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  1. On the verge of inflation: how the Dow Jones and S&P reacted for the third session in a row On Tuesday, amid expectations of important economic releases during the short holiday week, US stock markets fell, marking the third consecutive decline for the Dow Jones and Standard & Poor's 500 indexes. Investors are in a wait-and-see mood as they analyze potential changes in Federal Reserve policy. Tesla (TSLA.O) rose 2.92% on CEO Elon Musk's announcement that he would test self-driving technology for the company's vehicles, available to both new and existing customers in the United States. Over the current week, the stock price has increased by about 4%, although during the year their quotes have decreased by more than 28%. Market participants are particularly focused on the Personal Consumption Expenditures (PCE) price index, the Federal Reserve's main tool for assessing inflation. It is expected that the latest data on this indicator will be published on Friday, a day when trading on American exchanges will not be held due to the celebration of Good Friday. It is predicted that in February the inflation index will increase by 0.4%, reaching 2.5% at the annual level. Meanwhile, core inflation, which excludes volatile items such as food and energy, is expected to rise 0.3% for the month, keeping annual growth at 2.8%, according to expert forecasts. "Friday is key. All attention will be focused on this day, and any events before then will be perceived as background. Therefore, we should not expect significant changes in the market until the data is published," said Stephen Massocca, deputy president of Wedbush Securities. San Francisco. "It would be extremely risky for the market if there were any speculation that Fed rates have not yet peaked. Any hint from the Fed that interest rates could be raised further could signal an immediate shift away from risk assets." The U.S. economic sector is growing, with February orders for durable goods exceeding forecasts and equipment investment pointing to the start of a recovery. According to the Conference Board, consumer confidence remained virtually unchanged in March at 104.7. The Dow Jones Industrial Average lost 31.31 points, down 0.08%, to 39,282.33. The S&P 500 was down 14.61 points (down 0.28%) at 5,203.58, while the Nasdaq Composite was down 68.77 points (down 0.42%) at 16. 315.70. Last week, all three major US indexes hit new all-time highs after the Federal Reserve confirmed its forecasts for three interest rate cuts this year. Market expectations for the Fed to cut rates by at least 25 basis points in June continue to rise, now reaching 70.4% probability according to CME's FedWatch tool, up markedly from last week's 59.2%. Shares of the media and technology group linked to Donald Trump rose 16.1% to close at $57.99 after temporarily hitting $79.38 on the first day of trading following its reverse merger with the company. , specializing in the issue of securities. McCormick (MKC.N) jumped 10.52% to become the top gainer in the S&P 500, as its first-quarter sales and earnings beat market expectations. Shares of Seagate Technology (STX.O) also posted strong gains, rising 7.38%, after analysts at Morgan Stanley upgraded the hard drive maker's stock from overweight to overweight. At the same time, United Parcel Service (UPS.N) shares lost 8.16% following the release of the company's 2026 guidance. On the New York Stock Exchange, decliners outnumbered advancers by a 1.24-to-1 ratio. A similar trend was seen on the Nasdaq, where decliners outnumbered advancers by a 1.34-to-1 ratio. Trading volume in US stock markets reached 10.43 billion shares, less than the average volume of 12.23 billion shares over the past 20 sessions. Trading activity is expected to remain moderate throughout the current week, and as the holidays approach, volumes may decline further. The pan-European stock index STOXX 600 gained 0.24%, while MSCI's index of Asia-Pacific shares ex-Japan closed 0.25% higher at 535.59. Market attention is focused on the Japanese yen, which remains at its weakest against the dollar since 1990 despite the Bank of Japan raising interest rates last week for the first time in 17 years. The dollar strengthened 0.1% against the yen to hit 151.56, raising the risk of Japanese intervention to prevent further weakening of its currency. In October 2022, the dollar/yen exchange rate rose to 151.94, followed by a decline due to intervention. Japanese Finance Minister Shunichi Suzuki on Tuesday expressed readiness to consider options to stabilize the yen, reiterating statements made the day before by the country's top monetary policy official. The US dollar was marginally weaker, down 0.06% at 7.248 against the offshore Chinese yuan, which strengthened thanks to an unexpectedly high trading range setting. The yuan's fall the previous Friday, after a period of market volatility, had sparked concern among investors, with some speculation that China could loosen controls on its currency, allowing it to fall. Spot gold rose 0.24% to $2,176.69 an ounce, while U.S. gold futures rose 0.09% to $2,176.80 an ounce. In the cryptocurrency space, Bitcoin lost 1.74% to $69,753.73, while Ethereum fell 1.55% to $3,572.7.
  2. The main events by the morning: March 26 Bitcoin has returned to the area above $71 thousand. A day earlier, investment guru Jim Roger said that the cryptocurrency would collapse to zero. He does not see any long-term value in it, believing that the crypt will disappear. The United States has imposed sanctions against Russian operators of CFA and blockchain services. In the list: Atomize, Lighthouse, Distributed Registry Systems, Web3 Tech, B-Crypto, Netexchange, Masterchain. The Cabinet of Ministers of Russia ordered the sale of 27.5% in the Sakhalin-2 operator company for 95 billion rubles. Gazprom's daughter Sakhalin Project will buy a share, TASS reports. France may come into direct conflict with Russia in the event of the defeat of the Armed Forces of Ukraine. The LCI channel claims that there are several scenarios for the entry of French troops into the territory of Ukraine, including the deployment of NATO troops in fortified areas and trenches of the Armed Forces of Ukraine, as well as the possible construction of a military plant in Kiev or the deployment of troops in Odessa. Hamas has confirmed its unwillingness to make concessions. According to Reuters, the Palestinian movement informed the mediators that it would insist on a complete ceasefire in the Gaza Strip, as well as demanding the complete withdrawal of the Israeli military from the region and a «real exchange» of prisoners of war. The March package of assistance to Ukraine from the United States in the amount of $300 million was used back in November. According to Politico, a representative of the American administration said that these funds are currently «not available for use,» and the approval of assistance was rather a symbolic gesture.
  3. Changes to the trading schedule – March/April 2024 We’d like to inform you that due to public holidays celebrated in March/beginning of April, there will be changes to the trading schedule. Please refer to the table attached on the site to see all the changes and plan your activities accordingly.
  4. Wall Street's decline driven by tech sector and Fed rates The global stock index also showed a decrease on Friday, setting a course for a weekly decline after seven consecutive weeks of gains, while the dollar strengthened, heading for its most significant weekly gain since mid-January as the latest US inflation data fueled new hopes for interest rate cuts. Data released on Friday showed a slight increase in US import prices in February, as the rise in the cost of petroleum products was partially offset by modest growth in other areas, suggesting an improvement in the inflationary landscape. Stocks this week faced challenges after US consumer and producer price data indicated that inflation remains persistent, dampening expectations that the Federal Reserve would cut rates by its June meeting. Market assessments of a Fed rate cut of at least 25 basis points in June stand at 59.2%, down from 59.5% in the previous session and 73.3% a week ago, according to CME's FedWatch Tool. The central bank is expected to maintain interest rates at its meeting next week, but investors will closely monitor the central bank's economic forecasts, including interest rate projections. On Wall Street, the Dow Jones Industrial Average (.DJI) fell by 190.89 points, or 0.49%, to 38,714.77, the S&P 500 (.SPX) lost 33.53 points, or 0.65%, to 5,116.95, and the Nasdaq Composite (.IXIC) dropped 155.35 points, or 0.96%, to 15,973.17. Over the week, the S&P 500 lost 0.13%, the Dow dropped 0.02%, and the Nasdaq decreased by 0.73%. Additionally, a study by the University of Michigan showed its preliminary consumer sentiment and inflation expectations data barely changed in March, while a separate report indicated that US factory production in February increased more than expected. Adobe (ADBE.O) shares fell by 13.7% the day after the company forecasted second-quarter revenue below analysts' estimates, citing competition and weak demand for photos, illustrations, and videos integrated with artificial intelligence. Among other declining stocks, Ulta Beauty (ULTA.O) shares fell by 5.2% after its projected annual profit came in below Wall Street estimates, as rising supply chain costs and intensified promotional activities negatively impacted its profits. The S&P 500 technology index (.SPLRCT) dropped by 1.3% for the day, leading the downturn among sectors. Shares of Microsoft (MSFT.O) fell by 2.1%, marking one of the index's most significant declines. The semiconductor index (.SOX) decreased by 0.5% on Friday, registering its most significant weekly percentage drop since the beginning of January. Announcements related to AI at Nvidia's (NVDA.O) GTC developers conference, scheduled for March 18-21, will be closely watched. The Russell 2000 index of small-cap companies (.RUT) fell by 2.1% for the week. Friday's volume was the highest of the year on US exchanges, with 18.76 billion shares traded. The average full-session volume over the last 20 trading days was about 12.4 billion. Although Wall Street's AI-driven growth has stalled, the S&P 500 index has continued to rise by 7.3% since the beginning of the year. According to data released on Friday, US factory production in February grew more than expected, but the January figure was sharply revised downwards, as production continues to be constrained by higher interest rates. The dollar index gained 0.05% to 103.43, recovering some of the previous week's decline with a 0.71% increase, while the euro rose 0.06% to $1.0889 for the session. The sterling weakened by 0.13% to $1.273. Against the Japanese yen, the dollar strengthened by 0.49% to 149.05, despite expectations that the Bank of Japan is expected to end its negative interest rate policy at its meeting next week. The MSCI global stock index (.MIWD00000PUS) fell by 5.07 points, or 0.66%, to 767.58, heading for its third consecutive daily drop, the longest streak since the beginning of the year, and a 0.48% decrease for the week. The STOXX 600 index (.STOXX) closed down by 0.32%, while the broader European index FTSEurofirst 300 (.FTEU3) fell by 7.42 points, or 0.37%. The yield on benchmark 10-year US Treasury bonds rose by 1 basis point to 4.308% after reaching 4.322%, the highest level since February 23. The yield on 10-year bonds this week jumped by 22 b.p., the most significant increase since mid-October. The yield on 2-year Treasury bonds, which typically moves in step with interest rate expectations, rose by 3.9 basis points to 4.7297% and increased by 24.6 b.p. for the week, marking the biggest jump in two months. Oil prices fell a day after exceeding the $85 per barrel mark for the first time since November. Oil indices finished the week with a growth of more than 3%. U.S. crude oil decreased by 0.27% to $81.04 per barrel, and Brent crude fell by 0.09% to $85.34 per barrel.
  5. US election: Wall Street at a crossroads The S&P 500 and Nasdaq indices ended the trading session in the negative on Friday, retreating from the record highs reached during the day. This decline occurred against the backdrop of a decline in the sector of chip manufacturers and mixed data on the labor market, reflecting the exceeding of expectations for the number of jobs created while the unemployment rate rose. During the trading session, the S&P 500 and Nasdaq indices briefly hit all-time highs, but by evening their dynamics changed to decline. The Philadelphia Semiconductor Index (.SOX) experienced a noticeable drop, losing 4% by the close of the day after earlier reaching the day's high. Shares of Nvidia (NVDA.O), highly regarded in the market for its contributions to the development of chips for artificial intelligence, suffered a 5.6% loss, ending their six consecutive sessions of gains. This was despite the fact that they were up more than 5% in early trading. Broadcom (AVGO.O) shares in the chipmaker index also experienced a significant decline of 7%, driven by low investor expectations for the company's full-year outlook. In addition, Marvell Technology (MRVL.O) lost 11.4% in value after its first-quarter guidance fell short of market expectations due to weaker demand. The stock posted gains at the open after data showed that U.S. job growth accelerated in February, with job openings in the nonfarm payroll sector rising by 275,000, exceeding analysts' forecasts for a gain of 200,000. At the same time, the January jobs data was downwardly revised. There is also an increase in the unemployment rate in February to 3.9% compared to the previous figure of 3.7%, which was maintained for three months. It should be noted that the rate of wage growth fell to 0.1% on a month-over-month basis. Brian Price, head of investment management at Commonwealth Financial Network, highlighted a trend toward more restrained spending on the part of consumers. This is reflected in shares of Costco Wholesale (COST.O), which posted a 7.6% decline as its quarterly sales volumes fell short of expectations due to moderate demand for higher-priced goods. Nevertheless, Price emphasized that overall market sentiment remains optimistic with the anticipation of continued growth in the absence of any negative factors. He expressed his belief that the market is focused on the continuation of the favorable situation: inflation is expected to be maintained at a moderate level and the Federal Reserve is expected to initiate a policy of easing economic conditions. Upcoming data for February, which will be released next week and include information on the consumer price index (CPI) and retail sales, will provide additional information that could influence the assessment of the possibility of lowering interest rates. In a speech on Thursday, Jerome Powell, chairman of the Federal Reserve, shared his view that the central bank is nearing the point where it is confident enough that inflation is falling, allowing it to begin the process of lowering interest rates. While investors continue to analyze possible profits and keep an eye on monetary policy, they are also beginning to consider a new factor that could significantly impact market conditions this year - the upcoming U.S. presidential election in 2024. In an address to the nation on Thursday, US President Joe Biden put forward a proposal to raise corporate taxes, while his predecessor and potential Republican Party rival, Donald Trump, earlier in 2017 passed legislation aimed at cutting taxes for companies and the wealthy. Biden also expressed pride in U.S. economic achievements during his presidency. It is difficult to determine how politicians' proposals and initiatives ahead of the election will affect asset market prices. The winner of the election is likely to face the challenge of dealing with a divided Congress, which could significantly complicate any legislative initiatives. This uncertainty does not stop analysts from trying to assess how political changes may interact with other key elements influencing market dynamics. Such factors include increasing interest in the business outlook for artificial intelligence and adjusting expectations about when the Federal Reserve might begin easing monetary policy. The S&P 500 Index (.SPX) has made notable gains, up 7.4% YTD and near all-time highs. Polls show a tight contest between the 81-year-old Biden and 77-year-old Trump. Despite the U.S. economy performing better than most advanced economies, the American people generally express higher confidence in Trump's economic competence in polls. As part of his speech on Thursday, Biden unveiled an initiative to impose a 21% minimum tax on the profits of corporations whose revenues exceed $1 billion, building on the provisions of the 2022 Clean Energy Act. In addition, he expressed his intention to reinstate his "billionaires tax" initiative, which would impose a minimum tax of 25% on the income of U.S. citizens whose wealth exceeds $100 million. Analysts note that the Republicans' success in the elections is likely to entail an extension of the 2017 tax cuts, which could lead to higher inflation. At the same time, the Democrats' victory will result in an increase in tax rates for households and corporations with high income. The Dow Jones Industrial Average (.DJI) index of industrial companies closed down 68.66 points, or 0.18%, stopping at 38,722.69. The S&P 500 Index (.SPX) fell 33.67 points, or 0.65%, to settle at 5,123.69, while the Nasdaq Composite (.IXIC) fell 188.26 points, or 1.16%, to 16,085.11. Among the 11 key sectors in the S&P 500, the technology sector (.SPLRCT) posted the largest decline, losing 1.8%. It was followed by the consumer staples sector (.SPLRCS) with a 0.8% drop, where Costco made a significant contribution. Over the past week, the S&P 500 Index declined 0.26%, the Nasdaq fell 1.17%, and the Dow Jones lost 0.93%. Meanwhile, real estate stocks (.SPLRCR) were the biggest gainers, rising 1.1%. Behind them are shares of energy companies (.SPNY), which grew by 0.4%. Shares of Gap (GPS.N) jumped 8.2% as the retailer beat Wall Street analysts' forecasts for fourth-quarter results. That was due to increased demand for a revamped assortment of Old Navy and Gap-branded merchandise during the holiday season, as well as lower volumes of discounted merchandise. On the New York Stock Exchange, the number of stocks that increased in value outnumbered those that declined by a ratio of 1.25 to 1, with 708 new highs versus 48 new lows. On the Nasdaq exchange, the number of stocks that increased totaled 2,086, while 2,192 declined, showing a predominance of declining over rising stocks with a ratio of about 1.05 to 1. The S&P 500 index marked 65 new 52-week highs and recorded no new lows, while the Nasdaq recorded 351 new highs and 83 new lows. Trading volume on U.S. exchanges reached 12.29 billion shares, which compares with an average of 12.08 billion over the past 20 sessions.
  6. Keynote speech by Fed Chairman Jerome Powell The euro and the British pound continue to strengthen against the US dollar amid weak fundamental statistics coming from the United States recently. However, today we are anticipating a more interesting event: a speech by the Federal Reserve Chairman on Capitol Hill. Today marks the first of two speeches before Congress. Powell will first speak at the House Financial Services Committee and then repeat a similar speech at the Senate Banking Committee tomorrow. It is expected that legislators will pose a number of important questions to him, concerning not only the economy and monetary policy but also the operation of the banking system. The discussion will include the widely criticized proposal by the Federal Reserve to increase capital requirements for large banks. However, the cost of borrowing will also be an important issue on the agenda. Since July 2023, the Fed has maintained interest rates at their highest level in the last two decades, making access to credit increasingly difficult for many Americans. This affects purchases of homes and cars, not to mention servicing credit card debt. Lately, Democrats have sharply criticized Powell's actions. Senators Sherrod Brown and Elizabeth Warren have called on the Fed's head to lower interest rates soon, arguing that there is no longer a need for such a strict approach. Although recent inflation data suggest otherwise, many dovish policymakers consider the inflation spike to be temporary. It is clear that even against the backdrop of slowing economic growth, the Fed is in no hurry to make changes to interest rates. The labor market remains strong, and the monthly inflation rate in January this year was much higher than economists' expectations. Persistent concerns about price pressure have rallied central bank representatives who are convinced that additional evidence is needed that inflation is firmly moving towards the 2% target before starting a cycle of lowering interest rates. Some experts note that the longer the Fed delays the rate cut, the higher the chances that they will be lowered by the November presidential elections, which are almost certain to be a rematch between President Joe Biden and former President Donald Trump. While Fed representatives have repeatedly stressed that their decisions were independent of politics, lowering interest rates closer to election day could lead to sharp criticism of the Central Bank's work from Trump and the Republicans. Obviously, lowering rates at the time of presidential elections would benefit the Democrats and Biden, which they will surely take advantage of. As for the euro/dollar pair, demand for the euro persists after a series of weak statistics from the US. Now, bulls need to think about how to push the price to 1.0875. This will allow them to test 1.0900. From there, the pair may reach 1.0930, but doing so without support from major players will be quite challenging. The next target is the peak of 1.0965. If the trading instrument declines to 1.0835, I expect some serious actions from major buyers. If they do not take action, it would be wise to wait for the pair to hit the low of 1.0790, or to open long positions from 1.0760. As for the pound/dollar pair, bulls need to drag the price to the nearest resistance at 1.2730 to start an uptrend. This will allow them to target 1.2770, above which it will be quite difficult to break through. The next target is the area of 1.2800, after which we can talk about a more rapid surge to 1.2830. In case of a decline, bears will try to take control over 1.2690. If they succeed, breaking through this range may push the pair towards the low of 1.2660 with the perspective of reaching 1.2630. More analytics on our website: https://bit.ly/3VobLUv
  7. 2025: Gold and oil raise rates In Asian markets on Tuesday, gold prices remained within a narrow range amid fears of long-term interest rate hikes. The absence of trading signals was also due to a holiday in the American market. Gold demonstrated some strengthening, reaching the $2000 per ounce mark after recovering from a two-month low over the last two trading sessions. However, current fluctuations in gold prices are still occurring within the range of $2,000-$2,050, which was established for the majority of 2024. Spot gold prices increased slightly by 0.1% to $2,019.17 per ounce, while the price of gold futures expiring in April settled at $2,030.20 per ounce as of 23:34 Eastern Time. Analysts from Citibank highlight three main catalysts that could push gold prices to $3000 per ounce and oil to $100 per barrel in the next 12-18 months. Among them are a sharp increase in gold purchases by central banks, stagflation, and a deep global recession. Currently, gold is trading around the $2016 mark and could rise by approximately 50% in the event of any of these scenarios materializing. Analysts point to dedollarization in central banks of developing countries as the most likely path to reaching $3000 per ounce of gold. This would lead to a doubling of gold purchases by central banks and shift the focus of demand from jewelry to gold as the main driver. Central bank gold purchases have reached record levels in recent years, aiming to diversify their reserves and reduce credit risk. Leading this trend are the central banks of China and Russia, as well as India, Turkey, and Brazil, actively increasing their gold bullion purchases. According to the World Gold Council, global central banks have maintained a level of net gold purchases exceeding 1000 tons for two consecutive years. In the context of a global recession, a deep economic downturn could force the United States Federal Reserve to drastically cut rates, which, in turn, could be the reason for gold prices to rise to $3000. Gold traditionally exhibits an inverse correlation with interest rates, becoming a more attractive asset compared to fixed income in a low-rate environment. Stagflation, combining high inflation with economic slowdown and rising unemployment, could also trigger a rise in gold prices, despite the low likelihood of such a scenario. Gold is perceived as a safe haven in periods of economic instability, attracting investors looking to avoid risks. In addition to the above factors, Citi suggests that the baseline scenario for gold involves reaching a price of $2150 per ounce in the second half of 2024, with an expected average price just over $2000 per ounce in the first half of the year. Record prices may be achieved by the end of 2024. Although geopolitical tensions in the Middle East provide support for gold prices, a more significant price increase is restrained by the prospect of long-term interest rate hikes in the US. Traders are lowering expectations regarding the Federal Reserve's imminent rate cuts following reports of high inflation in the US, and statements from Fed officials reinforce assumptions about maintaining high interest rates over a longer period. The outlook for gold in the near future remains uncertain, similar to the situation in the market for other precious metals. Prices for platinum and silver show a decline, and copper experiences a slight drop in price, despite a reduction in the base interest rate in China, the largest importer of the metal. In the context of the oil market, analysts consider a scenario where oil prices could once again reach $100 per barrel, considering risks associated with geopolitical tensions, actions by OPEC+, and possible supply disruptions from key oil-producing regions. Tensions in the Middle East, particularly the conflict between Israel and Hamas, and increasing tension on the border between Israel and Lebanon highlight potential risks for oil suppliers in the OPEC+ region.
  8. XAU/USD: review and analysis The positive factor for raw materials currently lies in the fact that the dollar bulls are awaiting important economic events regarding the path and timing of the Federal Reserve's interest rate reduction. This week, the FOMC minutes will be published, which is expected to contribute to some impulse in the precious metal. Also, a decent increase in Treasury bond yields provides some support for the U.S. dollar and limits the rise of the non-yielding yellow metal. In addition, the overall positive tone in the stock markets contributes to restraining the global increase in the price of gold. And since yesterday was a holiday in the United States, there were no significant movements in the markets. From a technical point of view, any upward movement is likely to encounter some resistance near the $2,030 level, where the 50-day SMA is located, with subsequent testing. If this level is decisively surpassed, it will create a foundation for further growth beyond the intermediate barrier at $2,044–2,045 towards the supply zone at $2,065. On the other hand, the 100-day SMA, currently around $1,992–1,991, may act as immediate support before the $1,983 region or the two-month low reached on Wednesday. Following this is the 200-day SMA, currently tied to the $1,965 area, and in the case of a decisive breakthrough, it will be considered a new trigger for the bears. After that, gold may accelerate its decline to the November 2023 low, with some obstacles along this path.
  9. Inflationary explosion in the US: how do the dollar and bonds react? The consequences of high inflation are felt across the financial market. Specifically, the main Wall Street indices reacted to this news with a decrease after the publication of data indicating a higher than expected rise in consumer prices. This event pressured the expectations regarding the imminent lowering of interest rates, which in turn led to an increase in the yield of US Treasury bonds. Among other things, the Dow Jones Industrial Average recorded its most significant drop in almost 11 months after the US Department of Labor's report showed an unexpected increase in consumer prices in January, especially due to the rise in housing costs. Against this backdrop, market indices, which were on the rise in anticipation that the Federal Reserve System (FRS) would begin to lower rates as early as May, showed negative dynamics. The S&P 500 index, for example, closed above the 5000 point mark for the first time, and the Dow Jones index traded near record-high values. However, the publication of inflation data revised expectations regarding the FRS's policy, increasing the likelihood that rate cuts may not occur until June. Mega-cap companies sensitive to rates, such as Microsoft, Alphabet, Amazon.com, and Meta Platforms, showed a decrease in stock prices amid the rise in yields of US Treasury bonds to a two-month high. A similar situation was observed among chip manufacturers, including Micron Technology, Qualcomm, and Broadcom, which led to a 2% drop in the Philadelphia SE Semiconductor index. The real estate, consumer discretionary, and utilities sectors faced the most significant losses among the 11 major industry indices of the S&P 500, especially real estate, which reached its lowest values in more than two months. Small-cap companies also felt the pressure, with the Russell 2000 index showing the most significant daily drop since June 2022. "Various statements by Federal Reserve System officials in recent weeks have indicated that the market-anticipated rate cuts in the first half of the year might have been premature. The latest consumer price index data certainly confirms this trend," commented Bob Elliott from Unlimited Funds. The consumer inflation data followed a modest revision of inflation figures for the last quarter of 2023, giving investors temporary relief regarding inflation expectations. The Cboe Volatility Index reached its highest level since November, highlighting the growing market concern. The S&P 500 and Nasdaq Composite indices lost 1.37% and 1.79% respectively, while the Dow Jones Industrial Average fell by 1.36%, marking its most significant decline since March 2023. Among other developments, JetBlue Airways shares surged by 21.6% after Carl Icahn disclosed his stake in the company, calling the shares "undervalued." Arista Networks' shares declined by 5.5% following a gross profit forecast below expectations, and Marriott International lost value after forecasting annual earnings below analyst expectations. Cadence Design Systems and toy manufacturer Hasbro also faced a drop in share value after publishing gloomy forecasts. Meanwhile, Tripadvisor shares jumped by 13.8% following the announcement of the creation of a special committee to review deal proposals. The total trading volume on US exchanges reached 12.9 billion shares, comparable to the average of the last 20 sessions at 11.71 billion shares. The US stock market continues to demonstrate record levels, supported by leading technology companies and expectations of Federal Reserve rate cuts. The global stock index MSCI and the Stoxx 600 European index also showed a decline amid current events. The dollar index reached a three-month high, and bitcoin set a new record since December 2021, despite subsequent declines. Data on US retail sales and the producer price report are expected shortly, which may further influence market sentiments. The rise in oil prices continues amid tensions in the Middle East and Eastern Europe, with Brent crude futures and West Texas Intermediate showing significant increases. Meanwhile, gold prices fell below the key level of $2000 per ounce after the CPI data was released, reaching a two-month low.
  10. GBP/USD: Pound slightly weakens, but selling still risky as dollar remains weak The pound-dollar pair surged by more than 200 points yesterday, reacting to the publication of inflation growth data in the United States. The resonant release put an end to discussions about the Federal Reserve's future steps—at least in the context of the December meeting. The probability of the Fed raising interest rates in December decreased to 5%, meaning the market is almost certain that the U.S. regulator will maintain the status quo next month. The inflation report played the role of a cold shower for dollar bulls. Last week, Federal Reserve representatives, including Chairman Jerome Powell, thoroughly heated the public with their hawkish statements, so the sharp shift in sentiment significantly impacted the greenback. The U.S. Dollar Index dropped from 105.60 to 103.80 in just a few hours, reflecting the anti-rally of the American currency. The GBP/USD pair did not stay on the sidelines and updated a two-month price high, testing the 1.2500 level for the first time since September. But, as they say, "not everything is rosy." The pound rested on its laurels only briefly, as inflation data in the United Kingdom were also published following the U.S. report. It can be said that today, GBP/USD buyers also experienced a cold shower, as almost all components of the UK data were in the red. Certain conclusions can be drawn here as well, primarily regarding the prospects of tightening monetary policy by the Bank of England. These conclusions do not favor the pound as they suggest the central bank will maintain the status quo after the upcoming meetings. For instance, the overall Consumer Price Index in the UK sharply dropped to zero month-on-month (forecasted to decline to 0.1%) after two consecutive months of growth (0.5% in September). In the year-on-year calculation, the overall index also ended up in the red, reaching 4.6% (forecast at 4.8%)—the weakest growth rate since October 2021. For comparison, the overall CPI was at 6.7% YoY in September. A separate line needs to be drawn for the core Consumer Price Index, excluding energy and food prices. In June and July, it was at 6.9%, but it dropped to 6.2% in August. In September, the indicator again demonstrated a downward trend (6.1%), as well as in October—5.7% (while most experts predicted a decline to 6.0%). This is the lowest value of the indicator since March 2022. The Retail Price Index, used by British employers in salary negotiations, similarly ended up in the red zone: -0.2% MoM (forecasted to grow by 0.1% MoM) and 6.1% YoY (forecasted to grow to 6.3%)—a two-year low, the weakest growth rate of the indicator since October 2021. However, some components of the data entered the green zone but remained in the negative territory. For example, the Producer Purchase Price Index in the year-on-year calculation rose to -2.6% (forecast at -3.3%), and the Producer Selling Price Index reached -0.6% YoY (forecasted to decline to -1.0% YoY). Commenting on the published report, the chief economist of the Office for National Statistics stated that the decline in inflation occurred against the backdrop of falling energy prices. According to him, the downward trend in key indicators is associated with the decrease this month in the maximum level of energy prices, which limits the amount that suppliers can charge consumers per unit of energy. The sharp decline in inflation in the United Kingdom is a significant blow to the positions of the British currency. However, an interesting situation has developed for the GBP/USD pair: the dollar is knocked out after yesterday's release, and the pound is knocked down after today's news. Sellers of the pair managed to muffle the upward impulse but failed to turn the situation in their favor. At the moment, it is challenging to say whether sellers of GBP/USD will be able to reverse the trend. Despite the weak positions of the pound, the pair may resume its upward movement due to further weakening of the American currency. The disappointment of the dollar bulls is too great: just last week, Powell stated that the current level of the Fed's rate might be "insufficient" to curb inflation. However, after the publication of CPI growth data in October, his words lost their relevance. Therefore, rushing to sell GBP/USD now may not be advisable—after a short pause, buyers may regain the initiative in the pair. From a technical perspective, the pair is currently testing the support level of 1.2450 (the upper line of the Bollinger Bands indicator on the daily chart). In this price range, the downward pullback has stalled. This is another signal indicating the unreliability of short positions. It is advisable to consider selling only after sellers firmly establish themselves below the 1.2450 target—in this case, the next price target will be the level of 1.2340 (the Tenkan-sen line on D1).
  11. Trading Signals for GOLD (XAU/USD) for October 20-23, 2023: sell below $1,980 (21 SMA - double top) Early in the European session, gold is trading around 1,977.41, above the 21 SMA, and below the 8/8 Murray. Gold reached a new high around 1,982.12 and is showing indecision which is likely to trigger a strong technical correction in the coming hours. Since October 4, gold has been trading within an uptrend channel and has now reached the top of this channel, which means that a technical correction could occur in the next few hours with the target in the area of 1,944 (21 SMA). Yesterday, during a speech by the Fed Chairman, expectations were generated that the Fed would not raise interest rates anymore. This fueled the demand for gold as a safe haven asset reaching a new high. As investors do not expect any further interest rate hikes this year, gold could continue to rise. However, we should expect a technical correction to occur as long as gold trades below the psychological level of $2,000. A good level to buy could be around 1,944 (21SMA) or around 6/8 Murray at 1,937. Both levels could give us the opportunity to buy again with goals at the psychological level of $2,000. On the other hand, if XAU/USD continues to rise and reaches the 8/8 Murray level around $2,000 in the next few hours, it could face strong rejection. This 8/8 area acts as strong resistance and a key level. We could use the pullback to sell below this area with the target at 1,937. The eagle indicator once again reached the extremely overbought zone. So, we expect a technical correction to occur in the next few hours. Hence, our strategy could be to sell below 1,980 with targets at 1,962 and 1,944.
  12. EUR/USD: Short-term rise and bearish outlook. Markets eye Fed meeting Traders are showing a renewed appetite for the euro at the start of this week. However, it is essential to remain cautious. The trend remains bearish, and the eurozone calendar remains almost empty. The US dollar is under the spotlight this week. Meanwhile, some predict another US dollar rally. What to expect from EUR/USD this week? The euro will likely face pressure against the greenback in the coming weeks, especially after dipping below a critical level last week. With no new data from the eurozone, the Fed's upcoming rate decision might not add to this pressure and could even boost the pair's quotes. Everything hinges on the message from the US regulator. The following trading sessions will be tense. The direction for the EUR/USD pair remains unclear, even if some think otherwise. As we know, markets can quickly shift their sentiment. Following the European Central Bank's (ECB) recent decision on interest rates, the euro began to decline. The decision confirmed rates would remain steady for the foreseeable future, signaling a pause in rate hikes. The euro hovered near 1.0675, the lowest level since March 2023. There were initial attempts for a euro rally after the ECB decided to hike rates by 25 basis points, peaking at 1.0729, but these efforts did not bear fruit. This could lead to a test of this year's range between 1.0500 and 1.1000. Markets expect the ECB to tighten its policy by approximately 11 basis points and cut by 25 basis points in July 2024. This could pressure the euro, especially if followed by a soft review. The current instability of the EUR/USD pair suggests a stronger dollar position, especially after falling below the 200-day moving average on the daily chart. Analysts at Societe Generale say that this looks ominous. Upcoming economic data is anticipated to show a slowdown, implying a downturn in the eurozone due to high interest rates. This economic slowdown will work against the euro. The euro might remain at risk until economic growth in the eurozone starts to rebound. The only silver lining for the euro or British pound, in a context where growth forecasts drive currency trajectories, is that growth expectations for the UK and eurozone are already bleaker than in the US. This should help prevent a dramatic drop in the EUR/USD or GBP/USD pairs, but the pound could still reach 1.2000 and the euro could fall below 1.0500 if we do not see any positive economic news in the near future. Euro Technical Analysis The EUR/USD pair is bracing for a rebound from the multi week low of 1.0630 that was recorded on Friday. If the pair breaks the 15 September low of 1.0631, the next targets will be the 15 March low of 1.0516 and then the 6 January 2023 low of 1.0481. If the pair breaks through the level of 1.0827 (200-day simple moving average), it could encourage a bullish move to 1.0922 and then the August 30 high of 1.0945. A break above this level could facilitate a test of the psychological level of 1.1000 and the August 10 peak at 1.1064. Fed meeting The US central bank is preparing to release its latest decisions and recommendations, which may cause volatility for the US dollar. However, many experts believe that major changes in the Fed's monetary policy are unlikely. Highlights include Rate Forecasts: Many economists expect the Fed to keep rates at 5.25-5.50%. Fed Dot Plot. This chart will show how FOMC members see future interest rate movements. Most members will likely indicate that the current rate level will remain unchanged through the end of 2023. Risks for the US dollar. If the dot plot shows that some Fed members are considering a rate cut in 2024, it could put pressure on the dollar. Fed Summer Indicators. Two CPI inflation reports are expected to be close to consensus. These data, along with other economic indicators, will confirm that the current level of interest rates is likely adequate to stabilize inflation. Based on these projections and analysis, the Fed's decisions may confirm the current trend in monetary policy and, as a result, the resilience of the dollar in global markets. US Dollar Technical Analysis The US dollar index is near its 2023 high of 105.88. Short-term support and resistance levels are located at 104.44 and 105.88 respectively. The long term support level is marked at 103.04. Bullish Scenario. If the DXY closes above 105.88 during the week, it could signal further dollar strength in the medium term. Bearish Scenario. If the index reverses and breaches the level of 104.44, it could signal a significant decline to 103.04. Economic Outlook. Despite the current difficulties, the US dollar continues to attract investors due to high interest rates, especially compared to the economic situation in Europe and elsewhere.
  13. EUR/USD: The euro falls after hawkish ECB surprise The European Central Bank surprised market participants by raising interest rates by 25 basis points. We must pay tribute to the ECB – it hasn't forgotten how to surprise! Although such unexpected moves, typical of, say, the Reserve Bank of New Zealand, are not characteristic of the ECB – they indicate a weak level of communication. Some hints of hawkishness were heard from certain representatives of the Bank (for example, Klaas Knot suggested not underestimating the potential for a hawkish scenario), but overall, the market was largely expecting a different outcome. The probability of maintaining the status quo was estimated at around 60-70%, and this confidence was also shaped by cautious/dovish statements from ECB members. Weak PMIs, ZEW, IFO, a contradictory report on inflation growth in the eurozone, weak retail sales, a decline in industrial output, and a slowdown in the Chinese economy – all these factors also spoke in favor of a wait-and-see stance. Therefore, the ECB's decision is one that goes "against the grain." However, the determination (in the current circumstances, it can even be called boldness) of ECB members did not help the single currency. Ironically, the unexpected hawkish surprise from the ECB sent EUR/USD plunging. Reacting to the results of the September meeting, the pair hit nearly a 4-month low, marking it at 1.0650 (the lower Bollinger Bands line on the daily chart). So, what is the reason for such an anomalous market reaction at first glance? The devil, as always, is in the details. The ECB raised interest rates by 25 bps with one hand but effectively put an end to the current cycle of monetary policy tightening with the other. The central bank signaled that interest rates have "reached a level that will make a substantial contribution to containing inflation." Such wording is difficult to interpret, so EUR/USD traders viewed the ECB's decision as the "final chord" of the current cycle. Interestingly, ECB President Christine Lagarde tried to soften the message during the final press conference, stating that "it is not possible to definitively say that ECB rates have reached their peak at this time." However, judging by the EUR/USD reaction, market participants have already drawn conclusions about the prospects for further monetary tightening. It is important to note again that most ECB officials were cautious or dovish in the run-up to the September meeting, pointing out signs of economic slowdown (especially after the release of PMIs), cooling labor markets, slowing inflation (particularly core HICP), and a slowdown in bank lending. Thus, they hinted at the need to maintain the status quo. However, after the September meeting, it became clear that inflation, which is still at a high level, worries ECB officials more than the deteriorating economic outlook. The latest inflation report reflected the "stubbornness" of European inflation. The Consumer Price Index remained unchanged at 5.3% in August (against expectations of a decline to 5.1%). This gauge has been steadily declining since October 2022, moving from its peak of 10.6% to the current target of 5.3%. However, the downtrend has recently stalled. As for core inflation, the situation is somewhat different. Core HICP, excluding energy and food prices, rose actively until March, reaching 5.7%. Then, the gauge gradually lost momentum but remained within a range: it was at 5.3% in May, 5.5% in June and July, and finally, in August, the index returned to 5.3%. This report was published two weeks ago on August 31st. Since then, discussions in the expert community about the ECB's future actions have not subsided. After a series of disappointing economic reports (as listed above), hawkish expectations diminished, and the balance tipped in favor of a wait-and-see stance. However, as we can see, the ECB decided to "squeeze" inflation without considering the fragile economic growth in the eurozone. At the same time, the ECB weakened the euro with its "conclusive" rhetoric. In particular, it was stated that interest rates are already at a level that will be maintained "for a sufficiently long time." According to the ECB, this will significantly contribute to reducing inflation. The central bank hinted that another round of monetary tightening within the current cycle is possible, but such a step would be of an extraordinary nature. This rhetoric did not sit well with the euro, particularly with EUR/USD buyers, resulting in the pair remaining below the 1.06 level. From a technical perspective, the bears reached the support level at 1.0650, which corresponds to the lower Bollinger Bands line on the daily chart but failed to break through it. Therefore, selling appears risky right now, as you may "catch a price bottom." Short positions should be considered once the pair breaks through 1.0650 (in which case the bearish target will be around 1.0600) or during bullish corrections. In the latter case, the target would be 1.0650.
  14. Trading Signal for GOLD (XAU/USD) on September 12-13, 2023: buy above $1,919 (3/8 Murray - 21 SMA) Early in the European session, gold (XAU/USD) is trading around 1,923.19, above the 3/8 Murray, and above the 21 SMA. On the 4-hour chart, we see that gold is consolidating within a bullish trend channel formed since August 6. If theinstrument remains above 1,919 in the next few hours, we could expect it to continue rising and the price could reach the top of this channel around 1,930. According to the 4-hour chart, the bears are gaining strength in the short term, but overall, XAU/USD remains consolidated around 1,920 - 1,930. XAU/USD is above the daily pivot point which gives it a positive outlook. The key level is 1,923, above which gold is expected to continue rising to 1,930 and up to 1,953 (5/8 Murray). In case gold trades below 1,919, a bearish acceleration is expected to occur, but for this, we should wait for confirmation below 1,915, which could be seen as a signal to sell with the first target of 2/8 Murray at 1,906. The price could even reach the psychological level of 1,900. Meanwhile, gold might produce a positive signal if it manages to settle above 1,920. Then, there will be an opportunity to buy with targets at 1,930, 1,937, and 1,953. The eagle indicator is giving a positive signal. However, if the gold price falls below 1,915, we should avoid buying. If this scenario does not occur at the current price levels, we could buy with the target at 1,953 in the short term.
  15. The euro could be heading down for a long time The euro kicked off the new week with some negative traction. In previous articles, I've already drawn your attention to the statements of some members of the European Central Bank's Governing Council, which boiled down to a simple idea – the hawkish rhetoric is fading, and the ECB is preparing to conclude the process of tightening monetary policy. Thus, the decrease in demand for the euro is quite natural. On Monday, ECB President Christine Lagarde refused to answer questions about the rate at the September meeting. Some of her colleagues actively hinted that rates should be kept at peak levels for as long as possible but didn't mention new rate hikes. On Wednesday, Peter Kazimir said that interest rates could rise by another 25 basis points. This could happen as early as next week, although a pause in September with a subsequent increase in October or December is also possible. In my opinion, it doesn't matter when exactly the ECB will raise rates for the last time. The key point is that until the tightening process is complete, there is at most one more hike. Right now, it's not even important how high inflation is in the European Union and how quickly it is decreasing because rates have been the priority for the market over the past year. Since the ECB may raise rates for the last time and the Federal Reserve may raise rates for the last time, it may seem that the euro and the dollar are in similar conditions. However, this is not the case. First, the sentiment suggests a decline. Second, the US currency has been falling for quite a while, and during this period, the Fed has been more aggressive than the ECB. This implies that the euro is a bit more expensive than it should be. I believe that most factors currently favor further depreciation. I would also like to note another statement from another member of the ECB's Governing Council, Francois Villeroy de Galhau, who stated that interest rates are near their peak, echoing Kazimir's rhetoric. Villeroy also noted that there is currently no recession, and inflation will not slow down to 2% until at least 2025. This implies that the central bank will not further tighten its policy to avoid causing a recession in the European economy, and they can afford to wait on inflation. Based on the conducted analysis, I came to the conclusion that the upward wave pattern is complete. I still believe that targets in the 1.0500-1.0600 range are quite feasible. Therefore, I will continue to sell the instrument with targets located near the levels of 1.0636 and 1.0483. A successful attempt to break through the 1.0788 level will indicate the market's readiness to sell further, and then we can expect to reach the targets I've been discussing for several weeks and months. The wave pattern of the GBP/USD pair suggests a decline within the downtrend. There is a risk of completing the current downward wave if it is d, and not wave 1. In this case, the construction of wave 5 might begin from the current marks. But in my opinion, we are currently witnessing the construction of the first wave of a new segment. Therefore, the most that we can expect from this is the construction of wave "2" or "b". I still recommend selling with targets located near the level of 1.2442, which corresponds to 100.0% according to Fibonacci.
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