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Reserve Bank of New Zealand Expected to Cut 0.50 from Rate

by with No Comment AMT MarketsAssetsFeatured Highlights

Reserve Bank of New Zealand Expected to Cut 0.50 from Rate

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NZD/USD Six Month Chart as of 18th February 2025

NZD/USD Revival Mid-Term Coming? Reserve Bank of New Zealand is expected to cut its Official Cash Rate by 0.50 on Wednesday. N.Z govt is being proactive as they try to ignite the economy. The RBNZ also cut by 0.50 basis points in November. The central bank is expected to continue to remain aggressive tomorrow and suggest further cuts will be seen, perhaps via 0.25% afterwards.

The NZD/USD was trading around 0.63600 in late September of 2024 after gaining in correlation against the USD with the broad Forex market, via a bullish run which began in July. The NZD/USD is still traversing within its lower realms and it is logical to assume many financial institutions feel that support levels around the 0.56000 vicinity will prove rather durable going forward.

Day traders who believe the mid-term holds an optimistic bullish run for the NZD/USD may be correct, but speculators cannot be overly confident about a sustained surge higher quite yet. Conservative leverage is urged while looking for upside while betting. Speculators also need to remember tomorrow’s expected interest rate cut from the RBNZ has already been factored into the currency pair.

The rate cut is important for Wednesday, but it is the stance the Reserve Bank of New Zealand takes via its Monetary Policy Statement that affect behavioral sentiment among financial institutions. If the RBNZ sounds cautiously aggressive, meaning they suggest further cuts are being strongly considered this could help firm the NZD/USD and create more optimism regarding the potential for a move higher.

Yes, the shadow of the U.S White House administration looms over the Forex landscape. Decision making will remain tentative via financial institutions, but it is reasonable to suspect large players would treat clarity from the Reserve Bank of New Zealand with a positive Forex stance.

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A More Aggressive Sounding ECB Could be Wishful Thinking

by with No Comment AMT MarketsBehavioral SentimentFeatured Highlights

A More Aggressive Sounding ECB Could be Wishful Thinking

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EUR/USD Three Month Chart as of 30th January 2025

Will an interest rate cut by the ECB spark near-term buying in EUR/USD today? Financial institutions want news they have anticipated, day traders need to understand this dynamic.

The Federal Reserve stood in place yesterday almost acting as if it is afraid of its own shadow. No one was surprised the Fed did not cut the Federal Funds Rate. The Fed insisted inflation remains slightly elevated, it also said it thinks most of the worst employment data has been seen. What it did not say was that it remains in a quandary regarding the potential affects of President Trump’s policy on the U.S economy. The Fed wants to stay away from this debate. They also likely understand Donald Trump will bring up the subject himself. Trump wants the Fed to cut U.S interest rates more.

On the other side of the coin today stands the European Central Bank, which is anticipated to cut their Main Refinancing Rate by another 0.25, this to the 2.90% level. Financial institutions have certainly factored an interest rate cut from the ECB into the EUR/USD already. If there is no cut, this would cause an immediate reaction and likely a bad one against the EUR.

However, if the ECB acts as expected and cuts their rate this might actually spur on some near-term positive thoughts about the EUR and create some buying momentum. But for the move to be sustained and stronger, as outlandish as it might seem, what financial institutions will want to hear is that the ECB understands the E.U faces ongoing tough economic conditions and will remain dovish.

The problem with an overly aggressive attitude by the ECB today is that this is not anticipated. Yes, the rate cut of 0.25 is being counted upon, but the ECB and Fed are not exactly bastions of pro-active policy change. The ability of the EUR/USD climbing above the 1.05000 ratio last Friday and into Monday of this week was a signal financial institutions believe the EUR/USD is oversold, but they want to see more concrete steps taken. Doubts about what the ECB will say today has likely led to the 1.04000 level again being tested.

It may seem counterintuitive to believe that interest rate cuts from the ECB and a overly cautious Fed will help the EUR/USD achieve a bullish footing, but behavioral sentiment regarding mid-term outlook is crucial. Carry trade folks may say that if the ECB were to promise another cut today after their actions taken now, that this would create too large a difference between the ECB and Fed borrowing rates. This may be correct, but pro-active policy is something financial institutions would like to see. Day traders should be very careful today.

The EUR/USD hovering near 1.04000 is a signal that financial institutions will certainly react, there will be volatility in the coming hours. A rate cut from the ECB today will be the first ray of hope regarding a stronger EUR. However, unless the European Central Bank sounds like they will remain vigilant and are considering another potential cut sooner rather than later, the EUR/USD could quickly start to become choppy again.

The EUR/USD is essentially occupying a price range right now that it traded one month ago. Sentiment remains jittery. And President Trump will be watching and his comments which could come at anytime regarding the Fed, interest rates, potential tariffs and sanctions will create vulnerabilities for Forex and financial institutions in the days ahead.

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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 Musings for the 18th of November

by with No Comment AssetsBehavioral SentimentFeatured Highlights

AMT Top Ten Miscellaneous Musings for the 18th of November

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10. Election Results: The U.S election concluded almost two weeks ago and there is no discussion this time around of mischievous results, which we can all be thankful. However, there is still talk about results from the past, but perhaps these folks should be thankful for the prospect of a serendipitous outcome this time and get to work.

9. Conspirators: The Onion has tried to buy InfoWars via an auction which is now under review by a court to judge if the procedure was undertaken fairly. Alex Jones’s InfoWars and its sometimes other worldly offering of bizarre and misguided notions is in bankruptcy. The Onion wants to turn the tables on InfoWars and dedicate the ‘purchase’ of the site to ridiculing media and conspiracy folks who produce mindless gobbledygook.

8. From Beyond: The UAP, unidentified aerial phenomena, hearing before Congress last week led to a variety of questions and answers which rehashed known ‘unknowns’ while discussing orders of magnitudes of speed and g-forces that humans and machines can endure. The UAP (UFO) hearing didn’t disclose much in the way of developments regarding alien crafts visiting Earth, except to make it obvious to some that if ‘they’ are out there, we had better hope they are friendly. And if it is earthly corporations or nations testing and displaying new technologies, there seems to be little information publicly available about who may be playing in the skies and waters. Optical illusions?

7. Polymarket Raid: Many folks started pointing fingers when the CEO of Polymarket, Shayne Coplan, had his home raided on the 13th of November, claiming the FBI was politicizing Polymarket’s prediction that Donald Trump would win the U.S President race. But after further review, few have pointed out that Kalshi Inc., which also operates in the U.S and allows sentiment betting was not raided. The difference perhaps being that Kalshi is regulated via contract markets with the CFTC, and Polymarket is not and appears to be potentially operating in non-accordance to U.S laws.

6. Bitcoin & Coffee: BTC/USD continues to tread within the highest of tides and is slightly below 92,000 as of this writing. Coffee Arabica and Robusta are boiling within apex price ranges. Cocoa also remains rather impressively expensive. Which one of these speculative assets has no intrinsic value?

5. Buyer Remorse: At some juncture votes may start to feel a bit of angst per their recent voting decisions. We suggest to Polymarket and Kalshi to allow wagers on when this might be displayed in mass. However, in a very real way the U.S election in two years will be the key instrument to gauge the reaction to what is about to come from the new White House administration. Who will control the House of Representatives in two years time?

4. Forex: Foreign exchange should likely be placed in a number two or one AMT ranking, except to say we do not think retail traders should be enticed by being told no. Volatility that has pervaded the FX markets is not finished quite yet. While USD centric strength continues to cause upheavals against major currencies, and technical support and resistance levels are testing mid and long-term considerations, there still may be a week or so left in swirling whipsaw storms. Risk management has hopefully helped retail traders survive to wager again, but it shouldn’t be today.

3. Fed Donations: Federal law mandates employees of the U.S government, https://www.commerce.gov/sites/default/files/2023-08/political_activities-dos_and_donts-2022.pdf, must disclose their political donations. Recent studies indicate that approximately 90% of Federal Reserve employee donations to political candidates go to Democrats, https://www.yahoo.com/news/federal-employees-overwhelmingly-donate-democratic-175055289.html. This highlights the possibility that many current Fed employees have different perspectives regarding economics compared to those about to take positions of power in Washington D.C.

2. See No Data: U.S economic statistics have been rather tame recently, but financial institutions clearly are not paying much attention to near-term considerations about the potential influence of the Federal Reserve and interest rates. Instead behavioral sentiment appears anxiety laden. Retail traders and large speculators may be getting crushed together in a cyclone of certain assets, particularly if they are trying to fight short-term trends while infatuated with mid-term outlooks. The Fed may cut interest rates again in December.

1. The Clash: The highs in U.S Treasury yields and record territory of U.S stocks being traversed together indicates we will see a rather violent collision when one of these investment pursuits likely capitulates to market dynamics, allowing the other to take precedent. Some long-term investors may be nervous about President-elect Trump taking power in the third week of January, but it would be unwise to bet against him in the next six months. Meaning stocks may ultimately win this battle of attrition against bonds and prove they are more appealing.

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Return to Normal Market Conditions and a Trump Outlook

by with No Comment AssetsBehavioral SentimentFeatured Highlights

Return to Normal Market Conditions and a Trump Outlook

Retail speculators can now expect a return to calm and clear financial market outlooks, knowing that potential influences from new U.S policies will start to be considered. With the U.S elections in the rear view mirror and a Trump mandate delivered by many U.S voters, global financial institutions and traders will again be able to focus on a combination of technical perspectives, current behavioral sentiment and outlook.

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USD Cash Index Six Month Chart as of 10 November 2024

Some technical traders may believe behavioral sentiment has nothing to do with the long-term prospects of studying charts, but price action last week in FX and equities clearly showed why traders must be attuned to storms created by human emotions. Risk adverse trading has been prevalent since the end of September. A glance at the six month USD Cash Index demonstrates the extent of behavioral sentiment causing volatility the past handful of months. After believing the U.S Federal Reserve was going to become dovish which propelled the USD lower in many Forex pairs in early July, financial institutions expressed concerns about political outlook the past handful of weeks as a lack of clarity started to shroud their perspectives. USD centric positions have powered Forex.

And now that there is a Trump administration coming, and the U.S Fed has remained cautiously dovish this past Thursday, financial institutions may exhale with relief. The election on November the 5th has delivered a clear message regarding the potential for changes to U.S administration mandates regarding trade. Whether a stronger U.S economy is attained because of these hopes is not the question, it is the perception new policies will be initiated which try to deliver results which have been promised. Yes, promises can be broken.

However, the ability to believe changes are coming will affect behavioral sentiment. The Trump soundbites may prove to be rather weak in the future, but there is a chance he will also get things done regarding stronger trade agreements which protect U.S business enterprise and manufacturing. Folks can argue until they are blue in the face regarding the prospects of all things, but the U.S major equity indices rising like a rocket ride in the middle of last week is clear evidence that many believe the prospects for U.S corporations is better. No matter if it is only hopes about tax laws changing, less regulation, and better U.S trade agreements, investors are clearly betting on optimistic outlooks for the mid-term.

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Dow Jones 30 One Month Chart as of 10 November 2024

Improved attitudes are great for the prospect of financial institutions, but traders still have to certainly protect their positions against volatility developing. Markets should start to return to tranquil conditions in the days ahead. U.S data will come this week which will be important via the CPI numbers on Wednesday and PPI figures this Thursday – the combination of these inflation reports will be important. Friday will see Retail Sales from the States.

The return to data as a guideline for financial institutions teamed with the Fed’s rate cut this past Thursday may be an ointment for retail traders who seek a return to normal conditions. Nervous behavioral sentiment could remain a factor in the coming days as people adjust their outlooks to a Trump White House, but the coming week should be relatively quiet regarding surprises.

It isn’t a question of liking or disliking the outcome of the U.S election, it is a question about how behavioral sentiment will now be affected. While some bring up potential tariffs as a major risk for the U.S and global economy, we have been down this road before with Trump. The risk of inflation if trade disagreements flourish should be taken seriously, but Trump has dealt with China in the past and both sides did find a way to do business in many respects. China is probably worried about Trump being in the White House again, but they likely have a gameplan for the tough business discussions ahead. The experience of having dealt with President Trump before allows China and others to know what they may face this time and empower them to be prepared.

It should be noted that Trump has shown in the past a tendency to enter negotiations with a difficult offer and permitting the other side to counter. Trump then might turn down a proposal, but often shows he is open to discussing things further and reaching a compromise. And that is the crucial word – compromise. It is about business and geopolitics. Financial institutions have dealt with a Trump White House before. This time around there is a hope Trump’s naming of a White House cabinet will not be as messy an affair as it was the first time.

The naming of Susie Wiles as the White House Chief of Staff last week looks like a good first step, also having strong Republican leadership in the Senate and House of Representatives may make things easier. While some are worried about a slew of loud rhetorical stances by Trump, perhaps pragmaticism will be practiced. And based on that rather optimistic viewpoint, retail traders may also feel businesslike conditions are ahead and that the financial markets will be a safer place to pursue speculative wagers again in the near and mid-term.

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Interest Rate Cuts and Cautious USD Centric Gusts in Forex

by with No Comment AssetsBehavioral SentimentFeatured Highlights

Interest Rate Cuts and Cautious USD Centric Gusts in Forex

U.K inflation data this morning came in well below estimates, which almost assures the Bank of England will cut their Official Bank Rate on the 7th of November by at least 0.25 basis points. Tomorrow the European Central Bank will announce its Main Refinancing Rate and it is widely anticipated a 0.25 cut will be made official.

The downturns in the EUR/USD and GBP/USD are easy to see via three month technical charts, but both pairs remain above lows seen over the mid-term. However, the choppy and consistent selling in both currency pairs the past few weeks have likely caused pain for any day trader who has remained stubbornly bullish.

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EUR/USD Three Month Chart as of 16th October 2024

Questions surrounding the Federal Reserve remain murky and this is creating USD strength and cautious selling in other currencies. After a rather dovish sounding round of rhetoric from Jerome Powell and a 0.50% basis point decrease in mid-September, financial institutions clearly have become more guarded about the ability of the Fed to remain aggressively dovish. Will the Fed will cut by another 0.25 on the 7th of November and then say they believe they are done being dovish until additional data backs up their stance? Is there a capability the Fed will still cut the Federal Funds Rate by 0.50 over the next handful of month as once envisioned?

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GBP/USD Three Month Chart as of 16th October 2024

However, there is a chance the Fed will not cut in November and some analysts have banged their drums regarding this idea. But the Producer Price Index results last Friday did show that inflation remains under control. So I hold to the notion the Fed will cut by another 0.25 in November. Let’s see.

On Thursday the 10th of October the U.S Consumer Price Index statistics were slightly hotter than hoped for and this certainly caused some of the USD centric storms now thrashing financial institutions and day traders. It should also be mentioned that on the 4th of October the Non-Farm Employment Change numbers came in better than expected. But revisions lower in the jobs data the past handful of months needs to be remembered, and, yes, there will be another jobs report on the 1st of November. Which will be followed on the 5th by this little thing known as the U.S Presidential Election. So caution will be a solid instrument for day traders and possibly financial institutions over the next three weeks. The stronger move by the USD since the end of September has caught many folks off guard.

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Gold Three Month Chart as of 16 October 2024

Gold is trading near record high levels this morning, but intriguingly WTI Crude Oil has calmed down and is challenging near-term lows. U.S Treasury yields have come down slightly to start this week. The point being that while Forex and gold have seen volatility because of interest rates uncertainty, risk taking actually appears rather solid. Yesterday did see selling in U.S equity indices, but there is no denying U.S stocks remain within sight of ultra-highs. And I might be about to sound contradictory soon, and my own personal bias needs to be carefully given consideration by myself and you the reader. Because while I feel rather comfortable about the higher values in the major U.S indices, I do not feel the same way about Chinese equities currently.

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Shanghai Composite Index (SSE) Three Month Chart as of 16th October 2024

The Shanghai Composite Index has traded a little lower again, but this follows a massive swing upwards after Chinese stimulus intervention. But the U.S equity indices and the Chinese markets are not correlated. Perhaps mentioning the Shanghai Composite Index here is wrong, but the stimulus the Chinese government provided may prove to be window dressing on a storefront that suffers from poor economic infrastructure. Day traders in Asia and elsewhere who are betting on upside in Chinese equities need to be very careful, in fact they should be quite suspicious. Economic data from China to start this week has remained lackluster. On Friday GDP, Industrial Production, Retail Sales and New Home Prices data will come from China.

Major currencies which did very well against the USD since July have struggled the past few weeks as clouds have emerged regarding U.S interest rate outlooks. However, at some point day traders and financial institutions may believe the USD has sold off too much during this wave of caution. The JPY, GBP, and EUR have all lost value during this time. As always day traders need to remember they will find it hard to pick the correct time a strong reversal starts to take place. And it should be remembered because of the risk events lined up Forex volatility may rage a while longer. Certainly the outcome of the U.S election will be a factor in the days ahead and may create sideways trading outcomes in many assets until a winner is known.

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USD/JPY Three Month Chart as of 16th October 2024

But the global markets will remain open and trade. While shouts of danger should be listened to and given heed, tomorrow’s ECB meeting and outcome will be a good start to the parade. If the ECB plays the expected song and cuts the Main Refinancing Rate by 0.25 this will prove interesting, because financial institutions have already priced in the rate cut in most cases and they will wonder if their outlooks regarding the Fed and BoE are correct. The U.S will release data tomorrow with Retail Sales and weekly Unemployment Claims. On Friday housing sector results will come from the U.S also. These reports will provide USD impetus into the markets as the near-term is considered and wagered upon.

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AMT Top Ten Miscellaneous Interpretations on the 13th of Oct

by with No Comment Central BanksCryptocurrenciesFeatured Highlights

AMT Top Ten Miscellaneous Interpretations on the 13th of Oct

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10. Language: The French word histoirie includes both history and story via its English interpretation. The French usage conveys the acknowledgement that history is often subjective and a story written with an opinion which may or may not be the correct narrative.

9. Subway Series: New York baseball fans will be in an uproar this coming week as the Mets play the Los Angeles Dodgers, and the Yankees face the Cleveland Guardians. The potential of a crosstown World Series will have NYC holding its collective breath. New York fans shouldn’t celebrate too soon, because the Dodgers are dangerous and the Guardians will be competitive.

8. Free Press: CBS News in the U.S has been widely condemned this past week. Video released shows ’60 Minutes’ explicitly edited an interview with Kamala Harris. Also, a recorded and ‘leaked’ staff meeting from CBS management has come to light in which Tony Dokoupil, a news anchor, is reprimanded for asking critical questions to writer Ta-Nehisi Coates.

7. Barometers: Gold went into this weekend near 2,656.00, WTI Crude Oil closed around 75.45 on Friday, and U.S Treasury yields increased this week and are now challenging values last seen in the third week of August. Intriguingly, the major U.S equity indices continue to flirt with highs. Broad market results appear to be walking a tightrope as financial institutions seem to be waiting for November and U.S election outcomes. However, long-term investors who are diversified maybe cynical of this thought, and believe buy and hold remains the best policy.

6. Buy or Sell: Negativity surrounding Boeing via workers who are on strike, layoffs, a potential corporate bonds downgrade, production delays, and court decisions are still shadowing. In December of 2023, Boeing was near 265.00 USD per share value. Prices were near 158.00 this time last year, and as of this weekend Boeing is close to 151.00. The bad news surrounding Boeing has been a thorn in the side of investors. Boeing is a major corporation in the U.S and relied upon militarily and for global public aviation. What is the downside potential for Boeing the next year compared to upside capabilities long-term?

5. Crypto: The SEC has filed charges against Cumberland DRW LLC, claiming the crypto exchange has been acting as an unregistered dealer. https://www.sec.gov/enforcement-litigation/litigation-releases/lr-26151 It appears the SEC is growing more aggressive via confrontations with U.S based cryptocurrency exchanges. The U.S election result will play a role in the future leadership and direction of the SEC, and could have an affect on cryptocurrency values. BTC/USD is near 62,700.00, ETH/USD around 2,465.00, BNB/USD about 575.00 at the time of this writing.

4. Tranquility: Stronger USD centric price action continues to create some downwards motion for other major currencies, but price velocity was not as violent last week compared to previous days since the end of September. Fragile sentiment in financial institutions is still stirring. The ECB rate decision this week will come Thursday and a 0.25 basis point cut is expected. Traders need to remember that a change to the European Central Bank’s Main Refinancing Rate has likely been priced into the EUR/USD. What needs to be heard now is ECB rhetoric and that is likely to remain guarded. Price velocity in Forex remains a danger for retail traders this coming week.

3. U.S Election: There are only three weeks left until the U.S vote. Day traders need to understand financial institutions will grow more cautious as the election approaches. Speculators may want to try and wager on the outcome of the election, but unless a definitive result is predictable beforehand, it will be hard to take advantage of political winds which are swirling. It will be nearly impossible for day traders to hold onto a position over the next few weeks unless they have deep pockets, use no leverage, and have the patience of a saint.

2. Make or Break: China will release important economic data this week. Trade Balance and Foreign Direct Investment numbers are tentatively scheduled to be released on Monday, along with New Loans reporting. This coming Friday New Homes Sales, GDP, and Retail Sales figures will be released. China is trying to stimulate the economy with billions of cash, but critics suggests this will not work. The Shanghai Composite Index is near the 3,217 mark, on the 30th of September the SSE was near 3,675. Before the China stimulus was released the Shanghai Composite was near 2,755. Bullish SSE momentum has run into headwinds since the beginning of October, China may be pressured to try and create more stimulus, but will it produce a lasting positive result? Traders caught up in the buying frenzy in late September are likely getting more nervous about declines. The USD/CNY is near 7.066. Chinese economic data should be monitored this week.

1. Interest Rates: The Federal Reserve via the CPI and PPI inflation reports still appears able to cut another 0.25 basis point from the Federal Funds Rate on the 7th of November. While the Consumer Price Index data showed a slight tick up in a few categories, Friday’s Producer Price Index met expectations via the core monthly report and the broad monthly outcome came in less than anticipated. The November interest rate decision is important regarding consistency per the Fed’s messaging the past two months, and mid-term behavioral sentiment outlook among financial institutions. U.S Retail Sales and Housing numbers will be published this week.

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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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Has a Great Selloff Begun? The Fed Holds a Crucial Card

by with No Comment AMT MarketsAssetsFeatured Highlights

Has a Great Selloff Begun? The Fed Holds a Crucial Card

Once upon a time the Federal Reserve caused a massive amount of fear to simmer and then boil over in the global market place but this is no fairy tale, the date was the 5th of August 2024 to be exact. However, the trigger causing events to unfold was pulled on Thursday the 31st of July. The Bank of Japan increased their policy rate to 0.25%, which was an increase of 0.15%. Then later on the same day the U.S Fed published a cautious sounding FOMC Statement followed by an inconclusive Press Conference, which left investors scratching their heads.

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Nikkei 225 Three Month Chart as of 4th September 2024

Markets started to react with scorn on Friday the the 1st of August, particularly when the U.S jobs numbers showed a big miss with the Non-Farm Employment Change numbers, and also a lower than anticipated Average Hourly Earnings report was produced. Because Japan was essentially closed for equity trading when the U.S jobs data was released late on Friday, the Nikkei 225 responded with fury on the 5th of August. Global markets essentially crumbled over the next twelve hours as a massive selloff was sparked.

Some analysts noted the move lower in equity indices was an overreaction and the wild Forex trading would calm down, and this began quite predictably on the 6th of August. In essence the bad jobs numbers from the U.S proved the Federal Reserve was being too cautious and would need to begin sounding more aggressive regarding interest rate cuts. This dynamic played out when Fed Chairman Jerome Powell made his Jackson Hole Symposium speech on the 23rd of August and admitted the Fed would have to begin cutting interest rates – and he seemed to indicate the use of a plural regarding Federal Funds Rate cuts. This dynamic essentially confirmed what most financial institutions had bet on starting in late July via Forex. Equity indices which were able to recover plenty of lost ground after the 5th of August, also built up more momentum per Powell’s rhetoric at Jackson Hole.

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USD Cash Index Three Month Chart as of 4th September 2024

However, Powell while sounding more dovish did not say how much the Fed would cut by in September. And based on the history of the Fed’s rather cautious and very passive monetary policy over the past handful of years, many financial institutions likely felt a cautious outlook should include a 0.25% cut on the 18th of September and then another 0.25% move lower in November. In the last week of August – yes, last week – equity markets started to show signs of nervousness again and the USD began to produce choppy trading before going into the Labor Day holiday.

Yesterday’s large selloff in assets has sparked more worries. While it is clear U.S inflation data has shown signs of erosion, the Federal Reserve has not indicated in any form that a Federal Funds Rate cut of more than 0.25% should be expected in two weeks. And perhaps not so coincidentally, the U.S Non-Farm Employment Change and Average Hourly Earnings data will be published this Friday. The outcome of these two reports will shake the ground for investors and financial institutions may be positioning for the drama.

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Nvidia Three Month Chart as of 4th September 2024

An interesting three month barometer looking backwards has been created by Nvidia which has been choppy. While it remains only a ‘stock’, the company’s earnings and outlook are firmly on center stage for many investors. Nvidia has soared in value the past year. While some may feel that the asset is within a bubble, the company continues to post impressive earnings and its outlook appears bright as new software and hardware relies upon its products and development promises. Some analysts have said that earnings reports from Nvidia are now just as important as U.S economic data like inflation and jobs numbers. However, that is overstated, but let there be no doubt that Nvidia’s trading results over the next six months will probably tell us a lot about global market conditions and behavioral sentiment within financial institutions.

Day traders should not panic, they have the capability of watching from the sidelines if they choose over the next few days. The USD is still standing on weaker legs and Gold remains near 2,500.00 USD. Investors who have long-term holdings will certainly be nervous and want to make sure their mid-term yield perspectives are alright and their long-term targets are safe. Speculators small and large know the Fed will definitely cut the Federal Funds Rate in September. Yet, the trillion dollar question is if the Fed will only cut by 0.25%?

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Gold Three Month Chart as of 4th September 2024

If the U.S jobs numbers this Friday come in below anticipated results once again, the Fed should strongly consider a 0.50% basis cut to the Federal Funds Rate on the 18th, that is what financial institutions would certainly like to see. They should also consider coming out with a brief statement this Friday to make sure investors know that a more aggressive stance will be taken if the jobs numbers are weak. However, as long time day traders and investors know, it is not in the Fed’s nature to grab the microphone loudly, unless a seismic event is taking place in the world and inflicting harm on the financial markets. Are investors now trying to warn the U.S Federal Reserve that they will ignite a major selloff unless the Fed becomes more aggressive?

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Reactions and Risks as Trading Clarity Remains Hard to Grasp

by with No Comment AMT MarketsBehavioral SentimentFeatured Highlights

Reactions and Risks as Trading Clarity Remains Hard to Grasp

While many U.S government officials try to shrug off the downgrade of U.S Treasuries by Fitch Ratings last week, a warning shot has been fired regarding U.S spending and the nation’s growing deficit. Janet Yellen and others may believe the downgrade should not have happened, but the prospect that the U.S golden goose is going to stop eventually producing enough eggs is a realistic viewpoint from Fitch. Risk adverse trading on the news was seemingly sparked from the U.S Treasuries downgrade, while many prominent figures including Warren Buffet have claimed they are not worried. However, one thing that the downgrade did was certainly create more clouds for financial institutions which have already been suffering from a lack of clarity the past three weeks.

U.S economic policy remains troubling regarding its spending, and while the government believes its bonds will remain the best in the world for the foreseeable future, it would certainly help matters if responsible ‘adults’ would be allowed a voice regarding stimulus, expenditures and debt ceiling concerns. The U.S has been warned, but with a major presidential campaign approaching on the horizon, more promises to the U.S public will likely carry greater long-term costs.

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Gold One Week Chart as of 8th August 2023

While the USD did get stronger across Forex and gold finished last week near lows, some major currencies finished Friday with slight reversals higher against the USD before going into the weekend, based on the weaker than anticipated Non-Farm Employment Change outcome. However, Average Hourly Earnings came in slightly higher. The rise in wages for employees wasn’t expected, but the gains via the inflation number may not have been considered significant enough to cause a panic.

Day traders trying to navigate through the news of the ratings downgrade and the mixed jobs numbers from the U.S may have gotten ripped apart from the volatility late last week. Forex brokers likely had a good week if the majority of their speculators were ‘B’ book – virtual – traders. Survivors of last week’s dynamic price action should be aware that financial institutions do not have the best of outlooks for global central banks. This week’s coming data may help a bit, but trading could also remain rather dangerous and churn volatility.

Global Outside Influence to Give Attention:

Although Niger may seem like a world far away for most day traders, they should keep an eye on the developments of the African nation. A military coup has gotten the attention of global powers and there are threats of military intervention rattling. France, the U.S and Nigeria and other ‘Western’ leaning nations have a stake in the Niger drama, on the other side is Russia and its Wagner affiliated mercenaries. The potential for a war to to start in this landlocked northern African nation appears to be growing. A conflict in Niger could include a wide range of competing sides and create loud rhetoric and hyperbole. It could also cause uncomfortable feelings at the BRICS summit scheduled to begin on the 22nd of August in Johannesburg, South Africa.

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GBP/USD One Month Chart as of 8th August 2023

Monday, 7th of July, U.K Halifax Home Price Index – this data is expected to remain rather stable, but the past three results have been negative. Mortgages are getting expensive in the U.K and the pressure added from higher interest rates is not helping. The GBP/USD could react briefly to this outcome.

Monday, 7th of July, E.U Sentix Investor Confidence – the reading is anticipated to be worse than last month’s outcome regarding investor outlook. The past three months have been negative. The E.U is certainly facing recessionary pressure. Oddly enough, a poor outcome could spur on the belief the ECB may have to become less aggressive regarding their higher interest rates. The EUR/USD may see a flurry of reactions from this report.

Tuesday, 8th of July, China Trade Balance – the results will get plenty of attention because recent economic data from the nation has been troubling. Export demand is important for China’s economy.

Tuesday, 8th of July, Germany Final Consumer Price Index – the result is expected to match the forecast of a 0.3% gain. This inflation report will be watched by EUR/USD, but if expectations are met this could create rather consolidated trading until Thursday for the currency pair.

Wednesday, 9th of July, China CPI – the inflation data from the nation will be watched by global investors. Recent statistics from China have signaled concerns about ‘deflation’. An outcome of minus -0.5% is expected. Economic issues are shadowing China, this as it remains active in global affairs.

Last week Argentina announced China helped facilitate a ‘bridge loan’ for the South American nation so it could make a repayment to the IMF. Rising economic concerns in China could start to squeeze its ‘cash power’ as it tries to gain influence globally by pumping Yuan (CNY) into international finance. China has certainly been bold and is playing a ‘long game’, because its choice of Argentina as a nation to help can certainly not expect to produce short-term financial gains.

Thursday, 10th of July, U.S CPI – Consumer Price Index results from the States will cause potentially dynamic broad market movement. Inflation is expected to match last month’s rise of 0.2% via the broad and core numbers. However, traders should note that some analysts have voiced concerns rising energy prices the past month will hit the inflation numbers, if this occurs it could spark a volatile USD. Higher Crude Oil prices combined with a streak of U.S hot weather may create an intriguing outcome. Risk management should be used by day traders who are wagering in the markets as the CPI readings are released.

Friday, 11th of July, U.K GDP – the Gross Domestic Product numbers will be important immediately for the GBP/USD. Although last month’s outcome was slightly stronger than anticipated it was still negative with a minus -0.1% reading. The growth number this time around is expected to gain 0.2% per the monthly report.

Friday, 11th of July, U.S Producer Price Index – economic numbers from the States have been mixed recently. These inflation numbers are expected to show a slight rise, if the outcome meets expectations – the broad markets may remain calm. However, if inflation is stronger than expected, the result could set off fireworks if the outcome sets off fears about the U.S Fed maintaining it hawkish rhetoric.

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USD and the Fed: Parade of Jobs Data Ready to Make Noise

by with No Comment AMT MarketsEconomic CalendarFeatured Highlights

USD and the Fed: Parade of Jobs Data Ready to Make Noise

U.S data last week created landmines for Forex speculators and the Federal Reserve. Global financial markets return to full action today following the long holiday weekend. Growth and inflation numbers from the States last week provided more unsettling results for financial institutions. While Forex has proven difficult for many traders, the major equity indexes are flirting with highs but also running into some intermittent headwinds.

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US Dollar Index Six Month Chart as of 2nd April 204

In December of 2023 the Fed was interpreted as having confirmed it would be able to cut the Federal Funds Rate during the 2024 calendar year rather consistently. Dovish policy had been anticipated by financial institutions which began to sell the USD aggressively in November. But by the end of the Christmas week the USD had essentially hit lows in many major currency pairs, and as January started reversals intensified.

The last three months of trading has produced choppy conditions in Forex, but one thing is clear – financial institutions no longer believe the Federal Reserve will be able to aggressively cut the Federal Funds Rate. The Fed has now begun to show signs that it is nervous regarding U.S economic data, this as growth via GDP numbers has remained firm, inflation sticky, and consumers resilient. Clouds shadow Forex and day traders have been hampered by a lack of solid trends.

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Gold Six Month Chart as of 2nd April 2024

Gold is trading near record price levels. The fact that the precious metal is touching all-time values as the USD has been strong has flustered some speculators. But traders need to remember Gold is affected by large players, including nations, that may be hedging USD bets and preparing for political instability. The price of Gold may underscore belief the U.S Fed will have to cut rates at least a couple of times this year no matter the economic facts on the ground, because this is an election year and if the central bank doesn’t deliver on its ‘promise’ jobs at the Fed may be at stake.

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WTI Crude Oil One Month Chart as of 2nd April 2024

Not making anything easier for Federal Reserve policy is the higher price of WTI Crude Oil which has reached the 84.00 USD per barrel price. If energy costs go higher this will not help the fight against inflation. OPEC will be conducting a meeting this week. As an aside the price of Cocoa per metric ton is now over 10,000.00 USD, which is more expensive than Copper. While the price of Cocoa is not a game changer for global financial markets, the higher price will make chocolate more expensive, which some traders may find disagreeable as they try to relax and watch their speculative wagers while trying to nibble on their favorite snack.

Monday, 1st of April, U.S ISM Manufacturing – both the Purchasing Managers Index reading and the Price numbers came in higher than expected. The stronger results show the U.S economy remains better than anticipated by the Federal Reserve, which has been counting on its higher interest rate to slow down growth and inflation.

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EUR/USD Six Month Chart as of 2nd April 2024

Tuesday, 2nd of April, European Manufacturing PMI – the European Union and Great Britain will release their business readings today. The results will demonstrate insights regarding sentiment. Financial institutions are worried the European Central Bank and Bank of England may have to consider lowering their interest rates before the Federal Reserve. The EUR/USD and GBP/USD will react to the results.

Tuesday, 2nd of April, U.S Federal Reserve FOMC Members – there will be appearances throughout the day in the U.S from various Federal Reserve members who will make the case for their monetary policy outlooks. It should be noted that Jerome Powell will be speaking on Wednesday. The JOLTS Job Openings will come out before the FOMC members speak. While the JOLTS report will not cause earth shattering reactions, the jobs data is the beginning of the parade regarding employment statistics for this week.

Wednesday, 3rd of April, U.S ISM Services PMI – taking into account the Manufacturing report came in stronger than expected on Monday, the Services data will be watched by financial institutions. If this report is better than anticipated, USD sellers will not rest easy. The ADP Non-Farm Employment Change data will also be released on this day.

Thursday, 4th of April, U.S Weekly Unemployment Claims – the Federal Reserve has been counting on employment strength to erode based on their notion that higher interest rates would create ‘lagging’ reactions in the jobs sector. Jerome Powell has said the Fed is anticipating weaker employment data. The results from the weekly report will not be as significant Friday’s data, but should be given attention by day traders in Forex.

Friday, 5th of April, U.S Non-Farm Employment Change and Average Hourly Earnings – the climax for speculators this week will be these jobs numbers from the States. If the numbers produce less hiring than expected this would help USD bearish momentum. Wages will also prove crucial regarding behavioral sentiment for financial institutions. Simply put, the Federal Reserve is anticipating that weaker employment numbers are going to be seen, if this doesn’t happen it might cause major volatility in Forex going into the weekend.