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Correlation between Fed balance sheet changes and SPXThe United States Federal reserve publishes their balance sheet weekly, every Thursday at 4:30 ET. Basically, when they add to their balance sheet, this is injecting money into the economy. When they remove from their balance sheet, they are removing money from the economy. This chart shows the recent adds and removes on the SP:SPX chart. There appears to be a rough correlation. Also shown are the FOMC meetings. Often, there has been upward pressure following a meeting and downward pressure following the minutes. Here's a link to the Federal Reserve site where the changes are shown in a graph: fred.stlouisfed.org
SP:SPX
by dharmatech
Euro under pressure, falls below 1.04The euro has stabilized on Friday, after a dreadful Thursday in which EUR/USD fell 1.26%. The euro continues to struggle and is trading at lows last seen in January 2017. The Ukraine war has taken a bite out of the eurozone economy and sent the euro tumbling. The latest development weighing on the euro was Russia's announcement of sanctions on some European gas importers, at a time when the EU is trying to garner support for a ban on Russian oil. Germany has said that it could manage without Russian oil, but the main stumbling block to the ban appears to be Hungary, which is very dependent on Russian energy supplies. The euro has broken through major support lines at 1.08 and 1.05, and if it breaches the 1.03 line, we could see move towards parity with the dollar. The wobbly euro hasn't received any support from the ECB, which has been slow to shed its dovish policy. After years of monetary easing, ECB members are becoming more vocal about the need for tighter policy, and ECB President Christine Lagarde said earlier this week that QE would end in the third quarter, and a rate hike would follow "some time" after that. We could see a rate increase as early as July, although it's unclear if the ECB will launch a rate cycle with a hike of 25 or 50 basis points. The US dollar has shined against the majors, buoyed by an aggressive Federal Reserve. The April US inflation report indicated that expectations of an inflation peak were premature, as CPI fell only slightly, from 8.5% to 8.3%. Fed Chair Powell has signalled that the Fed will deliver 0.50% rate increases in June and July, as the Fed is focused on lowering inflation, which has hit a 40-year high. There has been some talk of a 0.75% hike, but it is far more likely that the Fed will stick with 0.50% moves, hoping that they can do the trick and wrestle down inflation. 1.0398 has switched to resistance. It is a weak line and could see further action during the day. Above, there is resistance at 1.0473 There is support at 1.0321 and 1.0246
by OANDA
New Zealand dollar sinks after US CPIThis week has gone from bad to worse for the New Zealand dollar, as NZD/USD has taken a tumble on Thursday. In the North American session, NZD/USD is trading at 0.6248, down 0.74% on the day. The currency has dropped 2.66% this week and is trading at lows not seen since June 2020. The US inflation report for April showed that CPI eased, but the decline was much smaller than expected. US CPI dropped from 8.5% to 8.3%, above the estimate of 8.1%. This chilled any speculation of an '"inflation peak", as the markets digested the fact that even if inflation is moving lower, it could do so at a very slow pace. For the Fed, the high inflation reading confirms that its hawkish stance is justified, but now there are calls for policy makers to be even more aggressive in tightening the monetary screws. The Fed has signalled that it plans to deliver 50-bps increases in June and July, but the markets aren't dismissing the possibility of a massive 75-bps hike. Fed member James Bullard said on Wednesday that 50-bps moves were his base case and this appears to be the majority view. Still, inflation was higher than investors or the Fed had expected, and the May inflation report, which will be released just a few days prior to the Fed's next meeting on June 14-15th, will be critical in determining the size of the next rate hike. The Fed has embarked on a rate-hike cycle primarily because of soaring inflation, so it stands to reason that inflation will be a key factor in rate policy. Fed member Mester said on Tuesday that she supports raising rates by 50-bps at the next two meetings and then speeding up or slowing down the pace of increases based on inflation levels. The RBNZ is also under pressure to tighten more aggressively after Inflation Expectations for Q2 crept upwards to 3.29% (3.27% prior). Inflation Expectations have now risen for an eighth successive month, and the RBNZ is looking to reverse this trend. At the April meeting, the RBNZ said it would act to ensure that "current high consumer price inflation does not become embedded into longer-term inflation expectations.”  With Inflation Expectations not showing any signs of easing, the RBNZ is widely expected to raise rates by 50-bps at the May 25th meeting. NZD/USD is down sharply and has broken below support at 0.6281. Below, there is support at 0.6169 There is resistance at 0.6344 and 0.6456
by OANDA
GOLD and other metals now is a safe heavenHi I am glad I put some of my money from crypto to silver few months ago for days like these. Now situation is not how to make money but how to safe current wealth. In the chart we can see that DXY is rising and Gold is rising, when usualy DXY up, gold is down, but this time is different because of inflation, not because of healthy economic factors. GOLD is not falling because of inflation and DXY is rising because of trust of dollar, trust dollar only because interest rate up, that means more valuable dollar, because interest rate compensates inflation It says alot about dollar. FED does not have any choices than rise rates, which means stronger dollar and bancrupting companies. Please remember that Buffet holding a lot of cash, guess for what? Yes inflation is destroing him billions in cash, but we and businesses pay for the inflation in advance and this is how he will recover and will make more by investing in stocks maybe crypto and other assets. Many people whould love to be in Buffet situation at the moment when having much of they wealth in dollars (I mean not having billions, but having most of your wealth in dollars), because FED is your friend today. Dollar will colapse for sure, but it does not say anything, everything would say if we know when it will happen. I guess the key moment will be US election in 2022 autumn ... Thanks
OANDA:XAUEURShort
by Tadf
Pound rises on US inflation, GDP loomsThe British pound is in positive territory, as the currency tries to break a four-day losing streak. In the European session, GBP/USD is trading at 1.2355, up 0.36% on the day. US inflation dipped in April, but still came in above the forecast. Headline CPI dropped from 8.5% to 8.3%, above the estimate of 8.1%. Core CPI came in at 6.2%, down from 6.5% but above the estimate of 6.0%. The US dollar is broadly lower as a result, although the decline would have been sharper had the estimates been right on. Today's inflation data will no doubt result in some headlines proclaiming an "inflation peak", but I would caution that it seems premature to declare that inflation is on its way down after just one release. Higher interest rates will do the job and curtail inflation, but it will take time. In the meantime, today's inflation report will not change the Fed's stance, and the CME's FedWatch has pegged the likelihood of a 50-bps rate hike in June at 89%. Looking forward, inflation gazing has become even trickier in the current environment. There are huge unknowns around price pressures due to the Ukraine war, as well as the extent of China's slowdown and the impact on supply chains due to China's uncompromising zero-Covid policy. With energy prices at very high levels, it will be difficult for headline CPI to come down. Over in the UK, we'll get a load of data on Tuesday. The key release, Preliminary GDP for Q1, is expected to slow to 1.0%, down from 1.3% in the fourth quarter. The UK economy is showing an unhealthy mix of slower growth together with soaring inflation, which has raised concerns about stagflation. The BoE has been raising rates to curb inflation, but investors have not been impressed, as the pound has hit hard times and hit a 23-month low earlier this week. There is support at 1.2199 and 1.2056 GBP/USD faces resistance at 1.2272 and 1.2418
by OANDA
Interest Rates vs Everyone - How Crypto Can Bounce BackA pretty rough week for the markets - especially crypto. The recent dips are a result of mainstream money (crypto curious, but not necessarily dedicated) leaving the space as a response to inflation woes and the Federal Reserve planning to increase interest rates over 2022. The US housing markets are also set to slow down as well, possibly leading to a recession in the US markets and the global economy as a whole. What's the silver lining? Well, the last time the housing market dipped was in 2008-2012, which coincides directly when Bitcoin itself was invented by Satoshi Nakamoto. Will the same sort of sentiment emerge as a result of fiat money crashing this time around? Time will tell.
ECONOMICS:USINTRLong
by RyanTanaka
2
NZDUSD; Forex recap and the week aheadWhile NZDUSD continued its bearishness last week, it showed a strong move up on Wednesday to produce a Thursday high. However, it sold off very quickly as it continued its drop during Thursday's London and New York sessions. The pair mostly consolidated on Monday and Tuesday. NZ Unemployment Rate report was the only high impact news coming from New Zealand last week but failed to affect a substantial move, and the NZDUSD kept inside of Monday’s range. Last week, the big fundamental impact came from the US, which had FOMC on Wednesday and Non-Farm Payroll on Friday. The former event is what finally broke the pair out of its range, pushing up over 130 pips in just a couple of hours. As noted above, the pair quickly reversed this climb and eventually ended the week lower by 0.77%. The NZDUSD has now racked up a monthly loss of just over 7.00%. The next two worst performing pairs on the monthly time scale are the GBPUSD and the AUDUSD, down by 5.63% and 5.48%, respectively. In the chart, we see the weekly opening price, and last Thursday’s high noted. In the bottom window, we see the Stochastic indicator from TradingView. Traders who use this indicator will try to look for overbought or oversold areas in price - gauging whether a sell or buy is unfolding when the indicator is showing extremes on either end of the window. It could also be used for divergence as we see a few hours before FOMC news. The indicator did not make a lower low, while the NZD/USD moved slightly lower than the low made in the previous session. Next week’s high impact events Events relating to the NZDUSD this week are the numerous speeches by US Federal Reserve officials. President of the Federal Reserve Bank of Atlanta, Raphael Bostic, speaks on Monday and Tuesday, likely to further dampen hopes for a 75 basis points hike from the Fed in June. The more hawkish officials such as John C. Williams (Federal Reserve Bank of New York) and Christopher Waller (Board of Governors) take the mic after Bostic, potential building a case against Bostic’s and Fed Chair Jerome Powell’s dovishness. Thrown in the mix this week is the US Inflation Rate YoY for April. This report is due on Wednesday (UTC+4) and is expected to fall closer to 8.0% from 8.5% in March.
by BlackBull_Markets
Sterling falls below 1.23The British pound has stabilized on Friday, after sustaining huge losses a day earlier. GBP/USD is trading at 1.2342 in the European session, down 0.11%. Earlier, the currency fell to 1.2276, its lowest level since June 2020. The BoE dutifully raised interest rates at its meeting on Thursday, but the market reception was a chilly one. GBP/USD plummeted a staggering 2.21% on the day. Investors gave a thumbs-down to the grim message from the central bank, as a fourth straight rate hike in as many meetings became an afterthought. The BoE's growth forecast for 2022 remained at 3.75%, but it slashed the 2023 projection from 1.25% to -0.25%. At the same time, the central revised upwards its inflation forecast for Q4 to above 10%, up from 8% in an April forecast. The 'double-whammy' of higher rates and a deteriorating economic outlook sent the British pound reeling after the BoE meeting. The rate decision was a 6-3 vote, with all three dissenters voting in favor of a 0.50% rate hike. This surprised the markets, which had expected an 8-1 vote. There is a deep split in the MPC, with Governor Bailey acknowledging after the meeting that an uncertain economic outlook had led to a range of views in the MPC. Such a statement can hardly be expected to instill confidence in the British pound on the part of investors. In its policy summary, the BoE signalled that more rate hikes are coming, and also dropped the word "modest" to describe upcoming rate hikes. Yet the markets were not impressed  - the 0.25% increase was modest, and with the BoE warning about 10% inflation, it's clear that it will take quite some time before rate hikes do the job and wrestle down sizzling inflation. The US dollar initially lost ground after the Fed rate decision on Wednesday, as investors seized on Fed Chair Powell's statement that the Fed was not considering a 0.75% rate hike. The greenback has since bounced back, as the markets digest that the Fed plans to be aggressive with further 0.50% hikes in its battle to bring down inflation. There is resistance at 1.2612 and 1.2719 GBP/USD tested support at 1.2272 in the Asian session. Below there is support at 1.2179
by OANDA
Microsoft - End of an era / back to the 80sPRIOR BEAR MARKET After such a disappointing day across all markets, Microsoft of all names is now showing signs of topping out. The first time since 2000. Back then, Microsoft corrected over time rather than just in price. Taking 9 years before finally capitulating for a 62% total decline. Given it’s gradual ascent in recent years, something similar may now lie ahead. CURRENT PRICE ACTION A close below $262 and Microsoft will paint a sell / short signal. RSI has already crossed into a bearish zone (below 40) on the weekly timeframe, suggesting an almost inevitability to downside price action. Like AMD, MSFT is showing signs of topping in the exponential channel (shown in the main chart above) and has closed below the top of it twice in the past 6 months. Next step for confirming the bearish case, would be to fall below the 50 week MA of $262. BEARISH TARGETS Assuming this happens in the coming days, we can start talking about targets. The top of the purple consolidation area, became a firm bottom last time around. If this were to play-out again this would represent a 70% decline, at a price of $78. The 0.618 fib retracement sits at $105 if you find comfort in a more reasonable and less aggressive target. BULLISH TARGETS If this one doesn't go as anticipated, a close above $310 would prolong and delay the bearish thesis. Regardless, MSFT is looking awfully toppy here, with a price to earnings ratio of still 31.9. Take profits and stay clear on buys at the very least. Any further upside is limited. Let's keep an eye on this one for the next 5-10 years… SIDE NOTE This chart has traded so textbook perfectly since 1986, that it has made for such simple investing and a near-perfect case study for this exponential indicator. If you'd acquired a position for $2,000 back then, you would be sitting on $10,634,879, with still an open position of $101k. Astronomical gains.
NASDAQ:MSFTShort
by DigiDavid
3
Officer Omicron and Insurgent Inflation Team Up To Fight the FedScene 1 Darth Powell summons the legends of the past to formulate the plan to fight the Omicron and Inflation insurgence. Brigadier Bernanke, General Greenspan and Veteran Volcker report for duty. “We are at an event horizon, what should we do?” declares Powell. “Pretend it isn’t happening”, says Greenspan “Bailout everything, print more money,” says Bernanke “I killed inflation forever, this cannot be happening,” says Volcker Powell rises from his throne and addresses the senate. "There is nothing to see here. We will continue as normal, and start to cool off our insurgent inflation with the ice bath of interest rates, and the tepid taste of tapering." In the background the sound of screaming. Cut Scene 1. Scene 2. The morning after a sweet night of passion, Omicron and Inflation wake up with a hangover and get to work on terrorizing the economy. Officer Omicron has already infected 30% of the planet and inflation is rampant. Cut Scene 2. Well, that was exciting, but if the global economy was a star wars movie, it would be something like this. A big gap down today, and the short-term outlook is definitely to the downside, with limited room for stimulus, and unlimited room for inflation, virus infections, and lockdowns. Short-term RSI – Nasty KST – Nasty AD Ratio - ouch Choose Your Ending Scene 3. After two hard years the people of Naboo (earth) are battered yet determined to summon the force to fight whatever stands in their way. It will be tough, but we will beat nature and fight to live another day. 15% to 20% drop in equities, a collapse in crypto, followed by a green revolution where we live in ESG harmony. Scene 4. Mother natures death star finally scourges us to hell causing the next great depression, which takes an entire generation to recover from. (Like the 2000 dotcom bust 8-year recovery) Scene 5. Darth Powell farts, and the world goes on as normal 😊 Cast your vote now. Scene 3, 4, or 5. If you like, then hit like. Barry
SP:SPXShort
by liberatedstocktrader
4
Today's Closing on a local Triple Top - Where to Now?Given the somewhat bullish news from the Fed today, a rate hike of only 50 basis points and no larger hikes in the near future, things seem to be looking up. The news gave way to a major rally midday, erasing losses since- well, last Monday. However, it should be noted that the fed slipped in a dirty curveball: in June it will start a multi-trillion dollar balance sheet runoff starting June 1st. In the month ahead, it should be expected that the market will be trying to gauge what this will mean for them. As a hint, the last time the Fed dumped its balance sheet in response to extreme economic conditions was in December of 2008. October's decline caused a run-up in the fed's balance sheet as the housing market began to tilt sideways. When things seemed stable, the Fed ran off nearly 20% of its holdings in the 2 months following- before the stock market reached its lows that following March. This coming runoff isn't nearly as drastic, as the fed maintains a $8.9 trillion fund and is only giving up $47.5 billion a month for the first three months, and $90 billion for the next three. This equates to only a 4.6% drop, over a much longer period of time. Will the balance sheet runoff be enough to curb inflation? Only time will tell. However, I take it as a sign that we've not yet hit the bottom in this market. Continuing this thought, let's look at the hourly chart for the S&P 500. We're seeing some resistance at the 4300 mark. We seem to have closed on a Triple Top, and today's rally wasn't enough to blow past this target ( again! ). The previous two times we've hit this figure, it looks like we've declined by 3% & 5%. My best guess is that if tomorrow does not carry this rally's momentum higher, we'll be seeing a 8% decline from here by Monday. If after fully digesting today's news the market decides to continue its rally into tomorrow, we could even reach the top of this bearish channel. However, the RSI on this chart seems to have topped out and the MACD seems ready for a reversal. Basic technicals seem to point downward from here. If we break out of the bottom of this channel, as outlined in the chart, it could spell gloomy days for the market overall. This resonates with the nervous "big crash" bears, I'm sure. But what do you think? Are we to continue the rally this week, or bounce off of this triple top?
SP:SPXShort
by CozmicKnight
2
Bitcoin Price Projections Based on Fed Rate IncreasesTraders, We all know that the USD is still the global reserve currency. And who governs the strength or weakness of the dollar? Yours truly, JPOW and co. Crypto currency prices are absolutely without question tied to the broader markets and the U.S. dollar. Therefore, we MUST consider how our crypto lead dawg will respond to JPOW's rate decision. With that said, here's what I see in the cards for ole' BTC. Let's start with the worst-case scenario: JPOW rug pulls the market with an enormous 75 pt hike or more - we drop below our strong and very critical 37550 support, somewhere in the purple JPOW does the expected 50 point hike & either speaks to another 50 pts hike soon or insinuates such action - we remain below our multi-year resistance level and move sideways-ish, somewhere in the red JPOW does the expected 50 point hike & either speaks to another 25 pt hike soon or insinuates softer action going forward - we either remain red or it is possible we go yellow again JPOW only bumps it 25! - Rocket fuel! It's moon time again! Green area. 🚀🚀🚀 Watch closely, everything (and I mean EVERYTHING) hinges upon the FED today! Press release 2:30 EST (I believe). Best to you all, -Stewdam.us
INDEX:BTCUSD
by stewdamus
2
Prediction of 4 Scenarios from Fed's decision on BTC From what I've managed to gather, 7 out of 9 governors vote for a +50bp hike; 8 out of 9 are in favor of reducing B/S. If the news to be released in 3.5 hours comes out with reducing balance sheet, which is likely to take effect in June, then highly likely we’ll see a black swan. +50bp is within expectation, but it’s still negative to the market. We can expect a pull back in 1-3 days but it’s not strong enough to reverse as liquidity is under the pressure of flowing out… Welcome your comment and ideas. Viva la Bitcoin. Safe trading, frens.
by BitMidas
2
India VIXWith FOMC outcome due tonight, volatility is increasing sharply (pre-event uncertainty) We are in the dark as to what FED will do tonight - so many possibilities, add to that statement - hawkish or dovish 25 bps market will rally 50 bps appears discounted 75 bps market will panic Hence better to stay light Above 21.75 the crucial resistance is at 2.80 if that breaches then be prepared for extreme moves (we have just seen the trailer in that case) all the way till 28 This would be mean large intra-day candles & gap openings. Avoid writing PE during such time unless well hedged. Also reduce derivative exposure its not worth it during such times. Post event wait for VIX to start cooling down, trend direction will become clear by then
NSE:INDIAVIX
by Dinesh_C_Nagpal