Financial News

Archive for Financial News – Page 262

Sentiment Hit By Rekindled Fed Hike Bets

Asian shares were under attack on Tuesday, following the negative cues from Wall Street overnight as unexpectedly strong US data revived expectations of the Fed raising rates more than expected.

European futures are pointing to a mixed open this morning amid the shaky sentiment and lack of risk appetite. This overall market caution could trickle back down to US indices, empowering US equity bears ahead of a light week of data for financial markets. In the currency universe, the dollar pushed higher, dragging most G10 currencies lower while gold tumbled back below $1780. Oil bears seem to be in control as investors juggle the impact of the new EU sanctions, the OPEC+ meeting over the weekend, and the strong US economic data.

Overnight, the Reserve Bank of Australia (RBA) raised its key interest rate by 25 basis points as widely expected. Given how the central bank left the door open to further hikes down the road, this has offered some support to the Australian dollar. However, signs of easing inflationary pressures may raise hopes that prices have peaked. Back in October, inflation cooled to 6.9% compared to 7.3% year-on-year in September. With the central bank potentially adopting a less aggressive approach towards rates as the tightening cycle approaches an end, this could eventually hit the Australian dollar.

Dollar receives a lifeline?

Over the past few weeks, the dollar has been bruised and battered by expectations around the Federal Reserve adopting a less aggressive approach towards interest rate hikes. It has depreciated against every single G10 currency since the start of the fourth quarter as long dollar positioning eased and the DXY index shifted in favour of the bears. However, buying sentiment towards the world’s reserve currency received a slight boost yesterday after the ISM services PMI data surprised to the upside, further fuelling bets that the Fed could keep its foot on the rate rise pedal. While the central bank is widely expected to hike interest rates by 50bps next week, continued strength in the labour markets and signs of inflation regaining momentum could lead to a higher peak or “terminal” rate than anticipated.

Looking at the technicals, the DXY is trading below the 200-day SMA and 105.50 resistance level. A breakout above this point could encourage more upside towards 107.00 and 107.85, respectively.

Currency spotlight – USDCAD

USDCAD is edging higher ahead of the Bank of Canada’s final rate decision for 2022 on Wednesday, which analysts expect to conclude with a 25bp rate hike. However, money markets price in a 68% chance of a 50bp move after better-than-expected Q3 GDP and the tight labour market.

Looking at the technical picture, the USDCAD remains fairly neutral on the daily charts with support found at 1.3390 and resistance at 1.3620. A breakout could be on the horizon with the BoC meeting acting as the directional catalyst.

Commodity spotlight – Gold

Gold crumbled yesterday, cutting through key levels like a hot knife through butter thanks to a stronger dollar, renewed Fed hike bets, and the easing of China’s Covid zero policies.

The precious metal fell roughly 1.6% and has found itself back within the November range. Support can be found at $1735 and resistance at $1785. Given how bears seem to be in a position of power, prices could test the lower part of the range soon. Below this level, a decline toward $1700 could be on the cards.

Article by ForexTime

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

Economics & Fundamentals Financial News

05 Dec

Trade of the week: USDCAD Waits For BoC Rate Decision

By ForexTime

This could be a wild week for the USDCAD due to the Bank of Canada’s (BoC) rate decision on Wednesday.

A sense of tension can already be felt when observing the currency pair which remains wedged within a small range on the hourly timeframe. The USDCAD’s choppy price action and indecision are likely based on last Friday’s jobs report from both the United States and Canada which sent prices on a mini rollercoaster ride.

US employers added more jobs than expected in November, signalling that demand for new workers remained robust despite the Federal Reserve’s war against soaring inflation. Non-farm Payrolls rose by 263,000 in November, smashing the 200,000 estimates but below the upwardly revised 284,000 increase seen in October. In Canada, it was a tepid picture with the economy only adding 10,100 jobs. Although this was the third straight month of increase, the small increase was seen as having limited impacts on the Bank of Canada’s rate decision for December.

Sentiment remains bearish toward the Canadian economy with most economists expecting the country to descend into a technical recession in 2023. With the BoC already shifting into lower gear on rate hikes, this could translate to further Loonie weakness for the rest of 2022 – especially combined with the gloomy sentiment.

Before we discuss what to expect from the USDCAD over the next few days, it is worth keeping in mind that prices remain in a bearish trend on the daily charts. A minor breakout/down could be on the horizon which may pave a path south or north depending on how markets react to the final BoC rate decision for 2022.

The low down…

After peaking at 8.1% back in June 2022, Canada’s annual inflation rate has slowed over the past few months with the current rate at 6.9% in October.

Signs of easing inflationary pressures have encouraged the BoC to adopt a less aggressive approach toward rates. In fact, the central bank is widely expected to hike rates by only 25 basis points on Wednesday which could be the final one before taking a pause. The Canadian economy expanded at an annualized 2.9% on quarter in Q3 2022, which exceeded the forecast of 3.2% and marked a fifth consecutive quarter of growth. Looking ahead, economic growth is forecasted to cool to 0.5% in Q4 according to Bloomberg which will result in GDP expanding by 3.3% in 2022. In the first quarter of 2023, growth is seen contracting -0.5%. With the road ahead for the Canadian economy rocky, this may hit buying sentiment toward the Canadian dollar.

The week ahead…

It’s all about the BoC rate final rate decision for 2022 on Wednesday, December 7th which is expected to conclude with a 25 basis-point rate hike. This decision is widely expected despite the better-than-expected Q3 GDP and somewhat tight labour market.

However, much attention will be directed toward the press conference by Governor Macklem which could provide key insight into the monetary policy path for 2023. Although economic data has been painting a positive picture since the October meeting, most economists expect the country to descend into a technical recession in 2023. This sentiment is likely to keep BoC hawks at bay, reducing the possibility of a surprise 50 basis-point hike.

Other factors to watch out for…

The oil-linked Canadian Dollar (CAD) appreciated on Monday, drawing strength from OPEC’s Sunday meeting.

Oil prices edged higher after OPEC+ decided to stick with the game plan to cut output. Although production was kept unchanged, the cartel stated that it would take “immediate” action if needed to stabilise global oil markets. Another factor supporting the Loonie is the European Union imposing a price cap on Russian oil. These factors could keep the Canadian dollar buoyed ahead of the BoC rate decision.

What next for the USDCAD?

On the daily chart, the USDCAD remains in a bearish trend with prices currently bouncing within a small range. Prices are trading below the 50-day SMA but still above both the 100-day and 200-day. A solid breakdown below 1.3390 could encourage a decline toward 1.3230 and 1.3050, respectively. Should prices break above 1.3500, bulls could be inspired to challenge 1.3600 and 1.3750.

Article by ForexTime

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

Financial News Forex and Currency News

05 Dec

Jobs are up! Wages are up! So why am I as an economist so gloomy?

By Edouard Wemy, Clark University

In any other time, the jobs news that came down on Dec. 2, 2022, would be reason for cheer.

The U.S. added 263,000 nonfarm jobs in November, leaving the unemployment rate at a low 3.7%. Moreover, wages are up – with average hourly pay jumping 5.1% compared with a year earlier.

So why am I not celebrating? Oh, yes: inflation.

The rosy employment figures come despite repeated efforts by the Federal Reserve to tame the job market and the wider economy in general in its fight against the worst inflation in decades. The Fed has now increased the base interest rate six times in 2022, going from a historic low of about zero to a range of 3.75% to 4% today. Another hike is expected on Dec. 13. Yet inflation remains stubbornly high, and currently sits at an annual rate of 7.7%.

The economic rationale behind hiking rates is that it increases the cost of doing business for companies. This in turn acts as brake on the economy, which should cool inflation.

But that doesn’t appear to be happening. A closer dive into November’s jobs report reveals why.

It shows that the labor force participation rate – how many working-age Americans have a job or are seeking one – is stuck at just over 62.1%. As the report notes, that figure is “little changed” in November and has shown “little net change since early this year.” In fact, it is down 1.3 percentage points from pre-COVID-19 pandemic levels.

This suggests that the heating up of the labor market is being driven by supply-side issues. That is, there aren’t enough people to fill the jobs being advertised.

Companies still want to hire – as the above-expected job gains indicate. But with fewer people actively looking for work in the U.S., companies are having to go the extra yard to be attractive to job seekers. And that means offering higher wages. And higher wages – they were up 5.1% in November from a year earlier – contribute to spiraling inflation.

This puts the Fed in a very difficult position. Simply put, there is not an awful lot it can do about supply-side issues in the labor market. The main monetary tool it has to affect jobs is rate hikes, which make it more costly to do business, which should have an impact on hiring. But that only affects the demand side – that is, employers and recruitment policies.

So where does this leave the possibility of further rate hikes? Viewing this as an economist, it suggests that the Fed might be eyeing a base rate jump of more than 75 basis points on Dec. 13, rather than a softening of its policies as Chair Jerome Powell had suggested as recently as Nov. 30. Yes, this still would not ease the labor supply problem that is encouraging wage growth, but it might serve to cool the wider economy nonetheless.

The problem is, this would increase the chances of also pushing the U.S. economy into a recession – and it could be a pretty nasty recession.

Wage growth still trails behind inflation, and for one reason or another people have been opting out of the labor market. The logical assumption to make is that to make up for both these factors, American families have been dipping into their savings.

Statistics back this up. The personal saving rate – that is, the chunk of income left after paying taxes and spending money – has fallen steeply, down to 2.3% in December from 9.3% before the pandemic. In fact, it is at its lowest rate since 2005.

So, yes, employment is robust. But the money being earned is eroded by soaring inflation. Meanwhile, the safety net of savings that families might need is getting smaller.

In short, people are not prepared for the recession that might be lurking around the corner.

And this is why I am gloomy.

About the Author:

Edouard Wemy, Assistant Professor of Economics, Clark University

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

Economics & Fundamentals Financial News

05 Dec

Japanese Candlesticks Analysis 05.12.2022 (XAUUSD, NZDUSD, GBPUSD)

By RoboForex.com

XAUUSD, “Gold vs US Dollar”

At the support level, gold has formed a Hammer reversal pattern. Currently, the pair is going by the signal in an ascending wave. The goal of growth might be 1835.50. Upon testing the resistance level, the pair might break through it and continue the uptrend. However, the quotes may pull back to 1790.00 before further growth.

NZDUSD, “New Zealand Dollar vs US Dollar”

On H4, at the support level, gold has formed a Hammer reversal pattern. Currently, the pair may go by the signal in an ascending wave. The goal of growth might be 0.6505. After the resistance level is broken away, the quotes may get a chance to continue the uptrend. However, the price may pull back to 0.6380 before further growth.

GBPUSD, “Great Britain Pound vs US Dollar”

On H4, at the support level, gold has formed a Hammer reversal pattern. Currently, the pair is going by the signal in an ascending wave. The goal of the growth may be the resistance level of 1.2465. However, the price may pull back to 1.2200 before continuing the uptrend.

Article By RoboForex.com

Attention!
Forecasts presented in this section only reflect the author’s private opinion and should not be considered as guidance for trading. RoboForex LP bears no responsibility for trading results based on trading recommendations described in these analytical reviews.

Financial News Forex and Currency News

05 Dec

Murrey Math Lines 05.12.2022 (EURUSD, GBPUSD)

By RoboForex.com

EURUSD, “Euro vs US Dollar”

On H4, the quotes are above the 200-day Moving Average, which signifies prevalence of an uptrend. However, the RSI is nearing the overbought area. As a result, the quotes are expected to test 7/8 (1.0620), a bounce off it, and falling to the support level of 5/8 (1.0376). The scenario can be cancelled by rising over 7/8 (1.0620), in which case the pair should continue growing and reach 8/8 (1.0742).

On M15, the lower line of VoltyChannel is too far from the current price, so a signal to fall will be a bounce off 7/8 (1.0620) on H4.

GBPUSD, “Great Britain Pound vs US Dollar”

The situation of the GBPUSD chart is similar. On H4, the quotes are above the 200-day Moving Average, and the RSI is nearing the overbought area. A test of 7/8 (1.2451) is expected, followed by a bounce off it and falling to the support level of 5/8 (1.1962). The scenario can be cancelled by rising over the resistance level of 7/8 (1.2451), which might provoke further growth to 8/8 (1.2695).

On M15, the lower line of VoltyChannel is too far from the current price, so a signal to fall will be a bounce off 7/8 (1.2451) on H4.

Article By RoboForex.com

Financial News Forex and Currency News

05 Dec

The Analytical Overview of the Main Currency Pairs on 2022.12.05

By JustMarkets

The EUR/USD currency pair

Technical indicators of the currency pair:

Prev Open: 1.0525
Prev Close: 1.0539
% chg. over the last day: +0.13 %

On Friday, investors were looking for signs of weakness in the US labor market, especially wages, as a precursor to a faster slowdown in inflation, which would allow the Fed to slow down and eventually halt its current rate hike cycle. But the NFP data surprised again, and the October data was revised upward, highlighting that the US labor market continues to show signs of high resilience despite tightening financial conditions. This, in turn, gives the Fed room for another major hike, although there is less than a 20% chance of such a scenario.

Trading recommendations

Support levels: 1.0543, 1.491, 1.0446, 1.0361, 1.0332, 1.0284, 1.0193
Resistance levels: 1.0610

The trend on the EUR/USD currency pair on the hourly time frame is bullish. The price is trading above the moving averages, and the MACD indicator is in the positive zone, but with signs of stopping in the form of divergence. Buy trades are best considered after a slight correction to the support levels of 1.0543 or 1.0491, but with additional confirmation. Sell deals can be considered from the resistance level of 1.0610, but it is better with confirmation in the form of reverse initiative.

Alternative scenario: if the price breaks down through the support level of 1.0332 and fixes below it, the downtrend will likely resume.

News feed for 2022.12.05:

– Eurozone ECB President Lagarde Speaks at 03:45 (GMT+3);
– Spanish Services PMI (m/m) at 10:15 (GMT+3);
– Italian Services PMI (m/m) at 10:45 (GMT+3);
–– French Services PMI (m/m) at 10:50 (GMT+3);
– German Services PMI (m/m) at 10:55 (GMT+3);
– Eurozone Services PMI (m/m) at 11:00 (GMT+3);
– Eurozone Retail Sales (m/m) at 12:00 (GMT+3);
– US ISM Services PMI (m/m) at 17:00 (GMT+3).

The GBP/USD currency pair

Technical indicators of the currency pair:

Prev Open: 1.2242
Prev Close: 1.2291
% chg. over the last day: +0.40 %

Financial markets gave British Prime Minister Rishi Sunak a pretty easy start. The Bank of England will meet for the last time this year on December 15. Swati Dhingra of the bank’s monetary policy committee said late last week that the Bank of England’s benchmark interest rate must peak no higher than 4.5% if the central bank wants to avoid a deepening and prolonged recession. For now, the Bank of England is holding the rate at 3%, compared with the RBNZ’s 4.25%, the US Fed’s 4.00%, and the Bank of Canada’s 3.75%.

Trading recommendations

Support levels: 1.2224, 1.2016, 1.1964, 1.1684, 1.1476, 1.1418
Resistance levels: 1.2381, 1.2431

From the technical point of view, the trend on the GBP/USD currency pair on the hourly time frame is bullish. The price is trading above the moving levels. The MACD indicator is in the positive zone, and there are signs of divergence, which indicates the weakness of the buyers. Under such market conditions, it is better to look for buy deals from the support level of 1.2224, but with confirmation. Sell trades are best to look for on intraday time frames from resistance levels of 1.2381, but also better with confirmation in the form of a reverse initiative or a false breakdown.

Alternative scenario: if the price breaks down of the 1.1965 support level and fixes below it, the downtrend will likely resume.

News feed for 2022.12.05:

– UK Services PMI (m/m) at 11:30 (GMT+3).

The USD/JPY currency pair

Technical indicators of the currency pair:

Prev Open: 135.28
Prev Close: 134.31
% chg. over the last day: -0.72 %

As market participants focused on strong wage growth and solid US employment data, the USD/JPY pair jumped on Friday after the NFP release. However, another 50 basis point hike is expected at the December FOMC meeting. Given that the Bank of Japan will maintain an ultra-soft policy at least until spring 2023, analysts expect a new wave of USD/JPY growth amid a widening of the difference between the interest rates of the US Federal Reserve and the Bank of Japan.

Trading recommendations

Support levels: 135.20, 133.53
Resistance levels: 137.65, 139.09, 140.75, 143.17, 145.16

From the technical point of view, the medium-term trend on the currency pair USD/JPY is bearish. The MACD indicator is in the negative zone, but on the higher time frames, the divergence is formed, which indicates the weakness of the sellers. Under such market conditions, buy trades can be sought on the intraday time frames from the support level of 134.26, but only with confirmation, since the level has already been tested. Sell deals could be sought from the resistance level of 135.11 or 137.65, provided there is a reversal.

Alternative scenario: If the price fixes above 139.08, the uptrend will likely resume.

News feed for 2022.12.05:

– Japan Services PMI (m/m) at 03:30 (GMT+3).

The USD/CAD currency pair

Technical indicators of the currency pair:

Prev Open: 1.3430
Prev Close: 1.3471
% chg. over the last day: +0.31 %

The Bank of Canada has a tough decision to make at its upcoming policy meeting on December 7. Governor Tiff Macklem argues that further rate hikes are needed to bring inflation under control, but the central bank is facing criticism as there are signs of a slowing economy. Therefore, it is very likely that the Bank of Canada will raise the rate by 0.25%. But there could be surprises, as Tiff Macklem wants to keep up with the US Fed, and the US central bank is planning a 0.5% rate hike. Robust employment data could justify a potential 50 basis point hike by the Bank of Canada.

Trading recommendations

Support levels: 1.3386, 1.3360, 1.3281, 1.3212
Resistance levels: 1.3446, 1.3479, 1.3522, 1.3658, 1.3682, 1.3776, 1.3855

From the point of view of technical analysis, the trend on the USD/CAD currency pair has changed to bullish. The price failed to break down through the priority change level. The MACD indicator is in the negative zone, but sellers’ pressure is weak. Buy trades should be considered on the lower time frames from the support level of 1.3386, but with additional confirmation. For sell deals, it is better to consider the resistance level of 1.3446 but with confirmation in the form of reverse initiative.

Alternative scenario: if the price breaks down and consolidates below the support level of 1.3386, the downtrend will likely resume.

There is no news feed for today.

By JustMarkets

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.

Financial News Forex and Currency News

05 Dec

EUR Decided to Sky-Rocket

By RoboForex Analytical Department

On Monday, the market major has reached 1.0580. It must be realized, that this is not because the euro is strong but because the dollar is weak. Investors are undermining the USD, treading on statistics and upcoming decisions of the US Federal Reserve System.

The labour market in the US remains vigorous. In November, the unemployment rate remained at 3.7%, and the NFP grew by 263 thousand instead of 200 thousand forecast. Average hourly wage increased by 5.1% y/y upon growing by 4.6% in October.

All this makes the employment picture quite stable and gives us an idea that the US business withstands the growing expenses on crediting quite efficiently. The wage fund has expanded, which hinders the market idea about the interest rate growing by 50 base points in December.

With all this background, the USD is really unstable, which is obvious in the quotes.

On H4, the currency pair has formed a consolidation range around 1.0466. Today the market is trying to break it upwards. The structure of growth is expected to extend to 1.0634, and after it is reached, a link of correction to 1.0464 is not excluded, followed by growth to 1.0703. Technically, this scenario is confirmed by the MACD: its line is directed strictly upwards, which suggests further growth.

On H1, the pair has completed an impulse of growth to 1.0531. Today the market has formed a consolidation range around it, and with an escape upwards, it extends the structure of growth to 1.0634. Technically, the scenario is confirmed by the Stochastic oscillator. Its signal line is above 80 and shows no evidence of decline as yet.

Disclaimer

Any forecasts contained herein are based on the author’s particular opinion. This analysis may not be treated as trading advice. RoboForex bears no responsibility for trading results based on trading recommendations and reviews contained herein.

Financial News Forex and Currency News

05 Dec

China eases Covid restrictions. The dollar index fell to a 5-month low amid expectations of a rate hike slowdown

By JustMarkets

Fed Chairman Jerome Powell said last week that it might be time to slow rate hikes, raising hopes that the Central Bank is near the end of its tightening cycle. But Friday’s jobs report that hiring remained high last month while average hourly earnings rose. The US non-farm payrolls report (NFP) beat market expectations with 263,000 new jobs created compared to the expected 200,000. The unemployment rate remained unchanged at 3.7%, while average hourly earnings rose to 5.1% year-over-year against expectations of 4.6% and a revised higher October rate of 4.9%. This suggests that the labor market remains strong, giving the Fed room for another major hike, although there is less than a 20% chance of such a scenario.

At the close of the stock market on Friday, the Dow Jones Index (US30) increased by 0.10% (+0.45% for the week), while the S&P 500 Index (US500) decreased by 0.12% (+1.66% for the week). Tech Index NASDAQ (US100) was down by 0.18% (+2.82% for the week). Despite the slight decline on Friday, all three indices closed the week on a profit.

Equity markets in Europe mostly rallied last week. German DAX (DE30) gained 0.27% (+0.40% for the week), French CAC 40 (FR40) lost 0.17% (+0.96% for the week), Spanish IBEX 35 (ES35) was down 0.30% (+0.06% for the week), British FTSE 100 (UK100) closed 0.03% (+0.93% for the week).

European Central Bank President Christine Lagarde is scheduled to appear twice this week ahead of this year’s key ECB policy meeting on December 15. Markets are leaning toward a 50 basis point rate hike at the ECB’s upcoming meeting after data last week showed that Eurozone inflation fell much more than expected in November. European Central Bank officials in Germany and France said over the weekend that the ECB would return inflation to 2% by the end of 2024 or 2025. National governments have used hundreds of billions of euros to protect companies and households from rising energy prices, which bankers said could undermine their efforts to rein in inflation. Nagel and Villeroy called for a return to a more balanced budget in the near future.

Representatives of OPEC+, which includes the Organization of the Petroleum Exporting Countries, and its allies, including Russia, met Sunday to discuss production targets after the G7 countries agreed to cap Russian oil prices. On Friday, the G7 nations and Australia agreed to cap the price of Russian offshore crude at $60 a barrel to deprive President Vladimir Putin of revenue to fund the invasion of Ukraine. Many OPEC analysts and ministers say the cap is ineffective because Moscow sells most of its oil to countries such as China and India. So far, OPEC+ countries have agreed to stick to their oil production targets at a meeting on Sunday. Russian Deputy Prime Minister Alexander Novak said Sunday that Russia would rather cut production than deliver oil under a price cap.

Asian markets traded flat last week. Japan’s Nikkei 225 (JP225) declined 1.57% over the week, Hong Kong’s Hang Seng (HK50) jumped by 9.85% last week, and Australia’s S&P/ASX 200 (AU200) was up 0.58%. Most Asian markets are trading sideways on Monday amid some uncertainty over US monetary policy after strong wage data, while Chinese stocks are rising as the government loosened restrictions imposed on COVID. Hong Kong stocks have also significantly outperformed their Chinese counterparts in the last month as the city rolled back its COVID policies early.

In the commodities market, futures on silver (+8.98%), copper (+6.27), WTI oil (+5.32%), palladium (+4.56%), platinum (+3.8%), cotton (+3.68%), and gold (+3.27%) showed the biggest gains over the week. Futures on natural gas (-15.12%), lumber (-6.23%), wheat (-4.64%), corn (-3.69%), and orange juice (-3.18%) showed the biggest drops.

S&P 500 (F) (US500) 4,071.70 −4.87 (−0.12%)

Dow Jones (US30) 34,429.88 +34.87 (+0.10%)

DAX (DE40) 14,529.39 +39.09 (+0.27%)

FTSE 100 (UK100) 7,556.23 −2.266 (−0.030%)

USD Index 104.51 −0.22 (−0.21%)

Important events for today:

– Japan Services PMI (m/m) at 03:30 (GMT+3);
– Eurozone ECB President Lagarde Speaks at 03:45 (GMT+3);
– China Caixin Services PMI (m/m) at 04:45 (GMT+3);
– Spanish Services PMI (m/m) at 10:15 (GMT+3);
– Italian Services PMI (m/m) at 10:45 (GMT+3);
– French Services PMI (m/m) at 10:50 (GMT+3);
– German Services PMI (m/m) at 10:55 (GMT+3);
– Eurozone Services PMI (m/m) at 11:00 (GMT+3);
– UK Services PMI (m/m) at 11:30 (GMT+3);
– Eurozone Retail Sales (m/m) at 12:00 (GMT+3);
– US ISM Services PMI (m/m) at 17:00 (GMT+3).

By JustMarkets

Economics & Fundamentals Financial News

03 Dec

U.S. Dollar: Has the Mainstream Been Way Too Confident?

Meanwhile, greenback’s Elliott waves are showing the way

By Elliott Wave International

Investors who use Elliott wave analysis know that the main price trend of a financial market subdivides into five waves.

Also know that wave 1 and wave 5 are often approximately equal in length.

That knowledge helped the Global Market Perspective, a monthly Elliott Wave International publication which covers 50-plus financial markets, make a successful call on the U.S. Dollar index.

The November issue showed a monthly chart which dates back more than 14 years and said:

The U.S. Dollar Index continues to look like it’s topping. The index is testing the level where wave (5) would equal wave (1), a common relationship.

Keep in mind that Global Market Perspective subscribers get to see all the wave labeling.

With the benefit of hindsight, we now know that the top registered on Sept. 28 — still, that doesn’t discount the fact that the topping process was recognized by using Elliott wave analysis.

Since that analysis on Nov. 4, the U.S. Dollar Index has declined in price.

Another giveaway that the greenback was headed for a tumble is that the mainstream seemed to be growing a bit too confident about the prospect for a further rise in the index. These two magazine covers provide examples of that:

The late analyst Paul Macrae Montgomery showed over the years that specialist industry magazines sometimes highlight financial trends on their covers just as those trends are ending.

Of course, Elliott wave analysis nor any indicator — such as the magazine cover indicator — can offer a guarantee about future market action, but the Elliott wave model and many time-tested indicators have proven to be quite useful throughout different market cycles.

If you’d like to learn about the Elliott wave model, know that the definitive text on the subject is Frost & Prechter’s Wall Street classic, Elliott Wave Principle: Key to Market Behavior. Here’s a quote from the book which should be in every serious investor’s library:

[R.N.] Elliott himself never speculated on why the market’s essential form is five waves to progress and three waves to regress. He simply noted that that was what was happening. Does the essential form have to be five waves and three waves? Think about it and you will realize that this is the minimum requirement for, and therefore the most efficient method of, achieving both fluctuation and progress in linear movement. One wave does not allow fluctuation. The fewest subdivisions to create fluctuation is three waves. Three waves (of unqualified size) in both directions would not allow progress. To progress in one direction despite periods of regress, movements in that direction must be at least five waves, simply to cover more ground than the intervening three waves. While there could be more waves than that, the most efficient form of punctuated progress is 5-3, and nature typically follows the most efficient path.

Good news: You can read the entire online version of the book for free once you become a member of Club EWI, the world’s largest Elliott wave educational community.

A Club EWI membership is also free and allows you complimentary access to a treasure trove of Elliott wave resources on financial markets, investing and trading. These resources include videos and articles from Elliott Wave International’s analysts.

Hop on the Club EWI bandwagon now by following this link: Elliott Wave Principle: Key to Market Behavior — get free and instant access.

This article was syndicated by Elliott Wave International and was originally published under the headline U.S. Dollar: Has the Mainstream Been Way Too Confident?. EWI is the world’s largest market forecasting firm. Its staff of full-time analysts led by Chartered Market Technician Robert Prechter provides 24-hour-a-day market analysis to institutional and private investors around the world.

Financial News Forex and Currency News

02 Dec

REIT Aims To Improve Value for Unitholders

Source: David Chrystal (12/1/22)

To achieve this end, the board of trustees is currently weighing various options, noted an Echelon Capital Markets report.

The Firm Capital Apartment REIT (FCA.U:TSX.V) posted a year-over-year AFFO/unit, or adjusted funds from operation per unit, gain in Q3/22 and during the quarter, commenced a strategic review, reported Echelon Capital Markets analyst David Chrystal in a Nov. 15 research note. Firm Capital invests in U.S. multifamily properties, owns assets and interests in joint venture investments, and provides debt financing.

The Canada-based real estate investment trust’s Q3/22 AFFO/unit was US$0.09, a 7% increase over Q3/21, Chrystal relayed. The figure beat Echelon’s estimate of US$0.06 due to a foreign exchange gain.

Target Price Decreased

However, Echelon reduced its target price on the REIT to US$7 per share from US$7.50, following the release of its Q3/22 results, to reflect writedowns carried out during the quarter on certain investments. The trust’s current share price is about US$4.67.

“Given the current capital market environment, a significant NAV discount is likely to persist under the trust’s current structure,” wrote Chrystal.

The target price could be raised in the future, Chrystal noted, if First Capital were to divest certain assets at an international financial reporting standards net asset value (NAV) of US$8.44 per unit.

This is because Echelon predicts near-term “incremental impairment of certain assets in the trust’s Northeast markets, where operations remain challenged due to regulatory issues delaying evictions and collections.”

Strategic Review Underway

The REIT’s board of trustees, in fact, may decide, during its strategic review, to dispose of some assets. The objective of the review is to “identify, evaluate and pursue potential strategic alternatives aimed at maximizing unitholder value,” Chrystal relayed.

Other options under consideration include effecting some type of merger or acquisition, privatizing, and changing the business to a real estate merchant bank or value-add model.

“Given the current capital market environment, a significant NAV discount is likely to persist under the trust’s current structure,” wrote Chrystal.

Distributions Paused

The analyst pointed out that while the review, in progress, is taking place, distributions by the REIT are and will remain on hold.

“A quarterly review will determine if the trust will allocate capital to unitholder distributions, unit repurchases, or reinvestment,” Chrystal added.

Echelon maintained its Buy rating on the First Capital Apartment REIT.

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Disclosures For Echelon Wealth Partners Inc., Firm Capital Apartment REIT, November 15, 2022

Echelon Wealth Partners Inc. is a member of IIROC and CIPF. The documents on this website have been prepared for the viewer only as an example of strategy consistent with our recommendations; it is not an offer to buy or sell or a solicitation of an offer to buy or sell any security or instrument or to participate in any particular investing strategy. Any opinions or recommendations expressed herein do not necessarily reflect those of Echelon Wealth Partners Inc. Echelon Wealth Partners Inc. cannot accept any trading instructions via e-mail as the timely receipt of e-mail messages, or their integrity over the Internet, cannot be guaranteed. Dividend yields change as stock prices change, and companies may change or cancel dividend payments in the future. All securities involve varying amounts of risk, and their values will fluctuate, and the fluctuation of foreign currency exchange rates will also impact your investment returns if measured in Canadian Dollars. Past performance does not guarantee future returns, investments may increase or decrease in value and you may lose money. Data from various sources were used in the preparation of these documents; the information is believed but in no way warranted to be reliable, accurate and appropriate. Echelon Wealth Partners Inc. employees may buy and sell shares of the companies that are recommended for their own accounts and for the accounts of other clients.

Echelon Wealth Partners compensates its Research Analysts from a variety of sources. The Research Department is a cost centre and is funded by the business activities of Echelon Wealth Partners including, Institutional Equity Sales and Trading, Retail Sales and Corporate and Investment Banking.

U.S. Disclosures: This research report was prepared by Echelon Wealth Partners Inc., a member of the Investment Industry Regulatory Organization of Canada and the Canadian Investor Protection Fund. This report does not constitute an offer to sell or the solicitation of an offer to buy any of the securities discussed herein. Echelon Wealth Partners Inc. is not registered as a broker-dealer in the United States and is not be subject to U.S. rules regarding the preparation of research reports and the independence of research analysts. Any resulting transactions should be effected through a U.S. broker-dealer.

ANALYST CERTIFICATION

Company: Firm Capital Apartment REIT | FCA.U-TSXV

I, David Chrystal, hereby certify that the views expressed in this report accurately reflect my personal views about the subject securities or issuers. I also certify that I have not, am not, and will not receive, directly or indirectly, compensation in exchange for expressing the specific recommendations or views in this report.

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