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Risk Events and Questioning the Hyperbole of ‘Bad Actors’

by with No Comment AMT MarketsBehavioral SentimentFeatured Highlights

Risk Events and Questioning the Hyperbole of 'Bad Actors'

The week in a way has already started for financial institutions and traders because of the developing news from Russia. Due to yesterday’s events surrounding the ‘noise’ caused by the Wagner Group’s leader Yevgeny Prigozhin, let there be no doubt that energy sector traders became nervous and fragile behavioral sentiment was being anticipated for Monday’s openings. However, like a well staged drama (perhaps this is giving too much credit to the actors) the Russian saga seems to have come to an odd conclusion. Leaving the possibility for a Part Two to develop. Stay tuned ladies and gentlemen.

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EUR/USD One Month Chart as of 25th June 2023

Monday, the 26th of June, Germany ifo Business Climate – the reading is forecast to come in worse than the previous month. Germany has turned in rather troubling economic data and the E.U as a whole is struggling under the weight of inflation and lackluster growth. The EUR/USD could be affected from the business climate survey.

Monday, the 26th of June, E.U ECB Forum on Central Banking – the annual event which is a bit like the Fed’s Jackson Hole Symposium will be attended by the leading central bank officials from around the globe. This year’s event in Sintra, Portugal will focus on inflation. ECB President Christine Legarde will kick off the event, which will end on Wednesday the 28th of June with speeches from Fed Chairman Jerome Powell, BoE Governor Andrew Bailey and others.

Tuesday, the 27th of June, Canada Consumer Price Index – a slew of inflation reports will be delivered. The forecast anticipates a slight drop in price pressure, but will that actually be the result? The USD/CAD could move based on the outcomes.

Tuesday, the 27th of June, U.S Consumer Confidence via the Conference Board – this survey is expected to show a slight improvement in the outlook of American consumers.

Wednesday, the 28th of June, E.U ECB Forum on Central Banking – the event will conclude with speeches from the heads of the ECB, Bank of Japan, Bank of England and Federal Reserve. The event is not supposed to stir up the dust, but Forex traders should monitor the rhetoric generated.

Thursday, the 28th of June, Germany Preliminary Consumer Price Index – the data is expected to show an increase in prices and underscore the ECB’s aggressive rhetoric regarding inflation.

Thursday, the 28th of June, U.S Final Gross Domestic Product – the growth numbers are projected to show a gain of 1.4% compared to last month’s 1.3%. The results will move the financial markets if they are surprising. Traders should be on the lookout for revisions to the previous month’s numbers.

Friday, the 29th of June, U.K Final Gross Domestic Product – an expected ‘growth’ number of 0.1% is anticipated, which would match last month’s lackluster outcome. The U.K is hovering under recessionary pressures and this GDP result will be watched by GBP/USD day traders.

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USD/INR: Correlation to Broad Forex Market Intriguing Signal

by with No Comment AMT MarketsBehavioral SentimentFeatured Highlights

USD/INR: Correlation to Broad Forex Market Intriguing Signal

The USD/INR is near the 82.1200 price as of this writing. On Friday the USD/INR hit a low near the 81.8000 ratio. The ability to touch depths in the USD/INR before going into the weekend correlated well with the broad Forex markets, as the USD was showing signs of weakness globally. Yesterday’s trading volumes were weak because of a U.S banking holiday being observed and only in the next handful of hours will U.S financial institutions return from their long weekend, meaning an increase in volatility could arise.

The lows seen in the USD/INR on Friday challenged values not seen since the 10th and 11th of May. Interestingly support seems to have held technically, and the USD/INR was not able to test lower values seen in the middle of April and the first week of May. However, the trading conditions in the USD/INR appear to be healthy and performing in a manner that can be compared to the broad currency markets, and that is important because it may be a sign that interventions have not been necessary from the Reserve Bank of India the past few weeks.

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USD/INR One Month Chart as of 20th of June

Was the Federal Reserve Decision a Pause or a Skip Regarding Interest Rates?

While the U.S Federal Reserve behaved as anticipated last Wednesday and did not raise its Federal Funds Rate, the central bank is still rattling its ‘inflation’ sword and has let it be known it can raise interest rates in July. The decision to not hike borrowing rates in June has been described widely as a pause by U.S Federal Reserve watchers, but if the Fed were to raise interest rates in July the pause would then have to be described as mere ‘skip’.

However, if broad Forex market price action is being interpreted correctly, it does appear many financial institutions are seemingly betting on a less aggressive Federal Reserve over the long-term. The question is if this is the correct outlook. Inflation remains problematic and until consistently solid drops in the costs of goods takes place, the Federal Reserve will remain rather unclear regarding its rhetoric and will likely bang on its higher interest rates ‘drum’ as a warning.

Here Comes More U.S Federal Reserve Rhetoric: Today and Tomorrow

Something USD/INR traders should pay attention to later today and tomorrow are the spoken words and gestures from Federal Reserve officials. New York Fed President John William will be speaking later today and he will certainly be asked about his outlook regarding interest rates. Because he is in charge of the New York Federal Reserve Bank, Williams remarks are watched carefully by the financial markets and his comments will certainly affect Forex and equity indices.

And then leaning into the microphone tomorrow will be Federal Reserve Chairman Jerome Powell. He will present his viewpoints and be asked questions regarding monetary policy in the House of Representatives by the Financial Services Committee on Wednesday. On Thursday, Powell will remain in Washington and perform the same show for the Senate Banking Committee. The Fed Chairman is a trained D.C insider and he will try not to inflame the financial markets with any surprises.

Outlook for the USD/INR is Choppy in the Near-Term

A reversal higher in the USD/INR early this morning has also correlated to the broad Forex market. It is likely the USD has been viewed as potentially oversold in the short-term. However, the slight moves higher might also be a natural cautious reaction to the coming rhetoric from John Williams and Jerome Powell. Because of this USD/INR traders should expect rather choppy conditions to flourish near-term.

Friday’s trading for the USD/INR will get important U.S economic data via the Flash Manufacturing and Services PMI reports. If the USD/INR remains below resistance levels of 82.1500 and 82.2000 consistently over the next few days leading into Friday’s trading, this could mean the broad Forex market remains bearish regarding its outlook for the USD. Speculators should be careful over the next 24 hours. It should also be mentioned that if Jerome Powell doesn’t surprise the marketplace tomorrow, he will not be likely to offer any new information the following day in Washington, meaning tomorrow’s comments from the Fed Chairman are the words likely to cause volatility if this happens.

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Tether’s Wobbling Should Set off Alarms for Crypto Traders

by with No Comment AMT MarketsBehavioral SentimentFeatured Highlights

Tether's Wobbling Should Set off Alarms for Crypto Traders

Tether is wobbling and this should not come as a surprise to cryptocurrency traders. While many speculators likely do not carry USDT in wallets or day trade the cryptocurrency, it does serve as a barometer in the digital asset world regarding behavioral sentiment. A sustained drop below the 1.00000 USD price tag should raise eyebrows and increase nervousness.

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Tether (USDT/USD) 5 Day Price Chart as of 15th June 2022

This morning’s drop in value in USDT/USD comes on the heels of trouble with Binanace and Coinbase via civil suits brought forth by U.S government agencies that accuse both exchanges of wrongdoing.

Tether’s accounting practices have been under suspicion for a long time and transparency has been lacking. While influencers within the crypto world can came claim all they want the Tether ‘stablecoin’ has nothing to hide – just like Binance and Coinbase – plenty of suspicion remains. And in fact a lawsuit brought against Tether’s parent company which was settled with a payment of nearly 41 million USD in 2021 to the U.S government via CFTC charges should serve as a caution sign.

A simple look at a five day chart of USDT/USD above shows the ‘stablecoin’ has incrementally suffered selling the past handful of days (this before today’s storm lower). Yes, folks may claim this has happened before and recoveries invariably have always developed higher, and they may be proven correct again. Perhaps today’s selling has been a mere reaction to the ‘public’ finding out about recent Binance transactions which are being reported, but maybe it is something more important – like a lose of confidence.

Until now the cryptocurrency world hasn’t really seen a strong reaction to the allegations brought forth from the U.S against Binance and Coinbase yet, and the question that should be asked is when is confidence going to crack again in the cryptocurrency world. Because as sure as the sun comes up and sets, the cryptocurrency world is going to suffer another major crisis, perhaps not today, but one will occur.

If the price of Tether starts to stumble badly and shows signs of not recovering that would spark a major downturn in the value of cryptocurrencies across the board. The darling of the ‘stablecoin’ world certainly has its detractors and there are certainly folks lurking who have been making long-term bets against Tether.

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Binance Coin (BNB/USD) One Month Chart as of 15th June 2023

Speculators in the digital asset world will be watching Bitcoin and Tether values closely. It has been reported that by many crypto media sources that Binance has recently made large trades involving USDT in an effort to boost their liquidity. What should concern traders in the cryptocurrency space is the ability of noise in the sector to turn into actual thunder which causes dramatic reactions to cryptocurrency prices.

Because while some people try to claim there are reasonable ways to value cryptocurrencies, in fact behavioral sentiment rules the jungle and a loss of confidence in the sector remains an extinction level threat for nearly every digital asset at anytime. The entire cryptocurrency space is vulnerable to fragility.

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Anticipated Federal Reserve Shop Talk to be Delivered Today

by with No Comment AMT MarketsBehavioral SentimentFeatured Highlights

Anticipated Federal Reserve Shop Talk to be Delivered Today

For what it’s worth, here is my prediction regarding what the Federal Reserve will do today. The Federal Funds Rate will remain unchanged in my opinion. The FOMC Statement may show that the vote actually was debated and not unanimous. The statement is likely to warn that inflation remains stubborn and potentially problematic, meaning the Federal Reserve continues to believe it may have to raise the Federal Funds Rate over the mid-term and again before the end of 2023.

The Forex market has seen the USD get weaker against many major currencies since late May. While financial institutions have seemingly positioned for no increase from the Federal Reserve today, this move has also likely been priced into Forex. Day traders need to understand institutional traders will not be betting on what took place the last three weeks, but are trying to anticipate what will happen into early July and beyond regarding their Forex positions.

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GBP/USD One Month Chart as of the 14th June 2023

Many financial institutions may still be betting the Fed will remain more dovish than the U.S central bank wants to admit, but this is a dangerous perception and could prove costly. Financial institutions are concerned about the Fed because they know the central bank has painted itself into a corner it may not be able to maneuver freely within. The battle to conquer inflation while trying to fuel economic growth is not an easy one. Mixed sentiment abounds regarding the U.S economy depending on who is asked.

Talk of a soft landing and a small recession continues to be heard, this while some analysts warn about a hard drop and darker days ahead. Folks, it is all about timelines and their interpretations, experts warning about brighter or darker days ahead have a tendency to be vague regarding exact moments in time. Everyone has an opinion, and people often have more than one.

In my opinion – my one opinion, the Fed is likely to say that it is not going to raise rates today, but may have to do so in the mid-term. If these were normal times and economic conditions were not suffering from huge spending running amok in Washington and the corporate banking sector wasn’t fragile, the Fed may actually have raised the Federal Funds Rate today to continue to battle inflation deliberately. However, a pause for the moment seems like the logical choice, this while ‘hoping’ inflation continues to diminish. And hope is a key word here. Everyone seems to be hoping. The question financial houses and traders need to decide after the FOMC Statement takes place today is how seriously do they consider the Fed’s remarks.

If they believe the Fed will have to continue to remain neutral regarding its mid and long-term interest rate policy, the USD may soften and incremental selling might be demonstrated. Human instinct tends to be optimistic, which means financial institutions and maybe even the Fed wants to believe inflation will ebb lower. If this happens the USD would weaken further. However, the Fed may have to sound more aggressive than people want, but that would damper the mood of financial institutions – so look for optimistic interpretations to abound with rose colored glasses, even if they are wrong in the long-term.

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Gold One Month Chart as of the 14th June 2023

For evidence of outside barometers, traders may want to look at Gold which has essentially traded between 1940.00 and 1975.00 with a few outliers since the last week in May. The price of Gold has seemingly situated within a consolidated framework the past few weeks. The precious metal may produce a strong move if the Fed shows more dovish behavior today, particularly if financial institutions show more optimism via behavioral sentiment in Forex – meaning if a weaker USD trend continues momentarily Gold could traverse higher.

My prediction and $1.00 USD may get you on a bus. As always caution will be needed if you are trading immediately before and after the U.S Federal Reserve’s rate decision. I advise using a seat belt today consisting of entry price, stop loss and take profit orders via solid risk management, but then again these cautious attitudes should always be practiced by day traders.

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Week Ahead: Inflation Followed by the U.S Federal Reserve

by with No Comment AMT MarketsBehavioral SentimentFeatured Highlights

Week Ahead: Inflation Followed by the U.S Federal Reserve

Monday, 12th of June, U.S Federal Budget Balance – hold down the laughter and snickers please as you wonder why you should care, this as the report shows monthly income versus spending from the month before. Yes, the U.S ‘Debt Ceiling’ bill was passed recently. Very few people are going to pay attention to Budget Balance report, except economists and traders who have ‘skin in the game’ via hedge funds as an example – that make long-term bets, and U.S politicians who want to hoot and holler…….while nothing really gets done to limit wasteful spending in Washington D.C.

Tuesday, 13th of June, U.S Consumer Price Index reports – yes, this inflation data will be important per the monthly numbers showing what consumers are spending. A slight uptick is expected with an outcome of plus 0.2% via the broad statistics – last month’s number showed a gain of 0.4%. The outcome of the broad and core CPI statistics will give the Federal Reserve a sounding board for what will take place on Wednesday via the Federal Funds Rate announcement. Stronger than expected inflation numbers could cause a rupture and nervousness. A weaker result would calm Forex and perhaps make the USD slightly weaker.

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EUR/USD One Month Chart as of 11th June 2023

Wednesday, 14th of June, U.S Producer Price Index – these numbers will be released early in the day and will be followed by the Federal Reserve five and half hours later. The inflation outcome via the PPI if stronger than anticipated would cause some caution before the Federal Reserve takes the stage.

Wednesday, 14th of June, U.S Federal Funds Rate, FOMC Statement and FOMC Press Conference – while many analysts seem convinced the Fed will not hike the interest rate this week, there are obviously no guarantees. The FOMC Statement will indicate the U.S central bank’s outlook. Traders who are intent on trading before the official interest rate announcement and statement are playing with fire. Speculators should keep in mind that other central banks have surprised folks with increases recently including Canada and Australia. A hike from the U.S Federal Reserve would surprise a lot of people and financial institutions, but stranger things have happened.

Thursday, 15th of June, New Zealand Gross Domestic Product – the growth numbers which will come out a handful of hours after the U.S Fed leaves the stage will be intriguing and provide NZD/USD traders more impetus into what will likely already be a volatile trading session taking place.

Thursday, 15th of June, China Industrial Production and Retail Sales – these two reports from the economic giant will be watched closely. China’s economy is struggling a bit, and weakness in the housing sector via values are starting to cause a reaction in domestic spending. Industrial Production numbers will give some insights regarding global demand. Economic problems in Europe and North America are certainly not helping matters in China because demand for goods are restrained and hurting the manufacturing sector.

Thursday, 15th of June, U.S Retail Sales – consumers in the U.S have been expected to start producing negative numbers via these statistics, will they begin to do it? A stronger number would be of interest to some, but after Wednesdays’ FOMC Statement and news that will be generated, it is questionable who will give full attention to this report and what affect it could have.

Thursday, 15th of June, E.U ECB Press Conference – this question and answer session could prove to be interesting depending on what the U.S Fed does the day before. Certainly the European Central Bank will give their opinions on monetary policy and economic circumstances in the European Union and abroad. The EUR/USD could be affected.

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USD/JPY One Month Chart as of 11th June 2023

Friday, 16th of June, Japan BoJ Policy Rate and Monetary Policy Statement – no major changes are expected from the Bank of Japan. This is the one central bank unwilling to change its attitude regarding monetary policy because of the whims of others. Perhaps if the U.S Federal Reserve surprised everyone on Wednesday with a hike, this could change the quiet rhetoric from the BoJ – but even that is doubtful. USD/JPY traders should pay attention to the BoJ Press Conference just in case.

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Determination and Success: Integrity of the Catcher’s Mitt

by with No Comment Behavioral SentimentBusinessFeatured Highlights

Determination and Success: Integrity of the Catcher's Mitt

In the Long Run’ mused Maynard Keynes ‘we are all dead’ or as someone else once said, ‘Don’t go through life with a catcher’s mitt on both hands, throw something back’. The author of that line is unknown but we can assume that he knew something about baseball and the cut and thrust of business and life. It seems to me that the two are inseparable… In the consumer society of the developed world in which we live, the lifestyle we enjoy is largely shaped by the extent to which we buy and sell.

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A market without anything to sell will be just as ineffective as a market full of merchandise with no one to buy. When we have real financial wealth, we are able to indulge many of our fantasies or dreams. That’s one of the reasons for aspiring to wealth and the independence it brings. For example once you have travelled around the globe staying in the world’s most luxurious hotels it’s not necessary to have the 5 star penthouse suite, something more modest will do. Once you’ve tasted the grape it’s not necessary to taste it with every meal.

Success in anything comes at a price and business is no exception. The ability to be disciplined and to persevere no matter what, is possibly the single greatest attribute to be successful in business. As Calvin Coolidge put it ‘Nothing in the world can take the place of persistence. Talent will not. Nothing is more common than unsuccessful men and women with talent. Genius will not. Unrewarded genius is almost a proverb. Education will not. The world is full of educated derelicts. Persistence and determination alone are omnipotent’.

But perhaps there is another price to which, in a sense, it is not obvious until it hurts and that is the price of integrity. The lack of ability for individual companies and institutions to police themselves, has led to a plethora of regulatory bodies for professions and businesses. We have created a “blame and shame” culture in which so often we prefer to abrogate responsibility and seek litigation, rather than facing up to the challenge ourselves. Integrity perhaps is best summed up as acting in a responsible, honest and fair way no matter what the cost to the individual or company.

We have been given a shocking example by many in authority on how to be economical with the truth, once a civil offence now a well-­honed practice is to ‘spin’ the facts to suit a particular agenda of self interest.

Philanthropy, no longer the preserve of the rich and famous, often anonymous, through centuries has made a contribution to the good of many of the underprivileged, as well as aiding education research and science, from which we all have benefited in some way. Many of the wealthy have historically helped the poor and those needier than themselves. Two of the world’s current incurable illnesses are AIDS and cancer, the major problem facing the developing nations is AIDS. Hardest hit are the children with an increasing numbers of orphans born with AIDS. In contrast, the problem facing the developed nations, is one of cancer, and in particular breast cancer. Drug addiction and alcoholism, particularly amongst the young is increasing at an alarming rate in both the most affluent areas of society and amongst the desperately poor, like the street children on Seventh Avenue in Guatemala City.

Huge wealth has been created over the past two decades, not least amongst City of London financiers, many of whom became millionaires on the strength of their bonus payments alone. That we should try and help those less fortunate than ourselves is a desire common to most people. We also know that charity begins at home. The stock market is the barometer of the economy, and the economy is driven by business, and business is the powerhouse that can make a real difference by making a positive contribution to the society in which we all find ourselves. Working with integrity is perhaps not just about the way we treat our employees, colleagues and competitors but also about how we use the wealth that we create. Whilst financial wealth will mean different things to different people, having more than we need gives us an opportunity to make a difference for others, however small we may think the contribution is, and speaks more about us than the what we are able to give.

Taking off the catcher’s mitt and throwing something back is at the heart of charitable giving and philanthropy and in doing so helping the weakest and most vulnerable in society. ‘ For it is more blessed to give than to receive’. After all, in the long run, we are dead.

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Risks Ahead: Tranquil Data Mixed with Loud Nervous Chatter

by with No Comment AMT MarketsBehavioral SentimentFeatured Highlights

Risks Ahead: Tranquil Data Mixed with Loud Nervous Chatter

Last Friday finished with stronger than expected Non-Farm Employment Change numbers, which essentially collided with dovish rhetoric via two U.S Federal Reserve FOMC members from the middle of the week; this while inflation clearly remains stubborn in the U.S.

All of which sets up this coming week for nervous trading results and until the 14th of June, when the Federal Reserve’s Federal Funds Rate pronouncements will be brought forth. Plenty of talk about interest rates will be heard in the days ahead and traders should expect to hear debates as the chatter grows louder.

Commodity traders may be interested in the outcome of the OPEC+ meetings taking place this weekend. The cartel’s decisions regarding oil production will affect not only prices of Crude Oil futures, but is a direct reflection regarding global demand, which also tells us about the organization’s viewpoints regarding global economic conditions.

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WTI Crude Oil Three Month Chart as of 4th of June 2023

Monday, the 5th of June, European Services PMI – Germany, France and Italy and will release their Purchasing Managers Index readings. The German outcome could prove interesting because the nation is suffering from recessionary pressures. The PMI results could affect the EUR/USD a bit. The U.K will also release their data too.

Monday, the 5th of June, U.S ISM Services PMI – this report will be of interest because some are expecting a better outcome compared to May’s results. A potentially strong reading could prove problematic and put more pressure on the Federal Reserve to raise interest rates next week.

Tuesday, the 6th of June, Australia RBA Rate Statement – the Reserve Bank of Australia surprised people with an increase of their Cash Rate last month. No increase is expected now, but the RBA’s rhetoric should be listened to as they comment about domestic and global economic conditions.

Wednesday, the 7th of June, Canada BoC Overnight Rate – Bank of Canada is expected to hold its borrowing costs in place, but inflation is still creeping into prices and the BoC’s Rate Statement may prove intriguing.

Thursday, the 8th of June, U.S Weekly Unemployment Claims – following in the footsteps of the stronger than expected jobs numbers last week, this report could get some media fanfare. However, it also may prove to be a lot of noise and have little real affect on market direction.

Friday, the 9th of June, China CPI and PPI – the inflation reports from China could prove interesting in wake of recent lackluster economic data from the nation. Last Thursday’s Caixin Manufacturing PMI results came in slightly better than expected, but data from China the week before was negative. The data from China gives investors and traders insights because of its importance as a global supplier of consumer products.

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Federal Reserve Noise as Short and Long-Term Clarity Fades

by with No Comment AMT MarketsBehavioral SentimentFeatured Highlights

Federal Reserve Noise as Short and Long-Term Clarity Fades

There is a storm in the Forex markets currently and it will persist tomorrow. Today is a good day to talk about the difference between short-term trading and long-term investing. Short-term outlooks typically are top heavy with technical interpretation, and behavioral sentiment mixed with fundamentals when speculators are pursuing the marketplace looking for quick profits. Loud short term thunderbolts coming from various components that affect trading are significant. Yesterday’s noise had an impact.

Long-term investment is done with a focus on patience, conservative outlooks regarding fundamentals and potential behavioral sentiment that could develop and encapsulate attitudes within a chosen asset. Day traders are often ready to bet on what is going to happen in a matter of minutes, hours and perhaps a day. If a so called day trader has to be in a position longer than a couple of days, they often find that they are not emotionally prepared to wait for outcomes.

There is also the problem regarding a lack of enough cash in many trading accounts. Short term traders often do not have enough money to carry positions for a significant duration, sometimes overnight transaction fees charged by their brokerage platforms are too expensive. The availability of limited money is a liability and creates unprofitable propositions, unless an extreme amount of leverage is being used. Most short term traders lose their money when trying to apply excessive leverage. Dangers abound for day traders.

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GBP/USD One Month Chart as of 1st of June 2023

Important U.S Data is on the Schedule Tomorrow which may not be mere Noise

Tomorrow the Non-Farm Employment Change number will be published, but the Average Hourly Earnings report will be a crucial part of the data brought forth too. Short-term traders like wagering on the jobs outcome and trying to ride its impetus, hoping a prosperous wave delivers them to the shore with profits. If the Average Hourly Earnings report comes in stronger than anticipated tomorrow, this could send Forex markets into a volatile and dangerous session as it mixes with yesterday’s Federal Reserve ‘dust’ which is still in the air causing problems.

Federal Reserve Dust Storm Caused by Jefferson and Harker Yesterday

Two members of the Federal Reserve’s FOMC committee, Philip Jefferson a Federal Reserve Board of Governors member and Patrick Harker the President of the Federal Reserve Bank of Philadelphia, suggested on Wednesday that keeping the Federal Funds Rate in place on the 14th of June would be a good idea.

Philip Jefferson has been nominated by President Biden to take the powerful seat of Vice-Chair of the Federal Reserve, but he has not been appointed to the position yet officially. The position of Vice-Chair is a key job within the Fed which creates a rather strong voice regarding policy historically. Jefferson’s voice could make a difference in the next two weeks. However, even with Patrick Harker joining Jefferson’s rhetoric yesterday, among them are a handful of other FOMC voting members who have expressed loud concerns about inflation and made it clear in their opinions, that staying aggressive regarding interest rate policy is important.

Clarity remains difficult to visualize regarding what the U.S Federal Reserve will do near and mid-term. However, the Federal Reserve has been exceptionally good at creating choppy Forex conditions much to the detriment of short-term traders, which is supposedly not part of the Fed’s mandates.

Forex Markets have been Stirred and Tomorrow’s Data could Shake Conditions More

Wednesday’s comments from the two Federal Reserve members briefly stirred global Forex and the broad marketplace. Short term traders likely got caught in the momentary flashes of hysteria caused by the comments of the two gentlemen.

Arriving closely behind the comments by the Fed officials yesterday was the U.S JOLTS Job Openings report, which is viewed suspiciously by many professionals in the investment world because its numbers are sometimes suspected of being inflated by ‘headhunters’. However yesterday’s JOLTS results showed a huge increase in available employment options and caused another temporary reaction in Forex – in many ways counteracting the Fed voices.

Meaning tomorrow’s Non-Farm Employment Change numbers, and the inflation report via the Average Hourly Earnings will cause a loud buzz before and after their publication. This as the rhetoric from Fed members Jefferson and Harker mixes into the statistical outcomes.

The USD has been strong in the broad markets the past few weeks against many major currencies. This as evidence has grown the Federal Reserve may feel pressured into increasing the Federal Funds Rate in June in order to fight inflation. Tomorrow’s job reports will be essentially a week and half before the interest rate decision on the 14th of this month.

Short-term traders will likely bet on what will happen tomorrow and will continue to speculate in the coming two weeks regarding what the Federal Reserve will do. This while long-term players position their portfolios based on outlooks that can deal with the ‘dust’ in the air momentarily, knowing they should remain patient. Long-term investors do not always make money, but yesterday’s brief fireworks caused by the Federal Reserve officials weren’t quite as troubling for investors with a broader horizon who don’t flinch with fear from short-term murmurs.

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Calendar this Week includes Debt Ceiling, Earnings and Jobs

by with No Comment AMT MarketsBehavioral SentimentFeatured Highlights

Calendar this Week includes Debt Ceiling, Earnings and Jobs

Monday the 29th of May, Many banking holidays including in the U.S and U.K – traders choosing to participate in the markets should be aware that low transaction volumes can cause volatility due to imbalances. Be careful if you choose to trade on Monday.

Tuesday the 30th of May, U.S Debt Ceiling – talks and vote will be in focus. It appears an agreement may be in place, but financial institutions will certainly monitor the shenanigans from Washington, D.C. this week to see if a compromise can avert a crisis. Equity and Forex markets will respond to all developing news.

Tuesday the 30th of May, U.S CB Consumer Confidence – this survey of households in the States should be monitored. Spending remains strong in the U.S while manufacturing outlook appears nervous. The results may imply forward looking sentiment for U.S economy regarding consumption and could stir the markets slightly.

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EUR/USD Three Month Chart as of 28 May 2023

Wednesday the 31st of May, Germany Preliminary CPI – inflation remains troubling in Europe and the German economy is seen as the linchpin. The result from the Consumer Price Index could rattle the EUR/USD a bit.

Thursday the 1st of June, China Caixin Manufacturing PMI – this Purchasing Managers Index from China will give some insight regarding the nation’s economic sentiment and its results will offer some clues regarding global demand for goods. Last month’s number was viewed as slightly negative.

Thursday the 1st of June, U.S ISM Manufacturing PMI – last week’s manufacturing and Core Durable Goods Orders numbers from the U.S were negative. While growth via the Prelim GDP came in slightly better this past Thursday, economic outlook remains skittish. Last month’s ISM data result was negative and this month’s forecast is not optimistic either.

Friday the 2nd of June, U.S Average Hourly Earnings and Non-Farm Employment Change – the results will shake the broad marketplace. Inflation via wages in the U.S remains a concern for the U.S Federal Reserve and the job market has appeared on the surface to remain rather strong statistically. A strong number from the Average Hourly Earnings could keep the Fed nervous and another hike on the 14th of June within their mindset.

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USD/INR: Narrow Price Range as Nervous Sentiment Exhibited

by with No Comment AMT MarketsBehavioral SentimentFeatured Highlights

USD/INR: Narrow Price Range as Nervous Sentiment Exhibited

The USD/INR has delivered a rather narrow price range the past four days of trading as the currency pair awaits impetus from crucial U.S risk events.

The USD/INR is trading near the 82.7000 ratio as of this writing. While the currency pair over the past month has seen a rather incremental climb higher, the past handful of days has seen rather sideways price range emerge. Talk about Reserve Bank of India intervention has been discussed widely and this has caused speculative caution too. However, risk events from the U.S which will be delivered soon are also a catalyst for conservative trading in the USD/INR and broad Forex markets globally.

Trading Tip Regarding Bias that Forex Speculators should try to Avoid

A very important aspect for USD/INR traders to consider is that they should remove any bias they may feel personally regarding the Indian Rupee. Traders closely connected to the currency they are trading, particularly if they are citizens of the nation; tend to believe their national currency should always be stronger no matter the circumstances. This notion of bias does not always work out well for traders with a nationalist leaning.

The Indian Rupee is no different regarding its ability to maneuver against the USD like many other major currencies. While the Indian Rupee certainly has its own financial capabilities, the USD remains the dominant currency on the block and affects most outcomes. If a trader can remove their bias and love of their nation from their trading sentiment, this often makes it easier to have a more realistic viewpoint about potential price direction in the short-term and long-term. The Indian Rupee is an important global currency, one that will grow in stature, but traders should remember current circumstances too.

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USD/INR Five Day Chart as of 24th May 2023

U.S Debt Ceiling Concerns and the Upwards Drift of the USD/INR Causing Problems

Concerns are being voiced regarding the failure of U.S debt ceiling talks, the inability to not find an agreement in the U.S Congress is problematic. June 1st is supposedly the date the U.S government must reach a conclusion. The past week has seen signs from Democrats and Republicans acknowledging the importance of finding a settlement, but political rancor still is making a mess of the situation. Trading institutions are certainly not happy about the loud debate and could ‘punish’ financial assets more over the short-term until a debt ceiling compromise is reached.

The move higher in the USD/INR has likely caught many speculators by surprise the past month. However, the drift upwards has correlated to the broad Forex markets the past couple of weeks, this as the USD has turned stronger against many major currencies. The USD/INR essentially went from 82.1200 to its current price since the 15th of May. The Forex pair was trading near 81.6000 on the 4th of May. The temptation to sell the USD/INR the past couple of weeks has likely been strong as traders flirted with the notion technically that the currency would have to reignite its downwards path, but that clearly has not happened.

Today and the remainder of the week, the U.S has important risk events on the calendar. U.S Treasury Secretary Janet Yellen will be speaking and will certainly be asked to state her opinion on the debt ceiling talks. She will likely try to offer a neutral tone and not scare the financial markets. However, she can certainly be counted upon to say it is important to reach an agreement so the U.S can continue paying its financial obligations.

Perhaps more important than Treasury Yellen’s talk this afternoon, will be the U.S Federal Reserve’s FOMC Meeting Minutes publication later in the day. Financial institutions globally are nervous about the Fed’s interest rate outlook regarding its June Federal Funds Rate decision. Many analysts have predicted the U.S central bank will halt interest rate hikes and not increase on the 14th of June. Yet inflation data from the U.S remains problematic. Today’s FOMC Meeting Minutes text will provide insights regarding the Federal Reserve’s last meeting and give an inside look towards its leanings for a potential hike or pause.

USD/INR traders should also be aware that important Gross Domestic Product data will come tomorrow which will offer details regarding U.S growth. On Friday the U.S will release Core Personal Consumption Expenditure statistics and this will provide inflation results, and the outcome will certainly influence the U.S Federal Reserve’s June interest rate decision.

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AI Noise and Manipulation Feared as a Potential Threat

by with No Comment AI & Machine LearningBehavioral SentimentFeatured Highlights

AI Noise and Manipulation Feared as a Potential Threat

Yesterday’s AI generated graphic which claimed an explosion had happened around the Pentagon in Washington D.C. sent equity indices into a brief selloff mode. However, the graphic was soon proven to be false news as people in Washington confirmed there had been no explosion.

AI has the capacity to cause surprise storms if some people try to trigger manipulation in the financial world and elsewhere by using ‘false’ data and graphics. ‘Bad actors’ within A.I will likely be compared to ‘ransomware’ folks in the world of high-tech, and people and institutions will have to react quickly to distinguish between fact and fiction. The ability of AI to manipulate the markets yesterday is only the beginning and we need to be prepared for more stories like the Washington D.C fake.

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AI Mania is Building in the Media and People are Concerned about Wrong ‘Facts’

AI machine learning is coded by people and some of them are prone to bias, which raises the specter of bad input being used in systems that serve the public and clients in an ill-fated manner. Putting all of our trust into an AI system is wrong minded, just as we do not put all of our trust into Wikipedia information, and are aware facts should be checked on within a variety of sources.

Yesterday’s deep fake AI graphic highlights the need for financial markets to discern in a timely fashion attempts to manipulate narrative. Certainly some traders got hurt during yesterday’s reaction to the false report of an explosion in Washington. The dishonest graphic made instant news globally, and social media gadflies raced to report ‘the explosion’ and then had to quickly say they had been tricked. Data bias in AI is just as problematic and perhaps more dangerous, because what is presented as facts will always have to be given critical consideration by its users.

The prospect of bias producing arrogant AI systems ‘tools’ full of hubris as they assert ‘truth’ could develop and create self-perpetuating machines full of wrong details. This could happen as AI searches the internet for information and relies on data that is poor, and uses statistics from its own system posted elsewhere which could manifest falsehoods. The prospect of AI using its own potentially bad coding, and previous input distributed into other information networks in theory could lead to stubborn ecosystems which insists that they are correct, when they are actually not accurate.

Middle of the Road Results will make Users Choose Direction Sometimes

Public AI systems tend to frequently deliver ‘middle of the road’ result aggregates so they do not offend, leaving the users with mixed insights and without a firm stance. Perhaps if users understand this circumstance it can be perceived as a good outcome, because the person will have to do their own critical thinking while choosing direction. There is a danger that politically correct thinking which is coded into AI could lead to more vanilla and less flavor. The fear of offending people with facts may become a danger for AI, and coders will have to decide how to program searches as they produce objective and subjective outcomes.

Learning has changed as the internet has grown more robust with ‘facts’. Students often do not feel it is necessary to master particulars by reading a range of books. Instead they tend to rely on their mobile phones and laptops for their knowledge, avoiding in depth study on their own which would offer more insights and create critical thinking. This can and does lead to the use of ‘expertise’ produced by the internet which is incorrect.

Let’s also consider the notion that public use of artificial intelligence has won a large amount of publicity in the past year, but machine learning capabilities have in fact been used for a long time. The media has done a fairly good job of stirring the masses into a furor, and solid marketing has led to AI being the center of conversation the past handful of months.

AI is far from perfect because it is being built by flawed humans. In 1952 IBM via Arthur Samuel built a program allowing a computer to play checkers and learn how to improve its outcomes through ‘play’. In 1997 an IBM system called Deep Blue beat world chess champion Gary Kasparov in a six game match. The 45 year gap should be noted as we contemplate how AI will develop in the future.

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FOMC Meeting Minutes and Key Growth Data Coming this Week

by with No Comment AMT MarketsBehavioral SentimentFeatured Highlights

FOMC Meeting Minutes and Key Growth Data Coming this Week

Monday the 22nd of May, Japan Core Machinery Orders – which will likely have very little impact on the markets – not even the USD/JPY should react too much. Although it should be noted last month’s figure was negative and this month’s result is expecting a better outcome.

Monday the 22nd of May, E.U Consumer Confidence – forecast to produce a negative number, but this statistic doesn’t usually get much of a response in the financial markets unless there is a shocking result.

Tuesday the 23rd of May, E.U French and German Manufacturing and Services PMI, along with the broad E.U results – the manufacturing statistics from France and Germany are expected to come in slightly better than last month’s results but remain in negative territory.

Tuesday the 23rd of May, U.K Manufacturing and Services PMI – traders will watch these results after the bad GDP numbers from Britain almost two weeks ago.

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GBP/USD Three Month Chart as of 21st of May 2023

Tuesday the 23rd of May, U.S Flash Manufacturing and Services PMI – the reports could prove of interest and cause a bit of a tremor in the market, but unless there is a big surprise investors will remain cautious as they anticipate the next day’s potentially big risk events.

Wednesday the 24th of May, U.K Bank of England Governor Bailey – will be speaking at two events and could stir the GBP/USD with his comments on the British economy and inflation.

Wednesday the 24th of May, U.S Treasury Secretary Janet Yellen – will be speaking at a Wall Street Journal event, where she will be listened to for any comments on the ‘U.S debt ceiling” crisis. Yellen is a ‘trained’ speaker and she will try not to scare financial institutions who will have some leaders in attendance.

Wednesday the 24th of May, U.S FOMC Meeting Minutes – the report which will outline the U.S Federal Reserve’s thinking regarding its recent interest rate hike and what it might be considering regarding June could impact the marketplace. The report is published late in the day, but financial institutions will certainly wait for the publication and react. While the FOMC paper is sometimes considered ‘noise’, this report will be important because of the nervous sentiment which exists in markets like Forex and equity indices as they deal with a lack of clarity.

Thursday the 25th of May, U.S Preliminary Gross Domestic Product – the growth (or lack of growth) numbers from the States will be watched intently. A muted projected gain of 1.1% is anticipated by some analysts.

Thursday the 25th of May, U.S Preliminary GDP Price Index – this report will deliver insights regarding inflation in the U.S and should be given some attention by traders.

Friday the 26th of May, Core PCE Price Index – the inflation numbers should be watched. Any surprise above the anticipated 0.3% forecast could cause an affect in the financial markets.