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Atlanta Fed GDPnow Q3 growth tracker up to 2.5% from 1.4% last

August 11, 2022 00:40   Forexlive Latest News   Market News  

Atlanta Fed GDPNow tracks growth to 2.5% from 1.4% last

The Atlanta Fed Q3 estimate for growth jumped to 2.5% from 1.4% last. In their own words:

The GDPNow model estimate for real GDP growth (seasonally adjusted annual rate) in the third quarter of 2022 is 2.5 percent on August 10, up from 1.4 percent on August 4. After recent releases from the US Bureau of Labor Statistics and the US Census Bureau, the nowcast of third-quarter real personal consumption expenditures growth, third-quarter real gross private domestic investment growth, and third-quarter real government spending growth increased from 1.8 percent to 2.7 percent, -0.3 percent to 0.2 percent, and 1.4 percent to 1.7 percent, respectively, while the nowcast of the contribution of the change in real net exports to third-quarter real GDP growth decreased from 0.35 percentage points to 0.30 percentage points.

The next event will be released on August 16

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BOE’s Pill: Wage growth running too fast at present

August 11, 2022 00:29   FXStreet   Market News  

Bank of England Chief Economist Huw Pill said on Wednesday that wage growth in the UK is running too fast at present, as reported by Reuters.

Pill further noted that the companies’ pricing pass-through was excessively high. “I don’t want people who are subject to political forces setting monetary policy,” Pill added.

Market reaction

These comments don’t seem to be having a noticeable impact on the British pound’s performance against its major rivals. As of writing, the GBP/USD pair was trading at 1.2235, where it was up 1.3% on a daily basis. 

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USD/CHF tanks and refresh 4-month lows below the 200-DMA

August 11, 2022 00:29   FXStreet   Market News  

  • The USD/CHF is recording its biggest daily fall since June 15, down 1.16%.
  • The pair refreshes multi-month lows, just below the 0.9400 figure.
  • US headline inflation eases to 8.5% YoY, but the core remains unchanged.
  • Fed’s Evans: The Fed is not done hiking rates; expect the Fed funds to be at 3.25-3.50% by year-end.

The USD/CHF plunges in the North American session after the US Department of Labor reported that inflation in the US increased at a slower pace, which could deter the US Federal Reserve from tightening aggressively. Additionally, tensions between Taiwan and China seem to ease, exacerbating a positive mood.

At the time of writing, the USD/CHF is trading at 0.9413 after hitting a daily high in the early Asian session at 0.9542. However, upbeat US economic data tripped down the major,  which dived to a multi-month low at 0.9393, before bouncing towards current prices.

US inflation drops from 9.1% YoY in June to 8.5%

The US inflation report showed that July’s Consumer Price Index, annually based, increased by 8.5%, less than estimations of an 8.7% uptick. Meanwhile, excluding volatile items like food and energy, the so-called core-CPI rose 5.9% YoY, unchanged compared to June and less than forecasts. The fall is due to gasoline prices a $1 less than in June, offsetting increases in food and shelter.

Investors reacted with a sign of relief, sending US equity markets rallying, between 1.90% and 2.60%, while the greenback fell. The US Dollar Index, a measure of the buck’s values vs. a basket of peers, is losing 1.27%, tumbling below the 105.00 mark. US bond yields in the short-end maturity are dropping, while the 20s and 30s are up.

The USD/CHF immediately reacted to the downside, breaking on its way south, the 200-day EMA at 0.9424, exacerbating a push below the 0.9400 figure. Nevertheless, in the last hour, the major recovered some ground, and once the dust settled, buyers reclaimed the latter.

Late during the session, the Chicago Fed President Charles Evans crossed newswires. Even though the CPI is the “first positive report,” inflation is unacceptably high. He added that the Fed is not done hiking rates, and he expects the Federal funds rate (FFR) to be at 3.25-3.50% by year’s end. He added that by the end of 2023, he foresees the FFR between 3.75-4.00%.

What to watch

The US economic docket will feature Minnesota Fed President Neil Kashkari on Wednesday. By Thursday, the calendar will unveil prices paid by producers, also known as PPI and Initial Jobless Claims.

USD/CHF Key Technical Levels

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GBP/USD: Pound remains vulnerable, could break under 1.20 again – Rabobank

August 11, 2022 00:21   FXStreet   Market News  

Despite the broad-based slide of the US dollar on Wednesday following the US CPI, analysts at Rabobank still see the GBP/USD vulnerable to the downside and warn it could drop back again under 1.20 on a one to three-month view. 

Key Quotes: 

“Last week the market was taken by surprise by the candid tone adopted by the BoE in its warnings about the UK economic outlook.  The Bank forecast that the economy would fall into a 15 month recession starting in Q4 this year and that GDP would drop a little over 2 ppt from peak to trough in a downturn similar to the one experienced in the early 1990s.  While it was a surprise to hear the Bank speak in such frank terms, the fact that the UK growth outlook is poor was not a total shock.”

“Although fresh UK economic data has been limited so far this week, there has been plenty of evidence illustrating the precarious position of the UK economy. Bloomberg news is reporting that the UK government is preparing for the possibility of energy blackouts in the forthcoming winter. Additionally, estimates are circulating that average household annual energy bills could rise to over £4000 in the new year.  Since the average salary for full-time UK workers is around £38,400, this could have a devasting impact on consumer demand.”

“The USD has softened in the wake of today’s US CPI inflation report.  However, we retain the view that the pound remains vulnerable vs. the USD and see risk of another break below the 1.20 level on a 1 to 3 month view.  In our view, GBP has a better chance of holding its ground vs. the EUR into the winter, given the energy crisis currently facing the Eurozone.”
 

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Here’s why Avalanche price is rocketing

August 11, 2022 00:21   FXStreet   Market News  

  • Avalanche price surged by approximately 33% in August, upholding an uptrend ignited in June.
  • The growing NFT volume has much to do with AVAX’s bullish price action.
  • Short position liquidations on the Ethereum competitor hit $2.01 million across all derivatives exchanges as Avalanche price tagged $30.00.

Avalanche price continued with its consistent winning streak in August’s first and second weeks. After a 33.13% move, AVAX dodders within a whisker of $30.00. From both a technical and fundamental perspective, Avalanche price is unlikely to end its uptrend at the highlighted resistance.

Avalanche price recovery driven by rising NFT volumes

The substantial growth in Avalanche-based non-fungible tokens (NFTs) is one of the main fundamental factors pushing Avalanche price higher. Data from CryptoSlam shows that related volumes grew by 30.90% over the last 24 hours. The sum of all the sales made rose by 12% from 125 to 140 in the same period.

Navy Seal, the largest Avalanche-based NFT collection, saw its trading volume jump 62.7%. NFT collections such as Pizza Fame Chefs and Avepepes have also performed well.

The Futures data from Coinglass revealed that investors in short positions suffered massive liquidations as Avalanche price climbed to $30.00. Approximately $2.01 million in short positions have been liquidated over the last 24 hours. On the other hand, long trades worth $734,760 were liquidated within the same period.

AVAX PRICE

Avalanche price liquidations

Avalanche price needs to break above the seller concentration at $30.00 to affirm the bullish grip. A buy signal from the Moving Average Convergence Divergence (MACD) on the daily chart reveals that buyers have the upper hand. The next targets on the upside lie at $42.00 and $50.00, respectively.

AVAXUSD

AVA/USD Daily Chart

If the much-awaited break above $30.00 does not materialize, Avalanche price might suffer a blow as it corrects south. The ascending accelerated trend line (broken line) is in place to prevent the down leg from stretching to the primary trend line (continues line). Fortifying the second support area is the 50-day SMA. Avalanche price is not expected to pull back beyond $20.00 before a significant trend reversal occurs.

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Fed’s Evans: Inflation is unacceptably high

August 10, 2022 23:56   FXStreet   Market News  

Chicago Fed President Charles Evans acknowledged on Wednesday that the latest CPI data was the first positive inflation report but noted that inflation was still unacceptably high, as reported by Reuters.

Additional takeaways

“US labor market is vibrant.”

“Employment is so strong, a sign of a still-strong economy.”

“Optimistic economy will continue to grow in the second half of the year.”

“I expect we will increase rates this year and next year.”

“It’s an optimistic forecasting that next year core PCE inflation will be closer to 2.5%.”

“I’m not looking for the economy to turn down in a significant fashion any time soon.”

“The economy is almost surely a little more fragile, but would take something adverse to trigger a recession.”

“I expect economic growth next year to be 1.5% -2%.”

“Quite possible we will be able to tighten monetary policy enough to bring inflation down and unemployment will only rise toward 4.25%.”

Market reaction

These comments failed to help the dollar stage a rebound and the US Dollar Index was last seen losing 1.4% on the day at 104.80.

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Fed: A 75 bps rate hike at the next meeting remains our base case – Wells Fargo

August 10, 2022 23:56   FXStreet   Market News  

The US Consumer Price Index surprised to the downside in July, showed data released on Wednesday. Analysts at Wells Fargo point out that falling prices for gasoline, used autos and travel service categories such as airline fares, car rentals and lodging away from home helped cool monthly inflation from the torrid pace seen in May and June. They consider it will take several more soft inflation prints before the FOMC begins to feel confident that it is getting price pressures in check. They expect at least a 50 bps rate hike at the September meeting.

Key Quotes: 

“CPI inflation in July cooled from the scorching hot pace seen in May and June. Consumer prices were unchanged in July, the smallest month-over-month change since May 2020. On a year-ago basis, prices were up 8.5%, down from the 9.1% year-over-year pace registered in June. Falling gasoline prices were a major contributor to the slowdown in price growth. Motor fuel prices were down 7.6% in July on a seasonally adjusted basis.”

“Through the first half of August there has been some additional relief at the pump, and we would not be surprised to see another sizable decline in motor fuel prices in next month’s CPI release. Energy services inflation also eased to just 0.1% from 3.0% and 3.5% in May and June, respectively, as natural gas prices receded in early July.”

“It is important to remember that this is just one data point, and the past couple CPI reports have included significant upside surprises. In addition, there have been head fakes in the inflation data before, and we highly doubt the FOMC is ready to declare victory over inflation after just one softer-than-expected CPI report. Core CPI is still up 5.9% year-over-year and has grown at a 6.8% annualized pace over the past three months. The next CPI report will be released on September 13, just one week before the next FOMC meeting. A 75 bps rate hike at that meeting remains our base case, but the FOMC could go “just” 50 bps if that report provides additional evidence that inflation is slowing on a sustained basis.”
 

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GBP/JPY drops to three-day lows amid a stronger yen after US CPI

August 10, 2022 23:51   FXStreet   Market News  

  • Japanese yen soars across the board after economic data.
  • July US CPI rises below expectations triggering a rally in Treasuries.
  • GBP/JPY trims losses after falling to as low as 161.67, the lowest since August 5.

The GBP/JPY cross lost almost 200 pips following the release of US inflation data that triggered a rally of the Japanese yen across the board. It bottomed at 161.67 and then rebounded back above 162.00.

US CPI ends a quiet period

The annual US CPI rate dropped from 9.1% to 8.5% in July, against the market consensus of 8.7%. The numbers triggered a rally in US stocks and bonds. Expectations still point to more tightening from the Federal Reserve but the doors are open to less aggressive action. Still, market participants see a rate hike of at least 50 basis points at the next meeting.

The improvement in risk appetite failed to boost GBP/JPY that pulled back amid lower yields and despite the rally of GBP/USD above 1.2200.

The GBP/JPY cross was testing the key resistance around 163.60 before the report. In the move lower, it broke 162.80 which is now the immediate resistance.

Technical indicators favor the downside in the short term. A recovery above 162.80 would put the pound back on its way for another test of 163.80. While under 162.80, the crucial area on the downside is 162.00; a break lower would expose the next support zone at 161.10.

GBP/JPY 4-hour chart

GBPJPY

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Fed’s Evans: We do not expect we are finished with rate hikes

August 10, 2022 23:51   FXStreet   Market News  

Chicago Fed President Charles Evans said on Wednesday that he does not expect that the Fed is finished with rate increases, as reported by Reuters.

Additional takeaways

“At the end of this year, I expect fed funds to be 3.25%-3.5%.”

“I expect by end of next year rates will be 3.75%-4%.”

“I expect fed funds rate to top out at 4%.”

“We are in a good place on rates, can pivot to be more restrictive if needed, or not raise rates as much.”

“We are well positioned for turns in the data over the next couple of months.”

“It will be challenging to get inflation down.”

Market reaction

The dollar stays on the back foot and the US Dollar Index was last seen losing 1.25% on a daily basis at 105.00.

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European equity close: Strong gains for stocks and FX

August 10, 2022 23:45   Forexlive Latest News   Market News  

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Shiba Inu price ready to explode after Ethereum whale scoops up 312 billion SHIB

August 10, 2022 23:26   FXStreet   Market News  

  • Ethereum whale BlueWhale0113 scooped up 312.28 billion Shiba Inu tokens in the recent dip. 
  • Shiba Inu is poised for a breakout as bulls grow impatient, argue analysts. 
  • If the Shiba Inu price crosses the point of control at $0.0000118, a 150% rally to $0.0000211 target is likely. 

Shiba Inu leaves competitor Dogecoin and layer-1 altcoins behind as it prepares to explode. Large wallet investors on the Ethereum network scooped up Shiba Inu, accumulating over 312 billion SHIB tokens. 

Also read: Will meme coins Shiba Inu, Dogecoin make comeback after steep decline?

Shiba Inu prepares for a rally as bulls grow impatient

Shiba Inu community witnessed a massive burn overnight. Over 139.85 million Shiba Inu tokens were burned in a single transaction. Shibburn, the portal that reported a whopping 174 million SHIB tokens were sent to dead wallets in the past 24 hours. 15 separate transactions resulted in the destruction of 174 million Shiba Inu coins. 

The burn tracking website revealed that a mysterious wallet was involved in the purge of 139.85 million SHIB. Burning of Shiba Inu tokens implies their permanent removal from the meme coin’s circulating supply. The move therefore fueled a bullish sentiment among holders. According to Shibburn, a total of 410.3 trillion SHIB tokens have been burned so far. 

Ethereum whale scoops up 312 billion Shiba Inu tokens

BlueWhale0113, one of the major large wallet investors on the Ethereum Network scooped up 312.28 billion SHIB worth $3.72 million ahead of Shiba Inu’s price rally. The whale’s move signaled a bullish outlook among large wallet investors that are accumulating SHIB. Proponents believe Shiba Inu accumulation by whales could fuel a rally in the Dogecoin-killer token. 

Deep-pocketed Ethereum investors have cryptocurrencies with bullish potential in their portfolio. Therefore, the addition of 312.28 billion SHIB to BlueWhale0113’s portfolio is a sign that the investor expects Shiba Inu to accrue value and witness a rally soon. 

BlueWhale0113's transaction

BlueWhale0113’s transaction 

Analysts predict 150% rally in Shiba Inu price

Analysts at FXStreet evaluated the Shiba Inu price trend and predicted a 150% rally in the meme coin. If Shiba Inu price crosses the volume point of control at $0.0000118, analysts believe it is likely that SHIB will rally towards its target at $0.0000211. 

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USD/CAD plunges and refreshes 2-month lows as US inflation cools down

August 10, 2022 23:21   FXStreet   Market News  

  • USD/CAD plummets after hitting a daily high near the 1.2900 mark.
  • July’s US Consumer Price Index (CPI) slows to 0% MoM.
  • Despite US inflation data, ING Analysts expect the Fed to hike 75 bps in September.
  • Fed’s Evans and Kashkari will cross wires late during the day.

The USD/CAD nosedives after a softer than estimated US inflation report, used by investors as an excuse to shift towards riskier assets, awaiting Fed policymakers which could pave the way towards the FOMC September monetary policy meeting. Consequently, mood improved, additionally spurred by China-Taiwan tussles tempering as the former announced the end of its military drills, but it will continue patrolling the Taiwan strait.

The USD/CAD is trading at 1.2762 after hitting a daily high at 1.2895, but better-than-expected US inflation data sent the dollar tumbling close to 1.50%, with the US Dollar Index dropping from 106.403 to 104.840.

USD/CAD sinks as US inflation eases

Before Wall Street opened, the Labor Department reported that US inflation in July rose by 8.5% YoY, less than the 9.1% in June and lower than the 8.7% estimate. Excluding volatile items like food and gas, it increased by 5.9%, less than forecasts, and aligned with June’s reading.

According to ING analysts, the report provides the “notion” that US headline inflation peaked, with gasoline prices down $1 a gallon from their highest in June. “We are forecasting the YoY rate dropping to 8.3%.” They added that core inflation would likely remain on its “upward trajectory” due to higher rental costs, services sector inflation pressures, and wages.

Analysts added, “we don’t see core inflation peaking until around September/October time with the core rate up at around 6.5% YoY by then.” Furthermore, they commented that they expect the Fed to tighten 75 bps.

The reasoning is that “…inflation remains far from the target, the economy added more than half a million jobs last month, and third-quarter GDP is set to rebound based on consumer movement data. Add to all that a positive contribution from net trade and a less negative drag from inventories then the case for a third consecutive 75bp Federal Reserve rate hike in September remains strong.”

In the meantime, the USD/CAD reacted downwards, plunging below 1.2800, further extending its losses, despite falling crude oil prices and the lack of Canadian economic data to be reported.

What to watch

An absent Canadian economic calendar would leave USD/CAD leaning on US data. The US docket will feature the Producer Price Index (PPI9 for July, alongside Initial Jobless Claims.

USD/CAD Price Analysis: Technical outlook

The USD/CAD extended its losses beyond the 20, 50, and 100-day EMAs, eyeing the 200-day EMA at 1.2739. Further accelerating its fall is the Relative Strength Index, crossing below the 50-midline and dropping under 42 readings, with some room to spare, before hitting oversold conditions. However, a break below the 200-DMA will expose the 1.2700 figure, followed by the June 10 daily low at 1.2680.

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