Olivia

Retail sales and industrial production fell more than expected. With a recession on the horizon, silver may fly if the Fed stops the hikes! It is closer and closer… wrapping itself slowly but decisively around the economy like an anaconda around its prey. I mean a recession, of course. The recent bunch of economic data leaves no doubt that the U.S. economy is losing momentum. Retail sales fell 1.1% in December, following a downwardly revised drop of 1% in November. The decline was larger than expected, and it was the biggest decrease in 12 months. The fall is really disturbing as we are talking about the holiday shopping period. However, the sales were reduced in part because of the decline in prices. Industrial production also surprised negatively, falling 0.7% in December. It followed a 0.6% decrease in November and was larger than expected. The decline was driven mainly by manufacturing output which fell 1.3% in December and moved down 2.5% at an annual rate in the fourth quarter. Higher interest rates and reduced purchasing power by inflation hurt demand for goods. The latest edition of the Beige Book also doesn’t inspire optimism. According to the report, five of the Fed’s… Read More »US economy is losing momentum. A recession around the corner?

Stocks are on the slide once again, as fears of prolongued periods of high interest rates cast aside recent optimism on falling inflation. However, todays improved US data does help ease some of the fears that we could be facing a sharp economic collapse this month, says Joshua Mahony. Markets slump, although the dollar struggles to follow through “The bears have re-emerged after a near three-week period of hibernation that allowed the DAX to push an impressive 10% higher. However, US markets appear to have led the drive lower, with the Tuesday declines on the other side of the pond feeding through into Europe yesterday and today. Fortunately for the FTSE 100, we continue to see the declines in GBPUSD provide some protection to the index. However, we are yet to see any major appreciation for the dollar despite this week’s equity losses, with the sharp declines in US inflation signalling the potential for a relatively resilient outlook for the likes of EURUSD and GBPUSD. In the absence of any major resurgence for the dollar, we continue to see strength for the likes of Gold and Silver. ” US data improves, alleviating economic fears somewhat “Improved economic data out of… Read More »Stocks lose traction despite improved US data

Stocks continue to consolidate after the recent rebound, as Wall Street continues to debate the outlook for Q4 earnings season and future Fed moves. According to the latest data from FactSet, insiders expect the S&P 500 to report a year-over-year decline in Q4 earnings of -3.9%, which if realized would be the first quarterly loss since Q3 2020. Banks earnings Goldman Sachs and Morgan Stanley capped off big bank earnings yesterday with both taking a hit in their investment banking operations, similar to other Wall Street firms that reported last Friday. Goldman, which reported a whopping -69% decline in profits, was further pressured from the roughly $1 billion that the bank set aside in loan-loss provisions and a nearly $2 billion loss in its consumer banking division. Morgan Stanley saw a similar plunge in investment-banking revenues but did manage to deliver a smaller profit decline (-40%) than analysts had been expecting thanks to a record quarter for its trading desk. While some banks in Q4 fared better than others, bears overall see signs of trouble in the additional +$3 billion that Wall Street banks collectively set aside to cover loans that might go bad amid a potential US recession in… Read More »What drives markets now? Earnings, debt, risk of inflation

A second day of losses for the Dow comes as investors watch some worrying weakness in retail sales, says Chris Beauchamp, chief market analyst at online trading platform IG. Stocks turn lower again “Markets are quite happy to see inflation weaken, but the sight of weaker US retail sales is certainly not music to their ears. With earnings season only just hitting its stride, such weakness in economic data bodes poorly for corporate results, at least in coming quarters. In addition, comments from Fed member Bullard suggest that we haven’t quite seen the death of the 50bps rate hike, and that it might be better to err on the side of caution.” Slowing inflation still offers best hope of a rally “Stocks continue to wonder where the next driver of a bounce comes from. For the moment it seems that investors are going to remain fixated on inflation. But with allocations to US stocks at two-decade lows there is the chance of at least a first-half rebound if earnings are overall better than expected. But with the Nasdaq struggling in recent days it seems investors need a lot more convincing.”

Gold price is on a three-day corrective decline as the US Dollar recovery gathers strength. United States Retail Sales and Producer Price Index data eyed for fresh impetus. The USD/JPY upsurge powers the US Dollar, but US Treasury bond yields plunge. Gold price sees downside opening up as the 4H technical setup turns bearish. Gold price is extending its correction from nine-month highs into the third straight day this Wednesday. Gold price is undermined by resurgent United States Dollar (USD) demand, despite the sell-off in the US Treasury bond yields. Investors brace for the critical United States Retail Sales and Producer Price Index (PPI) data slated for release later in the day. United States Retail Sales and Producer Price Index data up next   The United States Dollar is firming up early Wednesday, continuing its recovery momentum from seven-month troughs reached at the start of the week. A sense of caution prevails as investors eagerly await the United States Retail Sales and Producer Price Index (PPI) data for fresh insights on the US Federal Reserve (Fed) future policy course. The US Retail Sales are foreseen at 0.1% MoM in December vs. -0.6% previous, while the Core figure is expected to… Read More »Gold Price Forecast: XAU/USD eyes further correction toward $1,870 amid bearish technicals

In today’s live stream, Coach shared his line in the sand on Cable. He also revised his short term view on Silver with $25.50 being viable.

It might be a day away, but the BoJ still holds sway as markets fret about the BoJ’s highly uncomfortable position, which is likely holding global markets hostage. Global shares are trading mixed after a quiet session for overseas markets because Wall Street was closed for a public holiday. China’s GDP came in a bit higher than expected but was received by the sound of crickets as traders care less about backward-looking data during China’s reopening process. Instead, they are now focusing on-the-spot proof in the economic pudding where retail sales laid an egg. However, on the flip side, China’s industrial engines are still revving up in conjunction with the grand reopening as industrial production came ahead of expectations. So, a bit of saw off in most folk’s books. Asia markets have become a tad less enthralled after the PBoC failed to lower the MLF rate while reaffirming its pledge to keep policy “targeted and forceful” this year. And with local FX traders expecting growth to drive the next leg lower in USDCNH, they, too, were less enamoured by the lack of a rate cut. In addition, they were less enthusiastic about Chinese consumers keeping their purse strings taught. Bank… Read More »A day away, but the BOJ holds sway

Outlook: This is a week you can go mad trying to absorb and understand so much data. It seems improbable, but Japan is front and center. Japan reports CPI on Friday, but before then, we get the Bank of Japan updated economic forecasts and any fresh changes to the monetary policy regime on Wednesday. The WSJ reports “The 10-year JGB yield could rise as high as 1% if the BOJ abandons yield curve control this week, according to estimates by Daiwa Securities strategist Eiichiro Tani. But he said the yield would likely decline toward the latter half of 2023 owing to the slowing economy and declines in global interest rates.”   Adding to the sense of crisis, Reuters reports there are rumors of a BoJ emergency meeting today “as it struggles to defend its new yield ceiling in the face of massive selling, sending the dollar to a seven-month low.”   We say abandoning curve control would be out of character for the BoJ after it modified it only a few weeks ago. Allowing a giant move from 25 bp to 1% in under a month is too wild for any central bank, let alone the staid BoJ. So, abandonment is… Read More »Will uncertainty about the seriousness of the US to fulfill its debt obligations harm the dollar?

Dollar Index has broken below 102 and it would be important to see if the fall would sustain or the index would bounce back in the next 1-2 sessions. That said Euro, Pound, Aussie trade higher and can test 1.09, 1.24 and 0.72 respectively while EURJPY and USDJPY look bearish. USDRUB has risen fairly from 66.35 seen on Friday and can now head towards 70. EURINR can slowly rise while USDINR can remain below 81.50 for some more time. USDCNY too has been strongly bearish and may continue while below 6.70. The US Treasury yields hovers above their crucial supports. A sideways consolidation is possible before we see a fresh rise eventually going forward. The German Yields are hovering above their key supports and can see a fresh leg of upmove from here. The 10Yr and 5Yr GoI have to get a strong follow-through rise from here to avoid a fall back. Dow and DAX remains bullish to see a test of 34800-35000 and 15300-15400 in the near term. Nikkei has come down further towards the key support at 25700. Shanghai has risen above the 3200 resistance zone and has room to move up further from here. Nifty is mixed… Read More »Morning Briefing: Dollar Index has broken below 102

Markets are complete opposites and divided as EUR/USD and DXY. On the EUR side is located Stock indices, all metals to include Gold,  Silver and Copper as the big 3 then Commodities. DXY trades opposite but trades along side the bond price.  The categories break down further to yields,  bonds and interest rates. All market prices trade from the interest rate curve as parity or 1.0000. AUD and NZD are 0 point currencies and trade from parity. JPY and BOJ contain negative interest rates yet trade from parity. All market prices then rise from parity as parity at 1.0000 is the interest rate floor. Only on fleeting instances would a market price trade below parity. This is the central bank design of markets, prices and movements. The current EUR/USD and ECB interest rate floor trades 1.0344 and quite high yet EUR/USD trades 1.0700's or 400 pips above 1.0344. No terrible at all. At the 2008 crash, EUR/USD traded at 1.6000's when the ECB curve traded 1.0500 and 1.0600's or 5400 pips. The eyeball view alone says screaming overbought by light years. The EUR/USD dropped but the interest rate curve had to drop in order for EUR/USD to trade miles lower.… Read More »FX next week: Interest rates and trade levels