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EUR/USD: Bearish Trend Driven by Diverging Monetary Policies!The EUR/USD continues to face bearish pressure, nearing two-month lows around 1.0890, driven by a strengthening U.S. dollar supported by increased risk aversion and geopolitical tensions in the Middle East. The dollar also benefited from the release of the minutes of the latest Federal Open Market Committee (FOMC) meeting, which revealed that a majority of members supported a monetary easing policy, though without a clear timeline for future rate cuts. The diverging monetary policies between the Federal Reserve and the European Central Bank (ECB) are strongly influencing the exchange rate. While the Fed is leaning towards further rate cuts, with an 84% probability of a 25-basis-point reduction next month, the ECB is more cautious. Despite inflation in the Eurozone falling below the 2% target, the ECB is closely monitoring economic data before taking new measures, leaving the euro vulnerable. The economic weakness in the Eurozone, with stagnant GDP growth, could continue to weigh on the euro, further favoring the dollar, which is in a position of strength thanks to the resilience of the U.S. economy. In conclusion, the EUR/USD is in a bearish context, with a possible break of key support levels that could lead to further declines. Only a recovery above the 1.0996 resistance could reverse the negative trend, but current economic and monetary conditions suggest the dollar will continue to dominate in the short term.
Short
by Forex48_TradingAcademy
1
Canada’s job growth sparkles but Canadian dollar fallsThe Canadian dollar can’t find its footing and is trading at nine-week low against the US dollar. In the North American session, USD/CAD is trading at 1.3792 at the time of writing, up 0.21%. The Canadian dollar has recorded eight straight losing sessions and is down 1.9% in October. The week ended on a high note, as Canada’s employment growth jumped by 46.7 thousand, crushing the market estimate of 27 thousand and sharply higher than the August reading of 22.1 thousand. Full-time employment surged by 112 thousand, following a decline of 43.6 thousand in August, while the unemployment rate dropped from 6.6% to 6.5%. The impressive numbers couldn’t stop the Canadian dollar’s nasty slide but it will please Bank of Canada policymakers. The central bank has shifted its primary focus from inflation to risks to the labor market, now that inflation has been largely contained. In August, CPI dropped to 2%, its lowest level since February 2021. The BoC meets next week and has a tough decision to make. The drop in inflation raised the odds of a 50-basis point cut but Friday’s employment report was stronger than expected and supports the case for a modest 25-bps cut. The BoC has been aggressive in its rate-cutting cycle and has lowered rates three times this year in a bid to ease the pressure of elevated rates. The Federal Reserve has been late to the rate-lowering party, delivering its first rate cut in September. Still, the oversized 50-basis point cut in September signaled that the Fed means business and isn’t afraid to slash rates with large cuts. The Fed is expected to trim rates by an additional 50 or 75 basis points before year’s end. The most likely scenario is rate cuts of 25 bps in both November and December. The Fed could, however, deliver one more 50-bps cut if employment or inflation numbers are lower than expected. USD/CAD has pushed above resistance at 1.3758 and is testing resistance at 1.3790. The next resistance line is 1.3817 1.3731 and 1.3699 are the next support levels
by OANDA
Event-Driven Strategy using Bitcoin Weekly FuturesCME: Bitcoin Weekly Futures ( MIL:BFF ) On Thursday, October 10th, The Bureau of Labor Statistics (BLS) reported that the Consumer Price Index for All Urban Consumers (CPI-U) increased 0.2% on a seasonally adjusted basis, the same increase as in August and July. Over the last 12 months, the all-items index increased 2.4% before seasonal adjustment. However, the headline CPI came in ahead of the 0.1% monthly gain and 2.3% year-over-year rate expected by analysts polled by Dow Jones. As a result, both the US equity markets and cryptocurrencies slipped on Thursday. While the year-over-year headline CPI is the lowest since February 2021, digging into the category data reveals sticky inflation. Noticeable data includes: • Food: +2.3% YoY. However, Eggs jumped 39.6%, while “nonconcentrated juices + soft drinks” category was up 15.3%. • Motor vehicle insurance: +16.3% YoY • Video discs + other media: +11.6% YoY • Admission to sporting events: +10.3% YoY • Health insurance: +7.5% YoY High prices affect day-to-day life and contradict the notion of low inflation. The fact is that prices have gone up a lot in the past few years. Even though they rise more slowly now, the absolute price levels remain high. Examples from my personal experiences: • The $9 price tag for 1-1/2 dozen eggs caused me to reduce purchase to 1-dozon for $5. I still remember the good old days of 99-cent per dozen large eggs. • I watched a WNBC match featuring Indianapolis Fever and Catlin Clark in the summer. A seat close by the basketball court costs $200. Adding up hotel stay, fuel cost and a $50 T-shirt, this felt like a vacation budget. • A recent doctor’s visit required copayment of $100. Six months ago, the same clinic charged $75. This is a 33.3% increase. Event to Watch: The Next Fed Rate Decision Retrospectively, it appears that the Federal Reserve acted a bit too aggressively with the supersized 50-bp rate cut in September. With the sticky inflation data, the Fed’s next move on November 7th is uncertain. According to CME Group’s FedWatch Tool, as of October 11th, the futures market expects the Fed to cut 25 basis points at the next FOMC meeting, with an 88.4% probability. Gone are the odds of another supersized cut. Meanwhile, the probability of a no-cut increases to 11.6%. www.cmegroup.com Driven by the lowered expectation on Fed rate cuts, on Thursday, the Dow Jones Industrial Average closed down 0.14% to 42,454, and the S&P 500 slipped 0.21% to settle at 5,780. Meanwhile, the Nasdaq composite shaved up 10 points (-0.05%) and closed at 18,282. The cryptocurrency market has a more pronounced reaction. Bitcoin gave up the psychologically important $60K level, lost $1,442 (or -2.36%) and settled at $59,564. Meanwhile, ETHER gave up $57.2 (or -2.38%) and closed at $2,356. However, market sentiments are still very bullish. By Friday, strong Q3 earnings reported by JPMorgan and Well Fargo helped push the stock market up again, with the S&P 500 breaking 5,800 and making its 45th all-time high in 2024. In my opinion, Bitcoin futures would be a good instrument for event-driven trades on the Fed rate decisions, given its higher volatility. Introducing Bitcoin Friday Futures Bitcoin Friday futures ( MIL:BFF ) are weekly, USD-settled contracts that offer a more precise way to gain bitcoin exposure and manage risk relating to such exposure. Each contract represents 1/50 of a bitcoin, ensuring capital efficiency and accessibility. The contract size of BFF is 1/5 of that of Micro Bitcoin Futures ( NYSE:MBC ), which is 1/10 of a Bitcoin. These shorter-dated contracts expire and settle to the CME CF Bitcoin Reference Rate New York Variant (BRRNY) every Friday at 4:00 p.m. New York time and may track the spot price of bitcoin more closely. Futures contracts traditionally expire on a monthly or quarterly basis, such as BTC and MBT, whereas BFF will settle weekly every Friday. Because of this shorter duration, BFF will have a shorter cost of carry resulting in a price that may more closely track bitcoin’s spot price. Bitcoin futures price = bitcoin spot price + financing costs to carry the position to expiration Two consecutive Fridays will be listed at any time. A new BFF contract will be listed every Thursday at 6:00 p.m. New York time such that market participants will be able to trade the nearest Friday plus the next two Fridays giving traders the choice to hold or not hold exposure over the weekend depending on their preference. Trade Setup using BFF for the FOMC Event The Federal Open Market Committee will release its next rate decision at 2:00 PM Eastern Time on Thursday, November 7th. The BFF contract expiring Friday, November 8th will begin trading at 6:00 PM Eastern Time on Thursday, October 24th. A trade could be set up on or after October 24th, and closed by November 7th or 8th, after the market reacts to the Fed decision and before contract expiration. While the market overwhelmingly expects the Fed to cut 25 bps, new data could change the expectations dramatically in the next four weeks. The most important data points are: • BLS Nonfarmed Payroll and Unemployment, November 1st • US Presidential Election, November 5th Separately, the next BLS CPI release will be on November 13th, after the BFF November 8th contract. We could use the BFF November 15th contract to trade on that event. As an educational writeup, I do not offer a personal view on the future direction of BFF prices. With basic information provided here, traders could apply their own view to set up a trade on BFF. Generally, if the Fed cuts rates in December, stocks and cryptocurrencies could get a lifting as lower rates reduce the cost of capital. Meanwhile, if the Fed pauses and decides on no-cuts, the uncertainty on interest rate trajectory could cause risk capital to fall. 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:MBT1!Long
by JimHuangChicago
4
RBNZ implements jumbo cut; Kiwi dollar plummeted Following the Fed's lead, the RBNZ also took a big step. The RBNZ took the jumbo step of cutting its benchmark interest rate by 50bps, bringing it down from 5.25% to 4.75%. RBNZ stated that New Zealand's economy is now in excess capacity, and low import prices fuel deflation. They insisted that the committee unanimously confirmed that domestic economic activity is decelerating, as business investment and consumer spending are weakening, and employment conditions are persistently deteriorating. As hopes for the Fed’s additional rate cut diminish, the US dollar is on the rise, while the Kiwi dollar has dropped briefly to 0.6050, matching its lowest since 18th August. NZDUSD advanced to 0.6095 after breaching the ascending channel’s upper bound. If NZDUSD breaches the resistance at 0.6110, the price could gain upward momentum toward 0.6175. Conversely, if NZDUSD fails to hold above the channel’s upper bound and breaks below the support at 0.6050, the price could fall further to 0.5960.
by inkicho_exness
GBP/USD: Key Levels and Market UncertaintyThe analysis of the GBP/USD pair indicates a context of uncertainty, with the British pound (GBP) seeking support from relatively subdued demand for the US dollar (USD) but lacking clear bullish pressure. The GBP/USD pair is influenced by various macroeconomic factors, including expectations of further easing by the Bank of England (BoE) and key economic data from both the United States and the United Kingdom. Following the release of the minutes from the Federal Reserve’s (Fed) September meeting, the dollar gained strength. The minutes revealed that most FOMC members supported a 50 basis point (bps) rate cut, but with caution regarding the future pace of easing, sending a more "hawkish" signal than expected and dampening the prospects for immediate further easing. The pound remains under pressure, as the market expects the BoE to continue with a more accommodative policy, which limits the potential appreciation of the GBP. However, UK economic data could provide short-term support if it surprises to the upside. From a technical perspective, GBP/USD has some key static support levels: 1.3050, 1.3000 (a psychologically important round level), and 1.2940, which could act as deeper support. On the resistance side, 1.3100 corresponds to the 78.6% Fibonacci retracement of the latest uptrend and could be a barrier for bulls, with the next resistance at 1.3170, located at the 61.8% Fibonacci retracement, representing the next hurdle in the event of a trend reversal.
Long
by Forex48_TradingAcademy
1
Copper Pulls Back as China Optimism FadesCopper extended the August rebound into autumn and reached three-month highs, helped by the Fed’s jumbo rate cut and massive stimulus from Chinese authorities aiming to prop the economy and the property sector. However the measures do little to address the structural problems and the real estate market is unlikely to return to its former glory, while the lack of follow through on the fiscal front this week caused prior optimism to subside. Furthermore, the Fed has struck a more cautious approach towards further easing and Friday’s strong jobs report supported the reserved commentary. Markets have now priced out previous aggressive bets for 75 bps of cuts this year, aligning with the Fed’s 50 bps projections. Copper pulls back as a result, threatening the EMA200 (black line) and the 50% Fibonacci of the recent recovery. A breach would pause the upside bias, send the non-ferrous metal into the daily Ichimoku Cloud and expose it to the ascending trend line from the August lows. Deeper correction however does not look easy under the current technical and fundamental backdrop. There are still hopes for additional Chinese stimulus (potentially within the weekend), while prospects of US soft-landing and easier monetary policies in major economies can support higher prices. So do the AI boom and the green energy transition. Copper tries to defend the EMA200 that maintains its recovery momentum. This will allow it to push again towards 4.791, but we are cautious around further strength at this stage. Stratos Markets Limited (www.fxcm.com): CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 64% of retail investor accounts lose money when trading CFDs with this provider . You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. Stratos Europe Ltd (trading as “FXCM” or “FXCM EU”) (www.fxcm.com): CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 66% of retail investor accounts lose money when trading CFDs with this provider . You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. Stratos Trading Pty. Limited (www.fxcm.com): Trading FX/CFDs carries significant risks. FXCM AU (AFSL 309763). Please read the Financial Services Guide, Product Disclosure Statement, Target Market Determination and Terms of Business at www.fxcm.com Stratos Global LLC (www.fxcm.com): Losses can exceed deposits. Any opinions, news, research, analyses, prices, other information, or links to third-party sites contained on this video are provided on an "as-is" basis, as general market commentary and do not constitute investment advice. The market commentary has not been prepared in accordance with legal requirements designed to promote the independence of investment research, and it is therefore not subject to any prohibition on dealing ahead of dissemination. Although this commentary is not produced by an independent source, FXCM takes all sufficient steps to eliminate or prevent any conflicts of interests arising out of the production and dissemination of this communication. The employees of FXCM commit to acting in the clients' best interests and represent their views without misleading, deceiving, or otherwise impairing the clients' ability to make informed investment decisions. For more information about the FXCM's internal organizational and administrative arrangements for the prevention of conflicts, please refer to the Firms' Managing Conflicts Policy. Please ensure that you read and understand our Full Disclaimer and Liability provision concerning the foregoing Information, which can be accessed via FXCM`s website: Stratos Markets Limited clients please see: www.fxcm.com Stratos Europe Ltd clients please see: www.fxcm.com Stratos Trading Pty. Limited clients please see: www.fxcm.com Stratos Global LLC clients please see: www.fxcm.com Past Performance is not an indicator of future results.
FX:COPPERLong
by FXCM
BoE is dovisher than the Fed. Will Sterling continue to fall? Sterling is exhibiting weakness as a robust US economy bolsters the dollar. With the likelihood of a substantial Fed rate cut now nullified by the strong US job market, speculation of further rate cuts by the BoE in November is exerting downward pressure on the GBPUSD. BoE Governor Andrew Bailey's statement about the potential for more aggressive rate cuts in response to ongoing inflation decline has intensified apprehensions about the BoE's hawkish monetary policy. It is also worth noting that the UK Treasury is expected to present a budget with tax hikes and austerity measures. This could exert pressure on near-term growth for the UK economy and lead to a decline in the value of the Sterling. GBPUSD maintained its downtrend and fell to 1.3060. The widening distance between both EMAs suggests a bearish momentum. If GBPUSD breaks the support at 1.3050, the price may fall further to 1.2960. Conversely, if GBPUSD breaches the resistance at 1.3250 and holds above both EMAs, the price could gain upward momentum toward 1.3435.
by inkicho_exness
Dollar begins to rebound after NFP data The Fed's possibility of making another jumbo cut quickly faded following September's NFP report, which renewed confidence in the US job market. According to CME FedWatch, the likelihood of a 50bp cut at the November FOMC has dropped from 36.8% to 0%, while the probability of a 25bp cut has surged to 88.8%. It's worth noting that the likelihood of a rate freeze has risen from 0% to 11.2%. Due to this, the dollar bounced back swiftly as expectations grew that the Fed's dovish stance would not persist. DXY quickly breached the trendline and climbed above the 102.50 level. The price holds above both EMAs, sending out an apparent bullish signal. If DXY sustains support above both EMAs, the price could gain upward momentum toward the 103.30 resistance. Conversely, if DXY breaks the 101.60 support, where EMA21 coincides, the price may fall further to 101.10.
TVC:DXY
by inkicho_exness
NZD/USD - RBNZ poised to cut, but by how much?The New Zealand dollar is down for a sixth straight day and has fallen 3.6% during that time. NZD has stabilized on Tuesday and is trading at 0.6120 in the North American session, down 0.07% on the day. The Reserve Bank of New Zealand meets on Wednesday and is widely expected to a cut rates, but by how much? The markets have priced in an oversize rate cut of 50 basis points, but a modest cut of 25 bps cannot be ruled out. The RBNZ joined the rate-cutting club of major central banks in August after holding rates for over a year. The August cut which brought the cash rate down to 5.25%, marked the first rate cut in over four years. That move surprised the markets as the central bank had projected its first rate cut would not take place until mid-2025. Why would the RBNZ slash by 50 bps? Elevated interest rates have weighed on economic activity and GDP contracted by 0.2% in the second quarter. Inflation eased to 3.3% in the second quarter, closer to the RBNZ’s upper band of the 1-3% target range. The RBNZ’s latest projections have inflation falling to 2.3% in Q3. The inflation report won’t be released until next week and if the RBNZ chops rates by 50 bps and inflation is higher than the RBNZ estimate, it will put the central bank in an awkward position. Another factor which supports a 50-bps cut is that the Federal Reserve lowered rates by 50 bps in September, which allows the RBNZ to do the same without risking a sharp decline in the value of the New Zealand dollar. NZD/USD is testing resistance at 0.6137 and 0.6161 There is support at 0.6100 and 0.6076
by OANDA
USDJPY Rebound Faces Pushback at Key ResistanceAfter the Fed’s jumbo pivot in September and aggressive easing path, Chair Powell adopted a more reserved approach at the start of the previous week. The cautious messaging was extrapolated at the end of that same week by the strong jobs report. Markets have now priced out bets for another outsized move, expecting 50 bps of cuts by the end of the year, in line with the Fed’s projections. At the same time, the Bank of Japan has shifted to a more patient approach to monetary tightening, after last month's hold, removing guidance for further hikes ahead. The August deceleration in wage growth adds a reason for caution, while the current political landscape does not favor aggressive tightening. With elections due later this month, the new Prime Minister does not see the need for more hikes. As a result of these developments, USD/JPY posted its best week of the year and extends its gains into the daily Ichimoku Cloud, testing the pivotal 38.2% Fibonacci. This creates scope for further recovery towards 151.90, but we are cautious about sustained advance as the upside is unfriendly technically and fundamentally. Inflation (ex-fresh food) in Japan has been rising for the past four months and remains above the 2% target for more than two years, wages are elevated and GDP posted strong growth in Q2. One more rate hike within the year is still reasonable and BoJ officials still see more tightening if the economy evolves as projected. Chair Powell may have struck a more cautious tone, but officials still expect another 150 bps of cuts by the end of next year, so the broader policy dynamics remains unfavorable for USD/JPY. The pair faces pushback at the 38.2% Fibonacci and rejection could send it back below the EMA200 (black line) and reaffirm the bearish bias. This would in turn create scope for new 2024 lows (139.57), although strong catalyst would be required. Stratos Markets Limited (www.fxcm.com): CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 62% of retail investor accounts lose money when trading CFDs with this provider . You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. Stratos Europe Ltd (trading as “FXCM” or “FXCM EU”) (www.fxcm.com): CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 59% of retail investor accounts lose money when trading CFDs with this provider . You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. Stratos Trading Pty. Limited (www.fxcm.com): Trading FX/CFDs carries significant risks. FXCM AU (AFSL 309763). Please read the Financial Services Guide, Product Disclosure Statement, Target Market Determination and Terms of Business at www.fxcm.com Stratos Global LLC (www.fxcm.com): Losses can exceed deposits. Any opinions, news, research, analyses, prices, other information, or links to third-party sites contained on this video are provided on an "as-is" basis, as general market commentary and do not constitute investment advice. The market commentary has not been prepared in accordance with legal requirements designed to promote the independence of investment research, and it is therefore not subject to any prohibition on dealing ahead of dissemination. Although this commentary is not produced by an independent source, FXCM takes all sufficient steps to eliminate or prevent any conflicts of interests arising out of the production and dissemination of this communication. The employees of FXCM commit to acting in the clients' best interests and represent their views without misleading, deceiving, or otherwise impairing the clients' ability to make informed investment decisions. For more information about the FXCM's internal organizational and administrative arrangements for the prevention of conflicts, please refer to the Firms' Managing Conflicts Policy. Please ensure that you read and understand our Full Disclaimer and Liability provision concerning the foregoing Information, which can be accessed via FXCM`s website: Stratos Markets Limited clients please see: www.fxcm.com Stratos Europe Ltd clients please see: www.fxcm.com Stratos Trading Pty. Limited clients please see: www.fxcm.com Stratos Global LLC clients please see: www.fxcm.com Past Performance is not an indicator of future results.
by FXCM
CNH: Chinese Currency Could Return to the 6.3-6.9 LevelCME: USD/Offshore RMB Futures ( CME:CNH1! ) Last week, I discussed how China’s huge stimulus package, coupled with the Fed’s supersized rate cut, could improve global energy demand and lift crude oil higher. As soon as the stimulus was announced, China’s stock market staged a huge rally. The Shanghai Stock Exchange (SSE) index moved from below 2,800 on September 24th to close at 3,336.5 on September 30th, up 19% in a week. One-month return for the SSE and notable Chinese stocks are listed here: • SSE: +17.5% • Yonghui Supermarkets: +59.9% • JD: +51.3% • BABA: +32.5% • BIDU: +25.5% China's stock market is closed on October 1st-7th for observation of the National Day holiday. Would the China rally continue when the market resumes trading on Tuesday? Goldman Sachs just released a research note, saying: Unless China does QE now, the current market rally will crash and burn, and the economy will be a crater. If China does do QE, oil will soar, and gold and bitcoin will be orders of magnitude higher. While this is presented as two alternative paths, there is only one way to go, in all practical purpose. After going all out last month with unprecedented fiscal stimulus, the Chinese government could not afford to see the stock market and the housing market to tank again. It really needs to finish the job by injecting fiscal stimulus into the economy. Now that the market sensation has already turned positive, government spending would trigger consumer spending as well as investment from the private sector. Such a multiplier effect could lift the Chinese economy higher. Everything looks bright, with one small problem: China-listed stocks are off-limited to most foreign investors due to financial regulations and the foreign currency control regime. China’s currency could strengthen as its economy recovers I hold the view that the China’s currency could appreciate as its economy improves. Outside of China, investors could invest in USD/RMB futures to hitch the economic hike. To start the discussion, let’s first make some clarification to the confusing terms in the FX market. The USD/RMB exchange rate is quoted as the number of RMB per dollar. The current USD/RMB rate is 7.09, meaning each dollar could exchange for 7.09 RMB. When the RMB appreciates against the dollar, the price quote would get lower, not higher. For example, the rate 6.50 means you now need 6.50 RMB to get one USD dollar. In RMB terms, this is 0.59 Yuan less than the current USD/RMB rate 7.09. In this scenario, the RMB gains value relative to the dollar. While the RMB appreciation equates to the dollar depreciation, in charts, the lines representing USD/RMB and the dollar index should move in the same direction. • For dollar index, the line moving up means dollar gaining value. • For the USD/RMB, the line moving up means the dollar appreciating against the RMB. • These two things usually occur at the same time. In 2023, as China’s economy did not rebound after the end of the pandemic closedown, the RMB depreciated more than 10% against the dollar, sending the rate from 6.69 to 7.37. In 2024, the two lines diverged due to different economic forces. • Dollar index moves down with the market expectation of the Fed cutting rates, reducing the interest earned from holding dollar asset. • The USD/RMB quote moves up because of the slowdown in China’s economy. In my opinion, the two lines will converge again, both moving down in Q4. Dollar index will get lower as the Fed continues rate cuts. The USD/RMB quote will also go lower, as improvement in China’s economy would strengthen the country’s currency. For someone with a bullish view of RMB, he could establish a short position in CME USD/Offshore RMB Futures ( NYSE:CNH ). Remember, shorting means the expectation of the quote to go lower, which actually means RMB appreciating against the dollar. The contract has a notional value of $100,000. At Friday closing price of 7.061, each December contract (CNHZ4) is worth RMB 706,100. CME Group requires an initial margin of RMB 14,000 for each CNH contract, long or short, at the time of writing. Hypothetically, if CNH bounced back to 6.70, its previous high in January 2023, the quote difference of 361 pips (=7061-6700) would produce a gain of RMB 36,100 (=0.361x100,000) for a short position. The risk of shorting the CNH is that the Chinese government did not follow through with a fiscal stimulus, and the market rally is short lived. 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!Short
by JimHuangChicago
XAUUSD - Gold waiting for an important weekIn 4H timeframe, gold is moving above the EMA200 and EMA50 in its ascending channel Gold is still trading in its range box, and geopolitical tensions and the strengthening of the dollar have not led to its failure to rise or fall so far As long as gold is in this range, the best strategy will be to buy at the bottom and sell at the top breaking of the two drawn upward and downward trend lines is the first warning in the direction of changing the trend, but the stabilization above the support and resistance ranges will provide the path for gold to break this range box in an authentic way The potential target of this upward and downward movement will be the ceiling and bottom of the ascending channel It should be noted that if Anas moves downward, we will look for medium-term gold buying positions at the bottom of the channel
FOREXCOM:XAUUSD
by Ali_PSND
XAUUSD - Gold waiting for an important weekIn 4H timeframe, gold is moving above the EMA200 and EMA50 in its ascending channel Gold is still trading in its range box, and geopolitical tensions and the strengthening of the dollar have not led to its failure to rise or fall so far As long as gold is in this range, the best strategy will be to buy at the bottom and sell at the top breaking of the two drawn upward and downward trend lines is the first warning in the direction of changing the trend, but the stabilization above the support and resistance ranges will provide the path for gold to break this range box in an authentic way The potential target of this upward and downward movement will be the ceiling and bottom of the ascending channel It should be noted that if Anas moves downward, we will look for medium-term gold buying positions at the bottom of the channel
FOREXCOM:XAUUSD
by Ali_PSND
Geopolitical Concerns Support Gold PricesGold price remains resilient, with buyers showing persistence as long as the static support at $2,630 holds firm. Gold's recent struggle to capitalize on the US Dollar's pullback, following the Greenback's seven-week highs, is notable. Despite weakening US Treasury bond yields, which typically support Gold prices, other global dynamics are weighing on the precious metal. Market risk sentiment remains elevated, driven by expectations of further stimulus measures from China as markets reopened after a week-long break. This surge in risk appetite has suppressed demand for traditional safe-haven assets like Gold and US bonds. Another factor dampening Gold's outlook is the shifting sentiment regarding Federal Reserve (Fed) interest rate cuts. Following stronger-than-expected US Nonfarm Payrolls (NFP) data, which reported robust job growth of 254,000 in September, expectations for a 50 basis points (bps) rate cut by the Fed have almost disappeared. The probability of a 25 bps cut is now seen at 94%, leaving little room for further dovish moves. This has reduced Gold’s short-term appeal, as higher interest rates increase the opportunity cost of holding non-yielding assets like Gold. However, geopolitical concerns continue to support Gold prices. The escalating conflict between Israel and Iran, highlighted by Israeli airstrikes on Hezbollah targets in Beirut and retaliatory rocket launches by Hezbollah into northern Israel, raises the risk of a broader regional war in the Middle East. This geopolitical uncertainty keeps safe-haven demand for Gold alive, counterbalancing the downward pressure from global risk appetite and Fed expectations.
OANDA:XAUUSDShort
by Forex48_TradingAcademy
1
GBP/USD Faces Continued Bearish PressureThe GBP/USD pair continues to experience downward pressure, primarily due to the resilience of the US Dollar. After breaking the key psychological level of 1.3100 following the release of stronger-than-expected US Nonfarm Payrolls (NFP) data, GBP/USD remains in a corrective phase. The NFP report showed a job growth of 254K in September, significantly surpassing the 140K forecast. Additionally, the Unemployment Rate dropped to 4.1%, further strengthening the US labor market outlook and reducing the likelihood of aggressive rate cuts by the Federal Reserve (Fed). As a result, the US Dollar has extended its gains, limiting any upward momentum for GBP/USD. Fundamentally, the Pound remains under pressure due to the dovish rhetoric from Bank of England (BoE) officials. Early Thursday, Governor Andrew Bailey's comments triggered a selloff in the Pound as the market interpreted his remarks as signaling imminent monetary easing. Although BoE Chief Economist Huw Pill struck a more cautious tone, stating that policymakers must avoid cutting rates "too far or too fast," this has done little to offset the bearish sentiment. In conclusion, the combination of a stronger US Dollar, resilient US labor market data, and the dovish BoE rhetoric creates a challenging environment for GBP/USD. Unless the pair can break through key resistance levels, the path of least resistance remains to the downside, with potential targets at 1.3050 and 1.3000 in the short term.
Long
by Forex48_TradingAcademy
1
THE KOG REPORT - NFP THE KOG REPORT – NFP This is our view for NFP, please do your own research and analysis to make an informed decision on the markets. It is not recommended you try to trade the event if you have less than 6 months trading experience and have a trusted risk strategy in place. The markets are extremely volatile, and these events can cause aggressive swings in price. Simple one for this NFP as we’re going to be more of the observer rather than the trader unless again, we get those extreme levels that we want. Key level here is 2670 which was our bias level earlier in the week, that is also now a resistance being attempting to break open. For that reason, we will wait to see if it breaks and look higher at the levels of 2675 and then step by step upwards following the path. We’ll be looking at the extreme level of 2710-20 for the exhaustion and the RIP to attempt the short trade. On the flip, downside risk on the break of 2650 key level should take us in to the order region 2630-35 where we may get a slight reaction in price, but potentially only for the scalp. Breaking this level opens the door and we won’t be looking to long again until we target 2600-10. Please do support us by hitting the like button, leaving a comment, and giving us a follow. We’ve been doing this for a long time now providing traders with in-depth free analysis on Gold, so your likes and comments are very much appreciated. As always, trade safe. KOG
FX:XAUUSD
by KnightsofGold
4
Gold Shakeout - Fed Comments/UD-Dollar - Rally TimeGold saw a huge shakeout this morning, as the Fed commented, and the move in the US dollar put some extreme pressure on metals. The funny thing is this move ended almost as fast as it started - and now metals are rallying again. Why? The Fed is trying to transition into a more global friendly position - allowing foreign nations to become more competitive with the US Dollar. China recently went ALL IN on a resurgence economy - betting the US Fed is going to move towards more Dovish rate cuts. This bet may be the downfall of China if the Fed changes direction near the end of 2025. The US dollar is still the biggest, badest currency on the planet. As Gold rises while the US Dollar rises - you are seeing global traders attempt to hedge global risk factors in precious metals while the US Dollar/Economy continues to be the 900lb Gorilla of the world's economies. Things could get very interesting through the US election. Sit tight - buckle up and prepare for some very big moves in the markets over the next 60-90+ days. Get some.
COMEX:GC1!Long
by BradMatheny
Gold is ready for NFP!Gold (XAU/USD) has shown resilience, bouncing back to around $2,640 per ounce after hitting a daily low of $2,638 on Thursday. This recovery was fueled by growing concerns over a potential conflict between Israel and Iran, as well as a stronger US Dollar. On the fundamental side, gold remains influenced by expectations surrounding the Federal Reserve's (Fed) monetary policy. Last week, the market predicted with over 60% probability a 50 basis point rate cut by November. However, stronger-than-expected US labor market data have reduced these expectations to 35%, boosting the US Dollar and applying bearish pressure on gold, which tends to lose appeal as the dollar strengthens. Technically, gold is in a phase of uncertainty. A break above $2,673, the weekly high, could signal a resumption of the uptrend, with a potential target of $2,700. Conversely, a break below $2,625 could lead to a test of support at $2,600. In the medium to long term, gold maintains a general bullish trend, supported by its traditional role as a safe-haven asset and the global low-interest rate environment.
OANDA:XAUUSDShort
by Forex48_TradingAcademy
1
EUR/USD Awaits NFP!The upcoming key EU inflation data could play a decisive role in the currency pair's movement. With the ECB signaling potential inflation stabilization at 2% by 2025, future monetary policy may be less aggressive. On the other hand, the Fed has kept the possibility of further rate cuts on hold, with the market anticipating up to 100-125 basis points of rate reductions over the next 12 months. This potential alignment between Fed and ECB policies could support EUR/USD, but the long-term economic strength of the US may limit the euro's upside. The US dollar has shown a significant rebound, recovering ground due to rising US Treasury yields, pushing EUR/USD down towards the 1.1110 level. The main resistance is set at 1.1214 (2024 high), followed by the 2023 peak at 1.1275. Should EUR/USD break these levels, a significant recovery may unfold. On the downside, immediate support is at 1.1113, followed by 1.1082. In the short term, EUR/USD could move sideways between the identified support and resistance levels, with EU inflation data and the US Non-Farm Payrolls (NFP) report acting as catalysts for significant movements. If inflation data shows a marked decline or NFP data underperforms, EUR/USD may break above the 1.1214 resistance level.
Long
by Forex48_TradingAcademy
1
MCL: One-Two Punch Could Lift Crude Oil to Higher GroundNYMEX: Micro WTI Crude Oil Futures ( NYMEX:MCL1! ) On September 18th, the U.S. Federal Reserve cut interest rate by a supersized 50 basis points, ushering a long-awaited monetary easing cycle. Six days later, on September 24th, China introduced a broad stimulus package to revive its economy. It includes cutting interest rates, reducing bank reserve requirements, supporting the property sector, and injecting liquidity into the stock market. Specifically, • The People’s Bank of China (PBOC), China’s central bank, cut its 7-day reverse repurchase rate to 1.5% from 1.7% • The PBOC slashed the reserve requirement ratio of financial institutions by 0.5% • The PBOC lowered home mortgage downpayment requirements to 15%; previously, those buying houses other than primary residence were required to put down 25% • Separately, the PBOC would advise banks to lower mortgage interest rate by 0.5% • The PBOC also announced a new RMB $1 trillion long-term credit facility (equivalent to US$143 billion). It allows financial institutions to use their stocks, bonds and ETF funds as collateral to obtain funding from the PBOC. The use of fund is specifically earmarked for credit lending to publicly traded companies for stock buyback Each of these policies is a major stimulus measure. Putting together, they have the potential to reshape the economic outlook for China, and for the rest of the world as well. Following the announcement, Chinese stock markets clocked their best week in 16 years as the CSI 300 rallied 15.7%. Hong Kong’s Hang Seng index recorded a weekly gain of 12.75%. On Friday, the CSI 300 climbed 4.47% to close at 3,703.68, its highest level in a year, while the HSI rose 3.32% to 20,586.94, its highest since February 2023. On Monday, September 30th, China’s SSE Composite Index rallied 8.06%, closing at 3,336.50. This marks a nine-day winning streak, its best day since September 2008 and its highest point since August 2023. In 2024, China’s economy has slowed significantly. Last week, China released its industrial profit data for August, which saw a 17.8% plunge year on year. On a year-to-date basis, profits at large industrial firms grew at 0.5% to 4.65 trillion yuan ($663.47 billion) for the first eight months, down from 3.6%. However, China’s supersized monetary policies could help its economy turn a corner. It is highly expected that China’s Ministry of Finance will follow suit to announce new fiscal stimulus and add more ammunition to fuel economic growth. Together, the extraordinary measures installed by the Top 2 economies, which account for 40% of global GDP, could help improve the global economy in a meaningful way. WTI Crude Oil: Higher Demand from Economic Growth While it is still too early to quantify how much the global economy would benefit from these stimulus measures, we could expect higher industrial output from the government credit extension and the lower business cost of capital. The potential impact could be huge for stocks, bonds, foreign exchange and commodities. Today, my analysis concentrates on crude oil. The Fed rate cut and China Stimulus package both exceeded market expectations. These are game changers big enough to reverse the declining trend of crude oil prices. Recent escalation of Middle East conflict would only add to the uncertainty of oil supply. In my opinion, WTI could reclaim the previous levels of $76, $83 and $89, consequently. The expected stimulus from China’s Ministry of Finance and the November 6th FOMC rate cut could support the upward trend if they meet or exceed market expectations. The recent CFTC Commitment of Traders report confirms a shift to the long positions: • As of September 24th, total open interest (OI) of WTI futures was 2,242,432 contracts • Managed Money held 210,469 long and 48,541 short, a 4.3-to-1 ratio • Compared to the previous week, the long positions increased by 24,734, while the shorts decreased by 3,969 contracts; this shows a bullish view building up For someone with a bullish view of crude oil, he could establish a long position in NYMEX Micro WTI Crude Oil Futures ( GETTEX:MCL ). The contract has a notional value of 100 barrels. At 1/10 the size of benchmark WTI Crude Oil contracts, Micro WTI futures offer the same robust trading transparency and price discovery with smaller margin requirements. At Friday closing price of $68.63, each November contract (MCLX) is worth $6,863. CME Group requires an initial margin of $596 for each MCL contract, long or short. Hypothetically, if WTI bounced back to $76.88, its previous high on August 5th, the price increase of $8.25 would produce a gain of $825 (=8.25x100) for a long position. The risk of buying crude oil is that the follow-up government stimulus packages were less than market expectations, which could undermine the growth forecast. To hedge the downside risk, an experienced trader could consider the use of put options on WTI crude oil futures. 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
NYMEX:CL1!Long
by JimHuangChicago
1
Hedging Yen amid bullish Nikkei outlook? The Nikkei-225 is trading near 40,000 once more. The sharp decline in early August due to the BoJ rate hike has been swiftly reversed. The outlook for the Nikkei remains bullish with continued investor interest driven by market reforms as well as foreign investor interest. With the BoJ currently on pause and signalling no urgency to raise rates further, the Nikkei appears poised to retest its all-time high set in July. However, the significant influence of monetary policy on the Yen makes it advantageous to hedge a Nikkei position with a long Yen position. This approach offers similar upside potential while reducing downside risk. BOJ ON HOLD FOLLOWING FALLOUT FROM RATE HIKE The BoJ decided to maintain rates at 0.25% during its September 20 meeting. Their statement indicated that the economy is on a recovery path aligned with the BoJ's mandate, upgrading its assessment of consumption from a "resilient trend" in July to a "moderate increasing trend." Governor Ueda noted that the recent yen strengthening is reducing inflationary pressures, signalling positive trends for the economy in line with the BoJ's mandate. During the September 20 meeting, he reiterated that the BoJ would not raise rates amid market instability, which they attribute to recession risks in the U.S. This cautious approach likely results from the fallout after the BoJ raised rates to a 15-year high at its July 31 meeting. This decision triggered a sharp yen appreciation and a significant unwind of the yen carry trade, leading to a global decline in equities fuelled by fear. The Nikkei-225 dropped over 20% in the following week, erasing all gains made in 2024. MARKET STABILITY ANOTHER CONCERN FOR BOJ The BoJ's policy mandate focuses on achieving sustainable economic growth through wage growth and consumption while maintaining a stable 2% inflation rate. Under Governor Ueda's leadership, the BoJ aims for a neutral policy rate that is neither overly restrictive nor too accommodative, indicating that rates must increase from their current excessively loose levels. However, following the market reaction to the July 31 policy meeting, the BoJ faces an additional mandate: balancing its monetary policy trajectory with the risks of market volatility and its effects on business stability. This additional mandate introduces a complex variable into the BoJ’s monetary policy balancing act, making it prudent for the BoJ to wait and assess the effects of policy changes. As Governor Ueda stated during the policy announcement, "We can afford to spend some time in making a policy decision." The BoJ has two remaining policy meetings scheduled for 2024: October 30 and December 18. Following Governor Ueda's recent statement highlighting risks from market volatility, analysts unanimously agreed that September policy meeting would not result in a hike but majority still expect another hike by the end of the year. With the recent encouraging inflation prints, BoJ has room to hike rates towards the end of the year. PAUSE RATHER THAN HALT The decision to maintain rates may signal a pause rather than a halt to rate hikes. Governor Ueda indicated in an August parliamentary hearing that the BoJ would continue to raise rates if economic data aligns with expectations. With inflation around the target range, BoJ has room to raise rates further. Additionally, the recent election concluded with Shigeru Ishiba becoming the next Prime Minister. The former defense minister has backed the BoJ's rate hike strategy and expressed concerns about yen depreciation. His leadership may foster political support for further rate increases in Japan. Finally, recession fears in the US are subsiding with recent jobs data and GDP figures above expectations. This may help ease market instability concerns for the BoJ. JAPAN EQUITIES REMAIN COMPELLING, ATTRACTING INFLOWS Japan equities remain compelling for foreign investors. The TSE’s recent market reforms have led to a material improvement in the firm’s balance sheets with higher utilization of capital in the form of both returns to shareholders and capital expenditure. Furthermore, Japan equities remains undervalued despite the massive improvement in valuations this year. While, the P/B ratio for Nikkei-225 has increased from 1.75 to 1.93 over the past year, the P/E ratio has remained largely unchanged at 20.88 (compared to 19.38 last year). The much unchanged P/E ratio reflects the strong earnings growth despite the 23% rally in the index. The potential undervaluation has attracted global value investors including Warren Buffet. Warren Buffet has built up large positions in Japanese trading houses with the value totalling nearly USD 25 billion as of 12/June. Buffet has previously opted to increase stakes in these investments when they traded at P/E similar to the level during the downturn in August. Furthermore, YTD inflows into Nomura Nikkei 225 Fund (NTETF) have totalled USD 891 million. While the fund is only available OTC in the US, it is one of the largest Japan equity ETF with USD 71 billion in AUM. Notably, inflows into the ETF have been concentrated after large declines this year suggesting investors are using decline in price to increase positions. CHINA STIMULUS ADDS FURTHER WIND IN NIKKEI SAILS The announcement of the massive stimulus package in China last week has supported most Asian equity markets with the rising tide of Chinese equities rippling through Japanese equities. As the positive sentiment in China continues, other Asian indices are likely to benefit too. HYPOTHETICAL TRADE SETUP The Nikkei-225 is supported by strong tailwinds including market reforms that support foreign investment and a positive sentiment in Asia equities. However, given the market reaction to the previous BoJ rate hike, monetary policy and Yen moves remain a pertinent concern for the Nikkei. Nikkei and Yen are inversely correlated. The correlation is particularly tight during periods of Nikkei decline. With the Yen remaining volatile from the impact of monetary policy, hedging a long position in Nikkei-225 with a long position in the JPYUSD is prudent. A combined position of being long on both the Nikkei-225 and the Yen has delivered similar gains to a long position in the Nikkei-225 over the past three months. However, the combined position has also offered crucial downside protection, outperforming during periods of market decline. The Yen remains on an uptrend, supported by both a weakening dollar from Fed rate cuts and a strengthening yen from BoJ rate hikes. A position consisting of long CME Nikkei (USD) futures can be combined with a position consisting of 2 x long CME Japanese Yen futures to roughly balance notional across both legs. Investors can also deploy 21 x long CME Micro JPY/USD futures to balance notional more closely. CME provides margin offset amounting to 35% as of 27/Sept for this trade which reduces margin requirements from USD 18,720 to USD 12,168. A hypothetical trade setup consisting of long 1 x CME Nikkei (USD) December futures and long 21 x CME Micro JPY/USD December futures offering reward to risk ratio of 1.43x is provided below. 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 tradingview.com/cme . 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.
CME:NKD1!Long
by mintdotfinance
7
Study of DXY, Gold, and Fed Fund Rates using 200MA indicatorBlack line: DXY (U.S. dollar index) Green line: DXY 200 week moving average Yellow line: GC (Gold futures) Blue line: DFF (U.S. Federal Funds Effective Rate) Since 1971 when U.S. dollar went off the gold standard, there have been 6 instances when the DXY crossed below its 200 week moving average while it was rising. At closing on 27 September 2024 was the 7th instance of this DXY crossing. Of interest: Performance of gold when DXY crosses below, until DXY reaches a local minimum. Results are highlighted in purple boxes. Of the 7 instances, interest rates were rising in 4, flat in 1, falling in 1, and presumed to be falling in the current scenario. The only rising rate period was 1985-92, when gold had a very marginal 4% gain. This was notably on the backside of the 1970's high inflation period. Technically, gold showed gains in all but 1 of these historical periods, with 1994-95 showing a 2% loss. Conclusions: 1) DXY trend reversal downward is not always, or often, associated with a U.S. interest rate cutting cycle nor is it strongly correlated with gold price gains. 2) The start of a U.S. interest rate cutting cycle is not predictive of gold price gains.
TVC:DXY
by StrobeT