InvestMacro

By George Prior

The US dollar’s dominance is in decline as Russia and Saudi Arabia eye the Chinese yuan for oil trades, and investors might need to begin to revise their long-term investment strategies, warns the CEO and founder of one of the world’s largest independent financial advisory, asset management and fintech organizations.

The warning from Nigel Green of deVere Group says the shift in how global oil trading is carried out will have far-reaching consequences for economies and, therefore, investors around the world.

He says: “One of the most significant, but under-reported, outcomes of last week’s three-day summit between Russia’s Vladimir Putin and China’s Xi Jinping was that Putin said Russia is now in favour of using the Chinese yuan for oil settlements.

“This suggests that the world’s second-largest economy and the world’s largest energy exporter are actively intending to reduce the dominance of the US dollar as the bedrock of the international financial system.

“Separately, two deals, announced on Sunday and Monday, would see Saudi Arabia’s Aramco supplying two Chinese companies with a combined 690,000 barrels a day of crude oil, bolstering its rank as China’s top provider of the commodity. It’s been reported that Saudi Arabia is also in talks with Beijing to settle with the yuan, instead of the dollar.”

Aramco is one of the largest oil producers in the world and is fully owned and controlled by the Saudi Arabian government.

He continues: “It appears US rivals, led by China, are forming a new major economic bloc. If Saudi Arabia – home to massive oil reserves, which are estimated to be the largest in the world – does move to the yuan that would lead to an enormous shift in the global economic system.

“Oil is one of the most important and widely traded commodities in the world, and it has traditionally been priced and traded in US dollars. This has given the US dollar a dominant role in global financial markets, as countries that want to purchase oil must first acquire US dollars in order to do so.

“If oil trading were to shift away from the US dollar it would dramatically reduce the demand for US dollars, which would lead to a decrease in the value of the US currency. This could have a number of ripple effects throughout the global economy, including hugely increased inflation in the United States and potentially destabilizing effects on financial markets.”

Additionally, a shift away from the US dollar in oil trading could lead to greater economic and geopolitical competition between countries.

“If the yuan were to become more widely used in oil trading, this could significantly increase the economic power and influence of China, challenging the dominance of the United States in major global affairs.”

These shifts are not just theoretic they are “beginning to happen in real time,” says Nigel Green, meaning investors may need to begin to revise their portfolios.

“If oil were priced and traded in a different currency, investors would be exposed to currency risk as the value of the currency could impact the value of their investments. They would need to consider the potential impact of currency fluctuations on their portfolio and may need to adjust their holdings accordingly,” he notes.

There are also industry-specific risks. “Companies that generate significant revenue from oil production or related services would be impacted by changes in the currency used for trading. Investors with exposure to these types of companies would need to evaluate the potential impact of a shift away from the dollar on their investments.”

He goes on to say: “Oil is a critical input for many industries, and changes in the price of it can have enormous, far-reaching implications for the global economy. If oil were no longer traded in the US dollar, it would impact the global financial system and would have ripple effects throughout the world economy.”

The deVere CEO concludes: “Investors who are serious about building their wealth for the long-term need to be alive to the impact of the dollar’s decline not in the future but now.”

About:

deVere Group is one of the world’s largest independent advisors of specialist global financial solutions to international, local mass affluent, and high-net-worth clients.  It has a network of more than 70 offices across the world, over 80,000 clients and $12bn under advisement.

By RoboForex.com

Brent

On H4, Brent quotes are under the 200-day Moving Average, revealing the prevalence of a downtrend. The RSI has broken the support line. In such circumstances, we should expect 0/8 (75.00) to break and the price to go down to the support at -1/8 (71.88). The scenario can be canceled if the price grows to the resistance at 2/8 (81.25).

On M15, a new breakaway of the lower line of the VoltyChannel indicator will increase the probability of further falling of the price.

S&P 500

A similar situation has formed on the S&P 500 chart. On H4, the quotes are under the 200-day Moving Average, while the RSI has broken the support line. As a result, we expect the level of 1/8 (3945.3) to break and the price to fall to the support level of -1/8 (3867.2). The scenario can be canceled if the price rises above the resistance at 2/8 (3984.4), which might lead to a trend reversal and growth of the S&P 500 index to 3/8 (4023.4).

On M15, the decline in the price can be additionally supported by a breakaway of the lower line of VoltyChannel.

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.

By ForexTime 

We return to the usual servings of tier-1 macroeconomic data for major economies, where inflation is all the rage, after highly anticipated central bank meetings this week have come and gone.

The final week of Q1 2023 also has the added spice of hearings on Capitol Hill to uncover “what went wrong”, as Fed Chair Jerome Powell asked publicly recently, in Silicon Valley Bank’s collapse.

Here are the economic data releases and events that could move global markets in the coming week:

Monday, March 27

• CNH: China February industrial profits
• EUR: Germany March IFO business climate
• GBP: BOE Governor Andrew Bailey speech

Tuesday, March 28

• AUD: Australia February retail sales
• USD: US Senate hearings on Silicon Valley Bank begins; US March consumer confidence

Wednesday, March 29

• AUD: Australia February CPI
• Crude: Weekly EIA Crude Oil Inventories
• WSt30_m: House panel on recent US bank failures

Thursday, March 30

• EUR: Germany March CPI; Eurozone March economic and consumer confidence
• USD: US weekly jobless claims; US 4Q GDP (third estimate); speeches by Boston Fed President Susan Collins and Richmond Fed President Thomas Barkin

Friday, March 31

• JPY: Japan February unemployment, retail sales, industrial production; March Tokyo CPI
• CNH: China March PMIs
• EUR: Eurozone February unemployment and March inflation; Germany March unemployment
• GBP: UK GDP (final)
• USD: US February PCE Deflator, personal income and spending; New York Fed President John Williams speech

Here are 3 events in the week ahead that could trigger big moves for the world’s most-traded FX pair, EURUSD, in the week ahead:

1) Hearings on Silicon Valley Bank failure

The US government is under pressure to find out why and how Silicon Valley Bank collapsed, despite all the regulatory oversight and safeguards that have been put in place since the global financial crisis more than a decade ago.

Note that fears over further banking turmoil are still plaguing market sentiment, as evidenced by the selloffs in banking stocks and the US dollar of late.

Even during Fed Chair Jerome Powell’s press conference on March 22nd, the greenback’s larger move came following comments surrounding US financial stability, rather than the conventional monetary policy talking points pertaining to the Fed’s inflation target.

Should these mid-week hearings before the House and Senate reveal new information of failings pertaining to the US banking sector, further stoking contagion fears, that may trigger further declines for the US Dollar while lifting EURUSD higher.

2) Fed Speak

Fresh from the just-concluded FOMC meeting, Fed officials are released back into the public arena, with markets eager for more clues about the Fed’s thinking about its own rate-hike cycle.

Chair Powell did reveal that the FOMC even considered pausing its rate hikes, in light of the recent banking turmoil.

The FOMC’s own projections (a.k.a. Dot Plot) still point to a 5.1% rates peak, suggesting that the end is near for the Fed rate hikes that began 12 months ago and resulted in 475 basis points worth of hikes so far.

As things stand, markets are now fully expecting the Fed to instead, CUT its benchmark rates by 50 basis points by September.

Should the upcoming speeches by Boston Fed President Susan Collins and Richmond Fed President Thomas Barkin on Thursday push back on such forecasts, such hawkish language may help restore the US dollar, provided there aren’t any further negative developments surrounding the US financial sector in the interim.

3) US, Eurozone inflation

In what could be a frantic Friday for EURUSD, traders will be met with fresh inflation data out of both sides of the Atlantic.

Here are the market forecasts for these tier-1 prints:

• Eurozone March CPI*: 7.5% (lower than February’s 8.5% year-on-year advance)
• US February Core PCE Deflator**: 4.7% (matching January’s year-on-year figure)

*CPI = consumer price index, which is used to measure headline inflation

**The US Core PCE print is the Fed’s preferred way of measuring inflation (as opposed to the CPI)

As things stand, inflation in both the US and Eurozone economies remain much higher than their respective central banks’ 2% target.

Markets are set to bid up the currency of the economy whose official inflation print produces the higher gap above market forecasts.

In other words, EURUSD traders are set to react using this simplified formula:

Higher-than-expected inflation = more rate hikes = stronger currency

And here’s why:

• Evidence of stubbornly-elevated inflation should require more rate hikes by the central bank.
• The prospects of more rate hikes for an economy (relative to its peers) tend to translate into more currency strength.

Overall, EURUSD’s performance over the remainder of Q1 2023 may be largely dependent on how the confluence of above-listed factors play out over the coming week.

Key levels for EURUSD

RESISTANCE

• 1.09297 intraday peak on March 23rd
• 1.09426 – 50% Fibonacci retracement from January 2021 to October 2022 plummet
• 1.10329 early-February peak

SUPPORT

• 1.0800 psychologically-important level, also resistance for mid-Feb cycle high
• 50-day SMA (simple moving average)
• 1.0690 resistance turn support

From current levels (around 1.083) at the time of writing, Bloomberg’s FX model points to a 73% chance that EURUSD will trade within the 1.0688 – 1.0981 range over the next week.

Article by ForexTime

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

By RoboForex.com

XAUUSD, “Gold vs US Dollar”

Near the resistance, gold has formed a Shooting Star reversal pattern. Currently, the instrument might go by the reversal signal in a descending wave. The target of the decline might be 1960.00. Upon testing the support level, the pair might push off it and continue the uptrend. However, the quotes might grow directly to 2000.00 without any pullback.

NZDUSD, “New Zealand Dollar vs US Dollar”

On H4, near the resistance, NZDUSD has formed a Harami reversal pattern. Currently, the instrument might go by the reversal signal in a descending wave. The target of the correction might be 0.6180. After a rebound from the support level, the quotes might continue the uptrend. However, the pair might rise to 0.6270 without testing the support.

GBPUSD, “Great Britain Pound vs US Dollar”

On H4, near the resistance level, GBPUSD has formed a Shooting Star reversal pattern. Currently, the instrument might go by the reversal signal in a descending wave. The target of the pullback might be 1.2200. However, the price might grow to 1.2325 and continue the uptrend without correcting to the support.

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.

By RoboForex Analytical Department

EUR/USD starts a new week of March by consolidating around 1.0670.

This week, investors will be anxious. The key event is the meeting of the US Federal Reserve System, where monetary politicians will have to make difficult decisions, specifically the ones concerning the interest rate. As soon as problematic spots emerged in the US banking sector, the market started discussing the necessity to make a pause in lifting the interest rate to stop the crisis from expanding.

On the other hand, there are appearing more and more arguments supporting the growth of the interest rate. Among them there are the increase in base inflation and the Core PCE inflation index, tracked by the Fed.

Earlier the ECB lifted its rate by 50 base points, dismissing banking problems, and continued tightening the monetary policy. Its main goal is still beating high prices.

By the end of the week, volatility of EUR/USD will have increased noticeably.

On H4, EUR/USD has formed a correctional structure to 1.0630. At the moment, the market is consolidating around it and with an escape from the range upwards might extend the structure to 1.0708. Then a decline to 1.0630 might follow. And then a link of growth to 1.0742 is not excluded. There the wave of growth will exhaust its potential. Next, the pair should go down by the trend to 1.0505. Technically, this scenario is confirmed by the MACD. Its signal line is above zero and is preparing to renew the highs.

On the H1 chart, EUR/USD has completed a wave of growth to 1.0650. Today the market has already formed a link of decline to 1.0620 and a link of growth to 1.0687. At the moment, a consolidation range is forming under this level. The price might escape it upwards, opening a pathway to 1.0708. Then a decline to 1.0620 and growth to 1.0742 are expected. Upon reaching this level, the price might fall to 1.0600, and if this level breaks, the quotes might drop to 1.0540. Technically, this scenario is confirmed by the Stochastic oscillator. Its signal line is near 50, and later it should fall to 20.

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.

By ForexTime

The Swiss Franc has been the most volatile G10 currency against the US dollar this week.

The turmoil from recent days surrounding Silicon Valley Bank and Credit Suisse has roiled USDCHF, while altering the market’s expectations for key central bank meetings due in the coming week.

And there could be more volatility in store for this FX pair, in a week that features these economic data releases and events:

Monday, March 20

• CNH: China loan prime rates
• EUR: ECB President Christine Lagarde speech

Tuesday, March 21

• AUD: RBA meeting minutes release
• EUR: Germany March ZEW survey expectations
• CAD: Canada February consumer price index (CPI)
• Nike earnings

Wednesday, March 22

• NZD: New Zealand 1Q consumer confidence
• GBP: UK February CPI
• USD: Fed rate decision

Thursday, March 23

• CHF: Swiss National Bank rate decision
• NOK: Norges Bank rate decision
• GBP: Bank of England rate decision
• USD: US weekly jobless claims

Friday, March 24

• JPY: Japan February CPI
• EUR: Eurozone January manufacturing and services PMIs
• GBP: UK February retail sales; March PMIs, consumer confidence

Typically, in a week like the upcoming one, we’d be focusing on the US Federal Reserve (Fed) and the Bank of England (BOE), being the central banks of larger economies compared to the Swiss National Bank (SNB).

However, given the recent Credit Suisse crisis, the SNB has muscled its way into the spotlight, along with its currency, the Swiss Franc (CHF).

Here are 3 reasons to watch how USDCHF fares next week:

1) Swiss National Bank’s take on Credit Suisse crisis

The SNB carries out its monetary policy assessment just 4 times per year, half the number of policy meetings that the Fed has scheduled for 2023.

For the upcoming SNB meeting, markets had expected another hike of 50-basis points (bps), following the central bank’s hikes last year totalling 175bps.

Yet, the Credit Suisse saga that’s unfolding in the SNB’s own backyard, noting the irony of Switzerland’s long-held stature as a banking haven, adds a dramatic dimension to the press conference by SNB President Thomas Jordan next week.

And the Swiss Franc (CHF) may react less to the actual adjustment to the policy rate, but rather any commentary that President Jordan may offer surrounding the Credit Suisse crisis.

Note how CHF weakened against every single one of its G10 peers as the CS drama played out across global financial markets this week:

The stakes are high for the SNB.

After all, CS is Switzerland’s second biggest lender, with the bank’s assets equal to about 70% of the country’s GDP!

Furthermore, the Bank of International Settlements has listed Credit Suisse as one of the top-30 banks most important to the global financial system.

Credit Suisse’s importance prompted the SNB to step in and extend a US$ 54 billion (CHF 50 billion) credit line to the embattled bank to help shore up liquidity.

Also, following the central bank’s previous policy meeting in December 2022, the SNB President had deviated from the norm of not commenting on individual commercial banks and publicly supported Credit Suisse’s ongoing 3-year transformation to its business.

Having already extended verbal, written, and liquidity support, should the SNB even hint that it has to step in with further aid for CS, that may actually have the unintended effect of weakening the Swiss Franc on the notion that Credit Suisse’s turmoil is not yet over.

2) Fed’s dilemma between inflation and financial stability

Last week, markets had assigned a 70% chance that the Fed would trigger a 50-bps hike at its March meeting.

That would reassert its aggressiveness in its fight against inflation after having downshifted to a relatively smaller 25-bps hike at its previous policy meeting held on January 31 – February 1st, 2023.

But that calculus has been altered dramatically, as the collapse of Silicon Valley Bank continues reverberating across the US banking sector.

With the Fed having to shore up financial stability in its own backyard, markets believe policymakers cannot follow through with yet another larger rate hike, which are intended to incur further damage to the economy so as to subdue US inflation that’s still stubbornly elevated.

Hence, at the time of writing, markets have whittled down their forecasts to an 81% chance of a 25-bps hike by the Fed next week.

Similar to the SNB (and the ECB’s press conference this week), concerns surrounding financial stability risks are set to dominate Fed Chair Powell’s session with the media after the FOMC meeting concludes.

Should markets even get a whiff that Chair Powell and his colleagues are growing more concerned about potential contagion risks and are refusing the shut the door on winding down, or perhaps even an abrupt pause, to the Fed’s rate-hike cycle, such policy clues may weaken the US dollar and drag USDCHF lower.

3) USDCHF’s one-week implied volatility surges to fresh year-to-date high

All of the above is clearly not lost on markets, prompting a surge in the expected volatility for USDCHF over the next one-week period.

With the banking woes of late leaving policymakers, both the Fed and the SNB, between a rock and a hard place:

• Do these central bankers keep focusing on their ongoing battle against inflation and persist with a 50-bps hike, risking further damage to its financial sector that’s still raw and vulnerable?
• Or do the likes of the SNB and the Fed opt for a relatively smaller 25-bps hike to preserve the still-fragile sentiment surrounding banks, but risk letting inflation rage further?

With so much at stake, markets are ready to react to the slightest clues.

The central bank that shows the greater concern for its own banking sector, should see its currency weaken further.

• Should fears surrounding Credit Suisse spike anew over the coming week, that could even launch USDCHF above its 100-day simple moving average.
• On the other hand, if yet another US bank is added to this infamous list which already features the likes of Silicon Valley Bank, Signature Bank, and First Republic, fresh alarms surrounding the US banking sector may drag USDCHF back into sub-0.920 domain.

Key levels for USDCHF

RESISTANCE

• 0.93393: previous cycle high
• 100-day SMA
• 0.9440 region: early-March peaks

SUPPORT

• 50-day SMA
• 0.920 psychologically-important region
• 0.905 – 0.907: year-to-date lows

From current levels, Bloomberg’s FX model points to a 73% chance that USDCHF will trade within the 0.9088 to 0.9420 range over the next week.

Article by ForexTime

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

By RoboForex.com

USDCHF, “US Dollar vs Swiss Franc”

On H4, USDCHF pair has broken through the 200-day Moving Average and is now above it, which indicates a possible bullish trend. The RSI is approaching the overbought area. In this situation we should expect the price to test 5/8 (0.9338) and its further breakdown and increase to resistance level of 6/8 (0.9399). A break-down of the support at 4/8 (0.9277) will cancel this scenario. In this case the pair may fall to the 3/8 (0.9216).

On M15, the upper line of the VoltyChannel indicator has been broken. This event increases the probability of further price growth.

XAUUSD, “Gold vs US Dollar”

On H4, level 8/8 (1937.50) and broke away from it, which indicates a possible corrective decline in the price. Convergence is observed on the RSI, which is also a signal of drop in the price. As a result, the price is likely to break down the level of 6/8 (1906.25) and then fall to the support level 4/8 (1875.00). Overcoming resistance at 7/8 (1921.88) can cancel this scenario. If that happens, the price of gold might return to the 8/8 (1937.50).

On M15, a break-down of the bottom line of the VoltyChannel indicator will be an additional signal for the downside movement of the price.

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.