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Re: Forex News from InstaForex

Postby IFX Gertrude » Tue Jun 28, 2022 9:41 pm

US stock indexes fall on Monday

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Main US stock indexes closed in negative territory on Monday, with the Dow Jones shedding 0.2%, the S&P 500 losing 0.3%, and the NASDAQ declining by 0.72%.

Equities were negatively affected by the preliminary US GDP data for January-March 2022. Economists expect the US economy to shrink by 1.5% quarter-over-quarter.

Market players also assess the state of the global economy amid soaring inflation and the resulting policy measures by central banks. Some investors are concerned an aggressive monetary tightening cycle could lead to a recession.

On the Dow Jones, the best-performing stocks were United Health Group, Inc. (2.02%), Chevron, Corp. (1.93%), and Merck & Co., Inc. (1.37%), as well as Nike, Inc., (2.13%).

The worst-performing stocks were Salesforce, Inc. (-2.48%) and Boeing, Co. (-1.99%).

On the S&P 500, the best-performing stocks were Valero Energy, Corp. (8%), Devon Energy, Corp. (7.48%), and Hess, Corp. (5.18%).

The worst performing stocks on the S&P 500 were Etsy, Inc. (-3.55%), Electronic Arts, Inc. (-3.53%), and Autodesk, Inc. (-3.43%).

On the NASDAQ, the biggest gainers were Evofem Biosciences, Inc. (187.71%), Acutus Medical, Inc., (87.59%), and Epizyme, Inc., (55.14%).

The biggest losers were Powerbridge Technologies, Co., Ltd. (-34.95%), Borqs Technologies, Inc. (-24,38%), and Enochian Biosciences, Inc. (-21,92%).

Shares of Coinbase Global dived by 9.3% after Goldman Sachs downgraded it to a sell rating.

Rising stocks outnumbered declining ones on the New York Stock Exchange by 1,756 to 1,418. On the NASDAQ Stock Exchange, 1,959 rose and 1,850 declined.

The CBOE Volatility Index, which measures the implied volatility of S&P 500 options, decreased by 1.03% to 26.95.

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Re: Forex News from InstaForex

Postby IFX Gertrude » Wed Jun 29, 2022 5:32 am

The cost of bitcoin is falling, but many experts give positive forecasts

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Bitcoin started Tuesday morning with a decline. At one point, the coin traded at $21,141. According to the website for tracking the value of digital assets CoinMarketCap, over the past 24 hours, the lowest price of bitcoin reached $20,577, and the highest – $21,478.

Bitcoin has demonstrated confident positive dynamics until Tuesday, since June 18.

Altcoin Market B
itcoin's main competitor, the Ethereum altcoin, also started Tuesday's trading session with a drop and at one point it had reached the $1,182 mark.

As for cryptocurrencies from the top 10 by capitalization, over the past 24 hours, all virtual assets, with the exception of a few stablecoins, have been declining in value. At the same time, Dogecoin (-6.77%) recorded the sharpest drop. According to the results of the past week, this cryptocurrency, on the contrary, showed the best results, soaring by 15.81%.

According to the world's largest aggregator of data on virtual assets CoinGecko, over the past day in the top 100 most capitalized digital assets, the Chiliz coin topped the list of leaders (+15.2%), and the first place in the drop list went to Synthetix Network Token (-13.0%).

Assessment of the market situation

Experts believe that the main reason for such a spectacular collapse of the crypto market in June is the loss of investors' appetite for risks. The weekly trading volumes of bitcoin and Ethereum fell below the levels of 2021.

At the same time, since the beginning of this year, the trading activity of the main altcoin has decreased significantly more than the indicators of the BTC. So, since January 2022, amid extreme market conditions, the outflow of users from the Ethereum network has increased by 28%.

Many analysts believe that it is not worth waiting for the recovery of the activity indicators of the leading cryptocurrencies in the near future, because the current bear market has become the most painful and protracted for the digital asset market in the entire history of their trading. At the same time, the key factors that led to such a deplorable state of cryptocurrencies, experts call a record increase in inflation and the tight monetary policy of the world's central banks.

For comparison, back in November 2021, the total capitalization of the virtual coin market exceeded the $3 trillion mark. Now this indicator balances at the level of $1 trillion.

An equally important proof of the seriousness of current market conditions was the decrease in the spot value of bitcoin below the selling price by 11.3%. Now traders are forced to sell their cryptocurrency at a significant loss. This situation in the virtual asset market is observed only for the fifth time since the launch of bitcoin in 2009.

What awaits bitcoin in the future?

The prolonged agony of the virtual asset market forces experts to make the most unexpected predictions about its future. Recently, analysts from Arcane Research suggested that the potential for reducing the value of bitcoin remains at $10,350.

Earlier, Jeffrey Gundlach, CEO of DoubleLine investment company, said that bitcoin could soon collapse to the $10,000 mark after a series of recent falls that made investors seriously doubt the stability of the cryptocurrency markets.

At the same time, some crypto experts continue to believe in the bright future of the first cryptocurrency. So, recently, a popular analyst and microblog presenter under the nickname Crypto Rover suggested that bitcoin has not yet completed growth and ahead of it is the fifth, final wave of positive movement.

A similar opinion is shared by the CEO of the software company XOR Strategy. So, recently, Aurelien Ohayon said that the BTC has reached a cyclical bottom and will soon make a rebound from the lows, starting a new growth cycle. If his assumption becomes a reality, Ohayon believes, by the end of June, the MTC can easily reach the level of $30,000.

Previously, well-known trader Peter Brandt predicted the return of bitcoin to a bullish trend when the BTC market dominance index will surely recover above 50%. At the moment, this indicator is balancing at 43.4%. It fell below the 40% level back in January 2022 and has not crossed the 50% mark since then.

Mike Novogratz, CEO of virtual asset management company Galaxy Digital, is also confident that the worst time for bitcoin is over. The analyst suggested that the main reason for the current sales in the crypto market was the liquidation, and not the deliberate refusal of traders from digital assets. According to Novogratz, the record volatility of cryptocurrencies eliminated too many orders, which triggered the recent collapse of the BTC below $18,000.

Despite all his optimism about the future of digital coins, Novogratz admits that a large-scale recession is coming to the crypto market, which will significantly hit the global economy.

Novogratz believes that bitcoin will be able to confidently turn to a bullish trend when the US Federal Reserve stops its tight monetary policy and a permanent increase in the key interest rate. According to the expert's calculations, the virtual asset market will remain in a state of recession for about 18 months.

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Re: Forex News from InstaForex

Postby IFX Gertrude » Thu Jun 30, 2022 6:15 am

The euro is looking for a bottom

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Inflation statistics for Germany misled the markets at the moment. Judging by the slowdown in the indicator in the locomotive of the European economy, some players began to anticipate a possible peak in inflation. A similar report from Spain somewhat grounded the markets, as inflation in this country was higher than expected.

Inflation Rate in Germany (M/M)
Market players will now look for clues on how the European Central Bank will behave at the upcoming meeting in July. Will the central bank take into account the fact that the worst of the current spikes in inflation may have passed and it will be possible to apply a less aggressive approach to raising rates.

At the moment, the ECB is ready to raise rates in July and then in September. The size and number of upcoming increases matter for the euro. If the meeting talks about 50 bp, it will be seen as a strong commitment to normalizing policy and potentially support the single currency.

The softening of inflation indicators may be a good reason for a symbolic rate hike– by only 25 bps. This will disappoint the players, as they are already set up for a more aggressive approach by the ECB. Lower inflation data may also mean a reduction in the frequency of rate hikes. In other words, the tightening will not happen monthly, as investors think.

Prior to the release of inflation data, the markets predicted a rate hike of at least 30 bps. The main scenario, after all, was an increase of 50 bp, besides, this figure increasingly surfaced in analytical and financial reviews.

It is worth noting that on June 13, the market expected the ECB deposit rate to peak at 2.48%, but since then it has fallen and as of June 27 was at 2.04%. There is reason to believe that this value will become even lower further.

Holding back expectations of a rate hike will trigger a mechanical reaction of the euro's decline, as was seen at midweek trading. Consequently, the summer consolidation of the EUR/USD pair may be limited to 1.0350-1.0642, and not 1.0350-1.0800.

Be that as it may, the euro does not look completely hopeless. Annual CPI in Spain for May was 10.2%, which is higher than expected 9% and 8.7% for the previous period. It is too early to talk about the stabilization of the inflationary situation in the euro area as a whole, so the ECB is likely to maintain its current rate.

Bank of America Forecast
The euro's weakness is due to the softness of the ECB and the periphery.

When it comes to a raise, it will be difficult for the central bank to keep up with other major central banks tightening policy. The policy divergence between the major central banks will be a key driver of the exchange rate in the coming months, according to Bank of America.

The ECB was left with the lowest interest rate in the G-10. While the majority is starting a quantitative tightening (reversal of easing) program, the ECB is only now about to complete its quantitative easing.

Analysts are convinced that Europe will not begin quantitative tightening until at least the end of 2024. The rate is likely to be increased by 25 bp in July.

The ECB will remain dovish compared to other members of the Big 10 until it eliminates the risks of fragmentation. In this regard, market players will pay more attention to how the ECB solves the issue of curbing the yield of Italian and Greek bonds.

Failure to solve this problem is highly likely to destabilize the eurozone and, therefore, is a key risk for the prospects of the euro.

However, ECB representatives have recently started talking about tools to ensure that the difference in bond yields between different countries remains stable, thereby containing risks. The information was once again reiterated by ECB President Christine Lagarde during her speech at the annual ECB forum.

In the near future, there will be a plan according to which the central bank will continue to buy bonds of vulnerable countries, which will limit the yield that these bonds pay, and therefore limit the cost of borrowing.

To compensate for the stimulus, the bank will pump out liquidity from other parts of the system, potentially offering banks attractive interest rates to hold cash with the ECB, Reuters reports. This is known as the "sterilization" program.

Bank of America has little faith in promises. If we are talking about the development of an instrument, this means that it is not in the ECB.

Bank of America's medium-term forecasts for the euro remain pessimistic until the end of this year. In the long term, a gradual return to equilibrium is expected.

"We maintain our forecast for EUR/USD for this year at 1.0500, which is still below the consensus forecast of 1.1000," analysts write.

In 2023, the quote is expected to be at the level of 1.1500, increasing to 1.2000 in 2024. Nevertheless, uncertainty remains high for these years as well.

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Re: Forex News from InstaForex

Postby IFX Gertrude » Mon Jul 04, 2022 7:23 am

Dollar moving away from the decline, and the sliding euro is far from slowing down

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The US currency is firmly in the leading positions, once again confirming its strength. At the same time, experts fear that the fall of the euro in the EUR/USD pair, which began last week, will continue.

At the end of the past week, the greenback demonstrated a reduction in price in relation to the euro, which continued to weaken. Disappointing reports on the US industrial sector turned out to be the driver of the USD decline. According to current data, the index of business activity in the American industry (ISM Manufacturing) fell to 53% in June from 56.1% in May.

Against this background, the European currency sank significantly against the American one. The catalyst for the fall of the EUR was a large-scale acceleration of annual inflation in 19 eurozone countries. According to reports, inflation made a dizzying turn in June, rising to 8.6% from the previous 8.1%. According to experts, this is another record rise, which increases the likelihood of a tightening of the monetary policy by the European Central Bank.

Many market participants are confident that the ECB may raise the rate again at the July meeting. The reason is the prolonged acceleration of inflation and the risk of its increase. In the current situation, the ECB is ready to revise its forecast of economic growth downward. Against this background, fears about stagflation in the eurozone are growing.

Earlier, ECB President Christine Lagarde expressed concerns about the recession, but hoped for a favorable outcome for the eurozone economy.

However, a number of negative factors, such as galloping inflation, low economic growth and a prolonged energy crisis, increase the central bank's concern about a significant downturn in the European economy.

Against this background, the greenback has noticeably strengthened, once again "stepping on the heels" of the euro. On the morning of Monday, July 4, the EUR/USD pair was trading at 1.0433, approaching 1.0349 – a five-year low reached in May. According to analysts, such actions mean a flight to the dollar on the part of investors.

Some market participants prefer to invest in USD amid unfavorable prospects for the global economy. At the same time, experts record a number of alarming signs indicating a weakening of the US economy. It should be noted that personal spending in the United States decreased to 0.3% in June from the previous 0.6%. At the same time, the inflation rate is gradually decreasing, and the labor market in the United States is showing steady growth. And so the markets expect the Federal Reserve to continue fighting high inflation and tightening monetary policy.

At the beginning of this week, risky currencies were trading near multi-year lows against the greenback, while the euro remained under pressure. Investors prefer safe haven assets, primarily the dollar. Powerful financial injections supported the latter, allowing it to strengthen against the currencies of exporting countries. Additional support for the USD was provided by the deterioration of the prospects for the global economy. Currently, the greenback is held at high levels, and the dollar index has consolidated near 105,100, approaching the high in the last 20 years. The growth of the US currency was not prevented by the doubts of market participants about the next rise in interest rates in the United States.

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Re: Forex News from InstaForex

Postby IFX Gertrude » Tue Jul 05, 2022 4:19 am

World stock indices received support from the recovery in oil prices

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The European equity markets index rose 0.8%, while the UK FTSE index climbed more than 1%, helped by gains in oil and gas stocks.

Oil fell $1 a barrel earlier on Monday on worries about the global economic outlook, but declines in production from the Organization of the Petroleum Exporting Countries (OPEC), unrest in Libya and sanctions on Russia outweighed those concerns.

Ecuador's oil production has been hit lately by civil unrest, and a strike in Norway could cut supplies this week.

Steven Brennock, a spokesman for oil broker PVM, said the growing supply disruption was exacerbated by a possible shortage of spare capacity from Middle Eastern oil producers. Prices will continue to rise unless new oil hits the markets soon.

A survey of analysts on Friday showed that production of 10 OPEC countries in June fell by 100,000 barrels per day to 28.52 million barrels per day. In the meantime, they promised to increase it by about 275,000 barrels.

Brent crude rose 1.25% to $113.02, while WTI rose 1.2% to $109.76 a barrel.

The MSCI World Markets Index rose 0.38%, while it lost 2.3% last week.

In June, global equity markets hit 18-month lows amid worries about rising inflation and higher interest rates, but have rallied slightly since then.

The broadest MSCI index for Asia-Pacific countries excluding Japan rose by 0.34%.

The Chinese Blue Chip Index finished the day up 0.7% on the back of a 4.65% gain in the sub-index of medical stocks. Cities in eastern China tightened COVID-19 restrictions on Sunday amid new coronavirus outbreaks.

The Japanese Nikkei added 0.84%.

US S&P 500 and Nasdaq futures shed 0.4% and 0.5%, respectively, as recent weak US data suggests a weaker data in the June jobs report due on Friday. American stock markets are closed today.

The Atlanta Fed's long-awaited Q2 GDP outlook has dropped to -2.1% year-on-year, meaning the country is already in a technical recession.

The jobs report is forecast to point to a slowdown in June job growth to 270,000, with median wage growth declining to 5.0%.

The minutes of the Fed's June meeting, which will be released on Wednesday, are expected to indicate the central bank's inclination to decisively tighten policy. Earlier, the Open Market Committee decided to raise rates by 75 basis points.

The likelihood of another 75 basis point rate hike this month and a rate hike to 3.25%-3.5% by the end of the year is estimated by the market at about 85%.

The US Treasury market is closed today, but their futures market is open and continued to rise. Judging by it, the yield of 10-year bonds is kept at the level of 2.88%; it has fallen 61 basis points since its June peak.

The yield on German 10-year government bonds, the eurozone benchmark, rose 10 basis points to 1.328%. Last week it was falling as investors began to buy protective bonds.

The US dollar slipped 0.06% to 104.99 against a basket of currencies, rebounding from recent 20-year highs driven by its defensive-currency status.

The euro rose 0.13% to 1.0442, off a recent five-year low of 1.0349. The European Central Bank is expected to raise interest rates this month for the first time in a decade, and the euro could be supported if the central bank decides to raise it by half a point at once.

The Japanese yen also attracted defence-currency buyers late last week, pushing the dollar back to 135.48 yen from a 24-year high of 137.01, though it still gained 0.3% on the day.

A strong dollar and rising interest rates weigh on gold, which traded down 0.15% to $1,808 an ounce. It hit a six-month low of $1,784 last week.

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Re: Forex News from InstaForex

Postby IFX Gertrude » Wed Jul 06, 2022 6:52 am

Zimbabwe's gold standard.

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At the end of this month, to try to tame inflation, the Reserve Bank of Zimbabwe will begin selling gold coins, thus providing a store of value for the country's declining currency and an alternative to the US dollar for the public.

The gold coin weighing 22 carats in one troy ounce will be called Mosi-oa-Tunya and will already be available from July 25.

Each coin will be assigned a serial number. After the purchase, the buyer takes possession of the coin and receives a certificate of ownership to the bearer. The buyer or the holder of the coin can transfer it to the bankers of his/her choice for safekeeping, and in this case a certificate of safe storage or a receipt will be issued.

According to the governor of the central bank, John Mangudya, gold coins can be bought for local currency, the US dollar and other foreign currencies.

The price will be set based on the international gold price and production costs.

Owners of gold coins will be able to exchange them for cash. Gold coins can also be used for transactional purposes and as collateral for loans.

According to the press release, the coins will be sold by Fidelity Gold Refinery, Aurex and local banks.

Rising inflation and currency devaluation have made life difficult for the Zimbabwean population. Annual inflation in the country was almost 192% in June.

The central bank of Zimbabwe was forced to more than double the discount rate from 80% to 200%, which was a new record.

Zimbabwe also announced plans to adopt the US dollar as legal tender for the next five years to stabilize the country's exchange rate. This is the second time in more than a decade that Zimbabwe has legalized the US dollar as legal tender.

According to the country's Finance Minister Mthuli Ncube: the government has announced its intention to maintain a multi-currency system based on the dual use of the US dollar and the Zimbabwean dollar.

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Re: Forex News from InstaForex

Postby IFX Yvonne » Thu Jul 07, 2022 9:04 am

China and the USA

The confrontation between countries with the first and second economies of the world lasts for years and runs along a variety of lines – from trade to intellectual property rights. Now Western sanctions against Russia have been added here, and Washington has directly warned Beijing about the consequences if they are violated. The United States has already blacklisted five Chinese companies last week, accusing them of supporting the Russian military-industrial base. However, at the same time, the American authorities say that China generally complies with the sanctions restrictions. The situation is quite slippery, especially amid statements about US President Joe Biden's plans to lift some restrictions on trade with China (introduced under Donald Trump). In addition, Beijing itself may fall under sanctions for aggression against fr. Taiwan, which China considers its territory. The relevant bill has already been submitted to the US Senate.

China and Investment

For more than four months, global markets have been operating in a changed reality and new standards. As the history of the last hundred days has shown, geopolitical events can become a threat to investments and indices, and very quickly. By the way, China has faced negative market movements and capital outflows before. In total (according to the Institute of International Finance, IIF), from January to March 2022, investors have already withdrawn more than $30 billion from China.

The main reasons for the outflow of capital were:
lockdowns due to COVID-19;
problems in the Chinese real estate sector;
rising yields on US Treasury bonds.

Moreover, according to the same IIF, there is "a perceived risk of investing in countries whose relations with the West are difficult." How much are investors willing to invest in stocks that may not be able to get out quickly if necessary?

China and COVID

In addition to fears of becoming a pariah of world markets in the event of political conflicts, the Chinese market is also under pressure from a zero tolerance policy for COVID. Lockdowns, testing and other restrictive measures have been introduced in Shanghai for several months now (after a new outbreak of the disease) and then in Beijing. As a result, many production processes and the operation of the world's largest port have slowed down. The real estate market is still depressed, consumer spending is weak, and businesses do not want to hire employees and invest because of COVID.

The quarantine also affected the work of shopping and entertainment centers, restaurants, etc. Last week, some breaks were introduced for residents and tourists, but on Tuesday Beijing again announced mass testing of most of its residents after an outbreak in a karaoke hall. Chinese President Xi Jinping said that it is better to bear the "temporary" economic costs of the "wartime" state than to "harm people's lives and health".

China and the world market

Meanwhile, many market experts believe that even in the event of political negativity, sanctions against China will be unlikely. The fact is that the size of its economy and markets is so large that it will cause much more harm to the West than, for example, the restrictions imposed on Russia.

For comparison:
China accounts for 40% of emerging market stock indices;
Before February 24, Russia accounted for 6.1% of benchmark debt.

The impact of sanctions against China on global financial markets will also be much greater.

China and economic growth

And although analysts believe that a precedent has already been set for restrictive and punitive sanctions, such a move against China looks more far-fetched than realistically feasible. However, even this risk deters investors. But not everyone. Last month alone, net inflows into China-listed equities totaled $11 billion. "Playing" on the side of China:

the size of its economy;

a huge amount of foreign money invested in Chinese enterprises.

Particularly contrasting amid recession fears in the West is that China is the only major economy in the world that promises a recovery in growth this year. In addition, according to some sources, to revive its economy, China is preparing to create a state infrastructure fund worth $74.69 billion in the third quarter.
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Re: Forex News from InstaForex

Postby IFX Gertrude » Sat Jul 09, 2022 1:00 am

USD/JPY: Japanese yen shaken by assassination of Shinzo Abe

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The Japanese yen moved upwards slightly following first reports of an assassination attempt against former Prime Minister Shinzo Abe. JPY reversed downwards almost immediately, but Abe's death could have some effect on the Japanese yen's performance.The yen spiked by 0.5% against the dollar at one point. US Treasury bonds also increased, as investors sought safe-haven assets.Analysts and economists have made a number of outlooks on JPY. Some claim a shift in BoJ's policy is likely, while others expect the event to have only a short-term effect on the markets. On Sunday, elections to the upper house of the Japanese parliament will be held.

What are the implications?
Former PM Abe was a well-known figure, very popular abroad and respected by investors. Abe pulled the strings of the Japanese economy from behind-the-scenes - he was the creator of the "Abenomics" economic policy. Abe's death might give an impression that the Bank of Japan could adopt a different monetary policy. If the BoJ abandons its stance on monetary easing, it would disappoint market players."Abe had been supporting Bank of Japan Governor Kuroda. The bank's policy could change as they would lose that backing," Tomoichiro Kubota, senior market analyst at Matsui Securities said."This may have an impact in the medium to long-term, and the markets will see a considerable appreciation of the yen and a decline in stock prices," he added.The yen has shown a safe haven bid today, as political risks had an additional premium ahead of the weekend election. There may be sympathetic support for the Liberal Democratic Party at the election. Given the lack of details, JGB market players are likely to take a wait-and-see stance.At this point, it is unclear whether the yen would extend its upside momentum or not. The fact that Abe was a former PM could prove key, limiting the market reaction.JPY remained in the trend channel in the run-up to the release of US non-farm payrolls. The US payroll data could seriously affect the yen's performance.

Will non-farm payrolls shake up JPY?
Previously, US non-farm payroll data was one of the most anticipated data releases, However, market reaction to this data could not be as strong as before, as the Fed focuses on fighting inflation.Nevertheless, the NFP report could be a market driver, as investors still see it as a benchmark for the US economy. Economists expected the US economy to create 275,000 jobs in June, down from 390,000 in May. Investors could interpret weak NFP data as a signal of an economic slowdown, putting pressure on USD/JPY.

What will save the yen?
Up until this point, the Bank of Japan continued to stand by its monetary easing policy. Due to interest rate hikes in the US and around the world, JPY lost 15% against USD this year. The Japanese currency also retreated against a wider basket of currencies, falling to the lowest levels since the 1970s.Many traders think the monetary policy divergence was the main reason for JPY's slump. BoJ Governor Haruhiko Kuroda claims Japan does not have to hike interest rates to the extent shown by the Fed, thanks to low inflation in the country.

There is a lot of speculation on whether traders should take advantage of the slump and go long on JPY. Unforeseen global developments could at some point seriously drive up the yen's defensive bid. As market players give contrasting recommendations, some even question JPY's weakness and whether it needs support or not. There are reasons to believe that it is necessary.

So what can push the yen upwards?
JPY has been sliding down due to fundamental factors and not market speculation. A reassessment of monetary policy by the Bank of Japan would increase the yield of Japanese government bonds, decreasing the gap between Japanese and American interest rates. This would boost the yen in the short term amid US Treasury yields approaching their peak. Lifting travel restrictions for foreign tourists would add additional support for JPY.

Currently, USD/JPY is likely to be highly volatile in the future. A steady upward trend for JPY would require fundamental changes of trade flow patterns, as well as significant policy adjustments that would go beyond economic aspects.

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Re: Forex News from InstaForex

Postby IFX Gertrude » Sat Jul 09, 2022 1:03 am

USD/JPY: Japanese yen shaken by assassination of Shinzo Abe

Image

The Japanese yen moved upwards slightly following first reports of an assassination attempt against former Prime Minister Shinzo Abe. JPY reversed downwards almost immediately, but Abe's death could have some effect on the Japanese yen's performance.The yen spiked by 0.5% against the dollar at one point. US Treasury bonds also increased, as investors sought safe-haven assets.Analysts and economists have made a number of outlooks on JPY. Some claim a shift in BoJ's policy is likely, while others expect the event to have only a short-term effect on the markets. On Sunday, elections to the upper house of the Japanese parliament will be held.

What are the implications?
Former PM Abe was a well-known figure, very popular abroad and respected by investors. Abe pulled the strings of the Japanese economy from behind-the-scenes - he was the creator of the "Abenomics" economic policy. Abe's death might give an impression that the Bank of Japan could adopt a different monetary policy. If the BoJ abandons its stance on monetary easing, it would disappoint market players."Abe had been supporting Bank of Japan Governor Kuroda. The bank's policy could change as they would lose that backing," Tomoichiro Kubota, senior market analyst at Matsui Securities said."This may have an impact in the medium to long-term, and the markets will see a considerable appreciation of the yen and a decline in stock prices," he added.The yen has shown a safe haven bid today, as political risks had an additional premium ahead of the weekend election. There may be sympathetic support for the Liberal Democratic Party at the election. Given the lack of details, JGB market players are likely to take a wait-and-see stance.At this point, it is unclear whether the yen would extend its upside momentum or not. The fact that Abe was a former PM could prove key, limiting the market reaction.JPY remained in the trend channel in the run-up to the release of US non-farm payrolls. The US payroll data could seriously affect the yen's performance.

Will non-farm payrolls shake up JPY?
Previously, US non-farm payroll data was one of the most anticipated data releases, However, market reaction to this data could not be as strong as before, as the Fed focuses on fighting inflation.Nevertheless, the NFP report could be a market driver, as investors still see it as a benchmark for the US economy. Economists expected the US economy to create 275,000 jobs in June, down from 390,000 in May. Investors could interpret weak NFP data as a signal of an economic slowdown, putting pressure on USD/JPY.

What will save the yen?
Up until this point, the Bank of Japan continued to stand by its monetary easing policy. Due to interest rate hikes in the US and around the world, JPY lost 15% against USD this year. The Japanese currency also retreated against a wider basket of currencies, falling to the lowest levels since the 1970s.Many traders think the monetary policy divergence was the main reason for JPY's slump. BoJ Governor Haruhiko Kuroda claims Japan does not have to hike interest rates to the extent shown by the Fed, thanks to low inflation in the country.

There is a lot of speculation on whether traders should take advantage of the slump and go long on JPY. Unforeseen global developments could at some point seriously drive up the yen's defensive bid. As market players give contrasting recommendations, some even question JPY's weakness and whether it needs support or not. There are reasons to believe that it is necessary.

So what can push the yen upwards?
JPY has been sliding down due to fundamental factors and not market speculation. A reassessment of monetary policy by the Bank of Japan would increase the yield of Japanese government bonds, decreasing the gap between Japanese and American interest rates. This would boost the yen in the short term amid US Treasury yields approaching their peak. Lifting travel restrictions for foreign tourists would add additional support for JPY.

Currently, USD/JPY is likely to be highly volatile in the future. A steady upward trend for JPY would require fundamental changes of trade flow patterns, as well as significant policy adjustments that would go beyond economic aspects.

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Re: Forex News from InstaForex

Postby IFX Gertrude » Mon Jul 11, 2022 8:51 pm

Major European stocks rise mostly by 0.10-1.34%

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Major European stocks rose mostly by 0.10-1.34%. Only the Spanish IBEX 35 declined by 0.27%. All other indices increased. The British FTSE 100 gained the least. It went up only 0.1%. Germany's DAX is the top gainer, adding 1.34%. France's CAC 40 advanced by 0.44% and Italy's FTSE MIB rose by 1%. The STOXX Europe 600 index was up 0.51%, ending positive for the third consecutive session.

Strong data on US unemployment partly contributed to investors' positive sentiment. According to this data, the US economy is on the verge of recession. It added 372,000 jobs in June. Meanwhile, analysts forecasted that the number of jobs would grow by 265,000-268,000. The unemployment rate remained unchanged at 3.6% compared to May.

European stock indices advanced despite traders' growing concerns about a possible economic downturn due to severe measures of global central banks to combat inflation.

Nevertheless, the latest statistical data show that the EU economic situation is deteriorating. The key reason for it is a sharp increase in energy prices, gas in particular, due to the reduction in Russia's energy supplies.

An economic slowdown is most likely amid the ECB's plans to raise interest rates. Moreover, the economic slowdown may last for several months.

Next week, US and EU companies will publish their corporate reports for the second quarter of 2022. However, many economists predict that they will worsen their outlook on major indexes.

Shares of Commerzbank AG (+ 7.9%), Societe Generale (+ 2.4%), Deutsche Bank (+ 2.7%), as well as Credit Agricole (+2.1%) and BNP Paribas (+2%) were among the major gainers of the STOXX Europe 600 index.

Volkswagen AG announced that it would plan to invest more than 20 billion euros in a new program to manufacture batteries for electric cars by 2030. Later, its shares rose by 5.1%. Porsche Automobil Holding SE stocks also went up, gaining 6.1%.

Shares of Electricite de France SA added 5.6% after the announcement of the company's nationalization and the suitable candidate for the position of CEO.

The major reason why Uniper shares rose by 0.6% was the company's call for aid to the German government.

Moreover, shares of oil and gas companies gained: OMV AG added 6.6% and Orron Energy AB went up 6.4%.

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