South Korea: BoK raised rates by 50 bps – UOB

 Economist at UOB Group Ho Woei Chen, CFA, comments on the latest interest rate decision by the Bank of Korea (BoK).

Key Takeaways

“Bank of Korea (BoK) ratcheted up its benchmark base rate by an outsized 50bps to 3.00% in Oct. This was the second time that the central bank had hiked by a 50bps pace following a similar move in Jul. The strengthened policy move was in response to the high inflation as well as sharp depreciation in the won which was seen adding more inflationary pressure through higher imported prices.”

“Despite opting for a larger 50bps hike, BoK’s tone was evidently more downbeat as Governor Rhee Chang-yong flagged weaker growth outlook for the global and South Korean economies.”

USD Index Price Analysis: Extra gains could challenge the 2022 peak

 

• DXY meets some decent hurdle around the 113.60 area.
• Further north emerges the YTD high near 114.80.
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DXY’s multi-session strong advance has faltered around the 113.60 region on Wednesday.

If bulls push harder and the index surpasses 114.00, then the next target of note should turn up at the 2022 high at 114.78 (September 28) prior to the round level at 115.00.

The prospects for extra gains in the dollar should remain unchanged as long as the index trades above the 7-month support line near 107.80.

In the longer run, DXY is expected to maintain its constructive stance while above the 200-day SMA at 103.10.

AUD/USD to fall towards 0.60 after RBA’s dovish decision – MUFG

 The Reserve Bank of Australia’s (RBA) surprise decision to slow the pace of tightening by delivering a smaller 25 bps hike weighed on the aussie. Economists at MUFG Bank expect the AUD/USD pair to challenge the 0.6000 level.

RBA policy update reinforces downside risks

“We continue to believe that risks remain tilted to the downside for commodity currencies in the near-term.”

“The RBA’s policy shift has increased the likelihood that AUD/USD will fall towards the 0.6000 level.”

EUR/USD Price Analysis: Key resistance lies at the parity zone

 

• EUR/USD wobbles around the 0.9800 zone ahead of NFP.
• Bullish attempts face a tough barrier at the parity level.

EUR/USD gyrates around the 0.9800 region ahead of the release of US Nonfarm Payrolls on Friday.

The resumption of the buying interest is expected to meet a solid hurdle at recent peaks around the parity zone. Ideally, EUR/USD should leave behind this key resistance zone in the near term to allow for the continuation of the rebound.

In the longer run, the pair’s bearish view should remain unaltered while below the 200-day SMA at 1.0616.

Stocks still look expensive and valuations look high – Morgan Stanley

 Will the fourth quarter bring an end to the bear market? Morgan Stanley’s Global Investment Committee believes this bear market is far from over and recommends investors consider three key dynamics to inform their equity investments going forward.

Stock investors should demand a greater premium for taking on risk

“The paths for interest rates, inflation and corporate profitability all remain uncertain. That’s why stock investors should be demanding a greater premium for taking on risk. In other words, stocks still look expensive, and valuations look high, especially given that inflation-adjusted yields have moved up.”

“Investors could be in for more surprises as they continue to overlook the impact of tightening financial conditions. They should be cautious about investing in long-duration or growth-oriented equities, which currently may not offer fair compensation for the risks of rising rates, weakening operating leverage and the strong US dollar.” 

“Any bear-market rally that may occur in the seasonally strong fourth quarter should be used for rebalancing portfolios and tax-loss harvesting.”

Silver Price Analysis: XAG/USD maintains a large top, further downside ahead – Credit Suisse

 Silver maintains the top analysts at Credit Suisse have been highlighting since mid-May. Therefore, XAG/USD is expected to decline towards the $15.56 support.

Break above $21.39 remains needed to negate the top

“Silver has risen back above the crucial 61.8% retracement support of the whole 2020/21 upmove at $18.65/15, however, still maintains a large top below $21.39 and we hence expect further downside from here towards the $15.56 support from a technical analysis perspective.”

“Next resistance is seen at $20.87 and above $21.39 remains needed to negate the top.”

USD strength to persist into early next year – Rabobank

 In the view of economists at Rabobank, the US dollar is set to remain well supported for several months with the hawkish position of the Fed underpinning the attraction of the greenback as a safe haven.

Scope for further dips in EUR/USD below parity

“As the Fed still has a lot of work to do in taming price pressures and ensuring that inflation expectations are well anchored into the medium-term, it can be assumed that the FOMC will not be ready to relinquish its hawkish position just yet. Since this will impact risky assets, we see risk that USD strength persists into early next year.”

“We expect the USD to remain the favoured safe haven relative to either the JPY or the CHF in view of higher US short-term interest rates.”

“Given also that the eurozone is facing a difficult winter which includes the possibility of energy rationing for some businesses, we see scope for further dips in EUR/USD below parity.”

EUR/GBP to extend its advance once key resistance at 0.8720 is reclaimed – SocGen

 EUR/GBP picks up bids to reverse Friday’s losses. Economists at Société Générale expect the pair to extend its race higher on a break past 0.8720.

Short-term support aligns at 0.8560

“EUR/GBP recently gave a break above the descending trend line drawn since 2020 denoting potential upside. This is also highlighted by weekly MACD which is now firmly anchored within positive territory and above its trigger.” 

“The pair is close to key graphical resistance of 0.8720. Once this is reclaimed, the up move is likely to extend towards projections of 0.8860 and perhaps even towards 0.8980/0.9010.” 

Iran Foreign Minister: Carefully reviewing EU-drafted text for revival of 2015 nuclear pact

 Iran's Foreign Minister Hossein Amirabdollahian said on Wednesday that Tehran is carefully reviewing the EU-drafted text for the revival of the 2015 nuclear pact, as reported by Reuters. 

"We need stronger guarantees from the other party to have a sustainable deal,"  Amirabdollahian added. "The (U.N.) agency should close its politically-motivated probes."

Market reaction

Crude oil prices showed no immediate reaction to these comments. As of writing, the barrel of West Texas Intermediate was trading at $89.10, where it was down 3.5% on a daily basis. 

USD/CHF Price Analysis: Hovering around the top of the 0.9600-0.9660 range, eyeing 0.9700

 

• USD/CHF bounces from weekly lows, set to finish the week with gains of 0.73%.
• From a daily chart perspective, the USD/CHF has nowhere to go; it would likely remain in consolidation.
• Near-term, a symmetrical triangle in the USD/CHF 4-hour chart targets 0.9767.

The USD/CHF stages a comeback after hitting weekly lows around 0.9577 earlier in the day and is about to erase Thursday’s losses as the USD/CHF aims towards the 100-DMA, following hawkish remarks by the US Federal Reserve Chief, Jerome Powell. The USD/CHF is trading at 0.9659, up by almost 0.20%.

USD/CHF Price Analysis: Technical outlook

Consolidation in the daily chart will keep the USD/CHF trading within the 0.9600-0.9690 range, as shown by this week’s price action. Worth noting that the support/resistance levels are the 100 and 50-day EMAs, each at 0.9657 and 0.9614, respectively. Therefore, unless the exchange rate decisively breaks above/below the range, the USD/CHF might remain subdued.

US Dollar Index Price Analysis: The surpass of the YTD high exposes 109.77

 

• DXY remains bid and flirts with the 2022 top near 109.30.
• Further north of comes the September 2002 high around 109.80.

DXY keeps the rally well and sound and trades at shouting distance from the YTD highs near 109.30 on Tuesday.

The continuation of the upside momentum looks increasingly likely in the very near term. That said, beyond the 2022 high at 109.29 (July 14) the index could challenge the September 2002 peak at 109.77 prior to the round level at 110.00.

In the meantime, while above the 6-month support line near 105.10, the index is expected to keep the short-term positive stance.

Looking at the long-term scenario, the bullish view in the dollar remains in place while above the 200-day SMA at 100.49.

US Dollar Index Price Analysis: Further losses not ruled out

 

• DXY accelerates the corrective decline to the 105.30 zone.
• Immediate to the downside appears the 55-day SMA at 104.75.

DXY navigates the fourth consecutive session with losses and revisits the 105.30 region at the beginning of the week.

The index broke below the multi-session pre-FOMC consolidative theme and in doing so it has paved the way for extra decline in the short-term horizon. That said, the immediate support now turns up at the interim 55-day SMA at 104.75 ahead of the 5-month support line around 103.85.

The near-term outlook for DXY remains constructive while above this 5-month support line near 104.00.

In addition, the broader bullish view remains in place while above the 200-day SMA at 99.49.

EUR/USD Price Analysis: Range bound within 1.0100-1.0260 since July 22

 

• The EUR/USD is set to finish the week almost flat, gaining 0.05%.
• The shared currency daily chart is neutral-to-downwards, but the hourly is neutral-to-upwards.
• EUR/USD Price Analysis: A daily close above 1.0200 could pave the way towards 1.0300; otherwise, it might drop towards 1.0096.

The EUR/USD is trading at 1.0220, after hitting a daily high at 1.0254, but later tumbled towards the daily low at 1.0145 on elevated US inflation data. In June, the Personal Consumption Expenditures (PCE) rose by 6.8% YoY, fueling expectations of additional Federal Reserve rate hikes, despite the market's pricing in only 80 bps of tightening.

EUR/USD Price Analysis: Technical outlook

From a daily chart perspective, the EUR/USD remains neutral-to-downward biased, helped by the 20-day EMA lying below the exchange rate at 1.0167. Nevertheless, the EUR/USD, unable to capitalize on an upbeat market mood, and broad US dollar weakness, keeps the shared currency exposed to further selling pressure. If EUR/USD buyers want to shift the bias to neutral, they must reclaim the May 13 low-turned-resistance at 1.0348. Once cleared, a challenge of the 50-day EMA at 1.0423 is on the cards. On the other hand, if EUR/USD sellers achieve a daily close below 1.0200, that would pave the road towards 1.0096.

US Dollar Index Price Analysis: Room for a test of YTD highs

 

• DXY resumes the upside beyond the 103.00 yardstick.
• Next on the upside comes the cycle tops near 104.00.

The index leaves behind the pullback seen at the end of last week and advances above the 103.00 area on Monday.

Price action in DXY remains supportive of the resumption of the uptrend with the initial target at the 2022 highs just below the 104.00 yardstick (April 28). Above this level comes 105.63 (December 11 2002 high).

The current bullish stance in the index remains supported by the 8-month line near 96.80, while the longer-term outlook for the dollar is seen constructive while above the 200-day SMA at 95.56

Series on the Russia-Ukraine Crisis:

Russia and Ukraine on Thursday agreed on the need for humanitarian corridors to help civilians escape Moscow's eight-day invasion, the first clear progress in the talks, as the United States  in addition to Western sanctions on more oligarchs.

 Thousands of people are believed to have died or been injured in the biggest attack on a European country since the outbreak of World War Two, creating 1 million refugees, affecting the Russian economy and worrying  concerns about broader conflict in the West for decades.

 Russian forces continue to besiege and attack Ukrainian cities, including Mariupol, the main eastern port that is under heavy shelling, without electricity or water.  Officials said they were unable to evacuate the injured.

 After talks at an undisclosed location, Russia said "significant progress" had been made, but not the outcome Kyiv had hoped for.

 The two sides agreed to conduct a third round of negotiations.

Prediction on Gold on 03/03/2022:

- In yesterday's session, precious metal Gold fell from 1947 to 1914 ($33), closing the day session with a bearish candle around 1927. The drop was not too strong and recovered in  end of trading day.  In my personal opinion, the increasing force of Gold is still dominant, so in today's session, the option will be to buy.

 - On the H4 time frame, the nearest support area for this precious metal is around 1914-1919.  Here we can establish a long position with a safe target around 1935-1940.  Then there is a signal I will update later.

Comment on Gold on February 28, 2022:

 Last week, we saw very strong fluctuations, Gold price bounced up quickly to 1974 and then fell sharply to 1877, closing the session with a bearish candle around 1889. At the beginning of the session.  this morning's trading World gold opened the first session of the week with about GAP increasing to nearly 1930 at the opening session and then decreasing after that.  With the Russian military campaign in Ukraine along with the tension of the US and its allies, it is very difficult at this time for Gold to fall deeply, so in my opinion, the possibility of Gold will continue to gain momentum.  get a raise.

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On the H4 time frame, Gold is showing signs of completing the GAP and if Gold returns to around 1900, this is the price range we can consider buying in with this precious metal with a target of 193x.  Another note is that currently, the amplitude of Gold at this time will be quite large, so everyone balances the volume and capital for safer transactions.

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 European Commission President Says Financial Sanctions Target 70% of Russian Banks!

 Von Der Leyen said the steps agreed by EU leaders include financial sanctions, targeting 70% of Russian banks and key state-owned companies, including in the defense sector.

 - Sanctions against Russia will increase Russia's borrowing costs and increase inflation

📕 Comment on Gold on February 23, 2022:

 

- In yesterday's session, precious metal Gold, after bouncing up to 1913, fell to 1891, then fluctuated in two directions in 1894-1905, closing the day session with a bearish candle around 1898. Although it closed with a bearish candle, the decline in Gold was not strong and the criticized between the US and Russia related to the Ukraine crisis boosted safe-haven demand for the precious metal. So in my personal opinion Gold will still be supported uptrend in today's session. - Currently around 1893-1898 is the closest support area for this precious metal, where investors can establish a buy position with a safe target around 1912 and expect it to be around 1912. 192x in today's trading session.