Currency Basket – Basket Village USA Wed, 12 Jan 2022 00:46:46 +0000 en-US hourly 1 Currency Basket – Basket Village USA 32 32 GLOBAL MARKETS – US stocks fall after Fed’s Powell announces 2022 rate hikes on the charts Tue, 11 Jan 2022 16:32:00 +0000

(Updates to add comments from Fed Chairman Powell)

* US stocks deepen losses after comments on Fed chairperson’s rate hike

* Rebound in European and Asian equities

* US Treasury yields rise slightly following remarks by Fed Chairman

NEW YORK / LONDON, Jan.11 (Reuters) – US stocks increased their losses on Tuesday after Federal Reserve Chairman Jerome Powell said the central bank was likely to raise interest rates this year, remarks which dampened demand for risky assets and raised bond yields.

At 3:53 p.m. GMT, the Dow Jones Industrial Average fell 0.57%, the S&P 500 lost 0.52%, and the Nasdaq Composite fell 0.41%.

European stocks fared better, with the pan-European STOXX 600 index rising 0.69%, while the gauge of MSCI stocks across the world fell 0.10%.

In remarks to U.S. lawmakers on Tuesday, Powell said he expected the Fed to raise interest rates this year and end its asset purchases, but the central bank took no action. decision on the timing of monetary policy tightening.

“We know that high inflation comes at a price,” said Powell, pledging to use the central bank’s full suite of policy tools “to prevent higher inflation from taking hold.”

US consumer inflation data for December will be released on Wednesday, with the headline CPI expected to hit 7% year-on-year, strengthening the case for a rate hike sooner rather than later.

Inflationary pressures prompted the Fed in December to signal its intention to tighten policy faster than expected, possibly even raising rates in March, although this is before it becomes clear how fast the variant will be. of the Omicron coronavirus would spread.

“We continue to believe that take-off in March is more and more likely. How these debates are settled will likely have implications for post-take-off rate hikes, ”Nomura economists said in a report, referring to US monetary policy.

“In particular, we believe the comments about earlier runoff and less aggressive rate hikes support our view that the Fed will slow the pace of rate hikes to two per year in 2023.”

Benchmark 10-year Treasury yields climbed to 1.7764% on Powell’s comments, after peaking nearly two years above 1.8% overnight.

Highly interest rate sensitive two-year Treasury yields jumped to 0.945%, the highest since February 2020.

The dollar index, which measures the currency against six counterparties, hovered around 95.91.

The prospect of rising US interest rates did not help the dollar, however. The dollar index, which measures the currency against a basket of major currencies, fell 0.27% to 95.674. The euro appreciated 0.23% to $ 1.135.

The abandonment of risk and a weaker dollar benefited gold. Spot gold rose 0.6% to $ 1,811.45 an ounce. US gold futures gained 0.39% to $ 1,805.40 an ounce.

Oil has hit nearly $ 82 a barrel, bolstered by tight supply and is hoping the increase in coronavirus cases and the spread of the Omicron variant won’t derail a rebound in global demand.

US crude added 1.96% to $ 79.76 a barrel and Brent to $ 82.33, up 1.81% on the day.

Bitcoin reversed some of Monday’s losses and climbed back to nearly $ 42,000 after falling below $ 40,000 the day before for the first time since September.

Reporting by Karin Strohecker, Sujata Rao and Tommy Wilkes in London and Anshuman Daga in Singapore Editing by Edmund Blair, David Goodman and Gareth Jones

US equity futures drop as Goldman raises Fed rate hike forecast Mon, 10 Jan 2022 12:20:00 +0000

U.S. equity futures fell on Monday as concerns about Federal Reserve policy spilled over, especially in the tech sector.

What is happening
  • Futures contracts on the Dow Jones Industrial Average YM00,
    fell 48 points, or 0.2%, to 36,059.

  • Futures on the S&P 500 ES00,
    fell 0.3%, or 15.25 points, to 4,652.50.

  • Futures on the Nasdaq-100 NQ00,
    slipped 0.7%, or 106 points, to 15,471.

Friday, the Dow Jones Industrial Average DJIA,
ended almost unchanged, but the S&P 500 fell 0.4% SPX,
and the highly technical Nasdaq Composite COMP,
lost 1%. Growth stocks have underperformed value stocks the most, according to FactSet, last week since election week in 2020.

What drives the markets

Analysts were still discussing Friday’s payroll report, which, despite a worse-than-expected reading on non-farm payrolls, showed a drop in the unemployment rate and an increase in wages.

Goldman Sachs economists now expect four Federal Reserve rate hikes in 2022, instead of their previous call for three, and say a runoff in the balance sheet will begin in July instead of December. “The weaker labor market slowdown has made Fed officials more sensitive to the risks of upward inflation and less sensitive to the risks of downward growth,” they said in a note to clients.

The eagerly awaited inflation report is due on Wednesday.

Which companies are targeted?
  • Lululemon Athletica LULU warned that fourth quarter profit and revenue would be at the bottom of its target, citing the impact of the omicron variant on capacity and staff.

  • Actions of Take-Two interactive software
    were the center of attention after the intercourse he would acquire Zynga
    in a deal with an enterprise value of $ 12.7 billion, paying in cash and shares of $ 9.86.

How are the other assets doing?
  • The yield on the 10-year Treasury bill was virtually unchanged at around 1.77%, after the biggest weekly gain since September 2019 based on 3 p.m. ET levels, according to Dow Jones Market Data. Treasury yields and prices move in opposite directions.

  • The ICE US Dollar Index DXY, a measure of the currency against a basket of six major rivals, rose 0.2% on Monday, following a weekly decline of 0.2%.

  • CL00 oil futures traded slightly lower, with West Texas Intermediate crude for February delivery CLG22 down 0.4% to $ 78.53 per barrel.

  • GC00 Gold Futures, 0.19% for February Delivery GCG22 traded less than 0.1% higher, to $ 1,798.30 an ounce, but with the most active contract down 1.7% for the week.

  • Bitcoin BTCUSD was trading down around 1% to around $ 41,000.

  • The Stoxx Europe 600 SXXP is trading down 0.5%, while London’s FTSE 100 UKX was down 0.1%.

  • The Shanghai Composite SHCOMP rose 0.4%, while the Hang Seng HSI index rose 1.1% and Japan’s Nikkei 225 NIK was closed for a holiday.

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Ray Dalio provides advice on cash, bonds and Bitcoin Sat, 08 Jan 2022 08:59:04 +0000

Hedge fund owner and CEO of Bridgewater Associates, Ray Dalio, has warned investors that cryptocurrency could be banned and advised against holding cash and bonds. A controversial statement for sure, but it’s not easy to ignore the advice of a man with a net worth of over $ 17 billion and a life of investing experience.

Ray Dalio founded Bridgewater Associates in 1975 in New York City to change the investment landscape. Despite a crushing setback in 1982, he rebounded, and today his hedge fund manages around 150 billion dollars in assets. The Monetary Assistant has achieved legendary status in the financial community for his innovative style and ideas.

Why is cash losing its luster? Maybe it’s because Ray Dalio is promoting Bitcoin.

In May of last year, he revealed that he now wants to spend his days helping others achieve their dreams and become the best they can be.

He warned people against building up liquidity as the US economy undergoes dramatic change as the pandemic has fueled increased debt creation and the monetization of debt has negatively affected them. interest rate. The author of Principles: Life and work, a book on investment and management philosophies, Ray Dalio strongly believes in minimizing the possession of cash and bonds.

In his article on LinkedIn, he states, “I think one should consider minimizing the possession of cash and bonds in dollars, euros and yen (and / or borrowing in these) and placing funds in a very diversified portfolio of assets. , including inflation-hedging stocks and assets, especially in countries with healthy finances and well-educated, civilian populations that have internal order.

He then presents graphics and arguments that support his opinion and explain how the pandemic beheaded the world order. The three main foreign exchange reserves, the United States, Europe and Japan, have struggled to gain a foothold since the onset of the crisis. While he praised China’s progress in the past and kept an eye on the emerging superpower, he laments America’s inability to keep pace.

The billionaire insists on the importance of not putting all of his eggs in one basket. Ray Dalio’s investment advice is to be careful and study the socio-political landscape before making monetary decisions.

He thinks it is time to start investing in cryptocurrencies and urges investors to keep some amount in Bitcoin. He recommends starting with around 1-2%. A diversified portfolio will help offset losses, if any, and also give you leverage. Previously, he had expressed his doubts about cryptocurrencies and their valuations as they tend to be volatile. But, in December 2021, he revealed that he was very impressed with the way bitcoin is written, how they managed to stay safe from hackers and achieve growth. He shares that bitcoin and gold will work as an inflation hedge. Dalio sees bitcoin as a new gold.

Only a limited amount of Bitcoin is available for mining. This is how it was designed and could be one of the factors that some investors believe it could generate higher returns over the long term. Once bitcoin becomes an established entity in the market, demand could far exceed supply, increasing its value.

Dalio, however, cautions against being overly optimistic. He insists that governments have always been wary of cryptocurrencies. Perhaps this is the reason why he mentions that it may be prohibited in certain places. Dalio believes that since this is a troubled area, governments would find it difficult to regulate it and therefore decide to ban it.

Recently, the minutes of a Federal Reserve system meeting caused an uproar in the markets, with bitcoin stocks taking a hit. However, Ray Dalio’s investment advice could be of great help to you as companies are slowly starting to accept cryptocurrencies as a valid form of payment.

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Commission approves 2022-2027 regional aid map for Greece Fri, 07 Jan 2022 18:31:11 +0000

Twenty years ago, on January 1, 2002, twelve EU countries changed their national currency notes and coins to the euro in the biggest currency change in history. During these two decades, the euro has contributed to the stability, competitiveness and prosperity of European economies. Most importantly, it has improved the lives of citizens and made it easier to do business in Europe and beyond. With the euro in your pocket, saving, investing, traveling and doing business just got a whole lot easier.

The euro is a symbol of the integration and identity of the EU. Today, more than 340 million people use it in 19 EU countries, with 27.6 billion euro banknotes in circulation worth around 1.5 trillion euros. The euro is currently the second most used currency in the world behind the US dollar.

As he celebrates this 20e anniversary, the EU is continuing work to strengthen the international role of the euro and adapt it to new challenges, including the rapid digitization of the economy and the development of virtual currencies. Along with cash, a digital euro would support a well-integrated payments industry and provide greater choice for consumers and businesses.

Ursula von der Leyen, President of the European Commission, said: “It has been twenty years now that we, European citizens, have been able to carry Europe in our pockets. The euro is not only one of the most powerful currencies in the world. It is above all a symbol of European unity. Euro banknotes have bridges on one side and a gate on the other, because that is what the euro stands for. The euro is also the currency of the future, and in the years to come it will also become a digital currency. The euro also reflects our values. The world we want to live in. It is the global currency for sustainable investments. We can all be proud of it. “

David Sassoli, President of the European Parliament, said: “The euro is the embodiment of an ambitious political project to promote peace and integration within the European Union. But the euro is also a condition for protecting and relaunching the European economic, social and political model in the face of the transformations of our time. The euro is a symbol, the realization of a historical political vision, an old vision of a united continent with a single currency for a single market.

Charles Michel, President of the European Council, said: “The euro has come a long way, it is a real European success. I would even say that the euro is now part of who we are. And how we see ourselves as Europeans. Part of our state of mind. And part of our European spirit. The euro belongs to all of us, European citizens. But it is not only a success within our European borders. It has also established itself on the international scene. Despite the crises, the euro has proven to be resilient, a symbol of European unity and stability. And that has never been truer than during COVID-19. The euro has served as a basis for stability. A stable asset for the Union. The euro is also fueling our recovery. Unlock the full potential of sustainable development, quality jobs and innovation.

Christine Lagarde, President of the European Central Bank, said: “The euros we have in our hands have become a beacon of stability and solidity in the world. Hundreds of millions of Europeans trust him and do business with him every day. It is the second most international currency in the world. As President of the European Central Bank, I pledge to continue to work hard to ensure price stability. And I am also committed to renewing the face of these banknotes and also giving them a digital dimension. “

Paschal Donohoe, President of the Eurogroup, said: “The euro has proven itself in the face of major economic challenges. In particular, our response to the COVID 19 pandemic has demonstrated that by sharing the euro we can achieve more collectively than we can individually. The euro has strengthened its foundations over the past 20 years. Now we must build on these foundations to make the euro the global currency for the transition to a lower carbon future. “

A long trip

The euro has come a long way since the first discussions on Economic and Monetary Union in the late 1960s. Specific steps towards a single currency were first discussed in 1988 by the Delors Committee. In 1992, the Maastricht Treaty marked a decisive moment in the transition to the euro, as political leaders signed off on the criteria that member states had to meet to adopt the single currency. Two years later, the European Monetary Institute (EMI) began in Frankfurt its preparatory work for the European Central Bank (ECB) to assume its responsibility for monetary policy in the euro area. As a result, on June 1, 1998, the ECB became operational.

In 1999, the euro was launched in 11 Member States as an accounting currency in financial markets and used for electronic payments. It was finally on January 1, 2002 that Austria, Belgium, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, the Netherlands, Portugal and Spain exchanged their national banknotes and coins for euros. Slovenia joined the euro area in 2007, followed by Cyprus and Malta (2008), Slovakia (2009), Estonia (2011), Latvia (2014) and Lithuania (2015). Croatia is currently taking the preparatory steps to join the euro area, which it plans to do on January 1, 2023, provided it meets all the convergence criteria.

Twenty years of benefits for citizens and businesses

The euro has brought many benefits to Europe, in particular to its citizens and businesses. The single currency has helped keep prices stable and protect euro area economies from exchange rate volatility. This made it easier for home buyers, businesses and governments to borrow money and encouraged trade in Europe and beyond. The euro has also eliminated the need for currency swaps and reduced the costs of transferring money, making it easier to travel and travel to another country to work, study, or retire.

A large majority of Europeans support the single currency. According to the latest Eurobarometer, 78% of citizens in the euro area think the euro is good for the EU.

A strengthened international role

The euro is the second most important currency in the international monetary system. Its stability and credibility have made it an international invoicing currency, a store of value and a reserve currency, representing around 20% of foreign exchange reserves. Sixty other countries and territories around the world, home to some 175 million people, have chosen to use the euro as their currency or to peg their own currency there. Today, the euro is used for almost 40% of global cross-border payments and for more than half of EU exports.

Since the global financial crisis of 2008 and the sovereign debt crisis that followed, the EU has continued to strengthen and deepen the Economic and Monetary Union. The EU’s unprecedented NextGenerationEU stimulus package will further improve the economic resilience of the euro area and strengthen economic convergence. The issuance of high quality denominated bonds under NextGenerationEU will add considerable depth and liquidity to EU capital markets and make them and the euro more attractive to investors. The euro is also now the leading green investment currency: half of the world’s green bonds are denominated in euros, and this figure is increasing thanks to new green bonds issued to finance NextGenerationEU.

In order to further develop the international role of the euro, the Commission has launched awareness-raising initiatives to promote euro-denominated investments, facilitate the use of the euro as an invoicing and denomination currency and foster a better understanding of the obstacles to its wider use. This awareness will take the form of dialogues, workshops and surveys with the public and private sectors, financial regulatory agencies and institutional investors in EU regional and global partner countries.

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Ringgit opens lower on stronger US dollar support Thu, 06 Jan 2022 02:26:00 +0000

KUALA LUMPUR: The ringgit opened lower against the US dollar on firmer buying support for the greenback, supported by better US employment data.

At 9am, the local currency was trading at 4.1970 / 2005 against the greenback of 4.1930 / 1955 at Wednesday’s close.

According to US ADP Non-Farm Employment Change data, 807,000 jobs have been created in the US private sector against a forecast of 400,000.

ActivTrades trader Dyogenes Rodrigues Diniz said this could further accelerate the economic recovery in the United States and accelerate the pace of the withdrawal of the current financial stimulus.

He said this shows that the monetary policies adopted by the US Federal Reserve have had a positive effect.

“From a macroeconomic perspective, data on the non-farm payroll in the United States, which will be released on Friday, could confirm the high level of new jobs created and could give the US dollar even more strength against its counterparts.

“From a technical standpoint, if the ringgit-US dollar manages to break through the 4.1950 mark, the local unit could drop to 4.2450 in a matter of days,” he told Bernama.

Meanwhile, the ringgit traded for a basket of other major currencies.

It edged up against the Singapore dollar at 3.0919 / 0950 from Wednesday’s close of 3.0924 / 0939 and edged up against the Japanese yen at 3.6146 / 6180 from 3.6190 / 6215.

The local currency eased against the British Pound to 5.6857 / 6908 from 5.6785 / 6814 yesterday and weakened against the Euro to 4.7454 / 7511 from 4.7408 / 7424. -Bernama

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DXY Pulls Back Towards 96.00 As ISM Survey Highlights Easing Supply Chain Problems Tue, 04 Jan 2022 16:03:54 +0000
  • The DXY fell back to near the 96.00 level following the latest US data, erasing early gains.
  • The latest ISM manufacturing report fell to 58.7 in December from 61.1 due to lower prices paid.

The DXY fell into negative territory that day in recent trading and is probing the 96.00 level following the latest batch of US data. The index, which is a weighted basket of trades of major USD currency pairs, is now trading around 0.15% lower on the day and around 0.4% lower than its previous peaks near 96.50.

Its latest dip saw it fall back south of its 21-day moving average, which is currently around the 96.20 level and bears will consider a test of last week’s lows in the 95.50 if the 96 level is reached. , 00 was broken. Support in the form of 50DMA at 95.65 is notable, the level of which has been associated with good buying interest in the recent past.

US data weighs on the DXY

The latest ISM manufacturing report fell to 58.7 in December from 61.1 in November, below the expected 60.0 and its lowest reading since January 2021. The drop was in part due to a drop prices paid sub-index, which fell to 68.2 from 82.4 in a sign of easing supply chain problems. This marked the index’s lowest reading since November 2020 and was the index’s steepest drop since March 2020. Elsewhere, new orders remained robust above 60.0 and the index l employment rose to 54.2 from 53.3, its highest reading since April, bodes well for Friday’s jobs report.

Meanwhile, the latest JOLT report for November showed a drop to 10.562 million job vacancies, from over 11 million in October. However, the report showed an increase in quits in high-end white-collar jobs, as well as in the hospitality industry, which, according to the famous Fed Observer and Chief U.S. Economist at SGH Macro, was consistent with increasing wage pressure at the top level. ends of the employment spectrum.

The lack of a title in the JOLT report coupled with the deflationary signal encapsulated by the sharp drop in prices paid ISM sub-index seem to have been enough to weigh on the intra-day DXY. This may be because traders may interpret the data to indicate that the US labor market is not as hot as it is thought and that inflation may come down sooner rather than later as the chain issues. supply easing, combining to put less pressure on the Fed to tighten monetary policy. as fast.

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3 best stocks we bought for 2022 Sun, 02 Jan 2022 12:00:00 +0000

With many growth stocks hit by a final sell-off in the final weeks of 2021, deals now abound. Tech companies are doing more than well in the second year of the pandemic and are poised to continue expanding their reach into the global economy in the new year and beyond.

For example, three contributors made stock purchases as the new year approached. The shopping list? Marvell Technology Group (NASDAQ: MRVL), Global Coinbase (NASDAQ: COIN), and Loan Club (NYSE: LC).

Image source: Getty Images.

A chip business transforms for the next generation of computing needs

Nicolas rossolillo (Marvell Technology Group): Not to be confused with Disney‘s (NYSE: DIS) superhero franchise with a similar name (Marvel, not Mar-VELL), this suddenly emerging semiconductor designer has been popping up on all kinds of Wall Street analyst radars lately. And for good reason. After a series of acquisitions over the past few years, Marvell has grown into a leader in data center hardware solutions capable of handling increasingly complex workloads like artificial intelligence (AI).

It doesn’t stop at data centers, however. On the last quarterly earnings conference call, Marvell discussed its opportunity in the auto industry, given that the modern car is like a mini-supercomputer on wheels. Technology swallows up a share of the cost of producing a vehicle, and Marvell’s diverse mix of computer chips and network equipment places it in a privileged position to benefit from increasingly advanced automotive technology. Currently, the company’s automotive segment generates annualized sales of around $ 140 million, but is expected to grow to several hundred million dollars annually in the coming years.

At the moment, Marvell’s finances seem a bit messy due to all the acquisition activity. Third-quarter revenue increased 61% year-over-year to $ 1.21 billion; net losses were $ 61 million; but free cash flow was positive at $ 185 million. However, over the next year or so, some of these confusing profitability signals will start to converge. And along the way, Marvell has indicated that he plans to stay in a double-digit sales growth mode as data center upgrades support new cloud services and the growth of the industry. auto industry continue.

At this point, the cat is out of the bag. Marvell is no longer a quiet bet for the semiconductor industry. Stocks trade 20 times the value of sales to the company over 12 months and 166 times the free cash flow over 12 months relative to the enterprise value. Free cash flow was in negative territory for a quarter earlier this year. However, the high price will moderate as the company digests its recent purchases and gains a greater share of the data center and automotive tech market. Given the strong momentum Marvell is riding on right now, I recently bought more before the start of 2022.

The closest thing to a cryptocurrency index fund

Anders Bylund (Coinbase): I started a position in cryptocurrency trading specialist Coinbase Global a week ago. As the digital currency industry recovers from the recent downturn, Coinbase strikes me as the surest way to increase my exposure to this industry – without selecting a particular cryptocurrency.

I own a basket of handpicked crypto tickers and will surely add to this portfolio over time. Including a solid stake in Coinbase is a more fundamental investment, much like building your retirement portfolio around an index fund.

Say all of the major cryptocurrencies in the market today are about to be obsolete by brand new projects that do the same things much better. i would miss my Ethereum (CRYPTO: ETH) and Bitcoin (CRYPTO: BTC) in the beginning, of course, but the investment in Coinbase would just continue to increase.

In fact, Coinbase also works as a hedge against sudden cryptocurrency upheavals. When everyone sells their digital coins the old-fashioned way to embrace the Next Big Thing, this company will be happy to help you out while pocketing a transaction fee for every Bitcoin sale. Trading platform operators love volatility, especially in the cryptocurrency market where brokers haven’t given up on trading fees like brokerages did in 2019.

And of course, Coinbase always benefits if the current leaders stay on top for the long haul. I consider this stock to be a large investment in the cryptocurrency market with a few bonuses as noted above. I see great things to come for this ticker regardless of how the cryptocurrency industry evolves over the long term.

This fintech, which beats the market, has just sold more than 50% on no relevant news

Billy Duberstein (LendingClub): Haven’t bought much lately, but have added to a few favorites including LendingClub which were particularly beaten amid the omicron sell-off / rate hike.

At the beginning of November, everything was going well for LendingClub. The company released a strong earnings report that beat expectations, and the stock rose from the low range of $ 30 to over $ 49 per share in no time.

Yet even with no company-specific news since then, LendingClub has sold over 50% at around $ 24.30 a share. This is a massive sale for a company that has been doing so well since its last public disclosure. It appears that omicron fears along with fears of higher rates have prompted investors to rethink LendingClub’s business, which focuses on unsecured personal loans.

But that doesn’t seem particularly rational to me. After all, management has revealed that its Q4 2019 vintage, or loans made on the eve of the pandemic, has outperformed the industry as a whole and is expected to achieve a total net return of 6%. Recent jobs and growth figures have remained strong even amid the omicron push. Inflation is a concern, but I don’t think anything that could cause a recession could materially affect the charges. As interest rates put pressure on LendingClub’s cost of funds, the company now has access to low-cost deposits through its acquisition of Radius Bank in February. The acquisition of Radius also allows LendingClub to hold more of its loans on its balance sheet, allowing the company to reap more profits from each loan it makes.

After the sale, LendingClub is actually trading for a market valuation of 14 times 2022 profit estimates. And with the company just thriving with this new model and the growth of new products such as auto loan refinancing, LendingClub is expected to continue growing at a strong pace in 2022, making it a well-priced growth stock for next year.

This article represents the opinion of the author, who may disagree with the “official” recommendation position of a premium Motley Fool consulting service. We are motley! Challenging an investment thesis – even one of our own – helps us all to think critically about investing and make decisions that help us become smarter, happier, and richer.

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Major banks’ forecasts for 2022: JPY, GBP, CAD, AUD, CHF, SEK, CNH Sat, 01 Jan 2022 14:13:03 +0000

We talked a week ago about what experts at the world’s biggest banks and agencies think about the behavior of the EUR / USD pair through 2022. And the fact that we paid attention to it in the first place makes some sense. : after all, this pair is the most traded in the Forex market, and the European currency itself leads with a huge margin in the formation of the DXY US dollar index, with 57.6%.

Recall that DXY was developed by the US Federal Reserve in 1973 and shows the ratio of the US dollar to a basket of 6 major world currencies. This basket includes the euro (57.6%), the Japanese yen (13.6%), the pound sterling (11.9%), the Canadian dollar (9.1%), the Swedish krona (4.2 %) and the Swiss franc (3.6%).

In our opinion, the economic situation in the world has changed a lot in the almost half a century since DXY was founded. And at least the Chinese yuan should have appeared in the basket. Therefore, below we will take a look at the outlook for the two currency pairs that make up the dollar index: USD / JPY, GBP / USD, USD / CAD, USD / SEK, USD / CHF and a few others, AUD / USD, NZD / USD, EUR / GBP and USD / CNH.

USD / JPY: Japan needs a weak yen

We know that inflation, along with the recovery of the labor market, is one of the two main factors on which central banks focus in their monetary policy.

The positive GDP gap is also called the inflation gap because it indicates that the growth of aggregate demand exceeds the growth of aggregate supply and accelerates inflation. This, according to the IMF, will be observed in the United States (+ 3.3%) and Canada (+ 0.8%) in 2022. And regulators will have to take active measures to tighten their monetary policy in order to contain the inflation. And this, according to experts from the Dutch banking group ING (Internationale Nederlanden Groep), will give the currencies of these countries, mainly the USD, an advantage over the currencies of countries where the GDP has a negative spread. It is also called recession because excess supply over demand is the path to deflation.

The recession gap has been observed since 2008 in Japan and is expected to repeat in 2022. This is why the Bank of Japan’s policy is one of the most accommodating among the central banks of other countries, and the interest rate on the yen has long held a negative level, minus 0.1%.

Bank of Japan chief Haruhiko Kuroda recently said that a weak yen would rather help the country’s economy than hurt it. According to the senior official, if the yen falls, it will support exports and corporate profits.

The ING group believes that such a differentiation between the approaches of the US Federal Reserve and the Japanese regulator will strengthen the dollar’s position against the yen. Their quarterly forecasts for USD / JPY for this year is: Q1 – 114.00, Q2 – 115.00, Q3 – 118.00 and Q4 – 120.00.

French financial conglomerate Societe Generale estimates the probability that the pair will rise to 116.00 in the second quarter at 50%, and up to 118.00 – 25%. Experts are betting the remaining 25% on a bearish scenario and the pair falling to 110.00.

Analysts from other major global banks also prefer the dollar. However, unlike their ING counterparts, a number of forecasts peak not at the end, but in the middle of the year. Barclays Bank forecasts look like this: Q1 – 115.00, Q2 – 116.00, Q3 – 116.00 and Q4 – 115.00. Forecasts from CIBC (Canadian Imperial Bank of Commerce) paint a similar picture: T1 – 115.00, T2 – 116.00, T3 – 115.00, T4 – 114.00.

Reuters polled the biggest banks represented on Wall Street and published their experts’ opinion on the stocks of the USD / JPY pair in the second half – end of 2022. For the most part, forecasts point to a strengthening of the dollar: JP Morgan Q3 – 114.00, Amundi Q4 – 116.00, Morgan Stanley Q4 – 118.00. On the contrary, Goldman Sachs estimates that the pair will fall to 111.00 in 2023.

GBP / USD: at the crossroads of three roads

Regarding the future of the British currency, British investment Barclays Bank has taken a very patriotic position. Its strategists consider the pound to be strongly undervalued and predict that the GBP / USD The pair will return to 2021 highs and climb to 1.4200 by the end of the year.

Unlike most investment banks, Barclays believes that the US Federal Reserve’s policy does not provide strong support for the US dollar at all, which will lead to its moderate depreciation. The Bank expects other central banks to take a more aggressive stance than the Fed, with higher interest rates, thus limiting the attractiveness of the dollar. First of all, of course, we are talking about the Bank of England here.

As for the pound’s short-term outlook, Barclays analysts are more cautious here, as the impact of high inflation will neutralize potential support from a slight increase in interest rates. In addition, concerns about the new wave of COVID-19 and the difficulties with the EU due to Brexit must be taken into account. As a result, Barclays’ quarterly forecast is: Q1 – 1.3300, T2 – 1.3700, Q3 – 1.4000 and Q4 – 1.4200.

Capital Economics, one of the UK’s leading independent research centers, has taken the opposite position. Its specialists, on the contrary, anticipate a weakening of the pound, and evoke a combination of 1) weak economic growth, 2) slowing inflation and 3) sluggishness of the Bank of England. These three factors may lead the UK regulator to raise the rate to just 0.5% in the coming months instead of 1.0%, and thus disappoint the markets.

But, in addition to the growth and decline of the British currency, there is a third scenario. Analysts at ING Group predict that the pound will sit somewhere in the middle of a triangle made up of a stronger US dollar, stable commodity currencies and weaker low-yielding currencies. Therefore, according to their scenario, the GBP / USD The pair will move in a sideways trend: Q1-1.3300, Q2-1.3400, Q3-1.3400 and Q4-1.3400.

Other currency pairs

If Barclays Bank believes in its national currency, specialists at CIBC (Canadian Imperial Bank of Commerce) are quite pessimistic about the future. They believe the Canadian dollar could weaken this year. “Markets have overestimated possible Bank of Canada stocks in 2022,” says CIBC, “and underestimated the Fed in 2022. The recalibration will leave the CAD out of favor with investors. »The bank’s forecasts for the USD / CAD the pair is: Q1-1.2800, Q2-1.2900, Q3-1.3000 and Q4-1.3000.

Experts from HSBC (Hong Kong and Shanghai Banking Corporation) believe that some currencies may still hold up against the stronger US dollar, notably the Australian dollar. HSBC believes the Reserve Bank of Australia could take a more hawkish stance, given the rather solid macro data.

ING strategists also do not rule out that the Australian dollar may benefit from an undervaluation and oversold. However, taking long positions in the AUD / USD pair, in their opinion, always carries a high risk.

In addition, according to ING experts, together with the euro (EUR / USD) and the Japanese yen (USD / JPY), the Swiss franc will also lag significantly behind the dollar (USD / CHF) in 2022 as well as the Swedish krona (USD / SEK).

Barclays Bank’s forecasts for other currency pairs included in brokerage firm NordFX’s palette of trading instruments are as follows: EUR / GBP : T1 – 0.87, T2 – 0.86, T3 – 0.85, T4 – 0.84 | USD / CHF : T1 – 0.91, T2 – 0.90, T3 – 0.90, T4 – 0.90 | AUD / USD : T1 – 0.75, T2 – 0.76, T3 – 0.77, T4 – 0.78 | NZD / USD : Q1 – 0.73, Q2 – 0.73, Q3 – 0.73, Q4 – 0.73 | USD / CAD : T1 – 1.23, T2 – 1.22, T3 – 1.21, T4 – 1.21 | USD / CHN : T1 – 6.35, T2 – 6.30, T3 – 6.40, T4 – 6.50.

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Investors expect a technical breakout of well-defined levels Fri, 31 Dec 2021 07:53:02 +0000
  • EUR / USD entered a phase of consolidation around 1.1300.
  • The ECB’s Knot sees the possibility that the bond buying program will end sooner than expected.
  • Investors are expected to sit on the sidelines while they wait for volumes to return to normal levels.

For the second day in a row on Thursday, EUR / USD climbed above 1.1350 but failed to maintain its bullish momentum. The pair appears to have entered a phase of consolidation around 1.1300 on Friday and market participants will consider a breakout of well-defined technical levels when market action normalizes after the New Years holiday.

On Thursday, European Central Bank Governing Council member Klaas Knot noted that the ECB could end its bond-buying program earlier than expected if inflation continues to surprise on the upside. Knot further argued that it was appropriate for the ECB to prepare for a gradual normalization of monetary policy. Although these remarks helped the common currency find some demand, the resilience of the dollar limited the rise of the EUR / USD.

As the yield on 10-year US Treasury bonds holds above 1.5% as the new year approaches, the US dollar index, which tracks the performance of the greenback against the to a basket of six major currencies, remains afloat above 96.00.

US bond markets will close early on New Year’s Eve and market action is expected to remain subdued for the remainder of the day.

EUR / USD technical analysis

The Relative Strength Index (RSI) indicator on the four-hour chart retreated to 50, confirming the view that buyers are showing no interest in the common currency after the rejection at 1.1360. On the upside, 1.1340 (static level) lines up as intermediate resistance before 1.1360 (static level, post-BCE high) and 1.1400 (psychological level).

The 100 and 200 period SMAs on the same chart appear to have formed a zone of strong support at 1.1290 / 1.1300. In the event that a four hour candle closes below this level, further losses towards 1.1270 (static level) could be observed.

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Morgan & Co will list a negotiable fund Wed, 29 Dec 2021 22:07:42 +0000

The herald

Nelson Gahadza, Senior Business Journalist

Morgan & Co Limited is preparing to introduce a multi-sector exchange-traded fund (ETF), which will be listed on the Zimbabwe Stock Exchange (ZSE) early next year.

Morgan & Co said in a statement that ZSE has already approved the listing of the multi-sector ETF which will be listed on January 3, 2022.

An actively managed ETF is a form of an exchange-traded fund in which a manager or team makes decisions about the allocation of the underlying portfolio instead of tracking the performance of a benchmark.

“… wants to establish Zimbabwe’s first actively managed ETF, which will invest primarily in banks, real estate companies, insurance and reinsurance companies, industrial and non-industrial companies and financial holding companies,” said part of the communicated.

The company said it was now in the process of raising seed money in the form of scrip.

“As this is an actively managed fund, the weightings and counters will inevitably change over time,” said Morgan & Co.

“The fund will then be listed on the ZSE as an introduction. Additional investments from other investors will be used to buy shares in the market and add to the portfolio, ”said Morgan & Co.

He noted that investors who wanted to invest in the fund could do so in two ways, by buying shares of the ETF through any registered broker or by delivering a basket of shares through the intermediary. of an authorized participant in the current weight of the fund.

In addition, the securities firm said all of the fund’s assets will be held by CABS Custodial Services which will act as the fund’s custodian.

The settlement of transactions in the units will be made through the custodian ZSE. “This investment offers investors the opportunity to own a mix of underlying stocks through an investment in the ETF.

“Therefore, the investor has no additional duties or costs beyond those associated with trading any other listed security and the fund manager will be responsible for adjusting or maintaining the components of the portfolio. The ETF will be constantly reviewed because it will be actively managed ”, read the press release.

ETFs are baskets of different types of investments such as stocks, commodities and bonds that are grouped into a single entity, which then offers stocks to investors which are then traded on the major stock exchanges.

The Top Ten Stock Indices of the Old Mutual Zimbabwe Stock Exchange Traded

The fund (ETF) that was listed on the ZSE in January 2021 became the first ETF to be listed on the platform.

The ETF industry closed 2020 with more than $ 5.5 trillion in investments, according to statistics from the Investment Company Institute.

According to the ZSE, potential issuers of exchange traded products will need to prove that the underlying asset or track of securities is liquid enough to satisfy the exchange so that there will be appropriate price formation in the product.

Meanwhile, the government, which is desperate for financing solutions in a capital-strapped economy, has put its weight in favor of ETFs.

“There is no reason why we cannot have ETFs to raise capital like they do in Botswana,” Finance Minister Professor Mthuli Ncube said at a business conference at the beginning of the year.

Business and government have both struggled to find capital due to the country’s currency crisis, characterized by soaring inflation.

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