30 Aug

Bitcoin ETFs are an inevitability and will drive crypto prices: deVere CEO

By George Prior

Bitcoin exchange-traded funds are “an inevitability”, which will send the price of the cryptocurrency soaring, predicts the CEO of one of the world’s largest independent financial advisory, asset management and fintech organizations.

The bullish assessment from deVere Group CEO – and long-time crypto advocate – Nigel Green, comes as the US Court of Appeals sided with Grayscale in a lawsuit against the Securities and Exchange Commission (SEC) which had rejected the company’s application to convert the Grayscale Bitcoin Trust to an ETF.

Spot ETFs invest directly in underlying assets, typically stocks or bonds, at the current market price (spot price). They aim to replicate the performance of a specific index or asset class by holding a portfolio of the actual securities that make up the index.

Mr Green says: “This is a landmark legal win for crypto against the US regulator.

“The court’s decision destroys the SEC’s central argument for rejecting every spot Bitcoin ETF over the last few years.

“This win paves the way for Bitcoin ETFs.

“Following the monumental ruling, there’s very little chance now the SEC will block the launch of ETFs.

“A swathe of big-name asset managers, among others, have filed ETF applications for Bitcoin ETFs and we expect that the SEC will organise a block approval of applications that meet requirements, as it will not want to be seen as a kingmaker.

“We believe that Bitcoin ETFs are now an inevitability. And they could come to market sooner than many anticipate.”

The deVere chief executive believes that the price of crypto will jump if/when Bitcoin ETFs are launched for three reasons.

“First, if Bitcoin ETFs are approved, it would open up the cryptocurrency market to a broader range of investors who might have been hesitant to directly invest in digital assets. This influx of new capital from institutional and retail investors could drive up demand for Bitcoin, leading to an increase in its price.

“Second, ETFs typically involve the purchase of the underlying asset by the fund managers. If Bitcoin ETFs follow this structure, it could create a substantial demand for actual Bitcoins to back the ETF shares. This increased demand, coupled with the limited supply of Bitcoin (capped at 21 million coins), could lead to a supply-demand imbalance, resulting in a price surge.

“And third, the launch of Bitcoin ETFs might improve the overall perception of cryptocurrencies in the eyes of regulators and traditional financial institutions. This increased legitimacy could attract more conservative investors who were previously wary of the regulatory uncertainties surrounding cryptocurrencies. As more institutional money flows into the market through ETFs, the price of Bitcoin would experience upward pressure.”

deVere expects that the first Bitcoin ETFs will be available in Quarter 1 of 2024 “if not before.”

Nigel Green concludes: “In-the-know investors are unlikely to wait until the potential launch of the ETFs to increase their holdings of Bitcoin.”

About:

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

Cryptocurrencies Opinions
30 Aug

The cryptocurrency market digest (BTC). Overview for 30.08.2023

By RoboForex.com

The BTC exchange rate climbed to 27,434 USD on Wednesday. The daily gain was 5.26%.

The cryptocurrency’s value started appreciating last night after the market heard about Grayscale’s victory in court. The judicial authorities ruled in favour of Grayscale in the company’s case against the US Securities and Exchange Commission (SEC). The lawsuit was filed in October 2021 and concerned the SEC’s repeated refusals to acknowledge Grayscale’s trusts as fully-fledged ETFs.

The Grayscale victory could serve as the long-awaited trigger for the cryptocurrency industry. The bitcoin-ETF matter had temporarily faded into the background because investors had grown pessimistic about a positive resolution.

The BlackRock fund awaits a decision on its ETF, expected this Friday.

So far, BTC has not used the support at 25,150 USD, which is a good sign.

The majority of altcoins followed BTC’s trajectory. The price of ETH increased by 4.12%, BNB rose by 3.23%, and SOL and TON also demonstrated growth, rising by 5.63% and 12.08%, respectively.

The cryptocurrency market capitalisation has increased to USD 1.09 trillion. The share of BTC rose to 48.8%, while the share of ETH remains at 18.9%.

“X” has been granted a licence for crypto payments

The X company (Twitter) has obtained a licence to conduct payments in cryptocurrency in the US. The document is necessary for providing digital asset-related services. Elon Musk is determined to transform the social network into an “app for everything” and is making rapid progress in this regard.

Losses incurred by mining companies exceed 4 billion USD

The mining industry is facing a challenging phase. According to Finbold, the combined losses of the industry’s 16 largest companies amount to a minimum of 4.47 billion USD. These losses have accumulated over the last twelve months.

Article By RoboForex.com

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

Cryptocurrencies Financial News
30 Aug

Stock indices were supported amid weak US economic data. Australia is experiencing a drop in inflation

By JustMarkets

At yesterday’s stock market close, the Dow Jones Index (US30) increased by 0.85%, while the S&P 500 Index (US500) added 1.45%. The NASDAQ Technology Index (US100) closed positive by 1.74% on Tuesday. The S&P 500 Index (US500) hit a 2.5-week high, the Dow Jones Industrials (US30) hit a 1.5-week high, and the Nasdaq 100 Index hit a 3-week high. The stock indexes rose after weaker-than-expected economic news from the US on Tuesday regarding JOLTS job openings for July and consumer confidence for August, pushing bond yields lower and raising the possibility that the Federal Reserve will pause its rate hike campaign.

US JOLTS job openings for July fell by 338,000 to a 2-year low of 8.827 million, weaker than expectations of 9.500 million. The Conference Board’s US consumer confidence index for August fell by 7.9 to 106.1, weaker than expectations of 116.0. Today, the US will release GDP data for August as well as labor market data from ADP. GDP growth on the back of solid labor market data may give confidence to the dollar and correct stock indices.

Equity markets in Europe were mostly up yesterday. Germany’s DAX (DE40) climbed 0.88%, France’s CAC 40 (FR40) gained 0.67%, Spain’s IBEX 35 (ES35) jumped by 1.05%, and the UK’s FTSE 100 (UK100) closed positive by 1.72%.

As the ECB’s September meeting approaches, hawks have begun to actively advocate for policy tightening. Market pricing for the September meeting is likely what ECB policymakers are concerned about. Markets are very reluctant to price in the possibility of another rate hike from the ECB, and the implied probability of a September rate hike is below 50%. But a lot will depend on Eurozone inflation data to be released today and tomorrow.

Asian markets were also mostly up yesterday. Japan’s Nikkei 225 (JP225) increased by 0.18%, China’s FTSE China A50 (CHA50) gained 0.52%, Hong Kong’s Hang Seng (HK50) added 1.95% on Tuesday, and Australia’s S&P/ASX 200 (AU200) was positive by 0.71% yesterday.

China’s actions over the weekend to stimulate its markets have sparked optimism about a possible resumption of economic growth, which is having a positive impact on energy demand and crude oil prices. In addition, gains in US stock markets on Monday boosted confidence in the economic outlook, supporting energy demand. But investors are refraining from taking large oil positions ahead of the release of key economic indicators from the US and China later this week.

Australia’s ASX 200 Index (AU200) was the best performer among its peers on Wednesday, rising more than 1% after data showed that the Consumer Price Index (CPI) declined more than expected in July (from 5.4% to 4.9% y/y, expectation 5.2% y/y). The data suggests that the Reserve Bank of Australia’s aggressive rate hikes are taking their toll, which in turn gives the central bank less incentive to raise interest rates further. However, separate data showed that Australia’s new construction fell in July, and current construction also rose less than expected in the second quarter, suggesting that high-interest rates are putting pressure on the country’s real estate market. Australia’s economic growth is expected to slow this year.

Japan’s unemployment rate rose in July for the first time in four months, while a measure of labor demand fell slightly. The number of employed people fell by 100,000 from the previous month, while the number of unemployed rose by 110,000. The weakening labor market risks triggering a negative spiral that would lead to lower wage growth, which is contrary to the BoJ’s plans as the BoJ wants demand to fuel inflation rather than cost increases.

China is set to cut mortgage interest rates by trillions of yuan for the first time since the global financial crisis. In addition, China’s state-owned banks plan to cut deposit rates for the third time in a year.

S&P 500 (F)(US500) 4,497.63 +64.32 (+1.45%)

Dow Jones (US30) 34,852.67 +292.69 (+0.85%)

DAX (DE40)  15,930.88 +138.27 (+0.88%)

FTSE 100 (UK100) 7,464.99 +126.41 (+1.72%)

USD Index  103.44 -0.62 (-0.60%)

Important events for today:
  • – Australia Consumer Price Index (m/m) at 04:30 (GMT+3);
  • – German Consumer Price Index (m/m) at 15:00 (GMT+3);
  • – US ADP Non-Farm Employment Change (m/m) at 15:15 (GMT+3);
  • – US GDP (m/m) at 15:30 (GMT+3);
  • – US Pending Home Sales (m/m) at 16:45 (GMT+3);
  • – US Crude Oil Reserves (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.

Financial News Stock Market News
30 Aug

Mid-Week Technical Outlook: Indices & Commodities

By ForexTime 

Global equities rose on Wednesday as weak US economic data overnight boosted hopes for a less hawkish Federal Reserve.

US job openings fell to their lowest level in more than two years while consumer confidence printed weaker than expected – fuelling bets around the Fed having less headroom to keep raising rates. This development weakened the dollar while supporting gold and US equities. Given how several more key U.S. economic indicators are scheduled this week, including the personal consumption expenditures and nonfarm payrolls – volatility could be the name of the game.

The increased volatility may present fresh opportunities across the board. However, our attention today falls on indices and commodities with the weapon of choice, none other than technical analysis.

SPX500_m bulls back in town?

The S&P 500 experienced a solid breakout above the 50-day SMA in the previous trading session with bulls slamming into the 4500-resistance level. A solid breakout above this point could encourage an incline towards 4580. Should 4500 prove to be reliable resistance, a decline back towards 4463 and 4390 could be on the cards.

NQ100_m gearing for fresh upside?

After breaking above the 15300 level, the Nasdaq 100 has the potential to push higher with the next key level of interest found at 15700. Should bulls run out of steam, prices may sink back below 15300 which could encourage a decline back towards 14965 and 14670, respectively.

UK100_m heads towards key resistance

UK100 bulls seem to be back in town after rebounding from the 7250 support level. Prices remain within a wide range with key layers of resistance at 7605 and 7710, respectively. Should bulls conquer these key levels, the UK100 may start a fresh bullish trend. If prices are unable to push beyond 7605, a decline back towards 7370 could be on the cards.

Brent approaches weekly resistance

It felt like the same old story for oil prices over the past few weeks as the supply and demand dynamics influencing the commodity clashed. Prices seem to be pushing higher thanks to a weaker dollar with the next key level of interest found at 89.00 – where the weekly 100 SMA resides.

Gold to extend rebound?

In our trade of the week, we discussed whether gold was primed for another breakout. We received our answer yesterday after the precious metal blasted through the $1920 resistance level following soft US economic data. Gold bulls are back in the building and could send prices higher amid a weaker dollar and growing hopes for a less hawkish Fed. The recent breakout above $1935 may inspire a move higher towards $1957 – where the 100-day SMA can be found. Although bulls are currently in power, this can be easily flipped by key US economic data – including Friday’s highly anticipated NFP report.

Forex-Time-LogoArticle by ForexTime

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

Opinions Stock Market News
29 Aug

Wealthy investors convinced by alternative investments

By George Prior

High-net-worth investors “remain absolutely convinced” by alternative investments, including venture capital, cryptocurrencies, structured products, and hedge funds – despite a wider slowdown of inflows into the sector.

The assessment from Nigel Green, the chief executive and founder of deVere Group, comes as media reports cite research that suggests that inflows have dropped by hundreds of billions of dollars over the last year as institutional investors reassessed their exposure to ‘alts.’

He says: “While institutional investor inflows into alternative investments might have slowed, our experience worldwide shows that the opposite is true with individual investors.

“Interest from our high-net-worth individuals around the world is growing in ‘alts’; they remain absolutely convinced that less familiar, return-enhancing asset classes, which include venture capital, structured products, high dividend stocks, crypto, hedge funds and managed futures, and real estate, should be a part of their investment mix.”

Alternative investments are distinct from traditional asset classes like stocks, bonds, and cash, encompassing a diverse array of investment options that offer unique risk and return profiles.

While they require careful due diligence, their inclusion in a well-structured portfolio can offer opportunities for enhanced returns and exposure to non-traditional investment strategies.

Alts are characterised by their potential to deliver higher yields and increased capital appreciation, though they can also come with greater complexity and illiquidity.

“Savvy investors will be considering this temporary period of falling inflows or lower popularity as a buying opportunity.  They will be seeing the bigger picture,” affirms Nigel Green.

“These investors understand that alternative investments tend to have low correlations with traditional asset classes like stocks and bonds, meaning that their performance may not be closely tied to the movements of traditional markets. Diversification can help reduce overall portfolio volatility and mitigate the impact of market downturns. This can improve the overall risk-adjusted returns of a portfolio.”

He continues: “While alternative investments come with higher risks, they also offer the potential for higher returns compared to traditional investments, especially in periods of economic growth or when specific strategies are successful.

“They also provide flexibility in terms of investment strategies. Hedge funds, for instance, can employ a range of strategies to potentially profit from market inefficiencies.

“Potential for Alpha: Some alternative strategies aim to generate alpha, which is the excess return earned above the market’s benchmark. Skilled managers in areas like hedge funds or private equity may be able to capitalize on their expertise to outperform the broader market.”

For these important, strategic reasons, the deVere CEO predicts that “institutional investors will be back into alts in the near future”, adding, “the current slowdown of inflows by institutions is a blip.”

Investors considering alternative investments should conduct thorough due diligence, assess their risk tolerance, and consult with a financial advisor who understands the opportunities as well as complexities of these investments.

“Remaining steadfast in their strategy for wealth building success, ‘diversify and thrive’ would be high-net-worth individuals’ attitude towards alternative investments,” concludes Nigel Green.

About:

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

Economics & Fundamentals Opinions
29 Aug

China is trying to stimulate economic growth. The probability of another rate hike by the Fed rose to 67%

By JustMarkets

At yesterday’s stock market close, the Dow Jones Index (US30) increased by 0.62%, while the S&P 500 Index (US500) added 0.63%. The NASDAQ Technology Index (US100) closed positive by 0.84% on Monday. Stocks rose on Monday while bond yields declined thanks to support provided by comments from US Federal Reserve Governor Powell on Friday that the Fed is prepared to continue raising interest rates if needed but “will proceed cautiously” on whether to raise rates again, opening the door for a potential pause in Fed operations. Currently, there is a 23% chance of a 25 bps rate hike at the September 20 FOMC meeting and a 67% chance of a 25 bps rate hike at the November 1 FOMC meeting.

Monday’s US economic news was positive for stocks after the August reading of the Dallas Fed’s measure of overall business activity in the manufacturing sector rose by 2.8 to a 5-month high of minus 17.2, which was stronger than expectations of minus 19.0.

Shares of 3M Co. rose more than 5% after it agreed to pay $5.5 billion to settle lawsuits related to military earplugs.

Equity markets in Europe were mostly up on Monday. Germany’s DAX (DE40) increased by 1.30%, France’s CAC 40 (FR40) added 1.32% yesterday, Spain’s IBEX 35 (ES35) jumped by 1.93%, and the UK’s FTSE 100 (UK100) was not trading due to the bank holiday.

Eurozone money supply unexpectedly declined by 0.4% y/y in July, weaker than expected and the sharpest rate of contraction in 13 years. ECB Governing Council spokesperson Holzmann said the following: “If there are no major surprises, I see grounds for continuing to raise rates without a pause.” The next ECB meeting will be held on September 14.

China’s actions over the weekend to stimulate its markets have sparked optimism about a possible resumption of economic growth, which is having a positive impact on energy demand and crude oil prices. In addition, gains in US stock markets on Monday boosted confidence in the economic outlook, supporting energy demand. But investors are refraining from taking large oil positions ahead of the release of key economic indicators from the US and China later this week.

Asian markets were also predominantly up yesterday. Japan’s Nikkei 225 (JP225) increased by 1.73%, China’s FTSE China A50 (CHA50) added 1.21%, Hong Kong’s Hang Seng (HK50) was up by 0.97% on Monday’s close, and Australia’s S&P/ASX 200 (AU200) was positive by 0.63% yesterday.

Asian equities were supported after China took a number of measures to stimulate its markets, including cutting the tax levied on share trading. The People’s Bank of China (PBOC) could potentially lower reserve requirement ratios sooner than expected, providing local markets with more liquidity. Chinese officials also talked about potential financial support for the economy.

S&P 500 (F)(US500) 4,433.31 +27.60 (+0.63%)

Dow Jones (US30) 34,559.98 +213.08 (+0.62%)

DAX (DE40)  15,792.61 +160.79 (+1.03%)

FTSE 100 (UK100) 7,338.58 0 (0%)

USD Index  104.02 -0.06 (-0.05%)

Important events for today:
  • – German GfK German Consumer Climate (m/m) at 09:00 (GMT+3);
  • – Australia RBA Gov-Designate Bullock Speaks at 10:40 (GMT+3);
  • – US CB Consumer Confidence (m/m) at 17:00 (GMT+3);
  • – US JOLTs Job Openings (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
29 Aug

Dollar braces for data-heavy week

By ForexTime

Chinese stocks paved the way higher for Asian shares on Tuesday as optimism from China’s measures to cut stamp duty boosted risk appetite. European futures are pointing to a positive open with the UK returning from a day’s holiday ahead of a data-heavy week for markets. In the commodity space, gold is modestly higher this morning with bulls drawing strength from a softer dollar and falling Treasury yields. Oil markets are flat, waiting for the next fundamental spark as supply concerns counter worries over demand.

US PCE Inflation and NFP in focus

The US dollar was choppy on Tuesday as investors watched on the sidelines ahead of a slew of key US economic releases over the next few days.

Due to the Federal Reserve’s current data dependent stance, every release of US economic data could play a critical role in determining whether the Fed raises rates again in 2023. As a result, close attention will be paid to upcoming releases such as August consumer confidence, Q2 GDP (2nd estimate), and weekly initial jobless claims.

However, the potential market shakers could be Thursday’s PCE inflation data and the NFP report on Friday. The Fed’s preferred inflation gauge, the Core Personal Consumption Expenditure will be closely scrutinised by investors for more signs of inflationary pressures cooling. Regarding the August NFP report, markets expect the US economy to have added 170,000 jobs in August with the unemployment rate unchanged at 3.5%. Ultimately, a strong set of economic releases may strengthen the argument around the Fed raising rates one more time this year, especially after Powell’s hawkish remarks last Friday.

Regarding the dollar, it has appreciated against every G10 currency this month with the USD Index trading around 104.00 as of writing. Although the trend is bullish on the daily charts, there are early signs of exhaustion with a break under 103.30 encouraging bears to jump back into the scene. Should 104.00 prove to be reliable support, prices could push back above 104.50, rising towards levels not seen since March around 105.00.

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
28 Aug

EUR/USD Consolidates Around 1.0810 as Powell’s Speech Influences Market Sentiment

By RoboForex Analytical Department

The EUR/USD currency pair is entering the final week of August in a phase of consolidation around the 1.0810 level. This follows a speech by Jerome Powell, the Chair of the Federal Reserve, during the recent Jackson Hole Symposium in the US. Powell highlighted the Fed’s commitment to raising interest rates continuously to maintain elevated levels of inflation, while also considering the effectiveness of measures already in place.

As a result, the Federal Reserve plans to make necessary interest rate adjustments and maintain a stringent monetary policy until it successfully manages price control.

With a relatively quiet macroeconomic calendar at the beginning of the week, the market is relying on existing factors to determine direction.

Technical Analysis of the EUR/USD Currency Pair

On the H4 chart, EUR/USD has completed a decline to 1.0765, followed by a corrective structure forming up to 1.0816. Once this correction is complete, there is potential for the decline to continue to 1.0740, a local target. The scenario is supported by the MACD indicator, as its signal line is below zero and pointed downwards.

On the H1 chart, EUR/USD has undergone a correction to 1.0816, possibly leading to the formation of a consolidation range below that level. If the price breaks out of this range in a downward direction, a new wave of decline to 1.0740 could be formed. This scenario is backed by the Stochastic oscillator, as its signal line is currently above 80, indicating a potential drop to 50. A break of this level could open the door to a decline towards 20.

Disclaimer

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

Financial News Forex and Currency News
28 Aug

Fed chief hints at another rate hike. Oil may come under pressure in the coming weeks

By JustMarkets

At Friday’s close, the Dow Jones Index (US30) increased by 0.73% (-0.53% for the week), while the S&P 500 Index (US500) added 0.67% (+0.58% for the week). The NASDAQ Technology Index (US100) closed positive by 0.94% (+1.82% for the week) on Friday. Fed Chairman Jerome Powell said on Friday that policymakers are prepared to raise interest rates further if necessary but also signaled that they may keep rates at current levels in September if economic data support it.

Key talking points from US Federal Reserve Chairman Jerome Powell’s speech at the conclusion of a conference in Jackson Hole:

  • We are attentive to signs that the economy may not be cooling as expected;
  • Evidence of sustained above-trend growth could jeopardize further progress in inflation and warrant further monetary tightening;
  • Evidence that labor market tightness is no longer easing could also warrant a monetary policy response.

According to analysts, despite the hawkish tones in Jerome Powell’s speech, the Fed is happy with current trends, and if they continue, they won’t change anything. But if the US Central Bank sees that these economic trends are fading or suddenly beginning to change, it will increase the likelihood of another rate hike because the Fed will be very sensitive to the data, and this sensitivity will be one-sided – in the direction of tightening.

Equity markets in Europe were mostly rising on Friday. German DAX (DE40) rose by 0.07% (week’s total +0.37%), French CAC 40 (FR40) rose by 0.38% (week’s total +0.90%), Spanish IBEX 35 (ES35) jumped by 0.15% (week’s total +0.76%), British FTSE 100 (UK100) closed up by 0.07% (week’s total +1.05%). Germany’s August business climate fell by 1.7 to a 10-month low of 85.7, below expectations of 86.8. ECB President Lagarde said at a symposium in Jackson Hole that the ECB “will set interest rates at a fairly restrictive level for as long as necessary to bring inflation back to the medium-term target of 2% in a timely manner.” For his part, Nagel of the ECB’s Governing Council said that with inflation still standing around 5%, “it is too early to think about a pause” in interest rate hikes. European inflation data will be released this week. Core inflation in Germany, as well as across the Eurozone, is expected to fall slightly, raising the possibility that the ECB may hit the pause button in September.

Oil was supported on Friday after Marathon Petroleum shut down its Garyville refinery in Louisiana, the third-largest refinery in the United States with a refining capacity of 596,000 BPD, due to a fire. In addition, Friday’s weekly report from Baker Hughes was upbeat for oil as the report showed that active oil rigs in the US fell to their lowest level in a year and a half. But analysts believe that against the backdrop of September, which is considered a seasonally weak month, there is a high probability of oil price declines in the coming weeks. Moreover, open interest is sharply declining, suggesting that oil bulls are taking profits after the rally.

Asian markets were also mostly up last week. Japan’s Nikkei 225 (JP225) increased by 0.23% for the week, China’s FTSE China A50 (CHA50) gained 0.04%, Hong Kong’s Hang Seng (HK50) ended the week up by 0.89%, and Australia’s S&P/ASX 200 (AU200) ended the week negative by 0.46%.

In Australia, seasonally adjusted retail sales for July rose by 0.5% month-over-month versus an expected 0.3%. Despite the increase, Australian Treasurer Jim Chalmers said he expects growth in the Australian economy to weaken significantly due to interest rate hikes by the Reserve Bank of Australia (RBA) and a slowdown in China.

A meeting between Bank of Canada Governor Kazuo Ueda and Japan’s Prime Minister last week sparked new rumors of monetary policy normalization. Traders are also wary of government intervention against the yen after it hit a nine-month low last week. The weak yen, which has helped Japanese stocks outperform global peers this year, is now pressuring the market, raising expectations that the Bank of Japan will be forced to move toward monetary tightening.

S&P 500 (F)(US500) 4,405.71 +29.40 (+0.67%)

Dow Jones (US30) 34,346.90 +247.48 (+0.73%)

DAX (DE40)  15,631.82 +10.33 (+0.07%)

FTSE 100 (UK100) 7,338.58 +4.95 (+0.07%)

USD Index  104.19 +0.21 (+0.20%)

Important events for today:
  • – Australia Retail Sales (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.

Economics & Fundamentals Financial News
28 Aug

Trade Of The Week: Gold Primed For Another Breakout?

By ForexTime 

Gold prices have kicked off the new week still nursing deep wounds inflicted from last Friday’s painful selloff.

The precious metal’s appeal took a hit following hawkish remarks delivered by Federal Reserve Chair Jerome Powell at Jackson Hole. With his comments leaving the doors open for further rate increases, gold found itself capped around $1920 as the dollar rose along with Treasury yields.

Gold is down roughly 2.5% month-to-date. Despite this, bulls and bears remain engaged in a fierce tug of war with prices almost unchanged since the start of Q3. Taking a quick look at the technical picture, the precious metal could experience a rebound or dead cat bounce with key resistance at $1920 and support at $1885.

A major breakout could be on the horizon and here are 4 reasons why:

1) US Data dump 

With the Federal Reserve’s recent shift to data dependency, every release of US economic data is of paramount importance. These data points will play a critical role in determining whether the Fed will raise rates one last time in 2023.

As a result, close attention will be paid to upcoming releases such as US August consumer confidence, US Q2 GDP (2nd estimate), and US weekly initial jobless claims to gauge the health of the US economy.

  • Gold prices may appreciate on a weaker dollar if the overall data disappoints and caps expectations around the Fed keeping rates higher for longer.
  • Gold could depreciate on a stronger dollar should the overall US economic data exceed market forecasts and fuel bets around higher US interest rates.

2) US July PCE report

The Fed’s preferred inflation gauge, the Core Personal Consumption Expenditure will be closely scrutinized by investors, especially after the central bank stressed that incoming data would influence monetary policy decisions.

Markets expect the July PCE report to show headline prices remained steady at 0.2% month-over-month with the core PCE deflator also forecast to remain unchanged at 0.2% MoM. The core personal consumption expenditures price index for projected to rise 4.2% year-over-year in April, up from the 4.1% seen in June.

Ultimately, further signs of easing inflationary pressures may support gold prices as rate hike bets cool. Traders are currently pricing in a 22% probability of a 25 basis point hike in September with this jumping to 67% by November, according to Fed funds futures.

3) US August NFP report

Fasten your seatbelts because the US nonfarm payrolls report on Friday has the potential to rock gold prices.

Markets expect the US economy to have added 168,000 jobs in August, while the unemployment rate is seen remaining unchanged at 3.5%. Given how markets remain sensitive to anything relating to the US economy and rate hike expectations, this jobs report could trigger volatility across the board.

  • Gold prices may appreciate if the August NFP report prints below the 168k market forecast, complemented by a higher unemployment rate. This combo may fuel speculation around the Fed being done with rate hikes, offering an opportunity for gold bulls to charge.
  • Gold prices may depreciate if the August NFP reports exceed markets expectations with the unemployment rate moving lower. This scenario could strengthen the argument around the Fed raising interest rates one more time this year.

4) Technical forces 

Despite pushing back above the 200-day SMA, gold bears still maintain some control on the daily charts.

Prices are trading below the 50 and 100-day SMA while the MACD trades to the downside. Bear may return to the scene if prices sink back below the 200-day SMA with $1885 acting as the first key level of interest. Weakness below this level may open a path towards $1870. Should prices experience a breakout above $1920, bulls could target $1935 and $1957 where the 100-day SMA resides.

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