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USDJPY | After the CPI : It goes up!The analysis of the USD/JPY (US Dollar/Japanese Yen) exchange rate is based on several key aspects: US Inflation and CPI: The increase in US inflation in December (3.4% against the expected 3.2%) signals a strong economy and reduces the likelihood of interest rate cuts by the Federal Reserve, favoring the US dollar. US Unemployment Insurance Claims: Lower-than-expected claims (202K against 210K expected) indicate a strong US labor market, supporting the dollar. Market Expectations and Interest Rates: Expectations for a rate cut in March have decreased due to rising inflation. Higher interest rates tend to strengthen a currency, in this case, the US dollar. Japanese Economic Indicators: Upcoming data on Japan's trade balance and current account will impact the JPY. Weak data could further weaken the yen. Technical Analysis of USD/JPY: Technically, USD/JPY has shown an uptrend, reaching a short-term high of 146.41. The 200-hour Simple Moving Average (SMA) and the congestion area between the 50-day and 200-day SMAs are key technical indicators to monitor. Breaking these thresholds could indicate further upward movements. In conclusion, recent US economic data and monetary policy expectations favor the strengthening of the dollar against the yen. However, future economic data from Japan and the US, including PPI data, will be crucial in determining USD/JPY's future direction. After the CPI, the trend seems clearly outlined towards an upward move, targeting the supply zone at 147.15. Moreover, the price is breaking a supply zone that could serve as support for an imminent bullish rebound. Happy trading to all from Nicola.
Long
by Forex48_TradingAcademy
1
GOLD| Time to evaluate a short entry!Analyzing XAU/USD, we can outline a detailed picture of the current situation and future prospects: Current Situation: Gold is struggling to make a decisive move in any specific direction mid-week. After rising above $2,030, gold lost momentum and retreated towards $2,020. The markets are awaiting the outcome of the 10-year US Treasury note auction. Macro Factors and Upcoming Events: A sparse macroeconomic calendar and upcoming top-tier events are keeping investors in cautious mode. Wall Street opened positively, attempting to reverse some of its recent losses, but trading remains uneventful. Influence of US Inflation Data: The US Consumer Price Index (CPI) for December, set to be released on Thursday, could significantly impact gold prices. An annual CPI increase of 3.2% is expected, slightly higher than the previous 3.1%, but the core CPI increase is expected to decline. Market Expectations Regarding the Fed: Market participants are betting that the Federal Reserve (Fed) might start cutting rates as early as March. This expectation is due to decreasing inflationary pressures, despite recent data showing a tight labor market. Recent Price Dynamics: Gold price (XAU/USD) saw a pause in its recovery on Wednesday, with investors focusing on US inflation data. The gold price recovery is expected to be short-lived due to investor confidence that the Fed will begin rate cuts starting in March. Technical Analysis: Gold price is aiming for stability above $2,030. It found intermediate support after correcting more than 3% from the high of December 28, 2023, around $2,090. Short-term demand for gold is no longer bullish, with the 20-day Exponential Moving Average (EMA) around $2,038 acting as a strong barrier. The broader trend remains bullish, with the 50- and 200-day EMAs sloping upwards. Further downside may occur if gold falls below the three-week low around $2,016. External Factors and Future Indications: The 10-year US Treasury yields have dropped to near 4.04% in anticipation of inflation data. The options market is showing signs of hedging against a negative outcome. Remarks by the President of the New York Federal Reserve, John Williams, could further influence gold prices. Conclusion: Currently, gold prices are influenced by a combination of expectations about the Fed's interest rates, US inflation data, and market sentiment. The future direction of the price will likely be determined by upcoming inflation data and Fed policies. My personal expectation is the 62% Fibonacci level at 1966.
FOREXCOM:XAUUSDShort
by Forex48_TradingAcademy
1
NASDAQ| It's time for a short reaction!The Nasdaq shows a significant rise in today's trading session. At the time of writing, the index has gained 460 points from the January 5th low. I've drawn two Fibonacci retracements to identify two potential areas: a bounce at the 0.62 Fibonacci level, illustrated in the chart, and a possible price reaction. Mainly, I expect a decline in the index tomorrow in anticipation of U.S. economic data. Wishing everyone successful trading.
NASDAQ:NDXShort
by Forex48_TradingAcademy
USOIL| Level 74$ will be decisive!Analyzing the oil market, we see that WTI (West Texas Intermediate) is priced around $72.55 per barrel, while Brent is at $77.71 per barrel. Several key factors are influencing the current oil market scenario. Saudi Price Reduction: Saudi Arabia's decision to lower the prices of its oil exports to Asia has contributed to a bounce back in prices from the Monday low of $70. This move might increase the competitiveness of Saudi oil in the Asian market, thus impacting the global market. Decline in Inflation and Oil Demand: The fall in oil prices is welcomed by analysts and fund managers as it could lead to a further decrease in inflation. Stock Market Dynamics and DXY Index: The steady state of the US Dollar Index (DXY) around 102.00, despite some selling pressures, and the strengthening of US and Japanese stock markets, indicate investor confidence, which could positively affect the oil market. Geopolitical Tensions: Despite geopolitical tensions, such as the recent elections in Taiwan and ongoing tensions in the Middle East, markets seem to be overlooking these risks, which could keep the oil market stable in the short term. Russian Compliance with OPEC+ Cuts: Russia is adhering to the production cuts agreed upon in the last OPEC+ meeting, helping to balance the market supply. Speculations and Realpolitik: Rumors that shipping companies paid fees to Houthi rebels for safe passage in the Red Sea, though denied, demonstrate the market's sensitivity to such news. US Secretary of State Blinken's visit to Israel could have implications for the security of maritime passages and, consequently, the oil market. US CPI Expectations: With the upcoming release of the US Consumer Price Index (CPI), a further decrease in oil prices could be expected, potentially stimulating demand. Technical Analysis: The $74 level is pivotal for WTI; we might see a bullish breakout towards $80 or a pullback towards $71. Happy trading to everyone.
TVC:USOILLong
by Forex48_TradingAcademy
Fed Policy Trajectory and Interest Rate OutlookCBOT: Micro 2-Year Yield ( CBOT_MINI:2YY1! ), Micro 10-Year Yield ( CBOT_MINI:10Y1! ) and Micro 30-Year Yield ( CBOT_MINI:30Y1! ) The latest US jobs report showed that employers added 216,000 jobs for December while the unemployment rate held at 3.7%, reported by the Bureau of Labor Statistics (BLS). That compared with respective market estimates of 170,000 and 3.8%. On Thursday, the BLS will release December’s CPI data. The prevailing market expectation is 0.3% monthly increase for headline CPI, up from 0.1% in November. The Federal Reserve sets monetary policy to support price stability and full employment. New data shows that the US economy is very resilient, and maybe slightly overheated with the upbeat job market. After hiking interest rates 11 times and pausing for 2 times, the Fed now has a dilemma. “To cut, or Not to cut”, this is a trillion-dollar question. In this 3rd installment of new year outlook for major asset classes, I will discuss what opportunities may lie ahead for bonds and interest rate derivatives. FYI: The first writing was a year-end review for metal commodities – Gold, Copper, and Aluminum. If you haven’t read it yet, you may follow the link here: The second writing was New Year outlook for US equities – the benchmark market indexes Dow, S&P 500 and Nasdaq 100. 2023: what’s the dominating market narrative? Last year, the Fed raised interest rates four times for a total of 100 bps. This was a slower pace comparing to the year before, where we saw seven rates hikes and 400 bps in total. To the surprise of most analysts, businesses continue to expand and hire new workers under tightened credit. Inflation could creep up with higher wages and a strong job market. US stock market rose for most of the year, shaking off bad news along the way. Despite interest rates are 5% higher than two yeas ago, major market indexes reached all-time-high records last December. The S&P 500 gained 23.9% for the year, and the Nasdaq Composite more than doubled that at 53.9%. 2024 Outlook for US Interest Rates Most investors agree that the Fed will cut rates in 2024. But the expectations for the timing and scope vary significantly. According to CME Group’s FedWatch Tool, the first rate-cut could occur at the March 20th Fed meeting, with a 69.2% probability. For June 12th, the odds of two or more rate cuts increase to 85.9%. By December 18th, investors expect the Fed Funds rate to fall between 1% to 2% lower than the current 5.25-5.50% range, with a 97.9% odds (Data as of January 7th). (Link: www.cmegroup.com) Treasury prices and yields move in opposite directions. Current bond prices reflect the market expectations of 5-8 rate cuts in 2024. Lower yields, higher prices. The January 2nd CFTC Commitments of Traders report (COT) shows that “Leveraged Funds” hold the following open positions on CBOT interest rate futures: • Fed Funds: 224,772 longs and 489,204 shorts • 2Y Treasury: 775,882 longs and 2,266,563 shorts • 5Y Treasury: 844,600 longs and 2,821,682 shorts • 10Y Treasury: 285,598 longs and 775,882 shorts • 30Y Treasury: 79,124 longs and 497,636 shorts The overwhelmingly Net short positions indicate that the “Smart Money” considers the rate cuts being oversold. Why do they want to short Treasury futures? If the Fed keeps the interest rates higher for longer, or implements fewer rate cuts, Treasury yields would be higher than the current price indicated. Higher yields, lower prices. Shorting Treasury futures expresses the viewpoint that Treasury bond prices would fall. In my opinion, the bond market tends to tell a better story, compared to the stock market. The institutional nature of most participants allows the bond market to be less prone to irrational hypes and price bubbles. Trading with CBOT Micro Yield Futures Micro Treasury Yield Futures are low-cost instruments to participate in the bond market. Micro yields are quoted by treasury yield directly. Higher yields, higher futures prices. This would ease the burden from working the complicated price and yield conversion. Last Friday, the February contract of Micro 2Y Yield futures (2YYG4) were settled at 4.186%. Each contract has a notional value of 1,000 index points, or $4,186 at current price. To acquire 1 contract, a trader is required to deposit an initial margin of $340. The February Micro 10Y Yield (10YG4) was settled at 4.008%. Notional value is 1,000 index points or $4,008. Initial margin is $320. The February Micro 30Y Yield (30YG4) was settled at 4.221%. N notional value is 1,000 index points or $4,221. Initial margin is $290. My reasoning: We just had a hotter than expected jobs report for December. If CPI data shows inflation rebound this week, the whole Fed cut narrative could be derailed. The January 30th Fed meeting could have a surprised rate decision, or a more hawkish Fed statement. To replicate the short bond futures strategy used by Leveraged Funds, investors could long the micro yield futures to express the same view of higher yields. Initial margins for 10Y Micro Yield are $320, compared to $2,125 for 10Y treasury notes futures (ZN). Hypothetically, if the yield goes up by 25 bps, a long Micro Yield futures position would gain $250 (= 0.25 x 1000). This would be the same for 2Y, 5Y, 10Y and 30Y micro yield futures, as they all have a 1,000-point multiplier. On the other hand, if investors continue to ignore the Fed, as they have often been in the past two years, short futures will lose money. Happy Trading. Disclaimers *Trade ideas cited above are for illustration only, as an integral part of a case study to demonstrate the fundamental concepts in risk management under the market scenarios being discussed. They shall not be construed as investment recommendations or advice. Nor are they used to promote any specific products, or services. CME Real-time Market Data help identify trading set-ups and express my market views. If you have futures in your trading portfolio, you can check out on CME Group data plans available that suit your trading needs www.tradingview.com
CBOT_MINI:10Y1!Long
by JimHuangChicago
USD/JPY edges lower ahead of Tokyo Core CPIThe Japanese yen has started the week with slight gains and is trading at 144.39 in the European session, up 0.16%. It was a rough week for the yen, which declined 2.5% against the US dollar, which has looked sharp against most of the majors since New Year's. US nonfarm payrolls ended 2023 on a strong note. The economy added 216,000 jobs in December, compared to November's downwardly revised 173,000 and above the estimate of 170,000. The unemployment rate remained at 3.7%, below the estimate of 3.8%. As well, wage growth rose 0.4% m/m and 4.1% y/y, higher than the estimates of 0.3% and 3.9%. The employment report was stronger than expected, which could lead the Fed to delay plans to lower rates. Job growth remains resilient and the wage growth data indicates that inflation remains strong in the labour market and is still too high for the Fed. The Fed fund futures markets reacted to the employment report by lowering the odds of a March rate cut to 64%, compared to 68% just prior to the employment report. The Fed has acknowledged that it plans to trim rates but failed to provide any details of timing in the minutes of the December meeting. The Fed may decide to prolong the pause in rates until the second half of the year unless there is a significant drop in inflation or unforeseen weakness in the US economy. The Fed does not seem in any rush to cut rates and the markets may be getting ahead of themselves by pricing an initial rate cut in March. Japan's Tokyo Core CPI, which will be released on Tuesday, is expected to ease in December to 2.1% y/y, compared to 2.3% in November. Core inflation has exceeded the Bank of Japan's 2% target for 18 straight months, but the central bank has insisted that it will not tighten monetary policy until wage growth rises. 144.80 and 145.80 are the next resistance lines There is support at 143.60 and 142.63
by OANDA
GBP/USD Bearish sentiment before the big rally 1.26-1.30!Analyzing GBP/USD, I note that the pair is experiencing some bearish pressure in the European session, trading slightly below 1.2700. The prevailing negative market mood is bolstering demand for the US Dollar, making it challenging for GBP/USD to maintain its position. Despite closing the previous week nearly unchanged, due to a late recovery on Friday, the pair's stability around 1.2700 is threatened by the shift in risk sentiment, which could hinder demand for the Pound Sterling. From a US perspective, the Dollar initially strengthened following the December jobs report, which exceeded expectations with a 216,000 increase in Nonfarm Payrolls. However, this momentum wasn't sustained due to the disappointing ISM Services PMI and the mixed details on the labor market, which kept market speculation alive regarding a potential Federal Reserve policy shift in March. The downward revisions in the November and October job figures, along with a slight decrease in the Labor Force Participation Rate, add complexity to the economic outlook. For GBP/USD, the risk sentiment, especially ahead of the release of the US Consumer Price Index data on Thursday, is crucial. Any negative shifts in Wall Street's performance could further strengthen the USD and put pressure on GBP/USD. Technically, the pair is at a critical juncture. Operationally, I expect the dollar's strength to drive the price below 1.2610 to create a false break with liquidity capture, then start a rally towards 1.30. Best regards and have a good trading day from Nicola.
Long
by Forex48_TradingAcademy
EURUSD: Good point to evaluate the weekly direction!On EUR/USD, there's noticeable buying interest, with the pair rebounding from multi-week lows at 1.0876 to settle around 1.0948, marking a modest 0.09% increase. During Thursday's European trading hours, EUR/USD gained ground but struggled to extend its recovery later in the day due to rising U.S. Treasury bond yields, supporting the Dollar (USD). The initial improvement in risk sentiment made it challenging for the USD to find demand on Thursday. However, after the ADP Employment Change report for December came in at 164,000, exceeding market expectations of 115,000, the yield on the ten-year U.S. Treasury bond rose above 4%, helping the USD limit its losses. The Nonfarm Payrolls (NFP) in the U.S. are expected to rise by 170,000 in December, following a higher-than-expected increase of 199,000 in November. The CME Group's FedWatch Tool indicates a 65% chance that the Federal Reserve (Fed) will cut the policy rate by 25 basis points in March, down from 85% at the beginning of the week. My personal expectation for today and possibly in the absence of movement in the coming days, I expect the price to drop below 1.088 to collect liquidity before bouncing towards 1.102 or a second scenario I personally consider less likely, a direct short towards 1.081. Happy trading everyone, from Nicola.
Long
by Forex48_TradingAcademy
XAUUSD Last rally of the year before the crash!The analysis gold price (XAU/USD) highlights several key factors influencing its market behavior. I will examine each element and assess its impact: Gold Price Movement: The gold price has increased, reaching a daily high above $2,060. This rise indicates strong investor interest, often triggered by economic uncertainty or the search for safe-haven assets. 10-year US Treasury Yield: There has been a significant decrease in the yield of 10-year US Treasury bonds, falling below 4%. Bond yields move inversely to prices; a decrease in yield indicates an increase in demand for safe bonds, which often translates into a rise in the gold price. Mixed Macroeconomic Data from the US: The varied economic data from the US have fueled the gold rally. Uncertain or weak data tend to push investors towards the safety of gold. Situation of the US Dollar and the Federal Reserve (Fed): The US dollar has been under mild pressure, influenced by mixed data and the minutes from the FOMC (Federal Open Market Committee). The Fed has considered rate cuts but has not provided precise timing indications. This uncertainty can fuel volatility and the desire for safe assets like gold. ADP Report and Labor Market: The ADP report indicated a higher-than-expected private job creation, suggesting a robust labor market "aligned with pre-pandemic hiring." A strong labor market can indicate a healthy economy but also potential inflationary pressures, influencing the Fed's interest rate decisions and, indirectly, the gold price. Nonfarm Payrolls (NFP) Report: The NFP report is awaited, which is expected to reveal the addition of 170K new jobs in September. These data are crucial to understand the health of the economy and future monetary policies, consequently influencing the gold price. Forecast: Currently, gold stands at 2045, a critical support/resistance level. I have identified two possible scenarios: the first anticipates a breakout of the bearish trendline with a retest on the breakout point followed by a rise to about 2085, while the second scenario suggests a decline towards the 1990 area. At the moment, I am leaning towards a further rise before a significant drop, so I will assess at the beginning of the week if there are conditions to go long on the market. Greetings and a good weekend to everyone from Nicola.
OANDA:XAUUSDShort
by Forex48_TradingAcademy
USDCAD It's time to go short towards 1.32!I've been closely tracking the recent dynamics of the USD/CAD pair. The exchange rate approached 1.3380, seemingly propelled by investors' apprehension about upcoming critical US labor market data. The Canadian Dollar (CAD) experienced a significant drop to a new weekly low against the US Dollar (USD), followed by an unexpected rally to a three-day peak. This tumultuous movement largely stemmed from the market's response to the robust US Nonfarm Payrolls (NFP) report, which dramatically outperformed expectations by revealing that the US added 216,000 new jobs in December, well beyond the predicted 160,000. Despite the impressive job numbers, ongoing revisions have cast a shadow over the data's accuracy, with numbers for previous months being adjusted down. In Canada, the job market has been more subdued, with job additions barely exceeding the statistical margin of error. Nonetheless, a significant uptick in wage growth, peaking at a two-year high, points to a tightening labor market and the possibility of rising inflation. In the US, while job growth was strong, other economic indicators offered a mixed view. Average Hourly Earnings saw a modest rise, and the Unemployment Rate remained steady, countering expectations of an increase. The US ISM Services PMI for December fell short of projections, hinting at a slowdown in a crucial sector of the economy. Meanwhile, in Canada, the Unemployment Rate stayed consistent, and while the Canadian December Ivey PMIs showed positivity in the seasonally adjusted data, the non-seasonally adjusted figures dipped to a 12-month low, suggesting potential cyclical economic frailties. Following the NFP release, the price rebounded to the 1.3390 level, near the 0.5% Fibonacci retracement. Observing two consecutive days of essentially neutral market channels, and considering yesterday's confirmation, I sense a strengthening Canadian dollar against a softening US counterpart. Therefore, I anticipate a retraction towards 1.32 and an ongoing bearish trend that has been active for over two months. Wishing everyone a good weekend, from Nicola.
Short
by Forex48_TradingAcademy
NASDAQ How to prepare for the 2024 Sell off!As a market analyst, I have recently observed the performance of the Nasdaq, the index of U.S. technology stocks, and my observations are quite significant. In the latest session, the index displayed a rather flat behavior, closing with a modest increase of 0.15%. This slight gain follows a start that was perfectly in line with the previous day's closing values and stability that was maintained throughout the session. From the analysis of the status and trend of the Nasdaq, it's clear that the medium-term structure remains positive. This indicates that, despite daily fluctuations, the general trend of the index is upward over a longer time horizon. However, some signs of contraction are emerging in the short term. This is evident from the index's difficulty in surpassing the resistance level located at 16,660.6. Breaking through this threshold could indicate potential for further upward movement, but until then, it seems the index is in a consolidation phase. The functional support, identified at 16,116.7, remains optimal. This level has provided a solid recovery ground for the index in recent sessions, suggesting that investors are willing to buy when prices approach this point. However, the persistence of the current consolidation phase might see the index testing the lower level of 15,927.4. A move toward this level could be seen as a buying opportunity for those who believe in the long-term resilience of the technology sector, or as a caution signal for those who fear further declines. In conclusion, while the overall picture remains positive, the Nasdaq is currently in a delicate phase. Investors would do well to monitor both resistance and support levels, as well as macroeconomic and sector news, to better understand the future direction of the index. Caution and strategy will be essential in the coming days and weeks.
NASDAQ:NDXShort
by Forex48_TradingAcademy
USOIL: Route map 71.50-79 awaiting the FED!Observing the price of West Texas Intermediate (WTI), I notice an upward trend, with the price having retested the bullish trendline after breaking through the $74 level. Now, I expect a slight pullback towards $71.50 before a significant rebound towards $79 per barrel. However, from a macroeconomic perspective, I've also detected growing concerns about the stability of demand due to an increase in U.S. gasoline and distillate inventories, leading to a decrease in prices. I am particularly mindful of the impact of Middle East tensions on energy markets. These conflicts directly influence logistics and shipping, so much so that I've observed companies diverting their ships from the Suez Canal route to avoid waters infested with Houthi rebels, significantly changing commercial routes between Europe and Asia. The arrival of an Iranian warship further complicates the situation. Additionally, I am monitoring the ongoing conflict between Israel and Hamas, aware of the risk that it might involve neighboring countries. I've noticed that Iran has suspended crude shipments to China to secure higher prices. This move is particularly interesting as it follows China's advance purchase of a significant portion of its annual oil demand, enjoying a discount on imports from sanction-hit Iran. In conclusion, my personal analysis describes a complex WTI oil market influenced by a variety of geopolitical and technical factors. I am closely monitoring how Middle East tensions, Iran's strategies, and technical indicators affect the direction of WTI prices. Best regards and have a great weekend, from Nicola.
TVC:USOILLong
by Forex48_TradingAcademy
How to make 20k in less then 5 daysWhat an impressive kickoff to the year! Despite the stock market's initial decline, largely attributed to tax harvesting and rebalancing, I still anticipate a substantial influx of funds returning to the market. This year is poised to be another double-digit growth period for equities. If one selects the right stocks, the potential for triple-digit account growth remains on the table. Turning to FX:EURUSD , the year started with the expected volatility, driven by a one sided trade, institutions short on the DOLLAR and favoring other currencies particularly the EURO. Any new data would cause an unwiding of their trade and more then average volatility. In anticipation of potential market movements, I shared two trades with my community just before the market open on Monday night. 1. Trade Idea #1 (Rating: 2.5 out of 5) Synopsis: The Fed minutes, scheduled just before the US close, may echo previous speakers' dismissal of imminent rate cuts. Trade - SHORT (this is protection, we are not going to profit from this) Position - 1.10300 Take Profit (TP) : NON SL Break-Even, or 1.1100. 2. Trade Idea #2 Rating 3.5 out of 5 Synopsis We are looking to capture any weakness from technical and fears of any messaging from the minutes. Trade - LONG, (ideally the size of this trade is equal to the short above, our risk is neutral until the Short BE hits) Position - anywhere near low 1.09xx or anywhere in US Open. We will not force the trade. We then wait for Jobs data TP - 1.15xx (we will add to our position in increments) SL - NON - Our short will hedge our long, and will remain in this position until our short hits BE, securing our profits These trades successfully capitalized on early-day volatile movements. The EUROZone PMIs on the 4th Jan further reinforced our short bias: Ireland: 51.5 (2 months low) Spain: 50.4 (5 months low) Italy: 48.6 (3 months low) Germany: 47.4 (2 months low) France: 44.8 (3 months low) However, positive monthly PMIs from France and Germany altered our outlook, ruling out a 'Deflation' scare. The Fed minutes, leaning towards a conservative stance with no mention of rate cuts, allowed EURUSD to hit 1.09100, aligning with our second trade idea and securing profits. Analyzing the EURO volatility index (EVZ inverted) revealed volatility having peaked and reducing, indicating towards a stronger EURO. On NFP day we remained focused on adapting our trades to incoming data. Upon reviewing the data release, I observed that while the headline figure surpassed expectations, there was a revision of -71k jobs from the preceding months. If this trend persists, it could result in negative job growth in the upcoming months. Additionally, a cause for concern was the 4.1% increase in hourly average pay, attributed to the holiday season dynamics. The report acknowledged that individuals typically do not face job terminations before Christmas, and many receive one-time bonuses during this period, introducing significant noise into the analysis. As a consequence, the price action exhibited heightened volatility during this phase. Once the market understood the data, we saw a reversal in the price action. Although my profits were secured, we had one more data released left for the day, and as per my plan I wouldn't hesitate to restructure my trades if new data contradicted my trade ideas. The week's final data point, PMI services (ISM service: 50.6, Prior: 52.7), hinted at a soft side for the Dollar, reinforcing the bearish dollar stance. Services were on the brink of contraction, raising concerns about job sustainability at the current interest rates. The question i would put to the fed, at what point do employers continue to fund jobs through their savings or do they start cutting jobs to save their margins. I think the fed knows this answer! In contrast to 2023, during which I accumulated trades and expanded my equity holdings, this year, my primary objective is to secure profits and minimize the holding period. The current market situation is marked by uncertainty, generating substantial volatility and potential drawdowns. Consequently, I am prepared to promptly close positions at a loss, prioritizing a data-driven approach to trades over reliance on technical analysis. I anticipate an almost 16% move on EURUSD this year, and this will be extremely volatile compared to the more subdued move of only 4.33% in 2023 As a reminder for new to the market, consistent explanation and adherence to a trading plan are crucial. If you follow traders who only give a buy or short signal with no fundamental explanation then this not sustainable way of trading and those follows should be avoided. As is overtrading, this is a detrimental habit and this is one of the single reason why retail traders incur more losses then they should, new traders should exercise extreme caution. A final point to note; July is a crucial period for Powell and the fed, akin to NEMO. If they haven't finalized their entire fed cut by then, accusations of political interference favoring Biden and Yellen may surface. Powell has adeptly steered the economy from double-digit inflation to nearly 2%, all without causing a surge in unemployment. As the only Federal Reserve chair in history to achieve this feat, I believe Powell is unlikely to jeopardize his legacy to assist Biden's electoral prospects. Instead, his legacy will form a part of the establishment in the form of a library or a policy named after him. Historians will look to Powell for inspiration when they have to overcome future inflation. Well done Fed Chair! As always, Links to my verified P&L and Community is available in my signature. Good hunting traders
CBOE:EVZLong
by Macro-Traders-Strategies
2
EURUSD: A decision turning point post NFP!Analyzing the EUR/USD situation, we can observe a series of dynamic factors that have recently influenced its behavior. The EUR/USD's bullish move, having crossed 1.0950, was triggered by disappointing ISM Services PMI data after gathering liquidity below 1.09 following the NFP data. Currently, the pair maintains a defensive stance, trading in negative territory below 1.0950 as market attention shifts to the December jobs report from the U.S. Initially, the positive risk mood made it difficult for the USD to find demand on Thursday morning. However, after the ADP Employment Change data for December exceeded expectations, rising to 164,000 versus the forecast of 115,000, the yield on the U.S. ten-year Treasury bond surpassed 4%, thereby supporting the USD in limiting its losses. The CME Group's FedWatch tool indicates that markets are pricing in a 65% probability that the Federal Reserve will cut the policy rate by 25 basis points in March, down from the 85% seen earlier in the week. In conclusion, EUR/USD is at a really interesting point, at the 1.0950 level and is about to close the daily candle with a neutral doji. I expect a rise from the Euro on Monday in the face of an approaching American recession, aiming for a rebound of the Euro towards the 1.1150 area as identified on the chart. Best wishes and have a great weekend from Nicola.
Long
by Forex48_TradingAcademy
2
GBP/USD Route map 1.26-1.28 post NFPAnalyzing the GBP/USD pair, I observe that the British Pound is under pressure, trading around 1.2670 against the US Dollar during Friday's European session. This movement is primarily driven by investors' growing focus on the US Nonfarm Payrolls data. While the UK manufacturing sector continues to face pressures, it's noteworthy that the services sector exceeded expectations in December, according to PMI data. Meanwhile, the US Dollar Index (DXY) is recovering swiftly, bolstered by positive data from the US. This rebound further pressures the Pound, which is already struggling to find solid ground. Investors are concerned as the Bank of England (BoE) policymakers face tough decisions, balancing the risks of a deep recession in the UK economy and high underlying inflation. The likelihood of a technical recession in the UK is high, with the economy contracting in the third quarter and anticipated to show stagnant performance in the final quarter. Moreover, recent PMI data indicates that the manufacturing sector continues to suffer due to high-interest rates. The future of the GBP/USD pair will be influenced by the US Nonfarm Payrolls data for December. Should this data indicate further cooling of the US job market, the outlook for the pair might improve. The expectation for job additions in December is moderate, with forecasted slower growth in average hourly earnings, which could signal a deceleration in US inflation. Investors are also increasing bets on a rate cut by the Federal Reserve in March if labor market conditions soften more than expected. However, a premature rate cut decision by the BoE to avoid a recession could fuel further inflationary pressures in the UK. On the chart, I've highlighted a possible price direction post-NFP; the price could take liquidity below 1.26 before moving towards 1.28. Best wishes and good trading to all.
Long
by Forex48_TradingAcademy
FED vs ECB - Soft Landing As of today Thursday, December 14, 2023- ECB ( European Central Bank ) at 14:00 PM ( Budapest Time GMT+1 ) will disclouse their interest rate decision in the following categories. 11:00 EUR EU Leaders Summit 14:15 EUR Deposit Facility Rate (Dec) 14:15 EUR ECB Marginal Lending Facility 14:15 EUR ECB Monetary Policy Statement 14:15 EUR ECB Interest Rate Decision (Dec) Over the last 2Mto 1M , depending on the data frequency, such as weekly or montly we have observed that, generally speaking, inflation is under control in the Eurozone. Therefore, any further rate hikes from the ECB are absolutely unnecessary and would cause serious issues in the Italian and German economies. Even though a rate hike would cause an immediate surge in EUR/USD, which is certainly in my interest since I hold a long position, in the case of a rate hike, I would close it nearly immediately. I expect that today the ECB will keep interest rates unchanged to allow time for the effects of their previous measures to fully transmit into the economy
Long
by ElGatoTrade
1
US Equities 2024 OutlookCME: E-Mini S&P ( CME_MINI:ES1! ), E-Mini Nasdaq ( CME_MINI:NQ1! ) Stock investors around the world had a banner year in 2023. Of the ten major stock market indexes I monitor, eight delivered solid 1-year returns. • North America: S&P 500, +23.9%; Nasdaq Composite, +53.6%; • South America: Bovespa (Brazil), +22.3%; • Europe: FTSE (UK), +3.0%; Stoxx (Germany), +11.3%; • Asia: Nikkei (Japan), +28.2%; Kospi (Korea), +18.7%; Nifty (India), +19.5%; • China: SSE (Shanghai), -3.2%; Hang Seng (HK), -13.7%. In this second installment of new year outlook for major asset classes, I will discuss what opportunities may lay ahead for US stocks. Subsequent writings will cover Energy, Agricultural commodities, Interest Rates, Forex, and Cryptocurrencies. FYI: The last writing was a year-end review for metal commodities – Gold, Copper, and Aluminum. If you haven’t read it yet, you may follow the link here: Record Gains Built from Lower Baselines While all four major US stock indexes booked double-digit returns in 2023, they each experienced a steep loss in 2022. The combined 2022-2023 returns aren’t so impressive. • Dow Jones: +5.3% • S&P 500: +3.3% • Nasdaq 100: +9.3% • Russell 2000: -5.9% You may think that adding the 2022 return of -18.1 and 2023 return of 23.9% will give the S&P a 2-year return of +5.8%. But the actual return is only +3.3%. Why? Simple Math: If you lose 20% first, you will need to gain 25% to make up for the loss and just get back to square one. Mathematically, 1/0.8 = 1.25, or (1-20%) * (1+25%) = 1. This matters a lot to hedge funds. An active manager may have a 2-20 arrangement with his investors, which is 2% fee on asset-under-management, and 20% on carry interest. If a fund closely tracks the Nasdaq, the manager received no carry for 2022, and the carry for 2023 is based on the 2-year return of +9.3%, not the 2023 return of 53.6%. The fund usually would have a “high water mark” clause that requires the manager to make up for prior loss before getting paid. Therefore, Wall Street bonuses may not be that big this year. 2024 Outlook for US Equities The December 26th CFTC Commitments of Traders report (COT) shows that: • E-Mini Dow: “Asset Manager” has 26,070 long positions and 3,098 short positions. • E-Mini S&P 500: Asset Manager has 1,147,149 longs and 275,037shorts. • E-Mini Nasdaq 100: Asset Manager has 111,046 longs and 20,662 shorts. • E-Mini Russell 2000: Asset Manager 229,229 longs and 142,312 shorts. The overwhelmingly Net Long positions on all major US index futures indicate that futures traders are very bullish on US equities. Investors eye in a soft landing for the US economy and expect aggressive rate cuts by the Federal Reserve. According to CME Group’s FedWatch Tool, the first rate-cut could occur at the March 20th Fed meeting, with a 73.5% probability. For June 12th, the odds of two or more rate cuts increase to 82.2%. By December 18th, investors expect the Fed Funds rate will be 1% to 2% lower than the current 5.25-5.50% range, with 98.5% odds (Data as of January 1st). (Link: www.cmegroup.com) US equity indexes could stay high as long as the Fed remains dovish. The past few months proved that investors are very resilient. The bullish market sentiment is very hard to break, unless really bad things happen. If an investor owns US stocks, there is no good reason to sell them now. We have seen that geopolitical risks had done little damage to US equities. Fed policy still drives the market. Staying with the ride and hedging the stock portfolio with put options may be a good strategy. Trading with CME E-Mini Equity Index Put Options As US equity indexes take turn making all-time high, it’s costly to buy the underlying stocks. Options are an inexpensive alternative to get exposure in stocks. Depending your stock portfolio and views, you could either long or short the options on E-Mini S&P 500 futures • Last Friday, the March E-Mini S&P 500 futures (ESH4) was settled at 4,812.75. Buying 1 long or short position requires initial margins of $11,800; • January end-of-the-month (EOM) Call options with a 4910-strike costed 23.50 points. Premium for 1 call is $1,175 (= 23.5 x $50 multiplier); • January EOM Put options with a 4710-strike priced at 27 points. Premium for 1 put is $1,350 (= 27 x 50). We could construct a similar strategy with E-Mini Nasdaq 100. • Last Friday, the March E-Mini Nasdaq futures (NQH4) was settled at 17,003.75. Buying 1 long or short position requires initial margins of $17,700; • January end-of-the-month (EOM) Call options with a 17,200-strike costed 208.50 points. Premium for 1 call is $4,170 (= 208.50 x $20 multiplier); • January EOM Put options with a 16500-strike priced at 127.70 points. Premium for 1 put is $2,551.40 (= 127.75 x 20). In a rising market, out-of-the-money put options could be a strategy for small odds with big payoff. In January, we will have new data releases for December inflation (CPI and PCE) and nonfarm payroll employment, as well as a Fed meeting on January 31st. My reasoning: If we see inflation rebound, stronger employment, or a hawkish Fed, the stock market could turn south, resulting in a gain for the put. Hypothetically, if the March S&P futures price drops 150 points by January month-end options expiration, the put would be 47.25 points in-the-money (= 4710 – 4,662.75) and earn $2,362.5 (= 47.25 x $50). Using the initial margin as cost base calculations, the theoretical return would be 75% (= 2362.5 / 1350 - 1). If the March Nasdaq drops 800 points (17,003.75-800=16,203.75) at January options expiration, the put would be 296.25 points in-the-money (= 16,500 – 16,203.75) and earn $5,925 (= 296.25 x $20). The theoretical return would be 132% (= 5925 / 2551.4 - 1). On the other hand, if stocks continue to rise, put options will lose money, but never go beyond the premium already paid. Options Calculator is a free tool CME Group provided for options traders. It generates fair value prices and Greeks for any of CME Group’s options on futures contracts or price up a generic option with this universal calculator. Traders could customize their input parameters by strike, option type, underlying futures price, volatility, days to expiration (DTE), rate, and choose from 8 different pricing models including Black Scholes. www.cmegroup.com Happy Trading. Disclaimers *Trade ideas cited above are for illustration only, as an integral part of a case study to demonstrate the fundamental concepts in risk management under the market scenarios being discussed. They shall not be construed as investment recommendations or advice. Nor are they used to promote any specific products, or services. CME Group Real-time Market Data help identify trading set-ups and express my market views. If you have futures in your trading portfolio, you can check out on CME Group data plans available that suit your trading needs www.tradingview.com
SP:SPXShort
by JimHuangChicago
Euro jumps to 5-month highThe euro has posted strong gains on Wednesday. In the North American session, EUR/USD is trading at 1.1121, up 0.72%. The US dollar is under pressure this week as we're seeing a risk-on mood in global markets. The week between Christmas and New Year's is normally quiet, with a very light data calendar. However, investors are anticipating the Federal Reserve to cut rates early next year and this sentiment has sent equity markets higher while weighing on the US dollar. The euro is powering higher, with gains of 2.1% in December and 2.9% in November against the retreating US dollar. Federal Chair Powell surprised the markets when he pencilled in three rate cuts for next year. Investors had braced themselves for Powell to push back against rate cut expectations, a script he has followed for months. This time, however, Powell jumped on the bandwagon although Fed members have since urged the markets to tamper their expectations of up to six rate cuts next year. The markets have priced in an initial rate cut in March, with over 150 basis points in cuts for all of 2024 according to the CME's FedWatch tool. There is a similar disconnect between the markets and the European Central Bank. The markets are looking at six rate cuts next year, perhaps as early as March, while the ECB has tried to dampen these expectations. ECB President Lagarde stated last week that members had not discussed a rate cut at the December meeting, at which the central bank held the cash rate at 4.0% for a second straight time. I expect that markets in both the US and Europe will remain much more bullish about rate cuts than the central banks. It's a light data calendar between Christmas and New Year's in the US. The Richmond Manufacturing Index decelerated to -11 today, down from -5 in November and missing the market consensus of -6. On Thursday, unemployment claims are expected to drop to 205,000, down from 210,000 a week earlier. EUR/USD is testing resistance at 1.1072. Above, there is resistance at 1.1130 1.0982 and 1.0924 is providing support
by OANDA
GBP/USD's Bullish Outlook Soars in Anticipation of 2024 Rate CutOn Wednesday, the Federal Reserve, as widely anticipated by investors, held its benchmark interest rate within the 5.25%-5.50% range—the highest level in 22 years. The accompanying Summary of Economic Projections disclosed a notable shift in the central bank's outlook. Now, the Fed foresees 75 basis points of rate cuts in 2024, exceeding the September projection by one additional rate cut. This shift in stance is contributing to the weakening of the US dollar over other currencies such as GBP. Now, let's delve deeper into the technical analysis of GBPUSD The GBPUSD exhibited an assertive recovery as it bounced off the dynamic support line represented by the EMA 200, marked by a robust bullish Marubozu candlestick. Subsequently, the breakout from both the falling wedge pattern and a prominent resistance zone strongly suggests the persistence of the bullish trajectory. Adding to the positive outlook, the momentum indicator recently formed a golden cross, underscoring the potential for an upward surge toward the target region. These collective indicators paint a compelling picture, signaling a noteworthy upside movement to the designated target area—a prospect worth considering for fellow traders navigating current market dynamics. It is essential to note that the analysis will no longer hold validity once the target/support area is reached. Disclaimer: "Please note that this analysis is solely for educational purposes and should not be considered a recommendation to take a long or short position on FX:GBPUSD ." Please support the channel by engaging with the content, using the rocket button, and sharing your opinions in the comments below!
Long
by financialfreedomgoals101
Dollar Index PivotBetting against the dollar is growing in popularity after the Federal Reserve upended markets by signaling the end of its monetary tightening campaign. Non-commercial traders — a group that includes hedge funds, asset managers and other speculative market players — boosted their bearish bets on the greenback in the week ended Tuesday. More than 39,000 contracts are now tied to expectations the US currency will fall, up more than 10,000 from a week ago when the Fed was preparing to meet, the data show. The currency has suffered a pronounced slump in the wake of that confab, when the Fed released updated economic projections forecasting additional monetary easing next year. Indeed, while there are now more contracts betting on dollar weakness, the dollar value of those contracts has actually slipped to $5.5 billion, slightly lower than last week. The dollar extended its drop on Friday after the Fed’s preferred gauge of underlying inflation showed muted price gains, affirming the central bank’s pivot toward interest-rate cuts next year. What is your opinion on Dollar in 2024? Trade with care Like | Share | Comment
TVC:DXY
by TheAnonymousBanker
8
Buying Opportunity in T-Notes? After putting in a bottom in mid-October, T-notes have rallied sharply higher. Patient bulls have been afforded few opportunities to enter the contracts on a pullback, but that may soon change. Pullbacks are a healthy part of any sustained rally, as they allow market participants to take profits from longer held positions, and reallocate capital in the direction of the prevailing trend. Fundamental Snapshot : T-Note prices are inversely related to yields - meaning that as yields decline, the price of T-Notes will rise. After the last Fed meeting, Chair Powell suggested that the Fed may be cutting rates as much as 3 times in 2024. As displayed on CME’s FedWatch Tool below, the market is pricing in a 77.2% probability that the first rate cut may come as soon as March. If that materializes, T-note prices should continue to press higher. Talkin’ Technicals : The white line on the bottom of the chart labeling short-term bearish divergence on RSI in the bottom indicates that the market is making successive new highs on decreasing momentum, and that the market remains in overbought territory. Meaning that the current rally is effectively running out of steam. Furthermore, volume has steadily decreased since the previous high. If there are no more bulls willing to enter the market, it will likely result in a pullback. A pullback on price will force current bulls to liquidate long positions to capture profit, and afford new bulls to enter the market amidst the correction. Fed policy is a major function in establishing the longer-term trend in T-notes and bonds. By lowering rates in 2024, one should expect both T-notes and bonds to perform well pricewise. Check out CME Group real-time data plans available on TradingView here: www.tradingview.com Disclaimers: CME Real-time Market Data help identify trading set-ups and express my market views. If you have futures in your trading portfolio, you can check out on CME Group data plans available that suit your trading needs www.tradingview.com *Trade ideas cited above are for illustration only, as an integral part of a case study to demonstrate the fundamental concepts in risk management under the market scenarios being discussed. They shall not be construed as investment recommendations or advice. Nor are they used to promote any specific products, or services. Futures trading involves substantial risk of loss and may not be suitable for all investors. Trading advice is based on information taken from trade and statistical services and other sources Blue Line Futures, LLC believes are reliable. We do not guarantee that such information is accurate or complete and it should not be relied upon as such. Trading advice reflects our good faith judgment at a specific time and is subject to change without notice. There is no guarantee that the advice we give will result in profitable trades. All trading decisions will be made by the account holder. Past performance is not necessarily indicative of future results.
CBOT:TN1!Long
by Blue_Line_Futures
EURUSD Pair Projections for Q1, Q2, and Q3 2024Financial Analysis: EURUSD Pair Projections for Q1, Q2, and Q3 2024 Disclaimer : This analysis is based on the information available as of the provided date and is subject to change. It should not be considered as financial advice. Readers are encouraged to conduct their own research before making investment decisions. Ifo Report and Current Business Climate The recent Ifo report reflects a clouded sentiment in the German business landscape, with companies expressing dissatisfaction with their current business situations and heightened skepticism regarding the first half of 2024. Notably: Manufacturing The Business Climate Index in manufacturing witnessed a noticeable decline, with companies perceiving their current business situation as significantly worse. Expectations in the manufacturing sector grew more pessimistic, particularly affecting energy-intensive industries. Service Sector The service sector experienced a slight improvement in the business climate, driven by increased satisfaction with current business situations. Service providers displayed reduced skepticism about the outlook for the next six months, although expectations in restaurants and catering saw a nosedive. Trade The trade sector suffered a setback, as companies assessed their current situations as notably worse. Holiday trade for retailers, in particular, disappointed. Construction The Business Climate Index in construction hit its lowest level since September 2005, with companies reporting a worsened current situation. Approximately half of the companies anticipate further deterioration in the months ahead. Projections for EURUSD in Q1, Q2, and Q3 The Ifo report's insights into the German business sentiment set the stage for assessing the FX:EURUSD pair's projections: Q1: Sluggish Momentum The current scenario suggests a sluggish start for EURUSD in Q1. The clouded business sentiment in Germany may contribute to a sideways market, marked by cautious trading. Q2: Anticipating Improvement As Q2 unfolds, there is an expectation of an improvement in the financial situation in Europe. Despite the challenging Q1, signs of stabilization and potential positive developments could influence a more favorable outlook for the EURUSD pair. Q3: Inverse Head & Shoulders Pattern An analysis of the larger fractal, specifically the Inverse Head & Shoulders pattern forming in the EURUSD pair, points towards robust bullish momentum. This projection aligns with a potential turnaround by the end of Q2 and the beginning of Q3, indicating a shift towards a more positive market sentiment. Conclusion In conclusion, the EURUSD pair is likely to face challenges in the early part of 2024, reflecting the clouded sentiment in the German business landscape. However, signs of improvement are anticipated in Q2, with the formation of an Inverse Head & Shoulders pattern suggesting a strong bullish momentum in the currency pair by the end of Q2 and the beginning of Q3. Traders and investors should closely monitor economic indicators, global events, and the evolving business climate for timely decision-making in the dynamic forex market.
Long
by wikitrades