greenback

FX Daily: One last big central bank meeting

The dollar is recovering some ground after the pushback from Fed officials against rate cut bets. However, the dovish Dot Plot may work as an anchor for rates and keep the dollar soft into the end of December. In Japan, the BoJ announces its policy in the early hours of tomorrow, and that will direct market expectations about a January hike.

 

USD: Softer into year-end?

The last few days of market action, before volumes dry up for Christmas, should continue to revolve around the “tug of war” between Fed officials trying to temper rate cut speculation and investors who have instead seen a validation of dovish bets from last week’s Dot Plot projections. Data can tip the scale in these situations, so consumer confidence, personal spending, and PCE figures should move the market this week.

We don’t expect the last bits of US data in 2023 to paint a very different picture, though. Ultimately, the Dot Plot surprise should keep provid

Greenback Strengthens, Silver Price (XAGUSD) Seems Stably

Greenback Strengthens, Silver Price (XAGUSD) Seems Stably

Jing Ren Jing Ren 07.04.2022 07:36
USDCAD attempts to rebound The US dollar rallied after FOMC minutes showed the central bank’s plan to reduce its balance sheet. The pair found support at 1.2400 after the RSI went deeply into the oversold territory. A break above 1.2500 prompted sellers to cover their latest bets, easing the downward pressure in the process. The bulls need to clear offers near 1.2590 before they could push for a sustainable bounce. Failing that, further weakness could drive price action to October’s lows around 1.2300. NZDUSD breaks support The New Zealand dollar softened against its US counterpart after hawkish Fed minutes. The rally came to a halt in the supply zone around 0.7050 from last November’s sell-off. 0.6900 was important support and its breach forced short-term buyers to bail out. As the kiwi grinds 0.6875 over the 30-day moving average, an oversold RSI may cause a rebound. A deeper correction may send the pair to 0.6800 and cause a bearish reversal. The bulls need to reclaim 0.6940 to regain the upper hand. XAGUSD tests major support Silver struggles as the greenback recovers across the board. A bearish MA cross on the daily chart suggests a deterioration in the market mood. Buyers’ struggle to lift offers at the psychological level of 25.00 indicates prevailing strong selling pressure. Sentiment has become cautious as the precious metal revisits 24.00. Price action could be vulnerable to another round of sell-off if the bears succeed in pushing below this critical floor. Following that, 23.30 would be the next target.
GBP To USD Shows Greenback Strength And GB's Vulnerability To Russia-Ukraine Tensions

GBP To USD Shows Greenback Strength And GB's Vulnerability To Russia-Ukraine Tensions

Alex Kuptsikevich Alex Kuptsikevich 08.04.2022 09:58
The US dollar works its way up against European currencies, including the British Pound. After a corrective bounce from March 15th to the 23rd, GBPUSD has returned to the downside. Most worryingly, this decline is coming very evenly. It is no longer a speculative flight of capital to safe havens in response to frightening news. The flat downtrend with a succession of lower local highs indicates a capital flight out of European countries. Britain is much less dependent on energy supplies from Russia but still bears an evident loss of economic growth due to the current situation. In addition, as the money hub for Europe, the UK is taking a hit due to worsening business sentiment and tighter financial conditions. The Bank of England's more determined move to raise the bank rate and cut QE is fueling the Pound's rise against the euro. The EURGBP pair is close to 0.8300, near the lower bound of an almost 6-year trading range. And so far, it isn't easy to find a reason to reverse the trend. In the meantime, the Pound still has too little strength to withstand a rising Dollar, whose economy is much less affected by the war in Europe. The inability of GBPUSD to develop a rebound above 1.3160 (61.8% of covid amplitude) sets up for further drawdown with near-term support near 1.2830 (50% of the rally) with the potential for a more profound decline at 1.2500 in the next few weeks.
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
Apple Q3 2023 Results – Surpassing Expectations and Aiming for New Heights

Enrique Díaz-Álvarez talks Forex market highlighting euro, pound, Japanese yen and more

Enrique Díaz-Álvarez Enrique Díaz-Álvarez 07.11.2022 14:48
Currency market volatility continues to rise, and signs are emerging that the dollar rally is running out of steam. The Federal Reserve delivered a massive hike and a more hawkish than expected message, while other central banks begin to fret about the impact of higher rates on their respective economies. However, the dollar failed to rally and in fact fell against most G10 currencies, with the notable exception of sterling, which was hobbled by an uber-dovish Bank of England. The star of the week, and also the year so far, was undoubtedly the Brazilian real, a favourite of ours, which put in another scorching rally on the back of the peaceful transfer of power to what looks to be a moderate Lula administration.   All eyes turn now to the critical October CPI inflation report out of the US (Thursday). Headline prices will probably drop further as energy prices continue to moderate, but the key will be once again the more persistent core rate. UK third-quarter GDP growth (Friday) may be important for sterling. Beyond economic news, it will be important to see whether signs of China easing its COVID policies are confirmed. As this is written, signs are emerging that last week’s rally in Chineses assets may have been premature. Figure 1: G10 FX Performance Tracker [base: USD] (1 week) Source: Refinitiv Datastream Date: 07/11/2022 British pound The Bank of England hiked rates by 75 basis points last Thursday as expected, but then surprised markets with one of its periodic pivots, this time a dovish one. The Bank of England appears to be taking a blasé view of inflation and focusing on recessionary risks instead. The reference to markets overestimating the terminal rate was unusually blunt, and sterling did not like it one bit, losing significant ground against every major currency worldwide. Third-quarter GDP growth data will be in focus this week. The MPC warned last week that the UK economy may already be in a recession, and this week data is indeed expected to show that contraction on a quarterly basis. This is, however, a backward looking number, and we expect sterling to react as much or more to the US inflation data out this week. Euro Another month, another blow out inflation report out of the Eurozone. This one came just a few days after the muddled attempt at a dovish pivot from the ECB at its meeting the previous week, thereby contributing to the developing credibility gap at the institution. In addition to double digit headline inflation, sticky core inflation continues to march higher. Figure 2: Euro Area Inflation Rate (2013 – 2022) Source: Refinitiv Datastream Date: 07/11/2022 On the plus side, the worst fears about a winter energy crisis continue to fade. On the negative side, early Monday morning reports from Asia suggest that hopes for an easing of Chinese lockdowns may have been premature, and hence the recovery of European exports to China may be further delayed. This week’s main event in the Eurozone will be a number of ECB official speeches, including President Lagarde. US dollar The hopes for a Federal Reserve pivot to a more dovish stance failed to materialise last week, and in fact Chair Powell indicated that rates may have to go even higher than markets were pricing in before the meeting. Bonds fell, as did stocks, but the dollar failed to follow the script and actually ended the week slightly down in trade-weighted terms following Friday’s nonfarm payrolls data. The labour market report was mixed, but still consistent with a very tight market that is yet to feel the impact of monetary tightening in any significant way. Figure 3: US Nonfarm Payrolls (2021 – 2022) Source: Refinitiv Datastream Date: 07/11/2022 The inflation report this week is expected to show another easing of headline annual price pressures on the back of lower energy costs. However, the key will be the core index that strips out the volatile food and energy components. The Fed needs to see a downward trend in these numbers before it can think of pausing hikes in interest rates, and is unlikely to see that in this report. Japanese yen The yen was one of the better performers in the G10 last week, ending modestly higher on the US dollar. The currency remains by far the worst performing major this year, though recent intervention efforts by the Bank of Japan appear to have put a temporary floor under the yen. According to Japan’s Ministry of Finance, intervention totalled more than ¥6 trillion last month, by far the largest ever. The 150 mark on the dollar seems to be a line in the sand for the BoJ, so we would expect fresh intervention to prop up the currency should the yen make another move towards this level. Tentative signs that the Bank of Japan is open to tweaking its monetary policy stance also provided a bit of assistance to JPY. During a speech mid-week, Governor Kuroda noted that changing the bank’s yield curve control policy could be an option should inflation pick-up. Japanese inflation remains far more contained than in most other countries, though it is expected to test three decade highs in the coming months, which could force the BoJ’s hand. Swiss franc EUR/CHF ended last week little changed, and the pair continues to hover below parity. The abundance of domestic economic data had little impact on the franc. Soft prints, for the most part, continue to point to a slowdown ahead. An indicator of consumer confidence, for instance, plunged to its lowest level since its inception in 1972. Retail sales, however, continue to show healthy consumer activity, expanding by another 0.9% in September. This resembles the situation in many other economies, where sentiment indicators and hard data are at odds. There’s not much on tap from Switzerland this week. Speeches by SNB chairman Thomas Jordan and fellow member Andrea Maechler could prove the most noteworthy. Last week, chairman Jordan suggested that further rate hikes may be needed in Switzerland, confirming our view that another rate increase is on the way in December. Australian dollar The Reserve Bank of Australia mostly met expectations during its meeting last week. Interest rates were raised by another 25 basis points to 2.85%, the second in consecutive meetings, having become the first major central bank to revert back to ‘standard’ sized hike in October. Governor Lowe struck a balanced tone in his presser, keeping the door open to additional hikes of a larger magnitude, as it waits to gauge the impact of its tightening cycle on domestic activity. The growth forecast for next year was downgraded, though there was an upward revision to its inflation forecast. All in all, there were no real surprises of note, and AUD largely tracked global risk sentiment and news out of the US. Meanwhile, news out of the Australian economy last week was mixed, with surprises to the upside in business activity and housing data offset by Friday’s soft retail sales print. This week is set to be a relatively quiet one in Australia, so we expect the dollar to be driven largely by goings on elsewhere. New Zealand dollar A stronger-than-expected labour report helped propel the New Zealand dollar to the top of the FX performance tracker last week. Employment rose strongly in the third quarter (+1.3%), following three quarters of essentially flat net employment gains, with the participation rate also up more than anticipated. News that China plans to stick by its zero-covid policy led a bit of a retracement in the dollar during Asian trading this morning, although a general improvement in market risk sentiment has kept the currency well bid. Developments out of China may be the main driver of NZD this week, as the domestic economic calendar is relatively light. We also think that expectations for the RBNZ’s next meeting in a couple of weeks time will remain key. Markets are torn between a 50bp and 75bp hike, though surprises to the upside in this week’s PMI and/or inflation expectations data could tip the balance in favour of the latter. Canadian dollar Friday’s stellar employment report out of Canada helped trigger one of the most violent rallies in CAD witnessed since the extreme volatility of the global financial crisis in ‘08-’09. The employment change number blew all expectations out of the water, as 108k net jobs were created last month, above the 21k consensus and the fastest pace of job creation since February 2020. Investors reacted by immediately raising expectations for Bank of Canada policy tightening, with markets now seeing a two-in-three chance of another 50bp rate hike in December. Figure 4: Canada Employment Change (2021 – 2022) Source: Refinitiv Datastream Date: 07/11/2022 A speech by BoC governor Macklem (Thursday) could be key in shaping the aforementioned rate expectations, and confirm whether this is indeed enough to delay a dovish pivot. Should the Bank of Canada follow in the footsteps of the Fed in prolonging its hiking cycle, then CAD would likely be dragged higher along with the US currency against most majors. Swedish krona The Swedish krona appreciated against the euro last week, extending the rally in SEK to almost 2% against the common currency since the recent peak in mid-October. The latest data out of Sweden continues to be mixed. The manufacturing PMI released last week decreased to 46.8 in October, pointing to the most significant contraction in factory activity since May 2020. However, the services PMI increased to 56.9 from a more than two-year low of 55.1 in the previous month. eptember industrial production data, which will be released this Wednesday, will complete the picture of the economy’s performance, although it has to be said that this data point runs on somewhat of a lag, and is not expected to have too much impact on the currency. Norwegian krone Norges Bank has become the latest G10 central bank to begin slowing its tightening cycle. At its meeting last week, interest rates were raised by only 25 basis points, below the 50bps expected by markets. This weighed on the Norwegian krone, which fell to its lowest level in two years against the euro, although it has since recovered some of these losses. According to its communications, Norges Bank anticipates further hikes ahead, but at a slower pace due to cooling in some areas of the economy and expectations of lower inflationary pressures. This decision is at odds with core inflation, at an all-time high 5.3%, and a labour market that is almost at full employment. In the words of Norges Bank, a larger rate hike would have been needed had only these two variables been taken into account, but the board has put more weight on risks to growth and a tightening in financial conditions. The October inflation rate, to be released on Thursday, is expected to continue its upward trend. This could cause the terminal base rate to be revised upwards, which would likely support the krone. CNY Traders certainly couldn’t complain about a lack of volatility last week. The yuan ended the week higher against the broadly weaker dollar, and the drop in the USD/CNY pair on Friday was among the biggest on record. Looking beyond the FX market, last week was extraordinarily positive for equities, with the key indices rallying sharply on rumour-fuelled hopes that China may soon embark on a path to exit its controversial zero-Covid policy. On Saturday, however, officials quashed speculation, stressing that China would ‘unswervingly’ stick to zero-Covid. Chinese equities have extended their gains today, but this could tell more about their relative cheapness than the validity of reopening hopes. Just before the weekend, China’s new Covid cases surged to six-month highs. Rising infection numbers don’t bode well for the economic outlook, and domestic consumption has already taken a hit, as shown by last week’s soft PMI numbers. Looking ahead, news on the covid front and October’s inflation data (Wednesday) could prove market moving this week. Economic Calendar (07/11/2022 – 11/11/2022) To stay up to date with our publications, please choose one of the below: 📩 Click here to receive the latest market updates👉 Our LinkedIn page for the latest news✍️ Our Blog page for other FX market reports 🔊 Stay up to date with our podcast FXTalk Source: US dollar rally stalls in spite of hawkish Federal Reserve | Ebury UK
Greenback decreased yesterday. Cryptocurrency world is absorbed with Binance-FTX case

Greenback decreased yesterday. Cryptocurrency world is absorbed with Binance-FTX case

Monica Kingsley Monica Kingsley 08.11.2022 15:57
S&P 500 closed on declining volume higher yesterday, but bonds weren‘t truly confirming for much of the session. Still, the table was set for the break higher, and I didn‘t hesitate in calling for it even in absence of bond or USD confirmation. Till the closing bell, the bonds chart posture improved somewhat, leaving the stock market upswing more well rounded than it would otherwise have been if you looked only at sectoral strength. The dollar went down a bit too much, bit too fast yesterday, and even though real assets (with copper bucking the trend today as much as it did yesterday with its close in the red) are modestly down on a less than decent USD upswing. Crypto daily woes remain isolated to the FTX (FTX-Binance) trigger, and are unlikely to spill over into other markets. Precious metals and copper offered a pleasant sight for the bulls, amply justifying my change of tune in the weeks gone by and still to come – note that even gold consolidated on declining volume, proving that there isn‘t much willingness to sell. As for today‘s S&P 500 levels, 3,815 has to hold as support while 3,848 – 3,855 represents solid resistance that can be reasonably overcome only on a sharp risk-on turn in bonds, which doesn‘t look to get a catalyst during today‘s session. Let‘s see about a possible pleasant surprise – still, the medium-term trend is up, and it‘s only a matter of time (more likely facilitated by Thursday‘s CPI confirming the notion of inflation peak being in, than midterms) before this level gets broken to the upside. This explains today‘s title „More of the Same“ = „Grinding Higher, not a Turnaround Tuesday“. This run can continue alongside the commodities and precious metals upswings, but the real asset one would prove more durable as in Q1 2023 stocks would look around and ask „based on what have we been rallying“. Crude oil would be comfortably in the triple digits by then... Keep enjoying the lively Twitter feed serving you all already in, which comes on top of getting the key daily analytics right into your mailbox. Plenty gets addressed there, but the analyses (whether short or long format, depending on market action) over email are the bedrock, so make sure you‘re signed up for the free newsletter and that you have Twitter notifications turned on so as not to miss any tweets or replies intraday.
Caixin Services PMI Data Has Helped The Chinese Yuan (CNH)

USD/JPY: There could be monetary policy shifts before the end of Kuroda's tenure

Kenny Fisher Kenny Fisher 22.12.2022 16:09
The Japanese yen has edged higher on Thursday. In the European session, USD/JPY is trading at 132.09, down 0.27%. The dust has settled after Tuesday’s dramatic events, when the yen shot up 3.7%. This followed the Bank of Japan’s shocking announcement that it would widen its yield curve control on 10-year bonds from 25 bp to 50 bp. The markets were completely blindsided, which could very well be what the BoJ was hoping for. The markets hadn’t expected any policy moves until after BoJ Governor Kuroda ends his term in April, but now there is talk of major policy moves before then, such as raising interest rates out of negative territory. The BoJ releases minutes later today, but these are minutes of the November meeting. Still, with all of the drama that the BoJ has produced this week, investors will be keeping an eye on this release, looking for clues about future policy. National Core CPI next What will be of more interest to the markets is National Core CPI for November, which will also be released later today. The index is expected to inch up to 3.7%, up from 3.6% in October. Japan’s inflation rate is much lower than the US or the UK, but price pressures have nonetheless put the squeeze on households and businesses, which became accustomed to decades of deflation. With economic conditions improving and inflation rising, there has been speculation that the BoJ might consider major policy moves in the short-term, such as exiting from its stimulus programme. The BoJ showed this week that it was willing to make significant moves, and more tightening could be on the way. Read next: Credit Suisse Sold Building In Geneva, Visa Is Building Success At The Expense Of Small Retailers | FXMAG.COM USD/JPY Technical USD/JPY has support at 131.13 and 130.15  There is resistance at 132.83 and 134.12 This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds. Japanese yen steady ahead of CPI - MarketPulseMarketPulse
Markets under Pressure: Rising Yields, Strong Dollar, and Political Headwinds Weigh on Stocks"

US tech stocks losses are huge - Netflix and Facebook are more than 70% down from Autumn peaks

Ipek Ozkardeskaya Ipek Ozkardeskaya 30.12.2022 10:18
US indices rallied yesterday, in an effort to recover a part of the past few session losses, rather than a fresh move, on fresh news, as there was no fresh news yesterday.   But yesterday's jump in US indices was relatively strong, perhaps due to thin trading volumes that make look the year-end moves impressive, while they are not.   Anyway, the S&P500 gained 1.75% yesterday, and could maybe finish the year with less than a 20% loss, while Nasdaq jumped more than 2.50%, but will still end the year with more than a 30% drawdown.   Things have changed so much in one year!  The Pivot  Remember, last year at this time, we were about to see Apple become the world's first $3 trillion company. The S&P500 and Nasdaq were running from record to record, and no one imagined how bad the hangover would be.   We didn't know it at that time but the 2022 bear market officially kicked off just a couple of days after the year started, when the first FOMC minutes release of the year showed that the Federal Reserve (Fed) was no kidding about the rate hikes, and that the financial conditions would get real tighter over the year.   And man, they got tighter... way tighter than we expected a year ago, with the Fed raising its interest rates 425bp starting from March.   As a result, Apple lost a third of its value, Amazon lost half of its valuation since the beginning of the year and, this month, became the first US big cap to lose more than $1 trillion in valuation. Netflix lost up to 75% of its value compared to November 2021 peak, and Facebook scraped 77% of its value since September 2021 peak.  Read next: 2023 predictions: All in all I forecast the S&P to fall 5% on the year but the Nasdaq will fall 10% says Ivan Brian, Chief Equity Analyst at FXStreet | FXMAG.COM It has been a terrible year for chipmakers as well. Nvidia, one of the most promising and hyped chipmakers in the US has also lost half of its valuation as, on top of slowing post-pandemic demand, the US blocked exports to the fructuous Chinese market.  And last but not least, Tesla contributed greatly to the fall of the S&P500, losing almost half of its valuation only since the start of the year. And the share price is down by more than 70% since its November 2021 peak, as Elon Musk made the headlines again this year, but not for good reasons. Twitter has in fact taken a huge toll on man's reputation. 2022 hasn't been his year.   A bad year...  In reality, 2022 hasn't been the year of no one, I guess. A was started in Ukraine as soon as end February and wreaked havoc in the markets. The Western nations imposed sanctions on Russia in March. Ruble lost half of its value against the dollar at the wake of its first attack in Ukraine, but only to close the year flat, and even slightly stronger against the dollar compared to before the war, as the skyrocketing oil prices filled the country's coffers.   Oil on the other hand soared to $130pb at the wake of Russia's first attacks on Ukraine. We had all kind of speculation that it would rally to the $180-200pb area. But Thank God that didn't happen. We are preparing to end the year below $80pb instead, as the recession fears took a toll on bullish bets.   But energy stocks had a great year. Exxon Mobil, Chevron, BP, Shell did so great that the desperate Western governments watching inflation cause a huge cost of living crisis decided to impose windfall taxes on these companies who announced jaw dropping earnings throughout the year and Exxon ended up suing the EU for this decision just a couple of days ago.  While all this was happening, the US' national debt went above the $30 trillion mark.   But the US dollar gained, as the Fed raised rates. Others raised rates as well, but the dollar kept rising.   Cryptocurrencies saw massive outflows, and the outflows revealed the cracks in the system, causing the collapse of the major institutions like Terra Luna, and FTX lately.   And gold hasn't been great in tempering inflation, but at the end of the year, and despite the soaring yields, the yellow metal managed to recover yearly losses, and is even preparing to end the year around 1% higher than where it started in US dollar terms.   So voilà. Everything looked ugly this year, except for energy and the US dollar.   The major take of 2022  The most important take of the year is: the era of easy money ended, and ended for good. It means that the financial markets won't look like anything we knew since the subprime crisis.   This is the beginning of a new era, when central banks will be playing a more subdued role in the markets, with less liquidity available to fix problems – a more than necessary move that came perhaps too late, and too painfully.   And given that there is still plenty of cheap central bank liquidity waiting to be pulled back, the situation may not get better before it gets worse in the first quarters of next year. Recession, inflation, stagflation will likely dominate headlines next year.   Happy New Year!
The USD/CHF Pair Is Likely To Decline More

US dollar has gained impressing 8% this year, but it didn't hurt Swiss franc very much as USD/CHF is only 1% higher

Kenny Fisher Kenny Fisher 30.12.2022 15:59
The Swiss franc is steady on Friday. In the European session, USD/CHF is almost trading at 0.9240, up 0.08%. On Thursday, USD/CHF dropped by 0.6% and hit a low of 0.9210, its lowest level since March 28th. KOF rebounds in December A quiet post-Christmas week wrapped up with the KOF Economic Barometer release today. After losing ground in the past two readings, the index rebounded in December and climbed to 92.2, up from 89.2 in November. This easily beat the estimate of 86.9 points. The main driver for the improvement was stronger manufacturing activity. Earlier this week, ZEW Economic Expectations also headed higher, rising from -57.5 to -42.8 points. The upturn is encouraging, but the indicator is still mired deeply in negative territory, as financial experts remain pessimistic about the Swiss economy’s outlook. As we turn the page to 2023, let’s take a quick look at the highlights of the Swiss franc’s performance over this past year. There have been plenty of ups and downs, but interestingly, USD/CHF is only about 100 points higher from where it was on January 1st. A US dollar rally in September and October saw USD/CHF break parity and hit 1.0148, its highest level since May. Since, then, the momentum has reversed, with the Swiss franc gaining an impressive 800 points since November 1st. Read next: Real bargains on Wall Street, Barron's point to, i.a. Google and Amazon as undervalued stocks | FXMAG.COM The US dollar has enjoyed a strong year, with the dollar index rising 8%, its best performance since 2015. The greenback has been boosted by a drop in risk appetite, but this didn’t hurt the Swiss franc, as both the dollar and the franc are Swiss haven currencies. In a major policy change, the Swiss central bank raised rates three times this year, which helped the Swiss franc keep pace with the US dollar even as the Fed aggressively raised rates. USD/CHF Technical USD/CHF is putting pressure on support at 0.9256. Below, there is support at 0.9159 There is resistance at 0.9377 and 0.9498   This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds. Swiss franc touches 9-month high - MarketPulseMarketPulse
Federal Reserve splits highlighted by May FOMC minutes

FOMC Minutes may show Fed members' interest in longer hiking

FXStreet News FXStreet News 03.01.2023 15:34
The US ISM Manufacturing PMI is seen dropping further to 48.5 in December. A potential improvement in US ISM components could drive the US Dollar trades. Moves could be restricted ahead of the Federal Reserve December meeting minutes. The US manufacturing sector contraction is set to deepen further in the final month of 2022, having shrunk for the first time in November after May 2020 when the economy began to recover from the Covid lockdown-induced downturn. The US data will be published on Wednesday at 15:00 GMT. The November ISM report showed that manufacturing registered an overall 49.0, down sharply from October’s 50.2, with New Orders and Employment sub-indices registering further deterioration. In December, the headline ISM Manufacturing PMI is seen lower at 48.5 while the New Orders Index is expected to improve to 48.1 alongside the Employment Index at 49.1. The US ISM Prices Paid component is likely to continue its downtrend, foreseen at 42.5 in December when compared to the previous reading of 43.0. Source: FXStreet.com Despite expectations of a softer headline figure, an improvement in new orders could provide the much-needed respite to the US Dollar buyers at a time when the European demand for orders is seen dwindling, with the full impact of winter and the Russia-Ukraine war coming through. Even domestic demand and exports are expected to be badly hit due to the stubbornly-high inflation in the US economy. Also, investors will gear up for the US Federal Reserve December meeting minutes due for release at 19:00 GMT, limiting the US Dollar price action on the US ISM data release The US labor market continues to show an uptrend but remains at risk of layoffs, with the global economy heading closer to a recession this year. However, the temporary signs of recovery in the sub-indices could revive the demand for the US Dollar. However, the US Dollar price reaction could be short-lived amid the extended retreat in the Price Paid component, suggesting a further easing of inflationary pressures in the world’s largest economy. Read next: 2023 Predictions: Natural gas prices in Europe and the US may in the nearterm struggle to find upside momentum with inventories staying elevated due to mild winter weather and consumers curbing demand| FXMAG.COM Also, investors will gear up for the US Federal Reserve December meeting minutes due for release at 19:00 GMT, limiting the US Dollar price action on the US ISM data release. Minutes of the Fed’s December meeting are likely to show that members see the need for interest rates to go higher for longer but markets will look for hints on any talk of pausing the tightening cycle or debates surrounding rate cuts later this year. It’s worth noting that markets are pricing in rate cuts for late 2023, with Fed fund futures implying a range of 4.25 to 4.50% by December. To conclude, mixed US ISM Manufacturing survey findings could fuel temporary buying in the US Dollar, which could fizzle out as the Fed expectations will lead the way starting out 2023.
FX Daily: Euro’s attractiveness on the rise

Forex: Euro against US dollar - technical analysis by InstaForex's Mourad El Keddani (January 3rd)

InstaForex Analysis InstaForex Analysis 03.01.2023 20:35
Overview : The EUR/USD pair drops sharply today but stays above 1.0520 resistance turned support. Intraday bias remains neutral first. On the downside, break of 1.0520 will confirm short term topping, on bearish divergence condition in 1 hour RSI(14). Deeper fall would be seen back to 1.0520 support and below. Focus stays on 38.2% retracement Fibonacci levels of 1.0594 (morning high) to 1.0548 at 1.0520. Rejection by 1.0594 will suggest that price actions from 1.0520 medium term bottom are developing into a corrective pattern. Thus, medium bearishness is retained for another fall through 1.0500 at a later stage. The EUR/USD pair traded lower and closed the day in the red near the price of 1.0548. Today it, on the contrary, grew a little, having risen to the level of 1.0594. On the hourly chart the EUR/USD pair is still trading below the moving average line MA (100) H1 (1.0594). The situation is similar on the four-hour chart. Based on the foregoing, it is probably worth sticking to the south direction in trading, and as long as the EUR/USD pair remains below MA 100 H1, it may be necessary to look for entry points to sell for the formation of a correction. The EUR/USD pair hit the weekly pivot point (1.0594) and resistance 1, because of the series of relatively equal highs and equal lows. But, the pair has dropped down in order to bottom at the point of 10520. Hence, the major support was already set at the level of 1.0520. RSI is still calling for a strong bullish market as well as the current price is also above the moving average 100 Moreover, the double bottom is also coinciding with the major support this week. Additionally, the RSI is still calling for a strong bullish market as well as the current price is also above the moving average 100. Therefore, it will be advantageous to sell below the resistance area of 1.0594 with the first target at 1.0500. From this point, if the pair closes below the weekly pivot point of 1.0594, the EUR/USD pair may resume it movement to 1.0500 to test the weekly support 1. the, continue towards 1.0450 (the weekly support 2). Read next: 2023 Predictions: Natural gas prices in Europe and the US may in the nearterm struggle to find upside momentum with inventories staying elevated due to mild winter weather and consumers curbing demand| FXMAG.COM Stop loss should always be taken into account, accordingly, it will be of beneficial to set the stop loss above the last bullish wave at 1.0639 . However, sustained break of 1.0594 will raise the chance of trend reversal and target 61.8% retracement at 1.0639. On the upside, however, firm break of 61.8% projection of 1.0639 to 1.0671 from 1.0671 at 1.0713 will pave the way to 100% projection at 1.0713. Relevance up to 18:00 2023-01-04 UTC+1 Company does not offer investment advice and the analysis performed does not guarantee results. The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade. Risk Warning: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 82.74% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. Read more: https://www.instaforex.eu/forex_analysis/307228
How to turn volatility into opportunity? Stephen Dover from Franklin Templeton offers some judicious perspective

Eurodollar: dominance of hawkishness in tomorrow's Fed minutes may support greenback

InstaForex Analysis InstaForex Analysis 03.01.2023 20:58
This morning, the euro/dollar pair abruptly collapsed to the base of the fifth figure, updating a three-week low in price. Although the price hit the 1.0700 support level (the top line of the Bollinger Bands indicator on the D1 timeframe) yesterday, the price has since retreated. Interestingly, there was no formal explanation of a fundamental nature for why there was such a rapid bend to the south. Unemployment in Germany maintained its November level in December (5.5%, with a modest increase, projected to 5.6%), and there were 13 thousand fewer unemployed people than expected, as opposed to projections for a 15 thousand increase Today's economic schedule for EUR/USD is relatively quiet: The crucial release on Tuesday will only be available in the afternoon. We shall learn the early figures for Germany's December inflation growth. German labor market data were released in the first half of the day, although this release is unrelated to the market's overall strengthening of the US dollar. In addition, the report was positive: unemployment in Germany maintained its November level in December (5.5%, with a modest increase, projected to 5.6%), and there were 13 thousand fewer unemployed people than expected, as opposed to projections for a 15 thousand increase. Trading in EUR/USD, however, disregarded this release. The pair moved in lockstep with the US dollar index, which in a matter of hours went from 103.23 to a daily high of 104.54. All currency pairs in the major group were impacted by these dynamics, and the euro/dollar pair was no exception. Regarding the nature of the US currency's behavior at the start of Tuesday's European session, there is no agreement on the market. I believe that several diverse basic reasons that were simmering last week and have now become apparent have increased demand for a secure dollar. Generally speaking, the strengthening of the dollar is advanced in character on the eve of the release of the minutes from the Fed and nonfarm meeting in December, as well as against the backdrop of rising anti-risk sentiment. Due to unstable market conditions, it is dangerous to initiate short bets on the EUR/USD pair at the moment. First of all, the suddenness of the price cut and the absence of a convincing explanation are concerning. There are numerous verbal explanations of the current situation available. It is clear that China indirectly supports the safe dollar. Let me remind you that the Chinese government repealed several restrictions associated with the "zero tolerance" COVID policy towards the end of last year. Following that, the prevalence of coronavirus in the country skyrocketed. Unofficial reports claim that between 250 and 300 million Chinese became ill in December, overwhelming the PRC's healthcare infrastructure. According to media reports, hospitals are congested in most areas. It is also reported how busy the crematoriums are (the WHO reports that in China, only 40% of those over 80 received the recommended three doses of the vaccine). The market's stance on the recent events in China has shifted multiple times during the past several weeks. At first, the safe dollar was supported by an anti-risk mentality. The markets' appetite for risk then rose once again when Beijing made it apparent that it would not tighten its COVID policy. However, it appears that the pendulum has now swung back toward panic, giving dollar bulls cause for increased confidence. Additionally, the rise in the number of cases is secondary; China is not likely unable to control a significant outbreak of the disease. The market is still seeing the situation in China through the lens of potential economic repercussions. And these repercussions appeared quickly. Read next: 2023 Predictions: Peter Garnry - Our target for S&P 500 is still around the 3,200 level sometime during the year leading to an overall drawdown of around 33% from the peak in early 2022 | FXMAG.COM Today's Caixin manufacturing PMI index for China dropped to 49.0, placing it in negative territory Thus, contrary to expectations of a reduction to 48 points, the manufacturing PMI for December in China decreased to 47.0 according to the data released today and on Saturday. For the third consecutive month, the indicator is below the critical 50-point threshold. Today's Caixin manufacturing PMI index for China dropped to 49.0, placing it in negative territory. This dynamic, according to many analysts, is brought on by the worsening of China's epidemiological situation, which is causing a temporary labor shortage and more supply chain disruptions. The Chinese factor is not the dollar's only ally, though. Before the release of the December Fed meeting minutes, in my opinion, the dollar is in high demand. Let me remind you that the December meeting's outcomes put pressure on the US dollar due to Jerome Powell's dovish remarks (which permitted a downward estimate of the PEPP's current tightening cycle's terminal point) and a pause in rate hikes. John Williams, the president of the Federal Reserve Bank of New York, addressed the audience after the meeting and shocked the markets with his hawkish stance. He specifically stated that the rate of increase in consumer prices in the United States is "stubbornly high." In addition, he said that the regulator would increase the base rate "as far as it takes to bring inflation under control," which might go over the proclaimed maximum of 5.1%. The United States inflation rate has started to decline, but, according to Williams, who has a permanent vote on the Open Market Operations Committee, "a considerably more significant slowdown is required so that the Fed may soften its position on the need to tighten policy." The dollar will get a lot of support if the document's wording is primarily hawkish The minutes of the December meeting have become more important in light of these contradictory signals. The dollar will get a lot of support if the document's wording is primarily hawkish. Now, the value of the dollar is rising in advance following the "buy on rumors, sell on facts." However, the fact that the EUR/USD price fell by 150 points without any discernible, tangible, or clear causes is concerning. Since the aforementioned fundamental elements grew in strength throughout the New Year period and now have the function of a trigger, it may be concluded that such dynamics are also caused by the fact that today is the first working day of 2023. Given that such impulsive moves on such fragile bases are typically unstable, it is impossible to discuss the priority of short positions on the EUR/USD pair in this instance. Right now, it is best to adopt a wait-and-see strategy, keeping an eye on how the price moves around the 1.0505 support level. The Fed procedure in this situation can play a significant role in the medium term, supporting or weakening the US currency. If the bears can break through this price barrier, then in this case it will be possible to talk about the first symptoms of a resumption of the southern trend. Relevance up to 12:00 2023-01-04 UTC+1 Company does not offer investment advice and the analysis performed does not guarantee results. The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade. Risk Warning: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 82.74% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. Read more: https://www.instaforex.eu/forex_analysis/331381
Issue on the US debt ceiling persists, Joe Biden goes back to the US

US dollar index: what will be the signal for building short positions?

InstaForex Analysis InstaForex Analysis 04.01.2023 16:29
The focus of traders today is the publication (at 15:00 GMT) of the Institute for Supply Management (ISM) report with key indicators on the U.S. manufacturing sector (forecast to decline from 49.0 to 48.5 in December), as well as the minutes from the December FOMC meeting (at 19:00 GMT). The monthly ISM report publishes (among other data) the PMI in the manufacturing sector of the U.S. economy, which is an important indicator of the state of this sector and the U.S. economy as a whole. The relative decline of the index and the result below 50 is seen as a negative factor for the U.S. dollar, as it indicates a slowdown in business activity. The minutes from the December Fed meeting may indicate further actions of the U.S. central bank. At the moment, most market participants expect the Fed to raise the interest rate by 0.25% to 4.75% on February 1. As you know, in December, the Fed leaders raised the interest rate by 0.50% after raising the rate by 0.75% in June, July, September and November. Federal Reserve Chairman Jerome Powell said during the press conference that much more evidence is needed to be sure that inflation will fall, holding interest rates at peak levels until they are really confident that inflation will decline in a sustainable way. "That 4.7% unemployment rate is still a strong labor market", Powell said. The Fed "hasn't reached a sufficiently restrictive policy level yet... there is some rate hike to go while the FOMC continues to consider risks to inflation as upward." It may surpise the market if the Fed hikes interest rates by 0.50% or even 0.75%, rather than 0.25%, at its January 31 and February 1 meetings. However, for Fed policymakers to have more of an argument for that, we have to wait for the updated data on consumer inflation in the U.S. on January 12. And here, we expect a further decline of inflation in December to 6.7% from 7.1%, 7.7%, 8.2%, 8.3%, 8.5%, and a 40-year high of 9.1% in June. Clearly, if the outlook is confirmed, supporters of the Fed's super tight monetary policy slowdown will have more arguments on their side.     And this week, the first important argument for the Fed's leaders when making such a decision will be the publication (on Friday at 13:30 GMT) of the monthly report of the U.S. Department of Labor with data for December. The state of the labor market (together with GDP and inflation) is a key indicator for the Fed in determining the parameters of its monetary policy. Wages and salaries are expected to have continued to rise in December, while unemployment remained at pre-pandemic lows. The weak point in the Labor Department's report may be the number of new jobs created outside the agricultural sector. Forecasts assumed figures to grow by +200,000 in December (preliminary forecast assumed NFP with a value of +57,000) after rising by +263,000 in November. If the figure is weaker than the forecast and is below +150,000, the probability of a softer interest rate decision at the upcoming FOMC meeting will increase. Conversely, if the data from the U.S. Department of Labor report exceeds market expectations, with a strong Bureau of Labor Statistics inflation report (January 12), market participants will expect another tough decision from the Fed leaders and an interest rate hike of at least 0.50%. The general conclusion that can be drawn from Powell's speech at the December 14 press conference is that "in order to achieve a sufficient level of tightening, it is necessary to continue to raise rates." This means that interest rates will continue to rise. In fact, this is a bullish factor for the dollar. In the meantime, the dollar remains under pressure, and its DXY index is developing a downward trend. DXY futures are currently trading near 103.85, 70 pips above the local low (since July 2022) of 103.15 reached at the end of December. The dollar is in desperate need of strong news or macro economic drivers. Maybe it will get one this week. Or not—if the aforementioned reports expected today and Friday do not meet the expectations of the market and dollar buyers.   From a technical point of view, the dollar index (CFD #USDX in the MT4 trading terminal) continues to trade in the medium-term bear market zone, below the key resistance levels 105.40, 104.45. The signal for building up short positions will be a breakdown of the last month's low at 103.36. Read next: Bitcoin: As for the price levels, one should pay attention to the level of $18,000 that has been recently hit. Probably, this level may well serve a starting point for buyers in case the price holds above it on a daily chart | FXMAG.COM Long-term downside targets for DXY are at 100.00, 98.55 and 93.00. A breakdown of support at 93.00, in turn, will mark a breakdown of the global bullish trend of the DXY. Relevance up to 13:00 2023-01-07 UTC+1 Company does not offer investment advice and the analysis performed does not guarantee results. The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade. Read more: https://www.instaforex.eu/forex_analysis/331455
Brazilian President suggesting replacing US dollar with own currencies of developing countries

Whereas a year ago, inflation was at a 50 year high, and double figures were being approached, inflation in the United States had declined to 6.5 percent in December

Gary Thomson Gary Thomson 25.01.2023 22:42
According to Gary Thompson (FXOpen UK), lower print of the US GDP could make GBPUSD even more volatile. The expected print is 2.6%. FXMAG.COM: USA GDP is the big one this week, what asset could benefit the most from the lower/higher-than-expected print? Are you of the opinion GDP will be seriously taken into consideration by FED?  Gary Thomson, Chief Operating Officer at FXOpen UK: The forthcoming announcement which will reveal the GDP for the fourth quarter of 2022 in the United States is a very interesting metric specifically because this is the period of last year during which the previously rapidly increasing inflation rate actually slowed down, stopped and inflation began to reduce. Whereas a year ago, inflation was at a 50 year high, and double figures were being approached, inflation in the United States had declined to 6.5 percent in December. The reducing levels of inflation began in October, and by November 2022 the inflation rate was standing at 7.1 percent, therefore looking quite healthy compared to mainland Europe and the United Kingdom. In the United Kingdom, inflation remains at approximately 10%. Therefore, the Federal Reserve Bank may be unperturbed and not concerned with either reducing or increasing interest rates, largely because the inflation levels are now far lower than previously, but the economy is still slowing, therefore a conservative view may be taken. Read next: Trump Returns To Social Media, Meta Will Restore The Former President's Account| FXMAG.COM The labor productivity of the United States' workforce will be interesting during this period which shows strength in the US economy compared to its European counterparts, but of course lower inflation in the US means that North American companies need to pay more to their European suppliers and subsidiaries as the inflation remains high in those regions by comparison, potentially affecting corporate revenues. Therefore, GBPUSD values may be worth watching, as the British Pound has been very volatile against the Dollar recently and a lower GDP figure may exacerbate this. It is entirely possible that the overall economy may have actually slowed during the fourth quarter of 2022, and one particular forecast alludes to that already. Tomorrow, officials are expected to report that US GDP grew by 2.6 percent in the three months to December 31, according to a Bloomberg poll of economists, which, if this turns out to be correct, would represent a move lower from the 3.2 percent in the third quarter.
Federal Reserve splits highlighted by May FOMC minutes

Bitget analyst about the US GDP: In my opinion, we will see higher GDP than expected 2% - in Q3 and Q4 revisions we’ve seen stronger economic momentum than expected

Dominik Podlaski Dominik Podlaski 24.01.2023 16:50
We're happy to share Dominik Podlaski's, analyst at Bitget views on the RBA decision, British pound, the US GDP and earnings. This week Australian CPI goes public what do you expect from the print and the RBA decision on February 7th? Since the beginning of October we have had some relief at the global market, although it didn’t change the looming threat of recession. In my opinion, Australian CPI already peaked in October, so I expect it to lower down to 6.8%. On the other hand, I believe it won’t change the strict attitude of the RBA. 15th of December EBC followed FED hawkish approach. Klaas Knot, member of EBC from Denmark, declared the raise of interest rates by 50 points in February and March. The continuation of monetary policy tightening in Q2 is also probable. RBA governor Philip Lowe highlighted multiple times their main goal – “… target for monetary policy in Australia is to achieve an inflation rate of 2–3 per cent…” Therefore, in my opinion RBA will follow the USA and the EU in this case and we can expect a raise by half a percentage point. On top of that, I expect the following RBA meetings to have similar results. Read next: USA Q4 GDP should show a growth to 2.5% with a 2.6% clip for real final sales and a tiny $2 bln inventory addition | FXMAG.COM (Source: Reserve Bank of Australia (rba.gov.au)). Do you expect GBP may be somehow boosted by PMIs on Tuesday? This PMI may give GBP slight spike, especially if we will have reading over 50, what could mean major trend reversal. Right now, GBP it’s regaining some of its strength. Unfortunately, in the long term it won’t matter, as U.K. economy may be severely hit by recession, as economists predict. Goldman Sachs forecast a 1.2% contraction in U.K. real GDP over 2023, while other major countries may expect small (but still) expansion. Therefore I perceive incoming weeks as calm before the storm for GBP, as in my scenario it will surely follow the U.K. shattered economy. (Source: GDP - International Comparisons: Key Economic Indicators - House of Commons Library (parliament.uk)) FED won’t consider changing their plans after the announcement of GDP, as in this case even the good news for 2022 won’t be satisfying with the terrible GDP forecasts for 2023 In my opinion, we will see higher GDP than expected 2% - in Q3 and Q4 revisions we’ve seen stronger economic momentum than expected. Despite of this rather positive surprise it will still on the decreasing trend. Therefore, I expect safe haven assets, like gold, silver and platinum, to thrive. We may also see higher demand for Government Bonds, although the hawkish attitude of FED may lower the amount of investors looking for them. Higher than expected print may also be impulse for DXY to have a relief bounce, but I’m afraid it will still remain in the downtrend. (Source: Economic Forecast for the US Economy (conference-board.org)) FED won’t consider changing their plans after the announcement of GDP, as in this case even the good news for 2022 won’t be satisfying with the terrible GDP forecasts for 2023. Additionally, the GDP measurement is inflated by CPI and its lagging indicator, while FEDs decisions will have an effect in the near future. Therefore, in my honest opinion, the FED will remain strictly hawkish regardless of the GDP reading. Huge rounds of redundancies by Microsoft, Google, Amazon measured in thousands of employees raised many questions about their status Dark clouds gathered over market giants. Huge rounds of redundancies by Microsoft, Google, Amazon measured in thousands of employees raised many questions about their status. Therefore I don’t expect the earnings data to be impressive, but I wouldn’t be surprised if none of them actually witnessed shrinking revenue. Despite what the audience may be thinking in my opinion it’s not a sign of weakness, but an adaptation. In particular, they will need to do some positive PR after the redundancies and slowed down growth. During times of market despair strongest should make bold moves instead of counting on stable growth, and that’s what we can expect from them in the incoming weeks. Microsoft just’ve announced multibillion dollar investments with OpenAI – creator of ChatGPT. Therefore I expect nothing less from other giants but fireworks as well. (Source: Microsoft and OpenAI extend partnership - The Official Microsoft Blog)
Australian dollar against US dollar - "It seems that the currency will soon hit a price above 0.68"

Australia: It is better to be prepared for lower data and a slowdown in CPI to 7.2-7.3%

Alex Kuptsikevich Alex Kuptsikevich 24.01.2023 15:38
Let's hear from Alex Kuptsikevich, Senior Financial Analyst at FxPro, who answers FXMAG.COM team questions. We asked Alex about Australian CPI, UK PMIs, British pound and the US GDP. This week Australian CPI goes public what do you expect from the print and the RBA decision on February 7th? On average, market analysts expect inflation to accelerate to 7.5%. It is better to be prepared for lower data and a slowdown in CPI to 7.2-7.3%. The Australian dollar has risen more than 14% from its October lows, helping to reduce external price pressures. Also worth noting is the 14.6k drop in employment in December and the stubborn unemployment rate of 3.5% for the past six months. In other words, the labour market needs to do more to accelerate inflation. At the same time, the construction market has been in steady decline since October 2021, which is a significant negative signal for the economy. As in most developed countries, such a disposition could already be working towards lower annual price growth. If we are right, AUDUSD could give back some of January's gains as the market reassesses the outlook for monetary policy. The weak data reinforced the double top formation signal in the GBPUSD The UK PMI indices recorded another month of declining activity. However, the rise in the manufacturing PMI from 45.3 to 46.7 suggests that the rate of decline is slowing. The services PMI fell from 49.9 to 48.0, clearly indicating that the recession is spreading to the broader economy. The CBI's industrial orders balance was also a nasty surprise, falling from -6 to -17, the lowest since February 2021. The weak data reinforced the double top formation signal in the GBPUSD, which is turning lower for the second time since mid-December as it approaches 1.2450. Traders are likely betting that the Bank of England will struggle to maintain the pace of policy tightening in light of the economic data released. This is not for nothing, given the reversal in the inflation trend. Read next: The Aussie Pair Is Above 0.70$, GBP/USD Pair Lost Its Level Of 1.24$| FXMAG.COM The GDP report has a good chance of delivering an unpleasant surprise, pushing the dollar further down The impact of US GDP on the markets isn't a trivial issue. Much depends on the balance between growth and inflation. If US growth comes in at or above expectations, the Fed may have more incentive to keep raising rates for longer than the markets are currently pricing in. This would be negative for equities and oil but positive for the dollar. Such a market reaction is long overdue. However, it is still too early to confidently bet on the Fed's hawkishness to take on the entire market. The GDP report has a good chance of delivering an unpleasant surprise, pushing the dollar further down. Still, it is highly likely to push equities and metals higher in the short term. 
Challenges Ahead: Tense Social Climate and Weak Outlook for the French Economy

USD Struggles to Gain Traction Despite Strong Data: FX Daily Analysis

ING Economics ING Economics 07.07.2023 09:29
FX Daily: Dollar late to the party Treasuries are hitting key levels on big US data surprises, but the dollar is not finding real support. The dollar may be mirroring some lingering reluctance to align with the dot plot’s two hikes, but market conditions point to a stronger greenback in the near term, barring a substantial downside surprise in payrolls today. Watch jobs numbers in Canada too.   USD: Surprisingly soft The large and unexpected jump to almost 500k in ADP private payroll numbers yesterday left clear marks across asset classes. Despite some recovery later in the session, US equities took a hit, and European ones closed with a nearly 3.0% loss. Treasuries are now trading around the two key benchmarks: 5.0% for the 2Y and 4.0% for the 10Y after a disastrous session for bonds. This would appear to be the perfect recipe for a substantial dollar rally, which hasn’t materialised however, and we are observing instead some dollar selling this morning. Indeed, the dollar had already moved in advance of yesterday’s release as the minutes had offered clear hawkish hints on Wednesday. Incidentally, markets still appear unconvinced to fully price in two rate hikes by the Fed despite the strong ADP (which arguably aren’t hard data, and have been misleading at times) and ISM services figures. The Fed funds curve has not shifted particularly higher, with the peak rate still seen at 36bp from here, so 14bp short of dot plot projections. In a way, the dollar might still be mirroring that lingering market pricing-dot plot gap. At the same time, the market backdrop does seem to point at dollar strength at this juncture, as we doubt this morning’s mild USD correction will have legs unless US payrolls released later today move in the direction of ADP figures and surprise on the downside. The consensus for the headline jobs number is 230k, but may be higher after the strong ADP read. Unemployment is also expected to tick lower to 3.6% and some focus will, as usual, fall on wage growth. Barring major disappointments, it should not take much to keep the Fed’s hawkish narrative going, and markets should have room to keep inching closer to the pricing in two rate hikes. The path for a more supported dollar in the near term appears to be the most obvious one, in our view, and a return above 104.00 in DXY in the coming days looks likely.
Challenges Ahead: Tense Social Climate and Weak Outlook for the French Economy

USD Struggles to Gain Traction Despite Strong Data: FX Daily Analysis - 07.07.2023

ING Economics ING Economics 07.07.2023 09:29
FX Daily: Dollar late to the party Treasuries are hitting key levels on big US data surprises, but the dollar is not finding real support. The dollar may be mirroring some lingering reluctance to align with the dot plot’s two hikes, but market conditions point to a stronger greenback in the near term, barring a substantial downside surprise in payrolls today. Watch jobs numbers in Canada too.   USD: Surprisingly soft The large and unexpected jump to almost 500k in ADP private payroll numbers yesterday left clear marks across asset classes. Despite some recovery later in the session, US equities took a hit, and European ones closed with a nearly 3.0% loss. Treasuries are now trading around the two key benchmarks: 5.0% for the 2Y and 4.0% for the 10Y after a disastrous session for bonds. This would appear to be the perfect recipe for a substantial dollar rally, which hasn’t materialised however, and we are observing instead some dollar selling this morning. Indeed, the dollar had already moved in advance of yesterday’s release as the minutes had offered clear hawkish hints on Wednesday. Incidentally, markets still appear unconvinced to fully price in two rate hikes by the Fed despite the strong ADP (which arguably aren’t hard data, and have been misleading at times) and ISM services figures. The Fed funds curve has not shifted particularly higher, with the peak rate still seen at 36bp from here, so 14bp short of dot plot projections. In a way, the dollar might still be mirroring that lingering market pricing-dot plot gap. At the same time, the market backdrop does seem to point at dollar strength at this juncture, as we doubt this morning’s mild USD correction will have legs unless US payrolls released later today move in the direction of ADP figures and surprise on the downside. The consensus for the headline jobs number is 230k, but may be higher after the strong ADP read. Unemployment is also expected to tick lower to 3.6% and some focus will, as usual, fall on wage growth. Barring major disappointments, it should not take much to keep the Fed’s hawkish narrative going, and markets should have room to keep inching closer to the pricing in two rate hikes. The path for a more supported dollar in the near term appears to be the most obvious one, in our view, and a return above 104.00 in DXY in the coming days looks likely.
US Inflation Reports: Key Catalysts for Dollar Pairs and Market Volatility

US Inflation Reports: Key Catalysts for Dollar Pairs and Market Volatility

InstaForex Analysis InstaForex Analysis 10.07.2023 11:48
Traders will focus on the upcoming US inflation report. The US will publish key inflation reports that will trigger high volatility among dollar pairs, including the EUR/USD pair. At the end of last week, buyers actively traded as they approached the boundaries of the 10th figure. Traders interpreted June's Non-farms against the US currency, although the report itself was rather contradictory (for example, the wage component came out in the "green").   Inflation reports can restore confidence to the dollar bulls if they reflect an acceleration of the main indicators. But they can also plunge the greenback, enhancing doubts about the interest rate hike within the "post-July" period (the fact of the rate hike at the July meeting is beyond doubt, judging by market expectations). Therefore, traders will focus on the three US inflation reports that will be published during the upcoming week. All other macroeconomic reports will be of secondary importance, although they should not be ignored either.   Consumer Price Index The most important release of the week is the report on the growth of the consumer price index in the US for June (Wednesday, July 12). According to most experts, the indicator will reflect a slowdown in inflation growth. Thus, the general consumer price index in June should decrease quite sharply - to 3.1% y/y (from the previous value of 4.0%). The core index, excluding food and energy prices, should also demonstrate a downward dynamic, slowing down from the May value of 5.3% to 5.0% y/y. Take note that even if the CPI surprises market participants with unexpected growth, this fact is unlikely to fundamentally change the situation in the context of the July FED meeting. According to the CME FedWatch Tool, the likelihood of a rate hike this month is 93%.   That is, traders are practically confident in the hawkish outcome of the July meeting - the "green tint" of the inflation report will maintain (confirm) this confidence, but no more. However, if the consumer price index ends up in the "red", the dollar will be under quite strong pressure.   The fact is that the probability of another rate hike in September is now only 24% (again, according to the CME FedWatch Tool). If inflation indicators decrease at a more active pace, the probability of another increase (after July) by the end of the current year will weaken, and this fact will put pressure on the greenback. Producer Price Index, Import Price Index... and more Interestingly, the other inflation reports to be published in the coming week are also expected to reflect a slowdown in US inflation. For example, on Thursday, July 13, we will learn the value of the producer price index.   Experts believe that the overall PPI in monthly terms will come out at 0.2%, and in annual terms - at 0.4%. In annual terms, the indicator has been consistently decreasing for 11 months in a row, and June will accordingly be the 12th month. If it comes out at the forecast level, it will be the weakest result since August 2020. The core producer price index should show a similar dynamic. In annual terms, it should decrease to 2.7% (from the previous value of 2.8%). In this case, it will be the fifteenth consecutive decrease in the indicator. For comparison, it should be noted that in March of last year the base PPI was at 9.6%. On Friday, July 14, we will learn the dynamics of the import price index.   This indicator can be an early signal of changes in inflation trends, or their confirmation. In this case - more likely a confirmation. According to general forecasts, in monthly terms, the indicator will remain in the negative area, standing at -0.1%. In annual terms, the index has been below zero for three months in a row, and in June it should also remain in the negative area (-6.9%). Certainly, aside from US inflation reports, the economic calendar for the upcoming week is packed with other events: for instance, many Fed representatives (Barr, Bostic, Daly, Mester) will speak on Monday, the ZEW indices will be published on Tuesday, and a speech by Fed Reserve representative Neel Kashkari and ECB governing council member Philip Lane is expected on Wednesday. Also, we have the release of the ECB's June meeting minutes and the initial jobless claims data in the US.   On Friday, the release of the University of Michigan's consumer sentiment index and a speech by Fed Reserve governing board member Christopher Waller is expected. But all these events will serve as a kind of information backdrop. The main focus will be on US inflation. Conclusions The aforementioned inflation reports have the potential to greatly influence the dollar, especially if they end up in the "red", i.e., if the pace of inflation decline in the US accelerates. Amid contradictory Nonfarm, this would mean that the Federal Reserve may limit itself to just one additional rate hike, which will obviously occur at the July meeting.   The July rate hike has already been factored into the market, so any doubts about further tightening of monetary policy will be detrimental to the greenback. In this case, buyers will be the beneficiaries of the current situation: their path will be open not only to the boundaries of the 10th figure, but also to the 1.1080 mark (upper line of the Bollinger Bands on the weekly chart).  
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Soft US CPI is not enough: Fed's hawkish stance remains strong

Ipek Ozkardeskaya Ipek Ozkardeskaya 12.07.2023 08:30
Soft US CPI is not enough.    The US dollar extended losses after breaking a long-term ascending channel base yesterday. The British pound rallied on yet another stronger than expected wages growth data released yesterday morning. Average weekly earnings excluding bonuses increased 7.3% in the three months to May. And although the unemployment rate ticked up to 4%, it was because more Brits started looking for jobs, and not because people lost the jobs they had.   But don't be jealous of Brits that get such a good jump in their pay because UK inflation is still too hot. The average mortgage rate rose to 6.6%, the highest since 2008, inflation in Britain is sitting at 8.7%, and according to truflation, prices grow at a speed that's faster than 11%. The thing is, the robust wages growth partly explains why the Bank of England (BoE) is having so much pain fighting inflation, and that's why yesterday's data fueled the expectation of another 50bp hike from the BoE at its next meeting. The BoE's policy rate is seen peaking at the 6.5/7% range by the Q1 of next year as predicted by many analysts. Cable hit 1.2970 level, the highest since last April, but whether this really could continue will depend on 1. where the US dollar will be headed after today's CPI data in the short run, and 2. where the UK economy is headed if the BoE hikes rates to 6.5/7% range in the long run. Because the BoE hikes will continue pressuring the British housing market, and growth, and that could limit Cable's topside potential following a kneejerk positive reaction.     Lower US CPI won't be enough to soften the Fed hawks' hand.  The consumer price index in the US is expected to have fallen to 3.1% from 4% printed a month earlier. But unfortunately, it won't be enough to prevent the Fed from further rate hikes, because the further fall in headline inflation to 3% is due to a favourable base effect on energy prices, while core inflation is expected to remain sticky at around the 5% mark - still more than twice the Federal Reserve's (Fed) 2% policy target.   Plus, the rebound in oil prices hints that the risk of an uptick in headline inflation is building stronger for the coming months. The barrel of American crude rallied past the 100-DMA yesterday and is flirting with the $75pb level this morning. Trend and momentum indicators remain positive, and we are not in overbought territory just yet, meaning that this rally could further develop. The next natural target for the oil bulls stands at the 200-DMA, at $77pb level. In percentage terms, we are talking about a 12% rally since the start of the month, and the rebound is a response to the further production restriction from Riyadh and Moscow that are determined to push oil prices to at least $80pb level, and also Beijing's stepping up efforts to boost the Chinese economy by fresh monetary and fiscal stimulus.   But despite the lower OPEC supply and news of fresh monetary and fiscal stimulus from China, US crude should see a solid resistance into $77/80 range as, yes, in one hand, OPEC+ is cutting supply to boost prices, and their supply cuts will dampen the global oil glut in H2 - even more so if China finally achieves a healthier recovery. But on the other hand, the Chinese recovery is not a won game just yet, while increased oil output outside the cartel helps keeping price pressure contained. American crude production is on track for a record year this year, and half of the new crude is coming from the US where companies like Devon Energy that deliver strong output thanks to improved efficiencies.     RBNZ stays pat, BoC to deliver a final 25bp hike  The Reserve Bank of New Zealand (RBNZ) kept its policy rate unchanged at 5.5%. Later today, the Bank of Canada (BoC) is expected to announce a final 25bp hike in this tightening cycle. The Fed however is seen hiking two more times as the strength of the US jobs data, combined with solid economic data, and little pain on US housing market thanks to life-long mortgages.   Therefore, it's interesting that the US dollar depreciates while there is nothing that hints at softening in the Fed's hawkish policy stance. That, and the fact that we will soon be flirting with oversold market conditions in the US dollar hint at a rebound in the greenback, if backed with robust core inflation and strong economic data.     By Ipek Ozkardeskaya, Senior Analyst | Swissquote Bank  
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Dollar's Strength: A Consequence of Limited Alternatives

ING Economics ING Economics 11.08.2023 10:44
FX Daily: Dollar benefits from a lack of alternatives The US remains on an encouraging disinflation track, but the dollar is not turning lower. This is, in our view, due to a lack of attractive alternatives given warning growth signals in other parts of the world (such as the eurozone and China). Evidence of a US economic slowdown is needed to bring USD substantially lower.   USD: Disinflation not enough for the bears July’s US inflation numbers released yesterday were largely in line with expectations, reassuring markets that there are no setbacks in the disinflationary process for now. Core inflation inched lower from 4.8% to 4.7%, while the headline rate suffered a rebound (from 3.0% to 3.2%) due to a reduced base effect compared to previous months, which was still smaller than the consensus of 3.3%. With the exception of resilience in housing prices, price pressures clearly abated across all components. All in all, the US report offered reasons for the Fed and for risk assets to cheer, as the chance of another rate hike declined further. Equities rallied and the US yield curve re-steepened: the dollar should have dropped across the board in this scenario. However, the post-CPI picture in FX was actually more mixed. This was a testament to how currencies are not uniquely driven by US news at the moment. The Japanese yen drop was not a surprise, given abating bond and FX volatility, equity outperformance and carry-trade revamp, but FX markets seemed lightly impacted by CPI figures and the subsequent risk-on environment, as many high-beta currencies failed to hang on to gains. From a dollar point of view, we think the recent price action denotes a reluctance to rotate away from the greenback given the emergence of concerning stories in other parts of the world. This is not to say that the activity outlook in the US is particularly bright – jobless claims touched a one-month high yesterday, and the outlook remains very vulnerable to deteriorated credit dynamics – but if economic slowdown alarms are flashing yellow in Washington, they are flashing amber in Frankfurt and Beijing. Chinese real estate developer Garden reported a record net loss of up to $7.6bn during the first half of the year yesterday, at a time when China’s officials are trying to calm investors’ nerves about another potential property crisis. Back to the US, PPI and the University of Michigan inflation expectation figures out today will clarify how far the disinflation story has gone in July, but we still sense a substantial dollar decline is not on the cards for the moment, or at least until compelling evidence of slowing US activity makes the prospect of Fed cuts less remote. DXY may consolidate above 102.00 over the next few days.
Dollar Strength Continues as 10-year Treasury Surges to 4.34%, Reaching Highest Levels Since Financial Crisis

Dollar Strength Continues as 10-year Treasury Surges to 4.34%, Reaching Highest Levels Since Financial Crisis

Kenny Fisher Kenny Fisher 22.08.2023 09:10
Canadian Dollar Experiences Biggest Intra-day Gain Since End of July. The Canadian dollar has been experiencing a steady weakening against the US dollar since mid-July. The ongoing bullish uptrend of USD/CAD is meeting resistance as foreign exchange traders speculate on the possibility of the Fed and BOC being close to completing their tightening cycles with one more rate hike. Major resistance at the 1.36 level could hold, potentially leading to a pullback targeting the 1.3454 level, the current 200-day SMA. The upcoming week might bring a hawkish stance from Fed Chair Powell, which could revive the king dollar trade. Oil Market Rally Fizzles Amid Strong Dollar Trade and Rising Real Yields Crude oil prices initially rallied in the morning, driven by expectations of a tight oil market due to current backwardation trends. However, the surge in real yields and a potential strong dollar resurgence after Jackson Hole are contributing to the reversal of the oil price rally. While risks to crude demand are emerging, the oil market's tightness should provide some support.     Dollar supported as 10-year Treasury hits 4.34%, highest levels since financial crisis Oil market to remain tight, but so far offers little help for the loonie Loonie was having biggest intra-day gain since end of July   The Canadian dollar has been steadily weakening against the greenback since the middle of July.  The USD/CAD bullish uptrend appears to be facing some resistance as FX traders anticipate both the Fed and BOC are possibly one more rate hike away from being done with tightening. It appears that major resistance from the 1.36 level might hold, so if a pullback emerges, downside could target the 1.3454 level, which is currently the 200-day SMA.  If markets get a very hawkish Fed Chair Powell this week could see the return of the king dollar trade.   Oil The morning oil price rally is fizzling as the strong dollar trade might be back given the surge in real yields.  Crude prices were much higher in early trade on expectations that the oil market would remain tight given the current backwardation. Risks to the crude demand outlook are growing, especially after China disappointed with last night’s easing, but for now a tight market should keep oil supported. The biggest risk for energy traders is if we see a massive wave of dollar strength after Jackson Hole. Right now there are so many oil drivers and most support higher prices. Heating oil prices are elevated and that might continue.  Iran nuclear talks won’t be having any breakthroughs anytime soon. Gulf of Mexico oil production could be at risk as a few formations build on the Atlantic.     Gold Gold’s worst enemy is surging real yields.  It was supposed to be a quiet start to the week for gold with China coming to the rescue and some calm before Friday’s Jackson Hole speech by Fed Chair Powell.  There is a little bit of nervousness from the long-term bulls as gold futures are getting dangerously close to the $1900 level, which could trigger a wave of technical selling.  It seems gold needs some disorderly stress in financial markets for it to rally and that doesn’t seem like it is happening anytime soon. The outlook for the next few quarters is cloudy at best, but it seems that there is still too much strength in the economy that is dampening safe-haven flows for gold.  It doesn’t help that hedge funds are throwing in the towel for gold, which now has net-long positions at a five month low.        
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US Dollar Rises as Bond Market Ignites: A Look at Dollar's Resurgence

ING Economics ING Economics 10.11.2023 10:03
FX Daily: Bond bears give new energy to the dollar A very soft 30-year Treasury auction and hawkish comments by Powell triggered a rebound in US yields and the dollar yesterday. Dynamics in the rates market will remain key while awaiting market-moving US data. In the UK, growth numbers in line with expectations, while in Norway, inflation surprised to the upside. USD: Auction and Powell trigger dollar rebound The dollar chased the spike in US yields yesterday following a big tailing in the 30-year Treasury auction and hawkish comments by Fed Chair Jerome Powell. Speaking at the IMF conference, Powell warned against reading too much into the softer inflation figures and cautioned that the inflation battle remains long, with another hike still possible. If we look at the Fed Funds future curve, it is clear that markets remain highly doubtful another hike will be delivered at all, but Powell’s remarks probably represent the culmination of a pushback against the recent dovish repricing. Remember that in last week’s FOMC announcement, the admission that financial conditions had tightened came with the caveat that the impact on the economy and inflation would have depended on how long rates would have been kept elevated. The hawkish rhetoric pushed by Powell suggests that the Fed still prefers higher Treasury yields doing the tightening rather than hiking again, and that is exactly what markets are interpreting. The soft auction for long-dated Treasuries also signals the post-NFP correction in rates may well have been overdone and could set a new floor for yields unless data point to a worsening US outlook. Today’s highlights in the US calendar are the University of Michigan surveys. Particular focus will be on the 1-year inflation gauge, which is expected to fall from 4.2% to 4.0%. On the Fed side, we’ll hear from Lorie Logan, Raphael Bostic and Mary Daly. Dynamics across the US yield curve will have a big say in whether the dollar can hold on to its new gains. Anyway, we had called for a recovery in DXY to 106.00 as the Fed would have likely pushed back against the dovish repricing. The rebound in yields should put a floor under the dollar, but we suspect some reassurances from the data side will be needed for another big jump in the greenback.
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FX Daily: No Thanksgiving Turkey for Dollar Bears as Resilient Jobless Claims Boost the Greenback

ING Economics ING Economics 23.11.2023 13:11
FX Daily: No turkey for dollar bears The Thanksgiving holiday means thin volumes and no US data releases today. We expect some stabilisation in EUR/USD after strong jobless claims fuelled the dollar rebound. Still, eurozone PMIs might trigger some fresh position-squaring events. In Sweden, we are slightly in favour of a Riksbank hike today, but it is a very close call given krona strength.   USD: Stronger into the Thanksgiving holiday The dollar rose for a second consecutive session yesterday, this time helped by a surprise drop in initial jobless claims to 209k from 233k: an indication of good labour market resilience ahead of the 8 December payrolls data, which will be key in setting the tone for FX into Christmas. University of Michigan inflation expectations were revised higher, although durable goods orders came in softer than expected in October, which probably limited the scope of the market impact of jobless claims. Today, FX flows will be subdued due to the Thanksgiving holiday. Equity and bond markets are closed, and there are no data releases in the US. Part of the rebound in the dollar observed over the past two sessions (especially on Tuesday) may well be related to some profit-taking on risk-on trades and more defensive positioning ahead of Thanksgiving. We think DXY can find some stabilisation around 104.00 into the weekend amid thinner trading volumes and a lack of market-moving data releases in the US.  
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FX Daily: Navigating Central Bank Winds in Year-End Markets

ING Economics ING Economics 18.12.2023 13:49
FX Daily: One last big central bank meeting The dollar is recovering some ground after the pushback from Fed officials against rate cut bets. However, the dovish Dot Plot may work as an anchor for rates and keep the dollar soft into the end of December. In Japan, the BoJ announces its policy in the early hours of tomorrow, and that will direct market expectations about a January hike.   USD: Softer into year-end? The last few days of market action, before volumes dry up for Christmas, should continue to revolve around the “tug of war” between Fed officials trying to temper rate cut speculation and investors who have instead seen a validation of dovish bets from last week’s Dot Plot projections. Data can tip the scale in these situations, so consumer confidence, personal spending, and PCE figures should move the market this week. We don’t expect the last bits of US data in 2023 to paint a very different picture, though. Ultimately, the Dot Plot surprise should keep providing an anchor for rates into the new year and prevent a major dollar rebound in a period that is also seasonally unfavourable for the greenback. It will, however, be important to see how much louder the post-meeting pushback against rate cut bets by Fed officials will be. We’ll hear from Chicago Fed President Austan Goolsbee today and Raphael Bostic tomorrow, but with Christmas getting closer, there will obviously be fewer chances to collect FOMC members’ remarks. Today, the US calendar is otherwise quiet, and the FX market will primarily focus on the Bank of Japan announcement overnight (more in the JPY section). We expect DXY to stabilise around 102/103 into year-end, but risks are skewed to the downside.

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