK currency is following global trends during a week with few domestic events. Analysts note that the UK's domestic situation is still difficult and that any gains are likely to be fleeting. Despite this, the Pound had the best performance among the major currencies on Monday as global markets continued their recent uptrend, helping the UK currency to somewhat recoup its losses following last Thursday's Bank of England report. The Pound's recovery may continue over the next several days if the mood music is generally cheerful. GBP/USD Price Chart US dollar is believed to be nearing the end of its uptrend The market is expecting bullish signals for this currency pair. Capital Economics experts believe that the Dollar may be nearing the end of a multi-month uptrend, but they caution that it is still too early to start preparing for a rollover and trend change. The Federal Reserve is reaching the conclusion of its tightening cycle, according to analysis by the independent financial and economics research source, and as a result, there is little room for a further widening of predicted interest rate differentials in favor of the Dollar. The war in Ukraine, anticipation of Fed interest rate increases, and a post-pandemic decline in equity markets have all worked together to strengthen the Dollar. GBP/USD Price Chart Sources: finance.yahoo.com, dailyfx.com, poundsterlinglive.com
UK recession could deteriorate with tighter monetary and fiscal policy, the US dollar suffered another setback

UK recession could deteriorate with tighter monetary and fiscal policy, the US dollar suffered another setback

Rebecca Duthie Rebecca Duthie 09.11.2022 17:00
Summary: Experts foresee more short-term weakness for the Canadian Dollar against the Pound The bullish trend in the USD suffered yet another setback on Tuesday. The UK recession will deteriorate with tighter monetary and fiscal policy. Euro recovery may be strong The market is reflecting bullish signals for this currency pair. After a support bounce failed, the bullish trend in the USD suffered yet another setback yesterday. The currency was driven lower by sellers to make a new monthly bottom, but support quickly appeared around the same level that had been in play a few weeks before and served as a target for a double top formation at 109.62. There are a number of levels close below that swing as well, which may allow for a support bounce before the release of the CPI data tomorrow. From some perspectives, the major question is whether a stronger recovery can be seen in the Euro. Over the past nine months, the euro has been battered and bruised, but as of my initial inspection in October, the pain was beginning to subside and a deeper downturn was beginning. EUR/USD Price Chart GBP down against its peers The market is reflecting bullish signals for this currency pair. The UK recession will deteriorate with tighter monetary and fiscal policy, according to Derek Halpenny, Head of Research Global Markets for EMEA at MUFG. The recent Bank of England policy update has strengthened the foreign exchange strategists' belief in this trade, according to a new note. They are selling pound sterling against the euro. On Thursday, November 3, the Bank of England raised interest rates by 75 basis points, but warned that if it followed market expectations and pushed through even more increases, the UK economy would enter a recession that would last eight quarters. As a result, the Pound dropped against all of its peers. The market interpreted this as a message from the Bank that it would not hike rates as much as anticipated going into the policy update, which caused expectations to be reassessed and caused the Pound to fall on the day. EUR/GBP Price Chart CAD weakness foreseen National Bank of Canada (NBC) experts foresee more short-term weakness for the Canadian Dollar against the Pound, Dollar, and Euro but a robust recovery through 2023. Up until the second half of the year, when oil prices began to decline from their post-invasion levels and the Bank of Canada slowed down its rate-hiking acceleration, the Canadian Dollar was one of the best-performing currencies in 2022. GBP/CAD Price Chart Sources: finance.yahoo.com, poundsterlinglive.com, dailyfx.com
German Business Confidence Dips, ECB's Lagarde Hosts Central Banking Conference in Portugal, EUR/USD Drifts Higher

US dollar index touching new monthly lows, pound sterling is reacting well to increase in market sentiment

Rebecca Duthie Rebecca Duthie 10.11.2022 18:54
Summary: Prices in DXY are currently driving down to new monthly lows. The British pound is responding to an overall increase in risk sentiment. The New Zealand Dollar is proving to be an apparent bet for a Chinese economic resurgence. USD feeling the effect of the CPI inflation data release The market is reflecting mixed signals for this currency pair. Prices in DXY are currently driving down to new monthly lows after posing a support rebound yesterday. Along the way, they are passing a significant area of confluent support. Sellers have struck. The daily candle for today will be crucial because it is presently forming a bearish engulfing pattern. And if that holds true, with price closing below those supports, then bearish continuation possibilities will still be possible. The daily bar close today will be crucial because, at this point, we're still feeling the effects of the CPI print, and how market players react today will reveal how they'll assimilate this new information. As market investors altered their expectations for higher policy rates, as shown by increased sovereign debt yields in the euro area, euro assets remained volatile across the review period. Since then, rates have somewhat decreased as the economic implications of aggressive tightening start to accumulate and systemic risk originating in the UK has largely been isolated as a result of the Bank of England's retaliatory actions and UK government policy reversals. EUR/USD Price Chart GBP supported by positive investor sentiment The market is reflecting bearish signals for this currency pair. The British pound is responding to an overall increase in risk sentiment, so Thursday's moves will likely be influenced by how the global equity markets perform, which are now suffering losses after a series of occurrences midweek. After suffering significant losses the day before, market morale has since improved, and the value of the pound is rising at the start of the day. In sync with the upbeat investor sentiment evident in global equities markets on Monday, the pound rose. However, these gains were erased on Wednesday amid a wider market selloff focused on China and disruptions in the cryptocurrency area. EUR/GBP Price Chart Chinese economic resurgence allows NZD to be an apparent bet Markets are adjusting to the possibility that China won't abandon its zero-Covid policy until the spring, which will result in a change in fortunes for the New Zealand Dollar and other like "commodity currencies." Analysts caution that the recent enthusiasm seen over the previous ten days is unwarranted and that the Chinese economy's reopening is likely to be a gradual and rocky process. Nevertheless, the New Zealand Dollar is proving to be an apparent bet for a Chinese economic resurgence. GBP/NZD Price Chart Sources: finance.yahoo.com, poundsterlinglive.com, dailyfx.com
EUR/USD Pair May Have A Potential For The Further Rally

Eurozone’s entry into a recession may be delayed, the GBP and NZD - high beta currencies

Rebecca Duthie Rebecca Duthie 14.11.2022 17:20
Summary: Analysts predict that the EUR/USD exchange rate will continue to improve. Eurozone entry into a recession may be delayed. Neither the British pound nor the New Zealand dollar seem to be winning out. Fed still determined to bring down inflation The market is reflecting mixed signals for this currency pair. Analysts predict that the EUR/USD exchange rate will continue to improve over the course of the upcoming week, however many still believe that the market is merely clearing out technical positions rather than the beginning of a long-term recovery. The Federal Reserve Governor Christopher Waller's remarks that the Fed was not yet prepared to cease its cycle of rate hikes helped the Dollar at the beginning of the new week. Investors' reactions to an unexpected drop in U.S. inflation caused the Dollar index, a gauge of the dollar's performance more broadly, to plummet by 4% last week. The statistics indicated that the U.S. inflation peak is near, and the Federal Reserve should therefore think about reducing the rate of raises. Most investors are now expecting a downshift to a 50 basis point boost in December. But Waller said investors risk getting carried away with a belief the end of rate hikes is close. EUR/USD Price Chart Eurozones entry into a recession expected to be delayed The market is reflecting bullish signals for this currency pair. Following a 0.9% month-over-month and 4.9% year-over-year increase in September industrial production for the Eurozone, the currency received a lift on Monday. The numbers are far better than the anticipated +0.1% m/m and 2.8% y/y, indicating that the European Union's entry into recession may be postponed. The current recovery could turn out to be mostly technical in character, which would increase the dollar's strength as investors pay attention to the Fed's warnings that the cycle of interest rate hikes is far from over. This would be a risk for those looking for a stronger Euro. The British pound is a "high beta" currency, which means that it tends to rise along with rising stock markets around the world, as was undoubtedly the case after the inflation figure. EUR/GBP Price Chart GBP/NZD currency pair A busy UK calendar could mean that this pair finally offers up some excitement this week. The Pound to New Zealand Dollar exchange rate (GBP/NZD) has been consolidating around 1.93 for nearly seven days now, and the near-term price activity is beginning to resemble the coiling of a spring. With two "high beta" currencies that are responsive to global conditions, the GBP/NZD pair has seen its price action in November mostly driven by world events. As a result, both currencies have benefited from the U.S. inflation surprise from last week. But when compared with one another, neither the British pound nor the New Zealand dollar seem to be winning out. GBP/NZD Price Chart Sources: finance.yahoo.com, dailyfx.com, poundsterlinglive.com
Inflation Outlook: Energy Prices Drive Hospitality, Food Inflation Eases

The US dollars surrender to the Euro continues, GBP/USD touching 3-month highs, BoJ may continue its loose monetary policy

Rebecca Duthie Rebecca Duthie 15.11.2022 18:54
Summary: The USD continues its surrender to the Euro. The Pound has risen to a new three-month high versus the Dollar. The figures from today may indicate that the BoJ will keep its monetary policy loose. Euro performs well against the USD The market is reflecting mixed signals for this currency pair. The Euro to Dollar exchange rate (EUR/USD) hit a high of 1.0477 on Tuesday as a result of the continued dollar surrender that was brought on by the publication of weaker-than-anticipated U.S. inflation data last Thursday. The advances have already brought the pair close to the 1.05 level, which was predicted to be a potential objective in the near future by our week ahead projection. Investors' assumption that the Federal Reserve will slow down its interest rate hike cycle as U.S. inflation shows symptoms of peaking has sent the EUR/USD up 3.7% last week and another 1.10% this week. The sudden increase in the Euro's value relative to the Dollar is most likely due to a sizable liquidation of "long" dollar positions taken by investors hoping to profit from the Dollar's multi-month advance. EUR/USD Price Chart US dollars downfall in the wake of economic data The market is reflecting bullish signals for this currency pair. The Pound has risen to a new three-month high versus the Dollar as another inflation report fueled the U.S. currency's significant devaluation that was initially started by last week's U.S. inflation data. At 13:30 GMT, the Dollar's drop increased with the announcement of the U.S. The PPI inflation data was less than anticipated, confirming the CPI inflation from last week that the trend of rising prices has peaked. The strong market response to last week's U.S. inflation reading, which saw CPI come in below market expectations and indicated a turning point for both inflation and the Federal Reserve rate hike cycle might have been reached, is extended by the GBP/three-month USD's high. GBP/USD Price Chart USD/JPY currency pair The market is reflecting mixed signals for this currency pair. The Japanese Yen initially ignored the dismal GDP numbers because the USD/JPY was comfortably over 140.00. After 30 minutes, it surged past 140.50. The Japanese seasonally adjusted 3Q quarter-to-quarter GDP was down 0.3% from the previous quarter's 0.9%, falling short of predictions of 0.3%. In contrast to expectations of 1.2% and 3.5%, seasonally adjusted annualized quarter-to-quarter GDP as of the end of September was -1.2%. Prior to the release of today's data, the USD/JPY had been lagging in the wake of last Thursday's release of the US CPI, which the market had deemed to be rather benign. This sparked suspicion that the Federal Reserve would not need to raise rates as aggressively as previously believed. The graphic below illustrates the connection between Treasury yields, Japan-US bond spreads, and USD/JPY. With the Bank of Japan's yield curve control program, changes in Treasury yield mostly dictate the bond spread. The figures from today may indicate that the central bank will keep its monetary policy loose. USD/JPY Price Chart Sources: finance.yahoo.com, dailyfx.com, poundsterlinglive.com
Growth Of The USD/JPY Pair Is Hampered By Resistance

Euro has remained resilient to currency counterparts despite Tuesdays events in Poland, Yen supported by USD decline

Rebecca Duthie Rebecca Duthie 16.11.2022 17:29
Summary: The EUR/USD has displayed remarkable resilience to trade higher. The British Pound plummeted against the Euro. The JPY has clearly benefited from the decline in the value of the USD. Financial markets are on high alert The market is reflecting bullish signals for this currency pair. According to the most recent 30-day Fed Fund futures price information, the Federal Reserve is anticipated to increase interest rates by a further 100 basis points over the upcoming months, to 475–500bps, and then suspend their tightening cycle. Despite yesterday's concern following reports of a missile landing in Poland, the EUR/USD has displayed remarkable resilience to trade higher this morning. According to Joe Biden's remarks, it seems improbable that Russia fired the missile based on its trajectory. Due to the possibility of a wider conflict now that a NATO ally has been negatively impacted by the Russia/Ukraine crisis, the missile has put Europe, NATO, and financial markets on high alert. At 9:00 GMT, NATO has called an emergency meeting to review yesterday's events and the alliance's response. EUR/USD price chart UK inflation figures caused GBP to decline The market is reflecting mixed signals for this currency pair. Following some hotter-than-expected UK inflation figures that suggested the Bank of England could not yet afford to stop its interest rate hike cycle, the British Pound plummeted against the Euro, the Dollar, and other major currencies. However, we cautioned in our week-ahead forecast that the market might now consider stronger-than-expected inflation as a negative, as rising prices and interest rates would snuff out the UK's prospects for economic development. Normally, such a result would help the Pound. EUR/GBP price chart JPY supported by weak USD The market is reflecting mixed signals for this currency pair. The Japanese Yen has clearly benefited from the decline in the value of the US dollar in November, outperforming all other major currencies. However, analysts at MUFG believe the Japanese Yen could rise even more in the future, especially against the British pound. They advise clients to bet against the GBP/JPY pair and look for a fall to 158. After official data revealed that U.S. inflation softened in October, the Yen surged substantially against all equivalents in the G10 group of major currencies, but analysts at Japan's largest banking MUFG claim that this was just the start of a longer-lasting rebound. GBP/JPY price chart Sources: finance.yahoo.com, poundsterlinglive.com, dailyfx.com
Serious liquidity crisis? According to Franklin Templeton, a massive, but unlikely deposit flight from Credit Suisse would have to happen

Eurozone headline inflation reached a record high in October, The UK’s future prospects for future economic development, CHF is the second best performing currency for 2022

Rebecca Duthie Rebecca Duthie 17.11.2022 16:10
Summary: Final headline inflation in the Euro Area reached a record high. Tax increases and spending reductions in the UK. CHF becomes the second best performer of 2022. EUR/USD constrained by interest rate disparity The market is reflecting mixed signals for this currency pair. Final headline inflation in the Euro Area reached a record high of 10.6% in October, just under the earlier estimate of 10.7%. Data from Eurostat show that the highest annual rate in October was for energy, which was at 41.5 percent (up from 40.7 percent in September), followed by food, alcohol, and tobacco, which had a rate of 13.1 percent (down from 11.8 percent in September), and non-energy industrial goods, which had a rate of 6.1 percent (compared to 5.5 percent in September). As the post-CPI surge slows, the current gain in the EUR/USD has come to an end. The prices in the ultra-short end of the US bond market are stable even as market forecasts of a reduction in rate increases rise. The yield on a one-year US Treasury bill is approximately 4.66 percent, which is more than 250 basis points higher than the yield on a one-year German bond. Any short-term increase in the EUR/USD currency will continue to be constrained by this interest rate disparity. EUR/USD Price Chart GBP relying on Hunts credibility The market is reflecting bullish signals for this currency pair. The UK's prospects for future economic development will be diminished by the tax increases and spending reductions, but a convincing autumn statement from Chancellor Jeremy Hunt might boost the value of the pound sterling. This is due to the fact that reputation will determine how the market responds to the fiscal event on Thursday. Hunt is expected to present a budget that will hinder development; however, the Pound's response will ultimately depend on how the market reacts to the credibility issue. Some analysts caution that while the Pound might gain from renewed confidence, its value could still drop if Hunt is overly bold and his recommended level of austerity becomes overwhelming. EUR/GBP Price Chart CHF could continue to strengthen According to analysts at Nomura, the Swiss Franc has flipped the major currency league table on its head to become the second best performer of 2022. However, it could rise even further against the Pound and even have the potential to bring the GBP/CHF rate back to 1.0555 in the coming months. In the early months of the year, the Swiss Franc had given the Japanese Yen a tough fight for the bottom spot in the performance rankings of the major currencies, but a hawkish stance by the Swiss National Bank (SNB) and a supportive foreign exchange policy have reversed the previous order of performances. The SNB has become open to buying back its own currency whenever market circumstances cause the Franc to weaken, even though it is still prepared to suppress the Franc if it appreciates too much for its tastes. This is because doing otherwise would raise Switzerland's inflation rate further. GBP/CHF Price Chart Sources: finance.yahoo.com, dailyfx.com, poundsterlinglive.com
Mexican Rate Spread: Tight vs. Central Bank's Rate Spread and Implications for Dis-inversion

The Fed may begin slowing their interest rate hiking cycle, UK promising to return to fiscal credibility

Rebecca Duthie Rebecca Duthie 18.11.2022 16:34
Summary: EUR/USD currency pair has risen 4% over the past 2 weeks. GBPs response to investor sentiment globally to determine near term credibility. The CAD was outperforming many other major currencies this year, but recently started to lag behind them. EUR/USD has risen by 4% over the past 2 weeks The market is reflecting bullish signals for this currency pair. The Euro will decline against the Dollar in the coming months, comfortably falling below parity, according to Danske Bank's unwavering forecast. The rate of exchange between the Euro and the Dollar (EUR/USD) has increased by 4.0 percent over the last two weeks as a result of signs that U.S. inflation is slowing down as well as market analysts' conviction that the Federal Reserve will reduce the pace of its rate hikes, giving investors more confidence to price the peak in interest rates. Data released on Wednesday showed that American consumers were still in good shape, with retail sales increasing by 1.3 percent in October, an acceleration from the 0 percent recorded in September and higher than the market's forecast of 1.0 percent growth. Therefore, the Fed may slow down its rate rise cycle but lengthen it, providing a series of 25 basis point rate adjustments over the ensuing months that may still provide support for the Dollar. EUR/USD Price Chart EUR/GBP on track to end the week slightly higher The market is reflecting mixed signals for this currency pair. The UK's Autumn Statement, which promised a return to fiscal credibility, was well received by the financial markets, but the direction of the near term should be determined by how the British Pound responds to investor sentiment globally. As part of his effort to tighten fiscal policy and ensure that the nation's finances remained on a sustainable footing, Chancellor Jeremy Hunt proposed savings totaling £55BN, or roughly 2.0 percent of GDP. The Pound-Euro rate appears to be on track to conclude the week slightly higher, and the Pound-Dollar rate is also slightly higher than it was at this time last week, consolidating the huge gains from the previous week. EUR/GBP Price Chart CAD emerging as a top option for speculative short-selling The Canadian Dollar has outperformed many other major currencies this year, but recently started to lag behind them. As a result, the Canadian Dollar is quickly emerging as a top candidate for speculative short-selling by Spectra Markets in advance of an anticipated economic slowdown caused by rising mortgage rates. By Friday, Canada's Dollar had dropped to third place in the ranking of the G10 currencies for the year after suffering significant losses against all significant rivals other than the US. Over the period of November, the dollar has generally corrected lower. The main thesis is that a large rise in Bank of Canada (BoC) interest rates this year will eventually affect Canadian homeowners' monthly mortgage payments. Higher borrowing costs are anticipated to reduce household earnings and have negative second-round impacts on a number of economic sectors. GBP/CAD Price Chart Sources: finance.yahoo.com, dailyfx.com, poundsterlinglive.com
GBP: Monitoring Data Outliers Amid Hawkish BoE Expectations

China’s COVID-19 regulations causing U.S Stocks to decline, Inflation in the UK could be pushed up by 1% in April

Rebecca Duthie Rebecca Duthie 21.11.2022 18:44
Summary: The Dollar was bid and stocks declined on Monday. The most recent budget from HM Treasury will push up inflation by a percentage point. AUD gave ground to most of its major currency counterparts to start the new week. Investor confidence improved in China The market is reflecting bearish signals for this currency pair. In spite of indications, the Dollar was bid and stocks declined. China is enforcing stricter regulations to combat a Covid-19 outbreak that is spreading. Three Covid deaths were reported by authorities over the weekend in Beijing, the first in more than six months. Just days after the nation said it was loosening some restrictions, there are reportedly early signs that some authorities are returning to a zero-Covid policy. In recent weeks, speculation that China would be willing to abandon its zero-Covid policy has intensified, boosting investor confidence amid speculation that the world's second-largest economy could spark a resurgence in global economic activity. This favorable environment proved to be a barrier for the dollar, which often gains when market anxieties are mounting and forecasts for global growth are weakening. EUR/USD Price Chart UK inflation expected to increase The market is reflecting mixed signals for this currency pair. Without changing the Bank of England (BoE) interest rate policy, own goals in c starting in April and force taxpayers to fork over an additional £5 billion or more to cover the increase in debt interest costs that results. The decision to reduce the household energy price guarantee and increase fuel taxes starting in April 2023 will result in higher inflation as measured by the consumer and retail price indices, which will automatically affect future government spending, particularly costs associated with debt servicing. Sterling pounds Live calculations indicate that these two factors will cause consumer price inflation to increase by an additional 1% in April and retail price index inflation to increase by 1.3%, both of which will raise the cost of servicing borrowings with inflation-linked interest rates by approximately £5BN. EUR/GBP Price Chart AUD gave ground to most of its major currency counterparts The Reserve Bank of Australia (RBA), the Federal Reserve (Fed), and the Bank of England will all be providing monetary policy commentary this week, so the Pound to Australian Dollar exchange rate has benefited from a corrective setback in AUD/USD that may keep Sterling buoyant above 1.7750 this week. The risk of new coronavirus-related economic closures in China weighed on asset prices throughout the Asia Pacific region as well as on the currencies of those countries exporting into the second-largest economy in the world, and Australia's dollar gave ground to most of its major currency counterparts to start the new week. AUD/GBP Price Chart Sources: finance.yahoo.com, dailyfx.com, poundsterlinglive.com
The EUR/USD Pair Maintains The Bullish Sentiment

Rising NGAS costs may pose downside danger to the Euro, UK economic outlook looks bleak

Rebecca Duthie Rebecca Duthie 22.11.2022 17:04
Summary: Euro held steady throughout Asian trading. Energy Bills Support Scheme's concurrent expiration, may have a greater negative impact on household earnings. NZD has had the best performance among major currencies over the past month. Euro faces downside risk The market is reflecting mixed signals for this currency pair. Following the turbulent start to the week on Monday, when the EUR/USD fell, the Euro held steady throughout Asian trading. The Fed speakers' continued hawkish posture, which also hurt markets, helped the US dollar increase. Risk assets were also hurt by a rise of Covid-19 cases in China because of concerns that harsh lock downs would continue there. Even while experts at one European bank claim there is "less pain in the pipeline" for the region and its single currency, rising natural gas costs in the Eurozone are recognized by foreign exchange strategists as a downside danger to the Euro. According to analysts, the little increase in gas prices coincides with a drop in temperatures across Europe after an abnormally warm autumn that allowed nations to stockpile gas supplies and use less gas than is customary at this time of year. EUR/USD Price Chart GBP under pressure from poor UK economic outlook The market is reflecting bearish signals for this currency pair. Early in the new week, the Pound to Euro exchange rate continued to rise after last Friday's advance, but after three straight days of gains, Sterling is now rapidly approaching a crowded area of technical resistances near and above the 1.16 level on the charts, suggesting that the rally may soon come to an end. The problem for families, the economy, and the pound is that, as a result of reforms outlined by Chancellor Jeremy Hunt in last Thursday's budget, energy costs are expected to grow dramatically once more starting in April 2023, when the average annual tariff would rise by another 20% to £3,000. Due to the Energy Bills Support Scheme's concurrent expiration, this will have a greater negative impact on household earnings. However, it will also have a positive impact on UK inflation rates and have additional effects on the state finances. EUR/GBP Price Chart NZD supported by improved investor sentiment Although the New Zealand Dollar has had the best performance among major currencies over the past month, one analyst claims that it is beginning to seem "stretched" in front of the Reserve Bank of New Zealand's upcoming interest rate announcement. The Kiwi has risen against all of its G10 counterparts over the past four weeks, helped by a noticeable improvement in investor sentiment worldwide and as investors raised their expectations for the amount of interest rate hiking to come from the RBNZ in response to a series of domestic data releases that exceeded expectations. Following New Zealand's October Q3 CPI inflation announcement, which exceeded estimates and bolstered expectations for a 75bp hike, the market increased its expectations. Data on the labor market and quarterly wages also confirmed these predictions. However, an analyst questions if the RBNZ will want to speed up rate increases given that it was among the first to act and has consistently moved rates by 50 basis points, and has no need to play catch-up given that it is one of the G10 rate leaders. GBP/NZD Price Chart Sources: finance.yahoo.com, dailyfx.com, poundsterlinglive.com
The EUR/USD Price Failed To Exhibit A Strong Trending Movement

Eurozone economy seems to be falling into a recession, UK economic outlook seems poor

Rebecca Duthie Rebecca Duthie 23.11.2022 18:08
Summary: The Eurozone PMIs showed that the bloc's economy contracted in November. Despite the UK economy contracting in November, the GBP extended a short-term recovery. CAD fared better than Sterling during the first sessions of the week Eurozone PMI data didn’t beat expectations by enough The market is reflecting mixed signals for this currency pair. The Eurozone PMIs showed that the bloc's economy contracted in November, but the magnitude of the decline was less severe than anticipated by the markets. The S&P Global Purchasing Managers Index (PMI) for manufacturing registered at 47.3, exceeding the consensus estimate of 46.0 and up from the previous month's reading of 46.4. Unfortunately for the euro, the positive data was insufficient to quell the bearish sentiment surrounding the currency, including recessionary risks and the ECB hawks' unwillingness to support a 75 basis point interest rate hike at the upcoming meeting. The day ahead should see increased volatility for the EUR/USD due to the prominence of US data. EUR/USD Price Chart UK economic outlook looks bleak The market is reflecting bearish signals for this currency pair. Following the release of statistics showing that, despite the UK economy contracting in November, corporate forecasts for the coming year increased from a 30-month low, the British pound extended a short-term recovery. The most recent S&P Global PMI readings indicated that economic activity continued to decline for another month, but the data was better than anticipated, so this would be a generally favorable development for markets. However, this downturn was predicted, and as economist at Berenberg Kallum Pickering puts it, "the recession is terrible, but not becoming worse." This remark is critical for the Pound given the dire economic prognosis for the UK. EUR/GBP Price Chart GBP/CAD outlook improved According to technical analysis from Scotiabank, the outlook for the Pound to Canadian Dollar exchange rate has improved further in recent trading. Sterling may now be able to hit some of its best levels since the end of the first quarter after gaining ground over the 1.57 mark last week. Although some believe this is likely merely a temporary setback for the Pound, the Canadian Dollar fared better than Sterling during the first sessions of the week after an over two month surge in GBP/CAD stopped following a run-in with technical support on the charts late last week. GBP/CAD Price Chart Sources: finance.yahoo.com, dailyfx.com, poundsterlinglive.com
The Bank Of England Has Warned That Negative Growth Will Extend All The Way

Eurozone recession may not be as bad as previously anticipated, demand for UK government bonds driving the GBP

Rebecca Duthie Rebecca Duthie 24.11.2022 15:34
Summary: Eurozone flash PMIs remain in the contractionary range. The GBP has just moved higher thanks to demand for UK government bonds. The value of the CAD has fallen as a result of falling oil prices. Eurozone economy still remains in contractionary range The market is reflecting bearish signals for this currency pair. The most recent flash PMIs for the Euro Area outperformed expectations this morning, but they are still firmly in the contractionary range. Although November's numbers were better than anticipated, the data point to the Euro Area's economy contracting by about 0.2% in Q4. A recession appears probable, but, as data provider S&P notes, the latest data provide hope that the severity of the slump may not be as severe as originally feared. The US dollar data and the most recent FOMC minutes will likely drive the pair into the weekend due to holidays in the rest of the day. EUR/USD Price Chart GBP supported by UK government bond demand The market is reflecting bearish signals for this currency pair. The British pound has just moved considerably higher thanks to demand for UK government bonds, and since the rest of the week will be quiet due to the U.S. Thanksgiving holiday, gains may hold. In tandem with a strong increase in the price of UK government debt, the Pound rose sharply versus the Euro, the Dollar, and other major currencies through Wednesday and into Thursday. The cost of funding mortgages and other financial products in the UK has decreased as a result of the increase in bond prices and the associated decline in their yields across different time tenors in the bond market. Bond yields are declining, which indicates a loosening of UK financial conditions and is positive for future economic growth. EUR/GBP Price Chart CAD weighed down by falling oil prices The value of the Canadian Dollar has fallen as a result of falling oil prices, and one industry analyst has predicted that a planned cap on Russian oil could have a disproportionately large effect on Canada. In the last 24 hours, the Canadian Dollar has fallen 1.5% against the British Pound due to a decline in oil prices. Canadian benchmarks are impacted by the decline in global oil prices, which reduces the possibility for the country to generate foreign money. Since the Canadian Dollar and oil market dynamics frequently correlate, the GBP/CAD exchange rate may soon be dependent on changes in the energy market. This linkage previously appeared to have disappeared. GBP/CAD Price Chart Sources: finance.yahoo.com, dailyfx.com, poundsterlinglive.com
The GBP/USD Pair Did Not Reach The Nearest Target Level Of 1.2259

Eurozone’s future is clouded by economic unrest in China, GBP’s future for the week lies in the hands of external variables

Rebecca Duthie Rebecca Duthie 28.11.2022 17:10
Summary: The EUR/USD exchange rate has benefited from the final quarter's risk asset rally. The GBP made gains this week in a market that was favorable to riskier assets. Euro opened weaker on Monday, weighed down by the Chinese economy The market is reflecting mixed signals for this currency pair. Although technical resistances near 1.04 on the charts have recently held back the recovery of the Euro to Dollar exchange rate, it could succumb to losses this week that push the single currency back toward 1.0303 or lower in the coming days. The Euro to Dollar exchange rate has benefited significantly from the final quarter's risk asset rally. Since financial markets adopted an upbeat perspective on the outlook for China in its ongoing fight against the coronavirus and for the U.S. as the Federal Reserve (Fed) attempts to get the better of inflation, the single currency of Europe has almost completely reversed this year's losses against the Dollar. The world's second-largest economy is currently experiencing restrictions due to the coronavirus, and there have been public demonstrations against these limits in several parts of China. This has put the euro on the back foot on Monday. The Chinese economy is also, in some respects, Europe's second-largest export market, which contributed to the weak start for the Euro on Monday, and the ongoing economic unrest in China further clouds the future for the Eurozone. EUR/USD Price Chart GBP’s future depends on external variables The market is reflecting mixed signals for this currency pair. The technical resistance for the Pound to Euro exchange rate is placed near 1.1667, and it started the new week close to November highs. The pound made some gains this week in a market that was favorable to riskier assets and unfavorable to the dollar, but it was unable to go over 1.1667 versus the euro, which is quite close to the 78.6% Fibonacci retracement of the late-August downturn in GBP/EUR. Technical resistance at that level previously prevented the Pound's October recovery from the lows it reached after the budget event in September, and it may do so again this week as a light UK economic calendar puts external variables in charge of Sterling's direction. EUR/GBP Price Chart GBP may struggle to move forward in the coming days The market is reflecting mixed signals for this currency pair. The GBP/USD exchange rate has more than partially recovered this year's decline, but it now faces the possibility of a corrective setback that could push it back around 1.20 or possibly below it during the next several days. Last week, sterling increased in a market that was favorable for riskier assets and unfavorable for the U.S. dollar, but it was unable to overcome a double-barreled layer of technical resistance and may now find it difficult to move forward in the coming days. This is partially due to events that occurred over the weekend in China, where new discontent over the most recent round of restrictions connected to the coronavirus is likely to keep financial markets focused on the significant financial consequences of the government's ongoing efforts to contain COVID. That might reduce risk appetite on the global markets and put the pound to dollar exchange rate on the defensive from the start of this week. GBP/USD Price Chart Sources: finance.yahoo.com, poundsterlinglive.com, dailyfx.com
Czech National Bank Prepares for Possible Rate Cut in November

German CPI inflation missed market expectations, CAD down around 2% on Tuesday

Rebecca Duthie Rebecca Duthie 29.11.2022 19:10
Summary: Signs of an industrial slowdown in the Eurozone emerged. Eurozone inflation could have taken a larger step toward its peak. Renminbi weighing on the CAD Worries of a global recession continue The market is reflecting bullish signals for this currency pair. Consumer confidence in the Eurozone for November came in at the expected level, but after actual data came in below expectations, signs of an industrial slowdown emerged. This may be related to concerns about a global recession as well as the effect of China on demand-side issues. After China is said to have deescalated tensions and given the euro a boost, yesterday's hawkish commentary from Fed officials and China's ongoing COVID crisis did not hold. The Eurozone has strong ties to China, which can expose the euro to weakness in the event of negative Chinese news. Yesterday, Christine Lagarde of the ECB noted that interest rates still have a ways to go. EUR/USD Price Chart German CPI inflation missed market expectations. The market is reflecting bearish signals for this currency pair. The Eurozone has strong ties to China, which can expose the euro to weakness in the event of negative Chinese news. Yesterday's hawkish commentary from Fed officials as well as China's ongoing COVID crisis did not hold true today. Interest rates still have a long way to go, according to Christine Lagarde of the ECB, who said that yesterday. According to Destatis, Germany's annual inflation rate for the year ending in November was 10%, down from 10.4% in October and below the consensus estimate of 10.4%. The information was released ahead of Wednesday's CPI inflation report, which currently appears to be on track to fall short of expectations. GBP/CAD Price Chart CAD lost around 2% on Tuesday Early in the new week, the Canadian Dollar dropped significantly against all major currencies due to a rolling underperformance that increased USD/CAD and GBP/CAD despite widespread declines in U.S. Dollar exchange rates, giving the Loonie the appearance that it might be about to roll over. On Tuesday, the Canadian Dollar experienced losses of over two percent against the rising Chinese Renminbi and Korean Won, but what was considerably more dramatic than this price action was the one percent rise in the USD/CAD, which surged swiftly and even as most other U.S. exchange rates sank. GBP/CAD Price Chart Sources: finance.yahoo.com, dailyfx.com, poundsterlinglive.com
Crypto Market Buzzes with Potential Launch of US Bitcoin ETFs

Inflation in the Eurozone fell for the first time since July, AUD one of the best performing currencies in the G10

Rebecca Duthie Rebecca Duthie 30.11.2022 19:03
Summary: On Wednesday, the dollar gained support as Bureau of Labor Statistics data. The ECB is expected to pause the pace of interest rate hikes. AUD benefited from the Renminbi's latest rally. U.S labor statistics offer USD support The market is reflecting bearish signals for this currency pair. The annual inflation rate for the Euro Area is 10% in November, down from 10.6% in October and marking the first decrease since July 2021. Energy, food, alcohol, and tobacco are not included in core inflation figures, which remained stable and had a 5% reading that was in line with expectations. The figures, together with weaker readings from Belgium, Germany, and Spain, will undoubtedly give the European Central Bank much to think about before its meeting on December 15. The market's concern is if they are prepared for the Fed to slow the pace down to 50bp after raising interest rates by 75bp at its last two sessions (Markets currently pricing in 54bp). A slowdown may not be in the cards, according to recent remarks from ECB President Christine Lagarde, who claimed that inflation has not yet peaked. On Wednesday, the dollar gained support as Bureau of Labor Statistics data suggested that the U.S. economy's recovery from the depths of a previous technical recession in the third quarter was more robust than previously thought. EUR/USD Price Chart ECB expected to slow interest rate hiking cycle The market is reflecting mixed signals for this currency pair. Following the announcement of Eurozone inflation statistics that arrived at a lower-than-anticipated rate, the European Central Bank (ECB) is expected to pause the pace of interest rate hikes with a 50 basis point move the following month. However, considering that core inflation is set at 5%, substantially over the ECB's preferred level of 2.0%, the ECB cannot afford to relax just yet. With prices still relatively high, the British pound is still in a phase of consolidation. EUR/GBP Price Chart AUD one of the best performing G10 currencies Midweek trading saw a further decline in the Pound to Australian Dollar exchange rate from recent highs around 1.80. Going forward, it is probable that the pair will fluctuate between 1.7660 and 1.8046 as a tug-of-war between the strong U.S. Dollar and the strengthening Chinese Renminbi takes place. Australia's Dollar was one of the best-performing currencies in the G10 on Wednesday as the Asian region's currencies benefited from the Renminbi's latest rally and the antipodean currency itself seemed to benefit from official data that revealed a surprising drop in Australian inflation rates for October. Australian inflation decreased in October from an annual rate of 7.3% to 6.9%, whereas the majority of economists had predicted a rise to 7.6%. This downward surprise was caused by lower price increases for the majority of items included in the consumer price index. GBP/AUD Price Chart Sources: dailyfx.com, poundsterlinglive.com, finance.yahoo.com
EUR: Persistent Pressure from Back-End Yield Premium

NetFlix (NFLX) gained 3.92%. Goldman Sachs raised its price target on the stock to $225 from $220 while keeping a "sell" rating on it

Intertrader Market News Intertrader Market News 11.01.2023 15:00
DAILY MARKET NEWSLETTER January 11, 2023               Pre-Market Session News Sentiment Technical Views           EUR/USD   Euro Stoxx 50 (Eurex)   Brent (ICE)                 Please note that due to market volatility, some of the key levels may have already been reached and scenarios played out.                     Price Movement Analyst Views Target Pivot   Dax (Eurex) 14,911.00 +77.00 (+0.52%) Read the analysis 14,860.00 14,960.00     FTSE 100 (ICE Europe) 0.00 0.00 (0.00%) Read the analysis 7,685.00 7,725.00     S&P 500 (CME) 3,941.00 +0.25 (+0.01%) Read the analysis 3,970.00 3,907.00     Nasdaq 100 (CME) 11,276.25 -5.75 (-0.05%) Read the analysis 11,370.00 11,150.00     Dow Jones (CME) 33,862.00 +13.00 (+0.04%) Read the analysis 34,060.00 33,620.00     Crude Oil (WTI) 74.49 -0.63 (-0.84%) Read the analysis 74.00 75.30     Gold 1,875.29 -1.745 (-0.09%) Read the analysis 1,890.00 1,872.00                     MARKET WRAP           Market Wrap: Stocks, Bonds, CommoditiesOn Tuesday, U.S. stocks closed higher. The Dow Jones Industrial Average rose 186 points (+0.56%) to 33,704, the S&P 500 increased 27 points (+0.70%) to 3,919, and the Nasdaq 100 gained 97 points (+0.88%) to 11,205.Investors were relieved to see that Federal Reserve Chair Jerome Powell avoided commenting on interest rates in his first speech in 2023. Retailing (+1.74%), telecoms services (+1.53%), and semiconductors (+1.26%) sectors gained the most.Coinbase Global (COIN) surged 12.96% after the crypto-currency exchange announced plans to cut 950 employees.Amazon.com (AMZN) rose 2.87%. The company said that it will shut down three warehouses in the U.K. this year.NetFlix (NFLX) gained 3.92%. Goldman Sachs raised its price target on the stock to $225 from $220 while keeping a "sell" rating on it.Jefferies Financial Group (JEF) climbed 3.76%. The financial services firm reported that fourth-quarter earnings fell 53% on year.The U.S. 10-year Treasury yield rebounded 7.7 basis points to 3.610%.Regarding U.S. economic data, wholesale inventories increased 1.0% on month in November (vs expected).European stocks closed lower. The DAX 40 declined 0.12%, the CAC 40 fell 0.55%, and the FTSE 100 was down 0.39%.U.S. WTI crude futures settled flat at $74.87 a barrel.Gold price advanced a further $5 to $1,877 an ounce.Market Wrap: ForexThe U.S. dollar was stable against other major currencies. The dollar index climbed to 103.27.EUR/USD added 5 pips to 1.0735. France's industrial production grew 2.0% on month in November (vs +0.6% expected).GBP/USD dropped 32 pips to 1.2152.USD/JPY climbed 38 pips to 132.26.AUD/USD declined 20 pips to 0.6892.USD/CHF gained 17 pips to 0.9230, and USD/CAD rose 37 pips to 1.3426.Bitcoin remained firm and traded higher to $17,460.Morning TradingIn Asian trading hours, AUD/USD was little changed at 0.6890. This morning, Australia's data showed that the inflation rate rose to 7.4% on year in November (vs +7.5% expected), and retail sales grew 1.4% on month in November (vs +0.3% expected).Meanwhile, EUR/USD was broadly flat at 1.0733 while GBP/USD remained subdued at 1.2150.USD/JPY rose further to 132.50.Gold was stable at $1,876.Bitcoin fell to $17,403.Expected TodayNo major economic data expected.           UK MARKET NEWS           Sainsbury, a chain of supermarkets, said full-year underlying profit before tax is now expected to be towards the upper end of the guidance range of 630 - 690 million pounds, as it posted 3Q like-for-like sales growth of 5.9%.JD Sports Fashion, a sports-fashion retail company, said it now expects full-year profit before tax and exceptional items will be towards the top end of current market expectations of 933 - 985 million pounds. The company reported total revenue growth for the 22 weeks to December 31 of more than 10%, compared with growth of 5% in the prior-year period.Auto & Parts, travel & leisure and basic resources shares gained most in London on Monday.From a relative strength vs FTSE 100 point of view, Ashtead Group (-0.9% to 5064p) crossed under its 50-day moving average.From a technical point of view, BP (-0.88% to 475.1p) crossed under its 50-day moving average.           ECONOMIC CALENDAR           Time Event Forecast Importance   07:00 MBA 30-Year Mortgage Rate (Jan/06)   MEDIUM     07:00 MBA Mortgage Applications (Jan/06)   LOW     07:00 MBA Mortgage Refinance Index (Jan/06)   LOW     07:00 MBA Mortgage Market Index (Jan/06)   LOW     07:00 MBA Purchase Index (Jan/06)   LOW     10:30 EIA Gasoline Stocks Change (Jan/06) 1.186M MEDIUM     10:30 EIA Crude Oil Stocks Change (Jan/06) -2.243M MEDIUM     10:30 EIA Refinery Crude Runs Change (Jan/06)   LOW     10:30 EIA Distillate Stocks Change (Jan/06) -472k LOW     10:30 EIA Heating Oil Stocks Change (Jan/06)   LOW     10:30 EIA Gasoline Production Change (Jan/06)   LOW     10:30 EIA Cushing Crude Oil Stocks Change (Jan/06)   LOW     10:30 EIA Distillate Fuel Production Change (Jan/06)   LOW     10:30 EIA Crude Oil Imports Change (Jan/06)   LOW     11:30 17-Week Bill Auction   LOW     13:00 10-Year Note Auction   LOW                                     NEWS SENTIMENT           BioNTech SE BNTX : NASDAQ 153.67 USD +5.16% In the last 5 days         NEWS SENTIMENT (24H) Very Positive       TECHNICAL SCORE Short-Term Medium-Term Long-Term                                   Bayerische Motoren Werke AG BMW : XETRA 90.52 EUR +3.00% In the last 5 days         NEWS SENTIMENT (24H) Positive       TECHNICAL SCORE Short-Term Medium-Term Long-Term                                   BHP Group PLC BHP : LSE 2,708.50 GBp +4.76% In the last 5 days         NEWS SENTIMENT (24H) Very Positive       TECHNICAL SCORE Short-Term Medium-Term Long-Term                                   Bayer AG BAYN : XETRA 53.96 EUR +8.96% In the last 5 days         NEWS SENTIMENT (24H) Very Positive       TECHNICAL SCORE Short-Term Medium-Term Long-Term                                   Infineon Technologies AG IFX : XETRA 30.82 EUR +3.01% In the last 5 days         NEWS SENTIMENT (24H) Very Positive       TECHNICAL SCORE Short-Term Medium-Term Long-Term                           TECHNICAL VIEWS           EUR/USD Intraday: range.   Pivot: 1.0760   Our preference: Short positions below 1.0760 with targets at 1.0725 & 1.0710 in extension.   Alternative scenario: Above 1.0760 look for further upside with 1.0780 & 1.0800 as targets.   Comment: The RSI lacks upward momentum.                     Euro Stoxx 50 (Eurex)‎ (H3)‎ Intraday: key resistance at 4096.00.   Pivot: 4096.00   Our preference: Short positions below 4096.00 with targets at 4071.00 & 4055.00 in extension.   Alternative scenario: Above 4096.00 look for further upside with 4114.00 & 4130.00 as targets.   Comment: The index currently faces a challenging resistance area at 4096.00.                     Brent (ICE)‎ (H3)‎ Intraday: under pressure.   Pivot: 80.25   Our preference: Short positions below 80.25 with targets at 78.95 & 78.15 in extension.   Alternative scenario: Above 80.25 look for further upside with 80.90 & 81.35 as targets.   Comment: The RSI is bearish and calls for further downside.        
USD/JPY Breaks Above 146 Line: Bank of Japan's Core CPI in Focus

USD/JPY Breaks Above 146 Line: Bank of Japan's Core CPI in Focus

Kenny Fisher Kenny Fisher 22.08.2023 09:05
The Japanese yen faced considerable losses on Monday as USD/JPY surged to 146.23 during the North American session, marking a 0.57% increase for the day. The US dollar's strength has propelled it dangerously close to pushing the yen below the critical 146 line, a scenario witnessed last week when the robust US dollar drove the struggling yen to a nine-month low. Once synonymous with deflation, the Japanese economy has undergone a significant transformation in the era of high global inflation. With Japan's inflation hovering slightly above 3%, a level that many major central banks would eagerly welcome, the landscape has shifted. Notably, inflation remains relatively high by Japanese standards, as both headline and core inflation have consistently outpaced the Bank of Japan's (BoJ) 2% target. Japan's inflation data is closely scrutinized as the prospect of elevated inflation sparks speculations that the BoJ might need to tighten its lenient policy stance. Although the central bank has maintained that the high inflation is transitory, it's worth remembering that other central banks have made similar claims only to backtrack later. The Federal Reserve (Fed) and the European Central Bank (ECB) come to mind as examples. In the previous week, July's Consumer Price Index (CPI) remained steady at 3.3% year-on-year, while Core CPI experienced a slight dip to 3.1% year-on-year from the previous 3.3%. Looking ahead, Tuesday brings the release of BoJ Core CPI, the central bank's favored inflation metric, which is projected to decrease to 2.7% for July, down from June's 3.0%.   USD/JPY pushes above 146 line Bank of Japan’s Core CPI is expected to ease to 2.7% The Japanese yen has posted significant losses on Monday. USD/JPY is trading at 146.23 in the North American session, up 0.57% on the day. The US dollar has looked sharp and is within a whisker of pushing the yen below the 146 line, as was the case last week when the strong US dollar pushed the ailing yen to a nine-month low. The Japanese economy was once synonymous with deflation, but that has changed in the era of high global inflation. Japan’s inflation is slightly above 3%, a level that other major central banks would take in a heartbeat. Still, inflation is relatively high by Japanese standards and both headline and core inflation have persistently been above the Bank of Japan’s 2% target. Japan’s inflation reports are carefully monitored as higher inflation has raised speculation that the BoJ will have to tighten its loose policy. The central bank has insisted that high inflation is transient, but the BoJ wouldn’t be the first bank to make that claim and then backtrack with its tail between its legs. Remember the Fed and the ECB? Last week, July’s CPI remained unchanged at 3.3% y/y. Core CPI dropped to 3.1% y/y, down from 3.3%. On Tuesday, Japan releases BoJ Core CPI, the central bank’s preferred inflation gauge, which is expected to dip to 2.7% in July, down from 3.0% in June. China’s economic troubles have sent the Chinese yuan sharply lower, with the Chinese currency falling about 5% this year against the US dollar. A weak yuan makes Chinese exports more attractive, but this is at the expense of other exporters including Japan. As a result, there is pressure in Japan to lower the value of the yen in order to compete with Chinese exports.   USD/JPY Technical USD/JPY pushed above resistance at 145.54 earlier today. The next resistance line is 146.41 There is support at 144.51 and 143.64    
Eurozone PMI Shows Limited Improvement Amid Lingering Contraction Concerns in September

Eurozone Economic Focus: Navigating Through August CPI and ECB Signals

ING Economics ING Economics 31.08.2023 10:32
EUR: Focus on the eurozone August CPI Flash August CPI data for the eurozone is released at 11:00 am CET today and is expected to show a gradual decline in both headline and core YoY readings to 5.1% and 5.3%, from 5.3% and 5.5% respectively. However, the decline is proving gradual and we are actually starting to see expectations of one more rate hike from the European Central Bank firm up a little. These peak at around 21bp of tightening priced in for January next year. Our macro team feels that the chances of a September rate hike are under-priced (now a 43% probability) meaning that EUR/USD could get a little support from the ECB story over the coming weeks. Today, also look out for a 09:00 am CET speech from ECB hawk Isabel Schnabel, speaking at a conference on 'Inflation: Drivers and Dynamics'. We will also see the ECB minutes for the July policy meeting released at 1:30 pm CET. EUR/USD has turned a little more bid over the last few days as US jobs data has softened the front end of the US yield curve and sticky inflation has kept EUR short-dated interest rates supported. Our short-term Financial Fair Value model sees EUR/USD fairly priced near 1.0900 - suggesting a probably range-bound session into tomorrow's US NFP release. Elsewhere, we note that Switzerland is planning some new large-scale Anti Money Laundering measures for 2024. This may be a slow-burn story, but one which may ultimately weigh on the Swiss franc in 2024.
Bank of England: Falling Corporate Price Expectations May Signal Peak in Rate Hike Cycle

MXN Outlook: Banxico's View on a Strong Peso Sparks USD/MXN Rally

ING Economics ING Economics 01.09.2023 10:56
MXN: Banxico expressing a view over a strong peso Unlike Chinese authorities which are battling renminbi weakness and cut the FX deposit required reserve ratio last night, Mexican authorities are seemingly expressing a view that the peso is too strong. Here USD/MXN spiked more than 2% last night after Banxico announced that it would allow its "hedge book" or short USD/MXN position in the FX forward market to roll off rather than be extended.  By way of background, Banxico has intervened to support the peso during two periods (February 2017 and March 2020) and has done this by auctioning dollars through the FX forward markets using one-month to 12-month tenors. The total size of those positions is now around $7.5bn. Banxico announced yesterday that it would allow this position to roll off gradually, effectively over the next 12 months. Investors have read this as Banxico expressing a view that the peso has come far enough. And given the peso has been a prime beneficiary of the carry trade, we should not underestimate the risk of a further correction higher in USD/MXN ahead of this long US weekend. Yet USD/MXN has traded below 17.00 for very good reasons, including high carry and nearshoring trends. And given our view that the dollar does turn lower next year, we see the Banxico move as slowing rather than reversing the USD/MXN trend. Two further quick points: returns on the MXN carry trade may now come more from carry than nominal MXN appreciation, and speculation may grow in the TIIE market (Mexican swap curve) that Banxico may prefer early rate cuts after all if it does not want its currency to strengthen much more.
The EIA Reports Tight Crude Oil Market: Prices Firm on Positive Inventory Data and Middle East Tensions

Navigating the Forex Seas: Unveiling the Role of a Forex Broker

FXMAG Team FXMAG Team 15.11.2023 08:33
The world of foreign exchange, more commonly known as Forex, is a dynamic and intricate marketplace where currencies are traded globally. At the helm of this vast financial ecosystem are Forex brokers, playing a pivotal role in facilitating transactions and providing a gateway for traders to navigate the turbulent waters of the currency market. Understanding the Forex Broker: A Key Player in the Market A Forex broker acts as an intermediary between retail traders and the interbank forex market. Essentially, they link buyers with sellers and vice versa, executing trades on behalf of their clients. While the concept may seem straightforward, the significance of a Forex broker in the trading process cannot be overstated.   The Forex Broker's Functionality: More Than Just a Middleman 1. Execution of Trades One of the primary functions of a Forex broker is to execute trades swiftly and efficiently. With the click of a button, traders can buy or sell currency pairs, capitalizing on market fluctuations. The efficiency of this process relies heavily on the broker's technological infrastructure. 2. Market Analysis and Research Tools To navigate the intricate Forex market successfully, traders rely on accurate and up-to-date information. Forex brokers often provide a suite of tools and resources, including real-time charts, technical analysis, and market research, enabling traders to make informed decisions. 3. Leverage and Margin Facilities Forex trading often involves leveraging, allowing traders to control a larger position with a smaller amount of capital. Brokers provide leverage, but it's essential for traders to use it judiciously, as it amplifies both potential gains and losses. 4. Risk Management Services Managing risk is a critical aspect of Forex trading. Experienced brokers offer risk management tools such as stop-loss orders to help traders limit potential losses and protect their capital.     Selecting the Right Broker: Navigating the List of Forex Brokers Given the crucial role Forex brokers play, selecting the right one is paramount for traders. The internet is flooded with a myriad of options, making the process seem overwhelming. To streamline this decision-making, traders often refer to a list of Forex brokers – a comprehensive directory that outlines the key features and offerings of various brokers. Considerations When Choosing a Forex Broker: Regulation and Compliance: Ensure the broker is regulated by a reputable financial authority, enhancing trust and security. Trading Platform: Assess the broker's trading platform for user-friendliness, stability, and the availability of essential tools. Transaction Costs: Evaluate the broker's fee structure, including spreads, commissions, and overnight financing costs. Customer Support: Responsive customer support is invaluable. Test their responsiveness before committing to a broker. Educational Resources: A good broker provides educational resources to empower traders with knowledge.   Conclusion: Sailing Smoothly with the Right Forex Broker In the vast sea of Forex trading, a reliable broker acts as a compass, guiding traders through the complexities and helping them navigate market trends. The importance of due diligence when selecting a broker cannot be emphasized enough. By referring to a well-researched "list of Forex brokers" and considering the key factors mentioned, traders can set sail confidently into the world of Forex, armed with the support they need to navigate and succeed in this dynamic market.    
Crude Oil Eyes 200-DMA Amidst Positive Growth Signals and Inflation Concerns

Yen Slips as Economic Data Disappoints, SNB's Dovish Stance Challenges Franc's Gains

Enrique Díaz-Álvarez Enrique Díaz-Álvarez 16.01.2024 14:48
A disappointing set of domestic economic data sent the yen lower against the dollar once again last week, with the Japanese currency opening trading this week around the 145 level. Expectations for the first Bank of Japan interest rate hike have continued to be pushed further into the future amid signs of an easing in wage pressure and a drop in inflation. Last week’s earnings data for November was a massive miss, with wages growing by only 0.2% year-on-year, the lowest rate since December 2021 and well below the +1.5% consensus. Bank of Japan officials have placed heavy emphasis on earnings data in recent communications. The upcoming annual ‘Shuntō’ salary negotiations, which conclude in March, will be key in determining the timing of the first hike. As things stand, a strong wage negotiation will likely be needed to convince investors that tightening will commence soon, with swaps now assigning only around a one-in-three chance of a first move in April. National inflation data will be the focus this week, with the December data due on Thursday.   CHF We recently said that it might be difficult for the franc to hold onto its gains and, indeed, the currency sold off last week and was among the worst performers among the G10 currencies. We continue to view the franc as expensive, and believe that more weakness could be in store in the coming quarters, particularly should the Swiss National Bank begin to shift its attention towards supporting the country’s growth outlook. We don’t view the recent uptick in inflation as something that could potentially prevent the SNB from delivering a dovish pivot, particularly as both measures of inflation remain firmly within target. The focus this week should be on external news, although Thursday's speech by SNB President Jordan in Davos will also be worth following.
Crude Oil Eyes 200-DMA Amidst Positive Growth Signals and Inflation Concerns

Treading Cautiously: Markets Await Today's Core PCE Data for Fed Insight

Michael Hewson Michael Hewson 26.01.2024 14:13
Today's core PCE the next key signpost ahead of next weeks Fed meeting By Michael Hewson (Chief Market Analyst at CMC Markets UK)   European markets managed to eke out a small gain yesterday after the ECB kept rates unchanged but left the door ajar to the prospect of a rate cut before the summer. ECB President Christine Lagarde did push back strongly on speculation that policymakers had discussed anything like that insisting that such talk was premature, echoing her comments made earlier this month. It was noteworthy however that the possibility of a cut before June wasn't ruled out completely, and it was that markets reacted to yesterday as yields declined sharply, which does keep the prospect of an earlier move on the table given how poor this week's economic data has been.   US markets also managed to finish the day higher with the S&P500 and Nasdaq 100 putting in new record closes, after US Q4 GDP came in well above expectations at 3.3%. The core PCE price index also remained steady at 2% for the second quarter in succession, and in line with the Federal Reserve's inflation target, thus keeping faint hopes of a US rate cut in March alive. It also places much greater importance on today's December core PCE deflator inflation numbers which aren't expected to vary much from what we saw in the November numbers. At the moment markets seem convinced that the Fed might spring a surprise in March and slip in an early rate cut if inflation shows further signs of slowing. That might make sense if the US economy was struggling but this week's economic numbers clearly suggest it isn't, and if anything is still growing at a decent clip. There is a danger that in cutting rates in March they drive market expectations of further cuts into overdrive, something they have been keen to push back on with recent commentary.   In any case with the Federal Reserve due to meet next week markets are continuing to try and finesses the timing of when the first rate cut is likely to occur, after Powell's surprisingly dovish shift when the central bank last met just before Christmas. That means today PCE numbers are likely to be a key waypoint for markets and the central bank, after the PCE core deflator slowed to 3.2% in November, slipping from 3.4% in October, and the lowest level since April 2021. A further slowdown to 3% or even lower, which appears to be the consensus could see markets continue to build on the prospect of a rate cut in March, which took hold back in December. The bigger concern for some Fed officials is that headline CPI appears to be ticking higher again, which may make the last yards to 2% much trickier. This will be the Fed's key concern over an early cut as it could reignite the inflationary pressures that have taken so long to get under control. This caution would suggest that March is too early for a US rate cut, and that the market is getting ahead of itself, with policymakers also likely to pay attention to consumer demand. This means personal spending is also likely to be a key indicator for the FOMC and here we are expecting to see a pickup to 0.5% from 0.2%. With the US consumer still looking resilient the Fed is likely to be extra cautious if inflation starts ticking higher again as it already has with headline CPI.   It was also interesting to note that while yields fell sharply yesterday, the US dollar didn't, it actually finished the day higher and well off the lows of the week.       EUR/USD – slipped back towards the 200-day SMA at 1.0820/30 yesterday, with a break below 1.0800 targeting a potential move towards 1.0720. Resistance at the highs this week at 1.0930 and behind that at 1.1000.  GBP/USD – while the pound has struggled to push higher this week, we've managed to consistently hold above the support at the 50-day SMA as well as the 1.2590 area. We need to get above 1.2800 to maintain upside momentum. EUR/GBP – finally slipped to support at the 0.8520 area, which needs to hold to prevent a move towards the August lows at 0.8490. Resistance at the 0.8620/25 area and the highs last week. USD/JPY – currently finding resistance at the 148.80 area which has held over the last week or so which could see a move back towards the 146.25 area. A fall through 146.00 could delay a move towards 150 and argue for a move towards 144.00. FTSE100 is expected to open 30 points higher at 7,559 DAX is expected to open 50 points lower at 16,857 CAC40 is expected to open 28 points higher at 7,492.