federal reserve – Ardud http://ardud.ro/ Sat, 19 Mar 2022 01:33:48 +0000 en-US hourly 1 https://wordpress.org/?v=5.9.3 https://ardud.ro/wp-content/uploads/2021/05/default1-150x150.png federal reserve – Ardud http://ardud.ro/ 32 32 Caution remains in Forex market after rate hike https://ardud.ro/caution-remains-in-forex-market-after-rate-hike/ Sat, 19 Mar 2022 01:33:48 +0000 https://ardud.ro/caution-remains-in-forex-market-after-rate-hike/ The dollar is getting strong again Fed and BOE rate hikes Stocks rally to end week high The U.S. dollar today regained some of the strength it had lost in the previous 48 hours as the foreign exchange market assessed the impact of rate hikes alongside ongoing problems between Russia and Ukraine. . Both issues […]]]>

The U.S. dollar today regained some of the strength it had lost in the previous 48 hours as the foreign exchange market assessed the impact of rate hikes alongside ongoing problems between Russia and Ukraine. . Both issues will weigh heavily on the direction of the market heading into the weekend, although other major currencies have managed to break out of a previously very weak position against the dollar. Meanwhile, Wall Street relied on gains from previous days of bullish trading to take a positive stance for the weekend.

A stronger dollar repels

More optimism from those trading the forex in recent days has seen the dollar lose some of the resolute strength it had built up in recent weeks. The US dollar index, which measures the strength of the currency against a basket of other major currencies, is trading around 98.00 and down more than 1% on the week, but it remains a high level for the index and still indicates an extremely strong dollar.

Part of the reason for the return to the safe haven dollar is likely the lack of any concrete breakthrough in the negotiations between Russia and Ukraine. Indications and tone on both sides have become more positive but this has not yet led to a ceasefire or any other step towards ending the invasion. The forex market reacted cautiously and remained focused on this news throughout the day with little hard-hitting data released.

Rate hikes digested by traders

This week, the Federal Reserve and Jerome Powell finally signed into law the long-awaited first interest rate hike. This 25 basis point increase appears to be the first of several to come this year, although the tone of policymakers has been decidedly more dovish than many had expected.

In the United Kingdom, the Bank of England followed suit in the United States with a rate hike of 25 basis points. However, this increase was accompanied by a more cautious outlook for the future of the economy. Acknowledging this, the pound struggled to find buyers and fell back near 1.31.

Largely positive week on Wall Street

Wall Street traders are moved to Friday in view of their best week on several streets. It comes as they capitalized on the positivity of the week which had seen gains of almost 5% for the S&P 500. It turned out to be the best week since the end of 2020 for the index as it added new gains of more than 1%.

The other two major US indices also ended very positive weeks. The Dow Jones was up almost 5% for the week before the start of the day, while the tech-heavy NASDAQ, which has suffered more than others lately, had posted gains of almost 6%. over the week. The two rallied to add to their positive momentum.

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FX Week Ahead – Top 5 Events: China Inflation Rate, Lending; ECB rate decision; US inflation rate; UK GDP; Canada Employment Report https://ardud.ro/fx-week-ahead-top-5-events-china-inflation-rate-lending-ecb-rate-decision-us-inflation-rate-uk-gdp-canada-employment-report/ Mon, 07 Mar 2022 18:40:24 +0000 https://ardud.ro/fx-week-ahead-top-5-events-china-inflation-rate-lending-ecb-rate-decision-us-inflation-rate-uk-gdp-canada-employment-report/ Preview of the week ahead: The European Central Bank is expected to strike a dovish tone this week as EU and US sanctions against Russia stoked a liquidity crunch. US inflation rates are expected to hit new cyclical highs, but that won’t change much of the Fed’s calculation for a rate hike this month. The […]]]>

Preview of the week ahead:

  • The European Central Bank is expected to strike a dovish tone this week as EU and US sanctions against Russia stoked a liquidity crunch.
  • US inflation rates are expected to hit new cyclical highs, but that won’t change much of the Fed’s calculation for a rate hike this month.
  • The Canadian jobs report should be quite strong, but the Canadian dollar may not benefit significantly either way.

For the entire week ahead, please visit the DailyFX Economic Calendar.

03/09 WEDNESDAY | 01:30 & 03/10 THURSDAY | 08:00 GMT | CNY INFLATION RATE (CPI) (FEB); LOANS IN NEW YUAN CNY (FEBRUARY)

As China grapples with another wave of COVID-19 infections – moving ever closer to abandoning its zero COVID strategy – evidence has been mounting that the economy has lost steam in the start of 2022. China’s CPI inflation rate for February is expected at +0.9% y/y, same as in January. But Chinese authorities appear to be trying to breathe new life into the economy – perhaps to offset lingering worries in the property sector – as evidenced by forecasts that new yuan lending will remain near record highs. . All told, the two data releases are unlikely to drag down the Chinese yuan, which has been incredibly resilient so far this year.

03/10 THURSDAY | 12:45 p.m., 1:30 p.m. | European Central Bank rate decision in EUR

Russia’s invasion of Ukraine is causing liquidity strains in the global financial sector, with European banks at the center of the storm. There is a non-zero chance that EU and US sanctions against the Central Bank of Russia will cause a liquidity crisis for European banks that persists for the foreseeable future.In turn, this may provide the excuse ECB officials need to justify maintaining their asset purchase program until 3Q’22, and lower interest rates for longer. We will hear this week from the ECB on its March rate decision, which should shed light on its outlook, alongside the release of its updated Staff Economic Projections (SEP).

03/10 THURSDAY | 1:30 p.m. GMT | Inflation rate in USD (CPI) (FEB)

We iinflationary pressures are poised to hit new multi-decade highs this week as the impacts of omicron’s variants of COVID-19 are still being felt in the global supply chain. But the worst may be yet to come, as the Russian invasion of Ukraine has triggered a surge in agricultural, energy and base metal commodities. According to a Bloomberg News investigation, the stock February The US inflation rate (CPI) is expected in at +0.8% month/month from +0.5% m/m and at +7.9% y/y from +7.5%y/y, with core inflation (excluding energy and food) expected at +0.5% m/m vs. +0.6% m/m and at +6.4% a/a of +6%. The data will likely help keep US rate hike expectations firmwho are strongly in favor of a 25 basis point rate hike by the Federal Reserve this month.

03/11 FRIDAY | 07:00 GMT | Gross domestic product in pounds sterling (JAN)

The UK economy appears to have gained momentum in early 2022, partly due to the statistical base effect resulting from the slowdown in early 2021 (when COVID-19 infections were raging). For January, tYear-over-year reading is scheduled for +9.3% of +6%, even if the growth rate over three months should go from +1% to +0.8%. Nonetheless, these are pretty strong readings that will likely keep the odds of a BOE rate hike high in the near term.

03/11 FRIDAY | 1:30 p.m. GMT | Change in employment in CAD and unemployment rate (FEB)

Despite nationwide protests against COVID-19 mandates, the Canadian economy appears to have benefited from lower COVID-19 infection rates and higher energy prices in the month last. According to a Bloomberg News survey, the Canadian economy added+160K jobs in February after losing-200.1K jobs in January. The Canadian unemployment rate should drop sharply from 6.5% to 6.2%. Unfortunately for the Canadian dollar, gains in energy prices do not necessarily stimulate appetite for the currency as broader “risk aversion” moves envelop the market thanks to the Russian invasion of Ukraine. ; more limited price action is expected.

— Written by Christopher Vecchio, CFA, Senior Strategist

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AUD/USD fails to test January high ahead of RBA rate decision https://ardud.ro/aud-usd-fails-to-test-january-high-ahead-of-rba-rate-decision/ Thu, 24 Feb 2022 23:00:00 +0000 https://ardud.ro/aud-usd-fails-to-test-january-high-ahead-of-rba-rate-decision/ Australian Dollar Talking Points AUD/USD breaks series of higher highs and lows at the start of the week as the increase Russia-Ukraine tensions appear to be spurring a flight to safety, and the exchange rate could consolidate ahead of the Reserve Bank of Australia’s (RBA) next interest rate decision on March 1, as it fails […]]]>

Australian Dollar Talking Points

AUD/USD breaks series of higher highs and lows at the start of the week as the increase Russia-Ukraine tensions appear to be spurring a flight to safety, and the exchange rate could consolidate ahead of the Reserve Bank of Australia’s (RBA) next interest rate decision on March 1, as it fails to test January high (0.7314).

AUD/USD fails to test January high ahead of RBA rate decision

AUD/USD extends decline from monthly high (0.7284) as greenback appreciates against all major peers, and further data printouts from the US could keep the rate going currency under pressure as the Federal Reserve’s preferred gauge for inflation is expected to rise for the fifth consecutive month.

The U.S. Personal Consumption Expenditure (PCE) price index update could influence AUD/USD as the core reading is expected to widen to 5.1% from December’s 4.9% yoy , which would mark the highest reading since 1983, and another rise could generate a bullish reaction from the US Dollar as evidence of lingering inflation prompts the Federal Reserve to adjust its exit strategy.

As a result, AUD/USD could consolidate for the remainder of the month as the Federal Open Market Committee (FOMC) is on track to implement higher interest rates in 2022, but the decision on RBA rate could influence the short-term outlook for the exchange rate. if the Central Bank adjusts the forward guidance of monetary policy.

Image from the DailyFX Economic Calendar for Australia

A significant change in RBA language could support the Australian dollar as the central bank recognizes that “inflation accelerated faster than the Bank had expected,” and it remains to be seen whether the governor Phillip Lowe and Co. will prepare Australian households and businesses for imminent regime change as the central bank pledges to “not raise the cash rate until actual inflation is sustainably within the 2-3% target range.”

In turn, the RBA can stick to a wait-and-see approach because “tThe board is ready to be patient as it monitors developments in the various factors affecting inflation in Australiaand more from the central bank could undermine the recent rally in AUD/USD as market participants brace for higher US interest rates.

Until then, AUD/USD may trade within a defined range as fails to test the January high (0.7314)but a further decline in the exchange rate could fuel the recent reversal in retailer sentiment, similar to the behavior seen in the previous year.

Image of IG client sentiment for the AUD/USD rate

the IG Customer Opinion Report shows 57.92% of traders are currently long fillet AUD/USD, with the ratio of long to short traders upright at 1.38 to 1.

The number of net long traders is 16.38% higher than yesterday and 2.32% higher than last week, while the number of net short traders is 39.95% lower than yesterday. yesterday and 31.67% lower than last week. Rising net buying interest had fueled the reversal in retailer sentiment, with 51.55% of traders net long on AUD/USD last week, while the decline in net short comes as the exchange rate rebounds rapidly from a new weekly low. (0.7095).

That said, AUD/USD could face some headwinds ahead of the RBA’s next rate decision as a further rise in the US PCE price index puts pressure on the FOMC to adjust its exit strategy, and the advance of the The January low (0.6968) could turn out to be a correction of the general trend, as the exchange rate appears to reverse ahead of the yearly high (0.7314).

AUD/USD daily rate chart

Image of daily AUD/USD rate chart

Source: Commercial view

  • Keep in mind that AUD/USD broke the November 2020 low (0.6991) earlier this year after failing to hold above the 50-day SMA (0.7176), but lack of momentum to test the 0.6940 region (78.6% expansion) pushed the exchange rate lower above the moving average as Relative Strength Index (RSI) diverge with the price.
  • AUD/USD seemed to be on track to test January high (0.7314) as the exchange rate hit a new weekly high (0.7284), but the lack of momentum to clear the yearly opening range pushed the exchange rate back towards the Fibonacci overlap around 0.7130 (61.8% retracement) to 0.7180 (61.8% retracement)with a break/close below the Region from 0.7070 (61.8% expansion) to 0.7090 (78.6% retracement) carrying the February low (0.7033) on the radar.
  • Failure to defend the January low (0.6968) opens the region of 0.6940 (78.6% expansion), with the next area of ​​interest around 0.6770 (100% expansion) to 0.6820 (23.6% retracement).
  • At the same time, the lack of momentum for break/close below 0.7070 (61.8% expansion) to 0.7090 (78.6% retracement) region may keep AUD/USD within a defined range, with a move above the 0.7260 zone (38.2% expansion) leading into January high (0.7314) back on the radar.

— Written by David Song, Currency Strategist

Follow me on Twitter at @DavidJSong

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NZD/USD Struggles Against Stronger US Dollar Despite Elevated RBNZ Inflation Expectations https://ardud.ro/nzd-usd-struggles-against-stronger-us-dollar-despite-elevated-rbnz-inflation-expectations/ Fri, 11 Feb 2022 02:42:58 +0000 https://ardud.ro/nzd-usd-struggles-against-stronger-us-dollar-despite-elevated-rbnz-inflation-expectations/ The NZD/USD bears are hiding in an attempt to take support from the daily trendline. A Doji candle followed by a daily engulfment could signal that more bears are coming in the days ahead. The RBNZ inflation extensions are at a 31-year high, but the US CPI is already winning out at a 40-year high. […]]]>
  • The NZD/USD bears are hiding in an attempt to take support from the daily trendline.
  • A Doji candle followed by a daily engulfment could signal that more bears are coming in the days ahead.
  • The RBNZ inflation extensions are at a 31-year high, but the US CPI is already winning out at a 40-year high.

At 0.6658, NZD/USD is down 0.17% on the day as the greenback continues to dominate the top spot in the forex chart. On an hourly basis, the US dollar is leading while commodity currencies are lagging.

In recent trade, the Reserve Bank of New Zealand released its two-year inflation forecast:

  • RBNZ: OCR expectations continue to rise in the short to medium term
  • T1: 3.27% (before 2.96%).
  • OCR expectations continue to rise in the short to medium term.
  • A year ahead of the CPI Inflation expectations hit a 31-year high of 4.40%.
  • Unemployment expectations are at historic lows.
  • Responses to house price expectations show uncertainty in the housing market.

“CPI inflationary pressures are expected to remain strong in the near term, and this should be reflected in rent and food prices next week,” analysts at ANZ Bank reported earlier. to confirm. This should relieve the CPI over time.”

Meanwhile, that failed to move the needle and markets instead consolidate volatility overnight when the U.S. Consumer Price Index came in hot, causing price action to swing both ways the New York day. the data was accompanied by very hawkish comments from James Bullard, a voting member of the Federal Reserve.

His rhetoric sparked a wave of bets on aggressive rate hikes. Bullard told Bloomberg that he would like to see 100 basis points of hikes by July and that rate hikes between meetings could be considered. This has led some Fd watchers to talk of a rate hike ahead of the March meeting. Rate futures have moved to a better chance of a 50 basis point hike next month and more than 160 basis points of tightening by the end of the year.

Data on Thursday showed the U.S. consumer price index rose 7.5% year-on-year in January, a fourth consecutive month above 6% and slightly above economists’ forecast for a rise of 7.3%. Consequently, US Treasury yields jumped and the dollar hit a five-week high of 116.34 yen. Kiwi was bodied for part of the day on a flight to commodities, but turned a dime when Bullard entered the scene and has been under pressure ever since. The New Zealand dollars each fell about 0.3% in morning trading.

NZD/USD technical analysis

According to previous analysis, in which it was noted: ”NZD/USD bulls are supporting a significant correction ”moving” on former lows near 0.67 the figure and towards the neckline from the M formation near 0.6733”, the price hit the target on Thursday. This was between the average reversion of 50% and the ratio of 61.8% as follows:

Preliminary and live analysis of NZD/USD

NZD/USD daily chart

The Doji candle, if followed by a bearish close on Friday, could set the stage for further downside activity into next week:

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FOREX-Euro stabilizes after ECB pushback, dollar waits ahead of US CPI https://ardud.ro/forex-euro-stabilizes-after-ecb-pushback-dollar-waits-ahead-of-us-cpi/ Wed, 09 Feb 2022 09:00:39 +0000 https://ardud.ro/forex-euro-stabilizes-after-ecb-pushback-dollar-waits-ahead-of-us-cpi/ Band Joice Alves LONDON, February 9 (Reuters) – The euro stabilized on Wednesday from a three-week high after European Central Bank President Christine Lagarde cut bets for aggressive interest rate hikes. The dollar was flat, a day before the release of consumer price data in the United States that could offer new clues on the […]]]>

Band Joice Alves

LONDON, February 9 (Reuters)The euro stabilized on Wednesday from a three-week high after European Central Bank President Christine Lagarde cut bets for aggressive interest rate hikes.

The dollar was flat, a day before the release of consumer price data in the United States that could offer new clues on the pace of monetary tightening by the Federal Reserve.

A more hawkish tone from the ECB and the Fed last week caught markets off guard and sent Eurozone and US debt yields higher as higher betting rates could rise further. quickly and higher than expected.

But Lagarde said on Monday that a major tightening was unnecessary, trying to temper rising expectations for aggressive action after first signaling last week that a rate hike this year was a possibility.

The euro edged up 0.1% to $1.1425 by 0850 GMT, following its gradual pullback from a high of $1.1483 on Friday when it hit its highest level since January 14.

The dollar index =USD, which measures the greenback against six major peers, was also little changed, down 0.1% to 95.504, after bouncing off a 2.5-week low of 95.136 hit on Friday. It hit the highest since July 2020 at 97.441 late last month.

“We view these types of moves as short-term volatility, although profitable if played well,” said Jens Nærvig Pedersen, chief FX and rates strategy analyst at Danske Bank, recalling the highs and lows of the market. dollar and euro over the past. two weeks.

“We expect the data (on US inflation) to support expectations of Fed hawkishness,” he said, adding that rate hike expectations will support the strengthening US dollar in the coming months. over the next few quarters.

Markets are pricing in more than a 70% chance of a 25 basis point hike from the Fed and nearly a 30% chance of a 50 basis point hike when policymakers meet in March, the tool says. CME’s FedWatch.

“Tomorrow’s release of the US CPI will help determine whether the Fed starts with a 25 basis point or 50 basis point move in March,” ING strategists told clients.

Economists polled by Reuters predicted U.S. data on Thursday would show consumer prices rose 7.3% year-on-year in January.

World exchange rateshttps://tmsnrt.rs/2RBWI5E

(Reporting by Joice Alves Additional reporting by Kevin Buckland Editing by Peter Graff)

((joice.alves@thomsonreuters.com; twitter @joiceal))

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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FOREX-Dollar up, Euro down as pair clash in fight against rate hike https://ardud.ro/forex-dollar-up-euro-down-as-pair-clash-in-fight-against-rate-hike/ Mon, 07 Feb 2022 18:09:43 +0000 https://ardud.ro/forex-dollar-up-euro-down-as-pair-clash-in-fight-against-rate-hike/ Band Herbert Lash NEW YORK, February 7 (Reuters) – The dollar rose slightly and the euro eased on Monday after European Central Bank President Christine Lagarde calmed market expectations of a rapid rise in interest rates that pushed bond yields higher. regions in Europe at multi-annual summits. There is no need to sharply tighten monetary […]]]>

Band Herbert Lash

NEW YORK, February 7 (Reuters)The dollar rose slightly and the euro eased on Monday after European Central Bank President Christine Lagarde calmed market expectations of a rapid rise in interest rates that pushed bond yields higher. regions in Europe at multi-annual summits.

There is no need to sharply tighten monetary policy in the eurozone as inflation is expected to come down and could stabilize around the ECB’s 2% target, Lagarde told a European Parliament hearing.

The ECB last week opened the door to a rate hike later in 2022 as inflation risks grew, while data showing an unexpected jump in US jobs created in January also sparked speculation of a longer timeline. fast for Federal Reserve rate hikes.

New expectations for both the Fed and the ECB pitted the dollar against the euro as to which one will take the upper hand. US consumer price data to be released on Thursday is poised to be a key determinant of the data points.

“The euro-dollar will be in a bit of a tussle between these two forces, but ultimately with the CPI in the US, we’re probably due for a bit more recovery in the dollar,” Kathy said. Lien, Managing Director of BK Asset Management.

A Reuters poll of economists showed they expected the year-on-year CPI to have climbed to 7.3% in January.

The dollar index = USD rose 0.138%, the euro USD= down 0.24% at $1.1418.

Last week the ECB moved the ball in a positive direction for the euro, said Joe Manimbo, senior market analyst at Western Union Business Solutions.

“Now the focus has shifted to US inflation, which the market will use to determine whether the Fed will hike 25 basis points or 50 basis points next month,” Manimbo added.

Markets 0#FF: have now assessed a one-in-three chance that the Fed could hike 50 basis points in March, and a reasonable chance that rates will hit 1.5% by the end of the year. FEDWATCH

The European common currency EUR=EBS hit its highest since mid-January on Friday, pushed by the ECB’s hawkish turn.

Not everyone is convinced of the ECB’s hawkish leanings.

“We don’t think the ECB is bracing for a sudden acceleration in tightening. We still think the Fed is on track to be well ahead of the ECB, supporting the dollar,” said Mark Haefele, chief investment officer at UBS. . Global Wealth Management.

Haefele said he expects the euro to fall to $1.10 by the end of the year and the dollar to gain against the Swiss franc to end the year at 0.98 francs. per dollar, against 0.92 currently. CHF=EBS.

The two years US2YT=RR The yield on US Treasuries, which generally moves in line with interest rate expectations, fell 2.4 basis points to 1.298%.

The Japanese yen strengthened 0.06% against the greenback to 115.14 to the dollar, while the British pound GBP= last traded at $1.3514, down 0.11% on the day.

Bitcoin BTC= rose 8.64% to $44,155.82, after surging 11% on Friday night.

================================================= =====

Currency rates at 12:58 p.m. (5:58 p.m. GMT)

The description

RIC

Last

Closing of the previous session

Percentage change

Percentage change since the beginning of the year

High bid

Low bid

dollar index

= USD

95.5550

95.4410

+0.14%

-0.113%

+95.6350

+95.3530

euro dollar

EUR=EBS

$1.1419

$1.1451

-0.28%

+0.45%

+$1.1474

+$1.1415

dollar/yen

JPY=EBS

115.1550

115.2100

-0.03%

+0.05%

+115.3750

+114.9150

Euro/Yen

EURJPY=

131.49

131.90

-0.31%

+0.90%

+132.1300

+131.2700

Dollar/Swiss

CHF=EBS

0.9246

0.9254

-0.06%

+1.39%

+0.9262

+0.9223

British pound/dollar

GBP=D3

$1.3515

$1.3525

-0.07%

-0.06%

+$1.3550

+$1.3492

Canadian dollar

CAD=D3

1.2687

1.2769

-0.64%

+0.35%

+1.2756

+1.2672

Australian/Dollar

AUD=D3

$0.7106

$0.7078

+0.42%

-2.23%

+$0.7122

+$0.7066

Euro/Switzerland

EURCHF=

1.0557

1.0592

-0.33%

+1.81%

+1.0604

+1.0551

Euro/pound sterling

EURGBP=

0.8448

0.8464

-0.19%

+0.57%

+0.8478

+0.8439

New Zealand Dollar/Dollar

USD=D3

$0.6617

$0.6615

+0.04%

-3.32%

+$0.6638

+$0.6602

Dollar/Norway

NOK=D3

8.8060

8.7805

+0.21%

-0.12%

+8.8555

+8.7800

Euro/Norway

EURNOK=

10.0576

10.0676

-0.10%

+0.45%

+10.1168

+10.0300

Dollar/Sweden

SEK=

9.1463

9.1532

-0.32%

+1.42%

+9.1736

+9.1168

Euro/Sweden

EUREK=

10.4454

10.4785

-0.32%

+2.07%

+10.4887

+10.4360

World exchange rateshttps://tmsnrt.rs/2RBWI5E

(Reporting by Herbert Lash; Additional reporting by Tommy Wilkes in London; Editing by Will Dunham, Frank Jack Daniel, Mark Heinrich and Andrea Ricci)

((herb.lash@thomsonreuters.com; 1-646-223-6019))

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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FOREX-Euro expects best week since COVID-19 hit after ECB’s hawkish turn https://ardud.ro/forex-euro-expects-best-week-since-covid-19-hit-after-ecbs-hawkish-turn/ Fri, 04 Feb 2022 05:43:47 +0000 https://ardud.ro/forex-euro-expects-best-week-since-covid-19-hit-after-ecbs-hawkish-turn/ Band Alun John HONG KONG, February 4 (Reuters) – The euro was heading for its best week since March 2020 and testing a nearly three-month high after Thursday’s hawkish shift in the European Central Bank fueled speculation over the pace and timing of rate hikes. Although the ECB kept rates unchanged as widely expected, the […]]]>

Band Alun John

HONG KONG, February 4 (Reuters)The euro was heading for its best week since March 2020 and testing a nearly three-month high after Thursday’s hawkish shift in the European Central Bank fueled speculation over the pace and timing of rate hikes.

Although the ECB kept rates unchanged as widely expected, the euro climbed 0.26%, hitting as high as $1.468 in Asian trading on Friday in reaction to ECB President Christine Lagarde acknowledging the risks rising inflation rates and refusing to repeat previous forecasts that an interest rate hike this year was extremely unlikely.

Europe’s single currency rose 2.86% on the week, its best weekly gain since March 2020, when the pandemic began. A break above $1.1482, a level last seen on Jan. 14, would be the euro’s strongest since mid-November.

“Lagarde has opened the door to a new round of tightening starting with the ECB this year. The market has pushed in that direction a bit, but the fact that the president has acknowledged that is a big deal,” Rodrigo Catrill said. , senior FX strategist at National. Bank of Australia.

The ECB had been considered one of the most accommodating of the world’s major central banks.

Sterling GBP=D3 was at $1.361 after hitting a two-week high of $1.3626 on Thursday after the BoE raised rates by 25 basis points and nearly half of its policymakers wanted a bigger hike to contain runaway inflation .

As a result, the dollar index =USDmeasuring the greenback against six major peers, was at 95.169 after falling 2% this week – its biggest weekly decline since March 2020.

This is a sharp reversal after the index gained 1.65% a week earlier, when traders shifted positions as they braced for faster-than-expected rate hikes from the Federal Reserve. Markets are now pricing in five US rate hikes this year.

U.S. nonfarm payrolls data is due later Friday, though it is expected to show a sharp slowdown in job growth due to the spread of the Omicron strain of COVID-19 in January , the data will not be as crucial for the Fed as in the past, as the focus is more on inflation.

“We have told our clients that they should be prepared for more volatility in the currency markets and in the markets in general when the major central banks begin to enter a new price cycle, and that is what we we’ve seen dramatically in the dollar in recent weeks,” Catrill added.

“Markets are starting to wonder not only when (central banks) will go up, but more importantly how fast and how far they will go up. This is not just a Fed story now, it is also a Bank of England, a history of the ECB and even a history of the RBA.”

The governor of the Reserve Bank of Australia said Wednesday that a rate hike this year was possible, while saying there was a rare opportunity to achieve full employment that warranted patience.

Friday’s RBA monetary policy statement did little to change that picture, leaving the Australian dollar AUD=D3 at $0.7151.

The yen was at 114.88 to the dollar as yields on benchmark Japanese 10- and 5-year government bonds hit six-year highs at the start of trading in Tokyo, with analysts beginning to speculate that even the Bank of Japan may have to follow its peers and tighten monetary policy.

World exchange rateshttps://tmsnrt.rs/2RBWI5E

(Reporting by Alun John; Editing by Edwina Gibbs and Simon Cameron-Moore)

((alun.john@thomsonreuters.com;))

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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FOREX-Euro jumps as record inflation adds pressure on ECB https://ardud.ro/forex-euro-jumps-as-record-inflation-adds-pressure-on-ecb/ Wed, 02 Feb 2022 12:54:56 +0000 https://ardud.ro/forex-euro-jumps-as-record-inflation-adds-pressure-on-ecb/ Band Joice Alves LONDON, February 2 (Reuters) – The euro appreciated for the third day in a row on Wednesday, break away a 20-month low last week as eurozone inflation hit a new record high last month, fueling bets that the European Central Bank could raise interest rates sooner than expected. At 5.1% in January, […]]]>

Band Joice Alves

LONDON, February 2 (Reuters)The euro appreciated for the third day in a row on Wednesday, break away a 20-month low last week as eurozone inflation hit a new record high last month, fueling bets that the European Central Bank could raise interest rates sooner than expected.

At 5.1% in January, price growth is more than double the ECB’s 2% target.

The euro has fallen nearly 8% in three months, rattled by expectations that the ECB will be the last major central bank to raise interest rates after ignoring inflation for months and arguing that factors temporary contracts were behind the rise.

The euro strengthened 0.45% against the dollar at $1.13245, touching a nine-day highas investors weighed the chances of the ECB signaling a faster lane for policy tightening at its Thursday meeting.

Ulrich Leuchtmann, head of foreign exchange at Commerzbank, said the money market was now pricing in an ECB rate hike for the final quarter of the year.

In the short term, the impact on the euro will depend on what ECB President Christine Lagarde has to say on Thursday, he said.

“Some market participants will expect the ECB to look hawkish tomorrow,” Leuchtmann added.

Shaun Osborne, chief currency strategist at Scotiabank, said the ECB was in an “uncomfortable position” but he expected it to stick to its no-hike forecast this year, ” which will remain a brake on the euro”.

In the meantime, the dollar fell from a 19-month high reached against a basket of currencies =USD last week as US Federal Reserve officials warned of potentially aggressive rate hikes this year.

A chorus of Fed officials said it would raise interest rates in March but spoke cautiously about what might come next, indicating a desire to keep options open given the uncertain inflation outlook.

The dollar fell for a third day against its peers, slipping 0.4% to 95.875, with a rally in global equity markets undoing some of its safe-haven allure.

The pound rose 0.3% to hit a 12-day high against the dollar at $1.3571 ahead of a Bank of England policy meeting on Thursday.

Investors fully priced in an expected BoE base rate hike of 25 basis points to 0.5% on Thursday. BOWATCH

euro against dollarhttps://tmsnrt.rs/3L3om7P

(Reporting by Joice Alves editing by David Goodman, Frank Jack Daniel and Chizu Nomiyama)

((Joice.alves@thomsonreuters.com; twitter to @joiceal))

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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The balance between growth and value https://ardud.ro/the-balance-between-growth-and-value/ Wed, 02 Feb 2022 06:35:00 +0000 https://ardud.ro/the-balance-between-growth-and-value/ monsitj/iStock via Getty Images Blackrock’s managing director and portfolio manager, Russ Koesterich, suggests rather than timing fluctuations between growth and value, aim for the middle. With headlines focused on inflation and the Federal Reserve, rotations between growth and value stocks have become increasingly violent. In the short term, this should continue. While skilled market timers […]]]>

monsitj/iStock via Getty Images

Blackrock’s managing director and portfolio manager, Russ Koesterich, suggests rather than timing fluctuations between growth and value, aim for the middle.

With headlines focused on inflation and the Federal Reserve, rotations between growth and value stocks have become increasingly violent. In the short term, this should continue. While skilled market timers may try to beat these moves, a different strategy is to embrace the middle: growth at a reasonable price, known as GARP.

Since the start of the pandemic, being on the right side of the growth/value gap has had a profound impact on short-term performance. There have been at least four rotations, each lasting between four and eight months and resulting in outperformance for a style of between 15% and 50%.

That said, seen over a slightly longer horizon, the performance gaps have been much smaller. For example, on an annual basis, US large cap growth and value returned around 21%, with around 1% separating the two.

The relative post-pandemic performance between the two styles is even more telling. Using global indices, after many sharp reversals, the relative return between growth and value has simply returned to where it was in the spring of 2021 (see chart 1).

Global Value Stocks vs. Growth Stocks

Global Value Stocks vs. Growth Stocks

black rock

Source: Refinitiv Datastream and MSCI, chart from BlackRock Investment Institute. January 14, 2022Notes: The line shows the relative performance of the MSCI World Value Index compared to the MSCI World IndexGrowth index. An increase in the level of the index means that value outpaces growth. The index is rebased on 100.

For investors less inclined to time these fluctuations, GARP offers several advantages. Since last March, whatever style is currently in vogue, high-beta stocks — stocks that show greater volatility than the market as a whole — low-quality stocks have generally underperformed.

Interestingly, these high-beta names are most visible at both ends of the value/growth spectrum. In other words, deep value as well as early or speculative growth tends to be high beta. Given that we are past the early stages of the bull market, when high beta stocks are typically rewarded, investors are likely better off with less speculative names.

Besides modest betas, the other argument in favor of GARP is reliability; historically, this is the most “all-weather” style of investing. As the past 18 months have demonstrated, equity-style rotations are often hostage to fluctuations in the economy.

At this point in the cycle, investors may want to moderate their macro risk. GARP has the advantage of generally working well in most environments.

watch inflation

A caveat to the GARP strategy: inflation. While GARP tends to outperform in most regimes, the historical exception has been where we are today, which is high and accelerating inflation. Research by my colleague Isabelle Liu suggests that during periods of exceptionally high nominal GDP (NGDP) and inflation, GARP can underperform, especially relative to value.

That said, growth and inflation are expected to moderate towards the middle of the year for a variety of reasons, including a substantial reduction in fiscal stimulus, as well as the possible easing of supply chain issues as as the current wave of Omicron passes and existing untapped labor pools can help fill a record number of job openings.

While near-term conditions are still supporting value, rather than trying to pivot every three months, the middle may be the most sensible place, at least in the longer term.

This Publish originally appeared on iShares Market Insights.

Editor’s note: The summary bullet points for this article were chosen by the Seeking Alpha editors.

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FX Week Ahead – Top 5 Events: BOE, ECB & RBA Rate Decisions; Canada Employment Report; American NFP https://ardud.ro/fx-week-ahead-top-5-events-boe-ecb-canada-employment-report-american-nfp/ Mon, 31 Jan 2022 18:00:52 +0000 https://ardud.ro/fx-week-ahead-top-5-events-boe-ecb-canada-employment-report-american-nfp/ Preview of the week ahead: The first week of February brings several rate decisions and jobs reports from the G20 economies. While the Reserve Bank of Australia and the Bank of England could take concrete action this week, the European Central Bank is still several months away from changing its position. The Canadian jobs report […]]]>

Preview of the week ahead:

  • The first week of February brings several rate decisions and jobs reports from the G20 economies.
  • While the Reserve Bank of Australia and the Bank of England could take concrete action this week, the European Central Bank is still several months away from changing its position.
  • The Canadian jobs report and the U.S. nonfarm payrolls report for January could prove disappointing as the omicron variant of COVID-19 rocked North America.

For the entire week ahead, please visit the DailyFX Economic Calendar.

02/01 TUESDAY | 03:30 GMT | Reserve Bank of Australia AUD rate decision

The Reserve Bank of Australia take note of the fact that Iinflationary pressures and expectations remain high, and a recovering labor market should help keep growth up for the foreseeable future. Likewise, they will likely zero out their QE program. EAustralia’s current unemployment rate of 4.6% is fast approaching the RBA’s 2022 end-of-year forecast of 4.2%. These factors point to an aggressive RBA this year – but no rate hike is imminent.

According to Australian Overnight Index Swaps (OIS), the first rate hike of 25 basis points is scheduled for July (54% chance). A second-order rise is scheduled for September (61% chance) and a third rate hike expected in December (64% luck). Any commentary that drags forward rate hike odds will prove beneficial for the Aussie dollar as the RBA closes the policy gap with more hawkish central banks like the Federal Reserve.

02/03 THURSDAY | 12:00 GMT | Bank of England GBP rate decision

Owith UK inflation ratesgo highest level in a decade and accumulating evidence that the labor market is steadily improving, both Bengland anchor policymakers and rate markets believe further policy tightening is ahead. Rates markets view February 2022 as the most likely time for the next rate hike, with a 98% chance of a 25 basis point rate hike; that’s a 66% increase early January. Moreover, interest rate markets have anticipated a fourth rate hike in 2022, compared to three early 2022. A BOE rate raise this week aligns perfectly with the release of the next version of the Monetary Policy Committee’s Quarterly Inflation Report (QIR). Sterling should remain well supported around an increasingly hawkish BOE.

02/03 THURSDAY | 12:45 GMT | European Central Bank EUR rate decision and press conference

ECB policymakers have been beating the same drum over the past few months: no rate hikes are expected in 2022. The last policy meeting of 2021 noted that the Governing Council believed that “monetary accommodation is still needed for inflation to stabilize at the 2% medium-term target inflation rate ECB President Christine Lagarde called the current rise in inflation a “hump”. This week’s inflation data, however, shows that price pressures are not receding as quickly as expected. The interest rate markets set prices in a#89% chance of first 10 basis points increase in prices to arrive in July 2022. Nevertheless, European Rallythat is to say could provide a selling opportunity as the odds of an ECB rate hike fall back, in line with feedback from policy makers.

02/04 FRIDAY | 1:30 p.m. GMT | Change in employment in CAD and unemployment rate (JAN)

A spike in COVID-19 omicron variant infections coupled with growing protests against mandatory vaccinations may have hampered the Canadian labor market in early 2022. According to a Bloomberg News survey, the Canadian economy lost -117.5 000 jobs in January after adding +54.7K jobs in December. The Canadian unemployment rate is expected to jump significantly, from 5.9% to 6.2%. But with risk appetite starting to stabilize and oil prices continuing to climb, any weakness seen in the Canadian dollar around a weak January jobs report could prove to be an opportunity ‘buy the drop’.

02/04 FRIDAY | 1:30 p.m. GMT | Non-agricultural payroll in USD and unemployment rate (JAN)

As in Canada, the spread of the omicron variant of COVID-19 appears to have weighed on the US labor market. Notably, US jobless claims rose every week through January, and alongside falling PMI readings, a weaker US employment reading is expected. According to a Bloomberg News survey, forecasters are looking for job growth of +153K while the unemployment rate (U3) is anticipated hold at an impressive 3.9%. Meanwhile, the U.S. labor force participation rate is expected to stay on hold at a still skinny 61.9%. Wage growth should remain robust, at +5.2% y/y in January against +4.7% y/y in December.

Atlanta Fed Jobs Growth Calculator (January 2022) (Chart 1)

The U.S. economy continues to move closer to achieving “full employment” as it was experienced before the pandemic. According to the Atlanta Fed’s jobs growth calculator, the US economy needs more424K jobs growth per month over the next 12 months to return to the pre-pandemic US labor market of 3.5% unemployment rate (U3) with a labor force participation rate of 63.4%.

— Written by Christopher Vecchio, CFA, Senior Strategist

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