russia-ukraine war

  • Thursday’s inflation report to seal the deal for a Fed hold in September
  • Treasury sells 10-year notes with strong demand as yields drop
  • China deflation raises prospects of more stimulus

USD/JPY rose after a strong auction signaled that Wall Street is very confident that inflation will continue to fall. It looks like investors will gladly be eating all the extra issuance that comes from the Treasury. After tomorrow, we will see if traders are nervous that inflation is proving to be a little sticky or overwhelming confident that inflation will fall to the Fed’s 2% target by year end.  

Price action is tentatively breaking out above key trendline resistance that has been in place since the end of June.  Further upside for dollar yen could target the 145.00 level, which would be accompanied by some jawboning from Japan.  To the downside, 141.50 remains key support.

 

Risk appetite should remain healthy as deflation in China is also providing limited optimism that the m

EUR: Range-bound Outlook Amid Tightened Swap Rate Gap

GBP Loses! EUR Gains! NFP (Non Farm Payrolls) Is Released And We Know How Have Forex Pairs Reacted To This Week's Events!

Mikołaj Marcinowski Mikołaj Marcinowski 01.04.2022 23:37
It was another week full of events, geopolitical news and economic indicators releases. As the Forex pairs charts show the fluctuation weren’t always slight and developed an interesting outlook ahead of April which has just begun. EUR/USD gained over 0.5% Let’s begin with EUR/USD. Of course this pair is significantly affected by the slowly ceasing (?) conflict between Russia and Ukraine. As we can see on the chart there was a huge rise on Tuesday as the tensions were reported to loose its momentum. Cease fire has been said to come shortly and this optimism seems to had remained till the end of the week. There’s no doubt today’s fluctuations were caused by the release of NFP. The following week’s FOMC Meeting Minutes will surely let us have a closer look of dollar’s rate future. EUR/GBP gained ca. 1.1% EUR has been fighting all the week to finally beat British pound. It seems that the single currency needs to be triggered, but only a little, to rise significantly. Naturally these supporters were positive news about cease fire in the eastern Europe. In the following week BoE’s Bailey speaks and we can expect that it will be an introduction to next monetary policy decisions. USD/CHF – Swiss franc strengthened… The beginning of the week wasn’t so optimistic for CHF. Before the news coming from Ukraine it was losing the fight with dollar. The situation got better after positive news about possible cease fire. USD/PLN – Zloty feels good Poland lies close to the area where the conflict takes place. Because of corelations and other factors Polish zloty was hit several times. After tightening of monetary policy (next decisions to come shortly) and optimistic signals from Ukraine zloty strenghthened again gaining 1.6% over the week. Source/Data: TradingView.com Charts: Courtesy of TradingView.com
Crude Oil Price - What Are The Effects Of Sanctions?

Crude Oil Price - What Are The Effects Of Sanctions?

Sebastian Bischeri Sebastian Bischeri 05.04.2022 18:09
  While Europe condemns Russia's actions, other countries take advantage of the turmoil and buy oil at a discount. Are any of the sanctions even effective? Crude oil prices jumped over 3% on Monday, with investors worried about tighter supply in the market and even more nervous about the prospect of new European sanctions against Russia, which could affect Russian exports. 27 EU members failed to agree on an embargo as part of further penalties for Russia’s military deployment in Ukraine, with Germany warning of hasty moves that could plunge the economy into recession. Finally, on April 5, it was decided to introduce a total embargo, including for Russian coal, truck transport, and ports for Russian ships. However, the UE did not agree on the most important issues, i.e., the embargo on Russian oil and gas. Some countries, such as Hungary – where Prime Minister Viktor Orbán secured a new consecutive victory in the past weekend’s elections – opposed any prohibition. Germany, however, aims to phase out Russian oil imports by the end of the year, officials said, as does Poland. Many buyers in Europe are voluntarily avoiding Russian crude oil in order not to damage their reputation or avoid possible legal difficulties. Meanwhile, India and China, which refused to condemn Russia's actions, continue to buy Russian crude oil. Lured by deep discounts following Western sanctions against Russian entities, India has bought at least 13 million barrels of Russian crude since late February, which is over 80% of the whole of 2021, according to some Reuters data. Until now, Russian energy imports provided Europe with 40% of its natural gas needs and another 30% of crude oil. Switching to a new energy source is NOT that simple, and the refineries also need a certain adaptation period to be recalibrated to new imported sources as crude oil may have very different components depending on where it was extracted from. This is what most politicians can’t even understand as they keep threatening supplies to their own country by pretending to be capable of just switching from one source to another as fast as an eye blink. It is certainly not as simple as that, and the same goes with SWIFT and energy payments.Many countries wanted to cut Moscow off from the SWIFT International Payment System. However, how will they pay for their gas after that? They will, in fact, have to make some exceptions with a few banks. Alternatively, they blocked or seized Russia’s currency reserves (both those in US dollars and euros), but now they are refusing to pay for their energy imports in roubles. Has Russian energy become free then? More seriously, given that the rouble is not widely available outside Russia, and that they will only accept payments in their domestic currency, there are only two options now for importing countries to pay Russia for their energy needs. As for the first option, they will have to pay for their imports with gold, which will surely be accepted. The second option, more indirectly, will use an intermediary bank that has not yet been disconnected from SWIFT, such as Gazprom Bank, where they will have to open a client account and then transfer the money in euros, so the bank will switch to foreign exchange operations (euro to ruble) and take a commission. The second option is indeed the most likely to be agreed between the different parties if the EU's most reliant on Russian gas does not want Russia to turn off the gas tap. Map of Europe showing EU-Russia gas pipelines If you think that Europe’s gas supplies could easily be replaced if Putin cuts off its gas exports to the EU, just look at the world gas reserves below, take a deep breath, and think again: Map of Europe showing EU-Russia gas pipelines (Source: Dailymail.co.uk) WTI Crude Oil (CLK22) Futures (May contract, daily chart) Henry Hub Natural Gas (NGK22) Futures (May contract, daily chart) Like what you’ve read? Subscribe for our daily newsletter today, and you'll get 7 days of FREE access to our premium daily Oil Trading Alerts as well as our other Alerts. Sign up for the free newsletter today! Thank you. Sebastien BischeriOil & Gas Trading Strategist * * * * * The information above represents analyses and opinions of Sebastien Bischeri, & Sunshine Profits' associates only. As such, it may prove wrong and be subject to change without notice. At the time of writing, we base our opinions and analyses on facts and data sourced from respective essays and their authors. Although formed on top of careful research and reputably accurate sources, Sebastien Bischeri and his associates cannot guarantee the reported data's accuracy and thoroughness. The opinions published above neither recommend nor offer any securities transaction. Mr. Bischeri is not a Registered Securities Advisor. By reading Sebastien Bischeri’s reports you fully agree that he will not be held responsible or liable for any decisions you make regarding any information provided in these reports. Investing, trading and speculation in any financial markets may involve high risk of loss. Sebastien Bischeri, Sunshine Profits' employees, affiliates as well as their family members may have a short or long position in any securities, including those mentioned in any of the reports or essays, and may make additional purchases and/or sales of those securities without notice.
Central Banks' Rates Outlook: Fed Treads Cautiously, ECB Prepares for Hike

Gas Price Has Increased As The Transportation Had Been Limited Because Of The Ukrainian War, NYMEX WTI Went Below $100 Yesterday, But The End Fuel Crisis And Supply Chain Issues May Be Far From Now | ING Economics

ING Economics ING Economics 11.05.2022 15:01
Your daily roundup of commodities news and ING views Gas storage tank Energy Oil sold off with risk assets on Monday, but it failed to follow equities higher yesterday. Instead, downward pressure on the market continued, which saw NYMEX WTI settle below US$100/bbl. Growth concerns continue to weigh on commodities, and a stronger USD only adds further downward pressure to the complex. This weakness has continued in early trading this morning after the API reported that US crude oil inventories increased by 1.62MMbbls - the market was expecting a small draw. In addition, API numbers also showed an increase in refined product inventories. Gasoline and distillate fuel oil inventories increased by 823Mbbls and 662Mbbls respectively. If today’s EIA report shows similar numbers, it would be the first weekly increase for US gasoline inventories since late March and the first for distillates since early April. However, the middle distillate market is still very tight and so we would expect US heating oil cracks to remain well supported. In fact, middle distillate cracks around the world should remain well supported, given the tightness in the market and concerns over Russian gasoil exports. The EIA released its latest Short Term Energy Outlook yesterday. The report cut expectations for US oil production growth for 2022 from around 833Mbbls/d to 731Mbbls/d, which implies US oil output averaging 11.91MMbbls/d this year. However, for 2023, supply is expected to grow by 940Mbbls/d (largely unchanged from last month), which would see US output hitting a record 12.85MMbbls/d. Obviously, the biggest concern for the global oil market is around supply in the short to medium term, given the uncertainty over Russian supply. And the downward revisions to 2022 output estimates will do little to ease these concerns. European natural gas prices showed some strength yesterday. TTF rallied by more than 5%, settling close to EUR99/MWh. This strength came after Ukraine’s gas grid operator (GTSOU) declared force majeure on the transit of Russian gas through Sokhranivka, which accounts for about a third of Russian gas transited via Ukraine. GTSOU has said that it is not possible to continue operations through Sokhranivka due to Russia's military aggression in the region. GTSOU said that gas can be rerouted through Sudzha (another entry point), Gazprom has reportedly said that this is not technically possible. Dutch gas network operator, Gasunie has said that it has contracted a second FSRU (floating storage and regasification unit) for the next 5 years, which would allow it to regas LNG imports at Eemshaven in the north of Groningen. The FSRU is expected to arrive in the third quarter of this year, and along with another FSRU already contracted, would provide a total of 8bcm of regasification capacity at Eemshaven. This regasification capacity would exceed the roughly 6bcm of natural gas that the Netherlands imports from Russia every year. The big question though is if there is enough LNG supply to fully use this capacity, particularly with Germany also securing 4 FSRUs, with an annual capacity of as much as 29bcm. Some of this capacity in Germany is also expected to come into operation ahead of the next winter.   Metals Base metals continued to decline in London amid fragile market sentiment. Copper initially rallied but was unable to hold onto these gains at the close. Shanghai is going into the hardest phase of lockdowns, weighing heavily on sentiment as local authorities vow to bring the Covid wave under control at the community level by the end of this week. Meanwhile, the China Car Passenger Association (CAPM) confirmed that retail passenger vehicle sales plunged by 36% in April, its biggest monthly decline since March 2020. LME aluminium prices continue to fall and have largely ignored a steep decline in on-warrant stocks and a large number of cancelled warrants from Asia, signalling further declines. As of Tuesday, on-warrant stocks have fallen to a record low of 294kt, whilst total closing stocks dropped to 560kt - the lowest since 2005. Antaike has reported that China’s aluminium demand fell 5.5% YoY to 3.3mt last month (the biggest decline since March 2020), primarily impacted by the closure of auto producers due to Covid-related lockdowns. In contrast, the impact on Chinese supply has been rather limited so far, with operating capacity rising to 40.31mt by the end of April. As we also pointed out yesterday, Antaike also believes that the recent Covid outbreak has had a larger impact on demand than the early 2020 lockdowns. Agriculture Data from Brazil’s sugar industry group, UNICA show that sugar production in Center-South Brazil increased to 934kt over the 2nd half of April 2022 compared to only around 127kt over the first half of April as more mills started operations; although it is still significantly lower than the 1.52mt of sugar produced over the same period last season. Sugar cane crushing was down around 20% YoY to 23.8mt over the period with the sugar mix falling to 37.2% compared to 44.5% a year ago. Cumulative sugar production so far this season in CS-Brazil is down around 51% YoY to 1.1mt, reflecting a slow start to the crushing season. High energy prices continue to be supportive for ethanol production with mills allocating more cane towards biofuel supply. TagsSugar Russia-Ukraine Natural gas EIA Covid-19 China   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
Disappointing German March macro data increase risk of technical recession

Germany: Supply Chains Issues Caused By The War, Lockdowns In China, Water Levels And Finally Energy Prices Worry Germans

ING Economics ING Economics 07.09.2022 09:48
Production in the construction sector prevented industrial activity from falling further in July. At the same time, high energy prices are leaving their mark on German industry   Is this the first gust of wind preluding a perfect storm? In July 2022, production in industry in real terms was down by 0.3% on the previous month on a price, seasonally and calendar adjusted basis, from an upwardly revised 0.8% MoM in June. On the year, industrial production was down by 1.1%. According to the statistical office, the relatively small number of school holidays and holiday leave prevented an even larger decrease in production compared with July last year. On the month, production in industry, excluding energy and construction, was down by 1.0%. Outside industry, energy production in July was up by 2.8% and production in construction by 1.4% from the previous month. Compared with developments in the second quarter, industrial production is down, while the construction sector shows some resilience. High energy prices have become biggest concern German industry is clearly suffering from disrupted supply chains on the back of the war in Ukraine, the aftermath of pre-summer lockdowns in China, low water levels in the main rivers and increasingly, higher energy prices. The statistical office released additional data showing that production in the energy-intensive industrial segments declined by more than the broader industry (-1.9% year-on-year). Production in this area has dropped by 6.9% since February 2022. For Germany’s industrial backbone, small and medium-sized enterprises, higher energy prices look like a ticking time bomb. With ongoing pressure on consumers’ disposable incomes, companies’ pricing power is fading. In this regard, it is remarkable that the government’s third relief package presented on Sunday provided only very limited support for this segment of the economy. Looking ahead, shrinking order books since the start of the Ukraine war, the well-known supply chain problems (both international and domestic) plus high uncertainty, high energy and commodity prices and potential energy supply disruptions will not make life any easier. Judging from the first macro data for the third quarter, the German economy has not fallen off a cliff at the start of the third quarter but is rather sliding into recession. Read this article on THINK TagsIndustrial propduction Germany Eurozone 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
Belarusian opposition leader proposed a collaboration to Ukraine

Belarusian opposition leader proposed a collaboration to Ukraine

Center Of Eastern Studies Center Of Eastern Studies 21.10.2022 13:57
On 10 October, the leader of the Belarusian opposition Sviatlana Tsikhanouskaya proposed to President Volodymyr Zelensky that an alliance be formed between Ukraine and a free & democratic Belarus – i.e. the interim cabinet formed under Tsikhanouskaya’s leadership in August this year. At the same time, she declared that Belarus should give up its political, economic and military alliance with Russia, and that Ukraine would win its war against the Russian aggressor. So far, the offer has not met with a high-level reaction from Kyiv. On 12 October Oleksiy Arestovych, an advisor to the Ukrainian presidential office, reacted positively to the Belarusian opposition leader’s appeal, while at the same time criticising the Ukrainian political class for “unfairly” holding Belarusians responsible for the pro-Russian policy of Alyaksandr Lukashenka. However the chairman of the Ukrainian parliament’s foreign affairs committee and member of the Servant of the Nation party Oleksandr Merezhko, together with another deputy from the same party Bohdan Yaremenko, stated that Ukraine could not recognise Tsikhanouskaya and her cabinet because the stance of the Belarusian opposition towards Russia remains unclear (including its failure to condemn Russia as a terrorist state); they also questioned the credibility of “certain people within her entourage”. Read full article on OSW.WAW.PL
More declines of Bitcoin to US dollar should force the altcoins to drop as well

Wyoming Prohibits Forced Disclosure Of Private Cryptographic Keys By US State Courts, JP Morgan Projections Of FX Market

Kamila Szypuła Kamila Szypuła 17.02.2023 12:42
The cryptocurrency market still requires special regulations, new laws are still being introduced to this market. Wyoming remains the most popular state in the US for this market. JP Morgan is looking at the situation on the forex market. In this article: Wyoming is the most cryptocurrency-friendly states in the US Climate prediction model for wind and solar power The 2023 dollar projections by JP Morgan The Russo-Ukrainian war Wyoming is the most cryptocurrency-friendly states in the US Wyoming passed a bill Wednesday that effectively bans forced disclosure of private cryptographic keys by U.S. state courts. The private key is used to verify cryptographic transactions and prove ownership of a blockchain asset or address. The right includes any private keys associated with digital assets, someone's digital identity, or any other interests or rights that a private key provides. If approved by Wyoming Governor Mark Gordon, the bill will go into effect on July 1, 2023. Wyoming has long been touted as one of the most cryptocurrency-friendly states in the US It was the first U.S. state to declare a decentralized autonomous organization (DAO) as a limited liability company (LLC) in July 2021, having previously considered state-issuing a stablecoin in February 2022, but has not gone very far since then. #cryptonews: Wyoming lawmakers pass a bill prohibiting forced disclosure of #Bitcoin private keys 🇺🇸 — CoinMarketCap (@CoinMarketCap) February 17, 2023 Climate prediction model for wind and solar power Economies around the world are moving towards renewable energy sources. China as the second largest economy in the world is introducing its own models that aim to accelerate and improve the green transformation. China has launched a national climate forecasting model for wind and solar resources to enable provincial governments to forecast energy demand and supply. Looking globally at renewables, unless new and stronger policies are implemented in 2023, global renewable power generation is expected to remain steady compared to 2022. While photovoltaics will break another record in 2023. China launches climate prediction model for wind and solar power https://t.co/DJKqCEH9bt pic.twitter.com/uR4bKzONIy — Reuters Business (@ReutersBiz) February 17, 2023 Read next: Microsoft: Bing With Artificial Intelligence And The First Mistakes And Confusing Answers| FXMAG.COM The 2023 dollar projections by JP Morgan 2022 was a historic year. The US dollar strengthened against almost every other major currency to levels not seen in decades as the Federal Reserve (Fed) aggressively raised interest rates to combat inflation. The US dollar gained over 12% in 2022, hitting a two-decade high in September 2022. The 2023 dollar projections for various currency pairs are more related to country-specific factors that JP Morgan is looking at. The situation of the euro, pound and yen currencies will largely depend on developments in the economy. Currency markets have been volatile. Will we see the return of a strong U.S. dollar? And what’s the outlook for other major currencies? Explore J.P. Morgan Research insights: https://t.co/5Bc5HAn7ix pic.twitter.com/bE292j9fBr — J.P. Morgan (@jpmorgan) February 16, 2023 The Russo-Ukrainian war The situation in Ukraine is getting worse. The Ukrainians, despite almost a year of defense, are still holding on, but Russia is not giving up. Several regions of Ukraine faced a barrage of missile attacks overnight, one of which hit the country's largest refinery. Meanwhile, Russia is increasing the number of reservists it is sending to the front lines as part of its anticipated spring offensive, and is already stepping up ground attacks in eastern and southern Ukraine. In addition, the world's government and military leaders gather in Munich, Germany, for the annual Munich Conference on International Security Policy. The theme of this year's summit is the Russo-Ukrainian war and it takes place just before the anniversary of Russia's full-scale invasion of its neighbour. World leaders convene in Munich; Zelenskyy rules out conceding territory for peace https://t.co/VTIFW9v3Lt — CNBC (@CNBC) February 17, 2023
Soft US Jobs Data and Further China Stimulus Boost Risk Appetite

Market Insights: Fed's September Decision Hinges on Thursday's Inflation Report Amid Strong Demand for Treasury Notes and China's Deflation Concerns

ING Economics ING Economics 10.08.2023 09:27
Thursday’s inflation report to seal the deal for a Fed hold in September Treasury sells 10-year notes with strong demand as yields drop China deflation raises prospects of more stimulus USD/JPY rose after a strong auction signaled that Wall Street is very confident that inflation will continue to fall. It looks like investors will gladly be eating all the extra issuance that comes from the Treasury. After tomorrow, we will see if traders are nervous that inflation is proving to be a little sticky or overwhelming confident that inflation will fall to the Fed’s 2% target by year end.   Price action is tentatively breaking out above key trendline resistance that has been in place since the end of June.  Further upside for dollar yen could target the 145.00 level, which would be accompanied by some jawboning from Japan.  To the downside, 141.50 remains key support.   Risk appetite should remain healthy as deflation in China is also providing limited optimism that the more stimulus is coming and that disinflation pressures will steadily ease across Europe and North America.  Markets should see some lackluster moves until tomorrow’s US inflation report.       Oil Crude prices are rallying on expectations China will be forced to deliver more stimulus and after the EIA report showed an impressive rebound with diesel and gasoline demand.  The US is also refilling the Strategic Petroleum Reserve (SPR), so that should provide some underlying support. The SPR rose by almost 1 million barrels and should be poised to receive another 2 million before the end of summer. The EIA report was not all bullish as US production rose to the highest levels since March 2020 and crude exports fell to the weakest levels in four weeks. The oil prices should remain supported going forward as OPEC+ remains committed to keeping the market tight and as the Russia – Ukraine war could threaten Russian crude exports.   Gold Gold prices are weakening ahead of a pivotal inflation report that is expected to solidify a Fed hold in September.  Gold’s weakness occurs as Treasury yields edge lower, while European yields rise.  With a softer dollar, gold shouldn’t be weakening this much ahead of a key inflation report. Some big traders must be profit-taking over fears Wall Street will not react kindly to a slight rise with the headline annual inflation reading.      

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