Overview: Global equities are bleeding lower. Several large markets in the Asia Pacific region, including Hong Kong, Taiwan, and India are off more than 2%. Japan and Australian bourses fell by more than 1.5%. Europe's Stoxx 600 is off more than 2% and giving back the gains recorded in the past two sessions plus some. US futures are extending yesterday's loses. The sharp sell-off of equities has given the sovereign bond market a strong bid. The 10-year US Treasury yield that had approached 3.20% on Monday has tumbled to 2.81% today. The 2-year yield had approached 2.75% yesterday after the disappointing CPI report. It is now around 2.57%. European 10-year benchmark yields are 10-14 bp lower. The dollar is flying, except against the Japanese yen. The Antipodeans and Norwegian krone are getting tagged more than 1% today. The euro and sterling have been sold to new lows. Emerging market currencies are a sea of red too. Hungary, which kept its one-week deposit unchanged, has seen the biggest hit, off almost 1.5% today, while the Chinese yuan is off by slightly more than 1%, which is a large move for it. The Hong Kong Monetary Authority intervened to defend its peg for the first time in three years. Gold is heavy, after recovering from a three-month low yesterday near $1832. It is hovering a little below $1850 near midday in Europe. June WTI is trading with a lower bias ahead of the OPEC and IEA reports. US natgas is off almost 3% after gaining more than 8.5% over the past two sessions. Disruptions of Russian gas to Ukraine has seen Europe's benchmark jump by more than 13% today. Iron ore, which snapped a three-day slide yesterday with a 4.2% jump is off nearly 5% today. Similarly, June copper rose for the first time in five sessions yesterday. However, today's 3.6% plunge more than offset yesterday's 1.3% gain. July wheat prices are little changed ahead of the US World Agriculture Supply and Demand Estimate report. Asia Pacific China's fourth largest property developer, Sunac, has defaulted on a dollar bond, according to reports, adding to the angst emanating from Beijing. New Covid cases in Shanghai means the lockdown will continue. The restrictions are estimated to cover around a third of the country's GDP. A PBOC indicated that it is guiding rates lower. The benchmark 1-year medium-term lending rate may be set on Monday. It stands at 2.85%. The market was disappointed that there was no reduction last month and does not want to be bit by the same dog twice and most look for it to be unchanged. Next week Chinese officials will meet with tech companies and there is hope that the crackdown will end. Japan is suffering from a terms-of-trade shock as the prices of imports have soared compared with exports. However, the broader measure, the current account surplus swelled in March to JPY2.55 trillion from JPY1.65 trillion and well above expectations (median forecast in Bloomberg's survey was JPY1.75 trillion. The key, as we have argued, is the primary income, which is the return on past investment, such as interest, dividends, re-invested earnings, royalties, and licensing fees. The weakness of the yen boosts the value of these foreign earnings. On balance-of-payment terms, Japan recorded a trade deficit of JPY166 bln, a little smaller than in February but larger than expected. Japanese figures which do not always jive with the US Treasury data, showed Japanese investors were sellers of JPY2.9 trillion of US government bonds in March, the sixth consecutive month this time series has recorded sales. Canadian, British, German, and Italian bonds were also sold in March. Japanese investors looked kinder toward Australian, French, and Dutch bonds. The continued drop in US Treasury yields has seen the dollar slump against the Japanese yen. The greenback has been sold to new lows for the month near JPY128.40. It has broken the 20-day moving average (~JPY129) for the first time since early March. A break of the JPY128.30 area could signal a move toward JPY127.00. The Australian dollar has broken down and is trading at new lows since mid-2020, pushing below $0.6900. After rising to around $0.7055 yesterday, the Aussie reversed sharply lower and settled near $0.6940. The next significant chart area is closer to $0.6760, which corresponds to the (50%) retracement of the gains from March 2020 low around $0.5500. The greenback rose to almost CNY6.79 as it broke higher out of the consolidative phase seen earlier this week. It is the strongest level of the US dollar since last October. We suggest the next target is around CNY6.82. For the eighth consecutive session, the PBOC set the dollar's reference rate lower than expected (Bloomberg survey). The fix was at CNY6.7292, while the market anticipated CNY6.7341. Given that the greenback is allowed...

Overview: Global equities are bleeding lower. Several large markets in the Asia Pacific region, including Hong Kong, Taiwan, and India are off more than 2%. Japan and Australian bourses fell by more than 1.5%. Europe's Stoxx 600 is off more than 2% and giving back the gains recorded in the past two sessions plus some. US futures are extending yesterday's loses. The sharp sell-off of equities has given the sovereign bond market a strong bid. The 10-year US Treasury yield that had approached 3.20% on Monday has tumbled to 2.81% today. The 2-year yield had approached 2.75% yesterday after the disappointing CPI report. It is now around 2.57%. European 10-year benchmark yields are 10-14 bp lower. The dollar is flying, except against the Japanese yen. The Antipodeans and Norwegian krone are getting tagged more than 1% today. The euro and sterling have been sold to new lows. Emerging market currencies are a sea of red too. Hungary, which kept its one-week deposit unchanged, has seen the biggest hit, off almost 1.5% today, while the Chinese yuan is off by slightly more than 1%, which is a large move for it. The Hong Kong Monetary Authority intervened to defend its peg for the first time in three years. Gold is heavy, after recovering from a three-month low yesterday near $1832. It is hovering a little below $1850 near midday in Europe. June WTI is trading with a lower bias ahead of the OPEC and IEA reports. US natgas is off almost 3% after gaining more than 8.5% over the past two sessions. Disruptions of Russian gas to Ukraine has seen Europe's benchmark jump by more than 13% today. Iron ore, which snapped a three-day slide yesterday with a 4.2% jump is off nearly 5% today. Similarly, June copper rose for the first time in five sessions yesterday. However, today's 3.6% plunge more than offset yesterday's 1.3% gain. July wheat prices are little changed ahead of the US World Agriculture Supply and Demand Estimate report. Asia Pacific China's fourth largest property developer, Sunac, has defaulted on a dollar bond, according to reports, adding to the angst emanating from Beijing. New Covid cases in Shanghai means the lockdown will continue. The restrictions are estimated to cover around a third of the country's GDP. A PBOC indicated that it is guiding rates lower. The benchmark 1-year medium-term lending rate may be set on Monday. It stands at 2.85%. The market was disappointed that there was no reduction last month and does not want to be bit by the same dog twice and most look for it to be unchanged. Next week Chinese officials will meet with tech companies and there is hope that the crackdown will end. Japan is suffering from a terms-of-trade shock as the prices of imports have soared compared with exports. However, the broader measure, the current account surplus swelled in March to JPY2.55 trillion from JPY1.65 trillion and well above expectations (median forecast in Bloomberg's survey was JPY1.75 trillion. The key, as we have argued, is the primary income, which is the return on past investment, such as interest, dividends, re-invested earnings, royalties, and licensing fees. The weakness of the yen boosts the value of these foreign earnings. On balance-of-payment terms, Japan recorded a trade deficit of JPY166 bln, a little smaller than in February but larger than expected. Japanese figures which do not always jive with the US Treasury data, showed Japanese investors were sellers of JPY2.9 trillion of US government bonds in March, the sixth consecutive month this time series has recorded sales. Canadian, British, German, and Italian bonds were also sold in March. Japanese investors looked kinder toward Australian, French, and Dutch bonds. The continued drop in US Treasury yields has seen the dollar slump against the Japanese yen. The greenback has been sold to new lows for the month near JPY128.40. It has broken the 20-day moving average (~JPY129) for the first time since early March. A break of the JPY128.30 area could signal a move toward JPY127.00. The Australian dollar has broken down and is trading at new lows since mid-2020, pushing below $0.6900. After rising to around $0.7055 yesterday, the Aussie reversed sharply lower and settled near $0.6940. The next significant chart area is closer to $0.6760, which corresponds to the (50%) retracement of the gains from March 2020 low around $0.5500. The greenback rose to almost CNY6.79 as it broke higher out of the consolidative phase seen earlier this week. It is the strongest level of the US dollar since last October. We suggest the next target is around CNY6.82. For the eighth consecutive session, the PBOC set the dollar's reference rate lower than expected (Bloomberg survey). The fix was at CNY6.7292, while the market anticipated CNY6.7341. Given that the greenback is allowed...

Overview: Global equities are bleeding lower. Several large markets in the Asia Pacific region, including Hong Kong, Taiwan, and India are off more than 2%. Japan and Australian bourses fell by more than 1.5%. Europe's Stoxx 600 is off more than 2% and giving back the gains recorded in the past two sessions plus some. US futures are extending yesterday's loses. The sharp sell-off of equities has given the sovereign bond market a strong bid. The 10-year US Treasury yield that had approached 3.20% on Monday has tumbled to 2.81% today. The 2-year yield had approached 2.75% yesterday after the disappointing CPI report. It is now around 2.57%. European 10-year benchmark yields are 10-14 bp lower. The dollar is flying, except against the Japanese yen. The Antipodeans and Norwegian krone are getting tagged more than 1% today. The euro and sterling have been sold to new lows. Emerging market currencies are a sea of red too. Hungary, which kept its one-week deposit unchanged, has seen the biggest hit, off almost 1.5% today, while the Chinese yuan is off by slightly more than 1%, which is a large move for it. The Hong Kong Monetary Authority intervened to defend its peg for the first time in three years. Gold is heavy, after recovering from a three-month low yesterday near $1832. It is hovering a little below $1850 near midday in Europe. June WTI is trading with a lower bias ahead of the OPEC and IEA reports. US natgas is off almost 3% after gaining more than 8.5% over the past two sessions. Disruptions of Russian gas to Ukraine has seen Europe's benchmark jump by more than 13% today. Iron ore, which snapped a three-day slide yesterday with a 4.2% jump is off nearly 5% today. Similarly, June copper rose for the first time in five sessions yesterday. However, today's 3.6% plunge more than offset yesterday's 1.3% gain. July wheat prices are little changed ahead of the US World Agriculture Supply and Demand Estimate report. Asia Pacific China's fourth largest property developer, Sunac, has defaulted on a dollar bond, according to reports, adding to the angst emanating from Beijing. New Covid cases in Shanghai means the lockdown will continue. The restrictions are estimated to cover around a third of the country's GDP. A PBOC indicated that it is guiding rates lower. The benchmark 1-year medium-term lending rate may be set on Monday. It stands at 2.85%. The market was disappointed that there was no reduction last month and does not want to be bit by the same dog twice and most look for it to be unchanged. Next week Chinese officials will meet with tech companies and there is hope that the crackdown will end. Japan is suffering from a terms-of-trade shock as the prices of imports have soared compared with exports. However, the broader measure, the current account surplus swelled in March to JPY2.55 trillion from JPY1.65 trillion and well above expectations (median forecast in Bloomberg's survey was JPY1.75 trillion. The key, as we have argued, is the primary income, which is the return on past investment, such as interest, dividends, re-invested earnings, royalties, and licensing fees. The weakness of the yen boosts the value of these foreign earnings. On balance-of-payment terms, Japan recorded a trade deficit of JPY166 bln, a little smaller than in February but larger than expected. Japanese figures which do not always jive with the US Treasury data, showed Japanese investors were sellers of JPY2.9 trillion of US government bonds in March, the sixth consecutive month this time series has recorded sales. Canadian, British, German, and Italian bonds were also sold in March. Japanese investors looked kinder toward Australian, French, and Dutch bonds. The continued drop in US Treasury yields has seen the dollar slump against the Japanese yen. The greenback has been sold to new lows for the month near JPY128.40. It has broken the 20-day moving average (~JPY129) for the first time since early March. A break of the JPY128.30 area could signal a move toward JPY127.00. The Australian dollar has broken down and is trading at new lows since mid-2020, pushing below $0.6900. After rising to around $0.7055 yesterday, the Aussie reversed sharply lower and settled near $0.6940. The next significant chart area is closer to $0.6760, which corresponds to the (50%) retracement of the gains from March 2020 low around $0.5500. The greenback rose to almost CNY6.79 as it broke higher out of the consolidative phase seen earlier this week. It is the strongest level of the US dollar since last October. We suggest the next target is around CNY6.82. For the eighth consecutive session, the PBOC set the dollar's reference rate lower than expected (Bloomberg survey). The fix was at CNY6.7292, while the market anticipated CNY6.7341. Given that the greenback is allowed...

The USDX and the precious metals market are like reverse images. Thus, it's possible to guess what gold and silver will do as the dollar gallops up. Miners and silver declined in a truly epic manner, and yes, the same is likely to take place in the following months, as markets wake up to the reality, which is that the USD Index and real interest rates are going up. Speaking of the USD Index, after invalidating the breakout below the multi-year head-and-shoulders pattern, the USDX was poised to soar, just like I’ve been expecting it to do for more than a year, and that’s exactly what it did. The RSI is currently above 70, but since the USDX is in a medium-term rally and is already after a visible correction, it can rally further. Please note that we saw the same thing in 2008 and 2014. I marked the corrections with blue rectangles. Still, the USD Index is now practically right at its next strong resistance – at about 104. I previously wrote the following about this target: It doesn’t mean that the USD Index’s rally is likely to end there. It’s not – but the USDX could take a breather when it reaches 104. Then, after many investors think that the top has been reached as the USDX corrects, the big rally is likely to continue. The important detail here is that the consolidation close to the 104 level doesn’t have to be really significant (perhaps 1-2 index points of back-and-forth movement?) and it definitely doesn’t have to take long. The interest rates are going higher, and investors appear to have just woken up to this reality – it will take some time before everyone digests what’s going on. Before the late-reality-adopters join in, the USD Index could be trading much, much higher. Back in 2014, when the USD Index approached its previous highs (close to 89), it consolidated so quickly that it’s almost not visible on the above chart – it took just a bit more than a week (from Dec. 8, 2014 – 89.56 to Dec. 16, 2014 – 87.83). I previously wrote the following: We could see something similar this time – and as the USD Index corrects for about a week, the same thing could take place in other markets as well: stocks and PMs. If junior miners were after a very sharp slide at that time, they would be likely to correct sharply as well. I would like to add one important detail. Back in 2014, the USD Index didn’t correct after reaching its previous high. It corrected after moving above it. The higher of the highs was the March 2009 high, at 89.11. The higher of the recent highs is at 103.96 right now, so if the analogy to 2014 is to remain intact, the USD Index could now top at close to 104.5 or even 105. That’s exactly what happened recently. Yesterday, the USD Index moved to 104.96, which is in perfect tune with what I wrote above. Consequently, it seems that we could now see a move to about 103-103.5, after which USD’s rally could continue. The opposite is likely to take place in the precious metals sector. Gold, silver, and mining stocks are likely to rally in the near term, and then – after topping at higher levels – their decline would continue. Want free follow-ups to the above article and details not available to 99%+ investors? Sign up to our free newsletter today!

In this technical blog we’re going to take a quick look at the Elliott Wave charts of NZDUSD forex pair. As our members know, the pair shows bearish sequences in the cycle from the February 2021 peak. The pair has made 3 waves bounce recently, that has reached our selling zone and gave us good trading opportunities. In the further text we are going to explain the Elliott Wave Forecast and the trading strategy. NZD/USD H1 Elliott Wave Analysis 05.11.2022 NZDUSD is correcting the cycle from the 0.65682 peak. Recovery has already reached blue box at 0.63552-0.64021 area to complete 2 red recovery. We recommended members to avoid buying the pair while we’re favoring the short side from the blue box. Strategy is selling the pair at the marked zone. Invalidation for the trade would be break above 1.618 fibs extension: 0.64021. As the main trend is bearish we expect sellers to appear at the blue box for 3 waves pull back at least. Once pull back reaches 50 Fibs against the ((b)) black low, we will make short position risk free ( put SL at BE) and take partial profits. As our members know Blue Boxes are no enemy areas , giving us 85% chance to get a reaction. NZD/USD H1 Elliott Wave Analysis 05.12.2022 The pair found sellers at the blue box area: 0.63552-0.64021 and made turn lower from there. As a result , members who took short trades made positions risk free ( Put SL at BE) and took partial profits. We got a break toward new lows which makes the pair bearish against the 0.63802 peak in first degree. At this stage we see wave 2 red completed at the 0.6380 high. While mentioned pivot holds, the pair can keep finding intraday sellers in 3,7,11 swings for a further extension down.

It’s going to be a full-on week for economic indicators with a barrage of data due that should keep the guessing game going on how much central banks will tighten this year. Australia and the UK report jobs numbers, the latter will also release CPI readings along with Canada and Japan. Retail sales will be watched in the UK and US, as well as in China, while the Q1 GDP estimate will be important in Japan.