Daily Technical Analysis

[xtreamforex]

FOMC Minutes, Fed Hiking Rates slowly

At the November 2nd FOMC meeting, members unanimously agreed to hike the Fed Funds rate by 75bps to bring the key rate to 3.75%-4.0%.The statement from the meeting said members agreed that ongoing rate hikes were necessary until rates were “sufficiently restrictive”. In addition, the statement noted that “in determining the pace of rate hikes, we will consider cumulative tightening, policy lags and economic and financial developments”. However, during the press conference which followed, Fed Chairman Powell stated that the incoming data suggests that the ultimate level of rates will be higher than previously anticipated.

The FOMC Minutes released on Wednesday showed that a substantial majority of officials said a slowing in the pace of rate hikes would be appropriate soon. 

Read More : Daily & Weekly Analysis On Xtreamforex

[xtreamforex]

This week’s currency pair, USD/CNH

This week will bring a lot of US macroeconomic data and speech from US Fed Chairman Powell, which should give the markets a clearer direction of where the Fed may be headed next regarding monetary policy. Powell speaks at the Brookings Institute on Wednesday. The topic is the economy and labor market. The statement after the November 2nd FOMC meeting stated that “ in determining the pace of rate hikes, we will consider cumulative tightening, policy lags, and economic and financial developments”. The markets took this to be dovish. However, in the press conference that followed, Powell said that the incoming data suggests that the ultimate level of rates will be higher than previously anticipated. However, the pace of tightening is not as important as the terminal rate. Markets took this to be hawkish, Traders will be looking for Powell to clarify these statements and try to determine if the Fed will hike by 50bps or 75bps at the December meeting. In addition, the US will release the Fed’s favorite measure of inflation, Core PCE. Expectations are for a YoY print of 5% vs a September reading of 5.1%. If this number is stronger, the Fed may feel comfortable leaning towards a 75bps hike in December. The US will also release Non-Farm payrolls on Friday. Expectations are for a print of 200,000 vs a previous reading of 261,000. The Unemployment rate is expected to remain unchanged at 3.7%.

Read More : Daily & Weekly Analysis On Xtreamforex
 

[xtreamforex]

Australian inflation fell but just ‘weight’ a minute

Australian inflation rose only to 6.9% y/y, down from a peak of 7.4% and lower than the 7.5% expected. Housing, food and non-alcoholic beverages and transport were most significant contributors. CPI rose 0.2% m/m, below its long-term average of 2.5%.

The RBA will be happy to hear that inflation was much lower than expected, even if it does remain historically high. But the ABS report also highlighted that they performed their annual weight adjustment to the CPI basket, and that inflation would have been 7.1% if last year’s methodology was used. But even a move down from 7.4% to 7.1% is noteworthy as it leaves the potential that inflation has in fact peaked.

Read More : Daily & Weekly Analysis On Xtreamforex

[xtreamforex]

Powell’s Brooking November 2nd FOMC Press Conference

In Fed Chairman Powell’s press conference after the FOMC meeting on 2nd November, he said that incoming data suggests that the ultimate level of rates will be higher than previously anticipated. In addition, he noted that, how high rates rise is more important than the pace of tightening. At the time, the markets took this to be hawkish as it was the first time Powell mentioned rates would be higher than anticipated and that the pace was not as important as the terminal rate.

Inflation and the labor market at the Brookings Institute. Powell repeated many of the same comments from 2nd November, while adding that the time for moderating the pace of rate hike increases may come as soon as the December meeting. This was now seen as dovish, as Powell is basically telling the markets that the FOMC will Only hike by 50bps in December .

Read More : Daily & Weekly Analysis On Xtreamforex

[xtreamforex]

Consensus is for the RBA to hike by 25bp tomorrow

What has happened since the last RBA meeting:-
10th November: Australia’s Central Bank says nearer to point when it can wait on rates.
CPI fell to 6.9% y/y, down from 7.4% and beneath the 7.5% – suggesting inflation has peaked.
Governor Lowe reiterated his belief that the economy can have a soft landing.
PMI’s continued south, business sentiment has been flat.
Consumer inflation expectations hit a record high according to one survey.
OIS curve is pointing lower as the case for a higher terminal rate diminishes.

Read More : Daily & Weekly Analysis On Xtreamforex

[xtreamforex]

Gold Falls Victim to Strong US Data

Gold has sold off thanks to a rebound in US dollar and bond yields. The fact that the yellow metal has turned lower from a key level makes today’s reversal eye-catching as the chart suggests that at least a temporary top may be in for now.

Gold fell along with the major currency pairs today as the dollar found support on the back of some stronger-than-expected US macro data. Factory orders surged by more than expected, rising 1% month-on-month, while the closely-followed ISM services PMI came in at 56.5 compared to 53.3 expected and 54.4 last.

With US data continuing to remain largely positive, some investors are starting to re-question the market pricing of the terminal interest rates in the US, currently priced in at just below 5%. If incoming data continues to remain favorable, then inflation is likely to persist longer and that may encourage the Fed to be even more reluctant to pause its hiking early in the first half of 2023.

Read More : Daily & Weekly Analysis On Xtreamforex

[xtreamforex]

The Australian Q3 GDP Economy | Xtreamforex

Australian economy expands by 0.6%, a little softer than expected. The impacts of high inflation and higher interest rates are becoming apparent – notably, the real estate sector on lower turnover subtracted 0.2ppts from activity in the period.

The Australian economy expanded by 0.6% in the September quarter. That was a little softer than anticipated, market median 0.7% and Westpac 0.8%. Annual growth is 5.9%. The level of activity is 6.5% above levels prior to the pandemic, at the end of 2019.

The Real Estate sector – in the form of ownership Transfer Costs plunged by -11.2%, subtracting 0.2ppts from activity. We had allowed for a more modest fall, recent quarterly outcomes have been -1.1%, -2.5% and -2.1%. This provides further evidence that the Australian economy is in transition. 

Read More : Daily & Weekly Analysis On Xtreamforex

[xtreamforex]

Invest in world’s largest financial market

Just Copy Trades of the Leading Forex Traders and Earn Returns It’s all Automatic. Another way to Grow Your Money Online. Grow Value of Your Investment Portfolio With Xtreamforex Copy Trading. Register Now: Copy Trading

[xtreamforex]

US CPI Preview: CPI To Remain Elevated

On Tuesday, December 13th , the US will release its CPI reading for November. Expectations are for the headline print to come in at 7.6% YoY after a surprisingly lower than expected October print of 7.7% YoY. If the print is in-line with expectations, it would be the fifth monthly decline in a row after peaking in June at 9.1% YoY, as well as, the lowest reading since January! In addition, the Core CPI print for November is expected to be 6.2% YoY vs a previous reading of 6.3% YoY. The result for the Core print was also a surprise in October, as economics expected a reading of 6.5% YoY.

Could these results affect the FOMC’s decision as to how much it should hike rates on Wednesday ? The Fed last met on September 21st. By the time the FOMC meets on December 14th , it will have seen the September, October, and November CPI prints. The October print was much lower than expected. In addition, the Fed has seen Core PCE prints for September and October. The September Core PCE reading was 5.1% YoY vs an expectation of 5.2% YoY and a prior reading of 4.9% YoY. The October print was 5% YoY vs an expectation of 5%. In addition, the Fed still sees the labor market as tight.

Read More : Daily & Weekly Analysis On Xtreamforex

[xtreamforex]

The Federal Reserve’s Open Market Committee Preview

The Federal Reserve’s Open Market Committee will complete its two-day meeting tomorrow. The committee will release its monetary policy statement and Summary of Economic Projections at 2:00pm ET, with Fed Chairman Jerome Powell’s press conference starting 30mins later at 2:30pm ET.

Most traders expect the central bank to downshift to a 50bps interest rate hike this month after four consecutive 75bps rate hikes and 375bps of increases since March, the most aggressive interest rate hike cycle in four decades.

According to the CME’s Fed Watch tool, Fed Funds futures traders are pricing in about 80% odds of a 50bps rate hike, with an outside chance of yet another 75bps hike. Additionally, the Fed is expected to continue to allow up to $60 billion in Treasury securities and $35 billion in agency mortgage-backed securities to mature and roll off its balance sheet per month.

Read More : Daily & Weekly Analysis On Xtreamforex

[xtreamforex]

Bank of England’s Monetary Policy Committee Preview

The Bank of England’s Monetary Policy Committee will meet tomorrow to decide on interest rates. The MPC meeting will be sandwiched between FOMC rate decision that will have taken place today, and the ECB rate decision that would follow an hour and a bit later. The GBP/USD, EUR/GBP and FTSE will be among the markets in sharp focus on the day.

The consensus is that the BoE will show the pace of hiking, as we are expected to see with the week’s other major central bank decisions. Economists expect the UK central bank to raise the benchmark interest rate by 50 basis points, which would bring the Official Bank Rate to 3.5%. If correct, this will mean the previous 75 basis point hike was just a one off.

Read More : Daily & Weekly Analysis On Xtreamforex

[xtreamforex]

USD/CHF Could Extend Losses

USD/CHF declined below the 0.9400 and 0.9350 support levels.
A major bearish trend line is forming with resistance near 0.9320 on the 4-hours chart.
The Fed increased interest rate by 0.50 percentage point.
The BoE interest rate decision is scheduled today.

The USD started a fresh decline from well above the 0.9500 level against the Swiss Franc. USD/CHF gained pace below the 0.9400 and 0.9380 levels. Looking at the 4 hour chart, the pair settled well below the 0.9400 level, the 100 simple moving average and the 200 simple moving average.

It broke the 0.9300 level and tested the 0.9230 support zone. It is now consolidating losses and remains at a risk of more losses below the 0.9200 support zone. The next major support is near the 0.9165 zone. Any more losses might send the pair towards the 0.9120 support zone. On the upside, the pair is facing resistance near the 0.9320.

Read More : Daily & Weekly Analysis On Xtreamforex

[xtreamforex]

Bank Of Japan Could keep same Policy

The Bank of Japan kept the same outlier as compared to the other major central banks which have been raising interest rates at a fast pace throughout this year in a synchronized attempt to bring the inflation down. This resulted in a down yen and fording Japanese authorities to step in in the currency market in September and October. But, after hitting a 32-year low against the USD, the yen staged a comeback, with the BoJ coming under the microscope as investors try to figure out whether a policy tweak is on the cards sooner rather than later. The Bank meets early on Tuesday, but no policy action is expected.

Governor Kuroda has been strict on the need to maintain ultra-low interest rates and pushed back against calls for reviewing the policy framework. He has been also repeating that the rise in core consumer prices is driven mostly by surging import costs and that inflation would return back to 2% during the next fiscal year.

Read More : Daily & Weekly Analysis On Xtreamforex

[xtreamforex]

RBA Board Considered Stop in December

The Reserve Bank Board considered three options in its deliberations at the December Board meeting. The options were: 50 basis point increase in the cash rate; 25 basis point increase; or no increase. This contrasts with recent meetings when only the 50 basis point and 25 basis point options were considered. Given consistent statement from the Bank about pausing it would come as no surprise that the Board did consider the pause. Indeed, it came as a bigger surprise that 50 basis points was still on the table.

The cause of pausing rested on the theme of placing further emphasis on the lagged effects of a large policy adjustment to date, and the value in proceeding cautiously in an uncertain environment. But this argument seemed to be quickly dismissed, noting that the Bank’s forecasts in the November SOMP were that, despite further increases in interest rates, “inflation was expected to take several years to return to the target range”.

Read More : Daily & Weekly Analysis On Xtreamforex

[xtreamforex]

Canada:- Inflation Tiptoes in the Right Direction in November

Consumer price inflation took a small step down in November, to 6.8% YoY, after holding steady at 6.9% through September and October.

Canadians got some relief at the pumps in November, with prices down 3.6% m/m, after prices surged 9.2% in October. However, gasoline prices are still up 13.7% versus a year ago.

Food inflation was back on the rise in November, up 10.3% y/y, up from 10.1% in October. Food purchased from stores was up even more versus a year ago at 11.4% y/y.

Read More : Daily & Weekly Analysis On Xtreamforex