Dr. Copper: A Barometer for Forex Market Sentiment

Introduction

“Dr. Copper” is a colloquial term used in financial markets to refer to copper, given its reputation as a reliable indicator of the overall health of the global economy. Here’s a detailed explanation of what Dr. Copper is, how it indicates market sentiment, and why it is important in forex trading.

What is Dr. Copper?

Dr. Copper refers to the industrial metal copper used extensively in various industries, including construction, electronics, transportation, and manufacturing. Because copper is fundamental to many economic activities, its price trends can provide insights into financial health and demand dynamics.

How Does Dr. Copper Indicate Market Sentiment?

1. Economic Health Indicator:

Demand for Copper: When the global economy expands, industries ramp up production, leading to higher demand for copper. Conversely, when the economy slows down, demand for copper decreases. Therefore, rising copper prices typically suggest a growing economy, while falling prices indicate an economic slowdown.

Infrastructure and Development: Since copper is crucial for infrastructure projects and technological advancements, high copper prices often reflect increased investment in these areas, suggesting economic optimism.

2. Correlation with Industrial Activity:

Manufacturing and Production: Copper is heavily used in manufacturing. Increased manufacturing activity, which is a sign of economic growth, leads to higher copper consumption. Monitoring copper prices can provide early signals about manufacturing trends.

Housing Market: Copper is a key material in electrical wiring and plumbing. A booming housing market increases copper demand, which in turn can signal broader economic health.

3. Commodity Markets and Inflation:

Commodity Prices: As a commodity, copper prices can reflect inflationary pressures. Rising copper prices can indicate increasing costs for raw materials, which may signal broader inflation trends.

Market Sentiment: Investors often look at copper prices to gauge market sentiment. Strong demand for copper can suggest confidence in future economic growth, while weak demand can imply uncertainty or pessimism.

4. Risk-Taking vs. Risk-Averse Sentiment:

Leading Indicator: Fundamental traders use the global price of copper to identify risk-taking or risk-averse sentiment. Because the global price of copper often leads and determines the mood of the market sooner, it is a valuable indicator.

Predictive Power: For example, when Dr. Copper loses its bullish guard and enters a bearish path, the VIX index (a measure of market volatility) goes up, stock market indices tend to decline, and the cryptocurrency market also follows this trend. Interestingly, this indicator often provides this information slightly ahead of other market signals.

Overbought/Oversold Levels: By using the price trend and monitoring Commitment of Traders (COT) contracts, traders can determine if Dr. Copper is at overbought or oversold levels. This can offer a good forecast of future market sentiment.

Importance of Dr. Copper in Forex Trading

Economic Indicators:

Currency Strength: Countries that are major producers or consumers of copper (e.g., Chile, China, the US) can see their currencies influenced by copper prices. For instance, a rise in copper prices can strengthen the Chilean Peso due to increased export revenues.

Trade Balances: Higher copper prices can improve the trade balance of copper-exporting countries, potentially boosting their currencies.

Inflation and Interest Rates:

Monetary Policy: Central banks monitor commodity prices, including copper, to make decisions about interest rates. Rising copper prices can be a sign of inflation, prompting central banks to raise interest rates, which affects forex markets.

Inflation Expectations: Forex traders use copper prices to gauge inflation expectations. Higher copper prices can lead to expectations of tighter monetary policy, affecting currency values.

Risk Sentiment:

Safe Haven vs. Risk Assets: Copper prices can influence risk sentiment. When copper prices are rising, it often indicates risk-on sentiment, where investors are more willing to take on risk, potentially leading to a stronger performance in riskier currencies.

Global Market Trends: By tracking copper prices, forex traders can anticipate broader market trends. For example, a sustained drop in copper prices may signal a slowdown in global growth, leading to a flight to safe-haven currencies like the US Dollar or Japanese Yen.

Conclusion

Dr. Copper serves as a barometer for global economic health and industrial activity. For forex traders, understanding and monitoring copper prices can provide valuable insights into market sentiment, inflation trends, and potential movements in currency values. By integrating copper price analysis into their trading strategies, forex traders can make more informed decisions and potentially enhance their trading performance.

Gold Analysis – December 4, 2023

Fundamental View

The fundamental outlook for gold suggests a mix of factors influencing its trajectory. Analysts predict a bullish trend, with forecasts ranging from $1,800 to $2,060 per ounce in 2023, and a continued upward trend in 2024. However, challenges like waning demand, driven by rising real rates and a stronger US dollar, persist, undermining gold’s strength. Gold is influenced by fluctuations in the US dollar and yields. The rise of gold by 14% from November 2022 to early February 2023 was supported by a less hawkish tone from the US Federal Reserve.

The significant activity of buying gold by central banks with the net purchase of 800 tons of gold last year has been the main factor behind the positive performance of gold. In the absence of a clear catalyst, the increase in the price of gold on the day may be due to the execution of profit limits of long positions. In this case, we can have the possibility of a short-term retreat in the price of gold.

Latest Gold’s Rally

Gold crossed its August 2020 high due to expectations of a US interest rate cut and the cautious stance of the Federal Reserve. The Fed’s comments fueled the gold rally. Gold prices were further boosted by Federal Reserve Chairman Powell’s comments on the restrictive monetary policy stance. The comment led to a decrease in yields and the US dollar, favoring the rise of gold.

There is always FED in between

Amid speculation of impending interest rate cuts, Powell cautioned against premature expectations. This led to a cautious market, with gold prices reflecting a hesitancy to react to signs of the Federal Reserve delaying rate cuts.

Market Sentiment and Influencing Factors

Gold prices fell today from Monday’s highs, perhaps reflecting the market’s reaction to signs that the Federal Reserve is in no rush to cut rates.
This sentiment was reflected in the Treasury market as the 10-year yield rose. The upcoming US labor force data, which is expected to show rising wages and Iran’s steady unemployment rate, could weigh on gold trends.

๐Ÿ“… Economic Calendar

Technical View

The medium-term outlook for gold looks upbeat, however, the potential for real rates to rise in the face of deflation may weigh on gold investments, while net long positions have increased. ETF holdings have not risen significantly, reflecting mixed sentiment. It is in the gold market.

Any talk and possibility of an interest rate hike by the Federal Reserve can bring the price of gold back to the 1850 area, and if the expectations of an increase in interest rates by the Federal Reserve continue to increase as in the past weeks, the price of gold will be above 50-20.

Our direction for gold remains bullish and dips can be bought. Significant levels for a buy scenario are the 2035 levels.

Long depended on Fed expectation by Alisabbaghi on TradingView.com

Calendar events

Affecting news/events for gold

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Australia’s Economic Landscape: A Deep Dive into China’s Key Role

Key points

  • Australia’s economy is significantly influenced by its partnership with China, extending beyond trade interactions.
  • China’s easing policies foster economic growth and create positive ripple effects.
  • The United States’ domestic economy and policy adjustments impact the global economic landscape.
  • Adjustments in interest rates by the United States may lead to a relative softening of the AUD-USD currency pair.
  • Short-term fluctuations in the AUD-USD pair require adaptability and understanding of market forces.
  • Thorough analysis and up-to-date information are crucial for navigating the complexities of global economics.

Introduction

In the intricate web of China’s economic partnerships, Australia holds a position of paramount significance. The symbiotic relationship between these two nations goes far beyond mere trade interactions, shaping the contours of Australia’s economic landscape. In this professional market analysis, we will delve into the intricate dance of economic interdependence, exploring the pivotal role played by China and the United States in steering Australia’s fiscal standing and the dynamics of the AUD-USD currency pair.

The Impact of China’s Economic Robustness on Australia

Australia’s economic prosperity is closely tied to the robustness of China’s economy. As China’s economy flourishes, Australia’s fiscal standing experiences an undeniable boost. The trade balances between the two nations become a key determinant in this augmentation. China’s insatiable appetite for Australia’s resources, particularly minerals and energy commodities, creates a strong foundation for Australia’s economic growth.

The Australian Dollar’s Buoyant Influence

The strong correlation between China’s economic prowess and Australia’s fiscal strength is further reflected in the value of the Australian Dollar (AUD). As China’s demand for Australian resources increases, it propels Australia’s export earnings and raises the value of the AUD. Consequently, the Australian economy has become more robust and resilient.

China’s Easing Policies and Economic Growth

China’s strategic implementation of easing policies plays a crucial role in fostering an environment conducive to economic growth. Measures such as reducing the legal reserve rate, expanding the balance sheet, and initiatives aimed at bolstering facilities and reducing loan interest rates collectively serve as catalysts for China’s economic expansion. This, in turn, generates positive ripple effects in the medium term, with sustained growth anticipated for China’s economy.

The United States Formidable Influence

While China’s direct impact on Australia is evident, the United States also holds significant power on the global economic stage. With its robust domestic economy, the United States possesses the potential to enact policy adjustments, particularly concerning interest rates. These strategic maneuvers are aimed at recalibrating fiscal policies while maintaining a steady trajectory.

Repercussions of Interest Rate Adjustments

The potential consequences of interest rate adjustments by the United States extend beyond domestic boundaries, affecting the global economic tapestry. As the United States contemplates interest rate hikes, the U.S. dollar’s strength is likely to be reinforced. This, in turn, has implications for the AUD-USD currency pair on the global stage.

Relative Softening of the AUD-USD Pair

Given the formidable resilience of the U.S. dollar, the AUD-USD currency pair may witness a relative softening against the Australian Dollar in the medium term. Even if the U.S. dollar does not experience a direct weakening, the strength of the Australian Dollar may outperform it, creating a relative softening effect.

Proactive Response to a Strengthening Dollar

In the short term, a proactive response to the strengthening U.S. dollar is anticipated. Market forces will realign themselves to adapt to this evolving economic landscape. As a result, the AUD-USD currency pair may undergo a transient correction, but this correction is expected to be temporary. The prevailing upward trend is likely to resume as the economic dynamics recalibrate and stabilize.

Conclusion

The intricate dance between China and Australia, accompanied by the strategic maneuvers of the United States, paints a complex tableau of economic interdependencies and recalibrations. The AUD-USD currency pair’s short-term fluctuations serve as a microcosm of the broader global economic intricacies. Navigating the undulating terrain of international finance requires foresight and a deep understanding of policy dynamics.

Positive forecast based on Ziwox AI over sold Net position based on COT report

To succeed in an ever-evolving economic landscape, thorough analysis and up-to-date information are crucial. By understanding the symbiotic relationship between China and Australia, as well as the potential impact of the United States’ policies, investors, economists, and businesses can make informed decisions. Recognizing the nuances of these economic interdependencies ensures a competitive edge in the intricate web of global finance.

๐Ÿ‡บ๐Ÿ‡ธ ๐Ÿ‡ช๐Ÿ‡บ ๐Ÿ‡ฌ๐Ÿ‡ง ๐Ÿ‡จ๐Ÿ‡ฆ ๐Ÿ‡ฏ๐Ÿ‡ต ๐Ÿ‡จ๐Ÿ‡ญ ๐Ÿ‡ฆ๐Ÿ‡น ๐Ÿ‡ณ๐Ÿ‡ฟ


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Trade Idea for GBPUSD

GBPUSD Trade Idea

The GBP/USD exchange rate has faced challenges, with recent concerns about a UK recession and hawkish Fed rhetoric impacting the pound’s performance. This has led to a decline in the exchange rate due to UK retail weakness and the anticipation of monetary statements from influential entities such as the Federal Reserve.

GBPUSD on Ziwox Terminal

Despite attempts by the British Pound to rally, an emerging bearish tone suggests a potential long-term bearish trend for the US dollar index. The British Pound’s recent performance has seen initial declines followed by stabilization above a key trend line. This stability is noteworthy, indicating resilience in the face of market challenges.

Conclusion

Due to the weakness of the US dollar, the currencies that are hounding against the US dollar, for example, the British pound, and the euro, have been able to experience good growth in the last weeks, but the British pound and its economic problems, these rallies will be short-term, and what will remain is the strength America’s economy is even with the Federal Reserve stopping interest rate hikes.
The British Pound is at attractive levels for sale. We are waiting for signs of return to be evident and we enter into the sale of the British pound.

The resistance level is 1.27140 and 1.2820 area and the first target could be 1.220 area

GBPUSD Trade idea by Alisabbaghi on TradingView.com


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Navigating the Global Gold Market: Insights and Analysis

Key points:

  • Historical Resistance: The $2,000 to $2,050 range has acted as a significant barrier to the growth of global gold prices, showcasing a pattern of resistance over the past three years.
  • Repeated Compression: Despite multiple attempts, the gold market has struggled to break free from the compression imposed by this resistance range.
  • Federal Reserve Influence: The anticipation of a potential interest rate reduction by the Federal Reserve introduces a new variable that could impact the gold market dynamics.
  • Market Speculation: Investors are closely monitoring the situation, speculating on whether the Federal Reserve’s decision could finally propel gold prices beyond the historical resistance.

Analysis

The global gold market has witnessed intriguing patterns in the past three years, with a notable resistance range between $2,000 and $2,050. This critical threshold has thwarted the upward trajectory of global gold prices on three occasions. However, as we observe the market dynamics approaching this resistance for the fourth time, a new factor emerges into playโ€”news of the Federal Reserve’s interest rate reduction.

Gold levels, fundamental trader EA

The Federal Reserve’s Influence:

A significant development on the horizon is the news of the Federal Reserve considering an interest rate reduction. Such announcements from central banking authorities have historically reverberated across precious metal markets, acting as catalysts for shifts in investor sentiment. As the gold market approaches the resistance range once more, the anticipation is palpableโ€”will the Federal Reserve’s decision be the catalyst needed to propel gold beyond the $2,050 barrier?

Optimism Amidst Patience:

While the potential impact of the Federal Reserve’s decision looms large, it’s crucial to emphasize the virtue of patience in navigating the intricacies of financial markets. The historical resilience of the resistance range suggests that overcoming it may require a sustained effort. Investors and stakeholders must brace themselves for a potentially protracted period of waiting, understanding that the interplay of economic factors and geopolitical events is intricate.

Conclusion:

As we stand at the crossroads of economic anticipation and cautious optimism, stakeholders in the global gold market are urged to adopt a balanced perspective. The confluence of factors, including the potential influence of the Federal Reserve, underscores the need for informed decision-making and a measured approach. In the ever-evolving world of finance, adaptability and strategic insight will be paramount for those seeking to navigate the complexities of the gold market successfully.

๐Ÿ‡บ๐Ÿ‡ธ ๐Ÿ‡ช๐Ÿ‡บ ๐Ÿ‡ฌ๐Ÿ‡ง ๐Ÿ‡จ๐Ÿ‡ฆ ๐Ÿ‡ฏ๐Ÿ‡ต ๐Ÿ‡จ๐Ÿ‡ญ ๐Ÿ‡ฆ๐Ÿ‡น ๐Ÿ‡ณ๐Ÿ‡ฟ


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Unlocking Trading Success: Why Fundednext Is Your Ultimate Funding Solution

Introduction

Are you a forex trader on the lookout for a funding partner that understands the challenges you face? Look no further, as Fundednext is here to revolutionize your trading journey. In this article, we’ll explore the enticing world of Fundednext and reveal how it outshines its competitors like FTMO. We’ll also delve into the often-overlooked factor of time limits for passing trading challenges and how they significantly impact traders’ psychology and, ultimately, their profits.

What Is Prop Trading?

Proprietary trading, often referred to as “prop trading,” is a financial practice in which a financial institution, such as a bank or firm, utilizes its own capital, rather than client funds, to engage in various financial transactions. This includes trading a wide range of financial instruments like stocks, bonds, currencies, commodities, derivatives, and more. Unlike traditional trading methods that rely on external investors or clients’ funds, prop trading allows these institutions to use their own resources for trading. It can encompass diverse trading strategies, including arbitrage, market-making, and directional trading, with the primary goal of generating profits while taking on the associated risks. Proprietary trading serves as a means for financial institutions to diversify their income streams beyond conventional banking services.

The Fundednext Advantage

Fundednext – Your Trusted Funding Partner

Fundednext is not just another funding platform; it’s your strategic partner in forex trading. They offer a unique approach to funding traders, setting them on a path to success. But what sets them apart from the competition?

Revolutionizing Proprietary Trading with Innovative Models and Profit-Sharing

FundedNext, founded on March 18, 2022, has rapidly emerged as a leading choice in the world of proprietary trading firms. In just over a year of operation, it has demonstrated remarkable evolution and progress within the industry.

What sets FundedNext apart from other prominent proprietary firms are its four distinctive funding models: Stellar 2-Step, Stellar 1-Step, Evaluation, and Express. These models provide traders with a range of options to suit their needs and preferences.

Moreover, FundedNext’s trading rules are known for their simplicity and flexibility, making it an accessible platform for traders. One of its standout features is the unique 15% profit split from the challenge phase, providing traders with an opportunity to earn from the outset. Additionally, traders can enjoy profit splits of up to 90% once they have a funded account, making FundedNext an enticing choice for traders seeking financial success.

The introduction of the new Stellar packages further enhances FundedNext’s appeal. These packages offer traders a no-time limit approach, balanced-based drawdown, and the freedom to engage in News and EA trading. FundedNext also provides two other trading models, Evaluation and Express, each with its distinct advantages for traders.

In summary, FundedNext’s rapid growth, versatile funding models, straightforward trading rules, and attractive profit-sharing features make it a highly appealing option in the realm of proprietary trading firms.

A Holistic Approach to Trading Success

Fundednext offers much more than just funds; they provide comprehensive support, education, and mentorship. Their personalized guidance is designed to ensure traders’ long-term success.

FundedNext places a strong emphasis on fostering success in the trading careers of its participants. This commitment is notably exemplified through the firm’s scale-up plan, which offers traders the potential to access substantial capital allocations, reaching an impressive cap of $4,000,000. This scale-up plan serves as a testament to FundedNext’s dedication to enabling traders to achieve significant milestones and elevate their trading pursuits.

Mastering the Psychological Challenges of Trading

FundedNext provides traders with a flexible profit-sharing model that spans from 60% to 90%, offering a range of options to suit individual performance. Moreover, traders benefit from attractive perks, such as the absence of time limits, ensuring they can trade at their own pace and without undue pressure. Additionally, participants enjoy the advantage of a 100% refund on their subscription fee, easing the financial burden of entry into the trading program. During the demo phase, traders can also receive a 15% profit split, further enhancing the incentives for aspiring traders to engage with FundedNext’s offerings.

Flexibility and No Time Limits, Evaluation Criteria That Matter

Unlike competitors like FTMO, Fundednext doesn’t impose rigid time limits on traders. This flexibility allows you to trade at your own pace, reducing the psychological stress that often leads to losses. Fundednext evaluates traders on essential criteria such as risk management, discipline, and consistency. This ensures that the funded traders are well-prepared for the dynamic forex market.

The FTMO Challenge

The FTMO Challenge – A Rushed Affair, The Pressure of a Ticking Clock

FTMO, while popular, imposes strict time limits on traders during their evaluation phase. These time constraints can significantly impact traders’ psychology and profitability.

Traders at FTMO face immense pressure to perform within tight deadlines. This constant rush can lead to impulsive decisions and trading errors.

The Psychological Toll

The pressure of time limits often results in traders making high-risk moves. The fear of not meeting the deadline can be overwhelming and hinder logical decision-making.

How Time Limits Affect Trading Psychology

The Psychological Rollercoaster

The imposition of time limits can be likened to a rollercoaster ride for traders. The constant ups and downs of emotions can wreak havoc on decision-making.

Fear and Anxiety

The fear of failing to meet the time limit breeds anxiety and affects traders’ ability to stick to their trading strategies.

Impulsive Decisions

In the rush to meet the deadline, traders might make impulsive decisions, deviating from their well-thought-out plans.

The Fundednext Difference

A Stress-Free Environment

Fundednext’s no-time-limit approach provides traders with a stress-free environment to hone their skills and make well-considered trades.

Empowering Traders with Profits from the Start ๐Ÿ˜ฎ๐Ÿค‘

FundedNext offers a unique feature known as “15% Profit Sharing from the Challenge Phase.” This feature provides traders with a 15% profit share even during the challenge phase of their trading journey. This means that traders can earn a portion of the profits they generate while attempting to pass FundedNext’s evaluation and challenges, further incentivizing their performance and success with the firm. This feature sets FundedNext apart by rewarding traders for their efforts from the very beginning of their engagement with the platform, supporting and motivating them as they work towards meeting the firm’s requirements.

fundednext

Building Confidence

Without the time pressure, traders can focus on building confidence and making rational decisions, which is crucial for long-term success.

Reducing Trading Losses

The absence of time limits reduces impulsive trading, leading to lower losses and a healthier trading account.

Conclusion

In the world of forex trading, success is often determined by the choices you make. Fundednext offers a refreshing approach that sets you up for long-term success, unlike its competitors like FTMO. The absence of time limits on trading challenges not only eases the psychological burden but also leads to better trading results. Choose Fundednext, and let your trading journey be one of confidence and success.



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10 Year Treasury reaches 5%, an alarm for risky assets

The 10-year Treasury bond yield is widely recognized as the benchmark for the global cost of capital and a measure of risk-free returns. Consequently, the disparity between the earnings yield of the S&P 500 index and the yield on the 10-year Treasury bond represents the risk premium associated with stocks.

Stock risk represents the degree to which stocks are perceived as an appealing investment in comparison to other asset classes. In the present circumstances, stock risk has plummeted to near-zero levels, signifying that stockholders are not being rewarded for assuming additional risk. This situation has created significant pressure within the stock market.

The current level of risk is at its lowest point in the past two decades. This decline in risk can be attributed to various factors, including the rise in the dollar index. However, this situation carries substantial implications, particularly for economically disadvantaged countries. It makes it increasingly challenging and costly for these nations to service and repay their debts.

The convergence of these factors, with stock risk hitting historic lows and the strengthening of the dollar, underscores the complex dynamics impacting both global financial markets and the economic well-being of nations with high debt burdens.

This phenomenon demands careful monitoring and analysis as it can have ripple effects throughout the financial world and international debt markets.

The yield curve is the difference between the yields of ten-year and two-year bonds; In normal economic conditions, naturally, the yield of ten-year bonds should be higher than the yield of two-year bonds.

Inversion means that the yield of two-year bonds is higher than the yield of ten-year bonds; Since the 1970s, whenever there has been an inversion of the yield curve, we have seen a recession in the coming months.

Due to the existence of inflation and the increase in yield of bonds due to the increase in interest rates, it is not possible to get a definite recession signal from the current inversion and more data needs to be examined.

A recession is a period of economic decline characterized by a decrease in economic activity, rising unemployment rates, and reduced consumer spending. During a recession, the concept of the “Dollar smile” refers to a graphical representation of the U.S. dollar’s exchange rate. It illustrates that the dollar tends to strengthen during both economic downturns and periods of strong economic growth, forming a smile-like shape on a chart. This phenomenon suggests that investors often seek the safety of the U.S. dollar as a global reserve currency during times of uncertainty, making it a preferred asset in their portfolios.

The risk of recession is closer than ever

A sharp inversion of the yield curve and the possibility of recession

The yield curve is the difference between the yields of ten-year and two-year bonds; In normal economic conditions, naturally, the yield of ten-year bonds should be higher than the yield of two-year bonds.

Inversion means that the yield of two-year bonds is higher than the yield of ten-year bonds; Since the 1970s, whenever there has been an inversion of the yield curve, we have seen a recession in the coming months.

Due to the existence of inflation and the increase in yield of bonds due to the increase in interest rates, it is not possible to get a definite recession signal from the current inversion and more data needs to be examined.

๐Ÿ‡บ๐Ÿ‡ธ ๐Ÿ‡ช๐Ÿ‡บ ๐Ÿ‡ฌ๐Ÿ‡ง ๐Ÿ‡จ๐Ÿ‡ฆ ๐Ÿ‡ฏ๐Ÿ‡ต ๐Ÿ‡จ๐Ÿ‡ญ ๐Ÿ‡ฆ๐Ÿ‡น ๐Ÿ‡ณ๐Ÿ‡ฟ


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ECB rate hike But makes EUR weak!

This rate hike, is the tenth consecutive policy rate hike since July last year, hiking all interest rates by 25bp and the rate is 4.5 right now. Higher inflation and inflation forecasts look like the main drivers of the hike. The ECB’s communication is clear: today was the lastย hike in the current cycle

This announcement could potentially lead to some market reactions. Traders, accustomed to these consecutive rate hikes, may view this as the end of the cycle. Consequently, the EUR currency might experience a weakening effect. As a result, it is important for market participants to adjust their strategies accordingly, considering the implications of this final rate hike by the ECB.

The European Central Bank (ECB) decided to raise interest rates for the tenth consecutive time since last July. This move was driven by a greater concern about the fear of not fully controlling inflation and the risk of ending the rate hikes too soon, rather than the increasing risk of recession in the eurozone. Following a total increase of 450 basis points, the ECB’s main policy rates are now at a historic high.

More insights into the reasons behind this decision and the discussions that took place will be shared during the press conference, scheduled to begin at 2:45 pm CET. At the moment, it is evident that the ECB is deeply troubled by inflation. This includes both the current inflation rate and the anticipated future inflation, as indicated by the latest ECB staff projections, which foresee headline inflation reaching 3.2% in 2024.

You might be wondering why the ECB isn’t taking a step back and waiting to assess the full impact of the previous rate hikes. The answer is straightforward: it’s about maintaining credibility. The ECB’s primary responsibility is to ensure price stability, which the eurozone has not experienced for nearly three years. While the recent surge in inflation is primarily influenced by factors beyond the ECB’s direct control, the ECB must demonstrate its commitment to curbing it. The potential consequences, such as a more pronounced economic slowdown in the eurozone, are of lesser concern to the ECB, at least for now.

Looking ahead, if the economy weakens further and a disinflationary trend gains momentum, it will become increasingly challenging to justify additional rate hikes before the year’s end. The official communication’s statement that “based on its current assessment, the Governing Council considers that the key ECB interest rates have reached levels that, maintained for a sufficiently long duration, will make a substantial contribution to the timely return of inflation to the target” suggests that today’s rate hike may well be the final one.

In summary, today’s interest rate hike not only bolsters the ECB’s credibility but also signals the end of the current rate-hiking cycle.

๐Ÿ‡บ๐Ÿ‡ธ ๐Ÿ‡ช๐Ÿ‡บ ๐Ÿ‡ฌ๐Ÿ‡ง ๐Ÿ‡จ๐Ÿ‡ฆ ๐Ÿ‡ฏ๐Ÿ‡ต ๐Ÿ‡จ๐Ÿ‡ญ ๐Ÿ‡ฆ๐Ÿ‡น ๐Ÿ‡ณ๐Ÿ‡ฟ


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FED interest rate hike probability

Based on the latest market pricing, the probability of an interest rate hike by the Federal Reserve in November has increased to 52%

The rise in expectations followed a surprise survey of the services sector by the Institute for Supply Management in August, which showed an acceleration in economic activity, including prices paid. The overall index rose to 54.5 from 52.5, and the prices sub-index increased from 56.8 to 58.9, reflecting rising price pressures in the economy. Market participants are currently grappling with uncertainty about how much the Federal Reserve will raise interest rates and how long interest rates will remain high. Federal Reserve officials have made it clear they will keep interest rates on hold for now, but will closely monitor economic data to determine their next steps. While some economic indicators have begun to moderate, the strong performance of the US services sector serves as a forward-looking indicator of continued economic strength.

An interesting perspective to consider is that earlier in the year, there was considerable talk of an impending recession, causing companies to take a cautious approach and potentially causing consumers to cut back on spending as well. However, the predicted recession never materialized and companies now find themselves with empty inventories but still experiencing high demand. As a result, they are putting aside their previous concerns and are actively investing in replenishing their inventories. It is important to realize that most of the stagnation is caused by psychological factors and this psychological barrier may have been removed, at least from a business perspective.

However, the impact of higher interest rates on consumers, especially in terms of the affordability of items such as new cars and mortgages, can be a gradual process. The market is currently pricing in an 89 basis point cut in interest rates by December 2024, but that forecast still depends on how the economic data unfolds. The possibility of higher interest rates for a longer period is certainly a possibility. Currently, the key point of these developments is the strengthening of the dollar in the currency market; Because expectations of a possible increase in interest rates in November continue to affect currency valuation and financial markets.

๐Ÿ‡บ๐Ÿ‡ธ ๐Ÿ‡ช๐Ÿ‡บ ๐Ÿ‡ฌ๐Ÿ‡ง ๐Ÿ‡จ๐Ÿ‡ฆ


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The Pressure of the Saudi Oil on the Market

The pressure of the Saudis on oil opens the oil foot to the forex market.

๐Ÿ‡บ๐Ÿ‡ธ The US dollar: With the increase in oil prices and the vulnerability of the Euro and the yen from this, the US dollar still has no competitors and is rising in the market. The only chance to change these ISM service conditions today, which should have a significant decline. The yen can be corrected against the euro, but it is difficult for the euro to work against the dollar.

๐Ÿ‡ช๐Ÿ‡บ Euro: There is no chance for the euro at the moment, and due to the possibility of inflationary stagnation and the vulnerability of the euro, in this case, the possibility of the euro’s weakness is high, and the euro-dollar can go up until the September meeting when there is a good chance to increase the rates. to go down to 1.0650.

๐Ÿ‡ฌ๐Ÿ‡ง Pound: All eyes will be on Bailey’s speech today, and in our opinion, there is another increase and then a stop. Due to the stagnation of production in the euro, the pound is susceptible to losses against the euro and the dollar, and there is a chance of breaking 1.25 per pound of dollars.

๐Ÿ‡จ๐Ÿ‡ฆ CAD: There is no possibility of new action in today’s meeting, but the negative things have already been priced and the expectation is that the CAD will not weaken much against the dollar, and it can even strengthen up to 200 pip in the future.


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