InvestMacro

By JustForex

Rosenberg Research’s chief economist expects the US Central Bank to raise interest rates by 75 basis points when it meets later this month. However, he urged the Fed to temporarily suspend its hike program because the US economy is already under pressure. According to Rosenberg, the Fed’s current rate hike program will punish long-term bondholders whose fixed-income assets are particularly sensitive to interest rate changes. Rosenberg added that he expects the US economy to come out of the Fed-induced recession (which will be 100%) only after it has gone through a period of deflation, allowing policymakers to start lowering interest rates.

The US retail sales rose unexpectedly after falling the previous month. The value of total retail purchases increased by 0.3% last month after a downwardly revised drop of 0.4% in July. Excluding fuel prices, retail sales increased by 0.8%.

The S&P 500 Index fell Thursday as energy and technology stocks fell, with the latter under pressure from rising Treasury yields as investors expect the Federal Reserve to raise its interest rate further to curb inflation. At yesterday’s close of the stock market, the Dow Jones Index (US30) decreased by 0.56%, and the S&P 500 Index (US500) lost 1.13%. The NASDAQ Technology Index (US100) fell by 1.43%.

According to the Fed’s rate monitoring tool, a 75 basis point rate hike next week is already priced in. But rising inflation and continued strength in the labor market are forcing a bet on higher and longer rates.

Equity markets in Europe traded without a single dynamic yesterday. Germany’s DAX (DE30) decreased by 0.55%, France’s CAC 40 (FR40) lost 1.04%, Spain’s IBEX 35 (ES35) added 0.37%, Britain’s FTSE 100 (UK100) closed by 0.07%.

New inflation data will be published today in the Eurozone. Analysts forecast that the consumer price index will not change and will remain at the same level. But there may be surprises in the form of a new round of price acceleration, so investors should keep a close eye on the report.

European Union lawmakers voted Thursday overwhelmingly to condemn the damage to democracy in Hungary under Prime Minister Viktor Orban, increasing pressure on the bloc to cut funding for the former communist country. Citing corruption risks, the European Commission is expected to recommend later this week that billions of dollars earmarked for Budapest be suspended from the bloc’s total 1.1 trillion-euro budget. “The situation has deteriorated to the point where Hungary has become a ‘selective autocracy’ rather than a democracy,” the chamber said in a statement. The European Commission has already blocked about 6 billion euros owed to Budapest from the bloc’s separate economic stimulus package for COVID-19, citing insufficient measures against bribery in Hungarian public procurement.

Gold is approaching a 2.5-year low due to excessive investor panic over interest rates. Tighter monetary policy is taking its toll on precious metals, and until rates stop rising and US Treasury yields start to decline, gold and silver will continue to be under selling pressure.

Asian markets were trading higher yesterday. Japan’s Nikkei 225 (JP225) gained 0.21%, Hong Kong’s Hang Seng (HK50) added 0.44% on the day, while Australian S&P/ASX 200 (AU200) gained 0.21%.

Alarming signals are emerging for the Chinese economy. Last week’s trade data showed export growth well below expectations and slowed for the first time in four months. It is very likely that China’s exports will slow further or even contract in the coming months as leading economic indicators point to slower global growth or even recession. Other data showed that retail sales and industrial production in China beat expectations in August. Core investment in the first eight months of the year also exceeded expectations despite major problems in the real estate sector.

The Governor of the Reserve Bank of Australia, Philip Lowe, said that the number of cases of excessive increase in interest rates has decreased. Lowe also said the Central Bank would discuss the benefits of a quarter-point or half-point increase at its October 4 meeting.

A Reuters poll showed that core inflation in Japan would reach an eight-year high in August. The nationwide core Consumer Price Index (CPI), which excludes food and fuel prices, will reach an annualized rate of 2.7%.

S&P 500 (F) (US500)  3,901.35  −44.66  (−1.13%)

Dow Jones (US30) 30,961.82 −173.27 (−0.56%)

DAX (DE40) 12,956.66 −71.34 (−0.55%)

FTSE 100 (UK100)  7,282.07 +4.77 (+0.066%)

USD Index 109.71 +0.05 (+0.04%)

• – China Industrial Production (m/m) at 05:00 (GMT+3);
• – China Retail Sales (m/m) at 05:00 (GMT+3);
• – China Unemployment Rate (m/m) at 05:00 (GMT+3);
• – UK Retail Sales (m/m) at 09:00 (GMT+3);
• – Eurozone Italian Consumer Price Index (m/m) at 12:00 (GMT+3);
• – Eurozone Consumer Price Index (m/m) at 12:00 (GMT+3);
• – US Michigan Consumer Sentiment (m/m) at 17:00 (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

The coming week will feature central bank decisions galore!

Take your pick: the US Federal Reserve, the Bank of England (meeting delayed from last week), the Bank of Japan, and Norges Bank (the central bank of Norway) are all set to hold their respective policy meetings.

Though of course, the Fed surely takes centre stage considering that it’s the most powerful central bank in the world and holds so much sway across global financial markets.

Here’s what to expect for the coming week:

Monday, September 19

• UK markets closed for funeral of Queen Elizabeth II

Tuesday, September 20

• JPY: Japan August CPI
• CNH: China loan prime rates
• AUD: RBA September meeting minutes
• CAD: Canada August CPI

Wednesday, September 21

• USD: Fed rate decision
• US crude: EIA weekly oil inventory report

Thursday, September 22

• NZD: New Zealand 3Q consumer confidence, August external trade
• JPY: Bank of Japan policy decision
• NOK: Central Bank of Norway rate decision
• GBP: Bank of England rate decision
• USD: US weekly initial jobless claims
• EUR: Eurozone September consumer confidence

Friday, September 23

• AUD: Australia September PMIs
• EUR: Eurozone September PMIs
• GBP: UK September PMIs and consumer confidence
• CAD: Canada July retail sales

Here’s what markets are forecasting for the upcoming Fed decision due mid-week:

• 75 basis point hike fully priced in.
• 25% chance of a 100bps hike.
• US interest rates to peak around 4.5% by March 2023 (from the current 2.5%, before the September FOMC meeting next week).
  That’s an extra 50 basis points on top of the 4% peak forecasted just this time last week (before the latest US CPI was released – more on that in a bit).

Such hawkish expectations (that the Fed would have to trigger more of these outsized rate hikes to combat stubbornly elevated inflation) has restored this equally-weighted US dollar index back to its recent peak, trading around levels not seen since the onset of the global pandemic.

The ramp-up in expectations for a more aggressive Fed came in the wake of the US August consumer price index (CPI) released on September 13th.

We learned that inflation rose by a higher-than-expected 8.3% in August, compared to the 8.1% figure forecasted by economists.

The core CPI print (excluding more volatile items such as food and energy prices) also came in 0.2 percentage points above the forecasted 6.1% figure.

In other words, US inflation remains stubbornly elevated, despite the Fed having already hiked by 225 basis points since March.

Recall how before this week’s US CPI release, some segments of the markets believed that the Fed may just be contented with a 50bps hike at the September FOMC meeting.

Such expectations have been dashed by the hotter-than-expected August CPI that was unveiled earlier this week.

The higher-than-expected inflation numbers are set to frame the Fed’s upcoming pivotal decision.

• Should the Fed indeed trigger that gargantuan 100bps hike, that may send this equally-weighted USD index up to 1.23, a fresh 2-year high.

  That 1.23 region may offer initial resistance for this USD index, as it did back in May 2020. Stronger resistance is set to arrive around 1.25, as was the case back in early April 2020.

• However, should the Fed unexpectedly deliver a dovish shocker, perhaps by triggering only a 50bps hike or suggesting that most of its intended rate hikes are already in the past, that could see this USD index swiftly unwinding recent gains.

  A moderating greenback would in turn allow the rest of the FX space room to breath a massive sigh of relief.

Article by ForexTime

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

By JustForex

Inflationary pressures in the United States failed to decline significantly last month, despite falling gas prices. This is a sign that the Federal Reserve still has much work to do to restore price stability and provide long-term relief to US households. According to the US Bureau of Labor Statistics, the Consumer Price Index increased by 0.1% on a seasonally adjusted basis after stabilizing in July, exceeding consensus forecasts. On an annualized basis, the consumer price index fell to 8.3% from 8.5%. Economists polled by Bloomberg had expected inflation to fall to 8.1%. Core inflation (excluding food and energy prices) rose by 0.6% last month. On an annualized basis, core inflation rose from 5.9% to 6.3%.

Treasury bond yields jumped sharply after the CPI data, with the two-year rate soaring 21 basis points to about 3.78%, the highest level since October 2007. The yield on the benchmark 10-year bond increased by 10 basis points to 3.46%, while the dollar strengthened against major currencies and US stocks fell. S&P 500 stocks fell the hardest as high-priced stocks suffered from a sharp rise in US Treasury yields.

As the stock market closed yesterday, the Dow Jones Index (US30) decreased by 3.94%, and the S&P 500 Index (US500) lost 4.32%. The NASDAQ Technology Index (US100) decreased by 3.53% on Tuesday.

According to analysts, the Fed is going to raise rates another 75 basis points next week, and the question is, will the Fed eventually raise rates to 4.5% or higher? This is keeping the whole market in suspense since rates are still low with this inflation.

Despite the widespread market expectation of a further 75 basis point hike, Prince – a global economist and advocate of economic reform – said the Fed would likely deviate from its hawkish trajectory in three steps as the gap between wealthy investors and institutions and the “real economy” widens. By first reducing the rate hikes to 50 basis points and then neutralizing policy, Prins expects the Fed to begin to reverse course as the US has posted two consecutive quarters of negative GDP growth.

Equity markets in Europe also fell yesterday. German DAX (DE30) fell by 1.59%, French CAC 40 (FR40) decreased by 1.39%, Spanish IBEX 35 (ES35) lost 1.59%, British FTSE 100 (UK100) closed down by 1.17%.

The Dutch Cabinet plans aid for energy bills. One million households in the Netherlands are facing financial problems due to rising energy prices. About 600,000 of these households have never experienced financial difficulties before. Now, these households have had to deal with debt counseling to get rid of these debts, which will cost the government dearly.

Germany’s Consumer Price Index was 7.9% annually, after 7.5% in July. The inflation rate has been above 7% for over six months. The main reason for the high inflation is still an increase in energy and food prices. The German economy minister Habek said yesterday that Germany would have to go into recession next year. Spain’s annual inflation rate has fallen from 10.7% to 10.5%.

The European Union wants to cap revenues from cheaper power producers; impose an excess profits tax on fossil fuel companies, and impose mandatory consumption cuts. Commission President Ursula von der Leyen’s plans have yet to be finalized and eventually approved by other states, and there are deep divisions over how to deal with the crisis. Already, the most controversial idea – limiting the price of imported Russian gas – has been postponed until further negotiations.

Oil prices fell nearly 1% on Tuesday, reversing earlier gains. US Consumer Prices unexpectedly rose in August, giving the US Federal Reserve another chance to raise interest rates sharply next week.

Asian markets were trading higher yesterday. Japan’s Nikkei 225 (JP225) gained 0.25%, Hong Kong’s Hang Seng (HK50) ended the day down by 0.18%, and Australia’s S&P/ASX 200 (AU200) ended Tuesday up to 0.65%.

S&P 500 (F) (US500)  3,932.69 −177.72  (−4.32%)

Dow Jones (US30) 31,104.97 −1,276.37 (−3.94%)

DAX (DE40) 13,188.95  −213.32 (−1.59%)

FTSE 100 (UK100) 7,385.86 −87.17 (−1.17%)

USD Index 109.89 +1.57 (+1.45%)

• – Japan Industrial Production (m/m) at 07:30 (GMT+3);
• – UK Consumer Price Index (m/m) at 09:00 (GMT+3);
• – Eurozone Industrial Production (m/m) at 12:00 (GMT+3);
• – US Producer Price Index (m/m) at 15:30 (GMT+3);
• – US Crude Oil Reserves (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 stock indices rose ahead of key inflation data, which is expected to show a further cooling in consumer prices. At the close of the stock market yesterday, the Dow Jones Index (US30) increased by 0.72%, and the S&P 500 Index (US500) added 1.07%. Technology Index NASDAQ (US100) gained 1.34% on Monday.

The US will publish an important inflation report today. Analysts forecast that the consumer price index will show a decline for the second month in a row. The expectation of lower inflation has already put pressure on the US dollar in recent days.

According to the Federal Reserve Bank of New York’s monthly survey of consumer expectations released Monday, expectations for US inflation for the three years ahead fell to 2.8% in August from 3.2% the previous month and 3.6% in June. The one-year-ahead inflation forecast fell to 5.7% from 6.2%. Consumers now expect 2% inflation versus 2.3% on the five-year horizon. The US inflation expectations for gas price increases have also declined, and households now expect them to be flat one year from now. The US central banks, aiming for 2% inflation, are rapidly raising interest rates to curb the highest inflation in nearly 40 years. They are expected to hold their third consecutive 75 basis point hike when they meet next week.

Equity markets in Europe mostly rose yesterday. Germany’s DAX (DE30) gained 2.40%, France’s CAC 40 (FR40) gained 1.95%, Spain’s IBEX 35 Index (ES35) jumped by 2.01%, and Britain’s FTSE 100 (UK100) closed up 1.66%.

According to ECB Vice President Luis de Guindos, the European Central Bank’s massive interest rate hike last week was designed to keep inflation expectations anchored. The ECB followed the Federal Reserve in choosing a massive move, with some officials signaling that they are open to a repeat of this step when they next meet in October. ECB policymakers see growing risks that the central bank will have to raise its key interest rate to 2% or more to curb record Eurozone inflation.

In the oil market, the Iran nuclear deal has again stalled, pushing oil prices higher. Also, it should be noted that OPEC+ countries decided to cut oil production starting in October in order to keep oil prices from falling significantly. And all this is because from October, the “low season” begins for oil when oil prices tend to go down. Analysts at ANZ believe that the outlook for oil still looks challenging as Chinese authorities are likely to tighten restrictions ahead of the Communist Party meeting in October.

Gold and silver prices continue to rise as the dollar index, and government bond yields fall. But it should be noted that the current growth is temporary because, at the moment, there are no fundamental factors for gold and silver price growth, as the US Federal Reserve is in the cycle of tightening monetary policy.

Asian markets traded higher last week. Japan’s Nikkei 225 (JP225) gained 1.16% yesterday, Hong Kong’s Hang Seng (HK50) gained 2.69% for the day, and Australia’s S&P/ASX 200 (AU200) was up 1.02% on Monday.

Wholesale inflation in Japan reached 9% in August. Wholesale prices increased by 0.2% in August compared to the previous month.

In Australia, business confidence rose to 10 index points. The report indicates employment growth and improved trading conditions in most sectors. Only the construction sector remains problematic.

S&P 500 (F) (US500)  4,110.69  +43.33  (+1.07%)

Dow Jones (US30) 32,383.18  +231.47 (+0.72%)

DAX (DE40) 13,402.27  +314.06 (+2.40%)

FTSE 100 (UK100)  7,473.03 +121.96 (+1.66%)

USD Index 108.34  −0.67 (−0.61%)

• – Australia NAB Business Confidence (m/m) at 04:30 (GMT+3);
• – UK Average Earnings Index (m/m) at 09:00 (GMT+3);
• – UK Claimant Count Change (m/m) at 09:00 (GMT+3);
• – UK Unemployment Rate (m/m) at 09:00 (GMT+3);
• – Eurozone German Consumer Price Index (m/m) at 09:00 (GMT+3);
• – Eurozone Spanish Consumer Price Index (m/m) at 10:00 (GMT+3);
• – Eurozone German ZEW Economic Sentiment (m/m) at 12:00 (GMT+3);
• – Eurozone ZEW Economic Sentiment (m/m) at 12:00 (GMT+3);
• – US Consumer Price Index (m/m) at 15:30 (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

Federal Reserve officials expect another major interest rate hike this month as they rush to curb demand. Fed spokesman Chris Waller said Friday that he supports another significant 75 basis point hike. Earlier, St. Louis Fed President James Bullard said he is also leaning toward another massive move when officials meet September 20-21.

A growing number of major banks changed their forecasts this month by 75 from 50 basis points, including economists at Goldman Sachs Group Inc, Deutsche Bank AG, Barclays Plc, and Bank of America Corp.

At the close of the stock market on Friday, the Dow Jones Index (US30) increased by 1.19% (+1.09% for the week), and the S&P 500 Index (US500) added 1.53% (+1.82% for the week). Technology Index NASDAQ (US100) gained 0.27% (+4.72% for the week).

Equity markets in Europe were mostly up on Friday. German DAX (DE30) gained 1.43% (+2.03% for the week), French CAC 40 (FR40) gained 1.41% (+2.71% for the week), Spanish IBEX 35 (ES35) jumped by 1.47% (+2.95% for the week), British FTSE 100 (UK100) added 1.23% (+0.96% for the week).

Thousands of Russian troops retreated in the face of a lightning-fast Ukrainian offensive in the Kharkiv region that thwarted the Kremlin’s attempts to consolidate control over eastern Ukraine. The Institute for the Study of War, a US-based think tank, now estimates about 2,500 square kilometers liberated. In response, Russia hit critical infrastructure with missiles and temporarily left several areas without power and water. Thus, Russia once again demonstrated that it is a terrorist state.

The EU countries failed to agree on a price limit for gas from Russia. The maximum price would be expected to be $520 per thousand cubic meters. However, the EU countries failed to reach an agreement. The gas price cap is the main emergency measure called for by the European Commission’s Energy Agency to help households and businesses with rising energy bills.

On Sunday, Britain rejected as false Russian President Vladimir Putin’s claim that only a small portion of the grain exported from Ukraine in an international deal was going to poor countries. Without citing a source, Putin said Wednesday that only two of the 87 ships carrying 60,000 tons of produce went to poor countries. Citing UN data, the UK Defense Department said that about 30% of the grain exported in the deal went to low and middle-income countries in Africa, the Middle East, and Asia. Thus, Putin has once again confirmed that he is a liar. According to a daily British intelligence bulletin, Russia is employing a deliberate strategy of disinformation to deflect blame for food security problems, discredit Ukraine, and minimize opposition to its invasion.

Gold prices rose slightly on Monday, maintaining last week’s slight gains, as the dollar retreated from a 20-year high ahead of this week’s release of key US inflation data. With fuel costs now declining, inflation could see new signs of cooling. This could give gold a temporary boost.

Asian markets traded higher last week. Japan’s Nikkei 225 (JP225) gained 2.35% over the week, Hong Kong’s Hang Seng (HK50) gained 0.33% over the week, and Australia’s S&P/ASX 200 (AU200) was up by 0.96% over the week.

At the commodities market, futures on wheat (+7.52%), palladium (+7.3%), lumber (+7.05%), platinum (+6.68%), silver (+5.06%), copper (+4.15%), and corn (+2.89%) showed the biggest gains last week. Natural gas futures (-8.51%) and cocoa futures (-2.11%) showed the biggest drop.

S&P 500 (F) (US500)  4,067.36 +61.18 (+1.53%)

Dow Jones (US30) 32,151.71  +377.19 (+1.19%)

DAX (DE40) 13,088.21  +183.89 (+1.43%)

FTSE 100 (UK100)  7,351.07 +89.01 (+1.23%)

USD Index 108.97  −0.73 (−0.67%)

• – UK GDP (q/q) at 09:00 (GMT+3);
• – UK Industrial Production (m/m) at 09:00 (GMT+3);
• – UK Manufacturing Production (m/m) at 09:00 (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 Ayonga Hereid, The Ohio State University 

With recent advances in artificial intelligence and robotics technology, there is growing interest in developing and marketing household robots capable of handling a variety of domestic chores.

Tesla is building a humanoid robot, which, according to CEO Elon Musk, could be used for cooking meals and helping elderly people. Amazon recently acquired iRobot, a prominent robotic vacuum manufacturer, and has been investing heavily in the technology through the Amazon Robotics program to expand robotics technology to the consumer market. In May 2022, Dyson, a company renowned for its power vacuum cleaners, announced that it plans to build the U.K.’s largest robotics center devoted to developing household robots that carry out daily domestic tasks in residential spaces.

Despite the growing interest, would-be customers may have to wait awhile for those robots to come on the market. While devices such as smart thermostats and security systems are widely used in homes today, the commercial use of household robots is still in its infancy.

As a robotics researcher, I know firsthand how household robots are considerably more difficult to build than smart digital devices or industrial robots.

Handling objects

One major difference between digital and robotic devices is that household robots need to manipulate objects through physical contact to carry out their tasks. They have to carry the plates, move the chairs and pick up dirty laundry and place it in the washer. These operations require the robot to be able to handle fragile, soft and sometimes heavy objects with irregular shapes.

The state-of-the-art AI and machine learning algorithms perform well in simulated environments. But contact with objects in the real world often trips them up. This happens because physical contact is often difficult to model and even harder to control. While a human can easily perform these tasks, there exist significant technical hurdles for household robots to reach human-level ability to handle objects.

Robots have difficulty in two aspects of manipulating objects: control and sensing. Many pick-and-place robot manipulators like those on assembly lines are equipped with a simple gripper or specialized tools dedicated only to certain tasks like grasping and carrying a particular part. They often struggle to manipulate objects with irregular shapes or elastic materials, especially because they lack the efficient force, or haptic, feedback humans are naturally endowed with. Building a general-purpose robot hand with flexible fingers is still technically challenging and expensive.

It is also worth mentioning that traditional robot manipulators require a stable platform to operate accurately, but the accuracy drops considerably when using them with platforms that move around, particularly on a variety of surfaces. Coordinating locomotion and manipulation in a mobile robot is an open problem in the robotics community that needs to be addressed before broadly capable household robots can make it onto the market.

They like structure

In an assembly line or a warehouse, the environment and sequence of tasks are strictly organized. This allows engineers to preprogram the robot’s movements or use simple methods like QR codes to locate objects or target locations. However, household items are often disorganized and placed randomly.

Home robots must deal with many uncertainties in their workspaces. The robot must first locate and identify the target item among many others. Quite often it also requires clearing or avoiding other obstacles in the workspace to be able to reach the item and perform given tasks. This requires the robot to have an excellent perception system, efficient navigation skills, and powerful and accurate manipulation capability.

For example, users of robot vacuums know they must remove all small furniture and other obstacles such as cables from the floor, because even the best robot vacuum cannot clear them by itself. Even more challenging, the robot has to operate in the presence of moving obstacles when people and pets walk within close range.

Keeping it simple

While they appear straightforward for humans, many household tasks are too complex for robots. Industrial robots are excellent for repetitive operations in which the robot motion can be preprogrammed. But household tasks are often unique to the situation and could be full of surprises that require the robot to constantly make decisions and change its route in order to perform the tasks.

Think about cooking or cleaning dishes. In the course of a few minutes of cooking, you might grasp a sauté pan, a spatula, a stove knob, a refrigerator door handle, an egg and a bottle of cooking oil. To wash a pan, you typically hold and move it with one hand while scrubbing with the other, and ensure that all cooked-on food residue is removed and then all soap is rinsed off.

There has been significant development in recent years using machine learning to train robots to make intelligent decisions when picking and placing different objects, meaning grasping and moving objects from one spot to another. However, to be able to train robots to master all different types of kitchen tools and household appliances would be another level of difficulty even for the best learning algorithms.

Not to mention that people’s homes often have stairs, narrow passageways and high shelves. Those hard-to-reach spaces limit the use of today’s mobile robots, which tend to use wheels or four legs. Humanoid robots, which would more closely match the environments humans build and organize for themselves, have yet to be reliably used outside of lab settings.

A solution to task complexity is to build special-purpose robots, such as robot vacuum cleaners or kitchen robots. Many different types of such devices are likely to be developed in the near future. However, I believe that general-purpose home robots are still a long way off.

About the Author:

Ayonga Hereid, Assistant Professor of Mechanical and Aerospace Engineering, The Ohio State University

This article is republished from The Conversation under a Creative Commons license. Read the original article.

By ForexTime 

Red-hot inflation remains a scourge for the global economy, undermining its post-pandemic recovery. In response, central bankers have been furiously hiking interest rates in other to tame runaway consumer prices.

Over the coming week, GBPUSD traders will be assessing the impact from the latest inflation readings out of either side of the pond, along with a crucial Bank of England rate decision:

Monday, September 12

• GBP: UK July monthly GDP, industrial production, external trade
• EUR: ECB Executive Board member Isabel Schnabel’s speech

Tuesday, September 13

• AUD: Australia August household spending, business confidence, September consumer confidence
• GBP: UK July unemployment rate, August jobless claims
• EUR: Germany August CPI (final), September ZEW survey expectations
• USD: US August CPI
• Twitter shareholders to vote on sale to Elon Musk

Wednesday, September 14

• JPY: Japan July industrial production (final)
• GBP: UK August CPI
• EUR: Euro area July industrial production
• US crude: EIA weekly oil inventory report

Thursday, September 15

• NZD: New Zealand 2Q GDP
• AUD: Australia August unemployment rate, September consumer inflation expectations
• GBP: Bank of England rate decision
• USD: US weekly initial jobless claims, August retail sales, industrial production

Friday, September 16

• CNH: China August industrial production, retail sales, jobless rate
• EUR: Eurozone August CPI (final)
• USD: US September consumer sentiment

And here are the market forecasts for the following key events:

1. (Tuesday) US August CPI: 8.1% year-on-year (lower than July’s 8.5% print).

   If so, that would mark two straight months of easing in the headline annual print, which markets may perceive as a sign that US inflation has peaked. Such a trend should eventually allow the Fed to back away from supersized rate hikes, while potentially prompting the US dollar to moderate.

   Still, the core CPI year-on-year figure is expected to come in at 6.1% – its highest since April. That suggests that the Fed’s battle against inflation is far from over.

2. (Wednesday) UK August CPI: 10.4% year-on-year (higher than July’s 10.1%).

   UK households are already contending with a cost-of-living crisis, with headline inflation having punched its way into double-digit territory well ahead of forecasts.

   Yet another higher-than-expected CPI reading would only darken the economic outlook for the UK, and underscore the tremendous battle facing the Bank of England.

3. (Thursday) BOE rate decision: At the time of writing, markets are pricing in a mere 18.4% chance that the Bank of England will press ahead with a 75-basis point hike.

   However, a higher-than-expected UK CPI print could raise the odds for such a bumper hike which would be the BOE’s largest since 1989.

   A 75bps hike would also help the BOE keep up with similar moves already made recently by its major peers such as the US Federal Reserve and the European Central Bank.

Ultimately, GBPUSD traders may face a range of scenarios, depending on how those CPI prints and the keenly-awaited BOE rate decision play out:

• Higher-than-expected CPI prints, either for the US or the UK, that prompt markets to expect more incoming jumbo-sized rate hikes by its central bank could lead to a stronger currency.
• A lower-than-expected inflation figure that pares market bets for the size of the incoming rate hikes should move that currency lower.
• If the Bank of England sticks with a “relatively dovish” 50-basis point hike, while signalling growing concern for the UK economy, that may also prompt GBP declines.
• Should the BOE indeed trigger that massive 75bps hike, while telling markets to keep expecting more of these larger hikes in the coming months, that may translate into limited GBP gains.

At the time of writing, GBPUSD is enjoying some relief as it pokes its head back above 1.160 while pulling away from its lowest since 1985.

However, GBPUSD’s upside remains significantly capped by the negative sentiment surrounding the UK economic outlook, with markets currently pricing in a greater chance (34.3%) that ‘cable’ would trade back below 1.15 rather than back above 1.17 (30.9%) over the coming week.

Much would depend on the actual CPI figures, and the Bank of England’s official decision and comments surrounding its path forward for UK interest rates.

Article by ForexTime

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

By JustForex

Queen Elizabeth II, the longest reigning monarch in British history, died at age 96, Buckingham Palace announced Thursday. The 96-year-old queen ascended the throne in 1952 at age 25, after the death of her father, King George VI, as Britain was recovering from World War II. A 10-day mourning period has been declared in Britain.

The US stocks increased on Thursday despite hawkish comments from Federal Reserve Chairman Jerome Powell about another major interest rate hike in September. There is a nearly 90% chance of such a move. Goldman Sachs also raised its interest rate forecast to 75 basis points this month from 50 basis points earlier. Chicago Fed President Charles L. Evans, who tends to take a dovish side in the monetary policy debate, said Thursday that the Fed may well raise the rate by 75 basis points at its September meeting.

As the stock market closed yesterday, the Dow Jones Index (US30) increased by 0.61%, and the S&P500 Index (US500) added 0.66%. The NASDAQ Technology Index (US100) jumped by 0.60% on Thursday. The S&P 500 Index is still nearly 8% away from its August peak and is down about 17% since the beginning of the year.

Equity markets in Europe traded without a single dynamic yesterday. Germany’s DAX (DE30) lost 0.09%, France’s CAC 40 (FR40) added 0.33%, Spain’s IBEX 35 Index (ES35) increased by 0.78% and the British FTSE  100 (UK100) closed on Tuesday in plus 0.33%.

The European Central Bank raised its three official interest rates by 75 basis points, the largest interest rate change in ECB history. The Сentral Bank also warned of further hikes as it struggles to bring record-high inflation back under control. At her regular press conference, ECB President Christine Lagarde said she expects the ECB to raise rates by “more than two more but less than five” meetings in the future, but left open the question of the extent of these rate changes. She stressed that steps of 75 basis points “are not the norm,” but said she did not know at what level the bank could stop tightening.

The new British prime minister, Liz Truss, announced yesterday that a household will now pay no more than 2,500 pounds ($2,880) a year for each for the next two years. The restriction will take effect October 1. According to politicians, such a move will reduce inflation to 5%. A similar guarantee for businesses will be in effect for the next six months. Then there will be further support for vulnerable sectors. Reports also said that a £40 billion package would be passed to support businesses with their energy costs, bringing the total expected amount of support measures to £180 billion.

Crude oil prices rose about 1% on Thursday after falling to a seven-month low in the previous session as Russia threatened to halt oil and gas exports to some customers. The US crude inventories data showed an unexpected increase of 8.8 million barrels last week.

Asian markets traded flat yesterday. Japan’s Nikkei 225 (JP225) gained 2.31% yesterday, Hong Kong’s Hang Seng (HK50) decreased by 1.00%, and Australia’s S&P/ASX 200 (AU200) added 1.77% by the end of the day.

The Chinese economy is under pressure because of the ongoing restrictions. Yesterday the second largest city of Chengdu extended the quarantine as the number of cases of coronavirus infection increased. With rising inflation and problems facing the economy, the People’s Bank of China must decide whether it will prioritize supporting the economy. China’s inflation rate decreased from 2.7% to 2.5% in annual terms.

S&P 500 (F) (US500) 4,006.18 +26.31 (+0.66%)

Dow Jones (US30) 31,581.28 +193.24 (+0.61%)

DAX (DE40) 12,904.32 −11.65 (−0.090%)

FTSE 100 (UK100) +24.23 −62.61 (+0.33%)

USD Index 109.67 +0.17 (+0.16%)

• – Japan GDP (q/q) at 02:50 (GMT+3);
• – China Consumer Price Index (m/m) at 04:30 (GMT+3);
• – China Producer Price Index (m/m) at 04:30 (GMT+3);
• – Canada Unemployment Rate (m/m) at 15:30 (GMT+3);
• – US FOMC Member George Speaks (m/m) at 19:00 (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.