A nice daily chart is coming off the ground: CHFJPY has been descending non-stop since it peaked last month at 118.00. this slide has been nowadays in touch with the support band between 113.00 and 113.50. this band has acted before as resistance and was tested 10 times already this year. It could mean that a further fall should be difficult to maintain and correction is viewed a priority. Are you interested to long the cross? Then set your stop if a close below the up sloping trendline (red) is triggered. Collect your greed in pips.
The tensions between Saudi Arabia and United States have left Crude Oil ascending triangle target untouched, at 78.80. Now, the price is back at the previous breakout level near 72.00. This $72.00 is acting as support along with the up sloping trendline, reading $71. A close below $71 should dismiss the rally and pummel would be favored. Stay Tuned!
The monthly chart shows that today VIX would weekly-close for the first time above the downsloping trend line aging 9-year. Coincide this gauge with US Midterms Elections, and here we go: unwinding US stocks is the most valuable instrumental decision you would ever be taking. Good Luck! Hell is Hell and that is famous for the Elites!
The International Monetary Fund (IMF) has warned the "rapid growth" of bitcoin and cryptocurrency assets could create "new vulnerabilities in the international financial system," as the world's banks adjust to the recent bitcoin and blockchain boom.
Bitcoin and cryptocurrencies, including Ripple Lab's XRP token, ethereum, litecoin, EOS, and stellar, are being examined by the traditional financial system to gauge how they might be integrated as both investment tools and ways to move money across borders more quickly and cheaply.
Excitement around how bitcoin and cryptocurrency technologies, based on the blockchain distributed ledger, has propelled the price of many major cryptocurrencies to stratospheric highs over the last 12 months. Last year, the bitcoin price ballooned from less than $1,000 at the beginning of 2017 to almost $20,000 in December.
The bitcoin price has since fallen sharply back, currently trading at around $6,500, and dragging many of the biggest cryptocurrencies with it — many of them recording 80% declines from their peaks.
"Cybersecurity breaches and cyber attacks on critical financial infrastructure represent an additional source of risk because they could undermine cross-border payment systems and disrupt the flow of goods and services. Continued rapid growth of crypto assets could create new vulnerabilities in the international financial system," according to the fund's latest World Economic Outlook report, out today. Forbes
Bitcoin has traced a bearish flag which indicates that low has not accurately been sealed. Buyers should pay attention to this flag set up as we do not ignore a wave towards the green zone and below to be materialized. Current hour is developing the next wave. Welcome to the South!
There is a nice Head and Shoulder pattern charted with neckline reading 1.0840. The recent congestion as shown in the green rectangle has ended flirting with the upsloping trend (yellow) line of year 2018 then it bounced back to the top of the rectangle. Such a bounce indicates that the rally has not ended yet and the market should levy the price further. Buyers should pay attention at 1.0840 strong fundamental support.
GBPJPY 3-week consolidation at the high of July after a 100% retracement in the form of U-turn indicates two ways: the market is in leeway and it is either heading towards 152.55 or 144.15. The break of the rectangle is what we would be looking for. From our perspective, there is a fight between the daily and the weekly scenario where this battle imposes a trigger of both levels.
EURCAD retracement has so far reached the below side of the GAP near 1.4950. The retracement has come out of touching the double bottom of the year at 1.4800 where this retreat should continue to close the gap and perform a test of resistance that is marked by August and September low at almost 1.5100 – 1.5070 exact.
Selling 1.5070 is preferable rather than buying current price to satisfy the details of the cross.
EURUSD slide of the previous week should not be fading yet, however, that does not mean a rally isn’t going to be ignited. Selling rally is the best approach for today’s squadron and would be happy if 1.1630 is printed to add to the sell phenomenon. A bi-daily close above 1.1630 will negate the splash directed by either of the three expected waves.
The behavior of the sterling at the start of the week should be set under standby mode. Currently, the market doesn’t belong to the blue channel neither to the yellow one, an indication that a consolidation framework is in charge.
Let the market clear either side, yellow support or blue resistance in order to evaluate the next wave.
Counting matters; the power of balance matters. This graph of sterling implies that the pair cannot seal a bottom yet. The counting from the left side of the chart is six, and it shot up in sequence through the formulation of higher lows and higher highs. At the top, the market reversed headily and prepared a 100% reversal approach. The counting on the right side of the chart should balance the counting on the left side. Right now, we are on the making of the forth count and two counts are left to be executed.
What happens to copper from September 2017 to September 2018?
It established a base (marked in purple)
This base turned into resistance (marked in red)
Market is holding 38% retracement and might jump to 50% as final touchdown before plummeting again
A close above 3.0 negates the bearish move. Go ahead!
The chart is in dilemma where two contracting patterns are identified. In the first pattern, a clear rectangle is traced targeting 97.70 as long as no close below 93.70 is taken. In the second pattern, is assumed to be favoring the bear move, a Head and Shoulder pattern that depicts a target at 90.50 as long as no close above 97.70 is locked.
What do you want to believe is greatly this time up to you! Stay Tuned!
What do you see? An uptrend
What the market is doing recently? Consolidation
Technically, what does it mean? Market is pausing after a huge rally
What’s the next forecast? Usually, the market should rally further once consolidation is terminated
How do we know when the consolidation is off agenda? When a break beyond border is triggered.
Signal: Stand By Mode and let’s wait for a break!
Our homework is always done at its best. let's revise the chart of the dollar index which was published on the 18th of september 2018 ( red box).
the market hasn't punched a close below 94, thus entrusting a u-turn and the dollar rallied. waiting for the close below 94.00 was greatly necessary to target 92.00.
What’s the status of euro after FOMC raised its benchmark?
- A rectangle derived within an upward channel
- The current price is testing channel’s support
- Pinning noisy quadruple tops versus double bottom
- Width of the rectangle equals 90 pips
A break of the rectangle’s borders sets up the primarily reason for issuing a signal and reverse accordingly if necessary. Bears target 1.1634 which coincides with the 61.8% Fibonacci level of the upward channel, while Bulls target 1.1905 which coincides with the resistance of the upward channel.
The common denominator is that both rectangle have each four tops and double bottom and while the first rectangle (lower one) had broken its resistance, the second one is expecting to do the same.
Last, there is an amazing possibility that the price may fall first towards 1.1634 and then rally towards 1.1905 as long as 1.1600 remains our favorable temporarily support.
India Imports Zero Barrel,
India isn’t planning to buy any Iranian oil in November, raising the prospect that Tehran will lose another major customer as U.S. sanctions hit and spurring speculation over whether China will follow suit. It was only about four months ago that India’s foreign minister said that the country won’t adhere to unilateral restrictions and will continue buying Iranian crude.
India is joining other Asian buyers such as South Korea and Japan that have already halted imports from the Persian Gulf state before American restrictions take effect in early November.
It’s unclear if China, the world’s biggest oil importer as well as Iran’s top customer, will persist with purchases. However, China will cut back.
BP Plc Chief Executive Officer Bob Dudley sees the sanctions on the OPEC nation having a bigger impact on the market this time than the previous round of restrictions six years ago.
When Trump in May announced plans to reimpose sanctions on Iran’s oil exports, the market estimated a cut of about 300,000 to 700,000 barrels a day, Trafigura’s co-head of oil trading Ben Luckock said this week. However, the consensus has now moved to as much as 1.5 million barrels as the U.S. is “incredibly serious” about its measures, he said.Bloomberg
Since 17 May 2018, EURUSD has been trading below 1.1800. in fact, the market has attempted to recover above 1.1800 ten times in the last 4 months. Today is the FOMC's day and today the market will try a final attempt to turn the resistance of 1.1800 into support. It will greatly succeed where afterwards a test towards 50% Fibonacci level 1.1860 and 61.80% at 1.1990 should be in the record as long as no close below 1.1600 is triggered.
on Monday the Turkish currency suddenly tumbled in thin trading on what some attributed was a Reuters reports that Erdogan has asked authorities to scrutinize the board of a major local bank Isbank, with the president reportedly focusing on the role the main Turkish opposition party, the Republic People's Party (CHP) played on that board.
Separately, Bloomberg reported that in an attempt to aid Turkey's ailing banks, the government would unveil measures to help banks tackle the expected pile-up of bad loans resulting from the lira’s plunge and soaring interest rates. Specifically, the plan will seek "to mitigate the need for capital injections and propose carving out non-performing loans" which could be transferred into a state-designated "bad bank."
The plan will be unveiled on Thursday when Erdogan's son-in-law and Turkey's Treasury and Finance Minister Berat Albayrak, announces a medium-term economic program with fiscal and macroeconomic targets for the next three years.
Shares of Turkish banks rallied on the news. The plan, if confirmed, will be a welcome move for bank investors as even before the currency crisis worsened in August, Turkey’s banks - which recently dumped 20% of their gold to shore up liquidity - were struggling to deal with a pile-up of bad debt and restructurings.
The pound kicked off a big week for Brexit talks on an upbeat note, holding above $1.30 and nudging higher again after a dip on Friday. Sterling has been highly sensitive to the risks surrounding a no-deal Brexit in recent months, with a perceived increase in the chances of the UK crashing out of the EU without a deal in six months’ time one of the drivers behind a significant increase in bets against the currency during August.
Since the start of September, however, the British currency has climbed as investors have grown more confident a UK-EU agreement could be as little as eight weeks away. Recommended The Big Read Deal or no deal? May’s moment of truth on Brexit 4 hours ago There are signs leaders in Brussels believe a deal is possible — and quickly — but concerns linger it will not be ratified in the UK.
Ahead of a meeting with EU leaders in Salzburg this week, Theresa May has moved to bring wayward Tory Brexiters into line, and curb the ambitions of others — such as former foreign secretary Boris Johnson — ahead of the annual party conference.
The Conservative party leader has said in a BBC interview that MPs will have a choice between her deal, or no deal. Bearish bets against the currency declined in the week to September 11, according to an analysis of data from the US Commodity Futures Trading Commission by Goldman Sachs.
Non-commercial traders, or firms that speculate on the exchange rate, cut their net short positions in sterling by $0.6bn to $5bn overall. The move by hedge funds, which had been responsible for the extent of the negative sentiment against the pound, was even more pronounced, according to Goldman.
Leveraged funds reduced their net short positions in the pound by around $1.5bn — although they cut their short positions in euro by even more, nearly $3bn. At pixel time, the pound was trading up 0.15 per cent against the dollar on the day at $1.3084 and just under 0.1 per cent higher against the euro at €0.8888. FT
When Turkey's inflation rate surged to a 15 year-high of 18 per cent earlier this month, the country's central bank vowed to take action at its next rate-setting meeting. That meeting is today, and analysts don't have a clue what the bank will do.
Some believe Turkey could walk back its signals from last week and continue to buck economic orthodoxy by keeping its benchmark rate at 17.75 per cent. Others believe the central bank will go big and announce a 725bp hike, to a rate of 25 per cent. “The lesson of history is that CBRT builds expectations and then under delivers.”
When Turkey's central bank held off from raising interest rates in July, the lira slid dramatically against the dollar: the currency has lost roughly 40 per cent of its value this year. Given the substantial amount of dollar-denominated debt held on Turkish balance sheets, a devaluation of this magnitude makes repayment all the more expensive, so the central bank might hike rates this time around to stabilize the lira.
Much of the confusion about what Turkey's central bank will do stems from uncertainty about how much grip President Recep Tayyip Erdogan has on determining monetary policy.
Considering Erdogan just appointed himself the chairman of the country's $50bn sovereign wealth fund, and appointed his son-in-law turned Finance Minister as deputy, it would not be a complete surprise if the self-avowed “enemy of interest rates” prevails. FT
Equity indices across Europe are expected to open lower on Thursday morning ahead of several central bank meetings. Yesterday, White House said that it had invited Chinese officials to restart trade talks. As a result, the dollar struggled to make gains on Thursday while the Chinese yuan held gains.
In Europe, the focus seems to be on monetary policy with three meetings scheduled. The Bank of England and the European Central Bank are due to announce their latest decisions at lunchtime in Europe. Analysts are not expecting any changes in policy but will be monitoring the statements carefully.
In Turkey, the central bank is expected to increase interest rates to compensate for the depreciation of the Turkish lira.
Market players will also keep an eye on the U.K. government, with a cabinet meeting scheduled to take place Thursday morning. Prime Minister Theresa May is set to discuss the issue of a no-deal with the European Union over Brexit CNBC
Turkey’s construction boom has begun to unravel, threatening to deepen a currency crisis that has sent ripples through global markets and alarmed investors amid a broader emerging markets selloff.
Across Turkey, scores of construction projects have been canceled or frozen in recent months and dozens of companies are straining to pay their foreign-currency debts as the local currency weakens, according to investors and executives in the sector.
Many firms are now selling below construction costs as Turkey’s backlog of unsold houses has swelled to around two million, enough to cover four times average annual new sales.
“The construction sector in Turkey is sick, even on the verge of a coma,” said Tahir Tellioglu, chairman of the Building Contractors Confederation of Turkey, which has 120,000 member companies. “70% of all private construction work has stopped or slowed down.”
2008 has special significance for gold bugs, both because of the money they lost in August of that year and the money they made in the half-decade that followed. Today’s world is beginning to feel eerily similar.
In 2008 the periphery crisis spread to the core, threatening to kill the brand-name banks that had grown to dominate the US and Europe. The markets panicked, with even gold and silver (normally hedges against exactly this kind of financial crisis) plunging along with everything else. Gold lost about 20% of its market value in a single month. Silver also fell harder than gold, taking the gold/silver ratio from around 50 to above 80 — meaning that it took 80 ounces of silver to buy an ounce of gold.
The world’s governments reacted to the crisis by cutting interest rates to record lows and flooding the financial system with credit. And precious metals and related mining stocks took off on an epic bull market. So it’s easy to see why the investors thus enriched look back on 2008 with nostalgia.
Now fast forward to Autumn 2018. The global economy is booming because of artificially low interest rates and massive lending to all kinds of subprime borrowers. One group of them – the emerging market countries – made the mistake of borrowing trillions of US dollars in the hope that the greenback would keep falling versus their national currencies, thus giving them a profitable carry trade.
Instead the dollar is rising, threatening to bankrupt a growing list of these countries – which, crucially, owe their now unmanageable debts to US and European banks. The peripheral crisis, once again, is moving to the core.
And once again, gold and especially silver are getting whacked. This morning the gold/silver ratio popped back above the 2008 level.
So are we back there again? Maybe. Some of the big western banks would probably fail if several major emerging markets default on their debts. And historically – at least since the 1990s – the major central banks have responded to this kind of threat with lower rates, loan guarantees and, more recently, massive and coordinated financial asset purchases.
So watch the Fed. If the EM crisis leads to talk of suspending the rate increase program and possibly restarting QE, then we’re off to the races. Just like 2008.
A relatively new development in global oil markets has unfolded in recent months, one that has replaced another new development that also has the ability to also roil oil markets. Renewed concerns of a heightened trade war between Washington and Beijing are bringing more pressure on global oil markets than the impending removal of more than 1 million barrels per day (bpd) of Iranian oil due to fresh U.S. sanctions, ushering in two market movers that traders did not have to wrestle with just a few months ago. Iran is OPEC’s third largest crude oil producer.
President Trump will likely move ahead this week with more duties for Beijing, putting in place another $200 billion in tariffs on Chinese goods, Bloomberg reported on Friday, citing six people familiar with the matter. The move would mean that around 50 percent of Chinese exports to the U.S. would be subject to extra duties. Beijing, for its part, has threatened to retaliate with $60 billion worth of new duties on U.S. imports to China.
Trump has threatened to up the ante even more, stating recently that he’s ready to put new tariffs on all $505 billion worth of Chinese products imported to the U.S. The problem for China is manifold since it simply can't go toe to toe with the U.S. in a retaliatory tit-for-tat fashion since the U.S. imports nearly five times the dollar value in goods from China than China imports from the U.S. According to the U.S. Census Bureau, China imported only $129.9 billion in U.S. goods last year compared to some $505 billion the U.S. imported from China.
In short, while renewed sanctions against Iran, which kicked in last month, are largely factored into the price of oil, and more sanctions leveled directly against Iran’s energy sector to hit on November 4 seem to be already factored in, trade tensions and lower economic growth and weakened oil demand have yet to run their full course. When, and particularly, how trade tensions will end is anybody’s guess at this point.
A Goldman Sachs Group Inc. indicator designed to provide a “reasonable signal for future bear-market risk” has risen to the highest in almost 50 years. The firm’s Bull/Bear Index, which is based on measures of equity valuation, growth momentum, unemployment, inflation and the yield curve, is now at levels last seen in 1969. While the gauge is at levels that have historically preceded a bear market, Goldman strategists including Peter Oppenheimer wrote in a note last week that a long period of relatively low returns from stocks is a more likely alternative.
Bitcoin is down 68% from its peak, and is back where it was on October 31, 2017
Ethereum collapsed 86% from its peak and is back where it was over 15 months ago
Ripple XRP has collapsed by 92% from its peak on January 4, 2018, and is back where it had been over 15 months ago.
Bitcoin Cash has collapsed 89% from the peak to $469
EOS has collapsed 78% and is back where it had been on December 7
Stellar shot up in six weeks from about 3 cents to 86 cents by January 3, 2018, and has since collapsed 78% to 19 cents
Litecoin peaked on December 18, 2017, at $353 and has now plunged 85%
Of the nearly 2,000 cryptos, there are many that have become worthless and trading volume in them has died down. Even among the larger ones, there are plenty that have plunged 90% or more. In other words, most of that wealth has already vanished or was transferred to sellers who took that hated fiat money and laughed all the way to the hated bank. What remains is a mop-up operation that may drag out for a while, kept alive by some exciting but fleeting moments of hope.
Banks must now fund themselves with more equity and less debt. They depend less on trading to make money and on short-term wholesale borrowing to finance their activities. Even in Europe, where few banks make large profits, the system as a whole is stronger than it was. Regulators have beefed up their oversight, especially of the largest institutions that are too big to fail. On both sides of the Atlantic banks are subject to regular stress tests and must submit plans for their own orderly demise. Derivatives markets of the type that felled AIG, an insurer, are smaller and safer. Revamped pay policies should prevent a repeat of the injustice of bankers taking public money while pocketing huge pay-packets—in 2009 staff at the five biggest banks trousered $114bn.
While Emerging markets crisis has no end in sight, Argentina’s economy minister sounded upbeat on Wednesday about clinching a new deal with the International Monetary Fund after two days of talks in Washington, and said had sought U.S. support for securing approval from the IMF’s board.
The peso ARS=RASL closed 1.38 percent stronger at 38.52 per dollar on Wednesday, marking a rare pause in losses that have shaved more than 50 percent off its value this year, making it one of the worst performing emerging market currencies.
Economy Minister Nicolas Dujovne said he believed a deal to release early disbursements from a $50 billion standby loan agreement with the IMF could be put to its board by the end of the month, helping to shore up investor confidence in Latin America’s third-largest economy.
Argentina has already received $15 billion from the credit line, which was agreed upon in June but has failed to clear up concerns about the country’s ability to pay off its debt.
Dujovne denied a report by local Argentine media outlet Infobae that Argentina was also in talks with the U.S. Treasury Department for a $5 billion to $10 billion credit line. Dujovne said that while Argentine officials had not spoken about direct financing from the United States, he had spoken with U.S. Treasury Secretary Steven Mnuchin about backing Argentina’s bid to win the IMF’s approval for a new deal. The United States controls 16.52 percent of votes in the IMF, the largest of any country by far.
On the eve of the talks with the IMF this week, Macri’s government announced ambitious new targets to balance next year’s fiscal deficit, to be paid for with new taxes on exporters and steep spending cuts.
But markets remained skeptical, with the peso losing 5.25 percent of its value against the dollar in the first two days of the week, despite the central bank selling $458 million on the local spot market.
The next few months are going to be fun for pound traders.
The pound fell below $1.29 on Monday after U.K. Prime Minister Theresa May’s Brexit strategy came under attack from both Europe and her own party over the weekend. With each side warning of the risk of no deal, investors are becoming increasingly sensitive to Brexit headlines.
“What is quite hard for markets to work out is how much of this is political noise and how much of it is genuinely moving the probability of no deal,” said Mike Amey, a managing director at Pacific Investment Management Co., adding the fund is hedging risks by not having big sterling positions either way.
While market participants still see no deal as unlikely, the approaching endgame is a prospect that pushed a one-month options gauge of swings in the currency up by nearly 50 basis points on Monday to a three-week high above 8 percent. That came after comments last week by European Union Chief Negotiator Michel Barnier sent sterling up by 1 percent before falling back.
The headlines will keep on coming. U.K. Brexit Secretary Dominic Raab admitted that the October deadline for a deal may be pushed back, and there is increasing talk of an extra emergency U.K.-EU summit in November. U.K. lawmakers will return this week from a summer recess and any proposed Brexit deal would have to be voted on before the U.K. leaves the bloc in March.
This chart is dedicated to the weekly chart with the moving average of 20 and 50. The sell cross has coordinated a plummet of 22% on average. The latest pummel has reached only 10% and if history is of indication, the average of 22% should be executed targeting PAR & below.
With Nasdaq closing above 8,000 threshold, an unprecedented high, ForexSurvivor Trading Program – OCTOPUS – has called for closing all trading short, medium, and long term positions that started in 05 August 2017. The statement has procured 375% Return on Investment ROI within the assured twelve months (August 2017 – August 2018) and Investors will be released the 30% ROI as per contract-promised by September 2018.
The Turkish lira has effectively become untradeable.
The currency fell Friday as the prospects of further U.S. sanctions and downgrades by S&P Global Ratings and Moody’s Investors Service spurred uneasiness before Turkish markets close for a weeklong public holiday. As things stand, the fear is that there’s little investors can do to protect themselves from the turbulence.
Offshore investors with lira assets will be faced with a difficult question. Either to close their lira position, convert to dollars and exit, or to continue bearing lira risk. In the absence of an improvement in U.S.-Turkey relations or a credible economic program, we think the outflows will accelerate.
If the wire is very true that Qatar pledges to invest $15 Billion with its strategic ally Turkey, that means that Turkey has lost in a matter of few weeks over $30Billion when its currency was devalued harshly under a political plot.
On the other hand, the "enemy of my enemy is my friend," Germany’s chancellor Angela Merkel and Turkey’s President broke the diplomatic ice and during a phone call, Merkel said that the "Turkish economy's strength is important for Germany." They also discussed the current situation and agreed on a meeting between Treasury and Finance Minister Berat Albayrak and the German ministers of economy and finance.
Today, Erdogan is set to speak with France’s President, Emmanuel Macron.
Will call the rescue effective once USDTRY is set to close below 5.00. Technically, a bounce is expected to meet 6.6.
Indian Oil Corp, the biggest refiner in India, has purchased a total of 6 million barrels of U.S. crude oil for delivery between November and January, as it has started to look for a replacement of Iranian oil cargoes ahead of the U.S. sanctions on Iran’s oil exports returning in early November.
Iran is said to have started to offer India cargo insurance and tankers operated by Iranian companies as some Indian insurers have refused to cover oil cargoes from Iran in the face of the returning U.S. sanctions on Tehran.
Hindustan Petroleum was said to have cancelled a crude oil shipment from Iran after its insurer refused to provide coverage for the cargo on concern about U.S. sanctions.
India’s imports from Iran could start to slow from August as some big Indian refiners worry that their access to the U.S. financial system could be cut off if they continue to import Iranian oil, prompting them to reduce oil purchases from Tehran.
The immediate sanctions coming into force are limited to banning exports of US electronics to Russia. But it’s what comes next that is perplexing. Washington is saying that if Russia does not give a “guarantee” on halting the future use of chemical weapons, and if Moscow does not allow international inspectors into its country to monitor alleged chemical weapons – then the second wave of sanctions will be applied within 90 days.
The subsequent round of sanctions include banning Russian state-owned airline, Aeroflot, from operating flights to the US. The impossibility of Russia meeting Washington’s absurd demands make the further application of sanctions inevitable.
A separate bill is passing through Congress which is planning to hit the Russian banking system, aimed at preventing international transactions.
Senators sponsoring that bill have labeled it “the sanctions bill from hell”. The title of the proposed legislation says it all: “Defending American Society From Russian Aggression Act”. Senators John McCain, Lindsey Graham, Robert Menendez and Ben Cardin, among other Russophobes who are pushing the bill, are explicit about the objective. They say the measures implemented will “crush the Kremlin”.
The chances are paltry that President Trump will use his executive power to block the forthcoming sanctions. The political climate in the US among the intelligence agencies, lawmakers and the mainstream media has become saturated with anti-Russian hysteria. The US is an oligarchy in throes of insanity beyond democratic accountable to its people.
Already this week’s announcement of more offensive economic incursions on Russia sent the Russian economy plummeting. The ruble, bonds and stocks all nosedived. This is an attack on Russia’s vital interests. An economic Barbarossa.
For Washington this seems to be open season for sanctions. It’s not just Russia and Iran on the receiving end. China, Canada, the European Union, Turkey, Venezuela, North Korea, among others, are also being battered with American economic warfare, either under the name of “sanctions” or indirectly using the rhetoric of “tariffs”.
From the conflict in Ukraine, to the alleged annexation of Crimea, to Moscow’s principled support for Syria being traduced as “supporting a dictator”, to alleged “meddling in US elections”, and much more, Russia has shown huge reserves of stoicism and self-discipline in tolerating what can only be called gratuitous American aggression.
The crazed American rulers are pushing the world to the brink by their belligerence. Washington has heretofore given notice that it is not interested in diplomacy, dialogue, or negotiation. It only has one mode of conduct – war, war, war.
Some of Wall Street’s biggest banks are warning investors to steer clear of Russian assets after the ruble’s worst week since the 2015 oil crash amid mounting risks of crippling sanctions from the U.S.
Both Republicans and Democrats in Congress have called for tough measures against Russia in the wake of last month’s summit between President Donald Trump and his counterpart Vladimir Putin. Still, the outlook for passage of the bill submitted last week remains uncertain, particularly since the U.S. Treasury warned that sanctioning sovereign debt could cause instability in global markets.
The U.S. is more likely to apply sanctions selectively to avoid “collateral damage” than to pass the bill in full. Pressure on Russia, however, is only likely to rise further in the near term, he said in a note.
Reduce holdings of Russian assets because the tail risk from potential sanctions is “just too large.” High foreign ownership of Russian sovereign debt means that sanctions would have a big impact on bond yields.
However, No decision can be taken on the bill until the House returns from summer recess next month, leaving a cloud of uncertainty over markets until then.
The lira tumbled as much as 11 percent against the dollar in thin trading in Asia, before trimming losses after the nation’s Banking Regulation and Supervision Agency stepped in to limit swap transactions on the battered currency.
Turkey will announce measures to calm markets on Monday, according to Treasury and Finance Minister Berat Albayrak. On The other side, Turkey’s friction with the U.S. is weighing on the lira, and is unlikely to improve anytime soon.
The drivers of the lira’s decline are very specific to Turkey – therefore it should not derail the positive fundamentals in other emerging markets over a longer-term.
Goldman Sachs warned 10 days ago that further lira depreciation to 7.1 would erode all of Turkey's banks' excess capital.
Don't forget though, as Erdogan said earlier in the day, "they have dollars, we have god." Good luck buying a mocchachino with some 'gods.'
This is a textbook currency crisis that’s morphing into a debt and liquidity crisis due to policy mistakes. The way things are going, markets need to be prepared for a hard landing in the economy, corporate defaults on foreign currency debt, and possible bank failures.
Erdogan is left with three options: 1) Hike rates (he said he wouldn't), 2) Enforce Capital Controls (he said he wouldn't), and 3) Confiscate Gold/Dollars (he never said he wouldn't).
Be wary: It is yet another evidence of the train wreck that monetarists cause in economies. Those that say that “a country with monetary sovereignty can issue all the currency it wants without risk of default ” are wrong yet again. Like in Argentina, Brazil, Iran, Venezuela, monetary sovereignty means nothing without strong fundamentals to back the currency. Turkey’s lenders and governments made the same incorrect bet that Argentina or Brazil made. Betting on a constantly weakening US dollar and that the Federal Reserve would not raise rates as announced. They were -obviously wrong.
Raising rates to 18% does not encourage anyone in Turkey to keep money in the bank when the risk is to lose all the money. Rates went from 8 to 17.5% and the crisis worsened. It will not stop because of slightly higher rates.
The dollar has literally become the atomic bomb that no one else has. Disobey and sanctions would be unleashed so economy explodes. The pain in the Emerging Market Currencies has started to feel the hell - China‘s Yuan, Argentine Peso, Turkish Lira, Iran Rial, and now Russia Ruble.
Between the pessimism notions of “Black Friday” and the number “13,” banks in Turkey will start a collapse mode similar to the oldish financial crisis saga of “Too Big To Fail” of 2008.
The Turkish lira hit a fresh record low amid a souring of diplomatic relations with the U.S. Traders sought out traditional havens in U.S. Treasuries and the yen. Turkish investors are looking to President Recep Tayyip Erdogan his son-in-law, Treasury and Finance Minister Berat Albayrak to calm their nerves when they speak Friday for the first time since the latest selloff began.
The government set a growth target of less than 4 percent, down from 5.5 percent on Thursday, a sign that authorities were taking whack at fixing the $880 billion economy’s vulnerabilities since a market meltdown sparked by last week’s U.S. sanctions. Yet the move has proved inadequate to temper investors unease.
Let’s not forget the Turkish central bank has a 5 percent inflation target and has not met it over the past decade.
Early Friday Erdogan called on Turks not to panic, according to state-run Anadolu Agency. “Don’t forget this: if they have got dollars, we have got our people, our right, our Allah,” he was cited as saying.
USDTRY TARGET REMAINS AT 10 WITH NO SINGLE INCH OF AMENDING
Watchdog doesn’t see the situation as critical yet: The European Central Bank has grown concerned about the exposure of some euro zone banks to Turkey following the lira’s plunge, the Financial Times reported. Banco Bilbao Vizcaya Argentaria SA, UniCredit SpA and BNP Paribas SA are particularly exposed after the Turkish currency lost more than a third of its value this year. The risk is that Turkish borrowers may not be hedged against the lira’s weakness and could start to default on foreign-currency loans.
After its worst day in 10 years, the Turkish Lira's early rebound is already starting to fade amid denied rumors of US officials predicting Lira's demise, a record high yield at its bond auction, and Goldman warning of the collapse of Turkey's financial system
Turkey's 10Y bond yield topped 20% for the first time ever and Turkey's Treasury sold 539.7 million liras of 5Y debt today at 22.1% compound yield.
With tensions remaining high, the U.S. Embassy in Turkey has denied news in Turkish media that a U.S. official predicted the lira would weaken to 7 per dollar, calling the claim an entirely baseless "lie."
Goldman Sachs warns that further lira depreciation to 7.1 would erode all of Turkey's banks' excess capital.
Within the current backdrop, we view banks as being vulnerable to Turkish Lira depreciation given that it impacts:
(1) capital levels due to a meaningful portion of FC assets, which increase RWAs in local currency terms on Turkish Lira depreciation,
(2) asset quality and cost of risk, as Turkish Lira volatility can put stress on borrowers’ ability to repay as well as underlying collateral values. Moreover, Lira depreciation leads to higher provisioning requirements for FC NPLs, though banks are hedging this risk and can offset the impact through trading income.
The authoritative tone of Canada towards Saudi Arabia is rejected by Russia, adding that the Kingdom had the full sovereign right to manage its own affairs.
The Saudis have escalated their fury towards Trudeau's "progressive" propaganda. Having expelled the Canadian ambassador, froze new trade and investment with the G7 member, suspended a student exchange program and halted Saudi Arabian Airlines flights to Canada, the Saudis are stepping up their pressure very directly.
The FT reports that the Saudi central bank and state pension funds have instructed their overseas asset managers to dispose of their Canadian equities, bonds and cash holdings “no matter the cost.”
Third-party managers are estimated to be mandated to invest more than $100bn of Saudi funds in global markets, executives say. While the proportion of that figure invested in Canadian holdings would be “fairly small in absolute terms,” the asset sale sent a strong message, one of the people said.
The sell-off began on Tuesday and underlines how the Gulf monarchy is flexing its financial and political muscle to warn foreign powers against what it regards as interference in its sovereign affairs. “This is severe stuff,” said one banker.
New Turmoil: Russia,
The ruble tumbled, sliding to the lowest level since November 2016, Russian CDS blew out and Russian stock and bond markets plunged after Russian Kommersant newspaper published the full text of the US bill which seeks to impose "crushing sanctions" on Moscow for election meddling.
The ruble dropped more than 2%, sliding as low as 65 per dollar, and breaking out of a range it’s traded in since April, after traders had a chance to read the full text of the sanctions draft introduced last week by a bipartisan group of legislators.
The liquidation panic set in after it was revealed that the bill includes proposals to sanction new sovereign debt and banking transactions, effectively a repeat of the US sanctions imposed on Russia in 2014 following the Ukraine coup, which sent the Ruble plunging from the mid-30s to below 70 in the span of a few months.
As Bloomberg notes, traders are particularly concerned by a clause that calls for prohibiting "all transactions in all property and interests in property" of some of the country’s largest lenders. The listed banks, Sberbank, VTB Bank, Gazprombank, Promsvyazbank, Rosselkhozbank and Vnesheconombank all saw their stocks tumble in response.
“Sanctions will remain a risk, so we have had a cautious stance particularly in the corporate space," said Shamaila Khan, who holds Russian bonds as a director of emerging-market debt at AllianceBernstein in New York. "Sanctioning sovereign debt will be a last resort and corporate debt and individuals are a more likely target."
The State Department said the sanctions tied to the use of chemical weapons are expected to take effect around August 22. A second round of sanctions will be imposed later unless Russia meets conditions including providing assurances it will no longer use chemical or biological weapons.
No action will be taken on the draft until the House is back from summer recess in September, leaving room for more market jitters through the end of the month. But with President Donald Trump calling for closer ties with Russia, and the U.S. Treasury warning earlier this year against sanctioning the sovereign debt market, it’s uncertain the bill will make it into law.
"Russia continues to become more and more isolated and the ruble will continue to weaken. Capital flight will accelerate. That’s generally negative for asset prices"
The Turkish lira pared its decline against the dollar after inflation accelerated less than forecast in July.
Government bonds also trimmed losses after consumer prices rose an annual 15.9 percent in July compared with the median economist forecast of 16.3 percent in a Bloomberg survey. The currency had earlier slumped to a record low as investors remained on edge over tensions with the U.S.
The data brings some relief to Turkish markets that have been hit by U.S. sanctions on two government ministers over a detained American pastor and concerns about the central bank’s willingness to tackle inflation that is three times its target. Still, the fourth month of accelerating inflation has eroded the real policy rate to less than 2 percent and leaves Turkish assets particularly exposed to a shift in investor sentiment given the economy’s large external financing needs.
“This number is not going to let the central bank off the hook. The pressure is still on. The central bank and Treasury and Finance Minister Berat Albayrak “need to wake up and quickly to roll out some credible policy responses.”
The lira climbed as much as 0.1 percent after earlier touching an all-time low of 5.1146 per dollar. The currency was down 0.2 percent at 5.0782 per greenback as of 11:41 a.m. Istanbul time. The yield on 10-year government bonds fell as much as 9 basis points after the inflation numbers before rising 4 basis points to 19.08 percent.
The central bank is scheduled to next meet on Sept. 13. Policy makers unexpectedly left rates on hold last week, saying the economy was slowing, and it wanted to see the impact of 500 basis points of hikes since April. But many investors worry that it acted too late to contain a more than 25 percent slide in the lira his year, and that it is coming under from President Recep Tayyip Erdogan not to raise borrowing costs further.
The bank obviously does not have the courage to stand up to politicians and pursue a more restrictive policy.
Gold’s appeal has waned, even amid ongoing trade-war tensions, partly because of an upbeat outlook on the U.S. economy that’s strengthened the dollar.
While gold is traditionally viewed as a haven in times of uncertainty, U.S. tax cuts and the Federal Reserve’s guidance for more interest-rate hikes has made the dollar an attractive alternative. There are other signs of investors getting out of gold -- holdings in exchange-traded funds are at a four-month low and money managers are holding their biggest bearish bet on record.
Gold has not confirmed a bottom yet and the low seems far from expectations.
AUDUSD has consolidated for a whole month within 150 pips signifying trend continuation: downward.
Sterling may revive a bit and the upbeat will sound like a dead cat bounce. Low is yet to be sealed.
EURUSD has managed charting a descending triangle along with a thin trading in July – quite an impressive wave ahead targeting 1.1200 when technical confirmation below 1.1530 is alarmed.
Have a Happy Holidays and be careful of thin trading in August
ForexSurvivor Policy Course
Mapped By Predecessor
i. The market is full of fat tail risks that are impossible to predict and can shift market fundamentals without warning.
ii. Markets can remain irrational a lot longer than traders can remain solvent.
iii. Unless we get some sort of new action, volatility isn't likely to spike out of whack.
iv. A hedge fund manager makes a series of lucrative trades based on research from analysts at his firm and conversations with industry consultants. Some of those consultants have access to nonpublic information, but the manager doesn't trade on just a single thread of data. Instead, he culls together various tidbits of information from every nook and cranny of the market to stitch together a picture of a company.
v. There's an old market adage that says it's those quiet, unassuming price trends which are the ones most likely to continue.
vi. If you are inclined to enjoy puzzles, numbers, finance, economics, business, mathematics, science, psychology, and statistics, the market will be a most enjoyable space to thrive.
vii. Charts illustrate the pendulum swing between supply and demand, and the fight between buyers and sellers. The SLOPE is the master and commander of the trade, and Fibs are the checkpoints to either lighten or increase the trade size known as load.
viii. Silver lining known as Safe haven is defined as a currency, stock or commodity favored by investors in times of crisis because of its stability and/or easy liquidation, generally have lower returns.
CAD International Securities Transactions (Canadian dollar) (AUG) - 16 Oct 2018
The difference between imports and exports of goods. Merchandise Trade differentiates itself from Trade Balance because it does not record intangibles like services, only reporting on physical goods. Because exports of tangibles like oil, gold and manufacturing contribute to a large part of Canada 's GDP, trade data can give critical insight into developments in the economy and into foreign exchange rates. Negative International Merchandise Trade (deficit) indicates that imports of goods are greater than exports. When exports are greater than imports, Canada experiences a trade surplus. Trade surpluses indicate that funds are coming into Canada in exchange for exported goods. Because such exported goods are usually purchased with Canadian dollars, trade surpluses usually reflect currency flowing into Canada, such currency inflows may lead to a natural appreciation of a the Canadian dollar, unless countered by similar capital outflows (Canadian International Securities Transactions tracks such capital flows). At a bare minimum, surpluses will buoy the value of the currency. There are a number of factors that work to diminish the market impact of Canadian Merchandise Trade on markets. The report is not very timely, released about three months after the reporting quarter. Developments in many of the components that comprise the figure are also usually well anticipated. Lastly, since the report reflect data for a specific reporting quarter, any significant changes in the Merchandise Trade should plausibly have been already felt during that quarter and not during the release of data. But because of the overall significance of Trade on Foreign Exchange Rates, the figure has a history of being one of the more important reports out of Canada . The headline figure for trade balance is expressed in millions of Canadian dollars and usually accompanied by a year-on-year percentage change figure
The difference between imports and exports of goods. Merchandise Trade differentiates itself from Trade Balance because it does not record intangibles like services, only reporting on physical goods. Because exports of tangibles like oil, gold and manufacturing contribute to a large part of Canada 's GDP, trade data can give critical insight into developments in the economy and into foreign exchange rates.
Negative International Merchandise Trade (deficit) indicates that imports of goods are greater than exports. When exports are greater than imports, Canada experiences a trade surplus. Trade surpluses indicate that funds are coming into Canada in exchange for exported goods. Because such exported goods are usually purchased with Canadian dollars, trade surpluses usually reflect currency flowing into Canada, such currency inflows may lead to a natural appreciation of a the Canadian dollar, unless countered by similar capital outflows (Canadian International Securities Transactions tracks such capital flows). At a bare minimum, surpluses will buoy the value of the currency. There are a number of factors that work to diminish the market impact of Canadian Merchandise Trade on markets. The report is not very timely, released about three months after the reporting quarter. Developments in many of the components that comprise the figure are also usually well anticipated. Lastly, since the report reflect data for a specific reporting quarter, any significant changes in the Merchandise Trade should plausibly have been already felt during that quarter and not during the release of data. But because of the overall significance of Trade on Foreign Exchange Rates, the figure has a history of being one of the more important reports out of Canada . The headline figure for trade balance is expressed in millions of Canadian dollars and usually accompanied by a year-on-year percentage change figure