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."

US: ADP Employment Change rises 239K in October vs. 193K expected

 The data published by Automatic Data Processing (ADP) showed on Wednesday that private sector employment in the US rose by 239,000 in October. This reading came in better than the market expectation of 193,000. September print of 208,000 got revised down to 192,000. 

Developing story...

Market reaction

The US Dollar Index showed no immediate reaction to this data and was last seen losing 0.22% on the day at 111.30.

Malaysia: BNM could pause its hiking cycle in November – UOB

 Bank Negara Malaysia (BNM) could make an impasse in its tightening cycle at the November 3 event, suggests Lee Sue Ann, an Economist at UOB Group.

Key Quotes

“Given that inflation expectations are anchored to official targets and risks to the domestic growth outlook are tilting to the downside, we believe BNM will tread more cautiously”.

“We expect BNM to take an intermittent pause to assess the effect of its cumulative 75bps rate hikes to date, domestic policy outcomes, as well as higher external risks and weaker global outlook. As such, we expect the OPR to be left unchanged at 2.50% at the coming Nov meeting”.

USD Index Price Analysis: No changes to the consolidative theme

 

• DXY attempts a mild rebound after bottoming out near 111.80.
• Further range bound remains on the cards for the time being.

DXY bounces off multi-session lows in the 111.80/75 band on Tuesday.

So far, the index looks poised to keep navigating within a 112.00-114.00 range at least until the next FOMC event.

The prospects for extra gains in the dollar should remain unchanged as long as the index trades above the 8-month support line near 108.00.

In the longer run, DXY is expected to maintain its constructive stance while above the 200-day SMA at 103.43.

German government expects economy to contract by 0.4% in 2023 – Reuters

 The German government still expects the economy to tip into recession next year despite the gas price brake that was presented on Monday, Reuters reported on Tuesday, citing government sources.

The economy is now expected to contract by 0.4% in 2023 and inflation is seen at 8% and 7% in 2022 and 2023, respectively.

Market reaction

This headline doesn't seem to be having a noticeable impact on risk mood. As of writing, Germany's DAX 30 Index was down 0.83% on a daily basis at 12,171.81 points.

AUD/NZD to slide towards the 1.12 level – OCBC

 AUD/NZD continued to trade with a heavy downside bias amid growing policy divergence between the Reserve Bank of Australia and the Reserve Bank of New Zealand. Economists at OCBC Bank maintain a short bias targeting 1.12.

Risks remained skewed to the downside

“RBNZ’s accompanying MPS was slightly more hawkish than expected as it noted that the MPC considered 50, 75 bps at this meeting; core CPI is ‘too high’ and lower NZD if sustained poses further upside risk to CPI.”

“We maintain our tactical short play on AUD/NZD, targeting 1.12, 1.1050 objectives.”

“Daily momentum is bearish while RSI fell. Risks remained skewed to the downside.”

“Support at 1.1240, 1.1210 levels.”

“Resistance at 1.1305 (21 DMA), 1.1380 levels.

EUR/JPY Price Analysis: Still scope for a move to 144.00

 

• EUR/JPY comes under some pressure and fades two daily gains in a row.
• There is still room for a potential rebound to the 144.00 region.

EUR/JPY seems to have met decent resistance around daily highs near 142.30 at the end of the week.

The continuation of the bounce off last week’s lows remains on the table in the very near term. That said, the cross could therefore extend the bullish attempt to the weekly top at 144.04 (September 20), which is deemed as the last defense for a move to the 2022 peak at 145.63 (September 12).

In the meantime, while above the key 200-day SMA at 135.84, the constructive outlook for the cross should remain unchanged.

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.”

AUD/USD descends to its lowest level since May 2020 amid blowout USD rally to 20-year top

 

---

• AUD/USD drops to its lowest level since May 2020 amid broad-based USD strength.
• Bets for more aggressive Fed rate hikes, elevated US bond yields underpin the buck.
• The risk-off mood further benefits the USD and weighs on the risk-sensitive aussie.
• 
  
  
  

The AUD/USD pair continues losing ground through the first half of the European session on Friday and drops to the 0.6565 area or its lowest level since May 2020.

The US dollar catches fresh bids on the last day of the week and hits a new 20-year peak, which turns out to be a key factor exerting downward pressure on the AUD/USD pair. The Federal Reserve struck a more hawkish tone on Wednesday and signalled that it will undertake more aggressive rate increases to cap inflation. This, in turn, remains supportive of elevated US Treasury bond yields and continues to act as a tailwind for the greenback.

In fact, the yield on the rate-sensitive two-year US government bond touched a fresh 15-year high and the benchmark 10-year Treasury note jumped to its highest level since 2011 on Thursday. Meanwhile, investors remain concerned that rapidly rising borrowing costs will lead to a deeper global economic downturn. This, in turn, tempers investors' appetite for riskier assets and is further underpinning demand for the traditional safe-haven buck.

Apart from this, economic headwinds stemming from China's zero-covid policy and the risk of a further escalation in the Russia-Ukraine conflict, have been fueling recession fears. This is seen as another factor contributing to driving flows away from the risk-sensitive aussie. With oscillators still far from being in the oversold territory, the fundamental backdrop supports prospects for an extension of the depreciating move for the AUD/USD pair.

Market participants now look forward to the release of the flash US PMI prints, due later during the early North American session. This, along with the US bond yields and Fed Chair Jerome Powell's speech at an event in Washington, will influence the USD price dynamics and provide some impetus to the AUD/USD pair. Traders will further take cues from the broader market risk sentiment to grab short-term opportunities heading into the weekend.

EUR/USD Price Analysis: Upside remains capped by 1.0100

 

• EUR/USD fades the initial bull run to 0.9985/90.
• The resumption of the selling pressure could retest the YTD low.

EUR/USD climbed to the proximity of 0.9990 earlier in the session, just to deflate afterwards and return to the 0.9930 region.

Against that, the inability of the pair to regain serious upside traction should keep the door to further retracement open in the near term. Extra losses face the immediate target at the 2022 low at 0.9877 (September 5) seconded by 0.9859 (December 2002 low) and then 0.9685 (October 2002 low).

The continuation of the downtrend remains in the pipeline, as the daily RSI around 36 still allows for some weakness prior to reach the oversold territory.

In the longer run, the pair’s bearish view is expected to prevail as long as it trades below the 200-day SMA at 1.0780.

When are the US durable goods orders and how could they affect EUR/USD?

 

US durable goods orders overview

Wednesday's US economic docket highlights the release of Durable Goods Orders data for July. The US Census Bureau will publish the monthly report at 12:30 GMT and is expected to show that headline orders rose 0.6% during the reported month, marking a notable slowdown from the 2% increase recorded in June. Orders excluding transportation items, which tend to have a broader impact, are anticipated to grow by a modest 0.2% in July as compared to a 0.4% rise reported in the previous month.

Analysts at Wells Fargo offer a brief preview of the report and explain: “Demand for goods is slowing. That is as true for business spending as it is for personal consumption. For businesses, the growing concern the economy is about to tip into recession is weighing on activity, as well as higher borrowing costs and demand largely having been pulled forward throughout the pandemic.”

How could it affect EUR/USD?

Ahead of the key data, the emergence of fresh US dollar buying drags the EUR/USD pair back closer to its lowest level since December 2002 touched the previous day. A stronger-than-expected domestic data will reinforce hawkish Fed expectations, which, in turn, should result in higher US Treasury bond yields and a stronger USD.

Conversely, a weaker report will further fuel concerns about a global economic downturn and weigh on investors' sentiment, offering some support to the greenback's safe-haven status. This, along with fears of a prolonged energy-supply crunch in the Eurozone, suggests that the path of least resistance for the EUR/USD pair is to the downside.

That said, any immediate market reaction is more likely to be short-lived as market participants might prefer to wait on the sidelines ahead of Fed Chair Jerome Powell's appearance at the Jackson Hole symposium on Friday. Nevertheless, a big divergence from the expected readings might still provide some meaningful impetus to the EUR/USD pair.

Eren Sengezer, Editor at FXStreet, meanwhile, offered a brief technical outlook for the EUR/USD pair: “On the four-hour chart, the Relative Strength Index (RSI) indicator stays well below 40 after having moved out of the oversold territory on Tuesday. Additionally, EUR/USD is yet to make a four-hour close above the descending regression channel coming from August 12. Both of these technical developments suggest that the pair's latest recovery was a technical correction rather than a reversal..”

Eren also outlined important technical levels to trade the EUR/USD pair: “In case the pair starts using 0.9950 (static level, upper limit of the descending regression channel) as support, it could face interim resistance at 0.9975 (20-period SMA) before testing parity. On the downside, 0.9900 (static level, psychological level) aligns as first support before 0.9870 (former resistance area from October 2002) and 0.9800 (psychological level).”

Dollar stuck ahead of key U.S. inflation print

 LONDON (Reuters) - The dollar lurked below recent highs on Tuesday as traders awaited this week's key U.S. inflation print for any signs that price pressures are finally abating and that the need for further aggressive U.S. interest rate hikes is easing.

Unexpectedly strong U.S. jobs data on Friday had boosted the greenback, which posted its biggest daily percentage gain since mid-June against the yen that day as investors ramped up bets on a 75 basis point (bps) rate rise in September.

But the currency has pulled back since then as focus shifted to Wednesday's July consumer price index (CPI).

The dollar index, which measures the currency's value against a basket of other peers, was marginally lower at 106.23. It held below a more than one-week peak hit on Friday at 106.93.

Sterling was little changed at around $1.2055 and the euro was 0.2% firmer at $1.0213. The dollar was also flat around 134.90 yen.

"I'm a bit concerned about inflation tomorrow. The market has been wrong-footed all year and if we get a strong core inflation print that will nail expectations for a 75 bps rate hike in September," said Kenneth Broux, a currency strategist at Societe Generale (OTC:SCGLY) in London.

"It's too soon to say it's time to short the dollar as the Fed may have to do more."

The U.S. Federal Reserve hiked rates by a hefty 75 bps in June and July. Money-market futures show traders see about a two-thirds chance of a 75 bps hike next month and have started pushing expectations for rate cuts deeper into 2023.

Economists polled by Reuters see year-on-year headline inflation at 8.7% - incredibly high, but below last month's 9.1% figure. The Fed targets inflation at 2%.

Last week's strong labour data stoked expectations of aggressive near-term hikes, pushing short-dated Treasury yields further above long-term peers.

The gap between two and 10-year Treasury yields, a reliable recession indicator, has grown to its largest in two decades. [US/]

On Monday, a New York Fed survey showed consumers' inflation expectations fell sharply in July, perhaps offering a sliver of hope that the CPI release brings relief.

"The market understandably is waiting for the numbers to then reprice, rather than moving in anticipation of them," said Ray Attrill, head of foreign exchange strategy at National Australia Bank (OTC:NABZY) in Sydney.

The dollar's haven status, though, makes the greenback's reaction a little harder to predict, especially as growth and geopolitical worries swirl.

Consumer confidence slid in Australia for a ninth straight month and the Australian and New Zealand dollars edged lower as London trade got under way.

China extended military drills near Taiwan, and the self-ruled island's foreign minister said China was using the drills launched in protest against U.S. House Speaker Nancy Pelosi's visit as an excuse to prepare for an invasion.

When is the Canadian monthly jobs report and how could it affect USD/CAD?

 

Canadian employment details overview

Statistics Canada is scheduled to publish the monthly employment details for July later this Friday at 12:30 GMT. The Canadian economy is anticipated to have added 20K jobs during the reported month, up sharply from the 43.2K decline reported in June. Meanwhile, the unemployment rate is expected to edge higher to 5.0% in July from the 4.9% previous.

Analysts at TD Securities (TDS) are more optimistic about the report and explain: “We look for job growth of 38k in July, driven by a partial rebound for trade services and natural resources after their sharp decline in June. Full-time hiring should lead the increase, while stronger labour force participation should keep unemployment stable at 4.9%. We also expect to see wage growth firm to 6.0% y/y in July, although AHE (Average Hourly Earnings) should slow on a m/m basis.”

Indonesia: Inflation accelerated in July – UOB

 Enrico Tanuwidjaja, Economist at UOB Group, comments on the latest inflation figures in Indonesia.

Key Takeaways

“July’s headline inflation jumped to 4.9% y/y, breaching Bank Indonesia (BI)’s 4% target upper bound for the second month in a row and currently at 7-year high, while core inflation rose to 2.9% y/y, a 28-month high, from June’s 2.6%.”

“Inflation in July continued to be driven by upward pressures from food services and restaurants and transport, in addition to housing, water, electricity and household fuel.”

“We revised our 2022 inflation forecast now to average 4% viz. 3.3% previously and for BI to hike rates now in Sep instead of in Jul.”

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

US: Weekly Initial Jobless Claims fall to 180K vs. 180K expected

 

• Weekly initial claims and continued claims were broadly in line with expectations according to the latest report. 
• The US dollar weakened as a result of weak US GDP data and ignored the latest jobless claims figures. 

There were 180,000 initial claims in the US economy in the week ending on 23 April, in line with consensus estimates and a slight decline from last week's 185,000 reading which was revised up from 184,000, according to data released by the US Department of Labour on Thursday. That meant that the four-week average of initial claims rose to 179,750 from 177,500 a week prior. 

Continued claims in the week ending on 16 April saw a slight fall to 1.408M from 1.409M a week prior, a little above the expected drop to 1.403M. The insured unemployment rate thus came in at 1.0% in the week ending on 16 April, unchanged from a week earlier. 

Market Reaction

FX markets did not react to the latest broadly as expected jobless claims report but rather reacted to weak US growth numbers, with the US dollar weakening slightly. 

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.

YOU CAN VISIT US FOR FOREX TIPS AND SERVICES.

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.

Contents after the FOMC meeting

  ☘️The Fed has reduced the amount of bond purchases, buying only $60 billion of bonds monthly (50% reduction compared to before November and 33% compared to December) and this number will continue to decrease until the number is reached.  0.

 ☘️The interest rate remains the same at the moment.  And it is expected to start raising interest rates (around March 2022) - maybe 3 times in 2022, 2 times in 2023 and 2 times in 2024.

 Therefore, with this policy of the Fed, it seems to be dovish when everything goes according to schedule and with advance notice, avoiding shock to the market.

The market expected the opposite so gold fell sharply until receiving the official announcement after the meeting.

With the above content, it is highly likely that gold will continue to increase in price from 1752xx

Visit: https://www.moneylifeconsulting.com/

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
• A limit level will help you to collect profits in the trades that are currently favorable.

 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 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.

SignUp For Forex Signals: https://forms.gle/hpwZr5c85T55kPNG7