InvestMacro

By ForexTime

Article by ForexTime

ForexTime Ltd (FXTM) is an award winning international online forex broker regulated by CySEC 185/12 www.forextime.com

By JustForex

Asset prices around the world fell sharply on Friday as central banks and governments stepped up their fight against inflation. At the close of the stock market on Friday, the Dow Jones Index (US30) decreased by 1.42% (-3.69% for the week) and the S&P 500 Index (US500) fell by 1.72% (-4.07% for the week). Technology index, NASDAQ (US100) lost 0.82% on Friday (-5.92% for the week).

Goldman Sachs strategists Friday lowered their year-end target for the benchmark S&P 500 US stock index to 3600 from 4300. Because monetary policy tends to lag, analysts estimate that the renewed aggressiveness by central banks means the global economy will become even weaker by the middle of next year. The Fed’s latest economic forecasts, released Wednesday along with a massive third straight 75 basis point interest rate hike, show that the Central Bank expects the nation’s unemployment rate to rise to 4.4% next year – up from 3.7% in August. Assuming the labor force remains unchanged, that would mean about 1.2 million people would be out of work. Analysts believe that Fed Chairman Jerome Powell has triggered an emotional bear market phase by endorsing the idea of a recession.

Analysts now dismiss the option that the recession will be short and shallow. Experts are now predicting much tighter monetary policy from central banks and other unintended consequences. The question now is already how deep the recession will be and whether the economy can face any form of financial crisis and a serious global liquidity shock. The US benchmark 10-year Treasury bond yields have reached their highest level in more than 12 years, while German two-year bond yields have exceeded 2% for the first time since late 2008. In the UK, five-year bonds jumped by 50 bps, the biggest one-day jump since late 1991.

Canadian retail sales fell by 2.5% to $61.3 billion in July, the first decline in seven months. Sales fell in 9 of 11 sub-industries, representing 94.5% of retail sales.

Stock markets in Europe were mostly down on Friday. German DAX (DE30) fell by 1.97% (-3.16% for the week), French CAC 40 (FR 40) decreased by 2.28% (-4.39% for the week), Spanish IBEX 35 (ES35) lost 2.46% (-4.68% for the week). British FTSE 100 (UK100) was 1.97% negative (-3.62% for the week).

The manufacturing PMI fell to a low in almost all economies of the region except France. These are clear signs of an impending recession in Europe.

In the UK, recession risks are also rising as the PMI business activity index signals a deepening recession. Companies report that the rising cost of living associated with the energy crisis and growing concerns about the outlook are suppressing demand and reducing output. Renewed supply constraints, soaring energy prices, and the rising cost of imports associated with the weakening pound exacerbate rising price pressures. The British pound and stock indexes fell sharply on Friday after the country’s finance minister announced historic tax cuts and a huge increase in borrowing. Investors are turning away from British bonds amid an expected increase in government debt. According to Bloomberg, analysts expect UK interest rates to reach 5.2% in August 2023, with growing expectations that the Bank of England may raise interest rates by one percentage point at its next meeting in November.

Italians are heading to the polls for a national vote that could bring back the country’s first female prime minister and first far-right-led government since the end of World War II. Incumbent President Mario Draghi, who was kicked out in July because of political strife, has agreed to stay as a caretaker.

Gold remains under pressure because of the rising US dollar index and US government bond yields. As long as the US Federal Reserve follows an aggressive tightening policy, precious metals will have no fundamental reason to rise.

Oil prices fell more than 5% to an eight-month low Friday as the US dollar hit its strongest level in more than two decades and fears that rising interest rates will lead to a recession in major economies, reducing demand for oil. As fears of global growth have turned to panic mode, this will weaken both economic activity and the short-term outlook for oil demand.

Asian markets traded lower last week. Japan’s Nikkei 225 (JP225) decreased by 2.58% for the week, Hong Kong’s Hang Seng (HK50) ended last week down by 4.08%, and Australia’s S&P/ASX 200 (AU200) ended the week in minus 3.92%.

The Chinese yuan finished the trading session at an almost 28-month low as the widening yield gap between the two largest economies in the world continues to put pressure on the Chinese currency.

In the commodities market, futures on orange juice (+6.43%), coffee (+2.32%), and wheat (+2.01%) showed the biggest gains by the end of the week. Natural gas futures (-11.89%), lumber (-9.6%), cotton (-6.8%), WTI oil (-6.29%), platinum (-5.34%), Brent oil (-5.15%), copper (-4.78%), silver (-2.82%) and gold (-1.89%) showed the biggest drop.

S&P 500 (F) (US500) 3,693.23  −64.76  (−1.72%)

Dow Jones (US30) 29,590.41 −486.27 (−1.62%)

DAX (DE40) 12,284.19 −247.44 (−1.97%)

FTSE 100 (UK100) 7,018.60 −140.92 (−1.97%)

USD Index 113.02 +1.67 (+1.50%)

• – Japan Manufacturing PMI (m/m) at 03:30 (GMT+3);
• – Japan Services PMI (m/m) at 03:30 (GMT+3);
• – Japan BoJ Governor Kuroda Speaks at 08:35 (GMT+3);
• – Eurozone German GDP (q/q) at 09:00 (GMT+3);
• – Eurozone German IFO Business Climate (m/m) at 11:00 (GMT+3);
• – Eurozone ECB President Lagarde Speaks at 16:00 (GMT+3);
• – US FOMC Member Mester Speaks at 23:00 (GMT+3).

By JustForex

This article reflects a personal opinion and should not be interpreted as an investment advice, and/or offer, and/or a persistent request for carrying out financial transactions, and/or a guarantee, and/or a forecast of future events.

By JustForex

The US indices continue to be under pressure due to the aggressive roadmap of the US Federal Reserve. At the close of trading on Tuesday, the Dow Jones index (US30) decreased by 0.35%, while the S&P 500 index (US500) lost 0.84%. The NASDAQ Technology Index (US100) fell by 1.37% yesterday.

Ahead of the Fed’s remaining meetings in 2022, analysts believe there will likely be another 75 basis point hike in November before the pace slows to 50 basis points in December as the Fed approaches the rate cap in early 2023. The Fed is likely to leave the discount rate at this capped level for a while before the economy eventually slows down. The gap between fighting inflation and adapting to growth is becoming increasingly difficult as the Fed hopes to cut the discount rate to neutral.

Equity markets in Europe mostly fell yesterday. Germany’s DAX (DE30) fell by 1.84%, France’s CAC 40 (FR40) decreased by 1.87%, Spain’s IBEX 35 (ES35) lost 1.24%, Britain’s FTSE 100 (UK100) closed down by 1.08%.

The Bank of England raised the interest rate to the highest level in 14 years. Money markets now expect another 50 basis point increase in November. The current issues affecting the Bank of England are a weak pound, fiscal policy, high energy prices, a technical recession with two consecutive quarters of GDP contraction, and a hawkish Federal Reserve stance. Experts believe that financial support from the UK government may stabilize inflationary pressures in the short term but will lead to higher inflation in the medium and long term.

The Swiss National Bankм(SNB) raised interest rates by 75 basis points to push the official borrowing rate into positive territory for the first time in more than a decade. The SNB said it could not rule out further rate hikes to ensure price stability over the medium term and was prepared to be active in the foreign exchange market as needed. The SNB now expects GDP growth to be 2% this year, down half a percent from the last meeting. The central bank also noted that inflation, which was 3.5% in August, is likely to remain elevated.

Norway’s Central Bank raised its interest rate by 50 basis points and signaled that another increase is likely in November. The bank’s interest rate has reached 2.25%. Meanwhile, the inflation forecast has been revised upward, peaking at 3% in 2023 and remaining at that level through 2024.

The US Federal Reserve’s 0.75% interest rate hike Wednesday was widely expected, but the central bank’s concurrent forecast was perhaps even more hawkish than expected. That pushed US Treasury bond yields to an 11-year peak, which is more bad news for unprofitable assets such as precious metals. The overall fundamental backdrop looks unfavorable for gold, given that it has recently been largely traded as a risk asset rather than a safe-haven asset.

Buyers in the oil market are hopeful that Vladimir Putin will reduce the supply of oil in Russia so much that prices per barrel will return to triple digits. But the Federal Reserve’s influence on the flow of funds through interest rates is proving tighter than anticipated. The European Union has stepped up its plans to impose a price ceiling on Russian oil, a measure aimed at weakening Moscow’s ability to finance the war in Ukraine. Also yesterday, Nigeria’s Oil Minister Timipre Marlin Silva, speaking on behalf of the OPEC+ producers’ alliance, threatened to cut global oil production if prices continue to fall.

Moscow’s decision to partially mobilize Russian military reservists marks the biggest escalation of the Ukrainian conflict since it began. Some Russians have rushed to the country’s borders to avoid mobilization. In southeastern Ukraine, attacks from Russia have intensified, coming on the eve of pseudo-referendums planned there by Moscow’s separatists.

Asian markets traded lower yesterday. Japan’s Nikkei 225 (JP225) decreased by 0.58%, Hong Kong’s Hang Seng (HK50) ended Thursday down by 1.61%, and Australia’s S&P/ASX 200 (AU200) closed the day by 1.56%.

Japan intervened in currency to support the yen for the first time since 1998, trying to stem a 20 percent drop in the yen against the dollar this year amid a widening policy divergence with the US. Japan’s Ministry of Finance said the Central Bank would defend the 145 USD/JPY level.

Singapore’s Core Consumer Price Index (CPI) rose year-over-year to 5.1% in August, exceeding expectations of 5% and up from 4.8% in July. Spending on food and transportation contributed the most to price pressures in August. The island nation imports nearly all of its fuel and grain. The Central Bank of Singapore (MAS) has tightened policy three times this year and is likely to continue to do so to offset increased inflationary pressures.

S&P 500 (F) (US500) 3,757.99  −31.94  (−0.84%)

Dow Jones (US30) 30,076.68 −107.10 (−0.35%)

DAX (DE40) 12,531.63 −235.52 (−1.84%)

FTSE 100 (UK100) 7,159.52 −78.12 (−1.08%)

USD Index 111.29 +0.65 (+0.58%)

• – Australia Manufacturing PMI (m/m) at 02:00 (GMT+3);
• – Japan BoJ Interest Rate Decision (Tentative);
• – Singapore Consumer Price Index (m/m) at 08:00 (GMT+3);
• – Australia Services PMI (m/m) at  :00 (GMT+3);
• – Eurozone Spanish GDP (q/q) at 10:00 (GMT+3);
• – Eurozone France Manufacturing PMI (m/m) at 10:15 (GMT+3);
• – Eurozone France Services PMI (m/m) at 10:15 (GMT+3);
• – Eurozone German Manufacturing PMI (m/m) at 10:30 (GMT+3);
• – Eurozone German Services PMI (m/m) at 10:30 (GMT+3);
• – Eurozone Manufacturing PMI (m/m) at 11:00 (GMT+3);
• – Eurozone Services PMI (m/m) at 11:00 (GMT+3);
• – UK Manufacturing PMI (m/m) at 11:30 (GMT+3);
• – UK Services PMI (m/m) at 11:30 (GMT+3);
• – Canada Retail Sales (m/m) at 15:30 (GMT+3);
• – US Manufacturing PMI (m/m) at 16:45 (GMT+3);
• – US Services PMI (m/m) at 16:45 (GMT+3);
• – Switzerland SNB Chairman Jordan Speaks at 18:30 (GMT+3);
• – US Fed Chair Powell Speaks at 21:00 (GMT+3).

By JustForex

This article reflects a personal opinion and should not be interpreted as an investment advice, and/or offer, and/or a persistent request for carrying out financial transactions, and/or a guarantee, and/or a forecast of future events.

By ForexTime

Article by ForexTime

ForexTime Ltd (FXTM) is an award winning international online forex broker regulated by CySEC 185/12 www.forextime.com

By JustForex

The Federal Reserve raised interest rates and changed its outlook for further rate hikes, indicating a period of higher interest rates. The prospect of higher interest rates over the long term has put pressure on growing sectors of the economy. As the stock market closed on Tuesday, the Dow Jones Index (US30) decreased by 1.70%, and the S&P 500 Index (US500) lost 1.71%. The NASDAQ Technology Index (US100) fell by 1.79% yesterday.

The Fed raised rates by 0.75% and signaled that rates will reach about 4.4% by the end of the year and 4.6% by the end of 2023, well above the 3.8% previously projected. For 2023, inflation is estimated to fall to 3.1% from the previous forecast of 2.7%, and in 2024, inflation expectations will remain unchanged at 2.3%. Fed members estimate that the economy will grow by 0.2% in 2022, sharply lower than the previous forecast of 1.7%. Growth forecasts have also been revised downward for 2023 and 2024. The Fed also predicts that a recession might be avoided, despite the need to accelerate rate hikes. But economists at Jefferies do not believe this and believe the Fed is incapable of effecting such a delicate planting of the economy. The pace of tightening has increased the risk that the Fed will slow growth too much, pushing the economy into a deep recession. The Fed’s aggressive push to bring inflation down to 2% would take years and cost higher unemployment and slower growth, according to policymakers who have questioned the prospects of a so-called “soft landing.” Bond markets quickly assessed the growing risk of recession as the Treasury yield curve flipped further. The yield on the 2-year Treasury bond rose above 50 basis points compared to the yield on the 10-year Treasury bond.

Federal Reserve Chairman Jerome Powell said Wednesday that the US real estate market will likely undergo a “correction.” This year, the Fed’s rate hikes have had the biggest impact on the real estate sector, slowing sales and lowering prices. Housing inflation will remain high for some time.

As for business activity, the geopolitical backdrop, slowing growth in China, the possibility of energy rationing in Europe, a strong dollar, and volatile domestic equity and real estate markets point to clear recession risks worldwide.

Equity markets in Europe were mostly up yesterday. German DAX (DE30) gained 0.76%, French CAC 40 (FR40) added 0.87%, Spanish IBEX 35 (ES35) declined by 0.01%, British FTSE 100 (UK100) closed the day at 0.63%.

Prime Minister Liz Truss’ plans to cut payroll taxes and reverse a planned corporate tax hike risk putting the UK national debt on an unsustainable upward trajectory, the IFS Institute for Financial Studies said Wednesday. Truss’ plans will likely result in a permanent budget deficit of about 3.5% of the Gross Domestic Product once energy subsidies end, well above the pre-recession average of 1.9%. Truss has promised tax cuts of about £30 billion a year. Finance Minister Kwasi Kwarteng will outline the details of the financial plan on Friday.

Finland will prepare a bill to restrict Russian tourists from entering its territory, Foreign Minister Pekka Haavisto said at a news conference in New York.

The European Commission is preparing a new package of sanctions against Russia. On September 23, the EU executive body will initiate a discussion of its proposals with ambassadors of EU countries. Among the proposed measures will be a restriction on Russian oil prices and a ban on imports of Russian diamonds and other luxury items.

The US President Joe Biden’s main talking points at the UN General Assembly:

• Russia is shamelessly violating the basic provisions of the UN charter. If countries can pursue imperial ambitions without consequence, it jeopardizes everything the UN stands for.
• Putin recklessly threatens nuclear weapons.
• No one has threatened Russia, and no one but Russia has sought conflict.
• The United States does not seek conflict with China.

Oil prices fell after the Fed raised interest rates to curb inflation because it could also reduce economic activity. A widespread increase in US oil, gasoline, and distillate inventories announced by the Energy Information Administration last week sent oil prices near their January lows.

Increased geopolitical risks made not only the dollar a safe haven but also the precious metals gold and silver, which yesterday showed resilience to the rising dollar. Investors are returning to safe haven assets because there are almost no alternatives now.

Asian markets were trading lower yesterday. Japan’s Nikkei 225 (JP225) was 1.36% lower, Hong Kong’s Hang Seng (HK50) decreased by 1.79% on Wednesday, and Australia’s S&P/ASX 200 (AU200) was 1.56% lower on the day.

Asian fund managers are betting that the inevitable fall of the Japanese yen will soon stop, and some are even getting ready for the possible fall of the Japanese government bonds. Analysts believe Japanese politicians will ask Bank of Japan Governor Haruhiko Kuroda to cancel the 0.25% ceiling on 10-year JGBs and try to steer the economy away from trouble. But for now, this is just a talk. At its meeting today, the Japan Central Bank kept all key elements of its policy unchanged.

S&P 500 (F) (US500) 3,789.93  −66.00  (−1.71%)

Dow Jones (US30) 30,183.78 −522.45 (−1.70%)

DAX (DE40) 12,767.15  +96.32 (+0.76%)

FTSE 100 (UK100) 7,237.64 +44.98 (+0.63%)

USD Index 111.32 +1.10 (+1.00%)

• – Japan BoJ Outlook Report (Tentative);
• – Japan BoJ Interest Rate Decision (Tentative);
• – Japan BoJ Press Conference at 09:30 (GMT+3);
• – Switzerland SNB Monetary Policy Statement at 10:30 (GMT+3);
• – Switzerland SNB Interest Rate Decision at 10:30 (GMT+3);
• – Norwegian Interest Rate Decision at 11:30 (GMT+3);
• – UK BoE Interest Rate Decision at 14:00 (GMT+3);
• – UK MPC Meeting Minutes at 14:00 (GMT+3);
• – US Initial Jobless Claims (w/w) at 15:30 (GMT+3);
• – US Natural Gas Storage (w/w) at 17:30 (GMT+3).

By JustForex

This article reflects a personal opinion and should not be interpreted as an investment advice, and/or offer, and/or a persistent request for carrying out financial transactions, and/or a guarantee, and/or a forecast of future events.

By JustForex

The US indices fell on Tuesday as investors raised their bearish rates over fears that the Federal Reserve might signal a continuation of aggressive rate hikes. The Fed’s willingness to continue tightening monetary policy brings the economic recession closer. The bond market continues to signal the risk of a broader recession as the continued inversion in the key part of the Treasury yield curve has intensified further. As the stock market closed on Tuesday, the Dow Jones Index (US30) decreased by 1.01%, and the S&P 500 Index (US500) lost 1.13%. The NASDAQ Technology Index (US100) fell by 2.52% yesterday.

The Fed has an important monetary policy meeting today. Analysts expect the US Federal Reserve to raise interest rates by 0.75% for the third time in a row. If the data is worse than expected and the Fed raises the rate by 1%, the dollar index may see upward momentum. If, on the contrary, the Fed raises interest rates by 0.5%, the dollar index is likely to fall sharply as the Fed is less aggressive. If the fact is as expected, there is a high probability that the market will just temporarily increase volatility.

ECB head Christine Lagarde said yesterday that Europe is experiencing a record-high inflation rate for the tenth month in a row, and this streak will continue soon. When inflation is high, monetary policy cannot remain expansionary. That is why the ECB is pursuing a strategy of monetary policy normalization. Normalization involves stopping net asset purchases and then raising rates to a neutral level that is neither stimulative nor restrictive. This is why the ECB has not only begun to raise interest rates but has indicated that it expects to raise interest rates further over the next few meetings. The ECB will reconsider whether the normalization strategy is enough to return to 2% inflation in the medium term.

The Netherlands imposed price caps on gas and electricity on January 1.

Oil falls ahead of the Fed’s interest rate decision. The dollar rose for the third time in four sessions, adding weight to oil prices as industry analysts forecast a third consecutive weekly increase in domestic crude inventories.

Gold prices are stuck at $1,600 a dollar, falling for the fifth time in six days. The rise in the dollar index is the main catalyst for gold’s weakness. Gold has lost about 4% in the last six sessions. Gold and silver could fall sharply if Powell can convince markets today not only that they will continue to aggressively tighten policy but that they will keep rates in place even as the economic downturn worsens.

Putin has announced a partial military mobilization in Russia. The Kremlin is still not calming down and has once again begun to intimidate Ukraine and the West with nuclear weapons.

Asian markets traded lower yesterday. Japan’s Nikkei 225 (JP225) gained 0.44%, Hong Kong’s Hang Seng (HK50) added 1.16% on Tuesday, while Australia’s S&P/ASX 200 (AU200) was up by 1.29% on the day.

China kept its benchmark lending rates on hold on Tuesday, as expected, as authorities postponed immediate monetary policy easing after a sharp drop in the local currency. The benchmark one-year lending rate (LPR) was kept at 3.65%, while the five-year LPR remained unchanged at 4.30%. Analysts believe that the growing divergence in the US and Chinese monetary policy could heighten fears of capital flight from China as Beijing seeks to mobilize resources to restore sluggish growth.

S&P 500 (F) (US500) 3,855.93  −43.96  (−1.13%)

Dow Jones (US30) 30,706.23 −313.45 (−1.01%)

DAX (DE40) 12,670.83  −132.41 (−1.03%)

FTSE 100 (UK100) 7,192.66 −44.02 (−0.61%)

USD Index 110.15 +0.41 (+0.38%)

• – US Existing Home Sales (m/m) at 17:00 (GMT+3);
• – US Crude Oil Reserves (w/w) at 17:30 (GMT+3);
• – US Fed Interest Rate Decision at 21:00 (GMT+3);
• – US FOMC Statement at 21:00 (GMT+3);
• – US FOMC Economic Projections at 21:00 (GMT+3);
• – US FOMC Press Conference at 21:30 (GMT+3).

By JustForex

This article reflects a personal opinion and should not be interpreted as an investment advice, and/or offer, and/or a persistent request for carrying out financial transactions, and/or a guarantee, and/or a forecast of future events.

By JustForex

At Monday’s close, the Dow Jones Index (US30) increased by 0.64%, while the S&P 500 Index (US500) added 0.69%. The NASDAQ technology Index (US100) jumped 0.76% yesterday.

The Federal Reserve is going to raise interest rates on Wednesday but is unlikely to raise them by 100 basis points, the CFRA reported Monday. On the other hand, Federal Reserve Chairman Jerome Powell explicitly warned in a speech last month that the Fed’s effort to rein in inflation by aggressively raising interest rates would “bring some pain” to the economy. Another sign of the Fed’s growing concern about inflation could be that it plans to raise rates much higher by the end of the year than predicted three months ago and to hold them higher for a longer period. Economists expect the US Federal Reserve’s key rate could rise to 4% by the end of this year. That said, there is a high probability of a rate hike to 4.5% next year. Most economists expect the Fed to stop raising rates in early 2023.

CME Group, the world’s leading derivatives marketplace, yesterday announced the launch of event contracts. The new event contracts will provide market users with innovative and inexpensive ways to trade oil, gold, stock indices, and foreign currencies. Individuals will be able to trade their opinion on whether prices in key futures markets will move up or down by the end of each day’s trading session, including gold, silver, copper, crude oil, natural gas, E-mini S&P 500, E-mini Nasdaq-100, E-mini Dow Jones Industrial Average, E-mini Russell 2000 and EUR/USD currency futures. These new daily futures options will also allow participants to know their maximum profit or loss when entering a trade. The size of each event contract is $20 per contract.

Equity markets in Europe traded without a single dynamic yesterday. Germany’s DAX (DE30) gained 0.49%, France’s CAC 40 (FR40) fell by 0.26%, Spain’s IBEX 35 Index (ES35) gained 0.11%, and Britain’s FTSE 100 (UK100) was not trading on Monday.

Economists believe a recession in the eurozone is almost inevitable. Households and companies in Europe are preparing for the possibility of energy rationing after Russia restricted gas supplies to the region and are already grappling with record-high inflation and other supply bottlenecks. Business surveys show that activity has been declining since July, and there are few signs of improvement in the near term. President Christine Lagarde and her colleagues are justifying higher price increases as a sign of their determination to tame rising prices, although economists believe their time for such action is running out. Respondents now see the ECB pausing its rate hike cycle early but raising interest rates to a peak of 2% on the deposit rate by February. More than half expect a 75 basis point increase at the ECB’s next meeting in October.

Germany’s Central Bank warned that the economy has already entered a recession. The Bank said business activity could decline slightly in the current quarter and fall markedly in the fall and winter months, even if strict gas rationing can be avoided as industry cuts or freezes production. Germany’s energy supply problems became especially acute after Gazprom cut gas supplies through the Nord Stream 1 pipeline, after which the pipeline was completely shut down.

Oil prices are rising as China’s easing of quarantine fuels demand hopes. Chengdu, a major Chinese city of about 21 million people, reopened after a two-week quarantine.

Australia supported a G7 price cap on Russian oil. The treasurer said there would be no downside to limiting the price of Russian oil imports, but the move could limit its ability to finance the invasion of Ukraine. The G7 countries – the United States, Japan, Germany, United Kingdom, France, Italy, and Canada – agreed to set a price ceiling on Russian oil imports in early September. The price cap is expected to fall between $40 and $60 a barrel.

Asian markets traded lower yesterday. Japan’s Nikkei 225 (JP225) decreased by 1.11%, Hong Kong’s Hang Seng (HK50) lost 1.04% on Monday, and Australia’s S&P/ASX 200 (AU200) was down by 0.28% on the day.

The national CPI rose to 2.8% y/y (2.6% previously), the highest reading in 8 years. And while inflation remains above the 2% target, the Bank of Japan cannot be expected to suddenly abandon its ultra-soft monetary policy. Analysts predict that no changes in the monetary policy of the Bank of Japan should be expected before the end of the year.

The RBA minutes of the monetary policy meeting showed that the RBA expects inflation to peak by the end of this year, after which inflation will fall to the target range of 2-3%. The Bank’s main forecast was for CPI inflation to be around 7.75% in 2022, just above 4% in 2023, and around 3% in 2024. The outlook for global economic growth has worsened and caused key uncertainty. Central banks in several major advanced economies have expressed further resolve to tighten monetary policy to prevent high inflation from taking hold, and this will likely entail a period of much lower growth.

S&P 500 (F) (US500) 3,899.89  +26.56  (+0.69%)

Dow Jones (US30) 31,019.68 +197.26 (+0.64%)

DAX (DE40) 12,803.24 +61.98 (+0.49%)

FTSE 100 (UK100) 7,236.68 0 (0%)

USD Index 109.81 +0.04 (+0.04%)

• – Japan National Core Consumer Price Index (m/m) at 02:30 (GMT+3);
• – China PBoC Loan Prime Rate (m/m) at 04:15 (GMT+3);
• – Australia RBA Meeting Minutes (m/m) at 04:30 (GMT+3);
• – US Building Permits (m/m) at 15:30 (GMT+3);
• – Canada Consumer Price Index (m/m) at 15:30 (GMT+3);
• – Eurozone ECB President Lagarde Speaks (m/m) at 20:00 (GMT+3).

By JustForex

This article reflects a personal opinion and should not be interpreted as an investment advice, and/or offer, and/or a persistent request for carrying out financial transactions, and/or a guarantee, and/or a forecast of future events.

By JustForex

The volatile rise in US stocks this year shows no signs of easing as data on high inflation makes it likely that the Federal Reserve will continue to raise interest rates further, increasing the chances of a recession. The US stock indices closed negative on Friday, with the S&P 500 and Nasdaq indices showing their biggest weekly percentage decline since June, as inflation worries, looming interest rate hikes, and warning signs for the economy weighed in. As the stock market closed on Friday, the Dow Jones Index (US30) decreased by 0.45% (-4.16% for the week), and the S&P 500 Index (US500) fell by 0.72% (-5.15% for the week). The NASDAQ Technology Index (US100) lost 0.90% (-5.97% for the week).

After last week’s strong inflation numbers, expectations that the Fed will eventually raise rates much higher increased. On September 9, the futures markets estimated a less than 1% chance that the Fed’s target rate would be above 4.5% by February. CME Group estimated that those odds had risen to 36% by Friday morning. This leads to a drop in stock prices and an increase in the likelihood of a recession. Annual Treasury bond yields are now more than 4%, the highest since 2007. Economists at Deutsche Bank have analyzed the potential endpoint of the Fed’s target rate using several different approaches. They all suggest a federal funds rate of 4.5% or so may be needed by early next year. If the outlook, quickly considered by the markets, becomes a reality, it marks the end of an era when rates were permanently pegged at zero. Ray Dalio, the founder of the large hedge fund Bridgewater, argues that if the Fed eventually raises rates to 4.5%, it means a 20% drop in stock prices because of the higher discount rate on future earnings as well as lower earnings. No one wants a recession, but central banks are willing to take risks to show anti-inflationary resolve.

Stock markets in Europe were mostly down on Friday. German DAX (DE30) fell by 1.66% (-3.27% for the week), French CAC 40 (FR40) was down by 1.31% (-2.65% for the week), Spanish IBEX 35 (ES35) fell by 1.25% (-1.26% for the week), British FTSE 100 (UK100) was down by 0.62% (-1.56% for the week).

The annualized Consumer Price level in the Eurozone reached 9.1% (compared to 8.9% in July). A year earlier, it was 3.0%. ECB member Nagel said Friday that the ECB would continue to raise rates to control inflation. Another ECB official, Ren, also agrees with the view that the ECB needs to keep raising rates.

The prospect of lower short-term inflation takes some pressure off the Bank of England to act even more aggressively. Analysts believe the Bank of England will stick with a 50 basis point rate hike, even as the US Federal Reserve and the ECB act more aggressively. The government guarantee of energy prices means that inflation is unlikely to get much higher.

Due to concerns about corruption in Hungary, the European Commission is considering freezing up to 65% of Hungary’s payments under the three main programs from the EU cohesion fund, amounting to about €7.5 billion. For his part, Hungarian Prime Minister Viktor Orban said he would oppose extending the anti-Russian sanctions, which he called a “shot in the foot.” He predicted that up to 40% of the European industry will stop in winter because of the energy crisis.

The German government may increase its stake in Uniper SE above 50% and is willing to take the historic step of fully nationalizing the country’s largest gas importer to prevent the collapse of the energy system.

The European Commission recommends that EU countries withdraw excess profits of energy companies from high energy prices, directing them to support citizens and consumer companies and reduce energy consumption by 5% this winter.

For the week, US benchmark oil was down nearly 2%, adding to the nearly 7% decline of the previous two weeks. Putin’s rhetoric seems to have lost its impact on energy traders, even though the energy market as a whole remains very tight on supplies. There was a time when Putin’s mere hint at cutting energy exports from Russia caused oil prices to rise steadily. But things are changing. At this point, much of the inflated oil and gas price forecasts for the fourth quarter of this year and the first quarter of 2023 are based on predictions that the coming winter will be harsh. India is not a G7 country considering imposing a price ceiling on Russian energy – India’s First Deputy Foreign Minister Vinay Kwatra.

Asian markets traded lower last week. Japan’s Nikkei 225 (JP225) lost 3.22%, Hong Kong’s Hang Seng (HK50) decreased by 0.70%, and Australia’s S&P/ASX 200 (AU200) was 2.25% lower over the week.

In the commodities market, silver futures (+9.19%), platinum (+3.23%), and soybean (+3.07%) showed the biggest gains. Futures on lumber (-7.18%), coffee (-5.51%), cotton (-5.29%), gold (-2.55%), and natural gas (-2.24%) showed the biggest drop.

S&P 500 (F) (US500) 3,873.33  −28.02 (−0.72%)

Dow Jones (US30) 30,822.42 −139.40 (−0.45%)

DAX (DE40) 12,741.26 −215.40 (−1.66%)

FTSE 100 (UK100) 7,236.68 −45.39 (−0.62%)

USD Index 109.64 −0.10 (−0.09%)

• – New Zealand RBNZ Gov Orr Speaks at 06:00 (GMT+3).

By JustForex

This article reflects a personal opinion and should not be interpreted as an investment advice, and/or offer, and/or a persistent request for carrying out financial transactions, and/or a guarantee, and/or a forecast of future events.

Article By RoboForex.com

BRENT

On H4, oil quotes are under the 200-day Moving Average, which indicates a downtrend. A downwards breakaway of 1/8 and subsequent falling to the support level of 0/8 should be expected. The scenario can be canceled by rising over the resistance level of 2/8, which might make the price rise to 3/8.

On M15, the lower line of VoltyChannel is broken away, which confirms the downtrend and a high probability of further price falling.

S&P 500

On H4, the index is under the 200-day Moving Average, which indicates a downtrend. Further falling of the quotes to the nearest support level of 0/8 is expected. The scenario can be cancelled by rising over the resistance level of 1/8, in which case the index might rise to 2/8.

On M15, the lower line of VoltyChannel is broken away, which confirms the probability of further price falling.

Article By RoboForex.com

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