For most of 2022, currencies were helped by rising yields on short-term government bonds.
When looking at the UK bond market, rising gilt yields have reflected expectations of future interest rate hikes by the Bank of England, but ultimately they begin to incorporate more political and fiscal risks into their rate premium.
Given the turbulent political climate...
OPEC+ has taken a tough stance, slashing output by 2 million barrels per day (bpd) beginning in November 2022, the largest reduction in crude oil production since March 2020.
In addition to production extending the agreement through 2023, oil producers have agreed to hold semiannual rather than monthly meetings.
WTI oil briefly spiked to $87/bbl following the...
Gold is back above $1,700, which is where it was in the middle of September, up 5% on the week.
A drop in Treasury yields and a weaker dollar have aided gold's rise as the market speculates on the end of Fed rate hikes.
From their 4% peak in September, US 10-year Treasury yields ( US10Y ) have decreased by almost 40 basis points in the last few session, and...
The S&P 500 index may perform noticeably better than the European stock market ( STOXX 50 ) in the event that the European Union experiences a sharp economic downturn.
The S&P 500 to EURO STOXX 50 ratio, which gauges the relative strength of the US stock market in comparison to the EU stock market, has been largely flat so far in 2022.
In the past, when the...
US natural gas prices have formed a head and shoulders top pattern, which may signal a weakening of the current major bullish trend and a subsequent reversal into a bearish one.
The left shoulder coincided with the relative highs at the end of July at $9.30/MMbtu, a level that was then followed by a pullback to $7.53 (August 8) prior to the beginning of a new...
The Nasdaq 100 index ( US 100 ) has moved in the opposite direction of US real yields ( DFII10 ), which are the difference between nominal Treasury yields and market-based inflation expectations (also known as Breakeven yields). Real yields serve as a measure of the Fed's rate tightening aggressiveness.
The 30-day correlation between Nasdaq 100 and US real yields...
Recent moves in the EUR/USD exchange rate have been driven primarily by the price differential between natural gas in the United States and Europe, rather than by the ECB's historic rate hike last week.
Over the last 90 days, the correlation coefficient between EUR/USD and US-EU gas price differentials is 0.88, indicating a very strong relationship between the...
What a day for silver !
Spot silver went up more than 5% to $19.7 per troy ounce in one of the best sessions this year, hitting the highest levels since August 18.
Silver's daily price action broke through both the 50-day moving average and the 2022 bearish trend line connecting the lower highs of April and August.
Momentum indicators show the daily RSI...
The daily palladium chart shows some interesting technical developments.
On September 8, the price action saw a 4.5% daily gain, which broke both the 50-day and 200-day moving averages. Previously, the same breakouts also occurred on July 7 and 8, but in two separate sessions.
With the September 6 lows, a short-term bullish channel may have formed, supporting...
The dollar-franc pair ( USD/CHF ) is recording its third straight day of losses, and is about to form a "three black crows" pattern, which is characterized by three consecutive bearish red candlesticks with lower highs and lower lows.
A three black crows pattern typically indicates a bull trend reversal and a shift in trader sentiment. This pattern formation on ...
The AUD/CAD pair formed a head and shoulders top pattern with neckline breakdown earlier this month.
This pattern is similar to the one seen in AUD/USD but shows a bit more room to the downside towards July 2022 lows.
The RSI pointing southward and the MACD crossing the zero line indicate that some weakness could persist in the short term.
From a monetary...
German Bund yields ( DE10Y ) are in the midst of a secular trend reversal after the breakout of both the 200-month moving average and a 40-year descending trend line.
Yields on the 10-year Bund have never gone over the 200-mma mark before.
The next barrier is the psychological threshold of 2%, which coincides with the September 2013 highs and 23.6% of the...
The US dollar-Chinese yuan pair ( USD/CNH ) has been trading on a bullish pennant pattern since April of this year, and is currently testing the critical 7.00 threshold, which corresponds to the close of July 2020 and 78.6% Fibonacci retracement level (2022 lows to May 2020 highs).
Following the PBoC's decision to reduce Chinese domestic banks' forex reserve...
The British pound ( GBP/USD ) hit an intraday low of 1.1406, temporarily breaking below Covid-20 lows and hitting the lowest level in 37 years, before recovering to 1.147 as of this writing.
The GBPUSD weekly chart reveals intriguing long-term patterns:
The major long-term trend is represented by a falling wedge, with the lower support line set by January...
The US dollar has defied gravity this year, rising 15% so far, with the DXY index on an exponential upward trend since May 2021, owing to strong macroeconomic factors that continue to support the Federal Reserve's plan to keep raising interest rates aggressively.
From the DXY monthly chart, we can see that the long-term major trend is still well in...
AUD/USD has formed a head and shoulders top pattern over the past month and half.
The daily RSI is pointing south, and the break below the neckline support at 0.684 yesterday now raises the prospect of a drop to the original low of 0.668.
Gold has fallen 2.1% in the last week, and it is now trading at its lowest level since July 21st, when it set the year's low of $1,680/oz.
Looking at the technical patterns, it appears that a double bottom is forming, as $1,680 is now only 1.5% below current prices.
A significant trend reversal could occur if this double bottom in prices is accompanied by a...
The publication of the August PMIs for the United Kingdom and the Eurozone affirms an ongoing economic slowdown in Europe. The UK Manufacturing PMI fell to 46 from 52.1 in July, indicating the first contraction in factory activity since May 2020 and well below expectations of 51.1.
In Germany, we saw a particularly weak Services PMI at 48.2 down from 49.7 and...
