<p>WTI crude oil settled up $3.25 today to $86.79 on the day. That’s higher than last week’s close at $85.98 and represents an impressive turnaround from $81.20 at yesterday’s low.</p><p>The market is struggling to price in tight global supplies against worries of falling future demand.</p><p>There are also uncertainties about how much natural gas-to-oil swtiching we will see this winter in Europe and Asia. One bullish signal today came from German economy minister Habeck who <a target=“_blank“ href=“https://twitter.com/berlinerzeitung/status/1567934378331836416″ target=“_blank“ rel=“nofollow“>said </a>he wants to put diesel-fired power plant ships off the coast to replace nuclear plants that are shutting down.</p><p>That will add to demand for diesel, where US inventories are already tight according to <a target=“_blank“ href=“https://twitter.com/JKempEnergy/status/1568285479610499074″ target=“_blank“ rel=“nofollow“>John Kemp</a>.</p><p>Mix in uncertainty about the SPR, the Russian price cap/ban, the Iran deal and the economy and it’s a volatile trade. The big doji start on this week’s chart indicates that more wild moves are coming.</p>

This article was written by Adam Button at forexlive.com.

<p id=“P3BBE52BD“ class=“fronthighlights-head-p“>The market is now pricing in a 91% chance of a 75 basis points Fed hike on September 21. The final push came today after Fed Governor Waller <a target=“_blank“ href=“https://www.forexlive.com/centralbank/feds-waller-says-he-supports-another-signficant-hike-this-month-20220909/“ target=“_blank“>said </a>the meeting was fairly straightforward and that he expected another big hike.</p><p id=“P3BBE52BD“ class=“fronthighlights-head-p“>Economists will continue to coalesce around 75 basis points now and that continued with Bank of America economists shifting their forecast to 75 bps from 50. They cited comments from Powell yesterday where he made no effort to push back on market expectations for 75 bps.</p><p id=“P3BBE52BD“ class=“fronthighlights-head-p“>Perhaps more importantly, Bank of America took its terminal top to 4.00-4.25% from 3.75-4.00%.</p><p id=“P3BBE52BD“ class=“fronthighlights-head-p“>“We think that more cumulative tightening is needed to restore balance in labor markets,“ they wrote. „We also believe the Fed wants to get to its restrictive policy stance sooner than later.“</p><p id=“P3BBE52BD“ class=“fronthighlights-head-p“>In a separate note, Bank of America Global Research also discusses its expectations for next week’s (Tues) US CPI print for the month of August.</p><p id=“P0F78FD9F“ class=“fronthighlights-text-p“>“In the August CPI report, we look for headline CPI to decline by 0.1% mom, its first decline since May 2020, and for core CPI to advance by 0.3% mom. This would leave headline and core CPI up 8.2% and 6.0% yoy, respectively,“ BofA notes. </p><p id=“P2FA671E3″ class=“fronthighlights-text-p“>“We look for the retracement in energy prices to continue in August as we forecast a 5.2% mom decline following the 4.6% drop in July. Meanwhile, food price appreciation should only ease modestly to 0.9% mom from 1.1% previously. Elevated wages should continue to put upward pressure on food away from home inflation, and though commodity prices have declined recently, this will take time to pass through to consumer prices,“ BofA adds. </p><p id=“P2FA671E3″ class=“fronthighlights-text-p“>For bank trade ideas, <a target=“_blank“ href=“https://plus.efxdata.com/ad/track/4655172E54F06040571CD0AB083845AD“ rel=“nofollow“ target=“_blank“ data-saferedirecturl=“https://www.google.com/url?q=https://plus.efxdata.com/ad/track/4655172E54F06040571CD0AB083845AD&source=gmail&ust=1662834220914000&usg=AOvVaw0IBG76FJtqqXmrtul82-mQ“>check out eFX Plus</a>. For a limited time, get a 7 day free trial, basic for $79 per month and premium at $109 per month. <a target=“_blank“ href=“https://plus.efxdata.com/ad/track/4655172E54F06040571CD0AB083845AD“ rel=“nofollow“ target=“_blank“ data-saferedirecturl=“https://www.google.com/url?q=https://plus.efxdata.com/ad/track/4655172E54F06040571CD0AB083845AD&source=gmail&ust=1662834220914000&usg=AOvVaw0IBG76FJtqqXmrtul82-mQ“>Get it here</a>. </p>

This article was written by Adam Button at forexlive.com.

<p>One of the best trades of this decade will be copper or copper miners with deep inventories. It’s well understood, right down to the government level, that we’re going to need a lot of copper in the green transition and that existing mines aren’t enough. At the same time, investors are unwilling to fund new mine construction because spot copper prices aren’t great and because of inflationary cost increases in mine construction everywhere.</p><p>I’m tempted to think that’s a story that’s so well understood that there’s no money to be made — I’ve <a target=“_blank“ href=“https://www.forexlive.com/news/the-case-for-copper-20220531/“ target=“_blank“>written about it</a> many times — but if you look at how copper miners trade, that’s not the case at all.</p><p>The general consensus is that the big shortage will emerge in 2024 or 2025 as the green transition ramps up and China rebounds but at some point there will be stockpiling ahead of that.</p><p>Is that what’s happening now? Bloomberg <a target=“_blank“ href=“https://www.scrapmonster.com/news/the-copper-market-is-flashing-signs-of-tight-supply/1/84891″ target=“_blank“ rel=“nofollow“>noted </a>that yesterday’s 2.4% rally in copper was the most in give weeks and that front month copper in London is trading with a $145/ton premium over the third month. That kind of backwardation is usually a sign of a tight physical market.</p><p>Even with the slowdown in China, imports there are up 8.1% ytd through August. At the same time, Chilean copper exports are down ytd.</p><p>ZeroHedge today also <a target=“_blank“ href=“https://www.zerohedge.com/commodities/energy-transition-could-be-derailed-looming-copper-shortage“ target=“_blank“ rel=“nofollow“>writes </a>about the looming copper shortage and cites an S&P Platts report that warns the green transition could be derailed by the unavailability of copper.</p><p>Again, this is all well known to anyone who is paying attention. It all really comes down to the question of when to buy copper. It’s certainly cheap now but it’s fallen because of economic worries. However note that copper prices have held up better than many risk assets lately. The weekly chart here also shows that it found support at the 61.8% retracement of the 2020-2022 rally.</p><p>I think this is a tough trade right now because it could be dead money for a couple years but at some point between now and 2025, it’s going to be a sensational trade.</p>

This article was written by Adam Button at forexlive.com.

<p>Headlines:</p><ul><li><a target=“_blank“ href=“https://www.forexlive.com/news/dollar-course-corrects-towards-the-end-of-the-week-20220909/“>Dollar course corrects towards the end of the week</a></li><li><a target=“_blank“ href=“https://www.forexlive.com/news/dollar-slides-further-down-1-against-the-euro-and-sterling-20220909/“>Dollar slides further, down 1% against the euro and sterling</a></li><li><a target=“_blank“ href=“https://www.forexlive.com/news/risk-trades-rejoice-on-dollar-correction-20220909/“>Risk trades rejoice on dollar correction</a></li><li><a target=“_blank“ href=“https://www.forexlive.com/news/usdjpy-falls-further-on-the-day-amid-softer-dollar-kuroda-jawboning-20220909/“>USD/JPY falls further on the day amid softer dollar, Kuroda jawboning</a></li><li><a target=“_blank“ href=“https://www.forexlive.com/news/heads-up-boe-postpones-september-policy-meeting-by-one-week-20220909/“>Heads up: BOE postpones September policy meeting by one week</a></li><li><a target=“_blank“ href=“https://www.forexlive.com/centralbank/ecbs-villeroy-inflation-should-be-back-to-around-2-by-2024-20220909/“>ECB’s Villeroy: Inflation should be back to around 2% by 2024</a></li><li><a target=“_blank“ href=“https://www.forexlive.com/centralbank/ecbs-villeroy-our-hands-are-completely-free-on-next-policy-move-20220909/“>ECB’s Villeroy: Our hands are „completely free“ on next policy move</a></li><li><a target=“_blank“ href=“https://www.forexlive.com/centralbank/ecbs-kaimr-75-bps-rate-hike-was-inevitable-and-right-20220909/“>ECB’s Kažimír: 75 bps rate hike was inevitable and right</a></li><li><a target=“_blank“ href=“https://www.forexlive.com/centralbank/ecbs-knot-curbing-the-dynamic-in-inflation-is-the-only-concern-20220909/“>ECB’s Knot: Curbing the dynamic in inflation is the only concern</a></li><li><a target=“_blank“ href=“https://www.forexlive.com/news/china-august-m2-money-supply-122-vs-121-yy-expected-20220909/“>China August M2 money supply +12.2% vs +12.1% y/y expected</a></li></ul><p>Markets:</p><ul><li>AUD leads, USD lags on the day</li><li>European equities higher; S&P 500 futures up 0.8%</li><li>US 10-year yields down 2.2 bps to 3.269%</li><li>Gold up 1.1% to $1,726.50</li><li>WTI crude up 1.9% to $85.16</li><li>Bitcoin up 8.2% to $20,981</li></ul><p style=““ class=“text-align-justify“>The US dollar is seeing a significant correction towards the end of the week and that is the key story in markets today.</p><p style=““ class=“text-align-justify“>You can point to a more hawkish ECB, jawboning by Japanese officials, a better outlook on the UK economy amid support from the fiscal side, or even a rally in stocks as main reasons for the move. But I would say it is all of that put together alongside a confluence of technical levels holding in place against the dollar this week.</p><p style=““ class=“text-align-justify“>EUR/USD defended daily support at 0.9900 in the past few days before running up 1% earlier to 1.0112, settling up 0.5% at 1.0040-50 levels at the moment. Daily resistance at 1.0075-90 remains a key spot to watch.</p><p style=““ class=“text-align-justify“>GBP/USD held at the March 2020 lows near 1.1400 on the week and has rebounded to 1.1648 earlier before keeping up by 0.5% around 1.1555 at the moment.</p><p style=““ class=“text-align-justify“>Meanwhile, USD/JPY is continuing its retreat after coming within a whisker of touching 145.00 two days back and has fallen further to a low of 141.50 earlier before holding around 142.50-60 levels currently.</p><p style=““ class=“text-align-justify“>USD/CAD also saw a rejection at daily resistance at 1.3200 on the week before sliding back today to just below 1.3000 and is now barely hanging above the figure level. AUD/USD kept a defense of key trendline support on the weekly chart just near 0.6700 before seeing a strong rebound today to 0.6877 – keeping around 0.6830 now, up 1.1% on the day.</p><p style=““ class=“text-align-justify“>Elsewhere, equities are looking to finish the week with a flourish with European indices trying to eat into the weekly losses while US stocks are hoping to snap a run of three straight weeks of declines. The risk rally has also helped to see oil be up by nearly 2% to above $85 and Bitcoin rally back above $20,000 on the day.</p>

This article was written by Justin Low at forexlive.com.

<p style=““ class=“text-align-justify“>This comes amid the mourning period that is being observed, so the central bank has decided to postpone the meeting (originally scheduled for 15 September). The policy decision will now be announced at 1100 GMT on 22 September. Just a heads up, so make sure you tweak those calendars for next week.</p><p style=““ class=“text-align-justify“>So far, the pricing going into the decision is favouring slightly a 50 bps rate hike (~65%) with a 75 bps rate hike (~35%) now seen as being less likely.</p>

This article was written by Justin Low at forexlive.com.

<p class=“MsoNormal“>A target-date fund can
be an <a target=“_blank“ href=“https://www.fxrevenues.org/“ target=“_blank“>excellent investment tool</a> for
hands-off investors who are near or already retired.</p><p class=“MsoNormal“>With target-date funds,
investors can obtain a suitable, stable risk-return profile through asset
allocation.</p><p class=“MsoNormal“>As your retirement
draws near, the fund will periodically and automatically readjust its
investments, following the performance of a safer asset mix, such as ramping up
your bond holdings and reducing your stock holdings.</p><p class=“MsoNormal“>Still, a target-date
fund has advantages and disadvantages that should be considered carefully.</p><p class=“MsoNormal“>Why Consider a Target
Date Fund?</p><p class=“MsoListParagraph“>1.
Helps Young Employees</p><p class=“MsoNormal“>A target date fund can
be significantly helpful to you if you’re a young employee. That’s mainly
because of the amount of time you have.</p><p class=“MsoNormal“>You have a long
investment horizon as someone working in their 20s or 30s. Therefore, in a target
date fund’s early year, your investments should primarily include stocks since
they are typically a good bet for generating long-term returns.</p><p class=“MsoListParagraph“>2.
Instant Diversification</p><p class=“MsoNormal“>A single target date
fund can provide you with a well-diversified portfolio of domestic and
international stocks and bonds.</p><p class=“MsoNormal“>In addition, target
date funds’ asset allocation is readjusted as you near retirement. So, if
you’re investments were initially focused on stocks, the fund will shift the
focus to bonds as you prepare for retirement.</p><p class=“MsoListParagraph“>3.
Rebalances on the Investor’s Behalf</p><p class=“MsoNormal“>Target date funds are
built to perform the rebalancing on the investor’s behalf.</p><p class=“MsoNormal“>While an investor’s
risk tolerance becomes less and less as they age, they may still end up with an
investment portfolio that doesn’t align with their needs. For example, a market
in a solid bullish condition could leave you having too much money in stocks and
fewer bets on bonds.</p><p class=“MsoNormal“>With a target date
fund, you could go for years without checking your retirement investments and
remain appropriately invested.</p><p class=“MsoNormal“>Why Think Twice About Opting
for a Target Date Fund?</p><p class=“MsoListParagraph“>1.
One-Size-Fits-All Nature</p><p class=“MsoNormal“>The one-size-fits-all
nature can be a huge disadvantage of target-date funds since this makes the
fund quite incapable of considering or adapting to the current state of the
economy.</p><p class=“MsoNormal“>For example, a target
date fund’s default concept is that bonds will always be less risky than stocks.
However, this is not entirely accurate in all economic situations, especially
right now when we are seeing higher inflation and interest rates.</p><p class=“MsoNormal“>Because of this
one-size-fits-all nature, investors can be caught off guard during unexpected
economic events.</p><p class=“MsoListParagraph“>2.
Lack of Diversity</p><p class=“MsoNormal“>Target-date funds have
a simple design, but this may not work for some investors who may need a
broader mix of assets than stocks and bonds. That’s because they may have to
consider more than their estimated retirement year, like existing assets such
as their <a target=“_blank“ href=“https://fxrevenues.com/signup“>real estate or savings</a>. </p><p class=“MsoListParagraph“>3.
Complicated Fee Structure</p><p class=“MsoNormal“>The fee structure of a
target-date fund can be complicated to grasp, as it has a management fee plus a
fund-of-funds management fee.</p><p class=“MsoNormal“>That means your
target-date fund portfolio doesn’t only have one mutual fund. Instead, it
consists of several mutual funds with different expense ratios. </p><p class=“MsoNormal“>Therefore, you should
properly research what the firm may charge you, as the fee structures vary
depending on the fund company.</p>

This article was written by ForexLive at forexlive.com.

<p style=““ class=“text-align-justify“>The rejection close to 145.00 this week has been a key point to note for the dollar and the sharp retreat in USD/JPY has also seen other major currencies take advantage of the softer greenback towards the end of the week. The added jawboning by Japanese officials earlier in the day <a target=“_blank“ href=“https://www.forexlive.com/centralbank/usdjpy-kicked-lower-by-suzuki-matsuno-and-then-kuroda-20220909/“ target=“_blank“>here</a> is also helping, with Kuroda outlining that when the pair moves by 200 to 300 pips, then it can be considered a ‚rapid‘ move. That said, I’ll bet he has no complaints about the 200 pips retracement today.</p><p style=““ class=“text-align-justify“>On the balance of things, I’d still argue that Japanese officials are still fine with a falling currency. I mean they know that they are not in a spot to contest otherwise with the BOJ still maintaining an ultra easy monetary policy at the moment. But they are just trying to curb any sudden depreciation and with a rise in USD/JPY from 140.50 to 145.00 within a few days, they saw the need to keep things in check before traders got too carried away.</p><p style=““ class=“text-align-justify“>Looking at the chart above, the drop sees a break back below the 100-hour moving average (red line) at 142.81 and now price action is caught in between that and the 200-hour moving average (blue line) at 141.10. That sees the near-term bias more neutral and outlines the technical levels in play in the short-term.</p><p style=““ class=“text-align-justify“>Further support is seen closer to the 140.00 handle while key resistance remains at the 145.00 handle in the bigger picture.</p><p style=““ class=“text-align-justify“>But for now, the retreat is still keeping more measured within the levels above as it moves in tandem with the dollar decline seen elsewhere as pointed out earlier:</p><ul><li><a target=“_blank“ href=“https://www.forexlive.com/news/dollar-slides-further-down-1-against-the-euro-and-sterling-20220909/“ target=“_blank“>Dollar slides further, down 1% against the euro and sterling</a></li><li><a target=“_blank“ href=“https://www.forexlive.com/news/risk-trades-rejoice-on-dollar-correction-20220909/“ target=“_blank“>Risk trades rejoice on dollar correction</a></li></ul>

This article was written by Justin Low at forexlive.com.

<p class=“MsoNormal“>Money Flow Index
Explained</p><p class=“MsoNormal“>The <a target=“_blank“ href=“https://demaxis.com/“ target=“_blank“>Money Flow Index</a> (IMF) is a technical indicator
that utilizes volume data and price in recognizing overbought or oversold
signals in an asset. Also, it could be used to identify divergences, which warn
of a trend alteration in price.</p><p class=“MsoNormal“>The oscillator is
moving between 0 and 100. A reading above 80 is deemed overbought, and an
interpretation below 10 is considered oversold. Even so, the levels 90 and 10
are also used as thresholds.</p><p class=“MsoNormal“>Calculating the Money
Flow Index</p><p class=“MsoNormal“>The following are the
several steps for calculating the Money Flow Index. It is recommended to do the
calculation using a spreadsheet rather than by hand.</p><p class=“MsoNormal“>Step 1: Compute the
typical price of each of the last 14 periods.</p><p class=“MsoNormal“>Step 2: For each
period, spot whether the common price was higher or lower compared to the
previous cycle. It will tell you if the raw money flow is positive or negative.</p><p class=“MsoNormal“>Step 3: Calculate the
raw money flow by multiplying the classic price by volume for that specific
period. Use negative or positive numbers depends on whether the term was up or
down.</p><p class=“MsoNormal“>Step 4: Compute the
money flow ratio by adding up all the positive money flows over the past 14
periods. Then, divide it by the negative money for flows for the same prior
course.</p><p class=“MsoNormal“>Step 5: Calculate the
Money Flow Index using by utilizing the ratio constituted in step four.</p><p class=“MsoNormal“>Step 6: Continue doing
the calculations as each new period ends by only using the data from the last
14 periods.</p><p class=“MsoNormal“>MFI’s Usage</p><p class=“MsoNormal“>One major way to use
the Money Flow Index is when there is a presence of divergence when the
oscillator is traversing in the opposite direction of the price. It is a hint
of a possible reversal in the prevailing price trend.</p><p class=“MsoNormal“>For instance, a very
high Money Flow Index that starts to decline below a reading of 80 while
underlying security continues to rise is a price reversal signal to the
pitfall.</p><p class=“MsoNormal“>On the other hand, a
very low MFI level that climbs above a reading of 20 while the implied security
continues to sell off is a signal of price reversal to the upper side.</p><p class=“MsoNormal“>Also, traders are
watching for larger divergences using multiple waves in the price and MFI. For
example, a stock hit a peak of $10.00 but pulled back to the $8.00 level. Then,
it rebounded higher to $12.00. </p><p class=“MsoNormal“>This means that the
price has made two successive higher, which is at the zone of $10.00 and
$12.00. If the MFI makes a lower higher when it reaches $12.00, the oscillator
is not confirming the new high. Accordingly, it could indicate a plunge in
price.</p><p class=“MsoNormal“>Furthermore, the
overbought and levels are used to indicate a possible trading chance. It is
believed that movements below 10 and above 90 are rare. Besides, traders observe
for the MFI to move back above 10 to <a target=“_blank“ href=“https://demaxis.com/Registration“ target=“_blank“>indicate
a long trade</a> and plummet below 90 to signal a short trade.</p>

This article was written by ForexLive at forexlive.com.

<p style=““ class=“text-align-justify“>The large option expiries at the parity level are arguably the key attraction for price action during the session and that seems to be holding the more or less narrow range for EUR/USD ahead of the ECB later today.</p><p style=““ class=“text-align-justify“>The ECB is in a rather unenviable spot as they are set to announce an aggressive 75 bps rate hike to try and put the inflation naysayers to bed. However, it comes at a cost of hurting an already spiralling economy – which looks set to enter a recession in the winter amid the impending energy crisis.</p><p style=““ class=“text-align-justify“>So, what are the key levels to watch ahead of the ECB decision?</p><p style=““ class=“text-align-justify“>In the event we do see any positive kneejerk reaction for the euro, the recent swing highs around 1.0075-90 will be ones to watch and I would expect sellers to lean on those levels to keep a lid on price action on the day.</p><p style=““ class=“text-align-justify“>As for downside risks, the 0.9900 handle remains the key one to watch on the daily chart.</p><p style=““ class=“text-align-justify“>I outlined some thoughts on the meeting <a target=“_blank“ href=“https://www.forexlive.com/news/welcome-to-ecb-day-20220908/“ target=“_blank“>here</a>. On the balance of things, I would expect the euro to remain pinned lower against the dollar and if we do see any form of bounce for whatever reason, that will make a good sell on the rally scenario.</p>

This article was written by Justin Low at forexlive.com.

<p style=““ class=“text-align-justify“>The pair is up by 0.1% to 1.1530 levels with the low earlier touching 1.1477 in European morning trade. As much as the announcement by UK PM Truss is a welcome development for households, it still won’t be enough to really dig the UK out of a recession heading into next year.</p><p style=““ class=“text-align-justify“>Sure, there might be some relief to households but essentially it comes with a fiscal cost and the root of the energy problems are still not being addressed. In other words, this is another can being kicked down the road.</p><p style=““ class=“text-align-justify“>For me, the bounce in cable today seems to be a case of a rejection at the support near the March 2020 lows close to 1.1400:</p><p style=““ class=“text-align-justify“>It’s a modest bounce but buyers will have to do more to convince of a stronger rebound. The 200-hour moving average at 1.1575 currently will be a key near-term level to watch in that regard. Otherwise, I still maintain that the path of least resistance is for the quid to move lower so long as the BOE looks the more likely of the two (against the Fed) to fold first in the monetary policy tightening race.</p>

This article was written by Justin Low at forexlive.com.