Time:
• FOMC rates decision and quarterly economic projections (SEP) – 4am AEST / 19:00 BST
• Fed Chair Jay Powell’s press conference 04:30 AEST / 19:30 BST
Despite 13 central banks meeting this week and most expected to hike rates aggressively, it’s the FOMC meeting that is the marquee event of the week. With so many variables that could move markets, we look...
Rising as a talking point in social media and among Pepperstone’s crypto trading clients is ‘The Merge’ – a union between Ethereum and Beacon Chain, that takes place on Thursday (Google has a countdown clock).
Essentially, this long-awaited move, sees ETH move from “proof of work” to “proof of stake” system – the two systems are vastly different in their...
We roll into the new trading week with risk and sentiment on the front foot – a broadly weaker USD, a slight dip in US real rates and a 5% rise WoW in reserve liabilities (on the Fed’s balance sheet) all working concurrently as a tailwind. Certainly, the correlation with reserves seems key and where reserves go risky assets head in obedience – liquidity is always...
It’s days like this that running a trend and/or momentum strategy works wonders. The USD pairs, notably USDJPY, USDCNH and USDCHF are ripping – We see the JPY as the weakest though with USDJPY spiking to 143.59 in early trade today, on what looks like a stop run through yesterday's session highs and amid thin liquidity.
The trade-weighted JPY sits at the lowest...
We start the week with a clear focus on the energy markets, with Russia’s response to the G7’s proposal for price caps, being the continued shutdown of the Nord Stream 1 (NS1) pipeline. We have crude futures opening first up, and amid a shortened session - due to US Labor Day - the lower liquidity may exacerbate the moves – EU Nat gas resumes trade at 4pm AEST and...
EURGBP is on the move as the energy crisis cools in Europe and hawkish bets on ECB rate hikes becomes consensus. Price has broken through a key 0.86 resistance level and the RSI has slightly overcome the 63.68 RSI level, which has marked previous price rallies. It remains to be seen if price can reach the 15 June high of 0.872. 0.865 will need to be overcome...
NZDJPY initially made a strong rally to 86.20 then pulled back and recently found itself stuck in a range between 84.40 and 85.20.
We saw JPY further decline yesterday after the Jackson Hole weekend and NZDJPY finally broke out of the 7 day range it had been consolidating in and the daily candle closed as a massive bullish engulfing above 85.20, signaling buyers...
We head into the new week with risky assets getting smacked on Friday and we look for Asian equity to open 1% to 1.5% lower. Powell’s speech at Jackson Hole was well noted in just how brief it was and designed to remove any doubt that this Fed committee will be remembered as being tough in its battle against inflation – equity was where the volatility has most...
The fundamentals in EURUSD remain skewed to a push lower, as the US (and Canada) remains the most attractive investment destination of the G10 economies. With this in mind, I’ve been impressed with how EURUSD has absorbed so much bad news, and the word ‘resilience’ has come up once or twice.
Perhaps the market has already gone some way to price in a fairly dark...
Ask a trader who is the most influential central bank, and the answer should unequivocally be the Federal Reserve. Then, ask the same traders which central bank has the hardest job in setting policy, and you’ll most likely hear them say “the ECB” – They have to set policy for 19 different countries, where a one-size fits all model is fraught with challenges – all...
The event risk this week is really centred on Jay Powell’s speech at the Jackson Hole forum (Sat 00:00AEST), with other global data points unlikely to promote as much of a reaction – Powell should keep the option of a 75bp hike at the 21 Sept FOMC meeting firmly on the table, but offer the flexibility to go 50bp if we do see sufficient softening in the labour...
The Australian 200 stock index continues to move higher, despite weakness in the states. A fiscal boost from China could be helping to spur the high risk index higher. Weaker Aussie employment data could also lead to a less aggressive RBA.
From a technical perspective, price is nearing a key resistance level at the 61.8% Fibonacci level and the 200-day SMA. The...
After a 18.6% run since 17 June, the US500, NAS100, US2000 and US30 have all started to look a touch more vulnerable – the tone on social media is certainly more bearish - client flow has turned progressively more net short, with 60% of open positions now held short on the US500 – we can look at various oscillators like stochastic momentum and the 9-day RSI and...
Markets usually exhibit the same behavioral patterns over and over and we can see this clearly on EURCAD as it continues its downtrend.
We saw EURCAD close extremely bearish below 1.31 last month and last week's candle also closed bearish. Higher time frame bias shows a strong sell off in EURCAD.
On the daily chart, we saw EURCAD sell off then sideways range...
Weaker than expected growth in Japan led to markets expecting policy by the BOJ to be kept loose. This recent breakout now puts the index in positive territory YTD and it is now at a 7-month high. The question remains whether this is a breakout to be faded or has legs to move higher? The RSI seems to be rolling over from overbought territory. This could...
We saw JPY index triple bottom at 808 after a massive sustained drop, with the RSI also showing bullish divergence.
Triple bottoms are usually big reversal patterns after a big drop.
Buyers stepped in and price went up to 829 and in the process, formed a falling wedge which is also a reversal pattern adding confluence to the triple bottom.
Buyers continued to push...
In the week ahead the known event risks are less impactful than what we faced last week, and we see catalysts that are more idiosyncratic to a set region. The RBNZ should hike by 50bp and indicate more is coming, and while much of this hike is already priced, I favour following the technical breakdown seen in EURNZD, GBPNZD, and GBPAUD EURAUD.
We get UK jobs...
Looking at the calendar for the coming week, Aussie wages and employment, and UK CPI jump out as event key risks and potential price catalysts. You can see the expectations in the calendar, but one should consider how they will affect rates pricing and how this impacts the FX markets.
As it stands the market feels on balance that we’ll get a 50bp hike from both...
