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The USD, China and the De-dollarization challengeThe US dollar has maintained its status as the world's dominant reserve currency for decades, thanks to its perceived security, resilience, and the depth and liquidity of US markets. Despite concerns surrounding the dollar's hegemony, it remains a crucial player in global transactions. Meanwhile, China's economy faces challenges, such as growing provincial government debt, an expanding real estate bubble, and potentially inflated GDP numbers. In addition, China's need for US dollars and the push for de-dollarization by countries like Russia, China, Iran, and Saudi Arabia have gained attention. This analysis will explore these issues in depth and examine why moving away from the US dollar system is complex. China's increasing debt, falling real estate prices, and the growth of its banking assets to around 55% of Global GDP are all causes for concern. The country's M2 money supply has grown at a 9% yearly rate, reaching HKEX:40 trillion, more than double its GDP. If China's GDP numbers are indeed inflated, as suggested by the Brookings Institution, this could exacerbate the problem. Moreover, the yuan (RMB) faces significant challenges in becoming a globally accepted reserve currency, primarily due to China's capital controls, illiquid markets, and authoritarian governance. In contrast, the US dollar remains dominant in global central bank reserves and transactions. This is partly due to the dollar's resilience and the perception of the US's security and stability. Although reserves have shifted for countries with closer trade relations with China, such as Indonesia, Malaysia, Hong Kong, Singapore, and Chile, the US dollar remains the world standard for now. The push for de-dollarization has gained momentum recently, particularly after the Russia-Ukraine conflict and Western sanctions against Russia. Countries like Russia, China, Iran, and Saudi Arabia seek to move away from the US dollar system to reduce their dependency on the US economy and gain more control over their financial systems. However, moving away from the US dollar system is challenging for several reasons. First, the US dollar's dominance in global markets ensures its continued importance in international trade. Even if countries like China and Russia attempt to shift away from the dollar, many other countries will likely continue to rely on it for their transactions, as it provides stability and liquidity. Second, while the yuan is gaining prominence as a reserve currency, it still faces significant hurdles in becoming a globally accepted alternative to the US dollar. China's capital controls, illiquid markets, and authoritarian governance make it difficult for other countries to trust the yuan as a reliable reserve currency. As a result, it is unlikely to replace the US dollar on a large scale in the foreseeable future. Third, OPEC members continue to price their oil in US dollars, despite the currency's decline relative to other world currencies. Economic, technical, and political factors prevent them from switching to other currencies or a basket of currencies. The benefits of such a switch are limited, and it would not benefit all OPEC members equally. Furthermore, the US will unlikely allow OPEC to disregard the dollar without consequences. Finally, the BRICS nations (Brazil, Russia, India, China, and South Africa) are reportedly considering creating a new currency to facilitate trade and promote de-dollarization. However, this plan faces several obstacles, such as political disagreements among the BRICS countries and convincing other nations to adopt this new currency. Additionally, the benefits of a new BRICS currency are uncertain, and it may not be enough to destabilize the US dollar's dominance in global markets. In conclusion, while there are signs of a shift in the balance of global reserve currencies, it is premature.
by BitcoinMacro
Trade Data Confirms Decoupling Well UnderwayCME: Offshore RMB ( CME:CNH1! ), Micro RMB ( CME_MINI:MNH1! ) On April 5th, the Bureau of Economic Analysis reported the latest U.S. global trade data. For the first two months of 2023, total export and import were $328.9 and $489.7 billion, respectively. U.S. international trade balance was $160.9 billion in deficit. Export growth was very strong, at 9.5% year-over-year, while import was up modestly (+0.5%). As a result, trade deficit was reduced by $25.8B from last year period. My analysis focuses on Exhibits 14 and 14a of the report, which detail global trades by trading bloc and country in 2022 and 2023, respectively. Here are what I found: • NAFTA: Canada and Mexico together have total trade (import plus export) of $245.6B. NAFTA is the largest US trading partner with a 30.0% share. So far in 2023, we see trading growth of 8.5% and 1.3% in share gain y/y. • EU+UK: Total trade is $173.9B, up strongly +20.2% y/y. This is the second largest trading bloc with a market share of 21.2%, up 2.8% y/y. • China+HK: Total trade is $98.6B, down sharply -14.5% y/y. Traditionally the largest US trading partner, China is now the 3rd largest, with a 12.0% share, down 2.6% y/y. • India: Total trade $20.1B (-1.1% y/y) with a 2.46% share (-0.1% y/y) • Vietnam: Total trade $19.1B (-3.0% y/y) with a 2.33% share (-0.2% y/y) • Taiwan: Total trade $19.2B (+72.2% y/y) with a 2.35% share (+0.9% y/y) Shifting of Global Supply Chain The U.S. has determined to reduce its reliance on China for manufactured goods. Decoupling aims to shift global supply chain out of China. Where would they go to? • On-shore: moving manufacturing back to the U.S. (Made-in-America); • Near-shore: moving manufacturing to NAFTA partners Canada and Mexico; • Moving to democratic countries with shared values, including the European Union, Asia (Japan, Korea, India, Vietnam, Taiwan) and South/Central America. Based on BLS nonfarm payroll data in March, total employment in manufacturing sector is 12.98 million. This is 600K more comparing to March 2017 level, before the US-China trade conflict. Manufacturing jobs are coming back to the U.S. What does the strong growth in trading with NAFTA, EU and Taiwan tell us? It shows the shifting of supply chain. This growth comes at the expense of China, which is the only major US trading partner that suffered a decline in both trading volume and market share. Implications of Decoupling Shifting of supply chain has long-term implications. Bringing manufacturing back to the U.S. means job creation as well as consumption and taxes. Companies may receive government incentives to offset the cost of relocation. In the long run, getting out of the expensive cross-ocean shipping and the punitive Trump-era tariff would lower the cost of production. Near-shore production in Canada and Mexico also benefits from a more reliable supply chain and lower transportation cost. Southeastern Asian nations have average labor cost at 1/3 or less comparing to workers of similar skills in coastal China. Vietnam and India prosper in recent years by taking production of clothes, shoes, toys, and low-end electronics away from China. What is the implication of trade decoupling on exchange rate? It will result in devaluation of Chinese Yuan against the US dollar. Firstly, currency exchange rate reflects the interest rate differential in the short-term. • US Fed Funds rate is 4.75%-5.00%, and China Shibor is 1.374%; • The Fed could raise rate again, while China’s central bank is easing to support the lackluster growth in economy. The widening US-China rate differential would cause RMB to devalue, holding all else constant. Secondly, exchange rate represents the relative strength between two economies in the long run. Decoupling has a positive impact on US economy, but a really negative one on China. Since China abandoned Zero-Covid policy last November, its economy has not rebounded as previously hoped. Export-oriented industries are seeing the horror of disappearing orders and clients. The housing sector, the bedrock of China’s economy, is suffering from a bust of real-estate bubble. Dedollarization: Fact or Fiction? Rhetoric about the pending doom of US dollar goes viral in recent weeks. While the Greenback is being challenged, no other candidate is capable of replacing it as global reserve currency. According to the BIS, 88% of international trade was settled in US dollars in 2021. The Fed estimates that from 1999 to 2019, dollar settlement accounted for 96% of international trade in the Americas, 74% in the Asia-Pacific region, and 79% elsewhere. IMF reports that the percentage of central bank reserve by currency in 149 countries is: US dollars, 59%; Euro, 20%; Japanese yen and pound sterling, 5% each; RMB, 3%; Others, 8%. A global reserve currency could retain its status for well over 100 years before being replaced by another. British pound was the last reserve currency since the start of 1800s. It wasn’t until the establishment of Bretton Woods system in 1944 when the US dollar became its replacement. At that time, the U.S. has been the largest economy for forty years and held over 70% of the world’s gold reserve. In a worst-case scenario, if an upstart currency were to successfully challenge the US dollar, its downfall would be decades away. If your investment horizon is months or years, this is not something stopping you from owning dollar. Trade Idea CME Offshore RMB (CNH) futures is settled at 6.8516 on Monday. The contract has a notional value of $100,000 and is quoted as the number of Chinese Yuan per $1. The next Fed meeting is on May 2-3. According to CME FedWatch, futures traders are pricing in a 71% chance that the Fed would raise 25 basis points. If the Fed raises rate and China’s central bank does nothing, futures price shall go up by mechanical calculation. Holding or selling 1 CNHUSD future requires HKEX:18 ,500 in minimum margin. If the exchange rate moves 1 tick, or $0.0001, the futures account would gain or lose 10 Yuan. Micro RMB futures (MNH) is 1/10 of the standard size CNH contract with a HKEX:10 ,000 notional. Margin requirement is also 1/10 of the original, at HKEX:1 ,850. Happy Trading. Disclaimers *Trade ideas cited above are for illustration only, as an integral part of a case study to demonstrate the fundamental concepts in risk management under the market scenarios being discussed. They shall not be construed as investment recommendations or advice. Nor are they used to promote any specific products, or services. CME Real-time Market Data help identify trading set-ups and express my market views. If you have futures in your trading portfolio, you can check out on CME Group data plans available that suit your trading needs www.tradingview.com
CME:CNH1!Long
by JimHuangChicago
7
'Can China’s Long-Term Growth Rate Exceed 2–3 Percent?' SummaryThis is a summary of Michael Pettis' 'Can China’s Long-Term Growth Rate Exceed 2–3 Percent?' carnegieendowment.org As the text was quite long, this summarizes some critical points. China's high investment share of GDP and growing debt burden are interrelated, stemming from an investment-driven growth model that began in the 1980s when the country needed significant investment in infrastructure, urban property development, and manufacturing facilities. High domestic investment required high domestic savings, leading to a rapid savings increase by constraining household consumption and income growth. Policymakers now recognize the need to rebalance China's economy towards domestic consumption. High investment levels initially benefited the Chinese economy, as productive investment grew at the fastest pace in history. However, a successful development model should make itself obsolete, and China has closed the gap between its actual investment level and the level its businesses and workers can productively absorb. As productivity benefits of additional investment decline, more investment begins to generate less economic value than the value of employed resources. This can be observed in China's increasing debt numbers. Countries that followed this growth model experienced a period of rapid, sustainable growth with stable debt levels, followed by a period of rapid, unsustainable growth driven by a surging debt burden. China entered this phase around fifteen years ago. Therefore, the investment share of China's GDP must decline sharply in the next few years, as the conditions that made high investment levels sustainable no longer exist. Historical precedents suggest that reducing the investment share of GDP to a sustainable level is better for the economy's long-term health, growth, and stability. In this context, rebalancing the Chinese economy will require significant adjustments in its economic structure. Beijing must focus on boosting domestic consumption, though this would likely result in a decline in China's annual GDP growth to around 2-3 percent for many years. The current investment share of GDP is extraordinarily high, making it difficult to reduce it without significantly affecting overall economic activity. Policymakers in Beijing have increasingly called for an expansion in the role of consumption, but there are significant political constraints in implementing such policies. Rebalancing would require consumption to grow faster than GDP and GDP to grow faster than investment. This implies transferring income from governments and businesses to households, a process that has not yet seen concrete proposals. The decline in growth will be unevenly distributed, with local governments bearing the brunt of the adjustment while ordinary Chinese people experience less impact. This also means that sectors of the global economy that depend on Chinese investment growth will be more affected, while those reliant on Chinese consumption will be less impacted. China's investment share of GDP currently stands at around 42-44 percent, which is unsustainable in the long run. For the purposes of this analysis, it is assumed that China should reduce its investment share to 30 percent over ten years, a level typical of rapidly developing economies. As investment declines, the consumption share of GDP must rise. Michael presents five scenarios under which China can rebalance its economy: A. Rebalance with a surge in consumption: China's consumption would need to grow by 6-7% annually, while investment grows by 0-1% annually, resulting in a GDP growth rate of 4% over ten years. However, this requires politically difficult income transfers from local governments and wealthy individuals to households. B. Rebalance while maintaining current consumption growth rates: Consumption growth would remain at 3-4%, with investment contracting by 1-2% annually. This would lead to an average annual GDP growth rate of 1.5% over ten years. C. Rebalance with a sharp decline in consumption growth: If consumption growth drops to 1-2% annually, the investment must decline by nearly 3% annually, leading to flat GDP growth. D. Rebalance with a sharp contraction in GDP: This scenario involves a short-term, severe GDP contraction but is considered politically disruptive and unlikely. E. Rebalance over a much extended period: If China takes 15-20 years to rebalance, with consumption growth at 3-4% annually, GDP growth will drop to 2% and 2.5%, respectively. Key points include the limited ways China can rebalance, the difficulty in maintaining a high investment share indefinitely, and the necessity of a surge in consumption growth for a more balanced economy. Rebalancing will involve slower GDP growth without faster consumption growth, driven by significant and politically challenging income transfers. In conclusion, China's rebalancing process will require significant adjustments in its economic structure. The country must reduce its reliance on investment and increase the role of consumption in driving growth. However, the political constraints and the impact on various sectors of the economy make this a challenging task for policymakers. The five scenarios presented illustrate the complexities of the rebalancing process and emphasize the need for a well-thought-out and carefully executed strategy. China's future economic health depends on its ability to navigate these challenges and transition to a more sustainable growth model. Beijing must strike a delicate balance between addressing political constraints and implementing policies that promote consumption growth while minimizing the negative impacts on various sectors and local governments. Moreover, the global economy is intricately connected to China's growth trajectory. As China undertakes the rebalancing process, the repercussions will be felt in sectors reliant on Chinese investment and consumption. Businesses and governments worldwide must closely monitor the situation and adapt to these changes. This analysis highlights the importance of understanding the complexities of China's rebalancing process and its implications for the Chinese and global economies. As China grapples with these challenges, the world must brace itself for the changes arising from this monumental shift in the world's second-largest economy. Only time will tell if China's rebalancing efforts will successfully pave the way for a more stable and sustainable economic future.
CAPITALCOM:CN50
by BitcoinMacro
HANG SENG BUYIncreasing confidence for global economic resilience in 2023. Global growth for 2023 has continued to improve. The U.S. has started the year with a degree of momentum, even if activity could wane as the year progresses. Chinese activity is bouncing back as the economy reopens, while the Eurozone is likely to benefit as energy prices have receded and headline inflation has slowed. While banking and financial sector strains have clouded the outlook to some extent, we ultimately believe authorities will do whatever is needed and will be successful in containing those difficulties. Against that backdrop, our upwardly revised forecast means we now expect the global economy to avoid recession this year.
HKEX:HSI1!
by thunderpips
USA vs. ChinaA new and dangerous phase of relations between China and America can bring a lot of problems for the world economy and not only. After the removal of restrictions on the coronavirus, China opened up and became accessible to the world economy again. Everyone was waiting for this event and hopefully expected that the global crisis would end and new growth would begin, but China is not so simple. Tensions between China and the rest of the world are only growing , because China sees the weakness of America and Europe, in addition, China feels pressure from America, which does not want to put up with a new big rival and wants to destroy it. America is not ready to just give away the title of economy No. 1. President XI has won the election again and is hostile to America, which means a difficult future for the countries' economic relations. Xi is starting to establish contacts with neighbors and with political allies. Xi's recent meeting with Putin confirmed the strength and cohesion of China and other countries. In response, America is trying to restrain China by force, increasing military tension in the Asian region. America imposes strict restrictions on products from China, while not yet able to replace vital parts, America is trying to build new production in other countries. In turn, China is increasing military spending and is not going to give up power in Asia, demanding to take its hands off Taiwan. All this leads to possible conflicts and a downturn in the economy. A drop in global GDP to an alarming 7% is possible. Last year, America imposed a ban on the sale of some semiconductors and equipment that is manufactured in China. This event increases the gap in the economies of both countries, because now not only China will not receive money, but the United States will not receive important components. In the US Congress, a complete ban on TikTok is on the agenda. This platform generates billions of dollars and its complete closure will lead to big problems. As noted in a recent article by Alan Wolf, Robert Lawrence and Gary Hufbauer of the Peterson Institute for International Economics, the growing hostility to trade in the United States risks negating the achievements of the last nine decades of extremely successful policy. A new World Bank book highlights that the long-term prospects for global economic growth are deteriorating. One of the reasons is the slowdown in global trade growth after the global financial crisis of 2007-09, exacerbated by the turmoil after the Covid pandemic and the rise of protectionism. Among other things, as noted in the book, trade “is one of the main channels for the dissemination of new technologies.” In addition, it should be noted that a more protectionist world will have a lower elasticity of supply and, consequently, a greater propensity to inflationary shocks. From all sides, countries are trying to aggravate the situation. Chinese investment in the US economy is at a minimum, investments from the US are no longer directed to China. China, in turn, wants to make the yuan the number one currency and create a union within which all payments will not be made in dollars. All this can have a detrimental effect on the dollar. The future is foggy as never before. The US is printing more and more money, causing more and more problems. China is a dangerous rival that is gaining strength. What will happen next? What do you think? Traders, if you liked this idea or if you have your own opinion about it, write in the comments. I will be glad 👩‍💻
Short
by Lingrid
11
Lower correction expected from CN50.CHN50 - 24h expiry - We look to Buy at 13045 (stop at 12975) There is no sign that this bullish momentum is faltering but the pair has stalled close to a previous swing high of 13369. Price action looks to be forming a top. A lower correction is expected. Short term bias is mildly bullish. We therefore, prefer to fade into the dip with a tight stop in anticipation of a move back higher. Our profit targets will be 13245 and 13660 Resistance: 13660 / 14440 / 15080 Support: 13180 / 12790 / 12400 Please be advised that the information presented on TradingView is provided to Vantage (‘Vantage Global Limited’, ‘we’) by a third-party provider (‘Signal Centre’). Please be reminded that you are solely responsible for the trading decisions on your account. There is a very high degree of risk involved in trading. Any information and/or content is intended entirely for research, educational and informational purposes only and does not constitute investment or consultation advice or investment strategy. The information is not tailored to the investment needs of any specific person and therefore does not involve a consideration of any of the investment objectives, financial situation or needs of any viewer that may receive it. Kindly also note that past performance is not a reliable indicator of future results. Actual results may differ materially from those anticipated in forward-looking or past performance statements. We assume no liability as to the accuracy or completeness of any of the information and/or content provided herein and the Company cannot be held responsible for any omission, mistake nor for any loss or damage including without limitation to any loss of profit which may arise from reliance on any information supplied by Signal Centre.
VANTAGE:CHINA50Long
by VantageMarkets
BTC UPDATE APRIL 5 2023Bitcoin Update: Resistance at $29,000 and a Potential Correction to $24,500 As of April 5th, 2023, Bitcoin is trading at around $28,000 USD, and the price has been trying to break out of the $29,000 area for the past two weeks. However, there seems to be a lot of resistance there, pushing the price down to the support levels at $28,000 and $27,600. On the other hand, an Elliot Wave structure has formed, with five waves up, and the current trading is at the fifth wave. These wave counts started from the formed bottom a few months back. Additionally, at the bottom area of $15,000, a falling wedge structure has been spotted. According to the Fibonacci retracement tool, this falling wedge targets 1.618 fib levels, which is the golden ratio between $29,000 and $30,800 areas. There are two possibilities at this point. The first is that Bitcoin will break out of the $29,200 areas and push the price up to $30,800 and possibly even higher. The second possibility is that a correction will start from the current levels towards the $25K-$24.5K areas. Once we reach there, an update will be provided. With 12 years of experience in trading and stock markets, the feeling is that Bitcoin has not yet finished the correction from the top that was made at the $69,000 areas. Therefore, it is important to keep an eye on the price action and be prepared for any potential volatility. Good luck.
by Htback
2
Rebounding Air Travel & Rising China to Fire Up WTI CrudeBack in the 70s, oil prices spiked shockingly from $2.90 to $11.65 a barrel; gasoline soared 6-times from 20 cents to 120 cents a gallon in a matter of days. Fuel shortages forced factories to shut, airlines to cancel flights and stations crying "Sorry, No Gas Today". Fistfights ensued, including occasional gunfire. President Nixon called for America to end its dependence on foreign oil. In those five lines of history lies the genesis of both West Texas Intermediate (WTI) Crude Oil and WTI Crude Oil derivatives. This paper is set in two parts. Part 1 looks back at the remarkable 40-year history of CME Group’s WTI Crude Oil Derivative. Part 2 of the paper analyses the fundamental drivers fuelling WTI crude oil prices higher and an accompanying case study delivering 1.75x reward to risk. PART 1: ENABLING RISK MANAGEMENT IN ENERGY PRICES FOR FORTY YEARS Energy markets form the backbone of the global economy. Its prices can make or break nations. Unchecked volatility in energy prices can adversely impact every aspect of daily lives from food to work to shelter to travel. WTI is high-quality crude oil extracted from the Texas Permian Basin. Crude oil is then refined into gasoline, distillate, and kerosene. WTI is known as light sweet crude oil. It is considered "sweet" as it contains low levels of sulphur. Given the low density, it makes WTI "light". WTI Crude is a widely used global benchmark for oil prices. It is the underlying commodity for one of the most liquid futures contracts in the world – the CME Crude Oil Futures ("CL Futures"). CL Futures is a physically delivered contract with tight correlation to the physical oil market. Over one million contracts of CL Futures change hands daily on NYMEX, representing $7+ billion in notional values. Each lot of the CL Futures contract represents one thousand barrels of oil. CL Futures provide deep liquidity and high-quality market structure for hedgers and investors to participate in and protect against oil price action. NYMEX began trading CL Futures on March 30th, 1983. Among the pioneer commodities to list and trade on NYMEX was the WTI Crude. In November 1986, NYMEX launched American options (LO) on CL Futures allowing participants greater sophistication and flexibility in hedging against oil price volatility. In March 2008, the CME Group acquired NYMEX for $9.4 billion. In April 2014, CME introduced weekly options on CL Futures (LO1-LO5) with more granular strike prices. In December 2021 CME launched Micro WTI Futures, which further enable affordable access to the oil market. The CME also offers options on calendar spreads which are useful as tactical trading and hedging tools given the cyclicality in the oil market. PART 2: TURNING UP THE HEAT ON WTI CRUDE OIL PRICES Travel Rebound & China Re-opening. Air travel is rebounding. Global air traffic was at 75% of its pre-pandemic levels in November 2022 as per IATA. Pandemic restrictions in China held it back. With China having re-opened its borders, air traffic growth has taken off. The International Energy Administration (IEA) mentioned in its latest report that Chinese domestic air traffic had rebounded sharply in January and was well above pre-pandemic levels by February. The IEA predicts that overall global oil demand growth will increase by two million barrels per day (bpd) in 2023. It is slower than the growth of 2.6 million bpd in 2022 but nevertheless taking demand to its highest level of 102 million bpd. The OPEC expects crude oil demand to increase by 2.3 million bpd in 2023, with Chinese demand growing by 710,000 bpd. Both OPEC and IEA have lifted their forecasts for demand from China given the surprising reopening pace. Nevertheless, banking crisis, recession risk, and economic uncertainty continues to weigh in and might dampen demand. US Strategic Reserves Running at 40 Year Lows The US Department of Energy’s (DoE) Strategic Petroleum Reserve (SPR) is a reserve set up in 1975 following the oil embargo of the 1970s. These reserves are used to tackle tail events causing significant disruption to global oil supply. Last few years, there have been one too many tail events leading to the depletion of SPR. The DoE released a record 266 million barrels of crude from SPR to contain scorching inflation unseen in 40+ years. The US has signalled that it may take several years to refill the SPR and that it may never reach previous baseline of 600 million barrels given high prices. Refilling the reserves can take a long time. In the 80s, it took DoE 15 months to fill 100 million barrels. In the 2000s it took even longer – almost 2.5 years – to fill 100 million barrels. Regardless of time taken, the need to replenish is certain. The DoE has signalled that it will refill when prices trade between $67-$72 a barrel. Hence, this price range serves as a strong support and floor for WTI prices. Rotation out of Risk Off Assets. Collapse of SVB and Credit Suisse has lit up forgotten fears. Financial markets suffered a massive tailspin. Liquidity easing measures by central banks have helped assuage worries but contagion concerns remain. Heightened economic uncertainty and recessionary fears plunged crude prices to their lowest levels in more than a year, even below the SPR replenishment price range. Risk sirens are blowing loud. Unsurprisingly, investors have sought shelter in haven assets such as gold and treasuries. If measures to contain the crisis proves adequate, investors will rotate back fuelling a breezy recovery in energy prices. Supply disruptions serves as a solid tailwind. Oil demand is critical, so is supply. Last December, OPEC+ conveyed its intent to cut output by 2 million bpd in 2023. Although pre-existing production shortfalls have kept OPEC+ output below their targets, these cuts are expected to translate to 1 million bpd of real supply shortfall. Adding fuel to fire, last week a legal dispute in the middle east has led to Iraqi oil exports via Turkey to be entirely halted, disrupting 400k bpd of supply. Oil prices are sensitive to supply disruptions. Persistent disruptions will drive prices high. MARKET PARTICIPANTS ARE STILL NET LONG AND BULLISH CRUDE OIL The CFTC COT report dated March 21 indicates that investors in the Other Reportable category nearly doubled their net long position on CL Futures from before the start of the banking crisis. However, the Managed Money category showed that these investors reduced net long positions by 65%. These investors have rotated into safe havens such as precious metals. Despite the reduction, these investors still remain net long on CL Futures. A shift in market sentiment could quickly have these investors piling into CL Futures. The put/call ratio on CL options is 0.56. For every oil bear, there are about two oil bulls. In fact, this ratio has actually fallen since the banking crisis began suggesting that investors are even more bullish on oil. TRADE SET UP This case study argues that a long position in WTI Crude Oil Futures expiring in September 2023 will deliver a 2.1x reward to risk ratio given the positive price drivers. CLU2023 offers exposure to 1,000 barrels of WTI crude and has a maintenance margin of $5,000 per lot. ● Entry: 72.78 ● Target: 79.53 ● Stop: 68.92 ● Profit at Target: $6,750 ● Loss at Stop: $3,860 ● Reward-to-Risk Ratio: 1.75x To hedge or trade with granular precision and for affordable access, investors could opt for CME’s Micro WTI Crude Oil Futures which offers exposure to one hundred barrels with a maintenance margin of $500 per lot. MARKET DATA CME Real-time Market Data helps identify trading set-ups and express market views better. If you have futures in your trading portfolio, you can check out on CME Group data plans available that suit your trading needs www.tradingview.com DISCLAIMER This case study is for educational purposes only and does not constitute investment recommendations or advice. Nor are they used to promote any specific products, or services. Trading or investment ideas cited here are for illustration only, as an integral part of a case study to demonstrate the fundamental concepts in risk management or trading under the market scenarios being discussed. Please read the FULL DISCLAIMER the link to which is provided in our profile description.
NYMEX:CLU2023Long
by mintdotfinance
AUD/USD - Aussie on the move, RBA expected to pause ratesThe Australian dollar has edged higher at the start of the week. In the European session, AUD/USD is trading at 0.6715, up 0.45%. The RBA meets on Tuesday (Australia time) and is expected to pause rates. The US releases ISM Manufacturing PMI, which is expected to record another decline. The RBA has aggressively tightened interest rates in the current cycle, raising rates 10 straight times. The fight against inflation continues but there has been some improvement. February CPI fell sharply to 6.8%, vs. 7.4% prior and 7.1% anticipated. Inflation is more than triple the RBA target, but the sharp rise in rates has dampened economic activity and further hikes could jeopardize a soft landing. The RBA is widely expected to stay on the sidelines, with the market pricing in a pause at 86%. Governor Lowe has said that in addition to inflation, employment and consumer spending data would play a key factor in the RBA's decision. The labour market remains tight, but retail sales hit the breaks in February and slowed to just 0.2%, down from 1.8% in January and just above the consensus estimate of 0.1%. The weak retail sales data supports the RBA taking a breather. The banking crisis, which roiled global financial markets, raised fears of a financial meltdown. Although the contagion appears to have been contained, central banks are having to think twice about raising rates in an uncertain economic landscape, and if the RBA does pause, it could use the banking crisis as further ammunition in defending its decision. We're seeing a decline in manufacturing across the globe as demand remains weak. The Russian invasion of Ukraine and China's Covid-zero policy interrupted supply chains and dampened demand, and manufacturing is yet to recover even though China has made an about-face and relaxed its Covid regulations. The US is no exception to this disturbing global trend. ISM Manufacturing PMI has been in decline for four straight months, with readings below the 50 threshold, which separates expansion from contraction. The estimate stands at 47.5, a bit lower than the 47.7 reading in January. AUD/USD is putting pressure on resistance at 0.6737. Above, there is resistance at 0.6790 There is support at 0.6678 and 0.6582
by OANDA
SP 500 where next ?Good day everyone. well as you see in charts if USA and other big players haven't found any way out for current political and financial issue, we will see a capitulation on Stock Markets specially in USA .. so be careful. so next target will be at 2000 pts area which will be marked technically in Elliot Wave Structure WAVE C !!! More Geopolitical and Financial information would help you to understand current world financial tension. inflation rate: The inflation rate in the United States has been on the rise in recent months, reaching a 40-year high in November 2021. The consumer price index (CPI), which measures the cost of goods and services, increased by 6.2% year-over-year, the highest rate since 1982. This is largely due to supply chain disruptions, labor shortages, and high demand for goods and services. Effects on the S&P 500 Charts: Inflation has a significant impact on the stock market, including the S&P 500 index. The S&P 500 index is composed of 500 large-cap stocks, and its performance is often seen as a reflection of the overall health of the US economy. As inflation rises, it can lead to higher interest rates, which can negatively impact the stock market. One way inflation affects the S&P 500 is through its effect on corporate earnings. Inflation can increase the cost of raw materials, labor, and other expenses for companies, which can ultimately lead to lower profits. This, in turn, can lead to a decline in stock prices and a drop in the S&P 500 index. Moreover, inflation can also affect investor sentiment and market volatility. As inflation rises, investors may become more cautious and less willing to take risks. This can lead to increased volatility in the stock market, with larger price swings in both directions. Conclusion: In conclusion, inflation is a key economic indicator that can have significant effects on the S&P 500 index and the overall US economy. As inflation continues to rise, it is important for investors to pay attention to its effects on corporate earnings and investor sentiment. Understanding these dynamics can help investors make informed decisions and better navigate the current market environment. it is important to note that predicting the future movements of the stock market can be challenging, as it is influenced by a wide range of factors. However, it is clear that the current inflation and other political and economic tensions are likely to continue to have an impact on the S&P 500 index in the coming months. It is important for investors to stay informed, exercise caution, and consider diversifying their portfolios to mitigate risk.
SP:SPX
by Htback
1
XRP General MovesRecent Price Movements and Potential Future Outlook XRP, also known as Ripple, has been in the news recently due to some positive developments, which have led to a price increase. However, the price of XRP has been volatile and has experienced significant fluctuations in the past few weeks. In this article, we will analyze the recent price movements of XRP and discuss its potential future outlook. Price Movements On March 31, 2023, the price of XRP reached a high of 0.588 USD, which was the highest it had been in several months. However, the price soon began to decline, and it currently sits around the 0.5 USD mark. This price decline can be attributed to several factors, including the overall market conditions, as well as concerns about the potential impact of Bitcoin's price movements. Support Levels Despite the recent price decline, there are some good support levels for XRP. The 0.5 USD mark is a significant support level, and it is possible that the price may bounce back from this level. Additionally, the 0.432 USD mark, which is where the rally started, could potentially be retested in the next few days. If this occurs, it may present an opportunity to buy XRP at a lower price. Future Outlook The future outlook for XRP is uncertain, and much will depend on the overall market conditions and the movements of other major cryptocurrencies, such as Bitcoin. If Bitcoin's price continues to decline, it is likely that XRP will also experience a price decline. However, if the market stabilizes and Bitcoin's price begins to increase again, XRP may also experience a price increase. Conclusion In conclusion, XRP has experienced significant price movements in the past few weeks, and its future outlook is uncertain. While there are some good support levels for XRP, it is important to be cautious when trading in these volatile market conditions. It may be worth waiting for further confirmation before buying XRP, especially if there are concerns about the potential impact of Bitcoin's price movements.
by Htback
Bitcoin : Be Ready for the next moves Good Day Everyone Bitcoin's Consolidation at 28/28.5k Areas Suggests Possible Retest of 25k Areas Bitcoin, the world's most popular cryptocurrency, has been consolidating in the 28/28.5k areas for some time now. This consolidation phase suggests that a possible downside move may be in the cards, with the 25k areas being the likely target for a retest. One of the key indicators that support this bearish scenario is the RSI (Relative Strength Index), which is currently in overbought territory on the daily timeframe, with readings above 60 points. This level of RSI typically suggests that an asset is due for a corrective move. Furthermore, the wave 5, which was previously discussed, is now completed, and any further extension would require a breakout above the 29k areas. However, the current price movements and volume do not seem to support such an upward move anytime soon. Given the current market conditions, the best trading strategy, in my opinion, would be to sell around the 28.4/28.5k areas, with a stop-loss set above 29k. For those trading on leverage, it is advisable to use a low leverage of 3-5x maximum to minimize potential losses. Overall, while there is still some uncertainty in the crypto market, the consolidation phase at the 28/28.5k areas and the overbought RSI suggest that a corrective move may be imminent, with the 25k areas being a likely target for a retest. As always, it is crucial to stay up-to-date with the latest market developments and adjust trading strategies accordingly. Good Luck And Have A Nice Weekend
Short
by Htback
USD vs CNY US Dollar vs Chinese Yuan Q1 Currency War Thoughts!The Background & Info: At the end of Q1 we have seen the usual crazy headline packed news cycle that we all have become accustomed to since 2020. Strange news, wars, meme realities and conspiracy vindication are now the new normal. You might have missed it in the news cycle, due to all the chaos, but the Chinese Yuan ( CNY ) has made some HUGE waves throughout the world by announcing the settlement of Saudi Arabia's purchase of gas from Russia. It appears that China is taking a page out of the USA playbook by being seen on the international stage trying to broker peace in a proxy war it appears to be funding in a foreign land, aggressively disrespecting nations borders with its airspace violations and spy equipment and, if all that was not enough of a copy cat move, they now have moved forward with courting Saudi Arabi into its BLOC countries that have agreed to swap their trade settlements from the USD to the CNY . It appears Long gone are the days of China shouting threats from the confines of the Forbidden City ( not Forbidden Garden ) walls. They now seem to be taking center world stage and with the Ukraine war and the Saudi Arabia agreement. This will allow them to continue their campaign of world influence peddling and open the doors of Europe to them as a proxy negotiator for Russian Oil & Gas as well as alternative trade settlement base, military assistance, and other one off trade alliances. Truly a wolf in sheep's clothing is now knocking on the doors of Eastern Europe. Europe is one of the few areas of the globe that China currently does not have a good foot in the door. In Africa and the Middle East they own the majority of rare earth mineral rights & mines, In Asia and America they control the tech and manufacturing sectors. Now they are taking on Global Policing and Influence that will lead them into Europe in 2024. Is this the END of the US Dollar being the currency of the world's economy? How is the Chinese Yuan stacking up against the US Dollar today? Well.... What does the Chart Say: My charts are telling me that historically the USD is a powerhouse and has had MANY moments of retracement while maintaining a VERY bullish uptrend. Support is EVERYWHERE for the USD and the world economy understands better than we the citizens do, that USA policy and leadership change every 4-8 years. The recent gains of the Chinese CNY BLOC should have crippled the USD but instead it merely dipped it back to the mid range of its upward bullish trading channel. SUMMARY: I would refuse to bet against the USD and I don't see any significant trading opportunities arising from this over the short term. However, if the Chinese continue to play the world police and peace broker on the world stage then other countries and other settlements will strengthen the BLOC alliance and that WILL have a noticeable effect on how the USDCNY trades. I would suspect that IF more significant trade partners join the BLOC and China continues its mature world stage presence, that the USDCNY would end up looking to trade between 5.5-6.25 this time in 2024. But if the USA gets back to world leadership, makes a strong presence felt on the world stage, then I would look for USDCNY to continue is current trading channel and its bullish uptrend. THIS is just me documenting my own thoughts on the matters at hand. Do your own Research.
Long
by TheStockMarketSniper
GOLD AND WORLD TENSIONS GOOD DAY FELLAS Gold, represented as XAU USD, is currently trading at 1980 USD. While many market participants expect gold to break its previous high of 2080 USD, there are diverging opinions on the future price direction of gold. In this analysis, we will explore the fundamental and technical factors that could influence the price of gold in the short and long term. Fundamentally, gold is seen as a safe haven asset, and its price is often influenced by geopolitical tensions and economic uncertainty. The US dollar is also an important factor in the price of gold, as they are inversely correlated. As the dollar weakens, gold becomes relatively cheaper for holders of other currencies, and demand for gold tends to increase. Conversely, when the dollar strengthens, the demand for gold weakens. Currently, tensions around the world are high, and there is economic uncertainty in various regions. The US dollar is also under pressure due to the increasing national debt and the ongoing tensions. These factors suggest that demand for gold could increase in the short term. However, I believe that the US will not allow markets to turn against the dollar, which could impact the price of gold. From a technical perspective, i believe that gold is currently undergoing a correction on the weekly time frame. This correction is targeting the downward support zone, which intersects with the golden ratio of Fibonacci at 1370-1500 USD dollars. This zone is seen as an attractive level to buy gold. Fibonacci ratios are often used by technical analysts to identify potential levels of support and resistance in financial markets. In summary, the current price of gold is 1980 USD, and there are diverging opinions on its future price direction. While geopolitical tensions and economic uncertainty could support the price of gold in the short term, the US dollar and government intervention in markets could limit its upside potential. From a technical perspective, gold is currently undergoing a correction, and a potential buying opportunity is seen at the support zone of 1370-1500 USD dollars A LIKE ON THIS POST WOULD HELP ME A LOT IF YOU PLEASE ,,
OANDA:XAUUSDShort
by Htback
3
REMX Rare Metals ETFOn the 4H chart the price is rising above support and the recent bottom. On the MACD indicator, the lines have risen above the zero line and over the positive histogram. The moving average "Williams Alligator" combination shows divergence with the short period MA rising the fastest. On the volume indicator, high solid relative volume occurred as the price reached support and has been more or less increased compared with the moving mean ever since. The volume profile showed the highest volume at the support level and price has now crossed above and out of the high volume area. Fundamentally, rare earth metals are a necessary component to lithium batteries for EVs and everything else. China has a large number of rare earth mines and can manipulate the global markets in these minerals. I see this as an investment play until there are signs the uptrend has ended. I will take call option of $81 for the the 5/19 expiration and close early if REMX makes reversal signals. In the gold rush of 1849, those who made the most money were the sellers of shovels and picks. I believe there are parallels here with regard to EVs, and lithium and rare metals may yield great profits and the same for EV charging stations and battery technology. Eton Musk is looking to buy a lithium mine and put a processing plant in Austin TX. Seems among other things, he is a bit visionary with regard to lithium and money. see also the link below
AMEX:REMXLong
by AwesomeAvani
USDCNH rollover TO 6.72 RIP DXY With the looming BRICS news I have turned my eyes to the Yuan/ dollar pair to ride the short for the exit of the Petro dollar. THIS IS A Q2 SWING MOVE This will not be a linear drop FYI! Very very choppy as US will attempt to pull out all the stops to avoid the collapse of the Dollar safe haven. Top Down Analysis: Using the Monthly I plotted out the High resistance of 7.329 aka the highest strength of DXY from early Q4 2022. Major support lies at 6.30 We are monitoring right now and looking to enter a trade if we can get a close under 6.82 as that takes out bullish sentiment. From 6.82 we can catch 1000 pips down to 6.72 as the liquidity will gain bearish momentum. (Q1 Double bottom low) Another 1000 pips down can be a bear trap at 6.61 so we will try to take 50% profits shortly after 6.72 is taken out. This is a High volatile trade and can be aggressive in trend. Please trade with caution. ****** THIS IS NOT FINANCIAL ADVICE******
Short
by chestephens1
bitcoin and world war 3Good Day Everyone It is understandable to feel cautious about investing and trading in the current geopolitical climate. There are indeed tensions between several countries, such as China and the USA, Israel and Iran, and Russia and NATO, among others. These conflicts could potentially escalate and lead to a full-scale world war. However, it is important to keep in mind that predicting the occurrence of a world war is complex and uncertain. While there are geopolitical risks, these do not necessarily mean that trading in decentralized assets like cryptocurrencies will inevitably result in the loss of all your money. Investments, including trading in cryptocurrencies, always involve risks. Risk management is an essential aspect of investing, and it is up to each individual to assess and manage their own risk tolerance. While the current global situation may warrant caution, it is important to remember that diversification is key to managing risk. Bitcoin, the world's largest cryptocurrency by market capitalization, has recently been trading at around 29,000 USD. This is a significant drop from its all-time high of nearly 65,000 USD in mid-April 2021. The volatility of Bitcoin and other cryptocurrencies is well-known, with prices often fluctuating wildly in response to a wide range of factors, from news events to regulatory changes and market sentiment. One major factor that is currently contributing to the uncertainty and volatility in the cryptocurrency market is the prospect of a potential world war. While the likelihood of such an event remains uncertain, there are certainly many geopolitical tensions and conflicts around the world that could potentially escalate into something more serious. In such a scenario, investors may be looking to reduce their exposure to high-risk assets like cryptocurrencies and move their money into safer, more stable investments. It is worth noting, however, that the decision to pull out of cryptocurrencies and other high-risk assets should not be taken lightly. While these investments can be volatile and risky, they can also offer potentially high returns for those who are willing to take on the risk. Moreover, there are many factors that can affect the price of cryptocurrencies, including government regulations, technological advancements, and changes in investor sentiment. Therefore, it is important for investors to carefully consider their options and assess the risks and rewards of different investment strategies. It may be wise to consult with a financial advisor or investment professional before making any major investment decisions. In the meantime, it is important to stay informed about the latest developments in the world and to monitor the situation closely. While there is no way to predict the future with certainty, having a solid understanding of the risks and opportunities in the market can help investors make informed decisions and navigate the ups and downs of the crypto market.
by Htback
YINN | China LONG | BounceThe fund, under normal circumstances, invests at least 80% of its net assets (plus borrowing for investment purposes) in financial instruments, such as swap agreements, exchange-traded funds ("ETFs") that track the index, securities of the index and other financial instruments that provide daily leveraged exposure to the index or to ETFs that track the index. The index consists of the 50 largest and most liquid public Chinese companies currently trading on the Hong Kong Stock Exchange. The fund is non-diversified.
AMEX:YINNLong
by DivergenceSeeker
4
GOLD TRIPLE TOP - WAR END?All eyes are on Chinese President Xi Jinping’s state visit to Russia that begins on Monday. During the three-day visit, the leaders of the two nations will discuss the deepening of economic and political cooperation as well as the war in Ukraine. If this meeting tends to reach a diplomatic solution to end Russia-Ukraine war then Gold will see a massive sell-off. Also, FED is very likely to add a 25BPS to reach 5% interest rate, kinda expected but it brings more pain to markets. I will keep updating this, follow to get alerts 🔔
OANDA:XAUUSDShort
by dogofwallstreets