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EUR/USD – 0.9976 Despite extending erratic rise from last Tuesday's 20-year bottom at 0.9865 to a 3-week high of 1.0197 on Monday, Tuesday's selloff on hot US CPI to 0.9956 (AUS) yesterday suggests correction over, as 1.0023 has capped recovery, weakness to 0.9930/32 is envisaged but 0.9865 should hold. On the upside, only a daily close above 1.0033/43 would risk stronger gain to 1.0071/76. Data to be released on Thursday New Zealand GDP, Japan exports, imports, trade balance, tertiary industry activities, Australia employment change, unemployment rate. Germany wholesale price index, France CPI, EU trade balance, labor costs. Canada housing starts, U.S. NY Fed manufacturing, import prices, export prices, initial jobless claims, continuing jobless claims, Philly Fed manufacturing index, retail sales, industrial production, capacity utilization, manufacturing output and business inventories.

Europe Up until this afternoon’s US CPI number it had all been going so well, with European markets initially picking up where they left off yesterday, trading at two-week highs, despite another sharp deterioration in the latest German and EU ZEW expectations survey for September, with both indicators falling further below their pandemic lows of March 2020. The pessimism around German business is being driven by concerns over the possibility of energy shortages, which is driving a decline in orders production and exports. This week’s initial US dollar weakness was being fed by a belief that perhaps the peak for inflation is now behind us. That may well be true, and today’s US CPI numbers do nothing to change that narrative, because we have still seen a modest fall to 8.3%, but the rise in core prices means inflation is likely to be a lot stickier than perhaps markets had been pricing. It also helps explain this afternoon's sharp reversal, with the DAX and FTSE100 both falling back sharply. This means that while the narrative of peak inflation may well be still valid, getting it down from these levels is likely to be a much tougher battle, requiring a continuation… Read More »US CPI puts a rocket under the dollar

The US equities ended last week on quite a high note, and the latest market optimism could be explained by hope to see a second month of softening inflation in the US at this week’s CPI release. Due Tuesday, the US will reveal its latest CPI figure which is expected to have eased to 8.1% in August, from 8.5% printed a month earlier, and from the 9.1% peak printed the month before that. If the data is soft enough, or ideally softer than expected, the equities will likely continue pushing higher this week as well. If, however, the data is not as soft as expected, or worse, if we see a higher figure than last month’s read, then last week’s gains in equities will likely be quickly given back. In the FX markets, we saw a decent pullback in the US dollar index last Friday, following the 75bp hike from the European Central Bank (ECB), and news that Japanese are increasingly uncomfy regarding the abnormally stronger USD. The EURUSD tests the important 50-DMA to the upside, gold benefits from a broad-based pullback in US dollar, meanwhile crude oil is softish as high energy prices hit the prospects of economic growth,… Read More »All eyes on US CPI and Ethereum’s Merge update this week [Video]

Equity markets end the week higher as risk appetites are back. Bitcoin bounces sharply to drag in more trend followers. Tuesdays CPI data point the highlight of the week ahead. Equity markets bucked a three-week losing run when they closed higher on Friday and completed a positive week for all the leading indices. Talk of 75 basis points failed to dent enthusiasm as investors flocked to all sectors including oil. Oil prices had taken a severe downturn last week as fears grew for the health of the global economy. But some further words of encouragement about supply cuts from OPEC+ and in-line economic data convinced oil bulls to return. The US SPR being drained even further was taken as a further bullish sign for oil as traders see it as needing replenishing sooner rather than later. Even Europe's energy woes could not dent the bullish enthusiasm and at least German electricity prices collapsed somewhat but are still sky high compared to this time last year. The ECB stepped up to the plate and swung for the bleachers when announcing its biggest rate hike ever, 75 bps, which seems to be the favorite number from central bankers these days. So is this rally the… Read More »Week Ahead on Wall Street (SPY) (QQQ): Bear market rally is back but could it become a new bull

In this week’s Live from the Vault, Andrew Maguire examines the unprecedented scale of the physical silver shortage that is draining COMEX inventories and causing havoc in the oversold, futures-driven silver market. The London wholesaler analyses the glaring disconnection between the physical and paper silver markets, evidencing investors capitalising on massive, risk-free arbitrage profit opportunity. Timestamps 00:00 – Start 01:10 – What is happening in these crazy silver markets? 07:55 – The similarities between the nickel and the silver markets. 12:45 – How does the situation in silver affect the gold price? 18:20 – The wholesale market – Andrew’s update. 27:30 – The short-term effects of the arbitrage process.

Economic contraction is unfolding – but how painful will it be? The deeper the recession, the better for gold. Let’s make it clear: an economic downturn is coming. We are already in a technical recession (GDP contracted in the first two quarters of this year), despite the White House’s attempts to change its definition. A full-blown recession is just around the corner and will likely come out next year. At this point, another question is more interesting: how long will the pain last? Or, how deep will the contraction be? Will it be a short and shallow recession like in 1990-91 or in 2001, or a long and severe one like the Great Recession? Or maybe a short but deep one like the pandemic recession of 2020? I don’t know . I forgot to take my crystal ball. However, I would exclude the last possibility, as the latest recession was mainly caused by the Great Lockdown – this is why it was so deep and short. This recession will be more normal – as long as recessions have anything to do with normality. Actually, this won’t be a normal recession, as it will be accompanied by high inflation, which implies… Read More »Gold wonders how severe this recession will be

USDCAD is coming lower,  after 75bp increased by BoC, but Rogers noted that the rates will need to be rised further. At the same time, we see USD making a strong reversal across the board while crude oil is trying to stabilize near 80-82USD. This makes a perfect case for some bearish price action. However this reversal can be temporary as we are now tracking wave b pullback that can belong to a higher degree fifth wave of an ending diagonal.  Ideall resistance is at 1.3300/1.3400 area. I think that later this year or in 2023 current USD bull cycle can come to an end, but of course this will depend on further FEDs interest rate policy decision. As soon as FED will signal that they are approaching end of the cylce the USD will be expected to turn south across the board. 

Another pivotal week lies ahead for currency traders, with the latest US inflation report set to decide whether the dollar’s relentless rally will finally cool off. Meanwhile, markets are leaning towards a half-point rate increase from the Bank of England, although sterling’s fate is mostly in the hands of global forces.    Inflation cooldown It’s been a glorious year for the US dollar so far. The reserve currency is essentially the only asset that has gained ground over the last nine months, riding a perfect wave of widening interest rate differentials, safe-haven flows, and an absence of alternatives.  The Fed poured gasoline on this rally recently when Chairman Powell pledged to do whatever it takes to eradicate inflation, even if that means a period of economic pain. He reinforced the notion that interest rates will need to be kept high for some time, sending traders scrambling to price in a ‘higher for longer’ path.  Encouraged by a labor market that is essentially at full employment, the Fed chief is convinced the economy can absorb this blow without sliding into a deep recession. Markets are currently pricing in an 85% probability for another three-quarter point increase this month and a terminal… Read More »Week ahead – US inflation and BoE rate decision on the menu [Video]

DXY traded to 110.78 highs against tops to the 40 and 50 year averages at 110.72 to 111.55. Points 110.72 – 111.55 holds as tops for months to come. DXY tops are driving non USD anchor pairs higher such as AUD/USD, NZD/USD, EUR/USD and GBP/USD. DXY tops drove USD/CAD 100 pips lower to current 1.3000's from 1.3200 highs. USD/JPY from reported 144.82 tops now trades 142.00's. DXY at current 108.00 crossed below 109.00's CAD/JPY. On the way higher for DXY to 110.78, EUR/AUD broke above vital 1.4740 to trade 1.4881 highs. Next FX focus is wide range currencies EUR/AUD, EUR/NZD, GBP/AUD and GBP/NZD. AUD/USD currently trades 0.6868 Vs AUD/EUR at 0.6749 and EUR/AUD at 1.4815. Last evening at 4:00 pm EST, AUD/USD traded 0.6750 Vs AUD/EUR at 0.6754 and EUR/AUD 1.4807. As DXY dropped to assist AUD/USD higher, AUD/USD was provided further assistance to cross above AUD/EUR to trade 126 pips higher to 0.6876. NZD/USD at current 0.6138 competes with NZD/EUR at 0.6081 Vs EUR/NZD at 1.6444 as NZD/USD crossed above NZD/EUR. EUR/CAD at 1.3124 Vs CAD/EUR 0.7619 to CAD/CHF 0.7379 and CAD/USD 0.7695. Yesterday at 4:00 pm, EUR/CAD 0.7642 Vs USD/CAD 0.7640 and CAD/CHF 0.7414. Actual at 4 yesterday,… Read More »Currency market: FX next week

Markets have ended the week on a firmly risk-on note, with stocks making further headway in the final session. Stocks rally to end the week “Investors have put the ECB hike and Powell’s warning about more rate increases firmly behind them, and the rally of the past two days has gathered strength. While the broader bear market most likely has further to run, it looks like the next bear market rally has also kicked into action. This provides scope for some significant short-term upside in stocks, although traders will probably only stick around for a while, and investors should be careful not to jump in too quickly or too enthusiastically.” Markets keep calm and carry on “UK investors will no doubt be feeling somewhat conflicted given the current events, and the BoE has followed the lead set by other institutions by postponing its rate increase. But otherwise it is very much business as usual, and next week will still see a significant focus on the UK with CPI and employment data, although it is unlikely to provide a real change in trend for sterling, which still looks to be on a downward path against the dollar.”