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European stocks decline after previous sharp rise

On Wednesday, key European stock indices declined dramatically amid the release of fresh statistics on the EU countries. At the same time, stock indexes have been actively rising over the last three sessions and closed Tuesday's trading with a record six-month gain.

By the time of writing, the STOXX Europe 600 index of Europe's leading companies had dropped by 0.9% to 399.40 points.

Meanwhile, the French CAC 40 fell by 0.73%, the German DAX lost 0.79%, and the British FTSE 100 declined by 1.15%.

Top gainers and losers

The stock price of Britain's largest grocery retailer Tesco Plc rose 2.5% despite a 2.8-fold decline in pre-tax profits in the January-June 2023 fiscal year. In addition, the day before, the company worsened its full-year outlook due to changing consumer behavior and continued uncertainty in the trading environment amid record inflation.

The Finnish airline Finnair rose 1.2%. Earlier the company reported that it carried 890,500 passengers last month, 1.1% more than in August. At the same time, in September 2021, the number of Finnair passengers was only 298.2 thousand.

The market capitalization of the Danish manufacturer of audio systems and other electronics Bang & Olufsen A/S fell by 2.6%. The company's revenue fell by 8.2% in the first fiscal quarter.

Share price of the Swedish Avanza Bank Holding dropped by 6.4%.

The stock price of French auto parts supplier Faurecia SE dropped 6.2%.

Swedish cloud technology provider Sinch AB soared by 9.7%.

Meanwhile, the market capitalization of the Swedish airline SAS AB is steadily increasing. Earlier, the company's management announced about the changes in the contracts with 10 lessors providing 36 aircraft. According to the preliminary expectations of the SAS AB management, it will help to save about $700 million a year by 2026. Market sentiment

The focus of European investors on Wednesday is fresh statistics on the region. So, according to the final estimation of experts, in September the business activity composite index (PMI) in industry and services of 19 Eurozone countries was 48.1 points down from 48.9 points in August. Meanwhile, earlier the market forecasted the decrease of the index down to 48.2 points only.

The final September PMI was the lowest in two years and eight months. Traditionally the value of business activity composite index in industry and services above 50 points indicates an increase in economic activity, below its decline.

In addition, on Wednesday morning S&P Global reported that the euro region's services purchasing managers' index was 48.8 points for the month, compared to August's 49.8 points. The September total was the lowest since February 2021. At the same time analysts predicted a less noticeable decrease in the index - down to 48.9 points. By the way, the fall of purchasing managers indicator in the services sector below 50 points traditionally indicates a decrease in business activity in the sector.

Meanwhile, in Italy PMI in the service sector fell to 48.8 points in September from 50.5 points in August, in Germany - to 45 points from 47.7 points. Meanwhile, in France the index rose last month to 52.9 points from August's 51.2 points.

Germany's foreign trade surplus decreased to 1.2 billion euros in August from 13.7 billion euros registered a year before and 3.4 billion euros in July. This tangible reduction in the country's trade surplus was a striking signal of a slowdown in external demand for goods produced by Germany's key manufacturing sector.

The volume of German exports in September, adjusted for calendar and seasonal factors, rose by 1.6% (EUR 133.1 billion) compared to August.

Meanwhile, imports rose 3.4% to €131.9 billion. Meanwhile, industrial production in France soared 2.4% in August compared to July's drop of 1.6%. At the same time the August figure was the highest since January 2021.

Previous trading results

On Tuesday, European stock indices closed in the green zone, gaining within 4%.

Thus, the composite indicator of Europe's leading companies STOXX Europe 600 rose by 2.01% to 403.03 points. By the way, the index exceeded 400 points for the first time since September 22.

The French CAC 40 advanced by 4.24%, the German DAX gained 3.78% and the British FTSE 100 added 2.57%.

The value of shares of the German automobile concern Volkswagen rose by more than 1%. The day before, the head of Volkswagen Oliver Blumet told local media that he plans to lead all subsidiaries to an IPO after the success of the initial public offering of Porsche.

Quotes of the Swiss banking group Credit Suisse Group AG soared by 8.9%, recovering from a 9% plunge the day before. The key pressure factor for the shares of Credit Suisse on Monday was the announcement of the bank's management that it is considering cutting 1,000 jobs over the next few years as part of a new anti-crisis program. The business reorganization plan will be unveiled at the end of October.

The market capitalization of the British insurance company Legal & General Group rose by 5.9% on the report of further support for pension fund clients affected by the sharp rise in interest rates.

The share price of British bakery chain Greggs PLC strengthened 10% on total sales, which rose 14.6% year-over-year during the past quarter.

Swiss vacuum equipment maker VAT Group AG gained 6.9 percent.

Quotes of the French IT company Atos SE rose by 6.8%.

The market capitalization of Made.Com, an online furniture retailer, soared more than 20% on news that its management had begun negotiations with "a number of interested parties" about selling the company.

The share price of Swiss chemical group Sika AG soared 6% on the back of an improvement in its revenue forecast for 2022.

The value of securities of Spanish banks Santander, BBVA and Caixabank rose by more than 7%.

Quotes of the British marketing company S4 Capital increased by 10%.

Market capitalization of Norwegian fish company SalMar ASA dropped by 10.3%.

The main factor of growth for the European stock exchanges on Tuesday was a strong outcome of the last trading session on the U.S. stock market. Thus, The Dow Jones Industrial Average gained 2.7% in the first trading session of the fourth quarter, reaching a February high. Meanwhile, the S&P 500 Index gained 2.59% and the NASDAQ Composite gained 2.27%.

In addition, Asian indices were up significantly the day before, as the Hong Kong stock exchange opened after a holiday.

Experts attribute the surge of optimism in the European stock markets the previous day to the weakening of investors' concerns over the further aggressive monetary policy of world central banks. The high recession risks for the global economy, analysts say, may force the regulators to follow a softer course.

According to the statistics published on Monday, the index of business activity in the manufacturing sector in the United States in September fell to its lowest level of May 2020. This state of affairs was perceived by investors as confirmation that monetary tightening by the Federal Reserve is beginning to suppress economic activity.

Meanwhile, the ISM Manufacturing index fell to 50.9 points last month from August's 52.8 points, according to data from the Institute for Supply Management (ISM). At the same time, the market on average expected the index to fall only to 52.2 points.

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US stocks closed lower, Dow Jones down 0.14%

At the close of the New York Stock Exchange, the Dow Jones fell 0.14%, the S&P 500 fell 0.20%, and the NASDAQ Composite fell 0.25%.

The leading performer among the components of the Dow Jones index today was Nike Inc, which gained 2.46 points or 2.78% to close at 91.10. Visa Inc Class A rose 2.02 points or 1.09% to close at 187.67. UnitedHealth Group Incorporated rose 3.90 points or 0.75% to close at 527.07.

The biggest losers were Goldman Sachs Group Inc, which shed 5.87 points or 1.86% to end the session at 309.00. Shares of JPMorgan Chase & Co rose 1.38 points (1.23%) to close at 110.39, while Dow Inc shed 0.56 points (1.20%) to close at 46 .06.

Leading gainers among the S&P 500 components in today's trading were Illumina Inc, which rose 6.56% to hit 218.52, Schlumberger NV, which gained 6.26% to close at 41.57, and Gap Inc, which rose 5.19% to end the session at 9.72.

The biggest losers were Lumen Technologies Inc, which shed 9.45% to close at 7.28. Shares of Enphase Energy Inc shed 9.25% to end the session at 261.60. Quotes Vornado Realty Trust fell in price by 6.38% to 22.47.

The leading gainers among the components of the NASDAQ Composite in today's trading were Chardan Nextech Acquisition 2 Corp, which rose 102.63% to hit 21.54, Nauticus Robotics Inc, which gained 96.27% to close at 6.32. , as well as shares of Pineapple Holdings Inc, which rose 93.01% to end the session at 2.76.

The biggest losers were Bit Brother Ltd, which shed 42.97% to close at 0.18. Shares of Avenue Therapeutics Inc shed 41.59% to end the session at 8.47. Quotes Scienjoy Holding Corp fell in price by 36.99% to 1.38.

On the New York Stock Exchange, the number of securities that fell in price (2102) exceeded the number of those that closed in positive territory (991), while quotes of 107 shares remained virtually unchanged. On the NASDAQ stock exchange, 2,313 companies fell in price, 1,443 rose, and 198 remained at the level of the previous close.

The CBOE Volatility Index, which is based on S&P 500 options trading, fell 1.79% to 28.55.

Gold futures for December delivery shed 0.28%, or 4.90, to hit $1.00 a troy ounce. In other commodities, WTI crude for November delivery rose 1.76%, or 1.52, to $88.04 a barrel. Futures for Brent crude for December delivery rose 2.07%, or 1.90, to $93.70 a barrel.

Meanwhile, in the Forex market, EUR/USD fell 0.96% to hit 0.99, while USD/JPY edged up 0.35% to hit 144.60.

Futures on the USD index rose 1.00% to 111.08.

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EUR/USD. Bearish cocktail for the euro

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The contradictory dynamics of the euro is somewhat alarming. Despite the unfavorable picture of the eurozone with pessimistic data and forecasts, where the cherry on the cake is the energy crisis, the single currency looks quite stable. Should we wait for lows at the level of 1.9000?

The German authorities reported unpleasant economic forecasts. A recession is expected in the country next year. The GDP of the European economy, according to the preliminary autumn estimates of the government, will decrease by 0.4% in 2023.

In addition, the growth forecast for 2022 was lowered to 1.4%. Inflation will be 7.9% this year and will reach 8% in 2023. The figures are not final, adjustments may be made next week, the government said in a statement.
Retail sales in the eurozone sank by 0.3% on a monthly basis in August against the expected 0.4%. On an annualized basis, the indicator fell by 2%, which is higher than the forecast value of 1.7%.

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Both macroeconomic factors did not cause an immediate reaction in the euro, which continued to trade with small losses on Thursday. The decline of the EUR/USD pair intensified only in the US session amid a growing dollar index.
What is the reason for the paradoxical stability of the euro?

At the beginning of the week, there was a clear rebound from the lows as a result of the emerging risk appetite. Bulls on EUR/USD aiming to break through the parity upward. Everything seems to be logical, but... At this point, other currencies such as the Canadian, Australian, New Zealand dollars and even the Swiss franc could not recoup, that is, they almost did not rise against the dollar.

It turns out this way: when the dollar rose, the euro fell slower than other currencies, and when the dollar adjusted down, the euro grew most vigorously. Although the same Canadian dollar had a good factor for recovery in the form of a sharp rise in oil prices.

The behavior is strange, however, it does not change the overall picture for the euro. From the point of view of the trade balance, budget stability, the level of public debt to GDP and taking into account the high risks of recession, the euro still looks weaker than other currencies of developed countries.

If, as a result, the recovery in the markets resumes, the euro should not be ahead of everyone, but behind. The future of the bloc does not bode well for the single currency – a recession and a debt crisis are on the horizon.
Yes, the euro has recently received support due to harsh statements by representatives of the European Central Bank, but this phenomenon is temporary. It is not a fact that the central bank will decide to raise the rate by 75 bps at the October meeting. Maybe it will cost a step of only 50 bps.

If inflation does push the ECB to tighten policy more aggressively, then the question will arise about government debt yields. The national debt of Italy, as you know, is a time bomb that will explode according to the Greek scenario. Last week, yields on Italy's 10-year debt tested the peaks since 2013 at 4.8%. Then they rolled back, then went up again. The moral is that as a result it will be possible to see at least 5%.

If we turn to history, the euro's fall amid the debt crises has always been significant. Economists, analysts and strategists each time started talking about the possible collapse of the euro bloc. This was the case during the Greek crisis, when the euro collapsed from the area of 1.4000 to 1.2000.

Now everything starts in a new circle of the current Italian scenario. It is possible that once again they will begin to "bury" the eurozone, especially since Italian problems are much more dangerous than Greek or Spanish ones and occur at such a difficult time for the world as a whole.
Forecast

The EUR/USD pair is highly likely to test the 0.9500 level, and even the growth of risk appetite is not an ally here.
The eurozone is on the verge of recession, the deepest recession is expected in the winter months, so the EUR/USD pair may well aim for the level of 0.9000.

"Three-quarters of negative growth and the still hawkish position of the Fed is a strong bearish cocktail for EUR/USD," according to ING economists, who also adhere to the scenario of a drop in the quote in the area of 0.9000.

"The increase in gas prices this winter will put pressure on the trade balance of the eurozone. This could lead to the euro falling to the lower limit of the 0.9000-0.9500 range over the next three or six months," ING predicts.

A potential reversal is possible in 2023 if the Federal Reserve starts to stick to dovish rhetoric, and the eurozone comes out of recession.
 
Forex Analysis & Reviews: Forecast for GBP/USD on October 10, 2022

On Friday, the British pound opened and closed below the technical level of 1.1170. Now the 1.0828 target is available. The signal line of the Marlin Oscillator also looks fixed below the zero line, in the downward trend zone. Consolidation under 1.0828 will open the second target at 1.0535.

A factor that could postpone the pound's decline is tomorrow's employment data in the UK, which, with the expected maintenance of the unemployment rate at 3.6%, may show an improvement in the employment structure, including wage growth.

The price reached the MACD line and stayed there on the four-hour timescale. The technical price level (1.1170) is pressing on the price from above, so the lateral price movement is unlikely to be long. With the departure of the quote under Friday's low at 1.1055, the movement to 1.0828 will begin.

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

Analysis are provided by InstaForex

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The pound does not hold back despair amid a strong dollar and sad forecasts

An important report on the labor market in the United States turned out to be quite strong, because experts' expectations of a weekly loss of the pound against the dollar and euro were being fully realized on Friday.

By the end of the trading day on Friday, the GBP/USD pair was trading at around 1.1103, declining in value by 0.51% under considerable pressure from various factors.

There are no important events in the domestic economic calendar of the UK yet that can give sterling another strong support. Events such as the Bank of England's next interest rate decision and the announcement of the government's budget plan will hit investors only in November. Therefore, the pound's movements on Friday and probably for some time to come will depend entirely on the subtle moods of investors.

According to the released data, the unemployment rate in the United States fell from 3.7% in August to 3.5% in September, and job growth was slightly higher than expected. And this is despite all of the Federal Reserve's efforts to slow down demand. The number of vacancies at the end of last month increased by 263,000, although most analysts predicted an increase of 250,000.

Apparently, the labor market in the world's largest economy is still tense, which means that the Fed has not had any good reasons to move away from its policy of a sharp rate hike. Although many experts fear that such a decisive position of the Fed will not just "cool" the country's economy, but also plunge the US into a deep recession. Nevertheless, the probability that in November the US central bank will implement another rate hike by 0.75 percentage points is all 83%.

Amid all these expectations, the pound found no reason to hold positions and was noticeably weakening against major world currencies. Not having had time to really recover from the extreme volatility caused by the mini-budget of Kwasi Kwarteng, sterling continues to sink under the dominance of the dollar.

The dollar index, which tracks its exchange rate against a basket of six key currencies, was almost invariably trading at 112.34 by 16:00 London time.

In addition to the strong dollar, sterling is under considerable pressure due to data that showed a clear slowdown in the UK economy.

The pound also had to face the first warning from National Grid. The company warns that in the coming winter it will most likely have to introduce rolling power outages in the UK. If Russian gas supplies to the country do not resume, and the temperature begins to fall below the usual level, then the threat from National Grid will become a terrible reality for the United Kingdom.

In addition, the international rating agency Fitch has changed the outlook for the UK's long-term rating to the status of "negative", although the country previously had the status of "stable". Actually, it's not surprising, given the rather risky plans of the government to reduce taxes. It is already obvious that such a plan of the authorities will lead to an increase in public debt. At the same time, the rating itself was confirmed at the "AA" level.

According to experts at Fitch, in the absence of compensating measures, the UK government budget deficit will amount to 7.8% of GDP by the end of this year. And next year this deficit will grow to 8.8%. At the same time, the average budget deficit for countries with an AA rating is about 2% of GDP.

It is expected that inflation in the UK at the end of 2022 will be 8.9%, and then will gradually decline and by the end of 2024 will reach the level of 3.5%. But even in this case, the inflation rate will be higher than the target of 2%.

Earlier this week, S&P Global Ratings also changed the outlook for the UK's long-term rating to the status of "negative", thereby confirming the country's rating at the level of "AA".

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European stock market falls after the collapse of Asian stock exchanges

On Monday, the leading stock indicators of Western Europe show a decline against the background of the negative dynamics of stock exchanges in the Asia-Pacific region. The general pessimism on the world markets was also provoked by investors' concern about further tightening of the monetary policy of the US Federal Reserve in the context of permanently rising inflation. In addition, the tense situation in Ukraine has returned to the agenda.

Thus, at the time of writing, the composite index of the leading companies in Europe STOXX Europe 600 sank by 0.68% - to 389.21 points, reaching a weekly low.

Meanwhile, the French CAC 40 shed 0.53%, the German DAX rose a symbolic 0.05% and the UK FTSE 100 shed 0.45%.

Rising and falling leaders

The value of securities of the French oil and gas company TotalEnergies SE sank by 1.5%. On the eve of the company's management proposed to organize annual negotiations on employee salaries with trade unions in France ahead of the scheduled date, provided that strikes at refineries are completed

The quotes of the British online retailer THG PLC fell by 7.8%.

The market capitalization of the German energy company Uniper SE decreased by 7.5%.

The share price of the Austrian manufacturer of sensors, semiconductor components and lighting equipment ams-OSRAM AG fell by 6.7%.

The value of the securities of the French automotive corporation Renault SA sank by 3.1% after the company's management confirmed that it was negotiating an alliance with Japanese Nissan about future investments in Renault's new electric vehicle business.

Quotes of the French bank Societe Generale SA rose by 0.8% on the news that the company's chief operating officer, Gall Olivier, will leave his post at the end of 2022 due to management reshuffles.

Market sentiment

The focus of attention of participants in the European stock market on Monday is concerns about the consequences of rocket attacks in Ukraine over the weekend. In addition, investors continue to worry about the decisive steps of the world's central banks in the field of monetary policy.

So, this morning it became known that the Bank of England will increase the maximum volume of daily auctions for the redemption of government bonds under the temporary program. The British central bank announced the start of the program on September 28.

At the same time, the British central bank plans to fully complete the repurchase of government securities on Friday, October 14. Since the launch of the program, the BoE has held 8 auctions. In total, the central bank bought bonds for $ 5.5 billion, although it had previously stated that it was ready to buy securities for 40 billion pounds.

Last Friday, a stronger-than-expected labor market report was published in the United States. As a result, the September figures from the US Department of Labor increased investors' concern that the Fed will continue to increase the interest rate in an attempt to cope with record inflation.

On Monday, world media reported that Russian President Vladimir Putin plans to meet with representatives of the Security Council after the attack on a major bridge between Russia and Crimea.

Following the results of Monday's trading, the stock exchanges of the Asia-Pacific region collapsed sharply. At the same time, trading volumes were insignificant due to the holidays in Japan and South Korea. Thus, the Shanghai Shenzhen CSI 300 stock indicator sank by 2.21%, and the Shanghai Composite lost 1.66%.

The main factor of pressure on the Asia-Pacific exchanges on Monday was the securities of chip manufacturers. Thus, the quotes of Anji Microelectronics Tech and Chengdu Xuguang Electronics companies fell by 20% and 10%, respectively, after the White House introduced export control measures. Under the new rules, Chinese companies will no longer have access to some semiconductor materials produced on United States equipment.

Such a decisive step by the American authorities, experts suggest, could provoke a tangible deterioration in trade relations between the United States and China and have serious economic consequences if the PRC takes retaliatory measures.

Another factor of pressure on Asian stock markets was the release of fresh data that by the end of September, the country's services sector declined amid permanent disruptions related to the consequences of the coronavirus pandemic.

This week, European traders will be waiting for the publication of statistical data on consumer prices in the United States. According to preliminary forecasts of experts, by the end of September, annual inflation in America slowed to 8.1% from August's 8.3%.

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Apocalypse today: the yen has collapsed again

On Wednesday morning, the Japanese currency was covered by a strong tsunami caused by the USD. Paired with the dollar, the yen crossed the red line at 145.90 and collapsed to a new 24-year low. The dollar has dispersed

Today's culminating event in the foreign exchange market should be the release of the minutes of the September FOMC meeting.

Recall that last month, as part of the current tightening cycle, the US central bank raised the interest rate by 75 bps for the third consecutive time and signaled the continuation of an aggressive course in order to curb inflation faster.

Now traders hope that the Federal Reserve's minutes will shed light on the central bank's future plans regarding rates. If the report turns out to be more hawkish, it will strengthen expectations for another increase in the indicator by 75 bps.

This development is an excellent driver for the yield of 10-year US government bonds. Ahead of the release of the FOMC minutes, the indicator soared to a 14-year high at 4.006%.

The jump in yields contributed to the dollar's growth in all directions. At the start of Wednesday, the DXY index rose by 0.16% and tested a 2-week high at 113.54.

At the same time, the greenback showed the best dynamics against the yen, which is absolutely logical. Among all the currencies of the Group of 10, the JPY is particularly sensitive to the growth of long-term US bond yields, since the same Japanese indicator is still near zero.

The growing monetary divergence of Japan and the United States has led to the fact that this year the yen has sunk against the dollar by more than 20%. And this morning, the yen set another anti-record.

The USD/JPY pair jumped by more than 0.3% and touched the level of 146.35. The last time the quote was traded at this level was in August 1998.

Is the intervention close?

Of course, the fact that dollar bulls crossed the red line again further increased the risk of repeated currency intervention by the Japanese authorities.

Recall that the Japanese government intervened in the market for the first time in 24 years three weeks ago, when the USD/JPY pair reached the level of 145.90.

Now, when the quote turned out to be much higher than this level, many traders are afraid of a repeat of the September scenario in the near future.

However, this time Japanese politicians will most likely not focus on any particular red line.

At this stage, the more important indicator will be the rate of change in the exchange rate. This was announced this morning by Japanese Finance Minister Shunichi Suzuki.

"If the yen falls rapidly, it will force the Japanese government to push the red button again," Commonwealth Bank of Australia strategist Joseph Capurso shared his opinion.

Meanwhile, many analysts warn that in the short term, the dollar's growth may accelerate significantly on all fronts, including against the yen.

Today's FOMC minutes is far from the only obvious driver for the dollar. The real rocket fuel for the USD may be tomorrow's release of statistics on inflation in the United States for September.

If the market sees that consumer price growth is still steady, it is likely to reignite a wave of speculation about an even sharper rate hike in America.

In this case, the dollar may demonstrate another parabolic growth. Then Japan will simply have no other choice but to re-intervene.

The yen is doomed anyway

According to Kapurso, the Japanese government will intervene in the market by the end of this week. However, as in September, the effect of the intervention will be short-lived.

Any fluctuations caused by the intervention of the USD/JPY pair will stop within a few weeks, the analyst is certain.

The quote will be able to recover fairly quickly, since the dollar now has very strong support: the Fed's November meeting is ahead, which means the next round of rate hikes.

The asset has excellent growth potential in the longer term. Even if in the future the Fed starts to slow down the pace of tightening its monetary rate a bit, the Bank of Japan policy will still remain ultra-soft. This should support the US currency.

We expect that the dollar will remain strong at least until next spring, and we maintain our 3-month forecast for the USD/JPY pair at 147.00, Rabobank analysts said.

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US stocks closed lower, Dow Jones down 0.10%

At the close of the New York Stock Exchange, the Dow Jones was down 0.10%, the S&P 500 was down 0.33% and the NASDAQ Composite was down 0.09%.

The leading performer among the components of the Dow Jones index today was JPMorgan Chase & Co, which gained 1.65 points (1.62%) to close at 103.61. Quotes of Coca-Cola Co rose by 0.66 points (1.21%), closing trading at 55.14. Intel Corporation rose 0.29 points or 1.16% to close at 25.33.

The biggest losers were Walgreens Boots Alliance Inc, which shed 0.67 points or 2.05% to end the session at 31.94. Walmart Inc was up 1.13% or 1.50 points to close at 131.17, while Boeing Co was down 0.87% or 1.15 points to close at 130.42..

Leading gainers among the S&P 500 index components in today's trading were Royal Caribbean Cruises Ltd, which rose 11.48% to 45.36, Norwegian Cruise Line Holdings Ltd, which gained 11.61% to close at 12. 98, as well as shares of Carnival Corporation, which rose 9.79% to close the session at 7.29.

The biggest losers were Albemarle Corp, which shed 7.89% to close at 251.45. Shares of T. Rowe Price Group Inc lost 5.14% to end the session at 98.07. Quotes of Entergy Corporation decreased in price by 4.52% to 96.58.

Leading gainers among the components of the NASDAQ Composite in today's trading were Pintec Technology Holdings Ltd, which rose 191.16% to hit 0.91, Agrify Corp, which gained 88.02% to close at 0.95, and also shares of 9F Inc, which rose 83.42% to close the session at 0.35.

The biggest losers were Fednat Holding Co, which shed 33.87% to close at 0.22. Shares of T2 Biosystms Inc lost 30.00% and ended the session at 0.06. Kinnate Biopharma Inc lost 26.65% to 8.12.

On the New York Stock Exchange, the number of securities that fell in price (1818) exceeded the number of those that closed in positive territory (1274), while quotes of 132 shares remained virtually unchanged. On the NASDAQ stock exchange, 1,902 stocks fell, 1,820 rose, and 278 remained at the previous close.

The CBOE Volatility Index, which is based on S&P 500 options trading, fell 0.18% to 33.57.

Gold futures for December delivery shed 0.33%, or 5.50, to hit $1.00 a troy ounce. In other commodities, WTI crude for November delivery fell 2.70%, or 2.41, to $86.94 a barrel. Futures for Brent crude for December delivery fell 2.13%, or 2.01, to $92.28 a barrel.

Meanwhile, in the forex market, the EUR/USD pair remained unchanged 0.03% to 0.97, while USD/JPY edged up 0.70% to hit 146.88.

Futures on the USD index rose 0.06% to 113.19.

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USD/JPY: simply the best

Yesterday, the foreign exchange market experienced a strong storm. At first, the dollar took off like a rocket in all directions, and then it also sharply sprung back. But it still looks good against the yen.

The bouncing dollar

On Wednesday, the US currency showed another parabolic growth against all its major competitors. The springboard for the greenback was the shocking data on inflation in the United States.

Statistics for September showed that consumer prices in America rose more than expected. On a monthly basis, the indicator rose by 0.4% against the forecast of 0.2%.

As for the annual dynamics, inflation also exceeded the preliminary estimate of economists and amounted to 8.2%. This is only 0.1% lower than the value recorded in August.

The market saw that the growth of consumer prices in the United States is still stable, despite the aggressive anti-inflationary campaign launched by the Federal Reserve this year.

This significantly increased traders' expectations about the continuation of the hawkish course in America and the next increase in the interest rate by 75 bps.

Moreover, the hot inflation data again provoked a wave of speculation about a possible rise in the indicator in November by a full percentage point. The probability of such a scenario has increased to 13.4%.

Optimism about a more aggressive tightening served as an excellent springboard for the dollar. Literally overnight, the DXY index jumped by more than 0.5%.

One of the most productive majors was the USD/JPY pair. The quote soared by 0.7% and set another record at 147.665.

The last time the dollar traded against the yen at this level was in 1990. However, the USD/JPY pair did not stay at the 32-year high for long.

Shortly after the release of the consumer price index, the large-scale triumph of the greenback was replaced by an epic failure of the same power.

Analysts explain this by the fact that the market has already fully embedded in the value of the dollar expectations about sustained inflation and its impact on the future course of the Fed. Now a new trigger is needed for the USD to grow steadily, and we will get it soon. Now everyone's focus is switching to the Fed's monetary policy meeting next month.

As we approach the moment X, the dollar will grow on strong US economic data.

The yen is an obvious loser

Despite its recent rebound, the USD/JPY pair still maintains a strong upward mood. This morning, the asset is staying near the 32-year peak reached a day earlier.

Even the growing risk of currency intervention cannot weaken the grip of dollar bulls. At the start of Friday, the Japanese government again threatened to intervene in the market if there is a rapid fall in the yen.

Recall that last month, for the first time since 1998, Japan intervened in support of its national currency, when it fell against the dollar below the level of 145.90.

Given the recent statements of Japanese officials regarding the intervention, it can be assumed that now they will not protect any specific levels.

The other day, the Japanese Finance Minister and the head of the Bank of Japan stressed that at this stage the focus is shifted to the rate of change in the exchange rate.

According to analysts, this approach can keep dollar bulls only from sudden movements, but in general USD/JPY will remain in a bullish trend.

In the future, the asset will move to new price highs quietly for several weeks. Perhaps at some point it will get bogged down in consolidation again, but the upcoming rate hike in the US will not allow it to go into suspended animation for a long time.

The monetary divergence of America and Japan, which has already collapsed the yen against the dollar by almost 28% since the beginning of the year, will continue to intensify and put pressure on the JPY.

This week, BOJ Governor Haruhiko Kuroda once again reaffirmed his commitment to a dovish monetary exchange rate.

He again stressed that he does not consider the current inflation a reason to raise rates, especially since the Japanese economy has not yet recovered from the COVID-19 pandemic and still needs incentives.

Kuroda's comment further aggravated the divergence in the policy of the BOJ and the Fed, especially amid the fact that the market is now expecting further tightening in America.

This suggests that the yen's downward trend against the dollar will not change in the near future, even if the threat of further interventions will contribute to slowing the growth of the USD/JPY pair.

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US stock market closed lower, Dow Jones down 1.34%

At the close on the New York Stock Exchange, the Dow Jones fell 1.34%, the S&P 500 index fell 2.37%, and the NASDAQ Composite index fell 3.08%.

The leading performer among the Dow Jones index components today was JPMorgan Chase & Co, which gained 1.82 points or 1.66% to close at 111.19. UnitedHealth Group Incorporated rose 3.22 points or 0.63% to close at 513.13. Boeing Co rose 0.75 points or 0.57% to close at 133.15.

The losers were shares of American Express Company, which lost 4.74 points or 3.35% to end the session at 136.81. Apple Inc was up 3.21% or 4.59 points to close at 138.40, while Chevron Corp was down 3.11% or 5.14 points to close at 160.14. .

The leaders of growth among the components of the S&P 500 index following the results of today's trading were shares of U.S. Bancorp, which rose 3.36% to 42.76, Delta Air Lines Inc, which gained 2.30% to close at 31.08, and Wells Fargo & Company, which rose 1.86%, ending the session at 43.17.

The losers were First Republic Bank, which shed 16.45% to close at 112.57. Shares of The Mosaic Company shed 9.88% to end the session at 46.86. Quotes of CF Industries Holdings Inc decreased in price by 8.40% to 98.04.

Leading gainers among the components of the NASDAQ Composite in today's trading were Agrify Corp, which rose 53.75% to hit 1.45, Fednat Holding Co, which gained 48.02% to close at 0.52, and shares of Imara Inc, which rose 46.90% to end the session at 3.79.

The drop leaders were shares of TOP Financial Group Ltd, which fell in price by 73.47%, closing at 5.49. Shares of Alfi Inc lost 69.90% and ended the session at 0.25. Quotes of Novo Integrated Sciences Inc decreased in price by 61.94% to 0.29.

On the New York Stock Exchange, the number of depreciated securities (2506) exceeded the number of closed in positive territory (579), and quotes of 85 shares remained virtually unchanged. On the NASDAQ stock exchange, 2,720 stocks fell, 1,005 rose, and 229 remained at the previous close.

The CBOE Volatility Index, which is based on S&P 500 options trading, rose 0.25% to 32.02.

Gold futures for December delivery shed 1.67%, or 28.05, to hit $1.00 a troy ounce. In other commodities, WTI crude for November delivery fell 3.75%, or 3.34, to $85.77 a barrel. Futures for Brent crude for December delivery fell 2.93%, or 2.77, to $91.80 a barrel.

Meanwhile, in the Forex market, EUR/USD was down 0.51% to hit 0.97, while USD/JPY was up 1.00% to hit 148.68.

Futures on the USD index rose 0.82% to 113.18.

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US stock market closes higher, Dow Jones gains 1.12%

At the close of the New York Stock Exchange, the Dow Jones was up 1.12%, the S&P 500 was up 1.14% and the NASDAQ Composite was up 0.90%.

Salesforce Inc was the top performer among the components of the Dow Jones index today, up 6.35 points or 4.31% to close at 153.53. Quotes of American Express Company rose by 4.45 points (3.14%), closing the session at 145.99. JPMorgan Chase & Co (NYSE:JPM) rose 2.98 points or 2.57% to close at 118.84.

The losers were shares of Intel Corporation, which lost 0.55 points or 2.08% to end the session at 25.87. Johnson & Johnson was up 0.58 points (0.35%) to close at 166.01, while Nike Inc was down 0.29 points (0.32%) to end at 89. 68.

Leading gainers among the S&P 500 index components in today's trading were Carnival Corporation, which rose 11.28% to 8.09, Lockheed Martin Corporation, which gained 8.69% to close at 431.84, and Norwegian Cruise Line Holdings Ltd (NYSE:NCLH), which rose 8.57% to close at 14.31.

The biggest losers were Moderna Inc, which shed 3.71% to close at 134.09. Shares of Hasbro Inc lost 2.88% to end the session at 65.76. Quotes of DexCom Inc decreased in price by 2.81% to 96.93.

Leading gainers among the components of the NASDAQ Composite in today's trading were COMSovereign Holding Corp, which rose 170.14% to hit 0.12, Akouos Inc, which gained 88.16% to close at 13.19, and shares of Helbiz Inc, which rose by 58.07%, ending the session at around 0.42.

The biggest losers were Agrify Corp, which shed 58.60% to close at 4.43. Shares of Cosmos Holdings Inc lost 47.33% and ended the session at 0.08. Quotes of Salarius Pharmaceuticals Inc decreased in price by 45.18% to 2.74.

On the New York Stock Exchange, the number of securities that rose in price (2293) exceeded the number of those that closed in the red (825), while quotes of 115 shares remained virtually unchanged. On the NASDAQ stock exchange, 2441 companies rose in price, 1295 fell, and 277 remained at the level of the previous close.

The CBOE Volatility Index, which is based on S&P 500 options trading, fell 2.77% to 30.50.

Gold futures for December delivery lost 0.43%, or 7.10, to hit $1.00 a troy ounce. In other commodities, WTI crude for December delivery fell 2.33%, or 1.97, to $82.56 a barrel. Futures for Brent crude for December delivery fell 1.43%, or 1.31, to $90.31 a barrel.

Meanwhile, in the Forex market, the EUR/USD pair remained unchanged 0.20% to 0.99, while USD/JPY edged up 0.12% to hit 149.21.

Futures on the USD index fell 0.02% to 111.88.

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GBP/USD. A feast during the plague

Deputies quarrel, ministers are leaving, Truss' chair is shaking, inflation is rising.

The pound has started a black streak again, although the presence of a white one can be questioned. The burden of problems hangs over the British currency and it does not get better, on the contrary, there are new reasons to think about the potential achievement of parity for the GBP/USD pair.

The dollar gaining strength, the equally rapidly growing inflation in the UK, which the Bank of England continues to ignore, the specter of a recession. All this is happening during a possible change of power in Britain. The new prime minister has not had time to settle in the chair, as MPs want to send her after Boris Johnson. The government's twists and turns are not at the right time, but apparently there is no other way out.

Inflation

The pound fell for a moment after the release of inflation data. The new indicator turned out to be disappointing, the price index in the UK continued to accelerate, reflecting, among other things, the passivity of the local central bank.

In September, inflation moved to double digits, increasing from 9.9% to 10.1% against the consensus of economists of 10%. More importantly, the core inflation rate rose just as quickly, amounting to 6.5% compared to 6.3% in the previous month.

The highest figure in four decades, but succeeding figures are expected to be higher.

"The overall inflation rate will rise to almost 11% in October, primarily due to a 27% increase in energy prices. But in the first quarter, the overall figure should decrease to 9%, since the peak of growth in food and motor fuel prices has probably been reached," Pantheon Macroeconomics economists comment.

High inflation could be made an argument for strengthening the pound due to the aggressive rhetoric of the BoE, which, in theory, should have followed after another record price increase. Now nothing is keeping the central bank from raising the rate sharply at the November meeting, which was raised to 2.25% in September and is expected to rise to about 4% by the first months of the new year. In practice, things may be different.

However, some economists say this may now be less likely after recent scenes in the government. Most of the September budget plan was canceled this week in favor of a return to "austerity."

This leaves the economy on the path to a barely mitigated recession, which, according to the August monetary policy report, could last for about a quarter.

Everything is too complicated, and the authors of this confusion are British politicians.

Downing Street

The inflationary picture in the UK has been erased by reports of new layoffs in the ranks of high-ranking political officials. Following the sudden departure of former Chancellor Kwasi Kwarteng, who was forced to resign on October 14, Interior Minister Sewelluella Braverman left her post.

The pound tried to grow amid large-scale losses on Wednesday. This movement, apparently, was a reaction to the departure of another high-ranking member of the government, followed by a decline in the yield of UK government bonds, which did not correspond to the internal inflationary picture.

Braverman was replaced by Grant Shapps, whom the prime minister had previously pushed to the back of the government.

Who's next? What other reshuffles are waiting for Britain and will this save the country from collapse?

Anyway, the pound likes what is happening with the change of the main characters.

The drop in yields on Wednesday did not correspond to the global background against which US bond yields were pushing other countries higher.

Dollar

Government reshuffles have a short-term impact on the pound. The reality is that the British currency lags behind not only the strong dollar, but also the weak euro.

The pound continued its downward trend, despite extremely high inflation and the rates of the financial markets on the increase in US bond yields after even more hawkish comments from the Federal Reserve representatives.

The pound's illogical reaction to the consumer price index data highlights that the currency is "trading in a structural, not cyclical way. In a cyclical world, higher inflation will be accompanied by higher yields and a stronger currency," HSBC noted.

When markets are most concerned about structural risks, "higher inflation and higher yields are seen as symptoms of a broader problem," the economists explain.

The pound is likely to continue trading structurally until the country's authorities make more efforts to contain the domestic budget deficit or until inflation reaches a peak. In this case, stabilization of the bond market and the pound is possible. In the meantime, the downward trend is the main one. Sterling is waiting for a difficult few months, during which the GBP/USD exchange rate risks falling to 1.0800 and below.

The dollar rally, fueled by even more aggressive Fed rhetoric, will put more pressure on the lifeless pound.

Traders are revisiting US interest rate hikes closer to 5%. In November, the rate can be raised immediately by 100 bps.

The dollar rally in the middle of the week followed statements from Minneapolis Fed chief Neel Kashkari. The official signaled that he had "very little confidence in what inflation will be in six months" and argued that the central bank should keep raising rates until there was "convincing evidence" that the inflationary peak had passed.

As for rates, September forecasts suggested an upper limit of 4.5% by the end of the year. Concerns were also raised about a rise to 4.75% early next year.

Core inflation rose from 6.3% to 6.6% y/y in September, while the official or headline inflation rate remained stubbornly elevated at 8.2%.

After the reversal of the dollar index, expectations about reaching new highs again became more active. The current range is 112.00-114.00. These notes will remain relevant until the next FOMC meeting. If bulls manage to break above 114.00, gains will accelerate to a 2022 peak at 114.80.

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US stocks closed lower, Dow Jones down 0.30%

At the close of the New York Stock Exchange, the Dow Jones was down 0.30%, the S&P 500 was down 0.80% and the NASDAQ Composite was down 0.61%.

The leading gainer among the components of the Dow Jones index today was International Business Machines, which gained 5.79 points (4.73%) to close at 128.30. Salesforce Inc rose 3.83 points or 2.49% to close at 157.50. Verizon Communications Inc rose 0.43 points or 1.18% to close at 37.00.

The biggest losers were Home Depot Inc, which shed 6.03 points or 2.19% to end the session at 269.46. Caterpillar Inc was up 2.10% or 3.87 points to close at 180.54 while Nike Inc was down 1.96% or 1.74 points to end at 86.83. .

Leading gainers among the S&P 500 components in today's trading were Lam Research Corp, which rose 7.81% to 355.87, AT&T Inc, which gained 7.72% to close at 16.74, and shares of Quest Diagnostics Incorporated, which rose 6.32% to close the session at 134.66.

The biggest losers were Allstate Corp, which shed 12.90% to close at 117.71. Shares of Union Pacific Corporation shed 6.80% to end the session at 186.45. Quotes of Tesla Inc decreased in price by 6.65% to 207.28.

Leading gainers among the components of the NASDAQ Composite in today's trading were Nextplay Technologies Inc, which rose 107.31% to hit 0.41, Cabaletta Bio Inc, which gained 50.77% to close at 1.96, and also shares of Save Foods Inc, which rose 31.33% to end the session at 1.97.

The biggest losers were Talaris Therapeutics Inc, which shed 43.39% to close at 1.37. Shares of LMF Acquisition Opportunities Inc shed 34.55% to end the session at 6.82. Quotes of Gaucho Group Holdings Inc decreased in price by 30.40% to 0.21.

On the New York Stock Exchange, the number of securities that fell in price (2067) exceeded the number of those that closed in positive territory (1018), while quotes of 114 shares remained virtually unchanged. On the NASDAQ stock exchange, 2037 stocks fell, 1694 rose, and 240 remained at the previous close.

The CBOE Volatility Index, which is based on S&P 500 options trading, fell 2.54% to 29.98.

Gold futures for December delivery lost 0.17%, or 2.85, to hit $1.00 a troy ounce. In other commodities, WTI crude for December delivery rose 0.50%, or 0.42, to $84.94 a barrel. Futures for Brent crude for December delivery rose 0.25%, or 0.23, to $92.64 a barrel.

Meanwhile, in the Forex market, the EUR/USD pair remained unchanged 0.12% to 0.98, while USD/JPY rallied 0.19% to hit 150.18.

Futures on the USD index fell 0.07% to 112.81.

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US stock market closes higher, Dow Jones gains 2.47%

At the close on the New York Stock Exchange, the Dow Jones rose 2.47% to hit a monthly high, the S&P 500 rose 2.37% and the NASDAQ Composite rose 2.31%.

Caterpillar Inc was the top performer among the components of the Dow Jones index today, up 10.88 points or 6.07% to close at 190.22. JPMorgan Chase & Co rose 6.10 points or 5.25% to close at 122.23. Goldman Sachs Group Inc rose 14.29 points or 4.60% to close at 325.10.

The losers were shares of Verizon Communications Inc, which shed 1.65 points or 4.46% to end the session at 35.35. American Express Company rose 1.67% or 2.38 points to close at 140.04, while Procter & Gamble Company rose 1.25% or 1.59 points to close at 128.58.

Leading gainers among the components of the S&P 500 in today's trading were Schlumberger NV, which rose 10.33% to 50.41, Freeport-McMoran Copper & Gold Inc, which gained 9.99% to close at 32. 03, as well as Huntington Bancshares Incorporated, which rose 9.47% to end the session at 14.45.

The drop leaders were SVB Financial Group shares, which lost 23.95% to close at 230.03. Shares of Robert Half International Inc lost 8.55% and ended the session at 73.01. Quotes of HCA Holdings Inc decreased in price by 5.69% to 196.74.

Leading gainers among the components of the NASDAQ Composite in today's trading were Huadi International Group Co Ltd, which rose 89.27% to hit 58.92, Altamira Therapeutics Ltd, which gained 58.64% to close at 0.52 , as well as shares of Missfresh Ltd ADR, which rose by 57.50%, ending the session at around 2.52.

The drop leaders were shares of Immunic Inc, which fell 77.39% to close at 2.08. Shares of Nextplay Technologies Inc lost 33.23% and ended the session at 0.28. Quotes of Kalera PLC decreased in price by 35.61% to 0.28.

On the New York Stock Exchange, the number of securities that rose in price (2282) exceeded the number of those that closed in the red (835), while quotes of 104 shares remained virtually unchanged. On the NASDAQ stock exchange, 2503 companies rose in price, 1265 fell, and 238 remained at the level of the previous close.

The CBOE Volatility Index, which is based on S&P 500 options trading, fell 0.97% to 29.69.

Gold futures for December delivery added 1.40%, or 22.95, to $1.00 a troy ounce. In other commodities, WTI crude for December delivery rose 0.73%, or 0.62, to $85.13 a barrel. Futures for Brent crude for December delivery rose 1.24%, or 1.15, to $93.53 a barrel.

Meanwhile, in the Forex market, EUR/USD rose 0.80% to hit 0.99, while USD/JPY shed 1.75% to hit 147.51.

Futures on the USD index fell 0.90% to 111.80.

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US stocks closed higher, Dow Jones up 1.34%

At the close of the New York Stock Exchange, the Dow Jones rose 1.34% to a one-month high, the S&P 500 was up 1.19% and the NASDAQ Composite was up 0.86%.

Amgen Inc was the top performer among the components of the Dow Jones index today, up 9.38 points or 3.72% to close at 261.32. Quotes Coca-Cola Co rose by 1.61 points (2.88%), ending trading at 57.57. Home Depot Inc rose 7.73 points or 2.81% to close at 283.26.

The least gainers were Nike Inc, which lost 0.49 points or 0.55% to end the session at 88.01. The Walt Disney Company (NYSE:DIS) was up 0.32 points or 0.31% to close at 101.72, while Chevron Corp was down 0.06 points or 0.03% to end the trading at 173.13.

Leading gainers among the S&P 500 index components in today's trading were HCA Holdings Inc, which rose 7.02% to hit 210.47, Tractor Supply Company, which gained 5.30% to close at 207.83, and also shares of Regions Financial Corporation, which rose 5.28% to close the session at 20.55.

The least gainers were Las Vegas Sands Corp, which shed 10.29% to close at 35.05. Shares of Starbucks Corporation shed 5.47% to end the session at 83.76. Quotes of Wynn Resorts Limited decreased in price by 3.86% to 56.53.

Leading gainers among the components of the NASDAQ Composite in today's trading were Applied Genetic, which rose 62.43% to hit 0.39, Vaxcyte Inc (NASDAQ:pCVX), which gained 60.35% to close at 33. 00, as well as shares of Mullen Automotive Inc, which rose 32.94% to close the session at 0.50.

The least gainers were Tricida Inc, which shed 94.48% to close at 0.60. Shares of Alfi Inc lost 54.32% and ended the session at 0.11. Quotes of Huadi International Group Co Ltd decreased in price by 43.99% to 33.00.

On the New York Stock Exchange, the number of securities that rose in price (1,751) exceeded the number of those that closed in the red (1,344), while quotes of 124 shares remained virtually unchanged. On the NASDAQ stock exchange, 1925 companies rose in price, 1828 fell, and 253 remained at the level of the previous close.

The CBOE Volatility Index, which is based on S&P 500 options trading, rose 0.54% to 29.85.

Gold futures for December delivery lost 0.15%, or 2.55, to hit $1.00 a troy ounce. In other commodities, WTI crude futures for December delivery fell 0.26%, or 0.22, to $84.83 a barrel. Futures for Brent crude for January delivery rose 0.13%, or 0.12, to $91.46 a barrel.

Meanwhile, in the forex market, the EUR/USD pair remained unchanged 0.14% to 0.99, while USD/JPY edged up 0.98% to hit 149.09.

Futures on the USD index fell 0.04% to 111.93.

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Gold still attractive for buyers

The price of gold dropped in the short term after reaching the 1,675 level. Now, it is traded at 1,664 at the time of writing. XAU/USD slipped lower as the DXY tried to rebound. Still, Gold could try to develop a new bullish momentum as the Dollar Index is under downside pressure.

Today, the fundamentals will drive the price, so you have to be careful. The ECB is expected to increase the Main Refinancing Rate from 1.25% to 2.00%. The Monetary Policy Statement and the ECB Press Conference could really shake the markets.

Also, the US Advance GDP is expected to register a 2.3% growth, Advance GDP Price Index may report a 5.3% growth, Unemployment Claims could be reported at 219K, Durable Goods Orders could register a 0.6% growth, while Core Durable Goods Orders may report a 0.2% growth.

As you can see on the H1 chart, XAU/USD found resistance at 1,668. The bias remains bullish as long as it stays above the uptrend line. Technically, after its strong growth, a temporary drop was natural.

Staying near the 1,668 resistance may signal an imminent breakout. Temporary consolidation could bring more bullish energy and attract more buyers.

XAU/USD Forecast!

Staying above the minor uptrend line and making a valid breakout above 1,675 could confirm further growth. A new higher high is seen as a buying opportunity. The 1,700 psychological level and the R2 (1,699) represent upside targets.

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

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The Bank of Japan pushes the yen into a loop again

Today, the Bank of Japan has once again confirmed its status as an outsider among global central banks. Despite the global tightening trend, the BOJ has decided to maintain ultra-low interest rates.

No changes on the Japanese front

At the end of the week, traders on the USD/JPY pair are focused on the BOJ meeting. At the start of Friday, the central bank issued its verdict on the further monetary exchange rate.

As expected, the BOJ did not present a hawkish surprise.

The central bank has maintained its policy guidelines: it left interest rates at -0.1% and promised to keep the yield of 10-year bonds at around 0%.

The BOJ continues to follow the dovish route, even despite the next jump in consumer prices. The report published today showed that in October, annual inflation in the country increased at the highest rate since 1989.

This month, the core CPI jumped to 3.4%, which is significantly higher than the BOJ target, which is at 2%. Nevertheless, the BOJ still considers the acceleration of inflation unsustainable.

The central bank expects consumer price growth to slow down to 1.6% over the next 12 months, although it has raised its inflation forecast for the current fiscal year.

According to BOJ estimates, the CPI will remain around 2.9% until March 2023, which is significantly higher than the previous estimate of 2.3%.

Another argument in favor of maintaining a soft monetary policy of the BOJ is the slow recovery of the economy after the COVID-19 pandemic.

Now the central bank is concerned that a total increase in interest rates in the world could trigger a global recession, which would negatively affect the state of the already fragile Japanese economy.

Given this risk, the BOJ sharply lowered its economic growth forecast for the current fiscal year. Now the central bank expects GDP to rise not by 2.4%, as before, but by only 2%, followed by a slowdown to 1.9%.

Such gloomy prospects are the BOJ's main obstacle on the way to normalizing its monetary policy. It forces the BOJ to take a marginal dovish position, which condemns the yen to further depreciation.

What is happening with JPY now?

This year, the yen is experiencing the worst drawdown in almost all directions in history, but most of all against the dollar. Since January, due to the strong monetary divergence of Japan and the United States, the JPY rate has fallen against the USD by more than 20%.

Unlike the BOJ, the Federal Reserve has embarked on a hawkish track this year and has significantly outpaced other central banks in terms of rate hikes.

In order to curb record high inflation in the country, American politicians have already raised interest rates five times during the year and are preparing to hold another round of hikes next week.

Now the markets expect that in November the Fed will again increase the indicator by 75 bps, which is an excellent driver for the dollar, especially when paired with the yen.

However, at the same time, most traders believe that by December, the US central bank may slow down the rate of tightening to 50 bps, as the American economy begins to show signs of slowing down.

The emergence of speculation about the Fed's less hawkish policy caused the greenback to sharply weaken on all fronts this seven-day period, including against the yen.

Recall that last week the dollar reached a new 32-year high relative to the yen, approaching the 152 mark. Since then, the USD/JPY pair has fallen by almost 4%.

In part, the greenback's position was undermined by two cycles of interventions, which Japan is supposed to have conducted in support of the yen. But the main pressure on the dollar was still exerted by increased expectations of a slowdown in the pace of rate hikes in America.

Now that the USD/JPY pair has received another powerful boost from the BOJ, analysts expect it to return to growth.

At the time of preparation of the material, the yen really moved into the red zone and fell against the dollar by 0.35%. According to experts, in the short term, the yen's decline may accelerate significantly.

Memories of last month are still vivid in the minds of many, when the dovish comments of BOJ Chairman Haruhiko Kuroda caused a sharp weakening of the yen. And just half an hour after Kuroda finished his speech, the Japanese Ministry of Finance conducted the first currency intervention in 24 years.

Some analysts do not rule out that in the near future the market may catch deja vu.

If the dollar bulls break loose again, the Japanese government will most likely not hesitate for a long time and press the red button.

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De-dollarization or de-eurozation? Analysts consider both scenarios possible

Analysts have been discussing the possible ditch of the US dollar in foreign settlements for a long time. However, now, they do not exclude a similar scenario for the euro. Analysts are mulling over what could lead to such outcomes. They fear that in the near future the European currency will face the same challenges as the Us dollar. Currently, many countries are trying to replace the US dollar in mutual settlements.

Analysts pinpoint that the euro has more disadvantages than advantages. Settlements in the euro and its support are getting more expensive. According to the Eurobarometer, the euro is popular with 60% of the population. However, now many EU citizens are skeptical about the future of the euro. Some economists reckon that some EU states may leave the eurozone and ditch the euro.

Earlier, economists suggested a possible replacement of the US currency by many countries. However, the euro is now facing such a risk as well. De-eurozation looks quite feasible. However, the situation in the global financial market is unlikely to change in the near future, economists believe.

Currently, the authorities of many countries are trying to diversify their foreign exchange reserves to reduce dependence on the greenback. However, a sharp decline in the dollar share of international reserves looks unlikely as roughly 40% of the world's transactions are done in dollars.

The use of national currencies in international settlements spurs their demand and reduces dependence on the Fed's monetary policy. At the same time, the current geopolitical turmoil is fueling a rally of the US dollar as many countries prefer to keep the US currency in their reserves.

At the start of the week, the euro was trading almost at the same levels. On October 31, the EUR/USD pair was fluctuating near 0.9952, slightly below the previous pivot level of 0.9963.

Investors are now awaiting the release of the euro area's important macroeconomic report, namely GDP for the third quarter of 2022. According to preliminary estimates, from July to September, the economy declined slightly to 2.1%. In the second quarter of 2022, this figure totaled 4.1%.

The greenback has been rising for some time thanks to the Fed's hawkish stance. On November 2, the Bank of England and the Fed will hold their meetings. The Fed is widely expected to raise the key rate by 75 basis points to the range of 3.75-4%.

The Fed's key rate decision may significantly impact market sentiment. Some analysts believe that the regulator could switch to less aggressive tightening despite a 75 basis point rate hike. However, other analysts are certain that the regulator will hike the rate by 75 basis points at the next meeting scheduled for December 14.

At the February meeting in 2023, the watchdog is expected to increase the key rate by 25 basis points to 4.50-4.75%. Analysts suppose that three will be more 25 basis point rate increases next year. Such a scenario is bearish for the US dollar. The euro is also unable to regain long-term rise. Thus, it is recommended to buy the EUR/USD pair with a long-term target level above 1.0500.

Many economists are afraid that sentiment will become more bearish on the US currency. Last week, large traders initiated a sell-off of the greenback. As a result, the number of short positions during the week increased by 21%. If there are no positive fundamental favors, the greenback may drop lower.

Nevertheless, the US dollar remains the most popular currency, with close to 90% of all currency trades having the dollar as one leg of the transaction. It has been rallying for some time amid the Fed's aggressive tightening. In the last few months, the US dollar has reached multi-year highs against the euro, the pound sterling, the yen, and the yuan. It also took advantage of a recession in the eurozone as investors got rid of the euro in favor of the US dollar.

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

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US stocks closed lower, Dow Jones down 0.39%

At the close in the New York Stock Exchange, the Dow Jones fell 0.39%, the S&P 500 fell 0.75% and the NASDAQ Composite fell 1.03%.

The leading gainers among the components of the Dow Jones index today were The Travelers Companies Inc, which gained 2.59 points (1.42%) to close at 184.55. Quotes of Goldman Sachs Group Inc rose by 3.03 points (0.89%), ending trading at 344.85. UnitedHealth Group Incorporated rose 4.11 points or 0.75% to close at 555.35.

The losers were shares of Intel Corporation, which lost 0.64 points or 2.20% to end the session at 28.43. Microsoft Corporation was up 1.59% or 3.74 points to close at 232.13, while Dow Inc was down 1.58% or 0.75 points to close at 46.73 .

Leading gainers among the S&P 500 index components in today's trading were Wynn Resorts Limited, which rose 9.61% to hit 63.90, Coterra Energy Inc, which gained 3.49% to close at 31.15, and also shares of DaVita HealthCare Partners Inc, which rose 3.47% to end the session at 72.99.

The biggest losers were Global Payments Inc, which shed 8.83% to close at 114.25. Shares of Newell Brands Inc shed 8.24% to end the session at 13.81. Quotes of Meta Platforms Inc decreased in price by 6.09% to 93.16.

The leading gainers among the components of the NASDAQ Composite in today's trading were Sonnet Biotherapeutics Holdings Inc, which rose 66.38% to 1.93, Acorda Therapeutics Inc, which gained 63.36% to close at 1.07. as well as shares of Shineco Inc, which rose 37.96% to close the session at 1.09.

The biggest loser was Y mAbs Therapeutics, which shed 59.80% to close at 3.61. Shares of Tusimple Holdings Inc lost 45.64% to end the session at 3.43. Quotes Bull Horn Holdings Corp. decreased in price by 45.61% to 6.50.

On the New York Stock Exchange, the number of securities that fell in price (1604) exceeded the number of those that closed in positive territory (1472), while quotes of 118 shares remained virtually unchanged. On the NASDAQ stock exchange, papers of 2004 companies fell, 1753 rose, and 165 remained at the level of the previous closing.

The CBOE Volatility Index, which is based on S&P 500 options trading, rose 0.50% to 25.88.

Gold futures for December delivery lost 0.53%, or 8.65, to hit $1.00 a troy ounce. In other commodities, WTI crude for December delivery fell 1.95%, or 1.71, to $86.19 a barrel. Futures for Brent crude for January delivery fell 1.32%, or 1.24, to $92.53 a barrel.

Meanwhile, in the Forex market, EUR/USD was down 0.80% to hit 0.99, while USD/JPY was up 0.87% to hit 148.74.

Futures on the USD index rose 0.77% to 111.45.

News are provided by InstaForex

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The U.S. stock market closed lower, the Dow Jones fell 0.24%

At closing time on the New York Stock Exchange, the Dow Jones was down 0.24%, the S&P 500 was down 0.41% and the NASDAQ Composite was down 0.89%.

The leaders among Dow Jones index components in today's trading were shares of JPMorgan Chase & Co. which gained 2.28p (1.81%) to close at 128.16. Nike Inc rose 1.09 pct (1.18%) to close at 93.77. Goldman Sachs Group Inc rose 3.94p (1.14%) to close at 348.45.

The least gainers were shares of Apple Inc, which fell 2.69p (1.75%) to close the session at 150.65. Salesforce Inc shares rose 2.79p (1.72%) to close at 159.80, while Microsoft Corporation dropped 3.96p (1.71%) to close at 228.17.

The top gainers among S&P 500 index components in today's trading were ABIOMED Inc which gained 49.88% to 377.82, IDEXX Laboratories Inc which gained 9.80% to close at 394.93, and Hologic Inc which gained 9.34% to end the session at 74.13.

Catalent Inc shares were the fallers, down 24.62% to close at 49.55. Shares of Zebra Technologies Corporation lost 15.86% and ended the session at 238.30. Ecolab Inc dropped 8.98% to 142.96.

The gainers among the components of the NASDAQ Composite index in today's trading were shares of ABIOMED Inc. which gained 49.88% to 377.82, Sonnet Biotherapeutics Holdings Inc. which gained 46.63% to close at 2.83 and shares of NLS Pharmaceutics AG which gained 44.00% to close the session at 0.74.

Varonis Systems shares were the fallers, dropping 35.49% to close at 17.27. Shares of China Liberal Education Holdings lost 27.39% to end the session at 1.14. Acorda Therapeutics Inc. was down 25.22% to 0.80.

On the NYSE, 1,960 securities gained more than 1,172 which closed negative and 95 were flat. On NASDAQ, 2,101 stocks gained in value, 1,680 declined, and 194 remained flat.

The CBOE Volatility Index, which is based on the S&P 500 options trade, fell 0.27% to 25.81.

Gold futures for December delivery added 0.55%, or 8.95, to $1.00 per troy ounce. In other commodities, December WTI crude oil futures rose 2.02%, or 1.75, to $88.28 a barrel. January Brent crude futures traded up 1.83%, or 1.70, to $94.51 per barrel.

Meanwhile, on the Forex market, EUR/USD remained unchanged 0.08% to 0.99, while USD/JPY dropped 0.33% to 148.23.

The USD index futures rose 0.02% to 111.44.

News are provided by InstaForex

Read More https://ifxpr.com/3Nvx8Nt
 
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