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DXY Potential Forecast | Post CPI | 13th April 2023Fundamental Backdrop 1. CPI m/m printed 0.1% compared to forecasted at 0.2% 2. Fed hikes effects really slowing inflation down 3. USD fell shorting after, signifying the slowing down of inflation at a faster pace than what the market has been pricing in. Technical Confluences 1. Price rejected off resistance at 102.8. 2. Price looks good to form a new higher timeframe low and continue its bearish trajectory. 3. There has not been a strong confluence for any longs on the DXY thus far. Idea We are looking for price to continue its bearish trajectory till 101.67 and the probability of it forming a new low is now high. NOT FINANCIAL ADVICE DISCLAIMER The trading related ideas posted by OlympusLabs are for educational and informational purposes only and should not be considered as financial advice. Trading in financial markets involves a high degree of risk, and individuals should carefully consider their investment objectives, financial situation, and risk tolerance before making any trading decisions based on our ideas. We are not a licensed financial advisor or professional, and the information we are providing is based on our personal experience and research. We make no guarantees or promises regarding the accuracy, completeness, or reliability of the information provided, and users should do their own research and analysis before making any trades. Users should be aware that trading involves significant risk, and there is no guarantee of profit. Any trading strategy may result in losses, and individuals should be prepared to accept those risks. OlympusLabs and its affiliates are not responsible for any losses or damages that may result from the use of our trading related ideas or the information provided on our platform. Users should seek the advice of a licensed financial advisor or professional if they have any doubts or concerns about their investment strategies.
TVC:DXYShort
by OlympusLab
US Inflation Slows for Ninth Month: What's the Plan, Jay Powell?The US annual inflation rate has slowed down for the ninth month in a row, hitting 5% in March of 2023. While this is the lowest it's been since May of 2021, it's still well above the Fed's target of 2%. Investors are trying to figure out when the central bank will put the brakes on its hiking campaign to slow inflation. The March FOMC minutes (released this morning) revealed that some Federal Reserve policymakers discussed hitting the pause button on interest rate increases, following the collapse of two regional banks. However, ultimately, all policymakers decided that tackling high inflation was still the top priority. In the end, they went ahead with a rate hike, despite the potential risks Complicating matters, core CPI (which excludes food and energy components) has gone up to 5.6%, after rising by 5.5% in February. This has led some people to believe that more tightening is in the cards. Initially, money markets thought that the Fed might not raise interest rates in May, but expectations have since risen to 70.5%. The Dollar index remains at its lowest since February 2nd, steady near 101.5. As for Canada, things are looking up - the Bank of Canada has left its key overnight interest rate on hold at 4.50% as expected, while curbing language warning of a potential recession. The Canadian dollar has responded positively, inching up to around 1.34 per USD. Meanwhile, the British pound has risen towards $1.25, nearing a ten-month high of $1.2525 that was touched on April 4. Bank of England Governor Andrew Bailey has stated that he doesn't see any signs of a repeat of the 2007/8 global financial crisis, which is reassuring news for investors. They're betting that the Bank of England will continue to raise interest rates to combat inflation, adding some fuel to the GBP.
TVC:DXY
by BlackBull_Markets
Fed v.s Market: the fight may last for a whileAfter the Non-farm payroll event last week, which saw 236,000 jobs added through March, it is clear that the job market is still creating many jobs compared to pre-COVID levels. However, the market has been experiencing some short-squeezing from yields to the dollar. The reason for this short-squeezing can be attributed to the mispricing between Fed fund futures, which are giving a dovish perspective beyond May, and the Fed's view from its last meeting, which hinted at least one more rate hike. However, with two holidays in a row right at NFP last week, the short-squeezing action was impaired after the news, and the market quickly came back to price in the CPI tomorrow, as well as retail sales on Friday. The Fed fund futures dropped a few percentage points for a 0.25% chance of a rate hike in May and the dollar also retreated. While tomorrow's CPI's headline may slow down and be close to the market forecast with a 0.1-0.2% m/m gain due to some correction from the energy price for the period back then, the service and rental costs are back, and they will continue to haunt the core CPI, which may print a 0.4-0.5% m/m gain for last month. From this perspective, the market is likely to price in the headline instead of the core, as the media would cover that number more, and it may continue to extend the mispricing between the Fed fund rates and the reality that the Fed may continue to have at least one more hike provided a still-hot labor market and stubborn inflation. Another reason for expanding the mispricing is retail sales on Friday, which may not meet expectations and give the market another reason to beg for Fed to ease. However, it is unlikely that the Fed will reduce that soon. Remember how eagerly people talked about a 0.5% rate hike for the last meeting before the banking crisis? It has only been a few weeks since the latest news on the bank, and things are calm, and the Fed is confident in containing liquidity issues. So things will be back on track, along with Fed's hiking. The more mismatching there is between the market's expectations and reality, which the Fed may continue to do, the more significant the opportunity when going against the crowd. In short, the yield will gradually come back, provided that the banking crisis is over and there are no more or fewer deposit drains. Then, the other assets follow the yields then. 
OANDA:XAUUSD
by DatTong
DXY Potential Forecast | Pre CPI | 11th April 2023Fundamental Backdrop 1. CPI tomorrow will give greater clarity to the direction of the USD. 2. Last week's NFP result was positive and bullish for the USD, with unemployment rate falling to 3.5% yet again. 3. CPI m/m forecasted at 0.2% compared to previous 0.4%, market has been pricing in a further slow down in CPI. 4. CPI reading would provide insights to the next FOMC meeting and whether Fed continues to hike or pauses. 5. Core CPI m/m forecasted at 0.4% compared to previous 0.5%. 6. All in all, inflation has been slowing down and Olympus Labs forecast that the road to inflationary cooling will be a smooth one from here on out. Technical Confluences 1. Price rejected off resistance at 102.8. 2. DXY still bearish on H4 timeframe. 3. Price could potentially tap into the support at 101.67. Idea We are looking for price to continue its bearish trajectory till 101.67 and potentially form a new low. NOT FINANCIAL ADVICE DISCLAIMER The trading related ideas posted by OlympusLabs are for educational and informational purposes only and should not be considered as financial advice. Trading in financial markets involves a high degree of risk, and individuals should carefully consider their investment objectives, financial situation, and risk tolerance before making any trading decisions based on our ideas. We are not a licensed financial advisor or professional, and the information we are providing is based on our personal experience and research. We make no guarantees or promises regarding the accuracy, completeness, or reliability of the information provided, and users should do their own research and analysis before making any trades. Users should be aware that trading involves significant risk, and there is no guarantee of profit. Any trading strategy may result in losses, and individuals should be prepared to accept those risks. OlympusLabs and its affiliates are not responsible for any losses or damages that may result from the use of our trading related ideas or the information provided on our platform. Users should seek the advice of a licensed financial advisor or professional if they have any doubts or concerns about their investment strategies.
TVC:DXYShort
by OlympusLab
USD/JPY - Yen slides as Ueda says no plans for policy shiftBank of Japan Governor Ueda spoke at his first news conference as head of the central bank today. It wasn't quite a State of the Union address, but Ueda's message was clear - the current monetary policy was appropriate and he had no plans to make any major shifts. There has been strong speculation that Ueda will make some significant moves, perhaps not right away but in the next few months. After years of battling deflation, Japan is facing inflation which has risen above the BoJ's 2% target. The US/Japan rate differential has been widening as the Fed continues to raise rates while the BoJ has capped yields on 10-year government bonds and interest rates remain negative. The changing of the guard at the BoJ seemed to some as an opportunity for BOJ policy makers to take some steps toward normalization, such as tweaking or even removing yield curve control. Ueda poured cold water on this sentiment, stating that, “Right now, the yield curve control is considered most appropriate for the economy while tending to market functionality”. Ueda's message of "stay tuned for more of the same" has lowered expectations of a policy shift at the April 28th meeting and the yen has responded with sharp losses. Japan's consumer confidence gave policy makers something to cheer about, rising to 33.9 in March, vs. 33.1 prior and 30.9 anticipated. This was the highest level since May 2022, although consumer confidence remains deep in negative territory, below the 50-level which separates contraction from expansion. The week ended with a solid US employment report. The economy added 236,000 jobs last month, within expectations and softer than the upwardly revised 326,000 reading in February. The labour market is cooling but has been surprisingly resilient to relentless rate hikes and the odds of a 25-bp rate hike have increased to 68% according to the CME Group, compared to around 50% prior to the employment report release. There is resistance at 133.74 and 135.31 132.18 and 131.67 are providing support
by OANDA
Rethinking Fed Intervention: Wages, Inflation, and AIIn light of the precarious global economy and numerous contributing factors, such as deglobalization, the inflationary impact of the war in Ukraine, an aging population, and an overwhelming amount of debt, the Federal Reserve's role and efficacy in the current economic climate have come into question. Drawing on Jeff Snider's work, it is increasingly evident that the Federal Reserve has not completely controlled the financial system. Despite their efforts to manipulate interest rates, external factors and market forces continuously challenge the Fed's authority. The market's current outlook suggests that the Fed may be forced to cut rates soon, indicating that its strategy of hiking rates may not have been the best approach. The central premise that the Fed should intervene to suppress inflation by keeping wages low is fundamentally flawed. Higher wages can lead to increased productivity investments, reducing the need for labor and raising living standards over time. However, hiking interest rates can stifle investment, hindering economic growth and exacerbating inequality. In recent months, inflation has decreased independently, without the direct influence of the Fed's actions, suggesting that the economy may be self-correcting. However, this natural deflationary pressure could be disrupted by external factors, such as the tightening of lending standards brought on by the mini-banking crisis. The ongoing threat of AI-driven job losses and an impending recession further complicates the situation for American workers. Jeff Snider's research at Eurodollar University offers valuable insights into the complex relationship between the Fed and inflation. Snider argues that the Fed's actions may not be the primary cause of inflation, as it has limited control over the money supply. Instead, he posits that the global financial system, specifically the eurodollar market, plays a more significant role in influencing inflation rates. As we progress into the exponential age, the rapid advancement of technology and artificial intelligence (AI) will lead to significant disruptions. However, there are potentially positive aspects to these developments. AI could revolutionize industries, streamline processes, and create new opportunities. The widespread adoption of AI can lead to increased efficiency, improved decision-making, and the automation of repetitive tasks, ultimately driving economic growth. The productivity gains associated with AI could offset some of the negative impacts of the current economic climate, such as job losses and wage stagnation. In summary, the belief that the Fed should intervene to suppress wages to tackle inflation is fundamentally misguided. Such intervention can have numerous negative consequences, including hindering investment and stifling economic growth. In contrast, allowing wages to rise can lead to increased productivity investments and improved living standards. To effectively address inflation, it is essential to consider a more comprehensive range of factors beyond the Fed's actions and recognize the importance of encouraging sustainable economic growth through policies promoting higher wages and productivity investments. Policymakers and financial analysts must carefully consider the consequences of their actions and their impact on the broader economy and society. Thanks to Michael Green, aka @profplum99, for inspiring me to write this analysis :) twitter.com
TVC:US10Y
by BitcoinMacro
DXY AT IMPORTANT RANGEHello friends, today Jerome Powell indicated that they should increase interest rates further more, they said same thing last month but it didn't give much strength enough to DXY enough, so I expect such a move which I have indicated in the chart... and J Powell speech indicates that there's loads of supply of US dollar in the market, and to make US Dollar strong, they should lower down the dollar note printing... and they have to lower the supply of US Dollar.... this indicates that US dollar supply is high, which means collapse of DXY... and I expect US dollar crash anytime soon, and I predict that it may happen after NFP report on 10 March... Hope y'all wellness....
TVC:DXYShort
by rawayoussef0
2
USD/CAD shrugs despite strong Canadian job numbersIt could be a busy day for the US dollar, with the release of nonfarm payrolls later today. Canada posted a strong employment report on Thursday, as employment change and unemployment were better than expected. In the European session, USD/CAD is trading at 1.3501, up 0.07%. All eyes are on US nonfarm payrolls, with a consensus estimate of 240,000 for March, following a reading of 311,000 thousand in February. This week's employment releases have been weaker than expected, raising concerns that the robust US labour market is starting to slip. JOLTS Jobs Openings and ADP Employment Change and unemployment claims all missed expectations, and last week's unemployment claims reading was revised sharply upwards. Will nonfarm payrolls follow the pattern and disappoint? If so, we could see a strong reaction from the markets, and the US dollar could lose ground due to speculation that the Fed might have to take a pause. The Fed has been able to relentlessly raise rates in large part due to the tight labour market, and if job creation shows cracks, it will be difficult for Fed policy makers to justify another rate hike at the May meeting. Canada released its March employment report on Thursday, and the numbers were solid. The economy added 34,700 jobs, crushing the consensus estimate of 7,500 and above the February reading of 21,800. Unemployment was unchanged at 5.0%, a drop below the forecast of 5.1%. Wage growth eased, however, slowing from 5.4% to 5.2%. The Ivey PMI also pointed to strong growth, climbing to 58.2 in March, up sharply from 51.6 prior and above the consensus estimate of 56.1 points. The labour market remains surprisingly resilient, even with the Bank of Canada's aggressive rate-tightening cycle. The Bank of Canada paused rates in March, for the first time since the current cycle started in March 2022. Governor Macklem has said that future rate decisions will depend on the data. The BoC meets on April 12th and will have to decide if the economy has cooled enough to warrant another pause. USD/CAD faces resistance at 1.3590 and 1.3673 1.3436 and 1.3353 are providing support
by OANDA
% BONDS & INTEREST RATESThere's obviously lots of discussion about interest rates and where they are headed. Today, I'm going to look at long-term interest rates based on the well-known ETF: $TLT . Long-term interest rates are useful as a guide for most people who get a home-loan or longer-dated loans and is usually less prone to manipulation (by Central Banks) than short-term rates. Bond prices move inverse to interest rates. A rise in bond price means a lower interest rate and vice versa. 📈📉 Let's have a look at the long-term chart. I'm using the weekly timeframe to remove the day-to-day noise. You can see that since the January 2020 peak, bond prices have fallen. This was when interest rates bottomed and started rising. The bear market in bonds extended to Oct 2022. Subsequently, we have seen a rally in bonds and therefore a drop in interest rates. The multi-trillion dollar question is: Was Oct 2022 the BOTTOM i.e. has interest rates peaked? My technical view is that the bearish trend in bonds is still the dominant force. So far the bounce off the bottom does not yet signal a trend reversal. For this to be the case, I need to see TLT move higher beyond 114. IF price moves beyond 114, I would be more confident in stating that at a minimum there has been a Change in Behaviour. At that price level, the size of the upward move would be the largest since the Jan 2020 top. Larger than the upward bounce that began in Mar 2021 and ended in Nov 2021. A Change of Behaviour signals that market participants are starting to have differing opinions. It is this change in opinion that sow the seeds as the first step required for a trend change. If the bond price falters prior to reaching beyond 114, it is highly likely that we have not seen the bottom and higher interest rates should be expected. Clearly the next few weeks will be crucial in that determination. I will update my thoughts as the price evolves.
NASDAQ:TLTShort
by mrstockyetoro
Gold Targets if the Fed Pauses Rate Hikes Gold has managed to surge its way to US$2,020/oz, taking full advantage of the renewed weakness in the dollar price and treasury yields. Recent data from the US showed a slowdown in the services sector growth, fewer private company job additions than expected in March, and a fall in factory orders for the second consecutive month. This suggests that the economy could be cooling down amid higher interest rates. As a result, the market anticipates that the Fed will keep the funds rate steady next month, following a similar path to the Reserve Bank of Australia which decided to pause its rate hikes this month. Investors have recently increased their bets that the Fed will opt for a pause in its rate hikes after its May 2-3 meeting to approximately 60%, up from around 43% the previous day. Gold is particularly sensitive to the rates outlook because lower interest rates reduce the opportunity cost of holding non-yielding gold. If the Fed does decide to pause rate hikes in May, how might we expect the price of gold to react? Markets see a ~60% probability that the Fed will pause. Target prices could include US$2,027, US$2,032, US$2,036, and US$2,040, with the first two being levels of recent struggle. If we want to look back to the last time that gold was this expensive (March 2022), we might like to consider a couple daily peaks at US$2,070 and US$2,060 as higher targets. The Fed decision is still quite some time away, so some downside risk is of course still present in the meantime.
BLACKBULL:XAUUSD
by BlackBull_Markets
What to watch in Q21. Any more bank failure? Bank crisis stabilized after UBS takeover Credit Suisse and First Republic Bank had been injected deposit to restore confidence. We can’t rule out any bank failure in Q2, especially the collapse of Lehman Brother was after the rescue of Bear Stearns. Having said that, the material different between now and the global financial crisis is the asset quality, that the subprime loan is basically at default while the long-term treasury and MBS many banks are holding now can recoup the floating loss if they can be held until maturity. Situation will improve with time. The drop of treasury yield because of risk aversion is also a self-cure mechanism that reduce the floating loss, and lower depositor’s incentive to move money out from banking system. Therefore, the level of Treasure yield is an important factor to determine whether a bank run might occur again, since higher yield means bigger deposit outflow to seek better yield return and a bigger loss of bank asset. The resurge of yield will worsen the sentiment and dampen confidence. Another good indictor is the size of emergency funding facilitates that Fed is providing to banks. If there is a sudden increase on the size, this could imply there might be another bank in trouble. 2. How lending be impacted after the bank crisis? Although Fed set the policy rate, it is the Bank to lend money in a rate they desire to the business and individual. In order to improve and avoid further deterioration of asset quality, Bank might take a more conversative approach in lending. The outflow of deposit also reduced Bank’s ability and willingness to lend. Since FDIC is asking Banks to pay the bill for saving SVC and Signature Bank, together with US government is seeking a tighter regulation for banking sector and many bank need to increase deposit rate to keep deposit, higher capital/operating cost might make Bank more selective and ask for higher lending rate to compensate the cost, that is not good for the whole economy. 3. Inflation trend? Even OPEC+ surprised the market by cutting production that boost price, Energy should still strongly pressure headline inflation downward in Q2, especially on a YOY basis. NYMEX WTI crude oil above $100 most of the time in Q2 2022 and reached $123. Compare to current energy price, there will be an obvious negative impact in headline inflation. The delayed effect of lower property price and rent should also drive the inflation lower. We have seen some signs of lower service inflation, and if banking crisis harm business confidence, we might see a less tight employment market and a less wages growth. Despite OPEC+ action might make thing a little bit complicated, we might still see some decent drop in inflation in Q2. 4. Fed to end hiking cycle after May’s meeting? May could be the last hike in this cycle. As mentioned, the inflation is cooling down and bank crisis will hurt the economy. Fed will also avoid hiking rate too much that will drive the Treasury yield up that might refuel the bank crisis. February Core PCE is trending lower, so as long as inflation doesn’t accelerate, a full stop of hiking cycle after May’s meeting will be a reasonable bet. 5. Recession possibility? Inverted yield curve and ISM survey pointed to recession. Q2 could be the turning point of economy growth and we might see some slowdown. Recession has become base case scenario to many investors and they will allocate their asset and conduct trading strategy accordingly. If inflation under control and GDP growth, probably in Q3, recorded a deeper-than-expected negative growth, Fed might start easing by the end of this year. 6. End of War? Russia-Ukraine war could enter the decisive phase in Q2 when Ukraine could launch the counter attack in Spring. It is very hard to predict the outcome but assuming Russia lost the war, the geopolitical ecosystem might be rewritten as well as the regime. How ally of Russia react is also highly unpredictable. With interest rate hike cycle coming to the end, there might be more rooms for Treasury yield to go lower. This will benefit growth stock so Nasdaq might outperform Dow again, adding to the gap built in Q1. Recession fears is not friendly to most of the commodities (except gold), and any big change on War might mean a lot to many cyclical commodities such as oil, natural gas, nickel and more. Good Luck and Good Trading in Q2. Disclaimers Above information are for illustration only and there is no guarantee on the accuracy of the information. They should not be treated as investment recommendations or advices. CME Real-time Market Data help identify trade set-ups and express my market views. If you have futures in your trading portfolio, check out on CME Group data plans in TradingView that suit your trading needs www.tradingview.com gopro/
CME_MINI:NQ1!
by FOTrading
1
DXY Potential Forecast | Pre NFP | 3rd April 2023Fundamental Backdrop 1. Plenty of USD news happening along the week. 2. All eyes will be on NFP. 3. At Olympus, we are forecasting payrolls to print <250k compared to 311k previous. 4. There has been multiple economic data release on the USD, highlighting the slow down of its economy and inflation. 5. ISM manufacturing PMI releasing later on in the day and forecasted 47.4 compared to 47.7 previous. 6. Anticipating USD to have more softer prints which will incentive Fed to take on a more dovish approach. Technical Confluences 1. H4 support at 101.67. 2. Price could potentially come lower to the support at 101.67. 3. Price currently hovering at the H4 resistance at 1102.899 and is rejecting it. 4. Anticipating further downside momentum on DXY. Idea Anticipating bearish price action on DXY for the week and for price to potentially break the H4 support at 101.6. NOT FINANCIAL ADVICE DISCLAIMER The trading related ideas posted by OlympusLabs are for educational and informational purposes only and should not be considered as financial advice. Trading in financial markets involves a high degree of risk, and individuals should carefully consider their investment objectives, financial situation, and risk tolerance before making any trading decisions based on our ideas. We are not a licensed financial advisor or professional, and the information we are providing is based on our personal experience and research. We make no guarantees or promises regarding the accuracy, completeness, or reliability of the information provided, and users should do their own research and analysis before making any trades. Users should be aware that trading involves significant risk, and there is no guarantee of profit. Any trading strategy may result in losses, and individuals should be prepared to accept those risks. OlympusLabs and its affiliates are not responsible for any losses or damages that may result from the use of our trading related ideas or the information provided on our platform. Users should seek the advice of a licensed financial advisor or professional if they have any doubts or concerns about their investment strategies.
TVC:DXYShort
by OlympusLab
EUR/USD edges lower as eurozone inflation slidesEUR/USD is slightly lower on Friday. In the European session, EUR/USD is trading at 1.0883, down 0.21%. The euro continues to look sharp and is poised to record its fifth winning week in a row. Eurozone headline inflation fell sharply, but the core rate ticked higher. In the US, the Core PCE Price Index was within expectations. ECB policy makers must be pinching themselves today, after eurozone headline inflation tumbled to 6.9% in March, down from 8.5% in February and below the 7.1% estimate. The massive drop was driven by the sharp decline in energy prices. Inflation hasn't been below 7% since February 2022, but the news was not all good, as March core inflation accelerated to a record 7.5%, up from 7.4% in February. Core inflation is seen as a more accurate gauge of inflation trends, which could spell trouble for the ECB in its battle to contain inflation. The ECB didn't flinch from hiking rates by 50 basis points earlier in the month, even though it was in the midst of the banking crisis. With core inflation remaining stubbornly high, the central bank will have to remain aggressive with its rate path. ECB President Lagarde has suggested that the banking crisis, which shook the financial markets, could dampen demand and lower inflation, but so far, that hasn't been the case with core inflation. What can we expect from the Federal Reserve? Market pricing has been on a roller-coaster. It was only a few weeks ago that Jerome Powell's hawkish testimony on the Hill had the markets expecting a 50-basis point hike, but the banking crisis squelched any thoughts of an oversize hike. The likelihood of a 25-bp hike is currently at 57% and a pause at 43%, according to the CME Group. The core PCE price index dropped to 0.3% m/m in February, vs. 0.5% in January and the estimate of 0.4%. On an annualized basis, the index ticked lower to 4.6%, in February, vs. 4.7% in January, which was also the estimate. This is within expectations and thus unlikely to have any impact on the Fed rate decision. EUR/USD showed little reaction to the release. EUR/USD faces resistance at 1.0916, followed by 1.1072 There is support at 1.0774 and 1.0618
by OANDA
$SPYCore PCE which is the Fed's favored methods in evaluating inflation just hit the wires and came in softer than expected, but still above the Fed's ideal. T&S is reflecting that pre-market traders are enjoying the news, albeit on low volume. It is the end of the quarter heading into the weekend so todays price action will be important, lets take a look at some levels The majority of yesterdays darkpool action occurred below the bid, the areas with the most significant orders occurred at 401.27 & 403.64, we will look at these as local supports. bulls need a break above 409, bears need a break below 400. these are the potential scenarios I will look for today : long: - break above PM high, retest & hold - dip to yday's darkpool prints & hold short: - pop to PM high & fail - break below yday darkpool prints, retest & fail resistances: 405.22, 407.20, 409 supports: 403.64, 401.27, 400, 398, 396.62,393.69
AMEX:SPY
by runNgun
QE or QT?Last week, the Federal Reserve (Fed) went ahead with the 25bps hike that many expected, causing a spike in the U.S. dollar and a temporary halt to the rally that equities and risk-on assets were experiencing. This rate hike has come under scrutiny from market analysts. In the past two weeks since Silicon Valley Bank ( SVB ) and Silvergate Capital collapsed, there has been a multi-billion dollar capital outflow from financial institutions. The primary driver of this depositor flight comes from individuals and asset managers moving capital from low-interest savings accounts to high-interest money markets in the form of treasury bills which pay upwards of 4%. In the week of the collapse of SVB, low-risk investment vehicles that invest money in short-term government and corporate debt saw net inflows of approximately $121 billion. This 25bps hike will increase the yield of newly issued treasury bonds (worsening depositor flight) and cause the value of existing bonds with lower yields to decrease. Ultimately, this initiated the collapse of SVB as the dollar value of the existing treasury bonds that the bank held as collateral fell below legally required levels, resulting in the bank announcing that they needed to raise capital, which culminated in a run on the bank’s reserves. Hence this rate hike further increases systemic risk within the market, displayed by the price of credit default swaps (the cost to insure bondholders against a default) going vertical for many banks within the economy. Consequently, it seems strange to some analysts that the Fed didn’t at least pause rate hikes after the latest FOMC, especially considering Powell stated that he considered pausing in the days leading up to the meeting. After SVB began to unwind, the Fed announced the Bank Term Funding Program (BTFP) in order to try and limit the contagion within the economy. The scheme provides eligible depository institutions with liquidity in return for posting collateral such as under-water treasuries and mortgage-backed securities. Some market participants initially interpreted this as the Fed commencing another round of quantitative easing ( QE ); however, the actual mechanism is very important here. QE is the Fed’s way of injecting the most liquidity into the economy. If the Fed were actively engaging in this, the medium-term outlook would become much more bullish. BTFP collateral posted to the Fed, at least for now, must be swapped back to the bank at the end of the term and comes at a cost. So without going deep into the details, the impact on liquidity is quite different from actual QE. In reality, the recent banking crisis and the Fed’s response display that, in the short term, a pivot to accommodative monetary policy is for now ruled out. The BTFP scheme perfectly displays how monetary authorities will utilise all available measures to preserve stability during further tightening, likely meaning that a hard landing is now firmly on the cards. From a technical perspective, the weekly Bitcoin chart looks good. The bullish momentum from MA9 crossing above MA50 has played out as Bitcoin has rallied towards the key psychological resistance of $30K. Bulls will hope for a weekly close above the $29K resistance level, which should ignite the rally to $30K and beyond. Should this bullish momentum break down, the market will likely test the $24 - $25K support range. A fall through this would likely result in a breakdown towards the $21K - $22K supply zone, where there are presumably a lot of unfilled longs that weren’t filled before the current rally. The fact that the relative Strength Index is hovering around overbought levels indicates that the market could be primed for a reversal and supports the bearish scenario. As we advance, the U.S. CPI data release on the 12th of April will have a bearing on short-term market direction. Soft CPI figures will provide risk-on assets such as crypto with bullish momentum while hurting the U.S. Dollar and yields. Again, volatility will be high around this time, so caution should be exercised, most notably in leveraged positions.
by Coinrule
VIX - is the sell 20, buy 30 strategy done?Throughout 2022 you would have done VERY well taking profit when the TVC:VIX hit 20 and accumulating when the VIX hit 30. But has this trend concluded? This movement and profit/accumulation opportunity is consistent with the most recent tightening from 2017 to 2018 where fed funds were rising, and the yield for 2 year treasuries in the bond market exceeded fed funds. When the yield for 2 year treasuries fell below fed funds the VIX remained below 20 until covid hit. The VIX spiked during covid and consistently descended while the market expanded. This pattern is only observed in the most recent cycle and not something that we see consistently repeated historically. If the 2 year remains below fed funds, should not expect the VIX to range between 20 to 30 or will 20 to become the ceiling?
TVC:VIXLong
by Ben_1148x2
Bitcoin repeating the post-scam cycle MxGox=FTX 1 million bet Bitcoin has been relegated in the last market by a conjunction of events related to the large frauds that have permeated the cryptographic market driven by an insane level of credit available between 2020 to 2021. This has led to a hyperbubble of all kinds of assets, crypto had to go through a purge similar to that of 2014 and with events representatively similar, such as what was the annexation of Crimea by Russia curiously between the dates of February 20 and March 20, 2014, the curious thing about this is not something else that in 2022 the turns of war would start by February 24, 2022. On the other hand, scams like FTX and other scam funds that backed the rise and fall of the biggest scam in crypto history Luna. It was very similar to the fall of MTgox , probably will have an added impact of the same magnitude. We have to understand one thing the amount of bitcoin out of circulation due to these scams, where bitcoins end up in custody of some government agency, has a strong impact on the circulating supply, because for example still not delivered assets associated with MTgox, after almost 10 years. The current rise is also explained by an ideological discourse framed in what I have given to call the Genesis block strategy, this strategy is really a puzzle and a proposal that is unfolding, that is when you look at the Genesis block, this block has a sentence that proposes a challenge , think about the categories that we conceive through the state, or the central entity and allow to think freely how to manage systems without biased supervision from " Bitcoin has faced many challenges in the last market due to a series of events that shook the crypto world. These events include massive frauds, excessive credit availability, geopolitical tensions, and ideological debates. All these factors have created a huge bubble in all kinds of assets, which eventually burst like in 2014. Interestingly, some of these events have historical parallels, such as Russia’s annexation of Crimea in 2014 and the war that started in 2022. Another similarity is how some crypto platforms like FTX and Luna turned out to be scams, just like MTgox did in 2014. These scams have taken away many bitcoins from circulation, as they are now in government hands. Some of these bitcoins have been locked up for almost 10 years, like those from MTgox. Bitcoin’s current rise is also influenced by a philosophical vision that I call the Genesis block strategy. This vision is based on a message hidden in the first block of Bitcoin’s blockchain. The message invites us to question our assumptions about governance and to explore new ways of organizing systems without central authority or interference. The universal basic income and the 15-minute cities are a currency of the same class, since they are complementary, these cities will be for those who are useless in the world of AI that we are entering.
INDEX:BTCUSDLong
by TrumpMakeBitcoinGreatAgain
DXY Potential Forecast | 29th March 2023Fundamental Backdrop 1. Uncertainty continues to surround the USD 2. Fed balance sheet continues to inject money to aid the banks in crisis Technical Confluences 1. Resistance level that price is currently at can potentially be rejected before heading back down 2. Price could potentially create a new lower low 3. on the H4 timeframe, DXY is on a bearish trend and we can anticipate further bearish continuations. Idea Strong bearish bias on DXY, anticipating price to tap into the key H4 support level below. NOT FINANCIAL ADVICE DISCLAIMER The trading related ideas posted by OlympusLabs are for educational and informational purposes only and should not be considered as financial advice. Trading in financial markets involves a high degree of risk, and individuals should carefully consider their investment objectives, financial situation, and risk tolerance before making any trading decisions based on our ideas. We are not a licensed financial advisor or professional, and the information we are providing is based on our personal experience and research. We make no guarantees or promises regarding the accuracy, completeness, or reliability of the information provided, and users should do their own research and analysis before making any trades. Users should be aware that trading involves significant risk, and there is no guarantee of profit. Any trading strategy may result in losses, and individuals should be prepared to accept those risks. OlympusLabs and its affiliates are not responsible for any losses or damages that may result from the use of our trading related ideas or the information provided on our platform. Users should seek the advice of a licensed financial advisor or professional if they have any doubts or concerns about their investment strategies.
TVC:DXYShort
by OlympusLab
Fed vs Market: Who gonna win?Hi everyone, just share some thoughts regarding to the FOMC's meeting last week: - Fed's rate hike with 0.25% as expected after considering 1% before the pre-bank-crisis events and 0% for post-events. It's more logical for me than any other option, as inflation is still high, the labor market is still hot, and the economy is still boosted with hyped capital goods from January through February. - The only things that make me feel confident are the tightening financial conditions at banks and other financial institutions. This showed a dramatic U-turn compared to before the banking crisis, and this is in line with what the Fed wishes for. - However, looking at the Fed Funds futures, we have some discrepancies between the median of Dot plot (a method of visually representing expectations of the future Fed Funds rate) and the Fed Funds futures. While Fed fund futures are implying a rate easing right in 2023 to around 4.25% and dot plots show expectation from the Fed to keep the rate after one more hike, as Powel said. - This gap of expectation between the Fed and the "market" out there shows the disbelief in the current situation of the economy in the next few months, especially after the banking crisis in the last 2 weeks. The crowd predicted that the economy would face such severe financial difficulties that the Fed would change its policy. So who's going to be right? Fed or the Market? Whatever side you choose, make your bets there.
TVC:DXY
by DatTong