Brain scans of Philly jazz musicians reveal secrets to reaching creative flow

By John Kounios, Drexel University and Yvette Kounios, Widener University 

Flow, or being “in the zone,” is a state of amped-up creativity, enhanced productivity and blissful consciousness that, some psychologists believe, is also the secret to happiness. It’s considered the brain’s fast track to success in business, the arts or any other field.

But in order to achieve flow, a person must first develop a strong foundation of expertise in their craft. That’s according to a new neuroimaging study from Drexel University’s Creativity Research Lab, which recruited Philly-area jazz guitarists to better understand the key brain processes that underlie flow. Once expertise is attained, the study found, this knowledge must be unleashed and not overthought in order for flow to be reached.

As a cognitive neuroscientist who is senior author of this study, and a university writing instructor, we are a husband-and-wife team who collaborated on a book about the science of creative insight. We believe that this new neuroscience research reveals practical strategies for enhancing, as well as elucidating, innovative thinking.

Jazz musicians in flow

The concept of flow has fascinated creative people ever since pioneering psychological scientist Mihály Csíkszentmihályi began investigating the phenomenon in the 1970s.

Yet, a half-century of behavioral research has not answered many basic questions about the brain mechanisms associated with the feeling of effortless attention that exemplifies flow.

The Drexel experiment pitted two conflicting theories of flow against each other to see which better reflects what happens in people’s brains when they generate ideas. One theory proposes that flow is a state of intensive hyperfocus on a task. The other theory hypothesizes that flow involves relaxing one’s focus or conscious control.

The team recruited 32 jazz guitarists from the Philadelphia area. Their level of experience ranged from novice to veteran, as quantified by the number of public performances they had given. The researchers placed electrode caps on their heads to record their EEG brain waves while they improvised to chord sequences and rhythms that were provided to them.

Young man plays guitar while wearing helmet covered in electrodes that measure brain activity
Postdoctoral researcher Yongtaek Oh plays guitar while his EEG is recorded in Drexel University’s Creativity Research Lab.
John Kounios/Creativity Research Lab/Drexel University, CC BY-ND

Jazz improvisation is a favorite vehicle for cognitive psychologists and neuroscientists who study creativity because it is a measurable real-world task that allows for divergent thinking – the generation of multiple ideas over time.

The musicians themselves rated the degree of flow that they experienced during each performance, and those recordings were later played for expert judges who rated them for creativity.

Train intensively, then surrender

As jazz great Charlie Parker is said to have advised, “You’ve got to learn your instrument, then, you practice, practice, practice. And then, when you finally get up there on the bandstand, forget all that and just wail.”

This sentiment aligns with the Drexel study findings. The performances that the musicians self-rated as high in flow were also judged by the outside experts as more creative. Furthermore, the most experienced musicians rated themselves as being in flow more than the novices, suggesting that experience is a precondition for flow. Their brain activity revealed why.

The musicians who were experiencing flow while performing showed reduced activity in parts of their frontal lobes known to be involved in executive function or cognitive control. In other words, flow was associated with relaxing conscious control or supervision over other parts of the brain.

And when the most experienced musicians performed while in a state of flow, their brains showed greater activity in areas known to be involved in hearing and vision, which makes sense given that they were improvising while reading the chord progressions and listening to rhythms provided to them.

In contrast, the least experienced musicians showed very little flow-related brain activity.

Flow vs. nonflow creativity

We were surprised to learn that flow-state creativity is very different from nonflow creativity.

Previous neuroimaging studies suggested that ideas are usually produced by the default-mode network, a group of brain areas involved in introspection, daydreaming and imagining the future. The default-mode network spews ideas like an unattended garden hose spouts water, without direction. The aim is provided by the executive-control network, residing primarily in the brain’s frontal lobe, which acts like a gardener who points the hose to direct the water where it is needed.

Slide showing views of brain with different areas lit
Views of left and right sides of the brain showing reduced brain activity when experienced musicians were in a state of high flow. These areas include key nodes of the brain’s default-mode network.
John Kounios/Creativity Research Lab/Drexel University, CC BY-ND

Creative flow is different: no hose, no gardener. The default-mode and executive-control networks are tamped down so that they cannot interfere with the separate brain network that highly experienced people have built up for producing ideas in their field of expertise.

For example, knowledgeable but relatively inexperienced computer programmers may have to reason their way through every line of code. Veteran coders, however, tapping their specialized brain network for computer programming, may just start writing code fluently without overthinking it until they complete – perhaps in one sitting – a first-draft program.

Coaching can be a help or hindrance

The findings that expertise and the ability to surrender cognitive control are key to reaching flow are supported by a 2019 study from the Creativity Research Lab. For that study, jazz musicians were asked to play “more creatively.” Given that direction, the nonexpert musicians were indeed able to improvise more creatively. That is apparently because their improvisation was largely under conscious control and could therefore be adjusted to meet the demand. For example, during debriefing, one of the novice performers said, “I wouldn’t use these techniques instinctively, so I had to actively choose to play more creatively.”

On the other hand, the expert musicians, whose creative process was baked in through decades of experience, were not able to perform more creatively after being asked to do so. As one of the experts put it, “I felt boxed-in, and trying to think more creatively was a hindrance.”

The takeaway for musicians, writers, designers, inventors and other creatives who want to tap into flow is that training should involve intensive practice followed by learning to step back and let one’s skill take over. Future research may develop possible methods for releasing control once sufficient expertise has been achieved.The Conversation

About the Author:

John Kounios, Professor of Psychological and Brain Sciences, Drexel University and Yvette Kounios, Adjunct Instructor of English and Professional Writing, Widener University

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

Boeing: what the next CEO needs to do to ensure quality and turn things around

By Bart MacCarthy, University of Nottingham 

The woes of Boeing show no sign of abating. CEO Dave Calhoun has announced he will step down at the end of the year. Board chair, Larry Kellner and the firm’s head of commercial planes, Stan Deal, are also quitting the aviation giant.

This follows an array of technical failures with Boeing aircraft, including the mid-air blowout of a door plug on an Alaska Airlines Boeing 737 Max 9 in January. It was recently confirmed that the manufacturer has paid US$160 million (£127 million) to the airline in compensation.

The diversity of issues indicates systemic failures in the management of quality in Boeing and its supply base. The Alaska Airlines incident represented a quality tipping point – the point at which fundamental changes in Boeing’s management of quality became imperative and unavoidable.

There were no serious injuries in the Alaska Airlines blowout incident – unlike the two crashes of Boeing’s 737 Max in 2018 and 2019, which killed a total of 346 people. But the aircraft was forced to make an emergency landing.

Among previous failures in design, manufacture and assembly were problems with an automated stabilising system on a new Southwest Airlines Boeing 737 Max in February 2023; a mid-air engine failure on a United 737 Max in November 2023; and Boeing having to ask all operators of the 737-Max a few weeks later to examine installation of a rudder following a loose bolt being reported on one aircraft.

In recent days a Southwest Airlines Boeing 737-800 needed to do an emergency landing shortly after takeoff from Denver because an engine cover came off. The blame here appears to lie with either the engine manufacturers or the airline rather than Boeing.

But the January failure has had severe, if not existential, consequences for Boeing. It has affected the company’s share price, harmed its competitive position with Airbus, and put the firm under intense scrutiny by media, regulators and airlines. Passengers are publicly wondering whether they should avoid flying on a 737 (or indeed any Boeing aircraft), while major airlines including Ryanair and United Airlines are facing uncertainty from delayed aircraft orders that were supposed to be due in time for summer.

The problem for Ryanair

The civil aircraft market in Europe is effectively a duopoly between Airbus and Boeing. For airlines, the costs of switching to another manufacturer are high and lead times from order to delivery are long. As such, there is mutual lock-in in the relationship between Boeing and Ryanair, one of the manufacturer’s largest customers.

Ryanair uses the 737 class across its extensive European fleet. This strategy brings many benefits in the lean business model Ryanair favours: operational flexibility, reduced maintenance costs and faster airport turnarounds. It gives Ryanair substantial leverage with Boeing, though as in many buyer-supplier relationships, there is strong interdependence.

Ryanair’s very vocal CEO, Michael O’Leary, has been outspoken in reporting increased quality issues in the airline’s inspections of Boeing aircraft delivered since the pandemic, including finding spanners under floor panels and missing seat handles. He has still expressed confidence in Boeing, but says it has to get quality right in future.

Reliable aircraft supply from Boeing is critical for Ryanair to take advantage of a resurgent post-pandemic passenger market. Delays to the 737 Max were already hampering Ryanair’s growth, to the extent that the airline offered back in January to take aircraft cancelled by other airlines. O’Leary warned in February that passengers could see a 10% hike in fares in 2024 due to gaps in the Ryanair fleet. Meanwhile, Chicago-based United Airlines has also reportedly asked pilots to take unpaid leave because of delayed aircraft deliveries from Boeing.

So why might ensuring quality be so challenging for an industrial giant such as Boeing?

Ensuring quality

A commercial aircraft is massively complex, with almost infinite potential for variations in component parts. Boeing has the resources and capabilities to tackle these issues. But the reported issue with the January blowout of missing bolts points to a basic quality failure that should never have occurred in a quality-focused organisation.

Many techniques can be deployed to improve quality in manufacturing and assembly operations. For instance, a well proven and commonly used approach is known as “six sigma”. This statistics-based methodology provides a set of steps to identify, investigate and resolve sources of variation to ensure a product or process conforms to specification. It strives for almost zero defects and can be applied with contemporary data science methods to identify root causes, target improvements, and ensure such an issue never recurs.

But viewing quality as just a set of technical, statistical problems misses the major challenges confronting Boeing. As statistician and pioneering business theorist W Edwards Deming argued, quality management has behavioural, organisational and cultural dimensions. Deming laid the responsibility for quality squarely in the hands of top management.

Reported issues in Boeing’s assembly operations include failure to follow procedures, workarounds and inexperienced staff recruited post-pandemic. Flaws in fuselages delivered from a major supplier were tolerated, to be corrected later, in order to maintain a production schedule. This all speaks to deep-seated organisational and cultural issues at Boeing.

Targeted improvement initiatives will help, but are not a panacea. Instilling a culture of quality excellence will need root-and-branch rethinking across the organisation and its massively complex supply base.

Crucially, Boeing needs to ensure that quality procedures are followed every time. In line with one of Deming’s key principles, this will require transformational quality leadership across the organisation, starting from the very top.

Organisations, whether product or service-based, ignore persistent quality issues at their peril. As Boeing demonstrates, if not addressed, they can have severe impacts at every level of an organisation.


A Boeing spokesperson said:

We are squarely focused on implementing changes to strengthen quality across our production system and taking the necessary time to deliver high quality airplanes that meet all regulatory requirements. We continue to stay in close contact with our customers about these issues and our actions to address them.The Conversation

 

About the Author:

Bart MacCarthy, Professor of Operations Management, University of Nottingham

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

 

Gold: Setting Near-Term Price Targets

This was our “initial upside target” — which has now been exceeded. What’s next?

By Elliott Wave International

Around the first week of the year, the outlook for gold was not looking promising, at least according to this Jan. 5 headline (Reuters):

Gold set for weekly decline as dollar, yields climb

The rally in gold which started in early October continued to struggle for much of the rest of January.

Even though the mainstream media was looking to so-called fundamentals — such as the action of the dollar or bond yields — Elliott Wave International focused on the patterns of investor psychology — as reflected by Elliott waves.

Indeed, on Jan. 24, the U.S. Short Term Update, a thrice weekly Elliott Wave International publication which focuses on major U.S. financial markets, said:

Spot [Gold] made its lowest close since January 17 today. Still, prices remain above $1972.89, which keeps the short-term bullish potential dominant. The [unfolding Elliott wave] should carry gold well above $2250 as the rally’s pattern progresses.

Keep in mind that when this analysis was offered more than two months ago, the price of gold was trading around $2013 — a far cry from our price target above $2250.

Now, fast forward to April 1 and this headline (CNBC):

Treasury yields jump to start second quarter

As you’ll recall, rising bond yields were mentioned in the media as a negative for gold back in January.

But what did gold do on April 1? Correct — it hit another all-time high.

Not only that, April 1 was the day that our price target was reached.

Here’s a quote from the April 1 U.S. Short Term Update:

The initial upside target for [Gold] was “above $2250,” which we first stated in the January 24 Short Term Update and reaffirmed throughout February and March. Gold hit this target today when spot prices pushed to $2263.64 intraday.

On April 2, gold traded even higher.

Remember, Elliott Wave International doesn’t make forecasts for financial markets — like gold — based on common beliefs about “fundamentals” which investors cannot count on.

Instead, we arrive at price targets based on Elliott wave analysis.

If you’d like to learn more about Elliott wave analysis, read Frost & Prechter’s Wall Street classic, Elliott Wave Principle: Key to Market Behavior. Here’s a quote from this “must read” book:

When after a while the apparent jumble gels into a clear picture, the probability that a turning point is at hand can suddenly and excitingly rise to nearly 100%. It is a thrilling experience to pinpoint a turn, and the Wave Principle is the only approach that can occasionally provide the opportunity to do so.

If you’d like to learn about the Wave Principle, know that you can gain complimentary access to the entire online version of Elliott Wave Principle: Key to Market Behavior for free.

Just follow the link and you can have the Wall Street bestseller on your computer in moments: Elliott Wave Principle: Key to Market Behavior — get free and instant access.

This article was syndicated by Elliott Wave International and was originally published under the headline Gold: Setting Near-Term Price Targets. EWI is the world’s largest market forecasting firm. Its staff of full-time analysts led by Chartered Market Technician Robert Prechter provides 24-hour-a-day market analysis to institutional and private investors around the world.

The RBNZ kept the interest rate at 5.5%. Intel plans to compete with Nvidia in AI chips

By JustMarkets

At the end of the trading day, the Dow Jones Index (US30) was down 0.02%, while the S&P 500 Index (US500) added 0.14%. The NASDAQ Technology Index (US100) closed positive 0.32% yesterday. Tuesday afternoon saw the emergence of short positions amid comments from Atlanta Fed President Bostic, who said he sees one Fed rate cut this year but is willing to change his mind toward additional rate cuts if the economic picture changes. In addition, weakness in industrial stocks, insurance companies, and telecommunication companies harmed the overall market.

Today, the US will release its monthly consumer inflation report. This report will affect the likelihood of a rate cut by the US Federal Reserve in June. Economists expect core inflation, which excludes food and fuel costs, to slow to 3.7% year-over-year from 3.8% in the previous month. However, overall inflation may rise to 3.2% y/y from 3.4% y/y. If the data comes out in line with forecasts, it would mean a mixed report for the US Fed. A decline in the core indicator (excluding food and energy prices) would indicate a continuation of the overall disinflation trend, while a rise in the overall indicator would likely reflect higher oil prices over the past month. Any surprise in the form of continued inflationary pressures will support the US dollar, especially as FOMC policymakers again discussed the possibility of holding rates longer on the back of strong economic data. While economists had previously planned for 3 rate cuts by the US Fed this year, they are now planning for 1-2 total cuts. This will be a green light for the dollar, putting pressure on risk assets, indices, and partly gold. However, gold could rise even as the dollar rises, which is rare. If the data comes out below expectations (inflation will fall more than the market expects), it will increase the probability of a rate cut in June, which will put pressure on the US dollar and lead to the growth of risk assets (euro, pound, franc), as well as support stock indices.

Nvidia (NVDA) closed down more than 2% after Intel said it is bringing to market a new artificial intelligence chip called Gaudi 3. Intel CEO Gelsinger said it will be faster and more energy efficient than Nvidia’s H100 chip and will be priced “well below” the cost of current and future Nvidia chips.

The first quarter corporate earnings season kicks off this Friday with the release of results from major banks, including JPMorgan Chase (JPM), Citigroup (C), and Wells Fargo (WFC). The consensus expects S&P 500 companies to average 3.9% y/y earnings growth in Q1, the lowest year-over-year earnings growth rate since 2019.

The Bank of Canada (BoC) will meet today. Markets are pricing at a 15% chance of a rate cut, so the BoCis is unlikely to cut rates at this meeting due to concerns about wage-led inflation. However, the BoC may give clearer signals that a rate cut will happen this summer. Oil prices will also influence the Canadian dollar, with any escalation in the Middle East likely to benefit the oil-exporting currency.

Equity markets in Europe were mostly down on Tuesday. Germany’s DAX (DE40) fell by 1.32%, France’s CAC 40 (FR40) closed down 0.86% yesterday, Spain’s IBEX 35 (ES35) lost 0.88%, and the UK’s FTSE 100 (UK100) closed negative 0.11% on Tuesday.

In its quarterly bank lending review, the ECB reported that demand for corporate credit in the Eurozone fell significantly in the first quarter as the region continues to suffer from elevated borrowing costs.

WTI crude oil prices traded near $85 a barrel on Wednesday after falling for two consecutive sessions. A larger-than-expected increase in US crude inventories and ongoing diplomatic talks between Israel and Hamas helped ease supply concerns. API data showed US crude inventories rose 3.034 million barrels last week, exceeding forecasts for a 2.415 million barrel increase and reversing a 2.286 million barrel decline the previous week. In the Middle East, the Hamas movement said it would study Israel’s ceasefire proposal and present its response to mediators, raising hopes of averting a wider conflict in the region. However, Iran’s Revolutionary Guard warned it could disrupt trade through the Strait of Hormuz if necessary, which could hit a fifth of the world’s daily oil consumption.

Asian markets were mostly up yesterday. Japan’s Nikkei 225 (JP225) gained 1.08% yesterday, China’s FTSE China A50 (CHA50) was down 0.38%, Hong Kong’s Hang Seng (HK50) was up 0.57% over yesterday, and Australia’s ASX 200 (AU200) was positive 0.45%.

The Reserve Bank of New Zealand (RBNZ) kept the official cash rate (OCR) at 5.5% at the April 2024 policy meeting, extending the rate pause for the sixth time and confirming market expectations. Policymakers noted that the current stance of monetary policy is appropriate to further reduce pressure on manufacturing capacity and inflation. Although core domestic inflation slowed to a two-and-a-half-year low of 4.7% in Q4 2023, it remained well above the 1-3% target. The Committee believes the OCR should remain at a restrictive level for an extended period to help annual consumer inflation return to the target range.

Bank of Japan data showed that producer prices in Japan rose by 0.8% year-on-year in March 2024, matching expectations and the highest since last October.

S&P 500 (US500) 5,209.91 +7.52 (+0.14%)

Dow Jones (US30) 38,883.67 −9.13 (−0.023%)

DAX (DE40) 18,076.69 -242.28 (−1.32%)

FTSE 100 (UK100) 7,934.79 −8.68 (−0.11%)

USD Index 104.11 −0.03 (−0.03%)

Important events today:
  • – Japan Producer Price Index (m/m) at 02:50 (GMT+3);
  • – New Zealand RBNZ Interest Rate Decision at 05:00 (GMT+3);
  • – New Zealand RBNZ Rate Statement at 05:00 (GMT+3);
  • – US Consumer Price Index (m/m) at 15:30 (GMT+3);
  • – Canada BoC Interest Rate Decision at 16:45 (GMT+3);
  • – Canada BoC Monetary Policy Report at 16:45 (GMT+3);
  • – Canada BoC Press Conference at 17:30 (GMT+3);
  • – US Crude Oil Reserves (w/w) at 17:30 (GMT+3);
  • – US FOMC Meeting Minutes at 21:00 (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.

NZD is G10’s best-performer so far today. But will it last?

By ForexTime

  • Markets boosted the “kiwi” after “hawkish” RBNZ signals
  • More action expected with US CPI, FOMC minutes to be released
  • Softer US inflation may boost NZDUSD by further 700 points
  • Still-elevated CPI may force NZDUSD to fall by some 200-400 points

 

The Kiwi is currently the best-performing G10 currency against the US dollar!

NZDUSD surged after the Reserve Bank of New Zealand (RBNZ) left its Official Cash Rate unchanged at 5.5%, as widely expected.

More importantly for Kiwi bulls (those hoping that NZDUSD would go higher) …

the RBNZ said that its policy needs to be “restrictive for a sustained period”.

And as we know, markets tend to reward the currency of the economy whose interest rates can stay higher for longer.

 

Following the RBNZ decision, NZDUSD a.k.a the “kiwi” saw a price movement range of over 300 points rallying to a high of 0.60774.

This psychological 0.60700 level will be closely monitored ahead of today’s US CPI release!

The US consumer price index (CPI) measures the rate of inflation, that is, the changes in the prices of a basket of goods and services over a period, in the United States.

The incoming data is expected to show:

  •  Headline CPI in March 2024 vs. March 2023 (year-on-year): 3.4%
    If that is the case, that 3.4% would be higher than February’s 3.2% year-on-year figure

  • Headline CPI in March 2024 vs. February 2024 (month-on-month): 0.3%
    If that is the case, that 0.3% would be lower than February’s 0.4% month-on-month figure

  • Core CPI (excluding food and energy prices) year-on-year: 3.7%
    If that is the case, that 3.7% would be lower than February’s 3.8% year-on-year figure

  • Core CPI month-on-month: 0.3%
    If that is the case, that 0.3% would be lower than February’s 0.4% month-on-month figure.

 

 

POTENTIAL SCENARIOS:

  • A hotter-than-expected US CPI report may be seen as bullish for the US dollar, likely dragging NZDUSD lower.
  • A softer-than-expected US CPI report may be interpreted as bearish for the greenback, perhaps even lifting NZDUSD past its 50-day SMA (simple moving average).

 

 

But wait, there’s more …

More FX volatility could be expected after the US CPI announcement.

The FOMC’s March meeting minutes are due to be released at 6:00 pm GMT today (Wednesday, April 10th).

  • NZDUSD may move lower if the FOMC minutes show that the US central bank is less convinced about the prospects of 75-basis points in cuts for this year, instead preferring fewer rate cuts.
  • However, NZDUSD could be given a boost if policymakers have greater confidence (more than they’ve conveyed to the public so far) that they can follow through with the 75-basis points of rate cuts pencilled in last month.

 

 

Looking at the chart above …

NZDUSD has rallied for over 1300 points from its year-to-date low at 0.59391.

A surprisingly soft US CPI, with the year-on-year figures close to 3%, may turbocharge the “kiwi” upwards by a further 700 points!

This could send NZDUSD to an upper trendline resistance around 0.61382!

 Possible near-term resistance:

  • 0.60839: the 100% Fibonacci level which is the current zone of the 50-day simple moving average (SMA)

The Fibonacci retracement levels are taken from the December 13th low at 0.60839 to the December 28th high at 0.63692.

 

On hotter-than-expected US CPI data, the US dollar may strengthen, which sets Kiwi up for a decline.

Possible near-term support can be seen at

  • 0.60506: an important price level, and upward trendline on the 4-hour timeframe.
  • 0.60319: the 21-day SMA

Forex-Time-LogoArticle by ForexTime

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EUR/USD holds steady ahead of key economic updates

By RoboForex Analytical Department

The EUR/USD pair is maintaining a neutral stance, trading around 1.0851 on Wednesday, as the market anticipates crucial updates, including the US inflation data for March and the outcome of the European Central Bank (ECB) meeting on Thursday. Given the significant events on the horizon, investors are exhibiting caution.

The US inflation rate for March is anticipated to show a 0.3% month-on-month increase, slightly below February’s 0.4% rise. The core Consumer Price Index (CPI) is also expected to grow by 0.3% month-on-month. The market consensus leans towards the US Federal Reserve reducing its interest rate by 75 basis points throughout 2024, indicating three separate 25-point cuts.

Despite the increase in yields on US government bonds since the start of the year, the US dollar’s reaction has been relatively subdued, with only a 2.5% appreciation against a 47-basis point widening in benchmark bond yields. This disparity suggests that the US dollar may play catch-up with Treasury yields, or bond yields might decrease to close the gap. This raises questions about the timing of this adjustment.

The ECB’s interest rate is expected to remain at 4.5% per annum, with the European regulator likely to wait for the Fed’s move towards easing monetary policy before making its adjustments. This approach is taken even though the eurozone has effectively managed high inflation ahead of other developed economies, theoretically positioning it to adapt its monetary policy sooner.

Technical analysis of EUR/USD

The H4 chart analysis of EUR/USD indicates a correction wave to 1.0883 followed by a decrease to 1.0844. A narrow consolidation range has formed above this level, potentially leading to a correction towards 1.0904 before a new decline towards 1.0790, with a continuation to 1.0700 as a possible target. The MACD indicator, with its signal line above zero and the histogram declining, suggests a potential sharp decrease.

The H1 chart shows a consolidation range of around 1.0850, extending to 1.0884. The market has returned to 1.0843, with the possibility of another correction wave to 1.0904 before a downward movement to 1.0790. The Stochastic oscillator, currently below 50, indicates a continuation of the decline towards 20, supporting the bearish scenario.

Disclaimer

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

Israel and Hamas have not reached an agreement. Markets await US consumer price report

By JustMarkets

Stock indices closed slightly lower on Monday as the yields on 10-year T-notes rose to a 4-month-high. At the end of the trading day, the Dow Jones Index (US30) was down 0.03%, while the S&P 500 Index (US500) decreased by 0.04%. The NASDAQ Technology Index (US100) closed negative 0.05% yesterday.

Markets await Wednesday’s US consumer price report to determine the direction of the dollar and indices. They also await the first quarter corporate earnings season, which begins this Friday with results from major banks, including JPMorgan Chase (JPM), Citigroup (C), and Wells Fargo (WFC).

Tesla shares are up more than 4% after CEO Musk said the company will unveil its robot cabs on August 8. Nike (NKE) shares are up more than 1% and led the Dow Jones Industrials higher after Hedgeye Risk Management upgraded the stock to a “buy” from a “hold” rating.

Equity markets in Europe were mostly up on Monday. Germany’s DAX (DE40) rose by 0.79%, France’s CAC 40 (FR40) closed yesterday up 0.72%, Spain’s IBEX 35 (ES35) was down 0.04%, and the UK’s FTSE 100 (UK100) closed positive 0.41% on Monday.

UK retail sales in March 2024 rose by 3.2% y/y, the strongest increase since August last year, mainly due to the Easter holiday, which boosted food sales.

The Apr Sentix Eurozone Investor Confidence Index rose by 4.6% to a 2-year high 5.9%, stronger than expectations of 8.3%. German industrial production for February rose by 2.1% m/m, stronger than expectations of 0.5% m/m and the largest increase in 13 months. German trade data was mixed. German exports for February fell by 2.0% m/m, which was weaker than expectations of 0.5% m/m. Imports for February unexpectedly rose by 3.2% m/m vs. expectations of 1.2% m/m.

WTI crude futures rose to $86/bbl on Tuesday after falling to $84.3/bbl in the previous session as the latest ceasefire talks between Israel and Hamas in Egypt failed to progress. Israeli Prime Minister Benjamin Netanyahu said on Monday that Israel would continue the plans. A senior Hamas official also said they had rejected Israel’s latest ceasefire offer made at the talks in Cairo. Risks of further supply disruptions continued to drive oil prices higher as Iran vowed to retaliate against an alleged Israeli attack that killed Iranian generals in Syria.

Asian markets were mostly up yesterday. Japan’s Nikkei 225 (JP225) gained 0.91%, China’s FTSE China A50 (CHA50) declined 0.78%, Hong Kong’s Hang Seng (HK50) gained 0.05% over yesterday, and Australia’s ASX 200 (AU200) was positive 0.20%.

In Australia, consumer sentiment weakened for the second consecutive month in April as inflation and high-interest rates weighed heavily. A Westpac report said that while the Reserve Bank of Australia (RBA) has signaled that rates are unlikely to rise, it needs more confidence in the inflation outlook to consider cutting rates. Markets had been betting that the central bank would start cutting rates later this year, but robust employment data and rising house prices dampened the outlook. Meanwhile, business confidence improved in March but remained below the long-term average.

S&P 500 (US500) 5,202.39 −1.95 (−0.04%)

Dow Jones (US30) 38,892.80 −11.24 (−0.03%)

DAX (DE40) 18,318.97 +143.93 (+0.79%)

FTSE 100 (UK100) 7,943.47 +32.31 (+0.41%)

USD Index 104.14 −0.16 (−0.15%)

Important events today:
  • – New Zealand NZIER Business Confidence (m/m) at 01:00 (GMT+3);
  • – Australia NAB Business Confidence (m/m) at 04:30 (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.

Yen weakens amid intervention concerns and interest rate differentials

By RoboForex Analytical Department

The Japanese yen is experiencing a notable decline against the US dollar, with the USD/JPY pair currently hovering around 151.88 on Tuesday. Despite the US dollar’s instability, driven primarily by fluctuations in Treasury bond yields, the yen faces significant downward pressure.

Market participants remain cautious, particularly as the USD/JPY pair approaches levels that had previously triggered currency interventions by Japanese authorities. Despite aggressive verbal measures from Japan aimed at bolstering the yen, these efforts have shown limited success. Finance Minister Shunichi Suzuki has reiterated Japan’s commitment to addressing the yen’s excessive depreciation, echoing his earlier statements about readiness to intervene against further declines in its value.

However, the prospect of intervention, although a genuine threat, has thus far prevented the yen from breaching the 152.00 mark.

This substantial interest rate differential between the US Federal Reserve and the Bank of Japan (BoJ) is a critical factor contributing to the yen’s weakness. While the BoJ has only recently moved away from its negative interest rate policy, setting its lending rate back to zero, the Federal Reserve maintains a fund rate of 5.5% per annum, with no cuts implemented thus far.

Technical analysis of USD/JPY

On the H4 chart, the USD/JPY pair has completed a growth wave to 151.75 and corrected to the 150.80 level. Another growth wave to 151.75 has been observed today, with the market forming a consolidation range around this level. An upward breakout from this range could lead to a rise to 152.07. After reaching this level, a correction to 151.75 (testing from above) may occur, followed by an increase to 152.70. This scenario is supported by the MACD oscillator, with its signal line above zero and poised to reach new highs.

On the H1 chart, support at 151.75 has bolstered the development of a growth structure to 152.07. After achieving this target, a correction to 151.75 may be seen, potentially leading to further growth towards 152.70, the main target of the growth wave. The Stochastic oscillator confirms this analysis with its signal line above 50 and preparing to ascend to 80.

Disclaimer

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

Israel withdraws troops from the southern Gaza Strip. Canada’s labor market remains resilient

By JustMarkets

Stock indices rose Friday on optimism that growth in the US economy will continue to drive consumer spending and corporate profits. Stocks rose even after a stronger-than-expected US payrolls report released Friday raised the likelihood of a longer-term interest rate hike. The Dow Jones (US30) Index was up 0.80% (for the week -1.64%), while the S&P 500 (US500) Index increased by 1.11% (for the week -1.02%). The NASDAQ Technology Index (US100) closed positive 1.24% on Friday (for the week -1.31%).

The US nonfarm payrolls for March rose 303,000, exceeding expectations of 214,000 and representing the largest increase in 10 months. The unemployment rate fell 0.1% to 3.8% in March, matching expectations. The US average hourly earnings fell to 4.1% y/y from 4.3% y/y in February, matching expectations and representing the slowest rate of growth in 2 years.

Fed spokeswoman Bowman said she still sees several upside risks to inflation and “it is not yet time” to cut interest rates. She added that it is possible that the federal funds rate level consistent with low and stable inflation “will be higher than it was before the pandemic, and if so, fewer rate cuts will eventually be needed to return our monetary policy stance to neutral.” Dallas Fed President Logan said on Friday that it was “too early” to cut interest rates because there are concerns that inflationary progress could stall and that price growth may not cool down to the Fed’s 2 percent target in a “timely manner.” The Fed’s hawkish comments on Friday drove bond yields higher and suggested that the Fed will not be cutting interest rates anytime soon. Markets rate the odds of a 25 bps rate cut at 6% for the next FOMC meeting on May 1 and 58% for the next meeting on June 12.

Tesla (TSLA) stock price fell more than 3% and topped the Nasdaq 100 losers list after reports that the company canceled its plans for a low-cost entry-level Tesla car.

The number of jobs in Canada was unchanged last month, but the fundamentals fared better. Average hourly earnings in Canada rose to a 4.5% m/m SAAR. This is a solid increase after 4.3% in the previous month. On the other hand, rising wages are a factor in rising inflation, which may force the Bank of Canada to delay plans to start cutting rates. The Bank of Canada is looking at an annualized rate of 5%, up a tick from the previous month. It means that wages are rising too fast relative to the inflation target.

Equity markets in Europe were mostly down on Friday. Germany’s DAX (DE40) was down 1.24% (for the week -1.64%), France’s CAC 40 (FR40) closed down 1.11% on Friday (for the week -1.89%), Spain’s IBEX 35 (ES35) fell by 1.58% (for the week -1.44%), and the UK’s FTSE 100 (UK100) closed negative 0.81% on Friday (for the week -0.26%).

Eurozone February retail sales fell by 0.5% m/m, weaker than expectations of 0.4% m/m. German Factory Orders in February rose by 0.2% m/m, weaker than expectations of 0.7% m/m. The German Import Price Index for February fell by 0.2% m/m and 4.9% y/y, weaker than expectations of unchanged m/m and 4.6% y/y. Swaps estimate the odds of a 25 bps ECB rate cut at 7% at the next meeting on April 11 and 97% at the next meeting on June 6.

WTI crude oil prices fell more than 2% to $85 a barrel on Monday as Israel withdrew troops from the southern Gaza Strip in response to mounting international pressure. Israel and Hamas also resumed peace talks in Egypt, easing tensions that have led to the recent surge in oil prices. Meanwhile, major oil exporter Saudi Arabia raised official selling prices for all grades of crude for Asia in May amid tightening global supply.

Asian markets were mostly down last week. Japan’s Nikkei 225 (JP225) fell by  4.07%, China’s FTSE China A50 (CHA50) declined 0.19%, Hong Kong’s Hang Seng (HK50) gained 1.17% for the week, and Australia’s ASX 200 (AU200) was negative 0.59%.

Bank of Japan Governor Kazuo Ueda said inflation will likely accelerate from “summer to fall” as a sharp wage rise will increase prices. It was his strongest hint yet of the possibility of another rate hike in the coming months. Ueda added that the central bank could “respond with monetary policy” if currency movements significantly affect inflation and wages, suggesting that a sharp fall in the yen could affect the timing of the next rate hike.

The Reserve Bank of New Zealand (RBNZ) is expected to quickly decide to keep interest rates unchanged at its meeting on Wednesday. Still, the central bank will have to deal with stagnant inflation amid growing financial stress. The official money rate is forecast to be kept at 5.5%, but there could be dovish adjustments to the forecasts. UBS believes that the RBNZ will wait until November before cutting interest rates.

On Sunday, the People’s Bank of China (PBoC) announced a 500 billion yuan “re-lending” program for technology innovation and transformation to support small and medium-sized technology enterprises. This week, investors await China’s latest inflation data for economic and monetary policy insights.

S&P 500 (US500) 5,204.34 +57.13 (+1.11%)

Dow Jones (US30) 38,904.04 +307.06 (+0.80%)

DAX (DE40) 18,175.04 −228.09 (−1.24%)

FTSE 100 (UK100) 7,911.16 −64.73 (−0.81%)

USD Index 104.29 +0.17 (+0.16%)

Important events today:
  • – Switzerland Unemployment Rate (m/m) at 08:45 (GMT+3);
  • – German Industrial Production (m/m) at 09:00 (GMT+3);
  • – German Trade Balance (m/m) at 09:00 (GMT+3);
  • – Switzerland SNB Chairman Thomas Jordan speaks at 18:15 (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.

Trade of the Week: Cryptos to rise again this CPI week?

By ForexTime

  • Bitcoin back to within 2% of record high!
  • All 11 FXTM Crypto CFDs climbing in tandem with Bitcoin
  • Cryptos often rise the same week that US inflation data is released
  • Cryptos’ weekly advance is tampered with 2 days of declines
  • Solana offered “strongest hedge” against Gold on CPI days so far this year

 

Cryptos are skyrocketing today (Monday, April 8th)!

At the time of writing, Bitcoin is surging over 4% and sliced well beyond the $70k psychological level.

The “OG” crypto is now trading at its highest levels since mid-March when it posted a record high of $73,850.

Perhaps more importantly for bulls (those hoping that prices will go higher), Bitcoin appears to have conquered the stubborn $71,400 resistance region which had capped prices in late March.

 

Bitcoin’s advance has lifted up many other cryptocurrencies along with it.

Within the 11 different crypto CFDs offered by FXTM:

  • At the time of writing, Ethereum is the best-performer so far today, surging over 6%
  • Besides Bitcoin, there are also one-day gains of more than 4% so far for Litecoin, Chainlink, Cardano, Dogecoin, and Bitcoin Cash respectively
  • Solana, Ripple, Avalanch, and Polygon are each rising over 2%

 

Potential breakout for Ripple and Litecoin?

Today’s surge is also translating into a couple of cryptos testing key resistance levels:

  • Ripple is now testing its 50-day simple moving average (SMA)

 

 

  • Litecoin is threatening to break above its upper downward trendline, which has supressed its prices since that April 1st intraday high.

 

The above-listed price movements come at the onset of a massive week for global financial markets.

The latest US inflation data is due this Wednesday, April 10th.

NOTE: CPI = consumer price index, is used to measure inflation

This monthly inflation data release out of the world’s largest economy often causes trillions of dollars to move across global financial markets.

Traders and investors decipher what the latest CPI figures would mean for the Fed’s interest rates outlook – arguably the primary focus of markets worldwide.

 

 

How do cryptos tend to behave on CPI weeks?

 

1) Cryptos have risen every week that the highly-anticipated US inflation data is released so far in 2024!

Here’s how cryptos have generally fared, as measured by the Bloomberg Galaxy Crypto Index, the same week as the US CPI announcement:

 

  • Week ending March 15th = +0.9%
    (US CPI released on March 12th, 2024)

 

  • Week ending February 16th = +9%
    (US CPI released on February 13th, 2024)

 

  • Week ending January 12th = +5.6%
    (US CPI released on January 11th, 2024)

 

NOTE: The Bloomberg Galaxy Crypto Index measures the performance of some of the largest cryptocurrencies traded in USD, 8 of which are offered by FXTM as Crypto CFDs namely Bitcoin, Ethereum, Cardano, Solana, Avalanche, Polygon, Litecoin, and Chainlink.
These 8 cryptos account for 92.4% of the Bloomberg Galaxy Crypto Index.

 

If the upward momentum currently evident across the crypto complex can persist …

that would only extend this trend of cryptos posting weekly advances when US inflation data is released.

 

 

 

2) Weekly advance, but with 2 days of declines

To be clear, it’s not a straight path upwards for cryptos towards a weekly advance. 

Each of those CPI weeks so far this year has seen 2 different days of declines for the Bloomberg Galaxy Crypto Index.

Such volatility ensures that crypto CFDs traders still have opportunities this week to potentially benefit from both rising and falling prices.

 

 

3) Solana has so far acted as “perfect” hedge against Gold

In trading, “hedging” means protecting against potential losses by making offsetting investments.

It’s like buying insurance for your investments to minimize risks from price changes.

And we know that Gold is a popularly-traded product on CPI release days.

The precious metal tends to post a larger-than-usual move on the days that the US consumer price index (CPI) is released.

Bullion has, on average, seen a $25 move between its highest prices and its lowest price on any given trading day so far in 2024.

This chart below shows the larger-than-average moves (white bars that extend above the red line) for gold on the 3 days that has seen CPI announcements so far this year.

 

 

However, the official CPI number can and do surprise markets, and may go against the trader’s position.

In order to potentially offset such losses,

Solana has been shown to offer a strong hedge against gold on CPI days.

 

Note how Solana has fared in comparison to Gold on US CPI release days so far this year:

 

  • US CPI release on March 12th, 2024

    Gold = -1.12%

    Solana = +1.46%

 

  • US CPI release on February 13th, 2024

    Gold = -1.33%

    Solana = +0.67%

 

  • US CPI released on January 11th, 2024

    Gold = +0.22%

    Solana = -2.09%

 

In other words … Solana and Gold have moved in OPPOSITE directions on every single US CPI release days so far in 2024.

Of the 11 crypto CFDs offered by FXTM, this “inverse relationship(when asset A goes up, asset B goes down, and vice versa) is strongest between Solana and Gold on US CPI announcement days.

This perhaps sets up Solana as a suitable “hedge” against Gold for this upcoming CPI release due Wednesday, April 10th, provided this “inverse relationship” holds strong once more this week.

 

 

Remember, past performance is not a guarantee of future results.

And trading is risky at all times!

Thus, it remains to be seen whether the 3 above-listed behaviours exhibited by Crypto CFDs will prove true once again this week.

Regardless, CPI announcements tend to inject massive bouts of volatility across global financial markets.

And that in turn may result in outsized trading opportunities in Crypto CFDs.


Forex-Time-LogoArticle by ForexTime

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