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  • 4 Global Market Updates- 15 July, 2022

    4 Global Market Updates- 15 July, 2022

    In this article, we have covered the highlights of global market news about the Silver Price, USD/JPY, Copper Price and S&P 500 Index.
    Silver Price Analysis: XAG/USD will continue to fall towards the $17.92 support level.

    Already having established a new high, silver is moving closer and closer to the critical support level of $18.65. The economists at Credit Suisse anticipate that there will be additional declines in the coming weeks and months.

    “Silver has already finished a massive top and is getting closer and closer to the vital 61.8 percent retracement support of the whole 2020/21 up move, which is around $18.65. We anticipate this will serve at the very least as a temporary floor. On the other hand, if the momentum continues to deteriorate, it is conceivable that more deterioration towards the $17.92 support may occur within the next one to two months.

    “From a purely technical point of view, Silver will not significantly stabilize until it rises over the 55-day moving average, presently sitting at $21.33.”

    Since ancient times, silver prices have been tracked. Among its many uses, silver (XAG) is a valuable metal found in jewelry, cutlery, electronics, and money. In financial markets throughout the globe, silver prices are closely monitored. Silver has been exchanged for thousands of years and originally served as the underpinning for money.

    USD/JPY: Attention moves now to 140.00

    The 24-hour view: “While we did anticipate that the USD would appreciate yesterday, we believed that a sustained increase over 138.00 is doubtful.’” When the USD climbed to a new high of 139.39, we were caught off guard by the sudden acceleration to the upside. Despite being at an all-time high level of buying, the quick surge has not yet shown any indication of slowing down. In other words, the USD might keep climbing higher until it reaches 139.50. It is doubtful that the enormous resistance located around 140.00 will come into play for the time being. Support may be found at 138.60, and then at 138.30.”

    Within the next one to three weeks: “We went bullish USD three days ago (12 July, spot at 137.20), and we predicted that USD might climb further to 138.00, as high as 138.50. Although we were correct in predicting that the USD would rise, we were not quite prepared for the lightning-fast pace at which it blew right through 138.00 and 138.50 yesterday on its way to a new all-time high of 139.39.

    The acceleration of the price increase provides evidence that the USD will continue to gain strength. The next important level to pay attention to is at 139.50, and then at 140.00, which is a significant round-number level. On the other hand, a breach of 137.50 (the level of strong support was at 136.30 the day before) would signal that the upward solid pressure present recently has weakened.

    Copper Price Analysis: A 61.8% retracement of around $6,844 is needed to level the market.

    Copper is still seeing selling pressure and is now trading only a hair’s breadth above the previous yearly low. The market analysts at Credit Suisse anticipate that the metal will locate a stable support level at the $6,844 price point.

    silver

    “We expect the 61.8 percent retracement at $6,844 to floor the market temporarily,” with the industrial metal holding just barely above the $7,291 last set YTD low. “We would expect the 61.8 percent retracement at $6,844 to floor the market.”

    Key resistances may still be observed at the latest breakdown point, near $8,570/8,740.

    S&P 500 Index: Around danger of more short-term weakening to long-term supports at 3522/05.

    S&P 500 continues under pressure. According to the analysts at Credit Suisse, the near-term risk over the next two to four weeks is projected to be lower than it is now. However, crucial support is still anticipated around 3522/05.

    The market has to break above the resistance level of 3946 to conduct a deeper rebound.

    “A break below 3637 would likely set off additional weakening over the following two to four weeks, with the following support being around 3522/05, which is the location of the 50 percent retracement and the 200-week average. We would be inclined to seek at least a floor here if it were hit, especially in light of the waning momentum over the medium term.

    Please click here for the News Updates from July 14, 2022.

  • What Is A Bear Market? Is It A Good Time To Invest?

    What Is A Bear Market? Is It A Good Time To Invest?

    What does “Bear Market” mean?

    A bear market is characterized by an asset price decrease of at least 20 percent from recent highs. Clearly, these are hardly favorable circumstances, but fighting back might be risky.

    Here, we will discuss eight essential investing methods and mentalities that can help you remain cool and “play dead” while the stock market eats into your gains.

    Bear Market Strategies

    Keep Your Fears Under Control

    Wall Street has an ancient saying: “The Dow climbs a wall of fear.” In other words, the Dow has continued to increase throughout time despite economic problems, terrorism, and numerous other catastrophes. Always attempt to separate your emotions from your investing decision-making process. A few years from now, what appears like a great global calamity now may be regarded as little more than a blip on the radar screen. Remember that fear is an emotion that may impair logical decision-making. Keep your cool and continue!

    Invest Using Dollar Cost Averaging

    The most essential thing to remember during an economic slowdown is that negative years on the stock market are common; they are a natural component of the business cycle. If you are a long-term investor (with a time horizon of 10 years or more), dollar-cost averaging is one of your options (DCA). By acquiring shares regardless of price, you get shares at a discount while the market is down. Your cost will “average down” over time, resulting in a better total entry price for your shares.

    Act Dead

    During a bear market, bears dominate and bulls have no chance. According to an ancient proverb, the best course of action during a bear market is to pretend dead, just as you would if you saw a genuine grizzly bear in the woods. Fighting back would be very risky. By remaining cool and avoiding unexpected movements, you will avoid becoming a bear’s meal. Playing dead in financial terms refers to allocating a greater proportion of your portfolio to money market products, such as certificates of deposit (CDs), U.S. Treasury bills, and other assets with high liquidity and short maturities.

    Diversify

    Diversification is allocating a portion of your portfolio to stocks, bonds, cash, and other assets. The manner in which you divide your portfolio depends on your risk tolerance, time horizon, objectives, etc. Every investor’s circumstances are unique. A smart asset allocation plan will enable you to avoid the potentially harmful consequences of putting all of your eggs in one basket.

    Never invest more money than you can afford to lose.

    Investing is vital, but so are eating and staying warm. It is undesirable to invest short-term cash (such as money for the mortgage or groceries) in the stock market. As a general rule, investors should not invest in stocks unless they have a five-year or longer investment horizon, and they should never invest money that they cannot afford to lose. Bear markets and even slight market dips may be exceedingly devastating.

    Consider Excellent Values

    Bear markets may provide excellent investment opportunities. The secret is knowing what you’re searching for. A bear market is characterised by equities that are beaten up, battered, and priced too low. Value investors such as Warren Buffett often consider bear markets as purchasing opportunities due to the fact that the prices of excellent firms fall in tandem with the valuations of inferior companies, resulting in very favourable valuations. Buffett often increases his holdings in some of his favourite firms during market downturns because he understands the market’s propensity to unfairly penalise even outstanding businesses.

    BEAR
    Take Stock in Defensive Industries

    In general, defensive or non-cyclical equities do better than the market as a whole during bear markets. These sorts of stocks provide a constant dividend and dependable profits regardless of the market’s condition. Companies that manufacture non-durable home goods, such as toothpaste, shampoo, and shaving cream, are examples of defensive sectors, since consumers will continue to use these products throughout difficult times.

     Prefer Short

    There are opportunities to benefit from price declines. One method is short selling, which involves borrowing shares of a business or ETF and selling them in the hope of buying them back at a cheaper price. Short trading involves margin balances and might result in damaging losses if markets rise and short positions are covered, resulting in further price compression. Put options are another alternative, which increase in value when prices decline and guarantee a minimum price at which to sell an asset, thereby setting a floor for your losses if you are hedging. To purchase puts, you must be able to trade options in your brokerage account.

    Inverse exchange-traded funds (ETFs) provide investors with the opportunity to benefit from the decrease of significant indexes or benchmarks, such as the Nasdaq 100. When the main market indexes decline, these funds increase, enabling you to benefit while the rest of the market declines. These options may be acquired simply from your brokerage account, unlike short selling or puts.

    Why Is It a Smart Move to Continue Investing During Bear Markets?

    The stock market and the economy tend to rise over the long term. Bear markets may disrupt this generally upward tendency, but these declines always finish and reverse, resulting in new highs. By investing during bad markets, you may develop stronger holdings by purchasing equities at cheaper prices (“on sale”).

    What is the frequency of bear markets?

    Historically, bear markets in the United States occur every 4.5 to 5 years on average.

    Why Is This Known as a Bear Market?

    There are many conflicting hypotheses about the origin of the names bull and bear markets. Bulls often attack by thrusting their horns forward, while bears typically strike by bringing their claws downward. According to a second explanation, the name “bear” derives from the early fur trade, in which bearskins were seen as especially dangerous goods in terms of price and durability.

    Which bear market was the most severe to date?

    The 1929-1932 decline, which coincided with the Great Depression, was the most severe and longest bear market ever.

  • How to Trade Following a News Release?

    How to Trade Following a News Release?

    By creating a solid trading strategy and embracing essential risk management, traders must learn how to handle turbulent markets while performing a trade. Effective trading techniques are provided in this article for investors wishing to trade after a news release.
    1. Trend-based approach

    This strategy uses many periods and clearly defined degrees of support and opposition that are activated after a news release.

    Traders might use this method when a clearly defined level of support or resistance is being approached but not quite reached by the current market price. Market movement might be pushed toward the trend line by the volatility after the news announcement. Traders might try to trade in the trend’s direction and on any possible rebound if the price stays inside the trend line.

    The following four points are helpful for this kind of trade:

    • Find the trend’s direction on a daily chart.
    • Draw lines of support and resistance.
    • Choose a forex time range between 1 and 4 hours.
    • In an uptrend, buy near support, while in a downturn, sell near resistance.

    Keeping this in mind, it is crucial to use tight stops while following this approach since news releases have the power to surpass established levels of support and resistance.

    1. Dual spike breakout approach 

    This approach uses a five-minute chart to wait for market volatility to display a range before trading a break of that range. The US Non-Farm Payroll (NFP) announcement, which often has the most ability to affect the market, is included in this section for illustrative reasons.

    Wait 15 minutes for three candles with a five-minute burn time to shut after the NFP release. Be sure to notice the highest and lowest prices of the two closed candles. After that, put an entry order to buy at the highest price and an entry order to sell at the lowest price. Targets and stops may be specified whenever an order is triggered at a distance twice the width of the high/low channel, respectively, for short trades and long trades.

    Trade

    Volatility might cause the price to go above or below the short-term range, triggering an entry order and prompting a quick reversal to reach a stop loss. This is a drawback of this method.

    In the following situations, this approach may be used:

    • To display 5-minute charts, alter the chart’s display options.
    • Consider the highs and lows of the first three candles.
    • Place entry orders when the price crosses the range’s upper or lower bound.
    • Set limits and stops.
    • Get rid of the unfulfilled order.
    1. Using a News Reversal Strategy

    Immediately after a large news release, the market may move one way before reversing course and moving in the other direction.

    The news reversal method targets a swift, persistent direction change after a significant initial price move and seeks to trade the news after the announcement.

    Algorithms or the market may have sensed an overreaction in price, causing transactions to be placed in the other direction, which led to the reversal. The disadvantage of this approach is that the price keeps moving in the direction of the initial spike without experiencing any price reversals.

    trade
    How to put the news reversal technique into practice:
    • Initial price increase: When news is announced that has the potential to affect the market significantly, prices often increase.
    • Watch for a reversal: Traders might wait 10–15 minutes for the reversal to return the price to where it was before the release.
    • Enter as soon as the price crosses pre-release levels or falls below them.
    • Target Levels: Trading professionals might think about creating numerous goal levels. Trades may be closed out on half of the positions as soon as one is triggered, and the remaining positions’ stops can be moved to break-even.
    CONCLUSION FOR TRADING FOREX AFTER THE RELEASE

    A more cautious method to approach news trading might be to trade the news after the announcement. This is because a trader has time to construct a technical setup for their trade once the emotions from the news announcement have subsided. Whatever trading strategy you choose for news trading, risk management, and using little to no leverage is essential to keeping money in your account to place the next transaction.

  • A 4-Step Guide to Gold Trading

    A 4-Step Guide to Gold Trading

    Due to its unique position within the global economic and political systems, the gold market provides significant liquidity and exceptional potential to benefit in almost all circumstances, regardless of whether it acts like a bull or a bear. Even while many people decide to buy the metal directly, trading on the futures, equities, and options markets provides excellent leverage with manageable risk.

    Because they are unaware of the distinctive features of the global gold markets or the hidden hazards that might steal gains, market participants often fall short of maximizing the benefits of gold price changes.

    Although trading in the yellow metal is simple, it requires specialized knowledge. Incorporating these four strategic measures into daily trading routines can benefit experienced investors, but beginners should use caution. While waiting, explore until you are familiar with the nuances of these intricate marketplaces.

    1.) What Drives Gold Price

    Gold is one of the world’s oldest currencies and has a strong psychological hold on the financial industry. Yellow metal is a topic on which almost everyone has an opinion. Yet, gold itself only responds to a small number of price triggers. Each of these factors divides into two halves, creating a polarity that affects trend intensity, emotion, and volume:

    -Both inflation and deflation

    -Fear and greed

    -Demand and supply

    While market participants trade the yellow metal in response to one of these polarities when another is driving price movement, they run a higher risk. Say, for instance, that the global financial markets experience a selloff and gold has a significant rise. Many traders enter the market assuming that fear is driving up the price of the yellow metal and act on this assumption. Inflation may have been the cause of the stock’s drop, drawing a more technical audience that will aggressively sell against the gold surge.

    In the global markets, combinations of these factors are always at work, creating long-term themes that follow equally long uptrends and downtrends. For instance, the 2008 Federal Reserve (FOMC) economic stimulus initially had minimal impact on gold because market participants were preoccupied with the intense panic that followed the 2008 financial crisis.

    2.) Recognize the Crowd

    Numerous groups with various, often competing interests are drawn to gold. Gold collectors, known as “gold bugs,” are at the top of the heap, investing a disproportionate amount of family wealth in gold stocks, options, and futures. These long-term participants are seldom deterred by downward trends and ultimately push away less ideological participants.

    Additionally, institutional investors who purchase and sell gold alongside currencies and bonds in bilateral strategies known as “risk-on” and “risk-off” engage in significant hedging activity. Funds may quickly trade these combinations by assembling baskets of securities that balance safety and growth (risk-on and -off, respectively). They are particularly well-liked in marketplaces with much disagreement and low levels of usual public engagement.

    Gold

    3.) Study the long-term chart.

    Spend some time being intimately familiar with the gold chart, beginning with a long-term history that spans at least 100 years. The metal has not only established patterns that lasted for decades, but it has also slowly declined for extended periods, depriving gold bugs of earnings. This study pinpoints price levels that should be kept an eye on from a strategic perspective in the case and when the yellow metal makes a comeback to test them.

    The following slump persisted throughout the late 1990s before gold began its legendary rise, which reached its peak in February 2012 at $2,235 per ounce. Since then, there has been a gradual fall that has lost almost 600 points in four years. Even though it saw its highest quarterly rise in three decades in the first quarter of 2016, it is now priced at $1,882 per ounce as of May 2022.

    4.) Select Your Area

    Liquidity fluctuates with gold movements, rising or falling substantially during times of increased volatility and falling during times of relative calm. Due to far lower average participation rates than stock markets, this oscillation has a more decisive influence on the futures markets. The CME Group, based in Chicago, hasn’t significantly improved this equation in recent years despite adding new products.

    The 100-oz. contract, the 50-oz. mini contract, and the 10-oz. micro contract are the three principal gold futures that CME provides. These contracts were introduced in October 2010. The volume of trading for the micro contract exceeded 6.6 million in 2021, but only 26,000 for the mini and 1.2 million for the most significant contract.

    Although long-dated futures held for months are unaffected by this limited participation, trade execution in short-term positions is severely impacted, driving up slippage costs.

    Although the VanEck Vectors Gold Miners ETF (GDX) grinds through more significant daily percentage fluctuation than GLD, it comes with a higher risk due to the volatility of its association with the yellow metal. The influence of spot and futures prices is reduced by the extensive price hedging used by large mining firms, whose operations may also retain considerable holdings in other natural resources, such as silver and iron.

  • Cryptocurrency Market: Recession fears halt the bounce.

    Cryptocurrency Market: Recession fears halt the bounce.

    Analysts do not see many encouraging signals to support a cryptocurrency boom. This article guides you through the news and highlights the day’s cryptocurrency market.

    On Monday afternoon, Bitcoin (BTC) was trading at about $20,800, giving up some of its previous week’s gains.
    The biggest cryptocurrency by market capitalization is maintaining its position above the crucial $20,000 threshold, but experts are pessimistic about the chances of a long-term uptrend.

    Cryptocurrency Market
    Image Source: Coindesk

    Simon Peters, a crypto analyst at EToro, said that the same toxic combination of low business profitability, inflation, and central bank rate rises that harmed equities and other assets this year also damaged crypto. Prices of cryptocurrencies have a growing correlation with market indices, especially those with a significant technological component. According to senior market analyst Craig Erlam of Oanda, the fizzling bitcoin rallies indicate a general lack of optimism toward riskier assets.

    Thoughts of the problematic cryptocurrency market lender Celsius Network and the bankrupt cryptocurrency hedge firm Three Arrows Capital seemed to lessen on Monday. President and co-founder of the Prosper Trading Academy’s Howard Greenberg told CoinDesk that the Bitcoin Fear & Greed Index is decreasing.

    Greenberg claimed, “observing the $22,650 level of the 200-week SMA (simple moving average) as the crucial price we must retake and maintain to witness a return to broader trading ranges across the Cryptocurrency Market.

    On Monday, most other cryptocurrencies fell. The second-largest cryptocurrency market’s currency, Ether (ETH), was recently trading at a little under $1,200, down 2.3 percent over the previous day. One of the most significant losers among cryptocurrencies this week was Polygon’s MATIC token, which fell 9.8 percent.

    According to the AAII short-term investor optimism poll, which market research company Macro Hive highlighted in a note, the threat of a recession dampened investor confidence in conventional markets, as optimistic sentiment plummeted to 19.4 percent and pessimistic view rose 11.4 percentage points to 58.3 percent.

    The Nasdaq index dropped 0.8 percent, and the S&P 500 dipped by 0.3 percent.

    According to Bloomberg, industrial metals like copper and tin are expected to experience their worst quarter since the 2008 financial crisis, highlighting the possibility of a recession.

    We are in a bear market, and it’s a bear that’s probably going to keep roaring, “Macro Hive’s CEO and head of research, Bilal Hafeez, published in a newsletter.

    Please click here for the News Updates from June 27th June, 2022.

  • Crude oil sell-off a bit overdone 

    Crude oil sell-off a bit overdone 

    Following a spike to near $123 per barrel last week due to a variety of global factors, crude oil prices fell by as much as 6%, or $11 to $112 per barrel, on June 17. This was a sharp reversal from the steep ascent that followed Russia’s invasion of Ukraine, with global travel opening up and services reviving. 

    The correction was primarily caused by two factors: new figures for Libyan oil being confirmed at 700,000 barrels per day (bpd) rather than the previously expected 100,000 bpd, and US market turmoil caused by a sell-off in broader risk assets.

    The Libyan oil minister confirmed this as well, and while the number is still below the 1.1-1.2 million bpd that Libya is capable of producing, compared to the 100,000 bpd production that the market had assumed, this was somewhat bearish news.” 

    Not only in the United States, but globally, demand is still strong. There is still some momentum there from pent-up demand.”

    However, in the midst of the COVID-19 pandemic, the bulk of demand has shifted from products to services such as travel, leisure, hospitality, and industries, among others. 

    It is also the peak season for travel in the Western Hemisphere, with people returning to the roads and skies in droves. There is some momentum, but suppliers remain in the driver’s seat. 

    The sell-off on Friday was “a little overdone,” and prices could soon be “ticking back up again.” 

    Since the Ukraine war, crude prices have remained in the $100-120 per barrel range and are expected to remain there. 

    As long as Western sanctions against Russia remain in place, there is no reason to expect crude oil prices to fall below $100 per barrel in the near term. 

    The immediate concern for the “here and now” is supply. So, $100-120 heading into the next quarter, with an average of around $110/barrel is expected. 

    On June 20, oil prices fell slightly, reversing earlier gains, as concerns about slowing global economic growth and fuel demand outweighed concerns about tightening supplies. Brent crude futures were down 3 cents at $113.09 per barrel at 0515 GMT, after rising as much as 1% earlier. Front-month prices fell 7.3 percent last week, the first weekly drop in five weeks.

    Meanwhile, WTI crude was trading at $109.42 per barrel, down 14 cents, or 0.1 percent, after rising more than $1 earlier. Last week, front-month prices fell 9.2 percent, the first drop in eight weeks. 

    On June 20, shares of Oil and Natural Gas Corporation (ONGC) and Oil India fell, mirroring the sharp drop in global crude oil prices. 

    Rising oil prices have been one of the driving forces behind ONGC and Oil India’s outperformance in 2022 thus far. While Oil India shares are still up 18% this year, ONGC is down 5.5 percent following the recent correction.

    Concerns about these stocks are heightened by the possibility of imposing a windfall tax on their earnings to compensate the government for the loss incurred by excise duty cuts. 

    Brokers are still optimistic that crude oil prices will remain above $100 per barrel for the rest of 2022-23, boosting ONGC and Oil India’s earnings. Furthermore, domestic natural gas prices are expected to rise sharply at the September review, potentially increasing earnings for ONGC and Oil India.

    #edgeforex #forex #forextrading #forexsignals #oil #crude #selloff #crude #sharply #rise #demad #gas #prices #supply

  • Forex News June 14, 2022

    Forex News June 14, 2022

    Dollar

    • The dollar rises as stock market gains fade.
    • Risk appetite has been sapped in European morning trade, as European indices have gone negative and US futures are now just staying afloat. Dollar bids have returned, and the dollar is now trading higher against the pound, loonie, Aussie, and kiwi, after some minor losses earlier.
    • For the first time since May 2020, cable has dipped below 1.2100:
    • The dollar’s earlier dip has little technical significance and is more due to the market needing a break. Risk, on the other hand, is showing signs of concern again, making the greenback easy pickings.
    • All things considered, the GBP/USD continues to look poised for a run towards 1.2000.
    • Elsewhere, the EUR/USD has dropped from 1.0485 to 1.0435, while the yen has benefited from lower bond rates (at least at the longer end of the curve) thus far in the session. As the push and pull just below the 135.00 handles continues, the USD/JPY is down 0.2 percent to 134.15.

    Crypto market

    • Bitcoin’s current decline cycle has most certainly found its “bottom.”

    In the last 24 hours, Bitcoin has risen 2.4 percent to $30.5K. Ethereum is now trading at $1820, up 0.2 percent. Ether was one of the laggards, which was surprising. The top ten altcoins increased from 1.5 percent (BNB) to 4.1 percent (Solana).

    According to CoinMarketCap, the total crypto market capitalization increased by 1.8 percent overnight to $1.26 trillion. The dominance index for Bitcoin increased by 0.2 percent to 46.3 percent. By Friday, the bitcoin fear and greed index had dropped 3 points to 10 and was still in “severe dread.”

    After a big drop the day before, Bitcoin rallied on Thursday. A weaker dollar and strong stock indices helped the gain. The local decline (which had previously been a consolidation triangle from May 10) has now become a support line. This is good news in the short run. It’s important to note, though, that this is a delicate structure that might be shattered by a stronger dollar or a market reaction to labour market news.

    According to Arthur Hayes, the former CEO of the BitMEX cryptocurrency exchange, Bitcoin has already touched the “bottom” of its current downtrend and will not fall below $25,000 in the near future. When the Fed stops hiking rates, though, a market trend reversal is likely.


    The bearish phase will end in six months as per BTC. TOP CEO Jiang Zhuoer. The Ethereum upgrade, which is expected to happen between October and December, could be a trigger for this. The failure of the US Federal Reserve to raise interest rates will also be a positive element.

    According to a Goldman Sachs poll, 6% of global insurance companies have invested in cryptocurrencies or intend to do so. A growing number of investors regard digital currencies as a valuable tool for portfolio diversification, according to the Economist Impact study.

    Interest rates

    • We had emergency settings during the epidemic, according to RBA governor Philip Lowe in a television interview

    • However, now that the emergency is ended, it’s time to turn off the emergency settings.

    • It’s past time for the Fed to return to more normal monetary policy settings.

    • Expects inflation to reach 7% by the end of the year.

    • RBA is confident in its ability to return inflation to the target range of 2% to 3%.

    That’s essentially a repeat of the turn they did in May. There isn’t much to suggest where they’re going, but as long as inflation pressures remain high, the RBA is likely to stick to its more aggressive tightening strategy for the time being.

    #edgeforex #forexsignals #forextrading #forex #crypto #dollar #technicals #interest rates #RBA #coinmarketcap #Risk #Break #Goldman sach

  • Forex News June 8, 2022

    Forex News June 8, 2022

    USD/JPY

    • USD/JPY remains on track to reach 135.00 in the near future.
    • The pair is currently up 0.4 percent on the day.
    • Following a brief pause in May, the pair has resumed its surging upward momentum in June.
    • With a 600 pips push since the lows around 127.00 last week, the pace remains rather unrelenting.
    • After breaking through short-term resistance just above 131.00, there is now little standing in the way of a push towards 135.00, at least from a technical standpoint.
    • Japanese officials’ light jawboning will continue to fall on deaf ears because their tone hasn’t changed in months. That speaks volumes about their willingness to intervene in the market.
    • The recent rally has been aided by a resumption of bond selling over the last two weeks. There was a brief pause yesterday, but yields are climbing again today.
    • 10-year Treasury yields have risen by more than 3 basis points to reclaim 3.00 percent. Returning to the USD/JPY, the strong momentum continues to provide some support for the dollar in general. That will be even more frightening if the pair breaks through the 135.00 level.

    Equities

    European equities open slightly higher to begin the day

    The gains, however, belie the more sluggish risk sentiment

    Eurostoxx +0.3 percent, Germany DAX +0.3%, United Kingdom FTSE +0.2%, France CAC 40 +0.3% & Spain IBEX +0.3%

    In essence, European indices are catching up to yesterday’s late turnaround in US stocks.

    The overall tone in the equity market remains sluggish.

    S&P 500 futures are currently down 0.3 percent, Nasdaq futures are down 0.4 percent, and Dow futures are down 0.3 percent.

    BOJ

    Remarks by BOJ Governor Haruhiko Kuroda: Monetary easing must continue to support economic recovery

    Monetary policy aimed at achieving 2% inflation in a stable, sustainable manner

    Current 2% inflation is simply due to higher energy prices and will not be sustainable

    Unless the Fed raises rates much faster than suggested, the dollar will be less affected by US-Japan interest rate differentials

    He is adamant that the current easy policy is correct and that it is not the primary reason for the yen’s weakness in recent months.

    The fact that the BOJ has been unable to change policy for nearly two decades speaks volumes about Japan’s underlying problems.

    And, regardless of what Kuroda and company say, policy/rates divergence is unquestionably a key factor driving the latest market moves.

    Dollar

    • The dollar rises in European morning trade.
    • The dollar is holding up well today as another push higher in USD/JPY sparks flows into the currency.
    • The pair appears to be heading for 135.00 and is currently up nearly 120 pips to 113.75. Bond yields have risen, lifting the mood, with the 10-year Treasury yield rising 4 basis points to 3.01 percent. Elsewhere, the greenback is making modest gains, with the aussie and kiwi being punished the most by the sluggish risk mood.
    • EUR/USD is down 0.2 percent to 1.0675 as the push and pull ahead of the ECB continues. Meanwhile, the GBP/USD has fallen from near-1.2600 highs to around 1.2520 levels.
    • This corresponds to the 38.2 Fib retracement level of 1.2471 and the 1 June low of 1.2458. On the daily close, those are key levels to watch to see if sellers are willing to chase the next leg lower.
    • Aside from that, the AUD/USD is down 0.6 percent to 0.7180 following a rejection of its 100-day moving average:
    • Sellers are battling for near-term control below the 200-hour moving average at 0.7194, but the minor support region around 0.7145-60 will be watched to see if the downside momentum continues.
    • The softer risk mood isn’t helping the more sluggish tones in the Aussie and Kiwi, with European indices now posting minor losses and US futures pointing lower. S&P 500 futures are still down 0.3 percent.

    #edgeforex #forextrading #forexsignals #forex #usd #jpy #equities #europe #dollar #markets #track #japanese #indices

  • Forex News May 27, 2022

    Forex News May 27, 2022

    Evergrande

    Evergrande is said to be considering repaying offshore bondholders with cash instalments.

    As part of the proposal, Evergrande is said to consider repaying offshore creditors the principal and interest on the debt by converting it into new bonds. The new bonds will then be repaid in instalments over a 7 to 10-year period. For context, Evergrande owes approximately $19 billion to its offshore public bondholders. Evergrande is also expected to complete the proposal by July and sign agreements with investors by December.

    That’s a lot of talking, but it’s unclear how they’ll come up with the funds to carry out this repayment plan.

    Equities

    European equities open slightly higher

    Risk remains stable to begin the session

    Eurostoxx +0.1 percent, Germany DAX +0.5 percent, France CAC 40 +0.2 percent, UK FTSE flat & Spain IBEX +0.3 percent

    As the week begins, we expect steady tones and equities to finish with a more moderate showing. S&P 500 futures are flat, Nasdaq futures are down 0.1 percent, and Dow futures are also flat on the day.

    Dollar

    • The dollar is not a sure bet on recession risks this time • Historically, the dollar gains on a flight to safety.
    • However, the caveat this time is that the dollar has already gained significantly on rate hike bets. And one could argue that with the recent drop in Treasury yields, we have already priced in the Fed’s maximum hawkishness – at least for the time being.
    • This is also evident in markets, which see a lower and earlier terminal rate compared to a week ago. As rate hike bets cool, the dollar appears to be cooling this week as well.
    • There is also a valid argument that the greenback is overdue for a technical retracement. However, it is no coincidence that it coincides with declining bets on further Fed hawkishness.
    • Given that inflationary pressures remain high and supply chain issues persist, there is widespread concern about recession (and stagflation) risks brewing around the world. The United States will not be immune to this, and economic data in the coming months, particularly later in the third quarter, will reveal whether they will follow suit.
    • If this is the case, it suggests that the Fed’s window for tightening is closing.
    • And all you have to do at this point is look at how the market perceives the BOE to get a sense of what the reaction might be.
    • Broader recession fears could spark a wave of risk aversion across equities, causing safety to flow into the dollar and bonds. However, if this coincides with the market exiting bets on Fed rate hikes, the dollar may face outflows as well.
    • Fed fund rate futures already have roughly 88 percent odds of the Fed hiking to above 2.50 percent by year’s end. If this trend continues, the typical dollar bet on recession risks will not be as simple as it appears.

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  • BOE gold trades at a rare discount.

    BOE gold trades at a rare discount.

    According to traders familiar with the matter, gold at the BOE has recently traded as much as a dollar an ounce below benchmark London prices. According to one of the traders, such a large discount usually indicates a large institution, such as a central bank, selling a significant amount of reserves in order to raise US dollars or other currencies. 

    The Bank of England’s vaults house 5,676 tonnes of bullion, making it one of the world’s largest stockpiles, which it holds on behalf of other central and commercial banks. Gold held by central banks is typically bought and sold in bilateral trades between large institutions at prices that are typically within a few cents of the market rate.

    Gold in central bank vaults traded $1 lower than the London benchmark. 

    The price of gold stored at the Bank of England has been unusually low, indicating that central banks may be selling some of their holdings. 

    According to the most recent World Gold Council data, central banks increased their gold holdings by nearly 456 tonnes in 2021, continuing a long-running trend driven by emerging markets diversifying their reserves away from foreign currencies. Brazil, Thailand, and Ireland, which made its first purchase since 2009, were among the notable buyers.

    Purchasing could slow in 2022 as financial institutions seek to hold more interest-bearing dollars as the Federal Reserve prepares for aggressive monetary tightening. The dollar is on track for its biggest annual gain in seven years, putting pressure on emerging market currencies and borrowing costs. 

    The BOE gold discount has narrowed since the dollar-an-ounce margin, but it remains large by normal standards, according to the people, who did not want to be identified because they were discussing private information. Bullion has fallen more than 12% since its peak in March, leaving it nearly unchanged this year.

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