Olivia

Fed Chair Jerome Powell remains unimpressed with the reduction of the rate of inflation; down to 7.1% in November, from 9.1% June. The Summary of Economic Projections shows a desire of the Fed to increase their forecast for the Fed Funds Rate to 5% in 2023, up from the 4.6% projection made in the last SEP that was released in September. And yet, the Deep State of Wall Street is busy telling investors that the Fed is almost done raising rates, hence, and a new bull market is right around the corner. But history proves this premise to be false. For example, during the preamble to the Great Recession, the Fed Funds Rate reached its apex in June of 2006 at 5.25%. It took 3 years for it to ascend to that level, up from the 1% starting level back in June of 2003. Ben Bernanke then began to cut rates in September of 2007; but the Great Recession began anyway in December of that same year. And, exactly one year from that first rate cut, the stock market went into freefall. This is another clear example of many throughout history that shows rate hikes work with a long lag.… Read More »Monetary lags and the acute recession of 2023

EUR/USD Current Price: 1.0601 EU S&P Global Services PMIs were upwardly revised for December, providing mild support to the EUR. The US FOMC Meeting Minutes showed that policymakers are still concerned about inflation. EUR/USD lacks bullish strength as it struggles to retain the 1.0600 threshold. The EUR/USD pair changed course once again and finished the day on the positive side at around 1.0600. The US Dollar came under selling pressure during Asian trading hours amid resurgent optimism fueling demand for high-yielding assets. The focus was once again on China, and the potential economic recovery the country will experience after dropping its zero-covid policy. Headlines suggesting China will resume imports of Australian coal were the initial catalyst of the US Dollar decline. The pair topped during European hours at 1.0635, spending the rest of the day at around 1.0600, as investors await the FOMC Meeting Minutes. The document showed that policymakers remain concerned about inflation risks, and while they welcomed easing price pressures in October and November, are still taking monetary policy decisions on the base of price pressures. There were no clues on the extent of a potential February rate hike. Following the release of the document, the EUR/USD pair… Read More »EUR/USD Forecast: Battling to retain the 1.0600 threshold

Join Senior Market Strategist & Trading Mentor Duncan Cooper as he watches price levels on the EURUSD weekly, daily, 4-hour, and 15-minute charts.

2022 was a year of profound transformation, of shifting geopolitical and economic paradigms. Looking ahead, 2023 should see a change of direction in key economic variables. Headline inflation should decline significantly, central bank rates should reach their cyclical peak and the US and the euro area should spend part of the year in recession. 2023 can be considered as a year of transition, paving the way for more disinflation, gradual rate cuts and a soft recovery in 2024. The traditional year-end reviews have reminded us of the exceptional nature of the past year: the war in Ukraine, the energy and food price shock, huge labour market bottlenecks, inflation reaching a multiple of what central banks are targeting, thereby triggering a ‘whatever it costs’ approach to monetary tightening, etc. 2022 was a year of profound transformation, of shifting paradigms, not only geopolitically but also economically. Looking ahead, 2023 should see a change of direction in key economic variables. Headline inflation should decline significantly, largely due to favourable base effects and an easing of supply pressures. Central bank rates should reach their cyclical peak. Initially, the Federal Reserve and the ECB should continue hiking their policy rates, but subsequently -probably in spring-… Read More »2023: A year of transition, to what?

The Fed has raised rates 7 times in a row, and the consensus among analysts is that it will do so again at the end of the month. At the moment, the majority of economics expect a 25bps hike, which would continue the “leveling off” trend from the Fed. But, after the last meeting, Fed Chair Powell was adamant that rates would keep going up, and that the market was misreading the Fed's attention. This hawkish tone didn't have as much impact on the markets after the Fed raised at a slower pace. And it's a scenario we've seen play out before, with Powell and the minutes of the meeting not exactly being in line. Which is why there could be some riling up in the markets tomorrow with the release of the minutes. Some analysts are wondering if there will be a repeat. What could happen again… Back in November, there was quite a bit of discussion about when the Fed would pivot. There was expectation that following that month's FOMC meeting, Powell would drop some hints that the next meeting would have a smaller rate hike. Instead, he came out quite adamant that rates would keep going up.… Read More »Could FOMC minutes shift Fed tone?

EUR/USD has gone into a consolidation phase following Thursday's rebound. Trading action is likely to remain subdued on the last trading day of 2022. 1.0680 aligns as immediate resistance for the pair. EUR/USD has lost its bullish momentum and retreated to the 1.0650 area after having registered modest gains on Thursday. In the absence of high-impact macroeconomic data releases, investors are unlikely to commit to large positions on the last trading day of the year. Hence, EUR/USD should continue to fluctuate in its weekly range. The positive shift witnessed in the risk mood on Thursday made it difficult for the US Dollar to find demand and helped EUR/USD push higher. Bargain shopping ahead of the New Year holiday may have triggered the rally in Wall Street's main indexes as there were no apparent fundamental drivers that could have impacted the sentiment in a significant way. On Friday, the only data from the euro area revealed that the Harmonized Index of Consumer Prices in Spain declined to 5.6% on a yearly basis in December's flash reading from 6.7% in November. This data, however, failed to influence the Euro's performance against its rivals in a noticeable way. The ISM Chigao's Purchasing Managers… Read More »EUR/USD Forecast: Euro unlikely to break out of trading range

There’s no question, 2022 will go down in history as one of the most profitable years ever for commodity traders, however 2023 is projected to be even bigger! This is now the second consecutive year that has seen a total of 27 commodities ranging from the metals, energies to agriculture tallying up astronomical double to triple digit gains – outperforming every other asset class out there! According Goldman Sachs, the macroeconomic backdrop for Commodities in 2023 is looking more bullish than ever before in history – ultimately indicating that we could be on the verge of another record-setting year ahead. In a note to clients, the bank’s analysts wrote that “underinvestment in new capacity, economic stagflation, China’s reopening, coupled with a slowing of global central bank rate hikes, leading to the eventual end of rate hikes next year and signs of a dollar peak will power monumental gains across the entire Commodities complex”. The bank’s analysts went on to say that “the setup for Commodities in 2023 is more bullish than it has ever been since they first highlighted the Supercycle in late 2020”. The Wall Street bank concluded by reconfirming their view that “we’re still only at the first inning of… Read More »2023 will be a record breaking year for commodity prices – Are you ready? [Video]

EUR/USD Current Price: 1.0639 New coronavirus-related concerns undermine the market mood in thin trading. EU November M3 Money Supply rose 4.8% YoY, beating expectations. EUR/USD is losing upward momentum, but bears are nowhere to be found. The EUR/USD pair keeps trading within familiar levels on Thursday, bottoming during the Asian session at 1.0605 and peaking during European hours at 1.0657. Trading remains choppy amid a scarce economic calendar and due to the winter holidays in the Northern Hemisphere, although the market sentiment continues to deteriorate. The latest news from China does not seem encouraging as the number of coronavirus cases has multiplied while the government moves away from its zero-covid policy. Italy reported that roughly 50% of the passengers of two flights arriving in Milan on Wednesday tested positive for COVID-19, and several western nations rushed to impose control on Chinese travellers, fearing a new strain could break the delicate balance in which they are living. It is still to be seen whether these latest developments will have long-lasting effects on growth and inflation. Meanwhile, China’s State Council announced it would adjust import and export tariffs of some goods starting January 1, detailing raising export tariffs on aluminium and aluminium… Read More »EUR/USD Forecast: Growing fears not enough to knock the EUR

US stocks are trading markedly higher on Thursday as sentiment rebounds on the back of higher-than-expected weekly jobless claims — amidst little liquidity on the final days of trading for this year. Indeed it's back to the ole faithful; “bad news is good.” Investors are heaving a sigh of relief on the penultimate trading day of 2022, with stocks recovering much of the losses we've seen over the past few sessions. Considering the market news was sparse, the shift higher has the hallmarks of a dead cat bounce. Still, by the same token, what little information we have had — namely, the weekly jobless claims — especially with investors devoid of holiday cheer, could be just what the markets doctor ordered to close out the year on a slightly better note.  Coming on the heels of last week's relatively benign PCE print, investors may be taking solace in this week's Goldilocks jobless claims as it suggests that the labour market is cooling, which is necessary to curb inflation. Even though most don't see Captain Sully in Chair Powell, with very few anticipating a soft landing, a cooling labour market, and lower inflation, suggest that the Fed is on a suitable… Read More »A sigh of relief on the penultimate trading day of 2022

AUD/USD Current Price: 0.6782 The upbeat tone of US equities helped AUD/USD recover from a fresh weekly low. Softer-than-expected Hong Kong data weighed on the pair at the beginning of the day. AUD/USD turned bullish in the near term, next resistance at 0.6810. Asian news undermined demand for the AUD throughout the first half of the day, with AUD/USD   pressured by a risk-averse environment. The pair bottomed at 0.6709, changing courses in the last trading session of the day to post an intraday high of 0.6784. It trades a handful of pips below the latter, in line with another leg north. At the beginning of the day, the Aussie was affected by news indicating that Hong Kong's exports plunged by the most in seven decades in November, affected by diminished global demand. The headline spurred risk aversion and sent global indexes into the red. The better market mood amid US indexes' comeback underpinned AUD/USD during the American afternoon. However, Wall Street shrugged off the negative tone and picked up, putting pressure on the American currency. Data-wise, there's nothing on the Australian docket until next week.   AUDUSD short-term technical outlook The  AUD/USD pair is neutral-to-bullish according to technical readings in… Read More »AUD/USD Forecast: Benefiting from Wall Street’s optimism