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Inflation

USCCI - Consumer Confidence Index - Recession is HereThe US Consumer Confidence Index (USCCI) does not look so good. Consumers (normal people) are feeling anxious about their future, and they have good reasons for that. The Bull Market did not last long after the Covid Pandemic and people don't feel optimistic about their future spending or wealth. If you don't know what the CCI is, no worries, I will briefly explain, so that a 12 year old will know. A very well-known university in Michigan started doing some surveys a long time ago. They were asking people how they feel about their future, about their spending confidence, etc. Basically, you can also ask yourself: Can you afford a new car now? Are you making more money now then you were 2 years ago? Do you have financial stability? How do you feel about that? Are you thinking of moving into a new, nicer home? For me it's a NO for most questions above. Not sure about you... Now, if I may continue, I will tell you this: people are scared. In fact, Covid shocked the world as we know it. We got used to being bullied by the higher, running forces in the world. Anyway, there are many factors for which Consumers are pessimistic at these times: - War & Tensions: Ukraine vs. Russia - Inflation Spike - Energy Crisis - Federal Reserve (FED) Interest Rate Hike - Surging Prices - Bear Market Fears - Recession Talks Remember this: WINTER IS COMING! No joke, many will suffer. The media plays a major role with inflicting sentiments in your mind. As for me, I'm more of a technical guy, so I go with what my technical analysis tells me. Until now I mentioned my personal fundamental analysis take. I'm not optimistic about the markets. The FED messed it all up. They overreacted with that Quantitative Easing (QE). Artificial (fake & printed) money was injected, and of course it lost its value. Because of that, Inflation skyrocketed, and of course they're surprised. NO! It's the oldest trick in the book. They are controlling the global economy. It's actually them who are causing inflation or stagflation, and also them who are switching bullish and bearish gears. But enough about that. I'm gonna' switch to the Technical Side. I just wanted to get that off my chest. LOL So, I'm an Elliottician. That means I trade by using the Elliott Wave Theory. It proven to me over the years that it works. The Market's price movements are simply suman beings buy & sell emotions, as a herd. Yeah, they're all sheep, and most indicators are based those herd emotions. So, on this USCCI chart, which is coming from 1953, I'm labeling my Elliott Wave Count. What I see is a Triple Three Complex Correction, in a very BIG degree. TradingView calls it: Elliott Triple Combo Wave (WXYXZ). Based on that Wave Count, I am suspecting more down-side to this chart. In a nutshell, I'm anticipating a RECESSION. How big it will be and how long it will last, that depends. For what I know, the Bear Market has already started for Indices globally. My VIX (Volatility Index) idea backs this up. Short and simple: the USCCI would tag the 61.8% Fibonacci Retracement of Wave A (white). That's a point of interest for bulls, because it reflects the Golden Ratio. If it breaches and goes lower than that, then it's not just a Recession anymore, it's gonna' be more like a Depression. 1929 all over again. Funny how these Cycles come into play... My chart has labels and infographic stuff. Write a comment if you want, give a like if you give a :poop: :D Good luck!
ECONOMICS:USCCI
by EW4X
5
World Wars & US Inflation From 1914This is the US Inflation Rate (YoY) from 1914 until 2022. Symbol is called USIRYY and it measures the Inflation Volatility in the United States. With the War going on in Ukraine, and Russia trying to force its way through, I took the liberty of looking into the following: - How Global Wars Affect Inflation - How US Inflation Reacts to External Wars - How Wars Affect the Financial Markets You can see the time-lines, it's all laid-out in the chart (graph). I took all the Major World Wars and events that significantly affected, not only the US Inflation, but Inflation itself. First of all, the US Inflation Rate (USIRYY) tells me the following: * When the US was involved in a War, we can notice that the US Inflation spiked. * Most of the times when US was not involved in an External War, then Inflation dropped. That's because of War & Uncertainty Sentiment around this "terrific" word. War does not bring anything good, in fact, in only brings bad times. People die and global sentiment gets super-negative. This of course, leads to... you guessed it: Market Crash. Why? Because after or during times of War, there are Recessions and Depressions. Supply Chains are disrupted and the Global Economy falls on its face. What about looking at things from a Technical Analysis perspective? * Symmetrical Triangle: and the only way is UP! I will give you points which I believe are worth keeping in mind for the next Market Crash. First of all, let's be logical about this. Winter is coming and it's only gonna get worse before it gets better. As Inflation spiked to a 40y high, the higher powers intervened, in an attempt to cool the Inflation spike off. I'm talking here about the Federal Reserve (FED) ramping up the Interest Rates. This is the Effective Federal Funds Rate (FEDFUNDS). Can you see the break-out? They want to calm down Inflation, but they can't. Why? Because this is no ordinary Inflationary period, it's a long-lasting thing. One of those hyperinflation, deflation, stagflation, or whatever the heck these experts call it... :) The Volatility Index (VIX) tells me that another spike in Fear Sentiment is inevitable. I'm in love with Elliott Wave Analysis, so I labeled this next chart. This is the United States Consumer Confidence Index (USCCI) and it measures exactly what its name says, LOL. When it drops, people are freaking out. When it rises, people are optimistic and the Markets are going up. Daaaa! With all that said, what's the bottom line here? I believe that periods of terror are gonna hit us all. Are we having World War 3? Who the heck knows? All I know is that there are more pieces to this puzzle: United States 10Y Bonds (USB10YUSD) have reached the Support, and a spike bigger than the Covid Pandemic has started: The 10Y Treasury Note Yield (TNX) have broken out of a 40y down-trend: Isn't it ironic how it synced with the Inflation 40y high? Damn! Germany 40 (DAX, GER30, GRXEUR) is doomed. Fractal sequence, Descending Channel, and a "beautiful" ABC Elliott Wave Pattern. So, how can you prosper from all this? Metals could be a good hedge. Gold (XAUUSD) just broke out of an important Bearish Structure. Maybe it will go up. Natural Gas (NG1!) & Crude Oil (USOIL) however, are showing Bearish Reversals. Bitcoin (BTCUSD) is Bearish until further notice as well. But this may become the new currency moving forward. In times of terror, the banking systems might need to change. Cash and Card is so '00. WHAT'S YOUR TAKE? WAR OR PEACE? Leave your commend down below. Cheers! Richard
ECONOMICS:USIRYYEducation
by EW4X
5
USD/JPY edges lower, Tokyo Core CPI risesThe Japanese yen has steadied after three straight days of losses. In the European session, USD/JPY is trading at 150.11, down 0.19%. Tokyo Core CPI climbed 2.7% y/y in October, above 2.5% in September which was also the consensus estimate. The index, which excludes fresh food is a key indicator of inflation trends in Japan and is closely monitored by the Bank of Japan. Tokyo's headline CPI also rose in October, from 2.8% to 3.3%. The Bank of Japan will find it hard to ignore these hotter-than-expected inflation readings. The timing of these releases is awkward for the BoJ, which holds its policy meeting on Oct. 30-31. Underlying inflation is proving to be stickier than expected and BoJ policy makers may have to revise upwards their inflation outlooks for 2023 and 2024. High inflation is a risk to Japan's recovery, putting pressure on the BoJ to make some kind of move at the meeting. The central bank will have a busy agenda at next week's meeting. Aside from stubbornly high inflation, the BoJ will have to decide whether to tweak its yield curve control (YCC) program and what to do about the falling yen. The Japanese currency breached the symbolic 150 line this week for the first time since October 3rd, raising speculation that the BoJ could shift its policy or even intervene in the currency markets. Tokyo has responded to the yen breaching 150 with the usual verbal intervention, warning investors not to sell the yen. The BoJ won't be providing any advance warning about a currency intervention, so traders should remain on alert. For those doubting US exceptionalism, the superb US GDP of 4.9% in the third quarter was proof in the pudding of a robust US economy. This was the fastest growth rate since Q4 of 2021, boosted by strong consumer spending in the third quarter. The sharp rise in growth hasn't changed market expectations with regard to rates, which have priced in pauses at the November and December meetings. USD/JPY is testing support at 1.5017. Below, there is support at 149.67 There is resistance at 1.5049 and 1.5099
by OANDA
NZD slides against the Japanese YenThe New Zealand Dollar (NZD) is trading bearish against the Japanese Yen (JPY) at 87.386 on Friday, October 27, 2023, following comments from Japan's Chief Cabinet Secretary Taro Matsuno that the Bank of Japan (BoJ) is expected to conduct appropriate monetary policy. Matsuno's comments come amid rising expectations that the BoJ will eventually tighten monetary policy in response to rising inflation in Japan. The BoJ has been maintaining an ultra-loose monetary policy stance for many years, but this has led to a significant weakening of the JPY in recent months. The NZDJPY currency pair has been under pressure in recent weeks as investors have priced in the possibility of a more hawkish BoJ. The pair has fallen by over 5% since the start of October. The bearish outlook for NZDJPY is further supported by the technical outlook. The pair has broken below a key support level at 88.00, and is now on track to test the next support level at 86.50. Factors Weighing on NZDJPY There are a number of factors weighing on NZDJPY at present, including: Expectations of BoJ tightening: The BoJ is expected to be one of the last major central banks to tighten monetary policy, which is putting downward pressure on the JPY. Rising inflation in Japan: Japan's inflation rate has been rising in recent months, which is putting pressure on the BoJ to tighten monetary policy. Global risk aversion: Global investors are currently risk averse, which is leading to a sell-off in riskier assets such as the NZD. Weak New Zealand economic data: The New Zealand economy has been slowing in recent months, which is weighing on the NZD. Technical Outlook for NZDJPY The technical outlook for NZDJPY is bearish. The pair has broken below a key support level at 88.00, and is now on track to test the next support level at 86.50. If NZDJPY breaks below 86.50, it could fall to 85.00 or even lower. Trading Strategy Traders who are bearish on NZDJPY could consider shorting the pair at current levels. A stop loss could be placed above the recent high at 88.00. A profit target could be placed at 86.50 or 85.00. It is important to note that the foreign exchange market is volatile and prices can move quickly. Traders should always use risk management techniques when trading currencies.
Short
by masterclass618
Inflation not down under!Australia's CPI data, released yesterday, showcased figures hotter than anticipated. While this may not be 'reaction-worthy' news on its own, the scenario in Australia is worth delving into for several reasons. Inflation Trends Initially, let's consider inflation trends. In most western economies, although inflation remains above central bank targets, the trends are on a downward trajectory. However, when juxtaposed against those for the European Union (EU) and the United States (US), Australia's (AU) inflation rates on a month-over-month (MOM) and year-over-year (YOY) basis still stick out from the norm. Moreover, yesterday’s CPI prints surpassed consensus on both the YOY & MOM basis, indicating a notable deviation from expectations. In fact, Australia's YOY CPI is now on its longest streak above inflation expectations, and crucially, inflation expectations have ceased revising downwards. Given the higher inflation levels compared to its peers, consensus estimates, and expectations, inflation remains a significant concern for Australia. Interest Rates In the realm of interest rates, Australia has been a long-standing “pauser,” having maintained its policy rate unchanged since its June meeting. This prolonged pause now further opens the leeway to raise rates, especially given the “watch and see” approach adopted towards burgeoning inflation. Additionally, its interest rates remain low compared to the US, EU, Canada, and even New Zealand. As a result, on the real rates basis, Australia trails far behind, with its policy rate still 1.3% behind its inflation rate, significantly less restrictive compared to other economies that have already moved into positive real rates territory. We posit that the RBA is behind the curve and has room to react, given the considerably long period of pause and still negative real rates. The market seems to echo this sentiment too, as the odds for a hike in the next meeting surged post the CPI news, moving from 21% to 55%! Against multiple currencies, the AUD appears to be threading above the long-term support level, a threshold that has essentially defined AUD low. This strong support is expected to hold, given its tested and respected level across multiple currency crosses since 2020. Policy turning points between the two currencies, as indicated by the turn in the interest rate differential, have generally marked the trend change for the currency, notably for the AUDEUR pair. Given the persisting high inflation in Australia compared to various economies and metrics, should market expectations trend in the right direction, it's plausible the Reserve Bank of Australia (RBA) may react with a rate hike. This action could tilt the rate differential and interest for the AUD, bolstering the currency. To capitalize on this bullish view on the AUD, we can consider a long position on the AUDEUR. We can set up this trade via a long position on the CME Australian Dollar Futures and a short position on the CME Euro FX futures to create a synthetic long AUD/EUR position at the current price level of 0.5951, stop at 0.5865 and take profit at 0.615. Given that one CME Euro FX futures is for 125,000 Euros and one CME Australian Dollar Futures is for 100,000 Australian Dollars, this suggest that we should use two Australian Dollar Futures to one Euro FX Futures to match the contract size, given that 125,000 Euros is roughly equivalent to 210,000 Australian Dollars at the prevailing exchange rate. Each 0.00005 increment in the Australian Dollar Futures is equal to 5 USD and each 0.00005 increment in the Euro FX Futures is equal to 6.25 USD. The charts above were generated using CME’s Real-Time data available on TradingView. Inspirante Trading Solutions is subscribed to both TradingView Premium and CME Real-time Market Data which allows us to identify trading set-ups in real-time and express our market opinions. 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 Disclaimer: The contents in this Idea are intended for information purpose only and do not constitute investment recommendation or advice. Nor are they used to promote any specific products or services. They serve as an integral part of a case study to demonstrate fundamental concepts in risk management under given market scenarios. A full version of the disclaimer is available in our profile description. Reference: www.cmegroup.com www.cmegroup.com melbourneinstitute.unimelb.edu.au www.rba.gov.au www.asx.com.au www.cmegroup.com
ECONOMICS:AUINTRLong
by inspirante
2
AUD/USD extends gains, employment report nextThe Australian dollar has extended this week's gains. In the North American session, AUD/USD is trading at 0.6357, up 0.36%. Australia releases inflation on a quarterly basis, which magnifies the significance of each release. We'll get a look at third-quarter inflation on Wednesday, with a market consensus of 1.1% q/q, compared to 0.8% in Q2. Inflation is expected to fall to 5.3% y/y in Q3, down from 6.0% in the second quarter. Inflation eased in the second quarter, courtesy of a drop in fuel and food prices. The core inflation rate excludes energy and food prices but also declined in Q2 to 5.9% y/y, its lowest rate in a year. The drop in inflation is an encouraging sign and the Reserve Bank of Australia is hoping that the downtrend continues in the third quarter. Still, inflation is well above the RBA's target range of 2-3% and it will be a challenge for the central bank to bring inflation back to the target range. The RBA meets next on November 7th after holding rates for four straight months. What can we expect? Just two weeks ago, the rate odds for a quarter-point hike at the November meeting were just 3%, according to the ASX RBA rate tracker. That has ballooned to 21% currently, which means that while a fifth consecutive pause is likely, it is no longer considered a shoo-in. The RBA has been sending out a hawkish message, saying that the battle with inflation is far from over and further rate hikes remain on the table. Earlier today, Governor Bullock said the RBA "will not hesitate" to raise the cash rate over inflation fears. Despite the RBA's jawboning, the markets are leaning towards another pause, and provided that Wednesday's inflation report is not hotter than expected, it should cement a pause at the November meeting. AUD/USD has support at 0.6240 and 0.6184 0.6343 and 0.6399 are the next resistance lines
by fisherkj4
Inflation SupercycleOn the afternoon of October 3rd, 2023 something unprecedented happened in the U.S. Treasury market. For the first time ever, bear steepening caused the 20-year U.S. Treasury yield and the 2-year U.S. Treasury yield to uninvert. Bear steepening refers to a scenario in which long-duration bond yields rise faster than short-duration bond yields, as bond yields rise across the term structure. In all past instances, inverted yield curves have normalized due to bull steepening . The probability that bear steepening would cause an inverted yield curve to normalize is so low that, until now, most term structure models excluded the possibility of it ever happening. In this post, I'll explain why this anomalous event is a major stagflation warning. The chart above shows that the 10-year Treasury yield has been rising much faster than the 3-month Treasury yield throughout 2023, narrowing the once-deep yield curve inversion. Since a yield curve inversion indicates that a recession is coming, and bear steepening indicates that the market is pricing in higher inflation for the short term, and even more so, for the long term, then bear steepening during a yield curve inversion indicates that high inflation may persist even during the recessionary phase. High inflation during the recessionary period is what defines stagflation . Since very strong bear steepening is normalizing a deeply inverted yield curve, the combination of these events is a warning that severe stagflation is likely coming. High inflation has caused Treasury yields to surge at an astronomical rate of change. Bond prices, which move in the opposite direction as yields, have sharply declined causing destabilizing losses. The effects of these massive bond losses are not even close to being fully realized by the broad economy. The image above shows a bond ETF heatmap with year-to-date returns. Large losses have been mounting across numerous bond ETFs. Long-duration Treasury ETF NASDAQ:TLT has declined by more than 18% this year. Click here to interact with the bond ETF heatmap Despite the extreme pace of monetary tightening, many central banks are still struggling to contain inflation. Inflationary fiscal spending and ballooning debt-to-GDP levels are confounding central bank monetary policy efforts. In Argentina, for example, inflation continues to spiral higher despite the central bank raising interest rates to 133%. The chart above shows that the central bank of Argentina has hiked interest rates to 133%. Despite this extreme interest rate, the country's inflation rate continues to spiral higher. In an inflationary spiral, there is no upper limit to how high interest rates can go. As the Federal Reserve tightens the supply of the U.S. dollar -- the predominant global reserve currency -- all other countries (with less demanded fiat currency) generally must tighten their monetary supply by a greater degree in order to contain inflation. If a country fails to maintain tighter monetary conditions than the Federal Reserve, then the supply of that country's (lesser demanded) fiat currency will grow against the supply of the (greater demanded, and scarcer) U.S. dollar, causing devaluation of the former against the latter. In effect, by controlling the global reserve currency, the Federal Reserve is able to export inflation to other countries. This phenomenon is explained by the Dollar Milkshake Theory . The forex chart above shows FX:USDJPY pushing up against 150 yen to the dollar. The longer the Bank of Japan continues to maintain significantly looser monetary conditions than the Fed, the longer the yen will continue to devalue against the U.S. dollar. The meteoric rise in bond yields is particularly concerning because it has broken the long-term downtrend, signaling the start of a new supercycle. After hitting the zero lower bound in 2020, yields have rebounded and pierced through long-term resistance levels. The chart above shows that the 10-year U.S. Treasury yield broke above long-term resistance, ending the period of declining interest rates that characterized the monetary easing supercycle. We've entered into a new supercycle, one in which lower interest rates over time are a thing of the past. The new supercycle will be characterized by persistently high inflation. It will start off insidiously, with brief periods of disinflation, but over the long term it will accelerate higher and higher, ultimately causing today's fiat currencies to meet the same fate that every fiat currency in history has met: hyperinflation. * * * Important Disclaimer Nothing in this post should be considered financial advice. Trading and investing always involve risks and one should carefully review all such risks before making a trade or investment decision. Do not buy or sell any security based on anything in this post. Please consult with a financial advisor before making any financial decisions. This post is for educational purposes only.
FRED:M2SL
by SpyMasterTrades
46
GBP/USD flat as retail sales eyedThe British pound is drifting on Thursday. In the North American session, GBP/USD is trading at 1.2142, almost unchanged. The UK inflation report on Wednesday was a stark reminder that inflation remains stubborn and sticky. The Bank of England has raised the benchmark rate to 5.25%, but headline inflation was steady at 6.7% y/y and the core rate ticked lower to 6.1%, down from 6.2%. Both readings were higher than expected disappointed investors sent the British pound lower on Wednesday. A key driver of headline inflation was rising motor fuel prices. The Israel-Hamas war has raised tensions throughout the Middle East and if there are disruptions in crude oil, inflation would likely rise due to higher motor fuel costs. The UK wraps up the week with retail sales on Friday. The markets are braced for a weak September with a market estimate of -0.2%, following a 0.4% gain in August. On an annualized basis, retail sales declined by 1.4% in August, but are expected to improve to -0.1% in September. In the US, unemployment claims for the week of October 14th sizzled at 198,000. This was lower than the previous week's release of 211,000 (revised) and lower than the consensus estimate of 212,000. The US labour market has been showing signs of softening as the Federal Reserve's rate hikes continue to filter through the economy and dampen economic growth. The markets are always interested in what Fed members have to say, hoping for some insights into Fed rate policy. A host of FOMC members will deliver remarks today, highlighted by a speech from Fed Chair Powell at an event in New York City. Today's lineup has added significance as the Fed will enter a blackout period ahead of the meeting on November 1st. The sharp rise in US Treasuries has led to some Fed members saying that inflation could fall without further hikes, and investors will be watching to see if that dovish message is repeated today by Powell and his colleagues. There is resistance at 1.2163 and 1.2202 1.2066 and 1.1987 and providing support
by fisherkj4
S&P500 adjusted for Money Suppy is unchanged for 26 years In order to get the decimal point to the right of a number, I had to multiply AMEX:SPY by 1,000,000,000,000 or 1 Trillion. The price of the market is unchanged since January 1997 with the adjustment. That is an incredible 26 years where prices haven't bean 'inflation as measured by the quantity of money' floating around in the banking system. Nominally, our purchasing power if stored in stocks has been maintained over that time period, which is good. BUT, if you think you are wealthier over these last 26 years, it may be because of your ability to pick stocks that do better than the market overall. The Nasdaq likely did far better than the S&P500, for example. 321 months sideways and plenty of deviation around the level we are at now. I have adjusted other charts for inflation to make a point and I wanted to add this one, which is more aggressive, to the bunch. Tim West October 18, 2023. 12:58PM EST
AMEX:SPY
by timwest
11
UK Inflation - worse things to come?Overview The UK's September inflation figures were released today. Inflation has not come down and continues to be high. This puts the Bank of England (BOE) in a dilemma. The Details UK YOY inflation has been released as 6.70%, the same as the previous month. Despite the BOE's rate hikes, UK inflation remains high and looks stubborn now. This could be the start of some significant economic challenges for the UK. Further rate hikes - the conventional policy is to continue to raise rates. Expect another rate hike from the BOE - possibly even rate hikes, yes, plural. The problem with this is the current rates are having a significant pinch on UK households. To raise rates further, signs the financial death warrant on many UK households. To beat inflation, the BOE may need to keep hiking rates until something breaks, i.e. the UK hits recession. Stop raising rates - this could be seen as irresponsible and letting inflation off its leash. So, continue to raise rates and break the UK economy, or hold rates and let inflation get out of control. Things to consider: This is early days. It will take some time for the above to dawn on the market. As this is early days, inflation for October may be lower, so the "panic" will be over quickly. Holding or raising rates could be bad news for GBP. It is a sell either way. Raise rates and the UK hits recession. Don't hike rates and get hit with high inflation. The latter will cause more substantial downside moves on GBP pairs.
by Samuel_Morton_Trader
GBP/USD slips on strong US retail salesThe British pound has declined 0.56% against the US dollar on Wednesday, wiping out yesterday's gains. In the North American session, GBP/USD is trading at 1.2158, down 0.48%. The pound's downswing was driven by a higher-than-expected US retail sales report. Retail sales in the US surprised on the upside with a gain of 3.8% y/y in September. This beat the upwardly revised 2.9% rise in August and crushed the market estimate of 1.5%. On a monthly basis, retail sales rose 0.7%, compared to an upwardly revised 0.8% in August and well above the market estimate of 0.3%. Core retail sales, which exclude automobiles and gasoline, rose by 0.6% m/m, down from an upwardly revised 0.9% in August but easily beating the market estimate of 0.2%. The better-than-expected retail sales report indicates that consumer spending remains robust despite the challenging economic picture, which includes high inflation and elevated borrowing costs. Consumer spending likely accelerated in the third quarter and that will be reflected in the consumer spending component of GDP. The UK releases inflation on Wednesday. September CPI is expected to tick lower to 6.6% after a 6.7% reading in August. Inflation is at its lowest level since February 2022 but remains more than three times above the Bank of England's 2% target. The core rate, which excludes food and energy is closely monitored by the BoE, is expected to dip to 6.0%, compared to 6.2% in August. If inflation falls as expected or even further, it will provide support for the BoE to pause for a second straight time at the November 2nd meeting and the pound could react with losses. The Bank's decision to hold rates at the October meeting was a narrow 5-4 vote and Governor Bailey said yesterday that he expected upcoming rate decisions to be tight as well. GBP/USD has pushed below support at 1.2202. Below, there is support at 1.2104 There is resistance at 1.2281 and 1.2343
by fisherkj4
US Govt Real Debt is Down Last 3 YearsThe "real value of the US Gov't Debt" is a different way of looking at our situation through rose-colored glasses, but it is a fair analysis. If we "adjust the debt level for inflation" as measured by the CPI Index (All Urban Consumers Index) from the beginning of the series back in 1966, you will have a line that is grinding SIDEWAYS since October 2020 at a reading of $105.9 Billion. The latest number was the July reading at $105.1 Billion which is a slight decline. All of this sounds like "hocus-pocus" but it is a fact that inflation makes it easier for the Gov't to pay off its debt in the new "cheaper valued" dollars. The dollar is the same, only there are far more of them floating around in the system so each of them is worth less. If we analyze how the US debt has increased relative to other countries' debt, we could also see how we are doing. The financial market's are open for analysts to find discrepancies between the value of various currencies and over time, the market adjusts for the amount of currency being created in an economy. We can look at the TVC:DXY or US Dollar Index to see how the US economy has fared versus its trading partners. The Dollar Index is weighted for the amount of trading between the various currencies. I can follow up on that analysis in the next chart. For now, we can at least see an optimistic chart about the actual "REAL" amount of debt that the US Gov't (which is US, the taxpayers) has over the last 3 years. Covid spending and lockdown payments to keep the economy afloat certainly launched us up into the stratosphere FIRST but since 2020 that debt has been in a sideways pattern.
FRED:GFDEBTN
by timwest
6
NZD/USD rises on strong Services PMIThe New Zealand dollar has started the week with strong gains. In the European session, NZD/USD is trading at 0.5919, up 0.55%. It was a miserable week for the News Zealand dollar, which fell 1.74%, its worst weekly performance since August. The driver for today's gains was the New Zealand Services PMI, which rose to 50.7 in September, up from 47. 7 in August. This reading is barely in expansion territory, but it indicates a welcome rebound after three straight declines - the 50 level separates contraction from expansion. As is the case with most major economies, the services sector is in better shape than manufacturing. Last week's Manufacturing PMI weakened to 45.3 in September, down from 46.1 a month earlier. This marked a seventh straight decline and was the lowest reading since August 2021. Inflation is still on everyone's mind and continues to have a strong impact on the currency markets. This was reiterated last week with last Thursday's US inflation report, which remained unchanged at 3.7% and was just above the market estimate of 3.6%. The release unnerved investors and sent risk appetite and risk currencies tumbling. The New Zealand dollar was steamrolled, sliding 1.54% on Thursday. New Zealand will release third-quarter inflation on Tuesday. The market estimate stands at 2.0% q/q, which would be a sharp rise from the 1.1% gain in the second quarter. The sharp rise in gasoline prices is expected to boost inflation. Core CPI, which excludes energy prices, will be closely watched by the central bank and policy makers will be looking for a decline on Tuesday. If that doesn't happen, expectations of a rate hike in November will likely rise. NZD/USD put pressure on resistance at 0.5942 earlier. The next resistance line is 0.5999 There is support at 0.5888 and 0.5827
by fisherkj4
UK and Canadian Inflation RatesOverview UK and Canadian inflation rates will be released next week. These events could provide insight into whether the Bank of England(BOE) and the Bank of Canada(BOC) decide to raise rates further. The Details As things currently stand, the BOE will likely pause rates, and the BOC will raise rates again. This is in line with the current inflation figures. Next week's inflation figures - Tuesday 17th for Canada and Wednesday 18th for the UK - may give more precise direction to what the BOE and BOC decide what to do next: hike, cut, or pause. August's inflation figure for Canada was 4.00% and 6.70% for the UK. Things to Consider: If September's inflation figures are higher or the same as August's, this gives a greater chance of further rate hikes. Another rate hike from the BOC will likely strengthen the CAD. Another rate hike from the BOE will likely strengthen the GBP. If September's figures are lower than August's, this gives a greater chance of the central banks holding rates and lowering rates in the near future. This will weaken the CAD and GBP. Key CAD pairs could be FX:EURCAD FX:GBPCAD FX:AUDCAD Key GBP pairs could be FX:GBPAUD FX:GBPCAD FX:GBPNZD
by Samuel_Morton_Trader
USD/JPY heads closer to 150 after US inflation reportThe Japanese yen is slightly lower on Friday. In the European session, USD/JPY is trading at 149.63, down 0.12%. The US inflation report for September was unchanged at 3.7% y/y, but this was higher than the market estimate of 3.6% y/y and the market reaction sent the US dollar higher against all the major currencies. USD/JPY rose 0.43% on Thursday, hitting a high of 149.82. The yen has recovered slightly but the critical 150 line remains within striking distance. Earlier in the month, the yen spiked higher after breaching 150 and the markets were abuzz with speculation that the Ministry of Finance (MOF) had intervened to prop up the yen. The MoF kept the markets guessing, as it likes to do, but the central bank's money market data indicated that it likely did not intervene. Still, the 150 line remains a psychologically important level and another breach could trigger volatility from the Japanese currency. The markets responded to the higher-than-expected US inflation release, as expectations increased that the Fed would be forced to continue its "higher for longer" rate policy and could even raise rates one final time before the end of the year. Overshadowed by all the talk about the hot CPI was the fact that the core rate dropped from 4.3% to 4.1%, matching expectations. This should encourage the Fed, which pays more attention to the core rate, as it is considered a better gauge of inflation trends. US unemployment claims pointed to a resilient labor market that has cracks but refuses to break. For the week ending October 7th, unemployment claims were unchanged at 209,000, below the estimate of 210,000. This is further evidence that the labour market remains very tight, which is complicating the Fed's efforts to bring inflation back down to the 2% target. 150.21 and 151.13 are the next resistance lines 149.23 and 148.31 are providing support
by fisherkj4
USD/JPY heads closer to 150 after US inflation reportThe Japanese yen is slightly lower on Friday. In the European session, USD/JPY is trading at 149.63, down 0.12%. The US inflation report for September was unchanged at 3.7% y/y, but this was higher than the market estimate of 3.6% y/y and the market reaction sent the US dollar higher against all the major currencies. USD/JPY rose 0.43% on Thursday, hitting a high of 149.82. The yen has recovered slightly but the critical 150 line remains within striking distance. Earlier in the month, the yen spiked higher after breaching 150 and the markets were abuzz with speculation that the Ministry of Finance (MOF) had intervened to prop up the yen. The MoF kept the markets guessing, as it likes to do, but the central bank's money market data indicated that it likely did not intervene. Still, the 150 line remains a psychologically important level and another breach could trigger volatility from the Japanese currency. The markets responded to the higher-than-expected US inflation release, as expectations increased that the Fed would be forced to continue its "higher for longer" rate policy and could even raise rates one final time before the end of the year. Overshadowed by all the talk about the hot CPI was the fact that the core rate dropped from 4.3% to 4.1%, matching expectations. This should encourage the Fed, which pays more attention to the core rate, as it is considered a better gauge of inflation trends. US unemployment claims pointed to a resilient labor market that has cracks but refuses to break. For the week ending October 7th, unemployment claims were unchanged at 209,000, below the estimate of 210,000. This is further evidence that the labour market remains very tight, which is complicating the Fed's efforts to bring inflation back down to the 2% target. 150.21 and 151.13 are the next resistance lines 149.23 and 148.31 are providing support
by fisherkj4
NZD/USD sinks after US CPI report, NZ Mfg. Index nextThe New Zealand dollar is sharply lower on Thursday. In the North American session, NZD/USD is trading at 0.5943, down 1.27% on the day. The US dollar has strengthened against the major currencies after today's inflation report and the New Zealand dollar has been hit particularly hard. On Friday, New Zealand releases the manufacturing index, which is expected to rise to 46.9 in September, compared to 46.1 in August. A reading below 50.0 indicates contraction. The September US inflation report was half-good-half bad, as headline CPI was unchanged while Core CPI declined. Headline CPI remained unchanged at 3.7% y/y, higher than the market estimate of 3.6% y/y. The core rate, which is a better gauge of long-term inflation trends, fell from 4.3% to 4.1% y/y, matching the market estimate. This marked the lowest level since September 2021. The stronger-than-expected headline CPI has raised expectations that the Federal Reserve will keep rates elevated for longer and could raise rates before the end of the year. The battle to bring inflation back down to the Fed's 2% target won't be easy, but a new wrinkle in the equation is the sharp rise in US Treasury yields. That has meant higher borrowing costs, and some Fed members have sounded more dovish, saying that the rise in yields could slow growth and push inflation down without the Fed having to raise rates. There is some dissension among Fed policymakers with regard to policy, as yesterday's FOMC minutes indicated. At the September meeting, the Fed held rates for the first time in the current tightening cycle. A majority said that a rate hike would be needed "at a future meeting", while a minority felt no more hikes were necessary. All agreed that policy should remain restrictive until the Fed was confident that inflation "is moving down sustainably" to its target. The US dollar has posted broad gains following the inflation release, and the Fed rate odds of a hike before the end of the year have jumped to 38%, up from 26% prior to the inflation report, according to the CME FedWatch Tool. NZD/USD is testing support at 0.5956. The next support level is 0.5905 There is resistance at 0.6042 and 0.6093
by fisherkj4