Daily Market Analysis and News From NordFX

[Stan NordFX]

Forex and Cryptocurrencies Forecast for November 28 - December 02, 2022​

EUR/USD: FOMC Protocol Dropped the Dollar

Last week ended quietly: the US celebrated Thanksgiving. But its first part was marked by the weakening of the dollar, as a result of which EUR/USD rose by more than 200 points, from 1.0222 to 1.0448. It has risen above its 200-day moving average (SMA) for the first time in 17 months, since June 16, 2021.

The reason for this behavior of the US currency was the forecasts regarding the future policy of the US Federal Reserve. Market participants expect the regulator to slow down the rate of interest rate hikes significantly. And the minutes of the November meeting of the FOMC (Federal Open Market Committee), published on November 23, confirmed the validity of such expectations.

They state that “Some of the Fed's leaders have observed that monetary policy has reached a point where it is sufficiently restrictive to meet FOMC targets and it would be appropriate to slow down the rate hike. The vast majority of participants in the meeting considered that a slowdown in the pace of recovery is likely to be appropriate in the near future.”

At the same time, some of the FOMC members believe that the rate "should reach a slightly higher level than previously expected," since both inflation and the imbalance of supply and demand in the US economy remain at a fairly high level. Combining these two points of view, we can conclude that the peak of monetary tightening (QT) may be higher than previously planned, but the rise to it will be longer and smoother.

Recall that the Fed has raised rates by 75 basis points (bp) four times in a row, and the market is now expecting a 50 bp rise in December, with the prospect of moving to a step of 25 b.p. in 2023. The key rate for the dollar is 4.00% at the moment.

As for actions on the other side of the Atlantic, the ECB raised the euro rate by 50 bps in July and then twice by 75 bps, and it is at 2.00% now. The swap market estimates it will rise by 50 b.p. in December, with a probability of 62%, and by 75 b.p. with a probability of 38%. The European regulator may also move to a step of 25 b.p. next year. In this case, the gap between the rates on the dollar and the euro will remain, which will give EUR/USD an incentive to fall below the parity line of 1.0000 again.

It should be noted that the ECB's monetary tightening has not had a suffocating effect on the European economy so far. Moreover, there is a way out of the energy crisis caused by the sanctions imposed on Russia because of its armed invasion of Ukraine. The EU countries have decided to exclude Russian gas from joint purchases. European Commissioner for Energy Kadri Simson said that the EU managed to replace the Russian fuel completely with the help of energy resources from other sources. Gas storages, primarily in Germany, are already filled to the very neck. And the risks of Europe experiencing rolling blackouts or freezing this winter have been drastically reduced.

Against this background, the Business Activity Index (PMI) in the German manufacturing sector rose from 45.1 to 46.7 instead of the expected fall, while it rose from 47.3 to 47.8 in the Eurozone as a whole. The IFO business climate index in Germany has also started to improve: with the forecast of 85.0, it rose from 84.5 to 86.3 in reality. These macro statistics, along with Germany's GDP growth of 0.4% in Q3 (0.1% in Q2, the forecast is 0.3%), give the ECB the green light for further rate hikes. And this, in turn, according to a number of analysts, may push EUR/USD further up, to the zone of 1.0500-1.0600.

The week closed at 1.0400, above the 200-day SMA. Scotiabank experts believe that this could strengthen the bullish momentum. And their colleagues from Commerzbank say that the comfort level for the pair is likely to be between 1.0400 and 1.0500. In general, among the analysts surveyed, 30% of analysts expect the pair to continue to grow, and 40% expect it to turn to the south. The remaining 30% of experts point to the east. The picture is different among the oscillators on D1. All 100% of the oscillators are colored green, while 15% is in the overbought zone. Among the trend indicators, the 100% advantage is on the green side.

The immediate support for EUR/USD is at the 1.0380 horizon, then there are levels and zones 1.0280-1.0315, 1.0220-1.0255, 1.0130, 1.0070, 0.9950-1.0010, 0.9885, 0.9825, 0.9750, 0.9700, 0.9645, 0.9580 and finally, the September 28 low at 0.9535. The next target of the bears is 0.9500. Bulls will meet resistance at levels 1.0430-1.0450, 1.0480, 1.0620, 1.0750, 1.0865, 1.0935.

The coming week will be full of macroeconomic statistics. Preliminary data on such an important indicator as the level of consumer prices (CPI) in Germany and the Eurozone, respectively, will be released on Tuesday, November 29 and Wednesday, November 30. Data on unemployment in Germany and on GDP and the US labor market will also become known on Wednesday. Fed Chairman Jerome Powell is expected to speak on the same day. Thursday will bring information on retail sales in Germany and business activity (PMI) in the US manufacturing sector. We are traditionally waiting for another portion of statistics from the US labor market on the first Friday of the month, December 02, including the unemployment rate and the number of new jobs created outside the country's agricultural sector (NFP).

GBP/USD: How Long Will the Pound Continue to Grow?

Despite the gloomy global outlook for the pound, a bullish scenario worked in the short term, voted by most experts, 85% of trend indicators and 100% of D1 oscillators. GBP/USD hit its highest level in three months at 1.2153 on Thursday, November 24. As in the case of the euro and other G10 currencies, the reason for its growth was not the achievement of the pound, but the weakening of the dollar.

The final chord for the pair sounded slightly below the maximum, at around 1.2095. According to Scotiabank strategists, the British currency rebounded strongly enough from the all-time low of September 26 (1.0350) to hold on to current levels. Fiscal policy in the UK has stabilized, market confidence has strengthened, and the pair's uptrend has been fairly stable. These factors, according to Scotiabank, should help the GBP/USD quotes stabilize in the 1.2000 area for the foreseeable future, and possibly even rise a little higher.

Analysts at ING, the largest banking group in the Netherlands, point to an even higher target. “We believe positioning has played a major role in the recovery of the pound, and GBP/USD could see further temporary gains towards the 1.22/23 area, which we see once again as the best level for the rest of the year,” they write.

At the same time, experts do not rule out a new bearish impulse and draw attention to the risks of the end of this year and the beginning of 2023, when the Central Banks of leading countries will raise rates during the recession. As we wrote earlier, rising inflationary pressures in the UK could lead to more aggressive rate hikes by the Bank of England (BoE). However, according to many economists, the regulator is likely to avoid drastic steps, since excessive tightening of monetary policy could knock out the UK economy for two long years. According to forecasts, the UK's current account deficit will remain at more than 5% of GDP in 2023-24. The result of such careful actions of the BoE may be the resumption of the downtrend of the British currency

The median forecast for the near term does not give any clear guidance: 45% of experts side with the bulls, exactly the same number side with the bears, and the remaining 10% prefer to remain neutral. Among the oscillators on D1, 100% are on the green side, however, 25% of them give signals that the pair is overbought. Among the trend indicators, the ratio of 85% to 15% is in favor of the greens, like a week ago. The levels and support zones for the pair are 1.2030, 1.1960, 1.1800-1.1840, 1.1700-1.1720, 1.1600, 1.1475-1.1500, 1.1350, 1.1230, 1.1150, 1.1100, 1.1060, 1.0985-1.1000, 1.0750, 1.0500 and the September 26 low of 1.0350. When the pair moves north, it will meet resistance at the levels of 1.2150, 1.2210, 1.2290-1.2330, 1.2425 and 1.2575-1.2610.

Among the events concerning the economy of the United Kingdom, Thursday 01 December attracts attention this week, when the value of November's Business Activity Index (PMI) in the country's manufacturing sector will be known.

continued below...

 

[Stan NordFX]

USD/JPY: The Yen Thanks the Fed

As an analyst wrote, "The whole world (except the US) thanks the Fed for the minutes of its meeting, which reinforced the dovish reversal, crashing the dollar and US bond yields, and gave respite to the fallen currencies around the world." Indeed, the DXY Dollar Index went down and 10-year Treasury yields hit a 7-week low.

As the yields on these US Treasuries declined, the Japanese currency was among the leaders of growth, and USD/JPY rushed to November lows once again, finding a bottom at 138.04 this time.

(Recall that there is a fairly stable correlation between US government bond rates and USD/JPY. And if the yield on securities increases, so does the dollar against the yen. If the 10-year Treasury bill yield falls, the yen rises, and the pair forms a downtrend).

Strategists at Singapore's United Overseas Bank (UOB) say that if the dollar continues to weaken, the pair might retest the 137.70 area. ING strategists look even further here. According to their forecasts, if the yield on 10-year treasuries ends 2023 at around 2.75%, USD/JPY may end up in the 125.00-130.00 zone at that moment, that is, where it was traded in May-August 2022. As for the possible upward dollar rally this December, according to ING, it will not be able to lift the pair above the 142.00-145.00 zone. There is no question of updating the maximum of October 21 and a new assault on the height of 152.00.

In addition, we must not forget about Day X, which is scheduled for April 8 next year. It is on this day that Haruhiko Kuroda, the head of the Bank of Japan, will end hs term, and he may be replaced by a new candidate with a less dovish position. Such a change could lead to a revolutionary push for USD/JPY to the south. After that, it could end 2023 exactly where ING strategists expect it to be.

As for the current situation, the pair closed last week at 139.05. Only 10% of analysts are counting on the fact that the dollar will try to win back at least part of the losses in the near future, and USD/JPY will turn to the north. 45% vote for a breakthrough to the south and a new fall. And another 45% find it difficult to make a forecast. For oscillators on D1, the picture looks like this: 100% are looking south, 10% of them are in the oversold zone. Among the trend indicators, the ratio is 85% to 15% in favor of the red ones.

The nearest strong support level is located in the zone 138.00-138.30, followed by the levels and zones 137.50-137.70, 136.00, 135.55, 134.55 and the zone 131.35-131.75. Levels and resistance zones are 139.85, 140.60, 142.20, 143.75, 145.30, 146.85-147.00, 148.45, 149.45, 150.00 and 151.55. The purpose of the bulls is to rise and gain a foothold above the height of 152.00. Then there are the 1990 highs. around 158.00.

No important events regarding the state of the Japanese economy are expected this week.

CRYPTOCURRENCIES: Market of Rumors and Fears

BTC/USD fell to its lowest level in two years on Monday, November 21. It was also trading in the $15,500 area on November 21, 2020. The local bottom was found at $15,482 this time. The main cryptocurrency was kept from falling further by the growth of risk sentiment, which is pushing up the S&P500, Dow Jones and Nasdaq stock indices. Additional support was provided by the minutes of the last Fed meeting published on November 23, in which the market saw dovish sentiment. But despite this, cryptocurrencies are still under strong bearish pressure, and many experts believe that a new collapse is inevitable.

JPMorgan analysts have warned that the collapse of major digital assets is not over, and the FTX crash crisis could act like a domino and lead to “cascading liquidations”. And now the market is gripped by anxiety related to the possible bankruptcy of Genesis, a subsidiary of the Digital Currency Group (DCG) fund. This happened after the company failed to raise $1 billion in funding. Citing the difficulties of Genesis, the lending arm of the Gemini crypto exchange has already frozen the withdrawal of client assets. Bloomberg estimates their volume at $700 million.

Investors are already afraid of their own shadow. And then Ethereum co-founder Vitalik Buterin added fear by posting a mysterious tweet. Without going into details, he wrote that "the rumor is that something important is about to happen." Almost at the same time, information appeared from somewhere that he was getting rid of his Ethereum reserves, and this alerted the crypto community furthermore. A wallet allegedly owned by Vitalik Buterin sold 3,000 ETH worth $3.75 million in the middle of the night, just hours after FTX crashed.

Jordan Belfort, a former stockbroker convicted of fraud and commonly known as The Wolf of Wall Street, believes that the FTX trading platform's bankruptcy was intentional, and Sam Bankman-Fried is a sociopath who implemented FTX pump and dump schemes.

The author of the world-famous book Rich Dad Poor Dad, Robert Kiyosaki, tried to soften the intensity of passions, saying that he still believes in the bright future of the two flagship digital assets bitcoin and Ethereum. According to him, bitcoin is not the same as Sam Bankman-Freed. The situation around FTX must be considered as a special case, and conclusions about the entire industry cannot be drawn only on its basis.

But it seems that investors are in no hurry to listen to Mr. Kiyosaki. Analytics firm Glassnode said in their November 21 report that recent market weakness has “shattered the confidence of bitcoin holders” and the looming crypto winter is following in the footsteps of its 2018-19 predecessor. According to Glassnode, most of the whales (wallets with more than 1,000 BTC) are now lying on the bottom, waiting for better times.

At the height of the previous bear market, bitcoin fell by 84% from its maximum. It took just under a year for the asset to fall from $20,000 in November 2018 to $3,200. It took about the same time this time to drop 77.3% and crash from $69,000 on November 21 to a new cycle low of $15,482. At the same time, some analysts believe that BTC should not be expected to recover soon, because several months had passed after the collapse of 2018 before the first noticeable upward impulse appeared.

In addition, last week saw the fourth-largest spike in realized losses with a daily volume of $1.45 billion. This dumping of crypto assets by long-term players “is often a sign of fear and capitulation among this more experienced cohort,” the Glassnode report notes.

According to the IntoTheBlock platform, out of 47.85 million BTC holders, 24.56 million addresses (51%) suffer losses. About 45% of wallets are still in the black, and the remaining addresses are in the break-even zone. According to IntoTheBlock analysts, the last time a similar situation was observed after the March market crash. At the same time, one of them added that the share of unprofitable addresses usually exceeds 50% at the moment when the market is at the bottom. Thus, he hinted that a more significant fall in the cryptocurrency should not be expected. However, statistics show the opposite: the share of addresses that suffered losses reached 55% in December 2018, and this figure exceeded 62% during the dominance of the bearish trend in 2015.

Arthur Hayes, former CEO of BitMEX, has increased the negative outlook for bitcoin to $10,000. American economist Benjamin Cowen does not rule out another decline in quotations either. He has recently published a comparison chart of the current bear market with the previous three, which shows that bitcoin is at a very interesting point today. On the one hand, 379 days have passed since ATH (the all-time high). In the previous two bearish markets, this period was 363 days in 2018 and 410 days in 2015. On the other hand, the current ROI (return on investment) is 0.247. In previous times, it has always fallen below the value of 0.2, which indicates a possible further fall of the market.

Another chart was published by a well-known cryptanalyst named Dave the Wave. According to his charts, bitcoin is now right at the lower end of the long-term LGC, which has historically acted as support. BTC's history has already seen price actions below this curve: for example, in the 2015 bear market or during the crash at the start of the COVID-19 pandemic in March 2020. However, such a fall did not last long then, and the cryptocurrency quickly restored its long-term support. This usually signaled the end of the bear market and the start of a new bull market.

Dave the Wave noted in a comment on his chart that special attention should be paid to the end of the month. According to him, there is technically nothing catastrophic in the price action yet, but the lower border of the model is hardly holding. If bitcoin closes the month below $16,000, LGC support is highly likely to collapse, and the fall will continue. And vice versa: if it manages to hold on and bounce up, this may be a signal for the beginning of a new bull market.

In the meantime, at the time of writing this review (Friday evening, November 25), BTC/USD is trading in the $16,520 zone. The total capitalization of the crypto market is $0.833 trillion ($0.832 trillion a week ago). The Crypto Fear & Greed Index fell from 23 to 20 points in seven days and could not get out of the Extreme Fear zone.


NordFX Analytical Group


Notice: These materials should not be deemed a recommendation for investment or guidance for working on financial markets: they are for informative purposes only. Trading on financial markets is risky and can lead to a loss of money deposited.

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[Stan NordFX]

CryptoNews of the Week

- A bull market will soon begin for bitcoin and other digital assets, but this will happen after a noticeable fall and reaching a real bottom. This opinion was expressed by cryptocurrency analyst Benjamin Cowen.
The expert expects the 2018 crypto winter scenario to repeat. At that time, digital gold demonstrated several stages of gradual recovery. But growth became stable after quotes fell to the minimum of the bearish cycle. “When the market is bearish, we see the following stages constantly: a fall, a consolidation, a small increase, and a failure again. We are following a simple signal: the intersection of the 200-day moving average and the bitcoin price chart,” the analyst said. According to him, such an intersection will take place on December 25-27. This is when we can expect the price to reach a real bottom and move to sustainable growth.
Cowen pointed to the duration of bearish markets, which has historically been about a year, as an additional argument. The 2014 cycle lasted 14 months, and the 2018 cycle lasted 12 months.
According to the expert's forecast, the bottom has not yet been reached so far. In addition to not crossing the BTC price with the 200-day SMA, Cowen also referred to the Puell Multiple indicator. The metric value at the minimum was about 0.3 in previous cycles. The indicator has so far dropped only to 0.375 this year.

- Mark Mobius, co-founder of Mobius Capital Partners LLP investment company, shared his prediction that bitcoin will continue to fall, and its immediate goal is $10,000. He added that he would not invest his own money or his clients' money in digital assets as "it's too risky." “But cryptocurrency is here to stay because there are some investors who still believe in it,” the famous investor “reassured” crypto enthusiasts.
Mark Mobius is not alone in his predictions. Deribit options data shows a large number of outstanding bitcoin put contracts, so called open interest, with an exercise price of $10,000 at the end of December.

- Analysts at IntoTheBlock note that bitcoin is currently experiencing a sharp backwardance: a situation where BTC futures are priced much lower compared to the current price of the asset in the regular (spot) market. This suggests that the market is under strong pressure from sellers. Traders are actively opening short positions, hoping that the price of bitcoin will continue to go down.
At the same time, IntoTheBlock points out that the times when futures contracts are backward tend to coincide with market lows, as was the case in March 2020 and May 2021. And it can also be a signal that the cryptocurrency has found a bottom now. A similar trend can be seen with extremely negative funding rates.

- Unlike Mark Mobius, Tom Lee, head of research at Fundstrat Global Advisors and well-known analyst, remains a bitcoin supporter and believes that this asset can still serve as an investment tool.
Lee agrees that the passing year has been a terrible year for the entire crypto industry. The macroeconomic events of early 2022, the collapse of Terra, which not only buried two TOP-10 cryptocurrencies, but also caused a domino effect that destroyed many industry participants. A new shock came in November when one of the market giants, the FTX crypto exchange, and related companies, collapsed. There are now rumors questioning the fortunes of Digital Currency Group and its subsidiaries, two of which are Genesis and Grayscale. However, despite all the tragedy of the current situation, Tom Lee believes that the above events are a "cleansing" moment for the industry, and next year should be better than this one.

- Michael Novogratz, CEO of the crypto investment company Galaxy Digital, said that digital assets will not leave the market, even though the industry is experiencing a crisis of confidence. “There are 150 million people who have chosen to store part of their wealth in bitcoin. […] Therefore, bitcoin, ethereum will not disappear. Other cryptocurrencies will not either,” he said.
Novogratz expects the recovery of the crypto industry and its slow growth. “You will see how people like ARK Invest CEO Cathy Wood will soon enter the crypto market and invest. I don't think this will be a quick recovery. It will most likely take a long time. It won't be easy to restore trust. Centralized companies will have to act differently,” the businessman said.
Cathy Wood herself, according to Yahoo, answered “yes” when asked whether she still sticks to her forecast of the BTC price of $1 million by 2030.

- Analysts at investment bank JPMorgan believe that the cryptocurrency industry will change significantly after the collapse of FTX. Primarily due to stricter regulations. They cite the bill on the regulation of cryptocurrencies in the European Union (MiCA) as an example.
JPMorgan expects regulators to pay close attention to the issues of storing crypto assets and protecting consumers. These areas should lead to the same level of security as in the traditional financial system. Another way to protect consumers could be the separation of roles for cryptocurrency companies. When, for example, a cryptocurrency broker cannot be a credit service or provide custodial services at the same time. It is also important to ensure the transparency of the crypto business and oblige companies to provide periodic reporting on their status.
JPMorgan researchers do not expect a significant increase in the role of decentralized exchanges due to numerous restrictions for such sites. “We believe,” they write, “that centralized exchanges will continue to play a huge role in the cryptocurrency ecosystem for the foreseeable future. Especially for large institutional investors, even despite the FTX crash.”

- Renowned crypto trader Ton Vays has described how bulls can end a year-long bearish market. According to him, they should push the price of the main cryptocurrency to the November high, and this will start an upward rally. “I want to see a move to $23,000. If there's a rebound, we'll need to hold on to $19,000 and then come back for a further $23,000. This is 95% to 98% likely to show that a bull market has begun.”
The crypto trader who predicted the collapse of bitcoin in 2018 accurately does not rule out that bitcoin will soon face a new sale. “Another scenario is we will fall to $11,000. I believe the bull market will start right after that because I just don't believe bitcoin could fall even lower.” In any case, under any of these scenarios, Vays expects bitcoin to reach $23,000 later this year or early 2023.

- Small retail investors (up to 10 BTC) are becoming increasingly optimistic about bitcoin and have accumulated a record number of coins despite the FTX crash and the ongoing crisis, according to a report by the Glassnode analytics platform.
It is reported that “shrimp” investors (less than 1 BTC) added 96,200 coins worth $1.6 billion to their portfolios after the FTX crash in early November, which is a “record high balance increase”. And now they own 1.21 million BTC in total, which is equivalent to 6.3% of the current turnover of 19.2 million coins. Meanwhile, “crabs” (up to 10 BTC) have bought about 191,600 coins worth about $3.1 billion over the past 30 days, which is also a “convincing all-time high.”
While crabs and shrimps were accumulating a record number of bitcoins, large investors were selling them. According to Glassnode, bitcoin whales have released about 6,500 BTC ($107 million) to exchanges over the past month. However, this is a very small fraction of their total holdings of 6.3 million BTC ($104 billion), which suggests that the whales remain somewhat optimistic as well.

- Texas Governor Greg Abbott sees bitcoin's value to the world, adding that his state “wants to be at the center of it all.” Abbott urged bitcoin companies to set up operations in Texas, promising that anyone who does so will be rewarded with ease of doing business and a lack of regulatory controversy.
According to a recent SmartAsset study on cryptocurrency-friendly states in the US, Texas ranked fourth along with New Jersey, behind Nevada, followed by Florida and California.


Notice: These materials are not investment recommendations or guidelines for working in financial markets and are intended for informational purposes only. Trading in financial markets is risky and can result in a complete loss of deposited funds.

#eurusd #gbpusd #usdjpy #btcusd #ethusd #ltcusd #xrpusd #forex #forex_example #signals #forex #cryptocurrencies #bitcoin #stock_market

 

[Stan NordFX]

November 2022 Results: A Difficult Month for Forex Traders​

NordFX Brokerage company has summed up the performance of its clients' trade transactions in November 2022. The services of social trading, CopyTrading and PAMM, as well as the profit received by the company's IB-partners have also been assessed. The results show that November was not the best month for Forex traders.

- The maximum profit was received this month by a client from Western Asia, account No. 1652XXX, whose profit amounted to 24,789 USD. This solid result was achieved mainly in gold (XAU/USD), British pound (GBP/USD), and euro (EUR/USD) trades.
- Gold helped their compatriot, account No. 1638XXX, to take the second step of the podium with the result of 19,260 USD.
- The third place belongs to the owner of account No. 1664XXX from Southeast Asia. Using various trading instruments (GBP/NZD, EUR/JPY, EUR/NZD, etc.), this trader made a profit of 15,597 USD.

The passive investment services:

- “Veteran” signal, KennyFXPRO - Prismo 2K, continues to grow in CopyTrading. Ie brought the profit to 277% in 576 days, but its maximum drawdown approached 67% in November. The signal provider had to increase the leverage to 1:200 for the first time to get out of it. The indicators of the second signal from the same provider, KennyFXPro - The Cannon Ball, look like this: 244 days of lifespan, 79% profit. At the same time, its subscribers avoided stress: the leverage did not exceed 1:43, and the maximum drawdown remained at the same level, a little less than 13%.

Startups include the Jhunjhunu signal (profit 547%/max drawdown 61%/lifespan 55 days). Here, as usual, we recall that such profitability certainly looks very attractive, but the subscriber should definitely take into account risk factors such as drawdown and signal life.

- However, as practice shows, a long lifespan and good trading performance in the past do not guarantee against future losses. Thus, two leading accounts in the PAMM service suffered significant losses in November.

The KennyFXPRO-The Multi 3000 EA account has been in existence since January 2021, and the maximum drawdown on it had not exceeded 20% until recently. However, the situation became more complicated last month, the drawdown exceeded 42%, and the account manager decided to close unprofitable positions. As a result, profits fell from 170% to 70% and returned to early 2022 levels. The TranquilityFX-The Genesis v3 account found itself in a similar situation: its maximum drawdown doubled as well, while profits fell from 130% to 44%.

It is clear that closing losing orders was a very difficult decision for these PAMM managers, and they made it in order to save at least part of the money. Perhaps, if they had acted the same as with the KennyFXPRO - Prismo 2K account in CopyTrading, the losses would have been avoided, but the risk of a complete zeroing of deposits would have increased many times over. At the same time, it should be noted that the profit in both these accounts exceeds the interest on bank deposits many times even after the November losses.

Among the NordFX IB partners, TOP-3 is as follows:
- the largest commission was accrued to a partner from Western Asia, account No. 1645XXX, for the second month in a row. It was 4,924 USD this time;
- the next is their colleague from Southeast Asia, account No. 1660XXX, who earned 4,173 USD in November;
- and, finally, a partner from Southern Asia, account No.1618ХХХ, who received 3,742 USD as a reward, closes the top three.

***

Attention! The NordFX Super Lottery New Year's Draw will take place in just a month, on January 04, 2023, where numerous cash prizes from 250 to 10,000 USD will be drawn among the company's clients.

You still have time to join it and get a chance to win one or even several of these prizes. All the details are available on the NordFX website.


Notice: These materials should not be deemed a recommendation for investment or guidance for working on financial markets: they are for informative purposes only. Trading on financial markets is risky and can lead to a loss of money deposited.

#eurusd #gbpusd #usdjpy #btcusd #ethusd #ltcusd #xrpusd #forex #forex_example #signals #cryptocurrencies #bitcoin #stock_market

 

[Stan NordFX]

Forex and Cryptocurrencies Forecast for December 05 - 09, 2022​

EUR/USD: Focus on the US Labor Market

The DXY dollar index is down 5% over the past month. This is the largest monthly decline since September 2010. And the American currency lost more than 10% against the euro over the same period. EUR/USD was trading at 0.9541 back on October 28, and it reached the high of 1.0544 on December 2. There are several reasons for this, and the main one, of course, lies in the US Federal Reserve's interest rate forecasts.

The head of this organization, Jerome Powell, speaking on Wednesday, November 30, confirmed once again that the rate of rate growth in December may slow down. Market participants were finally convinced after these words that the rate would be increased not by 75 basis points (bp), but by only 50 bps in December. Thus, the futures market for the federal funds rate expects that there will be no increase at all in January, and the rate will be increased one or two times by 25 bps in February and March, as a result, its peak value will be 4.75-5.00%, and not 5.25%, as previously predicted. Then there will be a gradual decline and it will drop to 4.45% by December 2023.

Of course, this is only a forecast, but the market reacted to it with a sharp drop in US Treasuries. Thus, 10-year securities fell in yield to 3.5%, the lowest value since September 20, and two-year securities fell to 4.23%, which put strong pressure on the dollar. Moreover, the statement by the head of the Fed was made against the background of the publication of statistical data on the US economy. And it pointed, on the one hand, to a slowdown in inflation, and on the other hand, to the fact that the country's economy is quite successfully coping with rising interest rates and is not in danger of sliding into a deep recession. As a result, the risk appetite of the market began to grow, stock indices ( S&P500, Dow Jones and Nasdaq ) went up, pulling cryptocurrencies with them, and the dollar continued to fall.

China also intervened in the dollar exchange rate. Vice Premier of the State Council of the People's Republic of China Sun Chunlang said that the omicron strain of coronavirus is becoming less pathogenic due to the increase in vaccinated people. Therefore, the strategy to combat the pandemic is entering a new stage. The authorities will even allow some infected people to spend a period of isolation at home rather than in the hospital. This shift towards less stringent anti-COVID measures also had a positive effect on investors' appetite for investments in Asia, and the dollar received another blow, losing its attractiveness as a defensive asset.

The Fed chief's speech about avoiding a “collapse of the economy” suggests that the regulator wants to bring inflation down to its target level, while minimizing the rise in unemployment. Based on this, reports on the US labor market will soon be even more important than before. And this was clearly shown by the market's reaction to the macro statistics released on Friday, December 2. The unemployment rate in the US remained at the same level and was fully in line with the forecast of 3.7%. But as for the number of new jobs created outside the agricultural sector of the country (NFP), on the one hand, it turned out to be less than the October value (284K), but higher than the forecast of 200K, and amounted to 263K. The American currency reacted to this with a sharp increase, EUR/USD dropped to 1.0427. However, then the situation calmed down, everything returned to normal, and it finished at 1.0535.

Among the analysts surveyed, 50% of analysts expect the pair to continue growing to 1.0600, and 20% expect it to turn to the south. The remaining 30% of experts point to the east. It should be noted here that when moving to the medium-term forecast, the number of bearish supporters who expect the pair to drop below the parity level of 1.0000 increases sharply, up to 75%. The picture is different among the oscillators on D1. All 100% of the oscillators are colored green, while 25% is in the overbought zone. Among the trend indicators, the 100% advantage is on the green side.

The immediate support for EUR/USD is located on horizon 1.0500, then there are levels and zones 1.0450-1.0467, 1.0380-1.0405, 1.0280-1.0315, 1.0220-1.0255, 1.0130, 1.0070, 0.9950-1.0010, 0.9885, 0.9825, 0.9750, 0.9700, 0.964, 0.9580 and finally the Sep 28 low at 0.9535. The next target of the bears is 0.9500. Bulls will meet resistance at levels 1.0545, 1.0620, 1.0750, 1.0865, 1.0935.

We are in for quite a lot of macro-economic statistics this week. There will be data on retail sales in the Eurozone and ISM business activity in the US services sector on Monday, December 05. Data on Eurozone GDP in Q3 will be released on Wednesday, December 07. The number of applications for unemployment benefits will become known the next day, December 08, and the US Producer Price Index (PPI) - on December 09. In addition, market participants will be waiting for the speeches by the head of the ECB Christine Lagarde, which are scheduled for December 05 and 08.

GBP/USD: If the Dollar Falls, the Pound Rises

Business activity in the manufacturing sector of the UK increased slightly in November compared to September: the PMI rose from 46.2 to 46.5 points (against the forecast of 46.2). However, this did not have any noticeable effect on the quotes of GBP/USD: it moved almost in unison with EUR/USD, reacting to events in the US. The week resulted in the continuation of its growth from 1.2153 to 1.2310, the highest value since early August. The last chord of the week sounded a bit lower, at 1.2280.

Thus, the dollar weakened by about 1.2% against the pound over the week. And now GBP/USD is only a short distance away from the important level of 1.2450, which is the lower limit of the multi-year range from which it left at the beginning of this year. According to the strategists of the French financial conglomerate Societe Generale, this is where a strong resistance zone is located. “A retreat from this barrier could lead to a pullback phase,” they write. “The October high at 1.1500, which is also a 50DMA, is expected to be the first level of support if the decline continues.” If the pair fixes above 1.2450, Societe Generale predicts that the upward movement may last to 1.2750 and even higher, to the 1.3250-1.3300 zone.

Of course, as we have repeatedly written, the actions of the Central Banks of the leading countries and how quickly and how much they will raise key interest rates in a recession will be decisive for exchange rates. It is possible that the growth of inflationary pressure in the UK may cause a more active rate hike by the Bank of England (BoE). However, according to many economists, the regulator is likely to avoid drastic steps since excessive tightening of monetary policy could knock out the UK economy for a long time. Recall that the main events of the end of this year are expected on December 14 and 15, when the Fed, ECB and BoE meetings will be held almost at the same time.

The median forecast so far is similar to that for EUR/USD: 50% of experts are bullish, 30% are bearish, and the remaining 20% remain neutral. At the same time, when moving to a medium-term forecast, the number of bear supporters increases to 80%. Among the trend indicators and oscillators on D1, 100% side with the greens, however, among the latter, 15% of them give signals that the pair is overbought. Support levels and zones for the pair are 1.2210, 1.2145, 1.2085, 1.2030, 1.1960, 1.1900, 1.1800-1.1840, 1.1700-1.1720, 1.1600, 1.1475-1.1500, 1.1350, 1.1230, 1.1150, 1.1100. When the pair moves north, it will meet resistance at the levels of 1.2290-1.2310, 1.2425-1.2450 and 1.2575-1.2610, 1.2750.

Among the events concerning the UK economy, Monday 05 December will attract attention this week, when the November Composite Business Activity Index (PMI) and the UK Services PMI will be released. The change in the same indicator in the country's construction sector will be published the next day, on Wednesday, December 06.

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[Stan NordFX]

USD/JPY: The Yen Thanks the Fed Once Again

The main trading range for USD/JPY for the last three weeks has been 137.50-140.60. It tried to move to a higher echelon on November 21, however, the published minutes of the Fed's last FOMC (Federal Open Market Committee) meeting returned it to the set limits. As an analyst wrote at the time, “the whole world (except the US) thanks the Fed for the minutes of its meeting, which strengthened the dovish reversal, bringing down the dollar and US bond yields.”

Last week, the world thanked once again the Fed represented by its head, Jerome Powell whose speech knocked over the dollar on Wednesday, November 30 and the yield on US securities is even lower. USD/JPY broke through the lower border of the channel after the speech of this important official and rushed down, finding the local bottom at the level of 133.61.

The American currency could get a chance to win back losses as a result of the release of the official report on employment in the US on Friday, December 02. As mentioned above, the NFP value of 263K was higher than the 200K forecast, and USD/JPY jumped more than 230 pips to 135.98. However, then the market realized that unemployment remained at the same level, and these 263 thousand new jobs are the lowest since April 2021. The pair turned south again and finished at 134.33.

Recall that 10-year US Treasuries fell to 3.5% after Jerome Powell's “epic” speech, the lowest level since September 20. And according to the forecasts of ING strategists, the largest banking group in the Netherlands, if their yield ends 2023 at about 2.75%, USD/JPY may end up in the 125.00-130.00 zone at that moment, that is, where it was traded in May-August 2022.

In the meantime, the forecast for the near future looks rather vague. 45% of analysts vote for the bearish scenario, 35% for the bullish one, and 20% prefer to remain silent. Although, in this case, most experts (70%) expect a serious strengthening of the dollar in the medium term. For oscillators on D1, the picture looks like this: 100% are facing south, 25% of them are in the oversold zone. Among the trend indicators, the ratio is 100:0 in favor of the red ones.

The nearest support level is located at 133.60 zone, followed by levels and zones 131.25-131.70, 129.60-130.00, 128.10-128.25, 126.35 and 125.00. Levels and zones of resistance are 135.20, 136.00, 136.65, 137.50-137.70, 138.00-138.30, 139.85, 140.60, 142.25, 143.75, 145.30, 146.85-147.00, 148.45, 149.45, 150.00 and 151.55. The purpose of the bulls is to rise and gain a foothold above the height of 152.00. Then there are the 1990 highs around 158.00.

Thursday, December 08 can be marked in the macroeconomic calendar, when the data on Japan's GDP for Q3 will be released. According to forecasts, this indicator will remain at the same negative level: a drop of 0.3%, which will serve as another argument in favor of the super-soft monetary policy of the Bank of Japan (BoJ). The next meeting of this Central Bank is scheduled for December 20, and it is likely to leave the interest rate on the yen unchanged at minus 0.1%.

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[Stan NordFX]

CRYPTOCURRENCIES: Cryptogeddon Instead of Crypto Winter

If the most frightening word for investors was "crypto winter" earlier, a new, much more terrible term has appeared in the current situation: "cryptogeddon" (similar to Armageddon, the place of the last and decisive battle between the forces of good and the forces of evil).

Everyone will probably agree that the outgoing year was terrible for the entire crypto industry. Macroeconomic events in early 2022, the collapse of Terra, which not only buried two cryptocurrencies from the TOP-10, but also caused a domino effect that destroyed many industry participants. A new shock in November, when one of the market giants, the FTX crypto exchange and related companies, collapsed. There are now rumors that cast doubt on the fortunes of the Digital Currency Group and its subsidiaries, two of which are Genesis and Grayscale.

The next victim of "cryptogeddon" was the BlockFi platform. It filed for bankruptcy last Monday. Creditors that will suffer the most from this will include Ankura Trust Company ($729 million), West Realm Shires Inc ($275 million), and even the SEC itself, the great and all-powerful US Securities and Exchange Commission ($30 million).

Miners are in huge trouble as the cost of mining bitcoin has fallen deep below the market price. Thus, according to MacroMicro estimates, it was $19,400 on November 29 at the price of $16.500 per BTC. This situation led to the fact that the losses of such an industry leader as Core Scientific Inc reached $1.7 billion, and it was also on the verge of bankruptcy.

(By the way, on December 6, Bitcoin will face the largest reduction in computation complexity this year. It takes more than 10 minutes now to find a block, and the expected correction will be from 6% to 9%).

Despite all the losses, the industry continues to hope for the best. The main forecasts are divided into 1) BTC/USD will fall again, but then it will turn up, and 2) the pair has already found the bottom and there is only a bright future ahead. Let's start with the first scenario.

So, Mark Mobius, co-founder of Mobius Capital Partners LLP investment company, shared his prediction that bitcoin will continue to fall, and its immediate goal is $10,000. This target is in line with options data from Deribit, which shows a large number of outstanding bitcoin put contracts, so called open interest, with an exercise price of $10,000 at the end of December.

Crypto analyst Benjamin Cowen is waiting for the bull market to start soon. But this will happen, in his opinion, after a noticeable fall and reaching a real bottom. We are following a simple signal: the intersection of the 200-day moving average and the bitcoin price chart,” the analyst advises. According to him, such an intersection will take place on December 25-27. It is then that we can expect the price to reach the bottom and the transition of BTC/USDto a steady growth. According to the expert's forecast, the bottom has not yet been reached so far. In addition to not crossing the BTC price with the 200-day SMA, Cowen also refers to the Puell Multiple indicator. The metric value at the minimum was about 0.3 in previous cycles. The indicator has so far dropped only to 0.375 this year.

Cowen pointed to the duration of bearish markets, which has historically been about a year, as an additional argument for the future turn. The 2014 cycle lasted 14 months, and the 2018 cycle lasted 12 months.

Renowned crypto trader Ton Vays has described how bulls can end a year-long bearish market. According to him, they should push the price of the main cryptocurrency to the November high, and this will start an upward rally. “I want to see a move to $23,000. If there's a rebound, we'll need to hold on to $19,000 and then come back for a further $23,000. This is 95% to 98% likely to show that a bull market has begun,” he writes.

However, the crypto trader who predicted the collapse of bitcoin in 2018 accurately does not rule out either that bitcoin will soon face a new sale. “Another scenario is we will fall to $11,000. I believe the bull market will start right after that because I just don't believe bitcoin could fall even lower.” In any case, under any of these scenarios, Vays expects bitcoin to reach $23,000 later this year or early 2023.

The second scenario, the beginning of a bearish trend, is hinted at by IntoTheBlock data. Analysts of this company note that bitcoin is currently experiencing a sharp backwardance: a situation where BTC futures are priced much lower compared to the current price of the asset in the regular (spot) market. This suggests that the market is under strong pressure from sellers. Traders are actively opening short positions, hoping that the price of bitcoin will continue to go down.

At the same time, IntoTheBlock points out that the times when futures contracts are backward tend to coincide with market lows, as was the case in March 2020 and May 2021. And it can also be a signal that the cryptocurrency has found a bottom now.

This version is supported by small (up to 10 BTC) retail investors. According to a report from analytics platform Glassnode, they are becoming increasingly optimistic about bitcoin and have accumulated a record number of coins despite the FTX crash and the ongoing crisis.

Since the FTX crash in early November, shrimp investors (less than 1 BTC) have reportedly added 96,200 coins worth $1.6 billion to their portfolios, a “record high balance increase.” And now they own 1.21 million BTC in total, which is equivalent to 6.3% of the current turnover of 19.2 million coins. Meanwhile, “crabs” (up to 10 BTC) have bought about 191,600 coins worth about $3.1 billion over the past 30 days, which is also a “convincing all-time high.”

While crabs and shrimps were accumulating a record number of bitcoins, large investors were selling them. According to Glassnode, bitcoin whales have released about 6,500 BTC ($107 million) to exchanges over the past month. However, this is a very small fraction of their total holdings of 6.3 million BTC ($104 billion), which suggests that the whales remain somewhat optimistic as well.

Many influencers are also optimistic about the future. Tom Lee, head of research at Fundstrat Global Advisors and well-known analyst, said that the tragic events of 2022 mentioned above are a “cleansing” moment for the industry, the next year should be better than this one, and bitcoin can still serve as an investment tool.

Michael Novogratz, CEO of the crypto investment company Galaxy Digital, also thinks that digital assets will not leave the market, even though the industry is experiencing a crisis of confidence. “There are 150 million people who have chosen to store part of their wealth in bitcoin. […] Therefore, bitcoin, ethereum will not disappear. Other cryptocurrencies will not either,” he said.

Novogratz expects the recovery of the crypto industry and its slow growth. “You will see how people like ARK Invest CEO Cathy Wood will soon enter the crypto market and invest. I don't think this will be a quick recovery. It will most likely take a long time. It will not be easy to restore trust,” the businessman said. Cathy Wood herself, according to Yahoo, answered “yes” when asked whether she still sticks to her forecast of the BTC price of $1 million by 2030.

In the meantime, at the time of writing this review (Friday evening, December 02), BTC/USD is trading well below the coveted $1 million, in the $17,040 zone. Its correlation with stock market indices (S&P500, Dow Jones and Nasdaq) has almost recovered. The Crypto Fear & Greed Index rose from 20 to 27 points in seven days and finally got out of the Extreme Fear zone into the Fear zone. The total capitalization of the crypto market has also grown slightly and stands at $0.859 trillion ($0.833 trillion a week ago).


NordFX Analytical Group


Notice: These materials should not be deemed a recommendation for investment or guidance for working on financial markets: they are for informative purposes only. Trading on financial markets is risky and can lead to a loss of money deposited.

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[Stan NordFX]

CryptoNews of the Week

- According to a Bloomberg poll, about 94% of respondents believe that the FTX bankruptcy will be followed by further turmoil as years of easy lending give way to a tougher business and market environment.

- The FTX collapse will continue to affect cryptocurrency market sentiment, leading to a drop in bitcoin's price to $5,000 in 2023. This is the conclusion reached by Standard Chartered. Eric Robertsen, chief strategist at this multinational bank, allowed interest to shift from the digital version of gold to its physical counterpart. The conclusion about the fall of bitcoin follows from his forecast for the growth of the precious metal by 30%, to $2,250 per troy ounce. Robertsen stressed that the proposed version of the development of events is not a forecast, but it only suggests a possible deviation from the current market consensus.
The described scenario is possible due to the suspension by the world's leading central banks of raising interest rates in 2023 after they have risen in recent months. An additional factor will be the expected continuation of a series of bankruptcies among major participants in the crypto industry with a loss of confidence in digital assets. “Gold will benefit from problems in the crypto industry in the future,” Nicholas Frappell, Global General Manager at ABC Refinery, agreed with Eric Robertsen.

- Galaxy Digital founder Mike Novogratz maintained his forecast for the price of the first cryptocurrency to rise to $500,000 in a comment to Bloomberg Television. However, due to significant changes in the macroeconomic situation, it will now take bitcoin more than five years to achieve this goal. “The reason bitcoin dropped from $69,000 to $20,000 is [Fed Chairman] Jerome Powell’s decision to start fighting inflation with a series of rate hikes from 0% to 4%,” he explained. “For this reason, all assets that are considered inflation hedges have fallen in value.”
The founder of Galaxy Digital said in early October that bitcoin would resume growth after the Fed backed away from aggressively raising rates to fight inflation.

- According to a report by CertiK, a blockchain security company, fraudulent bots are rapidly gaining popularity on YouTube: the number of dubious videos increased sixfold in 2022. CertiK describes a wave of fraud through bots that promise instant profits and up to 10 times a day in its report dated December 1. The scam itself usually involves victims being asked to download virus software that is designed to steal their assets the moment they attempt to initiate a pre-transaction.
North Korean hackers of the Lazarus group, which spread the AppleJeus virus under the guise of a bot for cryptocurrency trading BloxHolder are among the attackers, according to IT analysts from Volexity. The extent of the cryptocurrency they stole is still unclear. However, it is already known that the AppleJeus virus is actively updated and encrypted using a special algorithm, which complicates its tracking by antivirus programs.

- Investors lost $10.16 billion in just one week in November as a result of the collapse of the second-largest crypto exchange in terms of capitalization, FTX. According to the figurative expression of analysts, this was not a “crypto winter”, but a “crypto massacre”. The FTX crisis was like a domino that led to the collapse of many other companies.
To complicate matters, between 73% and 81% of investors lost money due to investing in cryptocurrencies between 2015 and 2022. This is evidenced by data from a study conducted by the Bank for International Settlements (BIS). According to many experts, regulators will no longer be able to ignore the complaints of those who have lost their savings in such a situation and will have to move to proactive action.

- Peter Schiff, a well-known financier and investor, is widely known as a supporter of gold and an opponent of cryptocurrencies. He expressed confidence in his latest interview that the global inflation rate will rise significantly in 2023, and what is happening now is just the beginning. In his opinion, the cryptocurrency market should fall even more, unable to withstand such strong pressure.
Schiff called the rising inflation rate a certain tax on the population. He noted that every US dollar that the government spends must be paid by citizens in one way or another. The authorities are using a dishonest path. They simply print new money and then put it into circulation. When this happens, the price of everything people buy is constantly increasing. So instead of taking money through taxes, they're stealing purchasing power.

- Texas Senator Ted Cruz said that cryptocurrency mining is essential to the US energy system. First of all, miners can use energy which is excess in the extraction of oil and gas. When it comes to extreme weather conditions in the state, whether it's severe frost or drought, miners can also benefit the Texas power grid. The senator explained that the energy generated by mining can be used to heat households and businesses.
Cruz stressed that Texas creates favorable opportunities for the development of the cryptocurrency industry thanks to an abundance of cheap electricity. In addition, the state government supports free enterprise, and this attracts companies working with blockchain and digital assets. According to the politician, he likes bitcoin, and this is the only crypto asset in which he invests and buys it on a weekly basis.

- Mike McGlone, senior strategist at Bloomberg Intelligence, believes that cryptocurrencies are now going through the last stage before reaching the bottom. However, he warned that it will be very difficult to survive this phase: “Normally, markets do not just form a V-bottom. They make it as hard as possible with a lot of volatility, taking money from all investors.”
Bloomberg analyst noted that there is good news as well. Thus, ethereum has grown 12 times compared to 2019 and is still growing. McGlone claims that ETH has strong support close to the current price level. According to his forecast, this coin will outperform all cryptocurrencies, thanks to growing demand and shrinking supply.

- According to Michael Van De Poppe, a well-known trader and analyst, the market situation has stabilized slightly, and BTC bulls need now to break through an important resistance level in the $17,400-17,600 range. In this case, the price will continue moving towards $19,000 quite quickly. He noted that one of the first goals was to reach the $18,285 horizon. As for the price of ethereum, Van de Poppe believes that the key support level for this cryptocurrency is the price of $1,200.

- JPMorgan CEO Jamie Dimon has once again criticized cryptocurrency and digital assets. He stressed that some people can be fooled into buying anything. The head of the bank has previously called cryptocurrencies “decentralized Ponzi schemes” and urged to stay away from bitcoin. However, he wrote in his annual letter to shareholders that “decentralized finance and blockchain are real new technologies” and went on to promote the bank’s efforts to implement them. In addition, JPMorgan registered a trademark for its own crypto wallet at the end of November. the bank will provide services related to digital assets under the new brand, including the transfer and exchange of cryptocurrencies, as well as the processing of cross-border payments.

- According to PricePredictions machine learning algorithms, which include a number of technical indicators (MA, RSI, MACD, BB, etc.), the price of bitcoin may rise in the near future. According to this forecast, the main cryptocurrency will reach $18,797 on December 31, 2022. It should be noted that this forecast is lower than the expectations of members of the CoinMarketCap crypto community, who believe that BTC will be trading at an average price of $19,788 by the end of the year.


Notice: These materials are not investment recommendations or guidelines for working in financial markets and are intended for informational purposes only. Trading in financial markets is risky and can result in a complete loss of deposited funds.

#eurusd #gbpusd #usdjpy #btcusd #ethusd #ltcusd #xrpusd #forex #forex_example #signals #forex #cryptocurrencies #bitcoin #stock_market

 

[Stan NordFX]

Forex and Cryptocurrencies Forecast for December 12 - 16, 2022​

EUR/USD: Ahead of the Fed and ECB Meetings

Two key events await us next week. The first is the FOMC (Federal Open Market Committee) meeting of the US Federal Reserve, which will be held on Wednesday, December 14. Recall that the key interest rate on the dollar is 4.00% at the moment, and that Fed Chairman Jerome Powell confirmed on November 30 that the pace of rate growth may slow down in December. These words of his convinced market participants that the rate would be increased in December not by 75 basis points (bp), but by only 50 bp. The actual developments on December 14 will set the mood of the regulator for 2023. Naturally, an important role here will be played not only by the decision on the interest rate itself, but also by the economic forecasts of the FOMC and the press conference of the management of this organization following the meeting.

It is highly likely that the decision of the Committee members will be influenced by data on inflation in the US: the November values of the Consumer Price Index (CPI) will be announced on the eve of the meeting, on Tuesday, December 13.

The second event is the ECB meeting on Thursday, December 15. The interest rate on the euro is 2.00% at the moment, and according to forecasts, the European regulator will also raise it by 50 bp, which will keep the advantage in favor of the US currency: 4.50% against 2.50%. As in the case of the Fed, the comments and forecasts of the ECB leaders, which will be made after this meeting, will also be important for market participants.

As for the past week, the DXY Dollar Index did not manage to win back at least some of the losses it has suffered since the end of September. This time it was hampered by statistics from China. On the one hand, China's manufacturing sector continues to deflate: the Producer Price Index (PPI) has been falling by 1.3% for the second month in a row. On the other hand, inflation is slowing down: the Consumer Price Index (CPI) in November was 1.6% against 2.1% a month ago. In this situation, the Chinese government has taken a course of easing monetary policy (QE) to support the country's economy. A survey conducted by Bloomberg showed that the market expects the People's Bank of China to cut interest rates on the yuan as early as Q1 2023. Against this background, stock indices, primarily Asian ones, went up, and the dollar went down. Optimism over the easing of strict COVID-19 restrictions in China also supported the positive tone in equity markets.

Additional pressure on the US currency was exerted by statistics on the US labor market. The number of initial applications for unemployment benefits became known on Thursday, December 08. This figure showed a slight increase from 226K to 230K, which was fully in line with the forecast. But repeated applications have reached a maximum over the past ten months: 1671K, which is also a signal for the Fed, pointing to problems in the economy.

On the contrary, European macro statistics looked good. Thus, the GDP of the Eurozone in Q3 turned out to be higher than the forecast, 0.3% vs. 0.2% (q/q) and 2.3% vs. 2.1% (y/y).

As a result, EUR/USD abandoned a deep correction and, having reached a local low of 1.0442 on December 07, reversed and rose to the level of 1.0587 on December 09. The Producer Price Index (PPI) and the Consumer Confidence Index from the University of Michigan made modest adjustments to the prices at the very end of the working week, after which the pair finished at 1.0531.

50% of analysts count on its further growth, 25% expect the pair to turn south. The remaining 25% of experts point to the east. It should be noted here that when moving to a medium-term forecast, the number of bearish supporters who expect the pair to drop below the parity level of 1.0000 increases sharply, up to 75%.

The picture is different from the oscillators on D1. All 100% of the oscillators are colored green, while 10% is in the overbought zone. Among the trend indicators, the 100% advantage is on the green side.

The nearest support for EUR/USD is located at the 1.0500 horizon, then there are levels and zones 1.0440, 1.0375-1.0400, 1.0280-1.0315, 1.0220-1.0255, 1.0130, 1.0070, followed by the parity zone 0.9950-1.0010. Bulls will meet resistance at levels 1.0545-1.0560, 1.0595-1.0620, 1.0745-1.0775, 1.0865, 1.0935.

We will see other important macro statistics next week in addition to the above. Thus, data on consumer inflation (CPI) and economic sentiment (ZEW) in Germany will be released on Tuesday, December 13. And business activity indicators in the manufacturing sectors of Germany and the Eurozone (PMI), as well as the November value of the European Consumer Price Index (CPI) will become known on Friday, December 16.

GBP/USD: Ahead of the Bank of England Meeting

Not only the ECB, but also the Bank of England (BoE) will decide on the interest rate on Thursday, December 15. It should be noted that the regulator of the United Kingdom was one of the first among the G10 Central Banks, following the Fed, to curtail the policy of quantitative easing (QE). It raised the pound interest rate by 75 bps in November. However, it is expected that like the ECB and the Fed, it will raise it by only 50 bp in December, after which it will reach 3.50%. According to a survey conducted by Reuters, 96% of economists have voted for this step. And only 4% of them insist on 75 bp.

Most respondents believe that the recession will be long and shallow. According to forecasts, the economy contracted by 0.2% in Q3 2022 (exact data will be known on December 12) and will decrease by another 0.4% in Q4. The fall in the first three quarters of 2023 may be 0.4%, 0.4% and 0.2%, respectively.

As for inflation, the survey conducted by the BoE showed that the fears of the UK population about it have slightly decreased. If we talk about economists' forecasts, it is expected that in it will reach a peak of 10.9% in Q4, and then it will decline. The current value is more than five times higher than the target level of 2.0%. And the Bank of England will be forced to continue to raise the rate to fight inflation, despite the threat of a deepening recession. It is predicted that BoE will raise it in Q1 and Q2 2023, another 50 bp and 25 bp, respectively, to 4.25%.

GBP/USD, as well as EUR/USD, has been developing an upward trend since the end of September taking advantage of the weakness of the dollar. In addition, it is being pushed up by the end of the fiscal micro-crisis and the Bank of England's actions to tighten monetary policy and support the British government bond market. GBP/USD reached its maximum value on December 05 at the height of 1.2344, however, it did not go further north and completed the five-day period at the level of 1.2260 in anticipation of the decisions of the coming week.

Strategists at the German Commerzbank consider the current situation only a temporary respite and expect increased pressure on the British currency. “At present,” they write, “the relief that the fiscal crisis has been brought under control prevails, and there are no signs of a further worsening of the energy crisis. In our opinion, this is only a temporary respite for the pound. The deteriorating economic outlook, relatively prudent monetary policy […] and continued high inflation continue to put major pressure on the pound.”

The median forecast for the near term copies the forecast for EUR/USD in full: 50% of experts side with the bulls, 25% side with the bears, and the remaining 25% prefer to remain neutral. At the same time, there is a slight difference when moving to the medium-term forecast: the number of bear supporters here is 10% higher, 85%.

The readings of trend indicators and oscillators on D1 also copy the readings of their counterparts for EUR/USD: all 100% are on the green side, and 10% of the oscillators give signals that the pair is overbought.

Levels and support zones for the pair are 1.2210-1.2235, 1.2150, 1.2085-1.2105, 1.2030, 1.1960, 1.1900, 1.1800-1.1840, 1.1700-1.1720, 1.1475-1.1500, 1.1350, 1.1230, 1.1150, 1.1100. When the pair moves north, it will meet resistance at the levels of 1.2290-1.2310, 1.2345, 1.2425-1.2450 and 1.2575-1.2610, 1.2750.

As already mentioned, Monday, December 12, when the country's GDP data will be published, attracts attention this week, as for the events concerning the economy of the United Kingdom. Data on unemployment and wages will arrive the following day, that on consumer prices (CPI) will become known on Wednesday, December 14, and on retail sales and business activity in the UK - on Friday, December 16. And of course, a special emphasis is on December 15, when the Bank of England will issue its verdict on the interest rate.

continued below...

 

[Stan NordFX]

USD/JPY: What Can Help the Yen

USD/JPY rose from the Dec 02 low of 133.61 to 137.85 last week, slightly above the strong 137.50 support/resistance zone. The last chord of the week sounded at 136.60.

The future of the pair will continue to depend on the difference in interest rates between the US and Japan. If the Fed remains at least moderately hawkish and the BoJ remains ultra-dovey, the dollar will continue to dominate the yen. The threat of new foreign exchange intervention by the Ministry of Finance of Japan, the same as it was on November 10, seems unlikely at current levels. Raising the key rate could help, but it is very likely that the Bank of Japan (BoJ) will leave it unchanged at its meeting on December 20: at the negative level of -0.1%. A radical change in monetary policy can be expected only after April 8 next year. It is on this day that Haruhiko Kuroda, the head of the Bank of Japan, will end hs term, and he may be replaced by a new candidate with a tougher position. Although this is not a fact.

Another hope is for renewed concerns about China's economic prospects. “Weak growth rates and a clear decline in bond yields,” economists from the ING banking group believe, “should lead to the fact that safe currencies, such as the yen, will begin to show superiority,” and this will support the Japanese currency.

Analysts' forecast for the near future is bearish: 50% of them vote for the pair to fall, the remaining 50% have taken a neutral position. However, in the medium term, most experts (60%) are shifting their gaze from south to north, expecting a serious strengthening of the dollar and the return of the pair to the 145.00-150.00 zone. For oscillators on D1, the picture looks like this: 90% look south, 10% look north. Among the trend indicators, the ratio is 85% versus 15% in favor of the red ones.

The nearest support level is located at 136.00 zone, followed by levels and zones 134.10-134.35, 133.60, 131.25-131.70, 129.60-130.00, 128.10-128.25, 126.35 and 125.00. Levels and resistance zones are 137.50-137.70, 138.00-138.30, 139.00, 139.50-139.75, 140.60, 142.25, 143.75, 145.30, 146.85-147.00, 148.45, 149.45, 150.00 and 151.55. The purpose of the bulls is to rise and gain a foothold above the height of 152.00.

The calendar could mark Wednesday December 14, when the values of the Sentiment Indices of Large Manufacturers and Non-Manufacturing Tankan Companies for Q4 2022 will be announced. The publication of other macro indicators of the Japanese economy is not expected next week.

CRYPTOCURRENCIES: Christmas Rally After Crypto Massacre

We titled the last review “Cryptogeddon Instead of Crypto Winter” (by analogy with Armageddon, the place of the last and decisive battle between the forces of good and the forces of evil). There is another “bloody” term now: “crypto massacre”, which characterizes what happened as a result of the collapse of the second most capitalized crypto exchange, FTX. Investors lost $10.16 billion in just one week in November. This crisis was like a domino, which led to the collapse of many other companies. About 94% of respondents believe the FTX bankruptcy will be followed by further turmoil as years of easy lending give way to a tougher business and market environment, according to a Bloomberg survey. To complicate matters , between 73% and 81% of investors lost money due to investing in cryptocurrencies between 2015 and 2022. This is evidenced by data from a study conducted by the Bank for International Settlements (BIS).

The price of bitcoin is consolidating around $17,000 at the moment, and the readings of the SMA100 and SMA200 indicators on the four-hour chart have converged almost at one point. BTC/USD is kept from falling by the dollar that has sagged in recent weeks. Markets froze in anticipation of December 14, when the Fed will make a decision on the interest rate. And it, in turn, depends on the data on inflation in the US, which will arrive the day before. The FOMC (Federal Open Market Committee) Economic Forecasts will also play a significant role in the dollar dynamics.

Optimists, including crypto communities such as Credible Crypto, Moustache and Dave the Wave, expect this data to positively influence the market's risk appetite, and the Christmas rally will push bitcoin to $20,000. According to the expectations of members of the crypto community CoinMarketCap, BTC will trade at an average price of $19,788 by the end of the year.

PricePredictions' machine learning algorithms, which include a number of technical indicators (MA, RSI, MACD, BB, etc.), indicate a price of $1,000 lower. According to their metrics, the main cryptocurrency will reach $18,797 on December 31, 2022.

However, not everything is so rosy and unambiguous. For example, Bloomberg Intelligence senior strategist Mike McGlone believes that cryptocurrencies are now going through the last stage before reaching the bottom. However, he warns that it will be very difficult to survive this phase: “Normally, markets do not just form a V-bottom. They make it as hard as possible with a lot of volatility, taking money from all investors.”

According to Michael Van De Poppe, a well-known trader and analyst, the pair will face many difficulties on the way to $19,000. The bulls will need to break through the important resistance level in the $17,400-17,600 range and then try to reach the $18,285 horizon.

As for the price of ethereum, Van de Poppe believes that the key support level for this cryptocurrency is the price of $1,200. Mike McGlone is of the same opinion. According to his calculations, ETH has strong support close to the current price level.

There is very little time left until the end of the year, and then we will find out who was more accurate in their forecasts. In the meantime, at the time of writing the review (Friday evening, December 09), ETH/USDis trading around $1,260, and BTC/USD - $17,100. The total capitalization of the crypto market has not changed much over the week and is $0.852 trillion ($0.859 trillion a week ago). The Crypto Fear & Greed Index has fallen only 1 point in seven days, from 27 to 26 and still remains in the Fear zone.

And to conclude the review, a few words about longer-term forecasts. Such popular Twitter analysts as Bluntz and Korinek_Trades do not rule out BTC/USD falling to $15,000 or even $12,000 in Q1 2023.

The picture drawn by Standard Chartered economists is even bleaker. They expect that the collapse of FTX will continue to affect the mood of the crypto market, the series of bankruptcies of large industry participants will continue, which will lead to a further loss of confidence in digital assets. As a result, bitcoin's price could fall to $5,000 during 2023. Standard Chartered Chief Strategist Eric Robertsen allowed investor interest to switch from the digital version of gold to its physical counterpart and the price of the precious metal to rise to $2,250 per troy ounce. At the same time, Robertsen emphasized that the proposed scenario is not a forecast, but only suggests a possible deviation from the current market consensus.

Galaxy Digital founder Mike Novogratz looked farthest into the future and saw a light at the end of the tunnel. In a comment to Bloomberg Television, he maintained his forecast that the price of the first cryptocurrency will rise to $500,000. However, it will now take more than five years for bitcoin, in his opinion, to achieve this goal due to significant changes in the macroeconomic situation and the aggressive actions of the Fed.


NordFX Analytical Group


Notice: These materials should not be deemed a recommendation for investment or guidance for working on financial markets: they are for informative purposes only. Trading on financial markets is risky and can lead to a loss of money deposited.

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