Articles
Polygon presents 2.0 protocol architecture, providing “unlimited scalability and unified liquidity”
324150 June 30, 2023 22:51 FXStreet Market News
- Ethereum Layer 2 scaling solution Polygon presented its latest architecture, tackling scalability and liquidity concerns.
- Polygon co-founder Sandeep Nailwal said the project offers unlimited scalability to the Polygon blockchain through its new architecture.
- Polygon network has continued building on the technology front despite the SEC’s crackdown on Layer 2 token MATIC.
Ethereum network’s largest scaling solution Polygon is developing updates despite the Securities and Exchange Commission’s (SEC) crackdown on MATIC. The SEC labeled MATIC as a “security,” resulting in a delisting of the token on crypto exchanges.
Polygon network continued growing and developing its blockchain, introducing the architecture for the 2.0 protocol.
Also read: Ethereum’s Vitalik Buterin supports tokens hit by SEC crackdown
Polygon releases 2.0 architecture that maximizes scalability for the blockchain
Polygon Labs’ engineering team, the developers behind the Ethereum Layer 2 blockchain, released a proposed architecture for its 2.0 version. The architecture is designed to provide unlimited scalability and liquidity, turning Polygon into a Value Layer of the Internet.
In its older blog posts, Polygon has explained its vision for building a fundamental protocol that allows anyone to create, exchange and program value on its blockchain, thus the name Value Layer.
The biggest challenge facing Web3 protocols and their development is scalability. While new chains keep meeting growing Web3 demands, the fragmented liquidity and poor user experience make it less suited for market participants.
Polygon’s vision is to unify the liquidity and help Web3 scale, while providing value to users. Sandeep Nailwal, co-founder of Polygon explains how the Ethereum scaling solution plans its next steps in his tweet early on Friday:
Polygon 2.0 architecture is finally revealed.
The architecture for the Value layer of Internet: Unlimited Scalability, Unified Liquidity.
Unlimited Scalability – Using ZK Powered L2 Chains
Unified Liquidity – Using novel Interop layer proposed in the architectureRead the… pic.twitter.com/GOOLu7OAVK
— Sandeep Nailwal | sandeep. polygon (@sandeepnailwal) June 29, 2023
Polygon’s continued development, despite the hurdles associated with the SEC’s crackdown on native token MATIC, could catalyze its recovery in the long term. At the time of writing, MATIC is trading at $0.6405 on Binance.
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USD/CAD: Demagnetizing of the 1.35 handle to prove to be a short-lived phenomenon – Rabobank
324149 June 30, 2023 22:33 FXStreet Market News
The outlook for USD/CAD is now very muddy. Tthe confirmed close below 1.3260 is a major event. Economists at Rabobank have updated their forecasts.
Short term forecasts revised lower to reflect a move back to 1.33 in the coming weeks
In light of recent price action, we have revised our short term forecasts lower to reflect a move back to 1.33 in the coming weeks, and then a return to the 1.35 magnet on a three-month basis but this will require a confirmed close above that critical 1.3260 that implies the move down through the bullish trend was a false breakout.
Full ArticleShould we see a move below 1.30, we will need to revise our outlook substantially to reflect a sustained period of trading within the 1.28 to 1.30 region. But to be clear, this is not our base case, and instead, we expect the demagnetizing of the 1.35 handle to prove to be a short-lived phenomenon.
GBP/USD rebounds to 1.2700 as PCE eases in the US, the GBP ends quarter on higher note
324146 June 30, 2023 22:33 FXStreet Market News
- GBP/USD surges more than 0.50% following strong UK economic data and easing US inflation.
- US Core PCE inflation cools, while UK Q1 GDP dodges recession, giving GBP the upper hand.
- Sterling’s rally fueled by expectations of less aggressive Fed action; US Dollar Index drops by 0.50%.
GBP/USD recovered lost ground on the last day of the week, month, and quarter, rising more than 0.80% after hitting a daily low of 1.2599. Upbeat data from the United Kingdom (UK) and inflation edging lower in the United States (US) boosted the Pound Sterling (GBP), set to finish the month with gains of 2%. At the time of writing, the GBP/USD is trading at 1.2717.
Stellar UK GDP data and slowing US inflation bolstered the Pound Sterling, past 1.2700 vs. the US Dollar
The latest inflation report in the US eased some pressure on the Federal Reserve (Fed) as the central bank struggles to curb sticky inflation. The Fed’s preferred gauge for inflation, the Core PCE, rose less than expected, coming at 0.3% MoM, below the prior’s month 0.4%, while annual-based figures diminished to 4.6% from 4.7%. Headline inflation rose by 3.8% YoY, below April’s 4.4%, while PCE climbed 0.1% month-over-month, lower than 0.4% in the previous report.
Across the pond, the UK economic docket featured the Gross Domestic Product (GDP) release of the first quarter, with the country missing a recession, expanded by 0.1% QoQ, as high inflation hurts households’ disposable income, as shown by the Office for National Statistics (ONS) figures. Given that inflation remains at around 8.7%, the Bank of England (BoE) is expected to raise rates to 5.5%, as shown by money market futures, though investors remain worried that higher Bank Rates would tip the UK economy into a recession.
Following the release of the US data, the GBP/USD increased from around 1.2640s to 1.2690s as investors began to price in a less aggressive Fed. Consequently, US Treasury bond yields dropped, while a measure of the buck’s value, the US Dollar Index, has dropped more than 0.50%, exchanging hands at 102.769 on Friday.
GBP/USD Price Analysis: Technical outlook
After falling for two straight days, the GBP/USD bounced off the weekly lows. On its recovery, GBP/USD must surpass the June 21 daily low turned resistance at 1.2691, so they can recapture 1.2700 and resume its uptrend. In that outcome, the GBP/USD’s next resistance levels would be the June 28 daily high at 1.2752, followed by the 1.2800 figure.
Conversely, if GBP/USD prints a daily close below 1.2690, it will exacerbate a re-test of the current week’s low of 1.2590.
Of note, the Relative Strength Index (RSI) aims upward after dipping to its neutral line, while the three-day Rate of Change (RoC) shows sellers losing momentum, opening the door for further upside.
Upcoming events
USD/JPY set to decline toward 133 by late 2024 – Wells Fargo
324145 June 30, 2023 22:12 FXStreet Market News
For the Yen, economists at Wells Fargo see potential for stronger appreciation next year.
Likely hawkish monetary policy shift from the BoJ later this year
The Japanese currency has remained a significant underperformer so far this year, especially as the US economy has remained resilient, prospects for Fed easing have been pushed out, and the BoJ has not adjusted monetary policy settings. Accordingly, the prospects for significant Yen strength have also been pushed out.
Full ArticleThat said, a likely hawkish monetary policy shift from the Bank of Japan later this year, combined with a weak US economy and lower US interest rates next year, should see the Yen strengthen to 133.00 by late 2024.
US Dollar two-faced trading day ends with Greenback cracking under pressure
324144 June 30, 2023 22:09 FXStreet Market News
- The US Dollar gives up all its earlier gains and erases Thursday gains as PCE data came out in line with expectations.
- Markets are perceiving it as weak and are reversing their earlier steps.
- The US Dollar Index dips toward the lower part near 103.00
The US Dollar (USD) is on the chopping block and is being thrown out the window at the US trading session is picking up speed with US Dollar bulls running into a numerous number of headwinds. The Personal Consumption Expenditures numbers all came out in line of expectations. Markets continued their unwinding of long US Dollar positions in several currencies intraday as just minutes before the numbers came out, the Chinese People’s Bank of China (PBoC) issued warnings that it wants a stable Yuan and it will use internventions if needed to support the Chinese currency. This triggered already a substantial sell off in US Dollar that was retreating from several session’s high positions.
There aren’t any Federal Reserve (Fed) speaking on Friday, so traders can mainly go into data-trading. At 12:30 GMT, the Personal Consumption Expenditures (PCE) Price Index numbers will came out and pointed to further easing of inflation, making the markets believe that a one-and-done hike is the only game in town as of now. The Chicago Purchase Managers Index undershoots expectations while at 14:00 GMT the final reading of the University of Michigan Consumer Sentiment Index for June will be released. Depending on their outcome, these two data points could support some more follow-through on the current trend in the US Dollar or trigger a turnaround.
Daily digest: US Dollar gives it all back
- The PBoC comes out in a statement that it wants to keep the Yuan stable, and that current demand is still insufficient for growth. It will ste up its macroeconomic policy adjustments to support the economy.
- The US State department approved a possible military sale to Taiwan, adding tension against China after the earlier AI chip export curbs out of the US toward China. The sale would still need to pass several security checks and approvals before actually taking place.
- The Japanese Yen weakened to $145 for the first time since November and is at risk of a market intervention by the Japanese finance ministry.
- China’s PBoC fixed the USD/CNY at 7.2258, quite far below the expected 7.2485 from market consensus. Markets ignored the fixing and even sent USD/CNY completely the other way to peak at $7.27.
- The most expected market moving event for Friday at 12:30 GMT proved to be an game changer for the US Dollar as the Personal Consumption Expenditures Price Index data for May held no surprises. The PCE Index on a monthly basis came in at 0.4%, stable from 0.4% in April. On a yearly basis, PCE inflation decelerated to 3.8%, coming from 4.4%. Both the monthly and yearly Core PCE are seen stable at 0.3% and 4.4%, just each time 0.1% lower from previous month. Personal Income steady and unchanged at 0.4%, while the Personal Spending decelerated significantly, from 0.8% to only 0.1%.
- Chicago Purchasing Managers Index for June disappoints at 41.5, while 43.8 was expected. This results in the US Dollar another few pips against several major currencies.
- At 14:00 GMT, the Michigan Consumer Sentiment Index for June will come out, which is expected to remain unchanged at 63.9. Participants for the survey had the opportunity as well to pencil in inflation expectations over the next year and for the next 5-to-10 years. Currently, the one-year inflation forecast is at 3.3%. An uptick or lower number could move the US Dollar in either direction.
- As the US session is set to open, European equities are getting some tailwinds as investors and traders are trying to eke out gains this Friday. The DAX jumps over 1% higher and the US equity futures are all in the green with the Nasdaq leading the charge.
- The CME Group FedWatch Tool shows that markets are pricing in a 86.8% chance of a 25 basis points (bps) interest-rate hike on July 26. The Fed hike is very much locked in as US GDP numbers showed that the US economy can whistand and endure some more rate hikes. Still, markets are reluctant to price in a second rate hike in the last meetings for 2023.
- The benchmark 10-year US Treasury bond yield trades at 3.87%. The proof of the US economy being in good health made investors reduce their safe haven positions and pushed US yields higher.
US Dollar Index technical analysis: USD bulls to the slaughter house
The US Dollar sees its early gains completely erased as several pairs against the US Dollar flip in the red and are seeing the Greenback taking a firm step back. Aspecially the double whammy of first the PBoC threatening language in terms of interventions followed by a very in-line PCE report made the Greenback erase a lot of gains and makes the US Dollar Index a touch weaker. With 103 broken to the downside it is a question on where the decline will come to a hold, as the move does not seem to be stopping anytime soon.
On the upside, look for 103.50 as the next key resistance level in order to lock in some solid support and a safe region where the Dollar index can take a breather before heading higher. The 200-day Simple Moving Average (SMA) at 104.98 is still quite far away. So the intermediary level to look for is the psychological level at 104.00 and May 31 peak at 104.70.
On the downside, the 55-day SMA near 102.67 is up for proving its reliability as a support after being chopped up that much in the last two weeks. A touch lower, 102.50 will be vital to hold from a psychological point of view. In case the DXY slips below 102.50, more weakness is expected with a full slide to 102.00 and a retest of June’s low at 101.92.
Fed FAQs
Monetary policy in the US is shaped by the Federal Reserve (Fed). The Fed has two mandates: to achieve price stability and foster full employment. Its primary tool to achieve these goals is by adjusting interest rates.
When prices are rising too quickly and inflation is above the Fed’s 2% target, it raises interest rates, increasing borrowing costs throughout the economy. This results in a stronger US Dollar (USD) as it makes the US a more attractive place for international investors to park their money.
When inflation falls below 2% or the Unemployment Rate is too high, the Fed may lower interest rates to encourage borrowing, which weighs on the Greenback.
The Federal Reserve (Fed) holds eight policy meetings a year, where the Federal Open Market Committee (FOMC) assesses economic conditions and makes monetary policy decisions.
The FOMC is attended by twelve Fed officials – the seven members of the Board of Governors, the president of the Federal Reserve Bank of New York, and four of the remaining eleven regional Reserve Bank presidents, who serve one-year terms on a rotating basis.
In extreme situations, the Federal Reserve may resort to a policy named Quantitative Easing (QE). QE is the process by which the Fed substantially increases the flow of credit in a stuck financial system.
It is a non-standard policy measure used during crises or when inflation is extremely low. It was the Fed’s weapon of choice during the Great Financial Crisis in 2008. It involves the Fed printing more Dollars and using them to buy high grade bonds from financial institutions. QE usually weakens the US Dollar.
Quantitative tightening (QT) is the reverse process of QE, whereby the Federal Reserve stops buying bonds from financial institutions and does not reinvest the principal from the bonds it holds maturing, to purchase new bonds. It is usually positive for the value of the US Dollar.
Breaking: US Core PCE inflation edges lower to 4.6% vs. 4.7% expected
324143 June 30, 2023 22:05 FXStreet Market News
Inflation in the US, as measured by the change in Personal Consumption Expenditures (PCE) Price Index, fell to 3.8% on a yearly basis in May from 4.3% in April, the US Bureau of Economic Analysis reported on Friday. This reading came in below the market expectation of 4.6%.
The increase in the annual Core PCE Price Index, the Federal Reserve’s preferred gauge of inflation, edged lower to 4.6% from 4.7% in the same period, compared to analysts’ forecast of 4.7%. On a monthly basis, Core PCE inflation and PCE inflation rose 0.3% and 0.1%, respectively.
Further details of the report revealed that Personal Income increased 0.4% on a monthly basis as expected and Personal Spending remained unchanged.
Market reaction
The US Dollar came under selling pressure with the initial reaction to soft inflation data. As of writing, the US Dollar Index was down 0.2% on the day at 103.14.
United States Personal Consumption Expenditures – Price Index (MoM)
The Personal Spending released by the Bureau of Economic Analysis, Department of Commerce is an indicator that measures the total expenditure by individuals. The level of spending can be used as an indicator of consumer optimism. It is also considered as a measure of economic growth: While the Personal spending stimulates inflationary pressures, it could lead to rise interest rates. A high reading is positive (or Bullish) for the USD. Read more.
Next release: Friday July 28, 2023 12:30:00 GMT
Frequency: Monthly
Source: US Bureau of Economic Analysis
The section below was published as a preview of the US PCE inflation report at 11:45 GMT.
- Personal Consumption Expenditures Price Index is expected to rise 4.6% on a yearly basis in May.
- Federal Reserve remains on track to return to a 25 basis points rate hike in July.
- US Dollar could gather strength against its rivals in case core PCE inflation remains hot.
The Core Personal Consumption Expenditures (PCE) Price Index report for May, the Federal Reserve’s (Fed) preferred inflation gauge, will be unveiled by the Bureau of Economic Analysis (BEA) on Friday, June 30 at 12:30 GMT.
How will the Federal Reserve read the PCE inflation report?
The PCE Price Index is forecast to rise 4.6% on a yearly basis in May, slightly stronger than the 4.4% increase recorded in April. The Core PCE Price Index, which excludes volatile food and energy prices, is expected to hold steady at 4.7% with a monthly increase of 0.4%.
The Federal Reserve (Fed) left its policy rate unchanged at the 5%-5.25% range following the June policy meeting. During the post-meeting press conference, FOMC Chairman Jerome Powell explained that the pause in rate hikes did not necessarily mean that they have reached the terminal rate. In fact, the revised Summary of Economic Projections, the so-called dot plot, revealed that the interest rate projection for end-2023 got revised higher to 5.6% from 5.1% in March, implying two more 25 basis points (bps) rate hikes this year.
While speaking at a policy panel at the European Central Bank Forum on Central Banking this week, Powell reiterated that a strong majority of Fed policymakers expected two or more rate increases this year and said that strong labor market conditions would allow them to continue to tighten the policy.
Currently, the CME Group FedWatch Tool shows that markets are pricing in a more than 80% chance of the Fed lifting the interest rate by 25 bps to 5.25%-5.5% in July. The probability of the policy rate reaching the 5.5%-5.75% range by December, however, is less than 30%.
The market positioning suggests that there is potential for the US Dollar (USD) to continue to gather strength on a hot PCE inflation report. Investors will likely pay close attention to the monthly Core PCE Price Index, since it is not distorted by base effects. A reading at or above 0.5% should increase the odds of two more 25 bps Fed rate hikes in the second half of 2023 and provide a boost to the USD. On the other hand, a soft print of 0.2% or lower should make it difficult for the US Dollar to stay resilient against its rivals ahead of the weekend.
When will the Personal Consumption Expenditures Price Index be released and how could it affect EUR/USD?
The PCE inflation report is scheduled for release at 12:30 GMT, on June 30. Previewing this publication, “the Federal Reserve watches PCE – so financial markets also examine it closely. The higher it goes, the greater the chance for further rate hikes and thus a stronger US Dollar. The Greenback would lose value against its peers on a lower read,” said FXStreet Analyst Yohay Elam.
EUR/USD gathered bullish momentum in June and climbed above 1.1000 before going into a consolidation phase. FXStreet Analyst Eren Sengezer offers a brief technical outlook for the pair and explains:
“Following EUR/USD lackluster performance this week, the Relative Strength Index (RSI) indicator on the daily chart declined to 50, highlighting a buildup of bearish momentum. Additionally, the pair was last seen trading near the 20- and the 50-day Simple Moving Averages (SMA) after having closed the last 10 trading days above those levels”
Eren also highlights the important technical levels for EUR/USD: “In case the pair turns south on a strong PCE inflation report, a daily close below 1.0850 (50-day SMA, 20-day SMA) could attract sellers. In that case, additional losses toward 1.0800 (psychological level, 100-day SMA) and 1.0700 (end-point of May-June downtrend) could be witnessed.”
“On the upside, 1.1000 (static level, psychological level) aligns as strong resistance before 1.1060 (end-point of March-May uptrend) and 1.1100 (2023-high).”
PCE inflation related content
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June UMich final US consumer sentiment 64.4 vs 63.9 expected
324142 June 30, 2023 22:02 Forexlive Latest News Market News
- Prelim was 63.9
- Prior was 59.2
- Current conditions 69.0 vs 68.0 prelim (64.9 prior)
- Expectations 61.5 vs 61.3 prelim (55.4 prior)
- 1-year inflation 3.3% vs 3.3% prelim (4.2% prior)
- 5-10 year inflation 3.0% vs 3.0% prelim (3.1% prior)
I have no use for this survey.
United States UoM 5-year Consumer Inflation Expectation: 3% (June)
324141 June 30, 2023 22:02 FXStreet Market News
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
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United States Michigan Consumer Sentiment Index came in at 64.4, above forecasts (63.9) in June
324140 June 30, 2023 22:02 FXStreet Market News
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
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United States Chicago Purchasing Managers’ Index registered at 41.5, below expectations (44) in June
324139 June 30, 2023 21:51 FXStreet Market News
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
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USD normally weakens for a few months after last Fed hike – TDS
324138 June 30, 2023 21:51 FXStreet Market News
Economists at TD Securities expect the US Dollar to struggle in the coming months.
Ding, dong the Fed is done
The end of the Fed cycle is normally quite bearish for the USD for the first few months. It normally drops >2% in the first two months.
For the US, disinflation is the main driver and sending the strongest directional H2 cue for the USD: choppy but lower, yet with a few USD baskets in play.
Full ArticleOur out of consensus call that US disinflation is strong enough for the Fed to skip July, effectively ending the cycle, would reinforce lower macro vol, late cycle growth dynamics and boost carry.
SEC says spot bitcoin filings are inadequate – WSJ
324137 June 30, 2023 21:45 Forexlive Latest News Market News
Hopes for a bitcoin ETF have spurred the bitcoin rally to $31000 from $25000 but they hit a speedbump today with a breaking WSJ report that the SEC rejected the applications.
All is not lost though as the story indicates they can re-file to address surveillance issues.
“Some
industry watchers predicted that BlackRock’s filing would appease the
SEC’s concerns through an agreement to share “surveillance” of a spot
bitcoin-trading platform with Nasdaq, which would list the ETF.
Yet
the SEC told the exchanges that it returned the filings because they
didn’t name the spot bitcoin exchange with which they are expected to
have a “surveillance-sharing agreement” or provide enough information
about the details of those surveillance arrangements. Asset managers can
update the language and refile.”
Bitcoin prices fell nearly $1000 on the headlines but have steadied.
What’s worrisome for the bulls here is that the idea, or the hope, is that the SEC has tapped Blackrock on the shoulder and gave it an indication of how to get approval. Perhaps that’s still the case but if their application is deficient, then maybe that’s not the case.
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