Non-Farm Payrolls

China trade disappoints, as Moody's downgrade weighs on Asia markets
By Michael Hewson (Chief Market Analyst at CMC Markets UK)
 
European markets saw another positive day yesterday, with the DAX posting another record high, while the FTSE100 broke 2 days of declines to close higher as well.
 
The outperformance on European markets appears to be being driven by the increasing belief that the European Central Bank may well be forced into cutting rates sharply in the early part of 2024 in response to sharply slowing inflation and a sclerotic economy.
 
The last few days has seen a sharp decline in bond yields reflecting an increasing belief on the part of investors that rather than higher for longer, central banks will start cutting rates as soon as Q2 next year.
The shift in tone has been most notable from several ECB policymakers who have indicated that rate hikes are done.
 
US markets also appear to have started to run out of steam after their big November rally, as tra

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

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

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

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

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

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

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

Interaction Between Non-Farm Payrolls (NFP) And Price Of Gold

FXStreet News FXStreet News 31.03.2022 16:21
Nonfarm Payrolls in US is forecast to increase by 490,000 in March. Gold is likely to react more significantly to a disappointing jobs report than an upbeat one. Gold's movement has no apparent connection with NFP deviation four hours after the release. Historically, how impactful has the US jobs report been on gold’s valuation? In this article, we present results from a study in which we analyzed the XAU/USD pair's reaction to the previous 20 NFP prints*. We present our findings as the US Bureau of Labor Statistics (BLS) gets ready to release the March jobs report on Friday, April 1. Expectations are for a 490,000 rise in Nonfarm Payrolls following the 678,000 increase in February. *We omitted the NFP data for March 2021, which was published on the first Friday of April, due to lack of volatility amid Easter Friday. Methodology We plotted gold price’s reaction to the NFP release at 15 minutes, one hour and four hours intervals after the release. Then we compared the gold price reaction to the deviation between the actual NFP release result and the expected result. We used the FXStreet Economic Calendar for data on deviation as it assigns a deviation point to each macroeconomic data release to show how big the divergence was between the actual print and the market consensus. For instance, the August (2021) NFP data missed the market expectation of 750,000 by a wide margin and the deviation was -1.49. On the other hand, February’s (2021) NFP print of 536,000 against the market expectation of 182,000 was a positive surprise with the deviation posting 1.76 for that particular release. A better-than-expected NFP print is seen as a USD-positive development and vice versa. Finally, we calculated the correlation coefficient (r) to figure out at which time frame gold had the strongest correlation with an NFP surprise. When r approaches -1, it suggests there is a significant negative correlation, while a significant positive correlation is identified when r moves toward 1. Since gold is defined as XAU/USD, an upbeat NFP reading should cause it to edge lower and point to a negative correlation. Results There were 11 negative and nine positive NFP surprises in the previous 20 releases, excluding data for March 2021. On average, the deviation was -0.92 on disappointing prints and 0.65 on strong figures. 15 minutes after the release, gold moved up by $3.66 on average if the NFP reading fell short of market consensus. On the flip side, gold declined by $1.68 on average on positive surprises. This finding suggests that investors’ immediate reaction is likely to be more significant to a disappointing print. However, the correlation coefficients we calculated for the different time frames mentioned above don’t even come close to being significant. The strongest negative correlation is seen 15 minutes after the releases with the r standing at -0.48. One hour after the release, the correlation weakens with the r rising to -0.3 and there is virtually no correlation to speak of four hours after the release with the r approaching 0. Several factors could be coming into play to weaken gold’s correlation with NFP surprises. Several hours after the NFP release on Friday, investors could look to book their profits toward the London fix, causing gold to reverse its direction after the initial reaction. Additionally, US Treasury bond yields’ movements have been impacting gold’s action lately and a decline in the benchmark 10-year T-bond yield on an upbeat jobs report could make it difficult for the USD to gather strength against its rivals, limiting XAU/USD’s downside.  
FXStreet’s Dhwani Mehta Opinion About Gold Movements

Price Of Gold Per Ounce - KOG Report – NFP (US Non Farm Payrolls). What to expect!

Knights of Gold Knights of Gold 01.04.2022 13:31
https://www.tradingview.com/chart/XAUUSD/fqxXg5WZ-XAUUSD-KOG-REPORT-NFP/ This is our view for NFP today, please do your own research and analysis to make an informed decision on the markets. It is not recommended you try to trade the event if you have less than 6 months trading experience and have a trusted risk strategy in place. The markets are extremely volatile and can cause aggressive swings in price. We’re seeing the price move with in a tight range now with MAs starting to converge in preparation for the NFP release. We would strongly suggest you stay out of this one, there is potential today for the move we were expecting yesterday for end of financial year. We’re going to use the hourly chart for the illustration but we’re going to use the 4H chart for the levels. Reason for this is we again will be waiting for key extreme levels if we do decide to take a position. So, on the hourly we can see the immediate trend and a potential H&S in the making. The right shoulder is sitting around the 1940 level which may act as support, however, there is a level above which is around the 1950-55 price point where again there is liquidity waiting. So we will trade this with two scenarios in mind, for both we will be using the 4H levels on the hourly chart. Scenario 1: Price pushes to the upside, in the scenario we will be looking for the price to stay below the 1960 level. If we see rejection and resistance around the higher level we feel this would represent an opportunity to short the market towards the lower levels of 1930-35 and below that 1910. If we do take any entries we will be taking partials along the way as long as they’re in profit and protecting the trade. Scenario 2: They push the price downside, we will be looking for the first reaction around the 1910 region where we feel there will be some support. There is a chance this level will break to the downside if we come down here so we will wait for the lower levels of 1890-85 where we feel there will be am opportunity to go long. The range is big hence the levels are further apart. While Gold is moving 2-500pips a day and swinging wildly its too risky to trade the immediate levels on NFP unless you’re an experienced trader with an effective risk management strategy in place. This could all be an anti-climax and we hardly move, in which case we’re happy to sit tight. The market has been nice to us last month and we don’t want to give anything back so we shall remain on the defensive and maintain patience. As always, trade safe. KOG
Investors Are Awaiting US CPI Print. Earnings Season Is Here! PepsiCo (PEP) And Delta Airlines (DAL) Earnings Are Released This Week!

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

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

Today's NFP Release Is A Big Deal. Forex: EUR/USD And GBP/USD Down

ING Economics ING Economics 07.10.2022 09:54
Pushback against the pivot from Fed officials ahead of payrolls Source: shutterstock Macro outlook Global Markets: Wednesday’s pause in the equity rally turned into a trickle of selling on Thursday, and it remains to be seen if this turns into a flood later today. And what is likely to be the catalyst for such a move would be the non-farm payrolls figure later today. What the market seems to be crying out for, is a Fed pivot, and anything in the numbers later that supports that case may be enough to bolster these ideas. That means that the market probably needs to see a much weaker payrolls figure than the 315,000 registered last month, though the consensus 255,000 expectation may not be sufficient. For its part, the Fed is sticking its  “higher for longer” mantra. This was repeated in various forms by the Fed’s Waller, Mester, Evans, Kashkari, and Cook yesterday, so even if the data is on the soft side, the Fed is unlikely to sanction a market move to price in 2023 rate cuts, at least not for a good while yet. Equity futures are showing a small negative as of writing. The EUR has resumed its slide again and is now down to 0.9795, and that has helped bring down Cable to 1.1162, and the AUD to 0.6414. the JPY is just below 145 at 144.96, which could set the scene for some BoJ intervention later on.  Within Asian FX, the INR stands out as one of the weaker currencies, not helped by the news that inclusion into the JP Morgan global bond index has been shunted back into next year. Otherwise, yesterday saw further gains for the KRW, which got back below 1400 at one point, but settled a bit higher and is at 1402 now. Today, Asian FX may struggle with the risk tone more subdued and caution ahead of payrolls. Bond yields meanwhile continue to rise, and it doesn’t feel as if risk assets or currencies have caught up with resurgent yields yet. 2Y US Treasury yields rose nearly 11bp to 4.258%, while the yield on the 10Y US Treasury rose 7.1bp  to 3.824%. Bond markets at least seem to be listening to Fed speakers at the moment, though we are likely to see sentiment waver to and fro over the coming weeks and months as the hawkish rhetoric meets increasingly gloomy activity data. G-7 Macro: As mentioned, US non-farm payrolls is the key release of the month so far, and the consensus is for a rise in employment of 255,000. Average hourly earnings are forecast to ease back to 5.0%YoY from 5.2%, and the unemployment rate to remain at 3.7%. Here is also a link to our new monthly, including articles on China’s economy, and a comparison of Asia now against the 1997/98 financial crisis.  What to look out for: US jobs report South Korea BoP current account (7 October) Regional GIR data (7 October) US non-farm payrolls (7 October) Read this article on THINK TagsEmerging Markets Asia Pacific Asia Markets Asia Economics Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more
GBP: BoE Stands Firm on Bank Rate and Mortgage Interest Relief, EUR/GBP Drifts Lower

USA: ING point to strong labour market and incoming data in the context of the December rate

ING Economics ING Economics 04.11.2022 15:04
The rate of job creation continues to slow, but the US still added 261,000 jobs in October, which was much better than expected. Meanwhile, average hourly earnings were also firmer, suggesting ongoing inflation pressures from the jobs market. The prospect of the Fed shifting to 50bp rate from December, while our call, is not guaranteed 261,000 Number of jobs created in October   The downtrend in hiring continues... This report was always going to be viewed in the context of the Federal Reserve signaling earlier this week that it is inclined to moderate the size of rate hikes, but end up at a higher terminal level than they had previously signaled. Well, on the one hand October’s 261,000 increase in non-farm payrolls is the smallest gain since December 2020, while the unemployment rate rose to 3.7% due to the household survey used to calculate the unemployment rate showing employment falling 328,000 and labour force participation declining – not a healthy look! The latest job announcements on job losses in the tech sector are also a concern so there is evidence of a moderation in the labour market that the more dovish members of the Federal Open Market Committee (FOMC) can point to. Monthly payrolls gains (000s) Source: Macrobond, ING But there is ammunition for the hawks too However, the hawks, who think the Fed needs to continue hiking at pace, also have ammunition to back their arguments. The 261,000 figure was well above the 193,000 consensus forecast and there were upward revisions for the past two months totaling 29,000. Importantly, every sector reported job gains with manufacturing up 32,000, education and health up 79,000 and business services up 39,000 the biggest contributors. Remember too that job openings actually rose and there are currently 1.9 job vacancies for every unemployed American, which indicates ongoing excess demand. Perhaps more significantly for the hawks was the 0.4% month-on-month print for average hourly earnings, which supports that excess demand argument. We had been looking for the third consecutive 0.3% print, which would indicate a clear step down in the rate of wage growth from the 0.4-0.5% typical print over the past couple of years. As such, the Fed are likely to remain wary about inflation pressures emanating from the jobs market. In aggregate it suggests the labour market remains fairly robust and it keeps alive the possibility of a fifth 75bp hike. Remember though that we do have another jobs report and two more CPI reports before the December 14th FOMC decision. Within those three reports we still feel there will be enought to justify a step down to 50bp.   Read this article on THINK TagsUS Unemployment Jobs Federal Reserve Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more
The Collapse Of The Silicon Valley Bank Weakened The Dollar And USD/JPY But Supported EUR/USD, AUD/USD, And GBP/USD

USA: Jobs market data play in favour of Fed hawkish script. Non-farm payrolls add 263K

ING Economics ING Economics 02.12.2022 15:10
Strong job creation and a big increase in wages underscore the Federal Reserve's argument that a lot more work needs to be done to get inflation under control. It has certainly jolted the market. But with recessionary fears lingering, market participants will remain sceptical over how long the strong performance can last US job growth was strong and wages rose in November 263,000 Number of US jobs added in November   Surging employment and wages show the economy remains strong The US economy added 263,000 jobs in November, well ahead of the 200,000 consensus estimate, even when accounting for a 23,000 downward revision to the past couple of months of data. Private payrolls rose 221,000, led by 88,000 jobs in leisure and hospitality and 82,000 in education and health. Construction was up 20,000 and manufacturing gained 14,000. However, there was weakness in trade & transport (-49,000) and retail trade (-30,000). There was more positive news for workers in the form of big wage gains of 0.6% month-on-month, double what was expected, which leaves the annual rate of wage growth at 5.1%. The unemployment rate remained at 3.7% despite the household survey showing an apparent drop of 138,000 people saying they were in work – the second consecutive decline. The unemployment rate held steady because the participation rate fell yet again as workers remain reluctant to return to the workforce. Read next: FX: Today’s US Payrolls With A Strong Bearish Rhetoric On The USD| FXMAG.COM Given the Fed’s repeated warnings that rates are likely to stay higher for longer to ensure inflation is defeated, officials will be hoping that today’s numbers will be the jolt needed to get market participants to finally believe the Fed’s intent. Payrolls growth is slowing, but not fast enough for the Fed (Jobs added per month '000s) Source: Macrobond, ING Jobs market remains far too hot for the Fed In his speech earlier this week, Fed Chair Jerome Powell discussed the prospect of declines in inflation relating to core goods and housing. His focus though was on another area, core services other than housing, where the situation is more troubling. This grouping accounts for more than half of the core PCE index, the Fed’s favoured measure of inflation. The tightness of the jobs market and the implication for wage pressures, which make up the largest cost in delivering these services, is therefore key to the outlook for interest rates. In the speech, he argued that “job growth remains far in excess of the pace needed to accommodate population growth over time—about 100,000 per month by many estimates.” Consequently, wage growth “shows only tentative signs of returning to balance”. Today’s 263,000 jobs number confirms we remain a long way off from demand balancing with supply, which would ease those labour market related inflation pressures. Adding to the Fed’s problems, monetary conditions have loosened in recent weeks as the dollar and longer-dated Treasury yields have fallen and credit spreads have narrowed. This is undoing the tightening effects of the Fed’s recent rate rises. Furthermore, the latest consumer spending numbers together with the anecdotal evidence of the Black Friday weekend sales show that the economy has not yet met the Fed’s requirements of slowing to a rate “well below its longer-run trend”. As such, the Fed has more work to do and we look for further 50bp rate hikes in December and in February, with the potential for tightening needing to go on for longer. Read this article on THINK TagsWages US Payrolls Jobs Federal Reserve Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more
FX Daily: Hawkish Powell lends his wings to the dollar

Current low prices may boost the US government's purchase of crude to replenish its strategic reserves, which it has been depleting to mitigate the impact of Russia's war in Ukraine

Yohay Elam Yohay Elam 23.12.2022 13:20
Some time ago we had a great opportunity to ask FXStreet to comment on commodities, American consumers and NFP. Here’s what we’ve heard from Yohay Elam. Brent crude oil nears $80 at the actual start of heating season, is China's covid situation affecting it to that extent or there's another 'hidden' factor and what can we expect till the end of the year? Yohay Elam (FXStreet): Fears of a US recession have been weighing on energy prices, but I see several reasons for a significant bounce. First, China's reopening is far from being fully priced in markets. Beijing is relaxing its draconian measures and at a dizzying pace, and higher demand expectations are set to boost demand. Second, Current low prices may boost the US government's purchase of crude to replenish its strategic reserves, which it has been depleting to mitigate the impact of Russia's war in Ukraine. Third, supply remains tight as a result of under-investment in recent years. Fourth, and as mentioned in the question, winter has arrived, and with it higher demand for energy. All in all, I see prices rising from the current abyss. Could NFP save the dollar from a quite long downtrend? Dollar index has been losing since ca. 7 weeks, is correction coming to USD? The robust Nonfarm Payrolls report – and especially the upbeat wages data – helped stabilize the Dollar but do not serve as a game-changer. The #1 market mover in recent months has been the CPI report, and the next one is due shortly. If Core CPI rises by 0.6% or more, it would trigger a massive turnaround in favor of the Dollar. A lower figure would resume the Greenback's downtrend. Read next: Migration Of Sports From Traditional Television To Streaming Is Chugging Ahead- The NFL Sunday Ticket On YouTube| FXMAG.COM According to Adobe, Black Friday sales soared $9.12bn despite headwinds like high inflation, rising interest rates, recession fears and uncertain geopolitical outlook - what made consumers buy goods so willingly? Americans still have excessive savings from the pandemic era, and were clearly delighted to see price cuts – partially related to high inventories and the unsnarling of supply chains. Recession fears, uncertainty and political polarization have negatively impacted sentiment, but not actual shopping. There is a gap between what Americans say about the state of the broad economy and what they feel and see in their community. Moving forward, I think consumption will ease, but not collapse, staving off a recession in the US.
UK Monetary Policy Outlook: A September Hike Likely, but November Uncertain

EUR/USD Analysis: Tips for Trading and Transaction Insights

InstaForex Analysis InstaForex Analysis 02.06.2023 11:00
Analysis of transactions and tips for trading EUR/USD The price test of 1.0719, coinciding with the significant rise of the MACD line from zero, limited the upward potential of the pair. Even so, market players continue to buy in anticipation of further interest rate hikes despite inflation in the eurozone starting to slow down. Clearly, market players do not expect any changes in the European Central Bank's monetary policy.     The empty economic calendar today will push traders to focus on upcoming US labor market data, as growth in unemployment and disappointing non-farm payrolls will convince the Fed to continue its tight approach to monetary policy. Only a pause in the rate hike cycle will weaken dollar demand and lead to a further rise in EUR/USD.     For long positions: Buy when euro hits 1.0780 (green line on the chart) and take profit at the price of 1.0816. Growth could occur. However, when buying, traders should make sure that the MACD line lies above zero or rises from it. Euro can also be bought after two consecutive price tests of 1.0754, but the MACD line should be in the oversold area as only by that will the market reverse to 1.0780 and 1.0816.   For short positions: Sell when euro reaches 1.0754 (red line on the chart) and take profit at the price of 1.0722. Pressure may return amid very good labor market statistics in the US. However, when selling, traders should make sure that the MACD line lies below zero or drops down from it. Euro can also be sold after two consecutive price tests of 1.0780, but the MACD line should be in the overbought area as only by that will the market reverse to 1.0754 and 1.0722.       What's on the chart: Thin green line - entry price at which you can buy EUR/USD Thick green line - estimated price where you can set Take-Profit (TP) or manually fix profits, as further growth above this level is unlikely. Thin red line - entry price at which you can sell EUR/USD Thick red line - estimated price where you can set Take-Profit (TP) or manually fix profits, as further decline below this level is unlikely. MACD line- it is important to be guided by overbought and oversold areas when entering the market   Important: Novice traders need to be very careful when making decisions about entering the market. Before the release of important reports, it is best to stay out of the market to avoid being caught in sharp fluctuations in the rate. If you decide to trade during the release of news, then always place stop orders to minimize losses. Without placing stop orders, you can very quickly lose your entire deposit, especially if you do not use money management and trade large volumes. And remember that for successful trading, you need to have a clear trading plan. Spontaneous trading decision based on the current market situation is an inherently losing strategy for an intraday trader.  
Challenges Loom Over Eurozone's Economic Outlook: Inflation, Interest Rates, and Uncertainty Ahead

Trading GBP/USD: Analysis, Tips, and Price Levels

InstaForex Analysis InstaForex Analysis 02.06.2023 11:02
Analysis of transactions and tips for trading GBP/USD he price test of 1.2480, coinciding with the significant rise of the MACD line from zero, limited the upward potential of the pair. Even so, market players continued to buy, ignoring weak manufacturing activity data in the UK.     The empty economic calendar today will convince traders to push GBP/USD higher, which could continue in the afternoon if the upcoming US labor market data show growth in the unemployment rate and a weaker increase in non-farm payrolls. Such a scenario will convince the Fed to continue its tight approach to monetary policy. Lately, the central bank expressed plans to pause its rate hike cycle. If this happens, dollar demand will decline, which will lead to a rise in the pair.   For long positions: Buy when pound hits 1.2544 (green line on the chart) and take profit at the price of 1.2592 (thicker green line on the chart). Growth could occur. However, when buying, traders should make sure that the MACD line lies above zero or rises from it. Pound can also be bought after two consecutive price tests of 1.2517, but the MACD line should be in the oversold area as only by that will the market reverse to 1.2544 and 1.2592.   For short positions: Sell when pound reaches 1.2517 (red line on the chart) and take profit at the price of 1.2477. Pressure could continue amid very strong labor market data from the US. However, when selling, traders should make sure that the MACD line lies below zero or drops down from it. Pound can also be sold after two consecutive price tests of 1.2544, but the MACD line should be in the overbought area as only by that will the market reverse to 1.2517 and 1.2477.       What's on the chart: Thin green line - entry price at which you can buy GBP/USD Thick green line - estimated price where you can set Take-Profit (TP) or manually fix profits, as further growth above this level is unlikely. Thin red line - entry price at which you can sell GBP/USD Thick red line - estimated price where you can set Take-Profit (TP) or manually fix profits, as further decline below this level is unlikely. MACD line- it is important to be guided by overbought and oversold areas when entering the market   Important: Novice traders need to be very careful when making decisions about entering the market. Before the release of important reports, it is best to stay out of the market to avoid being caught in sharp fluctuations in the rate. If you decide to trade during the release of news, then always place stop orders to minimize losses. Without placing stop orders, you can very quickly lose your entire deposit, especially if you do not use money management and trade large volumes. And remember that for successful trading, you need to have a clear trading plan. Spontaneous trading decision based on the current market situation is an inherently losing strategy for an intraday trader.  
Boosting Stimulus: A Look at Recent Developments and Market Impact

Federal Reserve at a Crossroads: Will They Hold or Hike?

ING Economics ING Economics 09.06.2023 11:32
Fed likely to skip, but it's going to be close Market pricing has shifted massively over recent weeks, but we think the most likely outcome remains the Fed leaving policy rates unchanged on 14 June. There will be some dissent and a shock inflation reading could make it a very close decision. Either way, the Fed will leave the door open to further rate moves.   No change the most likely outcome Just over a month ago, Federal Reserve Chair Jerome Powell hinted that after 500bp of rate hikes over a 14 month period, interest rates may finally have entered restrictive territory and the Fed could pause at the June meeting to take some time to evaluate the effects. Markets took this as a signal that we may already be at the peak with the fear that the combination of high borrowing costs and tighter lending conditions could prompt a recession with inflation falling swiftly back towards target. On 4 May, Fed funds futures contracts were pricing in 86bp of interest rate cuts by year end and the target range heading below 4% at the January 2024 FOMC meeting.   Over the subsequent six weeks, activity has remained resilient, inflation continues to run hot, payrolls jumped 339,000 and the Australian and Canadian central banks surprisingly hiked rates. Hawkish comments from a few Fed officials have added to the sense that they may not be done. The result is that pricing for the June FOMC meeting is not far off a coin toss (just under 10bp priced) and July is looking a decent bet for a hike (21bp priced). Next Tuesday’s CPI report could see pricing move even further in favour of a hike – currently the consensus is for core CPI to come in at 0.4% month-on-month, but if we get a shock 0.5% that could be sufficient to convince enough FOMC members to vote for a hike.   That’s not our base case and we believe there will be a majority on the committee who think they have tightened policy a lot and it makes sense to wait. This was certainly the commentary from senior Fed officials such as Governor Philip Jefferson and Philadelphia Fed Governor Patrick Harker, that while “there is still significant room for improvement” the Fed is “close to the point where we can hold rates in place and let monetary policy do its work”. Moreover, recent data releases have been sending very mixed messages, which suggests it may make sense pause to evaluate.   Conflicting data makes life hard for the Fed Friday’s Labour report is a notable example. The establishment survey, which questions employers and generates the non-farm payrolls number, reported a jump of 339,000 in employment in May. However, the household survey, used to calculate the unemployment rate, showed employment declined 310,000 with unemployment rising 440,000. Then we have the manufacturing ISM reporting a rise in its employment survey yet the payrolls report stated there was a 2000 decline. Meanwhile, service sector payrolls rose 257,000 yet the ISM services employment index fell into contraction territory.   We see similar mixed messages within the GDP report. On an expenditure basis, GDP grew 1.3% annualised in 1Q 2023 and 2.6% in 4Q 2022. However, an alternative measure of US economic activity, Gross Domestic Income, which combines all the costs incurred and incomes earned in the production of GDP, contracted 2.3% annualised in 1Q 2023 after a 3.3% drop in 4Q 2022 and has declined in three out of the past four quarters. An average of the two series suggests the economy has flatlined since 3Q 2022.   Fed to leave the door open for further hikes Nonetheless, the Fed wants to see 0.2% month-on-month or below CPI readings to be confident inflation will return to 2%. We aren’t there yet so if they do hold rates steady, as we predict, it is likely to be a hawkish hold with the door left open to further rate hikes if inflation doesn’t slow – July is clearly a risk. We certainly acknowledge the risk that they hike rates 25bp, especially if Tuesday’s inflation data surprises to the upside, but doubt they will intensify the language on rate hikes so the “hawkish hike” scenario in the table above looks unlikely.
Summer's End: An Anxious Outlook for the Global Economy

Resilient US Data Fuels Rate Surge: Pre-SVB Levels in Sight

ING Economics ING Economics 30.06.2023 09:55
Rates Spark: US resilience persists Inflation is what central banks are focused on, but resilient data is lending their hawkish positions more credibility. 10Y UST yields are testing the top of recent ranges after yesterday's data, and it also looks like front-end yields want to reclaim their pre-SVB highs soon. Key to achieving this will be data, and next week holds another busy slate.   US rates on their way to pre-SVB levels As much as inflation is in the spotlight these days, it was the revision to the US first quarter GDP data that elicited the larger reaction from markets yesterday. They were quick to price in a greater chance for a second hike from the Federal Reserve. It had been flagged as a possibility by Fed Chair Jerome Powell only recently in Sintra, but markets were previously reluctant to price it in. Now they see a 40% chance of it happening, even if not as back-to-back increases. The overall US yield curve shifted higher and the curve inversion has deepened further. The 10Y US Treasury yield is now effectively at 3.85%, and the 2Y is back above 4.8%, stretching the 2-10Y inversion back above 100bp. There's room for the 2Y to rise back to 5%, based on the likelihood that the market prices out the rate cut bias just about discounted for the December 2023 meeting and certainly beyond. Through the end of 2024, markets are more than fully discounting five 25bp rate cuts from the peak. Remember the 2Y was above 5% just before the banking turmoil around Silicon Valley Bank ensued. We can still see the 10Y getting back up to the 4% area. Again, back to where it was before the SVB-induced rally in bonds and sell-off in risk. A lot of this has reversed in the past months or so as risk has been bought and market rates have managed to march higher. There had been some flatlining in the past week or so, but data like yesterday’s maintain the upward pressure. Looking ahead at today’s monthly core PCE reading seen coming in at 4.7%, it reminds us that the US is still closer to a 5% inflation economy. We do think inflation will eventually ease, but for now, it is what it is until proven otherwise.   10Y UST yields are testing the upper end of their recent range   A US focused week ahead While the 4th of July holiday has come to mark the beginning of usually quieter summer conditions, the data calendar is still packed with key releases. Yesterday has highlighted the degree to which the credibility of the Fed’s higher-for-longer narrative hinges on the data. If activity refuses to lie down yields can only rise further.   The first key data set will be the ISMs, in particular the services report on Thursday. Recall that the May report had seen a big downward surprise falling to 50.3 from 51.9, with weaker readings in the past 14 years only seen during the pandemic in 2020. Even the employment sub-component had dropped to below 50, contradicting the earlier strong payrolls report. All eyes will be on whether the services sector joins the manufacturing sector, which looks like it is already in recession with its seven consecutive sub-50 readings. For now, the consensus is for the services report to increase to 51.1. The manufacturing report for June will be out on Monday. The final data highlight is the June employment report. May had seen an extraordinarily strong report with a non-farm payrolls increase of 339k – but it was also a mixed report, with the employment rate jumping to 3.7% and moderating wage growth. For June, the consensus is eyeing a 213k payroll increase and unemployment easing back to 3.6%.   Today's events and market views Inflation data is today’s main focus, both in the eurozone and in the US. As far as the eurozone flash CPI is concerned – where consensus is looking for a 5.6% year-on-year headline and a higher 5.5% core reading – country data over the past days has already provided some indication, with German inflation coming in higher than consensus for instance. In the US, the Fed's favoured inflation measure, the core PCE reading, is expected to stay at 4.7% YoY. The headline rate is expected to drop to 3.8% from 4.4% previously. The upshot from both US and eurozone data should be that the central banks' jobs are far from over, although the backdrop for the Fed does look comparatively more encouraging than for the European Central Bank.  In primary markets, we will only see Italy being active today with 5Y, 10Y and 30Y bond taps of up to €7.5bn in total. 
Weak Second Half Growth Impacts Overall Growth Rate for 2023

Rates Spark: Payrolls Awaited to Confirm ADP, Market Focus on CPI

ING Economics ING Economics 07.07.2023 08:55
Rates Spark: The burning question is whether payrolls agrees with the ADP Moves yesterday took us to break-out levels for market rates. It does not feel like the move is over yet, and today's payroll report will have its say first. A weak report would look like a contradiction given the ADP, but payrolls are still the dominant driver. The market will also have an eye on US CPI next week.   A consensus-type outcome for payrolls will take market rates off their highs The latest report from ADP National Employment for June reported a 497k increase in US jobs. That is undoubtedly strong, and double the 250k average seen in recent months. Challenger job cuts also showed a slowdown in cuts, also pointing to resilience in the labour market. The American economy is fighting back, despite what the Fed has been up to. The 10yr is now at over 4%. We think it will stay above 4% over the coming weeks and potentially months. And the 2yr will hold on to a 5% handle, with a 100bp curve inversion being sustained. The inversion points to a reversal lower in market rates ahead, and a recessionary tendency. While that sounds unseemly given what we see in front of us, the rise in market rates will ultimately have its effect. But that’s not the focus for now – the focus is on taking out prior highs hit in this cycle for market rates. The Services ISM report confirmed that the situation popped higher in June. The employment component, which had dipped below 50 in the previous month, is now at 53.1. New orders rose to 55.5, and the overall index to 53.9. These are not particularly high readings, but importantly they are reversing some of the declines seen in previous months. Prices paid also eased lower, to 54.1. That in fact is a very tolerable outcome, as the long-run average for prices paid is 60. Market yields can be comforted by the calming in implied inflation expectations. But it can, at the same time, be a tad concerned that macro strength in the services sector could frustrate ambitions to get inflation materially lower in the coming months. So nothing here to reverse the tendency for yields to test higher. Get used to a 4% handle on the 10yr – it’s here to stay for a while. That said, we will need to see the payrolls report first. It's a June report, the same as the ADP. The question is whether it shows the same spurt that the ADP did. Often the correlation between the two is remarkably weak. But even if we get a consensus outcome in 200k plus territory that would not take market rates materially off their highs. For that, we'd need to see a material rise in the unemployment rate and a notable fall in wages inflation. Neither of these are expected. If we get a consensus-type report, it is possible that the market takes yields off their extremes into the weekend, but we'd still maintain that there has been enough in the past few days of data for any pullback to be reversed next week, and for the push higher in yields to continue.   2Y UST at 5%, 10Y at 4% and now eying cycle peaks   The week ahead will shine a light on the inflation side Data in the week ahead will shine a light on the inflation development in the US with CPI taking centre stage on Wednesday. The consensus is looking for the headline rate to drop to 3%, but given that this is mainly down to known base effects, it will likely be outweighed by core inflation remaining uncomfortably high at 5%. Persistent core inflation also means no let-up in Fed hawkishness. Nonetheless, there are also other indicators to watch which should point to declining pipeline pressures like the producer prices. Also, keep an eye out for the University of Michigan consumer sentiment survey and its inflation expectations measure.   In the eurozone, the main releases are the final CPIs as well as the European Central Bank accounts of the June meeting. Remember that the ECB all but preannounced another hike for this month. Given the disappointing macro backdrop and question marks surrounding the tenability of the ECB’s hawkish stance, markets will most likely scrutinise the accounts for any growing concerns about the underlying economy which could pave the way for a more heated debate between the hawkish and dovish camps. The balance sheet may feature given the targeted longer-term refinancing operations repayment, but we don’t suspect any discussion around extending quantitative tightening with asset purchase programme reinvestments having stopped just this month. UK jobs data, and in particular wages, will be a focus for sterling markets where the 6.50% terminal rate is now almost fully priced for the first half of 2024.   Today's events and market views All eyes are on US non-farm payrolls number today after the huge surprise in the ADP estimate. The consensus still stands at 230k, but Bloomberg’s whisper number, which compiles individual user estimates, has jumped to 270k. The unemployment rate is expected to ease back to 3.6% while average hourly earnings are seen to have risen by 0.3% month on month again. Unless there is a huge downside surprise, that would put the job market’s resilience into question. We think the 4% handle for the 10Y UST could accompany us for a while. The counter notion is that the sheer size of the move should call for at least some reversal, but if anywhere we would make that case for Bunds that got dragged higher alongside Treasuries. It also appears that fall-out for risk sentiment was more noticeable in EUR space, in sovereigns certainly with spread widening, which could add to the resistance against a further move higher.    
FOMC Minutes Reveal Policy Divisions as USD/JPY Falls Sharply

FOMC Minutes Reveal Policy Divisions as USD/JPY Falls Sharply

Kenny Fisher Kenny Fisher 07.07.2023 09:26
FOMC minutes highlight policy divisions USD/JPY falls sharply Japan releases Household Spending and Average Cash Earnings on Friday The Japanese yen is showing strong gains on Thursday. In the European session, USD/JPY is trading at 143.82, down 0.57%.   Fed minutes point to disagreement over rate path The Federal Reserve has been aggressively tightening rates in order to curb inflation but took a pause in June after ten consecutive hikes. At the meeting, the Fed said that a pause would provide members with time to assess the impact of the hikes, which have amounted to some 500 basis points. The minutes of the June meeting were significant in highlighting that Fed members were in disagreement about the decision to pause rates. The decision to pause may have been unanimous, but the minutes made it clear that there was a difference of opinions, with some members preferring a hike but reluctantly agreeing to a pause. There was also disagreement over the pace of tightening in the second half of the year, with 16 of 18 members expecting at least one hike and 12 members expecting two or more hikes. After the minutes, the money markets slightly raised the probability of a 0.25% hike in July from 86% to 91%, according to the CME FedWatch tool. The pricing could continue to change, with two key reports ahead of the July meeting. The non-farm payrolls report will be released on Friday. Job growth is expected to have cooled to 225,000 in June, down sharply from 339,000 in May. This will be followed by the June inflation report next week, with headline inflation expected to fall from 4.0% to around 3.0%. Japan releases Household Spending and Average Cash Earnings on Friday. Household Spending declined by 4.4% in April and another decline of 2.4% is expected for May, as inflation has dampened consumer spending. Average Cash Earnings gained 1% in May and the consensus for June stands at 0.7%. . USD/JPY Technical There is resistance at 145.28 and 146.23 144.11 is a weak support level. The next support line is 143.16  
The British Pound Takes the Lead in G10 Currency Race Amid Disappointing U.S. Employment Data

Asia Morning Bites: China's Inflation Report, Global Markets, and Upcoming Economic Indicators

ING Economics ING Economics 10.07.2023 10:44
Asia Morning Bites Monday features China's inflation report which should show both CPI and PPI reflecting weak demand.   Global Macro and Markets Global markets:  US equities didn’t much like Friday’s labour market report, though they didn’t hate it either. The S&P 500 fell 0.29% while the NASDAQ lost 0.13%. US equity futures are looking a little brighter currently. Chinese stocks also had a disappointing end to the week. The Hang Seng fell 0.9% while the CSI 300 dropped 0.44%. US Treasuries were also a little unsure how to react to the labour report. The yield on 2Y US Treasuries fell 3.5bp, but yields on the 10Y UST rose 3.2bp to 4.062%. The USD weakened against the EUR on Friday. EURUSD rose to 1.0964. Other G-10 currencies were also strong, including the JPY, which has tended to strike its own path recently. USDJPY has fallen to 142.22. Friday was a mixed day for the Asia FX pack. The CNH made some modest gains, falling to 7.2328, but most of the rest saw modest losses, which they may well recoup in early trading today. G-7 macro:  The US labour report on Friday showed some welcome signs of slowdown in hiring, especially after the much stronger than expected ADP survey earlier had increased anxiety about a much bigger number, but it was a very mixed story, with a falling unemployment rate, and sticky wages all indicating that the Fed will be hiking again in July. James Knightley provides more detail in this note. In terms of the numbers, non-farm payrolls rose 209 thousand, the unemployment rate declined from 3.7% to 3.6%, and average hourly wages growth was unchanged at 4.4% YoY. There isn’t much on the G-7 calendar of note today. China: PPI data for June will likely show a further deterioration from the -4.6% YoY May figure, weighed down by weak demand. Aggregate finance data is released this week, possibly as soon as today. We should see an increase over the May figure of CNY1362bn, but probably less than last year’s June number of CNY2806bn. The consensus estimate is about CNY2300bn.   What to look out for: China inflation China CPI inflation (10 July) Japan trade balance (10 July) US wholesale inventories (10 July) Australia Westpac consumer confidence and NAB business confidence (11 July) Philippine trade (11 July) South Korea unemployment (12 July) Japan PPI inflation (12 July) New Zealand RBNZ policy (12 July) India CPI inflation (12 July) US MBA mortgage application, CPI inflation (12 July) South Korea trade and BoK policy (13 July) China trade (13 July) US PPI inflation (13 July) Singapore GDP (14 July) Japan industrial production (14 July) India trade (14 July) US import prices and University of Michigan sentiment (14 July)
US Non-Farm Payrolls Disappoint: What's Next for EUR/USD?

Inflation Front and Centre: China Slips Towards Deflation, European Markets Face Declines

Michael Hewson Michael Hewson 10.07.2023 10:48
Inflation front and centre this week as China slips towards deflation By Michael Hewson (Chief Market Analyst at CMC Markets UK)   European markets underwent a shocker of a week last week, posting their biggest declines since March, despite a modest rebound on Friday. With economic data continuing to look on the soft side and central banks showing little sign of easing up when it comes to interest rate rises there was little to cheer for markets in Europe, with concerns about weakness in the Chinese economy adding to the gloom.   US markets on the other hand, while still finishing the week lower, still managed to perform better after a slightly weaker than expected non-farm payrolls job report, which showed that the US economy added 209k jobs in June, down from 306k in May. There was also a 2-month net revision lower of -110k, taking some of the lustre off recent gains, and removing some of the euphoria around the ADP jobs number of 497k, the day before. The unemployment rate still fell to 3.6%, while average hourly earnings growth came in unchanged at 4.4%, which was at a slightly higher level than expected. One thing that we were able to take away from last week was that further rate rises from the Federal Reserve as well as the European Central Bank are almost certain when they both meet in 2 weeks' time, however there is now rising concern that we may see further rate increases after that in September as well.     The bond market is certainly reflecting the fact that rates are likely to stay higher for longer after the yield curve steepened as 10-year yields outperformed 2-year yields on a week-on-week basis.   With earnings season set to get underway in earnest over the next week or so, there is increasing nervousness that after such a good first half of the year, that the second half of the year is likely to be much more challenging.   What last week's economic data also tells us is that while the economy in Europe could well be set to contract for the third successive quarter in succession, the US economy appears to be holding up reasonably well There is a fear however that central banks are on the cusp of a serious policy mistake when it comes to their determination to drive inflation lower. We already know that inflation has been slowing sharply over the last few months, and we also know that PPI inflation in China and Europe is now in negative territory.       This morning we saw that inflation in China slowed even further in June with headline CPI coming in at 0%, and PPI slipping from -4.6% in May to -5.4% That alone suggests that the rate hikes that have already been implemented over the past 15 months have had an effect, however such is the nature of monetary policy, and the way interest rate markets have changed over the last 20 years, with many more fixed rate loans, there is no way of telling how much more tightening has yet to come through.     This should make central bankers much more cautious, however it seems to be having the opposite effect, causing frustration that inflation isn't coming down quickly enough, due to resilient consumption patterns. With US CPI for June set to be released on Wednesday, and PPI on Thursday we are likely to see further evidence of this disinflationary trend, even while wages growth remains resilient. These are the key macro items for investors to mull over this week ahead of the Federal Reserve later this month, while in the UK tomorrow we have the latest wages and unemployment numbers for the 3-months to May, which are expected to show strong wages growth against a backdrop of a tight labour market.           EUR/USD – broke higher last week after finding solid support around the 1.0830/40 area. We need to see a move above the June highs at 1.1010/15 to target a move towards 1.1100, and the highs this year. A break below the lows last week opens the way for a potential move towards 1.0780.     GBP/USD – broke above resistance at the 1.2770/80 area putting it on course for a move towards the 1.3000 area, but needs to take the 1.2850 area and June highs first. Support comes in at the 1.2770/80 area, and below that at 1.2680.      EUR/GBP – continues to find support at the 0.8515/20 area and June lows. Also has resistance at the 0.8570/80 area. We also have resistance at the 50-day SMA which is now at 0.8635. Below 0.8500 targets 0.8460.     USD/JPY – fell below the 144.00 area triggering stops all the way to the 142.00 area, also falling below support at 142.50. Posted a weekly reversal suggesting the top is in and the risk of a return to the 139.80 area. We need to see a move back above 142.80 to stabilise and argue for a return to 144.00.       FTSE100 is expected to open 3 points lower at 7,254     DAX is expected to open unchanged at 15,603     CAC40 is expected to open 14 points lower at 7,098  
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).  
EUR/USD: Outlook and Potential for Dollar Growth

EUR/USD: Outlook and Potential for Dollar Growth

ING Economics ING Economics 10.07.2023 11:51
EUR/USD As a result of Friday, the euro grew by 76 points after reacting to moderately positive US employment data. The unemployment rate slipped to 3.6% from 3.7% in May, although Non-Farms showed that the US economy added 209,000 jobs in June 2023, following a downwardly revised 306,000 in May, and below market forecasts of 225,000. This was reflected to some extent in the broad unemployment index – it rose from 6.7% to 6.9%. The overall labor force participation rate was unchanged for the fourth consecutive month at 62.6%, and there is room for growth to around 62.8-62.9%, where this share of the active population was quite stable in 2015/19. Therefore, the labor market is not yet saturated, even the average hourly earnings for all employees rose by 0.4% in June.   If we consider Friday's data in conjunction with Thursday's ADP data, the picture seems favorable for dollar growth. In fact, after a little hesitation with the release of data, the dollar strengthened, but as on Thursday, it was speculatively bought out. The trading volume was less compared to Thursday. And this could mean that the resistance of dollar buyers has been broken, or the bulls themselves are close to completing such a two-day speculative operation. In the first case, the euro's growth will extend at least to 1.1028 (and then the price will diverge from the oscillator on the daily chart), or higher, to 1.1085, or, in the second case, the euro will still grow a little for technical work out of the upper band of the price channel to 1.0980 and will turn to depreciation in the medium-term.     Whatever the case may be, buying the EUR/USD pair right now is risky, we are still waiting for the euro to turn to a 4-5 figure drop, we just have to wait for this turn to form. On the four-hour chart, the price is rising above the balance and MACD indicator lines, the Marlin oscillator is in a position to grow, we have an uptrend in the short-term.  
Risk of Deflationary Spiral in China Impacts Confidence in Equities, while USD Holds Steady Against Yuan

Risk of Deflationary Spiral in China Impacts Confidence in Equities, while USD Holds Steady Against Yuan

Craig Erlam Craig Erlam 10.07.2023 12:28
Deflationary spiral risk has negated confidence in China equities. US dollar has continued to hold steady against the yuan despite a broad-based sell-off against other major currencies ex-post US non-farm payrolls. The key intermediate support to watch on the USD/CNH will be at 7.2160. Weak China inflation data offset positive China Big Tech news flow The dreaded fear of a deflationary spiral in China has reached “code red” where the latest consumer inflation rate for June has flattened to 0% year-on-year from a gain of 0.2% year-on-year in May and came in below expectations of an increase of 0.2%. This latest reading in CPI is the weakest rate since February 2021. In addition, producers’ prices (factory gate prices) continued to deteriorate further into contraction mode; it dropped -5.4% year-on-year, faster than a 4.6% fall in May, and worse than expectations of a -5.0% decline. Overall, it has marked the ninth consecutive month of producer deflation and its steepest fall since December 2015. Time is running out for Chinese policymakers to negate the steepening rout in the internal demand environment that can potentially lead to further loss in consumer and business confidence if the deflationary spiral starts to be persistent. It may lead to a liquidity trap scenario in China where monetary policy tools will be less effective to stimulate real economic growth. The forward pricing mechanisms of the stock market seem to have started to take into account some aspects of the negative feedback loop triggered by the liquidity trap scenario, earlier intraday gains of between 1% to 3.2% seen in today’s Asian session on the Hang Seng indices as well as China’s benchmark CSI 300 driven by China Big Tech equities as Chinese regulators have signalled on last Friday after the close of the Asian session to end a two-year plus of crackdown on the technology sector have been reduced by slightly more than half, CSI 300 (0.5%), Hang Seng Index (0.8%), Hang Seng TECH Index (1.25%), and Hang Seng China Enterprises Index (0.7%) at this time of the writing.     China’s yuan remained soft despite the broader USD sell-off       Fig 1:  US dollar rolling 1-month performance as  of 10 Jul 2023 (Source: TradingView, click to enlarge chart) The US dollar sold off last Friday, 7 July reinforced by technical factors after the US Dollar Index cracked below its 50-day moving average that had been acting as a prior minor support since 28 June 2023, also ex-post US non-farm payrolls for June that came in below expectations (209K added vs. 225K consensus). Based on the rolling one-month performances as of today, the USD is weakest against the EUR (-1.89%), GBP (1.81%), and CHF (-1.35%) while holding steady against the offshore yuan, CNH (+1.44%). In addition, the US Treasury 2-year yield premium over an average of key developed nations’ 2-year sovereign yields (Germany, UK, Japan, Canada, Switzerland, Australia, China) has narrowed as well.     USD/CNH short and medium-term uptrend phases remain intact     Fig 2:  USD/CNH short & medium-term trends as of 10 Jul 2023 (Source: TradingView, click to enlarge chart) Since the start of its upside acceleration on 4 May 2023, the USD/CNH has managed to evolve above its 20-day moving average and today’s price action has managed to stage a rebound after a retest on it. If the 20-day moving average now acting as a key intermediate support at 7.2160 is not broken down, the USD/CNH is likely to remain in its short-term bullish trend trajectory which in turn may see further potential weakness in the CSI 300 and Hang Seng indices. The only catalyst for a potential revival of bullish animal spirits in China equities is a clear signal from China’s State Council on the implementation of new fiscal stimulus measures in terms of scope and timing.  
Pound Sterling: Short-Term Repricing Complete, But Further Uncertainty Looms

European Markets React to US Rating Downgrade and Economic Concerns

Michael Hewson Michael Hewson 02.08.2023 08:22
European markets set to open lower after US rating downgrade     We saw a negative start to August for European markets with the DAX leading the way lower, having only put in a new record high the day before, after poor manufacturing PMIs and disappointing earnings prompted profit taking.   Yesterday's weakness appears to have been prompted by concern that the economy is a little bit weaker than perhaps people would like, raising concern for earnings growth heading into the second half of the year. US markets also finished the day lower, although closing well off the lows of the day with the Dow managing to eke out a gain. US yields also finished the day higher, on the rising realisation that rates may well have to stay at current levels for quite a while yet.     This profit taking has continued overnight after Fitch downgraded the US credit rating to AA+ from AAA, while simultaneously boosting demand for haven assets, with Asia markets falling sharply, and which looks set to translate into a sharply lower European open.   The increase in crude oil prices over the past 4 weeks is also raising concern that the falls in input prices that we've seen over the last few months might start to hit a floor and start rising again. Yesterday we got another snapshot of the US labour market as US job openings (JOLTS) fell to their lowest levels since April 2021, although they are still well above the levels, they were pre-pandemic. The latest employment component in the July ISM manufacturing survey also slowed to its lowest level since July 2020.     Today we get the latest insight into private sector hiring with the ADP employment report for July which is unlikely to repeat the bumper 497k seen in the June numbers. We should also be prepared for a downward revision to that report with July expected to see a more moderate 190k, as we look towards Friday's more important non-farm payrolls numbers. While stocks slipped back yesterday the US dollar rose to a 3-week high, gaining ground across the board on the grounds of the broader resilience of the US economy.     EUR/USD – still finding support at the 1.0940 lows from last week with further support at the 50-day SMA as well as the 1.0850 area. Resistance currently at last week's high at 1.1150.     GBP/USD – has continued to slide lower towards trend line support from the March lows at 1.2710, and the 50-day SMA at 1.2700. While above this key support the uptrend from the March lows remains intact. Resistance at the 1.3000 area.         EUR/GBP – popped briefly above the resistance at the 0.8600 area, before slipping back again, with the risk of a return to the recent lows at 0.8500/10. We need to see a concerted move above 0.8620 to target the July highs at 0.8700/10.     USD/JPY – continues to move through the 142.00 area, with the next target at the previous peaks at 145.00. Support comes in at this week's lows at 140.70.     FTSE100 is expected to open 30 points lower at 7,636     DAX is expected to open 88 points lower at 16,152     CAC40 is expected to open 36 points lower at 7,370   By Michael Hewson (Chief Market Analyst at CMC Markets UK)  
Pound Sterling: Short-Term Repricing Complete, But Further Uncertainty Looms

European Markets React to US Rating Downgrade and Economic Concerns - 02.08.2023

Michael Hewson Michael Hewson 02.08.2023 08:22
European markets set to open lower after US rating downgrade     We saw a negative start to August for European markets with the DAX leading the way lower, having only put in a new record high the day before, after poor manufacturing PMIs and disappointing earnings prompted profit taking.   Yesterday's weakness appears to have been prompted by concern that the economy is a little bit weaker than perhaps people would like, raising concern for earnings growth heading into the second half of the year. US markets also finished the day lower, although closing well off the lows of the day with the Dow managing to eke out a gain. US yields also finished the day higher, on the rising realisation that rates may well have to stay at current levels for quite a while yet.     This profit taking has continued overnight after Fitch downgraded the US credit rating to AA+ from AAA, while simultaneously boosting demand for haven assets, with Asia markets falling sharply, and which looks set to translate into a sharply lower European open.   The increase in crude oil prices over the past 4 weeks is also raising concern that the falls in input prices that we've seen over the last few months might start to hit a floor and start rising again. Yesterday we got another snapshot of the US labour market as US job openings (JOLTS) fell to their lowest levels since April 2021, although they are still well above the levels, they were pre-pandemic. The latest employment component in the July ISM manufacturing survey also slowed to its lowest level since July 2020.     Today we get the latest insight into private sector hiring with the ADP employment report for July which is unlikely to repeat the bumper 497k seen in the June numbers. We should also be prepared for a downward revision to that report with July expected to see a more moderate 190k, as we look towards Friday's more important non-farm payrolls numbers. While stocks slipped back yesterday the US dollar rose to a 3-week high, gaining ground across the board on the grounds of the broader resilience of the US economy.     EUR/USD – still finding support at the 1.0940 lows from last week with further support at the 50-day SMA as well as the 1.0850 area. Resistance currently at last week's high at 1.1150.     GBP/USD – has continued to slide lower towards trend line support from the March lows at 1.2710, and the 50-day SMA at 1.2700. While above this key support the uptrend from the March lows remains intact. Resistance at the 1.3000 area.         EUR/GBP – popped briefly above the resistance at the 0.8600 area, before slipping back again, with the risk of a return to the recent lows at 0.8500/10. We need to see a concerted move above 0.8620 to target the July highs at 0.8700/10.     USD/JPY – continues to move through the 142.00 area, with the next target at the previous peaks at 145.00. Support comes in at this week's lows at 140.70.     FTSE100 is expected to open 30 points lower at 7,636     DAX is expected to open 88 points lower at 16,152     CAC40 is expected to open 36 points lower at 7,370   By Michael Hewson (Chief Market Analyst at CMC Markets UK)  
EUR/USD Downtrend Continues Amidst Jackson Hole Symposium Anticipation

EUR/USD Downtrend Continues Amidst Jackson Hole Symposium Anticipation

InstaForex Analysis InstaForex Analysis 21.08.2023 13:24
The downtrend prevails for the EUR/USD pair, falling for the fifth consecutive week. In mid-July, the pair reached a multi-month high at 1.1276, but then sellers took over, as the dollar strengthened and the euro weakened. Last week, bears managed to settle around the 1.08 figure, but they couldn't stay below the support level of 1.0850 (the lower line of the Bollinger Bands indicator on the daily chart), even though they tested this target. The driver of the bearish movement was the USD, which strengthened amid mixed inflation data, hawkish Federal Reserve minutes, decent economic reports, and growing risk-off sentiment. The euro obediently followed the greenback, seemingly content with its role as a "follower" rather than a "leader." This week, the focus will be on the dollar, which, in turn, is anticipating the key event of the month. The event in question is the annual economic symposium held in Jackson Hole, Wyoming. The significance of this event cannot be overstated. The Jackson Hole symposium is often referred to as a "barometer" for the sentiment of central banks in leading countries. As is known, the forum is attended by central bank leaders from major countries (usually at the level of chairmen or their deputies), finance ministers, leading economists and analysts, and heads of the world's largest conglomerates and banking giants. For three days, they discuss pressing issues, crystallize certain signals, and define the main points of further steps.   Typically, the financial elite discusses the most urgent issues at the time. For example, in 2015, the main topic was the crash on the Shanghai Stock Exchange, in 2016 the discussions focused on the consequences of Brexit, and in 2017 the expansion of bond spreads and the next steps of the Fed and European Central Bank were discussed. In 2018, the central topic of the meeting was the trade war between the US and China (or rather its consequences), in 2019, the global trade conflict was discussed again, as well as the impending Brexit. In 2020, the sole topic was the coronavirus crisis, in 2021, the aftermath of the crisis. The key issue discussed at Jackson Hole last year was inflation. It is evident that participants at this week's meeting will also focus on this issue, given the grim macroeconomic news from China. During the three-day symposium, which starts on August 24th, many central bank heads and representatives will speak and may outline their future course of actions in the context of monetary policy prospects. In particular, Fed Chair Jerome Powell is expected to speak on Friday – if he adopts a hawkish stance, the US dollar will get another boost across the market, including against the euro. The latest US data maintains the intrigue on the Fed chair's stance, so we can guarantee the volatility for the EUR/USD pair (as well as other dollar pairs). In short, the recent inflation reports have been somewhat contradictory.   The Consumer Price Index in July showed an uptrend – for the first time in the last 12 months. The indicator rose to 3.2% year-on-year after June's result of 3.0%. However, the core CPI decreased to 4.7% (the lowest level since July 2021). The Producer Price Index was in the "green" – both in annual and monthly terms. The PPI rose by 0.8%, compared to a forecast of 0.3%. The indicator had been steadily declining for 12 months, but it accelerated last month (for comparison, in June 2022 the PPI was at 11.3%, in June 2023, it was already at 0.1%). The core PPI also consistently declined over several months but remained at June's level in July, i.e., at 2.4%. The report on the Import Price Index similarly favored the greenback. According to data published last week, the index in monthly terms was above zero for the first time since April 2023. It is also necessary to recall the latest Non-farm Payrolls, specifically the "green hue" of the pro-inflationary indicator. The level of average hourly wage increased by 4.4% YoY in July, while experts expected a decrease to 4.1% (the indicator has been at 4.4% for four consecutive months). The question emerges - will Powell focus on the acceleration of the CPI and the dynamics of the PPI? Or will the core CPI and the basic PCE index, which showed a slowdown in inflationary processes, be the focus of his speech? According to data from the CME FedWatch Tool, the chances of a quarter point rate hike at the September meeting is currently only 11%. The likelihood of a rate hike at the November meeting is 33%. Powell may reinforce hawkish expectations regarding the Fed's future course of actions if he is concerned about the growth of the aforementioned inflation indicators. In this case, the Fed Chair will trigger a dollar rally, as a result of which the EUR/USD pair may not only fall to the base of the 8th figure but also test the support level of 1.0750 (Kijun-sen line on the daily chart).   However, if Powell focuses on the side effects of aggressive monetary policy (especially in light of recent decisions by rating agencies Moody's and Fitch), the dollar will be under pressure: in this case, EUR/USD buyers may be able to return the pair to the range of 1.0950-1.1030. Of course, apart from the economic symposium, EUR/USD traders will react to other fundamental factors in the background during the upcoming week (PMI indices, IFO, orders for durable goods, secondary housing sales in the US). However, Powell's speech is the main event not only of the upcoming week but probably of the whole of August in general.    
Pound Sterling: Short-Term Repricing Complete, But Further Uncertainty Looms

US ADP Set to Slow in August: Impact on Markets and Economic Outlook

Michael Hewson Michael Hewson 30.08.2023 09:42
06:00BST Wednesday 30th August 2023 US ADP set to slow in August   By Michael Hewson (Chief Market Analyst at CMC Markets UK)     We've seen a strong start to the week for European markets with the FTSE100 outperforming yesterday due to playing catch-up as result of the gains in the rest of Europe on the Monday Bank Holiday. US markets also saw a strong session, led by the Nasdaq 100 as yields retreated on the back of a sharp slowdown in US consumer confidence in August, and a fall in the number of vacancies from 9165k to 8827k in July, and the lowest level since March 2021.     The sharp drop in the number of available vacancies in the US helps to increase the probability that the Federal Reserve will be comfortable keeping rates unchanged next month, if as they claim, they are data dependent, and that rates are now close to restrictive territory.   This belief was reflected in a sharp fall in bond yields, as well as a slide in the US dollar, however one should also remember that the number of vacancies is still well above pre-pandemic levels, so while the US labour market is slowing, it still has some way to go before we can expect to see a significant move higher in the unemployment rate. Today's ADP jobs report is likely to reflect this resilience, ahead of Friday's non-farm payrolls report. The ADP report has been the much more resilient report of the two in recent months, adding 324k in July on top of the 455k in June. This resilience is also coming against a backdrop of sticky wages, which in the private sector are over double headline CPI.   Nonetheless the direction of travel when it comes to the labour market does suggest that jobs growth is slowing, with expectations for that jobs growth will slow to 195k in August. We also have the latest iteration of US Q2 GDP which is expected to underline the outperformance of the US economy in the second quarter with a modest improvement to 2.5% from 2.4%, despite a slowdown in personal consumption from 4.2% in Q1 to 1.6%.     More importantly the core PCE price index saw quarterly prices slow from 4.9% in Q1 to 3.8%. The resilience in the Q2 numbers was driven by a rebuilding of inventory levels which declined in Q1. Private domestic investment also rose 5.7%, while an increase in defence spending saw a rise of 2.5%.     Before the release of today's US numbers, we also have some important numbers out of the UK, with respect to consumer credit and mortgage approvals for July, and Germany flash inflation for August. Mortgage approvals in June saw a surprise pickup to 54.7k, which may well have been down to a rush to lock in fixed rates before they went higher. July may well see a modest slowdown to about 51k.   Net consumer credit was also resilient in June, jumping to £1.7bn and a 5 year high, raising concerns that consumers were going further into debt to fund lifestyles more suited to a low interest rate environment. This level of credit is unlikely to be sustained and is expected to slow to £1.4bn.     As long as unemployment remains close to historically low levels this probably won't be too much of a concern, however if it starts to edge higher, or rates stay higher for an extended period of time, we could start to see slowdown in both, as previous interest rate increases start to bite in earnest.     In comments made at the weekend deputy governor of the Bank of England Ben Broadbent said he that interest rates will need to be higher for longer despite recent declines oil and gas prices as well as producer prices. These comments prompted a sharp rise in UK 2 year and 5-year gilt yields yesterday, even as US yields went in the opposite direction. This rise came against a welcome slowdown in the pace of UK shop price inflation which slowed to 6.9% in August.     Headline inflation in Germany is expected to slow to 6.3% from 6.5% in July, however whether that will be enough for Bundesbank head Joachim Nagel to resile from his recent hawkishness is debatable. As we look towards European session, the continued follow through in the US looks set us up for another positive start for markets in Europe later this morning.     EUR/USD – rebounded off trend line support from the March lows at 1.0780 yesterday. Still feels range bound with resistance at the 1.1030 area, and a break below 1.0750 looking for a move towards the May lows at 1.0630.     GBP/USD – has rebounded from the 1.2545 area, but the rally feels a little half-hearted. We need to push back through the 1.2800 area to diminish downside risk and a move towards 1.2400.         EUR/GBP – the rebound off last week's 11-month low at 0.8490 has seen a retest and break of the 0.8600 area, however we need to push through resistance at the 0.8620/30 area to signal further gains, towards the 50-day SMA resistance.     USD/JPY – wasn't able to push through resistance at 147.50 and has slipped back. This remains the key barrier for a move towards 150.00. Support comes in at last week's lows at 144.50/60.   FTSE100 is expected to open 28 points higher at 7,493     DAX is expected to open 49 points higher at 15,980     CAC40 is expected to open 21 points higher at 7,394
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New Zealand Business Confidence Surges as Inflation Expectations Hold Steady

Akash Girimath Akash Girimath 01.09.2023 11:26
New Zealand business confidence rises ADP Employment Change falls to 177,000 The New Zealand dollar is almost flat on Thursday, trading at 0.5958 in Europe.   New Zealand Business Confidence improves again New Zealand’s ANZ Business Confidence index accelerated for a fourth straight month in August. The index improved to -3.7, up from -13.1 in July. Business Confidence has been in negative territory for 26 consecutive months, but the August print was the highest since June 2021. The consensus estimate stood at -1.9 and the New Zealand dollar didn’t react. If the upswing continues, we should see a positive reading in the next month or two, which would be a milestone and likely give a boost to the New Zealand dollar. The business confidence report noted that inflation expectations dipped very slightly, from 5.14% to 5.06%. This is clearly incompatible with a 2% inflation target but the key question is whether the Reserve Bank of New Zealand will pause for a third straight time in October, in the hope that the benchmark rate of 5.50% will further cool the economy and push inflation lower. The RBNZ doesn’t meet until October 4th, with only one tier-1 event prior to the meeting, which is GDP on September 20th. The central bank will also be keeping a close eye on events in China, where the economy has been deteriorating. On Thursday, China’s Manufacturing PMI rose in July to 49.7, up from 49.3 in June, but this marked a fifth straight contraction.   In the US, the markets await the non-farm payrolls release on Friday. The ADP employment report fell sharply to 177,000, down from an upwardly revised 371,000 and shy of the estimate of 195,000. The ADP release isn’t a reliable precursor to nonfarm payrolls but still attracts attention as investors hunt for clues ahead of the nonfarm payrolls release. The markets are expecting nonfarm payrolls to fall to 170,000 in August, compared to 187,000 in July. . NZD/USD Technical There is support at 0.5927 and 0.5866 0.5968 is a weak resistance line. Above, there is resistance at 0.6029        
Europe's Economic Concerns Weigh as Higher Rates Keep US Markets Cautious

Softening US Jobs Market Signals the Fed's Mission is Complete

ING Economics ING Economics 04.09.2023 10:30
Softening US jobs market suggests the Fed’s work is done The US August jobs report shows modest jobs growth, benign wage pressures and a large jump in the unemployment rate as the labour market slackens. With inflation set to continue slowing, the Fed is surely not hiking interest rates in September and is unlikely to do so in November either.   Employment growth is softening US non-farm payrolls increased 187k in August versus the 170k consensus, but there are a net 110k of downward revisions to the past couple of months, indicating that the slowing trend in employment growth remains in place. The private sector created 179k of those jobs, led yet again by private education and health with 102k jobs. Leisure and hospitality also remains a healthy provider of employment with a 40k increase. Information (-15k), trade and transport (-20k – presumably Yellow bankruptcy related) and temporary help (-19k) were the key areas of weakness.     Those numbers are all from the establishment survey of employers. The household survey, which is used to calculate the unemployment rate, reported a slightly stronger jobs gain of 222k, but the number of people classifying themselves as unemployed rose 514k with it seeming that more and more people are returning to the labour market. This increase in the participation rate is what the Fed wants to see and at 62.8%, it has risen nicely since a year ago when it stood at 62.1% and should help to keep wage pressures in check.   Wages cooling and unemployment is rising In that regard, wage growth (average hourly earnings) is soft at 0.2% MoM, the smallest increase since February 2022, while the unemployment rate jumps to 3.8% from 3.5% (consensus 3.5%). It’s pretty safe to say the Fed isn't hiking in September with this backdrop, and we don't think they will in November either, with core CPI set to slow pretty rapidly in the next couple of months.   Tightening lending conditions point to a higher unemployment rate   The Fed's work is done The chart above shows the relationship between bank lending conditions and the unemployment rate. With higher borrowing costs, less credit availability and student loan repayments all set to increasingly weigh on economic activity we fear that the unemployment rate will climb further. Unfortunately, it is unlikely to be just through rising participation rates but will likely involve some job losses too. As such, we continue to believe that US interest rates have peaked and the next move will be a cut. We are currently forecasting that to happen in March 2024.
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EUR/USD Trading Analysis: Navigating Market Volatility Amid Crucial US Economic Data

InstaForex Analysis InstaForex Analysis 06.10.2023 15:22
Early in the European session, EUR/USD is trading around 1.0541, above the 21 SMA, and above the downtrend channel that was broken yesterday in the American session. In the next few hours during the American session, data of crucial importance for the US economy will be published, namely, Non-Farm Payrolls (NFPs).   This data could generate strong volatility in the market and we could see bullish movement in the EUR/USD pair. This data, if negative, could give bullish momentum to the euro so that EUR/USD could reach 3/8 Murray and even the 200 EMA located at 1.0675. As the euro is exiting the overbought zone, a technical correction from current price levels towards the psychological level of 1.0500 could be seen as an opportunity to resume buying. The 2/8 Murray zone could be seen as an opportunity to buy just in case a technical bounce occurs above this area. On the other hand, if EUR/USD falls below 1.0500 (21 SMA), we could expect a bearish move to occur. The instrment could reach the October 3 low around 1.0447 and even 1/8 Murray at 1.0385. The daily pivot point is located around 1.0532 which favors a positive outlook. However, with a bounce around the daily S_1 support, we could expect an opportunity to buy the euro above 1.0513. The eagle indicator has been giving a positive signal since October 3. However, any pullback and while the euro trades above 1.0450 will be seen as an opportunity to buy with the target at 1.0675 (200 EMA).  
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Asia Morning Bites: Focus on China's Caixin Services PMI and Anticipation for US Non-Farm Payroll Data

ING Economics ING Economics 03.11.2023 14:07
Asia Morning Bites China's Caixin services PMI report will be the focus for today ahead of tonight's US non-farm payroll data.   Global markets and macro Global markets:  Front-end US Treasury yields bounced slightly yesterday after their big post-FOMC drop. 2Y UST yields rose 4.6bp, but remain below 5% (4.989%). But yields on the 10Y Treasury kept falling, dropping a further 7.5bp to 4.659%.  US equity markets are benefitting from the drop in bond yields. The S&P 500 rose a very decent 1.89%, and the NASDAQ was also up (1.75%). Chinese stocks were more mixed. The CSI 300 fell 0.47% on Thursday, but the Hang Seng rose 0.75%. The USD lost further ground on Thursday. EURUSD rose to 1.0617. The AUD rose to 0.6428. Cable pushed back above 1.22, though has dropped back to 1.2194 now, and the JPY has eased down to about 150.5.  Asian FX was broadly stronger against the USD on Thursday and looks likely to keep making gains today.  The KRW led the rest of the Asia FX pack, dropping to 1343. The THB followed, dropping to 35.99. The CNY also made small gains, and USDCNY has moved down to 7.3143.   G-7 macro: It was the turn of the Bank of England to sit on its hands yesterday, following the FOMC’s “pause” the previous day. The MPC committee decided to leave Bank Rate at  5.25%. But pushed back against the market’s expectation for rate cuts next year. Today, non-farm payrolls provide us all the entertainment we need to take us into the weekend. For what it is worth, the consensus forecast for the payrolls headline is +180K, with no change in the unemployment rate (3.8%) and average hourly earnings growth dropping from 4.2% YoY to 4.0%. We also get the non-manufacturing ISM. However, whatever it produces will be eclipsed by the payroll numbers.   China:  After the disappointments of the official PMIs, and then the Caixin manufacturing PMI indices earlier this week, the consensus view of a slight rise of the Caixin service-sector PMI to 51.0 from 50.2, looks in strong danger of being undershot.   Singapore: September retail sales are due for release later today.  We can expect another month of modest expansion with retail sales possibly up roughly 1.5%YoY supported by robust department store sales driven by the return of visitor arrivals. Retail sales have been a bright spot for economic growth this year but elevated inflation should cap its upside in the near term.    What to look out for: China Caixin PMI services and US NFP China Caixin PMI services (3 November) Singapore retail sales (3 November) US NFP and ISM services (3 November)
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The Jobs Dilemma: Deciphering Long-End Rates Amidst Fed's Balancing Act

ING Economics ING Economics 03.11.2023 14:38
Rates Spark: US jobs data can be key It has been a big move lower in long-end rates over the past days, and today's US jobs data will be key in determining whether it has further to run. Notably, however, the front end has started to turn higher again. The Fed, having tied itself to long-end rates to a degree, may start pushing back against easing financial conditions.   The rally in long-end rates extended with curve flattening accelerating Overall, we have now seen a drop of close to 30bp in 10Y and longer yields over just two sessions – the 10Y is now at 4.66% and 30Y at 4.80%. As seen in the move higher before, it was also in large part a move in the real interest rate component in this leg lower. The 2s10s curve has reflattened by a substantial 18bp with the larger part of that dynamic actually coming yesterday. The lower-than-feared long-end supply fuelled by the US Treasury has helped, as has weaker macro data. And certainly, there was evidence of value hunters out there getting in at 'high' yield levels. Markets will now be taking a close look at today’s US jobs data to determine whether yields have further room to fall. Yesterday’s US labour market indicators have already helped provide 10Y yields the final nudge below 4.7%. The initial jobless claims ticked a little higher to 217k from 212k and more importantly continuing claims rose to 1815k. That latter figure has been rising over the past month and a half. While the rate of layoffs might still be considered low, it suggests that if you do lose your job it is becoming more difficult to find a new one.   The Fed may push back agains financial conditions easing again The rally on long-end rates over the past sessions also highlights another conundrum for the Fed. By essentially referencing the higher longer rates as reason to withhold further tightening it has created an awkward interdependency with the market. The Fed said it needed to see persistence in the changes to broader financial conditions for it to have implications for the policy path. While there are good reasons to assume that further tightening is off the table, the prospect of a larger rally in rates bringing them back again potentially limits the downside at the onset. The caveat is that this may only work to the degree that long-end rates are actually driven by policy expectations. Front-end rates certainly are and pushed actually higher yesterday with the 2Y yield close to 5% again. That in mind, the Fed’s interdependency with the market is adding to the re-flattening dynamic of the curve.   As the-long end rally extended, front-end resistence accelerated the flattening   Today's events and market view We have doubts that this is the end of rises in long-dated market rates. For that to happen we would need to see material labour market weakness, putting today's job market report squarely in the spotlight. The consensus is looking for a 180k rise in non-farm payrolls, with forecasts ranging from 125k to 235k. It will be a slowdown from September’s bumper figure of 336k, but even the consensus figure would still be relatively robust – cooling, but making it hard to argue that the labour market is really troubled yet. As for supply as a driver, the market is effectively still facing higher issuance at upcoming Treasury auctions, and we are not even speaking of unresolved long-term debt trajectory concerns. As for the weaker ISM manufacturing that had helped drive the rally, it had been in contractionary territory since last October. The more relevant indicator should be today’s non-manufacturing ISM. And with regards to the Fed, the speaker schedule is looking busier again after the meeting and the drop in longer rates may get some pushback.
Federal Reserve's Stance: Holding Rates Steady Amidst Market Expectations, with a Cautionary Tone on Overly Aggressive Rate Cut Pricings

Turbulent Markets: Powell's Hawkish Turn Sparks Rate Cut Speculations

ING Economics ING Economics 04.12.2023 13:42
Global Macro and Markets Global markets:  Fed Chair, Jerome Powell, tried to sound a hawkish tone at his speaking event on Friday, talking down the likelihood of rate cuts. But markets latched onto a remark that policy was now “well into restrictive territory” as a clue that there was a greater chance of rate cuts next year than Powell was letting on. 2Y Treasury yields plunged 14.2bp to 4.538%, while the yield on 10Y Treasuries dropped 13.1bp to 4.196%. So far, there has been no obvious response from EURUSD, which you’d imagine would rise given the magnitude of this fall in US bond yields. However, the falls were matched very closely by falls in European bond yields on Friday too, as markets seem to be swinging around to the idea of meaningful ECB cuts as well.  The AUD rose sharply though, rising to 0.6687. Cable was also up to 1.2721. And the JPY has plunged to 146.33, its strongest since 11 September. Asian FX was mixed on Friday, though we can expect the laggards (KRW, TWD and MYR) to make up ground today. The rest of the pack will also likely follow the G-10 lead. Rising rate cut expectations gave US stocks another reason to rally on Friday, though the gains were relatively muted. The S&P 500 and NASDAQ rose slightly over half a per cent. G-7 macro:  Friday’s main data release was the manufacturing ISM index. This was unchanged at 46.7, a weaker outcome than had been expected. With non-farm payrolls due on Friday, the drop in the employment index from 46.8 to 45.8 probably carried more weight than the increase in the new orders index from 45.5 to 48.3. Both indices, as well as the headline, remain in contraction territory. Today is relatively light for macro data. We get the final US durable goods orders figures for October, along with the October factory orders figures which are derived from them. China:  China Evergrande Group is due to have its future determined today by a Hong Kong court hearing to determine whether a creditor request for the company to be wound up will be granted. The Group has outstanding liabilities of around $327bn. Liquidation will place China’s housing market, which has been showing signs of declining at a more rapid pace in recent months, under further downward pressure.   India:  Ahead of next year’s lower house elections, India’s ruling BJP party has won three state elections at the weekend, taking two of them from opposition parties.   What to look out for: South Korea GDP and China Caixin PMI services later in the week US durable goods and factory orders (4 December) South Korea GDP (5 December) Japan Tokyo CPI inflation and Jibun PMI services (5 December) Philippines CPI inflation (5 December) China Caixin PMI services (5 December) RBA meeting (5 December) Singapore retail sales (5 December) US JOLTS and ISM services (5 December) Australia GDP (6 December) Taiwan CPI inflation (6 December) US ADP employment and trade balance (6 December) Australia trade (7 December)China trade (7 December) Thailand CPI inflation (7 December) US initial jobless claims (7 December) Japan GDP (8 December) India RBI meeting (8 December) Taiwan trade (8 December) US NFP (8 December)
Brazilian Shipping Disruptions Propel Coffee Prices Higher in Agriculture Market

The Countdown to the Currency Market's 'Dead Season': What to Expect for EUR/USD in the Coming Weeks

InstaForex Analysis InstaForex Analysis 04.12.2023 15:07
It's early December, which means traders have very little time left before the start of the "dead season." The currency market will be active for a few more weeks before entering the Christmas-New Year lethargy. The EUR/USD pair is no exception here. Typically, life in the FX market slows down after the December meetings of the Federal Reserve and the European Central Bank (on December 12-13 and 14, respectively). For some time, traders reflect on the outcomes of these meetings, but inevitably, "winter holidays" set in. The main feature of the upcoming week is the "silence" of the Fed officials. The so-called "blackout period" started on Saturday: for 10 days leading up to the Fed meeting, officials of the U.S. central bank generally do not speak publicly or grant interviews. Therefore, EUR/USD traders will be focused on economic reports. Let's take a look at the economic calendar and see what awaits us in the coming days.   Monday The first working day is traditionally quite empty for EUR/USD. During the European session, the Sentix investor confidence indicator will be published. This is a leading indicator as it measures investors' sentiment towards the eurozone economy. Since March 2022, the indicator has been in the negative territory, but in November, it showed positive dynamics, rising from -21.9 to -18.6. In December, experts expect a further improvement to -15.0. Also on Monday, ECB President Christine Lagarde is expected to speak. She will participate in a conference that includes a Q&A session. The head of the ECB may comment on the latest eurozone inflation data, although the theme of the meeting, let's say, does not lend itself to such questions (the conference is organized by the French Academy of Ethics and Political Sciences). During the U.S. session, a report on factory orders in America will be published. The volume of total orders is expected to decrease by 2.7% in October, while core orders are expected to increase by only 0.3%. Tuesday On Tuesday, the final estimates of the PMI data for November will be published. According to forecasts, they will coincide with the initial reports (in this case, the market will likely ignore this data). Traders will focus on the ISM Non-Manufacturing Purchasing Managers' Index (PMI), which will be published during the U.S. session. This indicator has declined over the past two months, but according to most experts, it will rise to 52.5 points in November. However, if the index falls into the "red zone," the dollar will come under significant pressure. Let me remind you that the ISM Manufacturing Index published last week did not support the greenback. In November, it reached 46.7 points, against forecasts of an increase to 48.0 (the manufacturing index has been in contraction territory for the 13th consecutive month). In addition, the U.S. Bureau of Labor Statistics will release data on the level of job vacancies and labor turnover. However, considering that the market is anticipating the Non-Farm Payrolls data later in the week, they will likely overlook Tuesday's report.   Wednesday At the start of the European session, we will learn about the October volume of industrial orders in Germany. In annual terms, the indicator has been in the negative territory since July, and judging by forecasts, the situation is not expected to improve in October (forecast -5.6%). The main report of the day will be announced during the U.S. session, which is the non-farm employment in the United States from ADP. This report is considered to play the role of a kind of "harbinger" ahead of the release of official data—although quite often these indicators do not correlate. Nevertheless, the ADP report can trigger increased volatility among dollar pairs, especially if it comes out in the green/red zone. According to experts, 120,000 non-farm jobs were created in November. If the figure falls below the 100,000 mark, the greenback may come under pressure. Also, U.S. data on labor cost will be published (final estimate). This indicator, for the first time since the beginning of 2021, dropped into negative territory in the third quarter. According to forecasts, the final estimate will be revised downwards (from -0.8% to -0.9%). On the same day, ECB Executive Board member Joachim Nagel (head of the Bundesbank) will speak. Before the release of the latest data on eurozone inflation, he voiced rather hawkish theses, allowing for additional interest rate hikes in the foreseeable future. We do not know whether his position will change in light of recent events.   Thursday On this day, we will learn the final estimate of the eurozone Q3 GDP data. According to forecasts, the final result should match the second estimate (-0.1%). During the U.S. session, weekly data on initial jobless claims will be published. Since mid-October, this indicator has fluctuated in the range of 210,000 to 220,000 (except for one week when the count jumped to 233,000). According to forecasts, for the upcoming week, the indicator will come in at 220,000, i.e., at the upper limit of the "established" range. Furthermore, secondary economic reports will be released (wholesale inventories - final estimate, and consumer credit), but they usually do not have any significant impact on the market.   Friday On the last day of the trading week, key U.S. labor market data for the month of November will be published. According to preliminary forecasts, the unemployment rate in November will remain at the October level, i.e., at 3.9%. The number of non-farm payrolls is expected to increase by 185,000 (after a 150,000 increase in October) – meaning the figure will once again fall short of the 200,000 mark. In the private sector, the number of employed is expected to grow by 155,000 (after a 99,000 increase in October). And the average hourly wage level is expected to demonstrate a downtrend again – down to 4.0% YoY (in this case, it will be the lowest value of the indicator since August 2021). Obviously, such a result will not benefit the dollar, especially amid a decrease in CPI, producer price index, and the core PCE index.   On the bullish side, we have the dovish comments from some of the Fed officials (Waller, Goolsby), conflicting signals from Fed Chair Jerome Powell, and a decline in key inflation indicators. On the bearish side, we have the eurozone inflation data. The "red tint" of the latest report put an end to the discussion about the ECB rate hike in the coming months. The euro lost its fundamental trump card, but, as we know, the EUR/USD pair can successfully rise only due to the dollar's weakness. For instance, on Friday, the bears tried to break through to the 1.08 level but eventually failed. In my opinion, in the medium-term perspective (until the release of the NFP data), traders will exercise caution (both sellers and buyers), trading on "neutral territory," i.e., in the range of 1.0850 – 1.0930 (lower and middle Bollinger Bands lines on the 4H timeframe, respectively).
Crude Oil Eyes 200-DMA Amidst Positive Growth Signals and Inflation Concerns

Soft Australian 3Q23 GDP and Moody's Negative China Outlook Shape Market Sentiment

ING Economics ING Economics 12.12.2023 12:36
Asia Morning Bites Australian 3Q23 GDP comes in soft; Moody's negative China outlook will likely dominate risk sentiment today. Taiwan CPI out later.   Global macro and markets Global markets:  US Treasury markets continued to rally on Tuesday, helped by declines in Eurozone bond yields as one of the ECB’s more hawkish board members (Isabel Schnabel) noted that further hikes were “unlikely”. US yields were then given an additional downward push by some soft JOLTS job opening figures. 2Y Treasury yields fell 5.9bp to 4.577%, while 10Y yields fell 8.8bp to 4.165%. The slightly bigger falls in Eurozone bond yields helped EURUSD to decline to 1.0793 and that has also led AUD to decline to 0.6553, Cable to drop to 1.2593, while the JPY stayed fairly steady at 147.18. As the EURUSD move has more to do with EUR weakness than USD strength, these G-10 moves look unnecessary, and a case could probably be made for these other currencies to appreciate against both the EUR and USD, especially those where rate cuts are not on the agenda (JPY) or will be later and probably less than in the US (AUD). The KRW also weakened on Tuesday, rising back to 1311.20. The IDR was also softer at 15505, as were most of the other Asian FX pairs. There may be a bit of further weakness today, though for the same arguments as for the G-10, the rationale for this is quite weak, and we wouldn’t be totally surprised to see this go the other way. Equities didn’t know which way to turn yesterday, given the weak labour demand figures but the lower bond yields, and the S&P 500 ended the day virtually unchanged. The NASDAQ made a small gain of 0.31%. Chinese stocks were battered by the outlook shift to negative from Moody’s, which pointed to the rising debt levels and higher deficits China is adopting to try to underpin the property sector. Though the decision on Evergrande’s winding up was postponed until January, which could have provided some relief. The Hang Seng fell 1.91% and the CSI 300 fell 1.90%.   G-7 macro:  As mentioned, the JOLTS job openings data showed a large decrease in vacancies, to 8733K in October (for which we already have non-farm payroll data) from 9553K in September. The service sector ISM index was actually a little stronger than in October, rising to 52.7 from 51.8, and the employment subindex rose to 50.7 from 50.2, though this has little correlation with month-on-month directional payrolls trends. After a rare “hit” with its weak reading last month, attention may revert back to the ADP employment data later today.  A 130K  increase is the latest consensus estimate. The consensus for Friday’s non-farm payrolls is higher at 187K, with an unchanged unemployment rate of 3.9%. Outside the US, German factory orders and Eurozone retail sales are the main releases, along with a Bank of Canada rate decision (no change expected to the 5% policy rate).   Australia: 2Q23 GDP slowed from a 0.4%QoQ pace in 2Q23 to only 0.2% in 3Q23, weaker than the 0.5% consensus estimate (ING f 0.3%). A more negative contribution to GDP from net exports in data revealed yesterday was the main clue that the figure was going to undershoot. Yesterday’s RBA no change statement showed no additional sign that the RBA is done hiking rates and merely repeated the previous language. Today’s GDP data slightly increases the probability that rates have peaked – however.   Taiwan:  November CPI inflation should show a further moderation, dropping to 2.80% from 3.05% in October. We don’t see this having any impact on the central bank’s policy rates for the time being though.   What to look out for: Australia GDP and US jobs numbers Australia GDP (6 December) Taiwan CPI inflation (6 December) US ADP employment and trade balance (6 December) Australia trade (7 December) China trade (7 December) Thailand CPI inflation (7 December) US initial jobless claims (7 December) Japan GDP (8 December) India RBI meeting (8 December) Taiwan trade (8 December) US NFP (8 December)
All Eyes on US Inflation: Impact on Rate Expectations and Market Sentiment

DAX Eyes New Record High as US ADP Report Takes Center Stage

Michael Hewson Michael Hewson 12.12.2023 12:39
DAX set to open at a new record high, US ADP report in focus By Michael Hewson (Chief Market Analyst at CMC Markets UK)     European markets saw another positive session yesterday with a new record high for the German DAX, while the FTSE100 fulfilled its role as the perennial party pooper with another disappointing session and closing lower for the second day in succession. This was mainly due to weakness in metals and energy prices with Brent crude prices closing at a 5-month low. US markets also struggled for gains with the Nasdaq 100 closing higher due to a strong performance from the Magnificent 7 led by Apple, and Nvidia, while the Russell 2000 finished the day over 1% lower, with the S&P500 and Dow closing little changed.     The indifferent finish seen in the US has been shrugged off by Asia markets with a strong session there after the Bank of Japan's latest Tankan survey showed a big improvement in manufacturers sentiment with the auto sector with the second successive month of gains as chip shortages eased.   This rebound in Asia markets looks set to filter through into this morning's European open with the DAX set to open at a new record high.   Yesterday's economic data from Europe pointed to a modest improvement in services sector economic activity, while the latest US ISM service sector numbers were a mixed bag, with the headline number coming in ahead of forecasts at 52.7. Prices paid did slow but by less than expected, coming in at 58.3 pointing to stickier than expected inflation, while the employment index edged higher to 50.7.   Today we get a look at the latest ADP payrolls report for November as an appetiser for Friday's non-farm payrolls report. We are starting see increasing evidence that the US jobs market is starting to slow, with vacancies falling to their lowest level since March 2021 and with the last two ADP reports adding a combined 202k new jobs as private sector hiring slows.   October saw 113k jobs added an improvement on September and November is expected to see an improvement on that to 130k, given that a lot of additional hiring takes place in the weeks leading up to Thanksgiving and the Christmas period so we're unlikely to see any evidence of cracking in the US labour market this side of 2024.   We also have the latest rate decision from the Bank of Canada where we aren't expecting any changes to monetary policy here with the central bank forecast to keep rates unchanged at 5%.   The last 3-months have seen no growth in the economy at all while the October jobs report saw a rise of 17.5k jobs, all of these were part time positions. On full time employment we saw the first decline in jobs growth since May with a decline of -3.3k, while unemployment rose from 5.5% to 5.7% and the highest level since January 2021. We're also starting to see inflationary pressure continue to subside with core CPI on the median slipping from 3.9% to 3.6% in October.    EUR/USD – has fallen below the 200-day SMA at 1.0825, with a fall below the 1.0800 level raising the prospect of a move towards the 50-day SMA just below the 1.0700 area. Resistance now at the 1.0940 area, and behind that at last week's highs at 1.1015/20.   GBP/USD – the failure to move above the 1.2720/30 has seen the pound slip back towards support at 1.2580/90 area. A break below 1.2570 signals a deeper pullback towards the 1.2460 area and 200-day SMA. A move through the 1.2740 area signals a move towards 1.2820.    EUR/GBP – has found support at the 0.8555 area and is currently looking to recover through the 0.8600 area. While below the 0.8615/20 area, the risk remains for a move towards the September lows at 0.8520, and potentially further towards the August lows at 0.8490.   USD/JPY – currently trying to rally off the recent lows at the 146.20 area, with resistance now at the 148.10 area. Looks vulnerable to further losses while below this cloud resistance with the next support at the 144.50 area.   FTSE100 is expected to open 25 points higher at 7,514   DAX is expected to open 56 points higher at 16,589   CAC40 is expected to open 20 points higher at 7,407
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China Trade Disappoints as Moody's Downgrade Weighs on Asia Markets: European and US Markets Show Resilience Amidst Global Economic Concerns

ING Economics ING Economics 12.12.2023 13:05
China trade disappoints, as Moody's downgrade weighs on Asia markets By Michael Hewson (Chief Market Analyst at CMC Markets UK)   European markets saw another positive day yesterday, with the DAX posting another record high, while the FTSE100 broke 2 days of declines to close higher as well.   The outperformance on European markets appears to be being driven by the increasing belief that the European Central Bank may well be forced into cutting rates sharply in the early part of 2024 in response to sharply slowing inflation and a sclerotic economy.   The last few days has seen a sharp decline in bond yields reflecting an increasing belief on the part of investors that rather than higher for longer, central banks will start cutting rates as soon as Q2 next year. The shift in tone has been most notable from several ECB policymakers who have indicated that rate hikes are done.   US markets also appear to have started to run out of steam after their big November rally, as traders take stock of how resilient the US economy is.   Asia markets on the other hand have struggled with the latest set of Chinese trade numbers pointing to an economy that is still struggling, and a downgrade by Moody's on China's credit outlook, along with downgrades to banks, and other small companies which looks set to weigh in the European open this morning, in the wake of weakness in Asia markets.   In October Chinese import data broke a run of 10 consecutive negative months by rising 3% in a sign that perhaps domestic demand is returning, beating forecasts of a 5% decline.   Slightly more worrying was a bigger than expected decline in exports which fell -6.4%, the 6th month in a row they've been lower, and a worrying portend that global demand remains weak, and unlikely to pick up soon. Today's November numbers have seen imports decline by -0.6%, against an expectation of a rise to 3.9% in a sign that domestic demand is still very weak, while exports improved, rising by 0.5% a solid pick up from the -6.4% decline in October.   Yesterday's US ADP payrolls report saw jobs growth in November slow to 103k, in a further sign that the labour market is slowing, with the last 3 months showing significant evidence that hiring is slowing. This trend was also reflected in this week's fall in October job openings to 8.7m the lowest level since March 2021.   For the time being weekly jobless claims have shown little signs of increasing, trending in the low 210k for the last couple of months.   Continuing claims on the other hand have been edging higher rising to a 2-year high last week 1.93m. Today's claims numbers are expected to come in at 220k, with continuing claims set to also remain steady, ahead of tomorrow's eagerly anticipated non-farm payrolls report.   EUR/USD – continues to slip lower raising the prospect of a move towards the 50-day SMA just below the 1.0700 area. Resistance now at the 1.0825 and 200-day SMA, while above that at the 1.0940 area.   GBP/USD – remains under pressure as it continues to slip away from the 1.2720/30 area. A break below 1.2570 signals a deeper pullback towards the 1.2460 area and 200-day SMA. A move through the 1.2740 area signals a move towards 1.2820.    EUR/GBP – while below the 0.8615/20 area, the risk remains for a move towards the September lows at 0.8520, and potentially further towards the August lows at 0.8490.   USD/JPY – currently trying to rally off the recent lows at the 146.20 area, with resistance now at the 148.10 area. Looks vulnerable to further losses while below this cloud resistance with the next support at the 144.50 area.   FTSE100 is expected to open 29 points lower at 7,486   DAX is expected to open 52 points lower at 16,604   CAC40 is expected to open 24 points lower at 7,412

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