10 May

Natural gas prices are rising amid falling inventories. The Bank of England expectedly kept the rate

By JustMarkets

Yesterday, the Dow Jones Index (US30) gained 0.85%, the S&P 500 Index (US500) added 0.51%, and the NASDAQ Technology Index (US100) closed positive 0.27%. Stock index prices found support on Thursday as bond yields fell after US weekly jobless claims rose more than expected to an 8-month high, boosting hopes that the Federal Reserve will soon cut interest rates earlier.

US weekly jobless claims rose 22,000 to an 8.5-month high of 231,000, indicating a weak labor market compared to expectations of 212,000. On Thursday, hawkish comments from San Francisco Fed President Daly had a slightly negative impact on equities towards the end of the day when she stated that interest rates are currently holding back the economy. Still, inflation may take “more time” to return to the Fed’s target level.

Equinix (EQIX) climbed more than 11% and topped the list of top gainers in the S&P 500 after reporting adjusted first-quarter earnings of $992 million, above the consensus forecast of $976.9 million. Airbnb (ABNB) was down more than 6% and topped the list of Nasdaq 100 losers after reporting second-quarter revenue of $2.68, weaker than the consensus forecast of $2.74 billion.

First-quarter earnings results were mostly better than expected, which is favorable for the stock. First-quarter earnings are expected to grow 6.5% YoY, well above the 3.8% forecast.

Equity markets in Europe mostly went up yesterday. Germany’s DAX (DE40) rose by 1.02%, France’s CAC 40 (FR40) closed higher by 0.69%, Spain’s IBEX 35 (ES35) fell by 0.92%, and the UK’s FTSE 100 (UK100) gained 0.33%.

As expected, the Bank of England (BOE) kept its key rate unchanged at 5.25% for the sixth consecutive meeting and said the risks of continued inflation are diminishing. BOE Governor Bailey said, “It’s likely that we will need to cut the bank rate over the coming quarters and make monetary policy less restrictive over the forecast period, possibly more so than currently priced into market rates.” He added that a change in the bank rate in June “is neither ruled out nor a fait accompli.”

Precious metals prices closed higher on Thursday, with gold hitting a 1-week high and silver hitting a 2-week high. Silver prices rose on Thursday, which was a sign of stronger demand for industrial metals in China. The Chinese trade news showed that China’s exports and imports rose more than expected.

WTI crude futures climbed to $80 a barrel on Friday, rising for the third consecutive session and posting a strong weekly gain amid an improving global demand outlook and ongoing hostilities in the Middle East, which helped boost oil prices. On Thursday, data showed that China’s crude oil imports rose in April, with strong trade figures in the world’s largest crude importer signaling improving demand.

The US natural gas (XNG) prices rose more than 5% on Thursday to surpass $2.3 MMBtu, the highest in nearly four months. The rise was helped by a smaller-than-expected increase in gas in storage, reinforcing expectations of strong demand over the next two weeks and production cuts. The US inventories added 79 billion cubic feet (bcf) of gas to storage last week, while the market had expected an increase of 87 bcf.

Asian markets were mixed on Thursday. Japan’s Nikkei 225 (JP225) closed negative 0.34% yesterday, China’s FTSE China A50 (CHA50) was up 0.30% for the day, Hong Kong’s Hang Seng (HK50) was up 1.22% for the day, and Australia’s ASX 200 (AU200) was negative 1.06%.

Malaysia’s unemployment rate fell to 3.3% in March 2024 from 3.5% in the corresponding month last year, returning to pre-pandemic levels for the fifth consecutive month. The number of unemployed fell 3.8% year-on-year to 566.6k, while employment rose 1.9% to a record high of 16.53 million.

In New Zealand, the RBNZ is expected to keep the interest rate at 5.5% at its meeting later this month. This stance aligns with the OECD’s recent call for the central bank to maintain a restrictive policy until there are clearer signs that inflation is moving towards the target. In addition, the country’s manufacturing sector showed tentative signs of recovery in April despite the protracted economic downturn.

S&P 500 (US500) 5,214.08 +26.41 (+0.51%)

Dow Jones (US30) 39,387.76 +331.37 (+0.85%)

DAX (DE40) 18,686.60 +188.22 (+1.02%)

FTSE 100 (UK100) 8,381.35 +27.30 (+0.33%)

USD Index 105.23 -0.32 (-0.30%)

Important events today:
  • – UK GDP (m/m) at 09:00 (GMT+3);
  • – UK Industrial Production (m/m) at 09:00 (GMT+3);
  • – UK Manufacturing Production (m/m) at 09:00 (GMT+3);
  • – UK Trade Balance (m/m) at 09:00 (GMT+3);
  • – Eurozone ECB Monetary Policy Meeting Accounts at 14:30 (GMT+3);
  • – Canada Unemployment Rate (m/m) at 15:30 (GMT+3);
  • – US FOMC Member Bowman Speaks at 16:00 (GMT+3);
  • – US Michigan Consumer Sentiment (m/m) at 17:00 (GMT+3).

By JustMarkets

 

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

Economics & Fundamentals Financial News
10 May

Week Ahead: USDInd set for volatile week?

By ForexTime 

  • USDInd ↑ almost 4% year-to-date
  • Key US CPI report under spotlight
  • Watch out for Fed speeches
  • Trading within range on D1 charts
  • Levels of interest – 106.50, 105.60 & 105.00

The week ahead is jampacked with top-tier data and speeches by numerous policymakers.

But the spotlight shines on the incoming US inflation data which may rock FXTM’s USDInd:

Saturday, 11th May

  • CN50: China CPI, PPI

Monday, 13th May

  • AU200: Australia business confidence
  • NZD: New Zealand food prices, inflation expectations
  • USDInd: Fed speech
  • CHF: SNB President Thomas Jordan speech

Tuesday, 14th May

  • JP225: Japan PPI
  • GER40: Germany CPI, ZEW survey expectations
  • UK100: UK jobless claims, unemployment, BoE Economist Huw Pill speech
  • USDInd: US PPI, Fed Chair Jerome Powell speech

Wednesday, 15th May

  • CAD: Canada housing starts, existing home sales
  • CN50: China rate decision
  • EU50: Eurozone industrial production, GDP
  • USDInd: US CPI, retail sales, empire manufacturing, Fed speech

Thursday, 16th May

  • AU200: Australia unemployment
  • JP225: Japan GDP, industrial production
  • EUR: ECB publishes financial stability review
  • USDInd: Initial jobless claims, industrial production, Fed speech

Friday, 17th May

  • CN50: China property prices, retail sales, industrial production
  • HK50: Hong Kong GDP
  • EU50: Eurozone CPI
  • SG20: Singapore trade

The USDInd has been trapped within a range since mid-April with major resistance at 106.50 and support around 105.00.

Note: FXTM’s USDInd tracks how the dollar is performing against a basket of six different G10 currencies, including the Euro, British Pound, Japanese Yen, and Canadian dollar.

Digger deeper, the dollar has appreciated against every single G10 currency year-to-date.

Dollar bulls have been supported by cooling Fed cut bets in the face of sticky inflation and strong data.

With all the above said, here are 3 reasons why the USDInd could see significant moves:

    1) US April CPI report

The April Consumer Price Index (CPI) published on Wednesday may influence expectations around what the Fed does in the second half of 2024.  

Markets are forecasting:

  • CPI year-on-year (April 2023 vs. April 2024) to cool 3.4% from 3.5% in the prior month.
  • Core CPI year-on-year to cool to 3.6% to 3.8%.
  • CPI month-on-month (April 2024 vs March 2024) to remain unchanged at 0.4%.
  • Core CPI month-on-month to cool to 0.3% to 0.4%.

Headline inflation and the annual core inflation figures are expected to have ticked lower in April. But this is still some distance away from the Fed’s 2% target.

Nevertheless, further evidence of cooling prices may stimulate expectations around the Fed cutting interest rates in the second half of the year.

Traders are currently pricing in a 36% probability of a 25-basis point Fed cut by July with this jumping to 90% by September.

  • A softer-than-expected US CPI report could send the USDInd lower as Fed cut bets jump.
  • Should the inflation report print above market forecasts, this could boost the USDInd.

 

    2) Fed speeches + US data

A string of speeches from numerous Fed officials including Jerome Powell could pump the USDInd with fresh volatility. Given the recent mixed signals from US policymakers on the path of rates, the incoming speeches may provide investors with fresh clarity on what to expect from the Fed.

Much attention will also be directed towards the latest US retail sales, Producer Prices Index (PPI), and initial jobless claims to gauge the health of the US economy.

  • The USDInd could push higher if Fed officials strike a hawkish note and overall data supports the “higher for longer” narrative for rates.
  • If economic data disappoints and Fed officials sound more dovish, the USDInd may trade lower.

 

    3) Technical forces 

The USDInd is trading within a range on the daily charts with prices hovering near the 105.00 level. Still, the candlesticks are trading above the 50, 100, and 200-day SMA while the MACD trades above zero.

  • A solid breakdown and daily close below 105.00 could encourage a decline toward the 50-day SMA and 200-day SMA.
  • Should 105.00 prove to be reliable support, this could trigger a rebound to 105.60 and 106.50.

 

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
09 May

Why US offshore wind energy is struggling – the good, the bad and the opportunity

By Christopher Niezrecki, UMass Lowell 

America’s first large-scale offshore wind farms began sending power
to the Northeast in early 2024, but a wave of wind farm project cancellations and rising costs have left many people with doubts about the industry’s future in the U.S.

Several big hitters, including Ørsted, Equinor, BP and Avangrid, have canceled contracts or sought to renegotiate them in recent months. Pulling out meant the companies faced cancellation penalties ranging from US$16 million to several hundred million dollars per project. It also resulted in Siemens Energy, the world’s largest maker of offshore wind turbines, anticipating financial losses in 2024 of around $2.2 billion.

Altogether, projects that had been canceled by the end of 2023 were expected to total more than 12 gigawatts of power, representing more than half of the capacity in the project pipeline.

So, what happened, and can the U.S. offshore wind industry recover?

A map shows regions with the strongest offshore wind power potential, including off the US and Northern Europe.
Estimates of the mean annual wind speeds in meters per second extending 200 kilometers from shore at a height of 330 feet (100 meters).
ESMAP/The World Bank via Wikimedia, CC BY

I lead UMass Lowell’s Center for Wind Energy Science Technology and Research WindSTAR and Center for Energy Innovation and follow the industry closely. The offshore wind industry’s troubles are complicated, but it’s far from dead in the U.S., and some policy changes may help it find firmer footing.

Long approval process’s cascade of challenges

Getting offshore wind projects permitted and approved in the U.S. takes years and is fraught with uncertainty for developers, more so than in Europe or Asia.

Before a company bids on a U.S. project, the developer must plan the procurement of the entire wind farm, including making reservations to purchase components such as turbines and cables, construction equipment and ships. The bid must also be cost-competitive, so companies have a tendency to bid low and not anticipate unexpected costs, which adds to financial uncertainty and risk.

The winning U.S. bidder then purchases an expensive ocean lease, costing in the hundreds of millions of dollars. But it has no right to build a wind project yet.

A map shows lease areas, from South Carolina to Massachusetts.
Continental shelf areas leased for wind power development along the Atlantic coast.
U.S. Department of the Interior, 2024

Before starting to build, the developer must conduct site assessments to determine what kind of foundations are possible and identify the scale of the project. The developer must consummate an agreement to sell the power it produces, identify a point of interconnection to the power grid, and then prepare a construction and operation plan, which is subject to further environmental review. All of that takes about five years, and it’s only the beginning.

For a project to move forward, developers may need to secure dozens of permits from local, tribal, state, regional and federal agencies. The federal Bureau of Ocean Energy Management, which has jurisdiction over leasing and management of the seabed, must consult with agencies that have regulatory responsibilities over different aspects in the ocean, such as the armed forces, Environmental Protection Agency and National Marine Fisheries Service, as well as groups including commercial and recreational fishing, Indigenous groups, shipping, harbor managers and property owners.

For Vineyard Wind I – which began sending power from five of its 62 planned wind turbines off Martha’s Vineyard in early 2024 – the time from BOEM’s lease auction to getting its first electricity to the grid was about nine years.

Costs can balloon during the regulatory delays

Until recently, these contracts didn’t include any mechanisms to adjust for rising supply costs during the long approval time, adding to the risk for developers.

From the time today’s projects were bid to the time they were approved for construction, the world dealt with the COVID-19 pandemic, inflation, global supply chain problems, increased financing costs and the war in Ukraine. Steep increases in commodity prices, including for steel and copper, as well as in construction and operating costs, made many contracts signed years earlier no longer financially viable.

New and re-bid contracts are now allowing for price adjustments after the environmental approvals have been given, which is making projects more attractive to developers in the U.S. Many of the companies that canceled projects are now rebidding.

The regulatory process is becoming more streamlined, but it still takes about six years, while other countries are building projects at a faster pace and larger scale.

Shipping rules, power connections

Another significant hurdle for offshore wind development in the U.S. involves a century-old law known as the Jones Act.

The Jones Act requires vessels carrying cargo between U.S. points to be U.S.-built, U.S.-operated and U.S.-owned. It was written to boost the shipping industry after World War I. However, there are only three offshore wind turbine installation vessels in the world that are large enough for the turbines proposed for U.S. projects, and none are compliant with the Jones Act.

That means wind turbine components must be transported by smaller barges from U.S. ports and then installed by a foreign installation vessel waiting offshore, which raises the cost and likelihood of delays.

Dominion Energy is building a new ship, the Charybdis, that will comply with the Jones Act. But a typical offshore wind farm needs over 25 different types of vessels – for crew transfers, surveying, environmental monitoring, cable-laying, heavy lifting and many other roles.

The nation also lacks a well-trained workforce for manufacturing, construction and operation of offshore wind farms.

For power to flow from offshore wind farms, the electricity grid also requires significant upgrades. The Department of Energy is working on regional transmission plans, but permitting will undoubtedly be slow.

Lawsuits, disinformation add to the challenges

Numerous lawsuits from advocacy groups that oppose offshore wind projects have further slowed development.

Wealthy homeowners have tried to stop wind farms that might appear in their ocean view. Astroturfing groups that claim to be advocates of the environment, but are actually supported by fossil fuel industry interests, have launched disinformation campaigns.

In 2023, many Republican politicians and conservative groups immediately cast blame for whale deaths off the coast of New York and New Jersey on the offshore wind developers, but the evidence points instead to increased ship traffic collisions and entanglements with fishing gear.

Such disinformation can reduce public support and slow projects’ progress.

Efforts to keep the offshore wind industry going

The Biden administration set a goal to install 30 gigawatts of offshore wind capacity by 2030, but recent estimates indicate that the actual number will be closer to half that.

Despite the challenges, developers have reason to move ahead.

The Inflation Reduction Act provides incentives, including federal tax credits for the development of clean energy projects and for developers that build port facilities in locations that previously relied on fossil fuel industries. Most coastal state governments are also facilitating projects by allowing for a price readjustment after environmental approvals have been given. They view offshore wind as an opportunity for economic growth.

These financial benefits can make building an offshore wind industry more attractive to companies that need market stability and a pipeline of projects to help lower costs – projects that can create jobs and boost economic growth and a cleaner environment.The Conversation

About the Author:

Christopher Niezrecki, Director of the Center for Energy Innovation, UMass Lowell

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

 

Energy Opinions
09 May

Strong data on China’s trade balance fuels Asian indices

By JustMarkets

US stock indices showed mixed performance on Wednesday, with the Dow Jones Industrials Index hitting a 1-month high. The Dow Jones (US30) Index rose by 0.44%, while the S&P 500 (US500) Index was virtually unchanged for the day. The NASDAQ Technology Index (US100) closed negative 0.18% yesterday. Hawkish comments from the Fed and a rise in bond yields on Wednesday pressured stocks. On Wednesday, Boston Fed Bank President Susan Collins emphasized the need to cool the US economy to meet the central bank’s 2% inflation target. Markets estimate the odds of a 25 bps rate cut at 10% for the June 12 FOMC meeting, 34% for the next meeting on July 31, and 66% for the September meeting.

Lyft shares are up more than 6% after the company reported better-than-expected first-quarter gross orders and forecast second-quarter gross orders above consensus. On the negative side, Uber Technologies fell more than 5% after reporting Q1 gross orders below consensus and forecasting weaker-than-expected gross orders in Q2.

Equity markets in Europe mostly went up yesterday. Germany’s DAX (DE40) rose by 0.37%, France’s CAC 40 (FR40) closed 0.69% higher, Spain’s IBEX 35 (ES35) added 0.65%, and the UK’s FTSE 100 (UK100) gained 0.49%.

The Bank of England (BoE) will hold a monetary policy meeting today. The Bank of England is expected to leave the interest rate at 5.25%, keeping the forward guidance unchanged and leaving options open regarding the timing of a rate cut. This will cause traders and investors to shift their attention to Bank of England Governor Bailey’s speech at the press conference. If the press conference does not clarify the timing of the first rate cut, the UK index will likely come under pressure. However, if Bailey hints that the first rate cut will take place in late summer, presumably at the August meeting, it could hurt to give the index an additional boost.

WTI crude oil prices rose above $79 a barrel on Thursday, extending gains from the previous session. Official data showed a decline in US crude inventories, suggesting a tightening of supply. EIA data showed US crude inventories fell by 1.361 million barrels last week, a reversal from a 7.265 million barrel jump in the previous period, as refinery activity picked up. The outlook for OPEC+ production policy also remains highly uncertain ahead of the group’s June 1 meeting.

Asian markets were mostly up on Wednesday. Japan’s Nikkei 225 (JP225) closed negative 1.63% yesterday, China’s FTSE China A50 (CHA50) was down 0.61% for the day, Hong Kong’s Hang Seng (HK50) lost 0.90% for the day, and Australia’s ASX 200 (AU200) was positive 0.14%. But mainland Chinese stocks hit new multi-month highs as investors reacted to China’s trade data for April. The data showed that Chinese imports jumped 8.4% in April from a year earlier, beating predictions of 5.4%. Exports also rose 1.5%, above the 1% increase expected by analysts. The latest data was a pleasant surprise amid growing concerns that the US may impose additional tariffs on Chinese goods.

Hong Kong stocks were up 0.75% in early trading on Thursday, rising for the first time in three sessions. The city is reportedly working to attract a new set of investors from Saudi Arabia to replace investors from the US and Europe at a time of rising geopolitical tensions. The move comes after China said last month it would support companies holding IPOs in Hong Kong.

S&P 500 (US500) 5,187.67 −0.03 (−0.01%)

Dow Jones (US30) 39,056.39 +172.13 (+0.44%)

DAX (DE40) 18,498.38 +68.33 (+0.37%)

FTSE 100 (UK100) 8,354.05 +40.38 (+0.49%)

USD Index 105.51 +0.10 (+0.09%)

Important events today:
  • – China Trade Balance (m/m) at 06:00 (GMT+3);
  • – UK BoE Interest Rate Decision at 14:00 (GMT+3);
  • – UK BOE Monetary Policy Report at 14:00 (GMT+3);
  • – UK BoE Gov Bailey Speaks at 14:30 (GMT+3);
  • – US Initial Jobless Claims (w/w) at 15:30 (GMT+3);
  • – US Natural Gas Storage (w/w) at 17:30 (GMT+3).

By JustMarkets

 

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

Economics & Fundamentals Financial News
09 May

How does the brain think?

By Jennifer Robinson, Auburn University

Curious Kids is a series for children of all ages. If you have a question you’d like an expert to answer, send it to [email protected].

How does the brain think? – Tom, age 16, San Diego, California

Have you ever wondered how your brain creates thoughts or why something randomly popped into your head? It may seem like magic – but actually the brain is like a supercomputer inside your head that helps you think, learn and make decisions.

Imagine your brain as a busy city with lots of streets and buildings. Each part of the brain has a specific job to do, just like certain areas of a city or certain buildings serve different purposes. When you have a thought, it’s like a message traveling through the city, passing from one area to another.

As a professor of psychology and neuroscience, I have studied the brain for almost 20 years. Neurologists, neuroscientists and neurosurgeons work every day to understand the brain better. And there’s still a lot to learn.

Your brain has four major compartments, and each compartment has lots of “buildings.”

Practice and repetition create skills

The neuron is a key player in the brain – these are tiny cells that send and receive signals and messages so they can communicate with each other.

Your brain has somewhere between 80 billion and 100 billion neurons. Neurons tend to group together to form neural tracts, which would be like the streets and highways in the city analogy. When you have a thought, neurons in your brain fire up and create electrical impulses. These impulses tend to travel along similar pathways and release tiny chemicals called neurotransmitters along the way.

These neurotransmitters are like the construction crew that builds the roads, making it easier for the messages to be delivered. You can imagine it as a dirt road, but as more traffic – that is, neuron signals – travel the dirt road, the road gets upgraded to a paved street. If the traffic continues, it gets upgraded to a highway.

As you learn new things and experience the world around you, these connections grow stronger. For example, when you are learning to ride a bike, you may be unsteady and find it hard to coordinate all of the different muscles along with your ability to balance. But the more you practice, the more the neurons controlling your muscles and your ability to balance fire together, which makes it much easier as you practice. Neurons are wiring together and forming neural networks.

That’s why practice and repetition are important for improving your skills, whether playing the piano or learning a language. Neural networks are created and then strengthened the more times they communicate together. Scientists have a saying in this field: “Neurons that fire together wire together.” Certain thinking or behavior patterns can be chalked up to this kind of repeated synchronized activity.

Developing creativity

You are conscious of only a very small portion of the information your brain takes in. It is constantly receiving input from your senses – sights, sounds, tastes, smells and touch. When you see a cute puppy or hear your favorite song, your senses send signals to the brain, triggering a chain reaction of thoughts and emotions.

The brain also stores memories, which are like files in a computer that you can access whenever you need them. Memories help shape your thoughts and influence how you see the world.

If you remember a fun day at the beach, it might make you feel happy and relaxed. If you smell an apple pie, it may remind you of your grandma’s baking. These thoughts are triggered because these pleasant associations have been formed in your brain, and through repetition, strengthened over time.

Creativity is another superpower of the brain. When you let your imagination run wild, your brain can come up with new ideas, stories and inventions. Artists, writers and scientists all use their creative brains to explore new possibilities and solve problems.

Have you ever experienced a “eureka” moment when a brilliant idea pops into your head out of nowhere? That’s your brain’s way of connecting the dots and coming up with a solution.

Walnuts, leafy greens, chickpeas and berries are on the list of brain foods.

Keeping your brain healthy

Most scientists agree that sleep is really important for your brain to process information from the day and to allow it to rest and form new connections. A lot of people find that they have new ideas or thoughts after a good night’s sleep. The opposite is true, too – without enough sleep, you may feel like you can’t think straight.

Along with enough sleep, eat healthy foods and exercise. Just like a car needs fuel to run smoothly, your brain needs nutrients and oxygen to function at its best and to boost your thinking power.

Activities that challenge you are also great: reading, doing puzzles, playing music, making art, doing math, writing essays and book reports and journaling. Positive thinking also helps. Keep in mind that whatever you are consuming – what you’re eating or what you’re watching, listening to or reading – has the power to influence your brain.

Conversely, smoking cigarettes, vaping, drinking alcohol and using drugs kills brain cells. So might head injuries that can occur when playing sports such as football, soccer and bicycling – but wearing a helmet can make a big difference.

The brain is a fascinating organ that works tirelessly to create thoughts, memories and ideas. As technology continues to improve, scientists will learn more and more about how biological processes give rise to our conscious experiences. The challenges of learning about the brain are like a neuroscientific moonshot – we have a long way to go before we completely understand how it works.

Hello, curious kids! Do you have a question you’d like an expert to answer? Ask an adult to send your question to [email protected]. Please tell us your name, age and the city where you live.

And since curiosity has no age limit – adults, let us know what you’re wondering, too. We won’t be able to answer every question, but we will do our best.The Conversation

Jennifer Robinson, Professor of Psychology, Auburn University

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

Economics & Fundamentals Financial News
09 May

Target Thursdays: UK100, Wheat & EURUSD hit targets!

By ForexTime

  • UK100 bulls bag 770 points
  • Wheat “throwback” rewards bears
  • EURUSD secures all bearish targets

Here are how these discussed instruments performed this week:

 

    1) UK100 touches fresh record high

  • Where and when was Target Price (TP) published?

In our week ahead article published on Friday, 3rd May:

We were bullish on the UK100 and suggested that a solid “close above 8200 may encourage a move toward the next psychological level at 8300”

 

  • What happened since TP was published?

After hitting a fresh all-time high last Friday, the index extended gains on Tuesday after the bank holiday at the start of the week.

A weaker pound and optimism around the Bank of England (BoE) cutting interest rates down the road have turbocharged FTSE100 bulls.

Note: UK100 could see more volatility this week due to the upcoming BoE meeting and Q1 GDP figures

 

  • How much in potential profits?

Those who took advantage of a move above 8223 would have been rewarded 770 points.

 

    2) Wheat ready to resume upside?

  • Where and when was Target Price (TP) published?

Earlier in the week, we discussed how FXTM’S new commodity Wheat could push higher due to fundamental forces.

However, we cautioned that “prices may experience a technical throwback” with “sustained weakness below 629 opening a path towards 615….”

 

  • What happened since TP was published?

Wheat prices slipped on Wednesday, tumbling towards the 615 level before prices rebounded back towards 629.

Note: The soft commodity could see more volatility this week due to the WASDE report on Friday.

 

  • How much in potential profits?

Traders who took advantage of the breakdown below 629 and exited at 615 would have caught a roughly 2% move to the downside.

 

    3) EURUSD hits all bearish targets

  • Where and when was Target Price (TP) published?

This technical scenario (EURUSD) is based on the FXTM Signals that are released once a day, before the opening of the U.S. trading session.

These signals are designed around a trading instrument’s most influential factor – PRICE – making them a powerful asset to your trading strategy.

It can be found in the MyFXTM profile under Trading Services… FXTM Trading Signals.

 

  • What happened since TP was published?

The EURUSD fell as the dollar appreciated across the board.

Market caution and hawkish comments from a Fed official seem to be supporting the greenback.

 

  • How much in potential profits?

EURUSD has hit all its profit targets.

Traders who entered at 1.07418 and exited at the final target level of 1.07271 would have gained roughly 15 pips.

Feel like you missed out on these profits?

You can keep following our “Daily Market Analysis” for fresh trading ideas and opportunities across global financial markets.

Forex-Time-LogoArticle by ForexTime

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Economics & Fundamentals Financial News
08 May

US-Africa trade deal turns 25 next year: Agoa’s winners, losers and what should come next

By Bedassa Tadesse, University of Minnesota Duluth 

The African Growth and Opportunity Act (Agoa) is a landmark piece of trade legislation enacted by the United States in 2000. Its goal is to promote economic growth, development and poverty reduction in sub-Saharan Africa by providing qualifying countries with duty-free access to the US market for over 6,500 products. By eliminating import tariffs and quotas, Agoa aims to stimulate trade, attract foreign investment and foster economic integration between the US and African nations.

Agoa has made strides in boosting exports from eligible African countries to the US. Between 2001 and 2021, the annual value of US imports from Agoa-eligible countries nearly tripled, from US$8.15 billion to US$21.8 billion. The trade preferences have particularly benefited sectors like apparel, textiles, agriculture and light manufacturing. However, Agoa’s impact has been uneven across the region. Some countries have used the opportunities more effectively than others.

As Agoa approaches its 25th anniversary next year, policymakers are considering extending it for a further 16 years. I recently conducted a comprehensive review of scholarly articles and policy reports that analyse the impact of Agoa on the economic performance of sub-Saharan Africa. Below are the four key observations.

1. Some countries have benefited more than others

Agoa’s benefits can’t be measured in just one metric. They reflect in various terms for various countries. But available research indicates that the countries that benefited most from Agoa include South Africa, Kenya, Lesotho, Mauritius, Madagascar, Ethiopia and Ghana.

These nations have used Agoa preferences to substantially increase their exports to the US, particularly in sectors like apparel, textiles and light manufacturing.

Kenya, where apparel-dominated exports to the US have grown from US$55 million in 2001 to US$603 million in 2022, is a shining example of growth in exports. Mauritius exported chocolate and basket-weaving materials. Mali exported buckwheat, travel goods and musical instruments until its 2022 suspension. Mozambique exported sugar, nuts and tobacco. Togo exported wheat, legumes and fruit juices.

Lesotho’s success story is equally inspiring. It has had rapid export growth and job creation in its apparel sector, and this has contributed to new manufacturing jobs.

These success stories underscore the potential of Agoa to drive economic growth and job creation.

2. Some countries have not benefited much

Central and west African countries have not extensively used Agoa’s benefits. They have been held back by weakness in infrastructure, governance and global market integration.

Burundi, the Central African Republic, Equatorial Guinea, Eritrea, The Gambia, Guinea-Bissau and Mali have seen little export growth and foreign direct investment, or no benefits.

3. Reason for the uneven benefits

The variation in Agoa’s impact across sub-Saharan Africa is down to several factors. First, countries with better infrastructure, stable governance and conducive business environments are better positioned to attract foreign investment and increase exports.

Second, the level of economic diversification and export capabilities matters. Countries with more diversified export baskets and established manufacturing sectors have managed to make the most of Agoa’s opportunities.

Third, national policies and strategies to complement Agoa are essential. Countries that put in place policies to improve productivity, integrate value chains and ease supply-side constraints appear to have had success under Agoa. Cultural (historical) connections with the US market may have also provided an advantage for some countries, like Kenya and Lesotho.

4. What the future holds

The US Senate is considering extending Agoa for another 16 years. It is vital to consider the lessons learned from the past 25 years.

Diversify the economy and add value: Many countries still rely heavily on primary commodity exports. This leaves them vulnerable to global price movements and limits their economic development prospects.

Invest in infrastructure: Transport, energy and communication are critical to enhance competitiveness and attract more foreign direct investment. Public-private partnerships and multilateral development financing could help to fill infrastructure gaps.

Promote good governance, political stability and institutional reforms: These create an enabling environment for businesses and investors. It means strengthening legal frameworks, combating corruption and ensuring the rule of law.

Build capacity and develop skills: It should be a priority to enhance human capital and create a skilled workforce that can support the other steps outlined above.

Recognise the diverse economic, political and social contexts in sub-Saharan Africa: Tailored strategies and targeted assistance could work better for individual countries.

As Agoa approaches its 25th anniversary, the potential extension through 2041 presents a strategic opportunity. The sub-Saharan African countries should refine and broaden Agoa’s impact to better serve the diverse needs of the region. By tackling the uneven impacts and focusing on sustainable development goals, Agoa can continue to play a part in the region’s economic transformation. The US and beneficiary countries must work together closely to ensure the benefits are widespread and inclusive.The Conversation

About the Author:

Bedassa Tadesse, Professor of Economics, University of Minnesota Duluth

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

 

Economics & Fundamentals Opinions
08 May

What’s in a VIN? How to decode the vehicle identification number, your car’s unique fingerprint

By Jordan Frith, Clemson University 

Every vehicle built after 1981 has a unique vehicle identification number, or VIN. The location of this string of letters and numbers varies, but it’s located somewhere on every car, SUV, motorcycle and truck – typically on a small metal plate or a sticker.

VINs serve many purposes. They help consumers learn about a used car’s history, including whether it was stolen, or determine whether rebates for a particular electric vehicle are available. This code appears in the paperwork necessary to do everything from insuring your car to selling it.

I research data standards and became interested in VINs while doing research for my book about the cultural history of barcodes.

Like barcode numbers, a VIN’s characters are standardized. They can tell a story if you know what to look for.

A string of numbers and letters with the heading 'Decoding the VIN'
A lot of information is packed into these 17 characters.
The Conversation U.S., CC BY-SA

What VINs can tell you

VINs can convey at least seven pieces of information.

  1. Origin
    If a VIN begins with a 1, 4 or 5, that means it’s a vehicle assembled in the U.S. Many other countries have their own unique identifier. A 2, for example, means the vehicle was made in Canada; a J stands for Japan.
  2. Manufacturer
    The second and third characters indicate the manufacturer. In some cases, the code corresponds with a line of vehicles that now belongs to a larger corporation. Dodge and Jeep, now part of Stellantis, each has its own. So does Lincoln, which became a division of Ford Motor Co. in 1922.
  3. Description
    The fourth through eighth characters provide several details, such as body type and engine type.
  4. Security
    The ninth character is a “check digit” determined by a complex mathematical equation based on the rest of the VIN’s numbers and letters. This digit, either a number or the letter X, is used to authenticate that the VIN is not a forgery.
  5. Year
    The 10th character indicates the model year. There’s only one slot for this, and not all letters and numbers are used, resulting in repetition. An R could signal either 2024 or 1994, for example.
  6. Factory
    The 11th character indicates the specific plant where the vehicle was assembled.
  7. Serial number
    The VIN’s final six characters compose a serial number that differentiates the vehicle from all others made in the same factory that are the identical type and model year.
A drawing of a car with the heading 'Where's my VIN?'
Vehicle identification number locations vary but are generally found in one of four places.
The Conversation U.S., CC BY-SA

Finding more information

Only experts can tell where a vehicle was assembled or what type of engine it has by looking at its VIN. But help is available.

The National Highway Traffic Safety Administration provides a handy VIN decoder. When I plugged my vehicle’s VIN into the decoder, the site correctly determined that my SUV is a 2011 Subaru Forester with an automatic transmission.

Of course, I already knew all that.

What I didn’t realize was that it weighs between 4,000 and 5,000 pounds, has a 2.5-liter engine and features side curtain airbags to protect the driver and passengers in the front and back seats. I also learned that this Subaru Forester was assembled in Gunma, Japan.

Those details had been invisible to me as a consumer, but they had been within easy reach ever since I bought my Forester in 2018. I had somehow driven that car well over 100,000 miles without realizing the number on the side of my driver’s seat contained some history.

Before buying the Forester, even though I didn’t know that my VIN could say so much, I did run it through a free online system to make sure it hadn’t been stolen.

To be sure, VINs won’t tell you everything you might want to know about a vehicle, such as what color it was when it rolled off the line. But if you can do a little decoding and make use of widely available online tools, they do harbor important information.The Conversation

Where’s your VIN and what’s it for?

 

About the Author:

Jordan Frith, Pearce Professor of Professional Communication, Clemson University

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

Economics & Fundamentals Opinions
08 May

USDSEK: Golden cross on the horizon?

By ForexTime 

  • USDSEK jumps on Riksbank cut
  • Currency pair in megaphone pattern
  • Key point of reference at golden 161.8 Fib level
  • Potential golden cross on horizon
  • Other key levels at 11.0678 and 10.8333

The USDSEK punched above 10.9 on Wednesday after Sweden’s central bank cut rates for the first time in eight years!

In an expected move, the Riksbank trimmed its policy rate by 25 basis points to 3.75% and signalled two more cuts in the second half of 2024. This makes Sweden’s Riksbank the second major one after the Swiss National Bank to cut interest rates.

As of writing, traders see a 67% probability of another 25 basis point Riksbank cut by June with this fully priced in by August.

The Riksbank dovish stance contrasts with the US Federal Reserve which has struggled to cut rates in the face of sticky inflation.

Incoming data from the US this week is likely to influence bets around when the Fed will join the rate cut club.

At 12:30, GMT, the Unemployment claims data out of the US is expected to show 212,00 individuals filed for unemployment for the first time during the past week. If so, this will signal a relatively healthy labor market and continue to weaken bets of near-term rate cuts.

Technically speaking,

USDSEK is in a broadening pattern, also known as a megaphone.

In a broadening pattern, price peaks and valleys, are bounded by two diverging trendlines.

USDSEK is in a 3-day rally (coming off the support of the megaphone) and may be heading for the upper trendline of the pattern at 11.0678.

Golden cross on the horizon?

Interestingly, the 50-day SMA is close to crossing above the 200-day SMA.

This price phenomenon is called a “golden cross” and is used as an early “warning” sign to show that price could rally further.

When we add the Fibonacci retracement tool, drawn from November 30th 2023 high (10.5387) to December 27th 2023 low (9.9043), we see 10.9309 at the golden fib (161.8%)  ratio acting as resistance and a point of reference.

A strong close above this level may open the floodgates for USDSEK bulls (those looking to see the minor pair rally).

However, USDSEK bears (those looking to see a decline in the pair) will have their eyes set on the following levels.

  • 10.8333: the 21-day SMA

  • 10.7079: the lower trendline of the broadening pattern

Finally, the Relative Strength Index, – an indicator that shows overbought and over-sold zones- is above the 50-point mid-way line and pointing upwards towards the overbought zone, signaling a bullish sentiment in the asset.

Forex-Time-LogoArticle by ForexTime

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

Financial News Forex and Currency News
08 May

Oil prices are rising amid rumors of increased production by OPEC countries. European indices are growing amid the “dovish” position of the ECB

By JustMarkets

The US stock indices traded mixed on Tuesday. The Dow Jones Index (US30) rose by 0.08%, while the S&P 500 Index (US500) gained 0.13%. The NASDAQ Technology Index (US100) closed negative 0.10% yesterday. Minneapolis Fed President Kashkari’s comments on Tuesday were hawkish when he said that given the latest inflation data, he doubts that Fed policy is restrictive enough to bring price growth back to the Fed’s 2% target. He added that the Fed will likely keep interest rates unchanged “for an extended period” until it is satisfied that inflation will align with the target. Investors await further comments from the central bank and Friday’s Michigan consumer sentiment index to better understand how rates will move.

First-quarter earnings results were mostly better than expected, which is favorable for the stock. First-quarter earnings are expected to be up 6.5% YoY, well above the 3.8% forecast before the reporting season.

Equity markets in Europe mostly went up yesterday. Germany’s DAX (DE40) rose by 1.40%, France’s CAC 40 (FR40) closed 0.99% higher, Spain’s IBEX 35 (ES35) added 1.50%, and the UK’s FTSE 100 (UK100) gained 1.22%.

ECB Governing Council representative De Cos said that the ECB may cut interest rates in June if inflation persists. On the back of positive economic news from the Eurozone, European indices were supported on Tuesday. Eurozone retail sales for March rose by 0.8% m/m, which exceeded expectations of 0.7% m/m and was the largest increase in a year and a half. German factory orders for March unexpectedly fell by 0.4% m/m, weaker than expectations of 0.4% m/m. German trade news was better than expected: exports for March added 0.9% m/m, stronger than expectations of 0.3% m/m. In addition, imports for March unexpectedly rose by 0.3% m/m, stronger than expectations of 1.0% m/m.

WTI crude oil prices fell to $78 per barrel on Wednesday, back to their lowest levels in nearly two months after reports that Russian Deputy Prime Minister Alexander Novak said OPEC+ may consider increasing oil production. The group of major producers will meet on June 1 to decide on production policy for the year’s second half. The current supply agreement, which takes about 2.2 million barrels a day off the market, expires at the end of June.

Asian markets were mostly up on Wednesday. Japan’s Nikkei 225 (JP225) closed up 1.57% yesterday, China’s FTSE China A50 (CHA50) added 0.25% for the day, Hong Kong’s Hang Seng (HK50) was down 0.53% for the day, and Australia’s ASX 200 (AU200) was positive 1.44%.

The Hang Seng (HK50) attempted to near its highest level in eight months as traders focused on Chinese President Xi Jinping’s visit to Europe this week and how trade relations will develop despite ongoing inspections of various sectors. On the fiscal front, Beijing will allocate billions of yuan to upgrade infrastructure in China’s cities over the next three years. Meanwhile, foreign exchange reserves in China fell more than expected to US$3.20 trillion in April, and Hong Kong’s fell to the lowest level in six months, US $416.4 billion.

Finance Minister Shun’ichi Suzuki repeated a warning that authorities are ready to respond to excessive currency volatility. At the same time, Bank of Japan Governor Kazuo Ueda said they will study the impact of yen movements on inflation to guide policy decisions. Analysts say the intervention will only give the authorities some time, given the sharp interest rate differential between Japan and the US.

S&P 500 (US500) 5,187.70 +6.96 (+0.13%)

Dow Jones (US30) 38,884.26 +31.99 (+0.082%)

DAX (DE40) 18,430.05 +254.84 (+1.40%)

FTSE 100 (UK100) 8,313.67 +100.18 (+1.22%)

USD Index 105.37 +0.32 (+0.32%)

Important events today:
  • – German Industrial Production (m/m) at 09:00 (GMT+3);
  • – US Crude Oil Reserves (w/w) at 17:30 (GMT+3);
  • – US FOMC Member Cook Speaks at 20:30 (GMT+3).

By JustMarkets

 

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

Economics & Fundamentals Financial News
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