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South Korean customs: South Korea imported 10.8 million tons of crude oil in November, compared with 11.3 million tons in the same period last year.On December 14th, according to a report by Ukraines Interfax news agency, Ukrainian President Volodymyr Zelenskyy stated that the US demand for a unilateral withdrawal of Ukrainian troops from eastern Ukraine and the establishment of a "free economic zone" there is "unfair," and Ukraine needs to realistically view the peace process. Zelenskyy told the media that according to the USs "compromise plan," Russian troops would not be allowed to enter parts of eastern Ukraine, while Ukrainian troops would withdraw from these areas and establish a "free economic zone." "I think this is unfair because there is no stipulation on who will manage the economic zone," Zelenskyy said. He added that if Ukrainian troops withdraw, Russian troops should also withdraw, a problem that currently "has no answer, but is very sensitive and thorny." If a "buffer zone" is established along the military contact line, with only police deployed to maintain order, and troops withdrawn, "then the problem becomes very simple."December 14 - According to the Japan Meteorological Agency, a magnitude 4.9 earthquake struck off the coast of the Noto Peninsula, Japan, at approximately 11:26 PM local time on December 14, with a depth of 10 kilometers. There is no risk of a tsunami.On December 14th, the Financial Times analysis pointed out that given ECB President Christine Lagardes view that the bank is in "good shape," investors unanimously expect the ECB to keep its benchmark interest rate unchanged at 2% next week, instead focusing on its economic forecasts. Lagarde stated this week that ratemakers may again raise their growth forecasts for the Eurozone at their meeting. These stronger growth forecasts, along with persistent inflation, have recently led traders to increase their bets on an ECB rate hike next year. However, as the potential shift in monetary policy direction remains controversial, and this change has only recently been reflected in swap market pricing, traders will pay particular attention to clues about the timing of rate hikes; any adjustments to policy signals are expected to be subtle. George Moran, a Eurozone economist at RBC Capital Markets, said he expects the ECB not to raise rates in 2026 because "cyclical tailwinds are likely temporary." He added that the ECB has "made it clear that it does not want to overreact to temporary deviations from its targets."On December 14th, according to the Ukrainian National News Agency, Ukrainian President Volodymyr Zelenskyy told the media that he had informed members of the Verkhovna Rada (parliament) to prepare contingency plans for a possible election soon. Zelenskyy said, "Most importantly, I will not cling to the presidency. I believe Ukraine should be prepared for any changes." He said he had asked partners for help in resolving election security issues, and he had also informed Verkhovna Rada members to prepare contingency plans for a possible election soon. Zelenskyy said he had received "signals" from the United States and President Trump regarding the Ukrainian presidential election, adding, "Whether these signals come only from the United States or also from Russia, I do not want to comment at this time."

Investor attention is on the Fed's minutes as recession fears drive the US Dollar Index towards 107.00

Daniel Rogers

Aug 16, 2022 11:47

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The US Dollar Index (DXY) rises for a third day in a row during Tuesday's Asian session, gaining bids to 106.58. Thus, the greenback's signal captures the market's rush for risk-free assets in response to worries about the US and China's economies as well as worries about geopolitics in the Middle East, China, and Russia. It is noteworthy that aggressive Fed remarks and weaker US data enhance market trepidation and help DXY bulls.

 

Despite this, the DXY bulls closely monitor the gloomy statistics coming out of China and the US, particularly in light of the recession fears.

 

In August, the US NY Empire State Manufacturing Index fell from 11.1 in July to 31.3, below market estimates of 8.5. The August NAHB homebuilder confidence index in the US fell from 55 to 49, the lowest level since the start of 2020.

 

In other news, China's retail sales slowed in July to 2.7% YoY from 3.1% earlier and 5.0% forecast, while industrial production (IP) fell to 3.8% from 3.8% previously and 4.0% market estimates. Additionally, in an effort to counter bearishness, the People's Bank of China (PBOC) shocked the markets on Monday by reducing the rates on its medium-term lending facility (MLF) by 10 basis points (bps).

 

It should be emphasized that news stories about deteriorating coronavirus conditions in Shanghai, China's financial center, and the restart of Russian bond trading on Wall Street did not spur investors' desire to take risks. The Wall Street Journal's (WSJ) rumors of a potential meeting between US Vice President Joe Biden and his Chinese counterpart Xi Jinping may also encourage investors to take more risks. In a similar vein, Chinese President Xi proposed new efforts to revive the second-largest economy in the world.

 

The Pentagon said on Monday that the US, South Korea, and Japan took part in a missile warning and ballistic missile search and tracking exercise last week off the coast of Hawaii. Between August 22 and September 1, the US and South Korea will collaborate on military drills. The DXY rises as a result of the additional stress that geopolitical worries place on market sentiment.

 

The three-day downtrend in US 10-year Treasury yields is around 2.775%, while S&P 500 Futures are down at least 0.13 percent day-to-day.

 

Moving on, the secondary US housing and activity data released today should be of interest to DXY traders ahead of the release of the FOMC Minutes on Wednesday. The dollar's gauge might remain on the bear's radar if US data keep getting worse.

 

The three-week-old resistance line, which is now support at 106.35, would need to be broken for an extended period of time for DXY bulls to hit the monthly high above 107.00. However, in order to approach July's yearly high close to 109, the bulls need confirmation from late July's peak at 107.45.