Archive for Opinions – Page 79

26 Jul

Fed Meeting: Powell will talk tough to spook markets

By George Prior

Federal Reserve policymakers will raise interest rates today and Chair Jerome Powell will talk tough to intentionally spook the markets, predicts the CEO of one of the world’s largest financial advisory, asset management and fintech organizations.

The prediction from deVere Group’s Nigel Green comes ahead of the Fed’s latest interest rate policy decision and press conference planned for Wednesday afternoon (ET).

He comments: “Following a pause last time, we expect officials at the US central bank will raise rates again today, taking them to their highest level in 22 years.

“The FOMC, we believe, will raise rates .25, to the 5.25% to 5.5% range, which will be the eleventh hike since early 2022 as it continues its battle against inflation.”

The deVere CEO continues: “The markets have priced-in a rate rise today. What investors will be focusing on is the press conference after the meeting, as they look for any hints about future policy path.

“We expect Chair Jerome Powell will talk tough at this meeting, warning the fight against inflation is not done, that CPI is still way off target, and how this damages the economy.

“He’s right of course. But much of this will be ‘theatre’ in order to intentionally spook the markets.

“The war against inflation is being gradually won, but officials at the Fed will not want markets ‘to get ahead of themselves’, become complacent, and make their job of bringing down the rate of price growth harder.

“They’ll want to indicate that things are getting better, but on the other hand, they don’t want to suggest that they’re done with raising rates yet. It’s a fine line in communication.”

After the latest US CPI came in lighter than economists predicted earlier this month, the deVere CEO is urging the Fed not to raise interest rates past the one that is expected today.

“Investors are increasingly concerned that the Federal Reserve could, with further hikes, overtighten and that could steer the US economy into a major recession. The central bank must maintain the broader picture, not focus on a narrow set of metrics.

“Overdoing the hikes, could not only trigger a US, but a global recession.

“The time lag for monetary policies is incredibly lengthy. It takes around 18 months for the full effect of rate hikes to make their way into the economy.

“We’re now starting to see the drag effects on the US economy with households and businesses becoming considerably more prudent.”

The Fed is expected to announce its July policy decision at 2pm ET on Wednesday, followed by a 2.30 pm press conference with Chair Jerome Powell.

Ahead of the meeting and press conference Nigel Green concludes: “We expect Chair Powell will do his best Tough Guy act in order not to let the markets rip higher.”

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.

Economics & Fundamentals Opinions
26 Jul

Mid-Week Technical Outlook: Calm Before Fed Storm?

By ForexTime 

  • USD shaky ahead of Fed
  • USDJPY pressured below 141
  • SPX500_m preparing to breakout?
  • NQ100_m still in uptrend
  • Gold climbs beyond $1970

An air of tension settled over financial markets on Wednesday as investors braced for the pivotal Federal Reserve rate decision.

Global equities struggled for direction amid the growing caution, with European shares and US futures mixed as investors turned to the sidelines. Although the Fed is widely expected to raise interest rates by 25 basis points today, the key question is whether this will be the hike that concludes its aggressive campaign against inflation. Whatever the outcome of today’s policy meeting, it has the potential to rock financial markets.

Here are some technical setups to keep an eye on ahead of the Fed decision:

Dollar shaky and vulnerable 

The dollar has weakened against all G10 currencies this morning, with prices testing the 101.10 level. As discussed throughout the week, the pending Fed decision is likely to heavily influence the dollar’s short to medium-term outlook. A strong breakdown below 101.10 may open the doors towards 100.72 and 100.00. Should prices push back above 101.50, the next key level of interest can be found at 102.35.

EURUSD rebound or breakdown?

After rebounding from the 1.1032 region yesterday, the euro has extended gains this morning with bulls eyeing 1.1090. A solid breakout above this point may re-open a path back towards 1.12750. Should prices slip back below 1.1032, bears may target 1.0950.

GBPUSD to resume uptrend?

Wednesday’s strong bullish daily candle could be early signs of GBPUSD bulls returning to the scene. Indeed, prices remain in a bullish trend with the MACD trading to the upside. A move towards 1.3000 could be on the cards if 1.2810 proves to be reliable support. Alternatively, a break below this point may trigger a selloff toward the 50-day Simple Moving Average.

USDJPY pressured below 141.00

USDJPY bears seem to be slowly creeping back into the scene, especially after prices broke through the 141.00 level. Dollar weakness could drag the currency pair towards 138.80 and 138.00, respectively. If prices can push back above 141.00, bulls could challenge 141.90 once again.

SPX500_m breakout alert?

Expect the SPX500_m to be rocked by earnings releases from the largest companies in the world. The index remains bullish on the daily charts with resistance found at 4580. A strong breakout and daily close above this point could trigger a move toward 4640. Sustained weakness below 4580 could see prices test 4500 and 4463.

NQ100_m still in uptrend 

Our trade of the week remains in an uptrend on the daily charts. A strong move above 15700 could inspire a move towards 15947. Should prices slip back under 15300, the selloff may take the index towards 14965.

Gold gearing to push higher?

After kicking off the week on a rocky note, gold bulls seem to have their footing with prices trading above the sticky $1960 level. Should this rebound build momentum, this could take the precious metal towards $1985 and $2000. On the other hand, a decline back below $1955 may see prices test $1940 and $1932.

Forex-Time-LogoArticle by ForexTime

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

Forex and Currency News Opinions
25 Jul

Trade Of The Week: NQ100_m In Focus As Rebalancing Kicks In

By ForexTime 

If you have an appetite for volatility, then keep a close eye on the NQ100_m!

This could be a wild week for the index thanks to high-risk events ranging from a special rebalancing which takes effect today, to Big Tech earnings and the major Fed decision.

Despite the technical pullback witnessed last week, the NQ100_m which tracks the underlying Nasdaq 100 index remains a bullish trend.

The low down….

Nasdaq 100 bulls have been on a tear this year, turbocharged by the AI mania that gravitated investors to a handful of big tech names.

Before prices tumbled last Thursday, the index was up almost 45% year-to-date!

Indeed, these gains have been powered by the ‘Magnificent Seven’ known as Alphabet, Amazon, Apple, Meta, Microsoft, Nvidia, and Tesla whose combined weightings represented 55% of the index. In an effort, to limit the overwhelming influence of these tech titans, a special rebalancing will kick into effect before markets open today which will reduce the weightings from 55% to 44%. This development has the potential to spark some fresh action on the Nasdaq 100 as funds worth hundreds of billions of dollars move their allocation to mirror the new weightings.

The week ahead

We could see some more heightened volatility for the NQ100_m due to earnings from Big Tech companies this week.

Earnings from the likes of Microsoft and Alphabet on Tuesday 25th, and Meta on Wednesday 26th will the under the spotlight. When factoring how these Tech companies are within the top 5 holdings and account for roughly 16% of the Nasdaq 100 Index, their results could influence the index. Ultimately, a positive set of earnings may stimulate risk appetite, propelling the NQ100_m higher. Should earnings disappoint, this could drag prices closer to the 15300 support level – resulting in a potential breakdown.

Fed rate decision…

The Federal Reserve is widely expected to raise interest rates by 25 basis points on Wednesday.

However, the question is whether this will be the hike that concludes the central bank’s aggressive hiking cycle. Much attention will be directed to Fed Chair Jerome Powell’s remarks at the press conference for fresh clues on future monetary policy.

It is worth keeping in mind that tech stocks remain highly sensitive to Fed hike expectations because their value is based on earnings projected in the future.

  • Should the Fed signal that more rate hikes could be on the cards, this could drag the NQ100_m lower.
  • If the Fed hints it’s done with raising interest rates, this may propel the NQ100_m higher.

Technical forces

Nasdaq bulls remain in a position of power above the 15300 level but the Relative Strength Index is flirting with overbought conditions.

Should 15300 prove to be reliable support, prices may rebound back towards 15700 and 15947, respectively. Beyond this point, the next psychological level can be found at 16000. Alternatively, a breakdown below this level may inspire bears to target 14965 and 14670.

Forex-Time-LogoArticle by ForexTime

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

Opinions Stock Market News
23 Jul

Euro and Japanese Yen Speculator Bets Jump this week

By InvestMacro

Here are the latest charts and statistics for the Commitment of Traders (COT) data published by the Commodities Futures Trading Commission (CFTC).

The latest COT data is updated through Tuesday July 18th and shows a quick view of how large market participants (for-profit speculators and commercial traders) were positioned in the futures markets. All currency positions are in direct relation to the US dollar where, for example, a bet for the euro is a bet that the euro will rise versus the dollar while a bet against the euro will be a bet that the euro will decline versus the dollar.

Weekly Speculator Changes led by Euro & Japanese Yen

The COT currency market speculator bets were a bit lower this week as five out of the eleven currency markets we cover had higher positioning while the other six markets had lower speculator contracts.

Leading the gains for the currency markets was the EuroFX (38,670 contracts) with the Japanese Yen (26,943 contracts), the British Pound (5,666 contracts), the Brazilian Real (735 contracts) and Bitcoin (694 contracts) also showing positive weeks.

The currencies seeing declines in speculator bets on the week were the Australian Dollar (-5,317 contracts), the Canadian Dollar (-3,923 contracts), the New Zealand Dollar (-2,375 contracts), the Swiss Franc (-2,304 contracts), the Mexican Peso (-1,674 contracts) and the US Dollar Index (-944 contracts) also registering lower bets on the week.

Euro and Japanese Yen Speculator Bets Jump this week

Highlighting the COT currency’s data is the strength of this week’s moves in the speculator’s positioning of the Euro and Japanese Yen.

Large speculative Euro positions jumped this week by over +38,000 contracts and reversed a recent decline for the Euro positions in seven out of the previous eight weeks. This gain in bullish bets has pushed the overall net speculator position to the most bullish level of the past nine weeks at a total of +178,832 contracts.

The Euro currency’s strength has been on display over the past few months as the EURUSD exchange rate touched a one-year high this week at over the 1.1300 level. The EURUSD did close the week lower after hitting the one-year high but is now quite a ways off the 2022 low of 0.9508 that was touched in September.

The large speculative yen positions also surged this week by over +26,000 net contracts and gained for the second week in a row. The yen speculator positioning has been quite the opposite of the Euro as the Bank of Japan has maintained a policy of no interest rate increases which has prompted speculators to have large bearish positions in the yen. The speculator position on July 3rd marked the most bearish level since January of 2018 at a total of -117,920 contracts.

The yen positions in the past two weeks have improved though and this week’s gain brings the current bearish position (at -90,239 contracts) under the -100,000 contract threshold for the first time since May.

The yen’s exchange rate versus the US Dollar remains historically weak and in a downtrend in our trend model. The USDJPY exchange rate rose back over the 140.00 threshold this week (US Dollar strength/Japanese Yen weakness) after dipping below that level last week.

This upcoming week will be a potentially volatile week in currencies as the Bank of Japan and the US Federal Reserve will have central bank meetings and announce their respective policy outlooks.

Data Snapshot of Forex Market Traders | Columns Legend
Jul-18-2023OIOI-IndexSpec-NetSpec-IndexCom-NetCOM-IndexSmalls-NetSmalls-Index
USD Index41,0453711,06743-11,6175755023
EUR783,13280178,83287-229,3431350,51160
GBP265,7667763,729100-81,606017,87793
JPY230,93263-90,2391698,19584-7,95637
CHF43,21347-10,211285,927554,28472
CAD146,1712352155-12,9914712,47050
AUD148,59235-50,4013851,04557-64451
NZD39,40232-3,62644938492,68882
MXN238,0065194,49297-98,23933,74735
RUB20,93047,54331-7,15069-39324
BRL48,1463733,93379-32,19625-1,73730
Bitcoin15,45573-1,16157196096535

 

Strength Scores led by British Pound & Mexican Peso

COT Strength Scores (a normalized measure of Speculator positions over a 3-Year range, from 0 to 100 where above 80 is Extreme-Bullish and below 20 is Extreme-Bearish) showed that the British Pound (100 percent) and the Mexican Peso (97 percent) lead the currency markets this week. The EuroFX (87 percent), Brazilian Real (79 percent) and the Bitcoin (57 percent) come in as the next highest in the weekly strength scores.

On the downside, the Japanese Yen (16 percent) and the Swiss Franc (28 percent) come in at the lowest strength levels currently. The next lowest strength scores are the Australian Dollar (38 percent) and the US Dollar Index (43 percent).

Strength Statistics:
US Dollar Index (43.4 percent) vs US Dollar Index previous week (45.0 percent)
EuroFX (87.3 percent) vs EuroFX previous week (72.4 percent)
British Pound Sterling (100.0 percent) vs British Pound Sterling previous week (96.1 percent)
Japanese Yen (16.4 percent) vs Japanese Yen previous week (0.4 percent)
Swiss Franc (27.6 percent) vs Swiss Franc previous week (33.7 percent)
Canadian Dollar (55.0 percent) vs Canadian Dollar previous week (58.7 percent)
Australian Dollar (38.1 percent) vs Australian Dollar previous week (43.0 percent)
New Zealand Dollar (43.8 percent) vs New Zealand Dollar previous week (50.2 percent)
Mexican Peso (96.8 percent) vs Mexican Peso previous week (97.8 percent)
Brazilian Real (78.9 percent) vs Brazilian Real previous week (78.0 percent)
Bitcoin (56.7 percent) vs Bitcoin previous week (44.6 percent)

 

British Pound & Canadian Dollar top the 6-Week Strength Trends

COT Strength Score Trends (or move index, calculates the 6-week changes in strength scores) showed that the British Pound (36 percent) and the Canadian Dollar (36 percent) lead the past six weeks trends for the currencies. The Brazilian Real (10 percent), the Japanese Yen (9 percent) and the EuroFX (8 percent) are the next highest positive movers in the latest trends data.

Bitcoin (-34 percent) leads the downside trend scores currently with the Swiss Franc (-24 percent), New Zealand Dollar (-8 percent) and the US Dollar Index (-2 percent) following next with lower trend scores.

Strength Trend Statistics:
US Dollar Index (-1.9 percent) vs US Dollar Index previous week (-1.3 percent)
EuroFX (7.9 percent) vs EuroFX previous week (-9.9 percent)
British Pound Sterling (35.6 percent) vs British Pound Sterling previous week (31.1 percent)
Japanese Yen (8.7 percent) vs Japanese Yen previous week (-12.5 percent)
Swiss Franc (-23.5 percent) vs Swiss Franc previous week (-19.8 percent)
Canadian Dollar (36.2 percent) vs Canadian Dollar previous week (32.0 percent)
Australian Dollar (5.6 percent) vs Australian Dollar previous week (-0.9 percent)
New Zealand Dollar (-7.9 percent) vs New Zealand Dollar previous week (-3.0 percent)
Mexican Peso (7.8 percent) vs Mexican Peso previous week (11.1 percent)
Brazilian Real (9.9 percent) vs Brazilian Real previous week (2.4 percent)
Bitcoin (-33.7 percent) vs Bitcoin previous week (-35.6 percent)

Individual COT Forex Markets:

US Dollar Index Futures:

US Dollar Index Forex Futures COT ChartThe US Dollar Index large speculator standing this week came in at a net position of 11,067 contracts in the data reported through Tuesday. This was a weekly reduction of -944 contracts from the previous week which had a total of 12,011 net contracts.

This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bearish with a score of 43.4 percent. The commercials are Bullish with a score of 57.3 percent and the small traders (not shown in chart) are Bearish with a score of 22.5 percent.

Price Trend-Following Model: Weak Uptrend

Our weekly trend-following model classifies the current market price position as: Weak Uptrend. The current action for the model is considered to be: Hold – Maintain Long Position.

US DOLLAR INDEX StatisticsSPECULATORSCOMMERCIALSSMALL TRADERS
– Percent of Open Interest Longs:66.819.510.2
– Percent of Open Interest Shorts:39.847.88.9
– Net Position:11,067-11,617550
– Gross Longs:27,4107,9944,193
– Gross Shorts:16,34319,6113,643
– Long to Short Ratio:1.7 to 10.4 to 11.2 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):43.457.322.5
– Strength Index Reading (3 Year Range):BearishBullishBearish
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:-1.95.6-26.2

 

Euro Currency Futures:

Euro Currency Futures COT ChartThe Euro Currency large speculator standing this week came in at a net position of 178,832 contracts in the data reported through Tuesday. This was a weekly boost of 38,670 contracts from the previous week which had a total of 140,162 net contracts.

This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bullish-Extreme with a score of 87.3 percent. The commercials are Bearish-Extreme with a score of 13.0 percent and the small traders (not shown in chart) are Bullish with a score of 59.6 percent.

Price Trend-Following Model: Strong Uptrend

Our weekly trend-following model classifies the current market price position as: Strong Uptrend. The current action for the model is considered to be: Hold – Maintain Long Position.

EURO Currency StatisticsSPECULATORSCOMMERCIALSSMALL TRADERS
– Percent of Open Interest Longs:33.851.912.4
– Percent of Open Interest Shorts:10.981.25.9
– Net Position:178,832-229,34350,511
– Gross Longs:264,514406,32897,050
– Gross Shorts:85,682635,67146,539
– Long to Short Ratio:3.1 to 10.6 to 12.1 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):87.313.059.6
– Strength Index Reading (3 Year Range):Bullish-ExtremeBearish-ExtremeBullish
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:7.9-8.68.0

 

British Pound Sterling Futures:

British Pound Sterling Futures COT ChartThe British Pound Sterling large speculator standing this week came in at a net position of 63,729 contracts in the data reported through Tuesday. This was a weekly rise of 5,666 contracts from the previous week which had a total of 58,063 net contracts.

This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bullish-Extreme with a score of 100.0 percent. The commercials are Bearish-Extreme with a score of 0.0 percent and the small traders (not shown in chart) are Bullish-Extreme with a score of 93.1 percent.

Price Trend-Following Model: Uptrend

Our weekly trend-following model classifies the current market price position as: Uptrend. The current action for the model is considered to be: Hold – Maintain Long Position.

BRITISH POUND StatisticsSPECULATORSCOMMERCIALSSMALL TRADERS
– Percent of Open Interest Longs:50.928.715.0
– Percent of Open Interest Shorts:26.959.48.2
– Net Position:63,729-81,60617,877
– Gross Longs:135,26976,22939,762
– Gross Shorts:71,540157,83521,885
– Long to Short Ratio:1.9 to 10.5 to 11.8 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):100.00.093.1
– Strength Index Reading (3 Year Range):Bullish-ExtremeBearish-ExtremeBullish-Extreme
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:35.6-37.831.9

 

Japanese Yen Futures:

Japanese Yen Forex Futures COT ChartThe Japanese Yen large speculator standing this week came in at a net position of -90,239 contracts in the data reported through Tuesday. This was a weekly advance of 26,943 contracts from the previous week which had a total of -117,182 net contracts.

This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bearish-Extreme with a score of 16.4 percent. The commercials are Bullish-Extreme with a score of 83.6 percent and the small traders (not shown in chart) are Bearish with a score of 37.3 percent.

Price Trend-Following Model: Downtrend

Our weekly trend-following model classifies the current market price position as: Downtrend. The current action for the model is considered to be: Hold – Maintain Short Position.

JAPANESE YEN StatisticsSPECULATORSCOMMERCIALSSMALL TRADERS
– Percent of Open Interest Longs:12.973.812.2
– Percent of Open Interest Shorts:52.031.315.6
– Net Position:-90,23998,195-7,956
– Gross Longs:29,776170,49128,148
– Gross Shorts:120,01572,29636,104
– Long to Short Ratio:0.2 to 12.4 to 10.8 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):16.483.637.3
– Strength Index Reading (3 Year Range):Bearish-ExtremeBullish-ExtremeBearish
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:8.7-7.62.0

 

Swiss Franc Futures:

Swiss Franc Forex Futures COT ChartThe Swiss Franc large speculator standing this week came in at a net position of -10,211 contracts in the data reported through Tuesday. This was a weekly fall of -2,304 contracts from the previous week which had a total of -7,907 net contracts.

This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bearish with a score of 27.6 percent. The commercials are Bullish with a score of 54.8 percent and the small traders (not shown in chart) are Bullish with a score of 72.0 percent.

Price Trend-Following Model: Strong Uptrend

Our weekly trend-following model classifies the current market price position as: Strong Uptrend. The current action for the model is considered to be: Hold – Maintain Long Position.

SWISS FRANC StatisticsSPECULATORSCOMMERCIALSSMALL TRADERS
– Percent of Open Interest Longs:15.742.142.0
– Percent of Open Interest Shorts:39.328.432.1
– Net Position:-10,2115,9274,284
– Gross Longs:6,77218,18318,158
– Gross Shorts:16,98312,25613,874
– Long to Short Ratio:0.4 to 11.5 to 11.3 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):27.654.872.0
– Strength Index Reading (3 Year Range):BearishBullishBullish
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:-23.5-1.833.9

 

Canadian Dollar Futures:

Canadian Dollar Forex Futures COT ChartThe Canadian Dollar large speculator standing this week came in at a net position of 521 contracts in the data reported through Tuesday. This was a weekly decline of -3,923 contracts from the previous week which had a total of 4,444 net contracts.

This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bullish with a score of 55.0 percent. The commercials are Bearish with a score of 47.3 percent and the small traders (not shown in chart) are Bullish with a score of 50.5 percent.

Price Trend-Following Model: Uptrend

Our weekly trend-following model classifies the current market price position as: Uptrend. The current action for the model is considered to be: Hold – Maintain Long Position.

CANADIAN DOLLAR StatisticsSPECULATORSCOMMERCIALSSMALL TRADERS
– Percent of Open Interest Longs:23.250.524.6
– Percent of Open Interest Shorts:22.859.416.0
– Net Position:521-12,99112,470
– Gross Longs:33,87773,83335,907
– Gross Shorts:33,35686,82423,437
– Long to Short Ratio:1.0 to 10.9 to 11.5 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):55.047.350.5
– Strength Index Reading (3 Year Range):BullishBearishBullish
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:36.2-35.028.0

 

Australian Dollar Futures:

Australian Dollar Forex Futures COT ChartThe Australian Dollar large speculator standing this week came in at a net position of -50,401 contracts in the data reported through Tuesday. This was a weekly reduction of -5,317 contracts from the previous week which had a total of -45,084 net contracts.

This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bearish with a score of 38.1 percent. The commercials are Bullish with a score of 57.0 percent and the small traders (not shown in chart) are Bullish with a score of 50.9 percent.

Price Trend-Following Model: Strong Uptrend

Our weekly trend-following model classifies the current market price position as: Strong Uptrend. The current action for the model is considered to be: Hold – Maintain Long Position.

AUSTRALIAN DOLLAR StatisticsSPECULATORSCOMMERCIALSSMALL TRADERS
– Percent of Open Interest Longs:25.757.214.5
– Percent of Open Interest Shorts:59.722.814.9
– Net Position:-50,40151,045-644
– Gross Longs:38,25284,93721,539
– Gross Shorts:88,65333,89222,183
– Long to Short Ratio:0.4 to 12.5 to 11.0 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):38.157.050.9
– Strength Index Reading (3 Year Range):BearishBullishBullish
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:5.6-12.325.3

 

New Zealand Dollar Futures:

New Zealand Dollar Forex Futures COT ChartThe New Zealand Dollar large speculator standing this week came in at a net position of -3,626 contracts in the data reported through Tuesday. This was a weekly reduction of -2,375 contracts from the previous week which had a total of -1,251 net contracts.

This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bearish with a score of 43.8 percent. The commercials are Bearish with a score of 48.7 percent and the small traders (not shown in chart) are Bullish-Extreme with a score of 81.9 percent.

Price Trend-Following Model: Strong Downtrend

Our weekly trend-following model classifies the current market price position as: Strong Downtrend. The current action for the model is considered to be: Hold – Maintain Short Position.

NEW ZEALAND DOLLAR StatisticsSPECULATORSCOMMERCIALSSMALL TRADERS
– Percent of Open Interest Longs:33.552.413.0
– Percent of Open Interest Shorts:42.750.06.2
– Net Position:-3,6269382,688
– Gross Longs:13,19320,6545,117
– Gross Shorts:16,81919,7162,429
– Long to Short Ratio:0.8 to 11.0 to 12.1 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):43.848.781.9
– Strength Index Reading (3 Year Range):BearishBearishBullish-Extreme
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:-7.9-4.557.6

 

Mexican Peso Futures:

Mexican Peso Futures COT ChartThe Mexican Peso large speculator standing this week came in at a net position of 94,492 contracts in the data reported through Tuesday. This was a weekly lowering of -1,674 contracts from the previous week which had a total of 96,166 net contracts.

This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bullish-Extreme with a score of 96.8 percent. The commercials are Bearish-Extreme with a score of 2.9 percent and the small traders (not shown in chart) are Bearish with a score of 35.1 percent.

Price Trend-Following Model: Uptrend

Our weekly trend-following model classifies the current market price position as: Uptrend. The current action for the model is considered to be: Hold – Maintain Long Position.

MEXICAN PESO StatisticsSPECULATORSCOMMERCIALSSMALL TRADERS
– Percent of Open Interest Longs:51.644.03.6
– Percent of Open Interest Shorts:11.985.22.1
– Net Position:94,492-98,2393,747
– Gross Longs:122,811104,6178,638
– Gross Shorts:28,319202,8564,891
– Long to Short Ratio:4.3 to 10.5 to 11.8 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):96.82.935.1
– Strength Index Reading (3 Year Range):Bullish-ExtremeBearish-ExtremeBearish
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:7.8-6.2-15.1

 

Brazilian Real Futures:

Brazil Real Futures COT ChartThe Brazilian Real large speculator standing this week came in at a net position of 33,933 contracts in the data reported through Tuesday. This was a weekly lift of 735 contracts from the previous week which had a total of 33,198 net contracts.

This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bullish with a score of 78.9 percent. The commercials are Bearish with a score of 25.1 percent and the small traders (not shown in chart) are Bearish with a score of 30.2 percent.

Price Trend-Following Model: Uptrend

Our weekly trend-following model classifies the current market price position as: Uptrend. The current action for the model is considered to be: Hold – Maintain Long Position.

BRAZIL REAL StatisticsSPECULATORSCOMMERCIALSSMALL TRADERS
– Percent of Open Interest Longs:76.314.19.2
– Percent of Open Interest Shorts:5.881.012.8
– Net Position:33,933-32,196-1,737
– Gross Longs:36,7306,7934,429
– Gross Shorts:2,79738,9896,166
– Long to Short Ratio:13.1 to 10.2 to 10.7 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):78.925.130.2
– Strength Index Reading (3 Year Range):BullishBearishBearish
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:9.9-8.0-10.2

 

Bitcoin Futures:

Bitcoin Crypto Futures COT ChartThe Bitcoin large speculator standing this week came in at a net position of -1,161 contracts in the data reported through Tuesday. This was a weekly rise of 694 contracts from the previous week which had a total of -1,855 net contracts.

This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bullish with a score of 56.7 percent. The commercials are Bullish with a score of 63.9 percent and the small traders (not shown in chart) are Bearish with a score of 34.9 percent.

Price Trend-Following Model: Uptrend

Our weekly trend-following model classifies the current market price position as: Uptrend. The current action for the model is considered to be: Hold – Maintain Long Position.

BITCOIN StatisticsSPECULATORSCOMMERCIALSSMALL TRADERS
– Percent of Open Interest Longs:76.64.710.7
– Percent of Open Interest Shorts:84.23.44.5
– Net Position:-1,161196965
– Gross Longs:11,8467221,657
– Gross Shorts:13,007526692
– Long to Short Ratio:0.9 to 11.4 to 12.4 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):56.763.934.9
– Strength Index Reading (3 Year Range):BullishBullishBearish
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:-33.753.612.2

 

Article By InvestMacro – Receive our weekly COT Newsletter

*COT Report: The COT data, released weekly to the public each Friday, is updated through the most recent Tuesday (data is 3 days old) and shows a quick view of how large speculators or non-commercials (for-profit traders) were positioned in the futures markets.

The CFTC categorizes trader positions according to commercial hedgers (traders who use futures contracts for hedging as part of the business), non-commercials (large traders who speculate to realize trading profits) and nonreportable traders (usually small traders/speculators) as well as their open interest (contracts open in the market at time of reporting). See CFTC criteria here.

COT Updates Forex and Currency News Opinions
23 Jul

Speculator Extremes: GBP, Cocoa, 2-Year & Palladium lead Bullish & Bearish Positions

By InvestMacro 

The latest update for the weekly Commitment of Traders (COT) report was released by the Commodity Futures Trading Commission (CFTC) on Friday for data ending on July 18th.

This weekly Extreme Positions report highlights the Most Bullish and Most Bearish Positions for the speculator category. Extreme positioning in these markets can foreshadow strong moves in the underlying market.

To signify an extreme position, we use the Strength Index (also known as the COT Index) of each instrument, a common method of measuring COT data. The Strength Index is simply a comparison of current trader positions against the range of positions over the previous 3 years. We use over 80 percent as extremely bullish and under 20 percent as extremely bearish. (Compare Strength Index scores across all markets in the data table or cot leaders table).

Here Are This Week’s Most Bullish Speculator Positions:

British Pound


The British Pound speculator position comes in as the most bullish extreme standing this week. The British Pound speculator level is currently at a 100.0 percent score of its 3-year range.

The six-week trend for the percent strength score totaled 35.6 this week. The overall net speculator position was a total of 63,729 net contracts this week with a change of 5,666 contract in the weekly speculator bets.

Cocoa Futures


The Cocoa Futures speculator position comes next in the extreme standings this week. The Cocoa Futures speculator level is now at a 98.3 percent score of its 3-year range.

The six-week trend for the percent strength score was 4.9 this week. The speculator position registered 76,488 net contracts this week with a weekly change of 6,373 contracts in speculator bets.

Speculators or Non-Commercials Notes:

Speculators, classified as non-commercial traders by the CFTC, are made up of large commodity funds, hedge funds and other significant for-profit participants. The Specs are generally regarded as trend-followers in their behavior towards price action – net speculator bets and prices tend to go in the same directions. These traders often look to buy when prices are rising and sell when prices are falling. To illustrate this point, many times speculator contracts can be found at their most extremes (bullish or bearish) when prices are also close to their highest or lowest levels.

These extreme levels can be dangerous for the large speculators as the trade is most crowded, there is less trading ammunition still sitting on the sidelines to push the trend further and prices have moved a significant distance. When the trend becomes exhausted, some speculators take profits while others look to also exit positions when prices fail to continue in the same direction. This process usually plays out over many months to years and can ultimately create a reverse effect where prices start to fall and speculators start a process of selling when prices are falling.

 

Mexican Peso


The Mexican Peso speculator position comes in third this week in the extreme standings. The Mexican Peso speculator level resides at a 96.8 percent score of its 3-year range.

The six-week trend for the speculator strength score came in at 7.8 this week. The overall speculator position was 94,492 net contracts this week with a change of -1,674 contracts in the weekly speculator bets.

Live Cattle


The Live Cattle speculator position comes up number four in the extreme standings this week. The Live Cattle speculator level is at a 92.0 percent score of its 3-year range.

The six-week trend for the speculator strength score totaled a change of -0.8 this week. The overall speculator position was 104,844 net contracts this week with a change of -3,657 contracts in the speculator bets.

VIX


The VIX speculator position rounds out the top five in this week’s bullish extreme standings. The VIX speculator level sits at a 90.1 percent score of its 3-year range. The six-week trend for the speculator strength score was 12.8 this week.

The speculator position was -40,289 net contracts this week with a change of 10,444 contracts in the weekly speculator bets.

This Week’s Most Bearish Speculator Positions:

2-Year Bond


The 2-Year Bond speculator position comes in as the most bearish extreme standing this week. The 2-Year Bond speculator level is at a 0.0 percent score of its 3-year range.

The six-week trend for the speculator strength score was -13.2 this week. The overall speculator position was -1,119,380 net contracts this week with a change of -47,680 contracts in the speculator bets.

1-Month Secured Overnight Financing Rate

The 1-Month Secured Overnight Financing Rate speculator position comes in next for the most bearish extreme standing on the week. The 1-Month Secured Overnight Financing Rate speculator level is at a 0.0 percent score of its 3-year range.

The six-week trend for the speculator strength score was -56.1 this week. The speculator position was -237,629 net contracts this week with a change of -44,936 contracts in the weekly speculator bets.

Palladium


The Palladium speculator position comes in as third most bearish extreme standing of the week. The Palladium speculator level resides at a 0.0 percent score of its 3-year range.

The six-week trend for the speculator strength score was -14.5 this week. The overall speculator position was -8,350 net contracts this week with a change of -78 contracts in the speculator bets.

5-Year Bond


The 5-Year Bond speculator position comes in as this week’s fourth most bearish extreme standing. The 5-Year Bond speculator level is at a 0.0 percent score of its 3-year range.

The six-week trend for the speculator strength score was -9.5 this week. The speculator position was -1,145,489 net contracts this week with a change of -89,405 contracts in the weekly speculator bets.

Ultra U.S. Treasury Bonds


Finally, the Ultra U.S. Treasury Bonds speculator position comes in as the fifth most bearish extreme standing for this week. The Ultra U.S. Treasury Bonds speculator level is at a 4.6 percent score of its 3-year range.

The six-week trend for the speculator strength score was -13.4 this week. The speculator position was -439,397 net contracts this week with a change of -6,485 contracts in the weekly speculator bets.

Article By InvestMacro – Receive our weekly COT Newsletter

*COT Report: The COT data, released weekly to the public each Friday, is updated through the most recent Tuesday (data is 3 days old) and shows a quick view of how large speculators or non-commercials (for-profit traders) were positioned in the futures markets.

The CFTC categorizes trader positions according to commercial hedgers (traders who use futures contracts for hedging as part of the business), non-commercials (large traders who speculate to realize trading profits) and nonreportable traders (usually small traders/speculators) as well as their open interest (contracts open in the market at time of reporting). See CFTC criteria here.

COT Updates Forex and Currency News Opinions
23 Jul

COT Metals Charts: Weekly Speculator Changes led by Gold & Silver

By InvestMacro

Here are the latest charts and statistics for the Commitment of Traders (COT) data published by the Commodities Futures Trading Commission (CFTC).

The latest COT data is updated through Tuesday July 18th and shows a quick view of how large traders (for-profit speculators and commercial entities) were positioned in the futures markets.

Weekly Speculator Changes led by Gold & Silver

The COT metals markets speculator bets were higher this week as four out of the six metals markets we cover had higher positioning while the other two markets had lower speculator contracts.

Leading the gains for the metals was Gold (27,594 contracts) with Silver (23,570 contracts), Platinum (7,949 contracts) and Copper (7,607 contracts) also having positive weeks.

The markets with declines in speculator bets for the week were Palladium (-78 contracts) and Steel (-169 contracts).

Data Snapshot of Commodity Market Traders | Columns Legend
Jul-18-2023OIOI-IndexSpec-NetSpec-IndexCom-NetCOM-IndexSmalls-NetSmalls-Index
Gold482,10428193,34862-213,7154120,36731
Silver146,8633643,86281-55,9832612,12134
Copper216,86256-3,55028-1,054714,60448
Palladium16,017100-8,35008,837100-48712
Platinum65,8345415,73652-19,674533,93821

 

Strength Scores led by Silver & Steel

COT Strength Scores (a normalized measure of Speculator positions over a 3-Year range, from 0 to 100 where above 80 is Extreme-Bullish and below 20 is Extreme-Bearish) showed that Silver (81 percent) and Steel (72 percent) lead the metals markets this week. comes in as the next highest in the weekly strength scores.

On the downside, Palladium (0 percent) comes in at the lowest strength level currently and is in Extreme-Bearish territory (below 20 percent).

Strength Statistics:
Gold (62.2 percent) vs Gold previous week (50.0 percent)
Silver (80.8 percent) vs Silver previous week (47.2 percent)
Copper (27.8 percent) vs Copper previous week (21.2 percent)
Platinum (51.9 percent) vs Platinum previous week (33.6 percent)
Palladium (0.0 percent) vs Palladium previous week (0.6 percent)
Steel (72.1 percent) vs Palladium previous week (72.6 percent)

Silver & Copper top the 6-Week Strength Trends

COT Strength Score Trends (or move index, calculates the 6-week changes in strength scores) showed that Silver (32 percent) and Copper (19 percent) lead the past six weeks trends for metals.  is the next highest positive mover in the latest trends data.

Platinum (-20 percent) and Palladium (-14 percent) lead the downside trend scores currently.

Move Statistics:
Gold (7.8 percent) vs Gold previous week (-1.6 percent)
Silver (31.9 percent) vs Silver previous week (-1.2 percent)
Copper (19.4 percent) vs Copper previous week (21.2 percent)
Platinum (-20.5 percent) vs Platinum previous week (-36.0 percent)
Palladium (-14.5 percent) vs Palladium previous week (-18.4 percent)
Steel (6.8 percent) vs Steel previous week (14.8 percent)

Individual Markets:

Gold Comex Futures:

Gold Futures COT ChartThe Gold Comex Futures large speculator standing this week totaled a net position of 193,348 contracts in the data reported through Tuesday. This was a weekly rise of 27,594 contracts from the previous week which had a total of 165,754 net contracts.

This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bullish with a score of 62.2 percent. The commercials are Bearish with a score of 41.4 percent and the small traders (not shown in chart) are Bearish with a score of 31.0 percent.

Price Trend-Following Model: Weak Downtrend

Our weekly trend-following model classifies the current market price position as: Weak Downtrend. The current action for the model is considered to be: New Sell – Short Position.

Gold Futures StatisticsSPECULATORSCOMMERCIALSSMALL TRADERS
– Percent of Open Interest Longs:54.724.09.5
– Percent of Open Interest Shorts:14.668.35.3
– Net Position:193,348-213,71520,367
– Gross Longs:263,740115,49845,784
– Gross Shorts:70,392329,21325,417
– Long to Short Ratio:3.7 to 10.4 to 11.8 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):62.241.431.0
– Strength Index Reading (3 Year Range):BullishBearishBearish
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:7.8-6.0-5.5

 

Silver Comex Futures:

Silver Futures COT ChartThe Silver Comex Futures large speculator standing this week totaled a net position of 43,862 contracts in the data reported through Tuesday. This was a weekly increase of 23,570 contracts from the previous week which had a total of 20,292 net contracts.

This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bullish-Extreme with a score of 80.8 percent. The commercials are Bearish with a score of 26.1 percent and the small traders (not shown in chart) are Bearish with a score of 33.7 percent.

Price Trend-Following Model: Strong Uptrend

Our weekly trend-following model classifies the current market price position as: Strong Uptrend. The current action for the model is considered to be: Hold – Maintain Long Position.

Silver Futures StatisticsSPECULATORSCOMMERCIALSSMALL TRADERS
– Percent of Open Interest Longs:52.026.416.7
– Percent of Open Interest Shorts:22.264.58.5
– Net Position:43,862-55,98312,121
– Gross Longs:76,42038,71024,540
– Gross Shorts:32,55894,69312,419
– Long to Short Ratio:2.3 to 10.4 to 12.0 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):80.826.133.7
– Strength Index Reading (3 Year Range):Bullish-ExtremeBearishBearish
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:31.9-26.5-2.6

 

Copper Grade #1 Futures:

Copper Futures COT ChartThe Copper Grade #1 Futures large speculator standing this week totaled a net position of -3,550 contracts in the data reported through Tuesday. This was a weekly rise of 7,607 contracts from the previous week which had a total of -11,157 net contracts.

This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bearish with a score of 27.8 percent. The commercials are Bullish with a score of 70.8 percent and the small traders (not shown in chart) are Bearish with a score of 47.5 percent.

Price Trend-Following Model: Downtrend

Our weekly trend-following model classifies the current market price position as: Downtrend. The current action for the model is considered to be: Hold – Maintain Short Position.

Copper Futures StatisticsSPECULATORSCOMMERCIALSSMALL TRADERS
– Percent of Open Interest Longs:31.041.38.2
– Percent of Open Interest Shorts:32.741.86.0
– Net Position:-3,550-1,0544,604
– Gross Longs:67,32189,48817,684
– Gross Shorts:70,87190,54213,080
– Long to Short Ratio:0.9 to 11.0 to 11.4 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):27.870.847.5
– Strength Index Reading (3 Year Range):BearishBullishBearish
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:19.4-21.220.6

 

Platinum Futures:

Platinum Futures COT ChartThe Platinum Futures large speculator standing this week totaled a net position of 15,736 contracts in the data reported through Tuesday. This was a weekly rise of 7,949 contracts from the previous week which had a total of 7,787 net contracts.

This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bullish with a score of 51.9 percent. The commercials are Bullish with a score of 52.8 percent and the small traders (not shown in chart) are Bearish with a score of 20.9 percent.

Price Trend-Following Model: Strong Downtrend

Our weekly trend-following model classifies the current market price position as: Strong Downtrend. The current action for the model is considered to be: Hold – Maintain Short Position.

Platinum Futures StatisticsSPECULATORSCOMMERCIALSSMALL TRADERS
– Percent of Open Interest Longs:58.126.210.9
– Percent of Open Interest Shorts:34.256.14.9
– Net Position:15,736-19,6743,938
– Gross Longs:38,25617,2547,148
– Gross Shorts:22,52036,9283,210
– Long to Short Ratio:1.7 to 10.5 to 12.2 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):51.952.820.9
– Strength Index Reading (3 Year Range):BullishBullishBearish
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:-20.518.8-2.6

 

Palladium Futures:

Palladium Futures COT ChartThe Palladium Futures large speculator standing this week totaled a net position of -8,350 contracts in the data reported through Tuesday. This was a weekly fall of -78 contracts from the previous week which had a total of -8,272 net contracts.

This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bearish-Extreme with a score of 0.0 percent. The commercials are Bullish-Extreme with a score of 100.0 percent and the small traders (not shown in chart) are Bearish-Extreme with a score of 12.4 percent.

Price Trend-Following Model: Strong Downtrend

Our weekly trend-following model classifies the current market price position as: Strong Downtrend. The current action for the model is considered to be: Hold – Maintain Short Position.

Palladium Futures StatisticsSPECULATORSCOMMERCIALSSMALL TRADERS
– Percent of Open Interest Longs:23.361.48.7
– Percent of Open Interest Shorts:75.56.311.8
– Net Position:-8,3508,837-487
– Gross Longs:3,7389,8401,398
– Gross Shorts:12,0881,0031,885
– Long to Short Ratio:0.3 to 19.8 to 10.7 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):0.0100.012.4
– Strength Index Reading (3 Year Range):Bearish-ExtremeBullish-ExtremeBearish-Extreme
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:-14.512.46.2

 

Steel Futures Futures:

Steel Futures COT ChartThe Steel Futures large speculator standing this week totaled a net position of -370 contracts in the data reported through Tuesday. This was a weekly reduction of -169 contracts from the previous week which had a total of -201 net contracts.

This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bullish with a score of 72.1 percent. The commercials are Bearish with a score of 27.5 percent and the small traders (not shown in chart) are Bearish with a score of 47.3 percent.

Price Trend-Following Model: Strong Downtrend

Our weekly trend-following model classifies the current market price position as: Strong Downtrend. The current action for the model is considered to be: Hold – Maintain Short Position.

Steel Futures StatisticsSPECULATORSCOMMERCIALSSMALL TRADERS
– Percent of Open Interest Longs:18.074.21.7
– Percent of Open Interest Shorts:19.573.60.8
– Net Position:-370160210
– Gross Longs:4,35517,966411
– Gross Shorts:4,72517,806201
– Long to Short Ratio:0.9 to 11.0 to 12.0 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):72.127.547.3
– Strength Index Reading (3 Year Range):BullishBearishBearish
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:6.8-7.112.5

 

Article By InvestMacro – Receive our weekly COT Newsletter

*COT Report: The COT data, released weekly to the public each Friday, is updated through the most recent Tuesday (data is 3 days old) and shows a quick view of how large speculators or non-commercials (for-profit traders) were positioned in the futures markets.

The CFTC categorizes trader positions according to commercial hedgers (traders who use futures contracts for hedging as part of the business), non-commercials (large traders who speculate to realize trading profits) and nonreportable traders (usually small traders/speculators) as well as their open interest (contracts open in the market at time of reporting). See CFTC criteria here.

COT Updates Metals Opinions
21 Jul

Week Ahead: EURUSD set for another wild ride

By ForexTime 

Fasten your seatbelts because global financial markets could experience heightened volatility in the week ahead!

Investors will be bombarded with a long list of high-risk events ranging from pivotal central bank meetings, top-tier data from major economies and corporate earnings from the largest companies in the world.

But before we pinpoint what asset to watch out for amid the expected action, here are the scheduled economic data releases and events over the coming week:

Monday, July 24 

  • JPY: Japan Judo Bank Manufacturing PMI
  • EUR: Eurozone & Germany S&P Global PMIs
  • GBP: UK S&P Global/CIPS Manufacturing & Services PMI

Tuesday, July 25 

  • EUR: Germany IFO business climate
  • USD: US Conf. Board consumer confidence
  • NQ100_m: Microsoft Corp earnings

Wednesday, July 26 

  • AUD: Australia CPI
  • USD: FOMC rate decision, US new home sales
  • SPX500_m: Coca-Cola earnings

Thursday, July 27 

  • CNH: China industrial profits
  • EUR: ECB rate decision
  • USD: US Q2 GDP, durable goods, initial jobless claims
  • SPX500_m: McDonald’s Corp earnings

Friday, July 28 

  • AUD: Australia retail sales
  • EUR: Germany CPI, Eurozone economic confidence, consumer confidence
  • JPY: BoJ rate decision, Tokyo CPI
  • USD: US June PCE report, University of Michigan consumer sentiment

Indeed, the barrage of high-risk events could translate into fresh trading opportunities across financial markets. However, our attention will be directed to none other than the world’s most popular traded currency, which is set to be heavily influenced by the central bank combo and key reports.

But before we break down the factors that could see the EURUSD end July with a bang, it is worth keeping in mind that the currency seems to be under pressure on the H4 charts. After hitting a 17-month high at 1.1275, bulls seem to be running out of steam with bears greedily eyeing support at 1.1090. The events in the upcoming week could dictate whether prices rebound or sink lower.

Here are 4 reasons why you should not take your eyes off the EURUSD:

  1. Fed meeting 

Markets widely expect the Federal Reserve to raise interest rates by 25 basis points on Wednesday, taking the upper band of the Fed funds to 5.5%. The question is whether this will be the hike that ends the central bank’s aggressive hiking campaign. Given the mixed US economic data over the past few weeks, Fed Chair Jerome Powell’s remarks at the press conference are likely to be closely scrutinized by investors for fresh clues on future monetary policy.

  • Should the Fed signal more rate hikes down the road, this could inject dollar bulls with renewed inspiration – dragging the EURUSD lower.
  • If the Fed hints it’s done with raising rates, the dollar is likely to find itself under fresh selling pressure – resulting in the EURUSD pushing higher.

It is worth keeping in mind that traders are currently pricing in a 96% probability of a 25bps hike next week, with the probability of another 25 bps hike by November’s meeting only at 35%.

  1. ECB meeting 

The European Central Bank is expected to raise interest rates by 25 basis points on Thursday. Cooling inflationary pressures continue to support expectations around the central bank moving closer to ending its hiking cycle. Nevertheless, President Christine Lagarde is expected to reiterate that the ECB is unlikely to ease anytime soon with the decision in September depending on economic data.

  • The euro could push higher if the ECB strikes a hawkish note and signals more rate hikes beyond July’s policy meeting. This may trigger a rebound in the EURUSD.
  • A cautious-sounding ECB that signals a pause in hikes down the line could weaken the euro, pulling the EURUSD lower.

  1. Top-tier data dump 

Throughout the trading week, investors will be dished out a platter of key economic reports from the United States and Europe which could rock the EURUSD.

On Monday, all eyes will be on key PMI reports from the Eurozone and Germany. Tuesday see’s the Germany IFO business climate figures and US Conf. Board consumer confidence data. The dollar could be injected with more volatility on Thursday due to the second quarter of US GDP figures and the initial jobless claims report. On Friday, inflation data from the largest economy in Europe will be under the spotlight. This will be complemented by the latest Eurozone economic and consumer confidence figures. To wrap up the week, much focus will be directed towards the June PCE Core Deflator which is the Fed’s preferred measure of inflation and University of Michigan consumer sentiment.

  • Should the pending US/Eurozone print above markets expectations, this may support speculation around rates remaining higher for longer – lending support to respective currency.
  • If the incoming data from the US/Eurozone disappoint, this could reinforce speculation around the hiking cycle coming to an end – weakening the respective currency.

  1. Technical forces 

EURUSD has found itself under selling pressure after hitting a 17-month high at 1.1275. Indeed, the Relative Strength Index (RSI) was already at overbought levels with bears wasting no time to attack following the breakdown below 1.1200.

Despite the recent losses, the EURUSD remains in an uptrend on the daily charts with bulls maintaining some control above 1.1032. A technical throwback could be in the process which may see prices rebound back towards 17-month highs in the week ahead. Alternatively, a solid breakdown under 1.1032 may trigger a further selloff towards 1.0950 and 1.0850, respectively.

Zooming out into the weekly charts, prices remain in a bullish weekly channel. However, strong resistance can be found around the 200-week SMA. Should 1.1050 prove to be reliable support, this may provide a foundation for bulls to retest 1.1275 and beyond. Alternatively, a weekly close under 1.1050 may open a path back toward 1.0800.

Forex-Time-LogoArticle by ForexTime

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Forex and Currency News Opinions
19 Jul

Using green banks to solve America’s affordable housing crisis – and climate change at the same time

By Tarun Gopalakrishnan, Tufts University; Bethany Tietjen, Tufts University, and Seth Owusu-Mante, Tufts University 

Green banks are starting to draw attention in the U.S., particularly since the federal government announced its first grant competitions under a national green bank program to bring clean technology and more affordable energy to low-income communities.

But installing more solar and wind electricity generation isn’t the only way green banks can help.

Massachusetts is launching an innovative new green bank that could become a model as states try to manage two crises at once: lack of affordable housing and climate change.

While most green banks focus on clean energy, the Massachusetts Community Climate Bank is specifically designed to boost the state’s stock of sustainable, affordable housing. It comes at an opportune time: States can now tap into billions of dollars in new federal funding for green banks under the Inflation Reduction Act.

So what exactly is a green bank, and how might it work for sustainable housing?

What is a green bank?

Despite the name, green banks aren’t traditional banks. They function more like investment funds with a mission to promote sustainability.

Green banks are public, quasi-public or nonprofit entities that use public funds to encourage private investment in low-carbon, climate-resilient infrastructure.

By using innovative financing strategies, green banks can lower the risks for private investors to support projects, which reduces the amount of public money needed to reach government goals like expanding renewable energy or, in this case, affordable housing.

Green banks across the US

The U.S. had about two dozen green banks operating in early 2023 in at least 18 states and the District of Columbia – most of them focused on accelerating the transition from fossil fuel use to clean energy. And more were being developed.

In 2022, those banks used US$1.51 billion of public money to mobilize $3.12 billion in private investment. Since 2011, they have brought in a total of $14.8 billion.

Each bank is slightly different. Connecticut’s was the first state-run green bank in the U.S. It started with a renewable energy focus but expanded to include sustainable infrastructure, climate resilience, water, waste and recycling projects. Michigan created a nonprofit green bank called Michigan Saves that provides financing for energy efficiency. Hawaii’s state-run green bank boosts solar energy use.

At the local level, Maryland’s Montgomery County has been financing rooftop and community solar, energy efficiency and electric vehicle charging infrastructure through a green bank since 2016.

Finance New Orleans is a particularly instructive comparison – the 40-year-old housing finance agency recently transitioned to a climate-oriented business model to finance energy efficiency, stormwater management and green infrastructure projects for homeowners, businesses and local governments.

A green bank for sustainable housing

The new Massachusetts Community Climate Bank is solely dedicated to climate-friendly and resilient affordable housing to meet the goals of the state’s Climate Plan for 2050.

That might include upgrading insulation and windows in older housing complexes to make them less leaky on hot and cold days, transitioning to electric household appliances such as heat pumps or adding solar panels and electric vehicle chargers.

Residential buildings are one of Massachusetts’ largest sources of greenhouse emissions, accounting for 19% of the total. Making housing more sustainable would cut those emissions and also help cut emissions in other sectors. For example, rooftop solar panels can reduce the demand for electricity from natural gas-fired power plants, allowing the state to close the plants or run them less often.

The challenge is that the finance industry tends to view new technology and low-income households as risks.

Green banks are able to use public money to “de-risk” such investments. For example, they can lend at low rates to private or local lenders on the condition that they lend money at affordable rates for customers to electrify their heating. Other financial instruments include loan guarantees, securitization and co-investment.

Massachusetts’ green bank started with an initial $50 million in state funds, but it expects to grow by attracting both private investors and federal funding.

The timing is strategic. The Inflation Reduction Act, passed by Congress in 2022, includes funding for green banks. Among other commitments, it creates a $27 billion Greenhouse Gas Reduction Fund, $20 billion of which is earmarked to be awarded to nonprofits to invest indirectly in green projects through other local financing entities – including green banks.

Lessons from green banks around the world

The Climate Policy Lab at Tufts University, where we work as researchers, studies green banks around the world.

We have found that by following a few foundational principles, green banks can increase financing for climate priorities while remaining financially viable and without creating housing debt that owners can’t pay back. These organizations should:

  1. Have a clear, well-defined mission.
  2. Be profit-making, but not profit-maximizing.
  3. Address market gaps rather than competing with private investment.
  4. Be flexible enough to use a variety of financial instruments.
  5. Have an independent, stable and nonpartisan governance structure to ensure stability.

The Massachusetts green bank has a sector-focused mission that targets a market gap. Its focus on affordable housing could be clarified even more by tying it to the state definition of disadvantaged communities. The New York Green Bank does this by aiming to have $100 million – about 35% of its total – invested in green housing to benefit disadvantaged communities by 2025.

Focusing the Massachusetts bank’s climate mission will involve some tough decisions. For example, Connecticut’s Green Bank supports gas appliances above defined energy efficiency thresholds, but there is an argument for leapfrogging gas entirely to support the electrification of heating and cooking instead.

What else should green banks prioritize?

Reducing greenhouse gas emissions is important for curbing future climate change, but communities will also have to adapt to the climate impacts ahead.

The fact that the Massachusetts green bank is dedicated to affordable housing is already one adaptation. People who have homes are far more protected from climate impacts than those who do not. And if those homes are powered by clean energy with lower utility bills, low-income residents can more easily afford to cool their homes in extreme heat waves.

Green banks could also fund climate resilience, such as adding green spaces around buildings for natural cooling. Research shows that affordable housing in the United States is often in highly vulnerable locations, such as those at risk of flooding.

The Connecticut Green Bank, for example, is piloting “Property Assessed Resilience,” which allows homeowners to borrow for flood protection upgrades and benefit immediately from increased property valuations and reduced insurance premiums. They can repay over decades through modest increases in their property tax bills.

Focusing on the scarcity of affordable housing can reduce both emissions and socioeconomic inequity simultaneously. In our view, that is the holy grail of climate policy.The Conversation

About the Authors:

Tarun Gopalakrishnan, Research Fellow, Climate Policy Lab, Tufts University; Bethany Tietjen, Research Fellow in Climate Policy, The Fletcher School, Tufts University, and Seth Owusu-Mante, Research Fellow in International Development, Tufts University

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

Economics & Fundamentals Opinions
18 Jul

Earnings from ‘Magnificent Seven’ will determine stock markets’ path for 2023

By George Prior 

All eyes are on ‘The Magnificent Seven’ in this earnings seasons, with Tesla reporting on Wednesday, as these stocks will determine the market’s performance for the rest of this year and into 2024.

This is the assessment of Nigel Green, CEO of deVere Group, one of the world’s largest independent financial advisory, asset management and fintech organizations, as Apple, Microsoft, Alphabet, Amazon, Nvidia, Tesla and Meta Platforms, all report Quarter 2 earnings in the next week or so.

He says: “Investors around the world will be pouring over the earnings and guidance reports of these major growth and tech names in the next few days.

“These mega cap companies’ values have jumped between 40% and 200% so far this year.

“These jumps have accounted for the bulk of the S&P 500’s 17% year-to-date advance and pushed-up the main stock market in the world’s largest economy to its highest level since April 2022.

“On the S&P 500, the seven stocks make up almost 30% of the index’s weight.

“Therefore, their earnings and guidance will, we expect, determine the market’s trajectory for the rest of this year and into 2024.”

The deVere CEO continues: “The Magnificent Seven are going to need robust earnings to explain their sky-high valuations.

“In addition, they will need the guidance to indicate future quarters to be higher than aniticpated for shareholders to receive additional gains. Should this not happen, we could see these stocks shed some of the advances.”

Tesla and Netflix will be the ones to watch on Wednesday. Microsoft and Meta are among those reporting next week.

Recently Nigel Green warned that the volume is “getting louder” and the “frenzy is reaching fever pitch” about the so-called Magnificent Seven stocks.

“This hype is dangerous as it could lead investors to assume that these stocks are a silver bullet to build long-term wealth – and they are not, at least not on their own.

“While I believe that exposure to these mega-cap tech stocks should be part of almost every investor’s portfolio, as they have robust fundamentals and are future-focused, especially in AI, they should not be exclusive.”

The deVere CEO concludes: “Such is their weight, the Magnificent Seven earnings we receive in the next week or so will set global investors’ portfolio positioning for the foreseeable future.”

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.

Opinions Stock Market News
17 Jul

What this year’s El Niño means for wheat and global food supply

By David Ubilava, University of Sydney 

The World Meteorological Organization has declared the onset of the first El Niño event in seven years. It estimates 90% probability the climatic phenomenon, involving an unusual warming of the Pacific Ocean, will develop through 2023, and be of moderate strength.

El Niño events bring hotter, drier weather to places such as Brazil, Australia and Indonesia, increasing the risk of wildfires and drought. Elsewhere, such as Peru and Ecuador, it increases rain, leading to floods.

The effects are sometimes described as a preview of “the new normal” in the wake of human-forced climate change. Of particular concern is the effect on agricultural production, and thereby the price of food – particularly “breadbasket” staples such as wheat, maize and rice.

El Niño’s global impacts are complex and multifaceted. It can potentially impact the lives of the majority of the world’s population. This is especially true for poor and rural households, whose fates are intrinsically linked with climate and farming.

The global supply and prices of most food is unlikely to move that much. The evidence from the ten El Niño events in the past five decades suggests relatively modest, and to some extent ambiguous, global price impacts. While reducing crop yield on average, these events have not resulted in a “perfect storm” of the scale to induce global “breadbasket yield shocks”.

But local effects could be severe. Even a “moderate” El Niño may significantly affect crops grown in geographically concentrated regions — for example palm oil, which primarily comes from Indonesia and Malaysia.

In some places El Niño-induced food availability and affordability issues may well lead to serious social consequences, such as conflict and hunger.

Impact on global food prices

The following graph shows the correlation between El Niño events and global food prices, as measured by the United Nations’ Food Price Index. This index tracks monthly changes in international prices of a basket of food commodities.

Despite the general inflationary pattern, there have rarely been big swings in El Niño years. Indeed, it shows prices decreasing during the two strongest El Niño episodes of the past three decades.

Other human-caused factors were at play – notably the Asian Financial Crisis in 1997, and the Global Financial Crisis in 2007-2008. In 2015, prices decreased due to stronger (than expected) supply and weaker demand, when the El Niño event did not turn out to be as bad as feared.

This all suggests that El Niño does not usually play the lead role in global commodity price movements.

Impacts on wheat supply

Why? Because El Niño does induce crop failures, but for food grown around the world the losses tend to be offset by positive changes in production across other key producing regions.

For example, it can bring favourable weather to the conflict-ridden and famine-prone Horn of Africa (Djibouti, Ethiopia, Eritrea and Somalia).

A good example is wheat.

The following chart shows how El Nino has affected Australian wheat production since 1980. In six out of nine El Niño events of at least moderate strength, production has dropped significantly – in four cases, at least 30% below the “trend line” (representing the long-term average).

Australia is one of the world’s top three wheat exporters, accounting for about 13% of global exports. So its production does affect global wheat prices. But in terms of total wheat grown it’s less significant – about 3.5% of world production. And El Niño-induced crop failures tend to be offset by production in other key wheat-producing regions.

The next graph compare changes in Australia’s wheat production with other significant wheat exporters in El Niño years. Dips in Australia’s production tend tend to be offset by changes elsewhere.

In 1994, for example, Australian wheat production dropped nearly 50% but barely changed elsewhere. In 1982, when Australian production dropped 30%, Argentina’s production was 50% higher. Such balancing patterns tends to be present across most El Niño years.

But some will bear the cost

That said, there will be at least some negative effects. Even if crop failures in one region are fully offset by rich harvests in others, some people are going to bear the costs of El Niño’s direct impact.

Australian farmers, for example, will be worse off if local wheat yields drop while global prices remain relatively stable.

Moreover, because most countries are connected via trade, El Niño will have wider economic impacts. It could still lead to deeper societal issues in some region, such as famine and agro-pastoral conflicts.

These effects may also be nuanced. For example, poor harvests in Africa may mitigate seasonal violence linked with the appropriation of agricultural surpluses. But considering other vulnerabilities around the world, the odds are that even a moderate El Niño will make already dire socio-economic conditions in some countries worse.

Most of the usual warnings about the caveats of climate change apply here. The difference, of course, is that all this is happening now.The Conversation

About the Author:

David Ubilava, Associate Professor of Economics, University of Sydney

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

 

Opinions Soft Commodities
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