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According to the Wall Street Journal: US President Trump submitted the Saudi Arabia nuclear agreement to Congress.August 26th - The Bank of Koreas policy decision this week may not be finalized until the last minute. Slightly more than half of economists expect the central bank to raise interest rates for the second consecutive meeting to maintain policy leadership, given stronger-than-expected economic growth and persistent underlying inflation. Of the 22 economists surveyed, 14 predict the Bank of Korea will raise its benchmark interest rate by 0.25 percentage points to 3% on Thursday, while 8 expect it to keep the rate unchanged. Furthermore, the Bank of Korea will release its latest forecasts, which are expected to support further tightening of monetary policy. Given stronger-than-expected exports and domestic demand, the banks economic growth forecast for 2026 is expected to be significantly revised upward from 2.6% in May. Similarly, the inflation forecast is also likely to be revised upward from 2.7% in May, reflecting rising oil prices, currency depreciation earlier this year, and signs that the semiconductor boom is driving investment and consumption. Of course, the central bank may also cite the recent rebound of the won as a factor to ease the urgency of an immediate rate hike. If the bank keeps rates unchanged, investors are likely to set their expectations for a rate hike in October.On August 26, according to Axios, US Secretary of State Marco Rubio recently told officials from several allied countries that the US is not currently expected to launch a new military strike against Iran. Sources familiar with the matter revealed that the Trump administrations current policy is to "temporarily avoid military action against Iran," instead increasing economic pressure through a US naval blockade and a new round of Treasury sanctions, and pushing as much oil as possible through the Strait of Hormuz into the global energy market. US officials stated that clearing most of the mines from the Strait of Hormuz and the recent increase in oil tankers passing through the southern shipping lanes have "significantly weakened Irans influence in the global energy market." One US official stated, "Iran has lost control of the strait, and now the US controls it." The US believes that the naval blockade is cutting off a vital source of revenue for Iran, and almost no oil tankers have been seen near Kharg Island, Irans main oil export port, in the past two weeks. Rubio stated that the US currently has no plans to resume large-scale military action, but the US retains the option to strike if Iran launches a preemptive attack. Another US official stated that this policy is expected to continue at least until after the midterm elections, at which point new military action may once again become an option.The U.S. Department of Justice stated that Deloitte agreed to pay $21.5 million to resolve allegations of employment discrimination violations.On August 26th, according to South Koreas *Chosun Ilbo*, South Korean DRAM export prices continue to soar, with AI-driven HBM production squeezing the supply of conventional memory. Data shows that from August 1st to 20th, the export price of South Korean DRAM reached $92,183 per kilogram, a 401% year-on-year increase and approximately 12.5 times higher than the low point in January 2023. Goldman Sachs predicts that the DRAM supply gap will widen from 5.0% this year to 5.9% next year, and believes that "HBM required for AI servers and high-capacity server DRAM are absorbing limited production capacity, leading to a further tightening of conventional DRAM supply." TrendForce predicts that by the end of next year, Samsung, SK Hynix, and Micron will account for 30% of total DRAM wafer input for HBM production, but HBM will only account for about 13% of actual DRAM bit supply. Memory manufacturers warn that the AI-driven DRAM and NAND supply shortage may continue beyond 2027. SK Hynix stated that from a supply perspective, 2027 could become "the most severe shortage year in the history of the memory industry." Goldman Sachs predicts that the supply shortage may continue until 2028.

Wednesday's Doji and the ECB Economic Bulletin entice buyers below 1.0200 for the EUR/USD

Daniel Rogers

Aug 04, 2022 11:43

 截屏2022-08-04 上午11.44.23.png

 

During Thursday's mid-Asian session, the EUR/USD gets intriguing as it increases bids to 1.0165, supporting Wednesday's bullish Doji. However, the pair buyers anticipate that the recent decline in rates and the monthly Economic Bulletin from the ECB would provide support.

 

Having said that, the main currency pair had previously retested its weekly bottom before rebounding from 1.0122 to converge with the day's starting levels and produce a bullish Doji candlestick. In doing so, the quotation followed changes in the US currency and conflicting worries over the bloc's gas problem, as well as underwhelming statistics, in advance of Friday's crucial US Nonfarm Payrolls (NFP).

 

The US Dollar Index (DXY), which earlier on Wednesday re-tested the weekly high with a price of 106.82, is still undecided at 106.35.

 

The US-China rivalry over Taiwan, as well as the disappointing Eurozone retail sales and better US PMIs, originally encouraged the greenback's gauge. The pre-NFP angst, however, seems to have been joined by higher stocks and a positive China PMI to test the DXY bulls. The report released by Bloomberg also gives EUR/USD buyers optimism.

 

The European Central Bank (ECB) stated that the fiscal support given to the euro area economies during the Russia-Ukraine war is increasing the region's GDP while momentarily bringing down inflation in a pre-release of its economic report issued on Tuesday and shared by Bloomberg.

 

While the US ISM Services PMI for July increased to 56.7 from 55.3 in June and the market forecast of 53.5, the Eurozone's retail sales decreased by 1.2 percent MoM in June compared to a 0.0 percent projected decline and 0.4 percent previous month. Additionally, from 52.7 in June and the flash estimate of 47, the final reading of the US S&P Global Services PMI for July fell to 47.3, representing the first decline in two years. Additionally, China's July Caixin Services PMI shocked investors with positive information.

 

It's important to note that recent Fed officials have generally been hawkish and have pushed back against the EUR/USD bulls. According to James Bullard, president of the St. Louis Federal Reserve Bank, "there is still some distance to go to get to a restrictive monetary policy." The decision-maker expresses preference for the sort of frontloading while stating that he still hopes to reach 3.75 to 4 percent this year. Along with Bullard, Thomas Barkin and Neel Kashkari, the presidents of the Feds in Richmond and Minneapolis, joined the league of Fed hawks to apply downward pressure. The DXY bulls were later subdued, although San Francisco Fed President Mary Daly looked to have sent out conflicting signals. "Markets are ahead of themselves in expecting rate cuts next year," the policymaker added.

 

The S&P 500 Futures printed slight losses at the latest while the Wall Street benchmarks finished with substantial gains among these trades. Additionally, the US 10-year Treasury rates are still under pressure at 2.71 percent as of press time, down three basis points (bps).

 

Moving on, the US Good and Services Trade Balance for June, predicted to be $-80.1 billion vs $-85.5 billion previously, as well as the weekly Initial Jobless Claims, expected to be 259K versus 256K previously, will come before Germany's Factory Orders for June to embellish the calendar. Prior to Friday's US NFP, however, much focus will be placed on the remarks made by ECB and Fed leaders as well as the Sino-American conflict over Taiwan.

 

Prior to the 1.0200 level, there is a convergence of the prior support line from mid-July and the 10-DMA, which limits the short-term EUR/USD rebound. The 21-DMA and the Doji's bottom, which are located respectively at 1.0155 and 1.0120, may present difficulties for the intraday sellers.


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