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Jackson Hole and Eur-UsdIt is only a day away from the start of the central bankers' symposium on Thursday in Jackson Hole, Wyoming. Jerome Powell has already been making it clear to the markets for several days that the Federal Reserve's stimulus plan is coming to an end. Stop with the ultra-accommodating policy, zero-cost money and massive purchases of government bonds (120 billion a month): it is time for tapering. The markets did not react positively. However, as the days passed (two days, in fact), investors realised that the Fed will not allow a stock market crash, creating chaos. So yesterday, the S&P500 index has once again touched its all-time high. What is on the horizon is a split between the Fed and the ECB. After years of walking arm in arm in the name of growth and the fight against inflation, the Federal Reserve and the European Central Bank are about to part ways. With GDP at 6.5%, a steadily improving labour market and, above all, inflation already above 5%, the Fed is preparing to reduce stimulus. On an economic level, monetary tightening means that access to credit will become a little more expensive and thus less money will be available for families to consume and businesses to invest. As far as the currency market is concerned, all this translates into a strengthening of the dollar. There is some concern, especially because of Covid-19, which is far from being averted also because of its variants. Treasury Secretary Janet Yellen expressed her fears in a letter to Congress, in which she warned that the Delta variant of the virus could damage the economy. On the other side of the Atlantic, the ECB has no intention of changing its stimulus plan and rates will remain at zero for a long time to come, as Christine Lagarde confirmed when answering journalists' questions at the ECB's latest meeting, “there is still a long way to go before the damage to the economy caused by the pandemic is offset” and again, “none of us would want to tighten prematurely.” The only thing that remains to be seen is the timing of the Fed's tapering, most likely before the end of the year. Now, quickly a look at Eur-Usd to try to understand what could be the future scenario of the currency pair. Above, you can see the chart with the most important levels highlighted. If what is written above is confirmed and the US will set a date for the start of tapering, then for Eur-Usd the doors of decline will open wide. In this case, I don't think the rebound will continue any further. If there will be hesitations, second thoughts, and only hypotheses and ideas understudy, then I think that Eur-Usd can continue to rise with first targets 1.17800, 1.18200 and 1.18750/1.19250 area. So, from tomorrow, eyes on the symposium in Jackson Hole.
by TradingwDavid
S&P 500 Weekly Daily Chart Analysis For August 16, 2021 Technical Analysis and Outlook The S&P 500 fell 2.5% on Monday, at one point in the week, and on Thursday provided us with Rinse and Repeated buying opportunity ( Mean Sup $4,368-Mean Sup $4,385 zone ). As specified on Weekly Daily Chart Analysis For August 2, 2021, the main target is Outer Index Rally $4,483 and newly created the Key Res $4,480 . The very low downside scenario is revisiting the ''Rinse and Repeat'' buying zone. See the 'Weekly Market Review & Analysis For August 16, 2021" page at the usual site for the rest of the market story.
TVC:SPX
by TradingSig
1
USDCAD Testing the Previous Swing Peak The price action of the USDCAD pair is currently nearing the last swing peak at 1.28000 (the Distribution area in red). If it manages to penetrate above it, the price would then likely head towards the 1.272 Fibonacci extension level at 1.29054. The dollar strengthening in the short term is owing to investors and traders' expectations of FED tapering. Notice that the current uptrend commenced following a breakout above the Pennant pattern. Bears can look for an opportunity to sell around 1.29054 on the expectation for a minor correction. The price action could then fall to the 23.6 per cent Fibonacci retracement level at 1.26191.
Short
by Trendsharks
1
The CPI Fantasy And Commodity PricesRodney Dangerfield was one of my all-time favorite comedians. He was a master at the one-liner, and while his catchphrase was “I don’t get no respect,” he got plenty. Rodney passed in 2004, but his legacy lives on in films. His role as Thornton Melon in the 1986 comedy classic Back to School continues to have a cult following. As he sat in an economics class, the professor created a theoretical company that sold widgets, the favorite product of academics. The lesson included funding the company and developing a marketing strategy for the widgets. Rodney’s character, already a wealthy businessman, attempted to point out the realities of starting a business, but the professor objected. Rodney then glibly asked the economist if his factory was in “fantasy land.” While the film was a fictional comedy, there is a fine line between fiction and nonfiction. The US Federal Reserve continues to call rising inflationary pressures “transitory.” Long ago, the economists massaged the consumer price data to extract a core that excludes food and energy prices called “core CPI.” Thornton Melon would call the core data “fantasy land” as food and energy are the critical factors that take a bite out of consumers’ budgets. Another significant increase in the inflation barometer Core CPI is fantasy land Look at the evidence- It costs more to power our lives and fuel our bodies Transitory in Fed Speak and the literal definition is not the same The trend is always your friend- Economists are behind the curve Another significant increase in the inflation barometer In June and July, the previous month’s consumer price index data was off the charts, indicating rising inflation. This month, the July CPI reading rose 5.4%, another sky-high level. While the number was in line with the market’s expectations, core CPI, excluding food and energy, was up 0.3% compared to the forecast level at 0.4%. The market interpreted the core number as less inflationary as it was below the expected reading. Core CPI is fantasy land Economists are social scientists, making their projections and interpretations highly subjective. They argue that core CPI better reflects inflationary pressures because food and energy prices can be highly volatile. Excluding them from the inflation barometer smooths the data. In statistics, the science of data, hedonic regression is the application of regression analysis to estimate the impact of various factors on the price of demand for a good. Hedonics is commonly used in real estate pricing as a quality adjustment for price indices. When it comes to inflation, excluding food and energy from the CPI is similar. The problem with core CPI is that food and energy make up a significant part of budgets. Rising prices for the products that fuel our lives and provide nutrition for our bodies is taking an ever-increasing bite out of paychecks is a reality, while eliminating them distorts the actual cost of living for the majority of people. Economists massage data. The US Federal Reserve relies on statistics in its monetary policy decision-making process. Thornton Melon would say that core CPI only exists in “fantasy land.” Look at the evidence- It costs more to power our lives and fuel our bodies Anyone that fills their car with gasoline, heats or cools their homes, or eats, will tell you that prices are a lot higher in August 2021 than they were in August 2020. Futures prices are real-time objective data as they reflect where buyers and sellers meet in a transparent environment. The evidence pointing to the reality of rising inflation from the August 2020 high to the August 13, 2021 closing level on the nearby futures contracts is clear: Nearby NYMEX crude oil prices increased from $43.78 to $68.44 per barrel, an increase of 56.3%. Gasoline moved from $1.4395 to $2.2626 per gallon or 57.2%. Heating oil and distillate prices rose from $1.3054 to $2.0779 per gallon, a 59.2% rise. Natural gas appreciated from $2.743 to $3.861 per MMBtu or 40.8%. Corn rose from $3.53 to $5.6825 per bushel or 61.0%. Soybeans rallied from $9.67 to $13.73 per bushel or 42.0%. CBOT wheat increased from $5.5175 to $7.6225 per bushel or 38.2%. Coffee rose from $1.3080 to $1.8275 per pound or 39.7%. Sugar moved from 13.28 cents to 19.95 cents per pound or 50.2%. Live cattle appreciated from $1.08225 to $1.28125 per pound or 18.4%. Lean hogs are up from 56.70 cents to 86.525 per pound or 52.6% over the period. The substantial increases in food and energy commodities paint a very inflationary picture. Moreover, the price rises reflect wholesale levels. Retail prices have risen far more over the past year. Yesterday, I paid over $4.20 per gallon for gasoline in Las Vegas, double the price last year. Food and energy prices are the tip of an inflationary iceberg. Education, health care, and housing costs are soaring. All raw material prices have moved appreciably higher. Transitory in Fed Speak and the literal definition is not the same In reality, prices are soaring in the Fed’s “fantasy land,” the core CPI data does not look all that bad as they only rose 0.3% in August. However, our food and energy bills went up a hell of a lot more last month. Over the past months, the Fed blamed rising inflationary pressures on lumber, new and used car prices, and other “transitory” factors created by bottlenecks in supply chains and other pandemic-related factors. The academic ivory tower where the economists sit is far above ground zero, where consumers shop each day. The definition of “transitory” is not permanent. Adjectives are temporary, transient, brief, short, short-lived, fleeting, and passing. “Transitory,” in a literal sense, requires an end date. So far, the Fed has not provided that data to the market. When asked about the period the central bank measures its 2% average inflation target, Chairman Powell replied it is “discretionary” or available for use at the user’s discretion. Transitory and discretionary is Fed-speak for leave it to us. They are non-answers to critical questions about the Fed’s interpretation and policy stance. Transitory reflects the central bank’s hopes and wishes, while discretionary tells us they will figure it all out someday. The trend is always your friend- Economists are behind the curve The bottom line is that the most objective measures of inflation are the wholesale futures prices and the retail costs of living. Food and energy prices are only a microcosm of rising prices across all asset classes. Money’s purchasing power is eroding because of the tidal wave of central bank liquidity and tsunami of government stimulus. Even if the Fed bites the bullet and addresses rising inflation, the government continues to spend without abandon. A $3.5 trillion budget initiative before the US Congress with an infrastructure rebuilding package only increases the debt level. The Fed is living in “fantasy land” as inflation continues to rise. In August 2020, gold made a new record high. In May 2021, lumber, copper, and palladium prices rose to all-time peaks. Grains and oilseeds rose to eight-year highs in 2021. In July, coffee futures rose to their highest price since 2014. Bull markets in the volatile commodities sector rarely move in a straight line. The ascent of prices has been nothing short of a bull market relay race, with one commodity handing the baton to the next. The most recent recipient was the sugar market, which rose to over 20 cents per pound last week, the highest price since 2017. Even if we use statistical methods to smooth the bullish price action, the underlying trends reveal that the Federal Reserve’s approach to monetary policy is far behind the inflationary curve. Inflation can be a challenging beast to tame. As it rises, the central bank’s refusal to acknowledge and address the economic condition will reward it with the lack of respect it deserves. We live in a stark reality created by policies that continue to erode money’s value. Rodney Dangerfield was a comedian. There is a fine line between comedy and tragedy. If the approach to monetary policy that hides behind massaged data were not so tragic, it would be funny. 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CBOT:ZC1!
by Andy_Hecht
Bitcoin (BTC/USD) Weekly Daily Chart Analysis For August 9, 2021Technical Analysis and Outlook It seems there is no stopping Bitcoin after the cryptocurrency surged past our psychological Mean Res $46,580 mark, which held the coin captive for four sessions from passing this barrier. Next is our target Inner Coin Rally of $50,130, coinciding with a significant $50,000 Maginot Line . Will the price of Bitcoin increase to $50,000 this weekend? See the 'Weekly Market Review & Analysis For August 9, 2021" page at the usual site for the rest of the market story.
COINBASE:BTCUSD
by TradingSig
Slowdown In U.S. Inflation Not A Game Changer (12 August 2021)Prices stagnate in July. The U.S. Bureau of Labor Statistics (BLS) reported a continued rise in the prices of goods and services in July albeit at a slower pace while annual inflation has stagnated as expected. The key driver behind the slowdown in inflation comes from the strong deceleration in price rise of used cars and trucks (+0.2%). At the same time, prices of new vehicles (+1.7%) continued to rise at around the same pace as the previous two months. More downward pressure on oil prices as White House calls for more hikes in production. The White House called on the OPEC+ to hike oil production yesterday. In the released statement, the White House wrote that “higher gasoline costs, if left unchecked, risk harming the ongoing global recovery”, responding to the recent rise in oil prices that drove the spike in global inflation. The effect of transitory inflation is starting to play out. With the opening of the economy and the issue of supply shortage starting to tone down as supply catches up, inflation pressures coming from used vehicles will likely be toned down. Also, with the rising pressure applied on the OPEC+ to increase oil production, we may be hearing from the organization next month during their meeting on further production hike in the future. Fed likely to remain confident despite slowdown in inflation. To conclude, although the July inflation figures disappointed the market a little, translating to a weakening in the U.S. dollar, this is unlikely going to be a game changer for the Fed as annual inflation is still way above the central bank’s 2% target. As a matter of fact, the slowdown in inflation is within expectation of the central bank. Hence, the recent releases of strong jobs and inflation figures are likely going to boost the confidence of the Fed in making QE tapering announcements during the Jackson Hole Symposium.
TVC:DXY
by GH_Lee
Price Outlook of Gold for 2021-2050*** THIS IS NOT FINANCIAL ADVICE. DO YOUR OWN RESEARCH AND FORM YOUR OWN OPINIONS *** 10Y Treasury and Gold's Price: Gold is correlated strongly (92%) with the 10Y Treasury. During 2020, during the depths of the pandemic, we saw 10Y rates under 0.5%. This was the primary catalyst for Gold to find its new ATH during August of 2020. This strong correlation makes it necessary to understand the primary drivers of Federal Reserve policy and actions. Miss-guided Inflation to Gold Correlation: Inflation is the most commonly purported catalyst behind Gold's price movements. This remains true, however the present narrative surrounding inflation (and the convoluted way QE finds its way to markets) makes it very difficult for the public to have an understanding of long-term inflationary expectations. Under the current regime, we are in much greater danger of Cyclical Deflation than any significant inflation. Hyper-inflationary rhetoric is silly and I'll not address it seriously. My assertions of inflation and deflation trends rely strongly on the Federal Reserve operating under the laws by which it's presently constituted. This is unlikely to happen in the long term. Federal Reserve Frustrations and Law Breaking/Changing: Within the next 5 years it will become painfully obvious to the Federal Reserve they're incapable of generating true inflation. Once the Fed and the Government resign to this fact, there'll be a proposal to change the Federal Reserve Acts to give the Fed more monetary freedom. The way this affects American Life is in the introduction of a CBDC (Central Bank Digital Currency); transforming the Fed from the Lender of last resort into the Spender of all resorts. This will be the true catalyst behind inflationary trades; shifting Gold's closest price correlation from the 10Y rate to the threat of true inflation. Powell's Fed Ending: Jerome Powell is slated for re-appointment early in 2022. I don't think he will be. It's likely the next Chairman (Chairwoman) of the Fed will probably be Lael Brainard. In this case, my above statements are hastened and magnified. Federal Reserve (Monetary Policy Trajectory): The Federal Reserve remains hawkish in the short term. This means short term 10Y rates are unlikely to rise to or above 2% for the next few years. As stated above, under present forces, low rates are bullish for the price of Gold but since rates are already tightly approaching 2% the buy signal for gold will remain neutral until 2023. I don't think Gold make any significant moves, but it will likely maintain its present price with a +/-10% around the 200 day moving average. Price Prediction: I will not be buying more physical gold until either 10Y rates rise and remain above 2% or until the Fed introduces a CBDC. I don't see either of these catalysts forming until 2023. Until 2023, it's best to play the short-term averages and trajectories in the Paper Gold markets. Depending upon the economic outcomes of the next few years, Gold could vary wildly in price. If strong deflation persists, $500 Gold is not out of the question. If Laws change and a CBDC is introduced, the price of Gold could easily rise above $10,000 (or other denominations). Unconsidered Catalysts (BASEL III): BASEL III is close to being enacted. I have not been able to research all of the components of BASEL III's changes. However, one of the major changes (along with reinstating Gold as a Tier I asset for collateralization purposes) is making unallocated positions impossible. How BASEL III does this is not clear to me but I will post an update once I have a better understanding of this. Removal of unallocated paper positions in Gold would result in a precipitous rise in Gold's price if the assumption of many Goldbugs (that gold is heavily manipulated through paper markets (ETF's and Bullion Banks)) are true. This isn't that ridiculous an idea considering some statements given by Greenspan and Bernanke. I'll go into details on these statements in future ideas. Short Term Prediction (Now to 2023): NEUTRAL with a price of Gold ranging from $1,700.00 to $1,900.00 . Long Term Prediction (2023 to 2050): REMARKABLY BULLISH with a price of Gold ranging from $50,000.00 (eq) to $100,000 (eq). (where "eq" allows for future U.S. dollar equivalents)
TVC:GOLD
by forever_green
Fed QE Tapering Talks Reaching A Crescendo (05 August 2021)Just a couple of days before the release of the long-awaited U.S. nonfarm jobs report, several Federal Reserve committee members expressed their hawkish views on an QE tapering. Fed Vice Chairman sees QE tapering to start this year. During his speech at the Peterson Institute for International Economics yesterday, Fed Vice Chairman Richard Clarida said that together with the other committee members, they expect the U.S. economy to continue recovering towards the central bank’s “substantial further progress” standard although this was not met in July. Also, Clarida highlighted that if his “baseline outlook does materialize”, then he expects the announcement for quantitative easing (QE) tapering to be made later this year. With the progress made in recent months, he believes the Fed is ready for a first round of tapering by year-end. In regard to interest rate, Clarida explained that the three conditions required before the Fed considers a rate hike are: Labor market conditions reaching levels consistent with the Fed’s assessments of maximum employment Annual inflation rising to 2% Annual inflation is on track to moderately exceed 2% for some time And in a scenario whereby the Fed’s economic projections realized over the forecast horizon, Clarida believes that the three conditions will be met by the end of 2022, thus anticipating a rate hike in 2023. Other committee members in favor of carrying out QE tapering soon. Fed committee member Robert Kaplan said in an interview yesterday that the Fed should start tapering QE soon and gradually as this will give the central bank more flexibility in the future in terms of interest rate adjustments. He also highlighted that continued progress in the job market for July and August should warrant an early tapering of QE. Another Fed committee member James Bullard also supported the idea of an early tapering of QE during an interview with the following reasons: Economic growth in 2021 will likely exceed the central bank’s projection of 4% Unemployment rate has declined much faster than projected Annual inflation for 2021 will likely surpass the projected 1.8% Hence, Bullard believes it will not be an issue meeting the criteria to get QE tapering started.
TVC:DXY
by GH_Lee
1
The week ahead on Dollar. A BIG ONEDollar started this week's trading on a softer tone following an indecisive yet more dovish than expected FED meeting last week. It all depends now on the PMI numbers this week, which is expected to come out as positive. However, any lower than expected numbers should be bearish on the Dollar as this should confirm doubts of slower recovery and economic growth resulting from Delta variant. We also keep an eye on the NFP numbers at the end of this week, anything figure higher than 1 million new jobs should be considered highly bullish, and this would add extra pressure on Jerome Powell to at least specify a tapering roadmap at Jackson Hole's symposium. Any lower than 600k should again confirm slower growth and hence the sweet spot to me is in between 600k - 1kk that should give low to moderate volatility on the US dollar. Technically, USD still has a bearish target at 91.50 points roughly which could slowly be reached during this week's trading as it is supported with a negative divergence with the breakout below the rising bearish wedge.
TVC:DXY
by MohannadYakout
EURUSD Continues to Strengthen Following the FED Meeting The recent breakout of the EURUSD above the descending channel was bolstered yesterday following the July policy meeting of the Federal Reserve. Jerome Powell and his colleagues from the FOMC did not bring anything new to the table, which weakened the greenback in the short term. The price action is currently probing the 200-day MA (in purple). The next closest resistance can be found at the 23.6 per cent Fibonacci retracement level at 1.18892.
by Trendsharks
FED: Recovery Heading Towards The Right Direction (29 July 2021)The Fed’s decision. The U.S. Federal Reserve delivered no surprise during their monetary policy meeting earlier today as widely expected. The Federal Funds Rate was held unchanged at the target range of 0-0.25% while quantitative easing remains at $120 billion per month ($80 billion of Treasury securities and $40 billion of agency mortgage-backed securities). Optimistic tone on U.S. economic recovery in the rate statement. Although no actions were carried out, the Fed did expressed signs of optimism on the U.S. economic recovery in the interest rate statement. The following changes made in the statement indicate so. The sentence: “Amid this progress and strong policy support, indicators of economic activity and employment have strengthened.” has been revised to: “With progress on vaccinations and strong policy support, indicators of economic activity and employment have continued to strengthen.” The change indicates continued recovery in economic activities and employment. The sentence: “The sectors most adversely affected by the pandemic remain weak but have shown improvement.” has been revised to: “The sectors most adversely affected by the pandemic have shown improvement but have not fully recovered.” The change indicates that the sectors most adversely affected by the pandemic have improved since the previous meeting. The sentence: “Since then, the economy has made progress toward these goals, and the Committee will continue to assess progress in coming meetings.” has been added into the latest statement, indicating optimism in the economic recovery. Progress made in economic recovery but still far from full recovery. Despite the optimistic tone sent out by the Fed, the central bank’s Chairman Jerome Powell cautioned during the press conference that the economy is still a distance away from making “substantial further progress” towards the Fed’s goals of maximum employment and price stability. This does not come as a surprise since the U.S. job market is still around 6.3 million jobs away from the pre-pandemic level. Furthermore, Powell highlighted that inflation is expected to remain above the central bank’s target in the upcoming months but not sufficient to trigger a change in monetary policy. On the issue of the recent rise in COVID cases due to the Delta variant, Powell downplayed the negative impact it has on the U.S. economic recovery. He said: “With successive waves of Covid over the past year and some months now, there has tended to be...less in the way of economic implications from each wave, and we will see whether that is the case with the Delta variety,” expressing confidence that the handling of the Delta variant will be more effective than handling COVID-19 when it was first declared a pandemic. Impact on the market. The upbeat tone delivered by the Fed resulted in the market going risk-on, increasing the demand for risky assets and currencies. Thus, the safe haven U.S. dollar weakened against the other major currencies.
TVC:DXY
by GH_Lee
7.28.21 Candle Will Be Telling!What we have is a possible Hanging man. We have two of the three ingredients for a 87% chance of downward trend over next week or two if next candle is red. Given this weeks events, its looking bearish short term at the very least. Will be interesting to see how things shake out! Let me know your thoughts of if this was helpful! Not advice or a recommendation to initiate any kind of transaction. All investments have risks associated with them. Trade with care.
AMEX:SPYShort
by deadsquare214
5
Impact of Fed Unchanged Interest Rate and Gold PricesHere I tried to show the movement of the day when Fed announces its unchanged Interest Rate decisions during the last 6 times. As you can see, the gold prices had been quite volatile during the last Fed decision on June the 16th and shed 1.45%. Since then, the yellow metal has not been able to overcome the loss and is in the downward trend. Please note that this is shared for educational and informational purposes only and is not intended for financial decisions. If you like the idea, please like and comment :)
OANDA:XAUUSDEducation
by UnknownUnicorn621491
The Australian Dollar Appears OversoldThis week’s Federal Reserve meeting could ignite some activity in the currency market. The Australian Dollar, in particular, has some interesting patterns. First, stochastics on AUDUSD’s weekly chart have dipped to their most oversold level since February 2020. Next, consider how prices have returned to the 0.73 area where they peaked Aug. 31-Sept. 1. This is also near a monthly low from May 2017. Intermarket analysis could be interesting because the Aussie has traditionally followed copper (although that correlation has broken down this year). Given the current rally in copper and ongoing strength in iron ore, this could support the currency. Remember, Australia is a major mining country. Overall, there isn’t much confirmation yet and the Australian economy is still struggling. However, given the Fed’s commitment to low rates and potential topping patterns in the greenback, futures traders may want to keep an eye on the Aussie for a potential turn. TradeStation is a pioneer in the trading industry, providing access to stocks, options, futures and cryptocurrencies. See our Overview for more.
by TradeStation
Gold Miners Have Had a Golden CrossThe Market Vectors Gold Miners ETF has one of the most interesting charts in the market. Notice the steady decline from last summer, followed by a bump in the spring. It then gave back almost all those gains but still managed to drag the 50-day simple moving average (SMA) above the 200-day SMA. That results in a strange situation with both SMAs falling – yet still in a bullish sequence. Next, the recent drop erased most but not all the earlier bounce. It has managed to register a higher low (notice the weekly chart below). Third, MACD has turned positive in the last few sessions. Finally, stochastics on the weekly chart show an oversold condition: The other catalyst could be the Federal Reserve because Jerome Powell was more dovish than expected yesterday. The U.S. dollar has trended upward lately, but in March GDX turned higher about two weeks before the greenback rolled over. So we could be at a start of a new pattern, with a dovish Fed lifting precious metals and dragging on the dollar. TradeStation is a pioneer in the trading industry, providing access to stocks, options, futures and cryptocurrencies. See our Overview for more.
AMEX:GDXLong
by TradeStation
59
Gold has no concrete direction right now! After finishing an uptrend, the chart broke its parallel channel and entered a side way consolidation phase. In this current situation, there is no solid speculation for the future of the chart. The only thing which is possible here is to short when we are near the top and open a long position near the bottom(supporting areas). We should be cautious about tonight’s federal reserve’s statement. That news would make the markets move very extremely! Good luck.
OANDA:XAUUSD
by khanzadiashkan7