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DXY Potential Forecast | Pre-CPI | 14th March 2023Hi everyone, back with a pre CPI forecast. Today's CPI release will be wild and will be the determining factor to solidify the general direction and bias on the USD. There has been very bearish sentiments on the USD since last Friday after NFP's release. Fundamental context 1. Employments was good, well above the forecasted or what the market has been pricing in. 2. This shows the strong labor market in the US economy. 3. However, average hourly earnings increased at a decreasing rate to 0.2% from 0.3%. 4. This shows the slowing down of the wage inflation, which is directly correlated with the inflation print and numbers, showing an important signal/sign that inflation could be worse off. 5. In addition, unemployment rate increased by 0.2% compared to previous months. 6. The average earnings and unemployment rate prints showcases the effect of the continuous rate hikes that the Fed has partaken in. 7. This directly discourages the Fed from taking on a more hawkish stance in the market, upon seeing the fruition of the restrictive policy the Fed has performed. CPI 1. If CPI were to be worse off than forecasted, this really solidifies the bearishness of the USD as it confirms that the Fed policy has been coming to fruition and there might not be a need to hike interest rates anymore. 2. However, if CPI print continues to be resilient and strong or greater than expectations, there is a marked chance that the Fed will hike interest rates by 50bps in the upcoming FOMC meeting, in which this hawkish stance will continue to drive the market bullish for the USD. 3. All eyes will be on the CPI print tonight. Regards, Chern Yu
TVC:DXYShort
by Jon_Jones_Junior
1
EUR/USD Takes a Breather After U.S. CPI Data, ECB EyedThe U.S. dollar took a breather on Tuesday following the previous day’s sell-off as markets’ jitters surrounding the Silicon Valley Bank (SVB) collapse quieted, while U.S. consumer inflation data showed a slight deceleration in February. At the time of writing, the EUR/USD pair is trading at the 1.0730 zone, virtually unchanged on the day, with the upside still capped by the 1.0750 zone. Meanwhile, the DXY index trimmed daily gains and stabilized around 103.60 after hitting a daily high of 104.05. The U.S. Bureau of Labor Statistics reported that the Consumer Price Index came in line with expectations in February, with annualized inflation hitting 6%, down from its previous reading of 6.4%. On the other hand, the core CPI inflation rate was reported at 5.5% YoY, in line with analysts’ consensus. Following the data, U.S. bond yields recovered across the curve, helping the dollar. The 10-year bond yield is trading at 3.69%, while the 2-year rate recovered nearly 7% and stands at 4.25%. Amid the banking crisis triggered by the SVB collapse on Friday, investors seem to have taken out of the table a 50 bps rate hike by the Federal Reserve at the March 21, 22 meeting. The bets on a 25 bps increased to 73%, while on Monday, the case of a no-change decision was stronger. Wall Street indexes welcomed CPI data and the improvement in sentiment. The S&P 500 gained 1.65%, the Dow Jones Industrial Average advanced 1.06%, and the Nasdaq Composite posted a 2.14% daily advance. On Thursday, the European Central Bank (ECB) will decide on monetary policy, with analysts expecting a 50 basis point rate hike despite the recent developments. Technically speaking, the EUR/USD pair maintains a slightly bullish short-term outlook, according to indicators on the daily chart. The pair is trading above its key moving averages, and the RSI and MACD have moved into the green. On the upside, the following resistance levels are seen near this week’s highs at the 1.0750 zone and 1.0800 ahead of the more significant 1.0900 region. On the other hand, supports could be faced at the 20-day SMA at 1.0630 and the 1.0600 psychological level, followed by the 100-day SMA at 1.0545.
by Alex_Boltyan_FXAnalyst
⚠️ 🔥 No Time to FOMO!!!! ⚠️ 🔥⚠️ 🔥 NO TIME TO FOMO!!!! ⚠️ 🔥 Goodday for the markets and Crypto as the news came out being ok: US inflation slows to 6% annual rate amid looming banking crisis Let me rephrase it: the worst news where avoided, inflation did not rise. Look at CPI chart maybe: SP-5OO gets rejected despite the predictions for a 'softer more dovish' monetary policy: In the meantime bank charts look pretty bad to me: What i called 'good scenario' level did work as support for BKX but it will be retested: Also, Credit Swiss is nothing but bad news: www.bloomberg.com Lastly , i really don't like this rejection on Wells Fargo: In a few words: let's be careful... No love these days, just volatility. The FXPROFESSOR
CME_MINI:ES1!
by FX_Professor
1
SVB: Understanding and Managing Interest Rate Risks CBOT: 10-Year Treasury Futures ( CBOT:ZN1! ) Last Wednesday, Silicon Valley Bank (SVB) NASDAQ:SIVB announced that it incurred $1.8 billion loss in the sales of its bond portfolio and sought to issue new shares. Within 48 hours, a bank-run induced by panic customers brought down the legendary bank. On Friday, US banking regulators seized control of SVB. By Sunday, the Treasury Department, the Federal Reserve, and Federal Depository Insurance Corporation (FDIC) jointly announced a rescue plan that would make whole all depositors. However, SVB shareholders are not protected. Why has happened to the well-respected and once well-capitalized bank? Opportunity and Risk Go Side-by-Side Traditional banks seldom extend credit to startups, which are mostly under-collateralized, with little or no profit and big uncertainties about their future survival. SVB developed a niche competitive edge to provide banking services to companies funded by venture capitals. In the past 40 years, it nurtured many high-profiled tech startups through their entire life cycle, from early-stage to IPO and to Big-Tech giants. If Sequoia Capital invested in your firm and you apply for a loan from a commercial bank, you can expect the loan officer to ask: “Sequoia Who?” But if you go to SVB, they would say: “$10 million will be in your account tomorrow.” VCs are exceptionally good at spotting future technological trends, and they follow a rigorous due diligence process to pick investing targets. By working with VCs and startups closely, SVB created an ecosystem that foster technological innovations, and grew to become the 16th largest US bank by deposit. However, SVB’s concentration in the high-tech sector also make it vulnerable to a boom-and-bust cycle. Last year, bear market hit the industry hard. Publicly traded firms couldn’t raise money with falling share prices. Private companies found the path to IPO got blocked. As startup clients withdrew deposits to keep their companies afloat, SVB is short on capital. It was forced to sell most available-for-sale bonds at a huge loss. Bad news travelled fast in close-knit tech investing community. VCs urged their portfolio companies to get the hack out of SVB. All told, customers withdrew a staggering $42 billion of deposits on Thursday. By the close of business day, SVB had a negative cash balance of $958 million, according to the filing, and this triggered the government takeover. A Commercial Bank with a Failing Grade In fiscal year 2022, SVB earned $4.5 billion in Net Interest Income (NII) and $1.7 billion in non-interest income. When you take away the bells and whistles, SVB is by large a commercial bank. About 73% of its revenue comes from taking in deposits at a low interest rate and making loans at a higher interest rate. Based on its 2022 10K filing, SVB managed $209.2 billion in total interest-bearing asset and earned $5.7 billion. This represented an effective yield of 2.73%. During the same period, SVB paid out $1.2 billion in funding cost, which equated to 0.57%. • Therefore, in 2022, its NII = 2.73% - 0.57% = 2.16% • In comparison, its NII for year 2021 was 2.02% (=2.09% - 0.07%). • On the surface, SVB was doing well, with NII spread increasing by 14 basis points year-over-year. What has gone wrong then? Dive deeper into SVB’s balance sheet, we see the long-dated Treasury bonds and illiquid mortgage-backed securities it held got hammered by the rising interest rates. Simply put, SVB got its interest payment back, but the value of its investment principal eroded in a huge way in a rate-hiking environment. All in all, managing interest rate risk is at the core of banking business. A Naked Bond Portfolio In its 10K, SVB puts its investment portfolio in Available-For-Sales (AFS), Held-To-Maturity (HTM) and Non-marketable securities categories. AFS balance was $26.1 billion as of December 31st, including: • U.S. Treasury securities $ 16,135m (61.9%) • Agency-issued MBS $6,603m (25.3%) • Agency-issued CMBS $1,464m (5.6%) • Foreign government debt securities $1,088m (4.2%) • Agency-issued CMO—fixed rate $678m (2.6%) • U.S. agency debentures $101m (0.4%) • Total AFS securities $26,069m (100%) Last week, SVB sold $21 billion in the AFS portfolio and incurred a loss of $1.8 billion, or -8.6%. AFS assets are marked to market every quarter. My understanding is that the loss figure was based on selling price vs. year-end fair market value. Total loss calculated from purchasing price could be much bigger, as these bonds may have been marked down multiple times during previous quarters. Evidence: Since March 2022, CBOT 10-Year Treasury Futures (ZN) price went down from 124 to 109 (-12%) and 30-Year Treasury Bond (ZB) fell from 152 to 118 (-22%). CBOT Treasury futures market, with its sheer size and liquidity, makes it the marketplace of choice to manage interest risk in times of uncertainties. Each ZN contract has a notional value of $100,000. • On Monday March 13th, daily trading volume is 3,760,911 lots, which translates into total notional of $376 billion. Open interest (OI) stands at 4,311,338, or $431 billion in notional. • Volume and OI for ZB are 719,518 and 1,209,881, respectively. Notional value for each is $72 billion and $121 billion, respectively. What’s Next On Friday, Signature Bank customers spooked by the SVB collapse withdrew $10 billion. That quickly led to the bank failure. Regulators announced Sunday that Signature was being taken over to protect its depositors and the stability of the U.S. financial system. Despite government intervention over the weekend, fear ran contagious through the financial industry this Monday. San Francisco’s First Republic Bank, which had $212 billion in assets at the end of 2022, saw its stock price plunge as much as 70% when the market opened Monday morning. By market close, US stock market stabilized. Investors wonder if a banking crisis could be the final punch to end the year-long Fed rate hikes. Lessons Learnt As investors, we usually allocate our financial assets across various instruments, such as stocks, bonds, and derivatives. The 60 (stock) / 40 (bond) portfolio is the most popular advice from Wall Street. People generally pay more attention to what stocks to buy and hold, but we may not think twice about managing interest risk in a rising rate environment. The SVB fallout shows that even the safest, risk-free Treasury bonds, if not actively managed, could fall prey to interest rate changes and liquidity risk, resulting in loss of market value. For me, this is a wake-up call and a good time to review my bond holdings. Some may be hidden in a 401K retirement plan. Hedging interest rate risk with CBOT Treasury futures and Micro Yield futures could go a long way to stay solvent. A View on Interest Rate Trajectory Today, the Bureau of Labor Statistics reports that the consumer price index rose 0.4% in February and 6% from a year ago, in line with market expectations. This is the most recent data the Fed will consider before it makes interest decision on March 22nd. Inflation is cooling, but still too high. A bank run shows how damaging rising interest rate is to the economy. Whether the Fed will continue its rate hikes, pause them, or end them altogether, I think all options are open. In my view, interest rate is in an uncharted territory once again. With investors in panic mode, they will likely overreact to the Fed decision. This may be a good time to place an order of out-of-the-money options on CBOT 10-Year Treasury Futures (ZN). On March 14th, the June ZN contract is quoted at 113’220. Quoting convention in Treasury market is 100 and 1/64th. The quote reads as (113 + 22.0/64), or $113.34375 on $100 par value. If the Fed slows or pause the hike, Treasury price will likely go up. Call options would be appropriate in this case. • The 115-strike call is quoted 0’20 (=20/64). This is converted into $312.5 premium on the $100,000 contract notional for each contract. If the Fed stays its course on fighting inflation, Treasury price could fall. And put options would be a way to express your view. • The 112-strike put is quoted 0’14, or $218.75 premium per contract. Happy Trading. Disclaimers *Trade ideas cited above are for illustration only, as an integral part of a case study to demonstrate the fundamental concepts in risk management under the market scenarios being discussed. They shall not be construed as investment recommendations or advice. Nor are they used to promote any specific products, or services. CME Real-time Market Data help identify trading set-ups and express my market views. If you have futures in your trading portfolio, you can check out on CME Group data plans available that suit your trading needs www.tradingview.com
CBOT:ZN1!Long
by JimHuangChicago
6
DXY Potential Forecast | Pre CPI | 14th March 2023Fundamental Backdrop 1. Employments was good, well above the forecasted or what the market has been pricing in. 3. However, average hourly earnings increased at a decreasing rate to 0.2% from 0.3%. 4. This shows the slowing down of the wage inflation , which is directly correlated with the inflation print and numbers, showing an important signal/sign that inflation could be worse off. 5. In addition, unemployment rate increased by 0.2% compared to previous months. 6. The average earnings and unemployment rate prints showcases the effect of the continuous rate hikes that the Fed has partaken in. 7. This directly discourages the Fed from taking on a more hawkish stance in the market, upon seeing the fruition of the restrictive policy the Fed has performed. CPI 1. If CPI were to be worse off than forecasted, this really solidifies the bearishness of the USD as it confirms that the Fed policy has been coming to fruition and there might not be a need to hike interest rates anymore. 2. However, if CPI print continues to be resilient and strong or greater than expectations, there is a marked chance that the Fed will hike interest rates by 50bps in the upcoming FOMC meeting, in which this hawkish stance will continue to drive the market bullish for the USD. 3. All eyes will be on the CPI print tonight. NOT FINANCIAL ADVICE DISCLAIMER The trading related ideas posted by OlympusLabs are for educational and informational purposes only and should not be considered as financial advice. Trading in financial markets involves a high degree of risk, and individuals should carefully consider their investment objectives, financial situation, and risk tolerance before making any trading decisions based on our ideas. We are not a licensed financial advisor or professional, and the information we are providing is based on our personal experience and research. We make no guarantees or promises regarding the accuracy, completeness, or reliability of the information provided, and users should do their own research and analysis before making any trades. Users should be aware that trading involves significant risk, and there is no guarantee of profit. Any trading strategy may result in losses, and individuals should be prepared to accept those risks. OlympusLabs and its affiliates are not responsible for any losses or damages that may result from the use of our trading related ideas or the information provided on our platform. Users should seek the advice of a licensed financial advisor or professional if they have any doubts or concerns about their investment strategies.
TVC:DXYShort
by OlympusLab
DXY and expected CPI figures - inflationThis chart has a lovely little item called US INFLATION indicator. As you can see, on this daily chart, it is showing the current rate of inflation at the bottom of the chart Forecast figure was 6 with a previous of 6.4 - it has not been reached and yet, signs are that the FED will likely not raise interest rates again at the end of the month From now till the 22nd March, we are all playing a guessing gae really. But The real question is what will happen to inflation now ? It is a catch 22. do nothing to cap it and t will likely run riot, Cap it with raising Rates, and more Banks may collapse, not to mention smaller Firms Maybe it is time for Banks to start thinking about simply cutting their Profit margins to enable companies to continue with lower bank rates and the governemnt maybe introduces Caps on prices ?
TVC:DXY
by Orriginal
🏆🖨️💰 When the Champions of Inflation hate Bitcoin 🌴 ₿🌴👨🏽‍🦳💪 Dan Peña has made a name for himself as a successful entrepreneur, investor, and business coach. However, he has also been a controversial figure, with some of his opinions and actions drawing criticism. 🌴 ₿🌴 One example is his stance on Bitcoin, which he has publicly stated will go to zero. While many experts and investors believe that Bitcoin has the potential to revolutionize the financial industry, Peña has been highly critical of the cryptocurrency. He may not fully understand or appreciate the unique features of Bitcoin, such as its deflationary nature nor does he seem able (or willing) to navigate a rapidly changing economic landscape. 🏆Now let's dive into how this 'CHAMPION OF INFLATION' has created his legacy: 🥁Dan Peña has created jobs and achieved great success through his bold and unconventional approach to business. However, his success has not come without consequences, and I tend to think that Peña's activities have contributed to both inflation and environmental degradation. 🏗️🏢🌇🏢🏭 One of the ways the many Peñas has contributed to inflation is through investments in the real estate market. By investing in properties and then selling them at higher prices, Peña has been able to generate significant profits. However, this has also led to higher property values, which can make it more difficult for middle-class families to afford homes. In turn, this can lead to inflation as the cost of housing and other goods and services rise. I think you should agree.... 🏦🏧🖨️💸💰💰💰💰💰💸 Dan Peña is the GURU of loans. A true LEGEND in borrowing. A Legendary contributor to Printing and Inflation. Could had been nominated for the 'Federal reserve Client of the year' award. ☞Hear it from the man himself: www.youtube.com 🤦 Simple: Loans means printing = Inflation (on steroids....) ⛽🛢️🏭🚢☢️☠️ Peña's activities in the oil and gas industry have also been a source of concern. While his company, Great Western Resources, was successful in producing oil and gas, it also contributed to pollution and environmental degradation. Oil and gas production is a known source of greenhouse gas emissions and air pollution, and it can also have negative impacts on local ecosystems and wildlife. He doesn't seem like the 'Go green guy' to me (probably still drives Diesel). 🆗👍 While Peña's success in business cannot be denied, it is important to recognize that his activities have had real-world impacts on Inflation and the environment . As such, it is crucial that we consider the long-term consequences of business activities and work to minimize any negative impacts. By doing so, we can create a more sustainable and equitable economy that benefits everyone. In conclusion, Dan Peña's success in business has come at a cost, and he can be seen as a case of ''Inflation impersonated'' and environmental impact. While we should celebrate the achievements of successful entrepreneurs, we must also hold them accountable for their actions and ensure that their activities do not harm society or the planet. 🏆👨🏽‍🦳💪 Dan Peña, I hereby honor you with the Title of '🏆CHAMPION OF INFLATION🏆. May you have only great days forth and may your children and grandchildren understand and fix any damage that you have caused to the Economy and the world. For sure you been buying Bitcoin lately despite what you say. One Love, The FXPROFESSOR ps. It is important to note that Peña's activities in the oil and gas industry may have also had positive economic impacts, such as creating jobs and generating revenue. However, it is crucial to balance these benefits against the potential negative impacts, such as pollution and inflation, and to implement policies and regulations to mitigate any negative consequences. As we navigate a rapidly changing economic landscape, it is important to remain informed, open-minded, and committed to building a more sustainable and equitable future for all.
FRED:CPIAUCSLLong
by FX_Professor
6
The current context is serious | Forex-Indices-Stocks-Crypto |It seems that inflation is considered the devil for the markets, so the focus will be on the next Fed meeting scheduled for March 22nd. Last week we saw a strong increase in NFP and this could be the first sign of a hawkish FED, but this week we will see the second and final sign for the markets: CPI release. These two drivers will complete the big economic figure ahead of the interest rate announcement. In recent weeks Governor J.P has been under a lot of pressure from the financial community (including Janet Yellen, Treasury Secretary and former Fed Governor) due to the large risk of contraction and the impact of such aggressive monetary policy. But perhaps the news about failure of some banks could prove to be a strong ally of Powell. Why am I saying that? If the Fed's target is to drag the US economy into a mild recession to try and get inflation back to around 2 percent, concern that these two failures could be contagious within the banking sector could help Powell achieve the first target: "bring down inflation...". Even the geopolitical context should not be underestimated: The war in Ukraine and China-United States tensions over Taiwan. We will see the impact on the main markets (dollar, SP500, gold...) in the second part of this analysis.
by TheAnonymousBanker
5
Side-step a potential storm!Just when we thought the hawkish narrative was pretty much priced in, SVB’s fallout basically threw a spanner into the hiking cycle. You’ve probably read quite a lot about the whole SVB debacle since Thursday’s trading session so we won’t harp on that. We instead want to turn your attention to two other markets that moved significantly since the SVB episode. Interest Rates & Gold. A sharp repricing has occurred in the expected rate path as markets digest the onslaught of SVB-related events. As a result, we saw the probability of a 50bps point hike jump from 30% to 80% and then back down to 20% as of today. Additionally, further rate hikes have also been priced out indicating market’s expectations of a more cautious Fed. Most importantly, the implied aggressive rate cuts starting from the end of 2023 caught our eyes here. As a reminder, the last time the fed paused and then cut rates, Gold responded with a 60% rally. As the potentially lower terminal rate and faster pace of rate cuts narrative begin to pick up momentum, we think Gold deserves more attention now than ever. The next FOMC meeting is only 10 days away. From there, we will get a sense of what the Fed thinks of the current situation. If they start to show signs of retreat from their hawkish stance, we believe it will be a catalyst for this trade. Another point of worry is economic data still coming in hot, at least for now. For those not keeping count, Non-Farm Payrolls numbers have beaten estimates to the upside for the past 11 months as the economy remains unusually strong. With the next set of CPI numbers coming out this Tuesday, a hot print could drive inflation worries further. If the Fed shows signs of easing on the hawkish narrative while Inflation numbers continue to be hotter than expected, higher Inflation expectations could once again drive investors into inflation-protecting assets like Gold. Key volatility gauges have pointed higher over the past few days and major indexes have edged closer to key price and technical levels. Given these, volatility is likely to compound from here as Commodity Trading Advisors (CTAs) potentially flip sides and funds rotate out of the banking sector. In such uncertain times Gold’s status as a safe haven asset could attract flows as investors sidestep the market turbulence. Looking at the price action, Gold still trades well clear of the 500 Day EMA mark which has marked the support for the price action and well clear of the 1800 physiological level. RSI is still middle of the road indicating that there is still room for Gold to run higher. Gold’s relationship with interest rates and position as an inflation-hedge/safe haven asset could very well position it for further upside from here. For now, we think it provides enough upside to sidestep the potentially volatile times ahead. We set our stops near the previous level of support and the 0.618 Fib level, 1755, and our take profit levels at 2065. Each 0.1-point increment in COMEX Gold future is equal to 10 USD. The charts above were generated using CME’s Real-Time data available on TradingView. Inspirante Trading Solutions is subscribed to both TradingView Premium and CME Real-time Market Data which allows us to identify trading set-ups in real-time and express our market opinions. If you have futures in your trading portfolio, you can check out on CME Group data plans available that suit your trading needs www.tradingview.com Disclaimer: The contents in this Idea are intended for information purpose only and do not constitute investment recommendation or advice. Nor are they used to promote any specific products or services. They serve as an integral part of a case study to demonstrate fundamental concepts in risk management under given market scenarios. A full version of the disclaimer is available in our profile description. Reference: www.cmegroup.com www.cmegroup.com
COMEX:GC1!Long
by inspirante
1
Inflation (CPI) - A Battle Already LostInflation ( CPI ) - A Battle Already Lost I've recently shared my outlook on CPI and where I think its headed in the months ahead but after further review, it seems that I've previously overlooked certain signals which should have altered my perspective in a way that it did not. Based on discovery of those signals, I have now updated my anticipatory CPI chart to highlight certain levels of interest. As we can see on the wavemap, the Consumer Price Index (a measure of inflation) has broken above its 40+ year bearish trend line. The breakout was very strong and should be considered as very significant. The format of the wave during this breakout has developed as what seems to likely be a zig-zag formation. Noticeably, the upside zig-zag wave has retraced 90% of the 40 year long bearish drawdown. Therefore, leaving little probability of it being a truly corrective wave. Aside from the macro bear trend-line, I have also highlighted the newly respected bullish trend-line. Finding resistance near 6.77, Fibonacci measurements suggest that the pending action will fall to retest the former price containing trend line and maybe even drop below it. Specifically, Elliott Wave Theory suggests that 0.99-1.01 should be the downside target range. Over the past 20 years, this level has also supplied nearly unbeatable support. If support is once again discovered near 1.00, the currently active wave could then be sent to retest the red bullish trend, at a level near 9-10. Ultimately, completion of the blue diagonal will signify that the CPI (and inflation) area headed for upside levels that the American economy has never witnessed. Personally, I believe that inflation is a byproduct of capitalism and there is no true containment possible. The next decade will prove to show if this is on point or simply farce.
ECONOMICS:USCCPI
by DigitalSurfTrading
SILVER Bounce from Support?!Here we are looking at SILVER on the Weekly TF… As you can see, SILVER has been trading within a macro symmetrical triangle structure, which has clear and established support and resistance lines. Silver has been trading within this structure since March of 2020 (COVID—19 Crash). Since then, it has tested descending resistance 5 times on the weekly, and ascending support 3 times (so far). Currently, SILVER is on its way to that support, and I expect it to reach that line soon (relative to the weekly TF candles). While it’s still too early to definitively say, I do believe that SILVER will bounce from support, and make another run to resistance in another attempt to breakout to the upside. 
What do you think SILVER will do next? Let me know in the comments! Cheers!
TVC:SILVERLong
by GarethSolowayOfficial
4
USOIL chart & US inflation Ticker belowHere is the cause of inflation - OIL As its price rises, initially, nothing changes ( Arrows) But once the increase in cost is begun to be felt Retails prices rise to cover increase costs of manufacture, transport, staff Staff demand more wages so they can buy goods Repeat Then The FED comes in , raises the cost of Borrowing, putting pressure on retail to LOWER prices so that the Pubic can buy goods Note how the price of oil drops PRIOR to the effects of raises in interest rates HERE is your Problem Also, take note of the contract that the Petro$ had and that has now been Stopped by OPEC countries. The OIL charts over the next few years are going to show some interesting patterns I thinnk
TVC:USOIL
by Orriginal
1
Swissie rally fizzles, SNB's Jordan up nextUSD/CHF has rebounded on Tuesday, ending a rally that saw the Swiss franc climb over 1%. In the European session, USD/CHF is trading at 0.9344, up 0.40%. Switzerland released the February inflation report on Monday and the reading was higher than expected. CPI rose 0.7% m/m, up from 0.6% in February and above the 0.4% forecast. On an annualized basis, CPI climbed 3.4%, edging up from 3.3% and higher than the forecast of 3.1%. These inflation numbers would be a dream come true for most major central banks, which are struggling with inflation levels two or three times higher. Still, the Swiss National Bank is concerned about high inflation, as its target is 0-2%. The SNB was widely expected to raise rate by 50 basis points at the rate meeting on March 23 and the uptick in February inflation cements the likelihood of such a move. Swiss National Bank Chair Jordan will make an appearance later today and is likely to address the rise in inflation. The SNB does not provide forward guidance for its rate policy, but the central bank has projected an inflation rate of 2.4% for 2023. With the cash rate currently at 1%, it's a safe bet that we'll see another hike in June of either 25 or 50 basis points. The continuing tightening should provide a boost to the Swiss franc, but traders should keep in mind that the SNB has not hesitated to intervene in the foreign exchange market when the Swiss franc became too strong for its liking. In the US, Federal Reserve Chair Powell will be in the spotlight as he testifies before a Senate committee later today. The Fed has remained hawkish and after a host of strong January releases, the markets have shifted their expectations closer to the Fed's stance. It was only a few weeks ago that the markets were projecting a pause followed by rate cuts, but this has changed to pricing in three more rate hikes this year. There is a lot of uncertainty in the air about inflation and interest rates and the markets are hoping that Powell's comments will provide some clarity. There is resistance at 0.9381 and 0.9420 0.9304 and 0.9224 are providing support
by OANDA
$DXY chart update 3/6 👁‍🗨️*This is not financial advice, so trade at your own risks* *My team digs deep and finds stocks that are expected to perform well based off multiple confluences* *Experienced traders understand the uphill battle in timing the market, so instead my team focuses mainly on risk management* !! This chart analysis is for reference purposes only !! Market conditions are supporting the continuation of strength in the dollar. Expect Bitcoin , Gold , and SPY to retrace during this period. If you want to see more, please like and follow us @SimplyShowMeTheMoney
TVC:DXYLong
by SimplyShowMeTheMoney
Gold as an Inflation Hedge? Myth Busted!COMEX: Micro Gold Futures ( COMEX_MINI:MGC1! ) and Gold Options ( COMEX:GC1! ) Gold is often hailed as an effective hedge against inflation. It generally increases in value as the purchasing power of the US dollar declines over time. Does this still remain true? Since January 2013, the US Consumer Price Index increased 29.4% cumulatively, while the 10-year total return of Gold is only 11.3%. Let’s demystify the gold myth. In fact, gold is by no means among the best-performing investment assets in the past decade! Let’s look at where investing $10,000 in different assets would take you in the past ten years: • If you held $10,000 in cash, you still have $10,000, a 0% nominal return; • If you bought a gold ETF fund, you would have $11,300, assuming it tracks gold price perfectly. However, after subtracting an average 0.5% a year in fund expense, you would end up with only $10,800, an annual return of merely 0.78%; • 5-year bank certificate of deposit (CD) yielded 1.0%/APR in 2013 and 1.5% in 2018. If you put the money in CDs back-to-back, you would have $11,322 now; • If you invest in a market index stock portfolio, the S&P 500 gained 159% in the past ten years. You would end up with $25,900; • If you bought bitcoin at $4.43 each in January 2013, you would have amassed nearly $1.6 million from the original $10K, an astonishing 15943% return! Actual data shows that holding gold, a non-yielding asset, underperformed other investable assets in the past decade. Gold price endured a double-digit decline, from $1,600 per troy ounce, to as low as $1,000, during the low-inflation period of 2013-2018. It shot up in 2019 as the US-China trade conflict intensified. The outbreak of Covid pandemic pushed gold to a record high of $2,075 in August 2020. As US economy remerged from Covid in 2021, gold price fell back to $1,700. Then, the Russia-Ukraine conflict pushed it back up above $1,900. However, when the Federal Reserve embarked on the path of rate increases, gold price fell sharply to $1,600. This was a period where US CPI raged between 7-9%, and gold completely failed as a defense against inflation. US Dollar Is the Primary Price Driver Gold prices rose on Friday as a rally in the dollar and bond yields paused. COMEX Gold Futures (GC) for April delivery closed up $14.10 to $1,854.60 per ounce. The rise comes on expectations that higher interest rates are on the way as reports show that US economy is still running too hot to quell high inflation. Dollar index was down 0.35 points to 104.68, while the US 10-year note was paying 3.977%, down 8.4 basis points. US dollar continues to call the shot for gold as investors assess the Fed's rate path. The above chart shows a perfect negative correlation between gold price and dollar index. When dollar rises, gold falls; and when dollar declines, gold advances. Last month, the dollar's bounce had weighed heavily on gold. The dollar rallied as a run of hot U.S. labor and inflation data saw traders’ expectations for more aggressive Fed rate increases. A stronger dollar can be a drag on commodities priced in dollar, making them more expensive to users of other currencies. In recent weeks, gold may have found some support on fears that an aggressive Fed could push the U.S. economy into recession, but a continued rise in U.S. Treasury yields, along with a relatively resilient dollar means limited upside . Rising Treasury yields raise the opportunity cost of holding non-yielding assets, like gold. Short-term Trading Strategies At $1,850, gold is neither too expensive nor too cheap by historical standard. As such, I am not in favor of an outright directional trade, one way or the other. However, the market’s razor-thin focus on Fed rate actions will make a compelling reason for event-driven trades on Gold Futures and Gold Options. March is a very active month for macro-economic data releases: • March 8th, Fed Chair Powell will testify on the central bank's semi-annual monetary policy report to the House Financial Services Committee; • March 10th, Bureau of Labor Statistics will release February employment report; • March 14th, BLS will release the February CPI report; • March 22nd, Fed will announce its interest rate decision. Financial market tends to be sensitive to these data releases, as the latter could deliver huge shocks if actual data goes beyond market expectations. If you expect an upcoming data release to be bullish on gold, you could express this view with a long futures position on COMEX Micro Gold Futures (MGC). Each MGC contract has a notional value of 10 troy ounces. At $1,880, a June 2023 contract (MGCM3) is valued at $18,800. Initiating a long or short position requires a margin of $740. This is approximately 4% of contract notional value. In comparison, buying physical gold (i.e., gold bar or gold coin) and gold ETF fund requires 100% upfront investment. If gold price moves up to $1,950, the futures account would gain $700. Relative to the initial margin, this would equate to a return of +94.6%, excluding commissions. Alternatively, the same bullish view could be expressed by a call option of COMEX Gold Futures. Each COMEX Gold Future contract has a notional value of 100 troy ounces. At $1,880, a June futures contract (GCM3) is valued at $188,000. A call option on the 1,900 strike is quoted 37.0 on 3 March 2023. Acquiring 1 option requires an upfront premium of $3,700 (100 ounces per contract). If gold moves up to $1,950, the options account would be credited by $5,000 (=(1950-1900) x100), which represents a theoretical return of +35.1% from the original investment of $3,700. If you are bearish on gold, a short MGC futures or a put option on GC would be appropriate. Futures and options account would gain in value if the price of gold falls. Similar to investing in physical gold or gold ETFs, the biggest investment risk is betting the wrong direction. However, futures have a built-in leverage. In the case of MGC, each $1 movement in gold price translate into $10 variance in futures account balance. Options have a non-linear payout diagram. As the contract moves deeper in-the-money, options value grows exponentially. Long-term Trading Ideas After the active central bank action period is over, will gold price trend up or down? What would be the primary driver of gold price? Inflation, US dollar, interest rate, economic growth, or geopolitical crisis? All are possible, maybe a little bit of each. My research reveals that gold price has a relatively stable relationship with WTI crude oil (CL). Over the past ten years, each 1,000 barrels of WTI (1 CL) sell at a price between 150 and 300 ounces of gold for about 80% of the time. We could visualize an oil producer wanting to be paid by gold. When dollar fluctuates, he would adjust the dollar selling price to keep his gold acquisition stable. Therefore, whenever the price range is breached, gold price has a strong tendency of falling back in. In the next writing, I would explore a convergence/divergence idea between GC and CL. Stay tuned! Happy Trading. Disclaimers *Trade ideas cited above are for illustration only, as an integral part of a case study to demonstrate the fundamental concepts in risk management under the market scenarios being discussed. They shall not be construed as investment recommendations or advice. Nor are they used to promote any specific products, or services. CME Real-time Market Data help identify trade set-ups and express my market views. 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COMEX:GC1!Long
by JimHuangChicago
2
GOLD : Benefits of Investing in GoldOANDA:XAUUSD Gold has been an inconsistent inflation hedge, but there may still be benefits to holding a small amount of the yellow metal in your portfolio. Gold has historically had a low or even negative correlation to both stocks and bonds, suggesting it offers value as a tool of diversification. Gold prices held up pretty well during the Covid-19 pandemic market sell-off in early 2020, for example. From Feb. 1 to April 1 in 2020, the S&P 500 declined 23% while the price of gold dropped less than 0.1%. Demand for gold from investors, central banks, jewelers and tech companies is also growing. According to the World Gold Council, global gold demand increased 12% year over year to 2.189 tons in the first half of 2022. Depending on your individual goals, there are several easy ways to invest in gold. Investors can buy gold bullion, physical bars or coins that can be kept in a safe or bank. You can also buy physical gold exchange-traded funds (ETFs) that hold gold bullion on investors’ behalf. The most popular gold ETF is SPDR Gold Shares (GLD). Investors looking to speculate in the gold market can trade gold futures contracts. These contracts provide significant leverage, allowing investors to control large quantities of gold with a relatively small amount of money. Finally, investors can buy shares of individual gold stocks or a gold mining ETF. The VanEck Gold Miners ETF (GDX) holds a diversified basket of 54 gold-related stocks, including Newmont Corp. (NEM), Barrick Gold Corp. (GOLD) and Franco-Nevada Corp. (FNV). Conclusion : GOLD IS SAFE HEAVEN TO INVEST IN IT .
OANDA:XAUUSDEducation
by INVESTRONE
1