Bailey speech: Bank rate may have to go up further

 Bank of England (BoE) Governor Andrew Bailey is delivering his remarks on the policy outlook and responding to questions from the press following the bank's decision to hike the policy rate by 75 basis points to 3%.

Key takeaways

"If we do not act forcefully now, it will be tougher later."

"Bank rate may have to go up further."

"We think bank rate will have to up by less than priced in markets."

"We are increasing bank rate because inflation is too high."

"Low and stable inflation is the bedrock of a stable economy."

About Andrew Bailey (via bankofengland.co.uk)

"Andrew Bailey previously held the role of Deputy Governor, Prudential Regulation and CEO of the PRA from 1 April 2013. While retaining his role as Executive Director of the Bank, Andrew joined the Financial Services Authority in April 2011 as Deputy Head of the Prudential Business Unit and Director of UK Banks and Building Societies. In July 2012, Andrew became Managing Director of the Prudential Business Unit, with responsibility for the prudential supervision of banks, investment banks and insurance companies. Andrew was appointed as a voting member of the interim Financial Policy Committee at its June 2012 meeting."

BoE: Looking for a 75 bps rate hike next week – Rabobank

 Next week, the Bank of England will have its monetary policy committee meeting. Analysts at Rabobank look for a 75 basis points rate hike to 3.00% from 2.25%. They explain that it would still be the largest rate hike of this cycle. They expect to see rates peaking at 4.75%.

Key Quotes: 

“After the mini-Budget disaster of late-September, we shifted our call for the November MPC from +50 to +100 bps. We have dialled back our forecast to +75 bps, as most of the political and financial market upheaval has subsided. This is also the consensus among economists.”

“The central bank needs to show markets that it is cognizant that confidence in the UK’s institutional framework has been damaged, but there is no need for crisis management anymore. Still, a 75 bps hike would still be Britain’s largest of this cycle. We think it will also be a one-off, allowing the central bank to move back to a more gradual pace of 50 bps and then 25 bps rate increases this winter.”

“While inflation should remain around 10% in upcoming months, the outlook for growth has weakened markedly. Even as the August Monetary Policy Report was already sombre, forecasting a fifteen-month recession, we expect more of this gloominess rather than less.”

Canada: Annual CPI eases to 6.9% in September vs. 6.8% expected

 

• Inflation in Canada falls at a slightly slower-than-expected pace.
• USD/CAD trims a part of its intraday gains in reaction to the data.

Inflation in Canada, as measured by the Consumer Price Index (CPI), fell to 6.9% in September from 7.0% in August, data published by Statistics Canada showed this Wednesday. This reading is slightly better than the market expectation of 6.8%.

The Bank of Canada's (BOC) Core CPI, which excludes volatile food and energy prices, unexpectedly climbed to 6.0% on a yearly basis from 5.8% in August, again beating estimates for a reading of 5.6%.

The initial market reaction, however, is limited amid a goodish pickup in the US dollar demand, which continues to act as a tailwind for the USD/CAD pair.

The dollar remains firm as the new week begins – BBH

 Economists at Brown Brothers Harriman & Co. (BBH) maintain a bullish outlook for the US dollar amid the prevalent risk-off environment and last week's hawkish FOMC decision.

Key Quotes:

“Markets were already nervous last week as major central banks tightened aggressively but the huge fiscal policy mistake from the U.K. added further fuel to the fire.  MSCI World tumbled -5% in its worst week since mid-June and is adding to those losses today.  With global growth also slowing significantly, the backdrop for risk assets remains challenging.  We expect the dollar to continue strengthening in this environment even as Fed tightening expectations remain elevated.”

“WIRP suggests another 75 bp hike is almost fully priced in for November 2, as is a follow-up 50 bp hike December 14.  Elsewhere, the swaps market is pricing in a terminal rate of 4.75%.  As a result, U.S. rates continue to rise.  The 2-year yield traded near 4.35% today, the highest since 2007, while the 10-year yield traded near 3.82% Friday, the highest since 2010.  The real 10-year yield traded near 1.40% today, the highest since 2010.  This generalized increase in U.S. yields is likely to continue and will ultimately support the dollar.  Of note, the 3-month to 10-year curve remains positively sloped near 61 bp, the steepest since July, and so we are not yet ready to call for an imminent recession in the U.S.”

USD/CNH: Next on the upside comes 7.0500 – UOB

 Quek Ser Leang at UOB Group’s Global Economics & Markets Research suggests USD/CNH could retest 7.1000 once 7.0500 is cleared.

Key Quotes

“In our last Chart of the Day update from 29 Aug 2022, when USD/CNH was trading at a much lower level of 6.9200, we titled our update ‘USD/CNH could continue to advance, likely at a rapid pace as there are hardly any resistance levels of note until 7.0000’. While our view of a ‘rapid pace of advance’ was not wrong, USD/CNH did not break 7.0000 as it soared to 6.9967 about a week later before pulling back to a low of 6.9100.”

“USD/CNH rebounded sharply from 6.9100 and yesterday (15 Sep 2022), it cracked 7.0000. The break of the ‘psychological level’ resulted in a swift and sharp surge and USD/CNH continues to accelerate higher today. The price actions are not surprising as the next resistance level of note is at 7.0500. Looking ahead, if 7.0500 is broken, the focus will shift to 7.1000. Within these couple of months, the 2019 and 2020 highs, both near 7.1960, are unlikely to come into view.”

On the downside, the rising trend-line support, currently at 6.9400, is a strong support level but only a breach of the 21-day exponential moving average (at the time of writing, the level is at 6.9260) would indicate the current strong upward pressure has eased.”

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.”

Malaysia: BNM hikes rates again – UOB

 

Senior Economist Julia Goh and Economist Loke Siew Ting at UOB Group review the latest interest rate decision by the BNM.

Key Takeaways

“As widely expected, Bank Negara Malaysia (BNM) raised the Overnight Policy Rate (OPR) today (8 Sep) by 25bps to 2.50%. This marks the third back-to-back rate hike since BNM started the hiking cycle in May this year as the economy recovered at a stronger pace. To date, BNM has hiked 75bps, which partly reversed the 125bps of rate cuts since the start of the pandemic in Jan 2020.”

“In the latest monetary policy statement (MPS), BNM continues to expect the domestic economy to expand, supported by private sector spending amid the transition to endemicity, positive labour market conditions, resumption of tourism activities and investments. However, BNM cautioned that external demand is expected to moderate amid softer global growth. BNM expects inflation to peak in 3Q22 before moderating thereafter amid abating base effects and easing global commodity prices.”

“BNM highlighted that there is no ‘pre-set course’ and the monetary policy committee (MPC) will continue to assess developments and their impact on domestic inflation and growth. BNM also reiterated that any adjustments will be done in a ‘measured and gradual’ manner. We think BNM may have signalled a temporary pause for rate hikes pending forward-looking growth and inflation dynamics. As such, we maintain our OPR target at 2.50% by year-end, and 3.00% by mid-2023. The next and final monetary policy meeting for the year is on 2-3 Nov.”

US Dollar Index Price Analysis: Immediately to the upside comes 109.77

 

• DXY prints fresh cycle highs near 109.50 on Monday.
• Further upside could revisit the September 2002 high at 109.77.

DXY extends the post-Powell rally to the area of 109.50, recording at the same time new cycle highs.

Further upside remains on the cards for the index in the near term. Against that, the surpass of the 2022 high at 109.47 (August 29) should open the door to the September 2002 top at 109.77 prior to the round level at 110.00.

In the meantime, while above the 6-month support line around 105.40, 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 100.74.

GBP/USD needs to clear strong resistance at 1.1870 to gather bullish momentum

GBP/USD has managed to recover above 1.1800 on Friday ahead of FOMC Chairman Jerome Powell’s remarks at the Jackson Hole Symposium. The pair will reveal a buildup of bullish momentum on a break past 1.1870, FXStreet’s Eren Sengezer reports.

Pound struggles to turn bullish ahead of Powell

“In case the chairman's comments suggest that the bank could opt for another 75 basis points in September, GBP/USD could turn south amid a stronger dollar. On the other hand, an optimistic tone inflation outlook should hurt the greenback and help GBP/USD gain traction.”

 On the upside, cable faces key resistance at 1.1870, where the Fibonacci 23.6% retracement level of the latest downtrend is located. Above that level, the 50-period SMA forms interim resistance at 1.1900 ahead of 1.1940 (Fibonacci 38.2% retracement).”

“1.1800 (psychological level, 20-period SMA) aligns as initial support before 1.1750 (static level, end-point of the downtrend) and 1.1720 (Aug. 23 low).”

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.

USD & JPY Goes up & Down

The USDJPY has seen more up and down price action today continuing the price action seen on Friday. The pair did move below the low from Friday's trade, but found support near the low from January 14 at 113.474. It dipped briefly below the level to a low of 113.464, but quickly rebounded.

The subsequent move back higher saw the pair move into a topside swing area between 113.954 and 114.028 

 Sellers leaned against that area and pushed the price back down toward another swing area between 113.596 and 113.629. The price has been able to stay above that area. A break below is needed to solicit more selling with the lows near 113.47 as the next major target (obviously). Conversely, stay above the lower swing area (green numbered circles) and a rotation back toward the red numbered circles, would be the next target.

The USD and the JPY can both be safe haven currencies. That dynamic can neutralize the price action for this pair during volatile bearish price action in the US stock market. That is what we are seeing in the up and down price action over the last two days. Until it gets out of this bearish bias, we can expect more of the same going forward.

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Who will Help The AUSSIES As There is a Change in MAJOR and MINOR Currency Pairs

LONDON (Reuters) -The dollar dipped on Thursday as this week's rally in U.S. Treasury yields paused, while the Canadian and Australian dollars gained on the back of rising commodity prices and optimism about economic growth.

The euro and sterling rose after suffering their worst days in a month on Tuesday when the dollar was lifted by a jump in U.S. Treasury yields.

However, by 1100 GMT the initial gains had fizzled with investors cautious about the next move in government bond yields.

The European single currency was last at $1.1346, up slightly on the day and below an earlier high of $1.1369.

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The pound was 0.1% higher at $1.3622 and the yen was up marginally 114.26 per dollar.

This left the dollar index, which measures the greenback against six major peers, at 95.563, 0.1% lower on the session.

The dollar has not performed as well as expected recently, despite a dramatic rise in expectations for the U.S. Federal Reserve to begin hiking interest rates as early as March to curb soaring inflation.

U.S. benchmark 10-year note yields were at 1.8379%, off their two-year high of 1.902% reached on Wednesday.

The gains come as traders prepare for the United States to tighten monetary policy at a faster pace than previously thought. Fed funds futures have fully priced in a rate hike in March and four in all for 2022.

Elsewhere a combination of higher commodity prices and expectations for tighter policy supported the Aussie and the Loonie.

The Aussie firmed 0.4% to $0.7237, extending advances from the previous day, and the Canadian dollar was heading back towards the 10-week high it touched on Wednesday, with one U.S. dollar worth C$1.2493.

Analysts said a strong Australian labour market reading overnight also helped the Aussie.

"The latest Australian employment report...reinforced expectations that the RBA (Reserve Bank of Australia) will decide to bring an immediate end to the QE (quantitative easing) programme at their next policy meeting on 1st February," said MUFG analyst Lee Hardman.

Hardman noted that the Canadian dollar has been the best performing G10 currency in 2022, attributing that to a sharp rebound in oil prices -- which have hit seven-year highs -- and speculation the Bank of Canada will soon start to hike rates.

The Norwegian crown, another currency linked to the price of oil, fell after the central bank voted to keep interest rates on hold at 0.5% and said it was on track for a March hike. That disappointed some traders betting it would flag a faster rate of tightening.

The crown was last down 0.2% against both the euro and the dollar.

We can provide fundamental and Technical analysis in CURRENCY PAIRS TIPS.

GOLDEN MARKET: Forex | Comex | Stocks

   ☘️The price of gold in the international market has increased and decreased unpredictably according to the evolution of updated information on the mutation of the Omicron virus.

 ☘️Investors are insecure because of new information about the Omicron mutation and negative fluctuations in the world financial market.

 The CEO of Moderna believes that Omicron reduces the effectiveness of the vaccine.  Accordingly, the world will take many months to develop and ship a specific vaccine with the Omicron strain.  However, more time is needed to determine exactly how the Omicron variant affects the vaccine's effectiveness.

 ☘️The USD dropped sharply and world stocks simultaneously dropped, which was the factor that pulled the gold price up.

 The new Covid-19 variant was first detected in South Africa and has appeared in more than a dozen countries, prompting many countries to re-enact travel restrictions.  The World Health Organization (WHO) classifies Omicron as a variant of concern, on the same level as the Delta variant.

 US Federal Reserve Chairman Jerome Powell believes the Omicron variant poses a threat to the Fed's mandate to stabilize prices and maximize employment.

 Gold is under pressure from the possibility that the US Federal Reserve (Fed) accelerates the plan to tighten monetary policy to fight inflation.

 However, the precious metal commodity is supported by the unpredictable variables of the new virus strain.

 Fed Chairman Jerome Powell has just said that the Omicron mutation puts pressure on the US economy and complicates the inflation picture.

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Importance of Live Forex Signals In The Market

 

 

The Forex market is highly volatile and there are thousands of investors who enter this market to try their luck. As there are many beginners in this market, they also get some forex signals in order to make good profits in the market. Forex signals are derived from standard trading charts or analytical signals and technical indicators. Using these signals can help traders to capture more profits in the market.

Understanding technical and fundamental analysis of the forex market requires skills and expertise. But since traders understand this skill, they can convert market leverage and volatility into profitability. Alternatively, you can get a good forex signal provider to understand the basics of the forex market. One of the most important forex tips is to get good forex signals and act immediately in order to get superior returns as compared to other investors.

For the convenience of investors and for them to act immediately on such signals, a signal provider sends signals directly to the investor via email or WhatsApp. This is particularly helpful for investors who have limited time to perform market analysis. One important forex tip is to use stop loss and limit orders.

• A stop level will help you to stop the trade in case you find the trade going in the wrong direction
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Know Your Risk Tolerance

Before entering the forex market it is important to understand your risk tolerance. Otherwise, you will end up losing all your capital and savings in this market. This happens to many traders because of high volatility and leverage in the market. You should know what is the maximum loss that you can tolerate and the risk that you can take with invested capital.

Know Your Market

Are you investing for the long term or you are interested in investing for a short duration or intraday trading. All the investors use different strategies in the market. So it is important to choose your trading style and market based on which you can plan your investment strategy.

It is always better to get forex trading signals as you need not spend time monitoring the market or deciding entry and exit points, there will be an expert who will suggest the same. All these experts are experienced in this market and have in-depth knowledge about the market. Live forex signals in the forex market help you to stay updated.

Importance of Live Forex Signals In The Market

The Forex market is highly volatile and there are thousands of investors who enter this market to try their luck. As there are many beginners in this market, they also get some forex signals in order to make good profits in the market. Forex signals are derived from standard trading charts or analytical signals and technical indicators. Using these signals can help traders to capture more profits in the market.

Understanding technical and fundamental analysis of the forex market requires skills and expertise. But since traders understand this skill, they can convert market leverage and volatility into profitability. Alternatively, you can get a good forex signal provider to understand the basics of the forex market. One of the most important forex tips is to get good forex signals and act immediately in order to get superior returns as compared to other investors.

 In order to use the forex signals effectively, we suggest you use the following steps -

Know Your Risk Tolerance

Before entering the forex market it is important to understand your risk tolerance. Otherwise, you will end up losing all your capital and savings in this market. This happens to many traders because of high volatility and leverage in the market. You should know what is the maximum loss that you can tolerate and the risk that you can take with invested capital.

Know Your Market

Are you investing for the long term or you are interested in investing for short duration or intraday trading. All the investors use different strategies in the market. So it is important to choose your trading style and market based on which you can plan your investment strategy.

It is always better to get forex trading signals as you need not spend time monitoring the market or decide entry and exit points, there will be an expert who will suggest the same. All these experts are experienced in this market and have in-depth knowledge about the market. Live forex signals in the forex market help you to stay updated.

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How To Boost Your Trading Success Rate

 Do you feel like your trading capabilities are stuck in a rut? Do you wish you could find some new and different approaches to making a profit by buying and selling your favorite instruments like forex currency pairs, stock shares, bonds, index funds, options, futures, commodities, and more? The silver lining inside the dark cloud of trading inertia is that there are indeed many techniques that can help you do better. What are the specific approaches you can use to become more skilled at what you do and earn more money in the long run? Here are a few of the tried and true strategies that people have been using to good effect for many years. Give one, some, or all of them a try and see if they make a difference.

Learn Technical Analysis

There are dozens of widely used technical indicators, all of which have their own unique and instructive powers. By far, the most common is the moving average. The SMA, or simple moving average, merely shows the result of adding together several days’ worth of price data and graphing it in such a way that we can see the big picture of price behavior. You probably know of the most popular of these indicators: the 50-200 crossover. What is it? It implies that prices are headed upward when a stock’s 50-day moving average (MA) crosses above its 200-day MA. In general, you can test out this theory on your favorite securities and see if prices rose after such a crossover. Some traders swear by this theorem and stay out of the market completely, as a safety precaution, when the 50-day MA is below the 200-day MA.

One of the most popular indicators is called MACD, which stands for moving average convergence divergence. It’s a convoluted name for a simple straightforward mathematical concept. Without going into minute detail, we could use an example of MACD trading strategy to illustrate the point. Keep in mind that the MACD is often used by traders who want to stay on the correct side of a trend. There’s a general rule to never buy a security when the price chart shows the MACD below its zero line and shows the trigger line above the generic convergence line. If that sounds complicated, don’t worry. It isn’t. Your platform’s charting software will calculate all those variables for you. That way, if XYZ’s share chart shows today’s MACD as being below the zero line, while its trigger line is above the generic line, you are receiving a warning: “Do not open a long position in XYZ stock today.”

Read About Market Psychology

There are some classic books out there, many of which are in the public domain, which means you can pick them up for no cost. Others are widely available and come with reasonable price tags. Spend time studying the general topic of market-based psychology as it pertains to buying and selling for a profit. Pay particular attention to sub-topics about personal behavior and warning signs that you are falling into a bad pattern of activity, like over-trading, investing money you can’t afford to lose, and being guided by your emotions instead of logic.

Study the Basics of Fundamental Analysis

Fundamental analysis is everything other than chart-based theory. In other words, the fundamental approach says you should look at a company’s underlying strengths and weaknesses rather than recent or long-term price behavior. For example, you examine things like whether the business has released any new products, what their current level of earnings is, the past performance of its executives if there are any pending lawsuits against the organization, etc.

Practice and Back-Test

Don’t neglect to put your newfound skills to the test. Consider using the simulator on your platform to make some fictitious buys and see how you do when employing fundamental, technical, and intuitive analysis. Start using a daily diary to log all your activities, feelings, and attitudes. Finally, use the simulator to experiment with using the MACD method and see if you can get a feel for how particular security is moving based on its moving-average information. It’s always possible to do some back-testing by reviewing historical price movement and see if you would have been able to predict it by using one or another technical indicator.

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Weekly changes: EURUSD +0.61%, GBPUSD +0.28%, USDCAD +0.13%

 EURUSD closed the week at 1.16425. The pair reached the 1.1670 mark twice but declined both times from the strength of the current resistance level.

GBPUSD ended Friday at 1.37551. The pair traded modestly within a week, having risen 2.4% in the previous fortnight.

USDCAD closed the week at 1.23583, the same spot as the Friday ago. The oil stepped from its three-year high, giving the Canadian dollar space to consolidate.

BULLISH TRIGGERS

The U.S. dollar eased after Powell's comment, enabling EURUSD to advance near the 1.1650 level. However, the eurozone inflation expectations are at their highest levels in years. This puts additional pressure on the ECB and its monetary policy agenda meeting this week.

GBPUSD changed insignificantly. The British pound fluctuated due to the country's various economic releases but remained bullish by late Friday. Early in November, the BoE is expected to be the first major central bank to lift its interest rate.

BEARISH TRIGGERS

The USDCAD finished the week flat, slowing its monthly-long decline. The BoC interest rate decision meeting this week might propose another round of tapering. Two days later, Canada will release its GDP data. The central bank's choice of tight or dovish tone of voice, followed by the solid or weak data, will determine USDCAD behavior this week.

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📕 Comment on Gold on October 18, 2021

 - After the precious metal Gold touched MA20 on the weekly chart as well as the descending trendline channel extending from June 1, 2021 until now, as analyzed at the end of last week Gold has dropped sharply from 1796 to 1764 ($32).  Closing the week with a long bullish candle so in my opinion at the beginning of the week there will still be selling pressure before the next rally.

 - Switching to the daily time frame, we can see that the selling force of Gold on Friday dominated quite a lot and is showing signs of a slight recovery and we can wait to buy around 1767.  with the target 1778-1782.  Here we liquidate the order and wait for a sell signal.  At that time, the team will update the signal to watch.

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ZEW survey for economic sentiment, Germany

WHAT IT INFLUENCES: EUR and its subsequent pairs

WHAT'S HAPPENING: Economic Sentiment Index gauges the six-month economic outlook. A level above zero indicates optimism; below it indicates pessimism. The reading is compiled from a survey of roughly 350 German institutional investors and analysts. A reading that is stronger than forecast is usually positive or bullish for the EUR, while a weaker than forecast reading is generally negative or bearish for the EUR.

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Let's Have a look on Forex Market Updates

RBNZ Interest Rate Decision, New Zealand

WHAT IT INFLUENCES: NZD and its subsequent pairs

WHAT'S HAPPENING: The RBNZ Interest Rate Decision is announced by the Reserve Bank of New Zealand. If the RBNZ is hawkish about the economy's inflationary outlook and raises the interest rates, it is positive, or bullish, for the NZD.

Retail Sales, Eurozone:

WHAT IT INFLUENCES: EUR and its subsequent pairs

WHAT'S HAPPENING: The Retail Sales released by the Eurostat is a measure of sales changes in the eurozone retail sector. The report displays the retail sector performance in the short term by the change in percentage. The changes are widely accepted as consumer spending indicator. Usually, positive economic growth predicts bullish sentiment for the EUR, while a low reading is seen as negative, or bearish, for the EUR.

PMI Construction, UK

WHAT IT INFLUENCES: GBP and its subsequent pairs

WHAT'S HAPPENING: The PMI Construction released by the Chartered Institute of Purchasing & Supply and Markit Economics shows business conditions within the U.K. construction sector. It is worth noting that the construction sector does not influence GDP as much as the manufacturing industry does.

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