Tag Archives: Currencies

Key News to Watch This Week

Key News to Watch This Week: This week is packed with essential economic updates
that could shape market movements across various sectors.
From PMI reports to GDP figures and key employment data,
traders and investors should stay alert to these pivotal developments and their potential impact on currencies,
commodities, and indices. Here’s a breakdown of the key news to watch.

 

 

 

 

Economic Calendar

Monday, December 2

Manufacturing PMI (November) – 17:45 – USA

Tuesday, December 3

JOLTS Job Openings (October) – 18:00 – USA

Wednesday, December 4

GDP (Quarterly) Q3 – 03:30 – Australia

ADP Non-Farm Employment Change (November) – 16:15 – USA

Services PMI (November) – 17:45 – USA

Thursday, December 5

Construction PMI (November) – 12:30 – UK

Trade Balance (October) – 16:30 – USA

Friday, December 6

GDP (Quarterly) Q3 – 13:00 – Eurozone

Average Hourly Earnings (Monthly) (November) – 16:30 – USA

Non-Farm Payrolls (November) – 16:30 – USA

Unemployment Rate (November) – 16:30 – USA

 

Gold

Gold closed last week’s trading around the $2,650 level after recording some gains
following the release of US personal consumption expenditure data.
The lowered expectations of a Federal Reserve rate cut in December reduced pressure on the dollar,
which helped the gold rally.
Gold is expected to continue rising in the coming period to target $2,721.
However, bearish movements might resume if it breaks below $2,614 and closes beneath this level, targeting $2,537.

EURUSD

Despite recent euro weakness caused by a significant slowdown in Eurozone growth and harmful data,
the EUR/USD pair managed to gain due to the softness of the US dollar.
The pair trades around 1.0574 after rebounding from the support level at 1.0453.
If the dollar’s weakness persists, the pair may continue its upward trend, targeting 1.0823.

 

 

 

Dow Jones

The Dow Jones Index continues to show strong bullish momentum, achieving new historical highs.
Last week, it closed around 44,910, supported by the strong performance of US stock markets.
The index is expected to maintain its upward trajectory, targeting 46,000,
notably if the Federal Reserve lowers interest rates in its upcoming meeting.

Oil

Oil continues its bearish trend, with prices reaching $68.11 amid increased Libyan production
and reports of divisions within OPEC+ regarding future production levels.
Oil is likely to target $66.49 from a technical perspective.
If this level is breached and prices close below it, the decline may extend to $62 per barrel.

 

USDJPY

The Japanese yen has strengthened against the US dollar, with the USD/JPY pair trading around 149.64.
This comes amid growing expectations of a rate hike by the Bank of Japan this month,
which would support the yen, notably if the Federal Reserve also lowers interest rates.
Technically, the pair must break the support level 149 to continue its bearish trend and target 143.40.

 

Key News to Watch This Week

US Stock Indices Close November with Exceptional Performance

US Stock Indices Close November with Exceptional Performance: November ended with remarkable performance in US financial markets,
as the “S&P 500” recorded its strongest monthly gain this year.

This was accompanied by shifts in bond yields and the dollar,
driven by speculation about potential policy changes post-elections.

This report explores the impact of US economic policies and the global markets’ response,
including Europe, Canada, and Japan.

 

 

Content

Notable US Performance

Most robust Monthly

Global Performance of Stocks and Currencies

November Performance Summary

 

 

Notable US Performance

US stock indices ended the short trading session on Friday higher,
while Treasury yields fell across all maturities.
This was attributed to expectations that President-elect
Donald Trump might adopt less stringent trade policies,
leading to the dollar’s most significant weekly loss in three months.

The “S&P 500” index rose by more than 1%
for the second consecutive week and climbed 0.6% on Friday to reach new record levels.
Meanwhile, the 10-year Treasury yield declined to 4.17%,
and the Bloomberg Dollar Spot Index continued its
weekly decline by over 1% after an eight-week winning streak.

Trump’s selection of a Treasury Secretary nominee
boosted optimism that tariffs would be more measured.
This would support the performance of US stocks and bonds while weakening the dollar.

 

Most robust Monthly Performance for “S&P 500”

The S&P 500 rose 5.7% in November,
marking its best monthly performance of the year.
According to EPFR Global data,
investors poured approximately $141 billion into
US stocks during the month had the largest four-week inflow on record.

This performance was driven by a small group
of major technology stocks amid expectations of the
Federal Reserve lowering interest rates while the US economy grows.

Max Kettner, Chief Multi-Asset Strategist at “HSBC Holdings,”
stated in an interview with Bloomberg Television:
 “What matters now is that the Federal Reserve is shifting its policy,
leading to lower real interest rates and higher stocks. The current conditions are ideal.”

 

 

 

Global Performance of Stocks and Currencies

Canada and Europe:

  • In Canada, the economy recorded modest growth last month,
    increasing the likelihood of the central bank continuing to cut interest rates.
  • In Europe, fiscal spending appears to be improving,
    with expectations that any potential ceasefire
    in Ukraine could ease the pressure from rising energy prices.

Eurozone:
 Inflation rose above the European Central Bank’s 2% target,
but only slightly, which is unlikely to alter the course of monetary policy.

Japan:
 The yen briefly dropped below the 150 level against
the dollar after the Bank of Japan Governor
Kazuo Ueda stated that further currency weakening poses significant risks.
Earlier, the yen had rebounded above this level following
Tokyo inflation data showing higher-than-expected price increases,
raising bets on a potential interest rate hike at the Bank of Japan’s upcoming meeting.

 

November Performance Summary

The performance of US markets in November highlights the
relative strength of the US economy compared to the rest of the world,
supported by expectations of interest rate cuts
and substantial inflows into stocks.
As global market developments continue,
the future of monetary policies remains a critical factor in shaping market directions.

 

 

US Stock Indices Close November with Exceptional Performance

The Dollar and Euro on the Verge of Parity Amid Trump’s Threats and Rate Cuts

The Dollar and Euro on the Verge of Parity Amid Trump’s Threats and Rate Cuts

Recent developments in financial markets suggest that the euro may experience a significant decline, nearing parity with the U.S. dollar. These expectations are growing due to a combination of economic and political factors, most notably the interest rate cuts in Europe and indications that Donald Trump’s potential presidential victory could spark global trade wars.

 

Content

 

 

 

 

Warnings

Warnings of a New Trade War
Last week, Donald Trump hinted at the possibility of imposing new tariffs targeting Europe, along with China and other countries.
In response, European Central Bank President Christine Lagarde warned of “downside risks” to the struggling European economy.
These warnings coincided with the second consecutive interest rate cut, which led to a noticeable drop in the euro’s value.

 

The Euro’s Future Amid Trade Tensions
Top financial experts indicate that parity between the euro and the U.S. dollar is a real possibility, especially if Trump wins the election and imposes widespread tariffs.
Major banks such as Deutsche Bank and JPMorgan have suggested that the single currency could face further declines by the end of this year.

 

Impact of European Economic Weakness
While the Chinese yuan and Mexican peso are often seen as the currencies most affected by U.S. trade policies,
Europe’s weakening economy puts the euro at risk.
Reports suggest that continued slow growth in Europe, along with rate cuts, could push the euro to extremely low levels against the dollar.

 

 

 

 

Outlook

Economic Outlook
With expectations that the European Central Bank might cut interest rates by half a point before the end of the year,
markets seem to be preparing for the potential decline in the euro’s value.
Data shows that the euro has lost ground against the dollar for three consecutive weeks,
marking the longest losing streak since last June.

 

Conclusion
Amid global trade threats and rate cuts, the euro seems to be facing significant challenges
that could lead to parity with the U.S. dollar in the near future.

 

 

The Dollar and Euro on the Verge of Parity Amid Trump’s Threats and Rate Cuts

The Best Way to Invest Your Money: Stocks or Forex?

The Best Way to Invest Your Money: Stocks or Forex?

Many individuals seek the best ways to grow their wealth and increase their capital.
Investing in stocks and forex trading are two of the most popular methods for achieving this.
But what is the best way to invest your money?
What are the differences between investing in stocks and trading forex?
Let’s explore this in detail.

 

Topic

What is Stock Investment

What is Forex Trading

Stocks vs. Forex: A Comparison

How to Decide

Conclusion

 

 

 

 

 

 

What is Stock Investment

Investing in stocks means buying shares in publicly traded companies.
When you purchase a stock, you become a part-owner of the company, with the right to share in its profits (dividends) and benefit from the increase in the stock’s value over time.

  • Advantages:
    • Long-term returns: Stocks often provide significant returns in the long run.
    • Portfolio diversification: You can invest across multiple sectors.
    • Dividends: Some companies pay regular dividends to shareholders.
  • Disadvantages:
    • Price volatility: Stock prices can be volatile in the short term.
    • Market risk: Stock values can be impacted by market and economic changes.

 

What is Forex Trading

Forex refers to the trading of foreign currencies, where one currency is bought and another is sold.
It is one of the largest financial markets in the world and operates 24/7.

  • Advantages:
    • High liquidity: The forex market is the largest and most liquid market globally.
    • Trading hours: You can trade 24 hours a day.
    • Leverage: Forex trading allows you to trade with more money than you have by using leverage.
  • Disadvantages:
    • High risk: Forex trading carries a high level of risk, as small market movements can lead to significant losses.
    • Complexity: Forex requires in-depth knowledge and complex strategies to understand market movements.

 

 

 

 

 

 

Stocks vs. Forex: A Comparison

  • Investment Horizon:
    • Stocks: Suitable for investors seeking long-term gains.
    • Forex: Ideal for traders looking to capitalize on quick market movements and short-term gains.
  • Risk:
    • Stocks: Generally less volatile than forex but require patience and resilience to market fluctuations.
    • Forex: Highly volatile and demands significant expertise in trading and risk management.
  • Flexibility:
    • Stocks: Trading hours are limited to stock exchange opening hours.
    • Forex: You can trade at any time of day due to the global nature of the forex market.

 

How to Decide

  • Stock investment might be the better choice if you’re looking for long-term investments and are willing to handle market fluctuations.
  • If you prefer fast-paced trading and want to benefit from short-term market movements, forex might suit you best.

 

Conclusion

Ultimately, the choice between stocks and forex depends on your financial goals and risk tolerance. It’s essential to study each option carefully and make an informed investment decision based on knowledge and experience. Regardless of your choice, always remember the importance of diversifying your investment portfolio.

 

 

 

The Best Way to Invest Your Money: Stocks or Forex?

Three Major Economic Issues Discussed in the Debate

Three Major Economic Issues Discussed in the Debate Between Kamala Harris and Trump

U.S. Vice President Kamala Harris and former President Donald Trump met for the first time as presidential candidates on Tuesday, and economic issues were a central focus of the debate. Investors and other market watchers closely followed the hour-and-a-half debate in Philadelphia. The economy was the first topic of the night, and both candidates seized the opportunity to restate their positions.

Here are the details of the competition between the candidates on three key economic topics from Tuesday night.

 

 

Content:

 

 

 

 

 

 

 

Tariffs

 Republican candidate Donald Trump reinforced his plan on tariffs at the start of the debate.

Trump called for broad tariffs of 20% on all foreign goods and tariffs of 60% or more on Chinese products. Most economists argue that tariffs would hurt the economy more than help, as traders would pass the cost of tariffs on to consumers and give local manufacturers cover to raise prices.

 

He stated that the tariffs he imposed would generate hundreds of billions of dollars and wouldn’t cost the American people anything, claiming that other countries would finally pay us back, after 75 years, for everything we’ve provided to the world. “The tariffs will be substantial,” he said.

For her part, Harris called the tariffs a “sales tax,” saying they would cost the average person more money. She argued that his trade policies with other countries put the economy at risk during his presidency.

 

“Well, let’s be clear that the Trump administration led to a trade deficit, one of the highest deficits we’ve seen in America’s history,” Harris said. “He called for trade wars.”

 

 

 

 

Inflation

 Each candidate blamed the other for inflation.

The cost of living has risen sharply since the pandemic, by 21% on average, according to the Consumer Price Index. Meanwhile, wages have grown by more than 23%, according to the Bureau of Labor Statistics.

 

Economists largely agree that inflation was driven by supply chain constraints during the pandemic and, to a lesser extent, relief programs like the stimulus checks issued by former President Trump and his successor, President Joe Biden.

 

Trump claimed there was “almost no inflation” during his presidency (prices rose by 7.5% during his term) and that inflation has been disastrous for people of all classes. Harris, on the other hand, presented her economic policies and said Trump’s proposals would only worsen inflation.

 

 

 

 

 

Student Loans

 Harris supported Biden’s student loan debt relief program for federal borrowers, which has allowed $168.5 billion in student debt to be forgiven, while further relief proposals have been blocked or delayed due to legal challenges led by Republicans. These legal challenges have left students in uncertainty as the issues make their way through the courts.

 

Although student loans were not a major focus of the debate, Trump brought up the Supreme Court’s rejection of Biden’s loan forgiveness plans. Trump said: “So, all these students were ridiculed by this whole thing. How unfair it was, and part of the reason they lost, millions and millions of people had to repay their student loans. They didn’t get them for free.”

 

 

Three Major Economic Issues Discussed in the Debate

Contraction of the Japanese Economy

Contraction of the Japanese Economy in the First Quarter

The Japanese economy contracted in the first quarter of the year,
posing challenges for the Bank of Japan as it seeks to raise interest rates from near-zero levels.

 

Topic

Details

 

 

 

Details

The Japanese Cabinet Office released preliminary GDP data indicating an annual contraction of 2.0% from January to March, compared to the previous quarter. This decline was more significant than the economists’ forecast of a 1.5% drop.

 

On a quarterly basis, GDP fell by 0.5%, slightly above the expected 0.4% decline. Private consumption, which accounts for more than half of Japan’s economic activity, dropped by 0.7%, a sharper decline than the anticipated 0.2%. This marks the fourth consecutive quarter of declining private consumption, the longest period of decline since 2009.

 

Capital expenditure, another critical growth component, decreased by 0.8% in the first quarter. This decline occurred despite significant corporate profits and was slightly more than the economists’ forecasted 0.7% drop. Moreover, external demand, calculated by subtracting imports from exports, subtracted 0.3 percentage points from the first quarter GDP figures.

 

Policymakers are looking forward to upcoming wage increases and income tax cuts, scheduled to begin in June, to help revive weak consumer spending. Additionally, they expect the effects of the earthquake that struck the Noto region earlier this year and the halting of operations at Toyota’s Daihatsu unit to diminish over time.

 

The Japanese yen has seen a sharp decline to levels not seen since 1990, raising concerns about increased living costs and additional pressure on consumer spending. The Bank of Japan took a significant step in March by raising interest rates for the first time since 2007, moving away from negative interest rates. However, given the fragile state of the economy, the central bank is expected to proceed cautiously in easing monetary conditions.

 

 

Contraction of the Japanese Economy in the First Quarter

The Dollar’s Decline During Yesterday’s Trading

The Dollar’s Decline During Yesterday’s Trading

The dollar saw a decline on Thursday as traders focused on evaluating the future outlook for interest rates in the United States. This came following statements from officials at the Federal Reserve, which increased expectations that the tightening of monetary policy might continue for a longer period.

 

 

Content:

 

 

 

 

 

 

The Dollar

The dollar has experienced rises in recent weeks, after US economic data showed a series of strengths, which led to reduced expectations for interest rate cuts in the near future. Rising tensions in the Middle East have added to the dollar’s appeal as a safe haven. The strength of the dollar has impacted currency markets, leading to the continued decline of the yen, which is approaching its lowest levels in 34 years. These movements have sparked warnings from Japanese authorities about possible intervention. Emerging market currencies are facing pressure.

 

 

 

Bitcoin

Potential Decline in Bitcoin Price:

According to a research report from the prominent American investment bank J.P. Morgan, it is expected that the price of Bitcoin will decline following the anticipated halving event. This event occurs every four years and leads to a slowdown in the growth rate of Bitcoin supply. This reduction is expected to occur around April 19 to 20. The bank predicts a drop in the price of the world’s largest cryptocurrency after the halving, due to conditions of overbuying in the market, according to its analysis of open interest in Bitcoin futures contracts. Furthermore, the current price of Bitcoin, around $61,453, remains higher than the bank’s estimate based on gold price volatility, which it values at $45,000, and the expected production cost of Bitcoin after the reduction, estimated at $42,000. In the past, the production cost of Bitcoin was considered the floor for its prices.

 

 

 

 

Gold

Continued Rise in Gold Prices:

Gold prices rose during the trading session on Thursday, as a result of escalating risks related to the conflict in the Middle East, which increased the appeal of the yellow metal as a safe haven. However, these developments cast a shadow over the expectations related to longer-term interest rate increases in the United States. Uncertainty on the geopolitical front supports the prevailing upward trend in gold prices. Also, the continued rise in U.S. interest rates for an extended period may pressure the ongoing support for gold. However, we might see some enhancements and potential retreats in the short term. The rise in interest rates reduces the attractiveness of holding gold bullion, which does not provide a financial return.

 

 

The Dollar’s Decline During Yesterday’s Trading

 

Euro rises against the dollar on expectations of U.S. interest rate cuts

Euro rises against the dollar on expectations of U.S. interest rate cuts

The euro rose against the dollar on Wednesday, hitting its highest level in six months,
after the U.S. Federal Reserve signaled it could cut interest rates in 2024.

 

Topic

Hopes for U.S. rate cuts lift euro to six-month high

Seasonal gains boost euro

 

 

 

 

Hopes for U.S. rate cuts lift euro to six-month high

The euro jumped 0.3% to $1.107, its highest level since July 2023.
The euro has risen 3.4% this year,
with most of the gains coming in recent weeks after the Fed hinted it may halt rate hikes sooner than expected.

“Yields are lower, stocks are higher, and risk appetite is still there,
and markets are looking for the Fed to ease by spring,” said Kit Juckes,
chief foreign exchange strategist at Societe Generale in London.

 

 

 

Seasonal gains boost euro

Other European currencies also rose against the dollar,
with the Swiss franc up 0.2% to $0.992 and the pound up 0.2% to $1.224.

The dollar fell against most other currencies, with the dollar index,
which measures the value of the dollar against a basket of six major currencies, down 0.4% to 101.02.

“The holiday-related gains will fade a bit as we head into the first quarter,”
said Helen Given, a foreign exchange trader at Monex USA.
“The euro looks to be in overbought territory, and with the German economy teetering on the brink,
the risk of a regional recession seems a bit higher than it does here in the U.S.”

As for the dollar, there is also a strong seasonal tendency for it to weaken at the end of the year,
which is partly due to corporate activity.

 

Euro rises against the dollar on expectations of U.S. interest rate cuts

Will Turkey’s Central Bank Continue to Raise Interest Rates?

Will Turkey’s Central Bank Continue to Raise Interest Rates?

Opinions differ on whether interest rates in Turkey have peaked.
Goldman Sachs expects that the latest increase in Turkish interest rates
will be the last in the current tightening cycle,
while other banks expect another rate hike in January.

 

Topic

Goldman Sachs’s Forecast

Other Banks’ Forecasts

Conclusion

 

 

 

 

 

Goldman Sachs’s Forecast

In a report, analysts Clemens Graf and Basak Edizgil say that interest rates will not rise above the current level of 42.5% unless there is a surprise in the inflation rate. They expect that lending costs will start to decline after the third quarter of next year, reaching 25% by the end of the year.

Goldman Sachs’s forecast is based on several factors, including:

  • The decline in Turkey’s inflation rate from a peak of 85% in October last year to 61% in November of this year.
  • The Turkish Central Bank’s forecast that inflation will fall to 36% by the end of this year.
  • External pressure on the Turkish Central Bank to cut rates in order to support exports and attract foreign investment.

 

 

 

 

 

Other Banks’ Forecasts

Other banks, such as Morgan Stanley, Deutsche Bank, and Bank of America Securities, expect another rate hike in January.

This forecast is based on several factors, including:

  • The continued rise in Turkey’s inflation rate, with analysts predicting that it will accelerate to 70% in the coming months.
  • The Turkish Central Bank’s desire to fully control inflation before starting to cut rates.

 

 

Conclusion

It is still unclear whether interest rates in Turkey have peaked. This will depend on several factors, including the evolution of Turkey’s inflation rate and external pressure on the Turkish Central Bank.

In the end, the Turkish Central Bank will have to make a decision on interest rates based on its assessment of the economic situation in the country.

 

 

 

Will Turkey’s Central Bank Continue to Raise Interest Rates?

Euro to rebound strongly in 2024

Euro to rebound strongly in 2024, driven by dollar weakness and return of European investment

Analysts at RBC Global Asset Management expect the euro to rebound strongly in 2024,
with a potential gain of up to 10%.
This outlook is based on two main factors: the weakening of the US dollar and
the return of European investment to the home market.

 

Topic

Weakening of the US dollar

Return of European investment to the home market

Conclusion

 

 

 

 

 

Weakening of the US dollar

The US dollar has been on a downward trend since the end of October 2022,
and analysts expect this trend to continue in 2024.
This is due to a number of factors, including:

  • Rising inflation rates in the United States, which are pushing the Federal Reserve to raise interest rates.
  • Weakening economic growth in the United States, which is reducing the dollar’s appeal as an investment asset.
  • Improving economic growth in Europe, which is making the euro more attractive to investors.

 

 

 

 

 

 

Return of European investment to the home market

Analysts expect European investment that has been made outside the region to return to the home market in 2024. Around €4 trillion of European investment has been made outside the euro area since 2014, when the European Central Bank imposed negative interest rates. This is due to a number of factors, including:

  • Rising interest rates in Europe, which are making European investment abroad less attractive.
  • Improving economic growth in Europe, which is creating more attractive investment opportunities.

 

 

Conclusion:

Analysts expect the euro to reach $1.21 against the dollar by the end of 2024. However, they warn that the outlook could change if economic growth in Europe or the rest of the world weakens.

 

 

Euro to rebound strongly in 2024