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AMT Top Ten Miscellaneous Pre-Xmas Thoughts for 22nd of Dec.

by with No Comment AMT MarketsEquitiesFeatured Highlights

AMT Top Ten Miscellaneous Pre-Xmas Thoughts for 22nd of Dec.

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10. Music: The Nutcracker by Pyotr Ilyich Tchaikovsky via Simon Rattle and the Berliner Philharmoniker.

9. Book: Zhou Enlai: The Last Perfect Revolutionary by Gao Wenqian.

8. Mobile Gaming: Revenues from ‘gaming on the go’ in 2023, via an Electronics Weekly article, is estimated to be 92.6 billion USD worldwide. Honor of Kings via Tencent leads the pack.

7. Data: U.S Final GDP quarterly numbers came in at 4.9%, missing its estimate of 5.2%. Final GDP Price Index quarterly results were 3.3%, below the anticipated mark of 3.6%. Canada will release its GDP numbers today for those paying attention.

6. USD: The greenback continues to produce incremental declines. Yesterday’s ‘weaker’ U.S GDP numbers helped solidify a bearish USD outlook mid-term.

5. Trading Volumes: Speculators who insist on wagering today need to understand many financial institutions are closing early. ‘Thin’ holiday markets can be extremely quiet and then become volatile without warning.

4. Global Risk: As traders relax during their holiday break, they should monitor news about the Red Sea for potential problems caused by the Houthis rebels from Yemen.

3. China: Economic concerns are mounting for the nation. The Shanghai Composite is approaching lows last seen in October of 2022.

2. Holiday Markets: U.S equity indices continue to show solid risk appetite. S&P 500 is now approaching all-time highs seen in 2022. Dow Jones 30 is at a record level. Nasdaq Composite trend still bullish.

1. Thank you: We wish all readers who are celebrating Christmas a fantastic holiday.

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Forex Calm After the Storm? Volatility and Coming Holidays

by with No Comment AMT MarketsBehavioral SentimentFeatured Highlights

Forex Calm After the Storm? Volatility and Coming Holidays

The weakness of the USD was anticipated last week, this as the Federal Reserve essentially admitted its aggressive interest rate hikes policy has come to an end. While Fed Chairman Jerome Powell tried to sound neutral, most financial institutions reacted to the FOMC Statement and the Fed’s Press Conference last Wednesday with a rather demonstrative amount of USD selling, largely showing they were prepared to react.

The EUR, GBP and JPY all gained, and many other currencies added value against the greenback too. Gold flourished upwards and even WTI Crude Oil came off its lows. However, after producing strong gains late Wednesday and into Thursday, gold and major Forex pairs did reverse slightly lower on Friday as the USD gained some footing.

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Gold Five Day Chart as of 17th December 2023

Risk appetite likely has enough positive behavioral sentiment influence to continue its desire for dynamic buying on U.S indices. The Dow Jones Industrials will start Monday at record heights, the S&P 500 and Nasdaq Composite are approaching one year highs.

Yes, potential headwinds can develop, so day traders should not bet blindly on bullish gyrations to mount without reversals being expected too. As the GBP and EUR gave back some of their gains on Friday, financial institutions may have been reacting to the notion price velocity higher had been too robust in the near-term. Speculators received another reminder that one way trends tend to meet with reversals that can still cause harm.

Risk adverse traders who have their eyes on global affairs should monitor the situation in the Red and Arabian Seas. Houthi extremists continue to fire at international ships sailing in the areas, and this may generate a reaction at some point from allied navies which are supposed to protect vessels and commerce. If the U.S Navy reacts to the Houthis in a strong manner this could deliver a cold short-term shiver into markets.

Speculators also need to understand this is the last ‘full’ week of trading before the Christmas and New Year holidays, which can cause a massive decline in volumes. This Thursday’s trading will begin to decrease from norms, and Friday’s price action will likely be affected by offices around the world starting to shutter as employees disappear for extended vacations. Day traders who want to participate in Forex, commodities, and equities via CFDs should be prepared for the emergence of quiet markets the end of this week with occasional volatility disrupting technical charts.

However, this Monday and Tuesday will pose questions regarding possible reactions to the weaker USD which has emerged, and U.S equity indices showing signs of speculative zeal. U.S Treasury yields continued to trend lower last week, and U.S bonds should be watched early to see if market participants continue their optimistic paces, or show signs of becoming more passive as the holidays approach. Traders with strong convictions regarding directions may feel inclined to remain active throughout this week and cannot be blamed, but some caution should be practiced.

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EUR/USD Five Day Chart as of 17th December 2023

Monday, 18th of December, Germany ifo Business Climate – the reading is expected to show a slight improvement over the last month. EUR/USD traders may believe they should react to the results from this report, but the EUR is likely to stay within a USD centric mode driven by existing outlooks. The ability of the EUR/USD to hit the 1.10000 level late last week confirmed positive mid-term bullish outlook. The reversal lower on Friday may ignite speculative buying positions early this week, but day-traders may want to be conservative.

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USD/JPY One Month Chart as of 17th December 2023

Tuesday, 19th of December, Bank of Japan Monetary Policy Statement and Press Conference – the BoJ is not expected to raise their interest rates quite yet. However the end of the BoJ’s negative monetary policy may be coming to an end in 2024. The BoJ bet on the notion that inflation would come down eventually, even it maintained a negative interest rate policy – this seems to have been proven correct. The USD/JPY has reacted the past month with a rather incremental decline. Perhaps Japanese financial institutions have been positioning for a stronger JPY over the mid-term. The USD/JPY trajectory lower remains intriguing for speculators.

Wednesday, 20th of December, U.K Consumer Price Index – the BoE sounded more dovish than many folks expected they would this past Thursday. Inflation numbers coming this week should be watched. The British economy remains lackluster, but sounds about ‘weaker’ inflation have been heard. The data from the CPI is expected to be slightly lower than the previous month. The GBP/USD could react to this report. The British Pound has delivered upwards momentum since late October. Traders should be careful regarding potential short-term reactions from the GBP/USD, and understand Forex volumes may start to decrease on Thursday and Friday which could affect results.

Thursday, 21st of December, U.S Final Gross Domestic Product – growth in the U.S has been better than most anticipated. While many analysts are still predicting a slowdown, the GDP number is expected to show a 5.2% gain. The inflation report via the GDP Price Index is anticipated to be 3.6%. While the broad markets typically would react to these statistics in a strong fashion, trading might be somewhat muted as financial institutions begin to focus more on the coming holidays.

Friday, 22nd of December, Canada GDP – a slight gain of 0.2% is expected regarding the growth statistics. Markets will be quiet and while the USD/CAD could see a momentary increase in trading, behavioral sentiment from earlier this week will likely have had a bigger effect.

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The Yuan’s Slip is Showing and Troublesome

by with No Comment Uncategorized

The Yuan’s Slip is Showing and Troublesome

Two and a half weeks from Xi Jinping’s expected and unprecedented 3rd term coronation as China’s president, the country is trying hard to tamp down any distractions in a year that has provided plenty of them: pandemic lockdowns; faltering economy; supply chain headaches; a reeling real estate bubble; you know the list.

We can now add plunging currency to the usual suspects, as China’s Yuan — also known as renminbi (literally translated as the peoples’ currency) or simply RMB — weakened a further 3.7% against the dollar in the past month, and over 11% so far this year. That’s trending for its worst annual performance against the Greenback since 1994, which is the year China unified its currency market in an effort to modernize it. Not great for a basket currency its promotors aspire to be the world’s finest.

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Monday’s mark of 7.1738 RMB to dollar is also its worst since 2008, back when global markets were collapsing. This is a psychologically meaningful level that all but guarantees aggressive pushback by the People’s Bank of China (PBOC). On Monday, the bank announced the imposition of a risk reserve requirement of 20% on currency forward sales by banks, starting on September 28.

China has adjusted the FX risk reserve ratio on occasion in recent years, starting in 2015, but stopped doing so in 2020. The goal is to deter short sellers betting on further depreciation, something government spokesmen have even come out and warned investors against in the past several weeks, including PBOC deputy governor Liu Guoqiang.

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USD/CNY 5 Day Chart

It’s not the only move we’ll see. Other steps we can expect in the long term are delays in easing of monetary policy (a recent tool against recession); further cuts to foreign exchange reserve ratios; and pumping central bank bills into Hong Kong or elsewhere to stave off RMB liquidity. You can bet on a lot more firmer than usual midpoint fixings going forward as well.

Of course there’s not much they can do against the prime driver of the dollar’s recent surge: that would be the Federal Reserve, which has been aggressively raising rates to pump the brakes on inflation, resulting in part in bringing the trading strength of the dollar to a 20 year high, with all indications the policy will continue into next year. Other currencies, including the British pound and the South Korean won, have also struggled of late; the pound reaching a historic record low against the currency this week.

Look for more PBOC efforts to keep a lid on the problem, especially as the calendar draws nearer to the opening of the 20th Party Congress on October 16. While it has so far avoided more direct intervention, such moves are not off the table, should the slide persist or worsen significantly. Time will tell.