Gold Futures (GOLD1!), H1 Potential For Bearish Momentum

Type: Bearish MomentumKey Levels:Resistance: 51144Pivot: 51040Support: 50683Preferred Case:On the H1, price is moving within the descending channel , MACD is showing bearish momentum and price is moving below the ichimoku cloud which supports our bearish bias that price will drop from our pivot at 51040 in line with the overlap resistance to the 1st support at 50683 where the swing low support, 100% fibonnaci projection and 61.8% fibonacci projection .Alternative Scenario:Alternatively, price may break through pivot structure and rise to the 1st resistance level at 51144 in line with the overlap resistance and 61.8% fibonacci retracement .Fundamentals:The outcome of the US CPI would confirm if inflation remains on a rising trend or if it is topping out which gives us a mixed bias on gold .

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Russian Ruble Surprises Despite Sanctions

Much is said about how the world has punished Russia for its invasion of Ukraine. Packages of sanctions by the EU, prohibition of Russian oil in several countries and a massive evacuation of companies that have closed operations in Russia, as well as other measures designed to cut off the Russian capital that is financing the war, would suggest that the country is in freefall economically, but in fact the Ruble is one of the top performing currencies lately, although for how long this can continue?

“In the first four months of 2022 Putin could boast a surplus of $96 billion, more than triple the figure for the same period in 2021.” – Larry Elliott, The Guardian

Russia’s invasion of Ukraine began on February 24, and from that day on the price of USDRUB began to increase strongly until it reached a historical maximum on March 8 reaching 141.4075. From there the price began a fall, a surprising recovery for the Ruble leaving lows at 55.2685 in May.

At the start of the war, Russia initiated strong control of capital for its citizens, prohibiting them from buying foreign currencies, limiting shipments of Rubles abroad and now imposing higher fees for holding foreign currencies in some banks, as well as forcing exporters to convert most of their profits into their national currency to avoid the escape of Rubles and to freeze a good portion of the reserves in an attempt to counteract the flight of foreign investment.

Likewise, in reaction to global sanctions, the country had to abruptly raise the interest rate, going from 8.5% on February 12 to 20.0% by February 28. Currently Russia has reduced its rates and they are running at 11.0%.

Fuente: https://datosmacro.expansion.com/tipo-interes/rusia

 

“The rapid rise of the Ruble is a problem for exporters and some domestic producers, adding to the pressure of sanctions. It also means less revenue for the budget” – Scott Johnson for Bloomberg Economics.

The big increases in the price of food, raw materials and energy have also helped the Ruble to strengthen. Russia forced European countries to pay for their gas exports (+40% of the pre-war EU supply) in Rubles instead of Euros and Dollars, giving the currency greater demand, and threatened to cut off supply to those who did not comply. This move was made with the knowledge that a total ban on Russian energies in the EU will take a long time, during which time it will continue to yield returns for the country and even more so with price increases, although the EU has said that by the end of the year, it will have reduced dependence on Russian exports by 90%.

Fuente: https://cnnespanol.cnn.com/2022/04/27/cuanto-depende-mundo-combustible-rusia-exportaciones-orix/#:~:text=En%202020%2C%20Rusia%20export%C3%B3%2048,Ocean%C3%ADa%20y%2031%25%20a%20China.

While the EU is planning to ban the world’s second largest oil producer and initiate sanctions packages, Russia is redirecting its sales of crude oil and other products to countries such as China and India (the latter increased more than 60% of the oil it received last year), countries whose demand is much higher, increasing Russia’s income from exports, offsetting and even earning more despite the ban from the EU and other countries. Russia has earned $66.5bn from fossil fuel exports and the EU accounts for more than 70% (€44bn) of net energy revenue since the start of the war, according to the Center for Research on Energy and Clean Air in Finland.

Fuente: https://cnnespanol.cnn.com/2022/04/27/cuanto-depende-mundo-combustible-rusia-exportaciones-orix/#:~:text=En%202020%2C%20Rusia%20export%C3%B3%2048,Ocean%C3%ADa%20y%2031%25%20a%20China.

Technical Analysis – USDRUB 

Current Price: $59.9561

On a monthly basis, the price was in the range of 70.00-80.00 for 24 months before the events in the last 3 months.

On a weekly basis, the pair had been rising since before the start of the war, from a low at 74.23 and accelerating parabolically to leave all-time highs at 141.4075 on March 8 (previous ATH 82.21). From here it has been down for 13 weeks with only 2 of these being bullish, hitting lows at 55.26 (price not seen since 2015) 3 weeks ago with yesterday’s close. The 200 period SMA is at 71.12 until the psychological level of 50.00.

On a daily basis, the last high marked last week was at 68.66, before there was a fakeout of the 20-period SMA that did not break past highs above 70.00, and then the price dropped to the aforementioned low area leaving a low today at 56.25 on a hammer daily candle that closed testing the psychological level of 60.00.

 

Click  here  to access our Economic Calendar

Aldo Zapien.

Market Analyst

Disclaimer: This material is provided as a general marketing communication with specific informational purposes and does not constitute independent investment research. Nothing in this communication contains, is not bound to contain, investment advice or an investment recommendation or a solicitation for the purpose of buying or selling any financial instrument. All confirmed information is obtained from reputable sources and any information that contains an indication of past performance is not a guarantee or a reliable indicator of future performance. Users acknowledge that any investment in leveraged products is characterized by a certain degree of uncertainty and any investment of this nature involves a high level of risk for which users are solely responsible. We do not assume any responsibility for any loss arising from any investment made based on the information affected in this communication. This communication must not be reproduced or distributed without our prior written permission.

Sources:

1. https://www.bbc.com/mundo/noticias-internacional-61637673
2. https://www.breakingthenews.net/Article/Dollar-euro-at-two-week-lows-against-ruble/58034800
3. https://www.france24.com/es/programas/econom%C3%ADa/20220428-rusia-ganancias-combustibles-guerra-alemania

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COPPER1!, H4 Potential for Bullish Momentum

Type: Bullish RiseKey Levels:Resistance: 813.35Pivot: 783.5 Support: 770.55Preferred Case:On the H4, with price moving above the ichimoku cloud, we have a bullish bias that price will rise from the pivot at 783.5 in line with the 61.8% fibonacci projection and pullback support and multiple swing high to the 1st resistance at 813.35 in line with the 100% fibonacci projection and overlap resistance.Alternative Scenario:Alternatively, price may break the support structure at the pivot and drop to the 1st support at 770.55 at the swing low.Fundamentals:No major news

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Market Spotlight: Bearish Nasdaq Risks Into US CPI

US CPI Up NextAhead of the weekend we have one last major data focus today; US May CPI. The release is drawing plenty of attention ahead of next week’s FOMC meeting. We’ve heard plenty of debate recently between Fed hawks and doves. On the one hand, hawks are sticking to the view that the Fed will press ahead with the planned rate hikes for 2022, delivering at each of the remaining FOMC meetings of the year. Doves, however, are increasingly suggesting the Fed will take some time out following the July rate hike (June and July both fully priced in).One of the main drivers behind doves’ argument is that inflation is already moderating and by end of summer will have cooled enough to warrant a pause. So, today’s data is important because, following the 50% drop in inflation over April, if CPI is seen cooling again in May, this will add weight to this view likely leading USD lower near term. However, if inflation was seen rebounding over May this will diminish doves’ argument, leading USD higher near term.Where to Trade Today’s CPI Number?NASDAQThe tech sector has been highly responsive to changes in the USD/Fed outlook. If today’s data is USD bullish the NASDAQ is likely to head sharply lower. Price recently failed at the retest of the broken 12875.84 level. The market is now sitting on support at 12220.22. A break below here will target a run down to the 1154.72 level next.

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The MoneyWeek Podcast with James Ferguson: recession, house prices and the power of youth

Merryn talks to James Ferguson of the MacroStrategy Partnership about central-banker induced inflation, the threat of a thoroughly unpleasant recession, and how the young should benefit from falling house prices and rising wages.

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Will the ECB Keep a Lid on Inflation Expectations?

ECB leaves rates on hold, but the statement warned of inflation challenges as growth forecasts are cut and inflation forecasts lifted. The initial statement pretty much confirmed what Lagarde had signaled ahead of the meeting – Net asset purchases are set to end on July 1, rates are expected to be hiked by 25 bp in July and the central bank expects a further rate hike in September. That doesn’t totally rule out a 50 bp move in July, but signals that at the moment at least that is not the central scenario, although the statement already flagged that a larger step may be needed in September. So rather than front loading the tightening cycle, the ECB is keeping the bigger step for later, with the statement also flagging the likely need for additional gradual increases further out. The new staff projections see inflation at 6.8% this year, 3.5% in 2023 and 2.1% in 2024 – clear upward revisions and with the 2024 forecast a tad above the ECB’s target. Core inflation is expected to be even higher – at 2.3% in 2024. Growth forecasts meanwhile were revised down to 2.8% this year, and 2.1% in 2023 and 2024.

The Dollar Index is holding in the 102.40 range, though down from the overnight peak of 102.667 after the ECB’s steady stance but guidance for rate hikes. The ECB’s indication it will begin hiking rates next month to start a tightening cycle has boosted EUR and the EURUSD has risen to 1.0744 from the earlier low of 1.0689. A lot of the relative strength of the EUR will depend on the expectations for the size of the September ECB hike. Action is basically on hold momentarily, awaiting President Lagarde’s press conference. GBP is also rallying and has risen to 1.2549 from 1.2492. On the other hand, a gain in USDJPY to 133.95 from 133.187 is supporting the Dollar Index.

Click here to access our Economic Calendar

Stuart Cowell

Head 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 distribution.

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European Equities Under Pressure After ECB Meeting as the Path to Tightening Becomes Clearer

The main event for FX market today was the meeting of the ECB. The 2% rise in the Euro's trade-weighted exchange rate last month is positive news for the ECB, which has attempted to maintain room to maneuver to step up the pace of monetary tightening if necessary. Nevertheless, the course towards tougher policy has become clearer.The European regulator left the deposit rate unchanged and hinted unequivocally that it was going to raise it in July and September. However, the size of hikes will be 25 bp in each month. Given that inflation accelerated to 8.1% in May, the market considered such intentions insufficient and investors demanded a higher premium for inflation in bonds, which resulted in a sell-off:The ECB also published forecasts for economic growth and inflation. Compared to the previous meeting, the growth forecast has been cut, while inflation projections have been revised to the upside. The risks of stagflation for the Eurozone, as a result, continue to mount.Stock markets remain in stabilization mode, the S&P 500 index consolidates in a tight triangle around 4100 in anticipation of tomorrow’s CPI report and an update from the Fed next week:Oil trades in the red but remains on a rising path as traders try to understand how effective the EU embargo on Russian oil will be, whether Russia will be able to reorient supplies to other markets and how much the global oil supply will decrease. The breakout of the level of $120/bbl in Brent was a technical signal that the rally is gaining momentum.Today the economic calendar is rather unremarkable, the markets are waiting for the May CPI release tomorrow. The White House has already warned that the number will be high. The consensus forecast assumes that inflation is unchanged in May compared to April at 8.3%, but core inflation, which excludes food and fuel and reflects a key consumer trend, slowed from 6.2% to 5.9%.

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Five dividend stocks to beat inflation

During periods of high inflation, dividend stocks tend to do better than the wider market. Here, Rupert Hargreaves pick five dividend stocks for income investors to buy now.

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BANKNIFTY INDEX, H4 Potential For Bearish Continuation

Type: Bearish MomentumKey Levels:Resistance: 36773.8Pivot: 36066.95Support: 33255.7Preferred Case:On the H4, with price moving in a descending trendline and entering a bearish pressure area on the MACD indicator, we have a bearish bias that price will continue to drop from the pivot at 36066.95 in line with the 50% fibonacci retracement and multiple swing high to the 1st support at 33255.7 in line with the 78.6% fibonacci projection and swing low.Alternative Scenario:Alternatively, price may reverse and rise from the pivot to the 1st resistance at 36773.8 to the swing high in line with the 61.8% Fibonacci retracementFundamentals:No major news

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Palladium Futures (PA1!), H1 Potential For Bearish Momentum

Type: Bearish MomentumKey Levels:Resistance: 1989.0Pivot: 1954.5Support: 1887.5Preferred Case:On the H1, price is moving below the ichimoku cloud and along the descending trendline which supports our bearish bias that price will drop from our pivot at 1954.5 in line with the swing high resistance to the 1st support at 1887.5 in line with the swing low support, 127.2% fibonnaci extension and 100% fibonacci projection .Alternative Scenario:Alternatively, price may break through pivot structure and rise to the 1st resistance level at 1989.0 in line with the overlap resistance and 61.8% fibonacci projection .Fundamentals:Due to increasing inflation rates in the US,UK and other developed economies, we have a bullish view on the precious metal.

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Market Spotlight: UBS Turns Bullish on Tesla

Tesla to Bounce?In a note issued this week, analysts at UBS have upgraded Tesla to a buy following the recent plunge in price. Shares in Elon Musk’s iconic company are down around 45% on the year via a combination of broader tech stock weakness in the face of Fed tightening expectations, the impact of the recent Shanghai lockdowns as well as the impact of Musk’s botched Twitter deal.However, UBS has now gone bullish on the stock citing a backlog of pent up orders, the opening of two new giga factories. Analyst Patrick Hummel also noted Tesla’s work in semiconductors and batteries as being superior to its peers, saying: “Tesla can outgrow peers with a combination of in-house cell capacity, its lead vs. global competitors in using LFP cells and its high share of directly sourced battery commodities, lithium above all.” Indeed, this bullish outlook was issued despite Hummel acknowledging the risks around Musk’s unpredictable behaviour, such as his controversial social media presence.Technical ViewsTeslaThe recent test of support at the 617.03 level has seen Tesla shares rebounding firmly with price now sitting back atop the 699.92 level. Recent price action looks to be carving out an inverse head and shoulders pattern, suggesting room for a fuller reversal higher near term. Above 777.11 the focus will shift to 904 next, in line with bullish MACD and RSI readings.

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Market Spotlight: Trading Today's June ECB Meeting

June ECB Meeting Up NextThe key data focus for traders today will be the June ECB meeting. Hawkish expectations are already elevated ahead of the meeting with the market looking for the bank to announce an end to asset purchases along with giving a clear signal that a July rate hike is coming. With EUR higher ahead of the meeting, the bar to further upside has been raised here. However, if the ECB takes a stridently hawkish tone, perhaps signalling the need for aggressive action (suggesting a larger than .25% hike in July), this would likely see EUR higher on the back of the meeting. Alternatively, if the ECB fails to appear more hawkish than previously or if the bank strikes more of a concerned tone over the projected impact of tightening on the eurozone economy, this might see EUR under pressure as late longs unwind positions.Where to Trade the ECB Meeting?EURJPYThe breakout in EURJPY has the market exploding through recent highs to trade up and test the 143.80 resistance level. While this level is holding for now, a hawkish ECB outcome today will likely provide fuel for the next move higher towards 145.81 next. Additionally tomorrow’s US CPI number, if bullish, is more likely to hurt JPY than EUR, keeping focus on further upside for the pair while above 140.82.

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XAUUSD, H4 Potential For Bullish Momentum

Type: Bullish RiseKey Levels:Resistance: 1891.47 Pivot: 1838.042Support: 1829.137Preferred Case:On the H4, with price moving in the ascending trendline and entering the bullish pressure area on the MACD indicator, we have a bullish bias that price will rise from the pivot at 1838.042 at the swing low to the 1st resistance at 1891.47 in line with the 78.6% fibonacci projection and 50% fibonacci retracement at the swing high.Alternative Scenario:Alternatively, price may reverse off the pivot and drop to the 1st support at 1829.137 in line with the 100% fibonacci projection.Fundamentals:The recent sideways price action on gold supports the notion of a balance between expectations of rate increases by hawkish central banks vs the inflation rate.

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USDZAR: Q1 GDP 2022 Adds to SARB Pressure

South Africa’s better-than-expected Q1 2022 GDP data on Tuesday added to the pressure for higher interest rates and a 50bp hike from the SARB at the July meeting seems more likely this time, rather than a 25bp hike. South Africa’s GDP rose 1.9% in Q1, following an upwardly revised 1.4% gain in the previous period and well above the market forecast of a 1.2% gain helped by the remaining easing of Covid-19 restrictions. An annual measure, the economy grew by 3%, up from 1.7% growth in the previous period, in line with market forecasts. Statssa says the economy is about the same size as it was before the pandemic.

Improving market sentiment and a softer USD have seen the Rand recover significantly since mid-May along with other emerging market currencies. While the Q2 figures could yet negatively affect the SARB rate outlook, recent data has made the market expect the central bank to be more confident in continuing its cycle of rate hikes. The SARB has raised interest rates 4 times since November, to 4.75% in May, and recently suggested the benchmark is likely to rise to 6.25% in 2023. The bank’s policy has been very supportive of the Rand in the current inflation environment.

South Africa’s annual inflation rate hit a three-month high of 5.9% in April 2022, unchanged from the previous month, according to market forecasts. This marked the 12th month in a row in which annual inflation was higher than the midpoint of the Reserve Bank of South Africa’s target range of between 3% and 6%. On a monthly basis, consumer prices rose 0.6%, slower than the 1% increase in March.

Technical Overview

USDZAR, H4

The USDZAR intraday bias is still on the downside, but the overlapping candles are on the downside, implying a cautious market trend. A break of the 15.4050 support did not make the price drop significantly to immediately pursue the 61.8% FR (15.1589) retracement level, though the decline is still seen as a short-term correction wave on the rise to 14.4417. Gold, which generally provides support to the South African economy, appears to be stuck between inflationary vacillation and bank interest rate policies.

The price is moving in a tough descending channel, below the 200 EMA and Kumo. The histogram of the oscillation indicator confirms the direction of the market which tends to be indecisive. The continuation of the next wave of correction will test 61.8% FR and if it continues will test 78.6% FR. As long as the price stays below the support at 15.4050 which is now the resistance, the prospect of correction will continue. Meanwhile a move back above 15.4050, will see the pair test the minor resistance at 15.6983 and any further move will end the correction and see the price reverse upwards to test 16.3200 tops.

Click here to access our Economic Calendar

 

Ady Phangestu

Market Analyst – HF Educational Office – Indonesia

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 distribution.

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