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.”

S&P 500 Index: Next potential supports at 3500/3460 – SocGen

 S&P 500 has resumed its downtrend. Analysts at Société Générale note that the technical outlook denotes prevalence in downward momentum.

Failure to reclaim 3900 can lead to continuation in decline

“Monthly RSI is now close to the lower limit of its bullish territory (near 40 levels); this band has cushioned the declines since 2010. However, signals of a trend reversal are still not visible in price action.”

“Short-term resistance is located at 3860/3900, the 38.2% retracement from August. Failure to reclaim 3900 can lead to continuation in decline.” 

“Next potential supports are at projections of 3500/3460 and February 2020 levels of 3393.”

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.”

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. 

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.

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.

USD/TRY leaps to fresh 2022 peaks past 18.00 after CBRT cut rates

 

• USD/TRY clinches new YTD tops beyond the 18.00 mark.
• The pair now targets the all-time top at 18.25 (December 20 2021).
• The Turkish central bank reduced the policy rate by 100 bps.
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The Turkish lira debilitates to fresh lows vs. the greenback and pushes USD/TRY past the 18.00 yardstick for the first time since December 2021.

USD/TRY now targets the all-time high at 18.25

USD/TRY leaves behind the key barrier at 18.00 after the Turkish central bank (CBRT) caught the markets off guard and reduced the One-Week Repo Rate by a full point to 13.00% at its meeting earlier on Thursday. the central bank also cut the Overnight Borrowing Rate and the Overnight Lending Rate by 100 bps to 11.50% and 14.50%, respectively.

In its statement, the CBRT continues to see domestic inflation largely driven by higher energy costs exclusively on the back of geopolitical events and “effects of pricing formations that are not supported by economic fundamentals”.

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.”

Fed's Bostic: Fed is going to have to do more with interest rates

  "The Federal Reserve is going to have to do more with interest rates but details depend on the flow of data in coming months," Atlanta Fed President Raphael Bostic said on Friday, as reported by Reuters.

Additional takeaways

"The country is not in recession, but the real question is whether current conditions are creating hardship, inflation needs to be addressed."

There is still more work to be done on bringing demand and supply into balance."

"Rate hikes could hurt job growth, but so far seems there is momentum for continued hiring."

"Possible to control inflation while limiting the number of families who have really bad outcomes."

"The US is a ways from a recession, though concerned that recession fears could become self-fulfilling."

Market reaction

These comments don't seem to be having a significant impact on the greenback's performance against its rivals. As of writing, the US Dollar Index was down 0.25% on the day at 105.92.

Germany's Habeck: We want to prevent a domino effect in gas market

  

German Economy Minister Robert Habeck said on Tuesday that they will stick to their plan of prioritizing private households in case of a gas emergency, as reported by Reuters.

"The gas market situation is tense, cannot say whether more protection measures will be needed," Habeck added. "We want to prevent a domino effect in the gas market."

Market reaction

Safe-haven flows continue to dominate the financial markets following these remarks. As of writing, Germany's DAX 30 Index was down 1.5% on the day at 12,580.50 points.

📕 Comment on Gold on May 9, 2022:

 

📕 Comment on Gold on May 9, 2022:

 - On Friday, the US released Nonfarm payrolls data, this data was better than market expectations but only caused Gold to decline slightly to 1875. Gold then bounced up to close the daily candle equal to 1875.  The bullish candle is around 1882. This also makes the last candle close with a bearish candle, but retreated quite long.

 - My personal view at the beginning of this week's trading session is that Gold will continue to gain momentum.  The closest support area for this precious metal is around 1873-1877.  Here we can establish a long position with a safe target around 1883 -1888.

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. 

EUR/USD eyes 2020 lows at 1.0637 as USD regains poise

 

 The latest candle on the four-hour chart closed below 1.0700. The Relative Strength Index (RSI) indicator on the same chart stays near 40 and the descending line coming from April 21 stays intact, highlighting EUR/USD's bearish bias in the near term. 

It's worth noting that EUR/USD will touch its weakest level since April 2017 with a drop below 1.0635. Sellers might see such a move as a profit-taking opportunity and trigger a correction in the pair. In that case, 1.0700 (psychological level) aligns as the next recovery target before 1.0730 (static level) and 1.0760 (static level).

On the downside, a daily close below 1.0640 is likely to open the door for additional losses toward 1.0600 (psychological level) and 1.0570 (static level from March 2017).

When is the US monthly jobs report (NFP) and how could it affect EUR/USD?

 

US monthly jobs report overview

Friday's US economic docket highlights the release of the closely-watched US monthly jobs data. The popularly known NFP report is scheduled for release at 12:30 GMT and is expected to show that the economy added 490K new jobs in March, down from the 678K reported in the previous month. The unemployment rate is expected to edge lower to 3.7% from 3.8% in February. Apart from this, investors will take cues from Average Hourly Earnings amid expectations for a more aggressive policy response to contain high inflation. 

As Joseph Trevisani, Senior Analyst at FXStreet, explains: “It is becoming clear that the reconstitution of the labor market is not enough to prevent inflation from crippling the economic recovery. The crucial factor is consumer spending. About two-thirds of US economic activity can be directly traced to personal expenditures. The availability of jobs and the ability of workers to seek higher wages are the main supports for consumer spending.”

 

Gold Price Forecast: XAU/USD under pressure amid surging bond yields 

Gold price is weaker as the new week gets underway. Surging US Treasury bond yields and the dollar on the front foot are dragging down the yellow metal, economists at Comemrzbank report.

Rising interest rate expectations weight on gold

“Gold fell sharply to start the week. We attribute this on the one hand to the US dollar, which is continuing to appreciate. And on the other hand, bond yields are climbing further.” 

“We believe the rise in yields and thus the increase in real interest rates are due to the higher interest rate expectations of market participants. The Fed Fund Futures are meanwhile pricing in rate hikes of 90 basis points at the next two meetings of the US Federal Reserve. In our view the gold price is holding its own impressively well against this backdrop.”

“ETF investors have also not allowed themselves to be deterred as yet: the gold ETFs tracked by Bloomberg registered inflows of 43 tons last week – already their tenth weekly inflow in succession. By contrast, speculative financial investors have withdrawn further from gold, according to the CFTC’s statistics: they slashed their net long positions by 9% to a six-week low in the week to 22 March.”
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Gold Price Forecast: XAU/USD stays on the way to $1,960, NATO, yields eyed

• Gold prices stay above short-term key resistance, now support, despite retreating from weekly top.
• Yields underpin USD rebound but all depends upon today’s NATO summit, US data.
• Intraday bears may take entries below $1,937 but $1,930 holds the key for further weakness.

Gold (XAU/USD) bulls faced rejection around $1,949 heading into Thursday’s European session, having cheered the pullback in US Treasury yields with the biggest daily jump in two weeks the previous day.

That said, the yellow metal’s pullback could be linked to the firmer US dollar and a rebound in the T-bond yields, which in turn take clues from hawkish Fedspeak and fears of an escalation in the Ukraine-Russia war.

Also underpinning the US dollar’s safe-haven demand is the covid resurgence in China and Europe, as well as market’s anxiety ahead of the US preliminary PMIs for March and Durable Goods Orders for February.

Additionally, risk-negative headlines ahead of US President Biden’s meeting with the North Atlantic Treaty Organization (NATO) allies in Europe also challenge gold prices of late.

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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

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📕 Gold comment on January 6, 2022:

- In yesterday's session, after precious metal #Gold bounced to 1829, it fell to 1807, closing the day's session with a bearish candle with a rather long beard.  Gold has once more failed to break through the strong resistance zone 1830-1834 and in my opinion, the possibility of Gold moving sideways in a large range from 1798-1830.  We can align the transaction within this margin.
- In the early hours of this morning, it is likely that Gold will continue to decline to around 1800 and then go up, we can buy when the price returns around this price range with a safe target around 1815, period  Expect to be the upper band of the sideways at 1830.

📕 Comment on Gold on 05/01/2022:

- Ending yesterday's trading session, precious metal Gold had a day of increase from 1797 to 1816, closing the day session with a bullish candle around 1814 after not very positive news for USD.  Although closing with a bullish candle, this upward force in my opinion is only a recovery because the decreasing force of the previous candle is dominating.
- Moving to the H4 time frame, we can see that Gold is currently slowing down around 1815, I think it's likely that in the beginning of today's session, this precious metal may correct down to around 1805-1803 after that.  only have the ability to bounce back up.  Here I will have the next update.