Bank of Japan's Dovish Line Pushes Yen Down
Updated
STRATEGY LONG TARGET 175USD YEN
The market thinks the Bank of Japan’s new governor is negative for the yen and a plus for stocks, at least based on his first policy board meeting.
In fact, the headline NFP print showed that the US economy added 253K new jobs in April against 179K anticipated, offsetting the downwardly revised reading of 165K. Adding to this, the unemployment rate unexpectedly fell to 3.4% during the reported month from 3.5% in March, which assists the US Dollar (USD) to regain strong positive traction and provides a goodish lift to the USD/JPY pair.
Apart from this, a positive turnaround in the global risk sentiment - as depicted by a goodish recovery in the equity markets - undermines the safe-haven Japanese Yen (JPY) and further contributes to the bid tone surrounding the USD/JPY pair. That said, the Federal Reserve's (Fed) less hawkish stance holds back the USD bulls from placing aggressive bets and keeps a lid on any further gains, at least for now.
Nevertheless, the USD/JPY pair, for now, seems to have snapped a three-day losing streak and stalled this week's sharp retracement slide from the 137.75-137.80 region, or a two-month high. Spot prices, however, remain on track to register losses for the first time in the previous four weeks. This makes it prudent to wait for strong follow-through buying before placing fresh bullish bets around the major.
After Gov. Kazuo Ueda presided over his first meeting, the bank emphasized that it would continue monetary easing to support growth in wages and prices. That was enough to persuade market players that an interest-rate increase isn’t in the cards soon.
Late Friday in Tokyo, the yen was trading at around 136 to the dollar, compared with around 134 to the dollar before the central bank’s midday decision.
The USD/JPY pair catches aggressive bids during the early North American session and jumps to the 135.00 psychological mark in reaction to the stellar US monthly employment details.
USD BULLISH
When the dust settles, the Fed is set to continue raising rates
US to have permanently higher rates than elsewhere
Re-acceleration of inflation and its win over the Fed will continue to catch the market by surprise
The Dollar is higher for longer, alongside the Fed’s narrative
Stagflation to take USD even higher
Hot CPI means the Fed pivot is well beyond the horizon
Ugly inflation promises further flight to safety
US at war means a stronger dollar
Outlook for Fed monetary policy now more hawkish
Powell projects pain, higher rates for longer set to keep the dollar bid
There is no alternative to the US dollar
No recession for America's labor market, more dollar gains eyed
Fed Chair Powell prioritizes fighting inflation, and ready to see negative growth
The market thinks the Bank of Japan’s new governor is negative for the yen and a plus for stocks, at least based on his first policy board meeting.
In fact, the headline NFP print showed that the US economy added 253K new jobs in April against 179K anticipated, offsetting the downwardly revised reading of 165K. Adding to this, the unemployment rate unexpectedly fell to 3.4% during the reported month from 3.5% in March, which assists the US Dollar (USD) to regain strong positive traction and provides a goodish lift to the USD/JPY pair.
Apart from this, a positive turnaround in the global risk sentiment - as depicted by a goodish recovery in the equity markets - undermines the safe-haven Japanese Yen (JPY) and further contributes to the bid tone surrounding the USD/JPY pair. That said, the Federal Reserve's (Fed) less hawkish stance holds back the USD bulls from placing aggressive bets and keeps a lid on any further gains, at least for now.
Nevertheless, the USD/JPY pair, for now, seems to have snapped a three-day losing streak and stalled this week's sharp retracement slide from the 137.75-137.80 region, or a two-month high. Spot prices, however, remain on track to register losses for the first time in the previous four weeks. This makes it prudent to wait for strong follow-through buying before placing fresh bullish bets around the major.
After Gov. Kazuo Ueda presided over his first meeting, the bank emphasized that it would continue monetary easing to support growth in wages and prices. That was enough to persuade market players that an interest-rate increase isn’t in the cards soon.
Late Friday in Tokyo, the yen was trading at around 136 to the dollar, compared with around 134 to the dollar before the central bank’s midday decision.
The USD/JPY pair catches aggressive bids during the early North American session and jumps to the 135.00 psychological mark in reaction to the stellar US monthly employment details.
USD BULLISH
When the dust settles, the Fed is set to continue raising rates
US to have permanently higher rates than elsewhere
Re-acceleration of inflation and its win over the Fed will continue to catch the market by surprise
The Dollar is higher for longer, alongside the Fed’s narrative
Stagflation to take USD even higher
Hot CPI means the Fed pivot is well beyond the horizon
Ugly inflation promises further flight to safety
US at war means a stronger dollar
Outlook for Fed monetary policy now more hawkish
Powell projects pain, higher rates for longer set to keep the dollar bid
There is no alternative to the US dollar
No recession for America's labor market, more dollar gains eyed
Fed Chair Powell prioritizes fighting inflation, and ready to see negative growth
Note
Week Ahead: US CPI Report May Rock These 3 MarketsEven as anticipation mounts ahead of the US jobs data due later today, investors may be bracing for more volatility in the week ahead thanks to another round of risk events.
Economic Calendar for Next Week
All eyes will be on the incoming US inflation data as well as speeches from financial heavyweights and other risk events which could spark some fresh action across markets.
Monday, May 8
UK bank holiday honouring Charles III coronation
EUR: Germany industrial production, ECB Chief Economist Philip Lane speech
Tuesday, May 9
CHN: China trade, money supply
AUD: Australia consumer confidence
EUR: ECB Chief Economic Philip Lane speech (IMF)
USD: Fed New York President John Williams speech
US President Joe Biden debt ceiling talks
Wednesday, May 10
EUR: Germany April CPI (final)
USD: US April CPI
Thursday, May 11
CNH: China PPI, CPI
GBP: UK BOE rate decision & press conference
USD: US PPI, initial jobless claims
G7 finance ministers meet in Japan
Friday, May 12
GBP: UK Industrial production, Bank of England Chief Economist Huw Pill speech
USD: University of Michigan consumer sentiment, Fed speeches
The April US consumer price index (CPI) report published on Wednesday 10th May will be exactly one week after the Federal Reserve raised rates and signalled a pause in further increases.
Given how Fed Chair Jerome Powell has left the door open to further tightening if incoming economic data warrants, this could add more spice to the report.
CPI Forecasts
Markets are forecasting:
CPI year-on-year (April 2023 vs. April 2022) to remain steady at 5.0%.
Core CPI year-on-year to cool 5.4% from the 5.6% in the prior month.
CPI month-on-month (April 2023 vs March 2023) to rise 0.4% from 0.1% in the prior month.
Core CPI month-on-month to cool 0.3% from the 0.4% in the prior month.
Ultimately, further evidence of inflation slowing down could reinforce expectations around the Federal Reserve pausing and eventually cutting interest rates. Should inflation remain sticky, this could rekindle bets around the Fed leaving interest rates higher for longer.
Expectations are rising over the Federal Reserve cutting interest rates with the chance of a 25-basis point cut in July currently priced at 53%, according to Fed funds futures! It will be interesting to see how the incoming inflation data shapes market expectations around the central bank’s next move.
How Might the Markets React to the CPI Report?
With all of the above discussed, here’s how these 3 assets could react to the US CPI report
USD Index
The past few months have been rough and rocky for the dollar as investors weighed the prospects of the Federal Reserve pausing and then eventually cutting interest rates. More pain could be in store for the dollar if US inflation cools more than expected in April.
A soft inflation print may drag the USD Index toward the 100.72 level. Should prices experience a bearish breakout, this could open the doors toward 100.
A sticky inflation print could throw a lifeline to dollar bulls, propelling back above 101.50 with 102.34 acting as a key level of interest.
SPX500_m
After being trapped within a range for the past few weeks, could a breakout be on the horizon for the SPX500_m?
If the inflation numbers beat expectations, this may trigger a bearish breakout on the SPX500_m – taking prices below the 4050-support level.
Should the inflation numbers come in lower than market forecasts, SPX500_m bulls could be injected with renewed confidence as expectations intensify over the Fed ending its rate cycle. This could send the index back toward the 4180 resistance level and beyond.
Gold
It may be wise to fasten your seatbelts for potential volatility on gold due to its high sensitivity to inflation data and US interest rate expectations. The precious metal remains bullish on the daily charts despite prices pulling back from near-record highs.
A soft inflation report could sweeten appetite for the zero-yielding asset as bets rise over the Fed cutting rates in 2023. This development could push the metal back towards the 2023 high of $2063 with bulls eyeing $2070 and the all-time high at $2075.
A stronger-than-expected inflation number could drag gold prices back toward the psychological $2000 level.
Note
Traders Take Profits After Report Reveals Strong US Job GrowthTechnically speaking gold traded through a series of lower highs and strong support at $1980.
Market participants used the jobs report to actively engage in U.S. equities taking all three major indices higher. The Dow Jones industrial average gained 1.65%. The Standard & Poor’s 500 gained 1.85%, and the NASDAQ composite gained 2.25% in active trading today.
Gold Prices Drop as Investors Take Profit Despite Strong Fundamentals
Gold investors and traders also used this report as a reason to pull profits from recent gains in gold which had roughly a $100 trading range from Tuesday’s open at $1990 to yesterday’s high of $2083. Before the upside breakout in gold which occurred on Tuesday, May 2 gold pricing was contained in a narrow trading range between $1980 and $2020.
Technically speaking gold traded through a series of lower highs and strong support at $1980. This created an asymmetrical triangle pattern composed of a descending top and a flat bottom. Typically, this type of asymmetrical triangle occurs during a price correction and once pricing reaches the apex of the triangle market technicians look for a break to lower pricing. In rare instances, this pattern can be found during an uptrend as witnessed this week in gold.
Considering that the major fundamental factors that have moved gold substantially higher are still unresolved and worrisome today’s strong decline in gold prices could present an opportunity to buy the dip. There is still common ground that both Democrats and Republicans can sign off on as we get closer and closer to the date at which the government can no longer meet its obligations. Whether or not there are more midsize regional banks that could become insolvent is unknown. Combined these issues could certainly continue to be highly supportive of gold prices moving them higher.
However, gold enthusiasts got a reprieve today as gold futures dropped $30.80 or 1.5% with the most active June 2023 Comex contract currently fixed at $2024.90.
Note
The US Week AheadThe US CPI Report will impact the EUR/USD on Wednesday. Following the US Jobs Report, a hotter-than-expected US CPI Report would refuel bets on a June Fed interest rate hike.
On Thursday, wholesale inflation and jobless claims figures will also draw interest before consumer sentiment numbers on Friday.
Investors should track FOMC member reactions to the US Jobs Report and the incoming US CPI Report.
According to the CME FedWatch Tool, the probability of a 25-basis point June interest rate hike rose from 0.0% to 8.5%. On Friday, the US Jobs Report drove the modest rise. However, the US Jobs Report wiped out bets on a June Fed interest rate cut.
Note
Short Rising Trend Lines Cross Up Around 2,109Going forward, keep an eye on the two short rising trend lines that cross up around 2,109, to see if gold stays within the parameters of the rising wedge type pattern. There is also the ascending parallel trend channel present as well.
Note
An Expected Rates HikePowell’s 0.25% hike was expected, so when it became a reality, markets didn’t really react. But what changed was the narrative regarding the future price moves. Powell said that they will make further decisions based on the data that they get. So, Powell is no longer saying about further increases but about being data-dependent. The latter is irrelevant because the Fed is always data-dependent, at least in theory (theory says that there are no political influences on the Fed, too…). The former, however, means that the pause is on the table.
That’s what was said.
What does it mean? It means that if the inflation isn’t lower, they will have to raise rates again. Why? Because inflation is political – simple as that. That’s the thing that voters are most concerned with, and that’s a fact.
If the inflation does move lower, they will probably not be raising rates again.
Also, Powell added that he doesn’t plan to cut rates anytime soon.
“Inflation [is] going to come down not so quickly,” he said, yesterday. “It will take some time. And in that world, if that forecast is broadly right, it would not be appropriate to cut rates.”
So, to summarize what’s likely to happen: the rates are either moving higher if the inflation doesn’t decline or the rates are staying where they are if inflation declines visibly.
In both cases, real interest rates (nominal rates minus expected inflation) are going to increase. So, both outcomes presented by Powell are bearish for gold and the rest of the precious metals sector.
People expect that it’s practically certain that the rates will stay as they are on the next Fed meeting and that they will then start to decline. In other words, the market participants think that the rates are going to decline within the next couple of months, but not necessarily in June.
Please note the contrast between the current expectations and what I wrote above as the scenarios that Powell pretty much revealed.
For a long time, we’ve been emphasizing that inflation is much stickier than many expect, so it’s much more likely that what Powell is saying about the rates and the outlook for them is much more realistic than what the market largely expects right now.
We’re probably in the “return to “normal”” part right now, and the most recent upswing was a bull trap. The “New Paradigm” top was likely the moment when many thought that interest rates could be kept very low for decades and during the crypto peak.
Even the name makes perfect sense in light of yesterday’s news and the current expectations. The “return to normal” in this case, means a return to “normally” low interest rates.
So, what does that all imply? That the market is likely to be surprised – negatively so. It’s obvious also from the technical point of view, and I’ve been writing about the bearish stock price forecast for quite a long time now.
Stocks just failed to move to new 2023 highs. They got close but declined shortly thereafter. It looks like we’re going to get the right shoulder of the head-and-shoulder top formation completed in the following weeks.
Commodities like crude oil and copper are already declining, and so do their producers.
Note
USD/JPY climbs above 135.00 on dovish BoJ minutes, US Biden-McCarthy meeting in focusUSD/JPY has jumped sharply above 135.00 as BoJ continues to favor the ultra-dovish policy.
US President Joe Biden and Republicans are set for US debt ceiling talks on Tuesday.
A delay in US debt ceiling talks would cost millions of jobs in the US economy.
The USD/JPY pair has jumped above the crucial resistance of 135.00 in the Asian session. The asset has received the attention of buyers amid the release of the dovish Bank of Japan’s (BoJ) April monetary policy meeting minutes.
BoJ members supported the continuation of policy easing in order to achieve steady inflation. While discussing over an exit from the ultra-dovish policy, BoJ members conveyed that the central bank should consider the weight of risk associated with the policy shift stance before consideration. However, one member stated that the BoJ should prioritize the risk of missing the price goal due to a premature policy shift over the risk of shifting policy too late.
Meanwhile, S&P500 futures are showing choppy moves in the Asian session. US equities were the talk of the town on Friday as investors ignores fears of the US banking crisis and debt ceiling issues and only focused on optimism inspired by expectations of a policy-tightening pause by the Federal Reserve (Fed). The overall market mood seems positive amid decent traction for risk-sensitive assets.
The US Dollar Index (DXY) has retreated after a short-lived recovery to near 101.33 as investors are worried about the outcome of a scheduled meeting between US President Joe Biden with Speaker Kevin McCarthy and other congressional leaders on Tuesday. Delegates are expected to negotiate on raising the US debt ceiling as a delay would cost the loss of millions of jobs and economic output. Also, a failure in making obligated payments by US Treasury would affect the long-term outlook of the US economy.
Reuters reported that Scope Ratings placed the USA's AA long-term issuer and senior unsecured debt ratings in local and foreign currency under review for a possible downgrade due to longer-run risks associated with the misuse of the debt ceiling instrument.
Note
USD/JPY Bulls Eye Services PMI and the BoJ Minutes for 136It is a quiet start to the week for the USD/JPY. Finalized Japanese service PMI numbers for April and the Bank of Japan Monetary Policy Meeting Minutes will be in focus.
However, we don’t expect the minutes from the final meeting of Bank of Japan Governor Kuroda and the services PMI numbers to influence. The minutes are for the March 9-10 monetary policy meeting.
The lack of influence will leave the USD/JPY to respond further to the US Jobs Report from Friday. While recessionary jitters eased, bets on a 25-basis point Fed interest rate hike in June remained subdued. On Wednesday, the US CPI Report will give investors clues on what to expect from the Fed.
A hotter-than-expected US CPI report would tilt monetary policy divergence in favor of the dollar. As things stand, the Fed and the BoJ are in holding patterns, with the US economy showing signs of fatigue, despite the latest Jobs Report. The next round of US economic indicators should signal economic resilience to support the USD/JPY at the current levels.
USD/JPY Price Action
This morning, the USD/JPY was up 0.14% to 135.006. A bullish start to the day saw the USD/JPY rise from an early low of 134.807 to a high of 135.014.
The USD/JPY needs to avoid the 134.822 pivot to target the First Major Resistance Level (R1) at 135.338. A move through the Friday high of 135.125 would signal a bullish USD/JPY session. However, the market risk sentiment and the Fed chatter must support a USD/JPY breakout.
In case of an extended rally, the bulls would likely test the Second Major Resistance Level (R2) at 135.853. The Third Major Resistance Level (R3) sits at 137.097.
A fall through the pivot would bring the First Major Support Level (S1) at 134.094 into play. However, barring a dollar sell-off, the USD/JPY pair should avoid sub-134 and the Second Major Support Level (S2) at 133.365. The Third Major Support Level (S3) sits at 132.121.
Note
Looking at the EMAs and the 4-hourly chart, the EMAs send bullish signals. The USD/JPY sits above the 100-day EMA (134.601). The 50-day EMA pulled away from the 100-day EMA, with the 100-day EMA widening from the 200-day EMA, delivering bullish signals.A USD/JPY move through the 50-day EMA (135.017) would support a breakout from R1 (135.338) to target R2 (135.853). However, a fall through the 100-day EMA (134.601) would bring S1 (134.094) and the 200-day EMA (134.063) into view. A move through the 50-day EMA would send a bullish signal.
Note
The US SessionLooking ahead to the US session, it is a quiet day on the US economic calendar. There are no US economic indicators for investors to consider. A lack of stats will leave Fed chatter and market risk sentiment to impact the USD/JPY.
Fed Chair Powell delivered monetary policy uncertainty last week. Forward guidance will move the dial this week, with the US CPI Report to tip the monetary policy divergence scales.
Beyond the economic calendar, the banking sector, the US debt ceiling, and corporate earnings also need consideration.
Note
US Inflation Data Release to Impact MarketsOn Wednesday, the United States is scheduled to release its consumer price inflation data for April. This report could offer more insight into interest rate changes. It is widely anticipated that the U.S. Federal Reserve will stop increasing rates, and this data could confirm those expectations. Additionally, traders will closely monitor various Chinese economic indicators this week. This includes trade, inflation, lending, and money supply figures for April. This will help market participants evaluate the economic recovery of the world’s second-largest oil consumer. As a result, crude prices may continue to benefit from the upward momentum.
Note
Fed says banking sector looks set to weather recent turmoil"The Federal Reserve is prepared to address any liquidity pressures that may arise and is committed to ensuring that the U.S. banking system continues to perform its vital roles," the Fed said.
While the central bank noted there were spillover concerns following the failures of Santa Clara, California-based SVB and New York-based Signature, it maintained that the issues that sank those regional banks do not appear broadly across the banking sector, calling them "outliers" in terms of heavy reliance on uninsured deposits.
Those firms, as well as First Republic Bank, which was closed by regulators earlier this month and sold to JP Morgan Chase, also were grappling with large amounts of unrealized losses spurred by rapidly rising interest rates. Depositors fled SVB within days after it appeared the firm was in trouble, precipitating its abrupt closure.
The Fed noted in its report on Monday that more than 45% of bank assets reprice or mature within a year, suggesting there is not heavy exposure to less valuable securities for long periods of time. But while the amount of uninsured deposits at banks is declining, they still remain above historical averages after an influx of deposits spurred by the COVID-19 pandemic. In aggregate, it said banks remain well-capitalized.
DEBT LIMIT CONCERNS
The Fed released the report shortly after a separate central bank survey found banks were tightening credit standards amid weaker loan demand.
Beyond banks, the Fed said pressures on various market sectors remained within historical norms. However, it noted that valuations on commercial real estate remain high, which suggests there could be a "sizable" correction in property values should telework trends remain strong. The Fed found that banks hold about 60% of commercial real estate loans, with two-thirds of those at smaller lenders with less than $100 billion in assets.
The Fed's report also found that nearly half of its respondents identified the U.S. debt limit as a salient risk, after not appearing as a top concern in the previous report in November. U.S. Treasury Secretary Janet Yellen said the limit could be reached in June, but Democrats and Republicans are still sparring over what conditions, if any, should be attached to an increase.
Banking sector stresses were identified as a risk by more than half of respondents, up from 12% in the November report.
Note
USD/JPY trading flat as investors await US CPI reportBOJ Governor announces plan to end of yield curve control policy
Japan’s consumer spending drops unexpectedly, challenging post-COVID recovery
he upcoming report on the US consumer price index in April, which is expected to show a year-over-year rise of 5% and a month-over-month gain of 0.4%, will be closely scrutinized by investors for any clues on future Federal Reserve policy moves. According to the CME Group’s FedWatch tool, traders are currently pricing in only a 13.1% chance of another 25 basis-point rate hike next month.
BOJ to End Yield Curve Control Policy Once Inflation Targets are Met
Bank of Japan Governor Kazuo Ueda has announced that the central bank will end its yield curve control policy and shrink its balance sheet once inflation sustainably reaches its 2% target.
He stated that Japan’s economy is showing positive signs, with inflation expectations remaining high. However, he warned of uncertainties in the outlook. Under yield curve control, the BOJ sets a short-term interest rate target of -0.1% and caps the 10-year bond yield around zero.
The BOJ also announced a plan to review its past monetary policy moves and conduct workshops with private academics to analyze the benefits and side effects of past monetary policies.
Japan’s Consumer Spending Falls Unexpectedly
Japan’s consumer spending fell unexpectedly in March, marking the largest decline in a year. This is in contrast to twelve consecutive months of declining real wages and highlights the challenges facing Japan’s post-COVID recovery.
The data point to uncertainties surrounding the Bank of Japan’s policy outlook amid financial sector worries and slowing global growth, despite expectations of phasing out ultra-easy monetary settings.
Despite eased COVID-19 restrictions on domestic shoppers and international travelers, rising prices have limited Japan’s consumption-led recovery from the pandemic. The outlook for monetary policy normalization under the new BOJ Governor Kazuo Ueda depends on whether the trend of wage hikes in large firms spreads to smaller businesses.
Note
DXY Rising againNote
Recession in the United StatesWill the recession in the US – if it is actually rolling – significantly reduce the demand for oil, which could justify the already falling oil price? Well, on Friday at 2:30 p.m. they showed US labor market data for April: The US unemployment rate drops to 3.4% ( forecast 3.6% ). And: 253,000 new jobs were created in the USA in April ( Forecast + 180,000 ). So the US economy is running more robust than many analysts thought. Does that mean for the oil price? Possibly oil demand will continue to be at a higher level, which the futures market immediately priced in. Since Friday at 2:30 p.m. we have seen an increase in American WTI oil of $ 2.
Note
USA: Debt ceiling – Loss of credit insurance costs explodeUSA: Demand for credit default insurance is increasing
The mess has skyrocketed demand for euro-denominated US credit default swaps that are traded the most. These contracts for a default next year were traded on Wednesday at 166 basis points. They reached a record high and exceeded the levels reached during previous unrest over the US debt ceiling in 2011 and 2013.
Trading has picked up momentum due to the peculiarity of the derivatives market, which enables owners to achieve substantial returns in the event of a default. Your payment corresponds to the difference between the market value and the nominal value of the underlying asset – an attractive investment if long-term government bonds are traded particularly cheaply. According to Bloomberg calculations, the potential payout could exceed 2,400.
Emerging markets would be most affected
According to Simon Waever, an analyst at Morgan Stanley, the outstanding net nominal volume of US CDs with $ 5.5 billion is now comparable to many larger emerging markets. Ironically, emerging markets will be most affected by any impact on the overall market.
The anomaly is limited to one-year CDS. Five-year contracts, which are usually more liquid and better reflect the assessment of a country's longer-term credit risk, have also increased in the United States, but are still traded about 100 basis points below the one-year terms. This reverse curve indicates that the risks in the immediate future are considered to be higher than in the longer term.
The CDS price reflects the cost of insurance for a very large loan in a very small insurance market, said Charles Diebel, head of Fixed Income at Mediolanum International Funds
Note
What is the debt ceiling?The federal government operates in a deficit, spending more than it brings in with taxes, so it’s forced to borrow money to pay for everything from the salaries of armed forces and federal employees to Social Security
Congress has the power of the purse strings, letting it set a limit on what the government can borrow to pay for expenses (the debt ceiling). The current limit is $31.4 trillion.
What happens if the debt ceiling is not raised or suspended?
When does the U.S. hit spending limit?
How many times has the debt ceiling been raised?
How much has the U.S. debt increased in the past 20 years?
What caused the debt?
Answers here
Note
Why Say Recession at All Given How Much Inflation Has Come Down Already?Because when you dial into the Fed statements over the past several months, they believe anything short of recession will not truly stamp out the flames of inflation. If they just slow down the economy to touch their 2% inflation target, they fear that the remaining embers could reignite higher inflation in the months following.
So, under the heading “Don’t Fight the Fed” probably best that we take them at their word that a recession is coming. And when it is finally on the scene, that is when bears will take charge and stocks will retrace to the previous low of 3,491...and probably lower.
Note
BullishNote
USD/JPY Forecast – US Dollar Continues to RecoverNote
USDJPY prepares to attack the important 137,90 to break through.Next taget levels will be 141.20 and then 151,56
while volume increasing 180 yen/USD will be possible potential
In the next weeks
The trend can be changed always. Watch closely the levels and fundamentals
Note
US Stocks Rise Led by TechUnited States Stock MarketUS stocks rose on Monday, with the Dow Jones up more than 50 points, and the S&P 500 and the Nasdaq up 0.4% and 0.6% respectively, as investors remained hopeful about a debt ceiling deal following successful staff-level negotiations over the weekend. President Joe Biden is expected to host top congressional leaders on Tuesday. Tech companies outperformed after European Union regulators approved Microsoft’s proposed $69 billion acquisition of gaming firm Activision Blizzard. Additionally, Atlanta Fed President Raphael Bostic and Chicago Fed economist Austan Goolsbee signaled their preference for pausing interest-rate increases, while Minneapolis Fed President Neel Kashkari suggested the central bank may have more work to do in its inflation fight. Meanwhile, the NY Empire State Manufacturing Index showed an unexpectedly big drop in manufacturing business activity this month.
Note
USD/JPY carves a series of higher highs and lows as it extends the rebound from last week’s low (133.75), and data prints coming out of the US may keep the exchange rate afloat as the Retail Sales report is anticipated to show a rebound in household spending. USD/JPY Reverses Ahead of Monthly Low to Eye 200-Day SMA USD/JPY approaches the 200-Day SMA (137.04) after bouncing back ahead of the monthly low (133.50), and the exchange rate may attempt to test the monthly high (137.78) as it appears to be tracking the rise in US Treasury yields.Note
The Japanese Yen dipped after rising domestic PPI today ahead of CPIChina’s PBOC added liquidity, but equity markets did little in response
The US debt ceiling is creating anxiety in markets.
Note
The yield on the US 10-year Treasury note continued to march higher to top 3.6%, a level not seen in nearly two months, as investors follow the debt ceiling standoff and try to assess the Fed's next steps. Congressional lawmakers and President Biden expressed optimism on a deal and said the US will not default. At the same time, bets the Fed will cut rates this year fell and the chances of a pause in rate hikes in June also weakened. Dallas Federal Reserve President Lorie Logan said Thursday current economic data doesn't justify yet pausing the rate hiking-cycle. Retail sales data released this week showed consumer spending remained resilient and initial claims fell more than anticipated.Note
Here we GoNext Taget
144,57
Note
The Japanese yen steadied around 138.5 per dollar, pausing its recent decline on stronger-than-expected domestic inflation data. The headline inflation rate in Japan unexpectedly accelerated to 3.5% in April despite forecasts for a further slowdown to 2.5%, while the core inflation rate rose to a three-month high of 3.4% and exceeded the Bank of Japan’s 2% target for the thirteenth straight month. This challenges the BOJ's view inflation will slow back below its target later this year as cost pressures dissipate. Meanwhile, the yen remains close to its lowest levels in almost six months as growing optimism over the US debt ceiling negotiations and hawkish signals from the Federal Reserve weighed on the currency. US President Joe Biden and House Speaker Kevin McCarthy indicated confidence that a US default would be averted, while US Federal Reserve officials continued to push back against speculations for interest rate cuts this year.Note
Japan's trade deficit fell to JPY 432.4 billion in April 2023 from JPY 854.9 billion in the same month of the prior year, less than market expectations of a gap of JPY 613.8 billion. It was the 21st straight month of a trade shortfall and the longest sequence since 2015. Exports grew by 2.6% yoy to JPY 8,288.4 billion, the 26th straight month of increase but the softest pace since a drop in February 2021. Meantime, imports declined by 2.3% to JPY 8,720.8 billion, the first drop in 27 months, as a stronger yen and easing commodity prices, including oil, reduced costs.Note
Last week witnessed a rise in the USD/JPY currency pair, adding +1.6% and extending the previous week’s +0.7% rally. This led to fresh YTD highs on Thursday, reaching ¥138.75, levels not seen since November 2022.The recent bid also threw light on the weekly timeframe’s AB=CD bearish configuration at ¥140.34, denoted by way of a 100% projection, as well as a 1.272% Fibonacci extension at ¥140.48 and a 50.0% retracement ratio at ¥139.57. Given that the unit effectively probed beneath the ¥130.39 low (2 August), the AB=CD termination point could be somewhere longer-term sellers make a show from this week.
Against the backdrop of the weekly timeframe, the second half of the week observed the pair venture above its 200-day simple moving average at ¥137.10 and whipsaw above the upper boundary of an ascending triangle (drawn from ¥137.91 and ¥129.64). Assuming buyers remain in the driving seat, as suggested by the weekly timeframe (until around ¥140.30ish), daily resistance warrants attention at ¥139.55 this week, closely shadowed by resistance at ¥141.60.
Note
Meanwhile, on the H1 timeframe, since 11 May, the unit has been working between the limits of an ascending channel drawn from ¥133.74 and ¥136.24. Despite the retest of ¥138 in early London Friday, which managed to eke out a respectable 60 or so pips to a high of ¥138.65, sellers took the wheel during US hours and plunged through ¥138 to greet channel support. Aided by support at ¥137.45, buyers discovered a floor at the channel support base and ended Friday nearby the underside of ¥138.In light of the weekly timeframe likely to seek higher prices until ¥140.30, together with the daily timeframe breaking above its 200-day simple moving average and above an ascending triangle, reclaiming ¥138+ status this week and refreshing YTD highs (as well as targeting ¥139) could be on the menu this week.
Note
Monday happens nothingtuesday
pmi important also for eurousd if euro gets stronger nasdaq and s+p500 and gold get stronger too
pmi for dollar at 9:45 watch closely and wait how the algos trade. Dont go immediately in,just be patient
also manufacturing data will be published. Important
Until the dat come out, the price moves higher or lower above/below the opening price ,but suddenly comes back to the opening level. No good idea to trade.
Wednesday 2p.m.: FOMC meeting, but this meeting is FOMC minute. High impact, but not so much as the real FOMC meeting,
10 a.m. Yellen will speak,
Thurseday: GDP,pending homesales,unemployment
Friday: Big Day,PCE coming out, also Durable goods
also consumer sentiments and inflation expectations.
Friday will be a very busy day. Watch for those data points.
Note
The dollar index steadied around 103.3 on Tuesday, supported by growing expectations that the Federal Reserve will keep interest rates higher for longer, while traders cautiously awaited updates from the debt ceiling negotiations. In the latest central bank commentary, Fed’s Bullard suggested the possibility of raising rates by another half-point this year, while Fed's Kashkari described the decision to pause or hike rates in June as a close call. Markets have scaled back bets on interest rate cuts this year, with rates seen holding at around 4.7% by December. Meanwhile, President Joe Biden and House Speaker Kevin McCarthy signaled cautious optimism that a deal to raise the debt ceiling would be reached, with Treasury Secretary Janet Yellen reaffirming that the US could be at risk of default by June 1.Note
The Japanese yen was trading at 138 per dollar, remaining at the weakest level since the end of November, on the divergence between US and Japanese monetary policy. The Bank of Japan continues to keep its key short-term interest rate at -0.1% despite strong inflationary pressures. The headline inflation rate in Japan unexpectedly accelerated to 3.5% in April despite forecasts for a further slowdown to 2.5%, while the core inflation rate rose to a three-month high of 3.4%. On the other hand, traders have been slowly pricing out near-term Federal Reserve rate cut expectations as US inflation data remains sticky, retail sales were upbeat and the labor market shows no signs of easing. Meanwhile, investors are closely monitoring the US debt ceiling negotiations, as no progress has been made ahead of the June 1st deadline. .Note
USD/JPY is testing the resistance at 138.70 as Treasury yields continue to move higher amid debt ceiling uncertainty.A successful test of the 138.70 level will push USD/JPY towards the resistance at 139.60. If USD/JPY manages to settle above this level, it will head towards the next resistance at 140.50.
R1:138.70 – R2:139.60 – R3:140.50
S1:137.50 – S2:137.00 – S3:136.50
Note
The dollar has been trading a little firmer despite the impasse in US debt-ceiling negotiations. Bulls seem to be drawing strength from hawkish Fed speakers and technical forces. Prices have turned bullish on the daily charts with support found at 103.00. The upside momentum has already taken prices towards 103.80 with 104.00 the next key level of interest.Note
A solid support level is anticipated at ¥137, with a potential decline towards ¥135 if this level is breached. The approaching 50-Day Exponential Moving Average (EMA) is also expected to act as a technical support level.Note
Considering the current market conditions, it appears prudent to adopt a strategy of buying dips rather than attempting to short the US dollar. However, it is crucial to closely monitor the situation, particularly if the market breaks below the 200-Day EMA. Such a development could introduce significant bearish sentiment and alter the overall outlook. Nevertheless, the prevailing sentiment suggests that the US dollar is poised to advance over the long term.Note
Selling Pressure,Weakenning of UsDollar, thats good for Euro. Strong Euro is GOOD,no VERY GOOD for SP500;NASDAQ;DOW JONES; GOLD;BITCOIN;CRYPTOS: Everything against Dollar.Look also my NVIDIA Forecast Chart performed: Nailed it! Weak US DOllar also good for Tech Stocks, Bio Pharma and Tech have Highly positive correltions with Bitcoin and Ethereum, and vice versa. NVIDIA : Top Performer
Friday is the Big Day of the Week: aND IT WILL BE VERY BUISY. RGHT AFTER THE bELL PMI and Inflation DATA!
Note
Japan raises view on economy for 1st time since July 2022Japan's government raised its overall view of the economy for the first time in ten months in May, after recent data showed the country emerged from recession in the first quarter The Cabinet Office also upgraded its assessment of consumer spending, exports and factory output, suggesting economic and social activities gathered pace. "The economy is recovering moderately," the Cabinet Office said in its monthly report published on Thursday, upgrading its view for the first time since July 2022.
Note
Market UpDATES:NASDQ100 US100 and Indices Sky Rocketing after FED pivot reates cooling
Nasdaq breaking 14055 easily as forecasted in my analysis : Next Target 14350
NVIDAI Sky ROCKETING(Watch als my other Forecasts USD/US100/USDJPY/GOLD/EURO- Related Markets)
Godl Found More Buyers on support.More Bullish Delat coming in nEXT TO 2000USD)
Medium-term price action on the daily chart exhibits scope to extend losses. The longer-term ascending channel is interesting (drawn from $1,641 and $1,959). Note that price action FAILED to touch gloves with the upper boundary in recent trading, pencilling in highs just ahead of the all-time high of $2,075.
Investment Sentiment rising higher from Lows:More Bulls
The Key Fed Inflation Rate Is Cooling At Pivotal Time For The S&P 500
EURO/USD Taking Profits +More Bulls Accumulation and Buying Pressure /Support 1,4075
Note
USDJPY reaches target 1 stabilizing above 140.No divergence, more Bulls on higher values.Next target 148.20
Note
Japan FinMin Suzuki: FX Rates Should Be Set By Market Based On Fundamentals; Closely Watching FX MovesBut the markets ignoring the statements based on fundamentally proven evidence that confirming hiher interest rates differences of the two countriey
Note
US Dollar Breaks Out of TriangleThe US dollar has broken higher against the Japanese yen during the trading week to break above the ascending triangle.
The US dollar has broken higher against the Japanese yen during the trading week to break above the ascending triangle.
Note
Bitcoin price climbs above $26,800 as traders eye resistance at $27,600The durable goods number, personal spending, and the PCE inflation measures were all broadly above expectations
Note
support holdsNote
USDJPY breaks soon 141.200 and then 145.08Note
USDJPY OPENS BULLISH ABOVE YEARLY VWAP AND OPEN STRONG BULLISH DELTAS COMING INNote
US equity futures and Asian shares advanced as appetite for risk taking returned to global markets following the deal between President Joe Biden and House Speaker Kevin McCarthy on the US debt ceiling. Contracts for the S&P 500 rose about 0.3% in Asia on MondayNote
JPY: Why so weak?There are multiple factors contributing to the weakness of the JPY. 1- The Bank of Japan (BoJ) has consistently adopted a dovish stance, which has put downward pressure on the currency. 2- The Nikkei, the Japanese stock market, has been performing strongly, further impacting the JPY's value. 3- China's economic recovery has been moderate, with a focus on services and consumption rather than investment, which has influenced the JPY's weakness. Additionally, concerns regarding US regional banking have eased, leading to a more favourable outlook for investors. Moreover, investors have shown a confident outlook on the US debt ceiling negotiations, adding to the JPY's weakness. Lastly, the US economy has displayed resilience in the face of Federal Reserve rate hikes, which has contributed to the JPY's current state of weakness.
The JPY is expected to face ongoing pressures due to the consistent dovish stance of the Bank of Japan (BoJ) and the strength of the Nikkei. Additionally, the JPY's performance will be influenced by a moderate economic recovery in China. Although I anticipate that the BoJ will maintain its dovish approach and refrain from making further adjustments to its Yield Curve Control (YCC) in 2023, investors will continue to speculate on potential downside for USD/JPY during BoJ meetings, as witnessed in December when the BoJ surprised the market. As a result, the upside potential for USD/JPY will be limited.
The USD/JPY will face downward pressure as the Fed Funds rate reaches its peak and the US economy enters a recession. Although I anticipate a resolution to the US debt ceiling issue, the market has already factored this into its pricing, resulting in limited downside potential for the JPY from this weakness. However, if US lawmakers push the government to the brink of default with a last-minute agreement to raise the debt ceiling, it could have a significant impact on the JPY. Additionally, the persistently high interest rates in the US pose a risk of further troubles for regional banks, which could lead to a renewed safe-haven demand for the JPY.
Note
USDJPY long BullishToday the market is quiet and no buys recomanded. Support 1 137 support2 134 support3 131 support4 129 . At 134 the Market will fase big strong bullish volume where the last bullish wave started,and Bulls will defend this area heavily
US Futures Rise as Debt Ceiling Deal ReachedUS stock futures rose on Tuesday after the Biden administration and Republican lawmakers reached a tentative deal on raising the US debt ceiling, removing a source of uncertainty in the markets. Nasdaq 100 futures jumped 0.4%, S&P 500 futures gained 0.3% and Dow futures added 0.2%. President Biden and House Speaker Kevin McCarthy reached a tentative deal in a phone call late on Saturday and showed confidence it would pass in Congress. The bill will suspend the debt ceiling until January 1, 2025, and federal spending will be capped for the next two years. US stock and bond markets were closed Monday for the Memorial Day holiday. Investors now look ahead to a fresh batch of economic data this week including the May jobs report and the ISM Manufacturing PMI.
Note
USD/JPY dips on emergency meeting by Japanese authoritiesNote
Markets steady ahead of final push on the debt dealAfter long weekends in many parts of the world, FX markets are returning to some progress on the US debt ceiling. President Joe Biden and House Speaker Kevin McCarthy have reached a two-year deal. That deal will be assessed by the House Rules Committee today and, if approved, will likely go to a vote in the House tomorrow. Both Democrat and Republican leaders feel they have the votes to get the deal through Congress – although at times like these, there may be a few holdout politicians who like their day in the sun.
Note
Biden and House Speaker McCarthy reached an agreement on Saturday and the House vote is expected to take place on Wednesday. However, several Republicans have stated that they will not vote in favor of it. Most Ai stocks were still up after Nvidia rose as much as 4% earlier in the session, briefly hitting a $1 trillion market cap. Tesla also held gains after Elon Musk told Chinese foreign minister Qin Gang that he was willing to expand business in the country. On the other hand, energy stocks were among the worst performers dragged down by a 4% decline in oil prices.Note
314-117: The House passes the Biden-McCarthy debt ceiling agreement, raising the debt limit until 2025 and instituting discretionary spending caps for two years.71 Republicans and 46 Democrats voted “no” on the bill
Note
The Dow Jones cut early losses to trade around 50 points higher while the S&P 500 and the Nasdaq extended gains to add about 0.5% each, as traders focus on the monetary policy outlook. Fresh data for unit labour costs, the ISM PMI and comments from some Fed officials reinforced bets the Fed will pause the tightening cycle this month. As a result, Treasury yields fell and tech shares got a boost. On the other hand, stocks of Salesforce fell nearly 5% after the company reported higher capital expenses than expected. Meanwhile, traders welcomed the passage of the Fiscal Responsibility Act of 2023 by a vote of 314-117 on the House of Representatives. The bill is now headed to the Senate and is expected to be approved before the June 5th default deadline.The dollar index fell below 103.9 on Thursday, the lowest in nearly a week, as fresh data and comments from some Fed officials raised bets the central bank will pause the tightening cycle when it meets in about two weeks. Unit labour costs rose less than expected in Q1 and the slump in productivity was revised lower, while the ISM PMI showed the manufacturing sector contracted for a 7th month. On the other hand, initial jobless claims and the ADP report beat forecasts. Also, Fed Governor Philip Jefferson and Philadelphia Fed President Patrick Harker suggested the central bank would skip a rate hike in the next meeting. Meanwhile, the House of Representatives approved the Fiscal Responsibility Act of 2023 by a vote of 314-117 on Wednesday evening. The bill is now headed to the Senate and is expected to be approved before the June 5th default deadline.
Note
a BREAK ABOVE 141;341 WILL PUT usdjpy to 151 areaNote
Yen should appreciate when money returns to JapanIf the BoJ adjusts its Yield Curve Control (YCC) range at its June policy meeting as we expect, the USD/JPY could drop to around 130 again as the JGB yield rises.
Moreover, as a rule, the unwinding of foreign assets is bullish for the Yen. Net inflows into long-term bonds typically fuel Yen appreciation.
Note
The US dollar has fallen rather hard during the course of the trading week, but found enough support underneath to turn things around. The ¥138 level is an area that a lot of people had been paying attention to as it was the top of the ascending triangle that I have marked on the chart, and of course the “market memory” that comes with the top of the ascending triangle is coming into the picture. If we turn around and break above the top of the candlestick, then it opens up the possibility of a move toward the ¥142 level.If we break above the ¥142 level, then it opens up the possibility of a move to the ¥148 level which is the measured move from the ascending triangle. You can see that we broke out exactly where you would anticipate seeing that based upon standard technical analysis, so I do think this is a market that you are a buyer of dips on given enough time, and will have to look at it through that prism. I have no interest in shorting this market, and I do believe that as soon the market breaks above the top of this candlestick, we will probably continue to see a lot of upward momentum and a move to the upside.
If we were to break down below the ¥138 level, then it could see a fairly steep correction, but right now I don’t see that in the cards, and I believe we probably still have the possibility of a stretch higher. The US dollar continues to benefit from the Federal Reserve being tight while the Bank of Japan continues its yield curve control.
Note
The Fed meets next week and expectations of another rate increase are rising, particularly given the growing hopes the U.S. economy is headed for a 'soft landing' after Congress's approval last week of a debt ceiling deal that averts U.S. default.The Fed enters its traditional blackout period this week, but there is more data to digest, including the ISM services PMI later Monday, which is expected to point to a still solid rate of expansion.
Note
Nasdaq Bitcoin and Co. BullishNote
US100long bullish
5min divergence long
5min. short DXY rips nasdaq bitcoin gold euro and co bullish
Unemployment 261K
Note
DXY Falls after Weekly ClaimsThe dollar index dropped to as low as 103.58 on Thursday after higher-than-anticipated weekly claims reduced expectations of an imminent interest rate hike by the Federal Reserve. Market participants anticipate that the Federal Reserve will temporarily halt its cycle of interest rate increases before resuming them in July, but unexpected rate hikes by the Reserve Bank of Australia and the Bank of Canada have increased the likelihood of a Federal Reserve rate hike already next week. Nevertheless, the Federal Reserve's decision could be influenced by the release of May's consumer inflation data, scheduled for a day before the central bank's meeting, which is projected to indicate a 0.3% increase in prices.
Initial Jobless Claims Jump to 2021-Highs
The number of Americans filing for unemployment benefits jumped to 261K in the week ended June 3rd 2023, the highest figure since October 2021, and above market forecasts of 235K. Figures for the previous week were revised slightly higher to 233K from an initial 232K. It marks a third consecutive week of increases in the number of initial jobless claims, in a sign the labour market strenght may be fading. The 4-week moving average which removes week-to-week volatility was 237.25K, an increase of 7.5K from the previous week. Based on unadjusted data, the largest increases in initial claims were in Ohio (6.345K), California (5.173K), and Minnesota (2.746K), while the largest decreases were in Connecticut (-2.35K) and NY (-1.243K). Meanwhile, continuing claims fell to 1757K from 1794K, below forecasts of 1800K.
Note
US Wholesale Inventories Fall for 2nd MonthWholesale inventories in the US decreased 0.1% month-over-month in April 2023, less than earlier estimates of a 0.2% fall and following a downwardly revised 0.2% drop in March. Inventories fell for nondurables (-1.2% vs -0.5% in March), mostly drugs (-0.8%), apparel (-2.3%), and farm products (-7.1%). On the other hand stocks for durable goods rose 0.6% (vs a flat reading in March). Compared to a year earlier, wholesale inventories jumped 6.3%.
Note
ADA, MATIC, SOL face the music as Robinhood delists tokensHours after Robinhood delisted ADA, MATIC, and SOL, the price action of the tokens was not what participants would have hoped for.
Ethereum continues to dominate the crypto sector, with increased TVL and notable growth on DEXs. NFT sector however, does not witness the same level of progress.
Should Shiba Inu traders be worried as Shibarium launch date remains uncertain
Solana prices dive 42% within a week, will there be a quick recovery
Solana nears an important resistance
Bitcoin’s Implied Volatility declined rapidly indicating the anticipation of low fluctuations of price from the options market.
Note
Asian Stock Market: Bulls and bears jostle at monthly top ahead of central bank decisionsAsia-Pacific shares grind near one-month highs amid cautious mood.
Softer Japan inflation, hopes of no PBOC rate hike underpin mildly positive risk appetite.
Holidays in Australia, light calendar elsewhere join pre-Fed anxiety to limit market moves.
Gold price is looking to extend Friday’s pullback from five-day highs of $1,973 on Monday. Despite the retreat, Gold price maintains its last week’s range, as investors turn cautious ahead of a big week, with eyes on the United States (US) Consumer Price Index (CPI) and US Federal Reserve policy announcements
USD/JPY strengthens beyond mid-139.00s on modest USD uptick, lacks bullish conviction
USD/CHF Price Analysis: Bounces off 200-SMA but recovery remains elusive below 0.9100
GBPUSD SHORT on hawkish FED
SHORT
DAX40 Will Rise much more Higher
LONG
Note
US Fed, BOJ, ECB Are Set to Announce Policies This WeekNote
US Stocks Rise Ahead Inflation, Fed The Dow Jones rose 20 points on Monday, the S&P 500 was up 0.3% and the Nasdaq 0.4% as investors are hopeful that inflationary pressures would show further signs of easing, supporting the case for a pause in the Fed’s interest rate hikes this week. The US inflation rate is forecasted to fall 4.1% in May, the lowest since March 2021, from 4.9% in April while the core gauge may decelerate to 5.2% from 5.5%. Most market participants expect the US central bank to leave interest rates unchanged at the current levels but there is a 30% chance of a rate hike depending on the CPI reading and after surprise moves in Australia and Canada last week. Among single stocks, Nasdaq tumbled 10% after the exchange operator said it agreed to acquire Adenza. Oracle was up nearly 4% ahead of earnings results after the market close
Crude Short oil make another bearish attempt
SHORT
BITCOIN WILL RISE HIGHER
LONG
Bank of Japan's Dovish Line Pushes Yen Down
LONG
GOLD STRONG BUY , short term correction coming soon
LONG
USD/CAD continues to move higher amid a broad sell-off in commod
LONG
USDCHF BEARISH Meets monthly Low and Support
SHORT
US100 Long U.S. Debt Deal Optimism Boosts Sentiment
LONG
Note
CURRENCYCOM:US100 longnasdaq100 us100 we go to 15200 where the profit taking and reveras begins US100 Long Rises Higher to 15200zone,the possible correction
Note
US Dollar Index: DXY fades recovery below 104.00 on downbeat Fed bets, US inflation eyedUS Dollar Index struggles to extend the previous day’s corrective bounce off three-week low, snaps two-day winning streak.
Markets remain nearly sure of witnessing no rate hike from Fed in June but concerns about July stay dicey.
Bond market moves, challenges to sentiment prod DXY bears ahead of the key US CPI.
Core CPI will be closely observed as high inflation can allow FOMC to remain hawkish despite no rate hike decision.
US Dollar Index (DXY) remains pressured around 103.60 as it fades the previous two-day winning streak on Tuesday as the key US inflation data looms. That said, the greenback’s gauge versus the six major currencies rose in the last two consecutive days amid the market’s positioning for the Federal Reserve’s (Fed) pause to the rate hike trajectory. However, the recently mixed concerns about the US central bank’s future moves join the challenges to the sentiment to prod the DXY buyers ahead of an important data point for the markets.
It’s worth noting that a study from the San Francisco Fed about the correlation between wage growth and inflation could be cited as the reason for the US central bank to remain less hawkish, which in turn weighs on the DXY, apart from the pre-data anxiety. The survey concluded that wage growth has a very small impact on inflation, which in turn raises doubts about the central bankers’ emphasis on wage cost numbers as a source of information to gauge inflation pressure.
Talking about the latest challenges to sentiment, a trade dispute is developing after the US expands its ban on imports from Xinjiang. China vows to protect China firms against any US sanctions, per Reuters. Recently, Bloomberg released prepared remarks of US Treasury Secretary Janet Yellen’s scheduled Testimony in front of the House Financial Services Committee as she said that the International Monetary Fund (IMF) and the World Bank (WB) serve as important counterweights to nontransparent, unsustainable lending from others, like China.
Additionally, the increase in the bets favoring the Federal Reserve’s (Fed) 0.25% rate hike in July also prod optimism and put a floor under the US Dollar Index. It should be noted that the CME’s FedWatch Tool suggests nearly limited scope for the US central bank to act on Wednesday’s Federal Open Market Committee (FOMC).
Looking ahead, the US Consumer Price Index (CPI) figures for May will be in the spotlight as the Fed decision looms on Wednesday. That said, the market forecasts of witnessing no change in the Core CPI MoM figure of 0.4% gain major attention as softer figures could push back the July rate hike concerns and may not allow the Fed to sound hawkish, which in turn can drown the US Dollar.
Note
US Dollar Index: DXY licks US inflation-inflicted wounds at three-week low above 103.00 on Fed dayUS Dollar Index grinds near the lowest levels in three weeks after snapping two-day winning streak.
US inflation data bolsters market’s bets on Fed’s status quo and weigh on the DXY despite upbeat yields.
Cautious mood ahead of the FOMC announcements put a floor under the US Dollar price.
Expectations of witnessing a hawkish halt from US central bank highlight qualitative updates from the Fed.
US Dollar Index (DXY) steadies above 103.00, after bouncing off a three-week low, as markets brace for the Federal Reserve (Fed) announcements on Wednesday. The greenback’s gauge versus six major currencies slumped the most in a week, to the lowest levels since May 22, after the US inflation data fuelled speculations of the US central bank’s halt to the rate hike trajectory present in the last 10 monetary policy meetings.
As per the latest US inflation data for May, the headline Consumer Price Index (CPI) drops more-than-expected and prior releases to 0.1% MoM and 4.0% YoY. However, the Core CPI, known as the CPI ex Food & Energy, matches 0.4% monthly and 5.3% yearly forecasts. It’s worth noting that the US headline CPI dropped to the lowest since March 2021 and hence justifies the market’s expectations of the US Federal Reserve (Fed) hawkish halt, which in turn should have weighed on the US Dollar.
Following the data, the CME’s FedWatch Tool suggests more than a 90% chance of the US Federal Reserve’s (Fed) no rate hike during today’s monetary policy meeting, versus around 75% chance before that.
It’s worth noting, however, that the ex-Fed Officials have been pushing for a hawkish halt to the rate hikes and prods the DXY bears. On Tuesday, Former Dallas Federal Reserve Bank (Fed) President Robert Kaplan said that he would support a "hawkish pause" at this week's meeting while also adding that he would “leave the question of a July hike open.” Previously, Ex-Boston Fed President Eric Rosengren tweeted, “Expect a hawkish skip this week.”
As a result, Wall Street benchmarks rose for the second consecutive day but the US Treasury bond yields remain firmer. That said, the US 10-year Treasury bond yields rose to a 13-day high of 3.83% whereas the two-year counterpart poked the highest levels in three months with 4.70% mark before easing to 4.67% in the last hours.
Looking ahead, the pre-Fed sentiment may prod the DXY, as well as allow the greenback’s gauge to pare recent losses. However, the traders will pay attention to the US central bank’s economic forecasts, dot-plot and Chairman Jerome Powell’s press conference for clear directions afterward, as the rate hike pause is almost given.
Note
European equity markets were set for a positive open on Friday, tracking global peers higher amid bets that US interest rates could be nearing their peak as the American economy loses momentum and after the Federal Reserve paused its tightening campaign in June. Meanwhile, the European Central Bank opted to raise interest rates by another 25 basis points, with ECB President Christine Lagarde saying ‘we are not thinking about pausing.” Investors now look ahead to final euro zone inflation figures and wage growth data for further clues on the economy and future monetary policy. DAX futures jumped 0.9%, Stoxx 600 futures gained 0.5% and FTSE 100 futures edged up 0.2% in premarket trade.Note
The Dow finished more than 100 points below the flatline on Friday, the S&P 500 and the Nasdaq lost nearly 0.4% and 0.7%, respectively, as investors continued to assess the outlook of monetary policy for the Fed amid a massive options expiration at the second 2023’s quadruple witching date. Among stocks, Microsoft fell 1.7% and Micron Technology dropped 1.7%. Conversely, Virgin Galactic surged 16.3% on plans for commercial space tourism. Tesla added 1.8% after hitting a 37-week high during the session and Adobe gained 0.8% with positive earnings and guidance. On the week, the Dow Jones added 0.9%, marking a three-week winning streak despite the Fed's warning of future rate hikes. The S&P 500 gained 2.2%, its fifth consecutive weekly gain, the longest since November 2021, rising 2.2%. The Nasdaq was up 2.7% for an eighth straight positive week. Markets will be closed on Monday for the Juneteenth holiday.Note
BTC Bears Target Sub-$26,000 on SEC v Binance and Ripple BattlesBTC was flat this morning, with regulatory uncertainty stemming from the SEC lawsuits against Ripple, Binance, and Coinbase testing buyer appetite.
The market structure and momentum of Bitcoin was bearish, but its bounce back above 26k gave bears some food for thought.
Bitcoin’s correlation with the S&P 500 turned negative over May. This meant that the index has an overall bullish outlook, but Bitcoin has trended in the opposite direction in recent weeks. The increasing hostility from regulatory bodies in the United States has played a part in BTC’s misfortunes on the price chart.
There was an argument to be made that Bitcoin showed some signs of recovery. Yet, an analysis of the price action showed that the bias remained in favor of the sellers. On the other hand, if Bitcoin climbs to 28k, it could signal an uptrend.
Can the bulls drive Bitcoin past 27.4k next?
The market structure of Bitcoin on the daily timeframe was bearish. The structure shifted on 21 April when BTC dipped below a recent higher low. Since then, the price has trended lower on the chart.
Moreover, the trading volume has been extremely low from April onward, compared to the volume seen in February and March. This was reflected on the OBV as well, which only went slightly lower in May in contrast to the rapid gains it posted in mid-March.
The Fibonacci levels based on the recent leg down show that Bitcoin was likely headed toward 24.8k. The 61.8% extension level at 23.3k was also a target it presented. The price action showed that the 24.2k-24.4k region could serve as strong support. Beneath that, the 22.4k and 21.5k levels were important.
To signal a bullish shift in the structure, Bitcoin prices must rise back above the recent lower high at 27.4k. Yet, an uptrend would not be established there, as BTC would need to form a higher low and continue higher. Cautious investors can wait for this turn of events before looking to buy.
On Saturday, BTC extended the winning streak to three sessions, gaining 0.67% to end the day at $26,535.
SEC v Binance news delivered a breakout morning session before profit-taking left BTC with modest gains.
The technical indicators turned bullish, signaling a return to $27,000.
On Saturday, bitcoin (BTC) gained 0.67%. Following a 2.92% rally on Friday, BTC ended the day at $26,535. Significantly, BTC enjoyed its first three-day winning streak since May.
A mixed start to the day saw BTC fall to an early afternoon low of $26,202. Steering clear of the First Major Support Level (S1) at $25,523, BTC rose to a late morning high of $26,857. However, falling short of the First Major Resistance Level (R1) at $26,882, BTC eased back to sub-$26,500 and a range-bound afternoon session.
SEC v Binance News Delivered Brief Relief
On Saturday, news of Binance striking a deal to address the SEC’s motion to freeze Binance US assets supported a breakout morning.
Binance, Binance US, and the SEC agreed on a deal restricting access to customer funds to Binance US employees. The agreement prevents Binance Holdings staff from having access to private keys for US wallets.
The SEC filed a motion to freeze the assets of Binance US shortly after filing charges against Binance, Binance US, and Binance CEO CZ.
On Saturday, the US Court signed off on the deal, which allows Binance to repatriate all US customer funds and private keys onshore to nullify the motion to freeze.
While the news was positive, Binance US and Binance face charges that could drag on and further impact the US digital asset space.
Uncertainty toward the SEC v Ripple case remains another headwind, with optimism of a Ripple win fading after the release of the Hinman speech-related docs.
The Day Ahead
It is a quiet Sunday session, with no US economic indicators to provide direction. The lack of external market forces will leave BTC in the hands of the crypto market news wires.
SEC activity remains the focal point, with SEC v Ripple, Binance, and Coinbase (COIN)-related news likely to move the dial.
We also expect market sensitivity to lawmaker chatter. US lawmakers have remained silent on the William Hinman speech-related documents and the SEC charges against Binance and Coinbase.
Bitcoin (BTC) Price Action
This morning, BTC was down 0.05% to $26,523. A mixed start to the day saw BTC rise to an early high of $26,551 before falling to a low of $26,410.
BTC Technical Indicators
Looking at the EMAs and the 4-hourly candlestick chart (below), the EMAs sent bullish signals. BTC sat above the 100-day EMA ($26,269). The 50-day EMA closed in on the 100-day EMA, with the 100-day EMA narrowing to the 200-day EMA, sending bullish signals.
A move through the 200-day EMA ($26,654) would support a breakout from R1 ($26,861) to target R2 ($27,186). However, a fall through the 100-day EMA ($26,269) and S1 ($26,206) would bring the 50-day EMA ($26,059) into view. A fall through the 50-day EMA would send a bearish signal.
Resistance & Support Levels
R1 – $ 26,861 S1 – $ 26,206
R2 – $ 27,186 S2 – $ 25,876
R3 – $ 27,841 S3 – $ 25,221
BTC needs to move through the $26,531 pivot to target the First Major Resistance Level (R1) at $26,861 and $27,500. A move through the Saturday high of $26,857 would signal an extended bullish session. The crypto news wires should be crypto-friendly to support an extended rally.
In the event of an extended rally, BTC would likely test the Second Major Resistance Level (R2) at $27,186 and resistance at $27,500. The Third Major Resistance Level (R3) sits at $27,841.
Failure to move through the pivot would leave the First Major Support Level (S1) at $26,206 in play. However, barring a risk-off-fueled sell-off, BTC should avoid sub-$26,000 and the Second Major Support Level (S2) at $25,876. The Third Major Support Level (S3) sits at $25,221.
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Gold long going to above 2050LONG
Gold Price Analysis: Testing Support Levels Amidst Consolidation and Breakout Attempts
Technical analysis reveals a retracement in gold, testing key support zones and indicating a healthy consolidation phase before an expected continuation of the uptrend.
Gold, FX Empire
Gold Forecast Video for 19.06.23 by Bruce Powers
Gold rises to a three-day high of 1,986 on Friday before pulling back. It attempted to breakout above the top boundary trendline of a small symmetrical triangle consolidation pattern but is now on track to close below it and within the consolidation range.
Attempting to Break Up yet Remains in Consolidation Range
So far, Thursday’s test of the 100-Day EMA with a day’s low of 1,925 has held up but further signs of strength are needed. Gold briefly dropped below the 100-Day line earlier in the session on Thursday but managed to close strong, back above it and near the high of the day. The 100-Day EMA is now at 1,940.
Further Signs of Strength are Needed
Further signs of strength are needed to indicate whether yesterday’s low completes the retracement or further tests will occur. This week’s candlestick pattern is set to close as a bullish doji hammer. Next week an upside breakout signal will occur on a move above the high at 1,971, and the breakout is confirmed on a daily close above that high. Following a move above that high the next weekly resistance levels are 1,973, 1,983, and 1,985. A subsequent daily close above each price level will confirm strength, otherwise some resistance might be seen again around those levels.
If Lows Tested Again
If lower prices occur before a continuation higher the two potential support zones are around the 61.8% Fibonacci retracement at 1,912, followed by the 200-Day EMA at 1,894. The 200-Day EMA was tested as support with a double bottom in the first quarter of this year price reversed higher from there.
Uptrend Intact
The current retracement in gold is a test of support around previous high swing high of 1,960 from early-February. So far, the retracement is normal and healthy for the uptrend. Consolidation has been occurring at the 50% retracement area as well as the 100-Day EMA. Notice that there is a greater distance between the 100-Day EMA and 200-Day than what was seen in February. It reflects an improving trend. Once this retracement is complete, all signs are that gold should continue higher.
Gold held above $1,950 an ounce on Friday after gaining 0.7% in the previous session, benefiting mainly from the dollar’s weakness as the Federal Reserve paused its tightening campaign at a time other major central banks are still raising interest rates. Still, the metal remains close to three-month lows as the Fed hinted at two more quarter-point rate increases this year, while the European Central Bank delivered another 25 basis point rate hike on Thursday and signaled further tightening. The Bank of England is also set to raise rates again at its June policy meeting, a month marked by surprise rate increases from the Reserve Bank of Australia and the Bank of Canada. Meanwhile, the People’s Bank of China lowered key short-term interest rates this week for the first time in ten months, while the Bank of Japan maintained its ultra-easy monetary policy on Friday.
Daily bullish
4H Bullish
34min Bullish
Gold is mostly traded on the OTC London market, the US futures market (COMEX) and the Shanghai Gold Exchange (SGE). The standard future contract is 100 troy ounces. Gold is an attractive investment during periods of political and economic uncertainty. Half of the gold consumption in the world is in jewelry, 40% in investments, and 10% in industry. The biggest producers of gold are China, Australia, United States, South Africa, Russia, Peru and Indonesia. The biggest consumers of gold jewelry are India, China, United States, Turkey, Saudi Arabia, Russia and UAE. The gold prices displayed in Trading Economics are based on over-the-counter (OTC) and contract for difference (CFD) financial instruments. Our gold prices are intended to provide you with a reference only, rather than as a basis for making trading decisions. Trading Economics does not verify any data and disclaims any obligation to do so.
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Gold is Being Pulled Between a Hawkish Fed and New Geopolitical ConcernsUS Housing Surprises, Fed Pauses but Remains Hawkish
Last week, US economic data revealed a much stronger than expected housing market, with the NAHB Housing Market Index surpassing expectations to hit its highest level since July of last year. New building permits also beat market expectations, and new housing starts surged to their highest level since May 2022.
Last month, we reviewed the three possibilities of a Federal Reserve pivoting to rate cuts, continuing to hike, or pausing. The June FOMC meeting delivered our most likely scenario of a pause, which we presented as one of the better cases for gold, at least in the short term.
However, what markets received from the June FOMC meeting was a hawkish pause, in which no action was taken, while Chair Powell renewed his hawkish rhetoric, underlining his commitment to the task of bringing down inflation.
In a busy week for FOMC speakers, markets had the opportunity to digest comments from a total of six FOMC members. Jerome Powell also made his semi-annual trip to Capitol Hill, testifying before the House Financial Services Committee, and Senate Banking Committee, where he all-but confirmed that more rate hikes are in store and stated that “we don’t see rate cuts any time soon.”
Gold’s Reaction
The result of this pull between the resilience of the US economy plus a hawkish Fed on the one hand, and growing geopolitical uncertainty on the other, has resulted in muted price action despite the overall bearish trend.
We’re seeing this among investors at HYCM as well, for whom gold is one of the most popular assets this year. Positioning suggests current price action could be a period of short-term profit-taking within a longer-term bullish view.
We can see this reflected in gold’s chart. Between June 20 and 22, which saw the release of US housing data and FOMC speeches, gold prices declined by almost 2.4%.
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Fed Chair. Powell reiterated at the ECB Forum on Central Banking that interest rates will rise further and that he wouldn’t take moving in consecutive meetings off the table at all, but noted that a recession in the US is not the most likely case. Nvidia was down by over 2% and Advanced Micro Devices by 1% after the Wall Street Journal reported that the US government is considering new restrictions on exports of artificial intelligence chips to China. The Fed is also due to release the results of its annual stress tests to banks, and more details on Basel III Endgame and changes to bank supervision will be in the spotlight.The Dow Jones was down over 100 points and the S&P 500 dipped by 0.1% on Wednesday afternoon, on the prospect of further interest rate hikes following the Federal Reserve's chair Powell Speech at the ECB Forum. He said he does not see inflation reaching the Fed's 2% target any time soon. He reiterated that interest rates will rise further and did not rule out a boost in the cost of borrowing at the next policy meeting scheduled for the end of July. Meantime, the Nasdaq was up 0.2% powered by megacap momentum stocks. Among stocks, shares of Nvidia and Advanced Micro Devices were down by 2% and 1%, respectively, after the US government is considering new restrictions on exports of AI chips to China. Intel, Applied Materials and Qualcomm fell more than 2% each. On the other hand, Apple hit an all-time high of $189.8 during the session, while shares of Tesla and Alphabet advanced 1.4% and 2.5%. The Fed is due to release the results of its annual stress tests to banks.
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The US economy grew by an annualized 2% on quarter in Q1 2023, well above 1.3% in the second estimate, and forecasts of 1.4%. The updated estimates primarily reflected upward revisions to exports and consumer spending that were partly offset by downward revisions to nonresidential fixed investment and federal government spending. Imports were revised down.Note
Wall Street Edges Higher on Shortened Monday SessionUS stocks closed with marginal gains on a shortened Monday session, setting the stage for caution in the second half of the year as markets continued to assess the economy’s resilience to further monetary tightening from the Federal Reserve. The Dow added 10 points, while the S&P 500 and the Nasdaq edged 0.1% and 0.2% higher, respectively. Shares from rate-sensitive sectors edged lower after ISM PMI data showed that US manufacturing contracted more than expected for an eighth consecutive month in June, reigniting concerns that restrictive borrowing costs will hamper economic activity to a large extent. Apple closed 1% down to set the pace for tech giants, pressured by news that the company cut production forecasts for the mixed-reality Vision Pro headset. On the other hand, Tesla rallied 6% as the company beat deliveries and production estimates for Q2. Stock exchanges in the US will be closed on Tuesday for the Independence Day holiday.
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Strong US economic data: Positive data releases, such as higher GDP growth, increased job creation, or rising inflation, could strengthen the US dollar against the Japanese yen and push USD/JPY higher.US interest rates: If the Federal Reserve adopts a more hawkish stance and signals a potential increase in interest rates, it could attract investors seeking higher yields, leading to an appreciation of the US dollar and a higher USD/JPY exchange rate.
Market sentiment and risk appetite: When market sentiment is positive and risk appetite is high, investors tend to move away from safe-haven currencies like the Japanese yen and invest in higher-yielding assets. This shift in sentiment can contribute to a higher USD/JPY exchange rate.
Monetary policy divergence: If the Bank of Japan maintains an accommodative monetary policy while the Federal Reserve tightens its policy, it can create a divergence in interest rate expectations between the two countries. This divergence may lead to a stronger US dollar and a higher USD/JPY exchange rate.
Geopolitical events and economic indicators: Developments in geopolitical events, such as trade disputes or political tensions, can impact USD/JPY. Additionally, economic indicators like GDP growth, inflation, and employment data from both the US and Japan can influence the currency pair.
Based on the provided news, the following factors are influencing the USD/JPY exchange rate:
Close contact with US Treasury Secretary: The fact that Japanese officials are in regular contact with US Treasury Secretary Janet Yellen and other overseas counterparts suggests that there is ongoing communication regarding currencies and broader financial markets. Such communication can impact market sentiment and potentially influence the USD/JPY exchange rate.
Warning against excessive yen selling: Finance Minister Shunichi Suzuki's warning against excessive yen selling indicates a desire to prevent the yen from depreciating too rapidly. This caution may influence market participants' behavior and potentially limit downward pressure on the yen.
Yen near eight-month lows: The Japanese yen is currently trading close to its eight-month lows. When a currency is trading at lower levels, it implies relative weakness compared to other currencies. In this case, the yen's proximity to its recent lows suggests a weaker yen against the US dollar.
Bank of Japan's stance on inflation and wage growth: Bank of Japan Governor Kazuo Ueda's statement that there is still a distance to go in achieving sustainable 2% inflation and wage growth indicates a more accommodative stance compared to other major central banks. This divergence in monetary policy outlooks can contribute to a weaker yen and potentially support a higher USD/JPY exchange rate.
Monetary policy divergence: The news mentions that the Federal Reserve, European Central Bank, and Bank of England have signaled further rate increases this year, while the Bank of Japan has not. This divergence in monetary policy expectations can influence the relative strength of currencies and contribute to a higher USD/JPY exchange rate.
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Bonds can have an impact on the USD/JPY exchange rate due to several reasons:Interest Rate Differentials: Bonds are closely related to interest rates. When there is a difference in interest rates between two countries, it can affect the attractiveness of their respective currencies. Higher interest rates in one country tend to attract foreign investors seeking better returns on their investments. As a result, demand for that country's currency may increase, leading to an appreciation in its value. In the context of USD/JPY, if U.S. bond yields rise relative to Japanese bond yields, it can attract investors to invest in U.S. bonds, potentially increasing the demand for U.S. dollars and causing the USD/JPY exchange rate to rise.
Safe-Haven Status: Both the U.S. dollar and Japanese yen are considered safe-haven currencies. During times of economic uncertainty or market volatility, investors often seek refuge in safe-haven assets, including government bonds. If there is a flight to safety, demand for both U.S. and Japanese bonds may increase. This increased demand can lead to a strengthening of both currencies, potentially resulting in a more stable or less volatile USD/JPY exchange rate.
Bond Purchases by Central Banks: Central banks, such as the Bank of Japan and the Federal Reserve, engage in bond-buying programs as part of their monetary policy measures. When a central bank purchases government bonds, it injects liquidity into the financial system, which can potentially weaken the domestic currency. In the case of the Bank of Japan, if it increases its bond purchases, it can lead to a higher supply of yen in the market, potentially depreciating the currency against the U.S. dollar.
Market Sentiment: Bond market movements can influence overall market sentiment, which in turn can impact currency exchange rates. For example, if there is a significant sell-off in the bond market, indicating concerns about rising inflation or economic instability, it can lead to risk aversion among investors. As a result, they may sell riskier assets and currencies, such as the yen, and seek refuge in safer assets like the U.S. dollar. This increased demand for the dollar can cause the USD/JPY exchange rate to rise.
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Here is an analysis of the positive and negative impacts of a weak and strong Japanese yen on various countries and regions:Positive Impacts of Weak Japanese Yen:
Japanese Exports: A weak yen can boost Japanese exports by making them more price competitive in international markets. It makes Japanese goods relatively cheaper for foreign buyers, potentially increasing demand and stimulating export-oriented industries.
Tourism: A weak yen can attract more international tourists to Japan, as their foreign currencies can have greater purchasing power in the country. This can benefit the tourism industry and generate foreign exchange earnings.
Overseas Investments: A weak yen can encourage Japanese businesses and investors to seek opportunities abroad. It makes overseas investments relatively cheaper in terms of yen, potentially promoting outward foreign direct investment (FDI) and diversifying business activities.
Negative Impacts of Weak Japanese Yen:
Imported Inflation: A weak yen increases the cost of importing goods and raw materials, potentially leading to higher inflation. This can impact the purchasing power of Japanese consumers and erode their standard of living.
Energy Imports: Japan is heavily reliant on energy imports, particularly oil and natural gas. A weak yen increases the cost of energy imports, which can have adverse effects on energy-intensive industries and contribute to higher production costs.
Consumer Electronics: Japan is known for its consumer electronics industry. A weak yen can increase the cost of importing electronic components and materials, potentially affecting the competitiveness and profitability of Japanese electronic manufacturers.
Positive Impacts of Strong Japanese Yen:
Imported Goods: A strong yen makes imported goods relatively cheaper, benefiting Japanese consumers and potentially increasing their purchasing power.
Energy Costs: A strong yen reduces the cost of energy imports, which can benefit energy-intensive industries and help control production costs.
Travel and Education Abroad: A strong yen can make international travel and education abroad more affordable for Japanese citizens, potentially boosting outbound tourism and educational opportunities.
Negative Impacts of Strong Japanese Yen:
Japanese Exports: A strong yen can make Japanese exports relatively more expensive in international markets, potentially reducing their competitiveness and impacting export-oriented industries.
Tourism: A strong yen can make Japan relatively more expensive for international tourists, potentially affecting the tourism industry and reducing foreign exchange earnings.
Inflation and Deflation Concerns: A strong yen can exacerbate deflationary pressures in the Japanese economy, as it makes imported goods cheaper and can lead to lower domestic prices. This can hinder economic growth and pose challenges for policymakers.
It's important to note that the impact of currency strength or weakness on a country's economy can vary depending on various factors, including the country's economic structure, trade dynamics, fiscal policies, and global market conditions. The effects on specific countries or regions can also depend on their trade relationships, exchange rate policies, and economic interdependencies with Japan.
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bullishNote
TREND STRONG BULLISH US Mortgage Rates Rise to 8-Month High
The average rate on a 30-year fixed mortgage increased by 10 basis points from the previous week to 6.81% in the week ending July 6th, the highest November 2022 as higher interest from the Federal Reserve underpinned expensive mortgage rates for American consumers. A year ago, the 30-year fixed mortgage rate was at 5.3%. “Mortgage rates continued their upward trajectory again this week, rising to the highest rate this year so far,” said Sam Khater, Freddie Mac’s Chief Economist. “This upward trend is being driven by a resilient economy, persistent inflation and a more hawkish tone from the Federal Reserve. These high rates combined with low i
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The Dow Jones closed more than 209 points higher on Monday, while the S&P 500 and the Nasdaq added 0.2% each, as investors awaited the US consumer and producer inflation reports later this week and braced for the start of the second quarter earnings season. The upcoming inflation report is expected to offer additional evidence regarding inflationary pressures and provide insights into the Federal Reserve's future actions. Traders are currently pricing in a nearly 92% chance for a 25bps increase in the fed funds rate this month, but the odds for another quarter point hike later in the year have been swinging, currently standing at 22% for September and 33% for November. Healthcare shares were among top performers of the session including Amgen (+2.5%). Also, Inter (+2.8%), Honeywell (+2.2%) and Home Depot (2.5%) outperformed while mega cap shares dragged as Apple (-1.1%), Tesla (-1.7%), Microsoft (-1.6%), Alphabet (-2.5%) and Amazon (-2%) ended in the red.Note
Fed is close to end of rate hiking cycle, central bank officials sayJuly 10 (Reuters) – The Federal Reserve will likely need to raise interest rates further to bring down inflation that is still too high, but the end to its current monetary policy tightening cycle is getting close, several U.S. central bank officials said on Monday.
The Fed has raised interest rates by 5 percentage points since March 2022 to bring down the highest U.S. inflation in four decades. Fed policymakers opted last month to forego a rate increase to give themselves time to assess the still-developing effects of the previous hikes in borrowing costs, even as most also penciled in at least two more increases by the end of 2023.
"We're likely to need a couple more rate hikes over the course of this year to really bring inflation" sustainably back to the U.S. central bank's 2% goal, San Francisco Fed President Mary Daly said during an event at the Brookings Institution, giving voice to the most common view among her rate-setting peers at the Fed.
But, Daly added, while the risks of doing too little are still greater than those of overdoing it on rate hikes, the two sides are getting into better balance as the Fed nears "the last part" of its hiking cycle.
Daly said she fully supported June's policy decision, along with a go-slower approach that allows for more "extreme" data-dependence. "We may end up doing less because we need to do less; we may end up doing just that; we could end up doing more. The data will tell us." Fed policymakers are widely expected to deliver a rate hike at their meeting later this month, a move that would bring the policy rate to the 5.25%-5.50% range.
What's less clear is whether they will raise rates again at the September meeting, wait until November, or just stay on hold and let inflation ease over time.
Fed Chair Jerome Powell has said he cannot rule out consecutive rate hikes to deal with stubbornly high inflation, which by the central bank's preferred gauge, the personal consumption expenditures index, has fallen from a peak of 7% last year to 3.8% in May, still nearly twice the Fed's target.
"We still have a bit of work to do," Fed Vice Chair for Supervision Michael Barr said on Monday at a separate event. "I'll just say for myself, I think we're close." Atlanta Fed President Raphael Bostic, speaking at yet another event on Monday, repeated his view that the Fed can be "patient" on rates and allow restrictive policy to bring down inflation without further action by the central bank.
But within the Fed there remains a camp that feels just the opposite.
"In June, I was in the camp that we move up a little bit more and, in assessing where things are today, I'm still in that camp," Cleveland Fed President Loretta Mester said at an event held by the University of California, San Diego.
Still, she said, "we are closer to the end of our tightening phase than the beginning."
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US 10-Year Treasury Yield Down for 2nd SessionThe yield on the US 10-year Treasury note fell below 4%, retreating for the second consecutive session after hitting its highest since November 2022 at almost 4.1% as investors turned cautious ahead of key economic data that could influence the Federal Reserve’s next interest rate policy moves. The CPI report on Wednesday is expected to show headline annual inflation fell to 3.1% in June from 4% in the previous month, while the core index probably decreased to 5% from 5.3%. Markets are now pricing in a 94.9% chance of rates being hiked again during the central bank’s upcoming meeting on July 25-26 but uncertainty remains for the other three Fed meetings scheduled for later in the year. In the latest Fed commentary, Fed President Mary Daly said that she expects two further rate hikes to be announced this year to lower inflation, in line with early comments from Fed Chairman Jerome Powell.
Americans Become More Pessimistic in July
The IBD/TIPP Economic Optimism Index in the US unexpectedly fell to 41.3 in July 2023, the lowest since November last year, compared to 41.7 in June and market forecasts of 45.3. It also marks a 23rd month the reading stands below 50, indicating Americans remain pessimistic. “The economy continues to be the number one issue for Americans as we prepare for earnings season and new inflation data. The Six-Month Economic Outlook was the lone bright spot for July, as optimism slightly increased for the long-term, but it’s still a long way from positive. Expect some more twists and turns before consumers trust that the economy has stabilized”, said Ed Carson, IBD's news editor. The Personal Financial Outlook, a measure of how Americans feel about their own finances in the next six months, fell to 50 from 51.9 and the gauge for Confidence in Federal Economic Policies edged lower to 38.5 from 38.6. On the other hand, the Six-Month Economic Outlook rose to 35.5 from 34.5.
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Wall Street Extends Gain Ahead of CPI DataUS stocks closed higher on Tuesday, extending gains for the second session, as investors looked forward to the key inflation report due tomorrow. The Dow Jones finished over 316 points higher, as Salesforce rose 3.9% after the company announced it will be increasing list prices an average of 9% in August. 3M and Boeing were also among the top performers and advanced by 4.8% and 2.6%, respectively. The S&P 500 gained nearly 0.7%, led by the energy sector as APA (+6.3%), Halliburton (+4.2%) and Schlumberger (+4.5%) outperformed. Meanwhile, the Nasdaq added 0.5%. Traders were also digesting comments from several Fed officials which continued to point to the need of further tightening this year. The odds for a 25bps increase in the fed funds rate this year currently stand at 95%, but investors remain divided about another rate hike. The economic calendar is soft today and the earnings season kicks off later in the week.
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Dollar Index Hits 14-month LowDXY decreased to a 14-month low of 100.61
Wall Street Rallies after Softer Inflation
US stocks surged on Wednesday after both headline and core inflation fell more than expected in June, reinforcing the view the Federal Reserve may stop the tightening campaign sooner than expected. The Dow Jones gained around 250 points to 34548, the highest level since November last year, with 3M and Goldman Sachs up nearly 2% and among the top performers. The S&P 500 added 0.9% 4477, a level not seen since April of 2022, led by shares in the consumer discretionary, tech and real estate sectors. The Nasdaq was up about 1.2% to 13906, also the highest since April last year. Traders are currently pricing in a 92% chance for a 25bps increase in the fed funds rate this month, while the odds for another quarter-point hike in September fell to 13% from 20% before the CPI release and in November eased to 26% from 34%.
Brazil Business Morale Rises to 8-Month High
The Industrial Entrepreneur Confidence Index (ICEI) in Brazil rose by 0.7 points from the previous month to an eight-month high of 51.1 in July of 2023. This marks the second consecutive month in which the industry has shown confidence, attributed primarily to a more positive evaluation of the current economic conditions (+1.3 points to 45.5). Also, the indicator of future expectations increased (+0.4 points to 53.9), indicating optimism for the next six months.
FTSE MIB Close Rise to 15-Year High
The FTSE MIB index closed 1.8% higher at 28,573 on Wednesday, outperforming other benchmark European indices amid sharp gains for its heavyweight financial sector as markets digested the soft US inflation print. American consumer prices rose by 3% annually in June, below estimates of 3.1%, benefitting from a slowdown in core consumer prices. The development lifted equities amid hopes that the Fed will be able to ease its hawkish pressure. Banks were among the sharpest gainers as BTP yields fell by 15bps, aiding their balance sheet with Banca MPS and Banco BPM both adding more than 2%. In the meantime, STMicroelectronics shares surged 4.8% amid recommendation updates from Jeffries and Citigroup.
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Dollar Index Hits 14-month LowNote
US Stocks Pop on Cooling InflationAll major US stocks indexes were trading in the green on Wednesday afternoon as June CPI data came cooler-than-expected, raising hopes that Fed officials might rethink their stance on more rate hikes. The Dow Jones was up more than 100 points after reaching the highest level since November earlier in the session, as Salesforce, Goldman Sachs and Home Depot outperformed, adding nearly 2% each. The S&P 500 gained 0.8%, a level not seen since April of 2022, led by shares in the consumer discretionary, tech and basic materials sectors. The Nasdaq was up about 1.2%, also the highest since April last year. Bank stocks advanced firmly, with Citigroup and Goldman Sachs adding 2.9% and 2.5%, respectively. Also, regional banks such as Comerica(5.1%) and Zions Bancorporation (4.9%). In the news, Domino's Pizza surged over 11% after revealing its deal with Uber Eats.
All major US stocks indexes were trading in the green on Wednesday afternoon as June CPI data came cooler-than-expected, raising hopes that Fed officials might rethink their stance on more rate hikes. The Dow Jones was up more than 100 points after reaching the highest level since November earlier in the session, as Salesforce, Goldman Sachs and Home Depot outperformed, adding nearly 2% each. The S&P 500 gained 0.8%, a level not seen since April of 2022, led by shares in the consumer discretionary, tech and basic materials sectors. The Nasdaq was up about 1.2%, also the highest since April last year. Bank stocks advanced firmly, with Citigroup and Goldman Sachs adding 2.9% and 2.5%, respectively. Also, regional banks such as Comerica(5.1%) and Zions Bancorporation (4.9%). In the news, Domino's Pizza surged over 11% after revealing its deal with Uber Eats.Japanese Yen attempting fifth consecutive daily advance (first time since December)
USD/JPY plunge now approaching major support confluence- risk for price inflection
Resistance 140.10s, 140.93, 142.10/50 (key)- support 137.36/91, 136.15, 134.04
The Japanese Yen has continued to coil just below uptrend resistance with major event risk on tap into the close of the week. The focus is on a breakout of the monthly opening-range for guidance. These are the updated targets and invalidation levels that matter on the USD/JPY short-term technical charts.
Initial resistance now eyed at the 75% parallel (blue slope currently ~140.10s) backed by the objective May high at 140.93. Ultimately, a breach / close above the weekly open / 61.8% retracement of the 2022 decline at 142.10/50 would be needed to mark resumption of the broader USD/JPY uptrend.
Bottom line: The USD/JPY plunge us approaching the first major technical support hurdle just below the 138-handle. From at trading standpoint, look to reduce portions of short-exposure / lower protective stops on a stretch towards this key support zone – rallies should be limited to the weekly open IF price is heading lower on this stretch. I’ll publish an updated Japanese Yen Weekly Forecast once we get further clarity on the longer-term USD/JPY technical trade levels.
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Wall Street Ends Higher after CPIThe RICS UK Residential Market Survey house price balance, which measures the gap between the percentage of respondents seeing rises and falls in house prices, fell to -46 in June 2023 from -30 in May, posting the weakest reading in four months and coming in below forecasts of -34. This points to a slowdown in the British housing market as higher borrowing costs weighed on demand, with average two-year fixed mortgage rates in the country recently hitting a 15-year high. Expectations that the Bank of England will raise interest rates further this year to bring down inflation also dampened sentiment. Simon Rubinsohn, chief economics at RICS, said: “The latest increase in interest rates and the impact this has already had on mortgage rates is clearly visible in buyer enquiries, sales and prices which have all retreated over the past month.”
The BusinessNZ Performance of Manufacturing Index in New Zealand fell to 47.5 in June 2023 from 48.9 in the previous month. It marked the fourth straight month of contraction in the manufacturing sector and the steepest since last November as activities negatively influenced by declining demand, cost increases and production/staffing issues as the key negative influences on activity for the current month. Production (47.5 vs 45.7 in May) remained subdued and new orders (43.8 vs 50.8) fell back to contraction zone. Meanwhile, employment (47 vs 49.5) contracted further while deliveries (50.5 vs 46) rebounded.
Brazil’s Ibovespa stock index gave up on earlier gains to close 0.1% higher to finish around 117,700 on Wednesday, inline with global positive mood, after the US inflation data came in below expectations in June, even the core measures, suggesting a possible turning point for Federal Reserve policymakers in the coming months. On the domestic data front, services activity in Brazil grew by a more-than-expected 0.9% in May, following a decline of 1.5% in the previous month, placing the sector 11.5% above the pre-pandemic level of February 2020. On the corporate front, shares in the world's largest meatpacker JBS surged 9%, the most in the index, after proposing a dual listing of shares in Sao Paulo and New York in a securities filing today. It was followed by B3 (+2.4%), Gerdau (+2.1%) and PetroRio (+2%).
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US Futures Steady Ahead of Major Bank EarningsUS stock futures held steady on Friday after four-day winning streak on Wall Street as investors look ahead to earnings reports from major banks. Futures contracts tied to the three major indexes were all trading near breakeven. In regular trading on Thursday, the Dow rose 0.14%, the S&P 500 gained 0.85% and the Nasdaq Composite rallied 1.58%, with nine out of the 11 S&P sectors ending higher led to the upside by communication services, technology and consumer discretionary. Those gains came as the latest producer price index report showed inflation rose less than anticipated in June, adding to signs that US inflation is on a downward trend and raising hopes that the current tightening cycle is nearing the end. Investors now await earnings reports from big banks such as JPMorgan, Wells Fargo and Citi on Friday for more clues on the economy. US consumer sentiment data from the University of Michigan is also on deck.
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The greenback is approaching a make-or-break moment — at least as far as a closely watched technical indicator is concerned.The Bloomberg Dollar Index has now surrendered more than 61.8% of its gains since May 2021, bringing it to one of the Fibonacci retracement levels popular among chart watchers. They tend to keep a close eye on these indicators to determine whether or not trends will extend or reverse.
What happens next is therefore crucial.
If the index remains below this point over the coming sessions, it would be a strong signal to traders that the currency’s losses are the beginning of a new longer-term downtrend, and not just an aberration.
The latest bout of weakness comes as the market now sees an end to a tightening spree that Federal Reserve officials begun communicating more than two years ago. The prospect is narrowing interest-rate differentials with other major currencies and weighing on the dollar.
This week, it dropped to the weakest level against euro and pound since early 2022. It’s even falling out of favor against the yen — where rates are still negative — with the cross falling to a two-month low.
The bearish signal seen in the chart of the Bloomberg Dollar Index could be soon validated elsewhere too. The ICE Dollar Index — a popular alternative to the BBDXY — stands just 0.6% higher than the 61.8% Fibonacci retracement of a rally that kicked off in January 2021.
To be sure, options paint a more mixed picture. While long-term bets are supportive of the US currency’s prospects, sentiment over a one-month sentiment has reached its least bullish level since September 2020.
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USDJPY BULLISH WILL Go to 180 YenLONG
the Bank of Japan is unlikely to increase its ultra-loose policy rate until Governor Kuroda's term expires in the first quarter of 2023.
A break below 124is the start of bearish trend.
Technical: BULLISH
STRATEGY
BUY THE CORRECTION
Higher Highs
Higher Lows
Fundamentals:
See my previouse USDJPY trade ideas.All Tades are active, and a lot of fundamental explanations of USDJPY. Read them.Undestand them,then you can mae good trades.
Crude Oil Bearish Iran’s Growing Oil Production Boosting Up
SHORT
34minute Chart found its suppot . The corection was expected, as Japan Industrial Output Falls More than Initially Anticipated
BITCOIN WILL RISE HIGHER
LONG
GOLD STRONG BUY
Nasdaq100 US100 Bullish 21000 on Radar
LONG
EUR/USD re-targets 1.1000 post US-CPI
LONG
GBPUSD Bullish on Hot UK Inflation
LONG
XRP LONG 0.75$ and 1.15$ are on the Radar
LONG
GBPUSD Long Buyers to retain control
LONG
Litecoin Targeting Weekly Resistance
LONG
EUR/JPY Long A Break above creates more Buy Pressure
LONG
USDCHF BEARISH Meets monthly Low and Support
SHORT
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Week Ahead - July 17thNext week, investors will focus on the earnings results from major US companies, such as Bank of America, Morgan Stanley, Goldman Sachs, IBM, Netflix, Tesla, and Johnson & Johnson. Additionally, it will be interesting to monitor retail sales, industrial production, and housing data, including existing home sales, housing starts, and building permits. In other news, China is set to release Q2 GDP growth, retail sales, industrial production, and fixed asset investments. Markets will also be attentive to inflation rates in the United Kingdom, Canada, Japan, New Zealand, and South Africa. Furthermore, the central banks of Turkey and South Africa will make decisions regarding monetary policy, Australia will publish the unemployment rate, and the UK and Canada will release retail sales data.
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Bitcoin long will Go highe after Profit TakingLONG
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YEN Oil AUD NZD Asian stocks fall on bad chinese dataChina Industrial Output Growth Beats Estimates
The Chinese economy advanced 6.3% yoy in Q2 of 2023, faster than a 4.5% growth in Q1 but missing market estimates of 7.3%. The latest figures were distorted by a low base of comparison last year when Shanghai and other big cities were in strict lockdown. During H1, the economy grew by 5.5%. China has set a GDP growth target of around 5% for this year after the economy expanded by 3% in 2022 and missed the government's target of about 5.5%. Beijing has shown reluctance to launch greater stimulus, especially as local government debt has soared. In June alone, indicators showed a mixed picture: retail sales rose the least in 5 months, industrial output growth grew for the 14th month, and the urban jobless rate was unchanged at 5.2% but youth unemployment hit a new high of 21.3%. Data released earlier showed shipments from China fell the most in three years, as high inflation in key markets and geopolitics hit foreign demand. A Politburo meeting is expected later this month.
Asian Stocks Fall on Weak Chinese Data
Asian equity markets fell on Monday as investors reacted to key data showing China’s economy grew 6.3% in the second quarter, lower than the 7.3% expansion expected by analysts. The Shanghai Composite led the decline, losing more than 1%. The Shenzhen Component, S&P/ASX 200 and Kospi indexes also tumbled. Meanwhile, Japanese markets are closed for a holiday, while Hong Kong markets will likely be closed for the day due to a typhoon.
China Stocks Drop on Weak GDP Data
The Shanghai Composite dropped 1.1% to around 3,200 while the Shenzhen Component lost 0.8% to 10,990 on Monday, giving back gains from last week as investors reacted to key data showing China’s economy grew 6.3% in the second quarter, lower than the 7.3% expansion expected by analysts. Meanwhile, China’s industrial production and fixed asset investments increased more than anticipated, while retail sales missed forecasts. Mainland stocks gained last week amid hopes that a faltering post-pandemic recovery would prompt Beijing to offer more pro-growth policy measures. Commodity-linked and financial stocks led the decline, with notable losses from Yunnan Lincang (-3.5%), Zijin Mining (-1.5%), China Shenhua Energy (-4.5%), ICBC (-6%), Ping An Insurance (-1%) and China Merchants Bank (-1.1%).
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bullishNote
All major US stock indexes finished higher on Tuesday, at the levels not seen since early April 2022, boosted by stronger-than-expected earnings results from some of the country’s top lenders and a rally in AI-linked stocks. The Dow Jones soared over 360 points or 1%, the S&P 500 and the Nasdaq gained 0.7% each. Stocks of Morgan Stanley surged 6.4% after the bank's earnings and revenue beat forecasts. Shares of Bank of N.Y. Mellon added 4.1% after reporting better-than-expected profit and revenue, Bank of America jumped 4.4% after an earnings beat and Charles Schwab jumped 12.5% after reporting stronger profit and revenue. Microsoft shares rose 3.9%, hitting all-time high of $366.78 during the session after announcing a new AI subscription service for Microsoft 365. On the losing end, Masimo tumbled 20% after the medical equipment maker said it expects to report weaker-than-expected revenue for the spring quarter.Note
Bond Yields Continue to FallGovernment bond yields around the world fell for a third day on Wednesday, with the US 10-year Treasury note yield retreating to 3.74%, a fresh low since late June. Investors are getting increasingly convinced that major central banks, and specially the Fed will soon end their tightening campaign. Bets for a 25bps hike in the fed funds rate next week currently stand at 97% but investors remain divided on the need of further increases, with chances for a September increase currently standing at 12% and for November at 23%. Meanwhile, the ECB is also set to raise rates by 25bps again next week while there is just a 70% chance of a further rate rise in September. In the UK, another increase in borrowing costs is seen as certain next month, but a smaller-than-expected inflation reading for June lowered bets on further BOE rate hikes. On the other hand, traders are increasingly speculating the Bank of Japan could adjust its ultra loose monetary policy next week.
European Markets Head for Higher Open
European equity markets were headed for a higher open on Wednesday as investors reacted to data showing the annual consumer inflation in the UK stood at 7.9% in June, the lowest reading since March 2022 and below forecasts of 8.2%. Investors also await final euro zone inflation figures later on Wednesday to guide the economic and monetary policy outlook in the region. Moreover, markets look ahead to the latest earnings report from Dutch chip industry giant ASML, as well as from major US firms such as Tesla, Netflix and Goldman Sachs. DAX and Stoxx 600 futures rose 0.2% in premarket trade, while FTSE 100 futures jumped 0.8%.
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Japan will release some key data over the coming days that could provide some directionality for the JPY. The yen hasn’t been acting all that “normally” recently, as traders hang on comments from Japanese officials that might indicate intervention to support the currency.To make matters more confusing, the head of the BOJ, Kazuo Ueda, has said some things that appear to be contradictory. There’s a ball of forex yarn here that needs to be untangled to get a better idea of where the yen could be headed in the medium-to-long term.
First, the data
Tomorrow, Japan will publish its trade balance which is expected to see a dramatic reduction in the trade deficit to just ¥46.7B from ¥1.37T reported in May. Japan typically has relatively large fluctuations in its trade statistics, but if the forecast is correct, it would be the smallest deficit since the latter part of 2021. The weakness of the currency (and brief recovery earlier this year) have been a key factor affecting the trade balance, which is an important component for the BOJ’s decision-making.
The shrinking deficit is expected to be because imports are forecast to decline while exports are expected to grow. Part of that dynamic is seen as a result of the weaker yen meaning that exports are priced at a higher value. On the other hand, the shrinking imports are a sign of lack of dynamism in the economy. The erosion of purchasing power from a weaker currency could mean Japanese citizens are buying fewer things. That would be a worrying sign for the BOJ.
What’s the BOJ up to?
Just last Sunday, the Governor of the BOJ admitted that the weakness in the yen was a concern, and that the bank could take measures to address it. He used more technical speech, of course, talking about restoring market pricing. But the takeaway is what mattered for the market reaction. Just two days later, on Tuesday, he appeared to backtrack, saying that the BOJ is committed to easing.
This changing commentary shows the dilemma of the BOJ, which wants to keep easing in order to support the economy. That means not worrying about a weaker yen, because that helps exports. But the weaker yen has contributed to rising inflation, and slowing the economy. So the BOJ would be worried about a weaker yen.
Clearing up the situation
Ueda has repeatedly said that he wants to see inflation “sustainably” rising at the target rate of 2%. Inflation has been higher than that for months now. What he means is that the current bout of high inflation is seen as “temporary”, and the result of non-market driven yen weakness that has raised the cost of imported goods. “Non-market driven” here means things like carry trade and bets that the BOJ won’t intervene as the currency weakens. The BOJ is trying to cajole markets into getting the yen higher without actually having to do anything to strengthen the yen.
If inflation turns around and starts rising, however, the BOJ might have to come to the conclusion that they can’t have their cake and eat it too. That might prompt a move towards shoring up the yen, such as widening the YCC again. Japanese annual June inflation is expected to tick up to 3.3% from 3.2% prior.
Note
Japan will release some key data over the coming days that could provide some directionality for the JPY. The yen hasn’t been acting all that “normally” recently, as traders hang on comments from Japanese officials that might indicate intervention to support the currency.To make matters more confusing, the head of the BOJ, Kazuo Ueda, has said some things that appear to be contradictory. There’s a ball of forex yarn here that needs to be untangled to get a better idea of where the yen could be headed in the medium-to-long term.
First, the data
Tomorrow, Japan will publish its trade balance which is expected to see a dramatic reduction in the trade deficit to just ¥46.7B from ¥1.37T reported in May. Japan typically has relatively large fluctuations in its trade statistics, but if the forecast is correct, it would be the smallest deficit since the latter part of 2021. The weakness of the currency (and brief recovery earlier this year) have been a key factor affecting the trade balance, which is an important component for the BOJ’s decision-making.
The shrinking deficit is expected to be because imports are forecast to decline while exports are expected to grow. Part of that dynamic is seen as a result of the weaker yen meaning that exports are priced at a higher value. On the other hand, the shrinking imports are a sign of lack of dynamism in the economy. The erosion of purchasing power from a weaker currency could mean Japanese citizens are buying fewer things. That would be a worrying sign for the BOJ.
What’s the BOJ up to?
Just last Sunday, the Governor of the BOJ admitted that the weakness in the yen was a concern, and that the bank could take measures to address it. He used more technical speech, of course, talking about restoring market pricing. But the takeaway is what mattered for the market reaction. Just two days later, on Tuesday, he appeared to backtrack, saying that the BOJ is committed to easing.
This changing commentary shows the dilemma of the BOJ, which wants to keep easing in order to support the economy. That means not worrying about a weaker yen, because that helps exports. But the weaker yen has contributed to rising inflation, and slowing the economy. So the BOJ would be worried about a weaker yen.
Clearing up the situation
Ueda has repeatedly said that he wants to see inflation “sustainably” rising at the target rate of 2%. Inflation has been higher than that for months now. What he means is that the current bout of high inflation is seen as “temporary”, and the result of non-market driven yen weakness that has raised the cost of imported goods. “Non-market driven” here means things like carry trade and bets that the BOJ won’t intervene as the currency weakens. The BOJ is trying to cajole markets into getting the yen higher without actually having to do anything to strengthen the yen.
If inflation turns around and starts rising, however, the BOJ might have to come to the conclusion that they can’t have their cake and eat it too. That might prompt a move towards shoring up the yen, such as widening the YCC again. Japanese annual June inflation is expected to tick up to 3.3% from 3.2% prior.
Note
itcoin lagging gold despite weakening dollar: A Bitcoin, gold, USD analysisThe dollar continues to weak, now 12.5% off its 20-year high last year
Gold and Bitcoin tend to strengthen when the dollar falls
The relationship has turned this week though with Bitcoin lagging
The dollar continues to get hammered.
After dominating virtually every currency throughout the COVID pandemic, the DXY index, which measures the strength of the greenback against a basket of major currencies, hit a twenty-year high in Q4 of last year. Since then, however, it has shed 12.5% of its value.
The fall comes as inflation continues to cool, with the most recent CPI data putting year-over-year inflation at 3%. While core inflation remains a little stickier, the market is nonetheless betting that one of the fastest rate-hiking cycles in recent history is finally coming to a close.
The dollar strengthens in times of uncertainty because correlations go to one in a crisis, while there is a flight to safety as investors peel back on the risk curve. And there is no safer asset than the global reserve currency, so the dollar picks up steam in such turbulent periods.
While the last couple of years do not quantify as a recession, the turbulent climate which has arisen out of rampant inflation and spiking interest rates (not to mention a once-in-a generation global pandemic and all the bespoke economic fallout that entailed) has caused mass uncertainty. This in turn has increased the attractiveness of the dollar.
Additionally, the faster pace of interest rates in the US compared to many nations worldwide has encouraged capital to flow into the greenback. But with inflation cooling off and the market betting the rate hiking cycle is now nearing its conclusion, the climate has changed – and the dollar has pulled back as a result.
How are other assets affected by the dollar?
This is all relatively straight-forward, but what does this mean for other assets?
Well, as mentioned above, the dollar is the global reserve currency, meaning it is also the lifeblood of the global financial system. In such a way, the effects are widespread. If we look at the classic example of gold, a falling dollar means it takes more dollars to purchase the same amount of gold (and vice-versa). So we tend to see gold rise when the dollar falls, even if it may be nothing to do with gold itself.
In the next chart, I have plotted the correlation between the dollar index and gold over the last year, which shows a strong negative relationship in the -0.8 to -0.9 range for much of the period (albeit with a recent weakening).
Let’s now look at Bitcoin, gold’s wannabe best friend.With Bitcoin far more volatile as an asset than gold, and given the numerous crypto-specific scandals (Terra, Celsius, FTX etc) of the past year, this is unsurprising.Why is Bitcoin selling off amid dollar weakness?
This takes us to an interesting finding: why is Bitcoin not being buoyed by this weaker dollar? Gold is up 2.4% in the last week, taking advantage of the dollar’s dip. On the other hand, Bitcoin has actually fallen slightly, which goes against trend.
In truth, I am not really sure why the buying activity has been subdued. Perhaps buyers did their part after the XRP ruling last week, and are hesitant to pile further in while the market finds its footing. But that is a shaky theory at best.
Even looking at miners in the next chart, we can see that they are offloading Bitcoin rather than buying, which they have been doing since the start of the month. It seems that for whatever reason, there are just not as many buyers out there in the last week compared to normal, and the sell pressure has not been soaked up by a softening dollar. To be clear, this is far from alarming and a totally benign occurrence. My gut feeling is that this is simply a summer lag, which has tended to see the lowest trading activity in Bitcoin markets in the past, too.
Either way, it’s an interesting little tidbit. The relationship between gold, Bitcoin and dollar is always fascinating to track as it incorporates so much macro and so many intriguing variables, so it is worth keeping an eye on. If the trend continues to deviate, a deeper analysis may be warranted. But for now, it feels OK to assume this is just buyers taking a little summer break, and a minor abnormality.
Note
This trade is stil open and activerelevant market wraps
European Markets Head for Muted Open
European equity markets were headed for a muted open on Thursday as investors braced for the start of the earnings season in the region. Major European firms slated to report earnings today include SAP, EasyJet, Volvo Car, Publicis, ABB and Nokia. Investors also turned cautious after shares of key technology names in the US dropped in post-market trade on disappointing quarterly results. DAX, Stoxx 600 and FTSE 100 futures all fluctuated around the flatline in premarket trade.
Gold Hits 2-Month High on Fed Pause Bets
Japan 10-Year Yield Steadies Around 0.46%
Japan’s 10-year government bond yield steadied around 0.46% as a dovish outlook on Bank of Japan monetary policy kept the benchmark yield below the upper limit of the target range. BOJ Governor Kazuo Ueda recently stated that there was still some distance to sustainably and stably achieve the central bank’s 2% inflation target, indicating the BOJ’s commitment to ultra-easy monetary policy. Last month, the central bank held its short-term interest rate target at -0.1% and that of 10-year bond yields at around 0% by a unanimous vote, in line with expectations. Falling bond yields in other major economies also reduced upward pressure on JGB yields, as easing inflationary pressures raised hopes that the end of the current monetary policy tightening cycle is close.
Japan Raises This Year’s Price View to 2.6% Ahead of BOJ Meet
The Japanese government raised its overall inflation forecast to 2.6% for the current fiscal year ahead of the central bank’s policy decision meeting next week, the Cabinet Office said Thursday. The upward revision from the previous forecast of 1.7% shows stronger-than-expected inflationary pressure. Japan saw that trend holding up even after accounting for government price-relief measures, which the Cabinet Office says shaves 0.5 percentage points off this year’s price reading. For fiscal 2024, the government expects overall inflation to slow to 1.9%.
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TRADE OPEN and active : YEN DOWN! YEN DOWN YEN DOWN!Note
Japan Inflation Rate Below Estimates in JuneJapan Inflation RateThe annual inflation rate in Japan edged up to 3.3% in June 2023 from 3.2% in May but less than market forecasts of 3.5%. Core inflation also ticked higher to 3.3% in June from 3.2% in May, matching consensus but staying outside the Bank of Japan's 2% target for the 15th month. On a monthly basis, consumer prices rose 0.2% after being flat in May.
Dow Extends Winning Streak, Tech Drag
The Dow Jones closed 163 points higher on Thursday, marking its ninth-straight session of gains and its longest winning streak since September 2017. Meanwhile, the S&P 500 and the Nasdaq lost 0.7% and 2%, respectively dragged by tech shares as latest corporate earnings were in focus. Johnson & Johnson was the top performer and soared around 6% on upbeat revenue and earnings, helping propel the Dow. Travelers added 1.8% higher after beating on revenue but falling short of expectations on earnings. IBM shares were nearly 2.1% higher despite its disappointing revenue. Conversely, Netflix lost 8.4% after the company's revenue missed forecasts. Also, Tesla tumbled 9.7%, its biggest daily percentage drop since April 20 after reporting a drop in its second-quarter gross margins to a four-year low and Elon Musk hinted at more price cuts. Blackstone moved 0.7% lower after a 39% drop in earnings and American Airlines sank 6.2% despite raising its earnings outlook for 2023.
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trade is openNote
trade is openNote
trade is open.Trade setup as on the chart above explained and mentioned is open(See the Time Frame): The Trade setup above is only based on daily,weekly,monthly and 4 Hours timeframe. For daytraders who are involved on lower time frame you need to calculate or possibly use your other strategies. The trade setup above is only created for trend followers, also daytraders can benefit of it, if they choose to.
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trade is open.Trade setup as on the chart above explained and mentioned is open(See the Time Frame): The Trade setup above is only based on daily,weekly,monthly and 4 Hours timeframe. For daytraders who are involved on lower time frame you need to calculate or possibly use your other strategies. The trade setup above is only created for trend followers, also daytraders can benefit of it, if they choose to.
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Low volatility next week till friday. The pullbacks are profit takings, low trading volume and low volatility of the market makers. Trading oppurtunities are in USD FX specially USD JPY...Keep monitor them closely.
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Dow Rises for 11th SessionThe Dow Jones added nearly 100 points to book an 11th straight session of gains on Monday, with Chevron among the top performers (1.8%) after reporting better-than-expected earnings. Meanwhile, the S&P 500 was up about 0.3%, led by a nearly 1.5% gain for the energy sector, namely shares of Halliburton (2.5%), as oil prices touched a three-month high. On the other hand, the Nasdaq failed to hold early gains and was down about 0.2%, with Amazon (-1.2%) and Tesla (-0.7%) weighing. Investors brace for the Fed's monetary policy decision on Wednesday, with another 25bps increase in the fed funds rate already priced in, although traders will be looking for any clues on whether the Fed will stop the tightening cycle or believes further increases are still necessary. Meanwhile, the earnings season continues with about 40% of the Dow and 30% of the S&P 500 giving their financial updates during the week, including Alphabet, Meta Platforms, Microsoft, GE, 3M, General Motors, Boeing and Amazon.
US Private Sector Growth Slows to 5-Month Low
The S&P Global US Composite PMI declined to 52.0 in July 2023, down from 53.2 the previous month, as shown in a preliminary estimate. The latest reading indicated the softest pace of expansion in private sector business activity since February, with service activity growth easing to a five-month low, and manufacturing output levels remaining relatively unchanged. Total new orders rose the least since April, amid reports of constraints on client spending, including higher interest rates, while the rate of job creation was only marginal, marking the weakest level since January. On the price front, input prices increased the least since October 2020, while the rate of output charge inflation picked up as firms sought to pass through higher costs and increased interest rate payments to customers. Finally, business confidence dipped to the lowest level so far this year.
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masdaq bullish after FOMC , I bouht more nowmy target stays at 21000Next FED meeting in nov. december is much more important..
long dow jones long rty long indices and stocks
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Trade openI short the Yen , and am long majors
BOJ to keep ultra-low rates
Kazuo Ueda has vowed to keep ultra-loose policy until he is more convinced the economy can weather global headwinds and allow firms to keep hiking wages next year
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Trade openLong
VIX DOWN DXY DOWN
The US economy grew 2.4% GDP in Q2
US Futures Extend Gains after Upbeat GDP Growth
US stock futures extended gains on Thursday, with contracts on the Dow Jones jumping about 170 points, S&P 500 gaining 0.9% and the Nasdaq 100 up 1.6% as investors cheered fresh data and corporate earnings results. The US economy grew 2.4% GDP in Q2, surpassing market expectations of 1.8% expansion in a sign the US economy remains resilient despite high-interest rates. Meanwhile, Meta Platforms surged about 10% in premarket trading after reporting strong earnings and profit and a better-than-expected forecast for the current period. Comcast jumped over 2.5% after earnings and revenue came higher than anticipated and McDonald's was up about 1.3% after sales topped forecasts. Mastercard was also in the green (0.6%) after delivering strong revenue and earnings growth. Intel, Ford and T-Mobile are due to report today after the closing bell.
US Initial Jobless Claims Fall to 5-Month Low
US GDP Grows at a Stronger 2.4%
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US Stocks on Track to End July More than 3% HigherNote
trade open bullishNote
Trend Bullishlong
Japan's 'Mr Yen' Sakakibara expects no yen intervention
Australian Dollar Set For Big Move
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New Buy SignalUS Credit Card Markets Head Back to Normal after Pandemic Pause
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Nasdaq SP500 Dow ReversalTrend up US 10-Year Treasury Auction Sees Decent Demand Despite Yield Under 4%
DCY down
Oil UP
Nasdaq Bullish
Dow Bullish
RTY Bullish
SP500 Bullish
Wait for CPI today. Possible Correction(I hope so that the makrket goes down first to 15000-14500) That is exactly the Gap Fill ,before Nasdaq Flies to 15850 and 16250 2nd Gap FILL)...So ge ready ,wait and watch closely the supports and resistances,better with Divergenes. In the chats and social media a lot of amateur traders are nervouse, becuz no trading experiences.So stop listening to them...Chats will cost you money. Instead relax,wait,have patience till we get the buy zones. Read comments above. I mentioned already Picadelli Points.
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Perfect!Gap filling i over. The bear tap wants you to jump into short selling before it rises higher..Avoide bear traps. I baought today more nasdaq at 1477514995 again. The market will go higher . Next week FOMC. Meeting. Fundamentals are bullish.Infalition going don.Next week, investors will eagerly follow the FOMC minutes release for additional insights into the Fed's plans for the remainder of the year. In the US, retail sales and industrial production will also be in the spotlight. Elsewhere, the upcoming week is poised to bring a flurry of significant economic releases, including China industrial production and retail sales; GDP and inflation for the Eurozone; Japan GDP growth and inflation; Germany economic sentiment; wholesale and consumer prices for India; inflation, unemployment and retail sales for the UK; Canada CPI; Australia unemployment data; and interest rate decisions from Norway, the Philippines and New Zealand.
Michigan Consumer Confidence Falls In August, But Beats Expectations: Declining Inflation, Resilient Job Market Key Factors
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Japanese Yen Breaks Above 145Note
DXY downOil UP
Nasdaq,Dow,RTY AND Tech bullish
Source: The Federal Reserve Bank of New York’s Center for Microeconomic Data
Consumers’ Inflation Expectations Decline at all Horizons, Expectations about Household Financial Situation Improve
The Federal Reserve Bank of New York’s Center for Microeconomic Data today released the July 2023 Survey of Consumer Expectations, which shows that inflation expectations declined at the short-, medium-, and longer-term horizons. Year-ahead price growth expectations for food, medical care, and rent declined to their lowest levels since at least early 2021. Labor market expectations strengthened, while households’ perceptions about their current financial situations and expectations for the future improved.
The main findings from the July 2023 Survey are:
Inflation
Median inflation expectations declined across all three horizons, falling from 3.8% to 3.5% at the one-year-ahead horizon and from 3.0% to 2.9% at both the three-year and five-year-ahead horizons.The decline at the one-year-ahead horizon was broad based across demographic groups and the July reading is the lowest since April 2021. The survey’s measure of disagreement across respondents (the difference between the 75th and 25th percentile of inflation expectations) decreased at all three horizons.
Median inflation uncertainty—or the uncertainty expressed regarding future inflation outcomes—declined at the one-year-ahead horizon and increased slightly at the three- and five-year-ahead horizons.
Median home price growth expectations decreased from 2.9% in June to 2.8% in July, remaining well above the series 12-month trailing average of 2.0%.
Median year-ahead expected price changes declined for all commodities: by 0.2 percentage point for gas (to 4.5%), 0.1 percentage point for food (to 5.2%), 0.9 percentage point for medical care (to 8.4%), 0.3 percentage point for the cost of a college education (to 8.0%), and 0.4 percentage point for rent (to 9.0%). The current readings for food, medical care, and rent are the lowest since September 2020, November 2020, and January 2021, respectively.
Labor Market
Median one-year-ahead expected earnings growth decreased by 0.2 percentage point to 2.8%. The series has been moving within a narrow range of 2.8% to 3.0% since September 2021.
Mean unemployment expectations—or the mean probability that the U.S. unemployment rate will be higher one year from now—decreased by 1.0 percentage point to 36.7%, the lowest reading since April 2022.
The mean perceived probability of losing one’s job in the next 12 months decreased by 1.1 percentage points to 11.8%. The mean probability of leaving one’s job voluntarily in the next 12 months decreased by 1.9 percentage point, to 17.0%, its lowest reading since March 2021. The decrease in the average quit probability was broad based across demographic groups.
The mean perceived probability of finding a job (if one’s current job was lost) increased from 55.3% in June to 55.8% in July.
Household Finance
Median expected growth in household income was unchanged at 3.2% in July and remains below the series 12-month trailing average of 3.6%.
Median household spending growth expectations increased from 5.2% in June to 5.4% in July, but remains well below its 12-month trailing average of 6.1%.
Perceptions of credit access compared to a year ago and expectations about credit access a year from now were largely unchanged, with a slight deterioration in current perceptions and a slight improvement in year-ahead expectations.
The average perceived probability of missing a minimum debt payment over the next three months decreased by 0.3 percentage point to 11.7% in July.
The median expectation regarding a year-ahead change in taxes (at current income level) remained unchanged at 4.3%.
Median year-ahead expected growth in government debt decreased from 10.0% in June to 9.7% in July.
The mean perceived probability that the average interest rate on saving accounts will be higher in 12 months increased by 1.1 percentage points to 30.9%.
Perceptions about households’ current financial situations improved in July with more respondents reporting being better off than a year ago and fewer respondents reporting being worse off. Similarly, year-ahead expectations improved with fewer respondents expecting to be worse off a year from now and more respondents expecting to be better off. The share expecting to be better off a year from now is the highest since September 2021.
The mean perceived probability that U.S. stock prices will be higher 12 months from now increased by 1.8 percentage points to 37.1%.
Bitcoin started its bullish trend continuation based on buying pressure of the tech industry.
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longNote
New Upate: All trades open active ALL BULLISH!Technicals:
27 of 28 Indicators are bullish on 2H,4H,Monthly and Daily
Above 146,882 strong new Buypressure is expected, which will rive USDJPY to heaven( 147,516, 145,548,149,321,151,600)
151 is very important as we will expect vebal intevientions of BOj, which to me personally i very senseless, as in the past we have seen that even 2 strong interventions of the BOj have been emolished by the powe of the traers: DXY very strong, falling bond prices, and with strong dollar there is nerly tigh room fo BOJ to buy expencive US Bonds.That will lead us to the next technical fact: High volume on the top.The bullish volume comparission of the 2022 shows that now the strong bullish support volume has been shofted upsie fofrom 131,65 to 144,415. This means that now big instutions orldwie are massivley buying USD vs Jpanease Yen. Also rising Oil prices(Bullish signal) is helping to suppot vs yen, as JAPAN is 100% dependant on foreign oil:JAPAN HAS TO SELL YEN AND BUY US OLALR,to pay the Oil bills. This will create strong buy pressure on US olallar market cap. Additionally Chinas economy is weakenning which will have vey negative impact on Asia and Oceania makets. AUD,Japanease Yen are the first currenices which will lose more vs US dollar.
The beak above 151 will catapult the USD/JPY to around 190!!! VEY Fast! There we will have a consolidation ohase, and if BOJ doesnt change its policy ,my 2n Target will be 230! But before that we will have a correction to down to GAP fill at 155-165 area: Because the market will RISE VERY FAST UPWADS!
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BullishNote
++++Be careful Attention! VERY IMPORTANT+++++10Y Bonds US are testing 15 years Highest High. On day and weekly the trend is bullish. If it breaks that high and closes above 4,5 then the bonds US10Y will rise to 4,70%: At that level USDJPY; NASDAQ,RTY SP500, USD will break own nearly to cash and it will cause a sudden death or Sudden Crsh. So watch closely that maket,
++++iT IS VERY VERY IMPORTANT+++ Please dont trade blindly. And watch the markets and their intermarket relations.
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10Y USBonds!!!!!!!Note
US existing home sales slide again, but prices up from a year earlierDont Buy before the market stabilizes at 14000-14400... Storm is coming
Bonds up
DXY UP
CHINA!
Powell speaking till Sunday
The Fed May Need To Go To 6%
Fed Credibility at Risk If Inflation Target Changes, Barkin Says
banks dragged after S&P Global Ratings joined Moody’s Investors Service and downgraded some US banks due to a challenging economic environment.
Nvidia's stock initially rose to a record high but later fell in anticipation of its earnings report due on Wednesday.
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As I warned days before: Wait for Buy Signals at around 14200-14450Zone AND Wait till Monday open.It´s better we go down now, cuz if we don´t fill the Gap this week, in 3-4 weeks(september) The market will crash from 16000 to this level again. If we fill this gap till tommorrow close bell, then there is nothing what can stop Nasdaq and other Inidces on their way upsides....Wait to fill the gap completely. If it breaks the gap down, then it will ontinue to reach 1385-13650-13200...and then revere. So Use your ability to practice patience. If you re not patient enough, then.... ask Dalai Lama how to practice patience
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Philadelphia Fed President Patrick Harker suggests interest rate hikes are at an endNote
US yields rise as data suggests higher rates for longerThe data highlights the quandary the market faces a day before Fed Chair Jerome Powell speaks at the U.S. central bank's annual symposium in Jackson Hole, Wyoming
The two-year note's US2YT=RR yield, which reflects interest rate expectations, rose 6.7 basis points to 5.019% as it see-sawed either side of the key 5% threshold.
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Gap filled at 14583. Powell Jackson Hole: Although inflation has moved down from its peak, a welcome development, it remains too high.... we are confident that inflation is moving sustainably down toward our objective.Buy at 14880 Levels.. Targets up are 15150.Above that zone buying pressure to 15350(Coection Zone)..If breaking 15350 we go to 15850 Gap Up Fill...
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Next week in case we break the folloing level, NQ may go to:Keep Monitor closely these levels ,VERY VERY IMPORTANT 14609,14499, Balue Retrace 14280 and 14 256
The bullish target will be 14982 and 15132, First Target
WE ATE IN A PRETTY NASTY DOWN TREND ON 5 minute TF, So Opening on Monday an where the Price tends to go is pretty important for the reet of the week!
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bullishNote
Bullish but bonds down Corretion beinnin to 143,80.If breaking down to 133-135,80 Support
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bullidhNote
dxy up bonds up dollar up bullishNote
BullishNote
USDJPY bullisha break below 147.608
leads short term bearish move to 147.469 147 363 and 147.033 A break above 147,936 leads to 148.903 and to 151.764. Trading between 147.608 and 147.936 is not recommanded
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USD/JPY currently in Bullish mode:5D Close price calculated with my All in One Indicator is green(The close line changes colour to give bullish or bearish signals).The price is below red 1D Close, but bewteen S/R projected range(Sideways bearish.)
Sideways and no tradezone are marked in Yellow. Trading in This Zones are not recommandable.
Bullish Levels:
A break above 147.99 leads USDJPY TO 148:45;148;96 AND TO 152:
means bullish oppurtunity:
Bearish Levels
A break below 147.58 leads USDJPY TO 147:176; 147;03; 146,67 146,45 146,25 and 145,92
means bearish chance .
We can trade the trend or work individuell with profit targets.
Look for retracements.
USDJPY All Bullish/Bearish Levels and Signals Next Week
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Bullish below 143.985 bearish can fall to 140,306
target 152
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USDJPY SEll short BOJ BUYING BONDSIntervention
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US100 shortBased on AFPand yahoo news . Iran seems to think the priority is to take the fight to the Israelis first
Saudi Arabia puts Israel deal on ice amid war, engages with Iran, sources say
If socurrently Oil and commodities jumping higher, that will cause hiigher US Dollar, and dropping Indices down..
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