Sterling eases ahead of BoE rate decision this week

17. 6. 2024 - Josef Brynda

LONDON, June 17 (Reuters) - The pound eased modestly on Monday, ahead of a policy meeting by the Bank of England this week at which the central bank is not expected to cut interest rates, but might telegraph the likely timing of the first drop.

Political turmoil in France last week rattled risk appetite and sent investors fleeing from French assets and the euro which fell 0.6% against sterling last week .

By Monday, the euro had recovered some stability, rising 0.1% against the pound to 84.46 pence.

Against the dollar, the pound has fared less well, falling 0.6% last week, in its largest weekly slide in two months. Sterling was last down 0.1% at $1.2674.Recent data has shown inflation in the United States is not slowing as quickly as many had anticipated, while the Federal Reserve has said it sees only one rate cut this year.

Meanwhile, UK headline consumer inflation is falling towards the BoE's 2% target and markets are increasingly convinced the central bank, which meets on Thursday, will deliver two cuts this year, with close to a 90% chance of rates dropping to 4.75% by December.

Daily analysis 06/17/2024

17. 6. 2024 - Josef Brynda

Latest news

• No macroeconomic events are scheduled for Monday (06/17). Thus, low volatility and weak movements are expected for both currency pairs during the day
• Cryptocurrencies extend declines at the start of the week. Bitcoin lost nearly 0.7%, Ethereum nearly 1.5% and Solana nearly 2.2% at the start of Monday's session. Friday saw another consecutive net daily outflow of nearly $190 million from spot ETFs.
• The Australian Dollar (AUD) extends downside for the third consecutive day on Monday on the back of the stronger US Dollar (USD) broadly
• BoE interest rates are expected to remain unchanged on Tuesday morning
• The Greenback remains well-supported by the expectation that US interest rates will stay higher for longer, with the median projection from Federal Reserve (Fed) officials calling for one interest rate cut this year
• Asian stocks fell in connection with the French political crisis
• Rising risk premium on French government bonds plagues the euro
• Inflation Must Improve for ECB Cut in September, Vujcic Says
• UK inflation is expected to fall to the Bank of England’s target for the first time in almost three years
• Chinese retail sales beat forecasts, up 3.7% yoy
• The Euro is likely to remain weak, as it has remained weak, due to the RN party in France slightly strengthening its opinion poll lead, suggesting that the far right will take power in some form after the election is held within a few weeks.
• French stocks have struggled since Macron called for election

News summary

• No significant macroeconomic events are scheduled for Monday, June 17, 2024, leading to expectations of low volatility and weak movements in currency pairs throughout the day. The Australian Dollar (AUD) continues its downward trend for the third consecutive day, influenced by the stronger US Dollar (USD). The USD remains well-supported due to expectations that US interest rates will stay higher for longer, with Federal Reserve (Fed) officials projecting one interest rate cut this year.
• In the cryptocurrency market, declines persist at the start of the week. Bitcoin has lost nearly 0.7%, Ethereum nearly 1.5%, and Solana nearly 2.2% at the beginning of Monday's session. Friday saw another consecutive net daily outflow of nearly $190 million from spot ETFs.
• Asian stocks have fallen due to the political crisis in France. The euro is likely to remain weak, plagued by the rising risk premium on French government bonds. French stocks have struggled since President Macron called for elections, with the RN party strengthening in opinion polls, suggesting potential power shifts that add to market uncertainty.
• UK inflation is expected to fall to the Bank of England’s target for the first time in almost three years, providing a positive outlook for the UK economy. Meanwhile, Chinese retail sales have beaten forecasts, growing by 3.7% year-over-year. On the European front, ECB member Vujcic stated that inflation must improve for the ECB to consider a rate cut in September.
• In summary, financial markets are experiencing a period of low volatility due to the absence of significant economic events. The strong US Dollar is putting pressure on both the Australian Dollar and the Euro. Cryptocurrencies continue to decline amid ETF outflows. Political developments in France are causing uncertainty in European markets, while positive economic news comes from China and a hopeful inflation outlook in the UK.

The Fed isn't really taking 2 rate cuts off the table

13. 6. 2024 - Josef Brynda

On Wednesday, the Federal Reserve revised its outlook for interest rate policy in 2024, signaling just one cut instead of the three seen back in March.

A disappointing outlook on the surface for investors hoping for more reductions to interest rates this year — but as Fed Chair Jerome Powell reminded us, the projection is hardly set in stone.

As has often been the case, Powell reiterated that the projections are just a "forecast" and don't reflect a "really strong commitment to a particular rate path."

Daily analysis 06/13/2024

13. 6. 2024 - Josef Brynda

Latest news

• U.S. Crude Production Growth Challenges OPEC+ Control Over Prices
• Canadian Delinquencies and Non-Mortgage Debt Signal Mounting Financial Strain
• Fed Signals One Rate Cut This Year, But Keeps Door Open to Two in 2024
• Dollar falls after CPI, Fed meeting; PPI release due
• The EUR/USD price stopped at $1.0840, which created a strong resistance. The price then started to show a downward trend and approached the support level at $1.0795
• Analysts expect a short-term decline, after which the EUR/USD price should rise further
• Forecast for the Australian Dollar on June 13, 2024, predicts an attempt to test the support level near 0.6545, followed by growth above 0.6795. A test of the trend line on the RSI will signal further rise. If the price falls and breaks below 0.6455, it indicates continued decline with a target below 0.6235
• The G7 leaders are meeting in Italy from June 13-15 to discuss issues like the wars in Ukraine and the Middle East, West-China tensions, and the global economy
• The World Bank has upgraded its global growth forecast for 2024 to 2.6%, up from 2.4% in January, largely due to the resilience of the U.S. economy which is now expected to grow 2.5% this year. However, the projected growth rates are still below the pre-pandemic average of 3.1%
• According to the technical analysis prepared by Forex24.pro, it expects a slight decline to the level of 1.368. Expect confirmation of the pair’s growth with a breakdown of the resistance area and closing of the USD/CAD pair quotes above the level of 1.3835
• An interesting indicator today will be the initial jobless claim, which is forecast to be almost stable rather than the previous lower number. This may indicate stable economic growth and stable inflation.
• The ppi value is predicted to rise by less than 4 tenths of a percent, which suggests to us a slight increase in prices, but with the strengthening of the dollar this should not be so dramatic. 

News summary

• The growth in U.S. crude oil production challenges OPEC+ control over global prices, hinting at potential market volatility. In Canada, rising delinquencies and non-mortgage debt signal increasing financial strain. The Federal Reserve may cut rates once this year, possibly twice in 2024, amid economic uncertainty. The World Bank upgraded global growth to 2.6% for 2024, driven by the resilient U.S. economy expected to grow 2.5% this year. G7 leaders meet to discuss global issues, including Ukraine, Middle East conflicts, and West-China tensions. Steady initial jobless claims suggest stable growth and inflation, with mild inflationary pressure shown by a slight PPI rise.
• The U.S. dollar fell post-CPI and Fed meeting, with the PPI release anticipated to clarify inflation trends. The EUR/USD stopped at $1.0840 resistance, with a short-term decline expected before a rise after testing support at $1.0795. For the Australian Dollar, a test of support at 0.6545 is forecasted, followed by potential growth above 0.6795. USD/CAD is expected to see a slight decline to 1.368 and breakdown of the resistance area and closing of the USD/CAD pair quotes above the level of 1.3835
• Based on the available information, such as the stable cpi, unchanged fed funds rates, and the largely unchanged initial jobless claim, it can be assumed that financial capital will continue to be found, for example, in bonds, which suggests a further strengthening of the dollar. The euro is weakening slightly in light of the unexpected events following the euro elections. 

Daily amalysis 06/12/2024

12. 6. 2024 - Josef Brynda

Latest news

• The USD/CAD exchange rate is influenced by the strong US dollar and expectations about the Fed's decision.
• Strong US employment data and expectations that the Fed will not change interest rates are supporting the US Dollar
• US stock futures edge higher ahead of Fed rate decision, CPI data
• Oil perks up on inventory drawdown forecasts for this year
• Morgan Stanley sees 3 more rate cuts from Bank of Canada in 2024
• Euro Hits Monthly Low Amid Political Instability in France
• From its high point on Friday to its lowest so far this week, the EUR/USD has fallen about 170 pips, or 1.57% in the pace of two and a half sessions
• As expected, the Fed is not expected to cut interest rates, so rates should remain at 5.50%
• U.S. stocks mixed at close of trade; Dow Jones Industrial Average down 0.31%
• UK GDP flatlines as PM Sunak pins election campaign on economy
• World Bank revises India's FY25 growth forecast to 6.6% 
• ECB’s Lane Says Euro Moves Haven’t Impacted Inflation
• China Inflation Stays Low Amid Tepid Consumer Spending
• EUR/USD Forex Signal: Gets Oversold Ahead of Fed and US CPI Data
• The year-on-year US Consumer Price Index (CPI) is expected to fall by one tenth, which could indicate a future slowdown in inflation
• US Consumer Price Index (CPI) MoM is forecast unchanged, but this suggests the economy is not overheating further

News summary

• The US Dollar is supported by strong US employment data and expectations that the Federal Reserve (Fed) will not change interest rates, which are expected to remain at 5.50%. That said, the dollar should remain strong as stable interest rates and positive economic data usually attract investors.
• The euro is struggling with political instability in France, which has led to EUR/USD falling by around 1.57% in two and a half trading sessions. Moreover, ECB chief economist Philip Lane said that the euro's movements have not had an impact on inflation, suggesting that the ECB does not need to intervene in monetary policy due to fluctuations in the euro. This could mean that the euro will remain under pressure, especially if the political situation in Europe does 
• The Canadian dollar is affected by several factors. The Bank of Canada (BoC) is expected to cut interest rates three times in 2024, which could weaken the CAD. On the other hand, an increase in oil prices due to the expected decline in inventories could provide some support to the Canadian dollar as Canada is a major oil exporter.
• The global economy faces various challenges and opportunities. In the US, inflation is expected to slow, which could indicate a stabilisation of the economy. In Europe, the situation is more complex due to political instability and stagnating growth in some countries such as the UK. In Asia, China is facing low inflation and weak consumer demand, which may affect global trade flows. On the other hand, India has a positive outlook with GDP growth 
• Overall, the US dollar is expected to remain strong, the euro will be under pressure, the Canadian dollar will be affected by conflicting factors and the global economy will face different challenges and opportunities depending on regional conditions.

Daily analysis 06/11/2024

11. 6. 2024 - Josef Brynda

Latest news

• Global economic growth has improved to 2.7% in 2024, according to a UN report, but risks remain from high interest rates and geopolitical tensions
• Gold prices rose by ₹150 to ₹66,000 per 10 grams, while silver prices also increased
• The Fed is expected to leave interest rates unchanged at its upcoming meeting, with markets speculating on a possible rate cut in November
• The S&P 500 reached a new record high, closing at 5,360.79, driven by gains in tech stocks like Microsoft, Amazon, and Nvidia. The Nasdaq Composite also rose, closing at 17,192.53
• The US Dollar has maintained its strength, particularly against the Euro, which is struggling due to political uncertainties in the EU. 
• The Federal Reserve is widely expected to hold interest rates steady on Wednesday but its commentary will be closely parsed for hints as to the direction of monetary policy.
• Canada has interest rates still at their lowest level in 4 years
• The EUR/USD pair has been under bearish pressure recently. As of June 10, 2024, the pair is likely to fall to the support level of 1.0700 due to the stronger U.S. dollar and mixed economic data from the Eurozone
• Japan's Q1 GDP fell less than first reported on revised capex
• The U.S. economy created 272,000 jobs in May, more than the 185,000 expected, leading to a rise in U.S. Treasury yields

News summary

• The U.S. dollar has shown strength due to robust economic data and speculation about the Federal Reserve's monetary policy. This has led to gains against major currencies, including the euro and the Canadian dollar. The euro, on the other hand, has weakened due to mixed economic data from the Eurozone and political uncertainties in key member states like France.
• In summary, the U.S. dollar is expected to maintain its strength in the near term, driven by strong economic data and cautious monetary policy from the Federal Reserve. The euro and other major currencies may face continued pressure due to regional economic and political challenges.
• The global economy is showing signs of improvement with a growth rate of 2.7% in 2024
• Overall, while the global economy is on a positive trajectory, it remains vulnerable to various risks, including high interest rates, geopolitical tensions, and inflationary pressures

Temné fondy dostaly políček od ČNB. Miliardové pasti à la Cryfin ale padnou, až Češi zmoudří

4. 6. 2024 - admin admin

Navigating the Impact of High Interest Rates: Insights into Wealth Disparity and Economic Growth

30. 5. 2024 - Josef Brynda

High interest rates indeed benefit the wealthiest Americans, who are the driving force behind the surprising economic growth, and make it harder for the Fed to push through the desired rate cuts. The simplified theory of raising and lowering interest rates is straightforward - lower rates foster faster economic growth, while higher rates slow down the economy. However, experiences from the past 18 months of the U.S. economy are making the latter assumption harder to swallow. "In terms of income, those who earn more than $100,000 expressed the greatest increase in confidence," said Dana Peterson, Chief Economist at the Conference Board, in a press release. "Based on a six-month moving average, confidence remained highest among the youngest (under 35) and wealthiest (earning more than $100,000) consumers." Financial commentator Josh Brown suggested that high rates could prolong the current bout of inflation due to the advantages that higher rates provide to the wealthiest Americans. Wealthy households can now earn up to 4.5% on high-yield savings accounts, their stock portfolios have grown by 20% in a year, and they are watching as the value of their real estate climbs. These individuals desire nothing more than for rates to stay high.