market insights

Stocks, bonds downbeat on earnings disappointment, jobs data  Stocks and bonds in the US fell yesterday. Stocks fell, sent down by a nearly 10% plunge in Tesla and more than a 8% dive in Netflix. Chip stocks fell as well around the world as TSM cut its annual outlook for revenue due to geopolitical tensions and weak global demand, and announced that its Arizona production plant will be delayed due to shortage of qualified labour that could build the plant. TSM shares fell 5% to below $100 a share in NYSE, while Nvidia lost more than 3% as investors started wondering whether the chipmaker will be able to deliver the $11bn revenue estimate that it announced last quarter! All in all, the S&P500 retreated 0.68% and Nasdaq 100 lost 2.28%.      Bonds, on the other hand, fell as well yesterday, as unemployment claims unexpectedly fell in the US. That strengthened the Federal Reserve (Fed) hawks' hand yesterday on the reasoning that the US jobs market just won't loosen and challenge the latest expectation where investors and economists, including the ex-Fed Chair Ben Bernanke, think that the Fed's next week rate hike will also be its last in this tightening cycle due to easing price pressures. There is no expectation of another hike in September, while some 20% predict that there could be another hike in November. The rising question is, when will the Fed start cutting rates, in January, or in March? It will depend on inflation, really. The rising geopolitical tensions between Russia and Ukraine in the Black Sea, where Ukraine also said that ships going to Russian ports may be military targets threatens the crop trade. Wheat futures jumped past their 200-DMA yesterday and are up by more than 20% since last week. If that's not enough, India bans shipments of non-basmati rice to contain domestic prices and rice futures are also upbeat right now. While succeed in crude tests the 200-DMA to the upside, and technicals hint that the bulls could succeed breaking the resistance this time, as trend and momentum indicators are positive, and we are not in the overbought market just yet. So there is room for further recovery. And the European nat gas futures gained nearly 4% yesterday. So all these jumps in commodity prices will certainly show up in next inflation figures as the favourable base effect will also gently fade away.       The US dollar index is better bid after hitting the lowest levels since April earlier this week. The US dollar index is up from its recent lows but is still at the lowest levels seen this year, the EURUSD is down below the 1.12 mark, on the back of a broadly stronger US dollar, and a lack of consensus. In one hand, the European Central Bank (ECB) members said that a 2nd rate hike following the next ECB hike is not guaranteed. On the other hand, the higher-than-expected core inflation and the positive revision in growth figures leave the ECB enough space to stay on a hawkish policy path. We will likely see a rangebound EURUSD between the 1.10-1.12 range into next week's policy meeting. Gold is upbeat on the back of rising geopolitical tensions as the price of an ounce stands around the $1970 this morning, while the USDJPY tests the 140 mark and the 50-DMA, after inflation in Japan came in higher than last month but softer than the expectations, and kept investors pricing the persistent divergence between dovish Bank of Japan (BoJ) and sufficiently hawkish Fed expectations.       One place where the doves are also very persistent is Turkey. The Central Bank of Turkey (CBT) increased its policy rate by 250bp at yesterday's policy meeting, versus 500bp hike expected by analysts. This is Turkey's new economic team's – who was supposed to normalize policy and regain investor confidence – second policy meeting and it's the second time the rate hike is well below expectations. Inflation on Turkey on the other hand will be skyrocketing in the coming releases as the lira took a dive since May. Official inflation, which fell below 40% in June, will likely spike above 50% in the coming readings, and if the CBT normalizes policy at the current speed, the divergence between where the Turkish policy rates will be, and where they should be will keep the lira under further pressure. And of course, the softer than expected action from the CBT's new team will hardly restore investor confidence and remedy worries that the CBT decisions remain highly influenced by political pressure. The USDTRY rallied by around 40% since May and risks remain comfortably tilted to the upside with the next targets sitting at 28, and 30 levels. Note that the USDTRY is expected to jump by chunks as the CBT relaxes FX interventions from time to time to let the lira find a fair market valuation after a year-and-a-half long heavy FX purchases. Therefore, the timing of price moves are unknown, but there is little doubt about the direction.    By Ipek Ozkardeskaya, Senior Analyst | Swissquote Bank    

The previous trading week was filled with important events and reports. When looking at the range and movements of both instruments, one might wonder: why was it so subdued? It was reasonable to expect stronger movements and market reactions. To briefly recap, key reports from the United States turned out weaker than market expectations. Even the stronger ones left a peculiar impression. GDP grew by 2.1% in the second quarter, not the expected 2.4%. The ADP report showed fewer new jobs than expected. Nonfarm Payrolls reported more jobs, but the previous month's figure was revised downward. The ISM Manufacturing Index increased but remained below the 50.0 mark. The unemployment rate rose to 3.8%, which few had anticipated.     Based on all these reports, one might have assumed that it was time to build a corrective upward wave, but on Thursday and Friday, the market raised demand for the US dollar, so both instruments ended the week near their recent lows. So what can we expect this week?   On Monday, the most interesting event will be European Central Bank President Christine Lagarde's speech. On Tuesday, another speech by Lagarde, as well as Services PMIs of the European Union, Germany, and the United Kingdom. We can also expect speeches by other members of the ECB Governing Council. I advise you to monitor the information related to Lagarde's speeches. If she softens her stance, it can have a negative impact on the euro's positions. Wednesday will begin with a report on retail trade in the EU and end with the US ISM Services PMI. We can consider the ISM report as the main item of the week, although the ISM Manufacturing PMI that was released on Friday did not stir much market reaction. It is likely that the index will remain above the 52.7 mark, which is unlikely to trigger a market reaction. On Thursday, you should pay attention to the final estimate of GDP in the second quarter for the European Union. If it comes in below 0.3% quarter-on-quarter, the market may reduce demand for the euro. The US will release its weekly report on initial jobless claims. On Friday, Germany will publish its inflation report for August, and that's about it. There are hardly any important events and reports this week. Based on the conducted analysis, I came to the conclusion that the upward wave pattern is complete. I still believe that targets in the 1.0500-1.0600 range are feasible, and I recommend selling the instrument with these targets in mind. I will continue to sell the instrument with targets located near the levels of 1.0637 and 1.0483. A successful attempt to break through the 1.0788 level will indicate the market's readiness to sell further, and then we can expect the aforementioned targets, which I have been talking about for several weeks and months.     The wave pattern of the GBP/USD pair suggests a decline within the downtrend. There is a risk of completing the current downward wave if it is d, and not wave 1. In this case, the construction of wave 5 might begin from the current marks. But in my opinion, we are currently witnessing the construction of the first wave of a new segment. Therefore, the most that we can expect from this is the construction of wave "2" or "b". I still recommend selling with targets located near the level of 1.2442, which corresponds to 100.0% according to Fibonacci  

In the ever-evolving world of business, there are always exciting developments and trends to keep an eye on. From legal proceedings to potential IPOs and fundraising activities, the business landscape is constantly changing. Here's a roundup of some of the latest highlights in the business world: Legal Proceedings: FTX's Ryan Salame Pleads Guilty Former FTX executive Ryan Salame has pleaded guilty to two criminal counts. This development has significant implications for the cryptocurrency exchange world, and it will be interesting to see how it unfolds. Executive Shakeups at Flexport Flexport, a prominent logistics and freight forwarding company, is undergoing significant changes at the executive level. This move comes after the resignation of CEO Clark, and it could reshape the company's future direction. Goldman Sachs CEO's Optimism Goldman Sachs CEO David Solomon has expressed optimism about a potential Wall Street rebound, but there's a catch. He believes this rebound hinges on the performance of tech IPOs. This perspective sheds light on the interconnectedness of various sectors in the financial industry. ChatGPT Traffic Trends Downward For the third consecutive month, ChatGPT's traffic has seen a decline. This could reflect shifts in user preferences, technology adoption, or other factors. It's a reminder of how quickly the tech landscape can change. SEC's Interest in Bed Bath & Beyond Trades The U.S. Securities and Exchange Commission (SEC) is investigating trades made by Ryan Cohen, which could have repercussions in the retail industry. Regulatory scrutiny is always of interest to investors and market observers. Earnings and Market Movements Earnings season is in full swing, and companies like DocuSign have beaten Q2 analyst earnings and revenue estimates. These results can provide valuable insights into market trends and investor sentiment. Mergers and Investments The business world is abuzz with merger and investment activities. From French billionaire Francois Pinault's acquisition of Creative Artists Agency to Summit Materials' purchase of Cementos Argos, these deals reshape industries and create new market leaders. Venture Capital and Startups Startups continue to attract significant investments. Notable funding rounds include AI research startup Imbue, Marian Oncology, and H2 Green Steel. These startups are at the forefront of innovation and technological advancements. Crypto Corner Cryptocurrency news continues to make headlines. From legal action against fraudulent schemes to regulatory scrutiny of industry leaders like Digital Currency Group, the crypto world is navigating challenges and opportunities. Executive Insights In a world where data and insights are crucial, Bloomberg's analysis of the S&P 500's top-performing stocks offers intriguing insights for investors. Understanding historical trends can inform future investment strategies. As the business landscape evolves, staying informed about these developments can help investors, entrepreneurs, and industry professionals make informed decisions. Keep an eye on these stories as they continue to unfold in the dynamic world of business.

Analysis of GBP/USD 5M   The GBP/USD pair continued to decline on Tuesday, primarily based on technical factors, as this was in the absence of influential economic releases. The only noteworthy event was the moderately hawkish statement by Neel Kashkari, which we have already discussed. Nonetheless, this is just the opinion of one of the eighteen members of the Federal Reserve's monetary committee. At the CME, its own FedWatch tool showed a low probability of a hike for the December meeting. Therefore, the market currently does not expect a new rate hike in the US. However, this information should not be crucial for the US dollar. It should resume its trend and, consequently, continue to strengthen. It is almost guaranteed that the pair will return to the level of 1.2109, which is roughly 200 pips down from its current position. The decline may be gradual. There were only two trading signals for the pound yesterday. The price bounced off the 1.2269 level twice, but in both cases, it managed to rise by a maximum of 20 pips. This was enough to place a stop-loss to breakeven for both long positions. Therefore, both trades were certainly not losing ones. You could manually close the second trade in profit.   COT report:   COT reports on the British pound also align perfectly with what's happening in the market. According to the latest report on GBP/USD, the non-commercial group closed 3,400 long positions and 1,700 short ones. Thus, the net position of non-commercial traders decreased by another 1,700 contracts in a week. The net position indicator has been steadily rising over the past 12 months, but it has been firmly decreasing over the past three months. The British pound is also losing ground. We have been waiting for many months for the sterling to reverse downwards. Perhaps GBP/USD is at the very beginning of a prolonged downtrend. At least in the coming months, we do not see significant prospects for the pound to rise, and even if we're currently witnessing a corrective phase, it could persist for several months.   The British pound has surged by a total of 2,800 pips from its absolute lows reached last year, which is an enormous increase. Without a strong downward correction, a further upward trend would be entirely illogical (if it is even planned). We don't rule out an extension of an uptrend. We simply believe that a substantial correction is needed first, and then we should assess the factors supporting the US dollar and the British pound. A correction to the level of 1.1844 would be enough to establish a fair balance between the two currencies. The non-commercial group currently holds a total of 63,700 longs and 85,800 shorts. The bears have been holding the upper hand in recent months, and we believe this trend will continue in the near future.  

Cryptocurrencies kick off the new year with a strong performance, with Bitcoin surging by over 5% today, surpassing the $45,000 mark and resulting in a notable week-to-date and year-to-date gain for Bitcoin, reaching almost 9%. While the exact catalyst for this upward movement remains unclear, the overarching narrative in the cryptocurrency market centers around spot Bitcoin ETFs with the U.S. Securities and Exchange Commission (SEC) currently evaluating multiple applications and with unconfirmed reports suggesting that a decision to approve these applications and facilitate the listing of spot Bitcoin ETFs could be imminent, possibly within the week. A Reuters report from December 29, 2023, hinted at the possibility that the US regulator might clear some spot Bitcoin ETFs either today or tomorrow, paving the way for the ETF launch on January 10, 2024. The authenticity of this report and the likelihood of the green light being imminent remain uncertain, but the cryptocurrency markets have been responsive to any positive news, even those with vague details. Bitcoin is currently trading at its highest level since April 2022, marking a daily high just below the $46,000 threshold and from a technical standpoint, the situation appears bullish, as BITCOIN has broken above the upper limit of the $41,000-44,300 trading range and continues to gain momentum. As optimism grows in the crypto space, It seems almost certain that a Bitcoin ETF will be approved and the main doubts are now about timing rather than anything else.     

COT reports on the British pound show that the sentiment of commercial traders has been changing quite frequently in recent months. The red and green lines, representing the net positions of commercial and non-commercial traders, often intersect and, in most cases, are not far from the zero mark. According to the latest report on the British pound, the non-commercial group closed 10,000 buy contracts and 4,200 short ones. As a result, the net position of non-commercial traders decreased by 5,800 contracts in a week. Since bulls currently don't have the advantage, we believe that the pound will not be able to sustain the upward movement for long . The fundamental backdrop still does not provide a basis for long-term purchases on the pound.   The non-commercial group currently has a total of 58,800 buy contracts and 44,700 sell contracts. Since the COT reports cannot make an accurate forecast of the market's behavior right now, and the fundamentals are practically the same for both currencies, we can only assess the technical picture and economic reports. The technical analysis suggests that we can expect a strong decline, and the economic reports have also been significantly stronger in the United States for quite some time now.   On the 1H chart, GBP/USD is making every effort to correct lower, but the uptrend remains intact. We believe that the British pound doesn't have any good reason to strengthen in the long-term. Therefore, at the very least, we expect the pair to return to the level of 1.2513. However, there are currently no sell signals, so the uptrend is still intact. On Tuesday, there are few reasons for the pair to show volatile movements. We may see a flat phase, a downtrend, or an uptrend (intraday), so we need to purely rely on technical analysis. We expect the pound to consolidate below the trendline, and in that case, we can consider selling while aiming for the Senkou Span B line. A n upward movement is theoretically possible today, but we see no reason for it, so you shouldn't consider buying at the moment. As of January 2, we highlight the following important levels: 1.2215, 1.2269, 1.2349, 1.2429-1.2445, 1.2513, 1.2605-1.2620, 1.2726, 1.2786, 1.2863, 1.2981-1.2987. The Senkou Span B line (1.2646) and the Kijun-sen (1.2753) lines can also be sources of signals. Don't forget to set a breakeven Stop Loss to breakeven if the price has moved in the intended direction by 20 pips. The Ichimoku indicator lines may move during the day, so this should be taken into account when determining trading signals. Today, the UK and the US will release their second estimates of business activity indices in the manufacturing sector for December. These are not significant reports so it is unlikely for traders to react to them. Description of the chart: Support and resistance levels are thick red lines near which the trend may end. They do not provide trading signals; The Kijun-sen and Senkou Span B lines are the lines of the Ichimoku indicator, plotted to the 1H timeframe from the 4H one. They provide trading signals; Extreme levels are thin red lines from which the price bounced earlier. They provide trading signals; Yellow lines are trend lines, trend channels, and any other technical patterns; Indicator 1 on the COT charts is the net position size for each category of traders; Indicator 2 on the COT charts is the net position size for the Non-commercial group.