Newsquawk Week Ahead: US CPI & Retail Sales; UK CPI & Jobs data; Aussie jobs and RBNZ 0 (0)

12th-16th August 2024

Mon: OPEC Monthly Oil Market Report; Japanese Market Holiday (Mountain Day), German Retail Sales (May), Indian Trade Balance (Jul)Tue: IEA Oil Market Report, Australian Wage Price Index (Q2), UK Jobs (Jun/Jul), German ZEW Survey (Aug), US PPI (Jul)Wed: RBNZ Announcement and Quarterly MPS, Bank of Israel Announcement, UK Inflation (Jul), Swedish CPIF (Jul), Indian WPI (Jul), EZ GDP Flash (Q2), US CPI (Jul)Thu: PBoC MLF, Norges Announcement, Italy Market Holiday (Assumption Day), Japanese GDP (Q2), Australian Jobs (Jul), Chinese Activity Data (Jul), UK GDP (Jun), US Retail Sales (Jul), US Philly Fed (Aug)Fri: UK Retail Sales (Jul), US University of Michigan Prelim (Aug)

Note, previews are listed in day order.UK Jobs (Tue):

As usual, wages will be the key point of focus for the BoE from this release. In May, the headline and ex-bonus metrics both moderated to 5.7% as expected, a release which was judged at the time to have not significantly changed the calculus into the BoE’s August decision. Furthermore, almost all metrics for that month’s release printed in-line with consensus. This time, Morgan Stanley looks for ex-bonus wages to print in-line with the BoE’s view but with some risk of an upward revision to the May data. As always, the release will be key for BoE pricing and the calculus for September, however the wage metrics may well be superseded by the week’s CPI print and the knowledge of a sizeable upcoming public sector increase via recent wage negotiations which average out at around 5.5%. Finally, it is worth caveating that the data continues to be subject to reliability issues.RBNZ Announcement (Wed):

The RBNZ is to hold a policy meeting next week where there are mixed views regarding the Official Cash Rate with 19 out of 31 economists surveyed by Reuters expecting rates to be kept unchanged at 5.50% and 12 are forecasting a 25bps cut, while money markets have recently shifted to pricing greater chances of a cut following softer inflation expectations with OIS pointing to an 84% probability for a reduction and just a 16% chance for rates to be maintained at the current level. As a reminder, the RBNZ kept the Official Cash Rate unchanged at the last meeting as unanimously expected, while it maintained its rhetoric that the Committee agreed the OCR will need to remain restrictive but provided a dovish tilt in which it stated that the extent of this restraint will be tempered over time consistent with the expected decline in inflation pressures. The RBNZ also commented that some domestically generated price pressures remain strong although there are signs inflation persistence will ease in line with the fall in capacity pressures and business pricing intentions, while it also stated that current and expected government spending will restrain overall spending in the economy. Furthermore, the minutes from the meeting revealed that the Committee is confident inflation will return to within its 1%-3% target range over the second half of 2024 and that the appropriate stance of monetary policy was discussed at the meeting. There haven’t been many updates from the RBNZ since the last meeting, while the recent data had mostly supported the case for a continued pause including New Zealand CPI Y/Y for Q2 which softened to 3.3% vs. Exp. 3.4% (Prev. 4.0%) but remained above the target range, while employment data in Q2 beat estimates with surprise jobs growth of 0.4% (Exp. -0.2%) and the Unemployment Rate was less than feared at 4.6% vs. Exp. 4.7% (Prev. 4.3%) despite an unexpected increase in the Participation Rate to 71.7% vs. Exp. 71.3% (Prev. 71.5%). Labour Cost Index was also firmer than expected during the previous quarter with QQ growth at 0.9% vs. Exp. 0.8% (Prev. 0.8%) and Y/Y growth at 3.6% vs. Exp. 3.5% (Prev. 3.8%) which could compel policymakers to remain patient to avoid stoking inflationary pressures. However, the recent release of softer inflation expectations resulted in a shift in market pricing which is now heavily leaning towards a cut.US CPI (Wed):

After June’s downside surprise, analysts expect US consumer prices will rise +0.2% M/M in July (prev. -0.1%), taking the annual rate to 2.9% Y/Y (prev. 3.0%). The core rate of CPI is seen rising +0.2% M/M (prev. +0.1%), and the annual rate of core consumer prices is seen easing to 3.2% Y/Y (prev. 3.3%). For reference, the Cleveland Fed’s inflation nowcasting is tracking headline inflation rising +0.24% M/M in July and 3.01% Y/Y; the core rate is tracking 0.27% M/M, and is tracking 3.33% Y/Y, which would suggest some risks of upside for the latter relative to the consensus. Bank of America sees headline inflation rising 0.25% M/M unrounded due to the pickup in core services inflation and energy prices, and expects the annual rate will be unchanged at 3.0% Y/Y; it sees core CPI rising 0.22% M/M (unrounded), stating that „while this is not quite as low as June, it is in line with prior trend in deflation and should meet the Fed’s benchmark for beginning rate cuts in September.“ On core services inflation, BofA notes that the core services ex-rent and owners equivalents rents (OER) edged down in June on a decline in airfares, but in July, it expects the decline in airfares to be much more moderate. It also notes that shelter prices should pick up, but expects the deceleration in rents and OER to hold. „Should the July CPI report print in line with our expectations, we would maintain our expectation for the Fed to start its cutting cycle in September and deliver 50bps in rate cuts this year.“ BofA acknowledges that financial markets are pricing in more than 100bps of rate reductions this year, and some debate over the likelihood of a larger up-front cut or an inter-meeting move, but it does not think that the current situation meets the bar for action.UK Inflation (Wed):

The June BoE MPR forecast for Q3 CPI stands at 2.3%, a figure which would be a modest tick up from the 2.0% rate that has been in place for the last two months and the 2.1% average across Q2. For July, Pantheon expects the rate to tick up to 2.2%, upside which is likely to be driven by base-effects from Ofgem utility price adjustments in 2023 which saw a much more sizeable reduction than the cut announced in July 2024. On a core basis, the Y/Y is seen averaging 3.4% across Q3 (vs 3.6% in Q2) while from a services perspective, Morgan Stanley expect the Y/Y rate to moderate to 5.4% vs BoE expectations of 5.56%. However, they caveat this welcome development for the BoE by noting services have the potential to lift back above forecast in August’s print which will be released on the eve of September’s announcement. For the BoE, the July release will add to the debate among the five who voted for a cut, and particularly for the ‘some members’ of that group for whom the decision to cut was a finely balanced one due to the assessment that “inflationary persistence had not yet conclusively dissipated, and there remained some upside risks to the outlook.”. Currently, pricing implies the next cut in November (-31bps) with around a 30% chance of a move in September; CPI aside, the recent PMIs were upbeat on growth ahead which, with core inflation still set to be well above the 2.0% mark and CPI itself expected to rebound back above the official target, means that a back-to-back cut is perhaps unlikely to be the base case for September, but of course cannot be ruled out at this stage. (i.e. in-fitting with current pricing).PBoC MLF (Thu):

The PBoC will conduct its Medium-term Lending Facility operation next week in which it is likely to maintain the 1-year MLF rate at the current level of 2.30% following last month’s reductions in short-term funding rates. As a reminder, the central bank had initially opted to maintain the 1-year MLF rate at 2.50% during its regular mid-monthly operation on July 15th but then surprised markets with unexpected cuts to its short-term funding rates a week later including the 7-day reverse repo rate which was lowered by 10bps to 1.70% from 1.80%, while Chinese banks then followed through with similar magnitude cuts to the benchmark 1-year and 5-year Loan Prime Rates which were reduced to 3.35% and 3.85%, respectively. The PBoC also lowered its Standing Lending Facility rates by 10bps across all maturities and unexpectedly conducted a second MLF operation for the month on July 25th in which it cut the 1-year MLF rate by 20bps to 2.30%. Therefore, given the recent bout of cuts to funding rates, it is unlikely that the central will be in a rush to adjust rates so soon, while mixed data releases from China including the miss on exports, stronger-than-expected imports, and firmer inflation also support a patient approach.Norges Bank Announcement (Thu):

Overall, the Norges Bank is not expected to make any adjustments to forward guidance or rates at the interim meeting as we await the Q3 Regional Network Report on 12th September before the 19th September policy announcement which includes an MPR. This meeting instead will be the opportunity for the bank to revise its path, if developments merit it by this point with the development of CPI-ATE being a dovish factor thus far. July’s CPI printed at 3.3% for the CPI-ATE Y/Y measure, a print which was in line with market expectations and some 0.3pp below the Norges Bank’s own view for the month, though the release spurred no real reaction and is unlikely to change expectations for the August meeting. Beforehand, June’s CPI came in a touch softer than expected but also failed to spur any real reaction at the time. Last time, the Norges Bank kept its policy rate at 4.50% as expected but provided a particularly hawkish adjustment to forward guidance with all probability of a 2024 rate cut removed and a very slim technical skew towards tightening being more likely than cutting for the remainder of 2024.Japanese GDP (Thu):

Japanese Q2 GDP is seeing rising 0.5%, from the prior decline of 0.7%. The forecast range sees a low of 0.6% and a high of 3.0%. Since the last Q1 GDP metrics, Japan made an unscheduled revision to GDP, revealing that the economy contracted more than initially reported in Q1 2024. The revised data shows an annualised decline of 2.9% compared to the previously estimated 1.8% contraction. This revision was primarily due to corrections in construction orders data, highlighting inaccuracies in the initial estimates. Analysts at Deloitte anticipate that „real GDP growth will begin to recover in the second half of 2024.“ Stronger wage growth and more moderate inflation are expected to boost consumer spending, while a weak currency is likely to drive export growth. Although these factors should collectively improve economic conditions, Deloitte expects growth to be „relatively modest.“Australian Jobs (Thu):

The Australian economy is forecasted to add 12.5k jobs in July, against June’s 50.2k. Within the release, participation rate and unemployment rate are anticipated to remain at 66.9% and 4.1%, respectively. In June, Australian employment surged significantly, with net employment rising by 50,200, far surpassing the expected 20,000. Full-time employment contributed 43,300 to the increase, marking a second consecutive month of strong growth. Despite the job gains, the unemployment rate increased slightly to 4.1% from 4.0%, contrary to expectations of it remaining steady. This rise was due to an increase in the labour force participation rate, which climbed to near a record high of 66.9%. Desks suggested that despite the robust job growth, there are signs of slackening in the labour market, as indicated by the upward trend in the unemployment rate. However, the market remains tight overall. As a reminder, the most recent RBA meeting saw no major surprises as it kept the Cash Rate unchanged at 4.35% while it also stuck to its hawkish tone – although Governor Bullock at the presser clarified that a rate hike was discussed.Chinese Activity Data (Thu):

Retail Sales are expected to come in at 2.0% (prev. 2.0%), Industrial Output is seen at 5.2% (prev. 5.3%), and Urban Investments are seen at 3.9% (prev. 3.9%), and as usual, it will be closely watched to gauge the health of the Chinese economy. Using PMI data and commentary as a proxy, the Caixin Manufacturing PMI for July fell to 49.8 from 51.8 in June, indicating a contraction in the manufacturing sector. This reading was below analysts‘ expectations of 51.5 and marked the lowest level since October last year. The official manufacturing PMI also showed a decline. The drop in PMI was largely attributed to the first fall in new orders in a year, driven by subdued demand and client budget cuts. The decline in new orders primarily affected investment and intermediate goods, while the consumer goods sector experienced slight expansion in July. Caixin’s Chief Economist suggested the primary issues plaguing the manufacturing sector include „insufficient domestic demand and weak market optimism.“ In terms of the prior release, industrial output in China increased by 5.3% in June Y/Y (vs exp. 5.0%), a slight slowdown from the 5.6% growth observed in May. Retail sales rose by 2.0% in June (vs exp. 3.3%), a significant decline from the 3.7% growth recorded in May. Fixed asset investment grew by 3.9% in the first half of 2024, aligning with expectations.US Retail Sales (Thu):

US retail sales are seen rising +0.3% M/M in July (prev. 0.0%), with the ex-autos measure seen rising +0.1 M/M (prev. +0.4%), while the Control Group is seen +0.1% M/M (prev. +0.9%). Bank of America’s monthly consumer checkpoint data, which aggregates credit and debit card spending per household, declined -0.4% Y/Y in July (prev. -0.5% Y/Y in June). The report said that within the total, services spending was stronger than goods, but international travel was a highlight. BofA said that the labour market is showing more signs of cooling, but for now, its internal data on after-tax wages and salaries growth remains supportive of consumer spending. „We think households have managed to eke out some volume growth in their spending despite the weaker growth in nominal spending per household; to do this, consumers are becoming more price sensitive, and we see stronger spending in value groceries and clothing than in these categories overall,“ it wrote, adding that „one reason for increased price sensitivity may be the diminishing savings buffers consumers have, especially after allowing for inflation. But while deposits have fallen back, in our view, they remain modestly supportive of the consumer.“UK Retail Sales (Fri):

Morgan Stanley sees UK retail sales ex-fuel falling 0.3% in July, noting that “maybe it’s the rain, maybe it’s the level of rates, maybe it’s the level of prices of discretionary retail goods – but the consumer is not quite ready to spend yet.” Nonetheless, according to industry data from the British Retail Consortium (BRC), Retail Sales in the UK saw a recovery in July 2024, with a Y/Y increase of 0.5% (vs prev. -0.2% in June). BRC noted a notable increase in purchases of summer clothes and health and beauty products, driven by the arrival of warm weather and consumer preparation for outdoor activities and holidays. Conversely, spending on Furniture and Household Appliances weakened as consumers prioritised holidays and entertainment over indoor goods, resulting in negative growth for non-food items, particularly in-store sales. BRC also observed that with election uncertainty resolved, retailers are now looking towards the Autumn Budget for relief from business rates rises and potential reforms promised in Labour’s manifesto. Meanwhile, KPMG added that while summer staples have driven growth, the upturn is less significant than expected for this critical period. Televised sports events have boosted sales of electronics, such as TVs and tablets, but big-ticket purchases remain subdued. KPMG added that many households face financial pressure due to increased mortgage and rent costs, leading to cautious spending.This article originally appeared on Newsquawk

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

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Fed’s Bowman: Cautious on rate cuts, eyes upside inflation risks 0 (0)

  • „I am not confident that inflation will decline in the same way as in the second half of last year.“
  • Inflation still „uncomfortably above“ 2% target
  • Labor market showing signs of cooling, but uncertainties remain
  • Upside risks to inflation persist, including housing and geopolitical factors
  • Calls for patience in monetary policy decisions
  • Critical of rapid regulatory changes in banking sector
  • Advocates for thoughtful M&A framework in banking

Fed Governor Michelle Bowman delivered a wide-ranging speech touching on monetary policy, banking regulation, and liquidity concerns. On mon pol, Bowman stressed caution regarding potential rate cuts, citing persistent upside inflation risks despite recent progress. She noted that core PCE inflation averaged 3.4% annualized in H1 2024, well above the Fed’s 2% target.

Bowman highlighted several factors that could keep inflation elevated, including normalization of supply chains, geopolitical risks, and potential fiscal stimulus. She also raised concerns about immigration potentially driving up housing costs in some areas.

On the labor market, Bowman acknowledged signs of cooling but pointed to measurement challenges and data revisions complicating the assessment. She advocated for a patient approach to policy decisions, saying the Fed needs to avoid overreacting to single data points.

This is certainly a pushback on the 49% chance of 50 bps being priced in for the September meeting.

Quotable:

„Should the incoming data continue to show that inflation is moving sustainably toward our 2% goal, it will become appropriate to gradually lower the federal funds rate to prevent monetary policy from becoming overly restrictive on economic activity and employment.“

„But we need to be patient and avoid undermining continued progress on lowering inflation by overreacting to any single data point.“

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

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Forexlive Americas FX news wrap 9 Aug: A dull Friday ends a volatile week 0 (0)

It seems like ages ago, but on Monday, it seemed like markets were on the precipice. The Japan’s Nikkei 225 index on Monday fell -12.4% and analysts were figuring out where the circuit breakers would be. There were chatter on how the Fed needed to have an emergency meeting and cut rates by 75 basis points. The market priced in with 100% certainty 50 basis point cuts in September and November. Yields fell sharply.

However services ISM data didn’t come in as week, and the markets settled. By the end of the week, the flow of funds in the Forex market reversed their risk on/risk off trends. US yields erased the declines and moved higher. The US stock markets nearly erased over 3% declines in the S&P and Nasdaq indices with each closing just marginally lower.

In trading today, the USD closed mixed with gains vs the AUD and NZD and declines vs the JPY, GBP and CHF . The greenback was little changed vs the EUR and CAD.

The USDCAD is virtually unchanged after their employment data came out mixed today. The unemployment rate was unchanged from last month. The employment change was negative by 2.8K vs expectations of a gain of 22.5K, but making it not so bad, is there was a gain of 61.6K in full-time jobs. The part-time jobs felt -64.4K.

The JPY was the strongest of the major currencies today and the weakest vs the AUD.

For the trading week, the USD was mixed vs the major currencies. The greenback rose vs the CHF and GBP, but fell vs the CAD, AUD and NZD as traders bounced back those risk off/commodity currrencies. The USD was little changes vs the EUR and the JPY.

  • EUR: -0.09%
  • GBP: +0.30%
  • JPY: +0.11%
  • CHF: +0.94%
  • CAD: -1.02%
  • AUD: -1.00%
  • NZD: -0.79%

In the US debt market, the 2-year yield is closing near the high, while the longer end is trading near lows for the day as the yield curve gets flatter. For the week, the yields are closing higher after falls on Monday on the recession fears.

  • 2-year yield 4.059%, +1.5 basis points. For the week, yields rose 17.3 basis points
  • 5-year yield 3.797%, -3.5 basis points. For the week yields rose 18.0 basis points
  • 10 year yield 3.943%, -5.3 basis points. For the week, yields rose 15.0 basis points
  • 30-year yield 4.223%, -6.3 basis points. For the week yields rose 11.1 this point

Looking at other markets:

  • Crude oil is trading near $77 up $0.81. For the week the price of oil rose 4.69%
  • Gold rose $4.30 or 0.17% at $2430.75. For the week gold was near unchanged at -0.46%.
  • Silver fell -9 cents or -0.33% at $27.44. For the week the price fell -3.84%
  • Bitcoin is trading at $60,757. For the week, the price is up $2613 going into the weekend

IN the US equities, the major indices closed higher for the day, but although the sharp declines on Monday could not be fully recouped, most of the declines were recovered..

The S&P index was the closest to positive territory with a decline of -0.04% for the week. The NASDAQ index closed lower by -0.18%.

Thnak you for your support. Have a great weekend.

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

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Broader US stock indices fight for a positive week with less than an hour to go 0 (0)

With less than an hour left to go in trading, the broader stock indices are trying to fight its way to a positive close for the trading week.

Both the S&P and NASDAQ indices are currently on pace for a negative close. If it remains that way, it would represent the fourth consecutive down week for each of those indices.

At current levels, the S&P at 5345.02 is marginally lower by -0.04% – nearly unchanged on the week. The close last week was 5346.55.

The NASDAQ index is negative by -0.18 at 16747.09. The close last week was 16776.16.

It will be close, especially for the S&P, but it will take a late week run higher to snap the losing streak.

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

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Crude oil futures and settle at $76.84 0 (0)

Crude oil futures are settling the day and $76.84 that is up $0.65 or 0.85%.

For the trading week, the prices closing up $3.32 or 4.51%. The gain this week comes after four straight weeks of declines. The low price it this week reached $71.67 which was the lowest level since February 5. The price is also closing higher for the 4th consecutive day today

Geopolical tensions remain high in the Middle East as Israel awaits Iran’s response to last week’s assassination of a senior official in Hamas military group in Tehran. Higher-than-expected joint inflation also contributed to the better tone in trading today.

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

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Key events and releases for next week’s trading 0 (0)

The US CPI and Retail sales will dominate the economic releases next week. The RBNZ will announce their interest rate decision on Wednesday in NZ.

Tuesday August 13

  • 9:30 PM ET: AUD Wage Price Index q/q (Estimate: 0.9%, Prior: 0.8%)
  • 2 AM ET: GBP Claimant Count Change (Estimate: 14.5K, Prior: 32.3K), GBP Average Earnings Index 3m/y (Estimate: 6.5%, Prior: 6.9%)
  • 8:30 AM ET USD Core PPI m/m (Estimate: 0.2%, Prior: 0.1%);USD PPI m/m (Estimate: 0.2%, Prior: 0.1%)

Wedneday August 14

  • 10 PM ET NZD NZD Official Cash Rate (Estimate: 5.50%, Prior: 5.50%) RBNZ Monetary Policy Statement, Rate Statement, and
  • 11 PM ET NZD Press Conference
  • 2 AM ET GBP CPI y/y (Estimate: 3.0%, Prior: 3.0%)
  • 8:30 AM meeting USD Core CPI m/m (Estimate: 0.2%, Prior: 0.1%);USD CPI m/m (Estimate: 0.2%, Prior: 0.1%)
  • 3:30 PM ET: NZD RBNZ Gov Orr Speaks (Estimate: N/A, Prior: N/A)

Thursday August 15

  • 9:30 PM ET AUD Unemployment Rate (Estimate: 4.1%, Prior: 4.1%); Employment Change (Estimate: 26.0K, Prior: 50.2K)
  • 10 PM to CNY Industrial Production y/y (Estimate: 5.4%, Prior: 5.3%)
  • 10 PM meeting CNY Retail Sales y/y (Estimate: 2.6%, Prior: 3.1%)
  • 2 AM ET GBP GDP m/m (Estimate: 0.1%, Prior: 0.4%); GBP Prelim GDP q/q (Estimate: 0.6%, Prior: 0.7%)
  • 8:30 AM ET USD Retail Sales m/m (Estimate: 0.3%, Prior: 0.0%); USD Core Retail Sales m/m (Estimate: 0.3%, Prior: 0.0%)
  • 8:30 AM ET USD Unemployment Claims (Estimate: 239K, Prior: 233K)
  • 8:30 AM ET USD Empire State Manufacturing Index (Estimate: -5.9, Prior: -6.6)
  • 8:30 AM ET USD Philly Fed Manufacturing Index (Estimate: 6.6, Prior: 13.9)

Friday August 16

  • 7:30 PM ET AUD RBA Gov Bullock Speaks
  • 2 AM to GBP Retail Sales m/m (Estimate: 0.8%, Prior: -1.2%)
  • 30 Amy to USD Building Permits (Estimate: 1.44M, Prior: 1.45M)
  • today meeting USD Prelim UoM Consumer Sentiment (Estimate: 67.3, Prior: 66.4); USD Prelim UoM Inflation Expectations (Estimate: 2.9%, Prior: 2.9%)

As for the earnings calendar, HomeDepot, and Cisco highlight as most of the big names have already reported. Nvidia is still to come but won’t announce until August 28th.

Monday

Tuesday

  • Before Open: ON Holding, The Home Depot

Wednesday

  • Before Open: Dole, UBS
  • After Close: Cisco

Thursday

  • Before Open: Alibaba, Walmart, JD.com, John Deere
  • After Close: Applied Materials, H&R Block

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

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In the future you will vote for who can keep the lights on 0 (0)

These comments from Brookfield CEO Bruce Flatt caught my attention:

The next 20 years will be an unprecedented period for electricity build-out. The electrification of industrial capacity, automobiles, heating for houses, and other uses is driving unprecedented growth in the demand for electricity. On top of that, the world is adding data centers for Al and cloud computing at a stunning pace.

To put this in perspective, the global installed capacity for electricity is approximately 8,000 gigawatts. To meet expected demand, this installed capacity will need to expand to more than 20,000 gigawatts in the next 20 years. In addition, nearly half of what exists today will need to be retired, as it is very carbon-intensive. Said differently, we need to more than double the current capacity (which was largely built over the past 50 years) while also replacing approximately 50% of what we have. Nothing like this has ever been attempted, but it is essential in order to reach the world’s net-zero goals and drive the Al revolution.

All this needs to happen in a world where it’s never been tougher to build large projects due to costs, financing, liability, regulation and litigiousness. I envision a future where few can take steady electricity demand for granted and elections are regularly won by who can better keep the lights on.

See also: A perfect storm is about to hit global power grids

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

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About that 75 basis point emergency cut… 0 (0)

Wharton professor and frequent market commentator Jeremy Siegel caused a stir on Monday by calling for an emergency 75 basis point rate cut as markets melted down. He doubled down by calling for another 75 bps in September „at minimum.“

Skip ahead a few days and he has had a change of heart.

“I no longer certainly think it’s necessary. But I want [Powell] to move
down to 4% as fast as possible,” Siegel said to CNBC.
“Would it be bad? No. But would it be necessary? No, not at this time.”

The market is pricing a 55% chance of 50 bps on Sept 18 and a 45% chance of 25 bps with 104 bps priced in through year end.

So what’s the lesson here?

The main one is that when people on TV like Siegel, Bill Ackman or Jim Cramer are panicking, it’s often a buy signal, or at least a signal that cooler heads are no longer in charge. It also highlights what’s likely to happen if things in the economy ever do get bad and that the Fed put worked.

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

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Gold failed twice at $2475… time for a third try? 0 (0)

Gold has perked up in the past few minutes, rising a few dollars to $2430.

That comes after a large gain yesterday and a series of higher lows over the past month. Those are reasons for optimism.

However the main feature on the daily chart is a double top near $2475.

So higher lows vs a double top? Where do I come down?

A couple things sway me towards the bullish camp.

1) The pattern may be more of a consolidation from $2360-$2475 than a double top.

2) Speculative position was washed out.

Gold had a rough ride late last week and on Monday as global markets turned ugly. I’ve often highlighted that gold does well when things are bad but not when they’re really bad. That was the case Monday as the Nikkei fell 12%, US tech was beaten up and the VIX hit 60.

That triggered a run on specs, which were at eye-watering levels in the weekly CFTC report:

I would guess we will see a further drop in gold specs in the CFTC data due out later today. That will show that some of the speculative froth has been removed from gold.

The one thing that makes me cautious is the Middle East. The market has still priced in some chance of an Iran-Israel war or some wider hostilities but that’s looking less likely. It’s always tough to gauge how much of a geopolitical premium is priced in but I still suspect it’s higher now rather than lower.

Ultimately, price action will be the arbiter but with the US headed for a rate cutting cycle and the economy slowing, there case for buying gold dips is solid.

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

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Forexlive European FX news wrap 9 Aug – The risk sentiment remains positive 0 (0)

Markets:

  • CHF leads, AUD lags on the day
  • European equities higher;
    S&P 500 futures +0.20%
  • US 10-year yields down 4.1 bps
    to 3.951%
  • Gold
    up 0.20% to $2,432
  • WTI
    crude up 0.30% to $76.42
  • Bitcoin
    up 2.01% to $60726

The
European session today was once again uneventful with no fresh economic data or
notable headlines. The risk mood remains positive following yesterday’s US
jobless claims figures, and I don’t see anything that can change it going into
the weekend unless we get some scary headlines from the Middle East.

In the markets, risk assets are faring pretty well with equities and bitcoin being up to on the day. The major pairs are mostly flat and the US Treasuries are up. The notable mover is crude oil which is likely being supported by defensive positioning into the weekend risk as the tensions in the Middle East remain present.

In the American
session, we will get the Canadian labour market report where the consensus
expects the data to show 22.5K jobs added in July vs. -1.4K prior and the
Unemployment Rate to tick higher to 6.5% vs. 6.4% prior.

That’s all folks.
Have a great weekend!

This article was written by Giuseppe Dellamotta at www.forexlive.com.

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