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January 28th - Silver prices continued their upward trend, driven by a weaker dollar. Investors are shifting from sovereign bonds and currency assets to safe-haven hard assets. Saxo Bank analysts stated that gold and silver continued their strong gains as devaluation trades regained focus. Furthermore, the fact that Rick Riddell, a BlackRock executive known for his aggressive interest rate cuts, is considered a leading candidate for the next Federal Reserve Chairman further reinforces this logic.The Russian Foreign Ministry announced that the two Russian crew members detained on the oil tanker have been released and are en route to Russia.On January 28th, gold prices broke through $5,300 for the first time, accumulating a gain of over 20% year-to-date. The current "confidence crisis" in the US dollar further enhances the attractiveness of gold to overseas investors. Kelvin Wong, senior market analyst at Oanda, stated that the rise in gold prices stems from its extremely strong indirect negative correlation with the US dollar, as well as Trumps response to the dollar, reflecting a possible consensus within the White House to push for a weaker dollar. Trump also indicated that he would soon announce his nominee for Federal Reserve Chairman and predicted that interest rates would decline after the new chairman takes office. Ilya Spivak, global head of macro at Tastylive, pointed out that given the tension between the Feds responsibilities and the White Houses stance, the market is simply taking a defensive stance ahead of Powells speech today.Chairman of the German Federal Financial Supervisory Authority: There is a high possibility of a sudden correction in the financial markets.Italys Istat consumer confidence index for January was 96.8, below the expected 97 and the previous reading of 96.6.

As China PMIs decrease, the Fed moves, and US NFP is predicted, USD/CNH surpasses 7.2800

Alina Haynes

Oct 31, 2022 16:37

截屏2022-10-31 上午11.11.46.png 

 

As China's monthly activity data disappoints offshore Chinese yuan (CNH) investors, the USD/CNH continues to draw buyers for a third consecutive day on Monday, advancing 0.23 percent intraday to 7.2850 as of press time. Concerns regarding covid difficulties in the dragon kingdom and apprehensions regarding a hawkish move by the Federal Reserve also encourage buyers to remain positive.

 

As a result, China's official NBS Manufacturing PMI for October dropped to 49.2, compared to the expected 50.0 and the previous 50.1. In addition, the Non-Manufacturing PMI fell to 48.7, below market estimates of 51.9 and previous readings of 50.6. Following the publication of the data, Reuters produced an article "In October, China's factory activity unexpectedly dropped, according to a survey released by the government on Monday. Global demand decline and strict COVID-19 regulations impeded manufacturing."

 

Due to the US dollar's status as a safe haven, the shutdown of a casino resort in Macau and Russian concerns also add to the USD/appreciation. Russia, which invaded Ukraine on February 24, halted its participation in the Black Sea agreement for a "indefinite period" on Saturday because it could not "guarantee the protection of civilian ships" traveling under the treaty after its Black Sea naval was attacked.

 

The fact that US Treasury yields are directionless after a bad economic report is notable, as is the fact that US stocks futures are seeing modest losses as the Dow Jones prepares for its highest monthly gain since 1976. In addition, the US Dollar Index (DXY) demonstrates a three-day increase near 110.80, with an intraday increase of 0.1% as of press time.

 

In conclusion, the USD/CNH bulls may maintain control because China's fundamentals are weaker than those of the United States. Concerns that the Fed may suggest slowing the pace of rate hikes beginning in December have recently appeared to test buyers of currency pairs.


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