• SUN: UK Leadership Debate.
• MON: Japanese Marine Day Holiday, NZ CPI, UK Leadership Debate.

• TUE: UK Jobs Data.

• WED: PBoC, UK CPI, Canada CPI, NZ Trade Balance.
• THU: BoJ, ECB, CBRT, SARB, BoI, Japan Trade Balance, US Philly Fed.
• FRI: Japan CPI, UK Retail Sales, Flash PMIs, CBR, Canada Retail Sales.

NOTE: Previews are listed in day-order*

UK Leadership Debates (Sun/Mon):

On July 17th and 18th ITV and Sky News are to host Conservative Party leadership
debates, with the candidates eligible, but not required, to partake (at the
time of writing) including Sunak, Truss, Mordaunt, Tugendhat & Badenoch;
note, given that another elimination ballot is due on Monday, one of these
candidates will not be eligible for the July 18th debate. Subsequent ballots
are scheduled for the Tuesday and Wednesday at which point the final two
candidates will be put to eligible Conservative party members (circa. 150k) and
a new PM determined by September 5th. On this, the latest YouGov polling has
Penny Mordaunt as the clear front-runner among grassroot members, emerging as a
convincing winner against all other candidates in a head-to-head. Among Tory
MPs, Sunak is the current frontrunner having secured over 101 votes and trailed
by Mordaunt and Truss with 83 and 64 respectively. Former-Chancellor Sunak has
put forward a fiscally prudent card, looking to tackle the cost-of-living
crisis while acknowledging the heavy COVID-related expenditure that makes
sweeping tax reductions challenging at present. In contrast, Foreign Minister
Truss has pledged “Day 1” tax reductions and cutting current levels of public
expenditure, while paring down public debt over a longer period of time than
under present plans. While Mordaunt’s position is slightly vaguer than peers,
her proposals are much closer to those put forward by Truss than Sunak, who is
pledging to deliver a “modern economy” and focus on growth and competition with
a cost-of-living focus, i.e. by cutting fuel VAT significantly. The TV debates
themselves will see leaders asked questions on various topics by a virtual
audience, key focal points in shoring up party support will be the
cost-of-living crisis, fiscal intentions, ECHR and Brexit – to name a few.

NZ CPI (Mon):

New Zealand CPI data for Q2 is scheduled next week with the Q/Q reading
expected to accelerate to 2.0% from 1.8% and Y/Y consumer inflation anticipated
to rise to 7.1% from the previous level of 6.9% in Q1 which was the highest
reading in 32 years. The surge in Q1 CPI data was led by rising prices of food,
housing and transport which lifted inflation even further away from the RBNZ’s
1%-3% target range and suggests that the central bank will stay on course with
its current tightening cycle which has already seen 6 consecutive rate
increases. Furthermore, ASB Bank notes that “In the absence of a concerted
easing in labour market pressures, current high inflation outcomes run the risk
of being increasingly entrenched”, as well as suggesting that restrictive OCR
settings are needed and that it expects the RBNZ’s policy rate to peak at 3.5%
late this year, although sees cuts thereafter.

UK Labour Market Data (Tue):

The headline unemployment measure printed at 3.8% in April, which was an
above-expected increase from the prior 3.7%. For May, the corresponding PMIs
highlighted a “catch up on unfinished work contributed to a robust rise in
employment numbers at private sector firms” and thus may pressure the
unemployment rate itself. Additionally, the proximity of the Platinum Jubilee
Bank Holiday towards the start of June could have supported May employment
figures, though much of this would have been on a temporary basis. Anecdotally,
the GDP release for May was strong and driven by activity in the services
sector predominantly, with growth reported in production and construction as
well. As always, average hourly earnings will be scrutinized for any BoE
implications, particularly around second-round effects and after Governor
Bailey spoke about the possibility for above-25bp moves; last month, the
release posted the fastest median growth since 2008. Overall, the employment
metrics are interesting, but as always, dated given more timely PMI releases.
While the earnings metrics will undoubtedly factor into the BoE’s calculations,
they are likely to be overshadowed by the ongoing focus on energy-driven
inflation at the August MPR; where the debate will continue to be over 25bp or
50bp. Nonetheless, the ongoing tightness in the labour market has led to desks
calling for further upside to the earnings numbers.

PBoC LPR Announcement (Wed):

The PBoC is likely to keep its benchmark lending rates unchanged next
week with the 1-Year Loan Prime Rate currently at 3.70% and 5-Year Loan Prime
Rate at 4.45%. The expectation for the central bank to maintain the LPRs
follows its recent decision to keep the 1-Year Medium-Term Lending Facility
rate unchanged, which is seen as a fairly reliable leading signal for the
central bank’s intentions and given that the PBoC has been reserved in its open
market operations whereby it has conducted daily 7-day Reverse Repos liquidity
injections at a meagre CNY 3bln to match maturing contracts. Furthermore, PBoC
Governor Yi recently noted that policy will continue to be accommodative and
considering inflation, real interest rates are “pretty low”, which suggests
tightening is off the table, while further loosening also seems unlikely as the
central bank would prefer to avoid stoking currency depreciation or further
reduce the attractiveness of Chinese government bonds with China’s 10yr yield
already at a gap to its US counterpart amid PBoC-Fed policy divergence.
Nonetheless, prospects of a future rate cut cannot be dismissed given support
pledges by Chinese authorities including PBoC’s Monetary Policy Department Head
Zou Lan who noted that China will further guide banks to lower real lending
rates and with the central bank also stating it will use monetary policy tools
flexibly at the appropriate time, while there are also expectations for China
to miss its growth target with PBoC adviser Wang Yiming anticipating economic
growth at 4.7% this year vs the official target of 5.5%.

UK CPI (Wed):

Consumer prices are seen rising 0.7% M/M in June, matching the pace seen
in May; the annual rate is seen ticking up to 9.3% Y/Y from 9.1% previously.
Rising fuel prices are expected to underpin the headline measures; airline
fares are also likely to register upside in the month, both on the back of
rising fuel costs and demand conditions amid labour shortages; food prices are likely
to have remained elevated given that the UK imports a great deal, and global
food costs are being stoked higher by Russia’s aggression towards Ukraine. The
core measure of CPI is seen rising 0.5% M/M in June, matching the prior pace,
while the annual rate is expected to tick up further to 6.0% from 5.9%; lower
apparel prices and base effects are likely to constrain any upside, however.
Investec’s analysts do not see inflation peaking in June. The bank says energy
is a key input in determining how persistent inflation will be, and it notes
that the UK’s energy price cap is set to be adjusted in October; Investec
foresees the cap rising 67%. Investec also argues that recent political events
add an extra layer of uncertainty as to how long ‘core’ inflation will persist;
“many of the frontrunners to replace PM Johnson, former Chancellor Rishi Sunak
aside, have promised sweeping tax cuts as part of their leadership campaign,”
and “such tax cuts may help stimulate the economy, but also risk creating more
entrenched underlying inflation.”

Canada CPI (Wed):

The BoC’s monetary policy report this week saw upward revisions to the
inflation profile. The central bank now sees consumer prices at 7.2% in 2022
(prev. 5.3%), 4.6% in 2023 (prev. 2.8%), and 2.3% in 2024 (prev. 2.1%). The BoC
also lifted rates by more than expected (100bps hike vs expected 75bps)
following recent upside surprises in inflation data and a pick-up in Canadian
inflation expectations, while the unemployment rate continues lower – all
compelling the central bank to lift policy out of stimulative territory – rates
at 2.50% now sit at the mid-point of its 2-3% estimate of where the neutral
rate lies. “Tougher medicine will be needed to get inflation under control and
we look for the policy rate to rise to a restrictive 3.25% by October,” RBC
said, “the BoC’s limited guidance seems to align with that view, saying a
front-loaded tightening cycle argues for getting the policy rate ‘quickly to
the top end or slightly above the neutral range.’”

BOJ Policy Announcement (Thu):

The BoJ is expected to maintain its policy settings at next week’s
meeting with the central bank likely to keep rates at -0.10% and QQE with Yield
Curve Control to flexibly target 10yr JGB yields at around 0%. The BoJ has made
it clear that it will sustain its ultra-loose policy, despite the rapid JPY
weakening and trend of global central banks tightening policies, with Governor
Kuroda noting that the central bank stands ready to ease policy further without
hesitation as needed and expects short- and long-term policy rate targets to
remain at current or lower levels. Furthermore, Kuroda noted shortly after the
last meeting that he does not see a need for further policy easing now nor was
he thinking about raising the cap on the BoJ’s long-term yield target above
0.25% as this could result in higher yields and weaken the effect of monetary
easing. Recent data releases have been disappointing and therefore support the
view for the central bank to maintain its easy policy settings in which the Tankan
Large Manufacturing and Non-Manufacturing Indices and Outlooks all missed
expectations, although mostly improved from the prior quarter and Large All
Industry Capex growth more than doubled against forecast. The latest Household
Spending data showed a surprise contraction and Industrial Production also
unexpectedly contracted, which prompted the government to lower its assessment
of output, while National CPI Ex. Fresh Food remained slightly above the BoJ’s
2% price target as expected at 2.1%, though this is unlikely to have
ramifications for policy as the central bank has acknowledged that price
increases were due to rising raw material costs and a weak Yen instead of being
driven by a positive economic cycle, and therefore it would still be appropriate
to keep its easing policy. The BoJ will also release its latest Outlook Report
containing board members’ median forecasts for Real GDP and Core CPI with
recent source reports noting that the BoJ is expected to increase its FY22
inflation forecast marginally to slightly above 2% from 1.9% and lower its
economic growth forecast from the current 2.9% view.

ECB Policy Announcement (Thu):

The ECB will deliver on its heavily flagged 25bp rate hike, a lift-off
that will impact all three key rates and lift the main depo rate from -0.50% to
-0.25%. Sources and commentary indicate that some of the more hawkish officials
(e.g. Holzmann) on the GC want at least the optionality for a 50bp hike at this
meeting, as such there could well be dissent on the vote. Note, in wake of the
latest hot-US CPI data, market pricing turned significantly more hawkish for
numerous central banks; with expectations for the ECB rising to circa. 25%
chance of a 50 bp July move. Post-hike focus for the gathering will be,
primarily, on three factors: the inflation assessment, guidance for September
and the fragmentation tool. Firstly, the ECB’s assessment of the inflation
situation in June was that their projections indicated it will remain
undesirably elevated for some time. Since then, June’s EZ Flash inflation
metrics have been released and posted another above-exp. increase to 8.6% from
8.1% (exp. 8.4%) for the headline; however, the super-core did incrementally
and surprisingly dip to 3.7% from 3.8% – an occurrence that will be closely scrutinized
to see if it’s a one-off or the beginning of an easing in some price pressures.
Nonetheless, the inflation situation remains hot and significantly above the
2.0% goal. As such, and secondly, the ECB’s June guidance that if the inflation
outlook persists/deteriorates a larger increment (re. hikes) would be
appropriate in September; a condition that has, based on hard-data, likely been
met. However, the 5yr5yr gauge of long-term EZ inflation expectations recently
moved incrementally below the 2.0% target, for the first time since March. An
occurrence that, if sustained, could offer some relief, but is unlikely to be
sufficient to change the medium-term view and accompanying guidance for a 50bp
hike in September; a magnitude that numerous officials have stated they
anticipate. Finally, the fragmentation tool has, according to Bloomberg, been
named the Transmission Protection Mechanism. Interestingly, the sources piece
noted that there is not yet a sense of its certain arrival in July, and this
rattled periphery debt in particular. Participants will be focused firstly on
whether the tool arrives, and secondly its exact details following an emergency
meeting to discuss it which added very little new information. However,
subsequent sources indicate that the tool will involve the sale of other
securities, in an attempt to prevent a further fanning of inflation.
Additionally, PEPP reinvestment activity will reportedly have the periphery
nations listed as “recipients” and the likes of Germany and the Netherlands
“donors”, in a bid to prevent fragmentation. Reminder, the July meeting does
not include new forecasts which are scheduled to be updated in September, but
will, as always, feature a press conference from President Lagarde;
additionally, the timings for the announcement and press conference are now
13:15BST/08:15ET & 13:45BST/08:45ET respectively.

SARB Policy Announcement (Thu):

The South African Reserve Bank is likely to lift its Repo Rate by a
50bps increment in July, taking the rate to 5.25%. The SARB lifted rates by
50bps in May, in line with the market view, with members seemingly supportive
of a front-loaded rate hike programme. This is something many other major
global central banks have been doing, and accordingly, EMFX like the South
African Rand has come under pressure, compelling the SARB to adopt a similar
strategy. ING notes that the Repo Rate at the current 4.75% level seems low
relative to CPI, which is running at 6.5% Y/Y (NOTE: South Africa’s CPI data
for June will be released the day before the SARB announcement). ING says the
market expects rates will have risen to 6.00% by the end of this year, but the
bank itself believes that ZAR weakness could prompt larger hikes.

CBRT Policy Announcement (Thu):

The central bank’s most recent monthly survey of business leaders and
economists saw CPI expectations revised up, although those surveyed still see
the repo rate at the current 14.00% in three-months’ time; in 12-months’ time,
however, the expectation is that rates will have risen to 15.00% (vs 14.00% in
the previous month’s poll). Credit Suisse has said that “Turkey’s recent
monetary policy decisions have not been based on conventional economic
principles,” noting that the central bank cut rates by a cumulative 500bps in
late 2021 even as annual inflation was surging. Authorities have tried to
protect the value of the currency with the TRY deposit scheme, launched late
last year, but this ultimately has clouded visibility and predictability, the
bank says. “The inflation outlook remains challenging,” it writes, “headline
inflation will likely move toward 80% in the coming months and stay elevated
through November – the authorities will probably continue to implement ad hoc
measures as long as they can in order to sustain what we view as this ultimately
unsustainable policy stance.” The bank sees rates at 14.00% in 12-months, but
argues that this is not to suggest it thinks the current policy stance is
sustainable; instead, it is a reflection that the timing of the policy
adjustment required is impossible to predict. CS says, “that the timing of a
conventional policy adjustment will also crucially hinge, in our view, on
political considerations, in particular the presidential/parliamentary
elections that will be held no later than in mid-2023.”

Japan CPI (Fri):

Japanese nationwide inflation data for June is due next week with
National Core CPI (ex-Fresh Food) expected to remain at 2.1%, which would be
the third consecutive month just above the BoJ’s 2% price goal. Upward
inflationary pressures had been largely driven by rising costs of energy and
raw materials which were made worse by Japan’s rapid currency depreciation and
the ongoing war in Ukraine, while food prices excluding volatile fresh food
such as meat and fish increased by the fastest pace since 2015 and have led to
some concerns regarding consumption considering that wage growth remains
sluggish. In terms of the already-released Tokyo CPI data for June, this showed
core consumer prices accelerated to a 7-year high of 2.1% from the prior rate
of 1.9%, and therefore could be a leading indicator for a rise in nationwide
prices. Nonetheless, the inflation figures aren’t expected to spur a policy
reaction from the BoJ as the central bank had acknowledged that consumer
inflation was likely to accelerate and as it wasn’t being driven by a positive
economic cycle, easy policy remains appropriate.

EZ Flash PMI (Fri):

July’s Flash release follows on from a downbeat June survey where the
final reading was deemed to be indicative of quarterly GDP growth of just 0.2%
and forward-looking indicators pointed to an output reduction in the months
ahead. Overall, the findings suggested that risks are to the downside. While
the release will take a back-seat given Thursday’s ECB meeting and expected
hike, the accompanying commentary from S&P Global will be heavily
scrutinised for indications as to whether, as ZEW believes, conditions have
seen a marked M/M deterioration, and one that prompted ZEW respondents to cut
their 6-month view once again; citing the ECB’s announced hikes, China
restrictions (which have extended further since the survey was conducted) and
the energy situation. Given the referenced ZEW would not have incorporated the
most recent China-COVID developments, it will be interesting to see if this prompts
further caution/concern from PMI respondents for both the immediate and
medium-term outlook.

UK Flash PMI (Fri):

The flash manufacturing PMI for July is seen paring to 52.0 from 52.8 in
June; the flash services PMI is seen moderating to 53.2 from 54.3; this should
leave the composite PMI at 52.5, falling from 53.7 in June. Although the June
data surprised to the upside, the report noted that in the services industry,
new order growth fell to a 16-month low as economic uncertainty and rising
inflation hit discretionary spending, while the slowdown in manufacturing
continued as business optimism dips to lowest levels in over two years.
Analysts note that the UK continues to face uncertainty from international
(supply chain issues, higher global energy and food costs, slowdown in the
global growth engines like China, returning COVID in some areas) and domestic
factors (real income squeeze, uncertain political landscape, the prospect of
higher borrowing costs ahead), and these themes are expected to be reflected in
the data.

UK Retail Sales (Fri):

The consensus expects retail sales to decline 0.3% M/M in June (prev.
-0.5%); the ex-fuel measure is also seen slipping by 0.3% M/M (prev. -0.7%).
The data is also subject to some uncertainties given the adjustments needed for
the UK public holidays in June; the late May bank holiday was moved into June,
while there was an additional holiday for the Queen’s Jubilee (which could give
a boost to food sales in the month). The British Retail Consortium’s June
monitor noted that sales volumes were “falling to a rate not seen since the
depths of the pandemic, as inflation continues to bite, and households cut back
spending.” The BRC says discretionary purchases were heavily impacted, and
consumers were also trading down to cheaper brands in food and non-food items
alike. “Retailers are caught between significant rising costs in their supply
chains and protecting their customers from price rises,” it said, “the
government needs to get creative and find ways to help relieve some of this
cost pressure,” adding that “government action on transitional relief would
make a meaningful difference to retailers’ costs and ease pressure on prices
for customers.”

CBR Policy Announcement (Fri):

Official commentary has primed us to expect another rate cut from
Russia’s central bank in July, although the magnitude might not be as great as
the 150bps reduction in June, which was motivated by declines in inflation,
inflation expectations of household and corporates normalising, along with the
RUB currency continuing to strengthen. And these themes may continue to support
lower rates. Governor Nabiullina recently reiterated that the central bank will
lower rates further as inflation slows, and she sees more scope for rate cuts,
dismissing risks of a deflationary spiral. However, analysts note that
household inflation expectations picked-up in June, and that could limit the
CBR’s ability to lower its key rate from the current 9.5%. Potentially
offsetting that, the central bank’s monthly business climate survey saw
improvements, with companies noting that demand had stopped falling in May for
the first time since February; although that data was for May it nevertheless
highlights some of the themes that Russian officials have been impressing recently,
like the improved expectations of businesses, and a less negative view of the
current situation. Meanwhile, the RUB currency has largely moved sideways since
the June meeting, though many note is at stronger levels against the USD now
than it was in Q1 before Russia engaged in a conflict against Ukraine – another
factor that could support a smaller increment cut in July.

For the
full report and more content like this check out Newsquawk.

Try
a 14-day trial with Newsquawk and hear breaking trading news as it happens.

This article was written by Newsquawk Analysis at www.forexlive.com.

The video below presents a technical analysis for Gold as the price of XAUUSD is close to $1700 and the trade idea, for your consideration, becomes applicable only if the $1700 ‚round number‘ price is lost (crossed down).

If that happens, we look to fade the downward move, so seeking to enter a long position betting that there will be a bullish reversal up. Since it is impossible to catch the exact bottom, even if the trade idea plays out, we scatter a small net of three buy orders as follows:

First buy for Gold futures at $1684.20

Second buy Gold futures at $1673.6

Third buy Gold futures at $1660.6

Average entry price, if all 3 orders are filled: 1672.80

For the stop loss and 2 take profit targets: Watch the video.

And as always, as the Gold price forecast within the video shows, we set a stop risking 1.66% and aiming for double that on the take profit side of the long position. Furthermore, since there is very sifnificant upside potential for ther long term swing trader, if this Gold trade idea plays out, then letting half of the position ride further, as detailed in the technical analysis video, is something worth thinking about.

Trade gold at your own risk. See more technical analysis at ForexLive.

Note that it very possible that some of the buy orders get filled, trade becomes profitable, and there would be another lower buy order hanging. This is what happened with our recent DAX trade idea where the top buy order filled, and the trade is currently very profitable. In that case, traders can stick to the original idea or cancel the lower (unfilled) buy orders and set a stop at their discretion, including working with the stop losses that we may have suggested to consider. This is solely up to you, just be aware of which of your Gold orders get filled and adapt.

This article was written by ForexLive at www.forexlive.com.

The 10 year yield has a floor at 2.9%.

The US 10 year yield moved lower this week, helped by flow of funds out of the longer end as the yield curve between 2-10 year moved negative on expectations the Fed would be forced to tighten hard to halt inflation.

Looking at the hourly chart, the high yield for the week reached 3.10% on Monday after closing last week at 3.084%. The lows for the yield came in near 2.9% where there were three separate lows from July 12 twice, July 13 twice and again today (see red numbered circles). That level will be a key barometer for traders. Stay above, and there the yield can move back to the upside. Move below, and there should be more downside momentum.

The current yield is at 2.93% which is down from last week closing level at 3.084% (down -15.4 basis points on the week).

On the topside, the 200 and 100 hour MAs at 2.949% and 2.959% would be the next upside target. A downward sloping trend line at 2.97% would be another level to get to and through for more upside momentum..

Taking a look at the 2 year yield this week below, it is telling a different story. Last Friday, the yield closed the week at 3.11%. The low for the week was on Tuesday at 2.981%. The high was at 3.269% on Thursday. The current yield is at 3.138%. That is up 2.8 basis points on the week.

2 year yield is up marginally this week

The shorter end although off the high is still higher on the week.

With the 10 year yield down -15.4 basis points and the 2 year up 2.8 basis points, the yield curve collapsed by -18.2 basis points this week. Traders once again are anticipating a recession on expectations that the Fed will need to tighten to a hard landing.

This article was written by Greg Michalowski at www.forexlive.com.

• US 10 year yields ending the week lower
• Major indices close near session highs
• Biden: Had a good series of meetings and Saudi Arabia
• Crude oil settles at $97.59 up $1.81 or 1.89%
• Bloomberg: Draghi is determined to quit as Italy’s PM
• What key earnings releases will be announced next week
• Bakers Hughes oil rigs up 2 at 599
• Maj. European indices close the day with solid gains
• Atlanta Fed GDPNowfor 2Q growth -1.5% vs -1.2% last
• Daly: Fed is working to get inflation down without stalling economy
• Dollar moves lower after better-than-expected Michigan.Lower inflation expectations helps
• US business inventories for May 1.4% vs. 1.3% estimate
• US July UMich prelim consumer sentiment 51.1 vs 49.9 expected
• Bullard: Doesn’t make much difference on 75 or 100 bps. Will leave to colleagues
• Canadian housing activity continues to slow. Sales down 23.9% y/y in June
• US June industrial production -0.2% vs +0.1% expected
• Fed’s Bullard: Now sees 3.75% Fed funds at year end from 3.50% previously
• The market is voting that retail sales weren’t ‚material‘ enough
• Italy central bank sees GDP rising 3.2% this year
• Fed’s Bostic: Moving ‚too dramatically‘ could undermine economy and add to uncertainty
• US June advance retail sales +1.0% vs +0.8% expected
• US import prices for June 2022 0.2% vs 0.7% estimate
• Empire Fed July manufacturing +11.1 vs -2.00 expected
• The CHF is the strongest and the USD the weakest as the NA session begins
• ForexLive European FX news wrap: Dollar in focus with US retail sales up next

The US retail sales were anticipated today along with the Univ. of Michigan consumer sentiment. Recall from last month, the sharp fall in consumer sentiment was a catalyst for the Fed to hike by 75 basis points as concerns about inflation threatened the growth prospects in the economy..For retail sales, after stronger than expected CPI this week, a runaway report could tilt the markets and the Fed to a 100 basis point hike at their July 27 meeting.

The retail sales did come out at 1.0% vs 0.8% with the control group up 0.8% vs 0.3% est, but there was a revision to that measure to -0.3% vs 0.0% last month which took out some of the sting of the increase

Later before the stock open, the industrial production and capacity utilization came out weaker which helped to quell any concerns about overheating growth.

Fed officials also allayed fears of a 100 basis point hike. Bostic, who earlier this week did not rule out 100 basis points, softened his tone saying moving „too dramatically“ could undermine the economy. Fed’s Bullard did raise his projection for the end of year to 3.75% from 3.5%, but said he would defer to the committee on whether 75 or 100 is warranted. Later Fed’s Daly said the Fed is working to get inflation down without stalling the economy.

As far as the Univ. of Michigan sentiment, it rebounded from the low last month and perhaps more importantly showed lower inflation expectations 1 and 5 years forward.

That paved the way for some risk on flows into stocks, and a lower USD as well. US yields moved modestly lower. The greenback moved lower as well, and is ending the day as the weakest of the majors, while the CHF is the strongest.

The strongest to weakest of the major currencies

Looking at the stock indices, the:

• Dow industrial average rose 658.08 points or 2.15% to 31288.26
• S&P index rose 72.8 points or 1.92% to 3863.17
• NASDAQ index rose 201.25 points or 1.79% to 11452.43
• Russell 2000 rose 36.86 points or 2.16% to 1744.37

For the trading week, the gains today did not erase declines, but they did lessen the pain from the moves lower. Stocks were also helped by better-than-expected earnings and Citicorp which helped to send all financials higher today. The financial sector was the largest gainer today in the S&P with a gain of 3.5% on the day (all 11 sectors of the S&P rose today).

For the trading week:

• Dow industrial average fell -0.17%
• S&P index fell -0.99%
• NASDAQ index fell -1.56%

Although lower for the week, things could have been much worse.

In other markets to end the week:

• Spot gold is trading down $-3.37 -0.20% at $1706.70
• spot silver is trading up $0.25 or 1.39% at $18.68
• crude oil rose $1.82 to $97.60
• the price bitcoin also moved higher in reaction to the risk on flows is trading just below the $21,000 level at $20,929

In the US debt market today, yields moved modestly lower.

• 2 year yield is trading at 3.13%, -0.8 basis points. The high yield reached 3.269% this week
• 5 year yield is at 3.046%, -2.3 basis points. It’s high yield this week reached 3.154% for rotating back to the downside
• 10 year yield is at 2.924% down -4.1 basis point, with a high yield this week at 3.071%
• 30 year is trading at 3.083%, -2.6 basis points. It’s high yield reached 3.228%.

The 2-10 year spread is trading near -21 basis points after closing the week ago at -2.7 basis points. The low reached -27 basis points this week.

Wishing you all a good weekend.

This article was written by Greg Michalowski at www.forexlive.com.

The major US stock indices closed sharply higher and near session highs. The major indices for the week still closed lower, but cut into those declines with the sharp gains today. Retail sales came in better-than-expected which helped. Industrial production was lower and Michigan consumer sentiment came in a little better than expectations and showed a lower inflation expectations for one and 5 years which was a relief to market traders.

All 11 sectors of the S&P index closed higher led by financials which rose 3.51%. Healthcare rose by 2.44% and communication services rose 2.14%.

The laggards in the S&P were utilities which rose 0.21%, consumer staples which rose 0.4%, and industrials which rose 1.58%.

The final numbers are showing:

• Dow industrial average rose 655.85 points or 2.14% at 31286.101
• S&P index rose 72.51 points or 1.91% at 3862.80
• NASDAQ index rose 201.25 points or 1.79% 11452.43
• Russell 2000 rose 36.86 points or 2.16% at 1744.37

For the trading week:

• Dow industrial average fell -0.17%
• S&P index fell -0.99%
• NASDAQ index fell -1.56%

This article was written by Greg Michalowski at www.forexlive.com.

• Had a good series of meetings and Saudi Arabia
• opening airspace is a big deal
• we have accomplished has some significant business with Saudi’s
• hopes it will lead to a broader normalization of relations
• hopes opening of airspace 2 flights to and from Israel will lead to a broader normalization and relations
• agreed to work to deepen and extend the Yemen cease-fire
• discussed Saudi defensive needs
• Saudi will partner with US on clean energy initiative
• had good discussion on ensuring global energy security and adequate oil supplies
• I’m doing all I can to increase oil supply for the United States
• the race murder of journalists Khashoggi in meeting made my view crystal-clear
• we discuss human rights and the need for political reform
• have finalize the agreement to connect Iraq’s electric grid to the GCC grid through Kuwait and Saudi Arabia
• we are not going to leave a vacuum in the Middle East for Russia or China to fill
• Crown Prince said he was not personally responsible for Khashoggi’s murder
• gas prices have been coming down every single day
• we’ll see more declines when gas stations start to lower their price consistently
• I’ll use every power I have is present to fulfill pledge on global warming

Meanwhile a Saudi Arabia and official said:

• they are corroborating with OPEC+ to ensure enough supply of oil
• If they see evidence of oil scarcity, they will produce more

/Inflation

This article was written by Greg Michalowski at www.forexlive.com.

The price of WTI crude oil futures are settling at $97.59 that’s up $1.91 or 1.89%

The high price today reached $99.01. The low prices at $94.59.

WTI crude oil is closing near its 100 hour moving average

For the trading week, the contract close last week came in at $104.78. The high price early on Monday reached a high of $104.86. The low price was reached on Thursday at $90.54 before rallying yesterday and again today. The midpoint of the week’s trading range comes in at $97.64. The price closed just below that midpoint level.

Looking at the hourly chart above, the high price today stalled near a topside trend line. The price today did extend back above the 100 hour moving average (blue line in the chart above), but is still well short of the 200 hour moving average currently at $99.74.

Going into next week, those moving averages will be in play and help define the bullish bearish bias. Stay below is more bearish. Move above is more bullish. stay below is more bearish. The price has not traded above its 200 hour moving average since July 5th.

Pres. Biden is in Saudi Arabia. However expectations are not for any material impact on supply. Nevertheless, since the announcement of the President’s trip to Saudi Arabia back in June, the price has move down from around $119.

This article was written by Greg Michalowski at www.forexlive.com.

Inflation is the rate
at which the cost of goods and services in each economy rises. Inflation can
have a detrimental influence on society if it means higher prices for
fundamental necessities like food. Inflation can affect almost every commodity
or service, including necessities like housing, food, medical services, and
utilities, as well as luxuries like cosmetics, automobiles, and jewellery. Once
inflation has spread across an economy, people and companies alike are
concerned about the possibility of inflationary pressures.

As a result of
inflation, money saved today loses some of its value. Inflation reduces a
person’s buying power and can even make it difficult to retire. For example, if
an investor gained 5% on stock and bond investments, but the inflation rate was
3%, the investor only gained 2% in real terms.

The Consumer Price
Index (CPI) is a widely used index for measuring inflation, as it tracks
changes in the prices paid by consumers for a set of goods and services over
time. Food and beverage, housing, clothes, transportation, medical care,
recreation, education, and communication are the eight main categories of goods
and services.

Inflation is more
likely to have a profound negative impact on a currency’s value and foreign
exchange rate than it is to have a significant positive impact. A low rate of
inflation does not ensure a good exchange rate for a country, but a high rate
is very likely to adversely impact the country’s exchange rates with other
countries.

Exchange rates can be
impacted by interest rates because they are a direct result of inflation.
Countries try to keep interest rates and inflation under check, but the
interplay between the two is complicated to control.

Low-interest rates
encourage consumer spending and economic growth, and they have a beneficial
impact on currency value in general. If consumer spending increases to the
point that demand outstrips supply, inflation may ensue, albeit this isn’t
always a bad thing. On the other hand, low-interest rates rarely draw outside investment.
Higher interest rates are more likely to garner foreign investment, which
increases demand for a country’s currency.

However, there is no
universal formula that can be followed because the relationship between
inflation and share prices is not simple. An in-depth examination of each
stock’s unique traits is necessary for wise trading or investment plan.

Long-term, ownership of
stock might serve as a hedge against inflation for investors. This means that, despite rising
prices, the “actual” wealth that a stock or share portfolio stores – the
commodities or services it can be swapped for – may increase in value over an inflationary
era.

When inflation is
caused by increasing input costs (sometimes referred to as cost-push
inflation), for instance, revenues may rise, and typical profit rates may
return once firms have had enough time to adapt to the inflationary pressures
and raise their prices.

Analysts contend that
the short-term dynamic is less beneficial and that there is frequently an
inverse correlation between equities, prices, and inflation – meaning that
stock values fall as inflation rises or rise as inflation declines. Numerous
variables could contribute to inflation’s short-term negative impact on stock
values.

During the period of
higher inflation, value equities have outperformed growth and income stocks in the near run. Whether you are
taking a long or short-term perspective, though, will affect how you react to
an increase in inflation.

By allowing your
portfolio to gradually pass on rising prices to consumers, long-term investors
may protect the value of their capital and hedge against inflation. Evidence
suggests that rising inflation also tends to enhance stock market volatility,
which may present short-term traders with opportunities to buy or short-sell
equities.

As we have often
observed, it is not always the case. Despite an increase in the minimum wage,
recent income increases on average have lagged the general increase in the cost
of products.

One’s money management
may benefit from being aware of the rate of price increases over time. Here are
some suggestions for combating inflation.

Investing in some stocks
can be an effective approach to fight inflation, considering the lack of
confidence most people have toward markets. Consider your home as a business. A
business will experience inflation if it is unable to wisely spend its funds in
ventures that will provide greater returns than its costs. The fundamental
tenet of a successful business is that companies will sell their products for
higher prices, which will eventually result in higher revenues, earnings, and
stock prices.

An investment that is
regarded as protecting the diminished purchasing power of a currency as a
result of its value being lost owning to rising prices as a result of inflation
or macroeconomic growth is known as an inflation hedge. Purchasing an asset
with the expectation that it would hold or improve in value over tie is the
norm. An alternative to this is to take a larger position in assets, which may
depreciate less quickly than the value of the currency. Eg; Singapore’s central bank further
tightened monetary settings and raised its inflation forecast, sending the
currency higher. The SGD rallied the most in almost a month after the decision,
before trading up 0.4% at S$1.3564 as of 9:07 a.m. local time.

Real estate is always a
wise investment. Problems arise when a buyer intends to sell the property they
just purchased for a profit. Although skilled real estate investors can uncover
hidden values in houses, the average buyer should concentrate on buying a home
to stay in it for at least a few years. Similar to land, the value of homes
typically rises on an annual basis – offsetting the impacts of inflation.

Consider investing in
inflation-linked bonds if you want to try and guard your funds against
inflation. Simply said, if you invest in an ETF (Exchange-Traded Fund) that
invests in inflation-linked bonds, for instance, you will gain exposure to
bonds whose principal will rise in line with the consumer price index. This
implies that as inflation rises, the value of the instrument increases. Of
course, there is a risk that if inflation declines, the value would as well.
Additionally, rising interest rates will hurt inflation-protected bonds.

Whether it is accurate
or not, gold is frequently used as an inflation hedge, a solid way to guard
against the risk of losing buying power. However, precious metals might not be
the greatest choice in that situation. Some gold investors overlook the metal’s
volatility and potential cost, while others fail to foresee the necessity for
storage and other logistical challenges that come with gold ownership.

Also, use this time to
review your savings plan in addition to developing an investment strategy
appropriate for an inflationary period. You should prioritise cash in your
reevaluations. Although keeping cash on hand may seem like a „secure“
solution, cash is more vulnerable to inflation and buying power risk than
investments with a wider range of securities. It is strongly advised to stop
carrying cash or to make sure that it is maintained in a high-yield savings
account.

Investing in yourself
is by far the finest investment you can
make to be ready for an unpredictable financial future. one that will boost
your potential income in the future.

This investment starts
with high-quality education like seminars, and webinars
and continues with maintaining current skills and picking up new ones that will
correspond to the ones that will be most in-demand in the not-too-distant
future. Being able to adapt to a company’s shifting needs could help you
protect not only your career but also your compensation against inflation and
economic downturns.

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This article was written by ForexLive at www.forexlive.com.

Major currencies aren’t doing a whole lot as traders are keeping their focus on the US retail sales data later today. After yesterday’s wild ride, there is a particular importance to today’s report considering that it will provide some outline on a potential 75 bps or 100 bps rate hike by the Fed in less than two weeks‘ time.

The dollar was mostly steady earlier but is seen slightly softer in the last hour or so. That said, the moves aren’t anything too significant.

EUR/USD was lingering around 1.0020-30 before moving up to 1.0050 currently. Of note, price is holding above its 100-hour moving average at 1.0039 but it’s all about what the data release has to offer later today.

Meanwhile, USD/JPY remains down 0.1% to 138.75 and is little changed overall. USD/CHF is down 0.5% to just under 0.9800 though as the franc is the top performer on the day so far.

Elsewhere, USD/CAD is down 0.3% to 1.3075 and that is seeing price start to push back towards the broken resistance region around 1.3076-83 this week:

That will be a crucial level to watch before the close this week.

Looking at other markets, equities are holding slightly higher with European indices playing catch up to the late rebound in Wall Street yesterday. The mood is helped by slight gains in US futures with S&P 500 futures up 13 points, or 0.3%, currently.

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

• ECB has to act accordingly based on that
• Each euro state has its own responsibility for its own economic policy
• It may be that we will see a very difficult period in Italy amid political turmoil

Nothing too interesting from Rehn but it does highlight the challenges for ECB policymakers when making any decision. In essence, the central bank has to try and backstop Italy amid fragmentation risks as they try to normalise policy in the fight against inflation.

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