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Asian markets advance slightly on Wednesday

Asian stock indexes increased slightly on Wednesday. The S&P/ASX 200 edged up by 0.05%, while the Shenzhen Composite rose by 0.95%. The Shanghai Composite and the Nikkei 225 gained 0.36% and 0.41% respectively. The Hang Seng Index advanced by 0.71%, while the KOSPI increased by 0.73%.

Indexes in the Asia-Pacific region entered a slight correction following an earlier slump triggered by fears of a new wave of COVID-19 in the region. China has re-imposed quarantine measures, while South Korea reports an increase in coronavirus infections.

New lockdowns could weigh down on Asia-Pacific economic growth.

Traders also noted policy decisions by the main central banks, which are striving to bring soaring inflation under control. The Bank of Korea has increased the interest rate by 50 basis points to 2.25% from 1.75%, matching market expectations. Economists see the South Korean regulator hike the rate further in the near future.

South Korean stocks increased slightly, with LG Electronics, Inc. and Samsung Electronics, Co. gaining 0.7% and 0.5% respectively.

On the S&P/ASX 200, the best performing stock was Megaport, Ltd, which jumped by 6.5%. St. Barbara, Ltd. rose by 4.7%, while Pointsbet Holdings, Ltd. increased by 5%.

Investors also awaited the release of US CPI data. Inflation in the US was projected to increase to 8.8% in June, up from 8.6% in May.

Rising inflation would boost expectations of further monetary tightening by the Fed. However, it can also indicate that inflation has peaked amid falling crude oil prices. Market players are wary of higher interest rates weighing down on the global economy.

According to the latest statistic data, China's exports increased by 13.2% year-on-year over the past 6 months. Imports rose by 4.8%.

On the Hang Seng Index, Haidilao International Holding, Ltd. increased by 6%, while JD.com, Inc. and Sands China, Ltd. rose by 4.6% and 3.8% respectively. Shares of Tianqi Lithium, Corp. dived by 10% in their market debut.

On the Nikkei 225, the best-performing stock was Toho, Co., which climbed by 6.1%. The movie theater company's net revenue surged by 72% in the first quarter thanks to a rise in theater visitors.

Tokyo Electric Power Co Holdings Inc. increased by 5.6%, Recruit Holdings Co., Ltd. gained 2.9%, Honda Motor Co., Ltd. rose by 2.6%, and SoftBank Group, Corp. advanced by 2.4%.

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Dollar: fireworks of growth and inflationary confrontation

The US currency once again took advantage of rising inflation, soaring after the release of the consumer data index (CPI) in the US. However, "skimming the cream" after an inflationary turn, the dollar risks sinking in the medium and long-term planning horizons.

According to reports from the US Department of Labor, the inflation rate measured by the consumer price index (CPI) has soared to the highest in four decades. By the end of June, it reached 9.1% year-on-year, demonstrating the most significant increase since 1981. Recall that this indicator did not exceed 8.6% in May. At the same time, the expanded inflation indicator in the United States increased by 1.3%, which is the highest level since 2005. This indicator reflects the increase in prices for gasoline, housing and food.

Against this background, the US currency showed an incredible rise, sharply overtaking the euro in the EUR/USD pair. In the current situation, the euro sank by 0.3%, reaching 1.0004. As a result, the dollar, having tested another high, returned to parity with the euro after a short-term breakthrough. On Wednesday, July 13, the single currency fell to the level of 0.9998 for the first time since December 2002. Then the euro fell by 0.39% on the morning of Thursday, July 14, reaching 1.0020. Later, the EUR/USD pair traded at 0.0023, unsuccessfully trying to get out of the price hole.

The sharp spurt of the dollar amid the rise in consumer prices was accompanied by a violation of parity on the part of the euro. After the release of US inflation data, the euro slipped below the parity level in the EUR/USD pair. According to analysts at Commonwealth Bank of Australia, the parity of both currencies, settled at 0.9900, remains the lower limit for the EUR/USD pair. In the future, currency strategists expect consolidation to come in tandem.

Movements in the EUR/USD pair are taking place amid rapidly growing inflation, which has accelerated significantly after reaching a high over the past 40 years. Further strengthening of inflation increases the risk of an aggressive rate hike by the Federal Reserve. According to analysts, this will trigger a recession in the near future. At the same time, concerns about the recession provide significant support to the greenback.

According to Rafael Bostic, president of the Atlanta Fed, extremely high inflation leaves the US central bank no choice in raising interest rates, which is likely to be resolved positively. This statement was supplemented by Wells Fargo analysts, explaining that the Fed will need several monthly inflation indicators to make a final decision on the rate. Regarding the June consumer price index (CPI), experts expected that it "will be hot, but this report just burns." Recall that consumer price inflation in the United States outstripped already inflated expectations, soaring by 1.3%. In annual terms, prices rose by 9.1%, which is a new cyclical high.

According to experts, a steady increase in prices for basic goods, recorded for two months, is extremely undesirable for the Fed. The central bank seeks to weaken core inflation in the consumer goods segment amid a rapid rise in the cost of food and energy. However, progress in this matter is minimal so far.

In such a situation, the greenback was the winner, drawing strength from the unwinding of the inflationary spiral. However, there is a walk on thin ice here: in the long term, the USD risks to sink significantly. At the moment, the dollar feels confident, demonstrating its importance to the world. The recent aggressive USD rally indicates that the US currency acted as a shield for the population of the United States suffering from extremely high inflation.

In the current situation, the purchasing power of American imports is increasing. Note that a strong dollar provides protection from inflation in the form of cheaper imports. However, Morgan Stanley analysts believe that the strengthening USD adds risks for the Fed, as a strong national currency makes it difficult for the central bank to cool demand. Such a situation provokes further tightening of the monetary policy or leads to stagflation. Recall that with stagflation, high inflation persists, but economic growth slows down significantly.

Another important factor undermining the strength of the dollar in the EUR/USD pair remains the cardinal difference in the monetary strategies of the Fed and the European Central Bank. This year, the US central bank has raised rates by 1.50%, and the European one is still in thought, although inflation in the eurozone is also breaking records. The gap between the Fed and ECB rates will grow after the June consumer price index in the United States showed a new 40-year high. At the same time, experts do not rule out that this month the ECB will begin its rate hike cycle, but with a smaller step – 0.25%.

In the long term, the strengthening of the greenback will contribute to further tightening of financial conditions. Against this background, the Fed continues to reduce its balance sheet, Morgan Stanley emphasizes. As a result, a strong dollar increases the risk of a recession in the United States, which many investors consider inevitable.

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Gold cannot withstand the onslaught of a strong dollar[/B]

Gold is falling in price on Thursday amid a rising dollar. Judging by the rise in US currency quotes, investors reacted with enthusiasm to record inflation data in the US.

So, in the morning hours of the European trading session, the price of the August gold futures on the New York Comex exchange fell by 0.52% to $1,726.45 per troy ounce. By 14:50 GMT, the quotes had already fallen by 2.23% to $1,696.85. Silver by this time managed to decline by 5.61%, to $18,117.

At one point the August gold futures were at $1,704.28.

The dollar index, or its exchange rate against a basket of six other currencies, rose 0.96% today, reaching 109.03 points. A stronger dollar makes gold less affordable when buying in a different currency. The yield on 10-year US Treasury bonds is 2.982%. The yield curve of 2-year and 10-year Treasury bonds remains inverted and the most inverted over the past 22 years. This indicates an approaching economic recession.

In addition, another inflation report was published on Thursday, which made a lot of noise and caused a storm of emotions among traders. According to the data, in June, annual inflation in the United States rose to 9.1% in annual terms (it was at the level of 8.6% in May). This June figure was the highest in the United States since November 1981.

Obviously, in this scenario, the Federal Reserve is forced to keep its finger on the pulse of aggressive tightening of monetary policy. According to the CME Group, almost 82% of analysts are confident that at the July Fed meeting the discount rate will be significantly increased – immediately by 100 basis points, that is, to the level of 2.5-2.75%. By the way, before these data were released, about 91% predicted a rate increase of only 75 basis points. It just so happened that the increase in the US rate (and even expectations of its increase) has a very beneficial effect on the exchange rate of the US national currency, but for the demand for gold, this news can be called negative.

A significant difference in interest rates in large countries (they are higher in the US) leads to the spread of the so-called Carry Trade, when international traders and institutions exchange their own currencies for possession of the US dollar. As history shows, this phenomenon can persist for quite a long time, which once again will only strengthen the dollar.

The strong drop in crude oil futures prices this week is also a factor reducing the prospects for gold. NYMEX futures dropped overnight to the lowest level in the last three months – $93.24 per barrel. January crude oil futures are trading at $84 per barrel. This indicates that the market is confident that crude oil prices will decline in the coming months. The fall in the cost of crude oil contributes to a decrease in the value of assets in other commodity markets. Such a noticeable weakening of the commodity sector is an important early sign that inflationary pressure has already reached its peak.

So, we are seeing an increase in bond yields, a rise in the dollar, while a noticeable drop in crude oil prices. Obviously, these are all clearly bearish elements that are working against bulls in the metals market today. In addition, investors' fears about the recession in the United States are growing stronger and there is a decline in consumer and commercial demand for metals.

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Forex Analysis & Reviews: Forecast for GBP/USD on July 18, 2022

The British pound's growth from last Friday amounted to 42 points. This morning, the pound added another 32 points, coming close to the upper border of the descending wedge on the daily scale chart. Consolidating above it will open the way to the 1.2073 target level. The Marlin Oscillator is set strongly up. Its signal line has already gone above the sloping resistance line.

The price's exit from the wedge can transform it into a normal descending channel, the upper hypothetical border of which is indicated on the chart in light green. It will be a complex and ambiguous growth. The Marlin Oscillator is growing in the positive area on the four-hour chart, there is not much left to the MACD line (1.1925). The exit above the line will give the corrective growth an additional charge of optimism. The target will be resistance at 1.2073.

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Asian markets close higher on Monday

Asia-Pacific markets broadly advanced on Monday. The S&P/ASX 200 rose by 0.80%, while other indexes gained 1.50% or more. The Shanghai Composite and the Shenzhen Composite increased by 1.49% and 1.48%, respectively. The KOSPI went up by 1.65%, while the Hang Seng Index climbed by 2.64%. Japanese stock exchanges were closed today, however the Nikkei 225 edged up by 0.54% on Friday.Asian markets followed US indexes, which finished Friday in positive territory. American stock indexes gained about 2% on Friday thanks to strong statistic data which eased recession fears among market players. However, there is still a possibility of a 100 basis point interest rate hike by the Federal Reserve.The upsurge of COVID-19 infections in China is putting pressure on the upside potential of Asian indexes. New quarantine measures threaten to affect economic recovery, increasing the possibility of a recession in China.However, the markets found support in statements by Chinese officials that the country has enough financial resources and options to maintain economic stability in the country. The People's Bank of China has injected 12 billion yuan into the financial system via a seven-day reverse repurchase agreement.On the Hang Seng Index, the best performing stocks were Country Garden Services Holdings, Co., Ltd. (+7.2%), Meitua (+6.4%), and Country Garden Holdings, Co., Ltd., (+6.3%).Chinese oil stocks also went up, with CNOOC, Ltd. increasing by 4.5% and China Petroleum & Chemical, Corp. advancing by 4.1%. Shares of Alibaba Group Holding edged up by 0.8%.On the KOSPI, Samsung Electronics, Co. rose by 2.7%, while LG Electronics, Inc. increased by 1.6%.On the S&P/ASX 200, BHP Group, Ltd. and Rio Tinto, Ltd. gained 1.8% and 1.9% respectively. Shares of Australia & New Zealand Banking Group, Ltd. declined by 1.3% after the company announced it was set to buy Suncorp Bank for 4.9 billion Australian dollars or $3.3 billion.

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Forex Analysis & Reviews: Elliott wave analysis of EUR/USD for July 19, 2022

EUR/USD tested the channel support line at 0.9952 which was just above our ideal target at 0.9902. This could be enough to fulfil the target of wave C and 2 and set the stage for wave 3 higher. The expected impulsive rally in wave 3 should ultimately break above the peak of wave 1 at 1.6038.

To confirm that wave 2 has indeed completed and wave 3 is in motion, we will need a break above minor resistance at 1.0220 and more importantly above resistance at 1.0615.

*The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade.

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Bitcoin steadily rises, but experts see downsurge ahead

Bitcoin went into an upward correction early on Tuesday, reaching $21,793 at the time of writing.

According to CoinMarketCap, over the past 24 hours BTC reached an intraday low of $21,190 and an intraday high of $22,795.

During the trading session, bitcoin rallied and jumped 7.5% to $22,306 in several hours, surpassing $22,000 for the first time since June 8.

However, despite the strong upward movement of the past two days, the bear market still continues for bitcoin, analysts note. The leading currency needs to break above $30,000 to end its downtrend.

Altcoin market
Ethereum, the leading competitor to BTC, has also advanced. At the time of writing, ETH gained 8.12% over the past day and rose to $1,527.

Last week, Ethereum climbed by 20%. ETH has jumped by 47% since the beginning of July, but remains below its all-time high of November 2021 by 71%.

At the end of last week, ETH surged upwards by 12% to $1,300 following an announcement by one of the project's developers that the transition to the proof-of-stake algorithm could occur as early as mid-September.

Out of the top 10 cryptocurrencies by market capitalization, most coins advanced yesterday, except for XRP and several stablecoins.

The best-performing cryptocurrencies were Avalanche (+12.07%), Dogecoin (+5.19%), and Binance Coin (+4.4%).

According to CoinGecko, the best performing coin out of the top 100 cryptocurrencies by market cap was Ethereum Classic, which jumped by 22.8%. The worst performing currency was Lido DAO, which tumbled by 15.4%.

Contrasting outlooks by crypto experts

According to CryptoQuant, a BTC sell-off by miners in the future could push bitcoin's price down significantly.

CryptoQuant's analysts noted that June's downward correction forced miners to dump their BTC holdings to minimize losses and lower the overall risks. The analysts stated that miners are now in a distribution phase and warned that growing pressure caused by the miners' capitulation could push the price well below the $20,000 mark in the near future.

Matthew Kimmell, digital asset analyst at CoinShares, also stated that troubles plaguing the crypto mining sector could cause a downturn for leading digital assets. As mining companies go bankrupt, the prices of mining rigs could also slump, putting extra pressure on crypto assets.

An analysis by Glassnode said the capitulation in the crypto market would likely continue amid ongoing severe financial stress. Rising pressure in the digital asset market would send bitcoin below $20,000.Some experts, such as Nassim Nicholas Taleb, former trader and author of "Black Swan", refused to give any predictions on when the bear market would end. "The journalistic expression 'crypto winter' is highly deceiving; it implies seasonality and, perhaps worse, a reversion to some trend. No, your winter may not be transitory, and what you call winter may degrade into a permanent & inescapable ice age fraught with extinctions," Taleb claimed.

An outlook by Grayscale Investments was more bullish on crypto and bitcoin and particular.

The investment company's analysts claimed the bear market could last for another 250 days, citing their estimates of trend cycles in the crypto market. Grayscale stated the downtrend was a regular market event that repeats every several years, and that it presented a good buying opportunity.

Investment advisor Edward Dowd said bitcoin could soon become an integral part of any investment portfolio, despite the repeated turmoil in the market. Dowd added that BTC could also surpass gold thanks to its decentralized nature and transparency.

Arthur Hayes, former CEO of BitMEX, claimed bitcoin would rise swiftly after touching the bottom. Hayes sees the Federal Reserve begin printing trillions of dollars in the future, which would then push BTC up.

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EUR/USD. Trapped in inflated expectations: ECB July meeting preview

The European Central Bank will sum up the results of its next - July - meeting on Thursday. This is by no means a "passing" meeting: for the first time in the last 11 years, the ECB will raise interest rates.

By itself, the fact that there will be an increase in the rate has already been resolved, the intrigue remains regarding the magnitude of this increase. In addition, traders are interested in further prospects for tightening monetary policy amid existing risks for the debt market. In other words, the results of tomorrow's meeting will surely provoke strong volatility for the EUR/USD pair. The only question is, on whose mill will the water be poured. If the central bank surprises with an ultra-hawkish tone, the pair could not only test the 1.0300 resistance level, but also consolidate in the area of the 3rd figure. Otherwise, the euro will again be under pressure throughout the market. In my opinion, current market expectations are somewhat overstated, so there is a possibility that the ECB will not live up to its hopes on Thursday.

It is worth noting that a few weeks before the July meeting, traders actually resigned themselves to the fact that the ECB would gradually and measuredly tighten monetary policy. Representatives of the ECB have repeatedly said that it is impossible to sharply raise the rate to curb inflation - primarily because of the risks for the debt market. Just last week, a member of the Board of Governors of the central bank, Olli Rehn, announced that at the July meeting the rate would be increased by 25 basis points. Similar forecasts have been voiced by ECB President Christine Lagarde and some other members of the Board of Governors.


With such a wide-ranging and unequivocal preview, the market has grown accustomed to the idea of a 25-point advance in July. All attention was focused mainly on the prospects for further steps by the ECB, primarily in the context of the September meeting.

However, the day before yesterday, the market was stirred up by journalists from the news agency Reuters. Referring to their anonymous sources in the ECB, they said that the option of a 50-point rate hike is still on the agenda. At the same time, agency reporters quite recently (July 15) interviewed more than 60 economists about the possible outcomes of the July meeting. 62 out of 63 experts surveyed unanimously stated that the central bank will increase the rate by 25 points. In this case, economists reflected market expectations, which until recently prevailed among traders. However, insider information from Reuters, as they say, mixed all the cards.

Amid these hawkish rumors, the euro has significantly strengthened its position against the dollar. Bulls were able to move away from the parity level by more than 200 points, updating a two-week price high on Wednesday, rising to 1.0274. But, in my opinion, this is a Pyrrhic victory for the EUR/USD bulls, which could have negative consequences for the euro.

In fact, EUR/USD bulls are repeating the mistake of the dollar bulls, who were inspired last week by rumors that the Federal Reserve could raise rates by 100 points at once following the results of the July meeting. Such a hawkish scenario was supported by Fed spokeswoman Mary Daly, who, however, does not have a vote in the Committee this year. Nevertheless, the hawkish rumors did their job: the EUR/USD pair again renewed the 20-year price low, plunging below the parity level, to the level of 0.9953. But as soon as other Fed officials (primarily those with voting rights) criticized the idea of a 100-point increase, the greenback weakened across the market. The dollar literally slipped out of the blue and allowed opponents to seize the initiative.

EUR/USD bulls may find themselves in a similar situation on Thursday. After all, now a 25-point increase in the rate is no longer the base scenario, but a "conditional dove" scenario, the implementation of which will put pressure on the euro. To strengthen the single currency, the ECB needs to either raise the rate by 50 points on Thursday or announce such a step in the context of the September meeting in plain text. Any doubts of the central bank will be interpreted against the euro.

Also on the ECB's agenda is the issue of a possible uncontrolled expansion of spreads between the yields of government bonds of the EU core countries and the southern states of the bloc. Back in June, the ECB announced the development of a new tool to limit fragmentation in the eurozone. According to Bloomberg, at its July meeting, the central bank will present an unlimited bond buying tool that will help markets "adjust to sharper and faster interest rate hikes than previously thought." However, if the representatives of the ECB show excessive caution in tightening monetary policy, this fundamental factor will be ignored by the market.

Thus, the single currency found itself in a kind of trap of inflated expectations ahead of the ECB meeting. In my opinion, it will be difficult for ECB members to realize the expected hawkish scenario, even despite a record increase in headline inflation. It is also necessary to take into account that the core consumer price index in the eurozone (excluding volatile energy and food prices) unexpectedly slowed down its growth on an annualized basis, reaching 3.7% instead of the planned growth of 3.9%. And German inflation last month showed the first signs of a slowdown. All these factors reduce the likelihood that the ECB will decide on a 50-point rate hike.

Consequently, EUR/USD bulls are forced to rely only on an unexpected "hawkish impulse" of the ECB. To put it bluntly, this is an unlikely scenario.

In anticipation of such important events of a fundamental nature, it is advisable to stay out of the market. Amid a general weakening of the US currency and a (possible) weakening of the euro, it is reasonable to wait for the results of the ECB's July meeting: the pendulum will swing in one direction on Thursday, determining the further vector of movement for EUR/USD.

*The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade.

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Asian indicators show different directions

The main indices of the Asia-Pacific region show different directions. Some indices are declining, among them the Chinese Shanghai Composite and Shenzhen Composite, which lost 0.42% and 0.06% respectively, as well as the Hong Kong Hang Seng Index, which decreased by 1.35%. At the same time, other indices show a slight increase: the Australian S&P/ASX 200 gained 0.08%, the Japanese Nikkei 225 at 0.22%, and the Korean KOSPI at 0.71%.

A number of different reasons contributed to this ambiguous behavior of the Asia-Pacific indices: the deterioration of the situation with COVID-19 in China and the concerns about the possible economic recovery as a result.

Market participants reacted positively to the Bank of Japan's decision to leave the rate unchanged at -0.1%. However, the central bank's forecasts regarding the increase in GDP worsened somewhat: to 2.4% from 2.9% announced in April. As for the increase in inflation, expectations, on the contrary, increased to 2.3% from 1.9%.

At the same time, the country has seen an increase in imports of goods by 46.1%, which turned out to be higher than analysts' forecasts, who expected an increase in imports by 45.7%. Exports also increased (by 19.4%), which also exceeded expectations of 17.5%.

Of the companies included in the calculation of the Nikkei 225 index, Nikon, Corp. (+2.5%), GS Yuasa, Corp. (+2.4%), as well as Fujitsu, Ltd. (+2%) noted an increase in the value of securities.

Some support for the Asia-Pacific indices was provided by US indicators, which closed the day before with an increase of up to 1.5%. The growth of US indicators is primarily due to the good results of quarterly reporting of companies, especially among the technology sector.

Of the components of the Hang Seng Index, Country Garden Services Holdings, Co., Ltd. (-6.4%), Longfor Group Holdings, Ltd., (-5.3%), China Resources Land, Ltd. (-4.4%), as well as Haidilao International Holding, Ltd. (-2.2%) were marked by a drop in quotes.

The companies that form the basis of the calculation of the Korean KOSPI, on the contrary, showed an increase in the share price. Thus, Samsung Electronics, Co. securities gained 1.5%, and Kia Corp. at 0.5%.

The largest companies from Australia show a drop in quotes: BHP Group, Ltd. securities fell by 1.7%, and Rio Tinto. Ltd. by 2.8%.

While the price of Zip Co. shares rose by 13% after the announcement of the company's plans to optimize its operations in the international market for profit.

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The dollar remains the first violin in the EUR/USD pair, and the euro is afraid to make a mistake

The beginning of this week once again gave the dollar confidence in its strength, which cannot be said about the euro. The latter expects to bounce back after a series of losses, but fears a new decline. Many experts believe that the euro has no room for error.

Currently, the greenback continues the difficult path to strengthening. On Monday, July 25, market participants are preparing for a sharp increase in interest rates in the US (by 75 bp to 2.25-2.5% per annum). This is expected to take place on Wednesday, July 27th. In the current situation, the market is dominated by the risks of a decline in economic growth, so investors once again go to safe assets, in particular, gold and the dollar.

The current economic situation is characterized by the greenback's rise against key world currencies, primarily the euro. On the morning of Monday, July 25, the latter sank a bit in anticipation of information about the business climate in Germany. According to preliminary calculations, this indicator fell to 90.5 points from the previous 92.3 points. Against this backdrop, the EUR/USD pair was trading at 1.0200, retreating from the previous session's closing level of 1.0210.

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The current situation negatively affects the exchange rate of the single currency. Last week, the European Central Bank raised its base deposit rate by 50 bp after eight years of negative interest rates. At the same time, the consensus forecast suggested an increase of only 25 bp. According to experts, the ECB's decision is due to concerns about further acceleration of inflation. Against this background, the risk of a possible recession, which was previously relevant, fades.

A further rate hike is planned by the ECB on September 8 this year. At the same time, the pace of monetary tightening by the ECB is very different from those of the Federal Reserve. According to analysts, this figure is significantly behind the results shown by other global central banks. Recall that last month the Fed raised the rate by 75 basis points and is now ready for similar actions.

According to ECB President Christine Lagarde, such a decision is explained by the need to combat galloping inflation, primarily with a large-scale increase in food and energy prices. We note that the target inflation rate is likely to exceed 2%, as inflation in 19 eurozone countries is approaching double digits. In the event of a serious shortage of gas in winter, a further increase in energy prices is possible, experts emphasize.

The ECB officials also agreed on additional assistance to major eurozone debtor countries, including Italy, and introduced a new bond purchase scheme (TPI). Its goal is to prevent an increase in the cost of borrowing for EU member states in the course of tightening the monetary policy of the central bank. When launching this tool, the ECB focuses on public sector bonds with maturities of 1-10 years.

In this situation, the ECB does not rule out a slight devaluation of the European currency. The bank believes that moderation will not hurt the euro. We note that this process is proceeding smoothly, despite the weak economic outlook for the eurozone amid dependence on energy imports.

The strengthening of the dollar contrasts sharply with the fluctuations of its opponent in the EUR/USD pair. According to analysts, the strengthening of the greenback is a pro-inflationary factor for the global economy. However, now a strong USD is not beneficial even to the American authorities, who are actively fighting inflation, which has exceeded 9%. At the same time, only the US authorities can stop the dollar's growth, experts are sure.

A strong US currency negatively affects the ability of developing countries to service their external debts, a large part of which is denominated in USD. In such a situation, their maintenance requires a large number of national currencies. A weak greenback allows the countries of emerging markets to repay their debts in time and in full and increase trade.

The current cycles of strengthening and weakening the dollar are confusing market participants. At the moment, the growth of the USD exchange rate is working to reduce inflation and cool the economy, following the current Fed strategy. In addition, the current situation works for the authority of the greenback, strengthening its position.

In the coming months, the dollar's growth will be uneven, with occasional technical rollbacks. However, the US authorities can stop it at any time. This is possible in the event of a sharp reversal of the current cycle of tightening monetary policy. However, the Fed is unlikely to take such measures amid raging inflation, experts believe.

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The euro raises its head, trying to knock the crown off the dollar

The euro is looking for ways out of the price impasse, into which it has been driven by economic instability and recent parity with the American one. At the same time, the greenback remains the winner in the EUR/ USD pair, despite a short-term subsidence. The US currency was near multi-year highs on Tuesday, July 26, amid expectations of a Federal Reserve rate hike. Recall that the central bank will hold a meeting on Wednesday, July 27, at which it is highly likely to increase the interest rate by 75 bp. This measure is necessary to curb the ever-growing inflation. If the Fed leaves the greenback in limbo after the meeting, then this will be the best option for the euro. However, such a scenario is unlikely, experts warn. One of the euro's trump cards against the dollar is the risk of an approaching recession in the United States, Rabobank currency strategists believe. The bank's specialists have revised the current forecasts for the EUR/USD pair downwards. Analysts believe that by the end of the summer, the single currency may fall to 0.9500 relative to the greenback. As for the planning horizon in the next six months, Rabobank expects the pair to recover to the level of 1.0500. The EUR/USD pair was cruising near 1.0227 on Tuesday, July 26,, recouping previous losses. According to preliminary calculations, another wave of weakening of the greenback is possible at the beginning of next year.

Investors prefer safe assets in the current situation, primarily gold and USD. As a result, the latter is steadily rising in price. According to analysts, in anticipation of a downturn in the global economy, the demand for safe-haven assets is going through the roof. This provides impressive support for the dollar and reduces the euro's chances for further strengthening.

It is difficult for the euro to hold the gained positions amid the steadily growing greenback. The pain point for the euro, as well as for its rival in the EUR/USD pair, is galloping inflation. Recall that since the beginning of 2022, the single currency has dipped in relation to the greenback by 12%. At the same time, inflation in the euro area updated records for eight months: in June, price growth in the EU amounted to 8.6% year on year.

Some experts believe that the weakening of the euro is not an economic, but a political problem, due to the desire of the United States to dominate the world market. In this scenario, there is no place for a strong and independent Europe, whose currency is able to successfully compete with the dollar. "There is an exciting power play behind the current devaluation of the euro," said Feng Xiaohu, a columnist for the Chinese edition of Huanqiu Shibao. According to the expert, the euro's decline is due not only to economic factors. The political ambitions of the United States is in first place, since the euro is the main obstacle for the greenback, which prevents American authorities from "making profit from all over the world."

At the beginning of the week, experts recorded investors' flight from risk in the markets amid concerns about the onset of a global recession. Many analysts believe that the recession is the Fed's payment for curbing inflation, which has already accelerated to 9%. At the same time, market participants believe that the Fed will be able to take control of it. According to experts, there are signs of an impending recession in the US economy. However, they will not prevent the central bank from bringing the federal funds rate to a neutral level.

Many experts warn against misinterpretation of the coming recession in the United States, warning of its destructive power. According to Nouriel Roubini, one of the leading economists who predicted the financial crisis of 2008-2009, one should not count on a mild recession in the American economy. According to the analyst, it will be deep "amid a serious drop in GDP and debt and financial crises."

The growth of the key rate and the huge debts of the American economy, which have reached peak values, add fuel to the fire. At the same time, the debt burden of developed countries is growing, increasing the risks of stagflation, Roubini emphasizes. Recall that stagflation is a combination of an economic downturn with rising prices.

The current tightening of the monetary policy of the Fed and other central banks has a negative impact on the value of assets around the world. Most stock markets are experiencing a downturn, pulling the crypto industry with them. In such a situation, the US currency is the winner, justifying its status as a safe asset. According to the calculations of analysts at Standard Chartered Bank, almost 45% of the strength of the greenback is due to its status as a safe haven currency.

Despite the high probability of further strengthening, USD may decline in the coming weeks due to the Fed's current strategy regarding rates. In the current situation, the market has taken into account the entire cycle of tightening of the monetary policy in prices, but the major players continue to aggressively bet on the greenback's succeeding growth.

At the same time, representatives of the Fed note that they do not plan to raise the rate to 1.00%. The Fed intends to limit itself to an increase of 0.75%, which is fully taken into account in market prices. A potential rate hike of 1.00% will be a surprise for the market and will support the dollar, but such a scenario is unlikely. At the same time, the euro will try to maintain its recent upward momentum, not counting on a further decline in the greenback.

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US stocks closed lower, Dow Jones down 0.71%

At the close of the New York Stock Exchange, the Dow Jones fell 0.71%, the S&P 500 index fell 1.15%, and the NASDAQ Composite index fell 1.87%.

3M Company was the top performer among the components of the Dow Jones index today, up 6.63 points or 4.94% to close at 140.75. Quotes of McDonald's Corporation rose by 6.71 points (2.68%), closing trading at 257.09. Coca-Cola Co rose 1.02 points or 1.64% to close at 63.21. The biggest losers were Walmart Inc, which shed 10.04 points or 7.60% to end the session at 121.98.

Salesforce.com Inc was up 3.85% or 6.83 points to close at 170.46 while Nike Inc was down 3.73% or 4.08 points to close at 105. ,twenty.

Leading gainers among the S&P 500 index components in today's trading were 3M Company, which rose 4.94% to 140.75, General Electric Company, which gained 4.61% to close at 71.51, and shares of Archer-Daniels-Midland Company, which rose 4.36% to end the session at 78.92.

The biggest losers were Fortinet Inc, which shed 7.77% to close at 56.26. Shares of Walmart Inc lost 7.60% to end the session at 121.98. Quotes of Carnival Corporation decreased in price by 7.41% to 8.50.

Leading gainers among the components of the NASDAQ Composite in today's trading were Ayala Pharmaceuticals Inc, which rose 94.25% to hit 1.69, Pagaya, which gained 73.11% to close at 16.74, and Freight Technologies Inc, which rose 67.57% to end the session at 2.48.

The biggest losers were Revelation Biosciences Inc, which shed 51.39% to close at 0.49. Shares of Luokung Technology Corp lost 41.19% to end the session at 0.24. Quotes of Exela Technologies Inc decreased in price by 36.43% to 1.85.

On the New York Stock Exchange, the number of depreciated securities (1938) exceeded the number of closed in positive territory (1172), and quotes of 122 shares remained virtually unchanged. On the NASDAQ stock exchange, 2,320 companies fell in price, 1,412 rose, and 242 remained at the level of the previous close.

The CBOE Volatility Index, which is based on S&P 500 options trading, rose 5.69% to 24.69.

Gold futures for August delivery lost 0.21%, or 3.55, to hit $1.00 a troy ounce. In other commodities, WTI September futures fell 1.48%, or 1.43, to $95.27 a barrel. Brent oil futures for October delivery fell 0.71%, or 0.71, to $99.48 a barrel.

Meanwhile, in the Forex market, EUR/USD fell 0.99% to hit 1.01, while USD/JPY edged up 0.15% to hit 136.87.

Futures on the USD index rose 0.67% to 107.07.

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US stock market closes higher, Dow Jones gains 1.37%

At the close of the New York Stock Exchange, the Dow Jones rose 1.37% to hit a monthly high, the S&P 500 rose 2.62% and the NASDAQ Composite rose 4.06%.

Shares of Microsoft Corporation led the way among the components of the Dow Jones index in today's trading, which gained 16.84 points (6.69%) to close at 268.74. Salesforce.com Inc rose 9.84 points or 5.77% to close at 180.30. Walmart Inc rose 4.61 points or 3.78% to close at 126.59.

The biggest losers were 3M Company, which shed 1.89 points or 1.34% to end the session at 138.86. The Travelers Companies Inc was up 1.90 points or 1.18% to close at 158.96, while Visa Inc Class A was down 2.02 points or 0.95% to close at mark 210.47.

Leading gainers among the components of the S&P 500 in today's trading were Enphase Energy Inc, which rose 17.89% to hit 254.77, Chipotle Mexican Grill Inc, which gained 14.70% to close at 1.00. as well as PayPal Holdings Inc, which rose 12.18% to end the session at 86.42.

The biggest losers were Sherwin-Williams Co, which shed 8.78% to close at 231.97. Shares of Garmin Ltd lost 8.72% to end the session at 93.56. Quotes of Teledyne Technologies Incorporated decreased in price by 7.01% to 372.01.

Leading gainers among the components of the NASDAQ Composite in today's trading were Blue Water Vaccines Inc, which rose 53.17% to 3.14, Cryptyde Inc, which gained 43.70% to close at 1.27, and also shares of QualTek Services Inc, which rose 37.78% to end the session at 1.35.

The biggest losers were ObsEva SA, which shed 75.40% to close at 0.40. Kalera PLC lost 20.77% to end the session at 2.48. Quotes Burcon NutraScience Corp fell in price by 18.06% to 0.59.

On the New York Stock Exchange, the number of securities that rose in price (2573) exceeded the number of those that closed in the red (519), while quotations of 108 shares remained virtually unchanged. On the NASDAQ stock exchange, 2,854 companies rose in price, 916 fell, and 174 remained at the level of the previous close.

The CBOE Volatility Index, which is based on S&P 500 options trading, fell 5.87% to 23.24.

Gold futures for August delivery added 0.86%, or 14.70, to $1.00 a troy ounce. In other commodities, WTI crude for September delivery rose 3.35%, or 3.18, to $98.16 a barrel. Brent oil futures for October delivery rose 3.00%, or 2.98, to $102.44 a barrel.

Meanwhile, in the Forex market, EUR/USD rose 0.84% to hit 1.02, while USD/JPY shed 0.30% to hit 136.51.

Futures on the USD index fell 0.68% to 106.31.

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USD tactics and strategy: we need to retreat in order to put the euro's vigilance to sleep

At the end of this week, the US currency partially lost its position, giving way to the European one. However, some analysts believe that this is a clever tactical move on the dollar's part. The latter has to use a withdrawal strategy to distract the attention of the euro and give it a false sense of superiority.

According to experts, the greenback can afford to retreat, since its position in the global financial arena is quite strong. A short-term redistribution of forces in favor of the euro will not prevent the USD from reaching new heights. Currently, the greenback has sunk a bit, but soon financial fortune will smile on it, experts believe.

A short-term pullback of the US currency occurred after the Federal Reserve meeting, following which the central bank increased the interest rate by 75 bps, to 2.25-2.50% per annum. This decision coincided with market expectations, although some feared aggressive steps on the part of the Fed, namely raising the rate by 100 bps. However, the central bank prefers to move gradually, believing that in this way it will be able to control inflation.

At a press conference that took place after the central bank meeting, Fed Chairman Jerome Powell expressed readiness to further raise the rate if circumstances require it. According to Powell, the scale of the next hikes may be reduced in the event of a slowdown in inflation. According to Powell, as the monetary policy is further tightened and inflation is curbed, it is advisable to slow down the pace of the rate hike.

Market participants reacted positively to this information, considering that the central bank will limit itself to raising the rate by 50 bps at the September meeting. Note that the Fed currently adheres to the toughest strategy of raising rates over the past 40 years. Earlier, after the global financial crisis of 2008, the American economy was much harder to bear even a slight increase in rates. Now the situation has improved, despite its decline by 0.9% year-on-year and the decline in US GDP.

Against this background, the EUR/USD pair remained stable and was trading near 1.0220 on Thursday, July 28. The pair managed to maintain an upward momentum for a long time, which was occasionally interrupted. The EUR/USD pair was trading at 1.0242 on Friday morning, July 29, significantly strengthening its positions. According to analysts, the pair is currently in a consolidation phase, and in the next few weeks it will remain in a wide range of 1.0100-1.0285.

The euro made a sharp turn after the Fed meeting, taking advantage of the weakening of the greenback. This was due to the central bank's actions, which led to an increase in demand for high-yield assets, while politicians focused on curbing inflation. However, the euphoria in the markets did not last long, especially among euro bulls. Economic problems in the European Union, primarily related to gas supplies, put serious pressure on the euro. The cherry on the cake was the fall of the EU economic sentiment indicator. It should be noted that this indicator fell to 99 points in July, which is worse than the predicted 102 points. At the same time, the level of consumer confidence in the eurozone decreased to -27 from the previous -23.8.

An additional factor of pressure on the euro was the preliminary assessment of the German harmonized consumer price index. In July, this indicator showed an increase of 8.5% Y/Y, which is higher than the previous value of 8.2%. At the same time, the annual CPI of the eurozone was 7.5%. Against this background, the EUR/USD pair fell to a threatening low of 1.0113 ahead of the release of macro data from the US, but later managed to recover.

The US monetary authorities just published the first estimate of GDP for the second quarter, which did not meet market expectations. The reason is the contraction of the American economy by 0.9% in annual terms. According to current reports, US GDP has been declining for the second consecutive month. In such a situation, experts declare the onset of a technical recession.

Many economists are sure that at the moment the US economy is gripped by this kind of recession. However, the volume of decline in the American economy (by 0.6% over the past two quarters) is not so frightening compared to the European one. According to analysts, this failure is the result of budget cuts, not a consequence of higher rates. Recall that changes in monetary policy are not immediately noticeable, but their effect manifests itself in about six months. According to the results of the fourth quarter of 2022, you can see the results of current decisions, experts summarize.

In such a situation, the Fed is able to sharply slow down the pace of rate hikes and quickly move to easing the monetary policy. However, this is unlikely now. High inflation, which the central bank is struggling with, requires a tight monetary policy. If negative trends increase in the first quarter of 2023, the US economy may plunge into recession, analysts warn.

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Oil rises in price at the close of the trading session on Friday

As of 20:09 GMT+3, the price of September futures for Brent crude grew by 2.73% to $110.06, October futures - by 2.24% - to $104.11 per barrel, September futures for WTI — by 2.82%, to $99.14. September Brent crude is trading above $110 a barrel for the first time since July 5.

Pressure on quotes is exerted by fears of a recession in the global economy and, accordingly, a decrease in demand for energy resources. At the same time, experts warn that the supply of oil on the market may be insufficient.

Craig Erlam, senior market analyst, noted that oil prices are rising again amid reports that OPEC+ will leave production targets unchanged next month when they meet on Wednesday.

At the same time, since the beginning of the month, quotes have decreased by 4.5% for Brent and 6.6% for WTI. Demand concerns intensified in the markets amid recession risks.

Earlier Friday, Baker Hughes, an American oil and gas service company, released weekly data on the number of operating oil rigs in the US. In the week to July 29, their number increased by six units compared to the previous week and amounted to 605 units.

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Fiery yen: USD/JPY pair continues to inexorably fly into the abyss

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The US dollar reached another low against the Japanese yen at the beginning of Tuesday. It seems that the worst is yet to come: the technical picture is not in favor of the bulls for the USD/JPY pair.
These days, the Japanese currency is showing the longest growth against the dollar in six months. The rally of the JPY continues for the fifth consecutive session. During this time, the yen rebounded by more than 6% from the 24-year low, which was reached against the dollar in mid-July. The greenback fell against the yen by 0.5% at the beginning of today's trading, to the level of 130.595. This is the lowest level in almost two months.

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One of the catalysts for the yen is the news about the possible visit of the Speaker of the US House of Representatives Nancy Pelosi to the island of Taiwan. Official Beijing said that this visit, which poses a threat to China's independence, could undermine the already tense relations between America and China. Concerns about the consequences of the upcoming visit of a member of the US Congress to Taiwan put pressure on Asian currencies (Chinese yuan and Taiwanese dollar), which led to an influx of funds into the safe yen. Also, the Japanese currency continues to strengthen on the general weakness of the dollar. The greenback index dropped to 105.03 points on Tuesday morning, which is a monthly low. The greenback lost its growth momentum last week when the US Federal Reserve raised interest rates by 75 bps for the second time in a row. Strong pressure on the dollar was exerted by the reduction in expectations of aggressive rates of interest rate hikes by the Fed. The situation was aggravated by weak US GDP data published last week. Investors fear that the contraction of the US economy for the second quarter in a row will force the Fed to slow down the pace of tightening its monetary policy. The reassessment of expectations of a Fed rate hike led to a sharp drop in the yield of 10-year US government bonds. So, at the beginning of Tuesday, the indicator plunged to the lowest level since April of 2.53%. Meanwhile, the spread between the real yield of 10-year US bonds and their Japanese equivalents has decreased to 0.80% from more than 1.5% in mid-June. Recall that the yield gap that formed this year between the United States and Japan due to monetary divergence contributed to the rapid fall of the Japanese currency. Since the beginning of the year, the yen has fallen by about 13% against the dollar and remains the worst among the Group of 10 currencies so far. Nevertheless, many analysts are confident in the yen's further ascent against the US dollar. The continuation of the bearish trend of the USD/JPY pair is indicated by the technical picture. Now the asset is sharply declining after the breakdown of the ascending wedge on the daily scale. This usually indicates a loss of momentum in a bullish trend. In addition, for the first time in 11 months, the pair fell to almost a 100-day exponential moving average at 130.29, and the 20-EMA at 135.26 turned downward. All this reinforces expectations of a fall in the dollar against the yen. The relative strength index (RSI), which has settled in the bearish range of 20.00-40.00, also indicates a further decline in the USD/JPY pair.
 
American stock indices fell during trading

Investors are also evaluating a new batch of quarterly reports from major US companies. The value of the Dow Jones Industrial Average by 16:45 GMT+3 fell by 0.93% - to 32493.3 points.

The leader of the decline in the index, in addition to Caterpillar, are papers Boeing Co., falling by 2.6%. Only 5 out of 30 companies included in the indicator calculation are trading in positive territory, including Amgen Inc. and Cisco Systems Inc.

Standard & Poor''s 500 has dropped 0.57% since the market opened to 4095.17 points.

The Nasdaq Composite fell 0.4% to 12,319.41 points.

Shares of Uber Technologies jumped 13.7%. The taxi and food delivery company posted a loss again in the second quarter of 2022, although its revenue more than doubled, beating analysts' forecasts.

Papers Activision Blizzard rise in price by 0.2%. The American video game developer in April-June reduced revenue for the third quarter in a row, but the figure was higher than the market forecast.

Quotes of papers Marriott International increase by 0.5%. The operator of the world's largest hotel chain posted a 61% increase in net income in the second quarter on the back of a recovery in the travel industry, with adjusted figures and revenue well above expectations.

Shares of Cowen Inc. rise in price by 7.6%. Canadian Toronto-Dominion Bank has agreed to acquire a US investment bank in a $1.3 billion deal as it continues to expand its presence in the US market.

Capitalization of Caterpillar falls by 5.2%, the company is the leader of decline in the Dow Jones index. The manufacturer of equipment for road construction and mining in the second quarter increased its net profit by 18.4%, but the revenue was slightly worse than experts' expectations.

Market value of KKR & Co Inc. decreases by 4.7%. The American investment firm posted a net loss in the second quarter of 2022 and cut its distributable earnings (cash that can go towards paying dividends) by about 9%.

DuPont de Nemours Inc. fell 1.7%. The American chemical company posted a sharp increase in its second-quarter net income and a 7% increase in revenue, but its third-quarter guidance disappointed investors.

The price of Arconic securities decreases by 7.4%. The American producer of aluminum products in the second quarter of 2022 received a net profit and increased revenue better than market expectations, but worsened its forecast for the year.

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Pound signed the death warrant. And the policy of the Bank of England has nothing to do with it.

The main topic of the day is the increase in interest rates in the UK. If the Bank of England goes on the biggest rise since 1995, the pound will skyrocket. However, its euphoria will be short-lived. Why?

BoE is not omnipotent

Today, the British central bank once again intends to raise interest rates. This will be the sixth increase since December last year.

Recall that at each of its previous meetings on monetary policy, the BoE made a minimum step of 25 bps.

The market is now expecting more hawkish action from the BoE as UK inflation continues to break records. In June, it accelerated to a 40-year high of 9.4%, and so far there is no sign of a peak.

The situation is also aggravated by gloomy forecasts for further price hikes. Many economists are predicting inflation to rise to double digits this year.

In June, the BoE said it would act more decisively if inflationary pressures in the country become more sustainable.

According to analysts, now the BoE has no choice but to fulfill its promise, especially since its colleagues are not dragging their feet.

Since the beginning of the year, the US Federal Reserve has already raised rates four times, and twice - by 75 bps at once.

The European Central Bank only started tightening last month, but its first step was to raise the rate by half a percentage point.

Compared to other central banks, the BoE's policy looks more dovish now. This weakens the pound, as a result of which the cost of living in the country continues to increase.

In order to prevent inflation from taking root in the British economy, the BoE is likely to be forced to go for the largest rate hike in 27 years.

According to many currency strategists, a rise of 50 bps to 1.75% could significantly strengthen the pound's position against the dollar.

GBP/USD is expected to rise above 1.2170 today after the BoE meeting. However, the pound's rise will be short-lived.

The BoE, which launched the tightening mechanism much earlier than other central banks, delayed the process too much, and this allowed the inflation monster to become very strong.

Now, to defeat the monster, a 50 bps increase won't be enough. Inflation will not start to disappear, as if by magic, and BoE can no longer afford a larger increase in the current situation, when the country's economy is on the verge of a recession.

Far from beautiful

The threat of a recession that hangs over the UK economy is the main argument that the BoE will not risk raising rates by 50 bps at today's meeting.

Some experts expect the BoE to continue to act cautiously, as it has been extremely pessimistic in its latest economic growth forecasts. Recall that the central bank does not expect the UK economy to recover until 2025.

If the central bank does indeed raise rates by just 25 bps this month, despite rising inflation, that would further weaken the pound in the near term.

As for the pound's dynamics in the long term, it does not depend at all on what pace of tightening British officials choose now, UBS is certain.

Swiss bank analysts believe that the future of the pound is already predetermined, and it is not at all rosy. According to their forecasts, this year the GBP will fall to historical lows amid an exacerbation of the gas crisis.

According to UBS, Russia will continue to use energy exports as the main means of pressure on the West. The reduction in the supply of Russian blue fuel will cause huge and irreparable damage to the economies of Europe and the UK.

Electricity bills on the peninsula are expected to rise even more by mid-autumn, leading to another surge in inflation in the country and exacerbating the cost-of-living crisis.

In addition, the pound's growth will be limited by the uncertain political environment in the UK.Recall that Prime Minister Boris Johnson resigned in early July, and now the Conservative Party faces a long search for a successor.

Considering all the negative background that will put strong pressure on the British currency in the next few months, UBS sharply lowered its forecast for the GBP/USD pair.

Analysts expect the pound to fall against the dollar to 1.15 in the fourth quarter. The pound was trading at about this level two years ago when the COVID-19 pandemic shook global markets.

The Swiss bank's forecast is rather surprising, as most other experts believe that the currency will stay at 1.22 until the end of the year as the BoE raises interest rates sharply.

UBS also believes that even the biggest increase in almost three decades this month will not give the pound a solid boost and, moreover, will not serve as a long-term driver for it.

Analysts predict that the pound will be able to recover against the dollar only next year. So, the GBP/USD pair will still be trading at the level of 1.18 in the first quarter, and by June it will be able to rise to the level of 1.20.

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American stock indices rise during trading

The number of Americans who first applied for unemployment benefits increased by 6 thousand last week and reached 260 thousand people, according to a report from the US Department of Labor. Analysts, on average, also expected a rise to 260k from the previous week's previously announced level.

For clear guidance, investors should also wait for US nonfarm payrolls (NFP) data for July, expected to reach 250K, up from 372K earlier. It is also important to monitor the global reaction to China's strong military exercises near Taiwan.

The US trade deficit fell by 6.2% in June to $79.6 billion, according to the country's Department of Commerce. According to the revised data, in May, the negative trade balance amounted to $84.9 billion, and not $85.5 billion, as previously reported. Experts on average expected a decline to $80.1 billion.

The value of the Dow Jones Industrial Average by 16:47 GMT+3 rose by 0.03% - up to 32821.17 points.

Standard & Poor's 500 added 0.1% to 4159.39 points.

The Nasdaq Composite increased 0.4% to 12,719.37 points.

U.S. health insurance and services company Cigna Corp. posted a 6% increase in net income in the second quarter and improved its guidance for the full year of 2022. Its shares are up 3.7%.

eBay Inc. stocks cheaper by 4.9%. The world's largest online auction recorded a net loss in the second quarter of 2022 and reduced revenue. However, the latter figure, along with adjusted earnings, beat market expectations.

Papers of Booking Holdings Inc. drop by 4%, although the company that owns various travel planning services returned to profitable levels in the second quarter of 2022 as the market recovered from the coronavirus pandemic.

American oil company ConocoPhillips increased its net profit by 2.5 times in the second quarter due to rising oil prices and increased production and announced its intention to increase payments to shareholders by $5 billion, that is, up to $15 billion. Meanwhile, its shares are depreciating by 1.1%.

Share price of WeWork Inc. decreases by 4.8%. The American co-working service reduced its net loss in the second quarter of 2022 and increased revenue by more than a third, but the figures fell short of analysts' expectations.

Papa John's International is down 1.7%, although the pizza chain owner returned to profitability in the second quarter of fiscal 2022 with a modest increase in revenue and an increase in annual dividends.

Shares of Shake Shack Inc. fall by 13.8%. The American fast food chain again suffered a loss in the second quarter of the current fiscal year, and the company's revenue increased weaker than expected.

Walmart Inc. shares are down 0.3%. The nation's largest retailer is laying off hundreds of corporate management employees as part of a plan to restructure operations.

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EUR/USD: dollar maintains momentum, euro difficult to recover

The US currency started the week quite cheerfully, trying to maintain the positive momentum received after the release of the Nonfarm Payrolls data. At the same time, the euro cannot boast of similar dynamics, demonstrating pendulum dynamics.

The euro is once again teetering on the brink of falling, while trying to settle in the positions it has won. However, these actions are not always successful as the USD continues to dominate the market. At the same time, according to reports on the dollar index (USDX), investors are showing bearish sentiment against the US currency. Over the past two weeks, market participants have reduced their positions on USD growth after a long build-up. A continuation of the current trend can lead to a short-term drawdown of the greenback.

Currently, the greenback is trying to gain a foothold in the upward trend, and not without success. Its rise was catalyzed by impressive US employment data. Against this backdrop, markets expect more decisive action from the Federal Reserve in terms of tightening monetary policy. Recall that, according to reports, 528,000 jobs appeared last month in the US economy, and the unemployment rate fell to 3.5%.

According to economists, positive data on US employment revived the hopes of traders and investors about a significant increase in the key rate (by 75 bps) at the Fed's September meeting. Note that strong data on employment growth in America came as a surprise to the markets. Most experts expected opposite results, referring to recent studies on the onset of a recession in the US economy and to a slowdown in economic growth in the country.

For the time being, however, fortune favors the greenback. After the release of Nonfarm Payrolls, the dollar confidently overtook the euro. The EUR/USD was trading near 1.0186 on Monday morning, August 8, trying to return to last week's highs near 1.0200.

Note that after the release of the US employment report, the EUR/USD pair plunged sharply to the critical 1.0170, but later managed to recover. Against this background, some experts are optimistic about the immediate prospects for the euro. According to preliminary calculations, in the coming months, the euro may be in an upward trend, despite the threat of a recession in the European economy. The reason is the increased risk appetite in global markets. Against this background, experts believe that the fair rate of the EUR/USD pair is close to 1.1400. Analysts' conclusions are based on the difference in rates in the US and Germany. At the same time, experts do not exclude another fall of the euro to parity with the dollar.

This week, investors are focusing on US inflation data. The release of the July consumer price index is scheduled (the preliminary forecast provides for an increase of 0.2% in monthly terms) on Wednesday, August 10. The markets will get acquainted with the US producer price index on Thursday, August 11. This indicator is crucial for the further dynamics of the interest rate. Recall that the positive report on employment in the US opened the way for the Fed to aggressively tighten monetary policy.

According to experts, having received confirmation of the strengthening of the US economy, investors will return to long positions on the dollar. This will give an additional impetus to the latter and set up traders for an extreme tightening of monetary policy by the Fed.

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