Fundamental updates by Solid ECN

SOLIDECN

Master Trader
Nov 16, 2021
3,165
22
54
39

AUDUSD​

  • Asia-Pacific indices traded mixed today after Wall Street's better performance on Monday. The Nikkei rose 0.8%, S&P/ASX 200 declined 0.5%, Kospi with no change and Nifty 50 fell 0.3%. In contrast, Chinese indices traded slightly higher
  • The Australian AUD rose after the country's central bank surprised markets by boosting interest rates above expectations to battle inflation
  • The RBA increased Australian OCR to 4.1% versus forecasted 3.85% and previously 3.85%
  • The board is steadfast in its goal to return inflation to target, further tightening by is dependent on how inflation and the economy progress, but may be required
  • Labour market conditions in Australia have softened but remain extremely tight
  • AUDUSD rose 0.9% to 0.6675 after an unexpected rate hike to 4.1% from 3.85%
  • Futures for US benchmarks were stable after tech stocks led the S&P 500 lower on Monday, with Apple wiping out gains of up to 2% as investors weighed the possibilities of a new mixed-reality headset
  • Chevron and Exxon Mobil both fell after earlier rallying on higher oil prices following Saudi Arabia's supply cut
  • Morgan Stanley research set a year-end target for US500 to 3,900 points. Earnings per share for the S&P 500 are set to drop 16% this year, anticipates that S&P 500 earnings per share will come in at $185, compared with a median $206 prediction
  • According to Morgan Stanley a deteriorating liquidity backdrop is likely to put downward pressure on equity valuations over the next three months
  • the Federal Reserve is expected to hold rates steady in June while keeping the door open for future hikes
  • Precious metals trade mixed - gold drop while silver, platinum and palladium gain
audusd_13.png
 

SOLIDECN

Master Trader
Nov 16, 2021
3,165
22
54
39

EURUSD​

  • US indices finished yesterday's trading higher. S&P 500 gained 0.62% to 4,294 points, Dow Jones moved 0.50% higher to 33,833 points and Nasdaq 100 added 1.27% to 14,484 points. The Russell 2000 dropped 0.41%, as investors were taking profits after a good session the day before.​
  • Asian stock markets are poised for their second consecutive week of gains, buoyed by the prospect of economic stimulus in China and the S&P 500's transition into a bull market.​
  • Japanese markets bounced back from a two-day downturn - Nikkei climbed 1.66% to 32,174 points and Australian stocks also rebounded after a three-day decline - S&P/ASX 200 dropped 0.11%.​
  • South Korean stocks have hit their highest point since June of the previous year - Kospi gained 1.25%.​
  • Indices from China decreased by around 0.25%​
  • European futures point to a flat opening of the European cash session today, DAX futures are traded 0.06% lower at 16,014 points.​
  • The Chinese Consumer Price Index (CPI) Year on Year (YoY) remained as expected at 0.2%, while the Producer Price Index (PPI) YoY fell to -4.6%, lower than the forecasted -4.3%.​
  • The Bank of Japan's Governor Ueda stated that the bank is implementing policies to achieve a stable 2% inflation rate.​
  • A spike in US unemployment claims to the highest level since October 2021 indicates a softening labor market, which lowered the expectations that the Federal Reserve would keep interest rates elevated for a prolonged period.​
  • Despite the S&P 500's return to a bull market, an analyst from Bank of America has stated that the overall market sentiment remains pessimistic.​
  • Analysts at Bank of America believe that as long as inflation remains high globally and particularly in the US, the EURUSD is likely to remain weak. Currently, the carry trade is also applying downward pressure on the euro.​
  • Saudi Arabia reportedly threatened the US with economic repercussions last fall due to oil price reductions, according to the Washington Post.​
  • Precious metals trade mixed - gold trades flat, silver gains 0.15%, platinum gains 1.25% and palladium jumps 0.18%​
  • Binance.US has halted USD deposits and warned of a potential pause in fiat withdrawals in response to the "extremely aggressive and intimidating tactics" employed by the SEC and intended to safeguard customers and the platform.​
eurusd_24.png


EURUSD chart - according to BoA a sustained rally in EURUSD would necessitate a change in the Federal Reserve's stance, Interval H1.​
 

SOLIDECN

Master Trader
Nov 16, 2021
3,165
22
54
39

Economic Calendar: Quiet start to a busy week​

  • European indices set for slightly higher opening​
  • Fed, ECB and BoJ rate decisions this week​
  • US CPI and retail sales, Chinese monthly activity data for May​
Futures markets point to a slightly higher opening of the European cash session after a rather upbeat trading during the Asian session earlier today. Overall, weekend was uneventful and markets were not offered any major news that could impact price action at the beginning of the week.

Economic calendar for today is empty and markets seem to be in wait-and-see mode ahead of decisions from 3 major central banks later this week - FOMC, ECB and BoJ. While BoJ is most likely to hold rates unchanged, decisions from FOMC and ECB will not be as obvious. FOMC will decide between no change and 25 bp rate hike while ECB will most likely hike but may surprise with size. Apart from central banks, investors will also be offered some top-tier data releases, like for example CPI and retail sales data from the United States or monthly activity data from China.

Central bankers' speeches today​
  • 7:30 am BST - ECB Simkus​
  • 3:00 pm BST - BoE Mann​

Key events in the later part of the week

Tuesday​
  • 10:00 am BST - Germany, ZEW index for June​
  • 1:30 pm BST - US, CPI inflation data for May​

Wednesday​
  • 7:00 am BST - UK, GDP report for April​
  • 7:00 pm BST - FOMC rate decision​

Thursday​
  • 3:00 am BST - China, monthly activity data for May​
  • 1:15 pm BST - ECB rate decision​
  • 1:30 pm BST - US, retail sales for May​

Friday​
  • Tentative - Bank of Japan rate decision​
  • 3:00 pm BST - US, University of Michigan index for June​
 

SOLIDECN

Master Trader
Nov 16, 2021
3,165
22
54
39

Economic Calendar: US Holiday opens a busy week​

  • European indices set for lower opening​
  • US traders off to observe a holiday​
  • Rate decisions from BoE, SNB and Norges Bank later this week​

European index futures point to a slightly lower opening of the European cash session today. This comes after declines on Wall Street on Friday and after a rather downbeat Asia-Pacific session earlier today. Oil is trading lower at the beginning of a new week after a number of banks cut GDP growth forecast for China over the weekend and Bloomberg reported that Iranian oil exports reached a 5-year high.

Economic calendar for today is empty with no top-tier releases scheduled. Trader should also keep in mind that liquidity conditions on the markets may be limited, especially in the afternoon, as traders from the United States will be off to observe a holiday and there will be no Wall Street trading session today (changes to trading hours on xStation listed below).

However, things get more interesting later into the week with a number of events that can move the markets. Those include rate decisions from Swiss National Bank, Bank of England and Norges Bank on Thursday, flash PMIs for June on Friday as well as semiannual testimonies from Fed Chair Powell on Wednesday and Thursday.

Central bankers' speeches​

  • 9:00 am BST - ECB Simkus​
  • 12:00 pm BST - ECB Lane​
  • 12:40 pm BST - ECB Schnabel​
  • 2:00 pm BST - ECB Villeroy​
  • 7:00 pm BST - ECB De Guindos​

Trading hour changes because of US holiday​

  • No trading - CORN, SOYBEAN, WHEAT, SUGAR, COCOA, COFFEE, COTTON, LEANHOGS, CATTLE, SOYOIL​
  • Trading until 4:30 pm BST - VIX​
  • Trading until 6:00 pm BST - TNOTE, US100, US30, US500, US2000​
  • Trading until 6:30 pm BST - OIL, LSGASOIL​
  • Trading until 7:30 pm BST - GOLD, SILVER, PLATINUM, PALLADIUM, OIL.WTI, NATGAS, GASOLINE​
 

SOLIDECN

Master Trader
Nov 16, 2021
3,165
22
54
39

Economic Calendar: Survey Data from Germany and US, central bankers speeches​

  • European indices set for flat opening
  • Survey data from Germany and the United States
  • Speeches from ECB and SNB members
Markets remain calm after a short-lived Russian coup that took place over the weekend. PMC Wagner rebelled against the Russian Ministry of Defense, took control of few Russian cities and launched an armored column towards Moscow. However, agreement between Wagner and the Kremlin was brokered by Belarusian leader Lukashenko and rebellion ended before any hostilities took place.

European index futures point to flat opening of today's cash session on the Old Continent. Energy commodities and precious metals are trading slightly higher while the US dollar is pulling back. Economic calendar for today is light. Traders will be offered German IFO indices for June in the morning as well as Dallas Fed index for June in the afternoon. Apart from that, EUR and CHF may see some moves today as we have a number of SNB and ECB officials scheduled to speak.

Economic release schedule gets more interesting later into the week with CPI inflation from Europe and PCE data from the United States.
  • 9:00 am BST - Germany, IFO Business Climate index for June. Expected 90.8. Previous: 91.7
  • 9:00 am BST - Poland, unemployment rate for May. Expected: 5.1%. Previous: 5.2%
  • 3:30 pm BST - US, Dallas Fed manufacturing index for June. Expected: -20.0. Previous: -29.1

Central bankers' speeches​

  • 8:15 am BST - ECB Villeroy
  • 9:40 am BST - SNB Jordan
  • 3:00 pm BST - ECB McCaul
  • 3:25 pm BST - SNB Maechler
  • 6:30 pm BST - ECB President Lagarde
  • 6:30 pm BST - ECB De Cos
 

SOLIDECN

Master Trader
Nov 16, 2021
3,165
22
54
39

US100​

  • US indices rallied today, led by tech stocks. S&P 500 gains 1.1%, Dow Jones adds 0.7% and Nasdaq jumps 1.6%. Russell 2000 rallies 1.8%​
  • European stock market indices traded higher today. German DAX added 0.2%, UK FTSE 100 moved 0.1% higher while French CAC40 and Dutch AEX gained 0.4%. Polish WIG20 was a laggard with 1.4% drop​
  • Hopes for new Chinese stimulus sparked by comments by Chinese Primer triggered gains on industrial metals markets​
  • ECB President Lagarde hinted that recent data supports a rate hike in July​
  • Reuters reported that majority of ECB members expect rates to be raised at July and September meetings as inflation remains an issue​
  • Goldman Sachs increased its US Q2 GDP forecast from 1.8 to 2.2% QoQ​
  • HSBC warns that US will fall into recession this year while Europe will follow in 2024​
  • OPEC denied media reports saying that it has invited Guyana to join the group​
  • Cryptocurrencies traded higher following reports that Fidelity is preparing to file for the Bitcoin ETF​
  • US durable goods order surprised to the upside in May. Headline orders increased 1.7% MoM (exp. -1.1% MoM) while core orders were 0.6% MoM higher (exp. -0.1% MoM)​
  • Headline Canadian CPI inflation slowed from 4.4 to 3.4% YoY in May, in-line with market expectations. However, core CPI slowed more-than-expected, from 4.1 to 3.7% YoY (exp. 3.9% YoY)​
  • Conference Board consumer sentiment index jump from 102.3 to 109.7 in June (exp. 103.6). Present Situation subindex moved from 148.6 to 155.3 while Expectations subindex jumped from 71.5 to 79.3​
  • US new home sales 12.2% MoM in May to 763k (exp. 670k)​
  • Energy commodities trade lower - oil drops 1.9% while US natural gas prices decline 0.9%​
  • Precious metals trade mixed - gold drops 0.6%, silver gains 0.2% and platinum trades flat​
  • EUR and GBP are the best performing G10 currencies while JPY and CAD lag the most​
us100_6.png


Nasdaq-100 (US100) broke above the 50-hour moving average (green line), 15,000 pts resistance zone and bearish trendline today. The index is closing in on the 15,140 pts resistance zone, marked with previous price reactions and the upper limit of market geometry.​
 

SOLIDECN

Master Trader
Nov 16, 2021
3,165
22
54
39
Economic Calendar: Second-tier US Data, Speaches from Fed members
  • European indices set for higher opening.​
  • Second-tier data from the United States​
  • Possible decision on Grayscale Bitcoin ETF​
Index futures point to a higher opening of the European cash session today. This comes after solid performance of tech shares fuelled gains on S&P 500 and Nasdaq during the Wall Street session yesterday and later on regional indices during the Asia-Pacific session as well. These gains come in spite of a renewed sell-off on US Treasuries market, which led 10-year yields to 16-year highs above 4.30%.

Economic calendar for the day ahead is light. Traders will be offered second-tier data from Poland and the United States. Some USD volatility may be present around 3:00 pm BST when existing home sales data for July and Richmond Fed index for August will be released. USD volatility may also be present during speeches from Fed members Barkin, Goolsebee & Bowman. Oil traders will focus on API report on inventories, which is expected to show a big draw but smaller than last week.

Also, SEC decision on Grayscale's application to convert its Bitcoin Trust into Bitcoin Exchange-Trade Fund (ETF) is expected today, somewhere around 4:00 pm BST. However, it should be said that the timing is tentative and that the SEC has already delayed the decision twice so it may not even be announced today. Nevertheless, positive ruling could give cryptocurrencies a boost so it is worth watching.​
  • 9:00 am BST - Poland, retail sales for July. Expected: 2.5% YoY. Previous: 2.1% YoY​
  • 3:00 pm BST - US, existing home sales for July. Expected: 4.15 million. Previous: 4.16 million​
  • 3:00 pm BST - US, Richmond Fed index for August. Expected: -8. Previous: -9​
  • 9:40 pm BST - API report on US oil inventories. Expected: -2.9 mb. Previous: -6.19 mb​

Central bankers' speeches
  • 12:30 pm BST - Fed Barkin​
  • 7:30 pm BST - Fed Goolsebee​
  • 8:30 am BST - Fed Goolsebee & Bowman​
 
Aug 11, 2023
5
1
9
29

EURUSD​

The European currency shows flat dynamics of trading against the US dollar during the Asian session, consolidating near local highs from March 1 and the level of 1.1170. Activity on the instrument at the beginning of the week remains restrained, as investors expect new drivers to appear on the market. The day before, the single currency showed a fairly active growth, supported by weak data from the US, while European statistics had only a slight impact. Revised data from the United States showed GDP growth in Q4 2021 at 6.9%, which is 0.1% worse than previous estimates. The Gross Domestic Product Price Index for the same period also corrected from 7.2% to 7.1%. European data pointed to a further decline in business sentiment in the euro area, as well as a record increase in inflation in Germany. The Economic Sentiment Indicator in the eurozone fell from 113.9 to 108.5 points in March, while the market forecast was at 109 points. Business Climate Indicator in March fell from 1.79 to 1.67 points. Consumer Confidence Level remained at -18.7 points. Consumer inflation in Germany accelerated from 5.1% to 7.3% in March, setting a new record high and beating market forecasts of 6.3%.​

GBPUSD​

The British pound is losing ground against the US dollar during the morning session, again preparing to test 1.3100 for a breakdown. Expectations of an early conclusion of a peace agreement between Russia and Ukraine are noticeably declining as market participants state that there have been no significant changes after the negotiations, and fundamental contradictions still persist. The Russian Federation is reducing the number of its troops in one direction in order to strengthen it in another, and this, of course, does not lead to a ceasefire. Demand for risky assets is also falling as April approaches, when new rules for paying for Russian gas come into force. If the mechanisms for paying for "blue fuel" in rubles do not work or the EU countries take a principled position, this may negatively affect supplies. It should be noted that the UK's dependence on resources from Russia is significantly lower than, for example, Germany's. Today, investors are focused on the updated statistics on the dynamics of GDP in the UK for Q4 2021. According to current forecasts, the British economy will grow by 1% QoQ and 6.5% YoY.​

AUDUSD​

The Australian dollar is falling against the US currency during the Asian session, correcting after an uncertain rise on Tuesday and Wednesday. The instrument is testing the level of 0.7500 for a breakdown, reacting to the general deterioration in market sentiment. Hopes for a de-escalation of the conflict in Eastern Europe are gradually fading, as the rhetoric of the Russian and Ukrainian authorities does not share the initial optimism expressed by the participants in the negotiation process in Istanbul. Meanwhile, the risks of possible interruptions in Russian energy supplies to Europe and a number of other countries are growing, since Russian President Vladimir Putin earlier ordered to switch to gas payments in rubles. Weak macroeconomic statistics from China exerts pressure on the AUD positions today. Non-Manufacturing PMI in March showed a sharp decline from 51.6 to 48.4 points, while analysts expected a further increase in the indicator to 53.2 points. NBS Manufacturing PMI for the same period fell from 50.2 to 49.5 points, which also turned out to be worse than market forecasts at 49.9 points.​

USDJPY​

The US dollar shows a fairly active growth against the Japanese yen during trading in Asia, recovering from a two-day "bearish" rally, which led to the renewal of local lows from March 25. Demand for the US currency is gradually recovering as expectations decline for a peace deal between Russia and Ukraine that would bring about a final ceasefire. However, buyers are cautious ahead of the publication of a large block of US macroeconomic statistics at the end of the week. The focus is on the Friday's report on the labor market for March, which will re-evaluate the prospects for an earlier tightening of monetary policy by the US Federal Reserve during the May meeting. Earlier, the Chair of the regulator, Jerome Powell, did not rule out the possibility of raising the rate by 50 basis points at once in response to the continuing growth of inflationary pressure. Macroeconomic statistics from Japan published today does not have a significant impact on the dynamics of the instrument. Industrial Production in the country rose by 0.1% in February, which is noticeably better than the 0.8% decline a month earlier, but falls far short of market expectations at 0.5%. In annual terms, Production added 0.2% after falling 0.5% in January.​

XAUUSD​

Gold prices are slightly declining during the morning session, correcting after rising the day before, which was triggered by the return of negative market sentiment. On Tuesday, gold updated the local lows of February 25, reacting to the optimistic statements of the participants in the negotiation process between Russia and Ukraine after the meeting in Istanbul. There was hope that military activity would noticeably decrease, and soon a ceasefire could be announced altogether. However, later it became clear that such conclusions were made somewhat prematurely. The Russian Federation announced the preservation of fundamental contradictions in the positions of the parties (first of all, on the territorial issue), and explained the reduction in the number of troops in two directions by the planned regrouping of the military contingent. Trading activity on the instrument remains low today. Investors are waiting for the emergence of new drivers in the market, and are also preparing for the publication of the March report on the US labor market on Friday.​
This article offers a comprehensive view of the current trends in major currency pairs and gold prices. The interplay of geopolitical developments and macroeconomic indicators on market sentiment is well-illustrated. The concise breakdown of each currency pair's dynamics is a helpful resource for traders and investors.
 
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SOLIDECN

Master Trader
Nov 16, 2021
3,165
22
54
39

EURUSD​

The value of the EURUSD is at a 2.5-month low as people wait for speeches from Christine Lagarde, the President of the European Central Bank, and Jerome Powell, the Chairman of the Federal Reserve. The US economy is doing well and there are no signs of a recession, which makes the US Dollar stronger and the Euro weaker.​
  • Earlier in the day, Joachim Nagel from the European Central Bank and Boris Vujčić from the Croatian National Bank said that they think interest rates should stay high. However, there are concerns that the economy might slow down, which could mean that interest rates will have to be lowered.​
  • In the US, James Bullard and Susan Collins from the Federal Reserve said that they think interest rates should stay high. Patrick Harker from the Federal Reserve in Philadelphia said that interest rates might not go up anymore.​
  • The value of US government bonds is going up, which makes the US Dollar stronger. People think that Jerome Powell will say that interest rates will stay high for a long time.​
  • The US economy is doing well. There are more orders for durable goods and more jobs. This makes the US Dollar stronger.​
  • The value of the US Dollar is at its highest since June 07. The value of stocks is going down. The interest rate on 10-year US government bonds is going up.​
  • In Germany, there will be new information about how well the economy did in the second quarter of this year. There will also be new information about how people feel about the economy. This will affect the value of the Euro compared to the US Dollar.​
Speeches from Christine Lagarde and Jerome Powell will be important to watch.

eurusd.png


In technical analysis, if the value of the Euro compared to the US Dollar goes below 1.0765, it could decline more. If it doesn't break the 1.0765 barrier, it could return to 1.0805.​
 

SOLIDECN

Master Trader
Nov 16, 2021
3,165
22
54
39

Fundamental Outlook​

The US dollar has risen slightly after a strong run, but traders are waiting for more economic data before making any big bets. The Japanese yen, on the other hand, is near levels that triggered intervention last year.

The dollar index is up over 2% this month and has had six weeks of gains due to strong US economic data. This has led to expectations that interest rates may stay higher for longer. Federal Reserve Chairman Jerome Powell suggested that further rate increases may be needed to control inflation, but he also promised to move with care.

This week, there will be several important economic data releases, including personal consumption expenditure data and non-farm payrolls. Markets are currently pricing in a 78% chance that the Fed will not change interest rates next month, but the odds of a hike by November have increased.

In Europe, the euro zone CPI report will be released on Thursday and is expected to have a big impact on the market. The euro is currently flat at $1.081.

The yen has been under pressure due to the widening gap in interest rates between Japan and the US. The currency is currently at 146.69 per dollar, near its weakest level since November 9th. Traders are watching for any signs of intervention from Japanese authorities.

If US data continues to be strong, there could be more pressure on the yen. However, the threat of intervention has retreated at sub-150 levels due to a lack of comments from Bank of Japan Governor Kazuo Ueda and no signs of verbal intervention yet.​
 

SOLIDECN

Master Trader
Nov 16, 2021
3,165
22
54
39

Strong Job Data Impacts Investments and Oil Prices​

The path to a safe economic slowdown, which doesn't harm investments, is tricky. After the release of the latest job data (NFP data), people are worried. They think the fast growth might affect one of the main goals of the Federal Reserve (the Fed). The job data shows that there's not much improvement in job balance, so the Fed might need to take more actions. This strong job data could be seen as bad for investments and might make the dollar stronger.

Oil prices were already going down because people were scared of a recession caused by high interest rates. The strong job data might limit the increase in oil prices. If US 10-year loan interest rates get close to 5%, it might cause another drop in oil prices.​
 

SOLIDECN

Master Trader
Nov 16, 2021
3,165
22
54
39

CPI: Not the most welcome outcome​

Recent inflation reports have exceeded expectations, potentially offsetting the cautious tone from Federal Reserve officials. However, the focus seems to be on the duration of current interest rates rather than their height. Thus, a slightly higher inflation rate may not significantly disrupt the market.

The "Fed rhetoric shift" is becoming evident, with Christopher Waller's comments suggesting that the rise in yields could substitute for a rate hike. This indicates a possible shift towards a more dovish monetary policy.

The future hinges on economic indicators. Unless inflation rises unexpectedly or labor market imbalances lead to a wage-price spiral, the Fed may maintain a less hawkish stance. This could boost demand for longer-duration assets and foster a "Santa rally".

The market's reaction to today's CPI print is uncertain, but it may not be what investors were hoping for.​
 

SOLIDECN

Master Trader
Nov 16, 2021
3,165
22
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39

October 19 Market Overview


The Reserve Bank of Australia (RBA) has noted that there are distortions in the market prices. For example, the DXY is trading above its 50-year monthly average at around 99.00, and GBP/JPY is trading between 179.50 to 181.07, which is between its 36 and 37-year monthly averages. Last year, WTI traded at the 24-year monthly average when it was in the 70's. USD/JPY and EUR/USD need to align with DXY's 50-year monthly averages.

The SPX 500 is trading normally between its 1 and 10-year monthly averages. The speculation for XAU/USD and Gold, priced in all currencies, also trades between their 1 and 10-year monthly averages. However, these will not adjust to distorted locations and prices until the currency price trades normally again.

Central banks need to lower interest rates to normalize markets and currency prices. This is because the Federal Reserve's (Fed) increase of 500 points has caused distortions in market prices, especially since these increases did not reduce inflation.

The Fed's strategy to follow Volker was a complete failure. If the Fed had not increased rates, markets would be trading normally today and inflation would also be at normal levels and decrease faster than expected.

In terms of monetary policy, central banks consider inflation, interest rates, and exchange rates as import lines. The exchange rate should ideally be in the middle of import and export lines. Export lines include GDP, money supplies, and producer prices.

The position of the exchange rate is currently incorrect due to central bank increases which have distorted import/export prices and consequently, market prices.

Market normalization only occurs two weeks of every month when most vital GDP and inflation are released as import and export lines. GDP and inflation are running per month at differences of 0.10 to 0.20. At this rate, central banks may take until 2050 to normalize inflation at 2% while markets remain distorted and GDP remains low.

A major issue is the daily trade of interest rates at 2, 3, and 5 points. Central Banks raise by 500 points but offer daily trades at only 5 points. This problem won't see normalization anytime soon.

In terms of exports exceeding imports, the Swiss National Bank (SNB) is doing well compared to the Fed, Bank of Japan (BOJ), Bank of England (BOE), Reserve Bank of Australia (RBA), and Reserve Bank of New Zealand (RBNZ) where imports exceed exports.

Last week, EUR/USD and other EUR currencies were oversold but have since risen. This week, EUR/USD, EUR/JPY, and EUR/CHF are deeply oversold while EUR/AUD and EUR/NZD are overbought. GBP is trading similarly to EUR with GBP/USD, GBP/CHF, and GBP/JPY being deeply oversold.

There are issues as overbought EUR/AUD trades oversold to GBP/AUD, overbought EUR/NZD trades oversold to GBP/NZD, and oversold GBP/CAD trades oversold to EUR/CAD.

Next week we're watching for GBP/AUD at 1.9196 while GBP/NZD and EUR/NZD correct lower but fail to break any significant averages.

EUR/USD, GBP/USD, AUD/USD, NZD/USD are all not only massively oversold but close to extreme oversold. There's no concept of shorts for next week.

EUR/USD must trade at least to 1.0652 then trade above 1.0685 to easily target 1.0819 or higher.

GBP/USD has a minimum target at 1.2332; AUDUSD at 0.6539; NZDUSD has a minimum target between 0.6047 and 0.6214.

The anchor pairs must bring us back to normal trading again which means wider ranges, more profitable trades, and more currencies to trade.

The USD/JPY pair has a target of 148.07 for next week. The long-term targets are 144.27, 136.53, 131.99, and 128.60. It’s important to note that the 128.60 level in January was at 122.00, and this line has increased by about 60 pips each month for the past nine months.

The USD/JPY pair has the potential to move by 1000 pips in a day, but this isn’t seen as a significant move. Currently, USD/JPY is trading with daily movements of only around 50 to 70 pips, indicating significant distortions.

For the EUR/JPY pair, there’s a significant drop to 156.21, and for GBP/JPY it’s 180.62. GBP/JPY is expected to lead the way for all JPY cross pairs. Keep an eye on AUD/JPY next week for potential long and short positions at 94.32 and NZD/JPY at 87.61.

USD/CAD is trading in an overbought condition as usual and continues to aim for the long-term target in the 1.3100 range. The best strategy is to only trade short in order to follow the trend.​
 

SOLIDECN

Master Trader
Nov 16, 2021
3,165
22
54
39

Euro Stays the Same as Everyone Waits for the Big Bank Meeting

The Euro isn't changing much. It's still a little bit less than 1.06 dollars. It's hard for it to go higher right now. People are also watching what's happening in places far away in the Middle East. They're worried things might get worse there. This worry makes it tough for the Euro to start going up a lot.

In the United States, they're getting more money back for lending it (this is called high "yields" on something named "Treasuries"), and things are uncertain. So, for now, people like the US dollar more. But, the Euro is trying to stay strong. It's reacting well even when things get tough, and it's not going down just because stock markets might be going down.

There's not much news today. The only big thing is how confident people in Europe feel about buying things. There's no big news or talks from the United States today.

Everyone is really thinking about a big meeting for the European Central Bank coming on Thursday. They're pretty sure the bank won't change the interest rates (the cost of borrowing money). But they're very curious about what the bank's boss, President Lagarde, will say about how things are going with money and prices going up (that's called inflation).

For today, no one thinks anything surprising will happen. The value of money between the Euro and the dollar probably won't change much. If the Euro can stay at or above 1.06 dollars, that's good. But things can always change because of what's happening in the Middle East.​
 

SOLIDECN

Master Trader
Nov 16, 2021
3,165
22
54
39
Recession Looms Over Eurozone: PMI Indices Disappoint, EURUSD Dips

The economy in Europe is slowing down, which is causing worries about a possible recession in Germany and the entire eurozone.

The PMI indices, which are often used by investors to predict economic trends, have shown disappointing results for October. Instead of the hoped-for improvement, they indicate that the recession is getting worse.

The German services sector was particularly disappointing. Its index dropped from 50.3 to 48.0, indicating a contraction rather than growth. This was much weaker than the expected 50.1.

In France, the services index was 46.1, which is better than the expected 44.9 but still quite low.

Because of these results, the PMI for the whole euro area dropped to 47.8, the lowest it’s been since February 2021.

The manufacturing sector in the euro area also showed a faster contraction, with its index falling from 43.4 to 43.0 instead of rebounding to 43.6 as expected.

The composite index dropped from 47.2 to 46.5, which is the biggest drop since October 2020. This was unexpected and led to a sell-off in the single currency.

After this data was released, the EURUSD lost almost 0.5% and moved sharply away from 1.07. Sellers increased pressure after the pair touched its 50-day moving average, which is an indicator of medium-term trends.

If it closes below 1.07, it suggests that the recent recovery from 1.05 levels was just a correction and not a trend change.

In terms of fundamentals, Europe is having a hard time growing due to rising interest rates and fluctuating energy prices. These conditions have caused the ECB to stop raising rates earlier than the Fed. It’s possible that, like in the previous cycle of rate hikes after the global financial crisis, the ECB might start easing earlier than the Fed. This is a significant factor that’s putting pressure on the euro against the dollar, especially now that carry trade has become a key market driver.​
 

SOLIDECN

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Nov 16, 2021
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Eurozone's Inflation Slowdown: A Simplified Insight​

Eurozone inflation is slowing down, affecting many sectors and making things less expensive compared to the European Central Bank's (ECB) goals. However, overall inflation is still higher than what the ECB wants. If this trend continues, it may take until next September for the yearly inflation rate to stabilize at 2%. Rising global tensions might push up energy costs, making everything else pricier and slowing the reduction in overall inflation.

Here's what happened in September: Yearly inflation dropped to 4.3% from 5.2% in August and 9.9% last year. Costs for things like energy went down, and prices for factory goods (excluding energy) and services rose less than before. Charts show that this slowdown is widespread, with most sectors experiencing inflation below the ECB's target recently.

Let's break it down by sectors using October last year as a reference:​
  1. Most sectors, except energy, still have higher yearly inflation than the ECB's target as of September 2023.​
  2. Good news: Recent data shows food and factory goods (excluding energy) prices are rising slower.​
  3. Bad news: Energy costs might be going up again, which is worrying because it affects everything from household budgets to business costs, and overall inflation.​
  4. Services are mixed: Some areas are more expensive than last year, while others are cheaper. Most are still pricier than the ECB's target.​
  5. Core inflation (excluding energy, food, alcohol, and tobacco) looks promising, with prices recently increasing at a rate slightly below the target.​
In simple terms, while the cost of living in the Eurozone is rising slower, it's still more expensive than what's considered ideal, and global events might make things costlier soon.​
 

SOLIDECN

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Market Trends: Navigating Equity Dips and Economic Signals

Last week, European and US stock markets kept falling, marking six weeks of losses. The main worries were about companies' earnings not being as good as hoped and their future outlooks seeming less positive as we move into the year's last quarter. In the US, the markets also dipped, hitting their lowest point since May, showing they're not as strong as they were earlier in the year.

On Friday, the prices of oil and gold jumped suddenly. This happened when the news came out about Israeli forces moving into Gaza, which made gold prices go over $2,000 an ounce for the first time since May. Even though Brent crude oil's price went up past $90 a barrel, it ended the week lower.

The hope is that the careful steps taken in Gaza will increase pressure on Hamas without causing more trouble along Israel's northern border. European markets, which had closed by the time of the Gaza events on Friday, are expected to start a bit stronger, considering the military actions have been limited so far.

It's easy to think the drop in stock markets last week was just because of the uncertain situation in the Middle East. But it was also because of companies not doing as well as expected and lowering their future earnings outlooks, which led to some big drops in their stock prices. This pattern might keep up this week, with all eyes on updates from big companies like HSBC, BP, Shell, and Apple.

Meanwhile, economic reports from Europe and the UK didn't show much good news, but the US did better, with people waiting to see if central banks will change their plans based on recent data. The US Federal Reserve probably won't ease up on its policies soon, and another interest rate increase by the end of the year is still possible. But the Bank of England seems done raising rates for now, with people guessing when the next rate cut might happen in 2024.

In the UK, the number of approved mortgages and other spending data for September might show that people are still careful about spending. And in Germany, after the European Central Bank decided not to change interest rates, inflation is expected to go down in October, and the economy might shrink a bit in the third quarter.​
 

SOLIDECN

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Nov 16, 2021
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Market Update: Anticipation Before Fed Announcement​

As the financial community awaits the Federal Reserve's upcoming decision on interest rates, a sense of anticipation builds. The general consensus is that there won't be a change to the current rates. Investors are keenly waiting to hear from Fed Chair Jerome Powell for hints about future monetary policies. Meanwhile, there's buzz around Advanced Micro Devices (AMD) as it reveals long-term sales goals for its AI-focused processors.

Federal Reserve's Decision in Focus​

The Federal Reserve in Washington is poised to announce its latest stance on interest rates. It's predicted that the rates will remain between 5.25% and 5.50%. The market's attention will pivot to the Fed's statement and Powell's press conference for any forward-looking statements. The Fed is balancing efforts to manage inflation without stalling the economy. There's curiosity about how long the heightened rates will persist, especially with recent surges in Treasury yields affecting the stock market. Analysts are suggesting the Fed might pause to evaluate the effectiveness of its current policies in curbing inflation.

Market Movements Before the Fed's Update​

Stock futures indicate a slight dip as traders anticipate the Fed's announcement. Key stock indices like the Dow, S&P 500, and Nasdaq showed downward movements in early trading. This follows a slight rally that capped off a turbulent October, which saw declines across major stock indices.

Spotlight on AMD's Revenue Forecast​

AMD's shares saw mixed reactions after-hours due to its revenue forecast for the upcoming quarter and its first sales projection for the MI300 chip. While the forecast was below expectations, there's optimism about its potential in the AI market. This news comes alongside earnings announcements from other major players in the tech and consumer goods sectors.

China's Manufacturing Downturn​

In China, manufacturing activity has seen a downturn, according to the latest Caixin data. This contraction reflects weaker domestic and international demand, with a continued decrease in export orders due to challenging economic conditions in key markets.

Oil Prices on the Rise Amidst Fed Expectations​

In the commodities market, oil prices have marginally increased. Traders are exercising caution as they await the Fed's decision. There's also attention on geopolitical tensions that could impact oil supply and prices.​
 

SOLIDECN

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Nov 16, 2021
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Lexeo Therapeutics Hits Big with IPO

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Lexeo Therapeutics, a company working on gene therapy, made a big move by collecting $100 million when they started selling shares on the Nasdaq. They set the price at $11 for each share, which was a bit less than what they thought they'd get, between $13 and $15. They even added 91,000 more shares to sell. Although the price was lower, this event has brought new energy to the market for life science companies starting to sell shares to the public.

Investing in Health Advances

Led by Ronald Crystal, Lexeo is putting the money to good use. They're focusing on their main project, LX2006, which aims to help people with a tough muscle disease called Friedreich’s ataxia. They plan to use $45 million from the money they got for this work. The results of their study should come out in about a year.

They're also working on LX2020, putting $40 million toward understanding a heart issue that could cause sudden death. Another $10 million is going to LX1001, which is a new treatment they're working on for Alzheimer’s disease. They hope to have some news on this by the second half of 2024.

Lexeo also got money from Sarepta Therapeutics and raised $185 million from two big rounds of fundraising before going public.

Big banks like J.P. Morgan, Leerink Partners, Stifel, and RBC Capital Markets helped Lexeo get started with selling their shares.​
 

SOLIDECN

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Market Response to Federal Reserve Policy

Currencies around the world held steady early in the week. People were waiting to see if the U.S. dollar would keep falling. This comes after the Federal Reserve seemed less strict than before. The dollar measure fell a little to 104.99. The euro was up a bit at $1.0738. Last week, the dollar fell over 1%, its biggest drop since mid-July, hitting a six-week low. Stocks around the world did well too, having their best week in a year. This is because people think the Federal Reserve won’t raise interest rates anymore.


Other Economic Signs

Weak job numbers in the U.S., not-so-strong manufacturing globally, and lower interest rates for long-term U.S. government bonds also made the dollar weaker. At the same time, the British pound, the Australian dollar, and the Japanese yen got stronger. A market analyst named Tina Teng mentioned that usually, when there’s bad news, it ends up being good for the markets. She thinks this could mean the Federal Reserve and other central banks might stop raising interest rates sooner.

Teng believes the dollar could stay weak throughout November.


A Cautious Note from Analysts

But, some analysts, like those at J.P.Morgan, say people should not get too excited about the dollar getting weaker. They think the reasons why the dollar was strong are less now, but they haven’t gone away completely. They might come back and make the dollar strong again. They also say that for the dollar to keep getting weaker, other places like Europe and China need to show they are doing better, which is not quite certain yet.


Interest Rates and Predictions

Interest rates the government pays for borrowing money fell last week. This was after the job and manufacturing data weren’t great, and the head of the Federal Reserve talked about ‘balanced’ risks. The interest rates for 2-year notes have gone down a lot in two weeks, while 10-year rates are near a five-week low. Betting markets now really think the Federal Reserve is done with raising rates. They also think the Federal Reserve might start to lower rates as soon as June.


Global Central Bank Movements

People think that the European Central Bank will lower rates by April, and the Bank of England will do so by August. The Japanese yen went down a little to 149.48 per dollar. Tina Teng thinks that with the dollar’s direction changing and the yen getting stronger from last week, Japan might not need to step in to help its currency.

The British pound is stable at $1.2373. There is important information about Britain’s economy coming this week. Even though the pound went up last week, it’s still lost about 6% in four months.


Gold and Cryptocurrency

The weaker dollar and interest rates have helped gold prices stay high, close to a five-month high. In cryptocurrencies, Bitcoin stayed at $34,847. The end of the Federal Reserve raising rates has helped it. People are also watching to see if new types of Bitcoin funds for investors will come out. No new funds have been approved yet, but several companies have asked to start them.​