02 Nov

China plans to open to tourists in spring 2023. Bank of Japan may adjust its ultra-soft policy

By JustMarkets

As the stock market closed on Tuesday, the Dow Jones Index (US30) decreased by 0.24%, and the S&P500 Index (US500) lost 0.41%. The NASDAQ Technology Indexм(US100) decreased by 0.89% yesterday.

The JOLTS report indicated yesterday that the number of job openings rose to 10.7 million, missing analysts’ expectations. Fed officials began hinting that if Friday’s US labor market data indicated strength in the market, the US Fed might not cut the rate of increase until later in the year.

The US Fed is likely to raise rates by 0.75% today. This scenario is already in the price movement, so the biggest interest will be the speech of the head of the US Fed, Jerome Powell. If Mr. Powell hints that the Сentral Bank needs to take a slower rate hike, it could lead to a sharp drop in the dollar Index and a rise in the stock indices. Conversely, hawkish statements that the US Fed will stay on its current course could further strengthen the dollar Index. JP Morgan analysts say the 50bp rate hike combined with a dovish press conference could push the S&P 500 (US500) up 10-12% in 1 day.

Pfizer (PFE) reported third-quarter results that beat Wall Street estimates, despite declining Covid-19 vaccine sales in the quarter. The company’s stock was up more than 3%.

AMD (AMD) released a report Tuesday with third-quarter results that disappointed analysts. The income indicator did not justify the forecasts. But despite such a report, the company’s stock rose in the evening session.

Notable companies reporting today are Qualcomm (QCOM), Booking (BKNG), MetLife (MET), and Ferrari NV (RACE).

European stock markets were mostly up yesterday. German DAX (DE30) gained 0.64%, French CAC 40 (FR40) added 0.98%, Spanish IBEX 35 (ES35) jumped by 0.53%, British FTSE 100 (UK100) closed on Tuesday with 1.29%.

Risks to the global economic growth outlook continue to worsen in October, and leading indicators are signaling an even sharper decline, especially in the Eurozone. On the positive side, the Eurozone managed to avoid a recession in the third quarter, as private consumption proved more resilient to the impact of rising inflation. But inflationary pressures continue to intensify.

Despite a few concrete signs of easing inflation, Central Banks have already given the first signals that “peak growth” has been reached. The Bank of Norway, the Bank of Canada, and the Reserve Bank of Australia have already signaled a lower rate of tightening going forward, and analysts expect the ECB to also lower the rate of increase to 50 basis points in December.

China, the biggest oil importer, said Tuesday it is reviewing social restrictions because of the virus and may fully open for business and tourists by the spring of 2023. The news boosted oil futures after a two-day decline, and major Asian indices also rose.

According to the Wall Street Journal, Saudi Arabia shared intelligence with the US and warned of an imminent attack from Iran. The US, Saudi Arabia, and several other countries in the region raised the alert level of their units.

Asian markets traded higher yesterday. Japan’s Nikkei 225 (JP225) gained 0.33%, Hong Kong’s Hang Seng (HK50) ended the day up 5.23%, and Australia’s S&P/ASX 200 (AU200) increased by 1.65%.

The Reserve Bank of New Zealand, in its Financial Stability Report, indicated that while the financial system is generally strong, some households and businesses will be stressed in the coming months.

Bank of Japan Governor Haruhiko Kuroda said that the bank might adjust its ultra-soft policy if inflation in Japan continues to rise. Inflation in Japan is now close to an eight-year high and is projected to rise in the coming months.

S&P 500 (F) (US500) 3,856.10 −15.88 (−0.41%)

Dow Jones (US30) 32,653.20 −79.75 (−0.24%)

DAX (DE40) 13,338.74 +85.00 (+0.64%)

FTSE 100 (UK100) 7,186.16 +91.63 (+1.29%)

USD Index 111.51 -0.01 (-0.01%)

Important events for today:
  • – New Zealand RBNZ Gov Orr Speaks at 00:00 (GMT+2);
  • – Canada BOC Macklem Speaks at 00:30 (GMT+2);
  • – Japan Monetary Policy Meeting Minutes at 01:50 (GMT+2);
  • – Spanish Manufacturing PMI (m/m) at 10:15 (GMT+2);
  • – Italian Manufacturing PMI (m/m) at 10:45 (GMT+2);
  • – French Manufacturing PMI (m/m) at 10:50 (GMT+2);
  • – German Manufacturing PMI (m/m) at 10:55 (GMT+2);
  • – German Unemployment Rate (m/m) at 10:55 (GMT+2);
  • – Eurozone Manufacturing PMI (m/m) at 11:00 (GMT+2);
  • – US ADP Nonfarm Employment Change (m/m) at 14:15 (GMT+2);
  • – US Crude Oil Reserves (w/w) at 16:30 (GMT+2);
  • – US FOMC Statement at 20:00 (GMT+2);
  • – US Fed Interest Rate Decision at 20:00 (GMT+2);
  • – US FOMC Press Conference at 20:30 (GMT+2).

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
01 Nov

Beyond passenger cars and pickups: 5 questions answered about electrifying trucks

By Daniel Sperling, University of California, Davis; Lewis Fulton, University of California, Davis; Marshall Miller, University of California, Davis, and Miguel Jaller, University of California, Davis 

As part of its effort to reduce air pollution and cut greenhouse gas emissions that contribute to climate change, California is pursuing aggressive policies to promote clean trucks. The state already requires that by 2035, all new cars and other light-duty vehicles sold in the state must be zero emission. Its powerful Air Resources Board has adopted rules requiring that most trucks be zero emission by 2035, and is now proposing that all trucks sold by 2040 must be zero emission. The Conversation asked a panel of transportation experts from the University of California, Davis what’s involved in such a rapid transition.

1. Why is California targeting medium- and heavy-duty trucks?

Although diesel engines are valuable for moving heavy loads, they also are major polluters. Diesel trucks account for one-fourth of greenhouse gas emissions and about half of conventional air pollution from transportation in U.S. cities.

Pollutants in diesel exhaust include nitrogen oxides, fine particulates and numerous cancer-causing compounds. Since many disadvantaged communities are located near highways and industrial centers, their residents are especially affected by diesel truck pollution. Two regions in California – the Central Valley and Los Angeles-Long Beach – have some of the dirtiest air in the U.S., so the state has placed particular emphasis on cutting diesel use.

Almost all diesel fuel in the U.S. is used in trucks, not in passenger vehicles.

2. Are zero-emission trucks ready to go?

To a degree, yes. Some new models, mainly powered by batteries but some by hydrogen fuel cells, are available on the market, and more are being announced almost daily.

But the production volumes are still small, and there are many variations of truck models needed for very diverse applications, from delivering mail locally and plowing snow to hauling goods cross-country. Many of these needs cannot be met with currently offered zero-emission trucks.

Another hurdle is that new electric truck models have higher purchase prices than comparable diesel trucks. However, as the market for zero-emission trucks grows, economies of scale should bring these costs down significantly. We already see this happening with zero-emission cars and light-duty trucks.

The total cost of ownership for zero-emission trucks, which includes the purchase price, fuel costs and maintenance, is already competitive in some applications with conventional diesel trucks. One example is trucks used for local goods delivery by companies like Amazon, UPS and FedEx. This stage is also known as last-mile delivery – getting a product to a buyer’s door.

These trucks are typically driven less than 150 miles per day, so they don’t need large battery packs. Their lower energy costs and reduced maintenance needs often offset their higher purchase costs, so owners save money on them over time.

Our studies indicate that by 2025 and especially by 2030, many applications for battery trucks, and perhaps hydrogen fuel cell trucks, will have competitive or even lower total costs of ownership than comparable diesel trucks. That’s especially true because of California subsidies and incentives, such as the Hybrid and Zero-Emission Truck and Bus Voucher Incentive Project, which reduces the cost of new electric trucks and buses. And the state’s Low Carbon Fuel Standard greatly reduces the cost of low-carbon fuels and electricity for truck and bus fleets.

The market in California is already reacting to these policy signals and is developing quickly. In the past year, there has been a large increase in sales of last-mile electric delivery trucks, and companies have stepped up their pledges to procure such vehicles.

Over 150 zero-emission truck models are commercially available and eligible for state incentive funding. They range from large pickup trucks to heavy-duty tractor units for tractor-trailer combinations.

3. Is there enough charging infrastructure to support all these vehicles?

Providing near-zero-carbon electricity for EVs and hydrogen for fuel cells, and expanding charging and hydrogen refueling infrastructure, is just as important as getting zero-emission trucks on the roads.

Fleet owners will need to install chargers that can charge their battery-powered trucks overnight, or sometimes during the day. These stations may require so much power that utilities will need to install additional hardware to bring electricity from the grid to the stations to meet potentially high demands at certain times.

This video from the utility Southern California Edison shows some of the steps involved in electrifying medium- and heavy-duty vehicle fleets.

Fuel cell trucks will require hydrogen stations installed either at fleet depots or public locations. These will allow fast refueling without high instantaneous demands on the system. But producing the hydrogen will require electricity, which will put an additional burden on the electric system.

Presently there are few public or private charging or hydrogen stations for truck fleets in California. But the California Public Utility Commission has allowed utilities to charge their customers to install a significant number of stations throughout the state. And the U.S. Department of Energy recently allocated $8 billion for construction of hydrogen hubs – networks for producing, processing, storing and delivering clean hydrogen – across the country.

Despite these efforts, the rollout of charging and hydrogen infrastructure will likely slow the transition to zero-emission trucks, especially long-haul trucks.

4. Who would be affected by a diesel truck ban?

California’s rules will affect both truck manufacturers and truck users. The state’s Advanced Clean Trucks rule, adopted in 2020, requires the sale of increasing percentages of zero emission trucks starting in 2024. By 2035, 40% to 75% of all trucks, depending on the truck type, must be zero emission.

A new proposal scheduled for adoption in early 2023, the Advanced Clean Fleets rule, would require fleets with over 50 trucks to purchase an increasing number of zero-emission trucks over time, with the requirement that all truck sales and purchases be zero emission by 2040.

These two policies would work together. The Advanced Clean Trucks rule ensures that zero-emission trucks will become available to fleets, and the Advanced Clean Fleets rule would give truck manufacturers confidence that the zero-emission trucks they produce will find buyers.

These two rules are the most ambitious in the world in accelerating a transition to zero-emission trucks.

5. Are other states emulating California?

Yes, there is strong interest in many other states in electrifying trucking. Oregon, Washington, New York, New Jersey and Massachusetts have already adopted the Advanced Clean Trucks rule, and others are in the process of doing so. Seventeen states and the District of Columbia have agreed to work together to foster a self-sustaining market for medium- and heavy-duty vehicles.

We expect that transitioning to zero-emission truck fleets will require strong policy support at least until the 2030s and perhaps longer. The transition should become self-sufficient in most cases as production scales up and fleets adapt their operations, resulting in lower costs. This could be soon, especially with medium-duty trucks.

Converting large long-haul trucks will be especially challenging because they need large amounts of onboard energy storage and benefit from rapid refueling. Fuel cell systems with hydrogen may make the most sense for many of these vehicles; fleets will ultimately decide which technologies are best for them.

The transition to zero-emission trucks will be disruptive for many fleets and businesses, and will require government support during the early years of the transition. Overall, though, we believe prospects are bright for zero-emission trucking, with enormous clean air and climate benefits, and eventually, cost savings for truck owners.The Conversation

About the Author:

Daniel Sperling, Distinguished Blue Planet Prize Professor of Civil and Environmental Engineering and Founding Director, Institute of Transportation Studies, University of California, Davis; Lewis Fulton, Co-director, STEPS (Sustainable Transportation Energy Pathways), University of California, Davis; Marshall Miller, Senior Development Engineer, institute of Transportation Studies, University of California, Davis, and Miguel Jaller, Associate Professor of Civil & Environmental Engineering, University of California, Davis

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

Financial News Stock Market News
01 Nov

Bankers need to be personally liable to avoid future financial crises – new research

By David Blake, City, University of London 

Most financial crises have plenty in common. They tend to start in the banking sector and involve excessive borrowing, together with an asset bubble, usually related to property.

The global crisis of 2008 was no different, with the asset bubble focused on US real estate. But my research suggests this crisis had another underlying cause – that some people in the banking sector were playing or “gaming” the system for their own financial gain.

The game being played had several important features. First was the deliberate complexity of the financial products at its core – in particular the products based on pooling residential mortgage loans (called “mortgage-backed securities”) that were sold by banks to other banks and institutional investors.

These products were issued by the very banks that had offered the mortgages to customers who did not earn enough to pay the mortgage interest, and relied on ever-increasing house prices to stay afloat.

Then there are the behavioural biases that pervade decision-making at all levels of the banking industry. My research found that banking can often attract a certain kind of person: those who are prone to overconfidence, excessive risk-taking and, in some cases, psychopathic behaviour.

Such people tend to like complexity for its own sake. But they often do not fully understand the implications of that complexity for the stability of the financial system as a whole. Often they do not care – they are primarily interested in gaming the system to maximise their bonuses.

The next element is risk. There are parts of the banking sector that will always be prone to risk, but my research suggests that many bankers have come to feel immune to its potential impact. Instead, they are comforted and emboldened by the view that, however recklessly banks behave, governments – and hence taxpayers – will always be there to bail them out.

Meanwhile, financial regulators attempt to set out effective rules and codes to mitigate risk. But this usually results only in a continual game of cat and mouse with an industry constantly seeking to circumvent any regulations they consider too onerous.

Game over?

Given all of this, there are no effective measures that any government would be prepared to introduce to deal with this situation. There have been no serious attempts to recognise or address the issue of product complexity, and when it comes to dealing with behaviour and personality types, everyone – including employees, managers, directors and even regulators – is susceptible.

Previous attempts to combat systemic risk in finance were based on the underlying assumption that the financial system is rational and that bankers want to behave rationally if they are given the right incentives. But these assumptions, my research indicates, are questionable.

Gaming in the banking sector seems virtually impossible to eliminate. The only effective measure to end it would be to make bankers personally liable for losses, to remove the sense that their actions – their games – have no personal financial or legal consequences.

It is this, rather than removing the cap on bankers’ bonuses, that has the best chance of preventing the financial system blowing up again.

However, no government has ever passed such a law. And no single government could do so on its own, since this would immediately cause their entire national banking sector to move wholesale to another jurisdiction.

The law would have to be introduced simultaneously in all countries – and the probability of this happening is negligible. In short, the only effective measure to limit gaming will not, and cannot, be introduced.

This may seem like a bleak conclusion, and in many ways it is – particularly for taxpayers. But there is a more positive alternative, which entails the industry returning to the simple products that the banks, their regulators and their customers understand. In most cases the complexity is unnecessary.

For we should not forget that the main functions of banks are pretty straightforward: to raise funds from depositors and wholesale markets in order to lend to households and businesses. Banks have been providing these services successfully for centuries. But today bankers are not interested in simple products – because they are more difficult to game.

Until that changes, the really important lesson of the global financial crisis is that it is bound to be repeated. The “great game” will never end.The Conversation

About the Author:

David Blake, Professor of Finance & Director of Pensions Institute, City, University of London

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

Economics & Fundamentals Financial News
01 Nov

Why has the RBA raised interest rates for a record 7th straight month? High inflation – and worse is on the way

By Peter Martin, Crawford School of Public Policy, Australian National University 

Pushing up interest rates isn’t something the Reserve Bank does lightly.

But what’s worrying the Reserve Bank – and why it increased interest rates for a record seventh consecutive month on Melbourne Cup Tuesday – is that inflation seems to become completely detached from the bank’s target band.

That target band of 2-3% was introduced in the early 1990s, at a time when that’s where inflation was. With one brief exception during the introduction of the goods and services tax, at the start of the 2000s, inflation has never since been far away from the band – until now.

The jump in inflation from 6.1% to 7.3%, revealed last Wednesday, made it clear that, even after six consecutive interest rate hikes, inflation was further away from the Bank’s target band than it had ever been.

Inflation breaks free of the target band

Annual increases in the consumer price index. The RBA’s 2-3% inflation target band was adopted in the early 1990s.
ABS

When the Reserve Bank began hiking its so-called cash rate during the May election campaign, the National Australia Bank’s standard variable mortgage rate was 3.45%. It’s now 5.95% and about to go to 6.2%.

For a borrower with a $500,000 mortgage, the increase in payments amounts to $800 per month. For a borrower on a fixed-rate loan of 2% that’s about to expire, the burden will be even greater.

So the Reserve Bank wants to be sure the jump in inflation to 7.3% is real.

How the cost of buying a home skews inflation

The first thing to say is that 7.3% is almost the real thing, but not quite.

The Bureau of Statistics collects information on millions of prices per week, at times by going into stores in eight cities and noting down what’s on price tags, at times by direct feeds from supermarkets, petrol stations and electricity suppliers, and at times by “scraping” prices quoted on the web for home deliveries.

The bureau categorises the things it prices as either essential or non-essential (its words are “non-discretionary” and “discretionary”).

It’s found that the prices of essential items (those we generally have to buy) climbed by more than 7.3% in the year to September – by an extraordinary 8.4% – whereas the prices of things we generally don’t need climbed 5.5%.

For obvious reasons, food is among the bureau’s list of essential or “non-discretionary” items. Food prices continue to be pushed up by floods and labour shortages.

But what many people don’t realise is that also among that list of supposedly “non-discertionary” items is one type of purchase people don’t make often – and which some of Australians will never make.

And that single item – “new dwelling purchase by owner-occupiers” – makes up more of the consumer price index than anything else.

Buying a home is so expensive compared to the other things we buy (such as bread and milk) that it accounts for almost 9% of the consumer price index.

Worse still, being classified as essential, it makes up almost 15% of the “essentials” index, even though for most of us in any given year buying a home is optional.

In most years, this anomaly doesn’t matter much. The price of a new home (what’s priced is only the construction of the home, not the land) climbs pretty much in line with everything else.

But building material shortages, COVID-induced labour shortages, and an explosion in demand for building fed by the government’s HomeBuilder grant have pushed up the price of new dwellings by an astonishing 20.7% in the past year. That’s enough to add an awful lot to the reported rate of inflation.

The real cost of living is probably up 6%

A rough calculation suggests Australia’s inflation rate would be 6%, instead of 7.3%, if the price of new homes didn’t have such an outsized influence.

We will know more by mid-Wednesday. The bureau actually produces separate living cost indexes a week after the consumer price index that substitute mortgage payments for the cost of home-building.

Lately these indexes have been pointing to increases one to two percentage points below the official rate of inflation.

Accurately measuring rent rises

Another peculiarity is that the rent increases recorded in the consumer price index are so far below those we keep hearing about.

The bureau says in the year to September, average capital city rents climbed just 2.8%, compared to the figures of 10%, and in some suburbs, 20%, quoted by real estate analysts.

In part, this is because the bureau only reports capital city rents. But more importantly it is because it does its job better than real estate analysts.

It collects data on not only the rents that are advertised (these are climbing strongly), but also on the hundreds of thousands of rents paid by continuing renters, which either aren’t climbing at all or aren’t climbing as strongly.

The bureau compares the two by describing a bathtub of water.

The water in the tub represents all rents being paid by households, while the water entering the tub from the tap represents new rental agreements. The consumer price index is measuring the overall temperature of the bathtub whereas an advertised rents series measures the temperature of the water flowing into the tub.

Worse news ahead

Perhaps surprisingly, the bureau finds the average retail price of electricity only climbed 3.2% in the year to September, and the price of gas by only 16.6%, much less than the 56% and 44% mentioned in last week’s federal budget.

But the budget numbers were predictions of what’ll happen over the next two years unless the government provides relief. The bureau was telling us what has happened.

Which is why the Reserve Bank is worried. While gas and electricity prices will subside eventually, inflation is likely to climb even higher before it falls – the bank says to around 8%.

The way back to the target band of 2-3% is anything but clear. That means for homebuyers, there’s no relief in sight just yet.The Conversation

About the Author:

Peter Martin, Visiting Fellow, Crawford School of Public Policy, Australian National University

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

Economics & Fundamentals Opinions
01 Nov

Technical analysis for November 2022

Article By RoboForex.com

EURUSD, “Euro vs US Dollar”

The currency pair has completed a wave of growth to 1.0080 and a minimal correction to 0.9890. At the moment, the market is forming a consolidation range above this level. An escape downwards and extension of the range to 0.9800 are not excluded. Next, we expect a structure of growth to develop to 1.0155. The goal is estimated and local. After it is reached, a wave of correction to 0.9890 might begin.

EURUSD
Risk Warning: the result of previous trading operations do not guarantee the same results in the future

GBPUSD, “Great Britain Pound vs US Dollar”

The currency pair continues developing a consolidation range around 1.1315. At the moment, the market escaped the range upwards, reaching 1.1636. A technical test of 1.1315 from above is expected, followed by growth to 1.1680. After this level is reached, a wave of growth to 1.1020 is likely to begin.

GBPUSD
Risk Warning: the result of previous trading operations do not guarantee the same results in the future

USDJPY, “US Dollar vs Japanese Yen”

The pair has completed a wave of growth to 151.80 and the first impulse of decline to 146.13. Today the market has corrected to 148.99. Next, we expext a decline to 146.13. With a breakaway downwards, we will expect the wave of growth to continue to 143.08. The goal is estimated, local. Then growth to 146.00 should follow (a test from below). Next thing — a decline to 140.40. The goal is first.

USDJPY
Risk Warning: the result of previous trading operations do not guarantee the same results in the future

BRENT

Crude oil completed a wave of decline to 88.88. Practically, the correction is over. At the moment, the market is forming one more wave of growth to 101.70. The goal is first. Then correction to 92.70 might develop, after which we should expect growth to 105.77.

BRENT
Risk Warning: the result of previous trading operations do not guarantee the same results in the future

XAUUSD, “Gold vs US Dollar”

Gold performer a wave of decline to 1618.40 and a link of growth to 1674.00. With a bounce off 1674.00 downwards, the wave of growth is continuing to 1618.00. We expect a breakaway of this level downwards and trend continuation to 1565.05. After this level is reached, we expect the wave of growth to 1777.70 to begin.

GOLD
Risk Warning: the result of previous trading operations do not guarantee the same results in the future

S&P 500

The stock index completed a wave of growth to 3866.6. At the moment, the market is forming a consolidation range around it. The range might extend to 3950.0. Then the wave of decline might continue to 3679.3. In case it is broken away, the trend might continue down to 3400.0.

S&P 500

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
01 Nov

Australian dollar grew after RBA decision. Overview for 01.11.2022

Article By RoboForex.com

On Tuesday, the Australian dollar started growing against the US counterpart. The current quote is 0.6419.

At the meeting the Reserve Bank of Australia lifted the interest rate to 2.85% annual from 2.60% previously. This decision was anticipated, and this increase by 25 base points goes in line with the previously voiced RBA policy. This is the seventh increase in a row, so the interest rate has reached the high since April 2013. It seems that the rate is likely to keep growing: the RBA might go on raising it to hold back inflation.

In the comments, the Australian regulator mentioned that the growth of the interest rate is necessary for forming a good balance of supply and demand inside the economic system.

According to RBA expectations, inflation will reach the peak in Q4, hitting 8.00%. In 2023, average CPI is expected to be 4.75%, and in 2024 – 3.00%.

For the Aussie, all said above is a positive supportive factor.

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
01 Nov

The Analytical Overview of the Main Currency Pairs on 2022.11.01

By JustMarkets

The EUR/USD currency pair

Technical indicators of the currency pair:
  • Prev Open: 0.9964
  • Prev Close: 0.9881
  • % chg. over the last day: -0.84 %

The annual inflation rate in the Eurozone reached 10.7%, against expectations of growth of 10.3%. The core consumer price level, which excludes food and energy prices, rose to 5.0% from 4.8%. Eurozone GDP growth slowed in the third quarter, with business activity indices suggesting further declines. Energy prices continue to drive inflation, adding 4.2% to overall inflation in October. Meanwhile, inflation expectations for 2023 have also risen. All this indicates that it is too early for the ECB to slow down the pace of monetary policy tightening, and it is likely that Europe’s Central Bank will again have to aggressively raise interest rates by 0.75% at its next meeting. And that will slow down business activity in the region even more.

Trading recommendations
  • Support levels: 0.9873, 0.9835, 0.9755, 0.9601
  • Resistance levels: 0.9924, 1.0055, 1.0111, 1.0162, 1.0230

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 at the level of the moving averages, but the correction is close to the end. The MACD indicator is in the negative zone, but sellers’ pressure is weak due to the presence of divergence. Under such market conditions, buy trades should be considered from the support level 0.9873, but with additional confirmation, as the level has already been tested. Sell deals can be considered from the resistance level of 0.9924, but also with confirmation.

Alternative scenario: if the price breaks down through the support level of 0.9834 and fixes below it, the downtrend will likely resume.

EUR/USD
News feed for 2022.11.01:
  • – US ISM Manufacturing PMI (m/m) at 16:00 (GMT+2);
  • – US JOLTs Job Openings (m/m) at 16:00 (GMT+2).

The GBP/USD currency pair

Technical indicators of the currency pair:
  • Prev Open: 1.1616
  • Prev Close: 1.1465
  • % chg. over the last day: -1.32 %

The pound fell by 1.3% against the dollar yesterday. The Bank of England is likely to raise rates by 75 basis points at Thursday’s meeting, although analysts say long-term rate expectations are under continued pressure. Bank of England deputy governor Ben Broadbent suggested that the cost of borrowing, as assessed by investors, would hit the UK economy. Noting that, he doubted that the UK could do a “soft landing” or, in other words, bring inflation back to the target level without significantly damaging the real economy.

Trading recommendations
  • Support levels: 1.1466, 1.1337, 1.1172, 1.1093, 1.0915, 1.0817
  • Resistance levels: 1.1578, 1.1698, 1.1816, 1.1901

From the technical point of view, the trend on the GBP/USD currency pair on the hourly time frame is bullish. The price is trading at the level of the moving averages. The MACD indicator is negative, but there is still buying pressure. Under such market conditions, buy trades can be considered from the support level of 1.1466 or 1.1337, but better after confirmation. Sell trades are best sought on intraday time frames, the nearest resistance level is 1.1578, but also better with confirmation in the form of a reverse initiative.

Alternative scenario: if the price breaks down of the 1.1172 support level and fixes below it, the downtrend will likely resume.

GBP/USD
News feed for 2022.11.01:
  • – UK Manufacturing PMI (m/m) at 11:30 (GMT+2).

The USD/JPY currency pair

Technical indicators of the currency pair:
  • Prev Open: 147.41
  • Prev Close: 148.75
  • % chg. over the last day: +0.90 %

Japan’s Finance Ministry said Monday that it spent a record $42.8 billion in currency intervention in October to support the yen. The currency intervention has temporarily strengthened the Japanese currency. Still, the fundamental picture remains the same: the Bank of Japan does not intend to abandon its soft monetary policy until spring 2023, while the US Federal Reserve is in a cycle of tightening and rising interest rates. Even if the US Fed cuts the pace of increases, the interest rate differential will still widen, putting negative pressure on the yen.

Trading recommendations
  • Support levels: 147.99, 146.64, 145.50, 144.91, 144.19, 143.00
  • Resistance levels: 148.82, 147.75, 148.64, 148.64, 150.00, 151.05

From the technical point of view, the medium-term trend on the currency pair USD/JPY is bearish. The price is trading at the level of the moving averages. The MACD indicator has become positive, but the buyers’ pressure is decreasing. Under such market conditions, traders can look for buy trades on the intraday time frames from support at 147.99 or 146.64, but only after the confirmation. Sell deals can be sought from the resistance level of 148.82, but only with additional confirmation, as the level has already been tested.

Alternative scenario: If the price fixes above 150.00, the uptrend will likely resume.

USD/JPY
News feed for 2022.11.01:
  • – Japan Manufacturing PMI (m/m) at 02:30 (GMT+2).

The USD/CAD currency pair

Technical indicators of the currency pair:
  • Prev Open: 1.3605
  • Prev Close: 1.3619
  • % chg. over the last day: +0.10 %

The Canadian dollar is a commodity currency and is highly dependent on the movements of the dollar Index as well as oil price movements. Monthly government data showed that US oil production rose to nearly 12 million BPD in August, the highest since the COVID-19 pandemic. With new blockages in China indicating weak demand, oil prices are declining, negatively affecting the Canadian dollar. But analysts’ medium-term forecasts suggest that oil prices will rise as OPEC+ will cut production in November. This could give a boost to the Canadian dollar, but it should be noted that a substantial increase in energy prices could trigger a new round of higher inflation.

Trading recommendations
  • Support levels: 1.3542, 1.35000, 1.3454
  • Resistance levels: 1.3610, 1.3597, 1.3679, 1.3795, 1.3855, 1.3968.

From the point of view of technical analysis, the trend on the USD/CAD currency pair is bearish. The price is trading at the level of moving averages, wide-volatility balance is formed. The MACD indicator has become negative, there is slight seller pressure. For sell deals, it is best to consider the resistance level of 1.3609, but only after the additional confirmation. Buy trades should be considered on the lower time frames from the support level of 1.3542, but it is also better after confirmation.

Alternative scenario: if the price breaks out and consolidates above the resistance level of 1.3855, the uptrend will likely resume.

USD/CAD
News feed for 2022.11.01:
  • – Canada Manufacturing PMI (m/m) at 15:30 (GMT+2).

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
01 Nov

Oil declines amid rising US production. RBA raises interest rate by 0.25%

By JustMarkets

The US indices fell yesterday amid weakness in the technology sector and ahead of a US Federal Reserve meeting, where a  0.75% interest rate hike is expected. At Monday’s close, the Dow Jones Index (US30) decreased by 0.39%, while the S&P500 Index (US500) lost 0.75%. The technology index NASDAQ (US100) dropped on Monday by 1.03%.

Nevertheless, experts believe the dollar’s gains could be limited if the Fed signals on Wednesday that the pace of rate hikes will slow down as it assesses the impact of its policy tightening. At the December meeting, federal funds futures forecast a 55% chance of a 50 basis point rate hike, down from 67% chance last Friday.

Famous companies reporting today are Pfizer (PFE), Toyota Motor (TM), AMD (AMD), BP (BP), Uber Tech (UBER), AIG (AIG), and Electronic Arts (EA).

Equity markets in Europe traded without a single dynamic yesterday. German DAX (DE30) gained 0.08%, French CAC 40 (FR40) dropped 0.10%, Spanish IBEX 35 (ES35) jumped by 0.51%, and British FTSE 100 (UK100) closed on Monday with a 0.66% gain.

Eurozone GDP grew slightly better than expected by 0.2% in the third quarter, indicating a clear slowdown from the 0.8% growth in the second quarter. Germany and Italy beat expectations, growing 0.3% Q/Q and 0.5% Q/Q, respectively, while Spain and France grew by 0.2% QoQ. The annualized Eurozone inflation rate reached 10.7%, against expectations of 10.3% growth. The core consumer price level, which excludes food and energy prices, rose to 5.0% from 4.8%. The purchasing managers’ composite index (PMI) showed a decline, with activity in all sectors gradually decreasing. Analysts believe a recession in the Eurozone is inevitable, and the next quarter will point to a significant drop in GDP.

German Chancellor Olaf Scholz promised a rapid introduction of natural gas price subsidies to mitigate the impact of skyrocketing energy prices. Germany, Europe’s largest economy, is at the center of an energy crisis engulfing the continent as Russia cuts gas supplies to the region and the country assembles a 200 billion euro emergency aid package. According to the Independent Natural Gas and Heating Commission, which presented its report Monday, about half of the money must be used to subsidize households and businesses.

Although Moscow has suspended its participation in a UN program to secure ships carrying grain from Ukraine amid the ongoing war, Ukrainian President Vladimir Zelensky said his country would continue a program brokered by the UN and Turkey in July to ensure an uninterrupted supply of food products to world markets.

The US is increasing its oil production, which puts downward pressure on oil quotes. Monthly government data showed that US oil production rose to nearly 12 million BPD in August, the highest since the COVID-19 pandemic. The coronavirus outbreak in China is expanding and starting to affect other cities, dampening hopes for a recovery in oil demand.

Asian markets traded flat yesterday. Japan’s Nikkei 225 (JP225) gained 1.78%, Hong Kong’s Hang Seng (HK50) ended the day down by 1.18%, and Australia’s S&P/ASX 200 (AU200) increased by 1.15%.

The Reserve Bank of Australia (RBA) raised its target interest rate by 25 basis points (BPS) to 2.85%, bringing interest rates to their highest level in 9 years. The Central Bank pledged to continue raising interest rates as necessary and will continue its data-driven approach. The RBA raised its inflation forecast for the year to 8% from 7.75%. Also, Australia’s GDP is now expected to grow by 3% in 2022, down from the previous forecast of 3.25%.

S&P 500 (F) (US500) 3,871.98 −29.08 (−0.75%)

Dow Jones (US30) 32,732.95 −128.85 (−0.39%)

DAX (DE40) 13,253.74 +10.41 (+0.079%)

FTSE 100 (UK100) 7,094.53 +46.86 (+0.66%)

USD Index 111.58 +0.83 (+0.75%)

Important events for today:
  • – Japan Manufacturing PMI (m/m) at 02:30 (GMT+2);
  • – Australia RBA Interest Rate Decision (m/m) at 05:30 (GMT+2);
  • – Australia RBA Rate Statement (m/m) at 05:30 (GMT+2);
  • – Australia RBA Governor Lowe Speaks (m/m) at 10:20 (GMT+2);
  • – UK Manufacturing PMI (m/m) at 11:30 (GMT+2);
  • – Canada Manufacturing PMI (m/m) at 15:30 (GMT+2);
  • – US ISM Manufacturing PMI (m/m) at 16:00 (GMT+2);
  • – US JOLTs Job Openings (m/m) at 16:00 (GMT+2);
  • – New Zealand RBNZ Financial Stability Report at 22:00 (GMT+2);
  • – New Zealand Unemployment Rate at 23:45 (GMT+2).

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.

Energy Financial News
01 Nov

Market Mood Improves Ahead Of Fed Decision

By ForexTime

The next few days promise to be eventful and potentially volatile for financial markets thanks to key economic reports from major economies, corporate earnings, and crucial central bank meetings.

November has already kicked off on a positive note with European markets trading firmly higher, led by mining shares and robust earnings from British Petroleum which posted its second-highest quarterly profits ever. In Asia, shares flashed green amid the improving risk sentiment while US futures pointed to a positive start as traders looked ahead to the Fed rate decision on Wednesday. In the currency space, the dollar fell along with Treasury yields while sterling wobbled around 1.1500. Although gold has taken the opportunity to shine this morning as the greenback declines, the Fed meeting and US jobs report are likely to set the tone for direction in November.

In other news, the Reserve Bank of Australia hiked interest rates by 25bp for a second consecutive month while revising up its inflation forecast and downgrading its growth projections for 2022 and 2023. While the fierce war against inflation fuels recession fears, RBA doves are back in the building as the central bank steps away from aggressive rate hikes. This could hit the AUD which has weakened against almost every single G10 currency this quarter.

All eyes on the Fed meeting

The FOMC rate decision on Wednesday could rock financial markets.

Markets widely expect the central bank to raise interest rates by 75 basis points. Given how such a move has already been priced into markets, much attention will be on the language in the statement and the press conference for clues on future monetary policy. Should the central bank strike a cautious tone and signal that future rate hikes could be smaller, this could weaken the dollar as doves enter the scene. We have already seen some central banks switch into a slower gear on rate rises with the Bank of Canada and Reserve Bank of Australia two prime examples.  A similar step down by the Fed would hit the mighty dollar as bets of aggressive rate hikes beyond November rapidly diminish. Traders will also have to contend with Friday’s monthly non-farm payrolls report which is expected to show solid job gains and still-low unemployment.

Talking technicals, the DXY remains in a healthy uptrend on the daily charts, but some cracks are forming. Another breakdown below 110.00 could signal a selloff towards 109.00 and lower. If prices can push back above 112.50, bulls could target 113.50.

Currency spotlight – Pound waits on BoE decision

Watch this space. GBPUSD could turn explosively volatile this week thanks to the Federal Reserve and Bank of England meetings.

On Thursday, the Bank of England is likely to deliver what would be the biggest UK rate hike since 1989. With inflation at 10.1% and hitting levels not seen in 40 years, market players expect the central bank to join the 75bp hike club. However, sentiment towards the UK economy remains fragile with recent economic data including retail sales and manufacturing reports among others showing signs of a slowing economy. On top of this, the recent political drama over ex-Prime Minister Liz Truss’s controversial mini-budget has left a sour aftertaste with the new government on a mission to restore the UK’s fiscal credibility. 

In which light, markets think the bank will hike rates by 75bp but signal that this is a one-off move. Such a development could fuel speculation around less aggressive hikes from December and into 2023. There is a possibility that the MPC disappoints markets with a 50bp hike given the state of the UK economy and fears that the country may already be in recession. Whatever the outcome on Thursday, it will certainly have a lasting impact on sterling.

Looking at GBPUSD, prices are trading above 1.1500 as of writing. Should this level prove to be reliable support, a move back towards 1.1750 and 1.1850 could be on the cards. Weakness below 1.1500 may open a path towards 1.1400 and 1.1200 respectively.

Commodity spotlight – Gold

Gold drew strength from a weaker dollar and falling Treasury yields on Tuesday as investors braced themselves for the Federal Reserve meeting.

Although the central bank is widely expected to raise rates, gold could come out of this meeting smiling if the Fed hints of a slowdown in monetary policy in the future. Given how such a pivot could provide more room for gold bugs to fight back, prices would head north in the near term. Looking at technical levels, a breakout above $1655 could trigger a rise toward $1680 and $1700. Weakness below $1655 may open a path towards $1615 and $1600, respectively.

Forex-Time-LogoArticle by ForexTime

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

Economics & Fundamentals Financial News
31 Oct

Euro Remains Depressed

By RoboForex Analytical Department

On Monday, the final trading day in October, the market major is declining, balancing near 0.9940.

Active growth of the instrument stopped right after the European Central Bank last week lifted the interest rate to 2.00% annual. This was just the decision know long before, so on facts investors just took the profit.

The main event of this week will be the meeting of the US Federal Reserve System. The is hardly any doubt that the interest rate will grow by 75 base points to 4.00% annual. Much depends on the comments of the Fed: investors need to understand whether the rate will keep growing at such speed.

EUR/USD volatility will grow on Wednesday.

On H4, the market performed a wave of growth to 1.0090. Today the market continues developing a correction. The level of 0.770 is likely to be reached. Then a wave of growth may start for 0.9920. Practically, a consolidation range is likely to form between these two levels. With an escape upwards, another structure of growth is likely to develop to 1.0440. Technically, this scenario is confirmed by the MACD: its signal line is under zero and keeps going down to new lows.

On H1, EUR/USD has completed a structure of a wave of decline to 0.9930. At the moment, the market has formed a consolidation area above it. We expect an escape downwards and a decline to 0.9766. After this level is reached, a link of growth might develop to 0.9930, from where the trend may continue to 1.0440. Technically, the scenario is confirmed by the Stochastic oscillator: its signal line is headed downwards, to 50. Upon breaking this away, the trend should continue to 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
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