USD/JPY ended four days of selling yesterday with a doji star and now a retracement is underway. The pair is up 44 pips to 148.83.

It traded as high as 149.34 earlier but has since sagged. The mood in markets is quiet ahead of the US holiday but also moderately negative. US equity futures are down about 0.2% and oil prices off by nearly $1.

Yen crosses are broadly higher today but have only recouped a fraction of their recent losses.

Looking ahead, eyes will be on the Bank of Japan and the possibility for yen-supportive policy changes like ending yield-curve control or beginning a cycle of rate hikes. Officials have signaled a plan to patiently lift rates starting in the spring but it will depend on how economic data evolves. For now, they also have some respite on the currency side with the US dollar softening on expectations of a dovish Fed turn. That, however, could swing with upcoming US economic data, including today’s weekly jobless claims report.

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

• Order book balance -35 vs -26 prior
• Output balance for the past three months -17 vs -6
• Output price expectations +11 vs +7 prior

The latest UK manufacturing data point to a stagflationary environment with orders down the most in nearly three years and prices rising. Factories are struggling with weak demand due to high interest rates.

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

They are demand for a record monthly pay increase of ¥12,000, or 4% of the base pay, for 2024. JAM chairman, Katahiro Yasukochi, spoke to reporters and said that „what is important is to realise wage growth that is faster than price hikes“. This is certainly what the BOJ and Tokyo wants to hear after having pressured firms to raise wages even more next year.

For some context, Japan’s largest trade union confederation had earlier demanded for a pay increase of 5% going into upcoming the spring wage negotiations in March.

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

USD

• The Fed left interest rates unchanged as
  expected with basically no change to the statement.
• Fed Chair Powell stressed
  once again that they are proceeding carefully as the full effects of policy
  tightening have yet to be felt.
• The recent US CPI missed
  expectations across the board bringing the expectations for rate cuts
  forward. 
• The labour market is
  starting to show weakness as Continuing Claims are now
  rising at a fast pace and the recent NFP report
  missed across the board.
• The US Consumer
  Confidence and University of
  Michigan Consumer Sentiment continue to fall.
• The latest US ISM
  Manufacturing PMI missed expectations by a big margin,
  followed by a disappointing ISM Services PMI,
  although the latter remained in expansion.
• The recent US Retail Sales beat
  expectations, while the US PPI missed
  forecasts by a big margin.
• The recent Fedspeak has been leaning on
  the hawkish side, but last week’s inflation report pretty much confirmed that
  the Fed might be done for the cycle.
• The market doesn’t
  expect the Fed to hike anymore.

AUD

• The
  RBA raised the cash rate by 25 bps as expected as the central bank
  judged that the move was warranted to be more assured that inflation would
  return to target in a reasonable timeframe.
• The
  CPI report recently surprised to the upside
  prompting the market to price in a higher chance of another rate hike from the
  RBA in November, which is what we eventually got.
• The
  RBA Governor Bullock has been leaning on a more hawkish side recently, but the
  central bank remains optimistic on the future outlook.
• The
  labour market continues to weaken as seen also
  recently with the bulk of jobs added being part-time.
• The
  wage price index surprised to the upside as wage
  growth in Australia remains strong.
• The
  recent Australian Manufacturing PMI fell further into contraction with
  the Services PMI plummeting back into contraction as well.
• The
  RBA Meeting Minutes released today were more hawkish
  than expected and showed that the central bank is now more worried about
  inflation expectations getting out of hand.
• The
  market expects the RBA to hold rates steady at the next meeting.

 

AUDUSD Technical Analysis –
Daily Timeframe

On the daily chart, we can see that AUDUSD finally
broke above the key 0.65 resistance and
extended the rally towards the 0.66 handle. The next target for the buyers
should now be the major trendline around
the 0.6650 level where we can also find the 61.8% Fibonacci retracement level.
That’s where we can expect the sellers to step in more aggressively with a
defined risk above the trendline.

AUDUSD Technical Analysis –
4 hour Timeframe

On the 4 hour chart, we can see more closely the
breakout but we can also notice the divergence with the
MACD. This is
generally a sign of weakening momentum often followed by pullbacks or
reversals. In this case, we could see a pullback into the broken resistance now turned support where
the buyers will have a better risk to reward setup to target the major
trendline. The sellers, on the other hand, will want to see the price falling
back below the 0.65 level to pile in and target the lows.

AUDUSD Technical Analysis –
1 hour Timeframe

On the 1 hour chart, we can see that the
breakout of the descending
triangle led to an increase in the bullish momentum which was
enough to finally break above the key resistance zone. More aggressive buyers
continue to lean on the red 21 moving average but
from a risk management perspective, the trendline offers a better risk to
reward opportunity.

Upcoming Events

This week is pretty empty on the data front with the US
on holiday for Thanksgiving Day in the final part of the week. Today, we have
the FOMC Meeting Minutes but it’s unlikely to be market moving given that it’s
three-weeks old data. Tomorrow, we have the US Jobless Claims report which is
probably going to be the most important release of the week. On Thursday, we
have the Australian PMIs while on Friday we conclude the week with the latest
US PMIs.

 

This article was written by FL Contributors at www.forexlive.com.

Cryptocurrency, a digital
or virtual form of currency that relies on encryption techniques, has
gained significant attention in recent years. Bitcoin, the pioneering
cryptocurrency, paved the way for many others to emerge. While it provides
certain advantages over traditional financial systems, such as decentralization
and increased privacy, cryptocurrencies are not immune to instability issues.

One of the primary concerns related to cryptocurrency is its
inherent volatility. Unlike fiat currencies that are regulated by central banks
and backed by governments, cryptocurrencies lack such centralized control.
Instead, their value is determined solely by market demand and supply dynamics.
This gives rise to frequent price fluctuations, sometimes occurring within
minutes or even seconds.

The lack of stability in cryptocurrency prices poses
challenges for both investors and businesses. Investors seeking to profit from
trading cryptocurrencies face uncertainty and risk due to the highly volatile
nature of the market. Rapid price changes can result in significant gains or
losses, making it a speculative venture. Moreover, the absence of regulatory
mechanisms means that market manipulation and fraud can occur, exacerbating
instability further.

For businesses, accepting cryptocurrencies as payment may be
appealing due to lower transaction costs and faster cross-border transfers.
However, the constant fluctuation in cryptocurrency values presents
difficulties when pricing goods and services. Calculating revenue and profits
becomes problematic, especially for small businesses operating on tight
margins. Additionally, the risk of sudden devaluations could deter businesses
from adopting cryptocurrencies altogether.

Another factor contributing to the instability of
cryptocurrencies is the lack of widespread adoption. Despite their growing
popularity, cryptocurrencies are still far from being universally accepted as a
medium of exchange. The limited number of businesses, particularly large
retailers, that accept cryptocurrencies inhibits their mainstream usage. Such
limited adoption prevents cryptocurrencies from achieving stability through
increased market liquidity and reduces their appeal as a reliable store of value.

Moreover, government regulations play a crucial role in
shaping the stability of cryptocurrencies. As governments become more involved
in the cryptocurrency space, introducing regulations and oversight, the impact
on stability becomes significant. Regulatory actions can range from imposing
restrictions on cryptocurrency trading to outright bans, as observed in certain
countries. Uncertainty surrounding government policies and their effect on
cryptocurrencies add to the instability, as investors and businesses struggle
to predict future developments.

The emergence of new cryptocurrencies further compounds the
instability within the cryptocurrency market. The ongoing creation of
alternative coins, referred to as altcoins, contributes to the fragmentation of
investments and dilutes market concentration. With thousands of different
cryptocurrencies available, each with its own features and potential value,
investors are faced with an overwhelming array of options. This proliferation
of cryptocurrencies leads to a lack of standardization and increases uncertainty,
making it challenging for any single cryptocurrency to establish widespread
stability.

In conclusion, while cryptocurrencies offer innovative
solutions and benefits, they come with inherent instability issues. Volatility,
limited adoption, government regulations, and the constant emergence of new
cryptocurrencies all contribute to the unpredictable nature of the market.
Investors and businesses must carefully
consider these factors before engaging with cryptocurrencies, understanding
the risks associated with their instability.

This article was written by FL Contributors at www.forexlive.com.

Blockchain technology, which was initially developed to
support cryptocurrencies like Bitcoin, has rapidly evolved and found
applications beyond the realm of digital currency. With its decentralized and
transparent nature, blockchain offers numerous possibilities for
revolutionizing various industries. Here are some prominent applications of blockchain
technology beyond cryptocurrency:

1. Supply Chain Management

Blockchain can revolutionize supply chain management by
providing a transparent and immutable system for tracking products from their
origin to the end consumer. By recording every step in the supply chain on a
blockchain, businesses can ensure authenticity, reduce fraud, and improve trust
among all stakeholders. This technology enables real-time visibility of product
movement, ensuring that consumers have access to accurate information about
their purchases.

2. Healthcare Records

Blockchain has the potential to transform healthcare records
management. Currently, patient data is stored in fragmented systems, making it
difficult to access and share information securely. By implementing blockchain
technology, patient records can be securely stored and easily accessible to
authorized parties. Moreover, patients can have control over who can access
their personal health information, enhancing privacy and security.

3. Voting Systems

Traditional voting systems often suffer from issues such as
fraud, tampering, and lack of transparency. Blockchain offers a solution by
creating a secure and transparent platform for conducting elections. Each vote
can be recorded on the blockchain, ensuring immutability and eliminating the
possibility of manipulation. This could greatly enhance the integrity and
trustworthiness of electoral processes.

4. Intellectual Property Protection

Intellectual property rights can be efficiently protected
using blockchain technology. By registering patents, copyrights, or trademarks
on a blockchain, creators can establish proof of ownership and protect their
work from unauthorized use. The decentralized nature of blockchain ensures that
the information cannot be altered or deleted, providing a robust and
trustworthy way to establish intellectual property rights.

5. Financial Services

Beyond cryptocurrencies, blockchain can revolutionize the
financial sector by providing secure, transparent, and efficient transactions.
Cross-border payments can be facilitated instantly and at lower costs,
eliminating the need for intermediaries. Additionally, blockchain-based smart
contracts can automate complex financial agreements and streamline processes
such as lending, insurance, and trade finance.

6. Energy Trading

Blockchain technology can disrupt the energy industry by
enabling peer-to-peer energy trading. Through decentralized platforms,
consumers can directly buy and sell excess energy produced from renewable
sources. This not only promotes the use of clean energy but also eliminates the
need for traditional energy providers, fostering a more sustainable and
efficient energy market.

7. Supply Chain Finance

By combining blockchain with other emerging technologies
like the Internet of Things (IoT) or artificial intelligence (AI), supply chain
finance can be greatly improved. Smart contracts on the blockchain can
automatically trigger payments when certain conditions are met, reducing
paperwork and delays. This streamlines supply chain financing and creates
opportunities for small businesses to access affordable credit.

In conclusion, blockchain
technology has far-reaching applications beyond cryptocurrency. Its
decentralized and transparent nature makes it suitable for enhancing trust,
security, and efficiency in various industries. As we continue to explore and
develop blockchain solutions, the potential for innovation and disruption
remains immense.

This article was written by FL Contributors at www.forexlive.com.

• Markets are putting too much weight on current data releases
• Need to be concerned about potential inflation persistence
• Need to cement commitment to 2% inflation target (Mann)
• More tightness in monetary policy now is important (Mann)
• Speed limit of UK economy is low now (Ramsden)
• We are very clear in distancing ourselves from market expectations (Ramsden)
• Fall in headline inflation is not a good guide on inflation trend (Haskel)

There’s a lot of pushback here against what markets are presuming will be the trend moving forward on the inflation outlook. But I reckon this is all an added safety measure to keep the door open to tighten policy further if need be. As you can tell so far, they’re not touching much on the struggling UK economic performance – which would be a hindrance to more rate hikes.

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

The risk of a hard landing in the U.S.
economy is growing and may even increase in 2024. Statistics show that the Fed
has successfully curbed inflation by raising key rates. After hiking it 11
times, the U.S. Fed has contained its enthusiasm for three consecutive meetings
by keeping the rate hike on pause. On this basis, we can assume that the
regulator’s restraining cycle is over, and it is time to assess the effect on
the economy.

The risk of a hard landing in the U.S.
economy is growing and may even increase in 2024. Statistics show that the Fed
has successfully curbed inflation by raising key rates. After hiking it 11
times, the U.S. Fed has contained its enthusiasm for three consecutive meetings
by pausing the rate hiking. The regulator’s restraining cycle is over, and it
is time to assess the effect on the economy.

Hard landing of the U.S. economy

The Fed interest rate hike usually does
not immediately lead to a slowdown in economic growth. It takes time for the
effect of high rates to be transferred through the mortgage and consumer credit
market into the economy. Historical data show that, on average, 2–3 years pass
from the beginning of a rate hike cycle to the start of a recession in the U.S.
Its economy shows a weakening of consumer spending due to a compounding
increase in borrowing costs with periodic renewed storms in the banking sector.

In turn, in the labour market, we are
seeing a smooth rise in unemployment and a slowdown in wage growth. Whether
this growth will turn into a more severe recession depends on how hard the cuts
in fiscal stimulus, rising mortgage rates (and the cooling of the property
market as a consequence), and soaring fuel prices hit American households. We
may see only a slight cooling of demand—or perhaps a full-blown recession.

‚In this context, continued high rate
policy by the Federal Reserve is disastrous and is unlikely to be used further
because the current level of rates is sufficient to contain inflation,‘ said
Kar Yong Ang, the Octa financial market analyst. ‚This approach will maintain
positive (albeit marginal, creeping) growth in the economy as a whole‘, he
added.

Recent inflation data refreshes the big
picture—the U.S. dollar is weakening

According to the data released by the U.S. Bureau of Labor
and Statistics on 14 November 2023, the U.S. consumer price growth rate (CPI)
in October decreased to 3.2% from 3.7% in September. The reported results were
better than economists‘ forecasts of 3.3%. As core inflation came in below
expectations, this was perceived as a factor that the Fed rate hike in December
has been ruled out. These market expectations caused a sharp drop in the U.S.
Dollar Index (DXY) to a 2-month low.

Before the release of the Labor Ministry
report, traders were estimating an 86% chance that the Fed would keep the
benchmark interest rate unchanged at the December meeting and a 25% chance of a
25bp hike in January 2024. However, after the release of the data, these
expectations have changed dramatically: investors are almost 100% confident
that the Fed has completed the current tightening cycle and may even cut rates
at least four times in 2024.

‚Investors now bet the world’s major
central banks will end their long series of interest rate hikes. Based on
market expectations, no changes should be expected in the current and next
quarter,‘ said Kar Yong Ang, the Octa financial market analyst. ‚Deflation is
likely to force the Fed to lower the benchmark rate in late 2024 to the
2.50%–2.75% range‘, he added.

The slowdown in the U.S. labour market,
lower inflation, and market expectations of a rate cut in 2024 make it possible
to capitalise on the weakening dollar in the short term. The USDJPY currency
pair looks like the most exciting instrument—a solid technical picture confirms
the dollar’s decline here. The price tested the previous year’s high, which is
now a resistance level, ensuring the potential decrease of USDJPY to the range
of 144.00–144.50 by the end of the current year.

Octa is an
international broker that has been providing online trading services worldwide
since 2011. It offers commission-free access to financial markets and various
services already utilised by clients from 180 countries with more than 42
million trading accounts. Free educational webinars, articles, and analytical
tools they provide help clients reach their investment goals.

The company is
involved in a comprehensive network of charitable and humanitarian initiatives,
including the improvement of educational infrastructure and short-notice relief
projects supporting local communities.

Octa has also won
over 60 awards since its foundation, including the ‚Best Educational Broker
2023‘ award from Global Forex Awards and the ‚Best Global Broker Asia 2022‘
award from International Business Magazine.

This article was written by FL Contributors at www.forexlive.com.

As we get into Q4, just about everyone is coming around to the idea that the Chinese economy has bottomed out. I still hold my reservations as we all know, data from China is well.. data from China. In any case, HSBC is the latest to revise higher their forecasts for China following their lower revisions in September here.

They now see 2023 GDP growth forecast at 5.2% from 4.9% previously and 2024 at 4.9% from 4.6% previously.

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

The Dow Jones last week jumped following the miss
in the US CPI report
and went into consolidation ever since. The market doesn’t expect the Fed to
hike anymore and it’s pricing in the
first rate cut in May 2024.

At the moment, it looks like the market is still
trading based on inflation and interest rate expectations, but the softening in
the labour market as seen with the last NFP and Jobless Claims last
week, is gathering pace and it’s something to keep a close eye on.

Dow Jones Technical
Analysis – Daily Timeframe

On the daily chart, we can see that the Dow Jones is
consolidating at a key resistance level at
35000 following the incredible rally triggered by the miss in the US CPI
report. The rally was indeed overstretched as depicted by the distance from the
blue 8 moving average. In such
instances, we can generally see a pullback into the moving average or some
consolidation before the next move.

Dow Jones Technical
Analysis – 4 hour Timeframe

On the 4
hour chart, we can see that the price is now near the upward trendline. This is
where we can expect the buyers to step in with a defined risk below the
trendline to position for a break above the 35000 resistance. The sellers, on
the other hand, will want to see the price breaking lower to pile in and
position for a drop back into the 34000 support.

Dow Jones Technical
Analysis – 1 hour Timeframe

On the 1 hour chart, we can see that the
price is diverging with
the MACD right
at the key resistance level. This is generally a sign of weakening momentum
often followed by pullbacks or reversals. In this case, it might be a
confirmation for the sellers that might indeed see a deeper pullback into the
34000 support. Watch out for what happens around these key levels.

Upcoming Events

This week is pretty empty on the data front with the US
on holiday for Thanksgiving Day in the final part of the week. Tomorrow, we
have the FOMC Meeting Minutes but it’s unlikely to be market moving given that
it’s three-weeks old data. On Wednesday, we have the US Jobless Claims report
which is probably going to be the most important release of the week. Finally,
on Friday, we conclude the week with the latest US PMIs.

This article was written by FL Contributors at www.forexlive.com.