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Inflation

USD/JPY - Yen surges ahead of Fed rate decisionThe Japanese yen continues to show strong volatility, which started on Friday. In the North American session, USD/JPY is trading at 135.14, down 1.04% on the day. The Federal Reserve will announce its rate decision later today, and the markets are confident that the Fed will raise rates by 25 basis points, which would bring the benchmark rate to 5.25%. The markets have priced in a 25-bp hike at 87%, down slightly from the 93% probability earlier in the week.  Investors are expecting today's increase to be a "one and done" which will wrap up the current rate-tightening cycle. The economy is cooling and inflation is easing, which has raised expectations that the Fed will embark on an extended pause and possibly cut rates before the end of the year. One could make the argument that given this economic landscape, the Fed might be better off by pausing rates at today's meeting, but it appears that Jerome Powell is determined to get the inflation genie back in the bottle as soon as possible. Inflation has eased considerably but is still running at a 5% clip, more than double the 2% target. Another factor for the Fed to consider is the re-emergence of the banking sector crisis. First Republic Bank, whose collapse was the biggest bank failure since the GFC in 2008, has had its assets acquired by JP Morgan. That was followed by a plunge in shares of two US regional banks, and there are concerns that another hike today will put even more pressure on the troubled banking sector. The crisis has dampened risk sentiment and the safe-haven yen has been a big winner with sharp gains today. The tightening in credit conditions since the bank crisis began in March is estimated to be the equivalent of a rate hike of between 25 and 50 basis points. That is unlikely to deter the Fed from the expected hike today, but it could be an important factor in future rate policy. USD/JPY is testing support at 135.30. Next, there is support at 1.3450 There is resistance at 137.57 and 138.37
by OANDA
Euro Soars with Dollar WoesOne thing about tables, they turn. This time last year, the dollar was unrivalled. Now, it is being challenged amid a banking crisis, recessionary fears, and a debt ceiling drama. Having stepped up on the rates faster than the rest, the US Fed’s combat against inflation fuelled a dollar rally . It now finds itself between a hard place and a rock. Many expect the Fed to pause. In contrast, the ECB, having been slower off the block, has gradually lifted rates with ample headroom for further policy intervention to fend off a resurgent Euro area inflation. This paper explores fundamental forces driving a rally in the Euro and the headwinds facing the dollar. With EUR/USD making a golden cross on March 27th, this case study posits a long position in Euro using the CME Euro FX Futures delivering a 3x reward to risk ratio with entry at 1.1025 and target of 1.17 hedged by a stop at 1.08. Crushed and Bruised Euro is Fighting Back 2022 was a crushing year for the Euro. Geopolitics plunged Europe into an energy crisis. Bleak prospects plus soaring inflation meant deep recession. The Euro was wounded. The Euro was dealt another blow as the ECB was slow to lift rates. Key eurozone rates were well below those in the US, as the Fed was all pedal to the metal with unprecedented hikes. Higher yields in the US attracted foreign funds, boosting the dollar at the expense of other currencies. Tables turn and times change. Euro's rise is in part thanks to milder European winter. Warmer than normal and prudent energy consumption has kept gas prices in check. The region may well avoid a recession. In fact, it posted a surprise output growth in the final quarter of last year. A hawkish ECB also well supports the Euro. It continues to hike rates to tackle inflation, which remains stubbornly high. As rates in Europe rise while those in US stall, the Euro will attract capital inflows from across the Atlantic. Dollar’s dominance is being challenged Over the last 10 years, the Dollar Index (DXY) has gained ~25% while the EUR/USD has shed ~19%. The rotation away from the dollar is underway. Not only Euros, but the dollar has also been losing ground against other majors, including the sterling and the yen. Easing inflationary pressures should spell victory for the Fed allowing it to tone down its fighting monetary stance. Premium for insuring against US government default spiked to its highest level in more than a decade amid political impasse related to debt ceiling. While this political embarrassment is likely to be inconsequential, the tiny risk of a dollar debacle cannot be ignored. Investors hedging against this risk are likely to push the dollar lower. Is this De-dollarisation? The de-dollarisation camp shouts loud. But ignore the noise. Surely, the weaponisation of the dollar has alarmed nations. Not surprisingly, many are attempting to wean away from dollar dependence for trade settlement. The dollar’s share in forex reserves used to be 71.5% at the turn of the century and has gradually declined to 58.3% as of the end of 2022. The dollar remains at the core of global trade and finance. The dollar forms 88% of FX transactions. Distant second is Euro at 31%, according to 2022 BIS figures (aggregates equal 200% as each transaction involves two currencies). Transactions involving the Chinese yuan having grown at 70% over last three years represents a mere 7% of the total. About 60% of the world's forex reserves aggregating to USD 11 trillion are still denominated in dollar. The dollar will continue to play a pre-eminent role in global trade and as a global reserve for a long time to come. Absent a credible alternative, albeit weakened, the dollar is here to stay. Rate Expectations Point to the Fed Pausing Earlier Than ECB CME’s FedWatch tool shows a 78% probability of another 25bps rate hike at the next meeting on May 3rd and a 67% probability of no rate hike at the June meeting. Fed pause before pivot remains market expectations. Meanwhile, Reuters reported that the ECB is expected to raise rates by 25bps at its next meeting in May. Crucially, ECB survey of professional forecasters points to another 25bps rate hike in Q2 before pausing. Asset Managers & Funds are positioning for Euro to rally CFTC’s Commitment of Traders (CoT) report shows that leveraged funds and asset managers are bullish Euro. Asset managers increased net longs by 7.4% over the last 12 weeks. Leveraged funds have flipped from net short to net long, increasing long positioning by 125%. Meanwhile, the CoT for DXY futures shows that asset managers are still net long but have reduced long positions by 20.5%. Options Market are signalling bullish Euro and bearish Dollar Monthly options on Euro FX futures are trading with a put-call ratio of 0.87 pointing to more calls than puts, indicating Euro bullishness. Euro buoyancy is particularly apparent for June expiry options which have a put-call ratio of 0.6. Meanwhile, thinly traded options on DXY futures expiring in June have a put-call ratio of 1.66 signalling that market participants are bearish dollar with 1.66 puts for every call option. Trade Setup Each lot of CME Euro FX Futures provides exposure to 125,000 Euros. Every 0.00005 increment in the contract represents a trading P&L of USD 6.25. ● Entry: 1.1025 ● Target: 1.17 ● Stop: 1.08 ● Profit at target: USD 8,440 ● Loss at stop: USD 2,810 ● Reward-to-risk: 3x MARKET DATA CME Real-time Market Data helps identify trading set-ups and express market views better. 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 This case study is for educational purposes only and does not constitute investment recommendations or advice. Nor are they used to promote any specific products, or services. Trading or investment ideas cited here are for illustration only, as an integral part of a case study to demonstrate the fundamental concepts in risk management or trading under the market scenarios being discussed. Please read the FULL DISCLAIMER the link to which is provided in our profile description.
CME:6EM2023Long
by mintdotfinance
3
Cheap Yen & Low P/E To Deliver Immense Bargains in NikkeiBuying financial assets in dips provides an inbuilt margin of safety. Enriching that trade is a currency that is hovering at its near lowest in a decade. Expected equity gains compounded with Yen that is anticipated to strengthen will strongly propel alpha from the proposed trade setup in Japanese equities. The P/E ratio based on next 12-months earnings in Japan is 13x and cheaper relative to 18x for the S&P500 and 27x for the Nasdaq. The Yen is near its lowest on average based on real-effective exchange rate. It is 2.3x standard deviations below the average over the last decade. For investors looking to hedge their yen exposure, its term structure delivers a positive basis (forward value minus spot price) that can be harvested through hedging. A long position in CME Nikkei/Yen Futures combined with a full currency hedge delivers a 1.9x reward to risk ratio with entry at 29065 and target of 31295 hedged by a stop at 27900. DEMYSTIFYING THE NIKKEI 225 INDEX (“NIKKEI”) The Nikkei index lists 225 largest Japanese firms. Given Japan’s heft, the index is an indicator of Asian market sentiments. The Japanese stock index was previously called Nikkei Dow Jones Stock Average from 1975 to 1985. The name was later changed to Nihon Keizai Shimbun or Japan Economic Newspaper which is commonly referred to as Nikkei. The Nikkei is a price-weighted index with an adjustment factor for each stock. The summation of the adjusted prices is divided by a divisor (29.508) to maintain index continuity. The 225 firms are spread across thirty-five industries. Top fifteen industries form 93% of the index. Top ten firms represent 38% of the Nikkei. Technology, Consumer Goods, Materials, and Capital Goods represent 95% of the index. JAPANESE EQUITIES HAVE BEEN RESILIENT THIS YEAR Japanese equities have delivered 13% gains so far this year with resilience across all sectors. Thanks to Apple and Microsoft, Nasdaq has returned 22% this year as investors seek shelter from ongoing crisis in US banking sector. “Stealth” QE partly explains the outsized gains in Nasdaq. In sharp contrast, S&P500 is up 9%, Dow is up 3%, Russell 2000 is up merely 1% while Chinese equities are down 3%. Positive performance in Nikkei is evident across all sectors and names. Broad based recovery in Japan makes Nikkei far more resilient relative to US equities where superior performance is restricted to no more than a dozen quality names. JAPANESE EQUITIES ARE PRIMED FOR GROWTH Japanese shares continue to inch higher with the Nikkei trading near its highest level in eight months led by earnings optimism and expanded government subsidies for chip production. The prospect of chip makers looks bright after Industry Minister Yasutoshi Nishimura said Japan plans to provide additional subsidies to chipmakers. The P/E based on next 12-months earnings in Japan is around ~13x and cheaper relative to ~18x in the US. For every dollar of earnings, only USD 13 is required to be invested in Nikkei compared to USD 18 in the S&P500 & USD 27 in Nasdaq. Japanese stocks not only trade on low P/E but pay healthy dividends. Nikkei has a yield of 2.13% compared to Dow Jones at 2.09%, S&P 500 at 1.67% and Nasdaq-100 at merely 0.86%. THE YEN IS EXPECTED TO REGAIN ITS HAVEN STATUS The yen is expected to regain its status as a haven currency after years of dollar dominance with the BOJ expected to normalise its monetary policy. The BOJ is anticipated to discard its yield-curve control policy in coming months and that should help strengthen the Yen. Barclays analysts expect the yen to appreciate to 123 per dollar by this time next year. The yen has faced headwinds from higher energy prices and a worsening rate differential as global central banks hiked rates to contain inflation. As energy prices ease and the rate hiking cycles pause, selling pressure on the Yen will soften. If the Fed stops raising rates after a final increase this week, that might lead to inflation-adjusted yield differentials to stop widening in favour of USD. Majority of forecasts have the yen strengthening to levels beyond that implied by the forward market. Analysts are one way on the direction of the dollar-yen. Japanese yen forecast for end-2023 was 125 as of last week, compared to FX forward rate at 129. Analysts at RBC fear that these crowded expectations underplay the impact of recession. US recession spreading to global markets could send the Yen plunging to 150 to the dollar as per RBC. COT REPORTS POINT TO BULLISH SENTIMENTS FOR JAPANESE EQUITIES The CFTC’s Commitment of Traders report (COT) shows positioning by professional investors in Nikkei futures. The report shows open interest segmented into four buckets, namely, (a) Asset Managers (pension funds, mutual funds, & institutional asset managers), (b) Leveraged Funds (hedge funds & money managers), (c) Other Reportables (traders using derivatives to hedge business risk), and (d) Non-Reportables (small speculators). Asset Managers have increased their net long positioning by 278% in Yen denominated futures. Leverage funds have reduced net shorts on Dollar-denominated futures. TRADE SET UP Low P/E ratios, Cheap Yen, Resurgence as a Haven, are among the drivers favouring the Nikkei. A long position in CME Nikkei/Yen Futures with currency fully hedged will deliver a 1.9x reward to risk ratio with entry at 29250 and target of 31295 hedged by a stop at 27900. Every tick represents five index points corresponding to a change of JPY 2,500 per lot. ● Entry: 29065 ● Target: 31295 ● Stop: 27900 ● Profit at target: JPY 1,115,000 ● Loss at stop: JPY 582,500 ● FX hedging gains with CME Micro USD/JPY Futures (Dec 23 contract): JPY 37,200 ● Reward-to-risk: 1.9x MARKET DATA CME Real-time Market Data helps identify trading set-ups and express market views better. 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 This case study is for educational purposes only and does not constitute investment recommendations or advice. Nor are they used to promote any specific products, or services. Trading or investment ideas cited here are for illustration only, as an integral part of a case study to demonstrate the fundamental concepts in risk management or trading under the market scenarios being discussed. Please read the FULL DISCLAIMER the link to which is provided in our profile description.
CME:NIYM2023Long
by mintdotfinance
1
Bitcoin PA & US inflation index & FED Rate RisesSo while we wait on the next instalment of the DXY support Group ( FED) and its expected 25 point rise, which may possibly be the last one for now, I post the updated chart of its effect on Bitcoin PA and the US inflation index, which the rate rises are meant to be curbing You will alos note that the rate rises have had a minimal effect on BTC PA really, it has been more the collapse of companies effected by higher interest rates that has knocked confidence int he market in general what some may also notice is how BTC PA is forming a very Bullish CUP pattern beneath the line I have drawn as the line of "recovery" and I expect PA to break above this later on, come back and retest it and then continue its Rise over the course of the next 18 months to 24 months There are a number o f reasons to expect this that include the New Model of Global finance coming int o play with BRICS and the Bitcoin "Halving" , expected Q2 next year but with the increase of Mining operations, this date could be advanced/ Overall, Bitcoin IS doing very well despite many moves to try and destabilise it and has actually outperformed GOLD as a Store of Value. Do not miss teh chance to buy BTC, it may never return to this price range again P>S that is NOT Advice in any form DYOR and do it well
BITSTAMP:BTCUSD
by Orriginal
Analyzing Inflation: COVID-19, Energy, Conflict & LaborInflation, a critical financial and economic indicator, has been significantly impacted by various factors in recent years. This article delves into the influence of COVID-19, changes in work patterns, labor market shifts, energy sector decisions, and the Russia-Ukraine war on inflation, presenting a comprehensive analysis of our present financial landscape. COVID-19 and Supply Chains: A Recipe for Inflation The global pandemic, COVID-19, significantly disrupted supply chains worldwide. With a combination of limited supply and robust or surging demand, the result was inevitable - a price increase, a key driver of inflation. Rising costs of materials, labor, energy, and transportation, all amplified by the pandemic, made goods more expensive to manufacture and transport, further contributing to inflation. The aftermath of these disruptions led to a ripple effect: a rise in supply chain costs. Consumers facing higher prices found themselves with reduced disposable income, which could, in theory, lower demand. However, the essential nature of many goods affected by these disruptions likely negated this potential offset, fueling inflation further. In the long run, these disruptions could lead to persistent inflation. The pandemic has exposed the fragility of 'just-in-time' inventories and the impact of underinvestment in global commodity supply chains, adding to inflationary pressures. Consequently, inflation may become a more permanent fixture, disrupting business planning and forecasting and adding another layer of complexity to the economic environment. Labor Market Shifts: From Crisis to Recovery The pandemic has considerably affected the labor market, resulting in significant shifts and shortages across various sectors. The initial outbreak led to severe job losses, with the global unemployment rate peaking at 13%. However, as economies start to reopen, we're seeing an interesting trend: people voluntarily leave their roles, even as worker demand increases. This labor shortage, induced by changing demographics, border controls, immigration limits, and the call for better pay and flexible work arrangements, presents another challenge in our economic landscape. Furthermore, the acceleration of digitalization and the gig economy could have enduring effects on labor supply and productivity. The crisis has potentially long-term implications, like automation's role in slowing the employment recovery in service occupations. Remote Work: A Double-Edged Sword The rise of remote work, while offering significant societal and economic benefits, also carries potential inflationary effects. Increased demand for houses/apartments, home office equipment, utilities, and other home-centric products and services has led to price hikes, accelerating inflation. Moreover, while remote work has the potential to boost productivity and create new job opportunities, it also brings challenges. Difficulties in collaboration, communication hurdles, and blurred work-life boundaries could negatively impact productivity, painting a more complex picture of remote work's overall effect on productivity and inflation. Energy Decisions: A Balancing Act The decision to reduce investments in nuclear energy and fossil fuels can influence inflation and the overall energy market. A decline in energy production can lead to price increases due to supply-demand imbalances, contributing to inflation. Moreover, reduced domestic energy production may increase dependence on imported energy, which, if more expensive or if international energy prices rise, could also lead to inflation. Transitioning to green energy without adequate investment and planning could lead to shortages and disruptions, driving up energy prices and contributing to inflation. While renewable energy technologies are advancing rapidly, they cannot fully replace the capacity provided by nuclear and fossil fuels in many countries. This could lead to energy shortages and price increases, particularly if the transition to green energy outpaces the technology's readiness. The variability of renewable energy sources, such as wind and solar, presents another challenge. Without adequate energy storage and grid infrastructure investment to manage this variability, energy supply disruptions and price spikes could become more common. Moreover, a rapid transition to green energy could displace existing energy jobs before adequate green energy jobs are created. This could lead to economic instability and potentially contribute to inflation. While the long-term costs of renewable energy can be lower than fossil fuels, the initial investment required to build renewable energy infrastructure can be high. Higher energy prices can pass these costs to consumers, contributing to inflation. In conclusion, while the transition to green energy is crucial for addressing climate change, this transition must be well-planned and well-managed. Policymakers must strike a careful balance between the urgency of climate action and the need to maintain energy security and economic stability. The Russia-Ukraine War: Geopolitical Inflation The ongoing conflict between Russia and Ukraine has also played a role in driving inflation. The war has disrupted the supply of essential commodities such as oil, gas, metals, wheat, and corn, pushing their prices upwards. These nations are major suppliers of these commodities, and their reduced supplies have led to sharp price increases worldwide. Furthermore, the conflict has exacerbated global supply chain disruptions, already strained by the COVID-19 pandemic. This has led to heightened inflationary expectations among businesses and consumers. Additionally, the war has significantly increased oil and gas prices, particularly in Europe, directly impacting inflation and household spending. The war has also weakened global economic confidence, further fueling inflationary pressures. Countries already grappling with financial challenges, such as Lebanon and Zimbabwe, have been severely impacted by the inflationary effects of the Russia-Ukraine war. Overall, the conflict is estimated to add about 2% to global inflation in 2022 and 1% in 2023, compared to pre-war forecasts. Conclusion In conclusion, the dynamic interplay of the COVID-19 pandemic, remote work, labor market shifts, energy sector decisions, and the Russia-Ukraine war has significantly influenced inflation. Policymakers, economists, and businesses must navigate this complex landscape to develop effective strategies that mitigate inflationary pressures while promoting sustainable economic growth. As we move forward, we must continue to monitor these factors to understand their ongoing effects on inflation and the broader economy.
TVC:US10Y
by BitcoinMacro
Swing long GBPUSDHello everyone, My system tells me to swing long GBP towards 1.3 area. With inflation picking up in UK the path of least resistance is up. The fed is cornered and i dont think that any type of hike will help them today. I am expecting 25bps, markets will buy usd and then a dovish speech from powell. If they pause it will be the same. Only if they cut i think that will cause some massive panic and everything will sell off but this is a far fetched idea. Stay safe and cheers!
Long
by Inorogu
2
Long GBPJPY ideaAs we have UK CPI on Wednesday this long could be just an intra-day punt. Looking for a drop down into the imbalance and then a sweep of the recent swing high. There is a double bottom just below the entry hence why I am not really bullish. The news could be used to sweep those lows and maybe a pushed further down. Going to stay nimble. The USDJPY held up today, while the EURJPY and GBPJPY made an attempt to drop. IF we get direction in the UJ I'll use that as my lead for how much to bet on the GJ
Long
by Macrobriefing
USD/JPY - Yen eyes Tokyo CPI, US GDPUSD/JPY is trading quietly at 133.84, up 0.13% on the day. The yen's lack of movement could change today with a host of key releases. Japan will release Tokyo Core CPI, while the US publishes Preliminary GDP for the first quarter and unemployment claims. Japan releases Tokyo Core CPI for April early on Friday, which is expected to remain steady at 3.2%. Will BoJ meeting bring more of the same? Japan's inflation is running around 3%, a dream for most central banks but a headache for the Bank of Japan. There has been pressure on the BoJ to tighten policy as inflation remains above the target of 2%. Japan has experienced decades of deflation and the massive stimulus programme was meant to stimulate the economy. Inflation has moved higher, but former BoJ Governor Kuroda insisted that the central bank would not consider tightening until it was convinced that inflation was sustainable, which required stronger wage growth. New BoJ Governor Ueda has toed the party line so far, but left open the possibility of tightening if wage growth and inflation climb faster than expected. All signs point to the BoJ maintaining its policy settings when it wraps up its 2-day meeting on Friday, but the central bank has surprised the markets in a big way before, and the markets will be following the meeting closely. In the US, unemployment claims have moved higher for four straight weeks and come in above the estimate each time. The upward trend is expected to continue, with claims expected to rise to 248,000, up from 245,000. The labor market remains strong, but the upswing could signal cracks in what has been a robust US labour market. Preliminary GDP for the fourth quarter is expected to drop to 2.0% y/y, down from 2.6% in Q4. USD/JPY tested support at 133.41 earlier in the day. The next support line is 132.69 134.27 and 134.99 are the next resistance lines
by OANDA
EUR/USD's hidden clues & key levels? Here’s an interesting chart: the inflation differential of the US and the EU plotted against the EUR/USD pair. If we approximate the range of the inflation differential with an upper bound of 1.5 and a lower bound of -0.5, we get a compelling signal for trading the EUR/USD pair. Buying EUR/USD when the inflation differential bottoms has resulted in success 4 out of the 5 times this signal was triggered. Repeating the analysis using the preferred inflation measures for both central banks – PCE for the Federal Reserve (Fed) and EU HICP for the European Central Bank (ECB) – yields similar results. Is this spurious correlation or is there more to this? Our guess is that the inflation differential drives expectations of one central bank’s move versus the other which affects the currency pair. The upcoming US PCE release on 28th April will provide insight into whether the inflation differential between the US and EU will continue to narrow. The validity of this data remains to be seen, but it's certainly an intriguing observation to consider! The rather eventful economic calendar over the next two weeks offers opportunities for this pair. Starting with the PCE Price Index released on April 28th, it is followed by the Fed meeting on Wednesday, May 3rd and the ECB meeting on Thursday, May 4th. With these events in mind, we want to position ourselves for the flurry of announcements coming out, which could play into EUR/USD strength. The long-term price action still seems to point towards an uptrend, with the 100-day Simple Moving Average (SMA) crossing the 200-day SMA and clearly marking previous swings. The current price is also consolidating at the 1.1000 psychological level, with parity and 1.2000 levels roughly marking the EUR/USD range for the decade. Zooming in, the EURUSD has been trading in an uptrend. An attempt to break above the 1.11 level was quickly rejected, with prices trading back to the trend support shortly after. We are currently witnessing another attempt to break this same level once again. Hence, a risk-managed trade could yield opportunities here with the upcoming onslaught of announcements. Setting up a long position at the current level of 1.1074 with a tight stop just below the trend support at 1.0945 and take profit level of 1.1400 would give us a risk-reward ratio of roughly 2.5. Each 0.00005 increment per EUR in the EURUSD futures contract equal to 6.25$. 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
CME:6E1!Long
by inspirante
AUD/USD slips to 2-week low ahead of CPIThe Australian dollar has plunged on Tuesday. AUD/USD is trading at 0.6632, down 0.95% on the day. The Aussie is under strong downward pressure, having lost around 1.7% since Thursday. Australia releases inflation on a quarterly basis, which magnifies the impact of the release. Inflation has been falling and this trend is expected to continue in the Wednesday release of first-quarter CPI. The headline figure is expected to fall from 7.8% to 6.9% y/y and from 1.9% to 1.3% q/q. The core rate, which is considered a more reliable gauge, is likewise expected to fall - from 6.9% to 6.7% y/y and from 1.7% to 1.4% q/q. Investors will be mindful that headline inflation surprised on the upside in Q4, rising from 7.3% to 7.8%. The two monthly inflation reports since the Q4 release in January, however, indicated that inflation was back on its way down, with headline CPI falling from 7.4% to 6.8% and beating expectations. The RBA would love to pause rates at 3.60% for a second straight month, and another drop in inflation would strongly support a pause at the May 2nd meeting. As well, another deceleration would be a strong indication that inflation has peaked, although the battle is far from over as it will take a long time to achieve the 2% target. The likelihood of another pause in rates stands at 83%, according to the RBA Rate Tracker. In the US, today's data has been a mixed bag. UoM Consumer Sentiment for April was expected to remain unchanged at 104.0, but surprised on the downside, falling to 101.3. There was better news from New Home Sales, which soared 9.6% in March, rebounding from -3.9% in February and crushing the estimate of 1.1%. There is resistance at 0.6751 and 0.6808 AUD/USD is testing support at 0.6657. Next, there is support at 0.6572
by OANDA
Inverted Yield Curve Starts in 2023 - Explained When the yield of the 3-month bond is higher than the 30-year bond yield, this is known as an inverted yield curve. It is a rare and unusual occurrence and we are seeing this today. This signals a potential economic recession in the future. An inverted yield curve suggests that investors have a pessimistic outlook for the future of the economy. They are willing to accept lower yields on long-term bonds because they anticipate a slowdown in economic growth. In contrast, they demand higher yields on short-term bonds because they expect the central bank to raise interest rates in response to inflationary pressures. An inverted yield curve can lead to a decrease in borrowing and lending activity, as it can make it more expensive for businesses and consumers to borrow money. This can result in a reduction in economic growth and can eventually lead to a recession. Some reference for traders: Micro Treasury Yields & Its Minimum Fluctuation Micro 2-Year Yield Futures Ticker: 2YY 0.001 Index points (1/10th basis point per annum) = $1.00 Micro 5-Year Yield Futures Ticker: 5YY 0.001 Index points (1/10th basis point per annum) = $1.00 Micro 10-Year Yield Futures Ticker: 10Y 0.001 Index points (1/10th basis point per annum) = $1.00 Micro 30-Year Yield Futures Ticker: 30Y 0.001 Index points (1/10th basis point per annum) = $1.00 Disclaimer: • What presented here is not a recommendation, please consult your licensed broker. • Our mission is to create lateral thinking skills for every investor and trader, knowing when to take a calculated risk with market uncertainty and a bolder risk when opportunity arises. CME Real-time Market Data help identify trading set-ups in real-time 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_MINI:30Y1!Long
by konhow
USD/JPY extends rally ahead of BOJ Core CPIThis week's data calendar out of Japan will be dominated by inflation releases and the Bank of Japan's two-day meeting at the end of the week. Traders will be keeping a close eye on BoJ Core CPI, which will be released on Tuesday. The index, which is the BoJ's preferred inflation gauge, fell from 3.1% to 2.7% in February. Another drop would support the central bank's view that inflation is falling back towards the 2% target. Inflation has been running above 3% and this has raised speculation that the BoJ will respond by tightening policy, which would likely send the yen sharply higher. The BoJ has insisted that it will not tighten until it is convinced that higher inflation is sustainable and not a result of more expensive goods and raw materials. The uncertain outlook for global growth and a weak domestic economy means that the BoJ is in no rush to shift policy. New Governor Ueda has been consistent in his message that he will maintain an ultra-loose policy, but nonetheless, speculation continues that the BoJ will tweak or even abandon its yield curve control, which has been criticised for distorting bond market pricing. I suspect that speculators hoping for a shift in policy that will send the yen higher will be disappointed after this week's meeting, as Ueda is unlikely to rock the boat at his first meeting. The BoJ will provide updated quarterly growth and inflation forecasts, which could provide a hint as to future monetary policy. USD/JPY is testing resistance at 1.3427. Next, there is resistance at 1.3499 133.41 and 1.3269 are providing support
by OANDA