Buy Buy! Ultra-bull Niocorp DevelopmentsI have been following this stock for some time, and it is getting better and better. their long standing goals, producing commercial, industrial-grade niobium, scandium products are coming to fruitition. This includes securing the finances to embark on the endeaver (unofficial).
In the mining scene we have to be wary off the juristiction/country the mine is located in. it could get seized, laws could get passed that could dampen revenue or export be banned. But this is the opposite . It is located in Nebraska, U.S. and has tremendous political support . Niocorp Investor Presentation
Target is AT LEAST 25. This stock is very resiliant against war, and will actually benefit from it. more supply chain issues abroad , inflation, demand to name a few. I like the price right now, but could surely fall further.
We are near the support zone around 5.3, next is 4.7 zone then 3.9 zone. bargain zone: 2.6 - 2
Strategy: DCA
GL
Inflation
EUR/USD Daily Chart Analysis For Week of March 29, 2024Technical Analysis and Outlook:
According to the Daily Chart Analysis for the week of March 22, the Eurodollar has successfully completed a Squeeze Currency Dip of 1.078, which was the primary target. Consequently, this momentum is projected to generate further selling pressure, leading to a decline to the Mean Support level 1.070. Ultimately, the Eurodollar is anticipated to hit an Inner Currency Dip of 1.065. However, it is essential to note that a potential intermediary rebound may occur, which could result in a move to a target of 1.084.
Tokyo Inflation to trigger yen Intervention? But at what price?Recent remarks made by Masato Kanda, Japan's vice-finance minister for international affairs, have led to heightened cautiousness regarding potential actions by authorities to support the yen through intervention.
The USD/JPY has comfortably surpassed the 150.000 threshold, which historically has prompting interventions by the Bank of Japan to limit the weakness in the yen. This precedent was observed in 2022 when the currency reached 151.950 against the US dollar.
But have the intervention goal posts moved?
Maybe only slightly. Credit Agricole’s FAST FX model suggests a selling strategy for USD/JPY if it crosses 152.20.
Anticipated inflation data for Tokyo, scheduled for release later this week, could serve as a potential trigger for intervention. A higher-than-expected reading may positively impact the JPY, indicating bullish sentiment and potentially help the BoJ avoid the need to intervene. Conversely, a lower-than-anticipated figure could exert a bearish influence on the JPY.
USD/JPY shrugs after BoJ core inflation dipsThe Japanese yen continues to have a quiet week. In the North American session, USD/JPY is trading at 151.36, down 0.03%.
Bank of Japan core inflation fell to 2.3% in February, down from 2.6% in January and shy of the market estimate of 2.5%. The release further complicates the inflation picture in Japan, as we continue to see inflation indicators heading in all directions. The BoJ core inflation index eased in February ,while the services producer price index climbed 2.1%, unchanged from January.
The BoJ made a massive pivot last week as it raised interest rates for the first time in 17 years. The central bank is counting on rising service inflation replacing cost-push inflation as the main driver of inflation, which it expects will make inflation sustainable around the 2% target.
The shift in monetary policy has not translated into a win for the yen, which is above the 151 line. There is the threat of currency intervention, as Tokyo intervened last September and October when USD/JPY rose above 152. Japanese officials are trying to jawbone the yen higher before resorting to intervention, with Japan’s top currency diplomat sending a warning on Monday to speculators from trying to sell of the yen, saying the currency’s recent slide did not reflect fundamentals.
In the US, it was a mixed day. Durable goods recovered in February with a gain of 1.4% m/m in February. This followed a 6.9% slide in January and beat the market estimate of 1.1%. The Conference Board consumer confidence index was almost unchanged at 104.7 in February, compared to 104.8 a month earlier. This was shy of the market estimate of 107.
USD/JPY tested support earlier at 151.35. Below, there is support at 151.13
151.64 and 151.86 are the next resistance lines
$JPIRYY -CPI (YoY)ECONOMICS:JPIRYY Japan Inflation Rate Lowest in A Year
The annual inflation rate in Japan fell to 3.0% in September 2023 from 3.2% in August, pointing to the lowest reading since September 2022.
Meantime, core inflation rate dropped to a 13-month low of 2.8%,
slightly above market consensus of 2.7% while staying outside the Bank of Japan's 2% target for the 18th month.
Core inflation rate dropped to a 13-month low of 2.8%, slightly above consensus of 2.7% while staying outside the Bank of Japan's 2% target for the 18th month. On a monthly basis, consumer prices rose 0.3% in September, after a 0.2% gain in August. source: Ministry of Internal Affairs & Communications
source:
Ministry of Internal Affairs & Communications
How does inflation affect the stock market?The world’s financial environment has become incredibly tangled and multifaceted. The global availability of information to investors, particularly in rural areas, thanks to the internet, has caused investor sentiment to shift from an emotional response to an analysis and data-driven one.
Inflation serves as a prime example of this. In the past, most individuals viewed inflation as an indication of an unhealthy economy.
However, in the present day, investors have become more knowledgeable about economic cycles and are capable of making sound investment decisions at each stage of a country’s economy.
Therefore, today, we will discuss inflation in general and evaluate its influence on the stock markets in India. Let’s start with a topic on How does inflation affect the stock market.
What is Inflation?
In simple words, inflation refers to the gradual increase in the prices of goods and services. As the inflation rate rises, so does the cost of living, resulting in a decrease in purchasing power.
As an example, suppose bananas were priced at Rs.100 per kilo in 2010. In an inflationary economy, the cost of bananas would have increased by 2020.
Let’s assume that the price of a Banana is now Rs.200 per kilo in 2020. Thus, in 2010, with Rs.1000, you could buy 10kg of Banana.
However, in 2020, due to the decrease in purchasing power caused by inflation, you would only be able to buy 5kg of Bananas for the same amount.
To understand inflation in detail, let’s have a look at what is the reason behind inflation. So, there are two major factors behind an increase in the rate of inflation in the economy.
1) Demand > Supply
One reason for an increase in the inflation rate is when the average income of individuals in an economy rises, and they want to purchase more goods and services.
During such times, the demand for these products and services can exceed their supply, resulting in a scarcity of these goods and services. Consequently, buyers are willing to pay more for them, which leads to a general increase in prices.
2) Increase in the cost of production
Another reason for an increase in the inflation rate is when the cost of production of goods and services increases due to an increase in the costs of raw materials, labour, taxes, etc.
While this leads to an increase in the cost of production, it also causes a decrease in the supply of these goods and services. With the demand remaining constant, the prices tend to increase.
Inflation and the Indian Stock Markets:
The price of a share in the stock markets is determined by the interplay of demand and supply, which is influenced by a variety of factors, including social, political, economic, cultural, and so on.
Anything that affects investors can have an impact on the demand and supply of stocks, and inflation is no exception. Here is a brief overview of the impact of inflation on stock markets:
1. The Purchasing Power of Investors
Inflation, by definition, is a rise in the prices of goods and services, and it is also an indicator of the diminishing value of money.
Therefore, if the inflation rate is 5%, then Rs.10, 000 today will be worth Rs.9, 500 after one year. If the inflation rate increases to 10%, then the same amount will be worth even less in the future.
So, as the inflation rate increases, the purchasing power of investors decreases. This decrease in purchasing power can directly impact the stock market since investors would be able to purchase fewer stocks for the same amount.
2. Interest Rates
When the inflation rate rises, the Reserve Bank of India ( RBI ) often increases interest rates for deposits and loans. This move is intended to encourage people to save money and limit excess liquidity, thereby reducing the inflation rate.
However, as loans become more expensive, the cost of capital for companies also increases. Consequently, the projected cash flows of companies are valued lower, which can lead to lower equity valuations.
3. Impact on Stocks
As the increase in the inflation rate, speculation about the future prices of goods and services can create a highly volatile market environment. Since prices are rising, many investors may speculate that companies will experience a drop in profitability. As a result, some investors might decide to sell their shares, leading to a drop in their market price.
However, other investors who remain optimistic about the company’s future profitability may continue to buy these stocks, which can create a volatile environment in the stock market.
Value stocks tend to perform well during times of inflation because they are often more established companies with stable earnings and a history of paying dividends, making them more attractive to investors seeking steady returns. In contrast, growth stocks are often newer companies with higher potential for future earnings, but they may not have established cash flows to support their valuations.
When inflation rises, investors may become more risk-averse and prioritize stable, predictable returns over potential growth, leading to a decline in demand for growth stocks and a corresponding drop in their market prices.
4. Long-term benefits of increasing inflation rates on stock markets
A certain level of inflation is required for an economy to grow, as it encourages spending and investment. A moderate and controlled rise in inflation rates can lead to an increase in the income of the people and help in boosting the economy.
However, if the inflation rate goes beyond a certain limit, it can have a negative impact on the economy. Therefore, it is crucial to maintain a balance between inflation and economic growth.
Conclusion:
Investors should analyse the trend of inflation rates in recent years before making any investment decisions. Sudden spikes in inflation rates may cause uncertainty and volatility in the stock markets, while a gradual and steady rise in inflation rates can provide a conducive environment for businesses to grow and expand, leading to higher stock valuations. Additionally, investors should consider investing in sectors that perform well in an inflationary environment, such as energy, commodities, and real estate.
___________________________
💻📞☎️ always do your research.
💌📫📃 If you have any questions, you can write me in the comments below, and I will answer them.
📊📌❤️And please don't forget to support this idea with your likes and comment
Fed keeps rates steady, Banxico up next The US Federal Reserve has kept interest rates steady at 5.25%-5.50% while continuing its balance sheet reduction as planned since May 2023.
In contrast, the Bank of Mexico (Banxico) might announce a rate cut tomorrow.
It's anticipated that Banxico could decrease its interest rate from 11.25% to 11%, potentially applying pressure on the Mexican peso. This could drive the USD/MXN rate closer to the 17.00 mark, diverging further from its 10-year low. Some Fib levels from its recent swing higher could also be some interesting, more assessable, targets
However, the possibility of a rate cut from Banxico is not guaranteed, given potential divisions within its Governing Council. Recent speeches by officials indicate a 3-2 split, with some members leaning towards a more accommodative approach, while others like Jonathan Heath and Irene Espinosa Cantellano favor a hawkish stance.
$GBIRYY -CPI (YoY)The inflation rate in the United Kingdom remained stable at 6.7% in September 2023,
holding at August's 18-month low and defying market expectations of a slight decrease to 6.6%.
Softer price increases in food and non-alcoholic beverages (12.1% vs 13.6% in August) and furniture and household goods (3.7% vs 5.1%) were offset by a smaller decline in energy costs (-0.2% vs -3.2%) on the back of a monthly rise in motor fuel costs.
Moreover, the core inflation rate,
which excludes volatile items such as energy and food,
dropped to 6.1%, reaching its lowest point since January but slightly exceeding forecasts of 6%.
Both of these figures have remained significantly above the Bank of England's 2% target,
further emphasizing the mounting inflationary pressures in the country and complicating further the task for policymakers who are expected to keep interest rates unchanged at the upcoming meeting.
On a monthly basis, the CPI rose by 0.5% in September, the most substantial increase since May.
source: Office for National Statistics
Market Surprise? June Rate Cut Might Be Delayed Market Surprise? June Rate Cut Might Be Delayed
After today’s BOJ and RBA interest rate decisions, eyes will turn to the Fed’s decision on Wednesday.
Although the US central bank is expected to keep rates unchanged, it could change its outlook due to the upside surprise in the latest CPI and PPI reports.
For now, the first cut is still seen happening in June, but there is a possibility that this gets pushed back a month or two again. Maybe the market would be the only one surprised by this possibility.
But what USD pair could be interesting this week?
The Canadian Dollar is facing pressure in anticipation of the February inflation figures set to release on Tuesday. Analysts expect the annual headline inflation to have risen to 3.1% from January's 2.9%. This could postpone the Bank of Canada's intentions to lower interest rates, potentially leading to a clash with the Federal Reserve's monetary policy plans.
Depending on where market sentiment lay after we get the US and Canada data, the 100-day SMA could continue to support bulls. If sentiment turns, we have the 50- and 200-day SMA, which sits just above the ascending triangle trend, as a target for another support.
Aussie edges higher despite business confidence declineThe Australian dollar remains close to the 0.66 line, where it has been for most of the week. In the North American session, AUD/USD is trading at 0.6620, up 0.21%.
The business sector is not feeling very confident about the near-term outlook of the Australian economy. The NAB Business Confidence index dipped to zero in February, down from one in January but above the forecast of -1. The NAB report noted that retail confidence remains deeply negative.
There was better news from the NAB Business Conditions index, which rose to 10 in February, up from 7 in January. By industry, manufacturing showed improvement but retail and construction weakened.
Australia’s economy has been limping along and consumers are still feeling the squeeze of the cost-of-living crisis and high mortgage payments as the Reserve Bank of Australia is yet to lower elevated interest rate levels. The RBA has raised rates only once since June 2023 and hasn’t ruled out rate hikes, although the markets have priced in rate cuts for later this year.
The RBA is unlikely to consider lowering rates until inflation falls lower. In January, CPI rose 3.4% y/y, still well above the RBA’s target band of 2-3%. The next meeting is on March 18th and the RBA is widely expected to maintain the cash rate of 4.35%.
Thursday will be busy in the US, with the release of retail sales, the producer price index and unemployment claims. Retail sales is often a market-mover and will be closely watched. The markets are expecting a strong rebound in February, with an estimate of 0.8% m/m. This follows a 0.8% decline in January, which was a 10-month low.
There is resistance at 0.6702 and 0.6780
0.6590 and 0.6512 are providing support
Inverse relation of Bitcoin and Natural Gas!The top of Gas marks the bottom in bictoin, the bottom in gas marks the top in bitcoin.
HINT : Gas has reached flat bottom and about to boom imo.
CORE CPI PRINTS HOT U.S Core CPI
Rep: 3.9% 🚨HIGHER THAN EXPECTED🚨
Exp: 3.7%
Prev: 3.9%
U.S. Headline CPI
Rep: 3.1% ✅In line with Expectations✅
Exp: 3.1%
Prev: 3.4%
Breaching below 3% is proving a difficult task for Headline CPI .
In 25 years of inflation history above and headline CPI cant seem to breach down below into the moderate <3% level
Since Oct 2023 Core CPI has only declined 0.1%.
PUKA
USD/JPY slips after US inflation surpriseThe Japanese yen has looked sharp lately but is considerably lower on Tuesday. In the North American session, USD/JPY is trading at 147.75, up 0.55%. The yen has rallied for five straight days, gaining 2.4% during that time.
The US inflation rate crept higher in February. Headline CPI climbed 3.2% y/y, up from 3.1% in January and above the market estimate of 3.1%. On a monthly basis, CPI ticked higher to 0.4%, matching the market estimate and above the January gain of 0.3%. The increase in inflation was mainly due to energy costs, such as gasoline, falling less than expected.
Core CPI, which excludes food and energy and is considered a more reliable gauge of inflation trends, ticked lower to 3.8% year-on-year in February, lower than the 3.9% gain in January but above the market estimate of 3.7%. Monthly, core CPI remained steady at 0.4%, above the market estimate of 0.3%.
The US dollar responded to the inflation report with sharp swings against the major currencies. The markets have lowered rate cut expectations, as the Fed will be less inclined to lower rates if inflation is moving higher. The Fed is virtually guaranteed to pause at the March meeting and the probability of a June cut has fallen to 66%, compared to 90% just one month ago.
The US releases retail sales for February on Wednesday and an unexpected reading could cause further volatility for the US dollar. Retail sales fell to 0.6% y/y in January, compared to a sizzling 5.3% gain in December. The market estimate for February stands at 1%.
USD/JPY has pushed above resistance at 147.25 and 147.55, and is testing resistance at 147.93
146.87 and 146.57 are providing support
UNG - NAT GASI longed at $9. Long term support zone. Looks exhausted. This is a long term play, so it could take a year or more. Enjoy
weekly analysis of gold with my personal st based on WMPwe made almost 530 pips from our area on gold by 2-3 positions a day on NEWYORK session last week with just 50 pips SL .
gold make an uptrend move from 2079 to 2195 on friday now we have some plan to trade gold this week. we trade on newyork session by our new area and i wish more profit from last week.
"Using the data we get from the gold weekly chart and my special calculation program, we identify these waypoints as key gold points and based on that we can enter long and short positions. In this method, stoploss setting is based on your personal money management and is flexible, but the most logical stop is between 20 and 35 pips from the entry point on the drawing lines.
Every week we will recalculate and send you the lines and we hope to get between 200 and 500 pips of profit with this strategy.
Until further notice, this program will be run for free and after you believe in our method, the supplementary strategy along with the calculation program will be available for sale . and for those people who are not interested in calculation and training in the coming weeks of the channel, We will have a daily trading signal on gold."
HIGH WMP = 2195.06
LOW WMP = 2079.42
MID WMP = 2137.24
MID U WMP = 2166.15
MID D WMP = 2108.33
ADDED U WMP = 2223.97
ADDED U WMP = 2252.88
ADDED D WMP = 2050.51
ADDED D WMP = 2021.60
AUD/USD surges despite soft GDP dataThe Australian dollar has posted strong gains on Wednesday despite a weak GDP report today. In the North American session, AUD/USD is trading at 0.6562, up 0.90%.
Australia’s economy ended 2023 on whimper rather than a gain, as GDP rose just 0.2% q/q the fourth quarter. This was lower than the 0.3% gain in the third quarter and missed the market estimate which was also 0.3%.
The economy has been limping along and the Q4 release marked the weakest quarterly growth in five quarters. On an annual basis, GDP rose 1.5%, just above the market estimate of 1.4%. On the positive side, exports were up and imports fell, and household spending showed a small gain of 0.1%.
Consumers are still being squeezed by the cost-of-living crisis and high mortgage payments as the Reserve Bank of Australia is yet to lower elevated interest rate levels. The RBA has raised rates only once since June 2023 and hasn’t ruled out rate hikes, although the markets believe that rates have peaked and have priced in rate cuts later this year.
The RBA is unlikely to consider lowering rates until inflation falls lower. In January, CPI rose 3.4% y/y, still well above the RBA’s target band of 2-3%. The next meeting is on March 18th and the RBA is widely expected to maintain rates.
In the US, Federal Reserve Chair Jerome Powell testifies before the Senate Banking Committee later today. Powell is expected to reiterate that inflation is moving lower but needs to come down further before the Fed will feel comfortable in lowering rates.
The Fed’s consistent message of patience and caution appears to have been internalized by the markets, which are now in line with the Fed and have priced in three rate cuts this year. In January, investors had expected up to six cuts, but a stronger-than-expected US economy and a hawkish Fed have dampened the markets’ rate cut expectations.
AUD/USD has pushed past resistance at 0.6527 and is testing resistance at 0.6566
0.6486 and 0.6447 are providing support
🇺🇸 President Joe Biden’s Bearish Remarks on the USD vs. CNY 🇨
Ladies and gentlemen, my fellow Americans, and all you Zoomers out there, gather 'round! Uncle Joe’s got some thoughts about our greenbacks and those sneaky Chinese Yuan. Buckle up, because we’re diving into the financial rabbit hole. 🐇
1. “The Dollar’s Got Swagger”
You know, folks, the U.S. dollar has been strutting its stuff for centuries. It’s like that cool kid in high school who always had the latest sneakers and a killer mixtape. Well, guess what? The dollar’s still got swagger. 💸
2. “Yuan? More Like Yawn!”
Now, let’s talk about the Chinese Yuan. Sure, it’s got pandas on its bills, but pandas don’t pay the rent, my friends. The Yuan’s like that kid who shows up to the party with a veggie platter. Nice try, but we’re here for the pizza. 🍕
3. “Quantitative Easing? Nah, We’re on a Diet!”
Our Federal Reserve’s been flexing its muscles, printing money like it’s going out of style. But guess what? We’re not on a doughnut binge. We’re on a financial diet. No more QE buffets. 🍩
4. “Trade Wars? More Like Pillow Fights!”
China and the U.S. have been duking it out in trade wars. But honestly, it’s like watching two toddlers in superhero costumes pillow-fighting. Cute, but not exactly world-changing. 🛌
5. “0.11 CNY/USD? That’s a Bargain!”
So, rumor has it the yuan’s gonna dump to 0.11 CNY/USD. Well, let me tell you, that’s practically a yard sale price. Sell one, get one free! 🛒
6. “Zoomers, HODL Your Avocado Toast!”
To my Zoomer pals: Forget avocado toast for a sec. HODL those dollars like they’re vintage Pokémon cards. Trust me, when the Yuan’s doing the cha-cha, you’ll thank me. 🥑💰
7. “Crypto? Nah, I Prefer Monopoly Money!”
And don’t get me started on crypto. It’s like playing Monopoly with invisible cash. Pass Go, collect Bitcoin. But give me that real green paper any day. 💵
In conclusion, my fellow Americans, let’s keep our eyes on the prize. The dollar’s been through wars, recessions, and disco fever. It ain’t backing down. As for the Yuan, well, pandas are cute, but they won’t save your retirement fund. Stay woke, stay dollar-wise, and remember: In Joe we trust (and a little bit of Ben Franklin). 🇺🇸💪
Disclaimer: This post is purely fictional and for entertainment purposes. No actual financial advice here, folks. Consult your financial advisor, not Uncle Joe. 🎩🤝
EUR/USD steady after eurozone inflation dipsThe euro is calm on Friday. In the European session, EUR/USD is trading at 1.0818, up 0.13%.
Inflation continues its downward trend in the eurozone. On Thursday, Germany and France saw inflation fall in February. The eurozone followed suit on Friday, as headline inflation dropped to 2.6% y/y in February, down from 2.8% in January.
This was the lowest rate in three months but was above the market estimate of 2.5%. A sharp drop in energy prices was the main reason for the drop in inflation. However, February inflation rose 0.6% m/m, higher than expected and above the January reading of -0.4%. This upswing was mainly due to services inflation which remains sticky and this will be a concern for the European Central Bank.
The core inflation rate, which excludes food and energy, fell to 3.1% in February, down from 3.3% in January but higher than the market estimate of 2.9%.
The slight decline in inflation is welcome news but is unlikely to have much sway on policy makers at the ECB, as the drop was mainly due to base effects. The ECB remains concerned about cutting rates too early and then having to deal with inflation reversing directions and accelerating. The next meeting is on March 7th and the central bank is expected to maintain the deposit rate at 4.0%.
Overshadowed by the inflation release was the eurozone unemployment rate, which ticked lower to 6.4% in January, down from a revised 6.5% in December and matching the market estimate. This was the lowest level since the formation of the eurozone in 1999. (The initial December release came in at 6.4% but was revised upwards to 6.5%.)
The impressive unemployment rate points to a robust labour market, which is surprising given that the economy has been in poor shape. The solid labour market and high wage growth means there is less pressure on the ECB to lower interest rates.
EUR/USD is testing resistance at 1.0819. Above, there is resistance at 1.0842
1.0782 and 1.0759 are providing support
EUR/USD dips as German inflation declinesThe euro is in negative territory on Thursday. In the North American session, EUR/USD is trading at 1.0800, down 0.35%.
Germany’s inflation rate dropped to 2.5% y/y in February, down from 2.9% in January and lower than the market estimate of 2.6%. This was the lowest level since June 2021, as inflation continues to move closer to the European Central Bank’s target of 2%.
Food and energy prices were the main drivers of the decline, while services inflation was unchanged at 3.4%. Monthly, inflation rose 0.4%, up from 0.2% in February and shy of the market estimate of 0.5%. Core CPI remained steady at 3.4%, its lowest level since July 2022.
The eurozone releases February on Friday, which is also expected to decline. Headline CPI is expected to ease to 2.5%, down from 2.8% in January. Core CPI is projected to decline to 2.9%, compared to 3.3% in January.
If the market estimates are on target, the drop in inflation will put pressure on the ECB to consider lowering interest rates as inflation gets closer to the ECB’s 2% target. ECB policy makers have been extremely cautious about easing monetary policy too quickly due to fears of inflation resurging, but the recipe of high interest rates and a weak eurozone economy could lead to a recession.
In the US, market pricing for Fed rate cuts has been slashed and is currently in line with the Fed projection of three rate cuts this year. In December, the markets priced in as many as six rate cuts but a surprisingly robust US economy and a Fed pushback against rate expectations has pushed a March rate cut off the table, with June or September the likely dates of an initial rate cut.
EUR/USD is testing support at 1.0823 . Below, there is support at 1.0760
There is resistance at 1.0885 and 1.0948
U.S Core PCE (FEDS FAVOURITE METRIC)U.S Core PCE (FEDS FAVOURITE METRIC)
Rep: 2.8% ✅ Slight decrease as Expected ✅
Exp: 2.8%
Prev: 2.9%
U.S. Headline PCE
Rep: 2.4% ✅ Notable Decrease Expected ✅
Exp: 2.4%
Prev: 2.6%
Both Headline & Core PCE have come in lower and as expected;
✅ Core decreased from 2.9% to 2.8%
✅ Headline PCE decreased from 2.6% to 2.4%
Historical Core PCE Norms
On the chart you can see that since 1990 the typical Core PCE range is between 1 - 3% (red dotted lines on chart - green area). We are slowly getting back down into this more historically moderate level. We have fallen below the 3% level and down into the historically moderate zone for PCE levels.
The Federal Reserve have advised that Core PCE is expected to decline to 2.2% by 2025 & finally reach its 2% target in 2026. At this rate we might reach 2% a little sooner than that.
For the full breakdown of the Core and Headline PCE and to know the differences between PCE and CPI, please review the Macro Monday I previously released which explains it all (see below link).
PUKA
Australian dollar slides after CPI stays steadyThe Australian dollar took a hit after Australian inflation was lower than expected. In the North American session, AUD/USD is trading at 0.6493, down 0.78%.
Australia’s inflation rate remained steady in January at 3.4% y/y, unchanged from December and below the market estimate of 3.6%. This matched the lowest rate of annual inflation since November 2021. The Reserve Bank of Australia’s preferred core indicator, the trimmed mean, dropped to 3.8%, its lowest level since March 2022.
The soft inflation data is an encouraging sign for the Reserve Bank of Australia that its aggressive rate-tightening cycle is keeping inflation in check and the upper level of the 1%-3% target range is not too far off. More importantly, it reduces the likelihood that the RBA will hike rates and raises expectations of two or three rate cuts late in the year. This explains the sharp decline in the Australian dollar today, as lower interest rates would make the Australian dollar less attractive to investors.
The RBA has raised rates only once since June 2023 and hasn’t ruled out rate hikes, although the markets believe that this is posturing by the central bank and the tightening cycle is over. Still, the RBA is unlikely to jump on the rate-cut bandwagon until it is convinced that inflation will continue to fall or the strong labour market shows signs of cooling. The next meeting is on March 18th and the RBA is widely expected to maintain rates and continue its “higher for longer” stance.
AUD/USD has pushed below support at 0.6584 earlier and is putting pressure on support at 0.6453
0.6526 and 0.6560 are the next resistance lines
New Zealand dollar calm ahead of RBNZ rate decisionThe New Zealand dollar is trading quietly on Tuesday. In the European session, NZD/USD is trading at 0.6165, down 0.12%.
All eyes are on the Reserve Bank of New Zealand, which will set the cash rate on Wednesday. The central bank is expected to hold rates at 5.50% for a sixth straight time. Most of the major central banks are looking to lower interest rates but the RBNZ is an outlier in that regard, warning that it could raise rates and the markets have price in a rate hike at Wednesday’s meeting at around 25%.
The central bank finds itself in an uncomfortable position of high inflation coupled with weak growth. Inflation is running at a 4.7% clip, well above the 1%-3% target band. A rate hike would help push inflation lower but is risky in a weak economic climate as the economy could tip into a recession.
Last week, retail sales for the fourth quarter fell by 1.9%, lower than expected and marking an eighth consecutive quarter of decline. GDP growth contracted in the third quarter by 0.3% and a second straight quarter of negative growth would meet the definition of a technical recession.
RBNZ policy makers have pushed back against market expectations of a rate cut this year, insisting that it won’t lower rates until 2025. We can expect a hawkish message from the central bank at Wednesday’s meeting, even if the Bank decides to maintain rates at their current level.
There is resistance at 0.6180 and 0.6236
0.6141 and 0.6085 are providing support
USDJPY Watch: Inflation Release to Shape yen’s Path? Japan's economy recently slid to the fourth-largest position, trailing Germany. This shift is primarily attributed to a weakened Japanese yen. In 2023, Japan's GDP stood at approximately $4.2 trillion, while Germany's was around $4.45 trillion.
The weakness in the Japanese yen is pressuring BOJ Governor Kazuo Ueda to address this by tightening Japan's ultra-easy policy. However, this move is complicated by concerns about inflation, which BOJ policymakers still consider unsustainable, even as inflation negatively impacts domestic demand, contributing to a technical recession in the Japanese economy.
The upcoming release of Japan's inflation rate, scheduled for the coming Monday, is anticipated to significantly influence the BOJ's decision regarding potential rate hikes in the coming months. Analysts predict a possible rate increase as early as April, especially if the country's annual spring wage negotiations confirm a trend of substantial wage increases.
On the 4-hour chart, we are watching for the possibility of the USDJPY breaking above the weekly high of 150.430 and reversing the string of lower highs going back to the beginning of last week (which just so happens to be the yearly high for the pair).
