News en

The Reserve Bank of Australia will likely hike the cash rate by 25 bps. Mortgage rates in Australia are becoming a problem for households. AUD/USD is at risk of resuming its bearish trend and testing the 0.6300 area. The Reserve Bank of Australia (RBA) will announce its monetary policy decision on November 1, with board members stuck between a rock and a hard place. The Australian central bank hiked the cash rate in every single meeting since May but was the first to slow the pace of quantitative tightening, going for a modest 25 bps hike in October. The latter followed five-consecutive 50 bps hikes. Australian policymakers joined the global tightening train amid spiraling inflation in May, when the benchmark rate stood at 0.1%. The decision to downsize in October resulted from soaring mortgage costs. With rates going from 0.1% to 2.6%, roughly 30% of homeowners started struggling to pay their home loans, according to Finder’s consumer sentiment tracker. But if the RBA wants inflation to return to target, it would need a more restrictive rate. Australian inflation out of control According to the Australian Bureau of Statistics, the Consumer Price Index (CPI) rose by 1.8% in the third quarter… Read More »Reserve Bank of Australia Preview: Lowe and co have a tough decision to make

AUD/USD Current Price: 0.6387 Australian inflation surged by more than anticipated in October, according to TD Securities Inflation. The Reserve Bank of Australia will announce its monetary policy decision on Tuesday. AUD/USD is technically bearish in the near term, but further slides depend on the RBA. The AUD/USD pair trades in the 0.6380 price zone, falling on Monday for a third consecutive day. The Australian dollar was hit by Chinese figures, as the official NBS Manufacturing PMI fell to 49.2 in October, while the Non-Manufacturing PMI slid to 48.7,  missing the market’s estimates and signaling a steep contraction in business activity. Australian data added pressure on the pair as October TD Securities Inflation surged by 5.2% YoY, higher than the previous 5%. Private Sector Credit, in the meantime, increased a modest 0.7% MoM in September. Finally, the sour tone of global equities maintained the pair on the losing side. Equities eased as global inflation figures show that aggressive quantitative tightening has done little to take price pressures down. Speaking of which, the Reserve Bank of Australia will announce its decision on monetary policy first thing Tuesday. Governor Philip Lowe and co are anticipated to proceed with a modest 25 bps… Read More »AUD/USD Forecast: Bears maintain the pressure ahead of the RBA’s decision

EUR/USD is seen consolidating last week’s post-ECB rejection slide from the 100-day SMA. Traders seem reluctant to place aggressive bets ahead of the key central bank event risks. A sustained break below the 0.9900 mark is needed to support prospects for further losses. The EUR/USD pair extends its sideways consolidative price move below the parity mark through the Asian session on Monday amid uncertainty over the pace of future rate hikes by the European Central Bank. The ECB last Thursday lifted borrowing costs by a jumbo 75 bps for the second consecutive meeting and is expected to raise interest rates further to bring record inflation under control. The ECB, however, adopted a more dovish tone in the wake of the worsening economic outlook, forcing traders to trim their bets for a more aggressive tightening. This is seen as a key factor that continues to act as a headwind for the shared currency. On the other hand, the US dollar draws support from last week's stronger-than-expected US macro data, though speculations about a potential Fed pivot keep a lid on any further gains. It is worth recalling that the Advance US GDP report showed that the world's largest economy grew by… Read More »EUR/USD Outlook: 0.9900 mark holds the key for bulls ahead of Eurozone CPI/GDP

US Dollar: Dec ’22 USD is Up at 110.850. Energies: Dec ’22 Crude is Down at 87.82. Financials: The Dec ’22 30 Year note is Down 29 ticks and trading at 121.14. Indices: The Dec ’22 S&P 500 Emini ES contract is 126 ticks Lower and trading at 3788.00. Gold: The Dec’22 Gold contract is trading Down at 1651.00. Gold is 146 ticks Lower than its close. Initial conclusion This is not a correlated market. The dollar is Up, and Crude is Down which is normal, but the 30-year Bond is trading Lower. The Financials should always correlate with the US dollar such that if the dollar is lower, then the bonds should follow and vice-versa. The S&P is Lower, and Crude is trading Lower which is not correlated. Gold is trading Lower which is correlated with the US dollar trading Up. I tend to believe that Gold has an inverse relationship with the US Dollar as when the US Dollar is down, Gold tends to rise in value and vice-versa. Think of it as a seesaw, when one is up the other should be down. I point this out to you to make you aware that when we don’t… Read More »Today we aren’t dealing with a correlated market and the bias is neutral – Could this change? [Video]

Queen Elizabeth II died. She was a powerful anchor and symbol in the political sphere, just like gold in the financial realm. The Power of Symbols Her Majesty Queen Elizabeth II, the Sovereign of the United Kingdom of Great Britain and Northern Ireland and the Head of the Commonwealth, died on September 8, 2022. I’m not a British or Commonwealth citizen, nor a devoted supporter (and observer) of the British monarchy. And yet – together with millions of people all over the world – I was saddened by the death of the Queen. I began to wonder why it was such poignant news, given that she was not my monarch and that her role was purely ceremonial and formal (the Queen reigned, but didn’t rule). The first common explanation is that Queen Elizabeth II was a fixture, a source of continuity and stability in an ever-changing world. In the words of the former Prime Minister, Lizz Truss, Queen Elizabeth was “the rock on which modern Britain was built”. Indeed, she acceded to the throne in February 1952, when Winston Churchill was Prime Minister and Harry Truman was President of the United States. It means that she ruled for more than… Read More »The Queen is dead, long live the (Gold) King!

As kids growing up, many of us would have played the game of chicken; where you and a friend do something dangerous, and whoever backs out first loses. The energy markets feel just like this at the moment – except the game is on steroids and the stakes are the highest they have been since World War 2. The current energy crisis in Europe is extremely complex, with so many layers ebbing and flowing, that have exposed the weaknesses of many historical decisions. The crisis is pulling at the very fabric of the European Union, and Russia knows it. Divide and conquer is Putin’s mantra as the game of chicken escalates into a 4-dimensional game of chess between East and West. So, what is going on and how will the squeeze affect the Australian economy and AUD and where will the opportunities lie for traders? To help us, we include insights from Naeem Aslam, chief market analyst for forex trading in Australia with AvaTrade to weigh in on the likely effects on the Aussie market. The cause of the European energy squeeze As the northern hemisphere eases away from summer on its lonely journey toward winter, temperatures are falling. Winter… Read More »The European energy squeeze – What does it mean for Australia and the AUD?

The Canadian dollar is lower today. In the European session, USD/CAD is trading at 1.3617, up 0.39%. Markets eye Canada’s GDP The week wraps up with Canada’s GDP for August. The economy is expected to have expanded by 0.1%, which would be unchanged from July. The economy is likely heading into a recession, and Finance Minister Chrystia Freeland stated recently that the coming months would be a “challenging economic time.” The government’s key priority is curbing high inflation, which has eased slightly. In September, inflation fell to 6.9%, down from 7.0% in August. Still, this was higher than the consensus of 6.7%, as soaring food prices kept inflation from falling further. The good news is that inflation appears to have peaked from the June level of 8.1%, which marked a 40-year high. The bad news is that core inflation was unchanged at 5.3% in September, a sign that inflation remains sticky, despite the Bank of Canada’s aggressive rate-hiking cycle. High inflation pushed the BoC to deliver another oversize rate on Wednesday, but the 0.50% hike was considered dovish, as the consensus stood at 0.75%. The cash rate is now at 3.75%, its highest level since 2008. Although inflation is far… Read More »Canadian dollar slips ahead of GDP

XAU/USD Spot gold price was down around 1.5% by early US trading on Friday, pressured by stronger dollar on growing expectations that the Fed will deliver another 75 basis point hike in the policy meeting next week. Optimism on further policy tightening inflates dollar, weighing on its safe-haven counterpart. Fresh acceleration lower has so far retraced over 50% of $1617/$1674 upleg, with the metal being on track for the biggest daily fall since Oct 19. Weekly action is also going to end in red, with more significant signal that the yellow metal will register seventh consecutive monthly loss. Weakening daily studies (MA’s turning to bearish setup and momentum remains in negative zone) add to downside risk, which will be boosted by today’s close below $1646 (50% retracement of 1617/$1674/daily Tenkan-sen). Also, gold price is on track for the second monthly close below pivotal Fibo support at $1681 (38.2% of $1046/$2074) that would add to reversal signals and re-confirm a monthly double-top ($2074/$2070) as well as a double bull-trap above psychological $2000 barrier. Bears need to clear temporary footstep at $1647 (Oct low, reinforced by rising 55MMA) to open way for attack at monthly cloud base ($1598) and 50% retracement of… Read More »XAU/USD outlook: Gold price eases on revived expectations that Fed will keep its strong hawkish stance

With less than two weeks until the midterm elections, it’s galling to me to see Republicans making headway in their effort to present themselves as better stewards of our economy than the Democrats. It’s a lie. Of course, when we talk about the economy in this context, we’re really talking about inflation. Other than inflation, the state of the economy is quite good, with the unemployment rate near a post-war low and virtually all of the pandemic-related job losses now recovered. Regardless, Republicans are hoping and expecting the electorate to hold Democrats responsible for our currently unacceptable rate of inflation. Unfortunately, it seems that not enough of the public have realized that (a) it’s a dishonest accusation and (b) the Republicans haven’t offered a credible path forward that could reasonably be expected to solve the problem. Republicans cite the “excessive” government support offered in connection with the American Rescue Plan and the Inflation Reduction Act as causing the inflation, giving little acknowledgment to the covid-related supply chain problems we experienced starting with the onset of the pandemic or to the market disruptions caused by Russia’s war in Ukraine. Somehow, the fact that inflation is a world-wide problem rather than purely… Read More »The Republican solution to inflation: Feckless economics

From the weekly on Sunday: EUR/USD broke 0.9993 and first target at 1.0057 achieved destination, USD/JPY from 147.64 completed target at 148.40. DXY broke below 111.25 and traded to 109.00's. DXY from Sunday struggled and dropped from 112.00's. DXY's break below 111.25 allowed EUR/USD and GBP/USD to break above most vital levels at 0.9993 and 1.1572. EUR/CHF and GBP/CHF assisted EUR/USD and GBP/USD higher by breaks above EUR/CHF 0.9842 and GBP/CHF 1.1381. AUD/USD and NZD/USD failed to break above vital 0.6578 and NZD/USD 0.5913 to join EUR/USD and GBP/USD. AUD/USD and NZD/USD must break above vital levels or EUR/USD and GBP/USD must drop to maintain uniformity. EUR/USD levels for today: 1.0072, 1.0078, 1.0084, 1.0091, 1.0104, 1.0110, 1.0117 Vs 1.0015, 1.0021, 1.0027, 1.0040, 1.0050, 1.0053 Most Vital 1.0015 and 1.0040 Vs 1.0091 and 1.0117. EUR/USD vs DXY EUR/USD for next week must break 1.0005 and another line around 0.9950 to target again 0.9700's. Next target above 1.0171. DXY maintains a big break at low 111.00's to target 113.00's. DXY traded 302 pips this week to EUR/USD 297. EUR/USD maintain perfect paces to DXY as DXY drives all markets. EUR/USD strategy is short and long DXY and USD currencies. Overall DXY is… Read More »Currency market: FX next week