InvestMacro

The Analytical Overview of the Main Currency Pairs on 2022.11.22

The EUR/USD currency pair

Technical indicators of the currency pair:

Prev Open: 1.0322
Prev Close: 1.0240
% chg. over the last day: -0.80 %

ECB representative Centeno indicated yesterday that the ECB is considering a rate hike of less than 75bs. But his colleague Holzmann, head of the Austrian National Bank, believes that if current inflation does not start to decline, he will vote for a 0.75% rate hike. As a result, the main report influencing the ECB’s next move is the next inflation report.

Trading recommendations

Support levels: 1.0193, 1.0092, 1.0043, 0.9968
Resistance levels: 1.0384, 1.0504

From the technical point of view, the trend on the EUR/USD currency pair on the hourly time frame is bullish. But the price is trading below the moving averages, the MACD indicator is in the negative zone, and there is a slight sellers’ pressure. For buy deals, it is best to wait for the completion of the corrective movement to the support levels of 1.0193, but with additional confirmation. Sell deals can be considered from the resistance level of 1.0384 intraday, but it is also better with confirmation since the level has already been tested.

Alternative scenario: if the price breaks down through the support level of 0.9993 and fixes below it, the downtrend will likely resume.

News feed for 2022.11.22:

– FOMC Member Mester Speaks (m/m) at 18:00 (GMT+3);
– FOMC Member George Speaks (m/m) at 21:15 (GMT+3);
– FOMC Member Bullard Speaks (m/m) at 21:45 (GMT+3).

The GBP/USD currency pair

Technical indicators of the currency pair:

Prev Open: 1.1896
Prev Close: 1.1822
% chg. over the last day: -0.63 %

The dollar index found additional support yesterday after Mary Daly, president of the Federal Reserve Bank of San Francisco, said Monday that the US central bank may raise its overnight target rate above 5% if inflation does not cool down. A rise in the dollar index provokes a decline in the British currency, though it should be noted that the pound sterling is now trading more confidently than a month ago and is resisting the decline more than the euro.

Trading recommendations

Support levels: 1.1684, 1.1476, 1.1418, 1.1172, 1.1093, 1.0915, 1.0817
Resistance levels: 1.1921

From the technical point of view, the trend on the GBP/USD currency pair on the hourly time frame is bullish. But the price is trading at the level of the moving averages. The MACD indicator has become inactive, and a flat structure is forming. Under such market conditions, it is better to look for buy deals from the support level of 1.1684. Sell deals are best sought on intraday time frames from the resistance level of 1.1921, but better with confirmation since the level has already been tested.

Alternative scenario: if the price breaks down of the 1.1418 support level and fixes below it, the downtrend will likely resume.

News feed for 2022.11.22:

There is no news feed for today.

The USD/JPY currency pair

Technical indicators of the currency pair:

Prev Open: 140.31
Prev Close: 142.11
% chg. over the last day: +1.28 %

Sayuri Shirai, a candidate for vice governor, believes the Bank of Japan needs to move toward a more flexible interest rate policy. According to Shirai, who has a degree, the Bank of Japan should be more flexible in adjusting interest rates in response to cyclical economic fluctuations. But because the Japanese economy lacks momentum, the Bank of Japan may have to keep interest rates ultra-low even after Governor Haruhiko Kuroda’s term ends in April 2023. The best option for Shirai is to move to a neutral rate that will neither stimulate economic growth nor restrict it.

Trading recommendations

Support levels: 140.75, 139.44, 137.65, 136.80
Resistance levels: 143.17, 145.16, 146.06, 147.34, 148.82, 150.00

From the technical point of view, the medium-term trend on the currency pair USD/JPY is bearish. But the price is approaching the priority change level. The MACD indicator is positive again, and the buyers’ pressure is increasing. Under such market conditions, traders can look for buy trades on the intraday time frames from the support level of 140.75 or 139.44, but only with confirmation. Sell deals can be searched from the resistance level of 143.17, under the condition of a reverse reaction or a false breakdown.

Alternative scenario: If the price fixes above 145.84, the uptrend will likely resume.

There is no news feed for today.

The USD/CAD currency pair

Technical indicators of the currency pair:

Prev Open: 1.3373
Prev Close: 1.3451
% chg. over the last day: +0.58 %

The Canadian dollar is a commodity currency, so it depends not only on the monetary policy of the Bank of Canada but also on indicators such as the dollar index and oil prices. Since the central banks of Canada and the United States are keeping their rates at about the same level and have similar monetary policies, the main imbalance in the USD/CAD quotes right now is oil. Crude oil markets rose sharply yesterday near the end of Monday’s trading session after Saudi Arabia, the OPEC leader, said reports suggesting the cartel was planning to increase supply in December were false. Stronger oil is positive for the Canadian currency but negative for inflation indicators.

Trading recommendations

Support levels: 1.3351, 1.3281, 1.3212
Resistance levels: 1.3508, 1.3608, 1.3682, 1.3776, 1.3855, 1.3968

From the point of view of technical analysis, the trend on the USD/CAD currency pair is bearish. But inside the day, there is a predominance of buying. The MACD indicator is positive again, and the price is trading above the levels of moving averages. The best way to sell is to consider the resistance level of 1.3508, but with confirmation. Buy trades should be considered on the lower time frames from the support level of 1.3351 or 1.3281, but with additional confirmation in the form of a reverse initiative.

Alternative scenario: if the price breaks out and consolidates above the resistance level of 1.3508, the uptrend will likely resume.

News feed for 2022.11.22:

– Canada Retail Sales (m/m) at 15:30 (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 Forex and Currency News

22 Nov

The RBNZ is preparing to raise the interest rate by 0.75%. There are signs of a slowdown in inflation in Germany

By JustMarkets

On Monday, US indices closed slightly lower on weakness in energy and consumer stocks amid reports that China has reverted to disruptive restrictions related to the coronavirus. As the stock market closed, the Dow Jones Index (US30) decreased by 0.13%, and the S&P 500 Index (US500) lost 0.13%. The NASDAQ Technology Index (US100) was down by 1.09% yesterday.

Over the weekend, Atlanta Fed President Raphael Bostic supported further rate hikes, although he said he would consider slowing the rate hike from 75 basis points to 50. San Francisco Federal Reserve President Mary Daly said Monday that the real impact of the US central bank’s interest rate hike is probably greater than its short-term target rate suggests. Compared to the Fed’s current short-term target rate, which is in the 3.75% to 4.00% range, financial markets are acting as if the rate is around 6%, Daly said. About 85% of analysts expect the Fed to raise by 50 basis points in December.

Stock markets in Europe were mostly down Monday. German DAX (DE30) decreased by 0.36%, French CAC 40 (FR40) was 0.15% lower, Spanish IBEX 35 (ES35) gained 0.75%, and British FTSE 100 (UK100) closed 0.12% lower.

According to the Federal Statistics Office (Destatis), the producer price index, which measures inflation between factories, slowed. Compared to September 2022, producer prices decreased by 4.2%. This is a good sign, as slowing producer inflation will eventually lead to slower consumer inflation.

UK Prime Minister Rishi Sunak said yesterday that the UK would no longer maintain any relationship with Europe that is based on compliance with EU laws. Britain’s withdrawal from the EU has caused serious economic damage to the region’s economy, so now the new prime minister has to face the consequences of Brexit.

According to Nomura Holdings Inc. Czech Republic, Romania and Hungary will face the risk of exchange rate crises over the next year as fiscal and external problems escalate. The warning is based on an analysis of eight indicators, including import coverage by foreign-exchange reserves, real short-term interest rates, and fiscal and current-account measures.

Crude oil markets rose sharply late in the trading session yesterday after Saudi Arabia, OPEC’s leader, said reports suggesting the cartel planned to increase supply in December were false.

Asian markets were mostly down yesterday. Japan’s Nikkei 225 (JP225) gained 0.16% on Monday, Hong Kong’s Hang Seng (HK50) decreased by 1.87%, and Australia’s S&P/ASX 200 (AU200) ended the day down by 0.17%.

New Zealand’s Central Bank is preparing to raise interest rates by 75 basis points, accelerating monetary tightening to bring inflation under control. According to analysts, tomorrow, the Reserve Bank will raise the official interest rate to 4.25% from 3.5%. This will be the biggest increase since the RBNZ introduced the OCR in 1999. Stronger-than-expected inflation and a near-record-low unemployment rate are forcing the RBNZ to accelerate policy tightening.

Most Asian central banks have also begun raising rates this year to keep up with the US Federal Reserve and are signaling further rate hikes to counter rising inflation.

A record rise in daily infections in China has led to the reintroduction of curbs in major cities, including Beijing and Shanghai. Markets fear tighter curbs could again stifle the country’s economic growth and cause new global supply chain problems.

S&P 500 (F) (US500) 3,949.99 −15.35 (−0.39%)

Dow Jones (US30) 33,700.67 −45.02 (−0.13%)

DAX (DE40) 14,379.93 −51.93 (−0.36%)

FTSE 100 (UK100) 7,376.85 −8.67 (−0.12%)

USD Index 107.77 +0.84 (+0.79%)

Important events for today:

– Australia RBA Governor Lowe Speaks at 09:00 (GMT+3);
– Canada Retail Sales (m/m) at 15:30 (GMT+3);
– FOMC Member Mester Speaks (m/m) at 18:00 (GMT+3);
– FOMC Member George Speaks (m/m) at 21:15 (GMT+3);
– FOMC Member Bullard Speaks (m/m) at 21:45 (GMT+3).

By JustMarkets

Economics & Fundamentals Financial News

22 Nov

Dramatic collapse of the cryptocurrency exchange FTX contains lessons for investors but won’t affect most people

By D. Brian Blank, Mississippi State University and Brandy Hadley, Appalachian State University

In the fast-paced world of cryptocurrency, vast sums of money can be made or lost in the blink of an eye. In early November 2022, the second-largest cryptocurrency exchange, FTX, was valued at more than US$30 billion. By Nov. 14, FTX was in bankruptcy proceedings along with more than 100 companies connected to it. D. Brian Blank and Brandy Hadley are professors who study finance, investing and fintech. They explain how and why this incredible collapse happened, what effect it might have on the traditional financial sector and whether you need to care if you don’t own any cryptocurrency.

1. What happened?

In 2019, Sam Bankman-Fried founded FTX, a company that ran one of the largest cryptocurrency exchanges.

FTX is where many crypto investors trade and hold their cryptocurrency, similar to the New York Stock Exchange for stocks. Bankman-Fried is also the founder of Alameda Research, a hedge fund that trades and invests in cryptocurrencies and crypto companies.

Within the traditional financial sector, these two companies would be separate firms entirely or at least have divisions and firewalls in place between them. But in early November 2022, news outlets reported that a significant proportion of Alameda’s assets were a type of cryptocurrency released by FTX itself.

A few days later, news broke that FTX had allegedly been loaning customer assets to Alameda for risky trades without the consent of the customers and also issuing its own FTX cryptocurrency for Alameda to use as collateral. As a result, criminal and regulatory investigators began scrutinizing FTX for potentially violating securities law.

These two pieces of news basically led to a bank run on FTX.

Large crypto investors, like FTX’s competitor Binance, as well as individuals, began to sell off cryptocurrency held on FTX’s exchange. FTX quickly lost its ability to meet customer withdrawals and halted trading. On Nov. 14, FTX was also hit by an apparent insider hack and lost $600 million worth of cryptocurrency.

That same day, FTX, Alameda Research and 130 other affiliated companies founded by Bankman-Fried filed for bankruptcy. This action may leave more than a million suppliers, employees and investors who bought cryptocurrencies through the exchange or invested in these companies with no way to get their money back.

Among the groups and individuals who held currency on the FTX platform were many of the normal players in the crypto world, but a number of more traditional investment firms also held assets within FTX. Sequoia Capital, a venture capital firm, as well as the Ontario Teacher’s Pension, are estimated to have held millions of dollars of their investment portfolios in ownership stake of FTX. They have both already written off these investments with FTX as lost.

2. Did a lack of oversight play a role?

In traditional markets, corporations generally limit the risk they expose themselves to by maintaining liquidity and solvency. Liquidity is the ability of a firm to sell assets quickly without those assets losing much value. Solvency is the idea that a company’s assets are worth more than what that company owes to debtors and customers.

But the crypto world has generally operated with much less caution than the traditional financial sector, and FTX is no exception. About two-thirds of the money that FTX owed to the people who held cryptocurrency on its exchange – roughly $11.3 billion of $16 billion owed – was backed by illiquid coins created by FTX. FTX was taking its customers’ money, giving it to Alameda to make risky investments and then creating its own currency, known as FTT, as a replacement – cryptocurrency that it was unable to sell at a high enough price when it needed to.

In addition, nearly 40% of Alameda’s assets were in FTX’s own cryptocurrency – and remember, both companies were founded by the same person.

This all came to a head when investors decided to sell their coins on the exchange. FTX did not have enough liquid assets to meet those demands. This in turn drove the value of FTT from over $26 a coin at the beginning of November to under $2 by Nov. 13. By this point, FTX owed more money to its customers than it was worth.

In regulated exchanges, investing with customer funds is illegal. Additionally, auditors validate financial statements, and firms must publish the amount of money they hold in reserve that is available to fund customer withdrawals. And even if things go wrong, the Securities Investor Protection Corporation – or SIPC – protects depositors against the loss of investments from an exchange failure or financially troubled brokerage firm. None of these guardrails are in place within the crypto world.

3. Why is this a big deal in crypto?

As a result of this meltdown, the company Binance is now considering creating an industry recovery fund – akin to a private version of SIPC insurance – to avoid future failures of crypto exchanges.

But while the collapse of FTX and Alameda – valued at more than $30 billion and now essentially worth nothing – is dramatic, the bigger implication is simply the potential lost trust in crypto. Bank runs are rare in traditional financial institutions, but they are increasingly common in the crypto space. Given that Bankman-Fried and FTX were seen as some of the biggest, most trusted figures in crypto, these events may lead more investors to think twice about putting money in crypto.

4. If I don’t own crypto, should I care?

Though investment in cryptocurrencies has grown rapidly, the entire crypto market – valued at over $3 trillion at its peak – is much smaller than the $120 trillion traditional stock market.

While investors and regulators are still evaluating the consequences of this fall, the impact on any person who doesn’t personally own crypto will be minuscule. It is true that many larger investment funds, like BlackRock and the Ontario Teachers Pension, held investments in FTX, but the estimated $95 million the Ontario Teachers Pension lost through the collapse of FTX is just 0.05% of the entire fund’s investments.

The takeaway for most individuals is not to invest in unregulated markets without understanding the risks. In high-risk environments like crypto, it’s possible to lose everything – a lesson investors in FTX are learning the hard way.

About the Author:

D. Brian Blank, Assistant Professor of Finance, Mississippi State University and Brandy Hadley, Associate Professor of Finance and the David A. Thompson Professor in Applied Investments, Appalachian State University

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

Cryptocurrencies Opinions

21 Nov

How to design clean energy subsidies that work – without wasting money on free riders

By Eric Hittinger, Rochester Institute of Technology; Eric Williams, Rochester Institute of Technology; Qing Miao, Rochester Institute of Technology, and Tiruwork B. Tibebu, Rochester Institute of Technology

The planet is heating up as greenhouse gas emissions rise, contributing to extreme heat waves and once-unimaginable flooding. Yet despite the risks, countries’ policies are not on track to keep global warming in check.

The problem isn’t a lack of technology. The International Energy Agency recently released a detailed analysis of the clean energy technology needed to lower greenhouse gas emissions to net zero globally by 2050. What’s needed, the IEA says, is significant government support to boost solar and wind power, electric vehicles, heat pumps and a variety of other technologies for a rapid energy transition.

One politically popular tool for providing that government support is the subsidy. The U.S. government’s new Inflation Reduction Act is a multibillion-dollar example, packed with financial incentives to encourage people to buy electric vehicles, solar panels and more.

But just how big do governments’ clean energy subsidies need to be to meet their goals, and how long are they needed?

Our research points to three important answers for any government considering clean energy subsidies – and for citizens keeping an eye on their progress.

Why subsidize at all?

An obvious first question is: Why should governments subsidize clean energy at all?

The most direct answer is that clean energy helps to reduce harmful emissions – both of gases that cause local pollution and of those that warm the planet.

Reducing emissions helps to lower both public health costs and damage from climate change, which justifies government spending. Reports have estimated that the U.S. spends US$820 billion a year just on health costs associated with air pollution and climate change. Globally, the World Health Organization estimated that the costs reached $5.1 trillion in 2018. Taxing and regulating polluting industries can also cut emissions, but carrots are often more politically popular than sticks.

A female scientist holds a solar cell between tweezers — Subsidies helped launch the solar industry. Buyers today can get a 30% tax credit for home solar installations.
Joe DelNero/NREL

A less obvious reason for subsidies is that government support can help a new and initially expensive technology become competitive in the market.

Governments have been central to the development of many technologies that are pervasive today, including microchips, the internet, solar panels and GPS. Microchips were fantastically expensive when first developed in the 1950s. Demand from the U.S. military and NASA, which could pay the high price, fueled the growth of the industry, and costs eventually dropped enough that they’re now found in everything from cars to toasters.

Government support has also helped to bring down the cost of solar power. Rooftop solar system costs fell 64% from 2010 to 2020 in the U.S. because cells became more efficient and higher volumes drove prices down.

How much money?

So, subsidies can work, but what’s the right amount?

Too low, and a subsidy has no effect. Giving everyone a coupon for $1 off an electric car won’t change anyone’s buying plans. But subsidies can also be set too high.

The government doesn’t need to spend money persuading consumers who already plan to buy an electric car and can afford one, yet studies show clean energy subsidies disproportionately go to richer people. When people who would have purchased the item anyway receive subsidies, they’re known as “free riders.”

The ideal subsidy attracts new buyers while avoiding free riders and overspending on people who are already convinced. The subsidy can only work when it convinces a previously uninterested consumer to buy a product.

Chart shows costs falling as solar purchases rise. — Between 2009 and 2017, solar prices fell 50% and solar purchases increased tenfold with the help of subsidies. Lower cost makes a technology more attractive, while a growing solar industry is able to produce panels at lower cost.
Barbose et al., 2021; Solar Market Insight Report/SEIA

How long should subsidies last?

Timing is also important when thinking about the size of subsidies. When a promising technology is new and expensive, free riders are less of an issue. A large subsidy may be needed to attract even a few buyers, build out the emerging market and support the industry’s growth.

Solar power is a good example: In 2005, solar was several times more expensive than traditional electricity sources. Subsidies, like the 30% Investment Tax Credit established that year, helped lower the cost, and today’s solar is about one-tenth the price and cost-competitive with other electricity sources.

Once a clean technology is competitive, subsidies can still play an important role in speeding up the energy transition, but at a lower level than in the past.

In our research on residential solar panels, we estimate that the ideal subsidy for rooftop solar should have been initially higher than the actual federal tax credit but fall more quickly, declining to zero after 14 years from its start date.

By starting the subsidy about 20% higher, our models found that it would have boosted production faster, which would cut costs faster and reduce the need for high future subsidies.

Should subsidies eventually disappear?

It makes sense for subsidies to disappear altogether once a technology is sufficiently cost-competitive. However, even if a technology is competitive, it might be worth further subsidy if the speed of adoption is important.

The argument for continuing a subsidy depends on whether the additional adoption it stimulates is cost-effective in reducing emissions. Wind power is cheaper than fossil fuel power in many parts of the country. Even so, we found that continuing subsidies for wind power would lead to valuable emission benefits.

That said, sometimes subsidies stick around when they shouldn’t.

Fossil fuels have been heavily subsidized for decades, despite their harm to human health, the environment and the climate, all of which raise public costs. Governments globally spent almost $700 billion on fossil fuel subsidies in 2021. The U.S. government, in recent years, has spent more on renewable energy tax credits than fossil fuels, which is a promising transition of government support.

Global impact

While the U.S. was the focus of our solar subsidy research, this way of thinking – balancing the costs and benefits of subsidies – can be applied in other nations to design better subsidies for clean energy technologies.

The subsidy is just one policy tool, but it is an important one for both stimulating early-stage technologies and accelerating deployment of more competitive options. As the world attempts the fastest energy transition in history, today’s energy subsidy decisions will affect its ability to succeed.

About the Author:

Eric Hittinger, Associate Professor of Public Policy, Rochester Institute of Technology; Eric Williams, Professor of Sustainability, Rochester Institute of Technology; Qing Miao, Associate Professor of Public Policy, Rochester Institute of Technology, and Tiruwork B. Tibebu, Ph.D. Student, Rochester Institute of Technology

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

Energy Financial News

21 Nov

Crude Oil Inclined Down

By RoboForex Analytical Department

The crude oil market began the week with a crash. A Brent barrel is falling to 86.75 USD and looks very week.

Curiously, nothing has changed on the hews horizon.

On the one hand, the market is reacting negatively to the news about the coronavirus spreading in China. The country remains the main importer of crude oil. Any COVID-19 bound limitations might shorten the industrial demand for energy carriers. On the other hand, investors are caring for the comments of the US Federal Reserve System about further interest rate strategy.

Moreover, information has spread about a surplus of crude oil at European oil plants.

All this taken together is dragging the barrel price down.

On H4, Brent corrected to 86.00 and started developing a consolidation range. At the moment, the quotes performed and corrected an impulse of growth. Practically, they have set the borders of the range. With an escape upwards, a new wave of growth to 94.75 may start. The goal is first. Technically, the scenario is confirmed by the MACD. Its signal line is at the lows, getting ready to start growing to zero.

On H1, with a breakaway of 91.41, oil declined and extended the wave to 86.00. At the moment, the market completed an impulse of growth to 87.90 and a correction to 86.55. Another wave of growth is going to develop to 88.66. With a breakaway of this level upwards, a pathway to 91.41 should open. Technically, this scenario is confirmed by the Stochastic oscillator. Its signal line is under 50, aiming strictly upwards. Growth of the indicator to 80 is expected.

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.

Energy Financial News

21 Nov

Murrey Math Lines 21.11.2022 (EURUSD, GBPUSD)

By RoboForex.com

EURUSD, “Euro vs US Dollar”

On H4, the quotes are above the 200-day Moving Average, which means the uptrend is prevailing. The RSI is nearing the support line. A test of 4/8 (1.0253) should be expected, followed by a bounce off it and growth to the resistance level of 6/8 (1.0498). The scenario can be cancelled by a breakaway of the support level at 4/8 (1.0253) downwards. In this case, the pair will go on declining, probably to 2/8 (1.0009).

On M15, The upper line of VoltyChannel is too far away from the current price, which means growth can be signaled only by a bounce off 4/8 on H4.

GBPUSD, “Great Britain Pound vs US Dollar”

On H4, the quotes are in the overbought area. The RSI has bounced off the descending trendline. A downward breakaway of the support level of 8/8 (1.1718) is expected, followed by falling to 7/8 (1.1474). The scenario can be cancelled by rising over the resistance level of +1/8 (1.1962). In this case, the pair may rise to +2/8 (1.2207).

On M15, the lower line of VoltyChannel is broken away. This increases the probability of further price falling.

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.

Financial News Forex and Currency News

21 Nov

Japanese Candlesticks Analysis 21.11.2022 (EURUSD, USDJPY, EURGBP)

By RoboForex.com

EURUSD, “Euro vs US Dollar”

On H4, at the resistance level, the currency pair has formed a Shooting Star reversal pattern. Currently, the pair is going by the signal, continuing a correction wave. The goal of the decline might be 1.0210. However, the price may grow to 1.0440, break through it, and continue the uptrend without correction to the support level.

USDJPY, “US Dollar vs Japanese Yen”

On H4, at the support level, the pair has formed a Hammer reversal pattern. Currently, the pair may go by the signal in an ascending wave. The goal of the correction will be 141.75. However, the price may fall to 137.50 and continue the downtrend without correcting to the resistance level.

EURGBP, “Euro vs Great Britain Pound”

On H4, the pair has formed a Harami reversal pattern. Currently, the pair may go by the signal in an ascending wave. The goal of growth is still the resistance level of 0.8800. Upon testing and breaking through it, the pair has a chance for continuing the uptrend. However, the quotes may drop to 0.8660 without growing to the resistance level.

Article By RoboForex.com

Financial News Forex and Currency News

21 Nov

The Analytical Overview of the Main Currency Pairs on 2022.11.21

By JustMarkets

The EUR/USD currency pair

Technical indicators of the currency pair:

Prev Open: 1.0361
Prev Close: 1.0323
% chg. over the last day: -0.37 %

The current situation in the Eurozone has not changed much. Geopolitical tensions remain in the region, which creates new energy threats. For their part, ECB officials seem to be divided over their future plans, with some advocating a sustained aggressive rate hike stance, while others are considering quantitative tightening (QT) earlier than expected to avoid such a hawkish interest rate hike.

Trading recommendations

Support levels: 1.0193, 1.0092, 1.0043, 0.9812
Resistance levels: 1.0384, 1.0504

From the technical point of view, the trend on the EUR/USD currency pair on the hourly time frame is bullish. The price is trading below the moving averages, the MACD indicator has become negative, and there is slight sellers’ pressure. For buy deals, it is best to wait for the completion of the corrective movement to the support levels of 1.0193, but with additional confirmation. Sell deals can be considered from the resistance level of 1.0384 intraday, but it is also better with confirmation since the level has already been tested.

Alternative scenario: if the price breaks down through the support level of 0.9993 and fixes below it, the downtrend will likely resume.

News feed for 2022.11.21:

– German Producer Price Index (m/m) at 09:00 (GMT+3).

The GBP/USD currency pair

Technical indicators of the currency pair:

Prev Open: 1.1861
Prev Close: 1.1893
% chg. over the last day: +0.27 %

According to analysts, this week will be quite weak for the British pound as business activity data is forecast to be weak. Friday’s UK retail sales data was slightly positive, although a negative annual figure is not a reason to be very positive. On the other hand, according to the Institute for Fiscal Studies, the UK’s budget report may start the process of repairing Britain’s battered reputation.

Trading recommendations

Support levels: 1.1684, 1.1476, 1.1418, 1.1172, 1.1093, 1.0915, 1.0817
Resistance levels: 1.1921

From the technical point of view, the trend on the GBP/USD currency pair on the hourly time frame is bullish. But the price is trading below the levels of the moving averages. The MACD indicator has become negative, indicating a corrective movement. Under such market conditions, it is better to look for buy deals from the support level of 1.1684 or even 1.1476. Sell trades are best sought on intraday time frames from the resistance level of 1.1921, but also better with confirmation since the level has already been tested.

Alternative scenario: if the price breaks down of the 1.1418 support level and fixes below it, the downtrend will likely resume.

There is no news feed for today.

The USD/JPY currency pair

Technical indicators of the currency pair:

Prev Open: 140.19
Prev Close: 140.34
% chg. over the last day: +0.11 %

Even though inflation in Japan has reached a 40-year-high, the BoJ has no intention of abandoning its soft stimulus policy. At the moment, the BoJ is ignoring the global trend of central banks raising interest rates to fight inflation. Considering the fact that the Fed keeps raising interest rates, a bullish trend in the USD/JPY currency pair is the most likely scenario.

Trading recommendations

Support levels: 139.44, 137.65, 136.80
Resistance levels: 141.05, 143.17, 145.16, 146.06, 147.34, 148.82, 150.00

From the technical point of view, the medium-term trend on the currency pair USD/JPY is bearish. The price forms a trading range (balance) and is trading at the level of moving averages. The MACD indicator has become inactive again, indicating market participants’ uncertainty. Under such market conditions, buy trades can be sought on intraday time frames from the support level of 139.44, but only with confirmation. Sell deals can be searched from the resistance level of 141.05 on the condition of a reverse reaction or a false breakout.

Alternative scenario: If the price fixes above 146.06, the uptrend will likely resume.

There is no news feed for today.

The USD/CAD currency pair

Technical indicators of the currency pair:

Prev Open: 1.3325
Prev Close: 1.3384
% chg. over the last day: +0.44 %

The Canadian dollar continues to show resilience against the US dollar despite hawkish comments from US Federal Reserve policymakers. The increase in USD/CAD quotes is more caused by falling oil prices than by the strengthening of the dollar. The strength of the Canadian dollar may be due to rising expectations of a peak rate after last week’s release of Canadian inflation data. The peak rate is expected to reach about 4.25%. Markets are still factoring in the 50% chance of a 50 bps rate hike at the Bank of Canada meeting on December 7.

Trading recommendations

Support levels: 1.3351, 1.3281, 1.3212
Resistance levels: 1.3508, 1.3608, 1.3682, 1.3776, 1.3855, 1.3968

From the point of view of technical analysis, the trend on the USD/CAD currency pair is bearish. But inside the day, there is a predominance of buying. The MACD indicator is positive again, and the price is trading above the levels of moving averages. The best way to sell is to consider the resistance level of 1.3508, but with confirmation. Buy trades should be considered on the lower time frames from the support level 1.3351 or 1.3281, but with additional confirmation in the form of a reverse initiative.

Alternative scenario: if the price breaks out and consolidates above the resistance level of 1.3508, the uptrend will likely resume.

There is no news feed for today.

By JustMarkets

Financial News Forex and Currency News

21 Nov

China has a new record of Covid cases. Investors are returning to the dollar and gold

By JustMarkets

The Federal Reserve’s hawkish signals have heightened fears of a potential US recession. Central Bank officials say they will not keep raising rates until inflation approaches its annual target range. This is a deterrent to further gains in stock indices. At the close of the stock market on Friday, the Dow Jones Index (US30) increased by 0.59% (+0.25% for the week) and the S&P 500 Index (US500) added 0.48% (-0.32% for the week). Technology Index NASDAQ (US100) gained 0.01% (-0.78% for the week).

The Fed is set to release the minutes of its November meeting on Wednesday, and investors eagerly await any indication that policymakers will consider slowing the tightening process.

Equity markets in Europe mostly rallied last week. German DAX (DE30) gained 1.16% (+0.95% for the week), French CAC 40 (FR40) added 1.04% (+0.33% for the week), Spanish IBEX 35 (ES35) increased by 1.08% (+0.04% for the week), British FTSE 100 (UK100) closed on Friday up by 0.53% (+0.92% for the week).

ECB officials seem to be divided over their future plans, with some advocating a sustained aggressive rate hike stance, while others are considering quantitative tightening (QT) earlier than expected to avoid such a hawkish interest rate hike. ECB President Christine Lagarde seems to support raising interest rates as the best tool for containing inflation.

Italy’s new right-wing government plans to announce Monday new spending of about 30 billion euros in next year’s budget, mostly focused on containing the impact of high energy prices. In an effort to help families cope with incredible inflation, which has reached an annualized rate of 12.6%, according to an EU-agreed index, the cabinet is considering eliminating a sales tax on necessities.

Oil prices fell on Monday, extending last week’s losses, as worries over rising COVID-19 infections in China and a potential global recession worsened demand prospects. On the other hand, if European politicians decide this week to put a ceiling on Russian oil prices, it could lead to supply cuts in the coming months, especially if inventories deplete faster. Therefore, the prospect of higher oil prices remains high. OPEC countries will meet on December 4 to decide on production, and any further supply cuts are likely to push oil prices higher.

The outlook for gold remains upward, despite some uncertainty. On the one hand, gold is rising on inflation expectations. On the other hand, gold does not protect against inflation and suffers greatly from rising interest rates. But analysts believe that given the fact that the market is now close to a maximum in interest rates, and in 2023 is expected to pause and then lower rates (according to the futures curve for the federal funds), such an asset as gold should take a weighty share in portfolios of active investors.

Asian markets were mostly down last week. Japan’s Nikkei 225 (JP225) declined by 1.31% over the week, Hong Kong’s Hang Seng (HK50) ended down by 0.04%, and Australia’s S&P/ASX 200 (AU200) decreased by 0.09%.

The People’s Bank of China (PBOC) on Monday left key lending rates unchanged for the third straight month as the central bank tries to strike a balance between boosting economic growth and curbing further yuan depreciation. The rise in COVID-19 cases in China has led to new lockdown measures in some of the country’s biggest cities, adding to fears of a slowdown in demand for crude oil from the world’s biggest oil importer. The country is currently battling its worst COVID outbreak since April, when several cities were blockaded.

In the commodities market, futures on natural gas (+8.37%), sugar (+2.09%), and corn (+1.71%) showed the biggest gains by the end of the week. Futures on coffee (-13.66%), WTI oil (-9.78%), Brent oil (-8.59%), gasoline (-7.32%), copper (-7.04%), platinum (-4.98%), palladium (-4.49%), silver (-3.19%), cotton (-3.14%) and cocoa (-2.22%) showed the biggest drop.

S&P 500 (F) (US500) 3,965.34 +18.78 (+0.48%)

Dow Jones (US30) 33,745.69 +199.37 (+0.59%)

DAX (DE40) 14,431.86 +165.48 (+1.16%)

FTSE 100 (UK100) 7,385.52 +38.98 (+0.53%)

USD Index 106.97 +0.28 (+0.26%)

Important events for today:

– German Producer Price Index (m/m) at 09:00 (GMT+3).

By JustMarkets

Economics & Fundamentals Financial News

21 Nov

Trade of the Week: Kiwi to reach 200-day SMA on record RBNZ hike?

By ForexTime

The New Zealand dollar has been flying high in this tail-end of 2022.

And it could be further boosted by a hawkish Reserve Bank of New Zealand (RBNZ) this week.

NZD in Q4: by the numbers

NZD has a quarter-to-date gain against all of its G10 and Asian peers.

Here’s a sample:

NZD up 3.1% against GBP
NZD up 4.4% against EUR
NZD up 5.3% against AUD
NZD up 6.5% against JPY
NZD up 8.5% against USD

(% performance since September 30th till time of writing)

Even going slightly further back, for the second half of this year so far, the kiwi only has declines against FX safe havens such as the US dollar, Swiss Franc, Singapore dollar, and the Hong Kong dollar (HKD is pegged to USD).

What’s driving NZD’s outperformance of late?

Markets are forecasting a 64% chance that the RBNZ will trigger a 75-basis point hike this week.

If so, that which would be the RBNZ’s largest ever hike since its official cash rate was rolled out in 1999!

And a record hike would only add to cumulative hikes by this central bank, having already raised its official cash rate by 325 basis points (bps) since October 2021, including 50-basis points at each of its past five meetings.

Generally speaking, the higher interest rates go in an economy relative to its peers, the stronger its currency.

Why would the RBNZ need to trigger a record hike?

A larger 75bps hike may be needed to keep consumer prices from rising uncontrollably.

Note that a central bank’s main weapon against runaway consumer prices is by raising interest rates to “destroy” demand in the economy.

Keep in mind:

New Zealand’s consumer price index (CPI) for the third quarter rose by 7.2% compared to 3Q 2021.
That 7.2% figure was above the median forecast of 6.5%, with the former number being near its highest levels since 1990!

And that’s even with all of the RBNZ’s hikes that have been incurred over the past year which apparently are having little impact on the inflation scourge so far.

Hence, NZD has been lifted on the wings of expectations that the RBNZ may well send its benchmark rates higher than previously anticipated.

Markets are now forecasting that New Zealand’s interest rates will keep rising from the 3.5% level at present before peaking around 5.15% by mid-2023.

And this has been an opportune time for NZD bulls to take advantage of the US dollar’s pullback, with markets expecting that the Fed is getting closer to being down with its own US rate hikes.

But if the RBNZ actually opts for a 50-bps hike this week instead, that may disappoint NZD bulls who had been hoping for that larger 75bps hike, potentially prompting them to unwind some of NZD’s recent gains.

Can NZDUSD reach 200-day SMA?

At present, markets are forecasting only a 16% chance of NZDUSD the 0.63 mark, around where the kiwi’s (nickname for NZDUSD) 200-day simple moving average currently lies.

After all, Kiwi bulls (those hoping NZDUSD can climb higher) are already encountering resistance around the 0.62 psychological area, which has been a key battle region between bulls and bears since May.

Looking at a key technical indicator, NZDUSD’s 14-day relative strength index (RSI) is also pulling back from the 70 threshold which typically denotes overbought conditions, suggesting that the NZD’s ascent has gone too far.

To the downside lies its 100-day SMA, just above the 0.60 mark, which may offer underlying support should the RBNZ disappoint this week or if the US dollar’s catches fresh safe haven bids.

Markets are currently forecasting a 41% chance of 0.60 being attained by Kiwi bears for the next one-week period.

To recap, NZDUSD’s performance this week may all come down to the following key events:

the size of the RBNZ’s actual cash rate hike
RBNZ’s outlook for the cash rate going into 2023
Fed meeting minutes released on Wednesday/scheduled speeches by Fed officials this week

And on that final point above, let’s take a brief look at the USD half of NZDUSD.

Noting that this week is absent of tier-1 US economic data, the US dollar could react to fresh policy clues out of the FOMC meeting minutes and the Fed speakers due before the Thanksgiving break.

Should the US dollar relinquish its gains at the onset of this week, on renewed hopes that the Fed is closer to being down with its own rate hikes, that could make NZDUSD’s path towards its 200-day SMA a lot easier.

Article 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

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