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USD/JPY: Bank of Japan Actually Does its Job: Raises Rate

by with No Comment AMT MarketsBehavioral SentimentFeatured Highlights

USD/JPY: Bank of Japan Actually Does its Job: Raises Rate

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USD/JPY Five Day Chart as of 24th January 2025

The Bank of Japan actually raised its Policy Rate by 0.25 to 0.50% this morning. The move was done while the central bank stated the Japan economy is improving. The Bank of Japan also noted that the implications of U.S tariff policy are not completely known, thus it is acting on existing facts. The action by the BoJ created selling in the USD/JPY and is a healthy sign.

While the U.S Federal Reserve has taken on a cautious tone, President Trump has started to signal via rhetoric that he would like to see U.S interest rates lowered. The Fed and President Trump may find that they are in disagreement regarding mid-term policy and Forex traders shouldn’t be surprised if the debate escalates. The USD/JPY is trading near the 155.500 vicinity with fast price action at this moment. The ability to sustain values below the 156.000 level will be important technically if maintained. A fall below the 155.000 ratio may indicate more selling should be expected.

While financial institutions globally remain nervous about U.S economic policy regarding trade negotiations, Japan for the moment is out of the spotlight regarding tariff implications. The USD/JPY was trading near the 153.000 area on the 17th of December and it will be intriguing to see if large players use this level as a target in the coming days.

Retail traders should practice solid risk taking tactics and conservative leverage. The ability of the Bank of Japan to increase its interest rate, while the U.S Fed is in the midst of considering no changes to the Federal Funds Rate is a potentially solid sign for USD/JPY bearish attitudes.

Global Forex conditions remain choppy, but there has been some buying of the EUR/USD and GBP/USD produced recently. Next week talk of tariffs against China, Canada and Mexico will heighten, but traders need to understand the tough sounding talk from Trump is part of his negotiation tactics. While he certainly seems intent on carrying out his mandate, he will also be open to finding a way to create agreements.

Behavioral sentiment is in charge of Forex for the moment. Outlooks remain unclear, but USD centric strength may be traversing within the apex of its highs in many cases.

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Federal Reserve Expected to Sound Guardedly Cautious Tmrw

by with No Comment Behavioral SentimentCentral BanksFeatured Highlights

Federal Reserve Expected to Sound Guardedly Cautious Tmrw

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EUR/USD Five Day Chart as of 17th December 2024

Large traders are clearly bracing for the Fed tmrw as Forex produces volatile tight ranges. A rate cut is expected, but cautious Fed rhetoric will likely follow.

Forex has been a dangerous wagering ground for retail traders since the end of September. Financial institutions which clearly were betting on a more dovish Federal Reserve starting in early summer becoming a central theme into 2025 have been proven half right, this as the Fed has cut interest rates and is expected to do so tomorrow. However, being half right leaves the door open to also being half wrong, and financial institutions have reacted to this by becoming aggressive buyers of the USD since late September as perspectives have changed. The strong USD trend the past two months plus has hit some speculators hard.

The election of Donald Trump added a strong dose of impetus for USD buyers, this as the President-elect’s tough rhetoric regarding tariffs caused reactions and fear of unknown consequences. In the past couple of weeks more tranquil Forex trading has emerged and the USD finally started to give back some of its gains, yet the USD versus most major currencies, like the EUR/USD, remains within the the stronger elements of it range. While the Fed is expected to lower its Federal Funds Rate tomorrow by 0.25 to 4.50% tomorrow, traders need to remember this has been priced into Forex already. Tranquil trading the past two weeks indicates financial institutions have readjusted their outlooks to the incoming White House administration.

Now it is time to see if the U.S Federal Reserve has started to adjust their outlooks to what a Trump Presidency means. And financial institutions are keen to better understand the outlook of the U.S central bank. Inflation numbers while traversing lower are still rather stubborn and this may will not help the Fed’s mid-term mindset regarding interest rate cuts. GDP in the U.S has remained steady, and there is the potential the economy in the States will improve under Trump. Unemployment numbers while showing signs of weakness have not been terrible either. So while the Fed’s current Federal Funds Rate is higher than normal taking into consideration the historic average the past ten years, they still may not feel they have enough ability to cut interest rates too much more without sparking inflation.

A January rate cut seems unlikely at this time. If the Fed does sound guardedly cautious tomorrow, retail traders may see the USD get initially weaker due to the Fed rate cut, but then see a storm emerge and USD centric strength reappear all in the same day – perhaps in the span of minutes. Speculators need to understand that financial institutions have already baked tomorrow’s interest rate cut into the cake. So it isn’t the rate cut tomorrow that is important if it happens (if it doesn’t then that’s another story); it is what the Fed says and traders should expect them to be very cautious – because per the recent trading of the USD and a barometer it appears financial institutions are bracing for a more vigilant Fed.

Just like he has with many folks he views as uncompromising before, Donald Trump may begin to feel Federal Reserve Chairman Jerome Powell is not on his side regarding interest rate policy. If the Federal Reserve chooses to sound hesitant to cut interest rates in early 2025, it will be rather intriguing to see President-elect Trump’s response. Could a confrontation between the White House and Federal Reserve be in the cards over the next six months?

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AMT Top Ten Miscellaneous Votes for the 4th of November

by with No Comment AssetsBehavioral SentimentFeatured Highlights

AMT Top Ten Miscellaneous Votes for the 4th of November

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10. Priorities: Not to dismiss the execution of beloved Peanut the Squirrel by New York authorities recently, but lets reflect on the fact that this little fellow made international news while wars are raging, and nearly 300 people in the U.S are dying from drug overdoses per day. Social media is rather powerful.

9. NBC: Kamala Harris appeared on Saturday Night Live for roughly 90 seconds this weekend, this created criticism and questions about unfair airtime for the Vice President. SNL is lucky to get more than 5 million viewers per episode on average. To try and apologize for the potential trouble, NBC then gave Donald Trump free commercial airtime twice yesterday, once during a NASCAR race which on average attracts over 3 million viewers, and on a Sunday night NFL broadcast which averages sometimes up to 22 million viewers.

8. Saber-Rattling: There is a potential Iran is waiting on the outcome of the U.S vote for President before undertaking more military actions. Deciding if and how they are going to launch another attack on Israel, depending on who wins the U.S election because of the potential ramifications is likely part of their military strategy.

7. BTC/USD: Bitcoin as of this writing is trading near 68,500 USD. The digital asset continues to bounce around rather intriguing resistance. On Tuesday of last week Bitcoin traded near 73,500 momentarily, while the highs are certainly noteworthy, support for the speculative asset has been around 66,000 since the middle of October. There are reasons to suspect Bitcoin will display a large amount of volatility this week, particularly when the new U.S President is known.

6. Forex: As of this writing the USD/JPY is slightly below 152.000, the EUR/USD is around 1.09000, the GBP/USD is near 1.29650. The question is where these currency pairs and other major FX assets will be in three nights. Day traders dreaming of riding momentum via financial institutions need to understand the equilibrium of risk and reward. In other words, the same amount of money you can make, is likely the same amount of money you can lose. Risk management will be a life preserver for many speculators this week.

5. U.S. Data: This past Friday the Non-Farm Employment Change numbers came in wildly below the 106,000 jobs added estimate, the result of only 12,000 hired was rather shocking, but met with almost muted bewilderment. Also, the jobs numbers showed another revision lower from the previous month. Advanced GDP quarterly numbers, on Wednesday the 30th of October, also missed their estimate coming in with a 2.8% gain compared to anticipated growth of 3.0%. The U.S economy is still under stress.

4. Barometers: Risk adverse trading has been widespread the past handful of weeks. While gold has reached new highs and is slightly below the 2,750.00 mark for the moment, one month from now will be a telltale for gold and many assets. Since the end of September a number of narratives have been heard trying to explain the results seen across the board, but the simple answer is caution has entered the markets. U.S equity indices are still flirting with highs, even as they have suffered downturns in recent trading. WTI Crude Oil is near 71.50 USD per barrel. Gold, U.S equities and WTI Crude Oil will react to the outcome of the U.S election and serve as solid behavioral sentiment indicators in one month when compared to current prices.

3. Federal Reserve: If last week’s U.S economic data had been delivered without the fanfare of the U.S election approaching, Fed observers would likely be anticipating a dovish sounding FOMC Statement coming on the 7th of November. Instead, the USD has remained rather strong as risk adverse trading has been demonstrated in the broad markets. The Fed is certainly in a position to cut the Federal Funds Rate by another 0.25 basis points, some could even argue for another 0.50% cut. However, the Fed is likely to cut interest rates by a quarter of a point and sound rather cautious as they too read the landscape in the wake of the U.S voting results. Mid-term outlook from the Fed will be scrutinized this Thursday.

2: Nervousness: Day traders who decide to participate in the broad markets near-term may also enjoy walking outside and looking at approaching storms and dreaming about the fury about to come. Being anxious before and during large risk events when outcomes are unknown is a survival instinct. Speculators need to protect themselves over the next couple of days. Tranquil trading in all major assets may appear, but as tomorrow grows long assets will begin to percolate and by Wednesday almost all financial markets will be boiling. While this is certainly being hailed as the most important week of the year because of the U.S election and the Federal Reserve, it is also a very dangerous time to be trading. Those with limited funds may want to hunker down in a safe place and watch the markets create bedlam over the next 48 hours.

1. U.S Election: The vote is less than one day away when old standards are considered. However, more than 72 million votes have been cast early in the U.S already. That’s more than 45% of the total U.S vote during 2020, when 158,434,567 votes were counted. While the media bangs the drum regarding the incoming results tomorrow, it is important to note that many Americans and global observers are merely waiting for the final results to be announced. The end of the election campaign is nearly upon us, now financial institutions and traders await clarity. Wednesday the 6th of November is going to be an interesting day for the markets.

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AMT Top Ten Miscellaneous Concerns for the 6th of October

by with No Comment AMT MarketsBehavioral SentimentFeatured Highlights

AMT Top Ten Miscellaneous Concerns for the 6th of October

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10. Ya Gotta Believe: The New York Mets are finding ways to score in the late innings. Having won with last minute runs against the Atlanta Braves in the 8th and 9th innings early last week to save their season, hitting a home run to take the lead against the Brewers in the deciding game of the Wild Card in the 9th, and last night’s 5 runs in the 8th to take the lead in Game One against the Phillies in the Division Series has been rather remarkable. Game two between the Mets and Philadelphia will be played later today.

9. Information Technology: OpenAI’s value is now estimated around 157 billion USD, this after their latest round of investments garnered that includes both Nvidia and Microsoft funding. The search engine arms race will continue to get tougher and more competitive, but recent data released by Statcounter shows that Google still has over 90% of the U.S search engine traffic. While it has lost some ground in the search engine battles to upstarts statistically, Google remains dominant. Microsoft has made inroads with Bing, and Yahoo has also gained, but Google’s stranglehold via browser usage remains strong.

8. Helene Meets Milton: A pair of hurricanes – this if Milton fulfills forecasts and becomes a major storm – are not helping create easy days in the U.S Southeast, nor for the Biden administration. Criticism regarding a lack of government help has been heard in the aftermath of Helene and with another potential punch about to be delivered by Milton, U.S relief agencies like FEMA will certainly be pushed to the limit organizationally.

7. Oil Alerts: WTI Crude Oil went into the weekend close to 75.00 USD per barrel as nervousness increased about the potential of an attack on Iranian oil infrastructure. While many nations in the West do not purchase Iranian Crude Oil openly, the Iranian commodity is sold to China at nearly an 89% ratio. This allows oil from other suppliers like Saudi Arabia, the U.S and Mexico to sell elsewhere and the price of Crude Oil to remain relatively tame. However, if the supply of Iranian Crude Oil were suddenly to be crippled for any length of time, the price of the commodity from the other major suppliers would certainly go higher if expanded demand needs to be met. Speculators should pay attention to strike prices in the energy sectors via options trading in the future markets to understand potential vulnerabilities that large players may be anticipating.

6. Precious Metal: Gold prices remain within sight of record values, but below the apex values seen on the 26th of September. Risk sentiment, speculative forces and long-term investors are seemingly creating resilient support levels. Gold went into this weekend near the 2,653.00 USD ratio. Silver remains near 32.00 USD per ounce, which is where its price was traversing in May. Speculators intent on betting that silver will rise because nervous market conditions will create more demand need to be careful. A vast supply of silver exists in known mines globally, and producers simply need to extract more of the commodity to garner profits which is relatively easy. In other words, gold and silver do not correlate as much as some people believe.

5. Forex Chaos: Day traders of USDJPY, NZDUSD, EURUSD and a slew of other major currency pairs were taken on a wild ride last week as USD centric strength surged and fragile conditions in global markets grew. The coming days will remain difficult for FX retail traders as they face a whirlwind of threats. Technical and fundamental traders are being hit by shifting winds generating via a myriad of worries. Speculators without deep pockets are advised to remain cautious in the coming days because trading dynamics are not likely to ease. Yes, there will be price velocity which allows for quick profits, but those who are willing to bet on the prospects of fantastic gains must also accept the dangerous proposition that wildly expensive losses if they are on the wrong side of a trade are equally possible. Brokers will certainly welcome their clients with open arms this coming week because the volatility may entice many with the potential of getting rich. However, brokers will not tell you about the poor house on the other side of the street.

4. Unscripted: There are a little more than four weeks before the 2024 U.S elections on the 5th of November. Trump appears to be gaining momentum in polls, but certainly remains vulnerable per his ability to speak without a script and create verbal firestorms. Kamala Harris ran into problems recently with a suspected malfunctioning teleprompter and her inability to escape repeating the words ’32 days’. While the two candidates battle for voter supremacy, questions persists about the current leadership from the White House and who exactly is running the show.

3. Noisy Data: The Federal Reserve and economic data remain concerns. This Thursday the Consumer Price Index data will be released. If the inflation statistics can come in below expectations this may soothe financial institutions who have leaned into the notion the Fed needs to remain aggressive in November. Another interest rate has been expected, but some are nervous the Fed may not be able to cut as fully as wished. However, day traders need to also understand politics are playing a role in the bombastic soundbites being generated by the media, this as they try to deliver messaging which reflect their viewpoints. If inflation numbers remain under control the mid-term outlook continues to point towards more interest rate cuts. While the U.S jobs numbers on Friday were better than expected it should be noted revisions downward were seen again. There is one more Non-Farm Employment Change report before the election, by then it will probably not have an impact on potential voters, but its affect on the Fed will certainly be felt.

2. End Game: As the Iranian and Israel conflict escalates and threatens to become a dark spiral, some are still hoping for an avenue which will allow normality to return. That appears to be wishful thinking for the moment. Reports, perhaps paranoid, regarding an earthquake in Iran yesterday with a magnitude 4.5 seismic rating which was 48 kilometers from Semnan was noted by the USGS. The reason why it is potentially scary notion is because some are questioning if this was a nuclear test being conducted by Iran.

1. Risk Adverse: A trifecta of nervous behavioral sentiment is shadowing the financial markets via Fed outlook, Middle East tensions, and the approaching U.S election. Unfortunately none of these components are likely to disappear soon and in fact may grow in stature as outlooks potentially create more anxiousness. Safe havens in the USD, gold and U.S Treasuries may find they deliver some calm for those that are nervous. However, it must be noted that U.S equity indices gained nicely late last week after gains on Friday. The Dow 30 and S&P 500 remain near apexes and the Nasdaq Composite is within sight of highs. In other words, for all the talk about dark days, financial markets and investors are still active.

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Nervous? Central Banks Cautious, FX and Asset Equilibrium

by with No Comment AssetsBehavioral SentimentFeatured Highlights

Nervous? Central Banks Cautious, FX and Asset Equilibrium

Sometimes when looking for ideas regarding a risk analysis article it is difficult to find a timely subject. Exaggeration is often used to grab attention. This week and next will not be one of those times. Equities, Forex and commodities have produced nervous results since last Monday. The broad markets appear to be in search of equilibrium, but price velocity while higher than normal hasn’t produced a volcanic surge of pain. Financial institutions were presented less than inspiring jobs data this past Friday and day traders hopefully had their risk management working. Everyone will need to be paying attention this week too.

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Gold One Month Chart as of 9th Sept. 2024

Gold has hovered around the 2,500.00 level and while it certainly is a short-term speculative asset for day traders, the precious metal also serves as distinct barometer of behavioral sentiment and long-term guidance regarding inflation. Recent economic data has created concerns in financial institutions about the potential for a stronger than anticipated U.S downturn. The volatility and sell off in equity indices last week is a clear sign investors would like the Federal Reserve to be more aggressively dovish.

This coming week is packed with a variety of risk events which will keep all market participants engaged. Long-term investors may feel calm as they rely on their outlooks which extend over a handful of years, but anyone who needs a firm grasp on short and mid-term viewpoints might not be comfortable. It is important not to cry wolf too often, but based on the trading results seen the past week it is worthwhile to point to the turbulent outcomes and issue a warning that more volatility could develop.

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Nasdaq 100 One Month Chart as of 9th of Sept. 2024

Some analysts may apply the thought that what we have seen was profit taking, and this can certainly be debated. The coming two weeks have plenty of noteworthy events on the calendar. Besides the listed risk highlights noted below, the Fed will release its FOMC Statement on Wednesday the 18th, the BoE will follow on the 19th and not to be outdone the Bank of Japan will step onto center stage on Friday the 20th of September.

While long-term investors likely believe all variables will return to known price realms and that central banks sooner or later will fall into their proper places regarding monetary policy, day traders who are gambling on short-term momentum must try to figure out where behavioral sentiment is leaning. One of the ways speculators without deep pockets can put the odds in their favor concerning potential profits, is to make sure they are practicing rock solid risk management and not stepping into Forex trades, equity indices via CFDs wagers, and commodities bets when they are displaying rough conditions without being prepared.

Monday, 9th of Sept., China Consumer and Producer Price Index – the inflation reports from China both came in below their estimates earlier today. While some may believe that less inflation than predicted is a good thing, it isn’t when the economy is suffering from deflationary pressures. Lackluster spending from consumers in China continues to highlight negative sentiment about prospects for growth. The USD/CNY is near the 7.1125 ratio as of this writing.

Tuesday, 10th of Sept., U.S Presidential Debate – while not an economic data event, investors might want to pay attention to the answers given by Vice President Kamala Harris and former President Donald Trump. The race for the White House appears to be close according to various polling. It could prove interesting for financial institutions if Harris is questioned about her ideas regarding taxing unrealized capital gains.

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USD Cash Index One Month Chart as of 9th Sept. 2024

Wednesday, 11th of Sept., U.S Consumer Price Index data – the inflation reports will certainly get the attention of financial institutions. If the annual CPI report comes in weaker than the previous outcome, this could spark more USD centric weakness in Forex. All asset classes will react to the inflation numbers because they are likely to play a major part in the Fed’s FOMC decision in one week’s time. The USD Cash Index is still lingering near lows, but for it too resume a more bearish trajectory, financial institutions will need to believe the Federal Reserve is going to become increasingly dovish.

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EUR/USD One Month Chart as of 9th Sept. 2024

Thursday, 12th of Sept., European Central Bank Main Refinancing Rate – The ECB is definitely going to cut its prime borrowing interest rate, the question is how much of a haircut they are going to provide. A 0.25% cut has certainly been traded into the EUR/USD, but many financial institutions believe there is a possibility to see a 0.50% basis cut. Can the ECB and Christine Legarde be aggressive? The European Union remains under recessionary pressures and inflation data is starting to show signs of erosion. The amount of the interest rate cut from the ECB will also be a telltale sign regarding what will happen via the Federal Reserve on the 18th of September. The EUR/USD will react to the European Central Bank’s decision, and global assets in far off places may react too because behavioral sentiment among investors may shift according to the rhetoric provided. Prediction: The ECB will stay cautious and cut by 0.25%, while saying a November rate cut is likely if economic data remains under pressure. Having said the above, the ECB should cut by 0.50% this Thursday, if they do not – financial institutions will not be pleased unless ECB President Legarde sounds very dovish during her Press Conference.

Thursday, 12th of Sept., U.S Producer Price Index – more inflation data from the U.S will provide investors an other opportunity to glance into the Fed’s looking glass. But if these PPI numbers meet or are near the anticipated results, financial institutions may be reacting to the ECB’s rate decision more because they might believe it is a better clue regarding the Fed’s Federal Funds Rate decision which will come in a handful of days.

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USD/JPY One Month Chart as of 9th Sept. 2024

Friday, 13th of Sept., Japan Revised Industrial Production – this number may not get much attention, but because the Bank of Japan will release its Policy Rate on the 20th, the outcome could impact existing sentiment in the USD/JPY. The Japanese Yen has continued its bearish trajectory and traders who are wagering on more downside should not bet blindly on selling positions because intraday trading remains very choppy. The USD/JPY is now touching values last seen in a sustained manner in early January of 2024, lower values were seen in December 2023, and lower ratios that traversed the 138.000 realm and proved choppy occurred in the spring of 2023.

Saturday, 14th of Sept., China New Home Prices, Retail Sales, Industrial Production – this parade of data from the nation will be important. Foreign investors remain concerned about China’s economic prospects. The deflationary winds that have been blowing in the Asian giant have been well documented. The results from these three reports are expected to be lackluster.

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AMT Top Ten Miscellaneous Rays of Light for 23rd of August

by with No Comment AMT MarketsArtificial IntelligenceFeatured Highlights

AMT Top Ten Miscellaneous Rays of Light for 23rd of August

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10. Word of the Day: Like crepuscular animals which are active during twilight, large market players are ruminating as their summer hiatus draws to an end over the next week and a half. Plans for coming hunts are being formulated as leisure concludes for financial institutions preparing to work in the shadows.

9. Scrolling Failures: Lack of solid results on search engines are becoming a growing annoyance. Is it just us? An abundance of poor information via defined searches on the internet and finding what is sought is becoming increasingly problematic. Is AI being allowed to do too much while still too dumb? AI doesn’t know when it is wrong. Competitors to Google and others are sought.

8. How Dare Us: The postponement of imposed dates regarding energy policy changes are multiplying. The end for the classical use of oil, coal and nuclear is not near. Efficient power is evolving, but this will have to include ‘antique’ generation and grids. The demand for electric vehicles are being confronted with declining sales via U.S consumers. Tangible technology needs precise planning, not apocalyptic rhetoric which tries to scare people.

7. Middle East Calm: The storm is being limited within a tea cup for the moment. The potential for a dangerous boiling painful mess still exists. ‘Serenity now’ remains a mantra for those who need to pay attention as chagrin and anxiousness mix.

6. Fed Retreat: The FOMC Meeting Minutes released this week showed some Fed members remained cautious, while others banged the drum louder regarding interest rate cuts. However, a Fed Funds Rate reduction is almost a 100% certainty for the 18th of September. The question now is what the Fed will do in November. Fed Chairman Powell and a slew of other renowned global central bankers will speak today and tomorrow at the Jackson Hole Symposium. Financial institutions largely believe they know what is going to be said, but comments from Bank of Japan and Brazilian leadership could prove to be informative and entertaining for central bank nerds. Monday could be volatile for USD/BRL traders.

5. VIX: The CBOE’s Volatility Index climbed to the 56 vicinity on the 5th of August as panic grew via widespread overreactions to hyperbole ripping through the markets. The fear gauge is near the 17.55 ratio as of this writing. Market calm has resumed across the board as financial institutions and day traders have been able to achieve a pleasant tone again. Traders who use the VIX as a template regarding the potential of risks suddenly cascading into assets should keep their eyes on the index, which went to a low around the 14.45 mark on Monday. Yet, the slight incremental climb the past few days could be coming from folks still speculating on volatility which may not develop near-term.

4. Barometers: Gold is lingering slightly below 2,500.00 for the moment, this after having achieved a record high on Tuesday when it touched the 2532.00 apex. WTI Crude Oil is near 74.00 USD per barrel and is maintaining a polite value range. Speculatively, Cocoa is again above 9,000 USD per ton and Bitcoin has fought its way above 61,000 this morning. Risk appetite remains stable for the moment.

3. Forex: USD/JPY, EUR/USD, even the USD/ZAR have been able to hold onto their recent trends as USD centric weakness remains viable. Traders who were looking for huge moves in FX this week have likely been disappointed. Retail speculators need to understand financial institutions have been positioning for a weaker USD since the tail end of July. Market players may be quite pleased regarding current Forex equilibrium, which may allow technical traders the ability to take advantage of existing behavioral sentiment, this as reversals flourish and the next big wave of impetus is awaited. Next Thursday’s U.S Preliminary GDP numbers may deliver some noise.

2. Cassandras: Market experts who proclaimed a long-term stock market crash in early August have crawled back into their caves to take cover and percolate their next fear mongering tactics. This after the latest round of predicted catastrophes have vanished. While the major U.S stock indices are not at record highs, they have recovered plenty of lost ground and appear ready for more days in the sun.

1. Political Winds: The curtain closed on the Democratic National Convention in Chicago last night without a serious hiccup. Kamala Harris and Donald Trump now enter a crucial phase of campaigning, and will get plenty of attention as they go into attack mode. The next big event for Harris and Trump will be their televised debate on the 10th of September. Will the outcome prove to be a devastating storm for one of the candidates?

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Central Banks and Summer Storms for Traders as Actors Change

by with No Comment AMT MarketsAssetsFeatured Highlights

Central Banks and Summer Storms for Traders as Actors Change

Yesterday’s rather quiet start to the week regarding economic data allowed for traders to look over the financial markets before the onslaught of central bank mayhem hits on Wednesday. The Forex market has seen rather interesting results the past few weeks as behavioral sentiment has clearly shifted (for seemingly the tenth or so time) towards a more dovish outlook regarding the U.S Federal Reserve. Expect stormy waters this week in currency markets.

The usual lazy summer of the markets has had to deal with political winds in June and July as Britain, France and the U.S have delivered rather intriguing mischief via election results and changes of leadership. However, the world has survived and this is a lesson new day traders need to understand quickly. While tomorrow may not be known, experienced market players have seen these dramas before, they might be new episodes with different actors, but the theme remains the same for veterans of the markets.

Although powers shift, a focus on outlooks is often what matters. People and institutions are in pursuit of profit. This week central banks will be heard from and the rhetoric delivered will affect assets.

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GBP/USD Five Day Chart on the 30th of July 2024

Monday, 29th July, U.K assorted data – Mortgage Approvals, Net Lending to Individuals and M4 Money Supply data was released to various fanfare yesterday and did not shake the GBP/USD dramatically. However, making more important news perhaps was the public statement by Rachel Reeves, who is the new Chancellor of the Exchequer, saying there is an existing 22 GBP billion ‘black hole’ within the U.K government finances that was not accounted for by the Conservatives. In other words the blame game between the new Labour bosses and now banished Tories has begun. While the GBP/USD dropped a bit on this development, it did not crush the currency pair as it returned to the lower depths of its higher three month technical chart.

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GBP/USD Three Month Chart on the 30th of July 2024

Tuesday, 30th July, E.U Gross Domestic Product – a variety of GDP reports came from across the continent this morning, including France which recorded a slight gain of 0.3% and the German numbers which recorded a minus -0.1% result. The numbers show the E.U remains in trouble for the larger economic nations. Spain did show an improvement, but it is nothing that should start parades of celebration.

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EUR/USD One Month Chart on the 30th of July 2024

Tuesday, 30th July, U.S CB Consumer Confidence – this sentiment report for the U.S consumers will get some notice today, but financial institutions are largely braced for tomorrow’s U.S Fed rhetoric. The trading of Forex, gold, equities and their indices will likely remain choppy today as folks take on cautious tones.

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Wednesday, 31st July, Bank of Japan Policy Rate – and here we go ladies and gentlemen. The BoJ can never be counted on to do what is logical in the eyes of many analysts outside of the central bank’s inner circle. Japan has pursued a soft devaluation of the Yen this year. The Bank of Japan should consider an interest rate hike to the 0.20% level from the 0.10% ratio, but will they? Speculators need to be extra careful with the USD/JPY over the next 30 hours. If the BoJ somehow decides to raise and the U.S Fed makes it known they will consider more than one interest rate cut this calendar year, the USD/JPY could see swift price velocity lower. Perhaps the BoJ will stay muted and cautious, allowing for the currency pair to go higher again. However, there have been some signs large players suspect a slight interest rate hike could come tomorrow from the Bank of Japan. Day traders are advised to be extraordinarily careful.

Wednesday, 31st July, U.S Federal Reserve FOMC Statement – the Fed is not going to lower their Federal Funds Rate during this meeting. But what they are expected to do via their FOMC policy rhetoric is to say a cut is likely in September considering the current economic data, and that if inflation continues to show signs of erosion another cut will be considered in November. Recent economic data in the U.S has been mixed. GDP numbers jumped higher, but importantly the GDP Price Index was lower than anticipated last Thursday, and the PCE Price Index on last Friday matched expectations (and importantly didn’t rise). If the Fed sounds optimistic about an interest rate cut in September this will match the expectations of many financial institutions. If they sound cautious about a possible second rate cut later this year, this could cause a hiccup for those with weaker USD centric outlooks over the mid-term.

Thursday, 1st August, U.K Bank of England Official Bank Rate – the BoE is expected to lower the borrowing rate by 0.25% to 5.00%. The GBP/USD has been trading higher in July based on a cocktail of a weaker USD stance. There is plenty of reason to believe the less than sterling economic data from the U.K will help deliver the lower interest rate from the BoE this week. The BoE is likely to have spoken with the Fed and ECB to correlate a gameplan. The Bank of England Monetary Policy Summary should be given attention. GBP/USD traders will have responded to the Fed’s outlook from Wednesday, opening the door to plenty of volatility after the BoE speaks. Meaning that Forex speculators should be extremely cautious if they are pursuing short-term wagers which will be akin to surfing a violent storm.

Friday, 2nd August, U.S Non-Farm Employment Change and Average Hourly Earnings – this data will be anti-climatic. The results from Wednesday through Thursday from the central banks will take a lot of the bang out of these reports. The earnings report should be given some attention, but the financial markets will likely be trading on behavioral sentiment generated over the prior days.

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U.S Growth (Lack of it) and Inflation Report Key to End of Week

by with No Comment AMT MarketsBehavioral SentimentFeatured Highlights

U.S Growth (Lack of it) and Inflation Report Key to End of Week

Day traders may believe they are being confronted by another wave of data and news which is going to make their endeavors more difficult. The announcement by Joe Biden that he will not run for re-election in November however was not a major surprise. The handwriting on the proverbial wall has been clear for nearly a month that Biden was under immense pressure to step aside. It appears Kamala Harris will get the Democratic nomination per reports that delegates are starting to pledge their loyalty.

Financial markets which may have been interpreted yesterday as cautious due to the Biden and Harris news may actually not have had a tremendous effect. It is quite possible investors and traders have started to position their assets for a Trump victory. Love him or hate him, the polling numbers appear to suggest the Republicans are potentially going to win big in November. Except the word November is the key, there are still over 100 days for things to go wrong for the Republicans. Nothing is settled and day traders need to understand that a lot can change. Economic data from the U.S will be plentiful in the coming days. Also, China has lowered key borrowing costs in an effort to try and fuel spending in the nation as consumers remain hesitant and a sign the nation is battling a troubling economy.

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EUR/USD Five Day Chart on the 23rd July 2024

Traders who have been trying their hand in Forex have seen the EUR/USD and GBP/USD sink in value via short-term price changes. While retail speculators may look at the moves over the past day as vicious, they should note that since Wednesday of last week the USD has been stronger in Forex. It is doubtful financial institutions were betting on Biden to drop out of the race last week or for China to lower their interest rates. What in fact might be playing out is the possibility that most financial institutions believe the USD had been oversold and now want to position for the economic statistics coming this week. Results this week will help motivate notions the Federal Reserve will have to become dovish in September and proclaim a weaker U.S economic outlook through the end of this year, or for more idle chatter as the Fed undertakes a soundtrack which pleads for caution if inflation numbers remain stubborn.

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USD/CNY One Year Chart on the 23rd July 2024

Monday, 22nd July, China One and Five Year Loan Prime Rates – borrowing costs were cut officially yesterday. The interest rate reductions of 0.10% were small, but China hopes this change helps propel stimulus for its struggling economy. It may not. But before folks sell China short, the nation continues to be a dynamic economic and political force and this power is not going to abate soon. The USD/CNY has incrementally risen since the start of 2024, but it is still below the higher values seen from August into early November of last year. It seems possible the Chinese government will continue to allow the Yuan to lose value in an attempt to reignite export.

Tuesday, 23rd July, U.S Existing Home Sales – the past few months have seen a decrease in the housing data. However, last month’s outcome was stronger than anticipated. These numbers tend to get a lot of fanfare, because they are a solid barometer of U.S outlook regarding interest rates and potential inflation. If folks feel like they should not sell their homes because their current payments are cheaper via their existing mortgages compared to taking on higher costs which are being offered now due to more expensive interest rates, this causes existing home sales to often fall. This because those with homes are not looking to move and simply want to stay in place, also making the potential of finding a house for folks who want to enter the market a more expensive proposition. Again, the outcome of this data is more of a barometer and doesn’t tend to affect financial markets like equities or Forex too much.

Wednesday, 24th July, Europe Manufacturing and Services PMI – E.U nations and the U.K will publish their readings. Last week the ECB kept their key lending rate in place. Political questions still linger in France which is more of a thorn in the side of the E.U than the potential outcome of these data reports. France and Germany expect better results from the Manufacturing and Services numbers. The broad E.U estimate also is optimistic about better results. Great Britain too is expecting better numbers. However, Forex traders will likely be more focused on coming U.S data and stay in a USD centric mindset the remainder of the week when making their forward considerations. And it should be noted the E.U and U.K economies are still struggling.

Wednesday, 24th July, U.S Manufacturing and Services PMI – these reports will be important certainly regarding the sentiment of Purchasing Managers, but the index reading may not be the biggest thing on investors minds. U.S data statistics on Thursday and Friday will be the outcomes that are being prepared for regarding potential affects. The Manufacturing number is expected to match the previous result, the Services figure is anticipated to be weaker.

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U.S Dollar Index Six Month Chart on the 23rd July 2024

Thursday, 25th July, U.S Advance GDP and Advance GDP Price Index – last month’s growth number came in below expectations, this GDP number is anticipated to produce slightly better numbers. The U.S economy via data has been showing signs of slowing the past few months and this Gross Domestic Product number is going to get a lot of airplay not only because of investors who will use it as an outlook because they believe the Fed will be paying attention, but also because the GDP result will start to become a political football for the Republicans and Democrats. If the growth numbers are weaker than anticipated this could propel USD centric weakness. However, day traders need to keep their eyes on the GDP Price Index stats too – if the inflation report comes in below expectations this could also fuel USD selling. Day traders need to pay attention to the USD Index charts later this week. While the short-term has seen some bullishness, the range of the USD remains near important support levels via a six month perspective and as the Fed comes under more scrutiny, traders should expect more tests in the near-term.

Friday, 26th July, U.S Core PCE Price Index – last month’s report matched expectations. If this inflation number meets the anticipated outcome, or comes in below the estimate this could sustain USD centric bearish momentum into the weekend and early next week.

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Forex Debate and Coming Impetus this Week for Speculators

by with No Comment AMT MarketsEconomic CalendarFeatured Highlights

Forex Debate and Coming Impetus this Week for Speculators

In many respects the broad markets feel as if they are waiting for big news and this may not be delivered as wanted. Yes, the debate between Biden and Trump this Thursday will get attention, but unless there is a major television moment the outcome is not likely going to give a final affirmation regarding the U.S election results in November. Some people may be counting on Biden to literally misstep, and for Trump to say something incredibly outlandish, but it is also possible the debate disappoints even as entertainment. Perhaps the Presidential debate will deliver sideways action like the broad markets have the past week, leaving us with a desire for more.

Financial institutions will look at U.S growth numbers this coming Thursday certainly, and also keep their eyes on the upcoming Sunday vote in France on the 30th which might prove rather remarkable. The EUR/USD is certainly back within its lower depths when a six month chart is inspected, and traders will react to France’s election this weekend, but it should be remembered the second and vital round of voting will not occur until the 7th of July. Until then, reactionary and precautionary results in the EUR/USD may produce headaches. The EUR does look oversold, but timeframes and the ability to hold a position may prove tough for short-term traders hoping for a wave of optimism to suddenly take hold and create a strong trend.

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EUR/USD Six Month Chart on the 25th of June 2024

Not to be outdone the U.K is gaining plenty of attention because of its election on the 4th of July, but in this case it seems more like a coronation for the Labour Party and only a question about how devastating the carnage will be for the Tories. Financial institutions may have already factored in their perceived outlooks regarding the U.K vote into the GBP/USD. The currency pair will certainly react to the British election results, but financial institutions may have less to fear regarding sudden volatility of the British Pound, compared to the EUR/USD which could still have days ahead when it doesn’t trade in a USD correlated manner due to E.U political unknowns.

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Monday, 24th of June, Germany Ifo Business Climate – the reading produced a drop to 88.6, missing the estimate of 89.4. Germany economic pressures remain negative and this may keep the idea alive that the ECB should be considering another interest rate cut. However, because the European Central Bank cut its Main Refinancing Rate recently and the U.S Fed continues to look rather neutral, it seems unlikely the ECB will decide to suddenly become the only proactive central bank around over the mid-term. Meaning, the ECB may stay conservative and want to wait on others to join the interest rate cut party, this before they create more unbalanced carry trade opportunities which could lower the value of the EUR/USD too much.

Tuesday, 25th of June, U.S CB Consumer Confidence – the reading will certainly be watched by investors, but will it create bedlam if there is surprise for equities or Forex? The likely answer is no. Behavioral sentiment has become flustered and shifted over the past handful of months, and this will create some caution no matter what today’s consumer reading says. Large financial institutions will probably stay geared to other upcoming data which will be considered more important.

Wednesday, 26th of June, U.S New Home Sales – a slight uptick in the amount of housing sales is expected. However, because of higher interest rates in the U.S via the cost of mortgages this number is likely to remain rather muted. For interested traders a look at the previous revisions of the New Home Sales data will prove interesting. The outcome of this reading should be treated with a bit of skepticism because it may be changed down the road. Unless there is a huge surprise the impact of this report may be rather calm, no matter what media narrative dictates.

Thursday, 27th of June, U.K Bank of England Governor – Andrew Bailey will speak about the Financial Stability Report. Bailey is certain to add some insights regarding the BoE’s neutral policy stance taken last week regarding interest rates, but more hints regarding potential cuts later this summer and possibly late this year again may be given. Economic data from the U.K remains troubling. The Bank of England may want to remain cautious because of inflation concerns, but financial institutions would like to see a more proactive dovish stance. Bailey might also talk about the potential affects from the U.K election, but he will have to be careful to make sure it doesn’t sound like he is taking a political side.

Thursday, 27th of June, U.S Gross Domestic Product and GDP Price Index – these two reports will impact the financial markets. The growth and inflation data will be examined by all financial institutions and generate trading reactions. The GDP growth number is expected to come at 1.4%, which is slightly higher than the previous report which posted a 1.3% result. Any number below 2.0% growth will be considered as lackluster by most financial analysts. Traders will then turn their attention to the inflation results which are supposed to match the 3.0% gain from the last Price Index report. If this number can somehow come in below expectations, this could propel some weakness in the USD. However, traders should be careful and remember U.S economic data the past handful of months has produced surprises which have created dangerous and choppy Forex conditions.

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USD/JPY Five Day Chart on the 25th of June 2024

Friday, 28th of June, Japan Tokyo Core CPI – a gain of 2.0% is anticipated. The USD/JPY should be watched carefully. Early this Monday the BoJ likely tried an intervention in the Japanese Yen, but the USD/JPY only had a momentary swift selloff. As of this writing (Tuesday the 25th of June) the USD/JPY is trading near the 159.345 ratio which is very high when historical comparisons are considered. If the inflation number comes in with a 2.0% result or higher this could set off fireworks in the USD/JPY. Financial institutions clearly believe the BoJ should raise their interest rate by at least 0.25%, but the Japanese government appears keen on trying to keep the Japanese Yen weak to help GDP via exports from the nation. The Bank of Japan needs to be given attention. Speculators and the BoJ are battling against each other.

Friday, 28th of June, U.S Core PCE Price Index – the Personal Consumer Expenditures inflation report is forecasted to produce a gain of only 0.1% compared to the previous result of 0.2%. If the PCE Price Index does turn in the anticipated result, and the GDP Price Index from Thursday met expectations or came in lower, this could cause more speculative selling of the USD. However, if the inflation results come in stronger than expected Forex traders could see bullish USD buying which again challenges sellers abruptly.

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AMT Top Ten Miscellaneous Complexities for the 14th of June

by with No Comment Behavioral SentimentCentral BanksFeatured Highlights

AMT Top Ten Miscellaneous Complexities for the 14th of June

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10. International Tech Research: Universities and institutions around the world are developing innovative systems to deliver a quantum future. Cal-Berkeley, MIT, Cambridge, the Barcelona Supercomputing Center, the Institut Polytechnique de Paris, and the Cleveland Clinic are only a few of the places in the ‘West’ that investors should monitor for developments, Asia is also very focused on high speed computing.

9. Musk Schedule: The tech mogul has had a busy week. His Tesla stock option compensation package was approved by shareholders yesterday. In 2018 Musk negotiated a package with Tesla that included a massive compensation agreement via stock options if he met valuation targets over a 10 year period. He achieved the valuation goals within only a few years. Musk also formally dropped his lawsuit against OpenAI and Sam Altman in recent days, this after the enterprise released emails showing Musk backed OpenAI’s pursuit of profits in the past. Around 2015 Musk invested about 45 million USD into OpenAI.

8. Muted Data: The U.S Consumer Sentiment and Inflation Expectations numbers will be released today via the University of Michigan. However these numbers are likely not going to impact financial assets in the U.S. The Fed and CPI results from the States published this past Wednesday will dominate the investing narrative. Searching for meaning regarding why assets move in a particular direction is the media’s job, but perceived realities always remain open to complex interpretations as real time prices are exhibited. Day traders need to be cautious of revisionist history.

7. Petrol Dollar: Saudi Arabia has not reconfirmed its commitment to transact Crude Oil exports with USD. The formal agreement reached in 1974 has expired. Forex traders should not panic about this development yet. Speculators should note that Saudi Arabia is likely to still demand most of their payments in USD since they can count on the valuation of the currency to remain relatively tranquil compared to other instruments like China’s Yuan. What the absence of an agreement between the U.S and Saudi Arabia does indicate unfortunately, is that U.S foreign policy continues to look vulnerable.

6. Optimism: A South Africa government coalition agreement could be formalized soon and create a better economic outlook for the nation. While geo-political concerns remain, and the ANC is not a 100% friendly philosophical match with the Democratic Alliance and some of the other political parties which will be involved, it appears a working agreement can be reached. The question in South Africa is if transparent fiscal and anti-corruption mandates can be accomplished while diverse political outlooks will be heard and demanded from different factions. For the moment, financial institutions seem to like what they are hearing and the USD/ZAR has edged lower in the past week.

5. Highly Valued: Gold is over 2300.00, BTC/USD is near 67,000, and Cocoa is within sight of 11,000. Speculative large players remain active, and traders looking to take advantage of short and near-term fluctuations in these commodities need to remain vigilant. Cocoa, while extremely dangerous to trade, has outperformed gold and Bitcoin recently. Investors in gold think long-term, and Bitcoin influencers preach ‘hold on for dear life’ as non-believers shake their heads in disagreement. However, daily gyrations influenced by large players can still wreck havoc on those looking for short-term wagering opportunities.

4. Zombie Fed: Cautiously optimistic undertones were served from Jerome Powell as expected this past Wednesday, but intriguingly Powell admitted some government data remains open for interpretation, particularly the suspiciously strong headline jobs numbers which are being questioned. The Fed now says its outlook is for one interest rate cut this year. Financial institutions likely believe the Fed remains too reactive. The U.S GDP has shown signs of struggling, and CPI numbers have begun to erode. Crude Oil prices remain under 80.00 USD. However, the Fed seems intent on still pumping the brakes in order to kill off inflation via the high Federal Funds Rate. It would help if the U.S govt stopped spending cash recklessly, and the U.S Treasury stopped printing money.

3. Equities: U.S political concerns as the election approaches will create more analysis paralysis than normal. Short-term behavioral sentiment may sound nervous, but a bullish trend and risk appetite remain evident. Day traders may be able to take advantage of technical trading via support and resistance in CFDs, but fundamentally financial institutions appear inclined to count on equity indices achieving record highs.

2. 157.000 – 158.000: Today’s BoJ decision to remain stuck in the mud has created more financial institutional dismay in some quarters, and the the Japanese Yen will be punished occasionally against the USD. But the folks at the BoJ are not stupid and likely anticipated the USD/JPY move higher which ensued. The BoJ is obviously preserving its ‘soft devaluation’ of the JPY in order to maintain an export advantage for the U.S and European consumer markets. The question is if and when the BoJ will buy billions worth of JPY in order to punish bullish USD/JPY Forex speculators occasionally.

1. Volatile Near-Term: EUR/USD and GBP/USD price action has been boiling. France and the U.K have crucial elections in the coming weeks, after policies in both nations have led to a lack of confidence in the ruling governments. The ruckus outcome from the E.U Parliament voting have created an intriguing complication. Oddly enough, the U.K may be the left’s torch bearer in the coming year, while other European nations drift towards the right. Can centrists create a middle ground? Volatility and the search for equilibrium via financial institutions may create a lot of opportunities for Forex day traders in the coming weeks in the EUR/USD and GBP/USD as reversals and trends are sought.

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Forex Noise: Influences from Suspicious Data and Rhetoric

by with No Comment AMT MarketsAssetsFeatured Highlights

Forex Noise: Influences from Suspicious Data and Rhetoric

Yesterday’s GDP numbers from Japan served as evidence regarding things to be considered this week regarding the rather complex web central banks and governments have created for financial institutions and day traders. There are plenty of risk events ahead that should be given attention this week.

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USD/JPY Six Month Chart on the 11th of June 2024

The USDJPY is now again in a dangerous value range near-term as it battles within a higher trend. The BoJ did intervene twice – in late April and early May – to try and damper speculative buying zeal of the USD/JPY and stop overly exuberant selling of the JPY. But they have been acting duplicitous as they have also wanted to no doubt allow a weaker Yen – while keeping its value within control. The BoJ has likely been hoping the Fed is going to sound more dovish this week, but if the Fed sounds more cautious than had been anticipated it could set the table for remarkably dynamic price action in the USD/JPY this week and next. If the currency pair moves too high, the BoJ could intervene again, particularly after the Fed’s FOMC pronouncements. So traders need to be careful.

Traders likely know that tomorrow CPI data and the Fed are on the schedule and these will be key events, but the noise generated around the inflation statistics and FOMC rhetoric should be viewed through the eyes of not only potential reactions from financial institution behavioral sentiment, but the possibility many of the ‘big houses’ have already positioned for the outcomes they believe will play out. In other words day traders should be ready for whipsaw trading results in the immediate aftermath of the Fed’s FOMC Statement and Press Conference.

Last week’s Non-Farm Employment Change numbers provided intriguing forensic data which will stir the suspicions of large players in Forex, equity indices and Treasuries. The jobs numbers via the headline stats looked strong. However, it must be said U.S government hiring continues to pick up, which can be looked at as an expensive way to fuel a sugar high for Americans as the States go into an election season.

Also full time workers continue to add part-time work to their tasks, this to battle rising inflation no doubt which is making their paychecks actually less effective, even if they are getting raises and receiving extra money from the added work loads they are taking on. The costs of products in the U.S are outpacing rising income. Also there is a fact that while part-term hiring is on the rise, full-time hiring is declining along with the average amount of hours employees are working per week.

The Gross Domestic Product numbers from the U.S are in decline. If folks push aside their political ideologies and look at real job numbers on the back pages of Friday’s report, and then ask why people are working less hours it is easy to conclude many businesses are actually cutting back expenses in order to try and remain profitable.

All three major stock indices from the U.S remain in sight of record highs, while there is caution surrounding the mid-term, investors still seem to be banking (wagering) on the U.S Fed to become more dovish over the long-term. Part of this analysis includes the belief that weaker GDP will eventually start to impact inflation and that this conclusion will affect the decision making of the U.S Federal Reserve at some juncture.

The Fed finds itself in a precarious position right now. They need to sound cautiously optimistic. It is an election year and they know this too. The Fed cannot publicly say they want growth to slow down because that would irritate most Americans and the White House, but they know full well that slowing GDP eventually should lower demand for products and thus erode inflation pressures.

Yet turning this full circle, the hiring being done by the U.S government, and the as of yet unmentioned fact the U.S  Treasury has increased its sales of Two Year Notes since around November; and the record amount of money the U.S is spending via a slew of suspicious costs like the ‘student loan forgiveness’, creates a muddled and over-heated fiscal policy which could be interpreted as trying to buy votes from those receiving the gifts. In other words, while the Fed is trying to stress it is battling inflation with higher interest rates and anticipates lowering them eventually, other facets of the U.S government are making this difficult because of the record amount of spending and interest rate payments they are making on short term Treasury notes. Jobs and money in the short-term are candy for voters, but the government has problems ahead regarding conflicting policies because it can lead to more economic problems.

So what do financial institutions think, well they are focused on returns for their clients. They are also looking ahead and trying to swim waters that are murky but offer the ability to profit for themselves too. They might believe they know the landscape just as well as the Fed does, and financial institutions also understand what will be said and can be done may be two different things. What to expect moving forward therefore remains confusing over the mid-term for everyone.

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Gold Six Month Chart on the 11th of June 2024

Gold remains highly valued and traders should continue to use it as a barometer. Speculative players are also betting on gold as the USD and its ultimate mid and long-term direction remains complex. The recent downside price action after making record highs in May for the precious metal could reflect the belief the USD is going to become weaker over the mid-term.

Also it should be noted that a handful of commodities are being influenced by an abundance of speculative forces in Copper, Coffee and Cocoa. There has been a lot of talk surrounding the meme stock GameStop the past month. Experienced commodity traders understand the dynamics of speculative influences, pump and dump schemes better than most. Traders tempted to wager in these commodities should ask the same questions speculators in GameStop need to, what is the real value and when will the pin pop the balloon?

Monday, 10th of June, Japan Final GDP Price Index – the result in yesterday’s inflation data came in negative with a climb of 3.4% compared to the expected outcome of 3.6%. This is noteworthy might create more cautious rhetoric from the Bank of Japan later this week.

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GPB/USD One Month Chart on the 11th of June 2024
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EUR/USD Six Month Chart on the 11th of June 2024

Wednesday – 12th of June, U.S Consumer Price Index – the inflation reports will be watched by all market participants in the financial world. The broad monthly CPI result is expected to come in at 0.1%, which would be below the previous months’s outcome, but the Core monthly statistic is anticipated to match the previous result of 0.3%. The CPI numbers will certainly set the tone for the price action to come in Treasuries, equity indices and Forex. Weaker numbers could spark a selloff of the USD. Stronger numbers could create more bullish ability in the USD. No matter the outcome of these CPI numbers, the U.S Federal Reserve will be standing in the shadows and ready to take center stage a handful of hours later.

Wednesday – 12th of June – U.S Federal Reserve’s FOMC Statement and Federal Funds Rate – unless there is a massive surprise tomorrow, there will be no interest rate cut from the Fed. Anyone who was holding onto the idea of a cut, had these wrong thoughts killed off this past Friday because of the ‘better’ jobs numbers report. The Fed’s monetary policy statement is likely to try and sound cautiously optimistic and will certainly include the residuals of the CPI reports filed earlier in the day. However, financial institutions will want to hear if the Fed is leaning into the notion of cutting the Fed Funds Rate late in the summer as a possibility, or if the Fed sounds so cautious that they suggest a rate cut will not happen until later this year. Let’s remember this is an election year. Yes, the Fed is supposed to be an independent body, but like the Treasury there have been signs developing that the ironclad independence of Fed rhetoric can be influenced by U.S government influences from higher up the ladder. Or perhaps it is just all a happy coincidence and the White House, Treasury and Fed all simply agree on policies which remains rather questionable in the eyes of financial institutions and analysts.

EUR/USD Consideration into Wednesday

On this note, price action in the EUR/USD is a good representative of behavioral sentiment and the different ways it can be interpreted. EUR/USD will need attention during and after the U.S Federal Reserves’s policy rhetoric. The ECB cut its interest rate last week. However the ECB refused to say it will cut rates more – leaving the EUR/USD in a neutral position. The EUR/USD sold off on Monday, this after selling off strongly this past Friday after the U.S jobs numbers.

The Fed was looked on as having to become more dovish this Wednesday, but that is now in question because of the suspiciously strong U.S jobs numbers this past Friday. And then there is the outcome of the European Parliament voting this past weekend and a turn towards the right which many in the media seem to believe is the end of the democracy, but may simply represent that some citizens of Europe want a return to law and order, solid economic practices, and respect for their historical and cultural heritage.

Meaning that financial institutions aren’t likely to be too scared about the voting outcomes regarding the European Parliament and are likely more focused on the coming U.S inflation report and FOMC meeting results. However, as much as Forex traders are considered to be sophisticated and financially astute, they still reacted to the stronger selling which was sparked yesterday. Perhaps the EUR/USD results the past couple of days will prove to be like the reaction in the India markets, this when the Nifty 50 selloff occurred early last week upon election results being in question, only to experience a reversal later.

Thursday, 13th of June, U.S Producer Price Index – these inflation reports will be watched, but the reaction to the outcome is likely to be muted because of Wednesday’s dynamics from the U.S and behavioral sentiment which will have already been stirred.

Friday, 14th of June, Bank of Japan – the BoJ is expected to keep its Policy Rate at 0.10%. The BoJ will certainly have been paying attention to the USD/JPY this week, this before they make their public announcements. The Bank of Japan like the Fed is in a difficult spot. The BoJ is trying to fuel a stronger Japanese economy with a weaker Japanese Yen, while trying to sound vigilant in order to stop speculative buyers of the USD/JPY who are trying to take advantage of the trend higher. The threat of intervention should be a concern for day traders, even though the BoJ likely doesn’t want to take this avenue because it is costly and they know the only real way to make the Japanese Yen stronger is by increasing the BoJ Policy Rate which they seemingly do not want to do for the moment.

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USD/ZAR and EUR/USD as South Africa and ECB Create FX Shadows

by with No Comment AMT MarketsBehavioral SentimentFeatured Highlights

USD/ZAR and EUR/USD as South Africa and ECB Create FX Shadows

Risks for day traders will abound this week in Forex. Taking advantage of trends in the days to come will rely on interpretations of behavioral sentiment, which may become rather reactionary from financial institutions if they feel existing positions are vulnerable. For the moment there is calm but day traders should not expect this to last.

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USD/ZAR Three Month Chart on the 3rd of June 2024

The results from the South Africa election have delivered the need for a government coalition. The USD/ZAR will certainly move according to degrees of nervousness being generated in South Africa. While the African National Congress has publicly called for unity and openness to achieve a working government, there are legitimate fears the ANC may consider a left wing coalition known as the Doomsday approach, which could include political parties that are not seen as being pro-business or inclusive for the entire population. Financial institutions in South Africa and abroad will have their trust of the ANC tested in the days ahead.

South Africa political concerns may cause the USD/ZAR to step out of line and not correlate to the broad Forex market. The ANC has two working weeks to reach a coalition deal. The ANC has never been in such a weak position before, and if the ANC makes a political deal which is interpreted as being against free enterprise it will not be welcomed by many businesses. Will the ANC be able to admit a new path can be followed in South Africa that creates a space for more transparency regarding fiscal policy and oversight, or will the ANC become stubborn and make a deal with a political party that moves the nation backwards economically and causes more strain via geopolitics?

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EUR/USD Three Month Chart on the 3rd of June 2024

From Europe, the ECB will step into the spotlight this coming Thursday. Following last week’s lower than expected Consumer Price Index data from Germany, the ECB is widely anticipated to cut its Main Refinancing Rate by 0.25%. Day traders need to be aware of this, because on Thursday if and when the ECB does cut the interest rate, the reaction in the EUR/USD may not move the market as much as small retail speculators anticipate.

Instead the volatile reaction could come from the inspection and understanding of the published Monetary Policy Statement, and the Press Conference which will follow half an hour later. The EUR/USD it should be noted jumped higher last Wednesday on the weaker than expected inflation report from Germany, which may mean some of the EUR/USD bullishness has already been bought into the currency pair.

The thought that the ECB has seemingly stood in the shadow of the Fed for the past year and largely reacted only after the U.S central bank is important. If the ECB actually goes out on a limb and cuts its interest rate this week, and says it is considering another later this summer it will cause a reaction. The differentiation between the Main Refinancing Rate from the ECB and the Fed’s Federal Fund Rate will cause momentary headaches too.

However, this might ignite thinking within financial institutions that the Fed has given the ECB a quiet ‘green light’ and assured the ECB that the Federal Reserve will become dovish over the mid-term. However, the Fed is not expected to cut the Federal Funds Rate next week. What should happen is that the Fed delivers a December 2023 repeat performance on the 12th of June, in which it expresses a rather dovish perspective – but this time delivers, but there are no guarantees.

The U.S jobs numbers this Friday will play into the EUR/USD sentiment too and all other Forex pairs. Importantly, traders do not want to see a retraction from the Fed again in the coming months and cautious talk about inflation. While higher prices may be the reality for the moment, financial institutions appear to be hoping on proactive actions from the ECB and Fed combined. If dovish rhetoric isn’t seen Forex choppiness will become intense again.

Political rhetoric and its influence on Forex will not only come from South Africa and Europe, but India as its election results are finalized tomorrow and Mexico after the outcome of its vote held this past weekend. The results in India and Mexico have produced the anticipated outcomes, so the USD/INR and USD/MXN should expect to become calmer in the days ahead.

After the anticipated U.S Fed FOMC meeting rhetoric on the 12th of June, and the Bank of Japan’s policy tidbits on the 14th perhaps things will become relatively tranquil. However, financial institutions will be busy over the next ten business days as they try to make sure they have balanced Forex positions, which take into account their commercial transactions and cash forward outlooks for clients which could add to the potential for volatility.