US Markets With Hakwish Comments and Earnings

US stock markets with the SPX Futures contract are down by about 0.6% as investors monitor earnings and how markets react to the recent comments on monetary policy.

The Fed’s Bullard mentioned he would favor a terminal rate of about 5.50% and 5.75% while Bostic sees one more rate hike of about 25 bps before a potential halt of further hikes. Currently a rate ease is expected around November and December with higher probabilities which pressures markets as the easing projection moved from July to November.

Mixed and weakening earnings reports seemingly are another bearish factor to conclude into the current more likely bearish biased market structure while depending on the New York trading opening’s auction process, which tends to lean on buying, the market may lift higher by absorption.

The hawkish comments come along with a higher dollar which pressures commodities such as Gold which is down by about 1.6% and Crude oil which fell by about 1.7%. Meanwhile, Bitcoin which rallied recently due to the banking crisis fell by about 4% in the European trading session.

European inflation eased towards 6.9% from 8.5% by the central bank’s efforts to tighten monetary policy with current viewpoints of another rate increase of about 50 bps or 25 bps. The lower inflation read pressured the euro lower by about 0.3% against the dollar in the early trading session.

Looking at the E-mini S&P 500 we can observe some selling and long liquidations around the swing high back from February on the daily interval. Further hawkish remarks might lead the market to cycle down in a bearish rotation while any positive hints towards a dovish projection might lead core buyers to add to positions around VWAP key levels of the Quarterly and Yearly perspective. Another viewpoint to monitor in the short-term perspective is the lower volatility for the month which might surprise a soaring market, depending on economic data or events. Current calculations, which are slightly mixed, might point towards a balanced market behavior as traders could lean on the extremes to conclude a particular bracket area.

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The intraday perspective is imbalanced and out of the prior price range. The New York trading session might be able to lead the market back into the previous price range by buying around the swing lows from Monday’s session. However, current bearish calculation would point core sellers to add around the developing VWAP. 

Original post by The Private Banker.

Copper Concerns Of Lower Supply And Rate-Increases

 Copper, which fell by about 0.5% and trades around $4.08 per pound in the European trading session, is elevated by a weaker dollar and higher demand with concerns of lower supply.

Chinese credit growth is strong and supports the nation’s intentions to support the infrastructure construction which supports the price of the base metal.

The London Metal Exchange shows that inventories fell towards 56,000 tonnes which is the lowest since 2005, driving the price even higher as Goldman Sachs projects a global shortage of copper inventories around September.

The state owned company Codelco from Chile estimated that output will sink around 7% after a 10.6% decline in the prior Year. Supply concerns seemingly are the pressure factor as prices get driven higher just like with the OPEC+ production cuts for the oil price. This might add to the inflationary pressure, prompting central banks to conclude the best projections for interest rate hikes. The current more dovish view with potential cuts around July to November might be lifting for commodities as the dollar is weakening.

Looking at the technical perspective of the Copper market we can observe some selling around the Year’s upper value extreme on the daily interval. Seemingly the market closed with a selling tail and absorption in combination with long liquidations around the prior swing highs which could initiate the price to pullback as rotation to the developing VWAP or lower value extreme as secondary buying option for core long positions.

Taking a glance at the current TPO profile structure of this market, we can observe a balanced prior structure as the market cleared the unsecured low and might hit absorption to bring the price back into the previous price range which could initiate more buying. For the moment, the market is imbalanced with a slightly bearish bias for this session. Any bullish scenarios might target the prior POC level.

Current calculations, including the aspect of volatility, might show a mixed view which could lead the market to a balanced behavior, confluent with the fundamental supply concerns and the technical perspective.

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The managed money sector is more likely mixed as investors seemingly closing positions on both sides as of the COT data from the 11th April while net buying increased for three weeks.

Hawkish remarks by Fed Gov. Waller that inflation is too high spurred the fears for additional rate-increases in combination with visible weakness in the U.S. economy by lower-than-expected retail sales, pointing to lower spending. And the higher inflation expectations, pressures commodities and equities for the session.  

Original post on The Private Banker. 

Copper Drop Due Demand Worries With Bullish Nuance

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Copper fell by about 0.4% in the European trading session by upcoming fears of lower demand and concerns of recession which pressures demand for industrial products.

• The recent PMI data showed that China’s factory activity contracted in December due to the Covid cases as well as the property sector which hurt the market context.
• A bullish factor to consider would be Chile’s output drop of about 6.7% as global copper stock have fallen to record lows.
• Additionally, mining giants forecasted supply drops of about 50 million tones which might boost the price of the metal.

The technical perspective might changed its bias to a slight bullish tendency in the new month and Year with positive volatility and a potential weakening dollar which might boosting commodities, depending on the FOMC minutes later on the session to shed details of further inflation worries and the rate hike path. Increases of the rate with higher projections might be concluded as bearish while a potential easing with a dovish tone may support the metal.

The prior month’s low of December has been taken out and might initiate buyers for core long positions in combination with absorption. The daily interval dipped below the prior month’s balanced price range and a possible close inside of the particular range could conclude an additional buying signal with a buying tail and swing failure. The mentioned core buyers might target the upper balance extreme as rotational scenario.

The hourly interval as short-term perspective already worked its way back into the day’s developing value area to target the session’s highs and the prior VWAP close level.

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However, forecasts pointing to the downside, according to algorithm calculations which depend on further economic data input and the mentioned FOMC minutes.

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Monday’s Drop Of The Sterling Pound

(The Private Banker) - The British pound rose about 1% against the dollar and traded around $1.07 in the early European trading session, bounced back after yesterday’s record drop.

Many analysts state that the sterling might reach parity with the dollar or even fell below the $1 level as the recent announced tax cuts by the British government pressured the pound which might lead to a dept sour as there are no details about a new fiscal plan for the moment while Kwasi Kwarteng plans to explain his plan on 23rd November. The mentioned tax cuts leading to higher demand which effects inflation to pressure the pound, technically and presumably.

Monday’s drop did not lead the Bank of England to deliver an emergency interest rate hike as the speculation about this matter went around, stating that market developments will be monitored and the central bank will discuss the fall of the pound in the next meeting in November.

Markets pricing in a potential 200bps hike in November as the new government plans to boost growth with scrapping the 45p top rate of income tax and replacing it with a 40p rate.

Lenders begun to withdraw montage deals as of concerns that the Bank of England will hike interest rates again to support the pound and to fight inflation.

The central bank’s chief economist Huw Pill will speak later in the morning as traders and investors await some clarification about the current situation.

Current forecasts point to the downside as the cable rate approaches the lower historical standard deviation level for potential supportive core pound buyers, while risk is imminent.

The daily interval of the particular rate against the dollar trades below the Decade, Yearly and Quarterly developing value areas with an imbalanced downside slope, giving the lower periodicities a bearish bias.

However, the current fundamental aspect of the day points to a pullback towards selling areas where traders may add to their core positions.

The hourly interval bounced back from the lows of around $1.04, testing the week’s upper value extreme for pound shorting while buyers may target the upper monthly value area which is confluent with a prior VWAP close level, above the swing highs which might lead to absorption behavior. Depending on the further auction the lower value extreme of the week’s developing value area might be supportive.

Asset managers/Institutional were kind of mixed in the prior weeks positioning with new longs of 1.619 contracts of 6B Futures contracts and shorting about 818 contracts with a net position of about minus 97.492 contracts. The leveraged fund side bought about 5334 contracts while covering about 8154 short contracts as of September 20th.

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Crude Oil Below $90 By Economic Worries While Bouncing Back

Crude oil WTI is down by about 0.5% while bouncing back towards $91 from the lower value extreme of the month’s VWAP. The market was trading briefly below $90 in the European trading session.

The oil market is pressured by concerns of a global economic slowdown which may hurt energy demand and lead to tightening supply.

Central banks around the world are tightening their monetary policy and lifting interest rates higher to fight the inflationary rising prices which may lead to lower demand for a pressured oil price.

Additionally, Covid outbreaks in major Chinese cities of Shenzhen, Guangzhou, and Dalian placed millions under lockdowns and might result in slow economic activity in the second largest economy.

Clashes in Iraq did not affect the OPEC output for the moment while the New York trading session found some short covering. OPEC will meet in September for production policy while the Energy minister of Saudi Arabia mentioned that a revival of the Iran 2015 deal would lead to a production cut which eventually would be a bullish factor for the crude oil price.

The daily interval found some supportive core buyers around the Year’s lower value extreme, and raised the price back into the Quarter’s value area. The mentioned levels were confluent with the month’s lower standard deviation level of the VWAP which brought buyers and short covering into the market.

The short-term to median-term perspective may targeting rotations towards the upper value extreme of the Quarter’s view which stands around $100. The secondary target may lay around $112, depending on the auction around the mentioned Quarter’s DVAH and the Year’s VWAP.

The month fell by about 7.7% the third month in the row while the market found some core buyers around the Decade”s upper value extreme. Support is depending on the potential output cut which may lead to median-term long buyers.

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Japanese Yen Pressured By U.S Fed Tightening Approach

The Japanese yen increased its value against the dollar with about 0.4% in the early New York trading session. The rate found supportive yen buyers around the previous VWAP close level on the intraday interval.

The Yen got pressured by the recent hawkish comments by the Fed policymakers which want to keep raising interest rates until inflation gets under control to calm down the surging prices.

Bank of Japan Governor Haruhiko Kuroda’s speech at the Jackson Hole symposium indicated a continuation of the current ultra-supportive monetary policy as rising inflation in the country has been largely externally driven and prices might reverse towards 1.5% in the upcoming Quarters. BOJ board member Toyoaki Nakamura also stressed the need to maintain massive stimulus to support the Japanese economy.

The Japanese yen has been pressured for several months by the interest rate hike gap between the BoJ and the other global central banks which are raising and tightening monetary policy, strengthening the dollar favored side to fight the inflationary pressure in the other economies.

The daily interval found some resistance around the upper bracket extreme which found some yen buying and dollar shorting while the rate trades above the Quarter’s, Year’s and Decade’s VWAP value areas which might be bullish biased in favor of the dollar as path of least resistance by the mentioned Fed monetary approach.

The intraday perspective trades rotational in the week’s developing value and found potential dollar longs which drive the rate higher towards the week’s upper value extreme. Yen longs may emerge around the current VWAP close level or the mentioned upper DVAH level of the week. 

Yen buyers may emerger around the VWAP close level or upper DVAH level of the week.

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US Futures Gain While Twitter Shares Pressured: Market Update

U.S Futures rose with the E-mini S&P 500 up by about 0.7% and traded around 4047 in the European trading session. The market got balanced after the hawkish comments from the Fed Chair Jerome Powell which brought the Futures to tumble for around two days.

Banking, mega cap growth and technology stocks led while shares of Twitter fell after Elon Musk cited whistle-blower claims as a new reason to terminate the $44 billion takeover of the company.

Upcoming data includes the CB Consumer confidence and JOLTS due to release today. The VIX is around minus 3.2%, giving the market a slight bearish nuance. The yield and dollar index fell which may be supportive for the commodities while gold slipped about 0.4% and Crude oil dropped 2.4%.

Meanwhile, the economic sentiment indicator (ESI) in the Euro Area fell to 97.6 in August and Germany’s inflation rose to 7.9% vs 7.5% previously while the monthly data shows an easing towards 0.3% vs 0.9%.

The euro might be pressured by the data while the rate against the dollar is up by about 0.2%, testing the week’s upper value extreme for euro longs. In case of a drop the rate may find support around $0.9988 which is the week’s VWAP.

The CME:ES Futures contract trades above the week’s developing value area with a slight imbalanced slope to the bullish side. The prior VWAP close level around 4037 might be of support for buyers as well as the lower value extreme of the weekly perspective. Currently the Futures lurking for buyers around the week’s DVAH level.

The daily interval found buyers around the Quarter’s developing VWAP for potential bullish bias into the New York trading session while the prior swing highs served as absorption area for a reversal currently. 

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