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Differences in central bank interest rates.The FED Interest rate is moving the stock market, but forex is more sensitive to the spreads. In this simple aggregated chart, indexed to 100, several spreads between countries are shown. For example, focus on the white continuous line, the US Dollar is more appetible for investor respect to Japanese Yen, because the UnitedStates has higher interest rate on its currency. While, focusing on the red continuous line, the UnitedStates have the same interest rate of Canada. This means US Dollar and Canada Dollar have the same interest by investors in terms of interest on their currency. This means USD/CAD might be less dependant now from their central bank's monetary policies
ECONOMICS:USINTR
by automiamo
5
Interest rate ( DOLLAR )How high will the Federal Reserve ( FED ) raise interest rates? Here you can see how far. As you can see we still have a long way to go. We are on the verge of breaking a congestion of more than 40 years. The minimum rate hike will be up to 5 points. And that is at least, because we could revisit levels not seen since the 80s. We are in serious trouble, the economy of all citizens will suffer a lot. It is time to be cautious in the markets and not to make hasty decisions, as we may still have a long way to go before we see the end.
ECONOMICS:USINTRLong
by javieralcazarono
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
Will the yen hit 150 against the greenback?The Japanese yen fell to a seven-year low of 125 against the US dollar on Monday as the Bank of Japan continued easing its monetary policy further widening the gap with the US Federal Reserve’s hawkish tone. But instead of seeing it as a threat to the Japanese economy, the BOJ reiterated that a weaker yen would have positive effects on pushing Japan’s GDP higher. BOJ’s divergence from Fed The US central bank recently raised interest rates for the first time since 2018 and signalled more rate hikes in the coming months to tame rising inflation. The US consumer inflation rate skyrocketed to a four-year high of 7.9% in February, prompting the Fed to take a more hawkish stance despite the lingering COVID-19 pandemic and geopolitical uncertainties. Conversely, the BOJ continued to loosen its monetary policy, reiterating that it would maintain interest rates at ultra-low levels to support Japan’s economic recovery and as inflation stays below its 2% target. The central bank also offered to purchase an unlimited amount of government bonds from Monday through Thursday this week at 0.25%. The offer is for debts with maturities of more than five years and up to 10 years. The move is one of the BOJ’s attempts to contain rising bond yields despite US Treasury yields reaching new multi-year highs. Adding pressure to the yen The measure further weighed on the yen on Monday, with economists from ING Bank expecting upside risks to prevail beyond 125. They said "130 is well within reach in the near term unless the bond environment improves.” A depreciation in the Japanese yen would drive up the costs of imports, ultimately hurting households as it would increase the costs of imported goods and other goods for consumption. It also pushed Japan’s core inflation to a two-year high of 0.8% in March, quicker than market forecasts. Preference for a weaker currency While many economies beef up efforts to boost the value of their currencies, Japan has been aiming to devalue its currency to gain a competitive advantage in foreign trade. A weak yen will make Japan-made goods more competitive overseas and increase profits that Japanese companies make in foreign markets. It would also lift services exports and increase net income receipts from abroad when converted into yen. Back in January, the BOJ estimated that a 10% drop in the yen would boost Japan’s gross domestic product by about 1%. In the final months of 2021, Japan’s GDP rose 4.6% year over year, lower than its previous forecast for a 5.4% rise. Fitch Ratings expects Japan’s inflation at 1.8% this year on the back of higher energy prices and yen depreciation. Preventing another 1998 yen volatility As the yen continues to fall against the greenback, the markets are closely watching for a recurrence of a wild rebound that occurred in the USDJPY in 1998 at the height of the Asian financial crisis. At the time, the US dollar fell by almost 15% versus the yen from its previous peak. That slump was preceded by a three-year yen depreciation as Japanese authorities believed the yen was overvalued. Will the yen hit 150 against the greenback? The question of whether the yen will reach 150 versus the US dollar is more of a when as the Fed maintains its hawkish stance and as the BOJ is poised to keep its loose monetary policy setting in the medium term. This would further widen the gap between their policies, sending the yen lower as Japan continues to book current account deficits due to a jump in oil import prices.
ECONOMICS:USINTR
by BlackBull_Markets
BITCOIN VS INTEREST RATESBitcoin vs Interest rates (current rates 0-0.25%) year 2022 To many analysis were seeing around but they forget whos the one controls everything, remember when interest rates is rising stocks crypto start to go in parabolic moves and later it will go to blown off scenario were the crash begging's. for bitcoin we can compare the recent move to 2017 bullrun were bitcoin still pushing high even the interest rates is rising from 0.25% to 0.50% up to 1.5%, this 2022 rates was 0.25% and next rates will be 0.50% on march 16 according to recent meeting, i think bitcoin can still push higher above $100k along with rising rates, data from 2017 show clearly that rising rates can push the market to last bullrun and once rates reach 1.5% stocks and crypto start to go bearish, for now we should look at the daily range of bitcoin and telling us that were at wave 4 weekly and wave c daily and it was confirm when bitcoin bounce from $32k, the recent resistance to $45k was expected and i think it could retest the $39k-$49k again before breaking the $50k and bull run will start since $45k is the 1st impulse wave 1 of wave5 weekly and $39k $40k is impulse wave 2 of wave5 weekly, next move is wave 3 were bulls will start to go crazy again, the key here is we should see a strong bounce from $40k, (disclaimer this wave analysis can be invalid since crypto is a different wolrd it can go anywhere he wants, but 100% rates vs btc is correct) i hope my analysis helps you were bitcoins wants go and interest rates helps or not help the stocks and crypto market. THANK YOU
ECONOMICS:USINTRLong
by WolvesOkami
Market reaction on FED's change in monetary policy is irrationalThe stock and crypto market reactions on for some time known FED's change in monetary policy is an emotional overreaction driven by fear. As you can see from the graph that compares Nasdaq's Index development over the last years with US State Interest rates there was a period from 2015 to 2019 with climbing interest rates and climbing NDQ as well. Directly before the global start of Corona pandemic the US Interest Rate was 1.75%. Currently, the markets expect an up to four times increase of some 0.25% per step in 2022, perhaps resulting in 1.25% at the end of the trading year - so what are we in fear of ??? What changed at Nasdaq and Crypto during the Corona Years 2020 and 2021 is the steepness of the price increase - but is this increase of Tech and Crypto really mainly driven by a very low level of interest rates? Surely not, as we have already seen such low interest rates in the period of 2008/9 to 2015 during the global financial crisis and there was not such increase in the steepness of price development. Moreover, innovative tech companies which calculate with double digit sales increase per year can not be severely damaged by an interest rate increase of some 1%. To my mind, what really changed in 2020 and 2021 and boostered Tech Stocks and Crypto similarly, is a new awareness of the relevance of the global digital social and business model. As never before, Corona let us understand that digital and technical innovations are of systemic importance to jointly master the challenges of the future and Crypto's Blockchains may form a catalytic and secure fundament to trade and socially connect people peer to peer all over the world. Yours Edgar Neufeld Germany
ECONOMICS:USINTRLong
by ENeufeld
The Meme ReversionThe general idea is that the Fed let inflation get out of control because of the meme amounts of quantitative easing (QE). This amount of QE would not have been a problem if the Stock Market Capitalization (SMC) to Gross Domestic Product (GDP), also known as the Buffet Indicator, wasn’t already at a meme incline prior to the pandemic, now over x2. If you rewind 3 weeks ago I posted about using the Bond Yield Spread for 30y-20y to predict the FOMC (Hawkish or Dovish). The inversion of 30y-20y was riding a more dovish fed outlook to restoring interest rate hikes for 2022. Prior to Dec 15 FOMC, we saw a sharp correction in the 30y-20y yield spread as an indication that the FED would take a hawkish outlook to 2022. What it indicates is that sentiment in long-term bond yields shifted positive meaning the bond market was confident that interest rates would return in the new year. The problem is the fed dropped anchor on its policy for rate changes in 2022 as inflation is out of control ( USIRYY ) and as unemployment rates decrease ( UNRATE ) we will find ourselves diving towards inversion in the yield curve indicating the start of a recession (Phillips curve). This tells us that we are at or near the top of the market in early 2022 of a very overbought stock market and would indicate the largest correction in recent history that I will refer to going forward as The Meme Reversion . Strap In. 2022 is going to be more MEME X2 inverted!
ECONOMICS:USINTR
by SPYvsGME