Thursday, November 24, 2022

Market Spotlight: What Is Driving GBPUSD Rally?

GBP Rally ContinuesThe British Pound has been on a hot streak recently with GBP enjoying a strong rally against USD over the month so far. GBPUSD is now up almost 9% off the initial November lows and almost 17% off the all-time lows seen in September on the back of the former UK PM’s disastrous mini-budget. The rebound in GBP has largely been driven by the restoration of confidence on the back of Rishi Sunak taking over as PM and Jeremy Hunt delivering a much more balanced and credible budget this month.Better UK DataGBP received an additional boost this week from the latest set of UK PMI readings. Both services and manufacturing readings had been expected to fall further from the prior month’s numbers but both came in above expectations. At the same time, US PMIs were seen undershooting forecasts, raising recessionary fears and reinforcing the view that the Fed is likely to opt for a smaller hike next month.Fed in FocusThe sell off in USD has played a large part in the reversal of fortunes for GBPUSD, reflecting the extent to which USD long positions has built up. With some high-level names having bought GBP at the lows in September, more cautious players are likely joining the move as price heads higher now which should keep the pair supported near term. The big key here will be the next US inflation reading which comes ahead of the December FOMC meeting. If further CPI cooling is seen, a smaller hike in December looks to be far more likely, allowing GBPUSD further room to recover. However, should we see inflation jump back up, this will no doubt keep a larger hike on the table, sending GBPUSD lower near-term.Technical ViewsGBPUSDThe rally in GBPUSD off the all-time lows has seen price underpinned by a steep rising trend line. Price has recently broken above the 1.1474 level and is now fast approaching a test of the 1.2195 level. With momentum studies supporting, the focus is on a continuation higher with 1.2650 the next big objective for bulls.

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Market Spotlight: USD Falls on Dovish Fed Minutes

USD Under PressureThe US Dollar has come under fresh selling pressure this week on the back of the November FOMC minutes released last night. The minutes revealed that Fed policymakers agreed that smaller rate hikes would be appropriate soon. While there was no focus on a particular meeting, the minute shave been interpreted as increasing the chances of a smaller hike from the Fed next month.Economic Impact of TighteningThe minutes noted that: “A substantial majority of participants judged that a slowing in the pace of increase would likely soon be appropriate”. The minutes continued, saying: “The uncertain lags and magnitudes associated with the effects of monetary policy actions on economic activity and inflation were among the reasons cited regarding why such an assessment was important.”The minutes come on the back of a slew of recent Fed commentary which has been fairly evenly split. Some members have bene pushing for smaller hikes, voicing concerns over the economic impact of tightening. However, others have called for further tightening and even for the Fed to hike rates above the current peak projection.Market Expectations for December FedDespite the USD downturn, market pricing for a larger-than-.5% hike has actually increased recently, moving up to around 40% from around 20% a fortnight ago. With this in mind, risks are fairly well balanced for now with traders awaiting the next data/commentary to help them gauge the likely outcome of the December 14th meeting.Technical ViewsDXYThe sell off from YTD highs has seen price breaking below the corrective bear channel which had been framing the reversal lower. Price has subsequently retested the underside of the broken channel which is now holding as resistance and is currently sitting on support at the 104.95 level. This is a key level and a break here will be firmly bearish, putting focus on 101.27 next.

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Bitcoin Might Temporarily Head North

Bitcoin did not hit the supporting level of 13000+ just yet. The asset has repeatedly approached the level of 15625 and reversed back up. The key market players could be buying large amounts of Bitcoin now. Currently, Bitcoin is undergoing a correction, which might last until the asset will face resistance at the level of 18500. Bitcoin is likely to pull from this level and drop. Time will tell what is going to happen next.Gold got back to the broken level of 1735.00, tested it, and formed the combination of a hammer and bullish engulfing at the end of the trading day. Gold is likely to jump and hit the level of 1820.00 next. Although the broken range is large enough and the price of gold might also hit the level of 1880.00 and face resistance.The currency pair EUR/USD has pulled from the upper boundary of the local uptrend. So, this asset is on the rise for now. First, the currency pair might approach the resistance level of 1.0600 and the downtrend from the weekly timeframe drawn between the maximums from June 1, 2021, and February 10, 2022.

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Wednesday, November 23, 2022

Live Market Analysis Ahead of FOMC Minutes

The Dollar Index has been fluctuating around the 107 mark today, gaining against the retreating Yen, but losing out against EUR and GBP. Stronger than expected PMI reports for the Eurozone and the UK have left markets pushing up near term rate expectations, which has benefited both the Pound and the Euro. Markets are waiting for the minutes to the last FOMC meeting ahead of the US Thanksgiving holiday.

 

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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Market Spotlight: Credit Suisse Shares Tumble on Q4 Profit Warning

Client WithdrawalsShares in troubled French bank Credit Suisse are coming under fresh selling pressure this week as concerns build around large client withdrawals. Credit Suisse this week warned that it is facing a roughly $1.5 billion loss in Q4 as a result of withdrawals from major clients. The bank’s shares have been in decline all year and were only recently recovering from insolvency rumours, recovering off the roughly $3.79 lows. However, retracing the gap which opened up on Q3 earnings day, Credit Suisse shares have since turned lower again.Litigation CostsAlongside client outflows, the group noted that it was suffering high levels of litigation costs as a result of compliance failures. Looking ahead, the bank expects these costs to continue to hurt the group’s results. Additionally, these increased costs are fuelling an acceleration of the bank’s restructuring program.  Chinese IB & Research LayoffsOn that note, the group also announced this week that it was laying off around one-third of Chinese investment bank staff. This is part of the group’s broader shift in strategy which will see it carving up its investment banking business into smaller sections. The announcement, alongside a roughly 50% reduction in research department staff, is also in response to slowing business in China.Technical ViewsCredit SuisseThe decline in Credit Suisse shares this year has been framed by a well- defined bear channel. The sell-off has recently stalled along support at the 3.77 level. While we’ve seen bullish divergence creeping in on momentum studies, the bear channel is holding for now and while price remains below the 4.97 level, the focus is on an eventual break lower. If bulls can get back above the 4.97 level, the focus will turn to the 5.94 level next.

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15 ways bitcoin makes the world better

What problem does bitcoin solve? How does it make the world better? Dominic Frisby shares his view.

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Market Spotlight: AUDNZD Falls on Record RBNZ Hike

RBNZ Hikes AgainAt the November RBNZ meeting held overnight, the bank made good on prior hawkish signals and hiked rates by .75bps, in line with market expectations. The move marks the largest rate increase in RBNZ history, taking rates back up to 4.25% from 3.5% prior. Alongside the rate hike, the RBNZ was also firmly hawkish in its outlook and guidance, citing the need to stay tough on inflation. The latest consumer price data showed that CPI hit 7.2% in the three months to September, marking a thirty year high.Ongoing Inflation BattleLooking ahead, the RBNZ outlined the difficulties facing it as it tries to balance its efforts to tame inflation with protecting the economy. The latest set of RBNZ economic forecasts project that the domestic economy will likely fall into recession by Q3 next year. However, the RBNZ noted that any attempts to avoid recession by slowing the pace of rate hikes would only see inflation become entrenched at higher levels requiring more aggressive rates action later, having a worse impact on growth.RBA vs RBNZOn the back of the meeting, the market is expecting the RBNZ to push ahead with further rate hikes in coming months. In contrast, the RBA has recently pivoted on rates, slowing the pace of its tightening over the last two meetings. This policy divergence between the two central banks is likely to keep AUDNZD pressured lower near-term.Technical ViewsAUDNZDThe reversal lower in AUDNZD has seen the market breaking below the rising trend line from Q4 2022 lows and below the last key support at the 1.0828 level. With momentum studies bearish and the retail market heavily long here, there is plenty of room for a deeper push lower towards the 1.0618 level next while the market remains below the broken bullish trend line.

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Daily Market Outlook, November 23, 2022

Daily Market Outlook, November 23, 2022 Overnight Asian markets staged a rebound taking their lead from a positive session on Wall Street, albeit on very low volumes, a pullback in the Dollar and US yields supported sentiment ahead of the Thanksgiving holiday. Investors continue to keep one eye on the China Covid headlines, with major regions reintroducing mass testing to access public venues within the coming days. The Reserve Bank of New Zealand lifted rates by 75 bps stating that further tightening is likely, keeping the global rate story firmly on investors' radars. In the US Fed. The Crypto carnage continues to attract market attention as the New York Times reports that beleaguered lender Genesis, has now formally retained restructuring advisors to explore all options including bankruptcy,For the day ahead: November flash PMI data will be the main focus in the UK and Europe. Market watchers expect UK manufacturing and Services data to show continued contraction. The deceleration in activity suggests a contraction in Q4 GDP which would confirm a technical recession in the UK. In the Eurozone, PMI’s are also likely to remain in contraction given the loss of demand and general economic malaise, this would imply a Q4 GDP decline for the first time since 2021. The US data slate is heavy ahead of the holidays, first up will be US PMI’s which are set to remain below the all important 50 level confirming contraction. Durable goods data, new home sales and University of Michigan sentiment will also be released, but. The main event will be the FOMC meeting minutes. The FOMC raised rates by a further 75 bps at its November meeting, the key question for markets is will the committee slow the rate of hikes and where could rates peak in 2023, with markets betting on a slower increase at the December meeting.Overnight HeadlinesNew Zealand Steps Up Inflation Fight With Record Rate HikeRBNZ Warns Of Growing Wage Pressures Amid Rate Hikes, InflationAsia Shares Gain Despite Chinese Covid Case Numbers RisingNZ’s Robertson Says Economy Faces ‘Significant Challenges’Australian Private Sector Output Contracts Faster In NovemberChina Tightens Covid Restrictions In Big Cities As Cases ClimbChina Should Use Targeted Moves In Covid Control - Economic DailyChina Buys Fewer Chip-Making Machines As US Restrictions StartFed’s Mester Says Inflation Key Focus, George Weighing SavingsBank Of Canada Says Financial System To Weather Rate Hike RisksOil Steadies As Traders Look To Price-Cap Plan, Demand In ChinaAPI Reports US Crude Stockpiles Decreased 4.8M Bbl Last WeekU.S: G7 Should Soon Unveil Cap Level On Russian Oil, Adjust RegularlyGoldman Sees 10-Year Treasury Yield Of 4% Or More Through 2024Chinese Brokerages See Stock Market Rebound In H1 2023 - Sec NewsViolent Protests Erupt At Apple's Main iPhone Plant In Zhengzhou ChinaHP Plans Layoffs With PC Demand Slump Stretching Into Next YearTechnical & Trade ViewsSP500 Bias: Bullish Above Bearish Below 3950TechnicalsPrimary support is 3950Primary upside objective is 4120Next pattern confirmation, acceptance above 4050Failure below 3900 opens a test of 388020 Day VWAP bullish, 5 Day VWAP bullishEURUSD Bias: Bullish Above Bearish below 1.0230TechnicalsPrimary support is 1.0230Primary upside objective is 1.0620Next pattern confirmation, acceptance above 1.04Failure below 1.0230 opens a test of 1.018020 Day VWAP bullish, 5 Day VWAP bearishToday’s New York Cut Option Expiries: 1.0050-55 (1.4BLN), 1.0060 (408M)1.0085 (247M), 1.0280 (853M), 1.0300-10 (1.94BLN)1.0315-20 (344M), 1.0330 (236M), 1.0350-55 (904M)1.0395-05 (809M), 1.0475 (276M)GBPUSD Bias: Bullish Above Bearish below 1.1730TechnicalsPrimary support is 1.1730Primary upside objective 1.2050Next pattern confirmation, acceptance above 1.1970Failure below 1.17 opens a test of 1.164020 Day VWAP bullish, 5 Day VWAP bullishToday’s New York Cut Option Expiries: GBP/USD: 1.1800 (303M), 1.1850-55 (341M)EUR/GBP: 0.8725 (358M), 0.8750 (315M), 0.8775 (376MUSDJPY Bias: Bullish above Bearish Below 143TechnicalsPrimary resistance is 143Primary downside objective is 136Next pattern confirmation, acceptance below 138Acceptance above 143.30 opens a test of 14520 Day VWAP bearish, 5 Day VWAP bullishToday's New York Cut Option Expiries: 140.00 (900M), 141.25-30 (371M), 141.40-45 (225M) 141.75-85 (873M), 142.00 (491M), 142.50 220M)AUDUSD Bias: Bullish Above Bearish below .6560TechnicalsPrimary support is .6560Primary upside objective is .6900Next pattern confirmation, acceptance above .6775Failure below .6560 opens a test of .650820 Day VWAP bullish, 5 Day VWAP bearishToday’s New York Cut Option Expiries: 0.6600 (342M), 0.6700 (226M)BTCUSD Bias: Intraday Bullish Above Bearish below 16600TechnicalsIntraday 16600 is primary resistancePrimary downside objective is 15000Next pattern confirmation, acceptance below 15500Acceptance above 16700 opens a test of 1710020 Day VWAP bearish, 5 Day VWAP bearish

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OECD Flags Fresh UK Growth Fears

OECD Bearish on UK GrowthThe latest report from the OECD yesterday has cast further dark clouds over the UK economy. The group warned that the UK, the fifth largest global economy as of last year, is facing a unique downturn which other economies in the G7 are not facing. Indeed, in a table of 22 world economies, the UK is among only three economies looking at negative growth next year, alongside Russia and Germany. While the global economy as a whole is forecast to grow 2.2% next year, largely propped up by rebounding growth in emerging markets economies, the UK economy is forecast to shrink by 0.4%.UK Inflation WoesOne of the key drivers behind the harsher economic outlook for the UK is inflation. While we have started to see inflation moderating in the US and Eurozone for example, UK inflation was seen soaring to fresh multi-decade highs last month at 11.1%, a full 1% jump on the prior month’s reading. With inflation looking likely to remain entrenched at higher levels well into next year, the impact on growth will be significant. The OECD now forecasts UK inflation to cool to only 6.6% next year and 3.3% in 2024, still above the BOE’s 2% target.OECD Worried About UK Energy Payments SchemeIn particular, the OECD took issue with the UK government’s energy price guarantee scheme which will see all domestic electricity users paid £400, to help reduce financial stress. However, the OECD argues that this will only drive inflation further higher, causing the need for more aggressive tightening from the BOE, which will have harsher consequences on growth yet again. Additionally, with the minimum wage set to rise next year in the UK, consumer spending power will be marginally boosted, potentially offsetting some of the weaker demand seen in the face of the cost-of-living crisis, again underpinning inflation and harming UK growth.December BOE In FocusLooking ahead, the main focus for UK investors now will be the last remaining BOE meeting of the year. With inflation still at record highs, a further hike from the BOE is widely expected though a smaller .5% hike is the consensus call for now. While the BOE has cited a desire to slow the pace of tightening, inflation is not yet allowing for this and if CPI continues to outperform into next year, we will likely start to see current BOE peak-rate projections revised higher, further damaging the UK growth outlook.Technical ViewsGBPUSDThe rally off the YTD lows in GBPUSD remains intact for now, underpinned by the rising trend line. Price has recently broken above the bear trend line from YTD highs and above the 1.1474 level. With momentum studies bullish, the outlook remains in favour of further rallies while 1.1474 holds, with 1.2195 the next resistance for bulls to note.

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Tuesday, November 22, 2022

NZDCAD Targeting A test of .8400

Technical & Trade ViewNZDCADTrade VieWBias: Bullish Above Bearish below .8190/60TechnicalsPrimary support is .8190/60Primary upside objective .8400 Weekly TrendlineNext pattern confirmation, acceptance above .8285Failure below .8150 opens a test of .810020 Day VWAP bullish, 5 Day VWAP bullishInstitutional InsightsAnalysts at Credit Agricole note ‘The RBNZ’s aggressive tightening cycle will see NZ lead the rest of the G10 into an economic slowdown, and falling dairy  prices  on  the  back  of  a  weak  China  economy  are  seeing  the  NZD  underperform.  The  re-opening  of  the international border will be a positive for the coming 3M. Soft economic landings locally and internationally will improve the NZD’s prospects over the coming 6-12M’

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Four money apps to help your cut your spending

These four money apps will help you cut your bills, cancel unwanted subscriptions, grow your savings, and even file your tax return.

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Market Spotlight: NZDJPY Upside Risks Into RBNZ

Japanese CPI Jumps AgainThe BOJ’s commitment to maintaining an easing presence in the market is being tested further this week. The latest econ data shows that Japanese CPI hit forty-year highs last month at 2.7%, rising from the prior month’s 2% reading and well above the 2.2% reading the market was looking for. Annually, CPI rose at 3.6%, above the 3.5% increase the market was looking for, marking the fastest pace of inflation since 1982 in Japan. Japanese CPI has now spent seven consecutive months above the BOJ’s 2% target, raising serious questions over the central banks easing strategy.On the back of the data, BOJ governor Kuroda was quick to reaffirm the bank’s commitment to keeping rates at ultra-low levels in order to support the economy. However, Kuroda did acknowledge that price increases were significant and subject to upside risks in the near-future.Speculators vs BOJDespite the BOJ’s attempts at underpinning JPY, the currency has weakened again recently creating further upward prices pressures in the domestic economy. Withs peculators essentially pitted against the BOJ, JPY looks vulnerable to further downside while the BOJ refuses to budge on rates, regardless of other tactics such as FX intervention.Technical ViewsNZDJPYNZDJPY has been stalled against the 87.15 – 87.88 level resistance since Q1, despite several attempts at breaking higher. Price is now once again pushing up against the level and with the retail market heavily short, risks of an upside break are growing, particularly with the RBNZ head tonight. If NZDJPY does break above current resistance, 89.12 will be the initial target on the move with the near-term focus remaining bullish while price holds above 87.88.

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BTC – On the Ropes!

The entire Cryptocurrency ecosystem is suffering a real shock, partly due to the loss of investor confidence following the earthquake caused by the fall of the FTX exchange platform and the house investment fund Alameda, which both belong to Sam Bankman-Fried. The aftershocks were long overdue, and Genesis, an American trading company which specializes in crypto lending and which mainly targets institutional clients, could become the first big victim of the FTX-Alameda affair. This turmoil has served Bitcoin, which is trying hard to parry the blows, and is currently below the level of $16,000 at $15,633.

In order to avoid bankruptcy Genesis has engaged in a real race for financing up to 1 billion dollars. In this context, the firm has appealed to the investment fund Apollo Global Management as well as to Binance but has suffered a re-buff. The exchange platform explained that a potential conflict of interest with the economic model of Genesis would be at the origin of its withdrawal. Last night the company announced that it was revising its need for refinancing downwards, from 1 billion dollars to 500 million. However, the company said it had no plans to file for bankruptcy ‘imminently’.

Source: @Genesis sur Twitter

Already today, crypto broker Genesis warned of the risk of bankruptcy due to contagion from the rapid demise of Sam Bankman-Fried’s FTX empire, according to Bloomberg .

This heavy climate has been all the more exacerbated by the return of the Dollar as a safe haven, the surge in the number of Covid cases in China, and the hawkish remarks of certain members of the FED as well as the continuation of the war in Ukraine which could engender a risk of nuclear accident.

Technical Analysis

BTC price is currently at the $15,700 level below its KIJUN (Lv) and Tenkan (Lj) cloud; the lagging span (Lb) is located below the cloud and its partners clearly showing a bearish momentum. This decline could lead the price to its lowest level at $15,428, and if it is broken it could reach its support at the level of $14,000 for a second time. Conversely, if the price starts to rise again, it could reach $18,354.

 

Click here to access our Economic Calendar

 

Kader Djellouli

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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The IndeX Files 22-11-2022

Equities Rally Pauses Amidst Fed HawkishnessIt’s been a rather muted start to the week for benchmark global equities indices. On the back of the wave of better risk appetite we saw following the US October CPI report, markets have lost their shine due to a combination of better-than-expected US retail sales, hawkish Fed commentary and fresh fears regarding China lockdown risks.Market pricing for a large Fed hike in December is creeping up again in response to recent Fed comments. Last week, we heard Fed’s Daly calling for the Fed to hike rates beyond the current projected peak. This week, Fed’s Mester echoed that sentiment saying that Fed policy needed to be more restrictive, and that the Fed was “barely there” on rates so far. If this recent theme continues, and particularly if we see any upside surprise in the next inflation report, equities might well turn lower again.China Lockdown FearsOn the China front, news this week of two fresh covid deaths in Beijing have sparked concern that the region might be headed for fresh lockdowns. With China still sticking to its zero covid policy for now, there is a real risk of such measures being announced, particularly if further fatalities are noted. With plenty of market focus recently on potential reopening in China, such news would likely fuel sharp downside in equities markets, reflecting disappointment.Technical ViewsDAXThe breakout above the bearish trend line from YTD highs is holding for now. Price is currently sitting atop the 14170.79 level and with both MACD and RSI bullish the focus is on a continuation higher towards the 14703.98 level next. To the downside, 13672.31 is the nig support to note.S&P 500The rally in the S&P, framed by the corrective bull channel off the YTD lows, is fast approaching a test of the bearish trend line from YTD highs. This is a key area for the market and a break above there will be firmly bullish. To the downside, initial support is at the 3910 level, underpinning price currently, with 3814 and the bull channel low sitting beneath.FTSEThe rally off the YTD lows is continuing with the index attempting to break higher again this week. Price is fast approaching a test of the bear channel top, with structural resistance at 7575.8 – 7678.8 sitting just above. With momentum studies supportive, outlook remains bullish while the market holds above 7362.6.NIKKEIThe rally in the NIKKEI stalled into a test of the 28356.6 resistance last week. However, the recent bull move remains intact, with momentum studies supportive, and while price holds above the 27422.9 level, the focus is on a breakout higher and a continuation towards the next resistance level at 29464.9

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Don’t count resources out

Commodities have performed poorly over the past year, but they tend to move in long and volatile cycles. from Moneyweek RSS Feed https://m...