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/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/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.

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.

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).”

Bailey speech: Will not comment on Conservative leadership candidates' plans

 

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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 50 basis points to 1.75%.

Key takeaways

"BOE will not comment on Conservative leadership candidates' plans."

"BOE has a very clear mandate of price stability."

"Consequences of Russia's actions in Ukraine have a serious economic impact."

"Political pressures have been very well managed since BOE independence."

"I have not abandoned the narrow path analogy for UK policy outlook."

"A number of central banks have a similar narrow path to tread."

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 Dollar Index Price Analysis: Another visit to 105.00 remains on the cards

 

• DXY reverses the earlier bull run to the 106.50/55 band.
• The resumption of the selling bias could extend to 105.00.

DXY leaves behind Tuesday’s strong advance and sparked a corrective downside soon after hitting new 3-day peaks in the mid-106.00s on Tuesday.

Tuesday’s bounce did not clear any up barrier of note and thus leaves the index vulnerable to further weakness in the very near term at least. On this, the dollar faces the tangible chance to slip back to the multi-week lows in the 105.00 region (August 2) in the short term. This initial area of contention remains propped up by the proximity of the 55-day SMA, today at 104.84.

Furthermore, the broader bullish view in the dollar remains in place while above the 200-day SMA at 99.62.

EUR/USD Price Analysis: Sustained gains seen above 1.0670/80

 

• EUR/USD keeps the erratic activity well in place this week.
• The 1.0670/80 band continues to cap the upside so far.

EUR/USD resumes the upside bias past the 1.0500 mark following Thursday’s decent pullback.

So far, and as long as the 4-month line in the 1.0670/80 band limits the upside, extra pullbacks in the pair should remain on the cards in the near term. The surpass of this area, however, could spark a bull run to the June top at 1.0773 and the May peak at 1.0786.

In the longer run, the pair’s bearish view is expected to prevail as long as it trades below the 200-day SMA at 1.1136.

Russia's Putin: Will react to expansion of military infrastructure in Finland, Sweden

 Russian President Vladimir Putin said on Monday that the expansion of NATO is a problem and it is in the interests of the USA, reported Reuters. Russia has no problems with Finland and Sweden, he continued, but Russia will react to the expansion of military infrastructure in these countries. Putin added that Russia needs to pay additional attention to NATO plans to increase its global influence. 

Finland and Sweden both announced their commitment to applying for NATO membership over the weekend and most NATO nations have come out in support. 

USD/CHF pares intraday gains to fresh YTD peak, downside seems limited amid stronger USD

 

• USD/CHF jumped to a fresh YTD peak on Wednesday amid the prevalent USD buying interest.
• Bets for aggressive Fed rate hikes, a bleak global economic outlook continued boosting the USD.
• The risk-on impulse could undermine the safe-haven CHF and supports prospects for further gains.

The USD/CHF pair retreated a few pips from its highest level since May 2020 touched during the first half of the European session and was last seen trading just below the mid-0.9600s.

The pair prolonged its recent strong bullish run witnessed since the beginning of this month and gained follow-through traction for the fifth successive day on Wednesday. The momentum was sponsored by sustained buying around the US dollar, which climbed to a more than two-year peak amid the prospects for a more aggressive policy tightening by the Fed.

Investors now expect the Fed to raise interest rates by 50 bps at each of its next four meetings in May, June, July and September. The bets were reaffirmed by the recent hawkish comments by influential FOMC members, including Fed Chair Jerome Powell. This, along with the deteriorating global economic outlook, boosted the greenback's reserve currency status.

Expectations for rapid interest rate hikes in the US, prolonged Russia-Ukraine conflict and the latest COVID-19 outbreak in China have raised fears of stalling global growth. Investors now seem worried that Russia could follow through on its threat to halt gas flows to countries that refuse to pay for fuel in roubles and cut off supplies to Europe.

That said, extremely overbought conditions held back traders from placing fresh bullish bets and kept a lid on any further gains for the USD/CHF pair, at least for now. The intraday bias, however, remains tilted in favour of bulls amid the prevalent strong bullish sentiment surrounding the USD and the risk-on impulse, which tends to undermine the safe-haven Swiss franc.

Market participants now look forward to second-tier US economic releases for some impetus later during the early North American session. The data, along with Fed rate hike expectations, would influence the USD price dynamics. Traders will further take cues from the broader market risk sentiment to grab some short-term opportunities around the USD/CHF pair.

📕 Comment on Gold on April 20, 2022:

📕 Comment on Gold on April 20, 2022:

 - In yesterday's trading session, precious metal Gold had one day of decline from 1981 to 1943 ($38), closing the day session with a strong bearish candle around 1949. Gold has returned.  back to the upper boundary of the previous sideways range.  With Gold approaching this support zone, I think it's likely that Gold will have a rebound in the early trading session today.

 - On the H4 chart, Gold may recover to around the threshold of 1950-1951 and is expected to rise around the threshold of 1962-1965.  Here, there is a high possibility that Gold will face selling pressure and drop again.

Singapore: Industrial Production remains robust – UOB

 Economist at UOB Group Barnabas Gan reviews the latest industrial production figures in Singapore.

Key Takeaways

“Industrial production surged 17.6% y/y (+16.6% m/m sa) in Feb 2022, surprising market expectations for a 6.3% y/y (+5.7% m/m sa) growth. Excluding biomedical manufacturing, industrial production rose 16.8% y/y.”

“The strong performance in Singapore’s manufacturing sector is underpinned by the global trade recovery, especially on the back of healthy semiconductor- and biomedical-related demand. Other factors that have supported Singapore’s manufacturing momentum also include the gradual reopening of international borders, which resulted in higher levels of maintenance, repair and overhaul activity from commercial airlines.”

“In all, our outlook is for full-year manufacturing to grow by an average of 4.0% in 2022. This suggests that despite the high-base growth rate seen in 2021, global trade activity is expected to stay buoyant in the new year.”

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.

Series on Russia-Ukraine Tensions:

 On Wednesday, Prime Minister Fumio Kishida said Japan is imposing sanctions on Russia over its actions in Ukraine, and considers Moscow's moves an unacceptable violation of  with Ukraine's sovereignty and international law.

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 Japan's sanctions include banning the issuance of Russian bonds in Japan and freezing the assets of certain Russian individuals as well as restricting travel to Japan, Kishida said.

 Western nations on Tuesday imposed new sanctions on Russian banks and elites after Moscow sent troops into breakaway regions in eastern Ukraine

REBOUND OF EURO

 LONDON (Reuters) - The euro rebounded on Tuesday, nearly erasing all of Monday's losses, after reports that some Russian troops in areas near Ukraine have started returning to their bases.

Against the greenback, the single currency climbed 0.4% to $1.1346, and within striking distance of Monday's high of $1.1369 as European stock futures rebounded on the news.

Some troops in Russia's military districts adjacent to Ukraine are returning to bases after completing drills, Russia's defence ministry was quoted as saying, a move that could de-escalate frictions between Moscow and the West.

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"While any news about a potential de-escalation is welcome, I think the markets will want to see something more concrete before judging the crisis to be over," said Stuart Cole, head macro economist at Equiti Capital.

"By this I think it will require the removal from the border of sufficient troop numbers or military hardware that makes an invasion materially more difficult to undertake,"

Brewing geopolitical tensions had kept a lid on the euro's gains in recent days even as the European Central Bank joined its central bank peers in signaling a hawkish turn in its monetary policy at a meeting this month.

The euro tumbled to a near two-week low on Monday after Ukrainian President Volodymyr Zelenskiy called on citizens to fly the country's flags from buildings and sing the national anthem in unison on Feb. 16, a date that some Western media have cited as a possible start of a Russian invasion.

For now, investors greeted the news with relief, pushing up the currencies of economies that would be most affected by the conflict including the pound, euro and the Russian rouble while typical safe-haven shelters like the yen and the Swiss franc weakened.

Away from geopolitics, U.S. Federal Reserve officials continuing to spar over how aggressively to begin upcoming interest rate increases at their March meeting.

But the dollar failed to get a fresh lift from the comments with an index weakening 0.3% versus its rivals.

In cryptocurrencies, bitcoin was 3.4% higher, trading around $44,000.

INFLANATION RISK AT THE MARKET

 RUSSELS (Reuters) - Euro zone economic growth will be slower than earlier expected this year because of a new wave of COVID-19 infections, high energy prices and continued supply-side disruptions, while inflation will be much higher, the European Commission said.

In its regular economic forecasts, the EU executive arm said gross domestic product in the 19 countries sharing the euro would grow 4.0% this year and 2.7% in 2023.

The forecast is a cut compared to last November, when the Commission forecast 4.3% growth in 2022 and 2.4% in 2023 and is close to the latest view of the International Monetary Fund, which expects growth of 3.9% this year and 2.5% in 2023.

"Multiple headwinds have chilled Europe's economy this winter: the swift spread of Omicron, a further rise in inflation driven by soaring energy prices and persistent supply-chain disruptions," European Economic Commissioner Paolo Gentiloni said. "With these headwinds expected to fade progressively, we project growth to pick up speed again already this spring."

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The Commission expects inflation this year will be 3.5%, well above the European Central Bank's target of 2.0%, and much higher than its own forecast from November of 2.2%. This is also a more pessimistic forecast than that of the ECB from December, when the bank projected inflation at 3.2% this year.

Worried by the longer than earlier expected surge in consumer prices, the ECB has taken a hawkish turn and started preparing markets for the end of its unconventional stimulus with some hawkish board members calling for a rate hike already this year.

But the Commission, like the IMF, forecast inflation would slow again next year to 1.7%, below the ECB's target, so a potential rate rise would come just as price growth slows again. The ECB's own inflation in December was 1.8% for 2023.

"Price pressures are likely to remain strong until the summer, after which inflation is projected to decline as growth in energy prices moderates and supply bottlenecks ease. However, uncertainty and risks remain high," Gentiloni said.

The Commission said risks to the growth outlook were even as the COVID-19 infection wave could have a longer lasting impact and bring fresh disruptions to supply chains, but also household consumption could grow more strongly and investment, thanks to the EU recovery fund, could generate stronger activity.

Inflation could turn out higher if more cost pressures are passed on from producers to consumers and if that boosts the likelihood of wage growth to compensate.

"Risks to the growth and inflation outlook are aggravated by geopolitical tensions in Eastern Europe," the Commission said referring to the risk of Russian military aggression against Ukraine.

Dollar is Lower; Tight Range Ahead of Inflaton

 The U.S. dollar edged lower Wednesday, but remained in a tight range the day before the release of key inflation data which could confirm the start of the Federal Reserve’s policy tightening process. 

At 2:55 AM ET (0755 GMT), the Dollar Index, which tracks the greenback against a basket of six other currencies, traded 0.1% lower at 95.580, after bouncing off a 2-1/2-week low of 95.136 reached Friday. 

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The speed and timing of when central banks across the world start to lift interest rates is the main factor driving the foreign exchange markets these days, and in particular the Federal Reserve given the importance of the U.S. economy to global growth.

The dollar received a boost at the end of last week with the release of a much stronger than expected jobs report, and Thursday’s consumer price index should cement expectations that the U.S. central bank will raise interest rates next month.

The headline CPI is seen rising 0.5% on the month and 7.3% on the year in January, climbing to a four-decade high. Most in the market expected the Fed to lift interest rates by 25 basis points in March, a stronger print could offer support to those tipping a larger 50 basis point rise.

“We think that Friday’s payrolls numbers have helped build a floor under the dollar as markets should continue to cement their hawkish views on Fed tightening into the March meeting,” said analysts at ING, in a note.

Elsewhere, EUR/USD edged lower to 1.1412, retreating from the highs seen last week after the European Central Bank policy meeting, as President Christine Lagarde tried Monday to rein in these expectations for aggressive action with growth in the Eurozone still fragile.

“We still think that the market pricing of more than 50bp of higher overnight rates, i.e. around two 25bp rate hikes, until the end of the year looks excessive,” said analysts at Nordea, in a note.

Additionally, GBP/USD edged lower to 1.3538, USD/JPY fell 0.1% to 115.45, after the pair briefly touched a one-month high, while the risk-sensitive AUD/USD climbed 0.1% to 0.7148.

USD/PLN rose 0.1% to 3.9652 and EUR/PLN was flat at 4.5240, the day after Poland’s central bank lifted its benchmark rate by 50 basis points to 2.75%, increasing interest rates for a fifth consecutive month to an almost nine-year high in an attempt to curb record inflation levels.

Later Wednesday, the Riksbank holds its latest policy-setting meeting, with the markets increasingly looking at still-dovish central banks given the recent shift in many of their peers.

“The Swedish economy has overall developed better than projected by the Riksbank,” said Nordea, and “the development is strong enough for the Riksbank to trim its balance sheet.”

“However, we do not expect inflation to remain high long enough for the Riksbank to consider a rate hike.”

EUR/SEK traded 0.1% lower at 10.4226 and USD/SEK also down 0.1% at 9.1358.

AUDJPY retests its 200 hour MA on the downside

 

AUDJPY retests the 200 hour MA and bounces.

The AUDJPY saw the price move higher yesterday after an initial move lower after the RBA decision, but then rebounded higher

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The move back to the upside was able to get above its 200 hour moving average (green line currently at 81.379) and also above a downward sloping trendline near 81.72. The price also moved above its 38.2% retracement at 81.859 (move down from the January high).

Can You Directly Invest in Bursa Market

 Investing in stocks means buying shares of ownership in companies listed on the bursa market. By investing in stock you are hoping that the company performs well and generates more profit so that your shares become more valuable. In such a situation market sentiments for shares grow and so do the prices. This increases the valuation of shares.

The best way to invest in the stock market is to start with an online investment account. You can put money in this account that can be then used to invest in shares, stocks, or mutual funds.

In this article, we will show you steps to invest in stocks -

1. Decide How You Want to Invest in Stock Market

There are several ways in which you can make an investment in the stock market. You can choose the stock on your own based on klse stock tips and Bursa Malaysia stock tips. Here it is important to consider the right type of account for trading.

2. Choose Good Investing Account

To invest in stocks you need an investment account. You can open a brokerage account with a broker if you need help with the investment of funds. You can also trade on your own based on stock tips Malaysia and current market conditions.

#3. Learn the Difference between Investing in Funds and Investing in Stocks

You can invest in funds as well as shares but there is a difference between both -

Investing in Funds - Mutual funds will let you purchase small pieces of many different stocks in a single transaction. So when you invest in mutual funds you own small pieces of many companies. This helps you to diversify the portfolio.

Investing in Stocks - You can invest in stocks of a single company or multiple companies separately. It is possible to build a diversified portfolio out of many stocks but you will need huge investment for the same. Make sure to get good klse stock tips before investing in stocks directly.

#4. Set Your Budget

Before investing in the share market you need to set a budget for investment. If you have a good budget you can get some expensive, high-return stocks directly. But if you are starting with a low budget then stock funds or exchange-traded funds might be a good option for you.

#5. Focus on Long Term Investment

Stock markets have proven to be the best way to grow the long-term wealth of individuals. The average stock market return has been 10% over decades. So focus on getting the shares that have good potentials in the long term.

If you are investing some of your funds for intraday trading then we suggest you read Malaysia intraday stock picks. This will give you a good picture of the market.

Final Word

We hope this article helps you to understand the steps that you need to follow before making any investment in the stock market.