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USD Focus Fed Minutes USD CPIHi, and welcome to Wednesday’s update. Today we are looking at the USD, and it’s hard not to focus on the dollar with all the key news that’s on the way. From tonight, 11:30 local time (AEDT), we have PPI followed by the Fed minutes at 5:00 am and US CPI data at 11:30 pm to cap it off. The CPI data being released will be both the M/M EXP 0.2% and the Y/Y EXP 8.1%. This could be an important period for the markets. The last Fed minutes shocked the markets, and CPI came in hotter than expected. These surprises led to extended moves lower on risk markets and solid a rally on the USD. Will we see a repeat this time? As noted, it is going to come down to what’s released. CPI beats expectations. Fed remains hawkish we see the USD rallying. If CPI misses and the Fed message is not as hard as we have seen, we could see some selling and a move higher from risk markets like we saw just over a week ago. Are we starting to see a small bull trap on the USD? Don't discount the chance of softer minutes or a CPI miss that rattles the cage. It is definitely going to be an interesting period to watch traders from now until Thursday night local time. We like to hear from you, so please feel free to drop us a comment. We also run weekly webinars with guest analysts. Good trading.
EIGHTCAP:USDX
by Eightcap
Bitcoin Trend Analytics October 12Similar to the analysis yesterday, BTC is about to leave the channel and develop into new sideway patterns. Yesterday BTC went down to test $18798.44, with short-term capital inflow. The price dropped with increasing fund outflow and in the next 5 hours saw small capital inflow. The latter is larger than the former, so the price is kept at this level. But the inflow is not enough to form a reversal at the moment. Monitor this area - if the support is broken down, BTC could slide down. Set protections. $19882.81 is still a battleground. Only by taking hold of it could it reach neutral or the movement is still bearish. Now the price is pegged to 19k with shrinking volumes. BTC could possibly survive the release of CPI . The market expected interest rate hike in November: 75bp(77.7%),50bp(22.3%)
by BitMidas
1
SPX500 is trying to find a bottomIn my opinion the market is trying to find a bottom. How far it will go down, Im not sure, but anything lower that 3450-ish, will take market to very oversold territory. Everyone is waiting for Thursday’s CPI, depending on the result this can go either way: 1. Inflation is rising - this means FED will be rise rates by 0.75 in November, strong move downside, but then it to go to oversold territory and we might stay there few days before slow recovery starts. I dont believe the earning season takes market above 4000. More realisticaly 3900-3950. 2. Inflation is going down- rising rates start to do the job, FED might slow down next month but we’re not out of the woods yet. Economies already slowed down, we might see recovery on the markets and USD to cool off a little. The only difference between 1 and 2 is when we start the recovery- this or next week. If you look at the VIX, it is pretty high, over 30. On a brick of being overbought. That makes me believe we can see some green candles in the next few weeks but after that I expect very red November. I can be wrong, the markets are unpredictable so dont treat it as trading advice. Im not a professional trader but I’ve been following indices closely in the last few months. Always do your own analisys
OANDA:SPX500USD
by Trinnisia_Trades
Inflation & Interest Rate Series – Below 5.3% is Crucial for CPIContent: • Why CPI must be below 5.3%? • Can we invest or trade or hedge into inflation? Disclaimer: • What presented here is not a recommendation, please consult your licensed broker. • Our mission is to create lateral thinking skills for every investor and trader, knowing when to take a calculated risk with market uncertainty and a bolder risk when opportunity arises. Stay tuned for our next episode in this series, we will discuss more on the insight of inflation and rising interest rates. More importantly, how to use this knowledge, turning it to our advantage in these challenging times for all of us. Micro 5-Year Yield Futures 1/10 of 1bp = US$1 or 0.001% = US$1 3.000% to 3.050% = US$50 3.000% to 4.000% = US$1,000 See below ideas on the previous videos for this series.
CBOT_MINI:5YYU2022Education
by konhow
3
AUD/USD falls to new 18-month lowAUD/USD continues to lose ground and can't find its footing. The Aussie started the week on the wrong foot, with a decline of 1.0% on Monday. In today's European session, AUD/USD is trading at 0.6266 down 0.52%. Earlier the day, the Australian dollar fell to 0.6247, its lowest level since April 2020. Australia has posted weak numbers this week, adding to the downward pressure on the ailing Australian dollar. The Services PMI fell into contraction territory with a reading of 48.0 in September, down from 53.3 in August, as the uncertain economic outlook is weighing on business activity. Business confidence levels are down, with NAB business confidence slowing to 5 in September, down from 10 in August. Westpac Consumer Sentiment indicated that consumers are also in a sour mood, with a reading of -0.9% in September after a gain of 3.9% in August, which was the sole gain over the past 11 months. Risk appetite has been dampened by the escalating crisis in the Ukraine war, with Russia annexing parts of occupied Ukraine and firing missiles at civilian targets. As well, the energy crisis is looming over Western Europe, just weeks ahead of winter. This is weighing on the risk-sensitive Australian dollar. In the US, inflation releases have taken on added significance, as the Federal Reserve has designated soaring inflation as public enemy number one. The US releases PPI data on Wednesday and CPI a day later. Headline inflation has dropped over the past two months, but remains at 8.3%. Unless headline and core inflation both surprise with much lower readings than expected, I don't anticipate any change in course from the Fed. If inflation underperforms, the US dollar could lose ground. Conversely, a higher-than-expected inflation report would be bullish for the US dollar. AUD/USD tested resistance at 0.6503 in the Asian session. The next resistance line is 0.6607 There is support at 0.6433 and 0.6329
by OANDA
Will GDP shake up GBP/USD?GBP/USD is trading quietly for a second straight day. In the North European session, GBP/USD is trading at 1.1035, down 0.18%. The pound has not posted a winning day since October 12th and has lost 400 points during that time. GBP/USD dropped below the symbolic 1.10 line earlier today, and a break below 1.10 will likely increase talk of the pound following the euro and dropping to parity with the dollar. The UK labour market is one of the few bright spots in the economy, and today's employment report reaffirmed that the job market remains tight. Unemployment in the three months to August dipped to 3.5%, down from 3.6%, while average earnings jumped to 6.0%, up from 5.5% and ahead of the consensus of 5.9%. These rosy numbers are dampened by an inflation rate of 9.9%, which has badly hurt real UK incomes. The strong job market bolsters the likelihood of the Bank of England will deliver some tough medicine at its November meeting, perhaps a super-size rate hike of 1.0%. The BoE was forced to intervene on an emergency basis after the mini-budget almost caused a bond market crash, and investors have circled October 14th, which is the expiry date of the BoE's gilt-buying intervention. There are concerns that if the BoE does not renew its bond-buying, the result could be another exodus from UK government bonds. On Wednesday, the UK releases GDP for August, which is expected at 0% MoM, down from 0.2% in July. In the US, inflation will be in focus this week, with PPI data on Wednesday and CPI a day later. Headline inflation is expected to fall to 8.1% in September, down from 8.3% in August, but core CPI is expected to rise to 6.5%, up from 6.3%. Unless inflation surprises sharply to the downside, the release will not cause the Fed to rethink its hawkish policy. GBP/USD faces resistance at 1.1085 and 1.1214 There is resistance at 1.0935 and 1.0776
by OANDA
Bitcoin Trend Analytics October 10BTC is about to leave the downward channel with the highest slope. After that, the trend will develop into new patterns. It is likely to keep fluctuating based on the current data. Strength is contracting, cultivating a breakout. $19882.81 is still a battleground, the price will oscillate around it, today concentrating between $19109.09-$19882.81. (breaking down $19109.09 will it drop to $18489.00; breaking up $19882.81 will it rise to $20454.33.) Short-term pressure remains, with shrinking liquidity and act of cautiousness. Speculative capital mostly concentrates between $18798.44-$19108.80. So monitor this area closely - if it’s broken, the price would slide further downward. The market expected interest rate hike in November: 75bp(82%),50bp(18%)
by BitMidas
1
USDJPY How to trade it with upcoming CPI ReportWelcome back! Let me know your thoughts in the comments! **USDJPY - Listen to video! We recommend that you keep this pair on your watchlist and enter when the entry criteria of your strategy is met. Please support this idea with a LIKE and COMMENT if you find it useful and Click "Follow" on our profile if you'd like these trade ideas delivered straight to your email in the future. Thanks for your continued support! Brian & Kenya Horton, BK Forex Academy
Long
by BKTradingAcademy
6
Using the Commodity Index to predict the next CPIIt's fairly simple to chart how the next 2 months are going to play out. Dems flooded the market with strategic reserves just in time to save Midterm Elections. Given OPEC+ decision to reduce supply, a monkey could have seen a bounce in OIL and commodities. Conveniently a low was put in to end September which means this months CPI print will be lower. It won't be until November after the elections and Oil has had a chance to run up will the fireworks start. Dems probable going to tank midterms to a need for a conservative agenda. I'm predicting FOMC and CPI in November will be bad.
SP:SPGSCI
by SPYvsGME
2
Inflation & Interest Rate Series – The CPI Rally Content: • Why CPI could be at the beginning of a rally? • On 14 Dec 21, Fed: “Inflation is not transitory” changes everything • Strategy to counter inflation Disclaimer: • What presented here is not a recommendation, please consult your licensed broker. • Our mission is to create lateral thinking skills for every investor and trader, knowing when to take a calculated risk with market uncertainty and a bolder risk when opportunity arises. If you are into shorter-term trading, the live data feed is definitely a must for traders. In part 2 of this series, we will do a deep dive on if CPI were to decline, to at what specific level? Before we can consider inflation is under control. Stay tuned for our next episode in this series, we will discuss more on the insight of inflation and rising interest rates. More importantly, how to use this knowledge, turning it to our advantage in these challenging times for all of us. COMEX Micro Gold 0.1 = US$1 1.0 = US$10 1700 points = US$17,000 Eg. 100 points profit = US$1,000
COMEX_MINI:MGC1!
by konhow
3
UPDATED DETAIL OF RALLY CONCEPT BTCAll in all it's not looking good for the bulls, but there is a case to be made for a stronger rally. It’s a tough upside down one but there’s a valid thesis. Basically BoE buying bonds now, pivoting… currency wars…energy crisis…. feds MAY pivot for the wrong reasons, bad reasons, namely because of systemic risk. In this case FEDS would be effectively short term capitulating on inflation and there could be a flight from a rapidly inflating dollar into equities, of which deflationary assets like Bitcoin could get crowded and blow off. It’s a marginal scenario but it’s in the cards as we see nations risking default, currencies like GBP and EURO collapsing, and an environment of negative real interest rates. It would ultimately be a disaster over all, but it could lead to a powerful relatively short lived push for Bitcoin. Plunge protection rescued the global financial markets from a complete meltdown on Wednesday with margin calls and liquidation notices sent out on of UK’s long dated bond backed pension funds representing about 2/3 value of UK’s 1.5 TN Sterling Investment funds ….. Markets were possibly something like moments away from a 2008 scenario. (see below for CNBC coverage) With inflation running rampant in developed nations and the bond markets getting routed: - IF CPI Oct 13 shows US is finally cooling (NOT suggested by core PCE numbers today, labor market tightening rather than loosening and overall strong economic data points in the US) - AND Feds decide to take a wiat and see with 50 bps to give other economies a chance to breathe in order to avoid system risks, THEN we could see something like a short lived rally that could extend to end of year. www.cnbc.com Some quick and easy fun to follow refernces: youtu.be youtu.be
by Linneaus
1
Gold: Inflation Hedge or Not Really?COMEX: Gold Futures ( COMEX:GC1! ) Last Tuesday, September 13th, the Bureau of Labor Statistics reported that U.S. Consumer Price Index rose 0.1% in August to an annual rate of 8.3%. Both were higher than market expectations of -0.1% and 8.1%, respectively. One tenth of one percent didn’t seem much, but it refuted the mainstream notion that inflation has already peaked, and the Fed would tone down its tightening policy. The Dow dropped 1200 points on the news. Other US stock market indexes declined 3-4%. On September 15th, gold price fell sharply. COMEX gold futures (GC) plunged below $1670/oz. It closed down $40, or more than -2%, to its lowest level since April 2020. Gold price runs like a roller coaster this year. It surged to $2070/oz after the Russia-Ukraine conflict in February. Since then, it nose-dived as the Fed began raising interest rates. By September 15th, gold price has shaved off 19.3% from its 52-week high. We have long held a belief that gold is a good hedge against inflation. Now that US inflation runs at a 40-year high, we would have expected gold price to rise and help investors preserve their purchasing power. But why is gold price falling? In today’s story, we will explore the potential repricing of gold as a financial asset and a precious metal, in a new investment paradigm marked with rising interest rates and high inflation. (For previous writings on the “Great Wall Street Repricing” series, please follow the links at the end of this report.) What Caused the Gold Sell-off? Recent price slump is a direct result of investors liquidating their gold positions. As of September 13th, the world’s largest gold ETF fund SPDR Gold Shares saw its open interest falling by 80 tons to 962.88 tons, the lowest level since March. Last week, CFTC Commitment of Traders Report shows total open interest (OI) of COMEX gold futures as 463,674. This represents a 27% drop from March 8th OI of 638,502. The declines in gold open interest suggest that investors are taking money out of gold. This contradicts conventional wisdom that gold is a safe-haven asset. Historically, gold has been used as currency (gold coins), storage of value (gold bars), and luxury jewelry (gold necklaces). Today, I would focus on two attributes: gold as a financial asset (paper gold), and gold as a precious metal commodity (physical gold). Paper Gold Gold ETFs, Gold Futures and Gold Options are financial instruments with gold serving as the underlying commodity. Paper gold does not generate income. Furthermore, if the issuer holds gold as collateral, the monthly storage and insurance costs will be passed on to investors. Therefore, paper gold could be a negative yielding financial asset. In good times, any yield-generating asset would have more appeal than gold. Stock value is based on a company's future earnings. Bond holders receive periodic coupon payments. Commercial real estate produces rent income. Cash could earn interest while being invested in time deposit or money market fund. In times of war, natural disaster, economic crisis, and political upheaval, many assets could be destroyed. A building could be wrecked, a business ransacked, and a banking system shut down. In the early days of the Russia-Ukraine conflict, panic investors fled to gold, pushing its price sharply above $2000. Gold also serves as a hedge against inflation. When high inflation eats up real return, fixed income asset will underperform. Countries like Argentina, Turkey and Venezuela have experienced hyperinflation of triple-digits, rendering local currency worthless. However, things are very different this time. While inflation is at decades-high, US dollar index, a measure of US dollar against a basket of foreign currencies, is at 109, its 20-year high. Inflation has not resulted in a depreciation of US dollar. Although the stock market has pulled back significantly, it is still well above its pre-Covid level. US employment is strong, and the economy has not yet entered a recession. If investors are still debating when and if recession will be here, they are in no rush to buy gold now. Lately, investors are underweighting equity and bond. Hot money is flowing out of riskier foreign markets. However, investors may park money in cash for now. Earning 3% in money market plus the potential of dollar appreciation seem like a better choice than gold. Physical Gold As a precious metal commodity, gold is priced in US dollars in global market. In general, commodity prices have an inverse relationship with the value of US dollar. In the past three months, US Dollar Index rose 4.64%, while GSCI Index lost 18.66%. If you compare dollar index with gold futures directly, the 3-month returns are +4.6% and -8.2%, respectively. Therefore, while viewing gold as a commodity, one should not be surprised to see its price falls as US dollar gains in value. What’s behind the inverse relationship between US dollar and commodity? • Foreign buyers need to convert local currency into US dollar to buy commodities • When their currency depreciates against the dollar, it would cost more local currency to get the same unit of US dollar • Commodities become more expensive for them, which results in lower demand Whether gold is used as a storage of value, or luxury jewelry, it is sensitive to price. Strong dollar raises the cost of gold purchases. This put downward pressure on gold price. As the Fed continues to raise interest rates, foreign currencies would likely depreciate further against the dollar, which would continue to push gold price down. Any Investment Opportunity with Gold? As gold price falls to a two-year low, is this a good time to buy gold? Not necessarily. Gold is not yet a “safe haven” instrument preferred by investors, as we have not yet entered global economic crisis. As a commodity, gold faces downward price pressures as long as the Fed continues to raise rates. Recall our Event-driven strategy focusing on global crisis and strangle options trade targeting binary outcomes? Each Fed rate-setting meeting is a big event that could impact the global financial markets. For the upcoming September 20-21 meeting, I would define the likely outcomes as: 1) Exceed Expectations (Fed raises at least 100 bps); and 2) Meet Expectations (Fed raises 75 bps or less) Aggressive rate hike would strengthen the dollar, as it becomes a higher yielding currency. A strong dollar leads commodity prices to fall, which includes gold price. If you consider 100 bps to be the most likely outcome, a Put Option on COMEX Gold Futures (GC) is a good way to express your view. What if the Fed raises 75 bps? Just like the rate hike in July, avoiding an otherwise more aggressive rate hikes would be perceived as good news by the market participants. Gold price would rise as a result, in my opinion. A Call Option on COMEX Gold Futures is more appropriate in this case. Personally, I view a rate hike of 75bps vs. 100bps as equally possible in the upcoming FOMC meeting this week. If you hold the same view, you could consider a strangle strategy to buy a call and a put simultaneously. Buying options cost money. I would consider out-of-the-money strikes to lower cost. I would also pick a contract month 60-90 days ahead. For example, selecting the December contract, the strategy could apply to the November and December rate hikes in addition to the September Fed meeting. Financial market is extremely volatile this year. Getting an information edge increases your odds of success in managing risk. I suggest leveraging real-time market data for a better gauge of market situation. Tradingview users already have access to delayed data. A Pro user could upgrade to real-time CME market data for only $4 a month, a huge discount at the time of high inflation. 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.
COMEX:GC1!Short
by JimHuangChicago
11
$SPX downhill without brakesFear inside Wall Street The CNN Business Fear & Greed Index, which measures seven gauges of market sentiment, is once again showing signs of Fear on Tuesday as the broader market plunged. The VIX, a volatility index that is one of the seven components of the Fear & Greed Index, shot up nearly 8%. The Fear & Greed index was in Fear mode a week ago as well but it had recently moved back into Neutral territory following a 4-day winning streak for stocks. That streak is coming to a spectacular end thanks to the hotter than hoped for consumer price index report, as investors worry that the Federal Reserve is going to raise rates even more aggressively next week to fight persistent inflationary trends. Wall Street's mood has largely tracked the rapidly changing expectations regarding inflation and rate hikes. Just a month ago, before Fed chair Jerome Powell gave a speech that suggested more big rate increases were coming, the Fear & Greed Index was indicating levels of Greed, a sign of complacency.
SP:SPX
by icheeetah
A last chance for the Euro ?Under the US dollar pressure, EURUSD has been making lower lows and lower highs recently. However, RSI on the monthly chart is oversold for the 3rd time in this century. MACD is showing bullish divergence on multiple timeframes, and the EURUSD on H4 has just achieved a higher high this time with 5 impulse waves: the ABC correction is clear on the chart, wave C is nearly around 0.76 to 0.8 fib retracement. With today's good news on euro CPI and core CPI (higher than expected for both), we can give this currency a chance to retest the end of impulse wave 5, or even to make a higher high. Stoploss can go below the impulse wave 2 for some people, or below the lowest low (the beginning of the impulse wave). Note that on a long term perspective, USD is still stronger than EURO, we will just give eurusd a chance after the new high we saw lately. Goodluck everyone, Joe.
Long
by joe-abdallah