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27.09.2022
06:54
Russia's Medvedev: We have the right to use nuclear weapons if necessary

Russia's Medvedev: We have the right to use nuclear weapons if necessary

More to come

06:53
EUR/CHF to tick down towards 0.93 over months ahead – Danske Bank

Economists at Danske Bank continue to expect EUR/CHF to move downward in the coming months. The pair is forecast at 0.93 on a 12-month view.

Swiss National Bank to hike by 75 bps in December

“We expect the SNB to hike by 75 bps in December to curtail underlying inflation pressures bringing the policy rate to 1.25%.”

“With the SNB broadly following the ECB, we see relative rates as an inferior driver for the cross.”

“We continue to forecast the cross to move lower on the back of fundamentals and a tighter global investment environment.”

“We continue to forecast EUR/CHF at 0.93 in 12M.”

 

06:47
GBP/USD set to remain under pressure in the near-term – ANZ

GBP/USD has suffered a substantial drop. Economists at ANZ Bank expect the British pound to remain under downside pressure for the time being.

EUR/GBP to remain within historical ranges

“We expect the GBP to remain under pressure as it trades close to a 40-year low amid USD strength in the near-term.” 

“EUR/GBP will continue to remain within historical ranges, primarily led by volatility in the EUR.”

“Over the medium-term, the end of the two-year fiscal plan on energy prices, coupled with a USD reversal, may lead to some recovery in the GBP.”

 

06:35
USD/CAD set to remain at high levels over coming months – Danske Bank

The upward pressure on USD/CAD has resumed over the last month. Economists at Danske Bank continue to pencil in more topside.

Forecast: 1.34 (1M), 1.35 (3M), 1.36 (6M), 1.36 (12M)

“Looking ahead, we continue to pencil in more topside driven by both broad-based USD strength, shaky global asset markets, tighter global financial conditions and a Bank of Canada delivering less tightening than the Fed.”

“A much improved global growth outlook and/or more dovish central banks mark the biggest downside risk factor to our forecast. On the other hand, a sharp global recession could send USD/CAD considerably higher than in our base case.”

“We now have USD/CAD at 1.34 in 1M (from 1.30), 1.35 in 3M (from 1.33), 1.36 in 6M (1.34) and 1.36 in 12M (1.34).”

 

06:32
EUR/USD to bottom at 0.95 in Q2 2023 – ANZ EURUSD

EUR/USD has glimpsed below the 0.96 mark. Economists at ANZ Bank expect the pair to bottom out in the first half of 2023 at 0.95.

Downside pressure to continue

“Sentiment remains weak amid gas price volatility as Europe prepares itself for winter with limited gas supplies. This is set to dampen the euro area’s (already weak) economic prospects, given the lack of a long-term solution to the current energy crisis.”

We view any recovery in the euro area to be challenging and uncertain into Q2 2023, once the winter season is past.”

We have updated our forecasts for the EUR to bottom at 0.95 in Q2 2023.”

06:25
USD/JPY to remain elevated for now, pressure on yen to wear off over coming months – Danske Bank

USD/JPY has continued its move higher as the global pressure for higher yields and the global energy crunch has weighed on the yen. But economists at Danske Bank expect the pair to turn back lower over the coming months.

JPY headwinds remain in place

“The key driver of USD/JPY remains the outlook for the global economy and US treasury yields.”

“With the US labour market still in shape, we are not convinced global inflation pressures are yet turning and thus, in the short run, JPY headwinds will probably remain in place. Looking further ahead, we do expect the pressure on JPY will wear off.”

“We forecast the cross at 142 (1M), 142 (3M), 142 (6M), 130 (12M).”

 

06:25
Gold Price Forecast: XAU/USD bulls need acceptance beyond $1,645 – Confluence Detector
  • Gold price rebounds from two-year low as risk-aversion ebbs amid sluggish markets.
  • Softer yields, US inflation expectations underpin XAU/USD’s corrective bounce.
  • Sustained trading beyond $1,645 appears necessary for bulls to keep reins.

Gold price (XAU/USD) extends bounce off a 29-month low as buyers cheer the US dollar pullback near $1,635 during early Tuesday. That said, the US Dollar Index (DXY) retreats from the 20-year high, down 0.40% intraday near 113.68 by the press time, as softer yields join downbeat US data and inflation expectations. Also adding strength to the XAU/USD rebound could be the market’s hope of central bank intervention, considering the latest moves from the Bank of Japan (BOJ) and the People’s Bank of China (PBOC). Additionally, Germany’s capacity to channel more fuel for winter and the Fed policymakers’ fears of defending the US dollar amid the meddling from the other central banks also propel the gold prices, via the US dollar’s weakness.

That said, the speech from US Fed Chairman Jerome Powell and the US data comprising CB Consumer Confidence for September and Durable Goods Orders for August will be important for immediate direction. Also, headlines from the UK and concerning recession could offer additional hints to the XAU/USD traders.

Also read: Gold Price Forecast: XAU/USD seems poised to break below $1,600 amid Fed rate hike jitters

Gold Price: Key levels to watch

The Technical Confluence Detector shows that the gold price approaches the $1,646 resistance confluence comprising the middle band of the hourly Bollinger and the pivot point one month S2.

That said, a convergence of the previous week’s low and Fibonacci 61.8% on one day restricts immediate upside near the $1,640 mark.

It should also be noted that Fibonacci 23.6% on one week, around $1,652, acts as the last defense for the XAU/USD bears.

On the contrary, the middle band of the hourly Bollinger, Fibonacci 38.2% one-day and SMA5 4H high $1,631 as the immediate support.

Following that, the previous low on the 4H joins the Fibonacci 23.6% one-day to highlight the $1,627 as the key support.

Overall, gold is likely to remain weak unless staying successfully beyond $1,645.

Here is how it looks on the tool

fxsoriginal

About Technical Confluences Detector

The TCD (Technical Confluences Detector) is a tool to locate and point out those price levels where there is a congestion of indicators, moving averages, Fibonacci levels, Pivot Points, etc.  If you are a short-term trader, you will find entry points for counter-trend strategies and hunt a few points at a time. If you are a medium-to-long-term trader, this tool will allow you to know in advance the price levels where a medium-to-long-term trend may stop and rest, where to unwind positions, or where to increase your position size.

06:18
GBP/USD may take some time to settle as sterling needs credible policy delivery – ANZ GBPUSD

GBP/USD is down 21% on a year-to-date basis. In the opinion of economists at ANZ Bank, policy credibility is key to GBP stability.

UK policy setters need to get ahead of market anxiety

“The volatility serves as a salutary reminder of the need to deliver credible policy, particularly in the current climate of high inflation and asset price weakness.”

“We expect policy rates to rise materially further (4.0%) but think the market’s view of 6.0% rates is too high. Sterling may therefore take some time to settle, while the government needs to boost fiscal credibility.” 

“An inter-meeting Bank of England (BoE) rate hike could be seen as a panic measure and make volatility worse. Defending a given exchange rate level is not feasible beyond the very short-term.”

 

06:13
NZD/USD Price Analysis: Bulls attack balance area in a 0.5700-0.5760 range
  • NZD/USD has scaled above 0.5700 as a rebound move has turned into a reversal.

  • Kiwi bulls have crossed above the 10-and-20-EMA vigorously.

  • The RSI (14) has delivered a range shift in a 40.00-60.00 territory.

The NZD/USD pair has extended its gains after overstepping the immediate hurdle of 0.5692 in the early European session. The asset has refreshed its intraday high above 0.5700 and is expected to advance further as the upside momentum seems upbeat amid weakness in the US dollar index (DXY).

On an hourly scale, the kiwi bulls have attempted to enter into the prior balanced area in a 0.5700-0.5760 range. The balance area indicates a region where most of the auction activity took place. This is also recognized as a mark-down inventory distribution phase, which facilitated market participants to initiate shorts after the establishment of a bearish bias.

The asset has crossed the 10-and 20-period Exponential Moving Averages (EMAs) at 0.5677 and 0.5682 respectively. It is worth noting that the 10-EMA is still below the 20-EMA, which indicates that the upside momentum is extremely strong.

Meanwhile, the Relative Strength Index (RSI) (14) has shifted into the 40.00-60.00 range from the bearish territory of 20.00-40.00. This indicates that the kiwi bulls are not bearish for the time being.

A decisive break above the aforementioned balance area will send the asset towards the round-level resistance at 0.5800, followed by Friday’s high at 0.5888.

On the contrary, the kiwi bulls could lose their control if the asset drops below Monday’s low at 0.5625. An occurrence of the same will drag the asset towards the 23 March 2020 low and the psychological support at 0.5586 and 0.5500 respectively.

NZD/USD hourly chart

 

 

 

06:13
Fed’s determination is the most important factor supporting the US dollar – Commerzbank

The US dollar continues to move higher. Economists at Commerzbank believe that a strong greenback is fundamentally justified.

Strong, stronger, too strong?

“The outlook for the US dollar remains positive. Yes, the significant rate hikes are beginning to have an effect, as today’s housing market data in particular is likely to underline. But order intake and consumer confidence are also likely to illustrate that the real economic environment remains relatively robust.”

“Further rate hikes will be required to get a grip on inflation. The Fed’s determination is the most important factor supporting the dollar.”

“It cannot be overlooked that the dollar is trading at record levels on a trade-weighted basis. However, current exchange rate levels are fundamentally justified.”

 

06:04
Gold Price Forecast: XAU/USD has limited upside potential, caution for bulls

Gold gains positive traction on Tuesday and snaps a two-day losing streak to over a two-year low. The upside potential, however, seems limited, FXStreet’s Haresh Menghani report.

XAU/USD seems poised to break below $1,600

“The fundamental backdrop suggests that the path of least resistance for the metal is to the downside. The attempted recovery move runs the risk of fizzling out rather quickly.”

“Any subsequent move up is more likely to confront resistance near a one-week-old trading range support breakpoint, around the $1,654-$1,656 region. Sustained strength might trigger a short-covering move towards the $1,675-$1,676 supply zone. Some follow-through buying will negate any near-term negative bias and pave the way for additional gains, allowing bulls to aim back to reclaim the $1,700 round-figure mark.”

“The YTD low, around the $1,620 area, now seems to protect the immediate downside ahead of the $1,620-$1,590 region. A break below here will be seen as a fresh trigger for bearish traders and drag gold towards the $1,567-$1,565 support zone. The downward trajectory could extend towards the $1,530-$1,528 region, below which the XAU/USD might turn vulnerable to challenge the $1,500 psychological mark.”

06:01
Sweden Producer Price Index (MoM) above forecasts (0.5%) in August: Actual (3.3%)
06:00
Sweden Trade Balance (MoM) below expectations (0.7B) in August: Actual (-18.4B)
06:00
Sweden Producer Price Index (YoY) came in at 22%, above forecasts (18.7%) in August
05:47
EUR/USD Price Analysis: Bulls approach 0.9660 hurdle inside weekly triangle EURUSD
  • EUR/USD grinds higher inside a three-day-old symmetrical triangle, keeps bounce off 20-year low.
  • RSI, MACD hints at further recovery but one-week-old resistance line adds to the upside filters.
  • Sellers could quickly jump back on the table if witnessing a clear break of 0.9600.

EUR/USD renews intraday high around 0.9650, snapping a five-day downtrend, as buyers keep reins inside a short-term triangle heading into Tuesday’s European session. That said, the major currency pair takes rounds to 0.9660 by the press time.

Given the MACD and RSI conditions favor the quote’s rebound from the two-decade low, EUR/USD buyers are likely to overcome the immediate hurdle surrounding 0.9660, including the stated triangle’s upper line.

However, a downward sloping resistance line from September 20, close to 0.9710 at the latest, holds the key to the pair’s further advances.

In a case where the EUR/USD buyers keep reins past 0.9710, the odds of witnessing a run-up towards the 50% Fibonacci retracement level of September 20-25 downside, around 0.9810 can’t be ruled out.

Alternatively, pullback moves need validation from the 0.9600 round figure, also including the stated triangle’s bottom.

Following that, a south-run towards refreshing the multi-year low is more likely. In that case, the latest trough near 0.9550 may act as the next rest for the EUR/USD bears before a six-month-old descending support line, around 0.9470 by the press time.

EUR/USD: Hourly chart

Trend: Limited upside expected

 

05:41
Natural Gas Futures: Rising bets for further rebound

CME Group’s flash data for natural gas futures markets noted open interest increased for the second session in a row on Monday, this time by around 1.3K contracts. Volume, instead, shrank for the second consecutive session, now by around 132.7K contracts, the largest single-day drop since August 12.

Natural Gas now looks supported around $6.50

Monday’s drop and rebound from the $6.50 region was on the back of rising open interest, which reinforces the continuation of the bullish move in prices of natural gas in the very near term. In the meantime, decent contention seems to have now emerged around $6.50.

05:31
Asian Stock Market: Indices rebound as DXY weakens, China’s growth in trouble, oil near $75.00
  • Asian stocks have rebounded as the DXY has turned subdued ahead of US Durable Goods data.

  • World Bank has cut growth projections for China amid Covid-19 issues and a real estate crunch.

  • The BOJ has announced an unscheduled bond-buying program.

Markets in the Asian domain have rebounded as the US dollar index (DXY) has weakened after failing to sustain above the critical hurdle of 115.00. The DXY is witnessing pressure amid lower consensus for the US Durable Goods Orders data. As per the preliminary estimates, the apparels durables data will tumble by 1.1%.

At the press time, Japan’s Nikkei225 gained 0.50%, ChinaA50 added 0.27% while Hang Seng dropped more than 1%.

Chinese equities are getting support despite a decline in the growth projections by the World Bank. The giant lender believes that China’s longer zero-tolerance approach towards Covid-19 and the real estate crisis have trimmed its growth rate. Demand for steel, base metals, cement, and other building materials has declined firmly. Also, the eastern developing economies will perform better as much business will shift to them.

In today’s session, the US Durable Goods Orders data will be of utmost importance. The economic data will remain subdued as higher interest rates by the Federal Reserve (Fed) and soaring core Consumer Price Index (CPI) numbers have forced individuals to postpone their current purchasing plans.

Meanwhile, the Bank of Japan (BOJ) has announced an unscheduled bond-buying program. The central bank is offering to buy JPY 250 billion worth of Japanese Government Bonds (JGBs).

On the oil front, oil prices have displayed a less-confident rebound after dropping to nearly $75.00. The pullback move seems a result of a subdued performance by the DXY. The oil prices will continue to remain on the tenterhooks as fears of the global recession are skyrocketing.

 

05:30
NZD/USD faces some range bound near term – UOB

FX Strategists at UOB Group Lee Sue Ann and Quek Ser Leang suggest NZD/USD could attempt some consolidation in the very near term.

Key Quotes

24-hour view: “We expected NZD to weaken further yesterday but we were of the view that ‘the next support at 0.5640 is unlikely to come into view for now’. Our view for NZD to weaken was not wrong even though NZD took out 0.5640 and dropped to 0.5627 before rebounding. The rebound amidst oversold conditions and slowing momentum suggests NZD is unlikely to weaken further. For today, NZD is more likely to trade between 0.5645 and 0.5730.”

Next 1-3 weeks: “We turned negative in NZD about 2 weeks ago. As NZD dropped in line with our expectations, in our latest narrative from yesterday (26 Sep, spot at 0.5730), we indicated that NZD is expected to continue to weaken, possibly to 0.5640. Our view was not wrong even though we did not expect NZD to breach 0.5640 so quickly (low of 0.5627 in NY). Further weakness is not ruled out but oversold short-term conditions could lead to a couple of days of consolidation first. As long as 0.5800 (‘strong resistance’ level was at 0.5815 yesterday) is not breached, NZD is likely to weaken further. That said, the chance of a clear break of 0.5600 is not high for now.”

05:27
ECB’s Lane: We expect inflation to decrease significantly in 2023, with further decreases in 2024

“Our interest rate hikes will slow demand in the economy,” said European Central Bank (ECB) Chief Economist Philip Lane.

More to come

05:26
Crude Oil Futures: Potential bounce in the offing

Considering preliminary readings from CME Group for crude oil futures markets, traders trimmed their open interest positions by nearly 3K contracts following four daily builds in a row at the beginning of the week. In the same line, volume dropped the most since September 15, this time by more than 186K contracts.

WTI: Next on the upside comes $80.00

Prices of the WTI retreated to the vicinity of the $76.00 mark on Monday against the backdrop of shrinking open interest and volume. That said, further decline seems unlikely for the time being and the door now looks open to a probable rebound with the immediate hurdle at the $80.00 mark per barrel.

05:11
GBP/USD: Scope for a potential visit to parity – UOB GBPUSD

In the opinion of FX Strategists at UOB Group Lee Sue Ann and Quek Ser Leang, GBP/USD risks a probable drop to the parity zone.

Key Quotes

24-hour view: “While we expected GBP to weaken further yesterday, we were of the view that ‘1.0300 is likely out of reach for now’. However, GBP did not weaken further as it rebounded strongly to a high of 1.0934 before dropping back down to close at 1.0690 (-1.50%). The strong downward pressure has eased a tad and GBP is unlikely to revisit yesterday’s low of 1.0327. For today, GBP could continue to trade in a choppy manner and likely within a wide range of 1.0600/1.0900.”

Next 1-3 weeks: “Our view from yesterday (26 Sep, spot at 1.0600) still stands. As indicated, in view of the impulsive downward acceleration, a further decline in GBP to 1.0000 is not ruled out. That said, deeply oversold short-term conditions suggest GBP could trade above yesterday’s low of 1.0327 for a few days first. On the upside, a break of 1.1000 (no change in ‘strong resistance’ level from yesterday) would indicate that the weakness in GBP from about 2 weeks ago has stabilized.”

05:04
WTI licks its wounds near $77.00 as recession woes ebb, US macro, API inventories eyed
  • WTI rebounds from eight-month low as markets pare recent losses.
  • Fears of slowdown in demand, higher supply joined firmer US dollar to favor bears earlier.
  • Comments from Iraq, pullback in DXY join cautious optimism to underpin corrective bounce.
  • Recovery remains elusive as central banks stay hawkish, economic slowdown looms.

WTI crude oil portrays a corrective bounce amid Tuesday’s quiet Asian session, around $77.10 by the press time of the pre-European session.

In addition to the lack of data/events during early Tuesday, the US dollar’s pullback and hopes of avoiding the recession seem to have favored the energy benchmark’s recovery from the lowest levels since January 2020.

That said, the US Dollar Index (DXY) retreats from the 20-year high, down 0.40% intraday near 113.68 by the press time, as softer yields join downbeat US data and inflation expectations.

That said, US Treasury yields retreat from the multi-year high while the S&P 500 Futures also print mild gains by the press time. That said, US 10-year Treasury yields rose to the highest levels in 12 years while the 2-year bond coupons refreshed the 15-year top as traders rushed to the risk safety. Further, Chicago Fed National Activity Index weakened to 0.0 in August versus 0.09 market expectations and an upwardly revised prior reading of 0.29. Further, the US inflation expectations as per the 10-year and 5-year breakeven inflation rates per the St. Louis Federal Reserve (FRED) data, signaled that the gauges refreshed the multi-day low on Monday. While noting the details, the longer-term inflation expectations dropped to the lowest level since July 13, 2022, whereas the 5-year benchmark slumped to the lowest levels since June 2021 with the latest figures being 2.32% and 2.33% respectively.

Elsewhere, Iraq Oil Minister Ihsan Abdul Jabbar on Monday said the Organization of the Petroleum Exporting Countries (OPEC) and allies including Russia, known as OPEC+, are monitoring the oil price situation, wanting to have a balance in the markets, per Reuters.

Moving on, weekly prints of the American Petroleum Institute’s (API) Crude Oil Stock data, previous 1.035M, will join the US CB Consumer Confidence for September and Durable Goods Orders for August to determine short-term WTI moves.

Overall, oil prices are likely to remain amid economic fears and a firmer US dollar.

Technical analysis

WTI bulls need to cross the previous support line from May 11, around $77.60 at the latest, to keep buyers hopeful.

 

05:00
Gold Futures: Rebound likely short term – UOB

Open interest in gold futures markets resumed the downside and shrank by just 834 contracts on Monday, according to advanced prints from CME Group. Volume followed suit and dropped by around 28.4K contracts after four consecutive daily builds.

Gold appears supported around $1,620

Gold prices started the week on the defensive amidst shrinking open interest and volume, hinting at the likeliness that further losses look not favoured and therefore a potential rebound could be in the offing. In the meantime, decent contention has so far emerged around the $1,620 level per ounce troy.

04:43
USD/JPY Price Analysis: No man’s land hints at further consolidation
  • An ongoing inventory adjustment process has activated investors for a decisive move.
  • Overlapping 10-and-20-EMAs are still favoring a consolidation ahead.

  • The RSI (14) has witnessed some signs of exhaustion in the upside bias.

The USD/JPY pair has slipped to near 144.27 in the Tokyo session after failing to sustain above the critical resistance of 144.50. The asset is continuously facing barricades above 144.50 despite multiple attempts. On a broader note, the asset is advancing sharply higher after hitting a low of 140.35.

Considering the four-hour scale, the major is auctioning in an inventory adjustment process. It is critical to state that the adjustment process is an accumulation or distribution. Odds favor an inventory distribution as the asset is displaying signs of momentum loss.

The asset price is overlapping with the 20-and 50-period Exponential Moving Averages (EMAs), which indicates a consolidation ahead.

Scrutiny of the condition of the Relative Strength Index (RSI) (14) displays that the oscillator is struggling to shift into the bullish range of 60.00-80.00. This has come after the momentum oscillators displayed a range shift sign vertically to a bearish range of 20.00-40.00 from the bullish range.

For a decisive bearish reversal, the asset is required to drop below Thursday’s low at 140.35. An occurrence of the same will drag the asset towards the August 30 low at 138.05 followed by the August 23 low at 135.81.

Alternatively, the greenback bulls could drive the asset higher after overstepping Thursday’s high at 145.90, which will drive the asset towards the August 1998 high at 147.67. A breach of the latter will send the major towards the psychological resistance of 150.00.

USD/JPY four-hour chart

 

04:42
EUR/USD risks further losses near term – UOB EURUSD

According to FX Strategists at UOB Group Lee Sue Ann and Quek Ser Leang, EUR/USD still risks a deeper pullback in the near term.

Key Quotes

24-hour view: “After EUR plunged below 0.9600 and snapped back up, we highlighted yesterday that while ‘the weakness in EUR has not stabilized, 0.9500 is unlikely to come under threat for now’. EUR subsequently rose to 0.9709 before dropping back down to close at 0.9606 (0.87%). Downward pressure has eased slightly and this combined with oversold conditions suggests EUR is likely to consolidate for today, expected to be between 0.9560 and 0.9700.”

Next 1-3weeks: “There is no change in our view from yesterday (26 Sep, spot at 0.9630). As highlighted, the impulsive and outsized drop from last Friday suggests EUR could continue to weaken, possibly to 0.9500. Overall, the weakness in EUR from about 2 weeks ago is intact as long as EUR does not breach 0.9770 (‘strong resistance’ level was at 0.9810 yesterday).”

04:41
Silver Price Analysis: XAG/USD recovery needs validation from $19.10
  • Silver price jumps back beyond 61.8% Fibonacci retracement, off from two-week low.
  • RSI, MACD suggests further upside towards weekly resistance line.
  • Convergence of 200-SMA, previous support line from early September challenge bulls.
  • Sellers should break $18.30 before retaking the control.

Silver price (XAG/USD) extends recovery from a fortnight low to $18.55 during early Tuesday morning in Europe.

In doing so, the bright metal regains its place beyond the 61.8% Fibonacci retracement level of September 01-12 upside, after a brief fall the previous day.

Given the receding bearish bias of the MACD and the recently improving RSI (14) from the oversold territory, the XAG/USD prices are likely to approach a downward sloping resistance line from Friday, close to $18.70 at the latest.

However, a confluence of the 200-SMA and the support-turned-resistance line from September 01, close to $19.10, appears a tough nut to crack for the metal sellers.

If at all the silver price rallies beyond $19.10, the upside momentum won’t hesitate to challenge the monthly peak near $20.00.

Alternatively, the 61.8% Fibonacci retracement level of $18.50 acts as immediate support for the metal traders to watch for fresh impulse.

Also acting as the downside filter is the broad horizontal support around $18.30-35, established on August 30.

Silver: Four-hour chart

Trend: Limited recovery expected

 

04:24
Goldman Sachs: Underweight equities as real yields rise – Bloomberg

Goldman Sachs Group Inc. downgraded equities to underweight in its global allocation over the next three months while remaining overweight cash, saying rising real yields and the prospect of a recession suggest the rout has further to run, per Bloomberg.

Key quotes

The US investment bank’s market-implied recession probability has increased to above 40% following the recent bond sell-off, “which historically has indicated elevated equity drawdown risk,” strategists including Christian Mueller-Glissmann wrote in a note Monday. 

Current levels of equity valuations may not fully reflect related risks and might have to decline further to reach a market trough.

Real yields continue to be a major headwind.

Goldman’s bearish take on equity allocation comes after its US strategists slashed their year-end target for the S&P 500 Index to 3,600 from 4,300 last week.

Similarly, Europe strategists including Sharon Bell have reduced targets for European equity gauges, downgrading their 2023 earnings-per-share growth forecast for the Stoxx Europe 600 Index to -10% from zero. 

They have raised the recommendation for credit to neutral over the three-month horizon.

Investment grade credit yields are looking attractive in both absolute terms and relative to equities, they wrote. 

Also read: Forex Today: Panic took over financial markets

04:11
GBP/USD rebound pokes 1.0800 as BOE hesitates, DXY tracks yields ahead of key data GBPUSD
  • GBP/USD picks up bids to refresh intraday high, extends bounce off all-time low.
  • US dollar pares recent gains amid sluggish session, softer data, inflation expectations add strength to the DXY pullback.
  • BOE resists taming GBP strength, UK policymakers refrain from reversing any measures announced recently.
  • US data, Fedspeak will be crucial for directions, bears are likely to keep reins amid pessimism surrounding UK.

GBP/USD reverses the previous day’s heavy losses as it bounces off the all-time low to 1.0780 during early Tuesday morning in Europe. In doing so, the Cable pair renews intraday high while also snapping the five-day downtrend.

The quote’s latest gains could be linked to the hopes from the UK Chancellor (Finance Minister) Kwasi Kwarteng that he will be able to restore investor confidence via his medium-term budget, after sending sent sterling and government bonds into freefall the previous day. Also, expectations that the Bank of England (BOE) won’t need to intervene to defend the British Pound (GBP) add strength to the GBP/USD rebound. “The threshold for the Bank of England intervening in the foreign-exchange market to stabilize the pound is high,” said the HSBC Bank.

British finance minister Kwasi Kwarteng will set out a "Medium-Term Fiscal Plan" on Nov. 23, alongside growth and borrowing forecasts from the Office for Budget Responsibility, Britain's finance ministry said on Monday. The news also quotes the British Finance Ministry as saying, "The Fiscal Plan will set out further details on the government's fiscal rules, including ensuring that debt falls as a share of GDP in the medium-term."

On the other hand, the US Dollar Index (DXY) retreats from the 20-year high, down 0.40% intraday near 113.68 by the press time, as softer yields join downbeat US data and inflation expectations.

That said, US Treasury yields retreat from the multi-year high while the S&P 500 Futures also print mild gains by the press time. That said, US 10-year Treasury yields rose to the highest levels in 12 years while the 2-year bond coupons refreshed the 15-year top as traders rushed to the risk safety. Further, Chicago Fed National Activity Index weakened to 0.0 in August versus 0.09 market expectations and an upwardly revised prior reading of 0.29. Further, the US inflation expectations as per the 10-year and 5-year breakeven inflation rates per the St. Louis Federal Reserve (FRED) data, signaled that the gauges refreshed the multi-day low on Monday. While noting the details, the longer-term inflation expectations dropped to the lowest level since July 13, 2022, whereas the 5-year benchmark slumped to the lowest levels since June 2021 with the latest figures being 2.32% and 2.33% respectively.

It should be noted that the scathing response to the UK Chancellor Kwarteng’s mini-budget triggered fears of more pain for the British economy and dragged the cable to an all-time low, backed by the hawkish Fedspeak. Adding to the downside fears was the BOE’s inaction afterward.

To sum up, GBP/USD is likely to extend the latest corrective bounce but the upside potential is limited ahead of the US CB Consumer Confidence for September and Durable Goods Orders for August. Also important to watch are headlines from Britain.

Also read: US Consumer Confidence Preview: Near-term relief or more risk aversion?

Technical analysis

GBP/USD rebound needs validation from the 1.1000 psychological mark to aim for the previous support line from May, around 1.1270-80 by the press time. Otherwise, a pullback towards the year 1985 bottom close to 1.0520 and then to the recent low near 1.0340 can’t be ruled out.

 

04:00
AUD/USD struggles below 0.6500, upside looks likely, US Durable Goods Orders in focus AUDUSD
  • AUD/USD has faced hurdles around 0.6500 amid Harris-Albanese chatters.

  • World Bank has cut growth forecasts for China and has hiked same for eastern developing nations.

  • A lower-than-expected US Durable Goods data will bring more correction in the DXY.

The AUD/USD pair is witnessing a mild correction after hitting a high of 0.6495 in the early Tokyo session. Earlier, the asset rebounded firmly after dropping to near 0.6437 as the risk-off profile was heightened. As investors have started shrugging off the negative market sentiment, commodity-linked currencies have displayed a pullback move. Also, lower consensus for the US Durable Goods Orders data has weakened the US dollar index (DXY).

Meanwhile, a mix of news wires on China’s growth projections, and communication between Australian Prime Minister Anthony Albanese and US Vice President Kamala Harris has sidelined the aussie investors.

World Bank has cut growth projections for China considering its longer zero-tolerance approach towards Covid-19 and real estate crisis as reported by Wall Street Journal. Covid-19 restrictions suspended the movement of men, materials, and machines, which resulted in lower production outputs. While, the real estate crunch trimmed demand for base metals, steel, and other building materials dramatically. WSJ further added that developing economies in East Asia would grow faster than China this year for the first time since 1990.

Australian Albanese has congratulated US Harris on the passage of the Inflation Reduction Act. This came after US Harris announced that the economy will work on peace and security in the Indo-Pacific region with Australia.

In today’s session, the US consumer durables data will hog the limelight. The economic data is expected to decline by 1.1% as individuals are postponing their demand for durable goods amid sky-rocketing core price rise index and soaring interest rates. A lower-than-expected reading would shift the DXY into a corrective mode.

 

03:18
Gold Price Forecast: XAU/USD aims establishment above $1,630 as DXY skids, US data eyed
  • Gold prices need stabilization above $1,630.00 for an upside towards $1,650.00.

  • The DXY is displaying a lackluster performance amid lower consensus for Consumer Durables data.

  • Fed Powell will dictate the roadmap of hiking interest rates for the remaining 2022.

Gold price (XAU/USD) has extended its gains to near $1,630.00 after rebounding from $1,621.14 on Monday. The precious metal is eyeing an establishment above $,1630.00 as the US dollar index (DXY) is displaying a vulnerable performance right from the opening tick.

The DXY is facing signs of exhaustion amid lower consensus for the US Durable Goods Orders data. As per the consensus, investors will find a decline in the economic data by 1.1% against a decline of 0.1% recorded in precious reading. Thanks to the soaring core Consumer Price Index (CPI) and accelerating interest rates, which have trimmed the demand for durable goods. As the Federal Reserve (Fed) has pushed interest rates to 3-3.75%, households will face higher interest obligations. Therefore, individuals are preferring to postpone the demand rather than liabiling themselves for higher payouts. Also, a higher inflation rate has trimmed the confidence of consumers broadly.

Apart from that, the speech from Fed chair Jerome Powell will also remain in focus, which is due on Wednesday. Fed Powell will provide the roadmap for hiking interest rates for the remaining 2022.

Gold technical analysis

Gold prices have bounced back sharply from $1,621.14 after a negative divergence formation on an hourly scale. A loss in downside momentum was observed when the precious metal printed a lower low while the momentum oscillator Relative Strength Index (RSI) (14) made a higher low.

The asset has crossed the 20-period Exponential Moving Average (EMA) at $1,629.43 and is oscillating the 50-EMA around $1,632.35. The horizontal resistance is placed from Monday’s high at $1,649.83.

Gold hourly chart

 

 

03:02
EUR/USD snaps five-day downtrend near 0.9650 with eyes on ECB’s Lagarde, US data EURUSD
  • EUR/USD prints the first daily gains in six around 20-year low.
  • Markets consolidate recent moves amid light calendar, mixed headlines.
  • Hawkish central bankers, energy crisis keeps bears hopeful despite immediate rebound.
  • US CB Consumer Confidence, Durable Goods Orders, ECB’s De Guindos should also be eyed for fresh impulse.

EUR/USD picks up bids to add strength to the early Asian session rebound near 0.9650. Even so, the major currency pair remains sidelined as traders await the key catalysts while paring the latest losses at the two-decade low on Tuesday.

The major currency pair’s latest gains could be linked to the softer US data and downbeat inflation expectations, as well as the light calendar during the early day. Also keeping the pair buyers hopeful are the latest hawkish comments from the European Central Bank (ECB) officials and hopes of easing the energy crisis as the bloc plan to delay enforcing a price cap on Russian oil imports, per Bloomberg.

ECB President Christine Lagarde said on Monday, per Reuters, that the depreciation of the euro has also added to the build-up of inflationary pressures. “We expect to raise interest rates further over the next several meetings,” added ECB’s Lagarde. The policymaker also mentioned that they will decide whether further policy action is needed once they reach the neutral rate

Before that, ECB Governing Council member Yannis Stournaras said, “In my opinion, the ECB must maintain the basic principles of gradualism and flexibility as the problem it faces is different than that faced by the Fed in the US.” On the same line, ECB Vice President Luis de Guindos said that future rate hikes will depend on incoming macroeconomic data.

It should be noted, however, that Germany’s Economist from the IFO conveyed economic fears after witnessing downbeat prints for September and noted that retail business expectations are at historic lows. “A big minus on all fronts, almost all sectors of the economy are in the minus, the German economy is facing a recession,” stated the IFO Economist.

On the other hand, Chicago Fed National Activity Index weakened to 0.0 in August versus 0.09 market expectations and an upwardly revised prior reading of 0.29. Even so, Boston Fed President Susan Collins said, per Reuters, “Getting inflation down will require slower employment growth, somewhat higher unemployment rate”. Following that, Cleveland Fed President Loretta Mester said on Monday that if there is an error to be made, better that the Fed do too much than to do too little.

That said, the US inflation expectations as per the 10-year and 5-year breakeven inflation rates per the St. Louis Federal Reserve (FRED) data, signaled that the gauges refreshed the multi-day low on Monday. While noting the details, the longer-term inflation expectations dropped to the lowest level since July 13, 2022, whereas the 5-year benchmark slumped to the lowest levels since June 2021 with the latest figures being 2.32% and 2.33% respectively.

Against this backdrop, the yields pause the rally and the S&P 500 Futures also print mild gains around the monthly low.

Moving on, a speech from ECB President Lagarde and Vice President Luis De Guindos will join the US CB Consumer Confidence for September and Durable Goods Orders for August to direct short-term EUR/USD moves. However, the economic fears surrounding the old continent and the Fed versus the ECB divergence may keep the bears hopeful.

Also read: US Consumer Confidence Preview: Near-term relief or more risk aversion?

Technical analysis

EUR/USD stays bearish inside a six-month-old downward sloping trend channel, currently between 0.94875 and 1.0000.

 

02:36
Sources: Some of China's fund managers, brokers called by regulators to help stabilize stock market – Reuters

During Tuesday’s Asian session, Reuters came out with the news quoting anonymous source saying, “Some of China's fund managers, brokers called by regulators to help stabilize stock market ahead of the 20th party congress.”

The two sources also mentioned that regulators ask financial institutions to avoid trading activities that may cause big fluctuations in the securities market.

The instructions were give through the so-called "window guidance", with no written documents, one of the sources said per Reuters.

Market reaction

The news fails to witness any major reaction from the markets as the consolidation move continues. USD/CNH, however, hesitates in extending the pullback from two-year high.

Also read: USD/CNH struggles to cheer softer DXY above 7.0000 on pessimism surrounding China

02:30
Japan’s Matsuno: Lodged severe protest to Russian ambassador

Japanese Chief Cabinet Secretary Hirokazu Matsuno said on Tuesday, “Lodged severe protest to Russian ambassador to Japan,” while also adding that he told Japan needs to take "equivalent steps" after Russia's detention of Japanese consulate.

Key quotes

Japanese consul detained in Russia did not engage in any illegal activity.

Extremely regrettable that Russia’s FSB took Japanese consul into custody in intimidating manner.

Russia’s detention of Japanese consul is extremely regrettable, unacceptable and unbelievalbe.

Japanese consul detained in Russia is already released, no problem with health condition.

On a different page, Japanese Finance Minister Shunichi Suzuki mentioned that they will continue to monitor the forex market.

Also read: BoJ announces unscheduled bond buying operation

02:30
Commodities. Daily history for Monday, September 26, 2022
Raw materials Closed Change, %
Silver 18.373 -2.21
Gold 1623.75 -1.17
Palladium 2043.24 -0.87
02:12
USD/CNH struggles to cheer softer DXY above 7.0000 on pessimism surrounding China
  • USD/CNH bulls take a breather around 16-month high after six-day uptrend.
  • DXY retreats amid sluggish session, light calendar in Asia.
  • World Bank’s downbeat economic forecasts for China precede downbeat data from Beijing to favor CNH bears.
  • US data, risk catalysts can entertain traders, bulls are likely to keep the reins.

USD/CNH pares the first daily loss in seven around 7.6150 as it fails to cheer a pullback in the US dollar amid downbeat catalysts surrounding China. In doing so, the offshore Chinese currency (CNH) pair also portrays the market’s anxiety ahead of the key US data.

“Economic growth in East Asia and the Pacific will weaken sharply in 2022 due to China's slowdown, but the pace of expansion will pick up next year, the World Bank said on Tuesday,” per Reuters. The news Also mentioned that the Washington-based lender said in a report it expected 2022 growth in the East Asia and Pacific region, which includes China, to slow to 3.2%, down from its 5.0% forecast in April, and the previous year's growth of 7.2%. The weaker forecast was due mainly to a sharp slowdown in China, caused by its strict zero-COVID rules that have disrupted industrial production, domestic sales and exports, the World Bank said.

On the same line, China’s Industrial Profits YTD dropped to -2.1% in August versus -1.1% prior. Also, China's central bank stepped up cash injection towards the quarter-end by making the biggest daily offering in seven months on Tuesday, per Reuters, which in turn favor USD/CNH buyers.

That said, US Dollar Index (DXY) retreats from the fresh 20-year high marked the previous day as traders recalibrate emanating from the GBP/USD’s slump to the all-time low. Also weighing on the US dollar are the upbeat Treasury yields.

That said, US Treasury yields retreat from the multi-year high while the S&P 500 Futures also print mild gains by the press time. That said, US 10-year Treasury yields rose to the highest levels in 12 years while the 2-year bond coupons refreshed the 15-year top as traders rushed to the risk safety. Further, Boston Fed President Susan Collins said, per Reuters, “Getting inflation down will require slower employment growth, somewhat higher unemployment rate”. Following that, Cleveland Fed President Loretta Mester said on Monday that if there is an error to be made, better that the Fed do too much than to do too little.

Furthermore, the recent softer US data and inflation expectations should have also weighed on the USD/CNH prices.

Chicago Fed National Activity Index weakened to 0.0 in August versus 0.09 market expectations and an upwardly revised prior reading of 0.29. Further, the US inflation expectations as per the 10-year and 5-year breakeven inflation rates per the St. Louis Federal Reserve (FRED) data, signaled that the gauges refreshed the multi-day low on Monday. While noting the details, the longer-term inflation expectations dropped to the lowest level since July 13, 2022, whereas the 5-year benchmark slumped to the lowest levels since June 2021 with the latest figures being 2.32% and 2.33% respectively.

However, the fears of more central bank intervention, even as the People’s Bank of China (PBOC) announced reserve-related moves the previous day, keep the USD/CNH buyers hopeful. That said, the US CB Consumer Confidence for September and Durable Goods Orders for August will be crucial to watch for intraday guidance.

Also read: US Consumer Confidence Preview: Near-term relief or more risk aversion?

Technical analysis

USD/CNH remains on the bull’s radar unless breaking a two-week-old support line, around 7.0900 by the press time.

 

01:49
GBP/JPY dribbles around 155.50 amid BOE vs. BOJ action, pullback in yields
  • GBP/JPY licks its wounds with mild gains around 14-month low.
  • BOE refrained from any action but BOJ announced unchanged bond buying to tame JPY weakness.
  • US Treasury bond yields retreat after refreshing multi-year high.
  • Bears are likely to keep the reins amid fears of more central bank meddling.

GBP/JPY consolidates the previous day’s losses around 155.60 as traders seek more clues amid the mixed performance of the Bank of England (BOE) and the Bank of Japan (BOJ). That said, the cross-currency pair snapped a four-day uptrend during Tuesday’s Asian session after the latest BOJ bond-buying announcement.

Early on Tuesday, the Bank of Japan (BOJ) announced an unscheduled monetary policy operation to defend the Japanese yen and tame the Japanese Government Bond (JGB) yields.

“The operations, which followed a rise in global yields overnight, were consistent with remarks by BOJ Governor Haruhiko Kuroda on Monday that the BOJ will not raise interest rates and will maintain an easy policy to support the economy,” stated the NewsRoom via Reuters. The news also mentioned that the BOJ offered to buy JPY150 billion of JGBs with a remaining life of 5 to 10 years and JPY100 billion of JGBs with a remaining life of 10 to 25 years.

Elsewhere, the BOE refrained from taking any immediate actions and weighed on the GBP, Before the latest rebound in the GBP/JPY. That said, when asked whether the government is planning to change the measures set out in the mini-budget, British Prime Minister Lis Truss' spokesman responded by simply saying "no," as reported by Reuters. The diplomat also mentioned that it is important that BOE independence remains while adding that we don’t comment on interest rates.

On the other hand, the BOE stated that they are monitoring developments in financial markets very closely in light of the significant repricing of the financial assets. The BoE further noted that they welcome the government’s commitment to sustainable economic growth and the role of the Office for Budget Responsibility.

Elsewhere, The UK Times stated that Labour has surged to its largest poll lead over the Conservatives in more than two decades, with voters turning against (UK Chancellor) Kwasi Kwarteng’s tax-cutting budget. A YouGov poll for The Times today puts Labour 17 points clear of the Tories — a level of support not seen since Tony Blair won his landslide victory in 2001.

Amid these plays, US Treasury yields retreat from the multi-year high while the S&P 500 Futures also print mild gains by the press time. That said, US 10-year Treasury yields rose to the highest levels in 12 years while the 2-year bond coupons refreshed the 15-year top as traders rushed to the risk safety. Further, Boston Fed President Susan Collins said, per Reuters, “Getting inflation down will require slower employment growth, somewhat higher unemployment rate”. Following that, Cleveland Fed President Loretta Mester said on Monday that if there is an error to be made, better that the Fed do too much than to do too little.

Moving on, a light calendar can allow a bit more consolidation of the GBP/JPY losses. However, the bearish bias is less likely to fade.

Technical analysis

Although the 200-DMA restricts GBP/JPY upside around 160.35-40, a 1.5-year-old horizontal support area near 148.45-55 appears a tough nut to crack for the bears.

 

01:43
AUD/USD Price Analysis: Bears lurking in weekly resistance AUDUSD
  • USD/CAD bears could be about to move in from weekly resistance.
  • The daily chart's harmonic pattern is bearish.

USD/CAD is reaching into a key resistance area and a correction could be imminent on the longer term charts as the following analysis will illustrate across the weelkly and daily charts.

USD/CAD weekly chart

The price has run into a weekly chart's resistance area and while there is every possibility that the rally will continue, the following will draw the bear's attention:

USD/CAD daily chart

The harmonic pattern is bearish and the price that is meeting resistance would be anticipated to turn lower in a correction that could see a 50% mean reversion play out that has a confluence with the prior resistance of November 2020.

01:33
GBP/USD Price Analysis: Downside bias halts for a while on hammer formation GBPUSD
  • A hammer candlestick formation indicates that pound bulls are trying to make a comeback.

  • Declining 10-and20- EMAs still favors a downside bias.

  • An oversold situation by the RSI (14) cannot be ruled out.

The GBP/USD pair has advanced firmly after dropping to near 1.0356 as a responsive buying action kicked in. In the Asian session, the cable delivered an upside break of the consolidation formed in a narrow range of 1.0633-1.0724. The asset is expected to extend its gains above 1.0800 and will march towards 1.0900 ahead.

On a daily scale, the formation of a long Hammer candlestick pattern has triggered the chances of a pullback ahead. The formation of the above-mentioned single candlestick pattern indicates an activation of a ‘value bet’ phenomenon after an asset decline like a house of cards. Also, the downward sloping trendline placed from June 14 low at 1.1934 will act as a major barricade for the counter.

The 10-and-20-period Exponential Moving Averages (EMAs) at 1.1120 and 1.1335 are declining sharply, which adds to the downside filters.

Also, the Relative Strength Index (RSI) is oscillating in a bearish range of 20.00-40.00 for a longer period. Therefore, an oversold situation cannot be ruled out.

A break above Monday’s high at 1.0931 will activate the Hammer formation and will send the cable towards the round-level resistance at 1.1000, followed by 10-EMA at 1.1120.

On the flip side, the cable will lose significance further if drops below Monday’s low at 1.0339, which will drag the asset towards the round-level support at 1.0200. A slippage below the latter will direct the cable towards parity.

GBP/USD daily chart

 

01:28
USD/CHF Price Analysis: Extends pullback from four-month-old hurdle towards 0.9900 USDCHF
  • USD/CHF takes offers to refresh intraday low, snaps four-day uptrend near three-month high.
  • Overbought RSI, short-term resistance line direct sellers towards previous resistance line from July.
  • Bulls have a bumpy road to refresh the yearly high.

USD/CHF renews intraday low around 0.9910 as it prints the first daily loss in five during Tuesday’s Asian session.

In doing so, the Swiss currency (CHF) pair reverses from a downward sloping resistance line from May. Also adding strength to the corrective move could be the overbought RSI conditions.

With this, the quote is on the way to the resistance-turned-support line from July, around 0.9850. However, July’s peak of 0.9885 may probe the intraday sellers of the USD/CHF pair.

It should be noted, however, that the 61.8% Fibonacci retracement of the pair’s May-August downturn, near the 0.9800 threshold, could also test the bears before directing them toward the 100-DMA support level near 0.9685.

Alternatively, recovery moves need to cross the aforementioned resistance line, at 0.9950 by the press time, to recall the USD/CHF buyers.

Following that, the 1.0000 psychological magnet and multiple hurdles around 1.0050 can test the bulls before highlighting the yearly peak of 1.0065.

Overall, USD/CHF is likely to witness further downside but the bears are far from taking control.

USD/CHF: Daily chart

Trend: Limited weakness expected

 

01:21
USD/CNY fix: 7.0722 vs. the previous fix of 7.0298

In recent trade today, the People’s Bank of China (PBOC) set the yuan (CNY) at 7.0722 vs. the previous fix of 7.0298 and the previous close of 7.1344.

About the fix

China maintains strict control of the yuan’s rate on the mainland.

The onshore yuan (CNY) differs from the offshore one (CNH) in trading restrictions, this last one is not as tightly controlled.

Each morning, the People’s Bank of China (PBOC) sets a so-called daily midpoint fix, based on the yuan’s previous day's closing level and quotations taken from the inter-bank dealer.

01:16
BoJ announces unscheduled bond buying operation

The Bank of Japan has announced an unscheduled bond buying operation and offers to buy jpy250bln worth of JGB and includes JPY150bln 5-10 year, JPY100bln 10-25 year.

 

01:16
China growth to fall behind rest of Asia for first time since 1990 – FT

“China’s economic output will lag behind the rest of Asia for the first time since 1990, according to new World Bank forecasts that highlight the damage wrought by Xi Jinping’s zero-Covid policies and the meltdown of the world’s biggest property market,” said the Financial Times (FT).

“The World Bank has revised down its forecast for gross domestic product growth in the planet’s second-largest economy to 2.8 per cent compared with 8.1 per cent last year, and down from its prediction made in April of between 4 and 5%,” per the FT news that rolled out on early Tuesday.

Key quotes

At the same time, expectations for the rest of east Asia and the Pacific have improved. The region, excluding China, is expected to grow at 5.3 per cent in 2022, up from 2.6 per cent last year, thanks to high commodity prices and a rebound in domestic consumption after the pandemic.

The Washington-based group’s latest forecast follows a series of financial institutions, including Goldman Sachs and Nomura, slashing their outlook for next year, too. The rise in pessimism is based on assessments that Xi would probably pursue his zero-Covid policy beyond 2022.

By contrast, economies in east Asia and the Pacific, particularly the export-driven economies of south-east Asia, are mostly expected to grow faster and have lower inflation in 2022.

Also read: AUD/USD bears take a breather at two-year low near 0.6450, risk-aversion, US data eyed

01:03
NZD/USD bounces off 2.5-year low towards 0.5700 on RBNZ’s Orr, NZ FinMin’s comments
  • NZD/USD picks up bids to refresh intraday high, snaps two-day downtrend near the multi-month low.
  • RBNZ’s Orr signals little bit more to do, NZ FinMin sees gradually easing inflation.
  • A pause in the risk-off mood also favor corrective pullback amid a quiet session.
  • US data, risk catalysts will be crucial for fresh impulse as buyers are far from taking control.

NZD/USD consolidates recent losses around the lowest level since March 2020, up 0.75% intraday near 0.5680, as it snaps a two-day downside during Tuesday’s Asian session.

The quote’s latest rebound could be linked to the light calendar, as well as comments made by Reserve Bank of New Zealand (RBNZ) Governor Adrian Orr and New Zealand's Finance Minister (FinMin) Grant Robertson.

Earlier in the day, RBNZ’s Orr said that the central bank still had some work to do but the tightening cycle was already very mature. After him, "The global economy is a tough place to be at the moment. There are still issues coming out of Europe, obviously, with the war in Ukraine, issues in China," NZ FinMin Robertson said in an interview on state-owned TVNZ, per Reuters.

Also helping the NZD/USD buyers could be the recently softer US data and inflation expectations that raised questions on the hawkish Fedspeak.

That said, Chicago Fed National Activity Index weakened to 0.0 in August versus 0.09 market expectations and an upwardly revised prior reading of 0.29. Further, the US inflation expectations as per the 10-year and 5-year breakeven inflation rates per the St. Louis Federal Reserve (FRED) data, signaled that the gauges refreshed the multi-day low on Monday. While noting the details, the longer-term inflation expectations dropped to the lowest level since July 13, 2022, whereas the 5-year benchmark slumped to the lowest levels since June 2021 with the latest figures being 2.32% and 2.33% respectively.

With this, US Treasury yields retreat from the multi-year high while the S&P 500 Futures also print mild gains by the press time.

However, the market’s anxiety remains intact amid fears of multiple central banks’ actions to tame the heavy slump of respective currencies like the GBP/USD.

Also important will be US CB Consumer Confidence for September and Durable Goods Orders for August.

Also read: US Consumer Confidence Preview: Near-term relief or more risk aversion?

Technical analysis

Although oversold RSI triggered the NZD/USD pair’s rebound, the support-turned-resistance line from May 12, around 0.5900 by the press time, holds the key to the buyer’s conviction.

 

00:57
EUR/GBP declines towards 0.8900 as focus shifts to ECB Lagarde’s speech EURGBP
  • EUR/GBP is declining towards 0.8900 as the cross has weakened after surrendering 0.9000.

  • Eurozone Consumer Confidence is dropping continuously for the past year.

  • UK’s GDP is expected to remain steady this week.

The EUR/GBP pair has witnessed a vertical fall after facing barricades around 0.9000 in the early Tokyo session. On a broader note, the cross is declining after failing to sustain above the crucial resistance of 0.9200. The asset is expected to decline further to near 0.8900 ahead of the European Central Bank (ECB) President Christine Lagarde’s speech.

ECB’s Lagarde will likely dictate the likely monetary policy action ahead. ECB policymaker is expected to continue its hawkish stance on interest rate guidance as price pressures are escalating and are needed to be contained sooner. Energy prices are soaring sharply and are impacting the consumption expenditure of households.

On Monday, ECB Governing Council member and German central bank head Joachim Nagel said that decisive rate hikes are needed amid rising risks of inflation expectations getting de-anchored. Nagel favored a decisive action to bring down the inflation rate to 2%.

Apart from the ECB Lagarde’s speech, investors will also focus on the Eurozone Consumer Confidence data, which will release on Thursday. The sentiment data is seen steady at -28.8. Investors should be aware of the fact that the sentiment data is declining consecutively for the past few months.

Meanwhile, pound bulls are focusing on the Gross Domestic Product (GDP) data release, which is due on Friday. The growth rate is expected to decline by 0.1% in line with the prior release. While the annual data will grow by 2.9% similar to the previous reading.

 

00:30
Stocks. Daily history for Monday, September 26, 2022
Index Change, points Closed Change, %
NIKKEI 225 -722.28 26431.55 -2.66
Hang Seng -78.13 17855.14 -0.44
KOSPI -69.06 2220.94 -3.02
ASX 200 -105.3 6469.4 -1.6
FTSE 100 2.35 7020.95 0.03
DAX -56.27 12227.92 -0.46
CAC 40 -14.02 5769.39 -0.24
Dow Jones -329.6 29260.81 -1.11
S&P 500 -38.19 3655.04 -1.03
NASDAQ Composite -65.01 10802.92 -0.6
00:28
US Dollar Index pares gains at 20-year high, central banks, US data in focus
  • US Dollar Index renews intraday low, snaps two-day uptrend near the multi-year top.
  • Risk-aversion ebbs amid a light calendar, pre-data anxiety.
  • Fears of recession, central bank intervention joins firmer yields to propel DXY.
  • Firmer prints of the US CB Consumer Confidence, Durable Goods Orders could amplify US dollar strength.

US Dollar Index (DXY) takes offers to refresh its intraday low near 113.70 as it consolidates the latest gains around the two-decade high, marked the previous day, during Tuesday’s Asian session.

In doing so, the greenback’s gauge versus the six major currencies portrays the market’s indecision amid a light calendar as well as anxiety ahead of the key US data. Also challenging the US dollar bulls could be the recent softer US data and inflation expectations.

That said, Chicago Fed National Activity Index weakened to 0.0 in August versus 0.09 market expectations and an upwardly revised prior reading of 0.29. Further, the US inflation expectations as per the 10-year and 5-year breakeven inflation rates per the St. Louis Federal Reserve (FRED) data, signaled that the gauges refreshed the multi-day low on Monday. While noting the details, the longer-term inflation expectations dropped to the lowest level since July 13, 2022, whereas the 5-year benchmark slumped to the lowest levels since June 2021 with the latest figures being 2.32% and 2.33% respectively.

The DXY rallied to the highest levels since May 2002 on Monday as risk-aversion intensified after the GBP/USD pair’s slump to the all-time low. The sour sentiment also took clues from the firmer yields and the hawkish Fedspeak, as well as the fears that many central banks need to intervene to defend their respective currencies.

The US 10-year Treasury yields rose to the highest levels in 12 years while the 2-year bond coupons refreshed the 15-year top as traders rushed to the risk safety. Further, Boston Fed President Susan Collins said, per Reuters, “Getting inflation down will require slower employment growth, somewhat higher unemployment rate”. Following that, Cleveland Fed President Loretta Mester said on Monday that if there is an error to be made, better that the Fed do too much than to do too little.

Against this backdrop, Wall Street closed in the red but the S&P 500 Futures print mild gains at the latest.

Moving on, today’s US CB Consumer Confidence for September and Durable Goods Orders for August will be crucial to watch for immediate directions. However, major attention will be given to the risk catalysts for clear guidance. Overall, the DXY is likely to remain firmer unless the scheduled data prints a major disappointment, which is less anticipated.

Also read: US Consumer Confidence Preview: Near-term relief or more risk aversion?

Technical analysis

Although the failure to cross the May 2002 high of 115.32 joins the overbought RSI conditions to consolidate the latest DXY moves, the bulls remain hopeful unless witnessing sustained trading below the year 2001 bottom surrounding 111.30.

 

00:26
AUD/USD Price Analysis: Bulls eye a daily 38.2% Fibo correction
  • AUD/USD is on the verge of a test of key weekly support.
  • AUD/USD bulls could be about to make their moves.

The Australian dollar hit fresh multi-year lows at the start of the week as investors moved into the safe-haven greenback after Britain's historic tax cuts plan added to market volatility. This has sent the high beta currency to a low of 0.6437 vs. the greenback, the lowest since May 2020. The following illustrates the prospects of a test of 0.64 the figure or a prolonged correction from here prior to the next significant move to the downside.

AUD/USD weekly chart

There are significant prospects of a correction at this juncture, as per the structure highlighted on the chart above and below. 

AUD/USD daily chart

A Fibonacci scale drawn on the latest bearish leg on the daily chart shows prospects of a correction towards the 38.2% ratio ahead of a 50% mean reversion back to test the daily support.

00:15
Currencies. Daily history for Monday, September 26, 2022
Pare Closed Change, %
AUDUSD 0.64535 -0.87
EURJPY 139.023 0.23
EURUSD 0.96081 -0.63
GBPJPY 154.518 -0.22
GBPUSD 1.06794 -1.09
NZDUSD 0.5635 -1.69
USDCAD 1.37351 0.89
USDCHF 0.99323 1.11
USDJPY 144.69 0.88
00:11
USD/JPY eyes weakness below 144.50 ahead of US Durable Goods Orders
  • USD/JPY is expecting a downside break of the crucial support of 144.50.

  • Higher interest obligations are a major reason behind a decline in demand for durable goods.

  • The BOJ needs to turn neutral to keep the impact of intervention in currency markets steady.

The USD/JPY pair is displaying signs of momentum loss after displaying a juggernaut rally to near 144.70. A failure in smashing the psychological resistance of 145.00 has set the stage for a correction in the counter. The pair has attempted multiple times to hit 145.00 but has failed amid lower consensus for the US Durable Goods Orders data.

According to the forecasts, the economic data will drop by 1.1% against a drop of 0.1% in the prior reading. Soaring price pressures have forced households to make significant changes in their consumption pattern and have compelled them to postpone their demand for durable goods.

Escalating price rise index for durable goods and higher interest obligations due to monetary policy tightening by the Federal Reserve (Fed) has resulted in a decline in the demand for durable goods. Also, households are catering to their needs for essentials first due to higher payouts amid a higher inflation rate.

It is worth noting that the Bank of Japan (BOJ)’s intervention in the currency markets strengthened the Japanese yen against G-7 currencies except the US dollar index (DXY). The reason could be the heightened negative risk profile in which investors underpinned the greenback against yen. Market veterans believe that the impact of intervention won’t sustain for longer and the BOJ is needed to shift its stance and ditch the prudent approach.

On the economic data front, the Statistics Bureau of Japan will report the Unemployment Rate, which is seen lower at 2.5% vs. The prior release of 2.6%. While the Job/Applicants Ratio will improve to 1.30 from the former figure of 1.29.

 

00:02
US inflation expectations refresh multi-day low despite strong yields

US inflation expectations remain pressured on Monday, despite the latest rush to risk safety, which in turn propelled the US Treasury bond yields.

The inflation precursors as per the 10-year and 5-year breakeven inflation rates per the St. Louis Federal Reserve (FRED) data, signaled that the gauges refreshed the multi-day low. While noting the details, the longer-term inflation expectations dropped to the lowest level since July 13, 2022, whereas the 5-year benchmark slumped to the lowest levels since June 2021 with the latest figures being 2.32% and 2.33% respectively.

Behind the moves could be the mixed US statistics and the hawkish Fedspeak. That said, Chicago Fed National Activity Index weakened to 0.0 in August versus 0.09 market expectations and an upwardly revised prior reading of 0.29. Even so, Boston Fed President Susan Collins said, per Reuters, “Getting inflation down will require slower employment growth, somewhat higher unemployment rate”. Following that, Cleveland Fed President Loretta Mester said on Monday that if there is an error to be made, better that the Fed do too much than to do too little.

Moving on, the softer US inflation expectations may test the US Dollar Index (DXY) bulls who keep the reins at a 20-year high of late.

Also read: Forex Today: Panic took over financial markets

TIN TỨC THỊ TRƯỜNG NGOẠI HỐI

CURRENCY MARKET DEFINITION
The concept of currency market has several definitions:

  • Currency market is the sphere of economic relations that are manifested in the purchase and sale of currency values (foreign currency, securities in foreign currency), as well as operations related to the investment of capital in foreign currency;
  • Currency market is a financial center where currency purchase and sale transactions based on supply and demand for them are concentrated;
  • Curency market is a whole of authorized banks, investment companies, brokerages, exchanges, and foreign banks that perform foreign exchange operations.
  • Currency market is a whole of communications systems that link banks in different countries that conduct international currency transactions.

Simply put, currency market is the market where currency transactions are made, that is, the currency of one country is exchanged for the currency of another country at a certain exchange rate. The exchange rate is the relative price of currencies of two countries or the currency of one country expressed in another country's monetary units.

Currency market is part of the global financial market, where many operations related to the global movement of capital take place.

TYPES OF MARKETS. RUSSIAN AND INTERNATIONAL CURRENCY MARKETS
There are international and domestic currency markets.

Domestic currency market — is a market within a single country.

The international currency market — is a global market that covers currency markets of all countries in the world. It does not have a specific site where trading is carried out. All operations within it are carried out through a system of cable and satellite channels that link the world's regional currency markets. Regional markets today include the Asian (with centers in Tokyo, Hong Kong, Singapore, and Melbourne), the European (London, Frankfurt am Main, and Zurich), and the American (New York, Chicago, and Los Angeles) markets.

Currency trading on the international currency market is carried out on the basis of market exchange rates, which are set on the basis of supply and demand in the market and under the influence of various macroeconomic data. Forex is the international currency market.

Currency markets can also be divided into exchange and over-the-counter markets. Exchange currency market is an organized market where trading is carried out through an exchange—a special company that sets trading rules and provides all the conditions for organizing trading under these rules.

Over-the-counter currency market — is a market where there are no certain trading rules, and purchase and sale operations are not linked to a specific place of trade, as opposed to the case of an exchange.

As a rule, an over-the-counter currency market is organized by special companies that provide services for the purchase and sale of currencies, which may or may not be members of the currency exchange. Trading operations in this market are now carried out mainly via the Internet.

The over-the-counter currency market is much larger than the exchange market in terms of trading volume. The Forex international over-the-counter currency market is considered the most liquid in the world. It operates around the clock in all financial centers of the world (from New York to Tokyo).

CURRENCY MARKET FUNCTIONS
Currency market— is the most important platform for ensuring the normal course of all global economic processes.

The main macroeconomic functions of the currency market are:

  • creating conditions for the subjects of foreign exchange relations to make timely international current and capital payments and thereby promoting the development of foreign trade;
  • providing conditions and mechanisms for the implementation of monetary and economic policy of the state;
  • diversifying foreign exchange reserves;
  • forming the exchange rate under the influence of supply and demand;

NEWS IMPACT
Various currencies are the main trading tool in the currency market. Exchange rates are formed under the influence of supply and demand in the market.

In addition to that, currency rates are influenced by many fundamental factors related to the global economic situation, events in national economies, and political decisions.

News about these factors can be found in various sources:

  • Reports showing a country´s level of economic development.

The more stable an economy is developing, the more stable its currency is. Accordingly, it is possible to predict how the currency will behave in the near future, based on statistical data published in official sources of countries with a certain regularity.
This data includes:

  • GDP
  • unemployment;
  • return on equity;
  • consumer price index;
  • industrial price index;
  • propensity to consume;
  • salaries outside of the agricultural sector;
  • residential construction, etc.

Interest rate level, set by national authorities regulating credit policy, is an equally important indicator. In the European Union, this is ECB–the European Central Bank, in the US, this is the Federal Reserve System, in Japan—the Bank of Japan, in the UK—the Bank of England, in Switzerland—the Swiss national Bank, etc.

The interest rate level is determined at meetings of the national central bank. Then, the decision on the rate is published in official sources. If the central bank of a country reduces the interest rate, the money supply in the country increases, and the national currency depreciates against other world currencies. If the interest rate increases, the national currency will strengthen.

  • Speeches of country leaders, leading economists and analysts.

A speech or even a separate statement by a country's leader can reverse a trend. Speeches on these topics may change the currency exchange rate:

  • analysis of the situation on the currency market;
  • changes in monetary or economic policy;
  • adoption of a budget policy;
  • forecasts of the economic situation, etc.

All this news is published in various sources. Major international news is more or less easy to find in Russian, but news related to the domestic economic policy and the economy of foreign countries is much less common in the Russian press. Mostly, such news is published by the national media and in the language of the country where the news is published.

It is very difficult for one person to follow all the news at once, and they are likely to miss some important event that can turn the whole situation on the market upside down. Guided by our main principle—to create the best trading conditions for our customers—we try to select the most important news from all over the world and publish them on our website.

The TeleTRADE Department of Analytics monitors news on most national and international news sources on a daily basis and identifies those that can potentially affect exchange rates. These are the main news items that are included in our news feed.

In addition, all our clients have free access to the Dow Jones news feed. This is a joint project of Dow Jones Newswires, the world's largest news agency, and the leading Russian news agency Prime-TASS. The news feed is created specifically for currency traders and those who are interested in getting information about the world's currency markets.

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