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Absurd Friday Forex Results? Suspicions as the Week Begins

by with No Comment AMT MarketsAssetsFeatured Highlights

Absurd Friday Forex Results? Suspicions as the Week Begins

This coming week may be an opportunity where speculators can test their conspiracy thinking, perceptions of technical and fundamentals in unison. Experienced traders who typically have a high degree of skepticism about markets (particularly when results don’t go in the direction they expected) may question late last week’s results.

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EUR/USD 5 Day Chart as of 3rd of Sept. 2023

Without trumpets or too much hyperbole, was Friday before going into the weekend a ‘false flag’, this as the USD gained strength against many other major currencies. A lack of volume because of the Labor Day holiday coming in the U.S and Canada tomorrow may have affected the Forex landscape. While trading is largely done by computer programs in financial institutions, day traders should understand last Friday worked as a get away day to enjoy a long holiday weekend in North America.

Meaning financial executives largely escaped their offices because they have seniority and the ability to disappear while their ‘underlings mind the store’. Essentially senior management often tells the staff that has to stay behind, “monitor and not touch the system”. This could have left the door open for what appears to be a strange reaction in Forex upon what was in fact weaker data on Friday from the U.S via the Average Hourly Earnings which came in slightly below expectations, and less than stellar U.S GDP results on Wednesday the 30th of August.

Yes, also this past Friday the Non-Farm Employment Change numbers were fractionally better this month than anticipated, but the prior month’s results were actually revised downward. And yet the USD remained strong. Is this because senior analysts, chief traders and risk management officers were absent on Friday?

Tomorrow the same folks will remain largely away from the markets too, meaning results should also be viewed with suspicion. Which sets the table for an intriguing Tuesday and Wednesday for all the major and minor currency pairs teamed against the USD. Gold and equity markets will need to be monitored closely too.

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Gold Cash Price Five Day Chart as of 3rd Sept. 2023

Some potential clues are that the price of gold stumbled slightly on Friday as the weekend approached, but this happened as the EUR/USD sank to a low for the week, and the GBP/USD came under renewed pressure. But again this happened in rather questionable circumstances. Important support levels technically may get tested tomorrow, but trading volumes should be examined. Gold in many respects held onto gains made earlier in the week.

Yes, there are reasons to be nervous in financial institutions, due to higher short-term U.S Treasury yields, concerns about the China economy, mortgage rate worries in the U.S and elsewhere, fears about credit availability for small U.S businesses. However, these troubles have not caused a massive meltdown in the most primal of trading venues yet – major stock indices.

September is a notoriously volatile month for equities and speculators who use CFDs to participate in the stock markets globally need to be careful. Correct, some well known ‘traders’ are talking about a coming selloff in the markets, but so far we have not seen a major decline in the NASDAQ, S&P 500 or Dow Jones 30 indices. Day traders should not and cannot underestimate the potential for volatility to occur suddenly. Successful speculative bets via limited funds often means having to practice patience and risk management.

Thus, as the week begins early this Monday, day traders should be careful. Please note that a lack of big trading volumes because of the absence of U.S and Canadian financial institutions will make tomorrow’s results questionable. Opening the door for the potential of reversals on Tuesday, which might be abrupt as a ‘re-balancing’ of sorts takes place as folks returning to their offices seek equilibrium perhaps with their adjusted outlooks.

Simply put the U.S Federal Reserve the past two weeks has seen the same lackluster U.S data as all global traders, and the U.S central bank is in no position to raise interest rates over the mid-term. It would be useful if the Fed voiced their insights regarding the weaker than expected U.S Gross Domestic Product results last week, and the lower than expected Average Hourly Earnings report seen before the weekend. However, do not count on the Federal Reserve to do the right thing.

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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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U.S Inflation Data Ready to Rattle Markets and Traders

by with No Comment Federal Reserve, Interest RatesMajor Global Equity Indices

U.S Inflation Data Ready to Rattle Markets and Traders

Another Day to Prove some of us are Fools

The U.S will publish its PPI data in a few hours time. The outlooks from many experts regarding the Federal Reserve have been rather suspicious when contemplating the U.S central bank. However, the results of the Non-Farm Employment Change numbers on the 3rd of February, and this Tuesday’s rather stubborn Consumer Price Index reports have created doubt among the ‘experts’.

  • Forex and equities and their related indices will react to the publication of the Producer Price Index statistics today and create price velocity that day traders may find dangerous.

  • On the surface it appears many Forex pairs have begun to search for a calm middle ground leading up to the release of the PPI report. Perhaps positions are on hold until the release of the inflation data.

  • Traders should not be tempted and get stuck in tranquil waters that could turn into seas that drown their victims later.

Day traders who choose to wager before the reports are published today are essentially gambling with their money unless they have direct knowledge regarding today’s outcome. The rather comfortable mid-term bearish trend in the USD against most major currencies has been stopped cold since the 3rd of February.

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GBP/USD Five Day Chart

Outlook regarding the U.S Federal Reserve has gone from scorn and mockery and become a rather more sedated acknowledgement that inflation is rather robust. Today’s PPI numbers will provide evidence and clarity. If the number via the Producer Price Index is stronger than anticipated it will certainly create a foundation for the ‘promised’ 0.25% rate hike in March, but also set the road for more hikes to potentially come.

Questions remain loud. The better than expected jobs numbers a couple of weeks ago was a cumbersome development for financial houses paying attention to recent layoffs from top companies and betting on weaker data. When hiring proved to be stronger than anticipated it could be pointed out that the employment numbers were looking backwards and not forward. Yet, the strong Retail Sales numbers and the improving Empire State Manufacturing reading yesterday are signs the U.S economy remains in a better place than forecasted. Recession may not be around corner.

Day traders need to be cautious and the ‘experts’ may want to look for their safe places today.