Russian Ruble is Targeting the Level of 73

Good day,Having pulled back from the level of 75, the Russian ruble might potentially gain the required support at the level of 73.00 anytime soon. The asset might jump away from the level of 73.00.The price of gold has formed engulfing at the level of 1767.00, signifying potential growth.Swiss franc is approaching a very interesting level of 0.9215 away from which it might potentially drop. This level is also the broken neckline of the double top or so-called successful swing. This pattern always signifies trend reversal so let’s wait and see what is about to happen next.Disclaimer: The material provided is for information purposes only and should not be considered as investment advice. The views, information, or opinions expressed in the text belong solely to the author, and not to the author’s employer, organization, committee or other group or individual or company.High Risk Warning: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 73% and 65% of retail investor accounts lose money when trading CFDs with Tickmill UK Ltd and Tickmill Europe Ltd respectively. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.

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Dollar Up Near Two Week High, Employment Data Could Hold Next Fed Clue

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Dollar holds near two-week high, U.S. jobs data eyed for Fed clues

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GBP/USD Holds Gains Ahead of BoE Decision, Scottish Election

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EU should aim for multi-polar currency system as China rises: bailout fund's Regling

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US Data may Drive EURUSD Lower

Another leg of USD rally took place yesterday amid sell-off in US equities. The bout of risk aversion was fueled by the comment of the US Treasury Secretary Janet Yellen that a rate hike may be needed to prevent economy from overheating. The caused market turbulence in various asset classes, including stocks and USD, revealed lack of trust of investors to the Fed comments, showing that the Fed pledge to keep rates low and the stance on inflation (“we see inflation as temporary factor”) are taken with a grain of salt. Yellen later clarified that her comment was not a recommendation or a forecast for an interest rate hike, which is not surprising, because just a week ago we saw very cautious Fed rhetoric regarding rate hikes. Fed Speaker Charles Evans' speech today is likely to address market rumors sparked by the Yellen remark.The last three upside swings in USD were distinguished with length of the waves getting progressively shorter, while meeting resistance at the two-week high of 91.40:Such a price action, together with the stabilization of ATR and RSI near their averages, often precedes a breakout move. Taking into account the pressure of buyers its vector will likely be positive. The breakdown catalyst is expected to be the Non-Farm Payrolls report on Friday.Two other reports to look out for are the ADP US Job Growth Data and the ISM Service Sector Index. They will play an important role in shaping expectations for the NFP. The ADP is expected to point to an increase in jobs of 850,000 in April, while the ISM index is expected to rise from 63.7 to 64.3 points. Particular attention should be paid to the hiring component of the ISM index, as its predictive power in relation to the NFP report is quite significant. The two strong reports also once again could cast doubt on the Fed's ability to maintain current degree of monetary easing, which, in particular, may result in faster growth in long-dated bond yields. As I wrote on Monday, news and data flow this week favors tactical strengthening of USD as the reports on the US economy take central place in the economic calendar this week and risks are shifted towards positive surprises in the data.For EURUSD, the breakdown of lower border of the trend channel disabled it for some time, but there was no particular rush to sell near the critical 1.20 level as seen from little pressure in RSI:In this regard, the level can equally act as a foothold for growth after completion of the correction. The 1.1950 test on the release of US statistics looks like a logical scenario, but let’s not forget what drove the recent strengthening of EURUSD - progress in vaccinations, European fiscal stimulus and economic data. Next week, the news background is expected to be more favorable for the growth of the European currency.Disclaimer: The material provided is for information purposes only and should not be considered as investment advice. The views, information, or opinions expressed in the text belong solely to the author, and not to the author’s employer, organization, committee or other group or individual or company.High Risk Warning: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 73% and 65% of retail investor accounts lose money when trading CFDs with Tickmill UK Ltd and Tickmill Europe Ltd respectively. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.

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Midweek Market Podcast – May 5

The first week of the new month brings about some ‘high’ rated risk events, with the Bank of England meeting and Non-Farm Payrolls at the center. Overall, pressure on central banks to take the foot off the accelerator, and start to scale back asset purchases in the second half of the year, will likely intensify.

 

HotForex · Midweek Market Podcast – May 5

Political risks are also on tap as the UK’s local elections could potentially embolden the Scottish independence movement. The rising toll of the pandemic on India will remain the focus, and continues to weigh on sentiment, as vaccine rollouts continue.

The Bank of England is likely to ease its foot off the stimulus pedal and reduce its pace of bond purchases as Britain’s economy appears to be bouncing back. The BoE and elections could bolster Sterling sentiment and volatility.

In the US, all roads lead to the employment release, which faces some upside risks for April. The April NFP consensus is for a further increase of around 850,000 jobs. The jobless rate should drop to 5.7% from 6.0% in March.

This week USD remains firm, breaking the link with Treasury yields in the latest phase, but holding at a 2-week high in the wake of rates talk. This comes after Mrs Yellen stressed the need to lift rates, catalysing a sell-off on Wall Street. The risk-off tone was also responsible  for driving Treasuries slightly lower initially.

The USDIndex rose to 91.40. EURUSD ebbed below 1.1990 for the first time since April 19th. USDJPY lifted towards the 109.50 level, zoning back in on Monday’s 3-week high, and Cable posted a 2-day high but remains overall sideways ahead of BoE and elections. Key resistance remains at 1.4000.

Global stock markets continued to outperform but on more cyclical parts of the market and travel stocks. Tech stocks meanwhile depreciated this week as investors turned away, unnerved by indications that higher inflation was beginning to emerge. Speculation that stronger growth will see central banks take the foot off the accelerator also weighed on stocks that benefited from stay home orders.

Gold is unchanged, hovering within the 3-week range on firm USD as the possibility of higher US rates supports USD. Palladium soared to another record high this week, while Silver and Platinum sustain more than 2-month highs.

Ethereum extended gains, posting a new all-time high, pumping by 160% in value in a week. Bitcoin also sustains a bullish tone overall, however this week’s move will determine its direction after the rapid sell-off on Tuesday.

USOil prices spiked to $66.50 as more US states eased lockdowns and the European Union sought to attract travelers, improving the demand outlook for petrol and jet fuel.

Click here to access our Economic Calendar

Andria Pichidi

Market Analyst

Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in Leveraged Products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.

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EURUSD Weak Following Mixed Eurozone Data

EURUSD Under Pressure The latest data out of the eurozone today offered some small hope for bulls though, in light of the resurgence in USD, EUR remains under pressure for now. The eurozone service sector PMI for April showed an increase to 50.5 from the prior month’s 50.3 which was also the consensus forecast this time. Given that a large swathe of the eurozone is currently battling a third wave of the virus, meaning extended lockdown measures, the data is encouraging.Data Still Weak However, at just a touch over the neutral level, the sector is still very weak and on the back of recent data showing that the eurozone entered a double dip recession in Q1, the continued decline in EUR is not puzzling. The services sector has certainly been harder hit than manufacturing which, as a global theme, we have seen remain resilient during the pandemic as a result of the surging demand created by the rise in online shopping. However, the manufacturing PMI for April, released, earlier this week, showed that while the sector was still strong, at 62.9 it was below both the prior and expected 63.3 reading.Spain Strongest Services Sector Last Month Looking at the breakdown of today’s data, notably the Spanish sector has been the strongest performer at 54.6 on the month, a strong increase from the prior month’s 48 reading, which has seen the country’s services sector moving back into growth territory. Italy, however, was the weakest at 47.3, a decline from the prior month’s reading above 48.European Summer Tourism In Doubt The big challenge for the eurozone currently is the slow pace of vaccinations when compared with the UK and US. With vaccination numbers lagging far behind, the economic bloc has seen several key member states suffering from a third outbreak of the virus which has resulted in the reversal of reopening measures and extended lockdowns. With this in mind, the projected return to broad European travel this summer, and the resurgence of the European tourism sector, is still in doubt.Vaccinations Picking Up There are signs that the pace of vaccination is starting to increase, though it is not yet clear if enough momentum will have been achieved in time for the summer. If tourism is not able to return this year, this would strike another significant blow to the eurozone economy and is certainly something the ECB will be watching over coming months.Technical Views EURUSDThe attempted breakout above the bear channel from 2021 highs saw EURUSD running into selling pressure with the par subsequently reversing back into the channel. For now, price is still holding above the 1.1910 level which is the key downside pivot to note. While this level holds, there is still scope for a further push higher. Below there, focus will shift to the rising trend line support and the 1.1711 and 1.1609 levels next.Disclaimer: The material provided is for information purposes only and should not be considered as investment advice. The views, information, or opinions expressed in the text belong solely to the author, and not to the author’s employer, organization, committee or other group or individual or company.High Risk Warning: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 73% and 65% of retail investor accounts lose money when trading CFDs with Tickmill UK Ltd and Tickmill Europe Ltd respectively. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.

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Cryptocurrency ether has hit an all-time high. Why? And will the bull market last?

• SEE MORE Dogecoin goes “to the moon” – what’s going on?
• SEE MORE What does the Coinbase listing mean for bitcoin and other cryptocurrencies?
• SEE MORE What are NFTs and why are they so popular?

Cryptocurrency ether – the world’s largest cryptocurrency by market cap after bitcoin – hit an all-time high of $3,516.34 on Tuesday, just a day after it first crossed the $3,000 mark. 

So is it different this time, or will the bull market be short-lived, like when it climbed almost 9000% in 2017, and made only modest gains thereafter? 

Ether now has a market cap of more than $400bn, according to data from CoinMarketCap, and has risen by around 400% since the start of year, outpacing even bitcoin’s year-to-date gain, which has risen around 100% since the start of the year. 

So it may very well be different this time, and ether could well enjoy several months of further growth. Why is that? A number of market watchers think market fundamentals and several broader factors justify ether’s stunning price rally. 

So what caused the milestone for ether? 

Why the ether price spiked

A lot of the rally has got to do with the nature of the cryptocurrency and how useful it is. For a start, ether has enjoyed greater interest from institutional investors. In the last two weeks alone, four ether exchange-traded funds have debuted on the Toronto Stock Exchange. This has made it “easy for institutions to gain access as demand for crypto exposure broadens beyond bitcoin”, says investment management company Ark Invest. 

Ether was invented in 2015  by Vitalik Buterin. It runs on the Ethereum network, which shot to fame for its ability for developers to execute “smart contracts”. It has been particularly useful in decentralised finance (DeFi). But more recently the rise of non-fungible-tokens (NFTs), which are cryptographic tokens that run on a blockchain and work as a record of ownership, has also driven the ether price higher. The digital tokens caused shockwaves in markets when it emerged that artist Mike Winkelmann sold an NFT of his work for $69m. But how are these obscure tokens related to ether’s rise in value? 

Simply put, most NFTs use the Ethereum blockchain (although they can use others, too). "Usage of the Ethereum network is increasing and, by some measures, outpacing that of bitcoin, as shown by the number of active wallets and total transaction fees. In our view, decentralised finance (DeFi) and non-fungible tokens (NFTs), both of which are burgeoning, explain Ethereum's recent breakout”, says Ark Invest. 

Ether’s all-time high also comes weeks after euphoria around the recent listing of Coinbase, America’s largest cryptocurrency exchange. A number of cryptocurrencies hit fresh record highs after its public debut. 

Ether’s expected upgrades are also boosting its price 

A number of expected protocol upgrades to Ethereum’s system is also having a positive impact for the cryptocurrency. Anticipation of the forthcoming “Ethereum Improvement Proposal”, commonly referred to as EIP-1559, has been positive for ether.

Transaction charges must be paid for any cryptocurrency payment to be settled or recorded on the blockchain. Fees for ether, which are called “gas”, are highly volatile, which means users often have to speculate on what to charge. EIP-1559 is expected to mark an end to this problem as Ethereum developers approved a proposal in March, paving the way for an average transaction price to be used in the network. 

Another prominent feature of the update is that ether’s supply will fall, meaning this could provide further upside. At present ether’s supply is limitless, in stark contrast to other cryptocurrencies, like bitcoin which has a fixed supply of 21 million coins. 

Ethereum is also currently in the process of shifting to a mechanism known as proof-of-stake (PoS) to verify transactions on the blockchain. That should make the platform more scalable and energy efficient. At present proof-of-work (PoW) remains the most popular method, used by bitcoin and other cryptocurrencies. PoW requires “miners” to solve complicated mathematical puzzles and share the proof before blocks can be added. But the problem with this is that it requires a lot of energy. 

Looking ahead 

So is there no looking back for ether, or could it come crashing back down? Ark Invest points out a downside of EIP-1559 as “miners will bear the brunt of fees burned”, adding that “a miner revolt could impede the progress of the EIP-1559 upgrade”.

But ether’s rally has become one of the latest sources of frenzy in the market, with one analyst predicting ether prices could race past the $5,000 mark in coming days. “Ether is one of the main beneficiaries in the wider explosion in the cryptocurrency market,” says Nigel Green, chief executive and founder of financial services firm deVere Group. 

Ether is undoubtedly a promising cryptocurrency underpinned by strong fundamentals and practical uses. So this isn’t a classic story of a cryptocurrency soaring without reason or cause, such as Dogecoin, which began as a joke but has risen more than 11,000% since the start of the year. 

Another promising sign for ether is that the ETH-BTC ratio, which reflects ethereum as a proportion of bitcoin prices, is rising. This shows that ether is rising and bitcoin’s dominance is waning. 

But while ether’s gains are unlikely to fizzle out anytime soon, its usefulness and success will ultimately determine whether ether prices will eventually reach a top or have much further to go. But bitcoin’s prices may come under pressure if ether lives up to its hype.

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Market Spotlight: EURCAD Challenging Key Support

EURCAD Leaning Lower AgainThe bear channel which has framed the sell-off in EURCAD since December last year is now threatening to take another leg lower. Following the failed breach of the 1.4795 level, EURCAD reversed higher but ran into selling pressure on a test of the channel top. Price has subsequently reversed lower and is now once again testing the below the 1.4795 level with 1.4581 the next big downside target for bears.As we’ve seen with other pairs such as CADJPY, CAD is currently benefiting from the divergence in monetary policy outlooks between the ECB and the BOC. With the eurozone battling a third wave of the virus and the ECB reaffirming its commitment to maintaining easing, EUR prospects appear limited.CAD, however, has benefited from the BOC announcing a tapering of its monthly asset purchases along with bringing forward its first projected rate hike to late 2022, from 2023 previously, as the Canadian economy continues to rebound amidst reopening.Key Data to Watch The key data for the pair this week will be Canadian employment data on Friday. With the unemployment rate forecast to have ticked higher last month, there is room for a CAD-positive surprise which should weigh on the pair in the near term. Should data disappoint, we are likely to see consolidation continue around the 1.4795 level though the bias will remain bearish unless we see any key reversal signals develop.Disclaimer: The material provided is for information purposes only and should not be considered as investment advice. The views, information, or opinions expressed in the text belong solely to the author, and not to the author’s employer, organization, committee or other group or individual or company.High Risk Warning: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 73% and 65% of retail investor accounts lose money when trading CFDs with Tickmill UK Ltd and Tickmill Europe Ltd respectively. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.

from Tickmill Expert Blog - Forex Traders Blog https://www.tickmill.com/blog/market-spotlight-eurcad-challenging-key-support"
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PayPal and General Motors’ Q1 Report Today

PayPal ( #PayPal ) is an electronic payment provider for merchants and consumers. First-quarter results are scheduled for May 5 after the market close, with Zacks forecasting PayPal’s Q1 earnings per share of $1.01, down from $1.08 in the fourth quarter but higher than the $0.66 in the same quarter of last year. Revenue is expected to be $5.9 billion, down from $6.1 billion a quarter ago.

By the end of 2020, PayPal had 377 million active accounts and 29 million merchant accounts. Venmo, an inter-person money transfer service provider, with a steady increase in revenue every quarter since 2017, is expected to play a significant role in boosting PayPal’s current quarterly revenue. Last month, Venmo was connected to Paxos Trust Company to enable clients to trade currencies. Cryptocurrencies are available on the Venmo app as well.

Source: statista.com

PayPal was one of the biggest beneficiaries of online spending during the Covid-19 outbreak, along with other e-commerce giants. As well as a service introduced  in some countries called Buy Now, Pay Later, which the company plans to expand  to other countries, PayPal also announced another new addition last March, Checkout with Crypto, which is a service that allows US customers to make payments  in cryptocurrencies without any fees. Both Buy Now, Pay Later and Checkout with Crypto are expected to support the Company’s revenue growth in the short to medium term.

Looking at the current  technical trend, the stock price has fallen to the trend line around 250.00 after the price continued to fall over the past week. If the performance turns out to be as good as expected the stock price is likely ready to bounce off the trend line to test the April high again at 278.00, but if the report comes out lower than expected there may be a sellout until the price can break the trend line down to the key support MA200 at  225.00.

General Motors Co. ( #GeneralMotors ) is General Motors Corp. (formerly GM) that went bankrupt in 2009 and remains an industry leader in the United States. With a market share of 17.3% in 2020, the first-quarter earnings report will be ahead of the US market today (May 5), with Zacks forecasting earnings per share of the company at $1.02 , which is at the low end of the range. Below the $1.93 in the last quarter, but higher than $0.62 in the same quarter a year ago. Forecasts for current quarter sales of $33.26 billion.

The same is true for electric car maker Tesla, which has major sales in China. Which since the second quarter of the past year After the massive economic stimulus of the Chinese government As a result, car sales in China continue to grow. As one of the first countries to recover from the outbreak, in the first quarter of 2021, General Motors in China grew 69% (yearly) with more than 780,000 units sold, and the systematic shift to electric cars for the Chinese consumer market. Ultium Drive discrete batteries are expected to play a significant role in supporting the company’s current quarterly revenue.

For the trend of stock prices for #GeneralMotors, we can now see Bearish Divergence with MACD falling to its lowest level since March. Yesterday it was able to break through the line 0 for the first time  in several months, at  the same time as the price is testing the April trendline lows. If the turnover is lower than expected  the company’s share price may fall sharply, with the key support at the 49.5 zone. On the other hand, if the results are good, the target for the uptrend will be  at 59.00 and the original high at 62.00, respectively.

Chayut Vachirathanakit
Market Analyst – HF Educational Office – Thailand

Click here to access our Economic Calendar

Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in Leveraged Products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.

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USD Rises On Yellen Rate Hike Comments

Yellen Comments on Rates The US Dollar has seen continued buying across the early European session on Wednesday following comments last night from US Treasury Secretary Janet Yellen. Speaking at the Wall Street Journal’s CEO Council Summit, the former Fed chairman lit a fire under USD as she commented on the potential need for higher US rates, saying: “It may be that interest rates will have to rise somewhat to make sure that our economy doesn’t overheat.”Stimulus Impact Noted Commenting on the current stimulus, Yellen went on to say that “Even though the additional spending is relatively small relative to the size of the economy, it could cause some very modest increases in interest rates.” There has been a great deal of speculation over the impact that recent stimulus will have on the economy, specifically Biden’s $1.9 trillion fiscal stimulus and Yellen echoed these sentiments, telling the summit: “But these are investments our economy needs to be competitive and to be productive. I think our economy will grow faster because of them.”Yellen Not Attempting to Pressure Fed However, despite the seemingly hawkish tone to her comments, Yellen was quick to dial to add the caveat that her sentiments did not represent a recommendation or an effort to exert any sort of influence on the Fed. The former Fed chair told the council: “It’s not something I’m predicting or recommending, If anybody appreciates the independence of the Fed, I think that person is me, and I note that the Fed can be counted on to do whatever is necessary to achieve their dual mandate objectives.”Biden Pushing for Infrastructure PlanThe US economic recovery has been shown to be in strong health over the course of recent data releases. Inflation, GDP and employment are all tracking higher with the Fed acknowledging the budding momentum in the economy. With Biden now pushing for a new $2.25 trillion infrastructure spending bill to be passed through congress, there is strong potential for the economy to take another step higher. While the Fed has so far cautioned against rising inflation expectations with the view that any spike will be temporary, it has acknowledged upside risks which mean that going forward, the prospect of higher US rates is likely to be dominate discussions more.Technical Views DXYThe collapse out of the bullish channel from February lows saw the Dollar index trading back down as low as a breach of the 90.98 level. Price has since moved back above the level and while this area holds as support, focus is on a move back up to the 92.07 which is the key upside pivot. Bulls will need to see a break back above here to reclaim momentum.Disclaimer: The material provided is for information purposes only and should not be considered as investment advice. The views, information, or opinions expressed in the text belong solely to the author, and not to the author’s employer, organization, committee or other group or individual or company.High Risk Warning: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 73% and 65% of retail investor accounts lose money when trading CFDs with Tickmill UK Ltd and Tickmill Europe Ltd respectively. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.

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Investment Bank Outlook 05-05-2021

Citi Asia has seen markets tentatively rebound once again following a choppy Tuesday session, where comments from Treasury Secretary Yellen saw heightened volatility materialise as she touched on interest rate hikes and inflation. A degree of walk-back following initial comments appears to be behind the rebound in Asia hours since, where AUD, NZD and GBP have outperformed counterparts. Bigger picture, CitiFX Strategy continues to look through noise expecting further upside for risk assets and USD weakness along with this as per the latest Monday Macro FiX.Data wise today, USD ISM services is the main print of the day, while various pieces of Fedspeak are likely to see extra scrutiny following Yellen’s comments yesterday. Elsewhere we see central bank speak in EUR and CAD too. Over in EM, rate decisions in THB & PLN (hold), and BRL (75bp hike likely) are the focal points, with BRL IP and a COP quarterly inflation report also due. While the USD notched bids against all of its G10 counterparts on Tuesday, tentative weakness has once again ensued in Asia hours, with AUD, NZD and GBP seen as the G10 outperformers. The most notable overnight developments came in the form of comments by Treasury Secretary Janet Yellen which contributed to the initial bid as highlighted in today’s Asia Open:– Yellen stated when discussing fiscal efforts that “it could cause some very modest increases in interest rates to get that reallocation. But these investments are what our economy needs to be competitive and be productive. I think that our economy will grow faster because of them...It may be that interest rates will have to rise a little bit to make sure our economy doesn’t overheat.”– We note that Yellen’s remarks were more aimed at highlighting optionality rather than advocating for a hawkish shift in policy guidance. The comments are not necessarily at odds with recent points made by Fed officials. Powell has on multiple occasions acknowledged that the Fed would have the means of countering any unwanted inflation that “materially moves above 2% and persists above that range.”Yellen affirmed our above take after the NY close, and clarified via a Wall Street Journal event that she is neither “predicting nor recommending higher interest rates.” This appears to have calmed the market explaining the aforementioned rebound in risky FX. We also noted declines in equities too, with the S&P falling -0.7% to 4164.00, with losses spearheaded by losses in growth names. Nasdaq in comparison closed -1.85% to 13,544.00. Futures indicate a 0.2%-0.3% rebound though in Asia.Natixis FX: the US dollar rebounded against all G10 currencies on Tuesday after risk aversion took hold in reaction to the equity selloff. Traditional safe haven currencies, namely the Japanese yen and Swiss franc, were the ones that put up the stiffest resistance in the face of a resurgent dollar. The EUR/USD corrected back towards 1.2020. Commodity currencies were down sharply, in particular the Australian dollar, New Zealand dollar and Norwegian krone. Turning to emerging currencies, note the underperformance of the Turkish lira (USD/TRY at 8.32) ahead of today’s monetary policy meeting.Disclaimer: The material provided is for information purposes only and should not be considered as investment advice. The views, information, or opinions expressed in the text belong solely to the author, and not to the author’s employer, organization, committee or other group or individual or company.High Risk Warning: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 73% and 65% of retail investor accounts lose money when trading CFDs with Tickmill UK Ltd and Tickmill Europe Ltd respectively. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.

from Tickmill Expert Blog - Forex Traders Blog https://www.tickmill.com/blog/investment-bank-outlook-05-05-2021"
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Copper has hit a ten-year high, but this could just be the start of a huge bull market

Mining analyst Mark Turner, who writes the IKN Weekly, a newsletter focused on mining in South America, recently told his subscribers in no uncertain terms to cut their exposure to Peru.

“Sell Peru”, he said. It is, as far as mining investment is concerned, “off the map”. In fact, he went as far as to recommend shorting mining companies with significant exposure to Peru.

The reason? “Resource nationalism is coming to South America.”

Turner knows what he’s talking about. He’s at the coalface. He lives in Lima.

Politics could hit the supply of copper

Peru’s elections are a drawn-out process and the deciding vote comes in June. Socialist Pedro Castillo is the front runner and he is promising supertaxes of as much as 70% on mining profits in a bid to stop foreign firms “looting”, as he puts it, the country’s mining wealth.

The consequences are predictable. International companies will halt expenditure on both exploration and development. Why would they do anything else, if there is no reward for them? This means job losses for locals. What’s more, companies will reduce production, so as to leave metal in the ground until a new, more mining-friendly president comes to power. Which means diminished supply.

Peru is the world’s second largest producer, after Chile. It produced  2.2 million tonnes of copper last year, roughly 12% of annual supply. But it doesn’t look like it is going to be the world’s second largest producer for much longer.

Meanwhile, Reuters reports that Chile, which produced 5.7 million tonnes, “saw output of the red metal fall for the tenth consecutive month in March, marking a modest but continual slide in production that began shortly after the coronavirus pandemic struck the country.” Year on year production has fallen by just over 2%.

The world’s next largest producer is China, on roughly 1.6 million tonnes. Yet China is a net importer. That’s an understatement: it’s on a copper buying spree. It imported over a million tonnes more refined copper in 2020 than in 2019, and rumours of state stockpiling abound. China’s internal production can’t even meet its own internal demand, let alone what it needs for its exports’ manufacture. Between 2005 and 2020 China invested over $56bn securing overseas copper assets.

China alone accounts for over half of world copper demand, followed by Europe, then the US and Russia.

The “green revolution” will consume a lot of copper

Copper is in a runaway bull market. Demand is everywhere. Back in 2017 the World Bank was forecasting demand increases of at least 50% over the next 20 years. If the world moves towards a low-carbon energy future, then demand could rise tenfold by 2050, it claimed. Tenfold! The cause, irony of ironies, is the green energy revolution. 

In terms of metal demand, this revolution is anything but green. There is an immense, underappreciated materials intensity to green energy consumption in its many forms, of which copper is a major constituent. Alternative energy systems are on average five times more copper intensive, reports the Baker Institute Center for Energy Studies in Forbes, than their conventional counterparts.

Every 1,000 battery electric vehicles (BEVs) require 83 tonnes of copper – three times the amount needed by old-school motor cars. Wind turbines require 3.6 tonnes of copper per megawatt (MW) of output and photovoltaic cells four to five tonnes per MW.

30,000 BEVs can consume as much copper as a skyscraper. For the global passenger vehicle fleet to be one-third BEV would mean 300 million BEVs, or 20 million tonnes of copper. That figure is roughly equivalent to annual global copper demand. Never mind all the plumbing, wiring, weatherproofing, machinery, electricals, electronics and multiplicity of other applications that require copper.

And one forgets there are other countries in the world that use copper. It’s not just China.

All this adds up to one thing: a copper bull market

Is the green energy revolution narrative suddenly going to go away? I doubt it very much – views are too entrenched. It might be that an extraordinarily high copper price will change the narrative and the case for fossil fuels will get stronger. It might be that an overwhelming case is made that, because of the extraordinary metal demand and the fossil fuels required to meet that demand, green energy is not quite that green after all. I can see the argument being made – it is already being made – but I can’t see it catching on. In other words, copper demand is not going away.

It all looks very bullish. This is a bull market of the secular variety, it seems. 

Copper slipped below $2/lb in March last year. For the chartists out there, it formed a wonderful five-year double bottom with the lows of early 2016. It’s since made its way steadily up and today sits around $4.50/lb. It closed April at the exact price, almost to the penny, that it closed ten years earlier, at the peak of its last bull market, in April 2011.  

It could be that we form a multi-year double top, and that it pulls back from this incredibly historically sensitive price point, after what has been a bonanza year. 

But the momentum is up. Demand is escalating. Supply looks like it is coming under pressure. And once it breaks above its 2011 highs, what can I say? Look out above.

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