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Date 14th August 2023.

Market Update – August 14- CNH, CHINA50 slide, JPY nears 2022’s intervention zone, PPI ticks up.


Trading Leveraged Products is risky

Asia is in dire straits: CHINA50 and HK are down more than 2% as problems with developer Country Garden intensify and the stock is down almost -15% at its lows after suspending trading on 11 onshore bonds. Its issuance dated 01/2024 has fallen as low as 9 cents, indicating a yield of 2500%: a bankruptcy now seems inevitable, it remains to be seen how much the system will be able to sterilise it. The USDCNH currently trades at 7.2757, what would be the highest settlement of the year. But it is not the only one: the USDJPY touched 145.20, a new one-year low for the yen. Last year above 146, the BOJ’s monetary defence with open market interventions had begun and many traders expect something similar this year.



Back in the West, a higher-than-expected PPI figure favoured another red day for the US indices from which only the US30 was saved: that’s two weeks in a row of declines for both the US500 and US100. Remember that producer prices move ahead of consumer ones. Meanwhile, the USD continues to rise for the fourth week in a row and so does the Crude, up for 7 weeks in a row: the energy sector is now the best performer and has largely overtaken technology in short-term performance. Rates are on the rise again with the 2y at 4.90% and the 10y at 4.17%.

*FX – USDIndex up for weeks in a row trading at 102.80 now, approaching the channel down and the 200MA; both EURUSD and CABLE are -0.10% (1.0938, 1.2681) and seem to be close to break down their 10 months long uptrends.
*Stocks – US futures are -0.2% this morning, JPN225 -1.44%, AUS200 -0.87%, DAX -0.4% and clearly trading below its 50MA (as US100 is).
*Commodities –USOil -0.96% at $82.24, UKOil -0.93% at $85.58, another red day for Copper ($370).
*Gold – Down at $1913 as yield are rising.

Today: No data till tonight when Japanese GDP, RBA minutes and Chinese Retail Sales + Industrial Production will hit the tape.



Interesting Mover: US100 (0.15%) is trading below its 50MA and have broken the first steepest (yellow) trendline. 14935 area is now a weak static support.

Always trade with strict risk management. Your capital is the single most important aspect of your trading business.

Please note that times displayed based on local time zone and are from time of writing this report.

Click HERE to access the full HFM Economic calendar.

Want to learn to trade and analyse the markets? Join our webinars and get analysis and trading ideas combined with better understanding on how markets work. Click HERE to register for FREE!

Click HERE to READ more Market news.

Marco Turatti
Market Analyst
HFMarkets

Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in FX and CFDs products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.

Date 18th August 2023.

BRICS Summit’s Bold Gambit: The Drive Towards a New Currency Takes Centre Stage.


Trading Leveraged Products is risky

The BRICS summit serves as a gathering of strategic minds hailing from Brazil, Russia, India, China, and South Africa — a formidable union constituting nearly a quarter of global GDP and embracing 40% of the world’s populace. This annual convergence navigates a spectrum of vital concerns: trade, investment, innovation, development, and the orchestration of global governance. The 15th BRICS summit is set to unfold from August 22 to 24, 2023, with Sandton, South Africa’s iconic skyline, painting the backdrop.

At the epicentre of this summit rests a notion that could potentially recalibrate the global financial paradigm: the inception of a unified BRICS currency. It is a proposition with profound implications, wherein some BRICS members are aiming to offer an alternative to the dominant US Dollar, which holds the reins of international trade and finance with an iron grip—commanding 88% of global transactions and 58% of foreign exchange reserves. Yet, BRICS nations have weathered the dollar’s storm—navigating sanctions, trade tensions, debt quandaries, and inflationary waves.



Endeavours to free their economies from the dollar’s grasp are well underway. Consider Russia and China begging to trade in their own currencies, or the flourishing partnerships fostering alternatives such as the Euro and Gold. The potent Yuan has knitted stronger ties between Brazil, India, and China, while the New Development Bank (NDB) stands tall as a testament of their collective might—enabling BRICS to channel investments into robust infrastructure and sustainable dreams, all while dealing in their own currencies.

However, fashioning a new currency is like sculpting a masterpiece. The path forward is laden with challenges, such as a delicate choreography of design, governance, issuance, distribution, exchange rates, and global acceptance. As they embark on this journey, we also have to acknowledge the differences in economic magnitude, structure, policy orientation, and strategic visions between these countries. These divergent elements, while inspiring, present challenges to the harmonious orchestration of a new currency.



The dollar’s supremacy will not crumble overnight. Its roots run deep, fortified by the intricate web of global finance and unwavering trust. Governments, banks, corporations, investors, and individuals alike view the Dollar as a paragon of value, a cornerstone of commerce, a sanctuary for assets, and a bedrock for reserves. The allure of the US financial markets adds to its enduring power.

The pursuit, though risky, promises metamorphosis. Imagine a new BRICS currency, vibrant and resilient, standing shoulder to shoulder with the Dollar. Should it emerge as a contender, it could provide a much-needed alternative, branching out international trade and finance. The repercussions would resonate, and potentially see the dollar’s dominance challenged, its grip weakened, and the stage set for a more diverse financial narrative. Beyond the tangible, if successful the new currency could shield the countries within BRICS from the tempestuous winds of external shocks and dollar-driven fluctuations. It could amplify their voice in global economic governance, adding to the world’s economic discourse.

Always trade with strict risk management. Your capital is the single most important aspect of your trading business.

Please note that times displayed based on local time zone and are from time of writing this report.

Click HERE to access the full HFM Economic calendar.

Want to learn to trade and analyse the markets? Join our webinars and get analysis and trading ideas combined with better understanding on how markets work. Click HERE to register for FREE!

Click HERE to READ more Market news.

Francois du Plessis
Market Analyst
HFMarkets

Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in FX and CFDs products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.

Date 21st August 2023.

Market Update – 21 August – PBOC disappoints, markets quiet.


Trading Leveraged Products is risky

APAC stocks traded mixed as the disappointment from China’s decision on its Loan Prime Rates overshadowed its recent support efforts; Hong Kong underperformed. PBOC opted for a narrower-than-expected cut to the 1-year LPR alongside a surprise hold on the 5-year LPR, which is the reference rate for mortgages. PBOC and regulators met with bank executives and told lenders to boost loans to support the economic recovery instead. Meanwhile Country Garden has been delisted from the Hang Seng as the real estate sector in China crumbles before our eyes.



US500 futures were little changed on Sunday night after another losing week for the major averages: US100 closed the week lower about 2.6%, down for a third straight week for the first time since December. Meanwhile, the Dow closed the week lower by 2.2%, its worst streak since March. And the S&P 500 dropped 2.1% and posted its third consecutive losing week, which hadn’t happened since February. German PPI are just out, showing another consistent decline, but Unions at Woodside Energy’s North West Shelf offshore gas platforms on Sunday announced plans to strike as early as September 2nd, sending EU Natural Gas +18% this morning. On the inflation side we also have Japan, which is set to increase minimum pay by a record amount as inflation takes hold and 200 cargo ships are stuck waiting to cross the Panama Canal Water as shortages caused by the worst drought in 100 years have forced the canal operators to reduce the flow of traffic, which could have consequences for the global supply chain also as a result of what appears to be a still strong American consumer market.

Panama channel congestion real time



*FX – USDIndex is steady above 103 (103.32 now) and well above its 50-200 MAs; USDJPY found support above 145 (145.45 now), USDCNH heading north (7.33). NZDUSD keeps drifting lower (as does AUDUSD) after the Trade Balance data. Cable flat and lateral (1.2690 – 1.2765).
*Stocks – US and EU Futures are flat, Hong Kong slides again (-1.60% at 17631) despite Country Garden delisting.
*Commodities – USOil keeps recovering some ground, currently +0.61% at $81.88, the same for Copper steady at $371.20 after rebounding from the trendline last week.
*Gold – flat at $1,889 as is Silver ($22.75).

Today: No more relevant data after PBOC rate decision and German PPI earlier this morning.



Interesting Mover: VIX (-0.27%) @ 18.45, is pulling back after having tested its 200MA on Friday (Opex day); It’s finally back above the area that has been support after 2020 and should consolidate here. A move to the upside would have the 20.50-22 area as the next target.

Always trade with strict risk management. Your capital is the single most important aspect of your trading business.

Please note that times displayed based on local time zone and are from time of writing this report.

Click HERE to access the full HFM Economic calendar.

Want to learn to trade and analyse the markets? Join our webinars and get analysis and trading ideas combined with better understanding on how markets work. Click HERE to register for FREE!

Click HERE to READ more Market news.

Marco Turatti
Market Analyst
HFMarkets

Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in FX and CFDs products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.

Date 22nd August 2023.

Market Update – August 22 – US 10 year yield hits decades-long high, Tech rallies.


Trading Leveraged Products is risky

Futures are marginally higher this morning after US100 and US500 snapped a four day negative streak yesterday with the tech heavy index posting its biggest advance of the month (+1.65%) boosted by Tesla and Nvidia‘s performances. The chip maker rose 8.47% after being upgraded by HSBC (target price $780) and only 2 days before the much-anticipated earnings report that will come out Wednesday after the bell when we’ll find out whether the company’s revenue forecast – which was 50% higher than Wall Street estimates – will come to fruition. The Tech rally held despite yields on US Treasuries spiking again with the 10Y closing at 4.342% – its highest level since November 2007 – the 2Y trading above 5% and 10Y real rates shortly hitting 2%. Typically higher rates are negative for tech and growth stocks as they affect their future flows discount (despite of their cost of financing) but this was not the case yesterday. On the stock side, Softbank’s chip unit ARM is set to list at Nasdaq, becoming the largest IPO of 2023. Also, Zoom shares climbed around 4% after the close after reporting earnings that beat expectations.



*FX – USDIndex is trading at 103.04 right now (-0.16%), EURUSD is north of 1.09 (1.0918, +0.21%) and trading between its 50 and 200 MAs as CABLE is doing (1.2784). USDJPY is pulling back (145.89) after having touched 146.50 overnight.
*Stocks – US and EU Futures marginally higher (+0.07% US30/+0.15% US100/+0.16% GER40); JPN225 rose 0.9% on tech strength while China slipped on Miners weakness.
*Commodities – USOil -0.15% at $80.76 after having pulled back from $82.44 yesterday; Copper is catching a bid (+0.7% at $374.5) as are other metals (Palladium +0.62%, Platinum +0.82%).
*Gold – Shy of $1900 despite higher rates.



Today: EU current account, Richmond Fed Index, speeches from Fed’s Barkin, Bowman & Goolsbee.

Interesting Mover: Nvidia rose 8.47% to $469.67, jumping above its 50-day MA and putting its recent highs ($480) in sight. Seems to have found support on the lower bound of an extremely steep channel; RSI heading higher and not overbought.

Always trade with strict risk management. Your capital is the single most important aspect of your trading business.

Please note that times displayed based on local time zone and are from time of writing this report.

Click HERE to access the full HFM Economic calendar.

Want to learn to trade and analyse the markets? Join our webinars and get analysis and trading ideas combined with better understanding on how markets work. Click HERE to register for FREE!

Click HERE to READ more Market news.

Marco Turatti
Market Analyst
HFMarkets

Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in FX and CFDs products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.

Date 23rd August 2023.

Market Update – August 23 – Waiting for Nvidia, PMIs & Jackson Hole.


Trading Leveraged Products is risky

On a day when Monday’s optimism had already faded in US markets, weighed down by both a new downgrade of the banking sector’s credit rating – this time by S&P – and the pullback of NVDA, one of the most interesting movements was the USD. Without any real news flow and without any abrupt movements in the bond market, the US currency appreciated steadily throughout the day – slowly but surely – especially against the currencies of the European continent (the YEN was saved from the selling and this is another piece of news). This was a purely technical movement, without any important levels being vulnerable – an adjustment of flows – but the EURUSD for example fell 97 pips from the highs to the lows of the day. All this on the day that the BRICS meeting in Johannesburg started, there was talk of ”inevitable de-dollarisation’‘ and President Putin assured that the trade in USD between the constituent countries is now only 28%. Back on the corporate side, retail is showing much more mixed results than the official stats show: yesterday MACY‘s dropped 14% after reiterating its conservative outlook, while LOWE‘s rose 3% after beating expectations; Nike has been down for 8 consecutive sessions, its worst streak ever. Today will see Peloton, Foot Locker, Abercrombie and especially NVIDIA after the close: implied volatility in the options market is for an 8.8% move after the results. Today is PMI day, tomorrow the Jackson Hole Symposium kicks off.



*FX – USDIndex -0.05% at 103.42 after rebounding on its 200 MA yesterday; EURUSD sitting on its ST support (1.0855), CABLE 1.2748, YEN eked out a gain yesterday and is now trading at 145.667. USDCNH < 7.30.
*Stocks – US and EU Futures higher (+0.28% US30/+0.56% US100/+0.42% US500/ +0.34% GER40); China50 -0.59% despite good BAIDU earnings results.
*Commodities – USOil is below $80 ($79.54 now), UKOil relatively stronger at $83.87.
*Gold – Rising at $1904.41, XAG outperforming (-1.17% at $23.67).

Today: HCOB PMIs Composite, Manufacturing, Services in Germany, France, Europe, SP PMIs in UK, US, Home Sales in US, European Consumer Confidence.

EURUSD, 30 mins



Interesting Mover: EURUSD (+0.12% @ 1.0859) hovering around the support area of 1.0840/1.0855 after falling from a high of 1.0930 to a low of 1.0832 yesterday. MA 200 at 1.08.
Always trade with strict risk management. Your capital is the single most important aspect of your trading business.

Please note that times displayed based on local time zone and are from time of writing this report.

Click HERE to access the full HFM Economic calendar.

Want to learn to trade and analyse the markets? Join our webinars and get analysis and trading ideas combined with better understanding on how markets work. Click HERE to register for FREE!

Click HERE to READ more Market news.

Marco Turatti
Market Analyst
HFMarkets

Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in FX and CFDs products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.

Date 24th August 2023.

Market Update – August 24 – NVDA posts stellar Q2 results; Stocks, Bonds, Metals rally on eve of Jackson Hole.


Trading Leveraged Products is risky

Let’s start with NVIDIA that after the close reported results of a stellar Q2 and topped analyst estimates both on Revenues ($13.51 billion vs $11.22 billion expected) and EPS ($2.70 vs $2.09). The company raised its forecast again and expects its Q3 revenues to climb to $16 billion, an increase of 170% y/y. Gains are driven by the data center business. In after hours trading the chip-maker rose 6.57% also driving up AMD (+4%) and TSMC (+3.1%). Indices added to this week rally despite weak PMIs data around the Developed Markets that instead weighted on local currencies: EUR, GBP and USD fell in this order during the day after lackluster readings. Interestingly, the EURUSD perfectly rebounded on its 200 MA.



US 30y mortgage rate soared to 7.31% and this led to the lowest Mortgage applications since 1995: despite that, US new home sales rose in July. Bonds rallied around the world with the UK Gilt up 2.13% after traders repriced the terminal rate well below 6% and a narrow majority of economists polled by Reuters now believe the September hike to 5.5% will be the last one. German Bund gave up >10 bps and the 10y US T-note is 17bps off this week’s high. All of this gave wings to Gold, which touched $1921, and especially Silver, which rose 3.88%. Overnight, Asia joined the party and China50 rebounded strongly from near one-year lows.

US Mortgage 30 Years Rate and Mortgage Applications



*FX – USDIndex -0.05% at 103.28, EURUSD flat at 1.0865 after falling as low as 1.0802 yesterday, GBPUSD -0.09% @ 1.2713 still between the recent 1.2615/1.2785 range, USDJPY back above 145 (breached yesterday).
*Stocks – US Futures almost flat (-0.05% US30/+0.16% US100/+0.05% US500), EU Futures up 0.4%/0.6%; CHINA50 +1.42%, Hang Seng +1.91%, JPN225 +0.79%.
*Commodities – USOil is below $79 ($78.48 now) despite the bigger than expected drain from Oil Stocks (EIA data).
*Gold – holding at $1921, XAG consolidating at $24.23 after yesterday’s rally.

Later Today: US Durable Goods Orders, Jobless Claims, JACKSON HOLE kicks off.



Interesting Mover: USDIndex (-0.05% @ 103.28) pulled back after rising as high as 103.90 in what could be the test of the upper bound of a channel. It is trading above both the 50 and 200 MA and both RSI and MACD are positive and upward sloping.

Always trade with strict risk management. Your capital is the single most important aspect of your trading business.

Please note that times displayed based on local time zone and are from time of writing this report.

Click HERE to access the full HFM Economic calendar.

Want to learn to trade and analyse the markets? Join our webinars and get analysis and trading ideas combined with better understanding on how markets work. Click HERE to register for FREE!

Click HERE to READ more Market news.

Marco Turatti
Market Analyst
HFMarkets

Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in FX and CFDs products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.

Date 25th August 2023.

Market Update – August 25 – Powell at Jackson Hole, inflation mission not accomplished yet.


Trading Leveraged Products is risky

US equity markets pulled back strongly yesterday with US30 having its worst day since March, US100 its second worst in August and US500 swinging down $105 from the daily high to the daily low and drawing a big bearish engulfing pattern. The mighty NVDA started trading up 6.50% and ended the day +0.10%; JPN225 leads losses in Asia this morning (-2%). Yields rose and USD strengthened. Markets are cautious before today’s Jerome Powell intervention at the Jackson Hole symposium. The general consensus is that he will try to stay neutral, with no big surprises but a slight tilt to the hawkish side. Nothing similar to last year of course: but the FED does not think its fight against inflation is won yet and the strong economic data give it some room to act. Some energy prices have started to rise again lately – see Oil or Gasoline – but also Rice and Pork Belly are getting extremely expensive: the Cleveland Fed inflation tracker anticipates August’s figures will show a noticeable jump. It’s not time to declare ”mission accomplished” yet.



There has been some chatter about R* lately: this is the neutral interest rate of an economy, a mostly academic concept difficult to calculate and around which, incidentally, Powell developed his first speech in Jackson Hole in 2018. Nick Timiraos is a WSJ journalist who is known to be very close to the FED and in a recent article he brought up the subject of if the long-term neutral rate had not moved up in the US. Just yesterday, the WSJ also published an article wondering whether it was not time for the Fed to move the inflation target towards 3%. Is this perhaps a test of the reaction of the most informed and sophisticated investors? The Fed in June capped the R-Star at 2.5%: who knows if Powell will say anything about that and if there will be any news in September.

We shall see at 14:00 GMT.

*FX – USDIndex > 104 (104.12), EURUSD below its 50MA at 1.0783, GBPUSD 1.2570 (-0.24%), USDJPY 146.06, USDTRY pulling back (26.52) after the big drop yesterday following the hike to 25%.
*Stocks – US100 closed -2.19%, US500 -1.35%, US30 -1.08%; NVDA +0.10%, TSLA – 2.88%, MSFT -2.15%, AAPL -2.62%, META -2.55%, GOOGL -2.09%.
*Commodities – USOil in green for a second day, +0.65% at $79.36, Palladium keeps falling (-0.82% after yesterday’s -2.88%).
*Gold – $1913, XAG -0.35% slightly above $24.

Later Today: Jerome Powell’s speech at Jackson Hole, German IFO, US Michigan Consumer Sentiment index, ECB’s Lagarde speech. German GDP out at -0.2% y/y.



Interesting Mover: US500 (-1.35% the cash close @ 4376) gave up $105 (or roughly 2.5%) from the intraday high after testing from the downside the 50d MA and drawing a big bearish engulfing pattern.

Always trade with strict risk management. Your capital is the single most important aspect of your trading business.

Please note that times displayed based on local time zone and are from time of writing this report.

Click HERE to access the full HFM Economic calendar.

Want to learn to trade and analyse the markets? Join our webinars and get analysis and trading ideas combined with better understanding on how markets work. Click HERE to register for FREE!

Click HERE to READ more Market news.

Marco Turatti
Market Analyst
HFMarkets

Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in FX and CFDs products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.

Date 28th August 2023.

Rates differential is only one part of the equation but ECB has it still tough – EURUSD.


Trading Leveraged Products is risky

It is widely believed, not without reason, that the task of Lagarde and the ECB is far more difficult than that of her counterpart across the ocean. The PMI data of a few days ago showed grim future prospects, not just for manufacturing which we are used to by now. The leading data on services also returned to contraction after 7 months (48.3), following the composite that relapsed below the critical threshold two months ago. GDP growth for Q2 was not bad (+0.3%), but heavily influenced by the strong Irish figure while Germany continued to stagnate.

Services PMI lhs, Composite PMI rhs



At the same time, price pressure continues to be too high, especially in the service sector, due to wage pressures. True, the PPI has been declining m/m since the beginning of the year and is now in deflationary territory, but both core and headline consumer inflation readings are above 5% (5.5% and 5.3% respectively). If we look at the monthly data, both measures decreased in July but only imperceptibly (+0.1%) and for the first time after 5 months of increases.

Core Inflation m/m



That is why in Jackson Hole last Friday, the president of the ECB said central bankers had to be “extremely attentive that greater volatility in relative prices does not creep into medium-term inflation through wages repeatedly ‘chasing’ prices’’ and that “if global supply does become less elastic, including in the labour market, and global competition is reduced, we should expect prices to take on a greater role in adjustment’’.

The ECB has left the door open to a pause in policy tightening at its next meeting on September 14 and currently a hike at that meeting is only 40% priced in. Despite this, ultra hawkish voices such as Nagel’s have been heard saying it’s too early to think about a pause.

Looking at the futures curve of both the 1- and 3-month Euro short-term rate (ESTR) linked to the new Eurozone overnight swap, there is not a consistent probability of a further hike: the highest level currently priced is for January 2024 at 3.825% (13.5 bps higher than the September 2023 contract). The official deposit rate as of today is 3.75%. The 3m Euribor future gives a very similar picture peaking between December 2023 and March 2024 at levels that do not yet price a 4% deposit rate. (Remember that the ECB has 3 rates, deposit, main refinancing and marginal lending).



TECHNICAL ANALYSIS

Having said all this, the exchange rate between 2 currencies is influenced by many difficult-to-quantify factors and the interest rate differential is only 1 of them. The EURUSD returned to trade at the 1.07 handle Friday and is recovering to 1.08 (1.0818 now) this morning. It is trying to react to the MA 200 (1.0806) and seems to be close to the lower part of a slightly tilted bullish channel in which it has been moving since early 2023 (note that at the beginning of August it lost the steepest trendline at 1.0975). It will be important to see the reaction to the current levels of this pair so sold lately, as 1.0735 will probably have to hold to avoid further downside (to 1.05?). A reaction will face resistance first at 1.09 and then close to the 50MA (1.0976 today).




Always trade with strict risk management. Your capital is the single most important aspect of your trading business.

Please note that times displayed based on local time zone and are from time of writing this report.

Click HERE to access the full HFM Economic calendar.

Want to learn to trade and analyse the markets? Join our webinars and get analysis and trading ideas combined with better understanding on how markets work. Click HERE to register for FREE!

Click HERE to READ more Market news.

Marco Turatti
Market Analyst
HFMarkets

Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in FX and CFDs products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.

Date 29th August 2023.

Market Update – August 29 – Stock markets supported by China hopes and falling yields.


Trading Leveraged Products is risky

Treasuries and Wall Street rallied to kick off the last week of the month for what’s been a pretty bearish August. The same stands so far today. Rate hike fears amid a “higher for longer” policy stance, supply concerns, worries over spillover from slowing growth from China, mixed earnings, and fading AI enthusiasm helped knock bonds and stocks lower through August. But with yields having climbed to 16-year highs and much of the threat from still-hawkish monetary policy priced in, shorts covered and dip buyers emerged.

Treasury yields declined across tenors, with the 2-year dropping to slightly below 5%. The auctions of 2- and 5-year Treasury notes Monday drew the highest yields since before the 2008 financial crisis, a reflection of the US bond-market selloff that deepened last week in anticipation of another rate increase by the Federal Reserve. This is the first 5% handle and the highest award rate since July 2006.



This morning, the Japan unemployment rate for July came in higher than expected & German GfK consumer confidence dropped to the lowest level since May. Pessimists far outnumber optimists and the full breakdown, which is only available until August, showed that the assessment of income expectations deteriorated markedly. Not a positive report and the disappointing numbers tie in with the weakness in business confidence readings. Overall GDP growth is expected to contract this year and political headlines at home are not helping to lift the mood. The ECB seems to be expecting a soft landing though, so those numbers don’t necessarily mean that the ECB will pause next month, as the hawks seem to favor getting any additional hikes that may be needed out of the way.

*FX – USDIndex weakened against the G10 and dipped to 103.73 overnight, EURUSD spiked to 1.0837 (strong resistance area at 1.0840) , GBPUSD holds gains at 1.2617 and USDJPY sideways at 146.27-146.75. – Goldman sees Yen falling to 1990 levels if BOJ stays dovish!
*Stocks – The US100 advanced 0.84%, with the US500 up 0.63% on broadbased gains. Of note, this is the first back-to-back gain for August. The US30 was up 0.62%. NVDA +1.78%, Alphabet +0.87%, 3M +5.22%, GS +0.84%, DIS +0.96%, AAPL +0.88%, AMD +0.35%. European stocks made a positive start today, tracking positive momentum around the world.
*Commodities – USOil up by 0.35% to $79.55.
*Gold – rose 0.2% to $1,925.75.
*BTCUSD rose 0.3% to $26,054.53, ETHUSD rose 0.2% to $1,649.81.

Today: US Housing Price Index, Jolts & Consumer Confidence.



Interesting Mover: EURAUD (-0.26%) broke below 1.6800, with a bearish cross of 10- and 20-period EMA extending lower.

Always trade with strict risk management. Your capital is the single most important aspect of your trading business.

Please note that times displayed based on local time zone and are from time of writing this report.

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Andria Pichidi
Market Analyst
HFMarkets

Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in FX and CFDs products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.

Date 30th August 2023.

Market Update – August 30 – Data bring Joy, for now?


Trading Leveraged Products is risky

Weaker than expected consumer confidence and JOLTS numbers helped diminish Fed rate hike risks which in turn underpinned strong gains in Treasuries, Wall Street & the Asian stock market today as the markets clawed back some of the hefty losses in August also on speculation that the Fed is nearing the end of the tightening cycle. The USDIndex slumped on the less hawkish Fed outlook. Short and intermediate Treasuries outperformed with yields dropping about 12 bps. The break of technical levels and another solid note auction added to the bullish momentum. The 2-year rate fell to a low of 4.865% but closed at 4.879%. The 5-year richened to 4.26%. The 10-year was at 4.10%. These are the lowest rates in about 2 weeks after recently hitting new cycle highs of 5.08%, 4.48%, and 4.34%, respectively, the cheapest in about 16-17 years. The curve bull disinverted to -76 bps from -84 bps Monday.

German import price inflation at the start of the session is also helping to bolster speculation of a pause from the ECB, especially after a round of dismal confidence readings.




*FX – USDIndex slumped to 103.28 on the less hawkish Fed outlook, currently at 103.48. This broke two straight days over the 104 mark for the first time since June 6-7. Central bank differentials will be important for the Greenback, and it could find some footing if JPY and CNY remain weak. EURUSD spiked to 1.0890 (above the 2-week channel), GBPUSD steady at 1.2640 and USDJPY retested 147.45 but turned quickly lower at 145.77.
*Stocks – Mega-caps climbed after a tough August. The US100 surged 1.74%, while the US500 advanced 1.45%, with the US30 up 0.85%. Gains were broadbased but paced by communication services, consumer discretionary, and IT. The US500 rose for a third straight session, the first time since the end of July. And it broke resistance at 4440 to extend the move to 4495.
*Nvidia jumps by 4.16% as Google AI Alliance expands. Disney at 9-year lows.
*Commodities – USOil higher through the session, rallying 1.3% to $81.33, the highest in over a week, on a combination of factors:
1. Overnight reports of a fresh round of stimulus from China helped support the demand outlook.
2. The advance has been boosted by the advent of Hurricane Idalia which is threatening supply as shipping is halted and some terminals are closed.
3. DOE reported Cushing stockpiles declined -1.9 mln barrels, near January lows.
4. The drop in Treasury yields & the USD are also underpinning.
5. On the other side of the coin, China’s biggest refiner Sinopec said product demand growth is expected to slow in 2H.
*Gold – spiked to $1,938. Gold is likely to remain resilient, with any dip likely to attract buyers. Lisa Shalett, chief investment officer at Morgan Stanley Wealth Management, said in a note yesterday that “regarding the intermediate outlook, we are buyers of gold on weakness or declines in rates”, and others are likely to take a similar stance.
*BTCUSD rose 5.32% and is currently settled at 27,354.

Today: US ADP and Preliminary GDP Price Index in focus.



Key Mover: USOIL (+0.54%) extended more than 50% of August downleg, with next key restistance levels at 81.60 and 82.30.

Always trade with strict risk management. Your capital is the single most important aspect of your trading business.

Please note that times displayed based on local time zone and are from time of writing this report.

Click HERE to access the full HFM Economic calendar.

Want to learn to trade and analyse the markets? Join our webinars and get analysis and trading ideas combined with better understanding on how markets work. Click HERE to register for FREE!

Click HERE to READ more Market news.

Andria Pichidi
Market Analyst
HFMarkets

Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in FX and CFDs products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.