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Forexlive Americas FX News: No Bad Luck on Friday the 13th. Stocks Rebound.


It was Friday the 13th but the day was not scary for the markets. After sharp declines in US stocks, bond yields and crypto at the dawn of the day, stocks rebounded today, yields rose and bitcoin even rebounded.

Fundamentally, however, there was scare as UMichigan’s preliminary consumer sentiment dipped to 59.1 from 64.0. It was the lowest level in 10 years.

As for the components, they 2 showed weakness with current expectations conditions falling sharply and inflation expectations remaining stable at elevated levels:

  • Current conditions 63.6 vs. 70.5 expected
  • Expectations 56.3 vs. 63.0 expected
  • Inflation expectations over 1 year 5.4% vs. 5.4% previously
  • Inflation expectations over 5 to 10 years 3.0% vs. 3.0% previously

In the forex market today, the USD retraced some of the gains seen lately. The greenback fell against all major currencies except the JPY.

Strongest to weakest major currencies

The AUD, CAD and NZD were the strongest in the majors

Majors

There are hundreds of different currency pairs and crosses that can be traded. Major currency pairs or majors represent the most liquid and widely traded pairs. These include EUR/USD, USD/JPY, GBP/USD and USD/CHF. The reason for the popularity of these trading pairs is obvious, given that they include the currencies of some of the world’s most important economic centers. Moreover, these currencies including majors are also a significant part of global economic transactions. The US dollar, euro, Japanese yen, British pound, and Swiss franc are all among the major currencies traded around the world. EUR/USD alone is the most traded currency pair in the world, accounting for around 20% of all forex transactions. They are the most liquid and also usually have the lowest spreads during normal trading times. This differs from exotic pairs, which generally have lower volume or liquidity and therefore have higher spreads. Major trades engage in high volumes relative to minor or exotic pairs, which means traders can enter and exit the market seamlessly, even with large positions. Another benefit of trading majors is the reduction in slippage that traditionally occurs with such deals. High volumes correspond to a higher number of traders willing to buy or sell at any given time. Hence, there is a reduced likelihood or smaller amount of slippage, which is an extremely sensitive issue among retail forex traders. These factors in turn ensure that the majors are among the most traded currency pairs, especially in the retail sector.

There are hundreds of different currency pairs and crosses that can be traded. Major currency pairs or majors represent the most liquid and widely traded pairs. These include EUR/USD, USD/JPY, GBP/USD and USD/CHF. The reason for the popularity of these trading pairs is obvious, given that they include the currencies of some of the world’s most important economic centers. Moreover, these currencies including majors are also a significant part of global economic transactions. The US dollar, euro, Japanese yen, British pound, and Swiss franc are all among the major currencies traded around the world. EUR/USD alone is the most traded currency pair in the world, accounting for around 20% of all forex transactions. They are the most liquid and also usually have the lowest spreads during normal trading times. This differs from exotic pairs, which generally have lower volume or liquidity and therefore have higher spreads. Major trades engage in high volumes relative to minor or exotic pairs, which means traders can enter and exit the market seamlessly, even with large positions. Another benefit of trading majors is the reduction in slippage that traditionally occurs with such deals. High volumes correspond to a higher number of traders willing to buy or sell at any given time. Hence, there is a reduced likelihood or smaller amount of slippage, which is an extremely sensitive issue among retail forex traders. These factors in turn ensure that the majors are among the most traded currency pairs, especially in the retail sector.
Read this term as the risk to sentiment increased. The JPY – which traded at another 20-year high on Monday before reversing lower from Tuesday into Thursday, rebounded higher today on the tone of heightened risk and exited relative safety of JPY

JPY

The Japanese yen (JPY) is the official currency of Japan and, at the time of writing, is the third most traded currency in the world behind the US dollar and the euro. The JPY is widely used as a reserve currency and is used by traders as a safe haven currency. Originally set up in 1871, the JPY has a long history and has survived several world wars and other events. This was followed by the establishment of the Bank of Japan (BoJ) in 1882 and full oversight of the JPY by the Japanese government only in 1971. Japan has historically maintained a policy of monetary intervention, which continues to this day. The BoJ also adheres to a zero to near zero interest rate policy and the Japanese government previously had a strict anti-inflationary policy. Any other changes in monetary policy by the central bank are closely watched by forex traders. Also, the overnight call rate is the main short-term interbank rate. The BoJ uses the call rate to signal monetary policy changes, which in turn impact the JPY. The BoJ also buys 10- and 20-year Japanese government bonds (JGBs) on a monthly basis to inject liquidity into the monetary system. The consistent yield on the benchmark 10-year JGBs helps serve as a key indicator of long-term interest rates. Economic data is also very important for the JPY. The most important of these releases in Japan are Gross Domestic Product (GDP), Tankan Survey (Quarterly Survey of Business Sentiment and Expectations), International Trade, Unemployment, Industrial Production and GDP readings. money supply (M2 + CD).

The Japanese yen (JPY) is the official currency of Japan and, at the time of writing, is the third most traded currency in the world behind the US dollar and the euro. The JPY is widely used as a reserve currency and is used by traders as a safe haven currency. Originally set up in 1871, the JPY has a long history and has survived several world wars and other events. This was followed by the establishment of the Bank of Japan (BoJ) in 1882 and full oversight of the JPY by the Japanese government only in 1971. Japan has historically maintained a policy of monetary intervention, which continues to this day. The BoJ also adheres to a zero to near zero interest rate policy and the Japanese government previously had a strict anti-inflationary policy. Any other changes in monetary policy by the central bank are closely watched by forex traders. Also, the overnight call rate is the main short-term interbank rate. The BoJ uses the call rate to signal monetary policy changes, which in turn impact the JPY. The BoJ also buys 10- and 20-year Japanese government bonds (JGBs) on a monthly basis to inject liquidity into the monetary system. The consistent yield on the benchmark 10-year JGBs helps serve as a key indicator of long-term interest rates. Economic data is also very important for the JPY. The most important of these releases in Japan are Gross Domestic Product (GDP), Tankan Survey (Quarterly Survey of Business Sentiment and Expectations), International Trade, Unemployment, Industrial Production and GDP readings. money supply (M2 + CD).
Read this term.

In other markets:

  • Spot gold fell further from $10.89 -0.61% to $1,811.72. Today’s low price broke below the $1800 level for the first time since February 4th. Last Friday, the price closed at $1882.99. The rate of decline shows a decrease of 3.82% for the current week.
  • Silver rebounded today after this week’s short dip. the spot level increased by $0.41 or 2.06% to $21.07. This compares to a close a week ago at $22.33. The $1.26 drop represents a -5.6% decline for the week.
  • WTI crude oil futures are trading at $110.13 near the 5 p.m. level. It’s about $4.03 on the day. The settlement price for the week was $110.49

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Sentiment in the US stock market was more positive today after the S&P index closed -20% off the all-time high in yesterday’s trade (at the week’s low, the S&P was in decrease of -19.92%).

Today’s gains were led by the NASDAQ index which rose 3.82%. The NASDAQ index was the hardest hit during the decline in 2022, with the index hitting a low of -31.48% from the all-time high of yesterday’s session lows. The broad NASDAQ and S&P indices were even lower for the 6th week in a row, while the Dow Jones industrial average fell for the 7th week in a row.

In today’s trading, the major indices all rose and did not trade lower that day, which was a breath of fresh air.

Forexlive Americas FX News: No Bad Luck on Friday the 13th. Stocks Rebound.

US stock indices closed higher today

In the US debt market, after falling from Monday’s highs in today’s trading, yields along the yield curve rebounded higher.

Members of the Fed continued this week to stress that rates would rise until they reach a more neutral level around 2.5%. With the current yield at 1.0%, that leaves room for at least another 150 basis points.

Most expressed the wish to increase tariffs by 50 basis points during the next 2 meetings. After that, there is a debate.

The Fed’s Bullard, the most hawkish member, said this week that he would like to see the Fed tighten to 3.5% by the end of the year. Others are more in the 2.5% camp but would be ready to raise rates if justified.

This week, CPI data showed a higher than expected increase (although the rate was lower than the previous month). With crude oil prices higher and gasoline prices also rising ahead of the Memorial Day holiday, hopes for relief from lower oil prices do not look encouraging. This could lead to a tighter Fed, but could also lead to slower growth at the same time.

Forexlive Americas FX News: No Bad Luck on Friday the 13th. Stocks Rebound.

US yields rose

I hope you all have a good weekend. Thank you for your support.


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