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Market Update - November 17th 2023 Bitcoin and ether dip early, but recoup some gains later in the week: Bitcoin and ether had a sudden drop on Tuesday as equity markets roared following a favorable inflation report. Both cryptos, however, retraced losses quickly. Ether was also boosted on Thursday as BlackRock filed its S-1 for a spot ether ETF with the SEC. Solana’s upward trajectory continues as Cathie Wood touts the network: Solana gained ~8% this week as ARK Invest CEO Cathie Wood praised the network’s speed and cost-effectiveness in a CNBC interview. Solana has rallied ~150% over the past 30 days and is up more than ~325% over the past year. Equity markets soar as inflation cooled in October: Lower-than-expected inflation data released on Tuesday fueled a strong rally across equities, with the S&P 500 and Nasdaq both gaining over 2% on the day. The favorable inflation data suggests we may be nearing the end of the Fed's interest rate hiking cycle, which has brought rates to a 22-year high. Avalanche partners with JPMorgan and Apollo to bring blockchain to portfolio management: Avalanche announced a partnership with J.P. Morgan and Apollo Global Management during this week’s Singapore Fintech Festival to use blockchain technology in portfolio management. The initiative, overseen by the Singapore Monetary Authority’s (MAS) Project Guardian, plans to leverage blockchain smart contracts and tokenization to automate and simplify portfolio management. 📜 Topic of the Week: Private and Consortium Blockchains 🫱 Read more here
GEMINI:BTCUSD
by Gemini
USDX - BULLISH SCENARIOThe US Dollar index is currently positioned near crucial support levels, including the 38% retracement from July 2023 lows to October 2023 highs, alongside the previous descending channel trend line and support from the 50% retracement, 200-day moving average (DMA), and a potential bull flag pattern. Despite recent declines due to factors like a slightly weaker Consumer Price Index (CPI), reduced yields, and a general stock market rally, these support levels might prove stronger than anticipated. With the stock market vulnerable to a near-term pullback and upcoming European Purchasing Managers' Index (PMI) releases, the narrative of "USA exceptionalism" could persist. A significant bullish signal for the US Dollar index would be a rally above the 50-day moving average (DMA) at approximately the 105.75 level.
PEPPERSTONE:USDXLong
by legacyFXofficial
GBP/USD edges lower, eyes retail salesThe British pound has extended its losses on Thursday. In the European session, GBP/USD is trading at 1.2401, down 0.11%. The pound is having a roller-coaster week. GBP/USD surged 1.8% on Tuesday following the soft US inflation print and climbed to a two-month high. However, the pound has since coughed up about half those gains and is trading at the 1.24 line. The UK releases retail sales on Friday, which could result in further volatility. UK retail sales had a dreadful September, coming in at -0.9% m/m and missing the forecast of 0.2%. The markets are expecting a rebound in October, with a forecast of 0.3%. September was unseasonably hot, which led to fewer purchases of autumn clothing. Consumers remain deeply pessimistic about the economy and are being squeezed by higher heating and fuel costs, elevated borrowing costs and a softer job market. On the inflation front, there was good news on Wednesday as inflation dropped to 4.6%, down sharply from 6.7% and below the forecast of 4.8%. This was the lowest level since October 2021 and inflation has finally dropped below 5%. However, the BoE has been stressing that the battle against inflation is far from over, and has projected that inflation won't fall to the 2% target until late 2025. In the US, producer prices fell 0.5% m/m in October, its largest drop since April 2020 and below expectations. The decline in gasoline prices was a major factor in the soft release. Retail sales for October dipped 0.1%, missing the estimate of 0.3% and snapping a six-month streak of gains. The weak numbers are further evidence that the US economy is cooling down. GBP/USD is putting pressure on support at 1.2374. Below, there is support at 1.2312 1.2476 and 1.2522 are the next resistance lines
by OANDA
US yields looking "toppy"; more weakness after rallyThe US CPI came down more than expected yesterday at 3.2% y/y, and as a result the USD fell sharply with US yeilds, while stocks and metals are on the rise. For now, this seems to be a very important data as it causes also a very important breakdown on USD index and US yeilds. Looking at the US yeilds, we have five waves down, so it means that top is in place, and suggests that speculators believe that FED is done with hiking. But road map to lower yields/higher bonds will be a bit "bumpy", so be aware of some rally, especially if we consider five waves down on 10 year US yields. So A-B-C rally can cause some pullbacks on XXX/Dollar pairs, which will eventually see more upside after pullbacks. Grega
TVC:US10Y
by ew-forecast
AUD/USD soars on US inflation, Aussie employment nextThe Australian dollar is unchanged on Wednesday, after massive gains a day earlier. In the European session, AUD/USD is trading at 0.6505. Australian wage growth climbed 1.3% q/q in the third quarter, matching the consensus estimate and above an upwardly revised 0.9% gain in Q2. This was the highest gain since records started in 1997, but the spike was largely due to an increase in minimum wage and a pay rise for elderly care workers. The unusual confluence of factors behind the strong wage growth print meant that it had little effect on market pricing of a rate hike. The markets have priced in a pause above 90% at the Reserve Bank of Australia's next meeting on December 5th. The RBA raised rates earlier this month after four straight pauses but the hike was considered dovish by the markets and the Australian dollar took a tumble following the decision. Australia releases employment data on Thursday, with the labour market continuing to show resilience. The economy is expected to have added 20,000 jobs in October, compared to 6,700 in September. The RBA will be keeping a close eye on consumer inflation expectations, which is expected to fall in October from 4.8% to 4.1%. The US inflation report was only a bit lower than expected, but the US dollar was pummelled on Tuesday with sharp losses against the major currencies. The Australian dollar soared, gaining 2% against the greenback. Monthly, headline inflation was unchanged in October for the first time in 15 months, with lower gasoline prices helping to push inflation lower. On an annual basis, headline inflation fell from 3.7% to 3.2%, below the market consensus of 3.3%. Core inflation inched lower to 4.0%, down from the September reading of 4.1% which was also the market consensus. AUD/USD is putting pressure on resistance at 0.6526. Above, there is resistance at 0.6592 0.6476 and 0.6408 are providing support
by OANDA
EUR/USD Pullback before 1.10!The EUR/USD pair holds above 1.0850 but faces resistance below the 1.0900 threshold during the early European trading hours on Wednesday. Weaker-than-expected US inflation data exerts some bearish pressure on the US Dollar (USD) and supports the EUR/USD pair. That being said, the markets anticipate that the Federal Reserve (Fed) has concluded the hiking cycle this year and expects rate cuts in the early second quarter of 2024. The region between 1.0895 and 1.0900 represents an immediate resistance level for the pair. Further north, the next barrier is at 1.0933 (high of August 22). Additional resistance is observed at 1.0947 (high of August 30), with the final destination at 1.102 (a round figure and high of August 11). On the flip side, the initial support level is near the psychological round figure of 1.0800. The next contention level will emerge at the November high of 1.0756, followed by 1.0713 and 1.0672. The market overnight experienced a false breakout of the swing high, which could lead the price to react during the London session, initially gaining liquidity above the Asia high and subsequently pulling back towards the 38% Fibonacci level. Let me know what you think, comment, and leave a like. Happy trading to everyone from Nicola, the CEO of Forex48 Trading Academy.
Short
by EdgeTradingJourney
37
GBP/USD Pullback before of 1.27!On Tuesday, the GBP/USD experienced a significant surge following the release of a US inflation report, which increased the likelihood that the Federal Reserve has concluded its interest rate hikes. The US Bureau of Labor Statistics reported a more pronounced decrease in October's inflation than expected, with the Consumer Price Index (CPI) dropping to 3.2% annually from 3.7%, and the core CPI falling from 4.1% to 4%, missing estimates. These data triggered a dollar collapse, with the US Dollar Index falling over 1.40% to 104.13, and the yield on the US 10-year benchmark note dropping to 4.45%, a level last seen in September 2023. In the US, the Producer Price Index, Retail Sales, New York Fed Empire State Manufacturing Index, and Federal Reserve speakers are anticipated. Additionally, I note a price in supply zones in H4 and the break of some swing highs, suggesting a potential pullback before a continued bullish run towards 1.27. Comment and leave a like, greetings from Nicola, the CEO of Forex48 Trading Academy.
Short
by EdgeTradingJourney
7
USD/JPY slips on soft US inflationThe Japanese yen has rebounded on Tuesday with strong gains. In the North American session, USD/JPY is trading at 150.70, down 0.67%. The yen has snapped a nasty six-day losing streak which saw the currency lose 1.5%. The US dollar is broadly lower today after the October inflation report was weaker than expected. US inflation was softer than expected in October. Headline CPI eased to 3.2% in October, down from 3.7% in September and August and lower than the market consensus of 3.3%. Much of the downswing can be attributed to lower gasoline prices. On a monthly basis, headline CPI was unchanged, compared to a 0.4% gain in September and a market consensus of 0.1%. The core rate, which excludes food and energy prices, showed a more moderate decline. Core CPI fell from 4.1% to 4.0%, shy of the market consensus of 4.1%. Monthly, core CPI dropped from 0.3% to 0.2%, below the market consensus of 0.3%. The markets have responded to the soft inflation print by repricing in a pause in December at 94%, compared to 85% a day earlier. Japan's GDP is expected to have contracted in the third quarter, with a consensus of -0.4% y/y. This would be a huge downturn from the 4.8% gain in the second quarter and could have significant ramifications on monetary policy. If the economy experienced negative growth as expected, the Bank of Japan will find support for its argument that the economy is too fragile to exit negative interest rates. There has been growing speculation that the central bank will tighten policy in the near term due to persistently high inflation and signs of wage growth. A weak GDP print will provide the BoJ with a reason to continue its ultra-loose policy until there is evidence that growth is strengthening. USD/JPY pushed below support at 151.61 and is testing support at 150.82 There is support at 150.05 and 149.29
by OANDA
$GEO Border Detention Facilities - Profiting off of incompetenceGood morning everyone, Today I am evaluating a stock I have legitimately found valuable for a few months. With the escalation at our border (Record numbers of crossings in October) It is time to consider how we can profit from such a tragic situation. I've been invested in stocks like NYSE:GEO and NYSE:CXW for the past year or so, however, I think right now might be the most bullish I've been on them in a while. In this video, I lay out potential price targets for NYSE:GEO and show some of the methodology behind my trading strategy. Here are my outlined Targets / Resistances and supports Strong Support Level: $8.30 Strong Resistance Level: $9.95 Resistance 2: $12.35 Target 1: $14.31 Target 2 / Resistance 3: $17.58 Target 3: $19.82 Remember, both targets and resistances represent solid points to take profit. Don't get greedy The GEO Group (GEO) operates special-purpose, state-of-the-art residential centers on behalf of U.S. Immigration and Customs Enforcement (ICE). All ICE Processing Centers operated by GEO have a long-standing record of providing high-quality, culturally responsive services in safe, secure, and humane environments that meet the needs of the individuals in the care and custody of federal immigration authorities.
NYSE:GEOLong
by Helios_Capital_Investment
1
SR3: Trading Opportunities in a Disrupted Treasury MarketCBOT: Three-MO SOFR Futures ( CME:SR31! ) Breaking News: The US Treasury bonds are risk-free No Longer ! Last Friday, top credit ratings agency Moody's lowered its credit outlook on the U.S. to "negative" from "stable", citing large fiscal deficits and a decline in debt affordability. It has so far maintained the AAA credit rating for U.S. sovereign bonds. This move follows a rating downgrade by Fitch, another major ratings agency. On August 1st this year, Fitch cut U.S. credit rating from AAA to AA+, a decision made following months of political brinkmanship around the U.S. debt ceiling. Going back, the S&P was the first credit agency to give Uncle Sam a bad grade. It cut the U.S. credit rating from AAA to AA+ in August 2011 and has maintained it ever since. U.S. credit rating is now lower than that of Australia, Canada, Denmark, Germany, Luxemburg, Netherlands, Norway, Singapore, Sweden, Switzerland, and the European Union. These countries all enjoy AAA ratings from the top-3 major ratings agencies. The risk-free assumption on US Treasury bonds has long been the foundation of the global credit market. It typically measures the riskiness of a debt issue by adding risk premium(s) on top of a risk-free interest rate, which by default is the Fed Funds rate. If the U.S. bonds are no longer deemed risk-free, should we change “the mother of all reference rates” with a new risk-free rate? It would be like cracking the foundation of the Empire State Building and will bring chaos to the $133-trillion global bond market. In my opinion, this Doomsday scenario is very unlikely to occur. ‘A revisit of the following high-profile credit market events helps us understand why. August 2011: the S&P downgraded U.S. credit rating On August 5, 2011, the S&P announced its decision to give its first-ever downgrade to U.S. sovereign debt, lowering the rating by one notch to "AA+", with a negative outlook. S&P was direct in its criticism of the governance and policy-making process, which took the U.S. to the brink of default as part of the 2011 U.S. debt-ceiling crisis. This unprecedented downgrade drew sharp criticism from the Obama administration and the U.S. Congress, but the S&P refused to budge. What did the investors think? • The 10-Year Note with a par value of 100 traded at around 130 before the downgrade. A month later, its price hardly moved. By year end 2011, the 10Y note rose to 132. • The 30-Year Bond was quoted at 136. It reached 145 by year end, up 6.6%. • Following the downgrade, the S&P 500 lost 7.6% in August. But it quickly rebounded. The S&P ended the year at 1,258, up 3.3% from before the downgrade. I rephrase a famous quote to explain what happened: “When the U.S. sneezes, the World catches a cold.” The U.S. downgrade created a bigger chao in global markets. Investors pulled money out of emerging markets, which were considered even riskier. They put money back in the U.S. stocks and bonds, which, ironically, are deemed safer. There has not been any long-term impact from the S&P downgrade, or from its decision to keep U.S. rating at the less-than-perfect rating: • The S&P settled at 4,415 last Friday, up 260% since the downgrade in 2011; • US GDP has grown from $15.6 trillion in 2011 to $25.5 trillion in 2022, up 63%; • In 2011, US national debt totaled $14.8 trillion, a level the S&P considered as “unsustainable”. It has now mushroomed to $33.7 trillion, up 128%. The U.S. government has not defaulted on any debt or missed any interest payment. August 2023: Fitch downgraded U.S. credit rating In a surprise move on August 1st, Fitch downgraded U.S. Treasuries to AA+ from AAA. The U.S. markets were already in decline following the July 25th Fed decision to raise interest rates by 25 bps to 5.25-5.50%. Markets were clearly driven by the Fed, and the Fitch downgrade was merely a footnote. • The 10-Year Note traded at around 112 at the time of the downgrade. It fell as much as 6% to 105. The 10Y note has recovered somewhat to 107 by Monday. • The 30-Year Bond was quoted at 136. It dipped to 108 (-20%) by October, and it’s now quoted at 113, a rebound of nearly 5%. • Following the July rate hike, the S&P 500 has dropped from 4,588 to 4,117, a sharp 10% drawdown. However, it has since staged ten winning streaks, pushing the index back to 4,415, an impressive 300-point rebound (+7.2%). November 2023: Moody’s lowered U.S. credit outlook Last Friday November 10th, Moody's kept U.S. credit rating at AAA, but lowered its outlook to "negative" from "stable", citing large fiscal deficits and a decline in debt affordability. • The 10-Year Note ended the day at 4.646%, a modest gain of 0.016%. • The 30-Year Bond was settled 4.756%, down 0.011%. • The S&P 500 closed at 4,415, up 68 points or +1.6%. The U.S. hardly moved on Monday, as investors waited for the new inflation data. Today, the BLS reports that October CPI was unchanged from previous month, with the annual headline CPI dropping to 3.0%, below market expectations. The S&P pushed up 2% to reach 4,500 in morning trading. There you see how little the impact from a downgrade. Trading with CBOT SOFR Futures In “SOFR: Farewell to LIBOR”, published on July 3rd, I explained that the Securitized Overnight Funding Rate (SOFR) has already replaced the London Interbank Offering Rate (LIBOR) as the leading global credit market benchmark. If you are curious about what this means to you, check out your credit card agreement. You would find that the bank interest rate calculation usually consists of a “prime rate” and a markup, where the prime rate is defined as the sum of SOFR and a fixed rate. CBOT 3-Month SOFR Futures ( FWB:SR3 ) lists 40 quarterly contracts. It shows what the SOFR would be, quarter by quarter, ten years down to road. Based on Friday settlement prices and volume, here is the market consensus on SOFR through the end of 2024: • Current Fed Funds rate: 5.25-5.50% • December 2023 SOFR: 5.415%, volume: 265,153 • March 2024 SOFR: 5.350%, volume: 283,053 • June 2024 SOFR: 5.140%, volume: 324,902 • September 2024 SOFR: 4.880%, volume: 469,238 • December 2024: SOFR: 4.605%, volume: 402,005 SOFR futures are the most liquid futures contracts in the world. On Friday, 2,787,432 lots changed hands. Open interest was 10,655,832 contracts. The contracts showed here each traded over a quarter million lots in a single day. We could assume that market prices reflect best investor consensus on interest rate level at any given time in the future. Here are my observations: • The lead December contract is quoted at 5.415%, in line with the current Fed Funds range of 5.25-5.50%. It dropped to 5.3675% Tuesday after the CPI data. • The September 2024 quote of 4.635% on Tuesday, is 62-87 bps below range, indicating 2-3 rate cuts of 25 bps within the next ten months. • The December 2024 quote of 4.330% is 92-107 bps below range, indicating three to four rate cuts by the end of next year. In my opinion, the Fed decision, the Fed Chair statement and the latest data on payrolls and inflation, sent conflicting signals to the market, creating confusion among investors. Market prices are temporarily dislocated, which may present trading opportunities. The September 2024 quote indicates two or three rate cuts. I think that this assumption is too aggressive. The Fed, in both its statements and the Fed Chair public comments, repeatedly stressed that it never raised the issue of if or when to cut rates. If a trader holds the view that the September SOFR rate shall rise, he could express it with a short position in SOFR futures. The quoting convention of SOFR future is 100-R, where R is the effective interest rate. If the rate goes up, futures price will go down. SOFR contracts have a notional value of $2,500 x contract-grade IMM Index. Each 1 basis-point move would result in a gain or loss of $25 per contract. The minimum margins are $850 for the September contract. Hypothetically, if the trader is correct and the rates turn out to be 25 bps high, he would have a theoretical return of $625 per contract (= 25 X 25). The trader would lose money if the Fed cut rates faster than anticipated. 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
CME:SR3Z2023Short
by JimHuangChicago
SPX And The CPI WeekThe S&P500 index SPX surged by +1.31% last week to close above 4400 resistance level. The index is showing that there's more potential is yet to come, to hit 4520 next. The week ahead: The meeting between US President Biden and China President Xi is the highlight; there is also US CPI and retail sales, the former being a key input into the Fed's policy deliberations; China activity data will also be released. Sectors that may witness higher volatility are; Big techs, EVs, Oil & Gas and Semiconductors stocks.
SP:SPXLong
by AlyaAkram
GBP/USD calm ahead of UK job reportThe British pound has edged higher on Monday. In the European session, GBP/USD is trading at 122.48, up 0.18%. The pound is coming off a nasty week, in which it declined 1.2%. The UK labour market has been resilient despite the Bank of England's aggressive tightening but is showing some cracks. We'll get a look at key employment numbers on Wednesday. Job growth is expected to fall by 80,000 in the three months to September, after a massive loss of 207,000 in the previous release. Average earnings including bonuses are expected to slow to 7.4% in the three months to August, down from 8.1%. The BoE will be keeping a close look at wage growth, which is a significant driver of inflation. The UK releases the inflation report on Wednesday, with the markets expecting CPI to have fallen sharply in October from 6.7% to 4.8%. If inflation falls below 5%, it would mark a milestone in the government's tough battle with inflation, although the 2% target remains far, far away. Core CPI, which excludes food and energy, is expected to show a modest drop to 5.8%, down from 6.1% in September. The BoE is projecting that inflation will fall back to the 2% target at the end of 2025, six months later than the previous forecast. Governor Bailey has been stressing that inflation remains too high, but the BoE nevertheless voted to hold rates at this month's meeting after 14 consecutive hikes. Another pause at the December meeting would be the central bank's preferred plan of action, but that will depend on the data. There is resistance at 1.2287 and 1.2344 1.2183 and 1.2091 and are providing support
by OANDA
Bitcoin's Bull Run to $39,968: Unleashing Strong MomentumOverview: Bitcoin has recently displayed a compelling technical pattern, forming a triangle with a notable high at $37,978 and a corresponding low at $35,784. The chart indicates a period of consolidation, setting the stage for a potential breakout on November 12. This impending move is further accentuated by a strong resistance level at $39,968, making it a key target for the anticipated upward movement. The bullish outlook is substantiated by fundamental factors, notably BlackRock's proposal to introduce a Bitcoin Exchange Traded Fund (ETF), currently awaiting SEC approval by October 2023. Additionally, the projected decrease in November USD inflation to 3.3% and Federal Reserve Chairman Powell's expressed inclination to lower interest rates create a favorable environment for BTCUSD. Technical Analysis: 1. Triangle Breakout: The technical analysis reveals a well-defined triangle pattern, signifying a consolidation phase. A breakout is expected on November 12, providing a clear signal for potential bullish momentum. 2. Target at $39,968: Historical data and meticulous technical scrutiny indicate a significant resistance level at $39,968, establishing it as a plausible target for the upward movement. Fundamental Analysis: 1. BlackRock's Bitcoin ETF Proposal: The potential approval of BlackRock's Bitcoin ETF presents a substantial catalyst. Approval could attract institutional investors, fostering positive market sentiment and potentially elevating Bitcoin's market position. 2. USD Inflation Decrease: The projected reduction in November USD inflation from 3.7% to 3.3% is a favorable macroeconomic factor. Lower inflation mitigates pressure on the Federal Reserve to raise interest rates, benefiting risk assets like Bitcoin. 3. Powell's Interest Rate Stance: Chairman Powell's vocalized desire to lower interest rates to 2% reflects a dovish stance. This dovish sentiment is typically conducive to the performance of Bitcoin, as it diminishes the relative attractiveness of traditional fiat currencies. Risk Factors: Market Sentiment: Rapid shifts in market sentiment or unforeseen events can exert influence on cryptocurrency prices. Traders should remain vigilant for sudden changes in the market landscape. In summary, a comprehensive analysis incorporating both technical and fundamental factors supports a bullish breakout scenario for Bitcoin around November 12. The potential target of $39,968 aligns with historical resistance levels and is strengthened by positive developments such as BlackRock's ETF proposal, decreased USD inflation, Potential Powell's dovish interest rate stance. Traders are advised to closely monitor SEC decisions and stay attuned to broader market dynamics for informed decision-making.
BITSTAMP:BTCUSDLong
by fardycurry
GBP/USD stems slide as GDP beats estimateThe British pound is steady on Friday. In the European session, GBP/USD is trading at 1.2219, down 0.02%. The pound is coming off a nasty four-day slide, in which it declined 1.19%. Today's UK's GDP numbers weren't pretty, but they managed to beat the forecasts, which has helped the British pound stabilize after a disappointing week. The economy flatlined in the third quarter, below the Q2 reading of 0.2% q/q but higher than the market consensus of -0.1%. Monthly, GDP eked out a gain of 0.2%, versus a revised 0.1% in July and above the market consensus of 0.0%. The lack of growth in the third quarter is nothing to cheer about, but at least the UK will avoid a recession this year, which is defined as two consecutive quarters of negative growth. High interest rates and stubborn inflation continue to squeeze consumers and businesses, and a sharp drop in house sales has dragged down the services sector. Consumers are in a sour mood due to the cost of living crisis and are expected to cut down on Christmas shopping. The Bank of England lowered its growth forecast for the fourth quarter at its meeting earlier this month when it kept interest rates unchanged. GDP is expected to rise just 0.1% q/q. Inflation is projected to fall back to the 2% target at the end of 2025, six months later than the previous forecast. Governor Bailey has been stressing that inflation remains too high, but the BoE nevertheless voted to hold rates after 14 straight increases. Another pause at the December meeting would be the central bank's preferred plan of action, data permitting. There is resistance at 1.2287 and 1.2344 1.2183 and 1.2091 and are providing support
by OANDA
1
NZD/USD edges higher ahead of manufacturing PMIThe New Zealand dollar is in positive territory on Wednesday. In the European session, NZD/USD is trading at 0.5926, up 0.26%. New Zealand's manufacturing sector has been in decline for seven consecutive months and little change is expected from the October PMI, which will be released on Friday. The market consensus stands at 45.0, compared to 45.3 in September, which marked a 2-year low. Business activity in the manufacturing sector has been dampened by weak global demand and elevated borrowing costs have exacerbated the prolonged slump. China has been struggling with a significant slowdown, which is bad news for the New Zealand economy, as China is New Zealand's number one trading partner. China is grappling with deflationary pressures, and the October inflation report was softer than expected due to a sharp decline in the price of pork. Inflation in China fell by 0.2% y/y in October, down from 0.0% in September and lower than the market consensus of -0.1%. Monthly, CPI declined by 0.2%, versus a 0.2% rise in September and below the market consensus of 0.0%. If deflation continues, it could cause a downturn in inflation expectations that could dampen consumer spending. Federal Reserve Chair Jerome Powell didn't discuss monetary policy in public remarks on Wednesday, and the markets will again be listening carefully as Powell speaks later today. Earlier this week, two Fed members sounded hawkish about inflation. On Wednesday, Philadelphia Fed President Harker said he expected rates to stay higher for longer and there were no signs of rate cuts in the near term. This followed Dallas Fed President Logan, who said that inflation remains too high and looks to be trending towards 3% rather than the Fed's 2% inflation target. Logan warned that the Fed would have to maintain tight financial conditions in order to bring inflation back to target. NZD/USD continues to test support at 0.5929. The next support line is 0.5858 There is resistance at 0.5996 and 0.6069
by OANDA
Real Interest Rate: How It Affects the Economy and Forex MarketReal interest rate is the interest rate adjusted for inflation. Nominal interest rate is the reported rate, while real interest rate is the actual rate that the borrower receives after accounting for inflation. The formula for calculating real interest rate is as follows: Real interest rate = Nominal interest rate - Inflation rate For example, if the nominal interest rate is 5% and the inflation rate is 3%, then the real interest rate is 2%. Real interest rate plays an important role in the economy. High real interest rates can encourage investment and economic growth. Conversely, low real interest rates can dampen investment and economic growth. Real interest rate has a significant impact on the forex market. An increase in the real interest rate will make the domestic currency more attractive to foreign investors. This is because foreign investors can earn higher returns from their investments in countries with high real interest rates. An increase in the real interest rate will cause the domestic currency to appreciate against foreign currencies. This is because foreign investors will increase demand for the domestic currency to invest. A decrease in the real interest rate will cause the domestic currency to depreciate against foreign currencies. This is because foreign investors will reduce demand for the domestic currency to invest. Here are some examples of the impact of real interest rates on the forex market: In 2022, the US Federal Reserve (The Fed) raised the real interest rate. This caused the US dollar to appreciate against other currencies. DXY USDJPY USDDKK USDCNH In 2022, the European Central Bank (ECB) lowered the real interest rate. This caused the euro to depreciate against other currencies. EURCAD EURCHF EURSEK Governments and central banks can use the real interest rate as one of the instruments of monetary policy to influence the exchange rate of the currency. For example, if the government wants to increase the exchange rate of the domestic currency, the government can raise the real interest rate. Real interest rate can be used to predict the movements of currency pairs. Currency pairs with higher real interest rates tend to appreciate against currency pairs with lower real interest rates. Here are the steps for using real interest rate to predict the movements of currency pairs: Collect data on real interest rates from the two countries whose currencies form the currency pair. Compare the real interest rates of the two countries. If the real interest rate of country A is higher than the real interest rate of country B, then the currency pair A/B will tend to appreciate. For example, the real interest rate of the United States is 1.8%, while the real interest rate of Japan is -3.1%. Therefore, the currency pair US dollar/Japanese yen (USD/JPY) will tend to appreciate by 4.9%. Real interest rate is only one factor that affects the movements of currency pairs. Other factors that should also be considered include economic and political factors that can affect the demand and supply of the two currencies.
Education
by DNP-FX
Aussie soars to 3-month high, RBA expected to hikeThe Australian dollar has edged lower on Monday, after huge gains on Friday. In the North American session, AUD/USD is trading at 0.6499, down 0.21%. On Friday, the Aussie posted spectacular gains, rising 1.22% and hitting its highest level since August 10th. The US dollar retreated against the majors on Friday, suffering sharp losses after a softer-than-expected nonfarm payrolls report. Nonfarm payrolls fell to 150,000 in October, down from a downwardly revised 297,000 in September and shy of the consensus estimate of 170,000. The reading wasn't a massive miss of the forecast, but investors jumped all over the soft reading as expectations jumped that the Fed could be done with tightening. The Fed rate odds of a hike in December have fallen to 10%, compared to 24% just a week ago, according to the CME Fed Watch Tool. We can expect to hear the markets talk more and more about a rate cut sometime in 2024. The RBA meets on Tuesday and we've seen a remarkable swing in the RBA rate odds. Just a few weeks ago, the probability of a pause was close to 100%, but that has changed dramatically. According to the ASX RBA rate tracker, the odds of a hike are now 50/50, making it a live meeting that could see significant volatility from the Australian dollar. RBA policy makers have a tough call to make after holding rates four straight times. Inflation has been falling slowly but the current level of 5.4% is much higher than the 2% target. Inflation expectations remain high and the RBA wants to see these expectations remain anchored; otherwise, the battle with inflation will become even more difficult.
by OANDA
GOLD LONG HERE IS WHY part 2Dear ZTraders, We'd like to provide you with an analysis of the factors contributing to the potential decline in gold prices. While recent gains were largely attributed to geopolitical tensions in the Middle East, several significant factors at play may lead to a drop in gold prices: Stronger U.S. Economy: A robust U.S. economy tends to reduce the demand for safe-haven assets like gold. Investors, during prosperous times, tend to favor investments that offer potential returns, such as stocks and bonds, over non-interest-bearing assets like gold. This shift in investment preferences can lead to decreased demand for gold and, consequently, a decline in its price. Anticipated Interest Rate Increases: One of the critical factors affecting gold prices is interest rates. When central banks signal intentions to increase interest rates, it raises the opportunity cost of holding gold. Investors may opt for interest-bearing assets that promise higher yields, making gold less attractive. The expectation of rising interest rates can undermine gold's appeal, leading to a potential price drop. Delay in Rate Easing: During economic downturns or crises, central banks often implement policies to ease interest rates or use quantitative easing to stimulate economic growth. These measures can increase the demand for gold as a hedge against inflation and currency devaluation. However, if there is a delay in implementing these measures or a perceived slowdown in their effectiveness, it can reduce the upward pressure on gold prices. Recent Gains from Middle East Conflict: Geopolitical tensions, such as those in the Middle East, can elevate the demand for gold as a safe-haven asset. Investors turn to gold during uncertain times as a store of value. However, it's important to note that these gains are often temporary and may reverse when the geopolitical situation stabilizes. Supply and Demand Dynamics: The price of any asset, including gold, is influenced by the fundamental economic principle of supply and demand. If selling pressure outpaces buying pressure for gold, it will lead to price declines. The balance between supply and demand is a pivotal factor in determining gold prices. In conclusion, a combination of a stronger U.S. economy, expectations of higher interest rates, potential delays in rate easing, and a possible reduction in geopolitical tensions in the Middle East can collectively contribute to a decline in the price of gold. Nevertheless, it is crucial to recognize that various complex factors influence the gold market, and its price can be highly volatile. It is advisable for investors to closely monitor economic indicators and geopolitical developments to make well-informed decisions regarding their gold investments. Greetings, ZTRADES
OANDA:XAUUSDLong
by ZILATRADES
S&P 500 Daily Chart Analysis For Week of Nov 3, 2023Technical Analysis and Outlook: The stabilized selloff in the bond market in this week's price action sent the index raging upward all the way up to Mean Res 4378 and completing our Inner Index Rally 4375. On the downside, the index will likely go down toward the Mean Sup 4238, followed by a series of price targets marked on the chart. However, due to the reactionary nature of the market, sudden fluctuations in either direction are possible.
SP:SPX
by TradeSelecter
13
The Bank of Japan can’t let goThis week financial markets were dominated by central banks policy decisions. While the Federal Reserve (Fed) and Bank of England (BOE) kept rates on hold, the policy board of the Bank of Japan (BOJ) decided to further increase the flexibility in its yield curve control policy. The BOJ previously set a strict cap of 1.0% for the 10-year Japanese Government Bond (JGB) yield. But it has now decided that 1% should be a “reference” (not a strict cap), which effectively allows the yield to rise above 1% when the BOJ thinks it is appropriate. The upper bound of 1% appears to be a level they can’t let go of. By doing so, the BOJ is choosing an exit path that gives them the maximum flexibility but minimum volatility around the Yen. We view this as a dovish move as consensus expectations were for the BOJ to move the cap to 1.25% rather than 1%. Japan’s remains on a narrow path One of the reasons holding back the BOJ from normalisation of policy rates, is they still believe Japan’s recovery since the re-opening in October 2022 remains on a narrow path as it relies heavily on tourism, while the broader services sectors have yet to pick up significantly and manufacturing activity has been hampered by soft exports. Japan’s flash PMI readings for October showed us a bifurcated economy where the services sector is stronger than the manufacturing sector. Manufacturing PMI clocked in at 47.6, which is in contraction territory. Services PMI was 51.1, which is down from last month’s reading of 53.8 but is still in expansion territory, no doubt helped by fiscal stimulus and the accommodative monetary policy environment. BOJ on the lookout for an intensified virtuous cycle between wages and prices BOJ governor Ueda indicated that the BoJ will be monitoring the upcoming spring union-employer wage negotiations. A strong outcome could catalyse the earlier attainment of sustained inflation in Japan, but overall, Japan’s recovery isn’t strong enough yet for employers, especially small enterprises, to meaningful support wage hikes in the broad economy. While headline inflation bolted north of 4% in January 2023, it appears to have peaked and has begun receding. While core inflation remains around the 4% mark. The Producer Price Index (PPI) slowed to 2% annually in September suggesting a stabilization or even drop in CPI ahead. The BOJ revised its outlook for core inflation (all items less fresh food and energy) to 3.8% in FY23, 1.9% for FY24 and 1.9% for FY25. The BoJ stated that the inflation uptick “needs to be accompanied by an intensified virtuous cycle between wages and prices”. The Yen is unlikely to appreciate under BOJ’s policy change owing to the large gap in interest rates between the US and Japan. The direction of the Yen matters for Japanese equities owing to Japan high export tilt. The exporters stand to benefit amidst a weaker Yen. Fire power abounds for Japanese equities Japanese equities had a strong first half in 2023, attaining 33-year highs. Yet valuations at 15.7x price to earnings ratio (P/E), still trade at a 30% discount to its 15-year average providing room to catch up. More importantly, earnings revision estimates in Japan are currently the highest among the major economies. Earnings yield at 4.07% for the Nikkei 225 Index has been trending above bond yields 0.947% for 10 Year JGBs , keeping the well-known TINA (There is no Alternative) trade alive in favour of Japanese equities. Tailwind from corporate governance reforms Tokyo Stock Exchange’s (TSE) call for listed companies to focus on achieving sustainable growth and enhancing corporate value is beginning to bear fruit. The call was aimed at companies with a price to book (P/B) ratio below one. Those companies were asked to develop a plan for improvement, disclose and then implement and track its progress. The progress has been encouraging with 31% of companies on the prime market making a disclosure of their plan . Large companies with a price to book ratio below one have been more proactive with disclosure. Historically cash-heavy Japanese companies face increasing pressure to improve their numbers, possibly by funnelling historically high excess cash reserves into increased buybacks or dividends. Conclusion Inflation has been missing in Japan for more than a decade. So now that it has arrived aided by the post pandemic pick up of the Japanese economy, policy makers are not in a rush to obliterate it. With wage growth lagging behind inflation, the Bank of Japan does not appear ready to wean itself from Yield Curve Control until a more intensified virtuous cycle is observed between wages and prices. The BOJ’s policy decision this week is unlikely to allow the appreciation of the Yen, which should continue to provide a competitive advantage to Japanese exporters. This material is prepared by WisdomTree and its affiliates and is not intended to be relied upon as a forecast, research or investment advice, and is not a recommendation, offer or solicitation to buy or sell any securities or to adopt any investment strategy. The opinions expressed are as of the date of production and may change as subsequent conditions vary. The information and opinions contained in this material are derived from proprietary and non-proprietary sources. As such, no warranty of accuracy or reliability is given and no responsibility arising in any other way for errors and omissions (including responsibility to any person by reason of negligence) is accepted by WisdomTree, nor any affiliate, nor any of their officers, employees or agents. Reliance upon information in this material is at the sole discretion of the reader. Past performance is not a reliable indicator of future performance.
ECONOMICS:JPIRYY
by aneekaguptaWTE
🛢️ Crude Oil Hits $93 - 💰 Why 88$ is ok for Saudi Arabia 🌴Hey Traders, Professor here! 🤟 You might recall my bullish call on oil at $70, based on fundamentals and geopolitical moves. Fast forward, and here we are at $93 a barrel. But is this the ceiling, or is there more room to grow? Let's dissect. 🛢️🔍 The Resistance at $93: More Than Just a Number 🛑 Oil has rocketed to $93, and I'm seeing this as a strong resistance point. It's not just a psychological barrier; it's also a key level when you look at Fibonacci retracements and historical price action. Could this be the turning point for a retracement? 🤔 My Oil Long at $70 Post : Inflation's Role: The Double-Edged Sword 📈 While rising oil prices have been great for traders and certain economies, they also fuel inflation. And let's be clear: Inflation is a beast that the U.S. and Europe can't afford to ignore. High oil prices are now a geopolitical concern, and there will be pressure to tame them, especially as they contribute to rising inflation. 🌍 Inflation and Oil post Post Saudi Arabia's Profit Game: Low Costs, High Margins 😁 Here's where it gets interesting. Saudi Arabia and Kuwait enjoy production costs as low as $5.40 per barrel. Even at the higher end, it's just around $10. So, whether oil is at $88 or $93, they're raking in massive profits. This low-cost advantage gives them a competitive edge, especially when other countries are grappling with significantly higher production costs. 🇸🇦💰 The High Dollar's Role 🇺🇸 The dollar has been on a tear lately, and it's worth noting its impact on oil prices. A strong dollar usually puts downward pressure on commodities priced in USD, like oil. This could be another factor contributing to potential resistance at $93. The US Dollar & The Wolverine: What's Next? The Road Ahead 🤷‍♂️ Keep a close eye on potential retracement levels. Fibonacci and moving averages could be your guide here. 88$ to 93$ range is what i would most likely expect📉 Geopolitical events are always wild cards. Any tensions or agreements could send oil prices soaring or plummeting. 🌍 Don't lose sight of Bitcoin. It remains my go-to asset for hedging against inflation and market volatility. 🚀 Trade wisely, folks. My charts are always here if you need a second opinion. 📊 (ps if the price breaks over 95$ we might need to run for the great reset hills!) One Love, The FXPROFESSOR 💙
TVC:USOILShort
by FX_Professor
13
Could AI Help Dampen Inflation?Will the 2020s look like the 1970s with unstable inflation and soaring prices? Or will we return to the 2010s with low stable inflation rates of around 2%? There is a case to be made both ways. Those who worry about the possibility of durably higher inflation argue that the quarter century of low, stable inflation rates was a consequence of the end of the Cold War, globalization and just-in-time supply lines. Now, many of those factors have reversed. Military spending is on the rise worldwide as global tensions mount. Nearshoring and friendshoring are moving production out of China and into places like Vietnam and Mexico but at an increased cost. Finally, just-in-time-delivery has proven to be fragile and creates a strong potential for supply chain disruptions. These factors, combined with shrinking workforces in China, Korea, Japan and much of Europe, could put upward pressure on wages and inflation. But there is a counter argument: technology continues to advance rapidly, and generative AI could pose a threat to many middle-class service professions. And inflation has begun coming down in many countries, led by the United States. In the U.S., core inflation has fallen from 6.6% YoY to just 4.1%, and most of the remaining increase has come from one component: owners’ equivalent rent. Outside of owners’ equivalent rent, U.S. inflation is running at just 2.1% year-on-year. After a massive global tightening of rates, economies may also slow significantly, reducing inflationary pressures. 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 By Erik Norland, Executive Director and Senior Economist, CME Group *Various CME Group affiliates are regulated entities with corresponding obligations and rights pursuant to financial services regulations in a number of jurisdictions. Further details of CME Group's regulatory status and full disclaimer of liability in accordance with applicable law are available below. **All examples in this report are hypothetical interpretations of situations and are used for explanation purposes only. The views in this report reflect solely those of the author and not necessarily those of CME Group or its affiliated institutions. This report and the information herein should not be considered investment advice or the results of actual market experience.
CBOT:ZB1!
by CME_Group