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On February 25th, HP (HPQ.N) stated that its full-year earnings may reach the lower end of its previously forecast range due to tariffs and rising memory chip prices. The stock fell approximately 7% in after-hours trading after closing at $18.20 in New York. Over the past 12 months, the stock has fallen by 48%. HP and other device manufacturers are facing the dual challenges of rising memory chip prices and supply shortages as consumers buy new computers to replace outdated devices and acquire new AI capabilities. The company stated that the memory issue will persist throughout the fiscal year and may extend into the next. HP said it is raising product prices, working to bring in more suppliers, and adjusting some products to reduce memory demand. The company said today that it has made progress in these areas, including completing the certification of new suppliers. HP announced the launch of a multi-year cost-cutting plan aimed at saving the company $1 billion annually by 2028.Japans corporate services price index rose 2.6% year-on-year in January, up from 2.60% in the previous month.Japans corporate services price index fell 0.5% month-on-month in January, compared with 0% in the previous month.February 25th - Traders in the US futures and options markets are increasingly betting that the Federal Reserve will continue to cut interest rates next year rather than raise them. The spread of the Covered Overnight Financing Rate (SOFR) futures, which is closely linked to Fed policy expectations, is inverting significantly – indicating that traders are beginning to anticipate a longer period of central bank easing. Previously, traders had been betting that the Fed would cut rates twice by 25 basis points before the end of this year and then resume rate hikes in 2027. However, the increasingly heated debate surrounding the impact of artificial intelligence on the labor market has prompted them to reassess this expectation. Jack McIntyre, portfolio manager at Brandywine Global, stated, "The question is how AI will cause inflation. The only aspect of AI that could potentially cause inflation is the construction of data centers and the associated energy demand." Meanwhile, in the spot market, traders lack confidence in how to allocate US Treasuries. JPMorgan Chases latest client survey (for the week ending February 23rd) shows that neutral positions have reached their highest level since the end of 2024.February 25th - New revisions to Japans corporate governance guidelines could release some of the $840 billion in cash held by listed companies and fuel a new wave of buying in the Japanese stock market. The Financial Services Agency (FSA) will submit draft rules to an expert panel on Thursday, requiring companies to verify the efficiency of their cash usage, with the aim of implementing this change this year. Despite significant improvements in corporate governance in recent years, Japanese companies still have a large amount of idle cash on their balance sheets. Investing these funds in higher-yielding projects could potentially enhance the attractiveness of the Japanese stock market to investors. Sho Nakazawa, equity strategist at Morgan Stanley Mitsubishi UFJ Securities, stated, "This revision will make it easier to anticipate increased allocations to growth sectors, as well as more stable growth in share buybacks and dividends," which in turn could lead to capital inflows from overseas investors. Analysts have long argued that excessive cash holdings by Japanese companies are one of the factors hindering improvements in return on equity (ROE), a key metric closely watched by stock investors, which has caused Japans ROE to lag behind its Western counterparts.

The euro against the dollar is under pressure at the 1.16 line, and multiple factors drag the euro down

Oct 26, 2021 10:55

On Monday (October 18), the euro remained weak against the US dollar, and the exchange rate opened at around 1.1600, but failed to preserve its upward momentum. The current exchange rate is trading below 1.1600.


Following the rise in U.S. 10-year Treasury bond yields, the U.S. dollar rose above 94.00. Concerns that rising energy prices will push up inflation and optimism in US retail sales push up Treasury bond yields. Investors also expect the Fed to start reducing asset purchases as soon as November, while the European Central Bank maintains a dovish stance to suppress the euro. The expectation of a weak global economy has been strengthened within the day, leading to increased risk aversion in the market, and the US dollar is favored.

European Central Bank President Lagarde said that the central bank will continue to provide support to the euro zone economy because the impact of the epidemic is still there. She previously said that the inflation rate is "basically short-lived." In addition, Klass Knot, a member of the European Central Bank Management Committee, ignores inflation concerns and the prospect of short-term interest rate hikes.

In terms of economic data, industrial production in the Eurozone fell by 1.6% in August, and increased by 1.4% after revisions to the previous value.

At present, traders are waiting for US industrial production data, and Fed officials Quarles' speech to seek new trading momentum.

Technology prospects


The daily chart shows that the euro fell against the US dollar in early October, staying below 1.1600, and on Tuesday tested the year's low near 1.1524. The euro against the dollar is already below the 21-day moving average and the 50-day moving average, maintaining a downside risk.

Now, if the euro against the dollar breaks through the 20-day moving average of 1.1618, there may be a daily rise. The first upside target for the EUR/USD will be the 1.1650 resistance level, followed by the September 29 high of 1.1690. The MACD indicator is oversold. If the MACD indicator continues to run upwards, the long target for the euro against the US dollar is 1.1750.

Or, if the euro/dollar breaks below the low, the shorts will once again dominate, and the support will be at the 1.1555 level. Next, market participants will test the low of 1.1524. If the euro against the dollar falls below the above level, it will test the 2018 low.

UOB foreign exchange strategist: the euro against the dollar will still try to rise to 1.1640 in the next few weeks


24-hour view: "Yesterday we thought that'the euro does not rule out the possibility of further rise, but it is unlikely to hit the important resistance level of 1.1640.'Our view is correct, because the euro rose to 1.1624 and then fell. The upward pressure weakened, the euro did not It is very likely to strengthen further. The euro is more likely to consolidate in the 1.1570/1.1620 range today."

1-3 week outlook: "Our view has not changed much since October 14. The recent decline has ended. The rapid rebound has gained momentum, and the euro may rise to 1.1640. The euro does not rule out the possibility of further rise, but it is not easy to break through 1.1640. As long as it does not fall below 1.1540 in the next few days, the upward trend will remain unchanged."

(Daily chart of the euro against the dollar)

At 17:15 GMT+8, the euro traded at 1.1584 against the dollar.

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