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The Swiss National Bank’s decision to introduce bank reserve tiering sheds light on similar potential decisions at the Bank of England and European Central Bank. Central banks have to balance monetary policy transmission, interest costs, and incentive structures for banks

In this article SNB: actively moving to absorb liquidity BoE: saving money where it can ECB: peering into pandora’s box Source: Shutterstock European central banks are gradually adjusting their policy setting to a world of positive interest rates but with still abundant liquidity. The common theme here is that hundreds of billions, or trillions in the ECB’s case, of bank reserves will be remunerated at positive interest rates, at a cost for their central banks, and ultimately their domestic government treasury. SNB: actively moving to absorb liquidity The Swiss National Bank (SNB) was the first one to actually implement a reserve tiering system at its September meeting. I

What Will Be The Impact Of Rising Rates On Stocks & Commodities?

What Will Be The Impact Of Rising Rates On Stocks & Commodities?

Chris Vermeulen Chris Vermeulen 23.03.2022 21:33
Investors and traders alike are concerned about what investments they should make on behalf of their portfolios and retirement accounts. We, at TheTechnicalTraders.com, continue to monitor stocks and commodities closely due to the Russia-Ukraine War, market volatility, surging inflation, and rising interest rates. Several of our subscribers have asked if changes in monitor policy may lead to a recession as higher rates take a bigger bite out of corporate profits.As technical traders, we look exclusively at the price action to provide specific clues as to the current trend or a potential change in trend. We review our charts for both stocks and commodities to see what we can learn from the most recent price action. Before we dive into that, let’s review the various stages of the market; with special attention given to expansion vs. contraction in a rising interest rate environment which you can see illustrated below.PAY ATTENTION TO YOUR STOCK PORTFOLIOWe are keeping an especially close eye on the price action of the SPY ETF. The current resistance for the SPY is the 475 top that happened around January 6, 2022. This top was 212.5% of the March 23, 2020, low that was put in at the height of the Covid global pandemic.The SPY found support in the 410 area at the end of February. If you recall (or didn't know), 410 was the Fibonacci 1.618 or 161.8% percent of the Covid 2020 price drop. Now, after experiencing a nice rally back, of a little over 50%, we are waiting to see if the rally can continue or if rotation will occur, sending the price back lower.COMMODITY MARKETS SURGEDThe commodity markets experienced a tremendous rally due to fast-rising inflation, especially energy, metals, and food prices.The GSG ETF price action shows that we recently touched 200%, or the doubling of the April 21, 2020, low. Immediately following, similar to the SPY, the GSCI commodity index promptly sold off only to then find substantial buying support at the Fibonacci 1.618 or 161.8 percent of the starting low price of the bull trend. Resistance for the GSG is at 26, and support is 21.A STRENGTHENING US DOLLARThe strengthening US dollar can be attributed to investors seeking a safe haven from geopolitical events, surging inflation, and the Fed beginning to raise rates. The US Dollar is still considered the primary reserve currency as the greatest portion of forex reserves held by central banks are in dollars. Furthermore, most commodities, including gold and crude oil, are also denominated in dollars.Consider the following statement from the Bank of International Settlements www.bis.org ‘Triennial Central Bank Survey’ published September 16, 2019: “The US dollar retained its dominant currency status, being on one side of 88% of all trades.” The report also highlighted, “Trading in FX markets reached $6.6 trillion per day in April 2019, up from $5.1 trillion three years earlier.” That’s a lot of dollars traded globally and confirms that we need to stay current on the dollars price action.Multinational companies are especially keeping a close eye on the dollar as any major shift in global money flows will seriously negatively impact their net profit and subsequent share value.The following chart by www.finviz.com provides us with a current snapshot of the relative performance of the US dollar vs. major global currencies over the past year:KNOWLEDGE, WISDOM, AND APPLICATION ARE NEEDEDIt is important to understand that we are not saying the market has topped and is headed lower. This article is to shed light on some interesting analyses of which you should be aware. As technical traders, we follow price only, and when a new trend has been confirmed, we will change our positions accordingly. We provide our ETF trades to our subscribers, and somewhat surprisingly, we entered five new trades earlier this week, two of which have now hit their first profit target levels. Our models continually track price action in a multitude of markets, asset classes, and global money flow. As our models generate new information about trends or a change in trends, we will communicate these signals expeditiously to our subscribers and to those on our trading newsletter email list.Sign up for my free trading newsletter so you don’t miss the next opportunity! WHAT STRATEGIES CAN HELP YOU NAVIGATE The CURRENT MARKET TRENDS? Learn how we use specific tools to help us understand price cycles, set-ups, and price target levels in various sectors to identify strategic entry and exit points for trades. Over the next 12 to 24+ months, we expect very large price swings in the US stock market and other asset classes across the globe. We believe the markets have begun to transition away from the continued central bank support rally phase and have started a revaluation phase as global traders attempt to identify the next big trends. Precious Metals will likely start to act as a proper hedge as caution and concern begin to drive traders/investors into Metals and other safe-havens.We invite you to join our group of active traders and investors to learn and profit from our three ETF Technical Trading Strategies. We can help you protect and grow your wealth in any type of market condition by clicking on the following link: www.TheTechnicalTraders.com
Podcast: The Weak Equity Market, Focus On Copper, The Euro Situation

Natural Gas Price Rises As Triggered By Putin’s Rhetoric That He Will ‘Demand Rouble Gas Payments’

Mikołaj Marcinowski Mikołaj Marcinowski 24.03.2022 12:47
According to Investing.com Russia could require gas payment in roubles what clearly affects both Forex pairs (e.g. EUR/RUB) and natural gas price (TTF) which has increased by 31%. What’s more MOEX is back to the game after such a long break. Some companies have gained significantly already and many would like to know what’s ahead. Generally speaking Russian currency and Russia-associated markets are really volatile at the moment and there are many assets to watch in the following days. Let’s begin with natural gas price. Obviously monthly chart (yes, it’s been one month since the warfare started) shows the fluctuations caused by the start of invasion which took place on February 24th We may say that the true rise came few days later, as negotiations of cease-fire haven’t changed a thing and sanctions have begun to impact the markets. Further developments containing some signals of a ceasefire appeared not to coincide with the reality heading price of natural gas to a next rise. Natural Gas Price Chat (TTF) – monthly 24/02-23/03 - +31% Natural Gas Price Chart (TTF) Daily 22-23/03/22 +18.5% Russian Roubel (RUB) – Forex Charts +11% Monthly chart shows a huge decline and strengthening of RUB. EUR/RUB Chart - Monthly +6% EUR/RUB Chart - Daily (24h) Source/Data: Investing.com, TradingView.com Charts: Courtesy of TradingView.com  
Falling Japanese yen suggests a changing world order

Falling Japanese yen suggests a changing world order

Alex Kuptsikevich Alex Kuptsikevich 24.03.2022 15:23
The collapse of the Japanese yen continues, and so far, there are no signs of a trend reversal. The rise in the Yen is often linked to capital flight from risky assets, and the weakening is a sign of increased demand for risky assets. But that explanation hardly fits with what is happening now. We likely see the start of a significant reassessment by the markets of Japan's position in the financial system. In a worst-case scenario, this may turn into a debt crisis in the Land of the Rising Sun and be an even bigger disaster for financial markets than the eurozone debt crisis of a decade ago.The starting point for the weakening of the Yen was at the start of February. At that time, equities were in demand as a haven for capital to maintain the purchasing power of investments. The flow into equities was interrupted by the war in Ukraine but accelerated in the last couple of weeks on signs that these events have hyped up the processes that were taking place before. And these processes are now most visible in the dynamics of the Japanese yen against those currencies where the central bank can respond adequately to inflation.Since the start of February, the USDJPY has risen by 6.5%, and almost all of this increase has taken place since March 7th, taking the pair back to levels last seen at the end of 2015. A much more impressive rally is taking place in the Aussie and Kiwi against the Yen. Since the start of February, they have soared by more than 12%. So far this month, the strengthening is the largest in 11 years for AUDJPY and in more than 12 years for NZDJPY.The interest rate differential game, which was so beloved by traders in Japan before the global financial crisis, has found a second life. Australia and New Zealand have the economic potential to raise interest rates, as they are experiencing a surge in exports due to the boom in their export prices. However, the situation in Japan looks considerably more alarming, as Japan's debt-to-GDP ratio has risen by 77 percentage points to 170% since the financial crisis. Permanent QE from the Bank of Japan has kept government debt costs down but doesn't solve the problem.In the last decade, Japan has turned into a net commodity importer due to its growing dependence on energy and metals and increasing competition from China and Korea. The exchange rate should act as a natural mechanism to stabilise trade in this situation.But this adjustment is difficult for debt-laden Japan because selling currency would de facto mean selling bonds denominated in that currency. Under these circumstances, the Bank of Japan will either have to openly accept that it will finance the government (i.e. increase purchases despite inflation) or soften QE. The first option risks triggering a historic revaluation of the Yen. The second option would deal a blow to the economy and finances by raising questions about whether Japan can service its debt.
Top 3 Price Prediction Bitcoin, Ethereum, Ripple: Cryptos on the front foot as rebound turns into new uptrend

Top 3 Price Prediction Bitcoin, Ethereum, Ripple: Cryptos on the front foot as rebound turns into new uptrend

FXStreet News FXStreet News 24.03.2022 16:22
Bitcoin price set to touch $45,000 by tomorrow if current tailwinds keep supporting price action. Ethereum price set to rally another 12%, with bulls targeting $3,500.00XRP price undergoes consolidation as the next profit level is $0.90.Bitcoin price, Ethereum and other cryptocurrencies are enjoying a calm week with tailwinds finally able to thrive without constant interruption from headlines about Ukraine or Russia. Markets are also starting to adjust to the situation, with no immediate or significant movements anymore triggered by headlines coming out. Expect to see more upside with several possible cryptocurrencies eking out the best week of the year thus far.Bitcoin price has a defined game plan with $44,088 as the target for today and $45,261 by the weekendBitcoin (BTC) price is on the front foot for a third consecutive day as the rally turns into a broader uptrend. The crucial thing will be to see where BTC price will close this week, as bears need to get weakened with several short squeezes and breakouts running stops from short-sellers. Despite being elevated, the Relative Strength Index (RSI) is still not near the 'overbought' level, providing enough incentive for bulls and investors to keep buying BTC price action.BTC price is set to hit $44,088.73 today, the level of the March 03 highs. If that is gained – and given the current tailwinds – markets will start to expect Bitcoin to eke out new highs for the month with still a week to go. This additional bullish element should help conclude a daily close above $44,088.73. A support test on that same level will trigger new inflows from investors and provide the needed juice to pump price action up to $45,261.84, topping $45,000.00.BTC/USD daily chartA tail risk comes from the big joint meeting today in Brussels, with Biden meeting NATO, the G7 and E.U. leaders. An embargo on gas is on the table and could roil markets if the E.U. decides to walk away from Russian gas supplies, opening up the possibility of further Russian retaliation in Ukraine. That would make global markets move back to risk-off mode, with Bitcoin price dropping back to support at $39,780.68, and intersecting with the green ascending trend line. Ethereum price targets $3,500 after bulls force a daily close above $3,018.55Ethereum (ETH) price is performing a 'classic long' trading plan today after bulls pushed a daily close above $3,018.55. With price action in ETH opening slightly above this level, this morning, the price has faded slightly back towards that same $3,018.55 level to find support and offer the opportunity for new bulls and investors to enter the market. Ethereum price will move back to the upside and continue its rally, which is currently looking more and more like an uptrend that could continue over a broader time frame.ETH price will therefore need to find support around $3,018.55 as the fade will need to be kept in check, as too large a fade could spook investors. Seeing as the current favourable tailwinds are quite broadly present in global markets, expect to see another uplift towards $3,200 and $3,391.52 depending on the number of new positive headlines acting as additional accelerators. With those moves, at least new highs for March will be printed and possibly for February, depending on how steep the rally can continue.ETH/USD daily chartThe risk for Ethereum price is that price action slips back below $3,018.55. That could open the door for bears to jump in again and run price action back to $2,835.83, which is the low of March 21 and the monthly pivot. An additional fail-safe system is the 55-day Simple Moving Average at $2,808.84 as an additional supportive factor to take into account.https://youtu.be/wgpCSH70SIQXRP price undergoes consolidation as the bullish breakout hits $0.90Ripple's (XRP) price has bears and bulls being pushed towards each other as the bodies of the candles from the past two sessions grow very thin. This points to bulls and bears fighting it out and neither yet having the upper hand. Bears are defending the area above $0.8390 from bulls running to $0.8791, and bulls are trying to defend their support at $0.7843. With lower highs and higher lows, the stage is set for a breakout that, seeing the current tailwinds, will probably favour bulls, and result in a quick move towards $0.8791.XRP price is thus set to print new highs for March. With the stock markets having their best performing week for this year, expect to see even more tailwinds spilling over to cryptocurrencies and bulls targeting $0.9110. At that level, bulls will run into the 200-day SMA which will possibly be the halting point of the current uptrend as investors will need to reassess the situation before they advance. Where global markets are at that point and how far off a peace treaty is between Russia and Ukraine will determine if bulls will advance towards $1.00 in XRP price.XRP/USD daily chartAlthough several statements suggest it is unlikely, should Putin be backed further into a corner, the use of nuclear weapons could cast a dark shadow on markets. Expect a massive drop in equities and cryptocurrencies with those headlines coming out, where XRP price will fall towards $0.7843 or even $0.7600. In the first case, the historic pivotal level will provide support and further down, the monthly pivot is set to intertwine with the 55-day SMA, which should be enough to catch any falling-knife action. https://youtu.be/ZWrKMd2CiL8
Crude Oil Holds Its Breath Ahead of World Summits

Crude Oil Holds Its Breath Ahead of World Summits

Finance Press Release Finance Press Release 24.03.2022 16:46
Current levels of oil and petroleum products are high. Given that, what can explain such a surprising drop in US crude inventories?Energy Market UpdatesCommercial crude oil reserves in the United States fell much more than expected in the week ended March 18, according to figures released on Wednesday by the US Energy Information Administration (EIA).US crude inventories have shrunk by more than 2.5 million barrels, which implies greater demand and is obviously another bullish factor for crude oil prices. Such a decline in inventories is particularly remarkable as the American strategic reserves have also recorded a significant drop. This is the 25th consecutive week of falling strategic reserves since the Biden administration started to make those adjustments in an attempt to relieve the market.(Source: Investing.com)WTI Crude Oil (CLK22) Futures (May contract, daily chart)Furthermore, some additional figures extracted from the same EIA report were released and surprised the markets.These are US Gasoline Reserves, which plunged by about 2.95 million barrels over a week, while the market was not even forecasting a two-million decline.(Source: Investing.com)Thus, US exports jumped by more than 30% compared to the previous week, not only due to large flows to Europe to replace Russian barrels, but also marked by a significant rebound in Asian demand.RBOB Gasoline (RBJ22) Futures (April contract, daily chart)Beware that a NATO summit, a G7 summit, and a European Union summit are being held on Thursday, when the various countries could set a new round of sanctions against Moscow.So, how will black gold progress from now on? Do you think that the on-going negotiations with Iran and Venezuela could flood the market with additional barrels? Let us know in the comments!That’s all folks for today. Happy trading!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.
Price Of Gold Nears $45k As Many Authorities Are Speaking Of Crypto

Price Of Gold Nears $45k As Many Authorities Are Speaking Of Crypto

Alex Kuptsikevich Alex Kuptsikevich 25.03.2022 08:52
Bitcoin is trading above $44.1K on Friday, gaining 2.4% over the past day and 8.2% over the week. Increased inquiry for BTC Yesterday, the first cryptocurrency was in demand during the Asian and American sessions. The current values of BTC are consolidating in the area of 2-month extremes. In contrast to the previous test of these levels, this time, we see a smooth rise in the rate, indicating that the bulls still have some momentum. Also, over the past 24 hours, Ethereum has gained 2.4%, while other leading altcoins from the top ten have strengthened from 0.5% (XRP) to 7.4% (Solana). The exception is Terra, which is shedding 1.8%, correcting part of its gains in the first half of the week. According to CoinMarketCap, the total crypto market capitalization increased by 2.3% to $2 trillion. The Bitcoin Dominance Index rose 0.1 percentage points to 41.8%. The Fear and Greed Cryptocurrency Index added another 7 points to 47 and ended up in the neutral territory. Cardano leads the last week in terms of growth among top coins (+39%) as Coinbase added the possibility of staking cryptocurrency with a current estimated annual return of 3.75% per annum. Countries assess the risks of cryptos Credit Suisse reported that Bitcoin doesn't pose a threat to the banking sector as an alternative to fiat money and banking services. The CEO of BlackRock, one of the world's largest investment companies, noted that military actions in Ukraine and sanctions against Russia will increase the popularity of cryptocurrencies and accelerate their adoption. Despite the rally in global stocks over the past two weeks, financial conditions in the debt markets continue to deteriorate due to rising interest rates and inflation. Largely because of this, El Salvador has postponed the issuance of bitcoin bonds in anticipation of more favorable conditions. Since very active steps to raise key rates are expected in the next year and a half, and Bitcoin is far from the highs, it is unlikely that such bonds will be issued soon. The Bank of England intends to tighten supervision of cryptocurrencies due to the financial risks that their adoption carries. However, the Central Bank urged commercial banks to exercise maximum caution when dealing with these extremely volatile assets.
Is There Any Gold in Virtual Worlds Like Metaverse?

Is There Any Gold in Virtual Worlds Like Metaverse?

Finance Press Release Finance Press Release 25.03.2022 12:15
Imagine all the people… living life in the Metaverse. Once we immerse ourselves in the digital sphere, gold may go out of fashion. Or maybe not?Do you already have your avatar? If not, maybe you should consider creating one, as the Metaverse is coming! What is the Metaverse? It is a digital, three-dimensional world where people are represented by avatars, a network of 3D virtual worlds focused on social connection, the next evolution of the internet, “extended reality,” and the latest buzzword in the marketplace since Facebook changed its name to Meta. If you still have no idea what I’m talking about, you can watch this or just Spielberg’s Ready Player One.The idea of personalities being uploaded online is an intriguing concept, isn’t it? In this vision, people meet with others, play, and simply hang out in a digital world. Imagine friends turning group chats on Messenger or WhatsApp into group meetups in the Metaverse of family gatherings in virtual homes. Ultimately, people will probably be doing pretty much everything there, except eating, sleeping, and using the restroom.Sounds scary? For people in their 30s and older who were fascinated by The Matrix, it does. However, this is really happening. The augmented reality technology market is expected to grow from $47 billion in 2019 to $1.5 trillion in 2030, mainly thanks to the development of the Metaverse. China’s virtual goods and services market is expected to be worth almost $250 billion this year and $370 billion in the next four years.In a sense, it had to happen as the next phase of the digital revolution. You see, we now experience much of life on the two-dimensional screens of our laptops and smartphones. The Metaverse moves us from a flat and boring 2D to a 3D virtual universe, where we can visualize and experience things with a more natural user interface. Let’s take shopping as an example. Instead of purchasing items on Amazon, customers could enter a virtual shop, see and touch all products in 3D, and buy whatever they wanted (actually, Walmart launched its own 3D shopping experience in 2018).OK, we get the idea, but why does Metaverse matter, putting aside sociological or philosophical issues related to transferring our minds into the digital world? Well, it might strongly affect every aspect of business and life, just as the internet did earlier. Here are a couple of examples. Famous brands, like Dolce & Gabbana, are designing clothes and jewelry for the digital world. Some artists are giving concerts in virtual reality. You could also visit some museums virtually, and instead of taking a business trip, you can digitally teleport to remote locations to meet with your co-workers’ avatars.Finally, what does the Metaverse imply for the gold market? Well, it’s difficult to grasp all the possible implications right now. However, the main threat is clear: as people immerse deeper and deeper into the digital world, gold could become obsolete for many users. Please note that cryptocurrencies and non-fungible tokens (NFTs) are and will continue to be widely used as payment methods in the Metaverse.However, there are some caveats here. First, the invention and spread of the internet didn’t sink gold. Actually, the internet enabled gold to be widely traded by investors all over the world. Just take a look at the chart below. Although gold was in a bear market in the 1990s and struggled during the dot-com bubble, it rallied after the bubble burst.Second, the digital world didn’t kill the analog reality. Despite digital streaming of music, vinyl record sales soared last year, reaching a record high in a few decades. The development of the Metaverse could trigger a similar backlash and a return to tangible goods like gold.Third, some segments of the Metaverse look like bubbles. Maybe I’m just too old, but why the heck would anybody spend hundreds of thousands, or even millions of dollars to buy items in the virtual world? These items include virtual real estates (CNBC says that sales of real estate in the metaverse topped $500 million last year and could double this year), digital pieces of art or even tweets (yup, the founder of Twitter sold the first tweet ever for just under $3 million)! It does not make any sense to me, as I can right-click and download a copy of the same digital files (like a PNG file of a grey pet rock) for which people pay thousands and millions of dollars.Of course, certain items could increase the utility of the game or virtual experience, but my bet is that at least some buyers simply speculate on prices, expecting that they will be able to resell these items to greater fools. When this digital gold rush ends – and given the Fed’s tightening cycle, it may happen in the not-so-distant future – real gold could laugh last.Thank you for reading today’s free analysis. We hope you enjoyed it. If so, we would like to invite you to sign up for our free gold newsletter. Once you sign up, you’ll also get 7-day no-obligation trial of all our premium gold services, including our Gold & Silver Trading Alerts. Sign up today!Arkadiusz Sieron, PhDSunshine Profits: Effective Investment through Diligence & Care.
S&P 500 Has Been Moving Up For A While. What's Next?

S&P 500 Has Been Moving Up For A While. What's Next?

Paul Rejczak Paul Rejczak 28.03.2022 15:55
  Stocks extended their short-term uptrend on Friday, but this week we may see some more uncertainty and a possible profit-taking action. The S&P 500 index gained 0.53% on Friday following its Thursday’s advance of 1.4%. The broad stock market’s gauge extended its short-term uptrend after breaking above the 4,500 level. It gained over 380 points from the Mar. 14 local low of around 4,162. There have been no confirmed negative signals so far. However, we may see another correction and a profit-taking action at some point. There’s still a lot of uncertainty concerning the ongoing Ukraine conflict, but investors were recently jumping back into stocks despite that geopolitical uncertainty. This morning the index is expected to open virtually flat after an overnight advance followed by its retracement. The nearest important resistance level is at around 4,550-4,600, marked by the previous local highs. On the other hand, the support level is at 4,400-4,450. The S&P 500 index trades closer to its January-February local highs along the 4,600 level, as we can see on the daily chart (chart by courtesy of http://stockcharts.com): Futures Contract Remains Above the 4,500 Level Let’s take a look at the hourly chart of the S&P 500 futures contract. It is trading close to the new local high. Potential resistance level is at around 4,585, marked by the previous highs. There have been no confirmed negative signals so far. We are maintaining our profitable long position from the 4,340 level, as we are still expecting a bullish price action in the near-term. However, to protect our gain, we decided to move the stop-loss (take profit) and price target levels higher. (our premium Stock Trading Alert includes details of our trading position along with the stop-loss and profit target levels) (chart by courtesy of http://tradingview.com): Conclusion The S&P 500 index will likely open virtually flat this morning. However, the futures contract retraced its overnight advance, so we may see more uncertainty and a potential profit-taking action. The war In Ukraine remains a negative factor for the markets. The global markets will also be waiting for this Friday’s monthly jobs data release. Here’s the breakdown: The S&P 500 index extended its uptrend on Friday; this morning the futures contract retreated from its new local high. We are maintaining our profitable long position (opened on Feb. 22 at 4,340), but we moved stop-loss (take profit) and price target levels higher. We are still expecting an advance from the current levels. Like what you’ve read? Subscribe for our daily newsletter today, and you'll get 7 days of FREE access to our premium daily Stock Trading Alerts as well as our other Alerts. Sign up for the free newsletter today! Thank you. Paul Rejczak,Stock Trading StrategistSunshine Profits: Effective Investments through Diligence and Care * * * * * The information above represents analyses and opinions of Paul Rejczak & 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, Paul Rejczak and his associates cannot guarantee the reported data's accuracy and thoroughness. The opinions published above neither recommend nor offer any securities transaction. Mr. Rejczak is not a Registered Securities Advisor. By reading his 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. Paul Rejczak, 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.
Crypto trading volume exceeds $100 billion in 24 hours as bulls flock to the market

Crypto trading volume exceeds $100 billion in 24 hours as bulls flock to the market

FXStreet News FXStreet News 28.03.2022 16:34
Proponents noted a 63.07% spike in the total transaction volume of cryptocurrencies across exchanges. Coinmarketcap data reveals a month-on-month increase of 4.75% in crypto trading volume. Bitcoin price crossed $47,000, fueled by $200 million shorts liquidated across exchanges. Bitcoin price is rallying, fueled by a frenzy of massive short liquidations on crypto exchanges. Proponents believe bulls have flocked to the market, as transaction volume exceeded $100 billion. Bitcoin price pushes past $47,000 in recent rally Bitcoin price crossed key resistance to hit a high above $47,000 in a rally fueled by the liquidation of millions of short positions. Analysts at the crypto intelligence platform Santiment observed a massive liquidation of shorts across exchanges at 1 pm and 6 pm UTC across crypto exchanges on March 27, 2022. Analysts argue that Bitcoin’s recent price rally to $47,000 was a response to liquidation in large quantities over the weekend. The average funding rate entered the long zone, where uncertainty among market participants increased. Therefore, analysts conclude that Bitcoin shorts have fueled the asset’s ongoing rally. Bitcoin and altcoin shorts liquidatedColin Wu, a Chinese journalist, reported a spike in the total transaction volume of cryptocurrencies, exceeding $100 billion over the past 24 hours. Wu referred to data from Coinmarketcap and observed a 63.07% increase in crypto transaction volume compared to March 26, 2022. The total crypto market value now exceeds $2.12 trillion. Historically, analysts have witnessed high transaction activity when large wallet investors flock to the market or scoop up crypto. Bloomberg analysts argue that Bitcoin looks overbought, compared to its 50-day Moving Average. Bitcoin price crossed key resistance at $45,000 in the current rally, erasing its losses for the year. FXStreet analysts have evaluated Bitcoin price and predicted the start of a new uptrend in the asset, as it crossed the $45,000 level.
Tesla Stock News and Forecast: Shareholders to vote on TSLA stock split

Tesla Stock News and Forecast: Shareholders to vote on TSLA stock split

FXStreet News FXStreet News 28.03.2022 16:34
Tesla stock surges on news of a potential stock split dividend.TSLA is up at $1,066 of +5.6% in Monday premarket trading.Tesla stock has rallied sharply from early March lows.Tesla stock (TSLA) is back to the top of the social media chatter on Monday, usurping GameStop and AMC in the process. The stock is surging this morning on news of a potential stock split dividend. Tesla previously did a 5-for-1 stock split back in August 2020, and other companies have followed suit, notably Amazon. This makes it easier for retail investors to own the stock when it has a more affordable share price.Tesla Stock News: Stock split imminent?Tesla's board of directors has already approved the plan to split the shares for a stock dividend and will put it to a vote of the shareholders. The news was well-received by retail shareholders who tend to be more active in the premarket than other holders. A stock dividend is exactly what it sounds like. Instead of receiving cash, shareholders receive new shares in the company. This means companies do not use up cash to fund the dividend. Stock dividends are usually dilutive to earnings per share (EPS) as more shares are in issue after the event. Tesla is up nearly 6% before the open. It is not all plain sailing though for the EV giant as more Chinese covid lockdowns are announced. Tesla will close its Shanghai giga plant for at least a day on the back of lockdowns in the city. Tesla Stock ForecastA powerful rally with the next target now set at $1,210. This would set up Tesla's (TSLA) stock to break to all-time highs. Currently, on the longer-term time horizon, the narrative is still bearish with a series of lower highs and lower lows. So breaking $1,210 turns Tesla bullish on all time horizons. Naturally, it is already bullish in the short term after last week's strong rally. Holding above $945 is the key pivot for medium and long-term traders. TSLA 20-hour chartThere is a short-term pivot at $1,000, with high volume at this level. Below sees a volume gap to $945, the key as mentioned above. Tesla chart, 15-minute
Volatility Retreats As Stocks & Commodities Rally

Volatility Retreats As Stocks & Commodities Rally

Chris Vermeulen Chris Vermeulen 28.03.2022 21:32
The CBOE Volatility Index (VIX) is a real-time index. It is derived from the prices of SPX index options with near-term expiration dates that are utilized to generate a 30-day forward projection of volatility. The VIX allows us to gauge market sentiment or the degree of fear among market participants. As the Volatility Index VIX goes up, fear increases, and as it goes down, fear dissipates.Commodities and equities are both showing renewed strength on the heels of global interest rate increases. Inflation shows no sign of abating as energy, metals, food products, and housing continues their upward bias.During the last 18-months, the VIX has been trading between its upper resistance of 36.00 and its lower support of 16.00. As the Volatility Index VIX falls, fear subsides, and money flows back into stocks.VIX – VOLATILITY S&P 500 INDEX – CBOE – DAILY CHARTSPY RALLIES +10%The SPY has enjoyed a sharp rally back up after touching its Fibonacci 1.618% support based on its 2020 Covid price drop. Money has been flowing back into stocks as investors seem to be adapting to the current geopolitical environment and the change in global central bank lending rate policy.Resistance on the SPY is the early January high near 475, while support remains solidly in place at 414. March marks the 2nd anniversary of the 2020 Covid low that SPY made at 218.26 on March 23, 2020.SPY – SPDR S&P 500 ETF TRUST - ARCA – DAILY CHARTBERKSHIRE HATHAWAY RECORD-HIGH $538,949!Berkshire Hathaway is up +20.01% year to date compared to the S&P 500 -4.68%. Berkshire’s Warren Buffet has also been on a shopping spree, and investors seem to be comforted that he is buying stocks again. Buffet reached a deal to buy insurer Alleghany (y) for $11.6 billion and purchased nearly a 15% stake in Occidental Petroleum (OXY), worth $8 billion.These acquisitions seem to be well-timed as insurers and banks tend to benefit from rising interest rates, and Occidental generates the bulk of its cash flow from the production of crude oil.As technical traders, we look exclusively at the price action to provide specific clues as to the current trend or a potential change in trend. With that said, Berkshire is a classic example of not fighting the market. As Berkshire continues to make new highs, its’ trend is up!BRK.A – BERKSHIRE HATHAWAY INC. - NYSE – DAILY CHARTCOMMODITY DEMAND REMAINS STRONGInflation continues to run at 40-year highs, and it appears that it will take more than one FED rate hike to subdue prices. Since price is King, we definitely want to ride this trend and not fight it. It is always nice to buy on a pullback, but the energy markets at this point appear to be rising exponentially. The XOP ETF gave us some nice buying opportunities earlier at the Fibonacci 0.618% $71.78 and the 0.93% $93.13 of the COVID 2020 range high-low.Remember, the trend is your friend, as many a trader has gone broke trying to pick or sell a top before its time! Well-established uptrends like the XOP are perfect examples of how utilizing a trailing stop can keep a trader from getting out of the market too soon but still offer protection in case of a sudden trend reversal.XOP – SPDR S&P OIL & GAS EXPLORE & PRODUCT – ARCA – DAILY CHARTKNOWLEDGE, WISDOM, AND APPLICATION ARE NEEDEDIt is important to understand that we are not saying the market has topped and is headed lower. This article is to shed light on some interesting analyses of which you should be aware. As technical traders, we follow price only, and when a new trend has been confirmed, we will change our positions accordingly. We provide our ETF trades to our subscribers, and somewhat surprisingly, we entered five new trades last week, four of which have now hit their first profit target levels. Our models continually track price action in a multitude of markets, asset classes, and global money flow. As our models generate new information about trends or a change in trends, we will communicate these signals expeditiously to our subscribers and to those on our trading newsletter email list.Sign up for my free trading newsletter so you don’t miss the next opportunity! Furthermore, successfully trading is not limited to when to buy or sell stocks or commodities. Money and risk management play a critical role in becoming a consistently profitable trader. Correct position sizing utilizing stop-loss orders helps preserve your investment capital and allows traders to manage their portfolios according to their desired risk parameters. Additionally, scaling out of positions by taking profits and moving stop-loss orders to breakeven can complement ones’ success.WHAT STRATEGIES CAN HELP YOU NAVIGATE The CURRENT MARKET TRENDS? Learn how we use specific tools to help us understand price cycles, set-ups, and price target levels in various sectors to identify strategic entry and exit points for trades. Over the next 12 to 24+ months, we expect very large price swings in the US stock market and other asset classes across the globe. We believe the markets have begun to transition away from the continued central bank support rally phase and have started a revaluation phase as global traders attempt to identify the next big trends. Precious Metals will likely start to act as a proper hedge as caution and concern begin to drive traders/investors into Metals and other safe-havens.We invite you to join our group of active traders and investors to learn and profit from our three ETF Technical Trading Strategies. We can help you protect and grow your wealth in any type of market condition by clicking on the following link: www.TheTechnicalTraders.com
Bitcoin has become a leading indicator of investor sentiment

Bitcoin has become a leading indicator of investor sentiment

Alex Kuptsikevich Alex Kuptsikevich 29.03.2022 08:51
BTC is up 4% on Monday, ending the day around $48K, and corrected by about 1% to $47.5K on Tuesday morning. Ethereum was up 1.8% in the last 24 hours to $3.4K. Terra is a leader of the day According to CoinMarketCap, the total capitalization of the crypto market increased by 1% over the day, to $2.15 trillion. The Bitcoin dominance index fell by 0.1 points to 42.1%. The crypto-currency index of fear and greed rose by 11 points over the day, to 60, and moved from neutral level to the "greed" grade. On Tuesday, the index dropped to 56 points. Among the leading altcoins, Terra soared by 10%, Doge corrected by 2%. In most others, there is a slight correction in the growth of the last days, but they are in positive territory over the last day. Bitcoin continued to rise on Monday after it broke through the strong resistance of the February highs around $45K in the previous evening. By the end of the day, BTC has renewed the highs of early January above $48K, having won back the decline since the beginning of the year. Bitcoin is correlating with S&P500 The growth of the first cryptocurrency rested on the 200-day moving average ($48.2K). Confident consolidation above it promises to strengthen and expand the growth of the entire crypto market and breathe fresh impetus into the growth of bitcoin. In December, we saw a false break, but then the price levels were higher, and corrective sentiment intensified in the stock markets. Now Bitcoin is growing along with the rise of stock indices and often even acts as a leading indicator of investor sentiment. According to Arcane Research, BTC's correlation with the S&P 500 stock indicator recently hit a 17-month high. According to CoinShares, institutions invested $193 million in crypto funds last week, and it was the most significant amount in three months. Glassnode believes that the Bitcoin trend has already changed to bullish, as evidenced by the increase in the number of addresses accumulating BTC.
The GBP/USD Pair Found Support And The EUR/USD Pair Is Slowly Recovering

GBP: BoE Expected to Raise Yields, US Dollar (USD) Strengthens across the board - Good Morning Forex!

Rebecca Duthie Rebecca Duthie 02.05.2022 09:24
Summary: USD Trumps all other currencies on the forex market today. SNB Sticks to loose monetary policy. BoE expected to raise treasury yields. EUR weakens further over the weekend. Since the market opened today the EURO has weakened against the USD. The USD strengthening comes with expectations of the hawkish Fed pushing U.S yields higher in May, this comes in the fight against the highest inflation the US has seen in 40 years. In addition, the European Central Bank is not expected to increase yields until their Asset Purchasing Program (APP) comes to a close. The current market sentiment is mixed for this major currency pair. EUR/USD Price Chart   Read next: US Dollar (USD) Continues To Trump The EUR, BoE Expected To Increase Interest Rates, SNB Remains Dovish, South African Rand (ZAR) Performance    Mixed market sentiment for EUR/GBP. GBP weakens against the EURO today. The Eurozone and Germany are expected to announce their GDP figures this week which could likely improve investor sentiment in the EURO. The market sentiment for this currency pair is mixed, this comes as the lockdowns in China and the Russia-Ukraine conflict are current aspects that affect both of these currencies. EUR/GBP Price Chart Swiss National Bank Sticks to their loose monetary policy. The USD strengthening against the CHF comes in anticipation of the Fed further increasing U.S yields in May. The Swiss National Bank (SNB) is not budging on their loose monetary policy amidst beliefs that this period of high inflation is temporary, causing the Swiss Franc to weaken. USD/CHF Price Chart Bank of England (BoE) expected to raise yields. Since the market opened this morning, the market sentiment for this currency pair is bullish. Although the price is decreasing, the bullish sentiment comes with expectations that the Bank of England (BoE) will announce an increase in treasury yields by 25 basis points at Thursday's announcements. The Fed is also expected to raise yields, this is causing the price to show volatility. GBP Price Chart   Read next: Euro (EUR) Continues To Weaken Against The US Dollar (USD), Euro Under Pressure Amidst Russia’s Decision To Tighten Gas Supplies. GBP Strengthens Against the JPY.    Sources: fxstreet.com, Finance.yahoo.com, dailyfx.com.
The Bank of England Is Widely Expected To Take Decisive Action

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

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

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

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

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

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

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

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

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

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

Euro Remains Supported Ahead Of ECB Policy Decision, Netflix & Tesla Q2 Earnings Reports

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

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

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

Federal Reserve Raises The Interest Rates By 75bps

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

US ISM Data Defied Market Expectations (EUR/USD), GBP Strengthened Ahead of BOE Policy Decision (EUR/GBP, GBP/AUD),

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

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

Rebecca Duthie Rebecca Duthie 08.08.2022 20:30
Summary: The euro is battling to mount significant gains against the USD. BoE’s economic downgrades. Market expectations for a hawkish BoC. Read next: Meme Stocks Amongst Monday’s Top Performers  EUR/USD suffered defeats this week The market is reflecting mixed signals for this currency pair. The Euro to Dollar exchange rate suffered defeats this week from both near and distant, but if this Wednesday's U.S. inflation data further incenses a still-hawkish Federal Reserve (Fed), it might send the rate back into its laws from July. In the first session of last week, the Euro got dangerously close to the 1.03 handle versus a declining Dollar, but an attempt at a rebound was again thwarted by what appear to be escalating concerns to energy supplies in Germany and several other European nations. The euro has stabilized versus the U.S. dollar in recent weeks following a large sell-off earlier this year, but has been unable to mount a significant comeback due to a dearth of supportive fundamentals. In this aspect, the common currency has faced challenges that have limited its upward performance versus the dollar, including the oil crisis in Europe, regional economic instability, and the ECB's unwillingness to raise rates fast. EUR/USD Price Chart BoE shocked the market with sharp economic downgrades The market is reflecting bullish signals for this currency pair. The Bank of England (BoE) shocked the market last week with sharp downgrades to its economic forecasts, which put Sterling on the back foot and put it at risk of slipping into a cluster of technical support levels around 1.18 in the coming days. As a result, the Pound to Euro exchange rate was muted. The pound sterling was a little firmer this morning against the U.S. dollar and the euro, respectively. The new leader of the British Conservative Party and the British Prime Minister, both named Sunak and Truss, have been the subject of much discussion (tax cuts). Tax cuts may increase already high inflationary pressures, which could lead to additional interest rate increases from the Bank of England. Tax cuts are intended to promote economic growth inside the UK (BoE). EUR/GBP Price Chart GBP/CAD currency pair Last week, U.S. economic data, the U.S. Dollar, and a strong Loonie combined to drag the Pound to Canadian Dollar rate down toward 1.55 and a level that may continue to exert a gravitational pull in the days to come. This prevented the rate from rising above near 10-year lows. Although the unemployment rate in Canada remained at 4.9 percent and wages continued to grow at an annualized rate of 5.2 percent in July, the economy still lost jobs for a second consecutive month. This may have led the market to believe that the Bank of Canada (BoC) will likely maintain the more aggressive monetary tightening and interest rate policy implemented in recent months. GBP/CAD Price Chart Sources: finance.yahoo.com, dailyfx.com, poundsterlinglive.com
EUR/USD Is Vigilant To  Highly Awaited Jerome Powell's (Fed) Speech. Rise Of Monthly Bond Sales Could Make Stock Market Decrease By Over 20%!

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

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

US CPI Inflation Data For July Was 8.5%, Beating Expectations

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

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

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

Euro Under Pressure As A Result Of Events In The Energy Market (EUR/USD, EUR/GBP), RBNZ Due To Announce Policy Update (GBP/NZD)

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

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

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

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

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

EUR/USD Falls Below Parity, Investor Expectations For BoE Spiked (EUR/GBP), GBP/USD At Risk Of Further Losses

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

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

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

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

Rebecca Duthie Rebecca Duthie 25.08.2022 21:00
Summary: EUR trading below parity against the USD. UK at risk of energy crisis. Kiwi outperforms on Thursday. EUR/USD trading below parity The market is reflecting mixed signals for this currency pair. Policymakers at the European Central Bank have been relatively silent on the lecture circuit lately, but that may soon change as the summer comes to an end. There was disagreement about the 50-bps rate increase even as inflation pressures in the Eurozone had risen, according to the minutes of the ECB meeting in July. The ECB may ultimately disappoint in the upcoming months as fears turn back to weak growth, even as rates markets are discounting a more aggressive course going forward. Powell might exert pressure on the market to raise expectations for the Fed's September rate hike to 75 basis points because the markets now expect the Fed to deliver approximately 65 basis points of increases. This may provide short-term support for the Dollar and maintain pressure on the Euro into the next month. EUR/USD Price Chart Risk of UK Stagflation rises The market is reflecting bearish signals for this currency pair. The energy crisis in the Eurozone is still putting the Euro under pressure. As the economy slows and inflation pressures increase, the risk of stagflation in the UK is continuing to rise. However, given the developing energy crisis that threatens to drive UK inflation rates further higher into double digit territory over the coming few months, traders feel that the Bank of England is currently focusing on the latter of these two crises. In terms of odds on a BOE raise, markets are currently at their most aggressive levels of the year. EUR/GBP Price Chart GBP/NZD - Kiwi outperforms GBP This week saw the start of the short-lived mid-month recovery in the Pound to New Zealand Dollar exchange rate. If the Kiwi continues to excel and Sterling continues to underperform among the major currencies, the exchange rate is likely to unravel even more in the days to come. After profiting from a general easing of the U.S. Dollar ahead of Friday's visit by Federal Reserve Chairman Jerome Powell at the annual Jackson Hole Symposium for central bankers, the New Zealand Dollar outperformed on Thursday in a booming market for Asia Pacific currencies. GBP/NZD Price Chart Sources: finance.yahoo.com, poundtserlinglive.com, dailyfx.com
The Japanese Yen Has The Worst Performer Among The G-10 Currencies

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

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

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

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

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

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

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

Rebecca Duthie Rebecca Duthie 01.09.2022 17:56
Summary: The USD strengthened by a hawkish Fed. GBP struggled in August. Euro value declined against USD on Thursday The market is reflecting mixed signals for this currency pair. Thursday sees a decline in the value of the Euro as markets are swept by a steadfast US Dollar following additional hawkish remarks from Fed speakers. Despite the market leaning toward a 75 basis-point increase at the European Central Bank (ECB) meeting next week as a result of yesterday's higher than expected CPI, the EUR/USD was unable to gain traction. The US dollar's ascent is unabated, and it appears that it will soon reach highs last seen in 2002 as the preferred safety play. This week, a new wave of risk-off trading sent USD pairings higher and equity markets lower across a number of markets. US Treasury yields have reached multi-year highs as US interest rate expectations continue to rise. EUR/USD Price Chart EUR/GBP touching June lows The market is reflecting bullish signals for this currency pair. One analyst said there is little reason to expect an improvement over the upcoming weeks or months as the value of the pound relative to the euro has dropped substantially over the past few days and is currently at levels last seen in June. The Pound suffered in August, with analysts attributing its poor performance to worries that the UK's debt load will rise as the next administration tries to mitigate the effects of the cost of living problem. This occurs as the Bank of England raises interest rates, driving up the yield paid on gilts, the name for UK government debt. The Bank of England gave historically low interest rates during the Covid crisis and actively purchased government debt as part of its quantitative easing program. As a result, the government was able to increase borrowing without any problems. However, the Bank will now actively sell government debt and may raise rates by an additional 50 basis points in September, significantly restricting the government's ability to borrow money as the nation grapples with yet another crisis. EUR/GBP Price Chart GBP/AUD Despite a great August making the Australian Dollar one of the better performing currencies of 2022, experts at investment bank Goldman Sachs said they remain concerned on the currency on a "tactical basis." The announcement that one of China's major cities has been placed on lockdown as the government of the nation pursues a "zero covid" strategy to combat the coronavirus raises doubts about the near-term prospects for Australia's top export market. GBP/AUD Price Chart Sources: finance.yahoo.com, dailyfx.com, poundsterlinglive.com
Italian industrial production fell again in June, raising doubts over 3Q growth

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

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

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

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

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

Rebecca Duthie Rebecca Duthie 07.09.2022 16:03
Summary: Bank of Canada interest rate decision. BoC met market expectations. Bank of Canada meets market expectations The Bank of Canada (BoC) met the market expectations on Wednesday by hiking their interest rates by 75bps up to 3.25% from 2.5%. Their Ivey PMI beat market expectations which were set at 48.3, but came in at an actual value of 60.9. Bank of Canada increases policy interest rate by 75 basis points, continues quantitative tighteninghttps://t.co/YXW4npzhVA#economy #cdnecon — Bank of Canada (@bankofcanada) September 7, 2022 Bank of Canada In order to safeguard the economy by limiting the amount that interest rates might need to increase over the medium term, the BoC increased its cash rate from 1.75% to 2.5% in July. This was done as part of a strategy to move monetary policy to an economically restrictive level sooner rather than later. Despite the fact that interest rate derivative market pricing implies that investors already expect the benchmark to climb further and as far as 3.75% by year's end, the BoC considers that restrictive threshold to involve a cash rate that is a place above the 3% level. “The Bank's commitment to front-loading rate hikes in the face of red-hot inflation means an even bigger 100 bps increase (matching July's hike) can't be ruled out. Canadian employment (Friday) is expected to rise 5K in August following two consecutive monthly declines. The unemployment rate is expected to increase to 5.0%, which is still very low,” says Alvin Tan, head of Asia FX strategy at RBC Capital Markets. With the approaching Bank of Canada rate decision expected today and the European Central Bank meeting on Thursday, we will undoubtedly use expectations to our advantage. Expectations play a significant part in the market impact of major event risk. In this meeting, both are expected to raise their respective benchmark rates by 75 basis points, but the former is doing so based on a 100-basis-point increase at its last meeting and the discount of a hawkish central bank. Sources: dailyfx.com, poundsterlinglive.com, investing.com
The Japanese Yen Has The Worst Performer Among The G-10 Currencies

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

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

The ECB Interest Rate Decision - Met Market Expectations

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

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

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

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

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

US Dollar Rallies In The Wake Of CPI Inflation Data

Rebecca Duthie Rebecca Duthie 13.09.2022 18:17
Summary: U.S. inflation is running hotter than markets anticipated. Core inflation reading is the one that concerns the Fed the most. Core CPI increased by 0.6% in Augus US CPI Inflation Missed Market Expectations Data that showed U.S. inflation is running hotter than markets anticipated caused the Dollar to rise dramatically, giving the Federal Reserve more confidence to hike interest rates. After U.S. headline CPI inflation rose 8.3% year-over-year in August, defying expectations for a reading of 8.1%, stocks dropped and the safe-haven high-yielding Dollar surged, though it was still lower than July's 8.5%. But contrary to forecasts for a decline, the month-over-month metric increased by 0.1%, the BLS reported, up from July's reading of 0%. The core inflation reading will be the one that concerns the Fed the most. Core CPI increased by 0.6% in August, exceeding both the 0.3% market expectation and the 0.3% result in July. Core CPI inflation is the form of inflation that the Fed may be able to control through higher interest rates because it is domestically based and therefore excludes external factors like energy prices. Core CPI inflation increased by 6.3% on an annual basis, exceeding both July's 5.9% and the market's expectations of 6.1%. LISTEN NOW: Inflation rose 8.3% year-over-year — we discuss the hotter-than-expected CPI number. Listen and follow the @SquawkStreet podcast here or on your favorite podcast platform: https://t.co/BoklbeW3jy pic.twitter.com/v2SxAuQfsh — CNBC (@CNBC) September 13, 2022 With a 1.40% increase against the New Zealand Dollar and a 0.84% increase against the Euro, the dollar advanced versus all the major currencies. "In response to the data, all G10 currencies weakened against the US dollar, with the largest losses seen in currencies that had recently benefited from the improvement in risk conditions. The pound, euro, yen, Kiwi dollar, Aussie dollar, and Swedish krona have now recorded losses in excess of one percent against the greenback, while the Norwegian krone posted the largest decline as it is down 2% on the day," says Jay Zhao-Murray, Market Analyst at Monex Canada. Even though gasoline prices were down significantly, the U.S. inflation surprise still occurred, suggesting that the energy shock is still having an impact. However, everyone is still surprised by the lag. In the event that workers seek greater wage agreements and businesses increase their prices, the Fed will be eager to boost rates. Sources: poundsterlinglive.com
GBP/USD. August 19. UK retail sales show gains but market ignores statistics

UK CPI Inflation Data Reflected The First Drop In 1 Year

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Yesterday's Decisions Strongly Influenced The Situation In The Market, How Will Today's Decisions Affect The Market?

Swissquote Bank Swissquote Bank 22.09.2022 10:28
We thought that the Federal Reserve (Fed) decision would be the highlight of yesterday but news from Russia came to eclipse the FOMC. Putin’s announcement and Fed decision Vladimir Putin declared partial mobilization yesterday morning. Putin’s announcement, which fell like a bomb on investors who were already stressed out due to the Fed decision, sent capital to safe haven assets yesterday, but gains elsewhere than the US dollar remained short-lived.On the FOMC front, the Fed delivered the third 75bp hike yesterday, as expected, but the dot plot revealed that the officials’ rate projections went well above the market expectations. Banks' decisions The Bank of Japan (BoJ) maintained its policy unchanged. The Swiss National Bank hiked by 75bp hike*. The Bank of England (BoE) could opt for 50bp hike, instead of 75bp, as Liz Truss’s energy package could help taming inflation. While the Central Bank of Turkey (CBT) should keep its rate at 13%. BUT WHO KNOWS! Watch the full episode to find out more! 0:00 Intro 0:28 Russia escalates tensions in Ukraine 2:35 Fed hikes 4:34 BoJ maintains status quo 5:42 SNB hikes, as expected*  6:12 BoE could hike by 50bp 7:30 Turkey: God knows. *decision came after the shooting of the show Ipek Ozkardeskaya Ipek Ozkardeskaya has begun her financial career in 2010 in the structured products desk of the Swiss Banque Cantonale Vaudoise. She worked at HSBC Private Bank in Geneva in relation to high and ultra-high net worth clients. In 2012, she started as FX Strategist at Swissquote Bank. She worked as a Senior Market Analyst in London Capital Group in London and in Shanghai. She returned to Swissquote Bank as Senior Analyst in 2020. #FOMC #Fed #SNB #BoE #BoJ #CBT #rate #decision #jumbo #hikes #XAU #USD #JPY #GBP #CHF #TRY #BIST #Russia #Ukraine #war #SPX #Dow #Nasdaq #investing #trading #equities #stocks #cryptocurrencies #FX #bonds #markets #news #Swissquote #MarketTalk #marketanalysis #marketcommentary ___ Learn the fundamentals of trading at your own pace with Swissquote's Education Center. Discover our online courses, webinars and eBooks: https://swq.ch/wr ___ Discover our brand and philosophy: https://swq.ch/wq Learn more about our employees: https://swq.ch/d5 ___ Let's stay connected: LinkedIn: https://swq.ch/cH
Did The Bank of England Miss, Meet or Beat Market Expectations?!

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

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

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

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

The Italian Elections And Their Impact On The Euro, Interest Rates Around The World

Swissquote Bank Swissquote Bank 23.09.2022 10:24
A busy week for central banks come to an end with plenty of rate hikes, increased prospects of slowing growth, that leave investors with a bad taste in their mouth. Eyes on rate hike The Swedish Riksbank was the first major central bank to surprise with a 100bp rate hike. The US Federal Reserve (Fed) delivered its third 75bp hike. But the dot plot hinted at another jumbo hike before the year-end. The Bank of Japan (BoJ) maintained its policy rate unchanged at -0.10%, but intervened directly in the FX market to buy yen to fight back the strengthening dollar. The Swiss National Bank (SNB) raised its policy rate by 75bp. The Bank of England (BoE) opted for a 50bp hike, combined with an £80 billion Quantitative Tightening, and said the UK is now in recession. The UK will reveal the ‘mini’ budget today. Norges Bank also increased its policy rate by 50bp but signaled that tightening may be coming to an end. Indonesia and the Philippines also hiked by 50bp. Taiwan raised by a modest 12.5% as expected, Vietnam opted for a 100bp hike, South Africa raised by 75bp… …and Turkey… cut its rate by 100bp for the second consecutive meeting! But the week is not over. The Italian elections due Sunday will likely continue pressuring the euro lower. Watch the full episode to find out more! 0:00 Intro 0:26 Keeping up with the central banks 4:37 UK 'mini' budget is all but mini. 6:15 Continue keeping up with the central banks 7:22 Market update 8:42 Into the Italian elections Ipek Ozkardeskaya Ipek Ozkardeskaya has begun her financial career in 2010 in the structured products desk of the Swiss Banque Cantonale Vaudoise. She worked at HSBC Private Bank in Geneva in relation to high and ultra-high net worth clients. In 2012, she started as FX Strategist at Swissquote Bank. She worked as a Senior Market Analyst in London Capital Group in London and in Shanghai. She returned to Swissquote Bank as Senior Analyst in 2020. #FOMC #Fed #SNB #BoE #BoJ #CBT #rate #decision #jumbo #hikes #USD #JPY #GBP #EUR #CHF #TRY #BIST #UK #mini #budget #Italy #elections #crude #oil #FedEx #SPX #Dow #Nasdaq #investing #trading #equities #stocks #cryptocurrencies #FX #bonds #markets #news #Swissquote #MarketTalk #marketanalysis #marketcommentary ___ Learn the fundamentals of trading at your own pace with Swissquote's Education Center. Discover our online courses, webinars and eBooks: https://swq.ch/wr ___ Discover our brand and philosophy: https://swq.ch/wq Learn more about our employees: https://swq.ch/d5 ___ Let's stay connected: LinkedIn: https://swq.ch/cH
US Dollar's (USD) And Stock Market's Reaction To The US Labour Market Data | EUR/USD After The Release

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

Rebecca Duthie Rebecca Duthie 23.09.2022 19:01
Summary: EUR/USD is close to 20 years lows. The UK and the Eurozone may have already entered recession in the third quarter of the year. Canadian Dollar plunged to its lowest level against the U.S. Dollar since July 2020. US Dollar remains supported The market is reflecting bearish signals for this currency pair. A day after the Federal Reserve approved another sizable hike and promised to keep tightening monetary policy firmly in order to control inflation, the EUR/USD lacked confidence on Thursday, fluctuating between tiny gains and losses. This is probably due to rising U.S. Treasury yields. The exchange rate is very close to one of its lowest points in more than 20 years, having fallen dramatically from the overnight session high of 0.9907 and trading mostly flat on the day at 0.9843. The Fed's hawkish roadmap, which anticipates 150 basis points of additional tightening up to the terminal rate of 4.6% in 2023, as well as its commitment to maintaining a restrictive stance for an extended period of time, should keep U.S. rates biased to the upside and support the dollar's momentum in the FX market. EUR/USD Price Chart Europe & the UK may have already entered recession The market is reflecting bullish signals for this currency pair. According to analyst and economist readings of the data, the latest round of S&P Global PMI Surveys of the manufacturing and services sectors revealed on Friday that the economies of the UK and the Eurozone may have already entered recession in the third quarter of the year. Energy markets and developments in Ukraine, where Russian occupation troops are anticipated to be strengthened following substantial recent setbacks for the invading army at the hands of Ukrainian forces, also attracted attention in Europe. EUR/GBP Price Chart USD/CAD The market is reflecting bullish signals for this currency pair. This week, during another turbulent time for risky assets, the Canadian Dollar plunged to its lowest level against the U.S. Dollar since July 2020; however, updated BMO Capital Markets forecasts suggest that it may be due for one of the most significant recoveries if and when the dollar reaches its peak. The Canadian Dollar lost ground to the Swiss Franc on Friday as it dropped close to 73 cents versus the U.S. Dollar, but it still made significant gains over other currencies, several of which hit new multi-decade lows against the U.S. unit. USD/CAD Price Chart Sources: finance.yahoo.com, dailyfx.com, poundsterlinglive.com
Banks In The Old Continent Are Doing Their Best To Fight Inflation

Banks In The Old Continent Are Doing Their Best To Fight Inflation

ING Economics ING Economics 24.09.2022 08:18
The Swiss National Bank’s decision to introduce bank reserve tiering sheds light on similar potential decisions at the Bank of England and European Central Bank. Central banks have to balance monetary policy transmission, interest costs, and incentive structures for banks In this article SNB: actively moving to absorb liquidity BoE: saving money where it can ECB: peering into pandora’s box Source: Shutterstock European central banks are gradually adjusting their policy setting to a world of positive interest rates but with still abundant liquidity. The common theme here is that hundreds of billions, or trillions in the ECB’s case, of bank reserves will be remunerated at positive interest rates, at a cost for their central banks, and ultimately their domestic government treasury. SNB: actively moving to absorb liquidity The Swiss National Bank (SNB) was the first one to actually implement a reserve tiering system at its September meeting. In a nutshell, banks’ sight deposits at the SNB up to a certain threshold will earn the SNB policy rate, currently 0.5%, and 0% on balances above that threshold. This, however, is only part of the story. In parallel, the SNB announced it will conduct liquidity-absorbing operations (Open Market Operations or OMOs). With a threshold set at an elevated 28 times banks required reserves, it won’t take much effort for the SNB to absorb enough liquidity so that all that remains is remunerated at the SNB. In effect, the SNB rate should remain the marginal rate in CHF money markets, and tiering should act as an incentive for banks to participate in liquidity-absorbing operations. The SNB's goal seems to be to make sure higher policy rates are transmitted to the economy The upshot is that the main feature of the new liquidity set-up at the SNB will be to remove liquidity from the system as it tightens policy in order to get inflation under control. There is likely to be only marginal interest rate savings for the central bank on its CHF640bn of sight deposits, if at all, but this doesn’t seem to be the point of the policy change. Rather the SNB's goal seems to be to make sure higher policy rates are transmitted to the economy. Bank reserves at the BoE will decline with QT, but not fast enough to save much interest cost to the BoE   Source:Refinitiv, ING BoE: saving money where it can There have been persistent press reports that the UK is looking to reduce the amount of interest it pays to banks. This is a more pressing issue in the UK because bank reserves now approach £945bn and the swap curve is implying that the Bank Rate could climb to 5% next year. This is something of a worst-case scenario, but this would result in an interest rate bill approaching £50bn per year. In practice, we think that rate hike expectations are exaggerated, and the BoE intends to reduce its bond holdings, and so the amount of reserves, by £80bn per year at least. At a time of large open-ended fiscal support to energy consumers, the Treasury could be forgiven for trying to save on this interest rate bill. The Treasury could be forgiven for trying to save on its interest rate bill Two options present themselves to the BoE. Designing a reserve tiering system akin to the SNB would allow it to gradually reduce the amount of liquidity in the system. Interest cost saving would probably be underwhelming at first, but it could attempt to gradually increase the amount of liquidity withdrawn from the system, thus also supporting its monetary tightening stance. Inversely, it could determine a fixed amount of reserves that is remunerated at 0%, with balances above that threshold earning the Bank Rate. If that threshold is set too high, this measure would incentivise banks to get rid of their liquidity and would push money market rates lower, thus contradicting the BoE’s monetary policy stance. Setting the threshold lower would mean a lower interest rate saving from the BoE but also probably less disruption in GBP money markets. We think this is the option that would likely deliver the best near-term compromise for public finances. Its market impact should be limited at first. The distribution of bank liquidity and TLTRO borrowing is uneven across the eurozone Source: Refinitiv, ING ECB: peering into pandora’s box The European Central Bank’s motivation could be similar to the BoE's. As policy rates rise, the interest banks earn by placing liquidity at the ECB will gradually rise above the rate they are paying on their targeted longer-term refinancing operations (TLTRO) loans, presenting them with an interest rate gain. If this is the sole problem it is intending to solve, one option would be to retroactively change the TLTRO terms by raising its interest rate. This would be detrimental to the predictability, and so attractiveness of future TLTRO operations, however. With the brunt of TLTRO loans due to expire by the middle of next year, one could also question the need to come up with risky solutions to a problem that will disappear in nine months. The ECB has effectively allowed banks to borrow money at a lower rate than they earn when they place it back at the ECB If on the other hand, the goal is to reduce its interest bill over the longer term, it could borrow one of the two designs described above. A set-up similar to the SNB’s, where a fixed amount of reserves earns the policy rate and the amount in excess earns 0%, would imply that it intends to actively withdraw liquidity. This could be achieved if banks rush to repay TLTRO loans, but this is likely to result in at least a temporary drop in money market rates. To prevent this temporary disruption, the ECB could bridge the period until the next quarterly TLTRO repayment opportunity with ad hoc liquidity draining operations, or simply make the tiering apply on the same date as TLTRO repayment. If this is the option retained by the ECB, the reduction in excess liquidity resulting from early TLTRO repayments, and other liquidity draining operations, would push money market rates higher relative to the ECB deposit rate. Interbank lending rates would be the first area where we expect a reaction as banks move to replace TLTRO funding. In time, we'd also expect greater competition among banks to attract wholesale deposits. Both would push Euribor fixings higher relative to euro short-term rate (Estr) swaps. This should also contribute to pushing Estr fixings above the deposit rate, and closer to the refinancing rate. Draining liquidity would eventually push Estr above the ECB deposit rate Source: Refinitiv, ING   A design similar to the one described above for the BoE, where a fixed amount earns 0% and balances above that threshold earn the policy rate, would guarantee some interest rate saving but wouldn’t provide an incentive for banks to repay TLTRO funds if the threshold is set low enough. If the threshold is set high, then the risk is that 0% becomes the marginal interest rate for many banks and that some countries end up being net lenders, and others net borrowers. The result would be a drop in money market rates in some countries, and a rise in others. TagsSNB ECB BoE   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