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Inflation

USDJPY: What to expect for the upcoming days?Hello there! So after the Q3, and the decisions that has been taken by the BOJ concerning the interest rate, in addition to the 0.4% rise in the CPI. As well as the decrease in the DXY during the last month -4.79% and in the last 5 days a decrease that resulted -3.13%. Those factors alone can picture the path of the USDJPY. Going now into the technical part, too many indicators said the way now is bearish, but let's take things more friendly and talk about the structure. Now in lower time-frames, we can see that there was an order block that indicated that the currency will go bull to reach approx. (141.600 - 141.800). But it seemed that it reached something of 140.800, and went bear. So what we could exepect after this small hike? Well, according to some indications and order blocks, taking into consideration the supp. and res. areas, the currency could reach (133.300). But, following the news and the decisions that could be taken will be the ones who decide if the USDJPY will rally down more, or go for a reversal. But in the mean time, nothing indicates at all a reversal based on decisions from the federal reserve or the BOJ, as well as the technical analysis.
Short
by JawadShoukeir
Market Impacts: from Midterms to Second HalfCME: Micro E-Mini Nasdaq 100 ( CME_MINI:MNQ1! ) On August 17th, I published “Market Impacts of US Midterms Elections”. Thanks to your support, it made it to “Editors’ Picks” and was featured in TV Digest newsletter in an email themed “Midterms are Coming” to all subscribers. With the midterm elections coming to an end, it’s a good time to reassess the situation, exploring potential changes in economic policies which may give rise to trading opportunities. In the August 17th story, we have discussed 3 potential outcomes of the midterm election: • Party Government: The President, the House and the Senate are controlled by the same political party • Divided Government: Only one chamber of Congress aligns with the President • Opposing Government: The President and the Congress are from different political parties Before the elections, the Democratic Party controls the White House and both chambers of the Congress. It was clearly a “Party Government” under our definition. As of this writing, Democrats clinched 50 seats in the Senate. With the tiebreaking vote from Vice President Harris, Democrats retain Senate majority. Meanwhile, Republicans lead 212:204 in the House race but has not reached the magic 218 required to flip controls. GOP represent half of the voters in this election. They hold on to at least 49 seats in the Senate, gain more seats in the House, and are likely to retake control. They also have governorship in half of the 50 States. So, why the Midterms are being perceived as a landslide victory for Democrats? It’s all about expectations. Historically, midterms are bad for the ruling party. Whichever party in the White House usually loses seats in the Congress. In the 2018 midterms, Nancy Pelosi led the Democrats to recapture the House of Representatives. With Biden’s approval rate hovering at 40% low, and inflation rate flying high, GOP was widely expected to have a stunning victory at both chambers of the Congress. To the Democrats, the absence of “Red Waves” is a vindication of their political agenda. While a “Divided Government” is still possible pending final results, Biden and Senate Majority Leader Chuck Schumer already claimed election victory. Conclusion: the emboldened Democrats will go full speed with “Build Back Better” in the second half of President Biden’s presidency. Bigger Spending In the last two years, the Biden Administration passed legislations with budget over $4 trillion. These include: • American Rescue Act in March 2021, $1.9 trillion • Infrastructure Investment and Jobs Act in November 2021, $1.2 trillion • U.S. Chip and Science Act in August 2022, $280 billion • Inflation Reduction Act in August 2022, $757 billion Also in August 2022, the Administration announced a Student Loan Forgiveness Plan that is expected to cost $400 billion. The plan is currently on hold by court orders. In the First Half, new budget items averaged $2 trillion a year. I expect more big budget items to come in the Second Half. If Republicans are not there to slow down the legislative ambitions, it’s hard to tell how big the spendings will be. Bigger Deficit and Bigger Debt According to USDebtClock.org, the 2022 Federal Tax Revenue is estimated at $4.92 trillion, and the Federal Spending Budget will be $5.98 trillion. The shortfall is Federal Budget Deficit, at $1.06 trillion. The largest federal budget items are: • Medicare/Medicaid, $1.490 trillion, (24.9%) • Social Security, $1.231 trillion, (20.6%) • Defense/War, $770 billion, (12.9%) • Interest on Debt, $481 billion, (8.0%) I notice that debt interest has risen by $39 billion from previous estimate, and its share in the federal budget grows from 7.4% to 8.0%, thanks to the Fed rate hikes. US National Debt is estimated at $31.3 trillion. Budget deficit needs to be financed by debt. Therefore, national debt would rise to $32.5 trillion next year at a minimum. While many bonds were issued before 2022 and carried low yields, new Treasury bonds must pay current market rates. Considering Fed Funds already at 4%, I put 3% down as my estimate for weighted-average federal debt service rate in 2023. This would price the annual debt interest at $975 billion, which is 103% higher than this year, and $205 billion more than the Defense budget! With Democrats in control, I expect Medicare, Medicaid, and Social Security to get favorable budget allocation next year. Heightened geopolitical tensions in multiple fronts justify a bigger Defense budget. Assuming all of them goes up by 5% and there is no change in other budget items, my baseline forecast for 2023 federal budget is $6.65 trillion, an 11% annual increase. Assuming tax revenue goes up by 10%, we will have a budget deficit of 1.23 trillion, a 24% jump from 2022. Big spending legislations could add $1 trillion more on top of this. Sticky High Inflation The US economy is caught between restrictive monetary policies and expansive fiscal policies. When trillions of dollars are flooding the economy and the financial system, prices of goods and services tend to go up. Raising interest rates alone is not sufficient to bring the price level down. This is why inflation is still uncomfortably high after six consecutive rate hikes. Cathy Wood recently flowed an idea claiming inflation could turn negative next year, citing similarity from the Roaming Twenties. I peg to differ. The Federal Government is pumping $6-7 trillion in a $26 trillion economy. Every year, federal agencies and contractors get bigger budget, government employment grows, and federal employees get higher wages. Regardless of the business cycle, one quarter of the US economy is expanding. Industries benefiting from government spending will strive, even if the country may slip into a recession. Higher Taxes Big spending comes with bigger taxes. Government needs more tax revenue to pay for its ambitious agenda. • Higher tax rate on people earning $400,000 or more. New taxes on investment carry interest, translating into headwinds for hedge fund, private equity, and venture capital. • The 15% minimum corporate tax will affect multinational corporations which frequently use offshore tax haven. Potential Winner Unlike political elections, it is tricky to find a clear winner in the financial market. Comparing the performance of major US stock market indexes, the Dow has a year-to-date return of -7.18% as of November 11th, while S&P 500 and Russell 2000 yield -15% and -14.14%, respectively. Nasdaq 100 falls 25.10% and is the worst performer. Big Tech is laden with bad news these days, with missed earnings and widespread layoffs among them. As stock prices are beaten down, valuations become more reasonable. In my opinion, advanced technologies that align with government priorities would benefit in the next two years. Clean energy, artificial intelligence, biotechnology, space technology and electric vehicles are on the receiving end of major government funding. While I was bearish with the Nasdaq at 13,500, I think it could find price support at 10,500. However, impacts from the Midterms interact with business fundamentals, the ever-changing investor sentiments, and major global events. The next Fed meeting is only two weeks away. Let’s wait for the next rate decision, as it is the overarching factor that guides market direction right now. We can put CME Micro E-Mini Nasdaq 100 Futures ( CME_MINI:MNQ1! ) on the watch list today. MNQ has a notional value of $2 times the index. At 11,792, each contract is valued at $23,584. Opening a Long or Short position requires initial margin of $1,500. While the S&P 500 is trending down, certain sectors may outperform the broad market. CME recently launched E-mini S&P Biotechnology Select Industry Futures ( CME:SXT1! ) and E-mini PHLX Semiconductor Sector Futures ( CME:SOX1! ). They each offer more precise trading opportunities tailored to industries benefiting from increased government funding. 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 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
CME_MINI:MNQ1!Long
by JimHuangChicago
5
US100 14400 is a bullish targetThe Inverse Head & Shoulders has completed. There will be loads of stops under the right shoulder and the head. But for now, we have to assume that the pattern is going to play out. In my other research, I detail why fundamentally the Nasdaq should go higher but you would have to dig around and find it on the internet because I am not allowed to tell you where it may be. The reason I put it on a different platform is that I can't upload the charts of my research here! The nut of the thesis is that there is still a lot of money flowing into the markets from the US government. Targets for a (i)H&S is x2 the distance from the head to the neckline, projected in the direction of the breakout. Just be on the lookout for a fundamental reason why the algos reverse the price action and attack those stops under the RHS and Head
U
by Macrobriefing
2
Why is it better for Europeans to keep their savings in CHF ?Why is it better for Europeans to keep their security/savings in Swiss francs rather than in euros? Hi everyone, An idea that’s a little different from usual, but today I wanted to explain why it is better for Europeans to keep their security/savings funds in Swiss Francs rather than in Euros. Let's start with some history. A strong economy, low debt and high foreign investment all combine to make the Swiss franc a strong currency and a safe haven. But the strength of the Swiss franc is not new. Today's Swiss franc draws its strength from its long history, from its economic ties with Switzerland and its main partners. Strong vs. weak currency The notion of a strong currency is quite relative: a currency can be strong against one currency, and weak against another. The euro is strong against the Japanese yen but weak against the Swiss franc. Let’s take the EUR/CHF pair as an example (in other words, what one euro is worth after conversion into Swiss francs). At the beginning of 2008, it cost about 1,638 Swiss francs to obtain 1,000 euros, whereas today it costs only 984 Swiss francs to obtain the same amount. While in absolute terms these two currencies can be considered strong, the Swiss franc has won the match against the euro over the last decade with a positive evolution of the exchange rate against the single currency. Once we understand the concept of the exchange rate between currencies and its constant fluctuation, it is not very complicated to start to have a small idea of where we want to go to benefit from it. Why is the Swiss franc so powerful? In the case of Switzerland, three important factors explain the robustness of the Swiss franc compared to other currencies: - The economic growth ; rather in good shape in comparison with the rest of the world and has managed to get through the last few crises without too much damage. - Low debt ; despite the crisis, Switzerland's debt level remains well below that of its European counterparts. While Switzerland's debt ratio does not exceed 30% of GDP, those of its neighbours soar to 116.3% for France and 153.5% for Italy. - The stability of the geopolitical context ; Unlike some monetary zones that are relatively unstable due to geopolitical factors and/or galloping inflation, Switzerland is reassuring because of its great economic and political stability. A correlation between the Swiss franc and the N100 (Euronext 100 index)? Yes, but not only that, it seems obvious from the different developments of these two assets that a correlation link is indeed present. It is relatively simple to explain. We can observe that in the past, when the N100 performs well, it attracts investors and at the same time, it increases the strength of the euro and therefore decreases the strength of the Swiss Franc. In times of economic uncertainty or recession, however, investors flee the N100 and the euro to seek refuge (hence the term "safe haven") in the Swiss franc. The strength of the Swiss franc then increases and allows the investor to continue to gain purchasing power. We can also add to this that it is a very good way for European investors who wish to keep their savings liquid to fight inflation. Indeed, in 2021, the average inflation in the euro zone was 5% while the Swiss franc rose by 4.47% against the euro. We can therefore deduce that a European who has left his liquid assets in euro has lost 5% of his purchasing power, whereas a European who has converted his liquid assets into Swiss Francs has only lost 0.53% of his purchasing power. So why is it important to keep your savings in Swiss francs? If you want to keep your savings liquid while avoiding taking too much risk, it seems obvious to me that keeping them in Swiss francs is the best solution. The Swiss franc, compared to the euro, has all the advantages of a financial investment, while retaining the liquidity of a currency. It is obviously less risky than gold or commodities and provides an average annual return of about 3% over the last ten years. It is a good way to convert these investments into cash during recessions, but also to fight inflation during periods of uncertainty or to protect savings against the rising cost of living. How to find the best conversion point? Technical analysis lovers, it's up to us, let's start with this obvious bearish channel presented since early 2018. We can observe that the Swiss franc is gaining more and more strength against the euro and continues to oscillate within this channel. At the time of writing this article (November 11, 2022) we could observe during the last month a bullish reversal pattern which has not been validated yet, but which came to test the resistance n°1 (0.99453CHF). For the time being, even with this reversal figure in daily time unit, the euro remains bearish against the Swiss franc. It is therefore still interesting to convert savings into Swiss francs. We can consider a reversal when the euro breaks the 5 resistances and especially when we have a confirmed breakout from the top of the bearish channel. From a more macroeconomic point of view, we have observed a correlation link between the N100 and the EUR/CHF, we can thus deduce that when the N100 performs, the euro gains strenght and it becomes more advantageous to keep its savings in euros. When the N100 falls, the euro falls and the Swiss franc becomes stronger. The best conversion point is therefore logically the transition from a period of sustainability for the euro zone, to a period of uncertainty. This is what we saw on 24 February following the Russian invasion of Ukraine. How can you increase your profitability by combining the Swiss franc with your investments? Let's assume that you are an average French investor, you have invested part of your savings in an ETF/Tracker representing the 40 largest French companies (Lyxor CAC 40 (DR) UCITS ETF) . You then obtain an average return of 14.36%, smoothed over the last 10 years. Although this is already a very good performance, like many investors you are suffering from the covid crisis + the Ukrainian geopolitical context which has been causing the markets to fall for over a year now. During this last year, you would have lost 5.69% due to an economic recession. If we assume that you know that when the markets are down it is better to convert your investment back into cash and more specifically into Swiss Francs, you would have validated your gains of the previous 9 years, i.e. 149.34% which you would have converted into Swiss Francs. In one year, you would have earned 7.07% more on your investment. Therefore, you would have gone from a smoothed return of 14.36% to 15.64% over the last 10 years. So you can see that combining investments with safe havens in times of crisis can help you boost your profitability. We can also add that over the last 10 years you could have converted your investment during the covid period (March 2020) which would have further increased your profitability. Conclusion The Swiss franc is your ally, so use it! Whether it is to protect your savings from inflation or to boost your profitability during periods of economic downturn, the Swiss franc is a very powerful lever for your finances and your investments. It allows you to maintain a certain amount of liquidity while suffering from more moderate inflation than in the euro zone. Disclamer I would like to remind you that if you are domiciled in France or Monaco, you must declare to the tax authorities any accounts opened, held, used (at least once) or closed during the year abroad. THIS IS NOT INVESTMENT ADVICE ! If you have any questions, I remain at your disposal in the comment space. **************** French version **************** Pourquoi est-il préférable pour les Européens de conserver leurs fonds de sécurités/épargnes en franc suisse plutôt qu’en euros ? Bonjour à tous, Une idée un peu différente de d’habitudes, aujourd’hui je souhaitais vous expliquer pourquoi est il préférable pour les Européens de conserver leurs fonds de sécurités/économies en franc suisse plutôt qu’en euros. Commençons par un peu d'histoire. Une économie forte, un faible endettement et des investissements étrangers élevés réunissent tous les ingrédients pour faire du franc suisse une monnaie forte et une valeur refuge. Mais cette force du franc suisse n'est pas nouvelle. Le franc suisse d'aujourd'hui tire sa force de son histoire ancienne, de ses liens économiques avec la Suisse ainsi que de ses principaux partenaires. Monnaie forte vs monnaie faible La notion de monnaie forte est assez relative : une monnaie peut être forte par rapport à une monnaie, et faible par rapport à une autre. L’euro est fort par rapport au Yen japonais mais faible par rapport au franc suisse. Si l’on prend comme exemple la paire EUR/CHF (autrement dit, ce que vaut un euro après conversion en franc suisse). Il fallait débourser environ 1 638 francs suisses début 2008 pour obtenir 1000 euros, tandis qu’il suffit aujourd’hui de débourser 984 francs suisses pour obtenir la même somme. Si dans l’absolu ces deux monnaies peuvent être considérées comme fortes, le franc suisse remporte le match face à l’euro au cours de la dernière décennie avec une évolution positive du taux de change face à la monnaie unique. Une fois cette notion de taux de change entre les devises, ainsi que de cette perpétuelle fluctuation de ce dernier comprise, il n’est déjà pas très compliqué de commencer à avoir une petite idée d'où nous souhaitons aller pour en tirer profit. Pourquoi le franc suisse est-il si puissant ? Dans le cas de la Suisse, trois facteurs importants viennent expliquer la robustesse du franc suisse par rapport à d’autres monnaies : - la croissance économique  ; plutôt en forme en comparaison avec l’international et qui a su traverser les dernières crises sans trop de dommages. - le faible endettement  ; malgré la crise, le niveau d’endettement de la Suisse reste bien inférieur à celui de ses homologues européens. Si le taux d’endettement de la Suisse ne dépasse pas les 30% du PIB, ceux de ses voisins s’envolent avec 116,3% pour la France et 153,5% pour l’Italie. - la stabilité du contexte géopolitique ; Contrairement à certaines zones monétaires relativement instables en raison de facteurs géopolitiques et/ou d’une inflation galopante, la Suisse rassure de par sa grande stabilité économique et politique. Un lien de corrélation entre le franc suisse et le N100 (Euronext 100 index) ? Oui, mais pas que, il parait évident aux vues des différentes évolutions de ces deux actifs qu’un lien de corrélation est bien présent. Il est relativement simple à expliquer. Nous pouvons observer que dans le passé, lorsque le N100 performe il attire des investisseurs, par la même occasion, il fait augmenter la puissance de l’euro et contribue donc à faire diminuer la puissance du franc suisse. Tandis que lors des moment d’incertitude économique ou bien de récession, les investisseurs fuit le N100 ainsi que l’euro pour se réfugier (d’où le terme de monnaie refuge) en franc suisse. La puissance du franc suisse augmente alors et permet au investisseur de continuer à gagner du pouvoir d’achat. Nous pouvons également ajouter à cela que c’est un très bon moyen pour les investisseurs européens qui souhaitent garder leurs épargnes liquides de lutter contre l’inflation. En effet en 2021, l’inflation moyenne dans la zone euro a été de 5% tandis que le franc suisse à augmenter de 4,47% par rapport à l’euro. Nous pouvons donc en déduire qu’un Européen qui a laissé ces liquidités en euro a perdu 5% de pouvoir d’achat sur ces dernières tandis qu’un Européens qui aurait converti ces liquidités en franc suisse n’aurait quant à lui perdu que 0,53% de son pouvoir d’achat. Pourquoi est-il donc important de conserver son épargne en franc suisse ? Dans le cas où vous souhaiter garder votre épargne liquide tout en évitant de prendre des risques trop importants, il me paraît évident que la conserver en franc suisse sera la meilleure des solutions. Le franc suisse par rapport à l’euro, a tous les avantages d’un placement financier, tout en gardant la liquidité d’une monnaie. Il est évidemment moins risqué que l’or ou les matières premières et permet d’obtenir sur ces dix dernière un rendement annuel moyen d’environ 3%. C’est un bon moyen de convertir ces investissements en cash lors des récessions, mais également de lutter contre l’inflation lors des périodes d’incertitudes ou encore de protéger son épargne contre l’augmentation du coût de la vie. Comment trouver le meilleur point de conversion ? Amateur d’analyse technique, c’est à nous, commençons par cet évident canal baissier présenter depuis début 2018. Nous pouvons observer que le franc suisse prend de plus en plus de puissance par rapport à l’euro et continue d’osciller à l’intérieur de ce canal. À l’heure où j’écris cet article (le 11 novembre 2022) nous avons pu observer lors du mois dernier une figure de retournement haussière qui n’a pour l’instant certes pas été validée, mais qui est venue tester la résistance n°1 (0.99453CHF). Pour l’instant, même en présence de cette figure de retournement en unité de temps journalière, l’euro reste baissier par rapport au franc suisse. Il reste donc intéressant de convertir son épargne en franc suisse. Nous pourrons envisager un retournement lorsque l’euro viendra casser les 5 résistances et surtout lorsque nous aurons une cassure confirmée par le haut du canal baissier. D’un point de vue plus macroéconomique, nous avons pu observer un lien de corrélation entre le N100 et l’EUR/CHF, nous pouvons en déduire que lorsque le N100 performe, l’euro prend de la puissance et il devient donc plus avantageux de garder son épargne en euros. Tandis que lorsque le N100 régresse, l’euro chute et donc le franc Suisse prend plus de puissance. Le meilleur point de conversion est donc en toute logique le passage d’une période de pérennité pour la zone euro, à celle d’une période d’incertitude. C’est ce que nous avons pue observer le 24 février dernier suite à l’invasion de l’Ukraine par la Russie. Comment augmenter sa rentabilité en combinant le franc suisse à ses investissements ? Partons du principe que vous êtes un investisseur français lambda, vous avez placé une partie de vos économies sur un ETF/Tracker représentant les 40 plus grosses sociétés françaises ( Lyxor CAC 40 (DR) UCITS ETF ). Vous obtenez alors un rendement moyen lissé sur les 10 dernières années de 14.36%. Bien que ce soit déjà une très belle performance, comme beaucoup d’investisseur vous subissez la crise du covid + le contexte géopolitique ukrainien qui fait chuter les marchés depuis maintenant plus d’un an. Lors de cette dernière année, vous auriez perdu 5,69% dû à une récession économique. Si nous partons du principe que vous savez que lorsque les marchés s’essouffle qu’il est préférable de reconvertir votre investissement en cash et plus particulièrement en franc suisse, vous auriez alors validée vos gains des 9 années précédentes, cette à dire 149,34% que vous auriez alors converti en franc suisse. Ce qui en une année, vous aurez permis de gagner 7,07 % en plus sur votre investissement. Vous seriez donc passé d’un rendement lissé sur ces 10 dernières années de 14,36% à 15,64%. Vous comprenez donc que combiner l’investissement ainsi que les valeurs refuges en temps de crise peut vous aider à booster votre rentabilité. Nous pouvons ajouter à cela qu'au cours des 10 dernières années vous auriez également pu convertir votre investissement lors de la période du covid (mars 2020) ce qui aurez encore augmenter votre rentabilité. Conclusion Le franc suisse est votre allié alors utilisé le ! Que ce soit pour protéger votre épargne de l’inflation ou bien pour booster votre rentabilité lors des périodes d’essoufflement, le franc suisse est un effet de levier très puissant pour vos finances et vos investissements. Il permet de conserver une certaine liquidité tout en subissant une inflation plus modérée que dans la zone euro. Disclamer Je tiens à rappeler que si vous êtes domicilié en France ou à Monaco, vous devez déclarer à l'administration fiscale les comptes ouverts, détenus, utilisés (au moins une fois) ou clos dans l'année à l'étranger. CECI N'EST PAS UN CONSEIL EN INVESTISSEMENT ! Si vous avez des questions, je reste à votre disposition dans l'espace commentaire. **************** Thanks to Owen (owensn) for his help with the translation. ****************
Long
by UnknownUnicorn35464780
1
HTF Dxy is still bullish!DXY started forming a bearish structure due to heavy news we got last weeks. Can we see a bullish move next week? DXY may push higher in the short term to the next supply zone 109. Technically, DXY is reaching a critical and a psychological are 105.0 and also an unmitigated demand zone that can attract buyers to push the USD higher for the short term. Fundamentally, The index extends the sharp decline in the aftermath of US inflation figures and against the backdrop of a firmer sentiment in the risk-linked galaxy. In the meantime, investors’ repricing of a probable pivot in the Fed’s policy now emerges as a fresh and quite reliable source of weakness for the dollar, in line with a corrective decline in US yields across the curve.
CAPITALCOM:DXYLong
by thetradeveler
XAUUSD potential retracement and entrydownbeat US CPI data about inflation led a market rally which bulls are looking for clues to extend. There was a classic textbook double bottom after which the downtrend reversed into said rally. I myself caught a buy from 1712 to 1731 which was nice. I expect a retracement to 0.786 and probably price consolidation for the next day between 1 and 0.786. When the new York session opens on the 12th of November a bullish movement maybe present. Sorry for the lack of detail today, have been busy with uni A more detailed idea will be published shortly, TRADE WITH CAUTION GOOD DAY
FX:XAUUSD
by haadimilli
1
Treasuries After CPIToday’s cooler readings on inflation and jobless claims were welcome news for stock-market bulls. They could be even more important for the Treasury market. Today we’re considering the yields of the of two-year (US02Y) and 10-year (TNX) notes. The two-year shot to a 16-year high above 4.8 percent on November 4 after non-farm payrolls but failed to hold: a shooting star. It’s also noteworthy that the data had a touch of “Goldilocks,” with total jobs and unemployment both higher than forecast. Those headlines, and subsequent lows, potentially confirm the shooting star as a reversal pattern. There’s also a rising trendline along the lows of August and September that was broken on Thursday. Both events may suggest two-year Treasury yields have peaked. Next is the weekly chart of 10-year Treasury yields. They touched 4.33 percent in mid-October, the highest level since June 2008. Two inside weekly candles followed, potentially indicating a halt to the uptrend. These patterns together, combined with the Euro solidly back above parity, could mark a change from the kind of price action that’s characterized most of 2022. It could have a positive impact on broader sentiment if it continues. TradeStation has, for decades, advanced the trading industry, providing access to stocks, options, futures and cryptocurrencies. See our Overview for more. Important Information TradeStation Securities, Inc., TradeStation Crypto, Inc., and TradeStation Technologies, Inc. are each wholly owned subsidiaries of TradeStation Group, Inc., all operating, and providing products and services, under the TradeStation brand and trademark. You Can Trade, Inc. is also a wholly owned subsidiary of TradeStation Group, Inc., operating under its own brand and trademarks. TradeStation Crypto, Inc. offers to self-directed investors and traders cryptocurrency brokerage services. It is neither licensed with the SEC or the CFTC nor is it a Member of NFA. When applying for, or purchasing, accounts, subscriptions, products, and services, it is important that you know which company you will be dealing with. Please click here for further important information explaining what this means. This content is for informational and educational purposes only. This is not a recommendation regarding any investment or investment strategy. Any opinions expressed herein are those of the author and do not represent the views or opinions of TradeStation or any of its affiliates. Investing involves risks. Past performance, whether actual or indicated by historical tests of strategies, is no guarantee of future performance or success. There is a possibility that you may sustain a loss equal to or greater than your entire investment regardless of which asset class you trade (equities, options, futures, or digital assets); therefore, you should not invest or risk money that you cannot afford to lose. Before trading any asset class, first read the relevant risk disclosure statements on the Important Documents page, found here: www.tradestation.com .
TVC:US02Y
by TradeStation
1
GBP/USD rockets as US inflation dipsThe British pound has soared today, following the US inflation report. GBP/USD is trading at 1.1661, up a massive 2.7%. The October inflation report was lower than what everyone had expected, which has triggered strong volatility in the currency markets. The US dollar is sharply lower against the majors, as the markets are expecting the Fed to ease up on interest rates after today's favourable inflation data. Headline CPI dropped to 7.7%, down from 8.2% in September and below the consensus of 8.0%. Core inflation slowed to 6.3%, down from 6.6% and lower than the forecast of 6.5%. The surprisingly low numbers have turned rate pricing on its head. Prior to the inflation release, the markets had priced in 55% for a 50 bp increase and 45% for a 75 bp hike. This has changed to 80-20 in favor of a 50 bp hike, which has sent the US dollar into a broad retreat. The Fed may end up delivering a 50 bp move in December, but investors should remind themselves that this doesn't mean the Fed is going soft. It wasn't too long ago that a 0.50% hike was considered 'supersize'; it's only in comparison to 0.75% or full-point moves that a 0.50% increase can be considered dovish. Secondly, Fed Chair Powell said at last month's meeting that the terminal rate would be higher than previously expected, a clear sign that the Fed remains hawkish. The UK releases key data on Friday, and the markets are braced for soft readings. GDP for the third quarter is expected to slow to -0.5% QoQ, down from 0.2% in the second quarter. Manufacturing Production for September is expected at -0.4%, which would mark the third decline in four months. If these releases are weaker than expected, the pound could give back some of today's huge gains. There is resistance at 1.1767 and 1.1844 1.1609 and 1.1505 and providing support
by OANDA
US dollar index: DXY bull trend over as inflation cools? DXY fundamental analysis The dollar tumbled after US consumer inflation data fell more than expected in October. Annual headline inflation ECONOMICS:USIRYY fell to 7.7% in October, from 8.2% the previous month and below the 8% predicted. The core measure of inflation ECONOMICS:USCIR , which excludes volatile energy and food costs, fell to 6.3% from 6.6%, falling short of expectations (6.5%). The monthly increase in headline inflation was 0.4% instead of the 0.6% that was expected, and the core increase in inflation was 0.3% instead of the 0.5% that was expected. Lower-than-expected US inflation has prompted investors speculating on slower Fed rate hikes in the future. The probabilities for the December meeting have swung in favour of a 50 basis point hike, which is currently factored with an 80% chance, up from 50% before the CPI release. The expected terminal rate at which the Fed's rising cycle will terminate in May 2023 has decreased to 4.80% from 5.08% before to the inflation report. This means that the markets are currently pricing in an increase of just over 75 basis points until May 2023. US 2-year Treasury yields, which reflects expectations for the Fed monetary policy sunk by 26bps to 4.3%. Expectations of Fed terminal increases and rising US 2-year Treasury yields have supported the DXY bull trend throughout the year. Reduced rate hike expectations are bad news for the dollar, but Fed Chair Jerome Powell's comments at October's FOMC meeting suggest it's premature to declare the end of the raising cycle. Technical analysis The DXY daily chart would suggest that we may be facing the end of the dollar's bullish trend, as the price action in the November 10th session actually broke down the bullish trendline of 2022, and lowered even further than the 50-day moving average. However, for a confirmation of that trend reversal in the DXY, we should likely wait until major Fibonacci retracement levels are cleared by price action. The next level of support is 107.1 (38.2% Fibonacci level of 2022 range), followed by 104.7, which would represent a 50% retracement of the 2022 dollar rally. If bears can break through that barrier, it would mean that they will be in charge of the dollar trend. However, if the Fed pushes back against the slowdown in the inflation rate and signals a more restrictive monetary policy than the market is actually pricing in, we might see some bulls reappear on DXY dip. This contrarian scenario, which seems less likely for the market, could effectively limit the downward movement of the USD.
CAPITALCOM:DXY
by Capitalcom
Where we're going we don't need... inflationThe date was Oct 21st, 2015. No I can't tell the future, and neither can movie makers. What I can tell is the market is aware the next CPI print will come in much lower which is estimated at 7.8. My estimate in the above chart I have coming in lower at 7.4. Sit Rep going into tomorrows print. In my previous ideas and comments I said after the rally we would test the 50D again. If that failed a test of 20D would come soon after. This sets the market up for this CPI print. WARNING!! 10Y auction today at 1pm. Yesterdays 1PM Auction of 3Y ended yesterdays rally. Expect larger distributions in both directions as market makers jokey for position. What does it mean? Expect more indecision over the next 48 hours as bond auctions thru Thursday and more volatility may surface in bitcoin. Event vol from elections will likely remain high into CPI tomorrow. Skew for the first time yesterday pulled up from its steep dive.
AMEX:SPY
by SPYvsGME
32