postN14.1

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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USD/INR: Elevated Range as Questions about Values Persists

by with No Comment AMT MarketsCentral BanksFeatured Highlights

USD/INR: Elevated Range as Questions about Values Persists

The USD/INR has traded the past week approximately between the 82.2200 and 82.7000 ratios. Plenty of discussion regarding what the Reserve Bank of India has been doing as they battle the strong USD has been whispered openly, and is being questioned from financial institutions and speculators. Day traders who have been trying to wager on the value of the Indian Rupee have likely found the waters difficult to swim. As of this writing the USD/INR is near 82.5200.

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USD/INR Three Month Chart as of 8th June 2023

Last Wednesday’s sudden rhetoric, from two U.S Federal Reserve officials caused mayhem briefly within the USD/INR. The currency pair got hit after India’s official trading hours closed, and essentially moved in overseas accounts based on the spoken words from the two Fed members stating the U.S central bank should not raise the Federal Funds Rate on the 14th of June. These sudden Forex moves hurt many USD/INR speculators. After this rhetoric from the two well-regarded FOMC members, like clockwork U.S economic data provided a counter punch last Friday with better than anticipated Non-Farm Employment Change numbers, this while inflation results also remained persistent.

Three Month View of the USD/INR offers Sentiment Insights and perhaps Clues

The past three months of trading in the USD/INR have produced a rather rocky price trend. A low of nearly 81.5200 was seen on the 14th of April, which turned into a high of approximately 82.9000 on the 19th of May. Intriguingly while many USD/INR speculators may be looking at the U.S Federal Reserve and casting blame, questioning the potential interventions by the Reserve Bank of India remains relevant. The Reserve Bank of India has actually been rather tranquil regarding its use of interest rate hikes; it has not raised the key lending rate aggressively in India like many of its major global counterparts. Why is this?

Is there a potential the Reserve Bank of India and the government has wanted the Indian Rupee to get weaker? Deflating the Indian Rupee’s value in order to potentially create an unseen tax is considered an old trick by economists. This because some believe inflation is a way to tax people without actually raising interest rates, the deflated value of a currency makes it easier for governments to sometimes repay debt, based on the notion the money they are now using is cheaper compared to when the Indian Rupee’s value was better.

Where is the USD/INR Going to Go Next?

I am no economist; my specialty tends to be risk analysis. There is an old joke, ‘why did god create economists? To make weathermen look good.’ The point is that economists often get their outlooks wrong, but we cannot blame only economists for getting their outlooks wrong, many of us do. The USD/INR has a tough few days ahead, it must deal with nervous market sentiment generated from a lack of clarity via the U.S Federal Reserve. Looking for correlations in the Forex market is proving difficult for the moment for all short-term speculators. Choppy trading in the USD/INR has been noticeable the past few days, this Monday’s upwards trend has turned into near-term consolidated day trading. Other major currency pairs are turning in rather turbulent results also without a firm technical stance.

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Gold Three Month Chart as of 8th of June 2023

After speaking with many associates in the financial sector the past week, it appears many people believe the Fed should stop raising interest rates for the time being. Some financial institutions seem to be leaning in this direction, but there are caution signs all over that warn about potential surprises from the U.S Federal Reserve.

Yesterday the Bank of Canada raised its Overnight Rate by another 0.25%, when most analysts believed they would pause. Another interesting sign is the current price of Gold near 1950.00. The recent lower price could indicate some financial houses believe the Federal Reserve may actually remain active regarding further interest rate hikes, this because the price of Gold has tended to rise when the perception existed the Federal Reserve is going to be dovish. Gold’s downward price action should raise suspicious eyebrows.

But then again, I am not an economist; I am merely a risk analyst. So my words to you are, be careful if you are wagering on the USD/INR before the U.S Federal Reserve’s pronouncements next Wednesday on the 14th of June.

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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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USD/INR: Stubborn Higher Range and Risky Speculative Wagers

by with No Comment AMT MarketsFeatured HighlightsFinancial Institutions

USD/INR: Stubborn Higher Range and Risky Speculative Wagers

The USD/INR has remained within the higher level of its one month price range as behavioral sentiment remains difficult to gauge. As of this writing the USD/INR is near the 82.7200 ratio, but readers are urged to check this price against live market action as they read to compare conditions.

The Broad Forex Market is Nervous and so is the USD/INR

While many traders of the USD/INR who have been tempted to be sellers of the currency pair might be taking it personally that their perceived price targets have not been accomplished, they should note the broad Forex market has been difficult for most global speculators. The price action the USD/INR is experiencing currently comes from impetus due to nervous behavioral tendencies being generated from conflicting sentiment. The price range between 82.5000 and 82.8500 since the 18th of May has been rather persistent with momentary outliers.

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USD/INR Five Day Chart as of 30th May 2023

Fear of the U.S Federal Reserve remains rather strong in Forex, this has affected the USD/INR because of concerns the U.S central bank might increase the Federal Funds Rate on the 14th of June. Inflation remains durable and is showing few signs of vanishing. The higher consumer prices in the U.S are a thorn in the side of the Federal Reserve which is intent on trying to put a dent into rising prices. If U.S data continues to show inflation is pushing ahead a rate increase could happen, and the higher prices in the USD/INR likely reflect this has been priced into the currency pair.

Federal Reserve policy can certainly be debated and fingers pointed at their wrong conclusions and decisions made the past two years. The current circumstances for the Fed has put it in a very difficult position. The lack of a clear outlook for financial institutions is leading to a lot of risk adverse trading since the 9th of May. Also concerns about the U.S debt ceiling did not calm many nerves the past few weeks, although the crisis seemingly has found a compromise which is likely to be approved tomorrow in Washington.

High U.S Interest Rates and More Corporate Banking Woes as a Potential

Higher interest rates are hurting U.S corporate banking particularly in the mid and small sized sectors of the industry. If these banks continue to suffer, their problems will create a credit crunch for many in the U.S middle class, which could have a big effect on consumer spending.

Higher interest rates via the increasing Federal Funds Rate are hurting the corporate banking sector because it makes it harder to lend money, and some clients are taking their money out of deposits to seek better returns elsewhere – like Treasury Bonds. The increased interest rates in the U.S also hurt many global currencies like the USD/INR because global financial institutions sometimes seek the better paying U.S bonds, which are also seen as more trustworthy long-term investment vehicles.

Thus, while the Fed is projecting tough talk about the potential of raising interest rates in June, and warning the mid and long-term outlook is cause for concern as inflation shows its ugly head, financial institutions are demonstrating nervous behavioral sentiment. The strong rhetoric from the U.S Fed and its lack of clarity regarding real direction has left the USD/INR and many other major currency pairs in awkward choppy positions with highs being tested. Until U.S economic data shows inflation is under control and growth is slowing down substantially, the Fed may have to continue to be rather hawkish sounding, which will not help the USD/INR selloff strongly in the near-term. In other words traders considering selling should be conservative with the USD/INR and not be overly ambitious with their targets.

Today the CB Consumer Sentiment reading is coming from the U.S, a lackluster report with negative data would actually help the USD/INR. Also this coming Friday jobs statistics will be published. While many folks will watch the employment outcome from the Non-Farm Employment Change, the Average Hourly Earnings could be more important and provide insights regarding inflation which could prove crucial. A rise in wages is not the outcome the Federal Reserve wants to see.

Warning: Use Entry Price Orders when Trading the USD/INR when Possible

Traders should also note that short-term wagers on the USD/INR should be done with entry price orders to make sure they are not caught and hurt by the large spreads which might be offered by their brokers – the spread is the differential between the ‘bid and ask’ price. Frequently a trader will be given a price fill that leaves them feeling like they have been cheated. Speculators frequently try to target short-term price goals with quick hitting bets, but bad price fills make these types of wagers difficult to get a positive result – when only a handful of pips in either direction can hurt a trader because too much leverage is being used.

USD/INR traders who are buyers should understand they will most likely be given the sell price of the ‘bid and ask’ when seeking upwards direction, and sellers of the currency pair are likely to get the ‘buying’ price of the spread – thus making a chosen wager on direction further away and difficult to achieve profits. Using an entry order which pinpoints a chosen price to enter a trade is vital. A trader should not expect to get a price fill which is ‘geared’ towards their chosen direction. Also, spreads in the USD/INR are wider than many major currency pairs because the amount of volume in the Indian Rupee cash market tends to be thinner, leaving more room for the technological capabilities of Forex brokers to provide less than attractive pricing.

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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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Sudden Bullish Momentum of Indian Rupee Raises Questions

by with No Comment AMT MarketsCentral BanksFeatured Highlights

Sudden Bullish Momentum of Indian Rupee Raises Questions

The past week of trading within the USD/INR has seen a bullish trend emerge, this while many speculators were likely starting to believe lower price realms and targets were possible.

The USD/INR is trading near the 82.2200 mark as of this writing, which is within the higher elements of its one month price range. Volatility within the USD/INR has been abundant the past week and has likely proven expensive for speculators who were pursuing the currency pair with visions of more bearish price action to target. Early May values of the USD/INR certainly tested lows and likely fueled the appeal of selling positions. However, the early May lows within the Forex pair tested the 81.6260 mark, while never actually hitting April’s lowest values which tested the 81.5500 ratio on a couple of occasions.

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USD/INR One Month Chart as of 16th May 2023

One of the dangers of trading is always the potential for a sudden change in behavioral sentiment. The lows in the USD/INR seen on the 8th of May, which is only a little bit more than a week ago, highlights the price velocity the currency pair has demonstrated. While many speculators are trying to understand why the sudden shift in dynamics has taken place, it is important to remember the USD/INR was actually trading above its current values in February, March and early April of this year.

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USD/INR Five Day Chart as of 16th of May 2023

The Difference between Day Traders and Financial Institutions

The outlook of speculators within the USD/INR is totally different than financial institutions. This is because most speculators are short and near-term traders. They do not have deep pockets like financial institutions – which can hold the USD/INR in a chosen direction for a long period of time and simply allow the currency pair to trade until they want to cash out of a position. Day traders are also using leverage a lot of the time, and the combination of leverage with limited available trading funds makes the daily gyrations of trading volatile and frequently dangerous.

Short-term traders look at the USD/INR with a technical viewpoint much of the time, financial institutions are likely maneuvering in the Forex pair with fundamental perspectives and inside knowledge based on known transactions they have to accomplish.

Many financial houses believe the U.S Federal Reserve will have to become less aggressive regarding its hawkish interest rate stance it has maintained the past year and a half. However there is enough nervousness within the broad Forex markets to make things very difficult for day traders, this as the potential for risk adverse trading based on economic data results move currency pairs including the USD/INR constantly, particularly if a financial institution needs to react quickly.

The ability of the USD/INR to move downward and hit support depths at the beginning of last week, may indeed be a sign that financial institutions have a belief the currency pair should be lower. However, the recent strength of the USD the past handful of days may have been brought on by the simple notion that financial houses grew momentarily nervous. There is also the possibility that large corporations made transactions in the USD/INR that moved the price higher. Day traders must understand there are forces within the USD/INR that are much stronger than their opinions. The USD/INR is not a widely traded currency pair in the open markets, it is difficult for instance to trade the currency pair in a speculative manner within India and traders in the nation face restrictions, which forces many Indian speculators who want to wager on the USD/INR to seek foreign brokers abroad.

Data and Rumors Can Sometimes be False Flags for USD/INR Traders

Some analysts have claimed the recent move higher in the USD/INR has taken place because of factors like a fear of the U.S debt ceiling not being raised in time and causing chaos in the financial markets, however this if true is likely only a short-term worry. It is very unlikely the U.S government is ‘idiotic’ enough to allow the U.S debt ceiling to not be taken care of within Congress. It would be very problematic for the U.S Federal Reserve and Treasury to have to explain why U.S bonds are suddenly difficult to repay. In other words, the U.S debt ceiling is likely to be taken care of and many financial institutions with a long-term view know this, although it is a possibility they could ‘punish’ the financial markets and act in a risk adverse manner in the short-term.

Data from the U.S yesterday highlighted another important aspect again regarding behavioral sentiment. The U.S Empire State Manufacturing Index reading came in with a negative number of minus -31.8. The expected result was -3.7, the report shows that New York business activity and outlook is worse than forecasted. This doesn’t mean the entire U.S manufacturing sector will have the same results, but it underscores the potential for a U.S recession to possibly occur. Today the U.S will release Retail Sales numbers. If these numbers come in with a negative result this could spur on bearish sentiment within the USD/INR in the near-term, particularly if financial institutions feel the results are more evidence the U.S Federal Reserve will have to pause interest rate hikes in June. USD/INR day traders should be ready for more choppiness. But there is reason to suspect resistance above in the currency pair may start to prove durable from a speculative point of view considering the trading results the past month in the USD/INR.

Traders wishing to pursue the USD/INR need to use solid risk management. Entry price orders will help traders get a ‘fill’ they are expecting and the use of stop loss and take profit tactics are highly encouraged. The past week of trading in the USD/INR has likely tested the nerves of many speculators and the assault on highs is alarming, but downside price action may be ready to reignite if U.S economic data continues to falter in the near-term.

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Economic Data and Underlying Factors this Week

by with No Comment AMT MarketsAssetsFeatured Highlights

Economic Data and Underlying Factors this Week

Monday 15th of May, U.S Empire State Manufacturing – N.Y manufacturing sector report regarding business conditions, which serves as a sentiment reading. A lackluster outcome could put a bit more pressure on the Federal Reserve to lessen their aggressive stance, and certainly point out nervousness among U.S corporations regarding profits.

Monday 15th of May, U.S TIC Long-Term Purchases – report shows results from between domestic and international purchases of U.S Treasuries. While not considered a major data release, this one could give an impetus to investors in U.S banking sector who may find intriguing potential correlations. An increase in the number of domestic purchases compared to international buyers would be of interest. Large dark shadows on the U.S mid and small size banking sector still exists, pressures boil as depositors are still considering parking their money elsewhere, and corporate share values remain fragile.

Tuesday 16th of May, China Industrial Production and Retail Sales – China economic results are a barometer of global health due to the fact the nation is a large supplier of worldwide products. Industrial Production results if they are lagging in China, would indicate decreasing demand and global economic weakness. Retail Sales figures from China is an indicator of consumer sentiment within the nation.

Tuesday 16th of May, U.S Retail Sales – results indicate buying power and confidence among U.S consumers. Underlying numbers also focus on how Americans are spending, in other words – are they paying the full price being asked or are they looking for discounted goods as inflation continues to hit wallets.

Wednesday 17th of May, Japan Preliminary Gross Domestic Product – No real surprises expected from Japan’s growth numbers, but the results are always appealing to economists who debate the nation’s ability to remain among the wealthiest without any truly outstanding GDP numbers produced in years. In other words a lot of noise for traders without much real impact.

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WTI Crude Oil – One Month Chart as of 14th May 2023

Wednesday 17th of May, U.S Crude Oil Inventories – another report that seems important for commodities traders, but without any real surprises has limited impact. Many times even among WTI Crude Oil speculators, they are often looking at other data they have gathered like production numbers from OPEC, Mexico and Canada. And also oil tanker movements around the globe.

Thursday 18th of May, Australia Employment Change and Unemployment Rate – outcome from these numbers could factor into AUD/USD momentarily, but without a major surprise will likely have little impact on global speculators for more than a couple of hours.

Thursday 18th of May, U.S Existing Home Sales – housing numbers are under some scrutiny as they reflect behavior of current U.S home owners as they react to growing interest rate pressures on mortgages and stay within their current homes to avoid higher borrowing costs.

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Economic Data that needs Attention this Week

by with No Comment Central BanksDataFeatured Highlights

Economic Data that needs Attention this Week

Tuesday 8th of May, U.S FOMC Member Speaks – N.Y Federal Reserve President John Williams will talk at the New York Economic Club. N.Y Fed is important regarding monetary policy particularly for financial institutions. Williams words should be given merit. Williams will also be likely listened to for any comments regarding U.S corporate banking health regarding mid-size and smaller institutions.

Wednesday 9th of May, U.S Consumer Price Index reports – three key inflation consumer price statistics will be published including monthly, annual and core monthly changes. The results will be important taking into consideration the manner the U.S Federal Reserve conducted its ‘sitting on the fence’ rhetoric last week, as if looking for an accuse to continue to raise interest rates if inflation remains stubborn or worse continues to climb.

Thursday 10th of May, U.K BoE Monetary Policy Summary and Official Bank Rate – which is expected to produce another increase of 0.25%.

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GBP/USD One Month Chart as of 7th of May 2023

Friday 11th of May, U.K Gross Domestic Product – growth numbers from the U.K are expected to demonstrate economic conditions remain challenging.

Friday 11th of May, U.S Preliminary University of Michigan Consumer Sentiment – a rise in consumer sentiment from this report could add to the confusion and ‘concern’ that financial institutions have regarding the U.S Federal Reserve’s short term monetary policy regarding the prospects for a June increase to the Federal Funds Rate. If the number is weaker than expected this could help ‘pause’ outlooks.

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Gut Feeling about Fed June Hike, Perhaps Wrong

by with No Comment AMT MarketsCentral BanksFeatured Highlights

Gut Feeling about Fed June Hike, Perhaps Wrong

I have a distinct feeling the U.S Federal Reserve is going to suggest via their FOMC Statement tomorrow that another increase of the Federal Funds Rate is likely going to happen in June. I could definitely be wrong, but my gut instinct is rumbling.

Inflation Remains a Sincere Problem Per the Fed’s Thinking

Wage data demonstrated last Friday via U.S Personal Income that inflation remains stronger than expected. Yesterday’s ISM Manufacturing Prices reading also spiked to 53.2 versus the expectation of only 49.4. The increases shown within these economic reports will not please the Federal Reserve.

While a hike tomorrow is nearly a certainty, the Forex market remains rather unimpressed with the potential for an increase on the 14th of June. Behavioral sentiment has shown a rather polite USD actually losing momentum the past few days. Caution has seeped into the USD today, but are financial institutions too relaxed regarding a potential hike by the Fed in June?

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USD/AUD 5 Day Chart as of the 2nd May 2023

Reserve Bank of Australia’s Hike Earlier Today Caught Many Folks Unready

The Reserve Bank of Australia’s hike today, may be another sign the U.S Fed will not only hike tomorrow, but in June as well. What are the chances the Federal Reserve hinted strongly to the RBA, that if they wanted to protect the value of the AUD that an increase would be justified in order to guard against the Fed’s rhetoric to come? The Australian hike caught a lot of financial houses and day traders unprepared as the USD/AUD spiked lower this morning, for proof of the surprise simply look at the gap created downward today on the five day chart of the currency pair.

The RBA hiked their Cash Rate by 0.25% from 3.60% to 3.85% while sighting stubborn inflation as a main cause. Nothing is certain, but if the Federal Reserve’s FOMC Statement is rather strong tomorrow and says it will still consider a June increase perhaps we should not be shocked. Central banks do share information with one another.

Early February’s Rhetoric from the Fed wasn’t Treated Seriously at First Glance

Coincidentally, the Fed’s increase in early February was two days before the Non-Farm Employment Change and Average Hourly Earnings were reported on the 3rd of February. On the 1st of February the Federal Reserve warned that inflation remained stubborn, but the market didn’t take their words too seriously as the USD traded rather politely following the anticipated interest rate hike.

However, the USD gained violently the day after when Fed officials began to reiterate the strong tone from Fed Chairman Jerome Powell from the day before. And then stronger than expected jobs numbers followed on Friday. Note, that the Non-Farm Employment Change and Average Hourly Earnings will be published this coming Friday.

The Federal Reserve remains in a difficult position, a hike tomorrow will bring the Federal Funds Rate up to 5.25%, a June hike may not be welcomed by the broad financial markets, particularly equities in the near-term, but people may want to consider the possibility of it happening. Day traders should brace for strong price velocity developing. Tomorrow’s Forex action will be violent for speculators who are not ready, and if the Fed suggests a potential hike to 5.50% in June perhaps we should not be stunned.