• Need to be cautious in coming months after the many rate hikes
• Demand seen further contained due to delayed impact of rate hikes
• Need to avoid excessive tightening of monetary, credit conditions
• Fears of a wage-price spiral have sharply diminished

It’s pretty much just acknowledging the trend and I’m sure for some countries, they’d be glad that the rate hikes have stopped. But in the overall fight against inflation, it’s still too early to declare victory just yet. The trend is encouraging but price pressures could still end up being stickier than anticipated next year.

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

10-year yields are now down 6 bps to 4.818% as lower yields are also pinning the dollar down in European morning trade thus far. It’s a mix of moods in markets, with the Japanese yen also sliding amid a less hawkish than anticipated BOJ and then the announcement that there was no Tokyo intervention this month. Meanwhile, equities are able to claw its way back into positive territory with S&P 500 futures now up 0.2% on the day.

It’s still all to play for this week and in the case of the bond market, it’s all about the main event tomorrow. And no, it’s not the Fed.

Instead, the focus will be on the quarterly refunding announcement by the US Treasury in which they will unveil the details of their planning in terms of funding a widening budget deficit. In other words, bond traders will be looking to if they are going to step up sales of longer-term debt in relation to that. It’s all about the supply game.

This will then impact the upcoming auctions in November where we will see ones for 3-year notes (7 November), 10-year notes (8 November), and 30-year notes (9 November).

Watch this space. This is where the reverberations to broader markets will start from.

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

Headlines:

• Gold and oil fall back as safety flows unwind again after the weekend
• Bond yields nudge a little higher on the day
• ECB’s Kazimir: Additional tightening could come if incoming data forces us to
• ECB’s Simkus: Unless there are data surprises, current level of restriction is sufficient
• Spain October preliminary CPI +3.5% vs +3.5% y/y prior
• Germany Q3 preliminary GDP -0.1% vs -0.3% q/q expected
• Saxony October CPI +4.5% vs +5.4% y/y prior
• Bavaria October CPI +3.7% vs +4.1% y/y prior
• Eurozone October final consumer confidence -17.9 vs -17.9 prelim
• UK September mortgage approvals 43.33k vs 45.00k expected
• Switzerland October KOF leading indicator index 95.8 vs 95.0 expected
• SNB announces changes to remuneration of sight deposits
• Reminder: The clocks went back in Europe on Sunday

Markets:

• AUD leads, CHF lags on the day
• European equities higher; S&P 500 futures up 0.7%
• US 10-year yields up 4.7 bps to 4.892%
• Gold down 0.7% to $1,992.40
• WTI crude down 1.3% to $84.41
• Bitcoin up 2.1% to $34,576

It is shaping up to be a bit of a mixed start to the new week but it seems like the most dominant theme is the easing of safety bets from the end of last week. The Israel-Hamas conflict continues to rage on in the background but mostly centered around the Gaza Strip. While doleful, it isn’t really impacting global markets all too much for now at least.

And for the third Monday in a row, both gold and oil look set for a drop to start the week. Meanwhile, equities are catching a relief bid but could still face struggles later when Wall Street enters the fray. In the bond market, yields are higher but that hasn’t been of much help to the dollar today.

EUR/USD moved up slightly from 1.0550 to 1.0590 levels now, helped out by a slight better German Q3 GDP reading. USD/JPY while now little changed at 149.70 did see a drop earlier to 149.30, before finding some near-term support at the level.

The greenback is trading marginally lower as it trails against the commodity currencies on the back of a better risk mood overall. AUD/USD is up 0.7% to 0.6377 but the pair is still largely caught in a downwards channel as pointed out here.

As we look to the day ahead and to tomorrow, month-end flows will also be a consideration and that could keep the waters a little murkier before we get a better picture of things come November.

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

A position trader
is a type of trader who holds a position in an asset for a long period,
typically from months to years. Unlike day traders who make numerous trades
every day, or swing traders who hold onto positions for days or weeks, position
traders are more interested in the long-term performance of an asset.

Position
trading is often associated with „buy and hold“ investing,
but there’s a significant difference. While buy-and-hold investors will stick
with their positions no matter how the market moves, position traders aim to
profit from directional trends and will exit their positions if they believe
the trend is about to reverse. They rely heavily on fundamental analysis to
make their trading decisions, looking at factors such as a company’s overall
financial health, industry conditions, and macroeconomic indicators.

One of the
main advantages of position trading is that it doesn’t require constant
monitoring of the markets. Since position traders are not concerned with minor
price fluctuations, they don’t need to be glued to their screens all day. This
makes position trading a good choice for people who want to trade actively but
have other commitments.

However,
position trading also comes with risks. It requires a substantial amount of
capital since trades are held for a long time and can experience large
drawdowns. Also, because position traders are exposed to overnight and weekend
market risk, sudden market changes can lead to significant losses.

Here are
some tips for successful position trading:

1.
Patience
is key: Position
trading is a waiting game. You need to be patient enough to wait for the right
trading opportunity and for your trades to yield profits.

2.
Have
a solid understanding of fundamental analysis: As a position trader, you should be
able to analyze economic indicators, industry conditions, and company
financials to predict long-term market trends.

3.
Use
technical analysis to time your trades: While fundamental analysis is crucial for identifying
trading opportunities, technical analysis can help you decide when to enter and
exit trades.

4.
Diversify
your portfolio:
Don’t put all your eggs in one basket. Diversification can help you manage risk
and increase your chances of long-term success.

5.
Have
a clear trading plan and stick to it: Your trading plan should include your risk tolerance,
profit target, and criteria for entering and exiting trades. Once you have a
plan, stick to it. Emotional decision-making can lead to costly mistakes.

6.
Keep
learning: The
financial markets are constantly changing, and successful traders are those who
keep learning and adapting. Stay updated with market news, learn from your
trading experiences, and don’t be afraid to experiment with different
strategies.

In
conclusion, position trading can be a profitable strategy if done correctly. It
requires patience, a good understanding of fundamental analysis, and a
disciplined approach to risk management. With the right skills and mindset,
anyone can become a successful position trader.

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

In the world of finance, two types of currencies dominate
the scene – traditional currencies and cryptocurrencies. Both have their unique features, advantages, and
disadvantages. This article aims to provide a comprehensive comparison between
these two types of currencies, shedding light on their similarities,
differences, and offering tips for potential users.

Traditional Currencies

Traditional currencies, also known as fiat currencies, are issued and regulated by
governments around the world. Examples include the US Dollar, Euro, Japanese
Yen, British Pound, among others. They exist in both physical form (cash and
coins) and digital form (bank account balances).

Tip: When dealing
with traditional currencies, it’s crucial to understand the economic policies
of the issuing government as they can significantly impact the value of the
currency.

Cryptocurrencies

Cryptocurrencies are digital or virtual currencies that use
cryptography for security. Bitcoin, Ethereum, and Ripple are some popular
examples. Unlike traditional currencies, cryptocurrencies operate on
decentralized platforms.

Tip: Investing in
cryptocurrencies requires a good understanding of the technology behind them
and readiness to withstand high volatility.

Similarities

1. Medium of Exchange: Both traditional currencies and cryptocurrencies serve
   as a medium of exchange, enabling the purchase of goods and services.
2. Store of Value: Both can be used to store value over time, although
   the value of cryptocurrencies can be highly volatile.
3. Unit of Account: Both serve as a unit of account, providing a standard
   measure for pricing goods and services.

Tip: Regardless of
the type of currency, always consider its acceptance and stability before using
it as a medium of exchange or store of value.

Differences

1. Centralization: Traditional currencies are centralized, controlled by
   governments or central banks. In contrast, cryptocurrencies are
   decentralized, operating on a peer-to-peer network.
2. Regulation: Traditional currencies are subject to government
   regulations, while cryptocurrencies, due to their decentralized nature,
   are not regulated in the same way.
3. Anonymity: Cryptocurrencies offer a higher level of privacy and
   anonymity compared to traditional currencies.
4. Volatility: Cryptocurrencies are known for their high volatility,
   with prices often experiencing significant fluctuations. Traditional
   currencies are generally more stable.

Tip: When choosing
between traditional and cryptocurrencies, consider factors such as your risk
tolerance, need for anonymity, and understanding of the currency’s operation.

Conclusion

In conclusion, both traditional currencies and
cryptocurrencies have their place in the financial world. Traditional
currencies, being regulated and centralized, offer stability and wide
acceptance. On the other hand, cryptocurrencies, with their decentralized
nature and high volatility, offer opportunities for high returns (and losses),
privacy, and freedom from government control. The choice between the two
depends on individual preferences, risk tolerance, and understanding of each
currency type.

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

Since the Israel-Hamas conflict escalated earlier this month, gold and oil have been the two assets that are arguably impacted the most. And heading into every weekend since, we have seen both commodities gain ground only to fall back again on the following Monday. And with today’s decline, they look set for a third straight fall on the opening day of the new week.

Gold in particular is an interesting spot to watch after an attempted break above $2,000 on Friday. It is now down 0.6% to $1,993 and that could invalidate the breakout and put pressure back on the downside.

The Israel-Hamas conflict continues to be mostly centered around Gaza only and that is perhaps a cause for relief in broader markets. Equities are catching a bid today and that is translating elsewhere too, as we see in the price action in the commodities space.

Meanwhile, oil is down over 1% today tying in with a slight opening gap lower although price action in WTI crude continues to hold around $82 and $90 for now:

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

The back and forth continues in the bond market, as yields are trickling higher to start the new week. The more tentative mood on Friday might be caused by safety flows but we are seeing that unwind all across the board with both gold and oil sitting lower while equities are higher today.

That in turn is seeing 10-year Treasury yields be up nearly 5 bps to 4.892% in European trading. Still, it isn’t doing much to provide any help for the dollar as the greenback is marginally softer on the day. USD/JPY is able to recover slightly to 149.73 at least, up from a low of 149.30 earlier here. It’s still all to play for later in US trading, with month-end flows also a consideration in the coming day.

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

UPCOMING EVENTS:

• Monday:
  Australia Retail Sales.
• Tuesday: Japan
  Jobs data, Japan Retail Sales and Industrial Production, Chinese PMI, BoJ
  Policy Decision, Swiss Retail Sales, Eurozone GDP and CPI, Canada GDP, US
  ECI, US Consumer Confidence, New Zealand Jobs data.
• Wednesday:
  Chinese Caixin Manufacturing PMI, US ADP, Canada Manufacturing PMI, US ISM
  Manufacturing PMI, US Job Openings, FOMC Policy Decision.
• Thursday: Swiss
  CPI, US Challenger Job Cuts, BoE Policy Decision, US Jobless Claims.
• Friday:
  Chinese Caixin Services PMI, Eurozone Unemployment Rate, Canada Jobs data,
  US NFP, US ISM Services PMI.

Tuesday

The BoJ is
expected to keep everything unchanged with rates at -0.10% and YCC to target
the 10yr JGBs at 0% with a +/-50 bps soft cap and 1% hard cap. There is some
speculation about a tweak of the YCC policy though. The central bank is also expected
to raise its inflation forecasts to show prices exceeding its 2% target for
2023 and 2024.

The
Eurozone CPI Y/Y is expected to fall to 3.2% vs. 4.3% prior,
while the Core CPI Y/Y is seen at 4.2% vs. 4.5% prior. The ECB
has paused its tightening cycle at the last meeting with the market expecting
the central bank to remain on hold into the mid-2024 when it sees the ECB starting
the rate cut cycle.

The
US Consumer Confidence is seen ticking lower to 100 vs. 103 prior. The Conference
Board survey is more weighted
towards the labour market, while the University of Michigan survey is more
about households’ financial outlook. The labour market details have been
showing some weakness lately, which is something that we’ve been also seeing
via rising continuing claims.

Wednesday

The
US ADP has a poor track record in forecasting the US NFP, but it’s still a
market moving report, especially now that the labour market data is at the top
of the market’s attention. The consensus sees 150K jobs added in October vs.
89K in the prior
month.

The
US ISM Manufacturing PMI is expected to remain unchanged at 49.0 vs. 49.0
prior. The recent S&P
Global Manufacturing PMI beat expectations with the index printing at 50.0 as
the sector rebounded from the 2022 recession. Moreover, price pressures continue
to ease, which is a good development for the Fed.

The
US Job Openings are seen falling to 9.270M vs. 9.610M prior.
This has been a strong market moving report given that the labour market data
is now at the top of the market’s focus. For now, the US labour market has been
softening via less jobs rather than more layoffs, which is what the Fed has
been aiming for. This is something that we’ve been also seeing lately with the
rising continuing claims and falling initial claims.

The
Fed is expected to keep the FFR unchanged at 5.25-5.50%. The market doesn’t
expect the Fed to raise rates anymore and sees the central bank cutting in
mid-2024. The focus will be more on the guidance for the December meeting, but
we are unlikely to see any pre-commitment as the FOMC remains in a “wait and
see” mode. Expect to hear the usual “data-dependent”, “proceeding carefully”
and “resilient economy”, but this meeting is likely to be as “boring” as the July
one.

Thursday

The
Swiss CPI Y/Y is expected at 1.8% vs. 1.7% prior,
while the M/M reading is seen at 0.1% vs. -0.1% prior. The Switzerland
inflation has been in the SNB’s 0-2% target on both the headline and core
measures for quite some time already.

The
BoE is expected to keep the bank rate unchanged at 5.25%. Citing
Governor Bailey, this decision is likely to be a “tight” one as the hawks might
not like the recent
CPI report, while the doves may see the softness in the labour
market as a reason to keep rates steady.

The
US Jobless Claims last
week missed expectations with Continuing Claims now showing a clear upward
trend, which suggests that workers are finding it harder to get a job after
being laid off. This week the consensus sees Initial Claims at 210K vs. 210K
prior, while Continuing Claims are expected at 1795K vs. 1790K prior.

Friday

The
US NFP is expected to show 172K jobs added vs. a whooping 336K seen in the prior
month, and the Unemployment Rate to remain unchanged at 3.8%. The Average
Hourly Earnings Y/Y are expected to cool to 4.0% vs. 4.2% prior, while the M/M
figure is seen at 0.3% vs. 0.2% prior.

The
Canadian labour market report is expected to show 20K jobs added vs. 63.8K in
the prior
month and the unemployment rate to increase to 5.6% vs. 5.5% prior. The
focus will also be on wages as the BoC has been highlighting its focus
on wage growth.

The
US ISM Services PMI is expected to tick lower to 53.0 vs. 53.6 prior. The recent S&P
Global Services PMI beat expectations with the Services index returning
into expansion. The good news is that the price pressures continue to ease.

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

It’s tough to assess in exactly is happening in Gaza because electricity and communications have been largely cut off but it appears as though Israel’s ground offensive is underway. It came with an overwhelming number of airstrikes and reports of tanks entering in the northeastern corner of Gaza.

In any case, it hasn’t expanded into a broader Middle Eastern war. If anything, the US is signalling that it wants de-escalation. A general meant to advise Israel on a ground war has been recalled, ostensibly because the US advised Israel against a broad ground war and instead in favor of something more targeted. Evidently, Israel rejected that advice.

Now that could all be a smokescreen but I haven’t seen many signs that the US is trying to escalate this into a war with Iran, aside from a few leaks to the WSJ blaming Iran.

In any case, I expect this will set up as a sell-the-fact trade because so long as fighting is limited to Gaza, it’s a non-factor for the global economy.

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

• US September PCE core +3.7% vs +3.7% expected
• October final UMich US consumer sentiment 63.8 vs 63.0 expected
• BOJ likely to raise CPI forecast to 2% range – report
• Atlanta Fed GDPNow initial estimate for Q4 growth debuts at 2.3%
• Baker Hughes US weekly oil rig count 504 vs 502 prior
• Israel refused to respond to a long truce requested by Hamas – report
• Israeli military spokesman: Ground forces are expanding their operations tonight
• Reports suggest Israel ground incursion in Gaza; others suggest the US urges restraint
• There has been a ‚breakthrough‘ on Hamas hostage negotiations — CNN
• Sam Bankman-Fried takes the stand

Markets:

• Gold up $21 to $2006
• US 10-year yields down 1 bps to 4.83%
• WTI crude oil up $1.93 to $85.15
• S&P 500 down 0.5% or 20 points to 4117
• Nasdaq up 0.4%
• JPY leads, CHF lags

The cross-currents were deep and violent on Friday. Let’s break them down:

1) The fog of war

Early reports talked about a ‚breakthrough‘ in ceasefire talks but that was later disputed. It was followed by heavy strikes in Gaza and reports of tanks crossing, or getting ready to cross, into Gaza. Meanwhile, the Washington Post reports the US is trying to convinced Israel to abandon a ground assault altogether. With the late rally in gold, it seems as though the market concluded that escalation is more likely than the opposite into the weekend.

2) Tech turn

Amazon earnings and oversold conditions provided a reason for stocks to rally early and two hours into trading, it looked like we could see a rally into the weekend. But it wasn’t to be as tech stocks sagged aside from Amazon, Meta and Intel.

3) Pain in stocks elsewhere

The Russell 2000 broke major support today to touch (and close) at a three year low and back at 2018 levels. It illustrates the broader pain in equities that’s masked by strength in a few megacap names.

4) Yields slightly lower

Yields edged down and weren’t a big factor on Friday with 10s wrapping up the week 16 bps from the 5% threshold. That will be tested Wednesday with the FOMC and the quarterly refunding announcement.

5) Bank of Japan in focus

Some leaks suggest the BOJ will shift its 2024 inflation outlook higher and the fear is that could also lead to the end of yield curve control and steps towards rate hikes as soon as Tuesday’s meeting. That thinking is likely why USD/JPY fell and perhaps why the US dollar was broadly soft, particularly before late-day worries about Gaza.

6) Economic data

Yesterday’s PCE report foreshadowed higher headline inflation but that never materialized. Still, inflation did rise and the expectations metrics in the UMich report were worrisome. It all makes it less likely the Fed takes rate hikes off the table.

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