2022-12-15 • Updated
The US dollar index rose to 105.40 after the Fed’s 75-basis-point key rate hike, while the stock and the crypto markets fell. However, during the past few days, investors and traders returned to risk assets as they expect inflation growth to slow. Moreover, Jerome Powell, the head of the Federal Reserve, announced the Fed might start cutting the key rate by 2024, which is the most evident hint of an upcoming market reversal.
The last US inflation rate data sent the markets down as investors prepared for the sharp key rate increase from the Federal Reserve on June 15. And they were right. The Fed increased the rate by 75 basis points to 1.75%, pushing the US dollar index to year highs. However, the famous saying “buy the rumors – sell the news” always works in the markets, as already on June 16, the US dollar index lost 1%, boosting the other currencies against the USD.
The following week traders will learn about the German Flash Manufacturing PMI, which is important as Germany is the leading economy of the European Union. Moreover, they will listen to the speeches of the Reserve’s Bank of Australia and Bank of England governors on Friday, June 24, and Wednesday, June 29. If the speeches are more hawkish than expected, AUD and GBP might surge against the greenback. At the same time, better-than-expected German Flash Manufacturing PMI will boost EURUSD.
EUR and GBP occupy 57.6% and 11.9% of the US dollar index, respectively. The strengthening of these currencies might significantly affect USD and push other currencies, such as JPY, CHF, and CAD, up against it. Moreover, the US stock and crypto market usually correlate negatively with the greenback. Therefore, stocks and crypto might also surge trying to break the recent bearish trend.
EURUSD, weekly
EURUSD is consolidating above the historic support level of 1.0350, which is a positive sign for the bulls. Traders should consider buying the pair in the 1.0400 – 1.0500 range. However, if the price loses this support, it will slide to 1.0000.
US500, daily timeframe
US500 is retesting the breakout of the support trendline. Usually, a breakout of a support trendline signals an upcoming bearish impulse. We believe the US500 will reach 3515 within this week, where the final reversal will happen.
USDCAD, weekly
USDCAD reached the upper border of the ascending channel. The price has already reacted to this resistance, confirming an upcoming bearish impulse. Consider selling USDCAD with targets at 1.2800 and 1.2530.
The upcoming August inflation data may send mixed signals. The 12-month headline inflation rate is expected to rise to 3.6%, causing concerns for the Biden administration. However, core inflation, which excludes food and energy prices, is projected to decrease to 4.3%, aligning with the Federal Reserve's goals. Past price trends influence both figures, so looking at recent data for a more accurate picture is crucial.
The odds of a final interest rate hike by the US Federal Reserve (Fed) this year have dropped after US job openings hit their lowest levels since early 2021. This has led to a correction in the US Dollar as traders reduced their bets on further rate hikes.
Here we go again, my friends. It’s time to look critically into the future of what trading opportunities September might have in store for us. As always, it is essential to note that the views expressed here are mine and should not be considered financial advice without proper examination.
The past several weeks have been a real triumph for the bulls in the oil market. The Brent spot price grew by 8.5% during the last month.
Gold prices are rising for three consecutive days ahead of the Federal Reserve (Fed) interest rate decision, which is expected to remain unchanged due to declining inflation and a positive economic outlook. Investors are keen on the Fed's interest rate guidance, fearing a hawkish stance that could trigger market risk aversion.
Amid concerns of a Chinese economic slowdown, reports of declining investment often overlook China's efficient investment strategy in emerging sectors for long-term growth. China has taken measures to stabilize foreign and private sector investments, like reducing the reserve requirement ratio to boost investor confidence.
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