Forex News from InstaForex

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Re: Forex News from InstaForex

Postby IFX Gertrude » Wed Jan 19, 2022 3:01 am

Will the euro sharply rise again?

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The Euro continues to compete with the US dollar, trying to leave the outsider levels. However, these attempts are most often unsuccessful. The euro's short-term growth does not have a significant impact on its overall pessimistic mood.

Over the past year, the price of the EUR/USD pair has declined by 6.9%. The weakest link of the pair, which is the Euro currency, got the most blow. Experts said that the euro should not count on major achievements this year. Its weakness contributes to the excessive caution of the European regulator.

Currently, the Fed and other central banks have expressed their readiness to normalize monetary policy as soon as possible. Experts stressed that this contrasts sharply with the ECB's inaction. This strategy of the European regulator contributes to the further decline of the euro and increased inflation.

Markets have high hopes for the upcoming changes in the Fed's strategy, which include cutting stimulus and raising the key rate. The currency market is now under pressure from the growth of the USD and the increase in the yield of US Treasury bonds. The US dollar's strengthening prevents the euro from rising, but the latter does not give up.

Moreover, the growth of the yield of US government bonds supports the US currency before the Fed meeting. On Wednesday, it strengthened its position after a sharp rise in the yield of US government bonds. Markets are waiting nervously for the Fed to raise interest rates, and this sends the EUR/USD pair to new frontiers.

In the current situation, the pair found itself under bearish pressure, while the US currency strengthened amid the rising treasury yields. On Tuesday, the EUR/USD pair managed to reach the level of 1.1400, but further gains stalled. Experts said that the pair failed to develop an upward movement. On Wednesday morning, the EUR/USD pair was trading at the level of 1.1331, trying to rise higher, but failed.

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Re: Forex News from InstaForex

Postby IFX Gertrude » Thu Jan 20, 2022 5:07 am

Pound's growth contains a downward reversal

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Experts found signs of a downward movement in the dynamics of the British currency, which rapidly increased after the publication of economic data in the country. Analysts say that a potential reversal to low values will create a price fluctuation for the pound.

At the end of 2021, the pound rose intensely after the Bank of England's interest rate hike. This year, the British currency tried to stay in an upward trend, acting with varying success. Analysts are afraid of negative changes in the dynamics of the pound, which the British regulator is able to influence. The revision of the current monetary policy is possible after the release of disappointing macro data on the UK economy.

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Re: Forex News from InstaForex

Postby IFX Yvonne » Fri Jan 21, 2022 6:38 am

Employment reports do not meet the expectations of the Fed and the markets

According to the reports, the total number of Americans who applied for unemployment benefits exceeded a three-month maximum. Experts believe that the latest wave of COVID-19 infections is to blame, which has disrupted only the revived business activity, signs of revival of which are showing job growth.

Employment reports do not meet the expectations of the Fed and the markets.

Despite increased labor demand, initial jobless claims rose 55,000 to a seasonally adjusted 286,000 for the week ended January 15. This is the maximum since mid-October, which was reported on Thursday by representatives of the Ministry of Labor. The overall increase was the largest since July last year.

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"Even with the usual buzz in the numbers, they seem to reflect the record increase in COVID-19 cases from Omicron," said Robert Frick, corporate economist at the Navy Federal Credit Union of Virginia.

"Fortunately, Omicron is at its peak, and if past models persist, applications should decline rapidly in the next two to three weeks," he said.

In the meantime, economists are disappointed, as the median forecast fluctuated at the figure of 220,000 applications for the last week.

Unadjusted benefit applications declined last week. However, this decrease was less than expected (taking into account seasonal factors that the government uses to exclude seasonal fluctuations from the data).

Applications increased by 6,075 in California. But they fell by 14,011 in New York. There were also big drops in Missouri and Texas.

The United States reports an average of 732,245 new cases of omicron coronavirus infection per day, according to official government data. However, there are signs that in some regions, including hard-hit New York, the number of cases is beginning to decrease.

Applications may begin to decline as the number of cases of infection decreases.

And yet it may not just be a seasonal outbreak.

Thus, conditions in the labor market are tightening. Employers are in desperate need of workers: 10.6 million vacancies were opened at the end of November.

But what if some of these vacancies have unadjusted wages for inflation? It is known that wage growth always lags behind inflation. Taking into account the huge migration of employees noticed in December last year, it is possible that the most "delicious" vacancies were dismantled, leaving former employers with empty jobs. How competitive are these 10 million vacancies? This hidden factor does not allow us to estimate the actual capacity of the employment market.

Currently, the unemployment rate is at a 22-month low of 3.9%, which is a sign that the labor market is at or close to maximum employment. The question remains, where do 10 million vacancies come from if the real sector is going through hard times due to supply disruptions and the rise in the cost of components?

Recall that in December, the economy added 199,000 jobs, which is the lowest figure for the year. This shows that the economy has slowed down the recovery. At the same time, the last two years have "taken away" 2.2 million able-bodied residents from the United States. Given the weak reflation, it is not entirely clear why there is such a stir around the search for labor?

The application data covers the period during which the government surveyed businesses for the non-agricultural component of wages in the employment report for January. At first glance, applications significantly exceed their level in mid-December. However, the actual conditions may differ from those described in the application.

Along with this obvious discrepancy between the two indicators, experts note that the shortage of workers and disruptions caused by Omicron due to absenteeism, reduction of operations, or temporary closure of enterprises may lead to wage growth remaining moderate this month. If this happens, at the end of January, we will see a new surge in applications for unemployment benefits, which will offset the gains from the effect of the weakening of the coronavirus.

The report on secondary applications showed that the number of people receiving benefits after the first week of assistance increased from 84,000 to 1.635 million in the week ending January 8. These so-called continuing applications remained below 2 million for the eighth week in a row. However, the growth of extended benefits is impressive.

These figures suggest that the reports are lying: there are much fewer jobs that are competitive and ready to accept people today, otherwise, we would have seen an impressive increase in production and sales, which contradicts the data. My opinion remains the same: the government is wishful thinking to quickly introduce an upward regime of interest rates, putting a barrier to rampant inflation.

In the meantime, the latest reports on applications will hit the indices, although they are still growing. The yield of 10-year benchmark bonds is also rising, and the spot dollar rose by 0.03%. The euro/dollar pair is falling, the indices are also likely to turn around during the American session.
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Re: Forex News from InstaForex

Postby IFX Gertrude » Mon Jan 24, 2022 2:36 am

European stock markets ended trading on Friday in the red

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Stock indices of the countries of the Asia-Pacific region closed in the red on Friday, a similar trend has developed in the US stock market. Analysts attribute the fall in world markets to the prospects for a more aggressive than expected increase in rates by the Federal Reserve System.

Meanwhile, retail sales in the UK fell 3.7% in December from the previous month, showing the biggest drop since January, according to data from the National Statistics Office (ONS). Analysts on average had forecast a decline of just 0.6%. In annual terms, sales decreased by 0.9% instead of the expected growth of 3.4%.

Despite the decline in December, retail sales this month were up 2.6% compared to pre-pandemic February 2020. For 2021 as a whole, sales jumped 5.1%, the fastest pace since 2004.

The composite index of the largest enterprises in the Stoxx Europe 600 region fell by 1.8% to 474.44 points as a result of trading. At the same time, all sectoral sub-indices declined, the financial and technology sectors the most.

Losses of the indicator for the entire past week amounted to 1.5% on fears of tightening the monetary policy of the world's central banks and increased tensions between Russia and the United States.

The German DAX index fell by 1.9% during the day, the French CAC 40 - by 1.75%, the British FTSE 100 - by 1.2%. Spain's IBEX 35 shed 1.4% and Italy's FTSE MIB shed 1.9%.

German Siemens Energy AG shares plunged 16.6% on Friday after Siemens Gamesa subsidiary Renewable Energy SA released preliminary financial results for the first quarter.

The price of Siemens Gamesa fell 14%. The company posted an adjusted EBIT loss of €309m against a profit of €121m in the same period a year earlier, while its revenue fell to €1.8bn from €2.3bn. Siemens Gamesa also downgraded its forecasts for the main financial indicators for the 2022 financial year.

The fall leader in the Stoxx Europe 600 index, in addition to Siemens and Siemens Gamesa, was the Danish wind turbine manufacturer Vestas Wind Systems A/S (-9%). Also, steel ThyssenKrupp AG (-7.2%) and e-commerce platform InPost S.A. (-8.6%).

The energy sector went into the red zone following the fall in oil prices, including the value of Royal Dutch Shell Plc decreased by 1.7% and BP Plc - by 1.8%.

TotalEnergies on Friday announced its decision to pull out of a natural gas project in Myanmar and stop doing business in the country, which suffered a military coup in February 2021. The company will not receive financial compensation, its share in the Yadana field and the MGTC gas pipeline will be distributed among project partners. Capitalization of TotalEnergies for the day fell by 2.1%.

In addition, securities of the semiconductor industry, including ASML Holding (-1.7%) and AMS (-3.6%), as well as software developer SAP (-1.2%), fell in price.

Meanwhile, the shares of the German developer of software for remote connection TeamViewer AG (+4.3%) and the Polish retailer Dino Polska (+3.6%) grew most significantly

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Re: Forex News from InstaForex

Postby IFX Gertrude » Tue Jan 25, 2022 5:16 am

EUR/USD: the euro suffers from uncertainty about the Fed's future steps, and the dollar wonders when the central bank will present it with a gift in the form of an interest rate hike

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Less than two weeks ago, the words of Federal Reserve Chairman Jerome Powell that the central bank's plans to raise interest rates would not lead to a slowdown in the growth of the national economy, allowed market participants to consider the issue of tightening monetary policy in the United States resolved.

Fears that the Fed could throw the stock market under the bus to eradicate high inflation led to the strongest weekly drop in the S&P 500 index since the beginning of the pandemic in March 2020 (by 5.7%).

The shares suffered due to investors' concern for the fate of the corporate sector, which will lose cheap money during the deterioration of macro statistics in the country.

Thus, retail sales in the United States in December decreased by 1.9% compared to the previous month, although experts did not expect a change in the indicator.

Last month, the volume of industrial production in the country decreased by 0.1% with an expected growth of 0.3%.

The consumer confidence index from the University of Michigan in January sank to 68.8 points from 70.6 points recorded in December, which was the second lowest level in a decade.

The number of initial applications of Americans for unemployment benefits for the week ending January 15 increased by 55,000, reaching 286,000, which is the highest since mid-October.

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Re: Forex News from InstaForex

Postby IFX Gertrude » Wed Jan 26, 2022 5:03 am

Most Asian stock markets are trading in the red

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The Federal Reserve may signal to markets that it is ready to start raising interest rates in March following its January meeting, which ends on Wednesday, analysts say. This will be the first rate hike since 2018.

The easing of monetary policy was caused by the COVID-19 pandemic. But now the Fed may also say that it is considering other options for tightening monetary policy to combat rising inflation, CNBC notes.

A growing number of Fed officials and Wall Street economists see the possibility of more than three hikes in the base interest rate by the US Central Bank this year against the backdrop of a significant rise in consumer prices. They explain these forecasts as signals that inflation in the US, which is at a maximum for almost 40 years, affects all segments of the economy, while the labor market is growing rapidly.

The Japanese Nikkei fell by 0.4% by 8:36 GMT+2.

Among the components of the index, the shares of Idemitsu Kosan Co. are the leaders of decline. Ltd. (-8.8%), Shionogi & Co. Ltd. (-5.9%) and Ricoh Co. Ltd. (-4.9%).

Shares of the metallurgical company Japan Steel Works Ltd. lose 2.5%, shares of IT company Rakuten Group Inc. grow by 0.7%, investment SoftBank Group Corp. add 1.8%.

The Hong Kong Hang Seng fell by 0.1% by 8:45 GMT+2, while the Shanghai Shanghai Composite rose by 0.3%.

Shenzhou International Group Holdings Ltd (-7.4%), Wuxi Biologics (Cayman) Inc. are the decline leaders in Hang Seng. (-6.5%) and Li Ning Co. Ltd.(-3.08%).

Shares of automaker Geely Automobile Holdings Ltd. are cheaper by 2.3%, technology company JD.com Inc. - grow by 1.4%.

South Korean Kospi lost 0.15% by 8:45 GMT+2.

Shares of automaker Kia Corp. (KS:000270) up 1.8%, shares of Hyundai Motor Co. decrease by 2.1%.

The cost of chip and electronics manufacturer Samsung Electronics Co. is down 0.8%, its rival LG Corp. grows by 0.1%.

Australian stock exchanges are closed due to the holiday (Australia Day).

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Re: Forex News from InstaForex

Postby IFX Gertrude » Thu Jan 27, 2022 4:09 am

US stock indices ended trading without a single dynamics

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The Dow Jones Industrial Average fell 129.64 points (0.38%) by the close of trading to 34,168.09 points.

The Standard & Poor's 500 lost 6.52 points (0.15%) to 4349.93 points.

The Nasdaq Composite increased 2.82 points (0.02%) to 13542.12.

The Fed kept the interest rate on federal funds (federal funds rate) in the range from 0% to 0.25% per annum. The decision coincided with the forecasts of economists and market participants.

The Federal Open Market Committee (FOMC) of the Fed aims to achieve maximum employment and inflation at 2% in the long term. To support this goal, the committee decided to maintain the target range for the federal funds rate at 0-0.25%.

At the same time, since inflation is well above 2% per annum with a strong labor market situation, committee members expect that it will soon be appropriate to raise the target rate range. At the same time, the head of the Fed, Jerome Powell, during a press conference following the meeting, noted that FOMC members intend to raise interest rates already at the March meeting.

The American Central Bank also announced that it plans to continue reducing the volume of the asset buyback program and intends to curtail it in March.

Meanwhile, traders followed the ongoing reporting season of US companies.

Boeing Co. shares lost 4.8% in price on the news that the company's revenue fell by 3.3% and turned out to be worse than the market forecast, which was waiting for its growth.

Exchange operator Nasdaq Inc. in October-December increased profit by 16%, revenue - by 12%, and the latter figure and adjusted profit were higher than experts' expectations. Nasdaq shares fell 3.1%.

Telecommunications and media company AT&T Inc. returned to profitability last quarter, with adjusted earnings and revenue above forecasts. Capitalization of AT&T, however, decreased by 8.4%.

Freeport-McMoRan Inc. share price fell by 3%, although the producer of copper and gold in the last quarter of 2021 increased its net profit by 57%, revenue by 37%.

Automatic Data Processing lost 9% despite the HR software and services provider posting better-than-expected earnings and revenue in the second quarter of fiscal 2022.

Consumer goods manufacturer Kimberly-Clark Corp. in October-December of the year reduced net profit by a third, despite the growth in revenue, due to increased costs. The value of the company fell by 3.4%.

Meanwhile, US new home sales jumped 11.9% in December from the previous month to 811,000 annualized, the country's Commerce Department said. According to the revised data, 725,000 houses were sold in November (an increase of 11.7% MoM), while previously the figure was 744,000 (a jump of 12.4%).

Analysts, on average, expected a 1.8% increase in new home sales last month from the previously announced November level to 757,000.

Stock quotes of large American construction companies Lennar Corp. and KB Home were down 4.5% and 4.8%, respectively.

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Re: Forex News from InstaForex

Postby IFX Gertrude » Fri Jan 28, 2022 4:14 am

US stocks closed lower, Dow Jones down 0.02%

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At the close on the New York Stock Exchange, the Dow Jones fell 0.02% to a one-month low, the S&P 500 index fell 0.54%, and the NASDAQ Composite index fell 1.40%. Dow Inc was the top performer among the components of the

Dow Jones index today, up 2.96 points or 5.17% to close at 60.18. Chevron Corp rose 2.68 points or 2.02% to close at 135.37. Merck & Company Inc rose 1.44 points or 1.82% to close at 80.58.

The losers were shares of Intel Corporation, which lost 3.64 points or 7.04% to end the session at 48.05. Boeing Co was up 2.33% or 4.52 points to close at 189.75 while American Express Company was down 1.95% or 3.42 points to close at 171. 90.

Among the S&P 500 index components gainers today were ServiceNow Inc, which rose 9.14% to hit 528.69, Ball Corporation, which gained 8.57% to close at 93.99, and Seagate Technology PLC, which gained 7.65% to end the session at 103.68.

The biggest losers were Teradyne Inc, which shed 22.41% to close at 111.24. Shares of Tesla Inc lost 11.55% and ended the session at 829.10. Quotes of Advanced Micro Devices Inc decreased in price by 7.33% to 102.60.

The leading gainers among the components of the NASDAQ Composite in today's trading were National Security Group Inc, which rose 69.65% to 15.65, Sidus Space Inc, which gained 31.55% to close at 10.80. as well as shares of Galapagos NV ADR, which rose 22.47% to close the session at 65.30.

The biggest losers were Epizyme Inc, which shed 44.21% to close at 1.060. Shares of TG Therapeutics Inc shed 40.65% to end the session at 8.25. Quotes of Cyngn Inc decreased in price by 36.47% to 1.62.

On the New York Stock Exchange, the number of securities that fell in price (2349) exceeded the number of those that closed in positive territory (941), while quotes of 143 shares remained virtually unchanged. On the NASDAQ stock exchange, 3,122 companies fell in price, 838 rose, and 174 remained at the level of the previous close.

Chevron Corp shares rose to an all-time high, up 2.02%, 2.68 points, to close at 135.37. Shares in National Security Group Inc surged to a 52-week high, up 69.65% or 6.43 points to close at 15.65. Epizyme Inc shares fell to all-time lows, down 44.21% or 0.840 to close at 1.060. TG Therapeutics Inc shares fell to a 52-week low, falling 40.65%, 5.65 points, to close at 8.25. Cyngn Inc shares tumbled to all-time lows, dropping 36.47% or 0.93 points to close at 1.62.

The CBOE Volatility Index, which is based on S&P 500 options trading, fell 4.60% to 30.49.

Gold futures for February delivery lost 1.81%, or 33.15, to $1,796.55 a troy ounce. In other commodities, WTI crude for March delivery fell 0.08%, or 0.07, to $87.28 a barrel. Brent oil futures for April delivery rose 0.24%, or 0.21, to $88.90 a barrel.

Meanwhile, in the Forex market, EUR/USD fell 0.02% to hit 1.1141, while USD/JPY shed 0.01% to hit 115.32.

Futures on the USD index rose 0.87% to 97.235.

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Re: Forex News from InstaForex

Postby IFX Yvonne » Mon Jan 31, 2022 12:22 pm

Dollar is still full of determination and strength, and the turning point for EUR/USD has not yet arrived

During the pandemic, the US stock market, represented by the S&P 500 index, increased by about 120% from the low of March 2020 to the high of January 2022. During this period, stock investors even developed a reflex of buying on drawdowns, since fears of the consequences of the pandemic were offset by the fact that the US central bank and the federal government were lending a shoulder to the national economy, and through it to the markets.

"What cheap money has done is provide protection from bad news. But as this comfortable blanket is lifted, investors will be more vulnerable, and we suspect that this will create a more unstable environment for asset prices," Rabobank strategists noted.

Market participants were optimistic about entering 2022, believing that a strong US economy and further growth in corporate profits would keep stocks on an upward trajectory, even despite tightening monetary conditions in the United States.

Thanks to these expectations, on January 4, the S&P 500 index updated its record peaks at the level of 4818 points.

, the next three weeks showed that there are more reasons for anxiety than for optimism. This resulted in the S&P 500 falling from record highs by more than 10%.

The wave of sales began with fears that the Federal Reserve, which decided to tame inflation, would become very aggressive.

The first alarm bell sounded on January 5, when the minutes from the December FOMC meeting were published, which showed investors that interest rates in the United States would soon rise.

Then, on January 11, speaking in Congress, Fed Chairman Jerome Powell stressed that the American economy no longer needs an accommodative policy and that the fight against inflation is a top priority for the central bank.

Member of the Board of Governors of the Federal Reserve Leil Brainard supported her boss, noting that inflation in the United States is too high and called its containment the most important task of the central bank. She also said that it would be right to start raising rates as soon as the bond purchase program is completed.

A number of Fed officials also spoke in favor of starting to raise rates in March, and St. Louis Fed President James Bullard said that four interest rate hikes may be required this year amid high inflation.

On the eve of the January FOMC meeting, investors still had a glimmer of hope that Powell will take into account the fall in stocks and soften his tone.

However, leaving the possibility for a larger and faster-than-expected increase in interest rates, Powell showed that the fall in stocks in itself causes less concern to the Fed leadership.

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At a press conference, Powell acknowledged that inflation may remain high for longer than expected and that a rate hike at every FOMC meeting this year is not out of the question.

Against this background, US stocks quickly lost all gains for the day and closed in negative territory on Wednesday: the S&P 500 lost 0.15%.

The index also ended yesterday's trading with a decrease (by 0.54%) after the initial growth.

On Thursday, traders continued to evaluate the results of the January Fed meeting.

The range between the highest and lowest values of the indicators reached the day before was not as significant as in previous sessions this week, but continued to indicate the persistence of volatile market sentiment.

Initially, investors reacted positively to the report, which reflected the growth of American GDP at the highest pace in almost 40 years in the fourth quarter. However, subsequently, the S&P 500 index was again under pressure, including the realization that the impressive economic growth in the United States was caused by low interest rates, pent-up demand and a huge fiscal stimulus package of $1.9 trillion.

by some signs, the growth rate of national GDP is already slowing down. According to the latest survey of purchasing managers, activity in the US service sector has fallen to an 18-month low. Retail sales in the country declined sharply in December. Consumer confidence is also at a low level. Although some events can be explained by the recent outbreak of Omicron, this may also indicate a decline in underlying demand.

In addition, there are fears that the easy money that supports stocks will be gradually withdrawn, and corporate profits will decrease on both sides – due to a slowdown in income growth amid a downturn in the economy, as well as due to an increase in wage costs.

The US stock market ends the current week on a minor note, and experts disagree about its future prospects.

While some analysts believe that the sell-off is nearing its final stage, others predict an even bigger drop in stocks.

Goldman Sachs analysts believe that it's time to buy, as after the decline in the prices of many stocks have reached attractive levels.

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"Any further significant weakness in the S&P 500 index should be considered as a buying opportunity, from our point of view, although with moderate growth potential during the year as a whole," the bank's specialists said.

"The Fed will raise interest rates in 2022 to tame rising inflation, which is close to a 40-year high, but the central bank is likely to raise rates to a relatively low level," they added.

According to the forecast of Goldman Sachs, the S&P 500 index will grow to 5,000 points by the middle of the year, and by the end of the year it will rise to 5,100 points.

The sell-off on the US stock market is at the last stage, as investors' concerns about the federal funds rate hike and weak company profits are exaggerated, analysts at JPMorgan believe.

"If the stock market sell-off continues, the Fed could potentially change its policy to stop the fall. Easing expectations on the pace of interest rate hikes this year or delaying plans to reduce the Fed's balance sheet will help return investors' interest in risky assets," they said.

Following the results of the FOMC meeting and the press conference, Powell's futures market quickly put into quotes expectations of another, fifth, increase in the federal funds rate this year. This event triggered the decline of the S&P 500.

, due to fears of a real collapse of the US stock market, the Fed will raise rates only three times this year, economists at Mizuho Bank believe.

Meanwhile, Morgan Stanley strategists claim that the correction in the US stock market is not over yet.

They predict that the S&P 500 index could fall another 10% from current levels and drop below 4,000 points over the next three to four weeks.

"Apparently, investors underestimate the consequences of tightening monetary policy in the United States, as well as the potential slowdown in economic growth in the country. Therefore, we recommend doubling the share of investments in protective assets before the upcoming correction in the market," the bank noted.

flight from risky assets, provoked by the results of the January Fed meeting, led not only to the fall of the S&P 500, but to the rally of the US dollar against all major competitors.

Over the past week, the greenback has added about 1.8% to the euro, almost 2% to the antipodes, and the USD index has risen above 97 for the first time since July 2020.

"Powell made it clear that the increase in interest rates and the reduction of the balance sheet may occur faster than during the previous tightening cycle. We expect further growth of the dollar against the background of normalization of monetary policy in the United States, and the January FOMC meeting should give it an additional impetus," HSBC analysts said.

The US currency may well move to the next target in the 97.70–98.00 zone, beyond which there are practically no technical resistances up to the 100.00 mark, according to OCBC Bank.

It should be noted that the greenback did not start the current year well and initially defied the overwhelming consensus that it should strengthen, but then it was able to get up from its knees and is now close to showing the best week in the last seven months.

On Friday, the USD index updated 19-month highs in the area of 97.40-97.45, after which the bullish momentum weakened somewhat, but remains, which means that the markets continue to put more aggressive Fed rate hikes in quotes.

Some experts believe that after the "dust" settles down regarding the prospects for rates, the dollar rally will begin to run out of steam.

"The greenback is at cyclical highs, and it needs to move on, as the differential of interest rates and the increased level of market volatility provide support for the US currency. However, this is most likely the last stage of the USD movement," Societe Generale strategists said.

"There is a possibility that the global economy will come out of the worst period of the COVID-19 pandemic this year, and the market focus will shift to the normalization of monetary policy and growth outside the United States. In such a scenario, the best yield of the currency in the second half of this year will be obtained outside the world's largest economy," they added.

Wednesday, Powell not only left the door open to raising rates faster than in previous cycles, but also warned that the balance sheet reduction would be significant.

However, the question arises: how much will inflation fall in response to the first rounds of policy tightening. And will that be enough?

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If price pressure is able to ease quickly, the Fed's mood may turn out to be less hawkish, which will allow stocks to breathe a sigh of relief, and the greenback will be under pressure.

However, if aggressive efforts of the US central bank are required to reverse the price trend, the tone of its statements will be "belligerent", which may frighten the market and will increase expectations of further rate hikes, which in turn will support the dollar.

At the same time, it is difficult to predict the consequences that such sharp increases in interest rates and such powerful asset sales from the Fed's balance sheet will lead to.

A popular harbinger of a recession in the United States - the spread between 10- and 2-year government bonds - has fallen to a low since November 2020 mainly due to the fact that short-term yields jumped, and long-term yields barely moved places, hinting that some traders consider the position of the US central bank slightly reckless and begin to put the hawkish error of the Fed in quotes.

If a serious collapse in the US stock market begins, which will increase the risks of a sharp slowdown in economic growth in the country, the central bank will have no choice but to soften the rhetoric at some point.

There are some more good news that investors can cling to. Omicron may be the last wave of the pandemic. As it weakens, the problems in the labor market related to inflation may disappear.

All th

"If market expectations regarding central banks continue to grow in general, the ECB's capitulation in the context of the need to raise rates may be a turning point that will support the euro, however, this moment has not yet come. If longer-term yields in the US remain anchored, we will not necessarily see a rapid drop down. But in the future, either tightening by the Fed will bring down the markets, or the same shift in ECB policy will come," they added.

On Friday, the EUR/USD pair updated a 20-month low around 1.1125 before recovering to 1.1170. \

Divergence in the rates of the ECB and the Fed is likely to limit the growth of EUR/USD and allow the pair to continue to decline, at least until the key ECB meeting in March, Westpac analysts say.

"The chart of the yield spreads of two-year US and European government bonds clearly reflects the direction of this divergence. It should persist unless the ECB announces the end of PEPP and revises policy and economic forecasts in March. The inability of the EUR/USD pair to settle above 1.1400 in January may cause testing of 1.1000-1.1050," they believe.

The jump in short-term rates in the US due to the hawkish position of the Fed has led the EUR/USD pair to new cycle lows, and it seems that the test of the 1.1000 level is only a matter of time, ING economists note.

On the eve of the ECB meeting, which will be held next Thursday, the consumer price index in the eurozone for January will be released. The indicator is expected to reach 4.3% year-on-year, as some of the underlying effects will disappear. More clear signs that inflation peaked at 5% in December are unlikely to force the ECB to take a more aggressive stance. Since the European Central Bank does not support short-term interest rates in the eurozone, the EUR/USD pair will remain at the mercy of the Fed's policy tightening cycle," they said.

"The downward momentum in the euro was reinforced by the hawkish update of the Fed's policy. The head of the US central bank, J. Powell has opened the door for faster rate hikes than during the previous tightening cycle. Recent events confirm our forecast of a decline in the EUR/USD pair to 1,1000 in the first quarter. The downward pressure on the pair may increase in the near future if tensions between Russia and Ukraine increase. However, in the coming week, the bearish trend in the euro will be challenged if the ECB does not provide such strong resistance to expectations of an interest rate increase this year," MUFG Bank said.

The main currency pair has not yet managed to launch a convincing recovery, and it looks vulnerable due to the continuing divergence in the rates of the ECB and the Fed, which continues to support the outflow of capital from the eurozone. In this regard, attempts to increase EUR/USD can still be regarded as a convenient opportunity for short positions.

The initial resistance is at 1.1185. Its breakout may trigger a short squeeze, although growth may be stopped near the 1.1230 mark, which will be a key turning point for short-term traders. Its clean breakdown will lay the foundation for further recovery of the pair.

The nearest support is located around 1.1100, the breakdown of which will allow the bears to aim for 1.1050 and 1.1000.
is will have a negative impact on the defensive greenback, but for now it is determined and strong enough to challenge his main competitors.

The rally of the US currency has already led to the fact that the EUR/USD pair has sunk to the levels it last visited in June 2020.

"The main currency pair collapsed as the market was forced to assess the risk that the Fed could implement a larger rate hike this year than initially expected. This happened after the announcement of the results of the January FOMC meeting and the press conference of Powell. Meanwhile, signals from key members of the ECB board of directors continue to indicate that the central bank intends to adjust monetary policy gradually, believing that inflation will be transient," analysts at Saxo Bank noted.
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Re: Forex News from InstaForex

Postby IFX Gertrude » Tue Feb 01, 2022 1:26 am

US stock market closes higher, Dow Jones gains 1.17%

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At the close in the New York Stock Exchange, the Dow Jones was up 1.17%, the S&P 500 was up 1.89% and the NASDAQ Composite was up 3.41%.

The leading gainer among the components of the Dow Jones index today was Boeing Co, which gained 9.67 points or 5.07% to close at 200.24. Salesforce.com Inc rose 10.50 points or 4.73% to close at 232.63. The Walt Disney Company rose 4.34 points or 3.13% to close at 142.97.

The biggest losers were Walgreens Boots Alliance Inc, which shed 0.70 points or 1.39% to end the session at 49.76. Amgen Inc was up 0.87% or 2.00 points to close at 227.14, while Visa Inc Class A was down 0.80% or 1.83 points to close at 226. ,17.

Leading gainers among the S&P 500 index components in today's trading were Enphase Energy Inc, which rose 13.41% to 140.47, SolarEdge Technologies Inc, which gained 12.33% to close at 238.22, and also shares of Netflix Inc, which rose 11.13% to end the session at 427.14.

L3Harris Technologies Inc led the decline, shedding 4.29% to close at 209.29. Shares of Kellogg Company shed 3.46% to end the session at 63.00. Quotes of Citrix Systems Inc decreased in price by 3.42% to 101.94.

Leading gainers among the components of the NASDAQ Composite in today's trading were Calithera Biosciences Inc, which rose 55.65% to hit 0.650, Inspira Technologies Oxy BHN Ltd, which gained 36.52% to close at 3.14, and also shares of Vaccinex Inc, which rose 33.63% to close the session at 1.510.

The drop leaders were shares of Imperial Petroleum Inc, which lost 55.05% to close at 0.98. Shares of Appharvest Inc lost 12.06% to end the session at 2.99. Quotes of Vigil Neuroscience Inc decreased in price by 11.95% to 12.90.

On the New York Stock Exchange, the number of securities that rose in price (2,680) exceeded the number of those that closed in the red (574), while quotes of 106 shares remained virtually unchanged. On the NASDAQ stock exchange, 3323 companies rose in price, 582 fell, and 154 remained at the level of the previous close.

Imperial Petroleum Inc shares tumbled to historic lows, down 55.05% or 1.20 points to close at 0.98. Shares in Appharvest Inc plunged to all-time lows, shedding 12.06% or 0.41 points to close at 2.99.

The CBOE Volatility Index, which is based on S&P 500 options trading, fell 10.23% to 24.83.

Gold Futures for February delivery added 0.76%, or 13.60, to $1,798.50 a troy ounce. In other commodities, WTI crude for March delivery rose 1.49%, or 1.29, to $88.11 a barrel. Brent oil futures for April delivery rose 0.07%, or 0.06, to $89.28 a barrel.

Meanwhile, in the Forex market, EUR/USD was down 0.00% to hit 1.1233, while USD/JPY was up 0.03% to hit 115.14.

Futures on the USD index fell 0.65% to 96.632.

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