A separate report from the ECB noted a slowdown in loan growth in the eurozone to 0.6% y/y - the slowest in 8 years. However, the worst is apparently ahead for the indicator, judging by the dynamics of monetary aggregates. Trends in monetary aggregates M1-M3 are generally more than a year ahead of credit trends.
Monetary aggregate M1 is now 10% lower than a year earlier. It has been in negative territory so far this year. M3 in October was 1% lower than a year ago. In both cases, it is stabilising near historic lows, reflecting tightening financial conditions.
EURUSD's strength is now driven by high hopes for a Fed rate cut soon, but the weakness in Eurozone indicators should set the mood that a policy change from the ECB could be earlier and deeper, not saying that the US already has higher rates. This is a long-term negative for the single currency. However, markets prefer to play down US policy changes first.
📣Trade responsibly with fxpro.com
Monetary aggregate M1 is now 10% lower than a year earlier. It has been in negative territory so far this year. M3 in October was 1% lower than a year ago. In both cases, it is stabilising near historic lows, reflecting tightening financial conditions.
EURUSD's strength is now driven by high hopes for a Fed rate cut soon, but the weakness in Eurozone indicators should set the mood that a policy change from the ECB could be earlier and deeper, not saying that the US already has higher rates. This is a long-term negative for the single currency. However, markets prefer to play down US policy changes first.
📣Trade responsibly with fxpro.com
VIX drop: stocks collapse or boring growth ahead?
Financial market volatility has plunged to its lowest level in almost four years, according to the VIX index. This so-called "fear index" fell to 12.45 on Friday, the lowest level since January 2020. Such low levels could be both a sign of the market entering a smooth bullish trend or a lull before a sharp decline.
Low VIX values indicate weak expected market volatility in the coming months.
Sometimes, such market signals should be perceived as overconfidence by investors. And then, the calm is followed by a storm wave, knocking down everything in its path. The peak of overconfidence is usually followed by bitter disappointment in the form of a painful sell-off in stocks.
Financial market volatility has plunged to its lowest level in almost four years, according to the VIX index. This so-called "fear index" fell to 12.45 on Friday, the lowest level since January 2020. Such low levels could be both a sign of the market entering a smooth bullish trend or a lull before a sharp decline.
Low VIX values indicate weak expected market volatility in the coming months.
Sometimes, such market signals should be perceived as overconfidence by investors. And then, the calm is followed by a storm wave, knocking down everything in its path. The peak of overconfidence is usually followed by bitter disappointment in the form of a painful sell-off in stocks.
This can be a period of quiet growth in stocks. And while bears should be prepared for a reversal in stocks, they should not be in a hurry to make a quick bet on it because a rally in stocks can take an indefinitely long time while the VIX is at such low levels.
The VIX has spent most of June and July this year in the range between 13 and 14, and the S&P500 has added nearly 7.5% during that time. The S&P500 gained twice as much between October 2019 and January 2020, when we saw similar or lower VIX levels. Moreover, the VIX spent all of 2017 and early 2018 mostly below 12, dipping to 9.5 at times, and this was also a period of smooth, persistent 27% gains for the S&P500.
Thus, stocks are now close to a point where there could be both a painful switch into risk-off mode and the start of a long and boring uptrend for speculators.
In the short term, we see more bearish signals for the market as the last upside momentum in equities was extremely sharp. It looks like the market driver was closing shorts rather than building long positions. A similar amplitude rally in equities has been a sign of a reversal to growth in recent years with monetary easing, but now the pause is more of what the markets are hoping for, but the Fed is not confirming those hopes.
📣Trade responsibly with fxpro.com
The VIX has spent most of June and July this year in the range between 13 and 14, and the S&P500 has added nearly 7.5% during that time. The S&P500 gained twice as much between October 2019 and January 2020, when we saw similar or lower VIX levels. Moreover, the VIX spent all of 2017 and early 2018 mostly below 12, dipping to 9.5 at times, and this was also a period of smooth, persistent 27% gains for the S&P500.
Thus, stocks are now close to a point where there could be both a painful switch into risk-off mode and the start of a long and boring uptrend for speculators.
In the short term, we see more bearish signals for the market as the last upside momentum in equities was extremely sharp. It looks like the market driver was closing shorts rather than building long positions. A similar amplitude rally in equities has been a sign of a reversal to growth in recent years with monetary easing, but now the pause is more of what the markets are hoping for, but the Fed is not confirming those hopes.
📣Trade responsibly with fxpro.com
👍1
#WaveAnalysis
#USDCHF broke key support level 0.8900
Likely to fall to support level 0.8700
USDCHF currency pair continues to fall inside the minor impulse wave 3, which previously broke the key support level 0.8900, coinciding with the 50% Fibonacci correction of the upward wave (B) from the end of July.
The active impulse wave 3 belongs to the higher order downward impulse wave C from the start of October.
USDCHF currency pair can be expected to fall further to the next support level 0.8700, previous monthly low from August.
📣Trade responsibly with fxpro.com
#USDCHF broke key support level 0.8900
Likely to fall to support level 0.8700
USDCHF currency pair continues to fall inside the minor impulse wave 3, which previously broke the key support level 0.8900, coinciding with the 50% Fibonacci correction of the upward wave (B) from the end of July.
The active impulse wave 3 belongs to the higher order downward impulse wave C from the start of October.
USDCHF currency pair can be expected to fall further to the next support level 0.8700, previous monthly low from August.
📣Trade responsibly with fxpro.com
#WaveAnalysis
#EURUSD broke resistance level 1.0950
Likely to rise to resistance level 1.1065
EURUSD currency pair recently broke the key resistance level 1.0950, intersecting with the 61.8% Fibonacci correction of the downward impulse from July.
The breakout of the resistance level 1.0950 should further increase the bullish pressure on this currency pair.
Given the continuation of the strong US dollar sales seen today, EURUSD currency pair can be expected to rise further to the next resistance level 1.1065, former top of wave (2) from August.
📣Trade responsibly with fxpro.com
#EURUSD broke resistance level 1.0950
Likely to rise to resistance level 1.1065
EURUSD currency pair recently broke the key resistance level 1.0950, intersecting with the 61.8% Fibonacci correction of the downward impulse from July.
The breakout of the resistance level 1.0950 should further increase the bullish pressure on this currency pair.
Given the continuation of the strong US dollar sales seen today, EURUSD currency pair can be expected to rise further to the next resistance level 1.1065, former top of wave (2) from August.
📣Trade responsibly with fxpro.com
👍1
The crypto market added 2.4% in 24 hours to $1.43 trillion and went back to test highs since May 2022. Bitcoin added 3% during this time, #Ethereum 2.75%, and #Solana was the top performer among the major coins, adding 8.4%. #Toncoin was on a back foot with its 0.4% gain.
#Bitcoin has been floundering inside the upward range for more than five weeks now. On Monday, the price reversed to the upside from the lower boundary at $36.7K. On Tuesday evening, Bitcoin's price briefly exceeded $38.4K but pulled back down after failing to find solid ground to accelerate gains.
The positive sentiment extends well beyond the first cryptocurrency, as altcoins reversed to growth in a broad front on Tuesday. This could be investors' reaction to a weakening dollar on expectations of an imminent Fed interest rate cut.
📣Trade responsibly with fxpro.com
#Bitcoin has been floundering inside the upward range for more than five weeks now. On Monday, the price reversed to the upside from the lower boundary at $36.7K. On Tuesday evening, Bitcoin's price briefly exceeded $38.4K but pulled back down after failing to find solid ground to accelerate gains.
The positive sentiment extends well beyond the first cryptocurrency, as altcoins reversed to growth in a broad front on Tuesday. This could be investors' reaction to a weakening dollar on expectations of an imminent Fed interest rate cut.
📣Trade responsibly with fxpro.com
👍2❤1
NZD is tired of flying
The Reserve Bank of New Zealand left its key rate unchanged at 5.5%, the highest in 15 years, but on hold for six months now. The decision was in line with market expectations. However, the NZDUSD rallied, adding over 1.2% at one point and touching 0.6200, a 4-month high. The buying impulse came from the CB’s vocal preparedness to raise rates if needed. The RBNZ’s rate forecasts became more hawkish, confirming a willingness to act. The committee revised its August forecast expecting a higher rate in a year than it does now, fitting in with the latest Central Bank’s mantra “higher for longer”.
The Reserve Bank of New Zealand left its key rate unchanged at 5.5%, the highest in 15 years, but on hold for six months now. The decision was in line with market expectations. However, the NZDUSD rallied, adding over 1.2% at one point and touching 0.6200, a 4-month high. The buying impulse came from the CB’s vocal preparedness to raise rates if needed. The RBNZ’s rate forecasts became more hawkish, confirming a willingness to act. The committee revised its August forecast expecting a higher rate in a year than it does now, fitting in with the latest Central Bank’s mantra “higher for longer”.
🥰1
But at the height of morning trading in Europe, #NZDUSD erased all gains following the publication of the RBNZ decision, pulling back to 0.6150. The sell-off so far looks like profit-taking after rallying 5.8% in a fortnight following a weak US CPI report.
On the higher timeframes, NZDUSD almost touched the upper boundary of the descending corridor, which the pair has mainly followed since March 2021. This year, the pair have spent a lot of time near the lower boundary, while reversals down from the upper boundary have been swift.
During the period of this channel, it took only 5-6 weeks to move from the upper boundary of the range to the lower boundary. If the pattern repeats for the sixth time, NZDUSD could reach the 0.5750 level in early January.
The alternative bullish scenario will become mainstream only if NZDUSD can stay within the short-term growth momentum and overcome the previous local top at 0.6400.
📣Trade responsibly with fxpro.com
On the higher timeframes, NZDUSD almost touched the upper boundary of the descending corridor, which the pair has mainly followed since March 2021. This year, the pair have spent a lot of time near the lower boundary, while reversals down from the upper boundary have been swift.
During the period of this channel, it took only 5-6 weeks to move from the upper boundary of the range to the lower boundary. If the pattern repeats for the sixth time, NZDUSD could reach the 0.5750 level in early January.
The alternative bullish scenario will become mainstream only if NZDUSD can stay within the short-term growth momentum and overcome the previous local top at 0.6400.
📣Trade responsibly with fxpro.com
#WaveAnalysis
#AUDJPY reversed from resistance level 98.40
Likely to fall to support level 96.00
AUDJPY currency pair recently reversed down from the long-term resistance level 98.40, which stopped the sharp weekly uptrend in the middle of 2022, as can be seen below.
The resistance level 98.40 was further strengthened by the upper weekly Bollinger Band.
Given the strength of the resistance level 98.40 and the overbought weekly Stochastic, AUDJPY currency pair can be expected to fall further to the next support level 96.00.
📣Trade responsibly with fxpro.com
#AUDJPY reversed from resistance level 98.40
Likely to fall to support level 96.00
AUDJPY currency pair recently reversed down from the long-term resistance level 98.40, which stopped the sharp weekly uptrend in the middle of 2022, as can be seen below.
The resistance level 98.40 was further strengthened by the upper weekly Bollinger Band.
Given the strength of the resistance level 98.40 and the overbought weekly Stochastic, AUDJPY currency pair can be expected to fall further to the next support level 96.00.
📣Trade responsibly with fxpro.com
#WaveAnalysis
#GBPCHF reversed from resistance level 1.1130
Likely to fall to support level 1.1050
GBPCHF currency pair recently reversed down from the pivotal resistance level 1.1130, which stopped the previous minor correction 2 at the start of this month, as can be seen below.
The resistance level 1.1130 was strengthened by the upper daily Bollinger Band and by the 50% Fibonacci correction of the previous downtrend from June.
Given the overbought daily Stochastic, strong downtrend and the widespread Swiss franc inflows, GBPCHF currency pair can be expected to fall further to the next support level 1.1050.
📣Trade responsibly with fxpro.com
#GBPCHF reversed from resistance level 1.1130
Likely to fall to support level 1.1050
GBPCHF currency pair recently reversed down from the pivotal resistance level 1.1130, which stopped the previous minor correction 2 at the start of this month, as can be seen below.
The resistance level 1.1130 was strengthened by the upper daily Bollinger Band and by the 50% Fibonacci correction of the previous downtrend from June.
Given the overbought daily Stochastic, strong downtrend and the widespread Swiss franc inflows, GBPCHF currency pair can be expected to fall further to the next support level 1.1050.
📣Trade responsibly with fxpro.com
❤1
The crypto market cap fell 0.5% in 24 hours to $1.42 trillion, showing another pullback as part of a broader uptrend that started in mid-October but has slowed in the last couple of weeks.
#Bitcoin underwent a sell-off on Wednesday afternoon from the upper end of an upward range above $38.4K. Countless times, the market has proven that it's not ready to accelerate, but it hasn't found any reason to go deep down either.
Only a failure below $36.7K will confirm that $38K is a solid horizontal resistance. Without this confirmation, the working scenario remains in the upward range.
📣Trade responsibly with fxpro.com
#Bitcoin underwent a sell-off on Wednesday afternoon from the upper end of an upward range above $38.4K. Countless times, the market has proven that it's not ready to accelerate, but it hasn't found any reason to go deep down either.
Only a failure below $36.7K will confirm that $38K is a solid horizontal resistance. Without this confirmation, the working scenario remains in the upward range.
📣Trade responsibly with fxpro.com
👍1
Disappointing growth adds to pressure on the yuan
There is a new batch of weak data from China, whose economy has so far failed to respond meaningfully to government stimulus.
Official PMI (Purchasing Managers’ Survey) estimates noted that the manufacturing sector remained in contraction mode in November, while growth in the services sector approached zero.
The manufacturing PMI fell from 49.5 to 49.4 instead of the expected rise to 49.8. The simultaneous decline in the orders component and purchase prices is alarming. Manufacturing employment is in contractionary territory (48.1 in November and 48.0 in October).
The services PMI fell from 50.6 to 50.2 instead of forecasts of a 50.9 rise, with export sales falling from 49.1 to 46.8 and weakness in employment (46.9 vs. 46.5 previously).
It is clear from such data that the economy’s vivid upturn has not yet occurred. This is causing pressure on the markets where the need to build up support is being discussed.
There is a new batch of weak data from China, whose economy has so far failed to respond meaningfully to government stimulus.
Official PMI (Purchasing Managers’ Survey) estimates noted that the manufacturing sector remained in contraction mode in November, while growth in the services sector approached zero.
The manufacturing PMI fell from 49.5 to 49.4 instead of the expected rise to 49.8. The simultaneous decline in the orders component and purchase prices is alarming. Manufacturing employment is in contractionary territory (48.1 in November and 48.0 in October).
The services PMI fell from 50.6 to 50.2 instead of forecasts of a 50.9 rise, with export sales falling from 49.1 to 46.8 and weakness in employment (46.9 vs. 46.5 previously).
It is clear from such data that the economy’s vivid upturn has not yet occurred. This is causing pressure on the markets where the need to build up support is being discussed.
❤1
Meanwhile, the #USDCNH pair has been moving around 7.1450 for more than a week.
Technically, the yuan has found support on the decline towards the 200-day moving average and accumulated oversold on the RSI on the daily timeframes.
This is roughly the same area where the yuan was completing its corrective recovery in July. Therefore, it would not be surprising to see USDCNH rise in the coming days.
Fundamentally, selling the yuan against the dollar may also make sense due to the weakness in the economy. Managed RMB weakness may be in the Politburo’s interest as a measure to support exports.
In addition, China’s price growth rate is close to zero, so the authorities are not afraid of fuelling inflation through a weaker currency.
📣Trade responsibly with fxpro.com
Technically, the yuan has found support on the decline towards the 200-day moving average and accumulated oversold on the RSI on the daily timeframes.
This is roughly the same area where the yuan was completing its corrective recovery in July. Therefore, it would not be surprising to see USDCNH rise in the coming days.
Fundamentally, selling the yuan against the dollar may also make sense due to the weakness in the economy. Managed RMB weakness may be in the Politburo’s interest as a measure to support exports.
In addition, China’s price growth rate is close to zero, so the authorities are not afraid of fuelling inflation through a weaker currency.
📣Trade responsibly with fxpro.com
Economy may be the reason for ECB rate cuts
The euro was down 0.5%, close to 1.09, on Thursday on a continuing wave of weak data from Germany and the eurozone, reinforcing expectations of a policy reversal.
Wednesday saw weak inflation reports from Germany and Spain. On Thursday, equally weak French (-0.2% m/m and 3.4% y/y) and Italian (-0.4% m/m and 0.8% y/y) data added to the feeble inflation picture. For the entire eurozone, price growth slowed in November from 2.9% to 2.4% y/y, the lowest since July 2021. Core inflation is not falling as fast, dropping to 3.6% y/y.
This return to normal comes at a high price.
The euro was down 0.5%, close to 1.09, on Thursday on a continuing wave of weak data from Germany and the eurozone, reinforcing expectations of a policy reversal.
Wednesday saw weak inflation reports from Germany and Spain. On Thursday, equally weak French (-0.2% m/m and 3.4% y/y) and Italian (-0.4% m/m and 0.8% y/y) data added to the feeble inflation picture. For the entire eurozone, price growth slowed in November from 2.9% to 2.4% y/y, the lowest since July 2021. Core inflation is not falling as fast, dropping to 3.6% y/y.
This return to normal comes at a high price.
Europe is losing jobs, as seen in 10 months of non-stop jobless growth in Germany. The unemployment rate there rose to 5.9% in November, having bottomed out in February-May 2022 at 5%.
Fresh data also showed a 0.9% drop in personal spending for October - after zero change in September and a 0.6% decline.
Weakness in the labour market and consumer spending form the basis for a monetary policy reversal. Building on the weakness in demand, the ECB may move to cut rates before inflation steadily returns to target. By comparison, in the US, inflation is slowing, but the labour market continues to create jobs, requiring current rates to be maintained at the very least.
We would not be surprised if, in the coming weeks, debt market traders markedly lower their rate forecasts for next year, pushing the single currency down against its major peers.
Fresh data also showed a 0.9% drop in personal spending for October - after zero change in September and a 0.6% decline.
Weakness in the labour market and consumer spending form the basis for a monetary policy reversal. Building on the weakness in demand, the ECB may move to cut rates before inflation steadily returns to target. By comparison, in the US, inflation is slowing, but the labour market continues to create jobs, requiring current rates to be maintained at the very least.
We would not be surprised if, in the coming weeks, debt market traders markedly lower their rate forecasts for next year, pushing the single currency down against its major peers.
❤1
The crypto market has added 1.5% over to the cap of $1.44 trillion, which has been acting as resistance for the last three weeks. The upward movement has intensified since the beginning of December.
#Bitcoin rose 9.4% to $37.7K in November, strengthening for the third consecutive month. In terms of seasonality, December is considered relatively neutral, adding half the time over the past 12 years. The average gain is 30.8%, while the average decline is 12.8%.
December started on the upside, returning BTCUSD to another test of highs near $38.4K. The price went up with the start of a new day and month before touching the lower boundary of the trading channel. Such dynamics look like an attempt to accelerate the growth trend.
#Ethereum is adding 3.8% over the day, having returned to test $2100 - a horizontal resistance which withstood the bulls' onslaught in November and was a turning point in April. A move above opens up a wide untraded range, giving ETH freedom of movement all the way to $3500.
#Bitcoin rose 9.4% to $37.7K in November, strengthening for the third consecutive month. In terms of seasonality, December is considered relatively neutral, adding half the time over the past 12 years. The average gain is 30.8%, while the average decline is 12.8%.
December started on the upside, returning BTCUSD to another test of highs near $38.4K. The price went up with the start of a new day and month before touching the lower boundary of the trading channel. Such dynamics look like an attempt to accelerate the growth trend.
#Ethereum is adding 3.8% over the day, having returned to test $2100 - a horizontal resistance which withstood the bulls' onslaught in November and was a turning point in April. A move above opens up a wide untraded range, giving ETH freedom of movement all the way to $3500.
The #DowJones has taken a high of 36,000, which is only 2.5% below its historical peak of January 2022. Above that round level, the index traded above it for a few days in November 2021 and briefly in December and January 2022.
This was a turning point three years ago and could now be again, and it's not about the magic of numbers at all but a lack of fuel for growth. The Dow Jones rally began on 30 October after closing below 32,400 the day before. The ensuing rally of more than 11.4% was almost without a pullback.
As a result, the Relative Strength Index reached 78.10 on the daily charts, going deep into overbought territory. The index has not climbed higher since the end of 2017. In that period, the RSI spent quite a long time in highly overbought territory, but the Dow Jones 30 growth rate was two to three times lower than the current one.
This was a turning point three years ago and could now be again, and it's not about the magic of numbers at all but a lack of fuel for growth. The Dow Jones rally began on 30 October after closing below 32,400 the day before. The ensuing rally of more than 11.4% was almost without a pullback.
As a result, the Relative Strength Index reached 78.10 on the daily charts, going deep into overbought territory. The index has not climbed higher since the end of 2017. In that period, the RSI spent quite a long time in highly overbought territory, but the Dow Jones 30 growth rate was two to three times lower than the current one.
There is another worry for the bulls - the performance of other equity indices. The #Nasdaq100 – the guiding star of investors in recent years – has stabilised in a narrow range since the beginning of last week. An attempt to develop growth on Wednesday was met with a sell-off, and Thursday also went to the bears' credit.
The #SP500 index, the leading market benchmark, stuck to the 4560 level. The bulls managed to close the gap from the beginning of August and seem to be exhausted. A side effect of this is the compression of volatility and the VIX index falling to multi-year lows, from which reversals have also often occurred.
The small-cap #Russell2000 index, the DJIA’s opposite, has been hitting horizontal resistance near 1810 for more than two weeks now, unable to get above its 200-day moving average despite a spectacular reversal in late October.
📣Trade responsibly with fxpro.com
The #SP500 index, the leading market benchmark, stuck to the 4560 level. The bulls managed to close the gap from the beginning of August and seem to be exhausted. A side effect of this is the compression of volatility and the VIX index falling to multi-year lows, from which reversals have also often occurred.
The small-cap #Russell2000 index, the DJIA’s opposite, has been hitting horizontal resistance near 1810 for more than two weeks now, unable to get above its 200-day moving average despite a spectacular reversal in late October.
📣Trade responsibly with fxpro.com
👍1🥰1