November 14th Financial News

There’s a noticeable lack of a unifying theme in the forex markets today, largely attributed to an empty economic calendar across European and North American regions. Both Australian Dollar and British Pound are seeing a rebound from their recent downturns, particularly noticeable in currency crosses. However, the continuation of this momentum hinges significantly on impending economic data releases. Key reports to watch include Australian consumer and business confidence, along with UK employment data set to be unveiled tomorrow.

Dollar is trailing closely behind as the third strongest currency for the day. Meanwhile, Japanese Yen has seen a slight stabilization from its earlier steep selloff. However, Yen’s recovery is relatively modest and is confined to a select few currencies. The Japanese currency still seems poised to challenge its multi-decade low against Dollar, but market participants may reserve their major trading decisions on USD/JPY until release of US CPI data tomorrow.

Swiss Franc finds itself at the bottom of the performance chart today, facing additional downward pressure due to the resumed rally in EUR/CHF. Similarly, New Zealand Dollar and Canadian Dollar are also among the weaker performers, further weighed down by Aussie’s rebound against them. Euro, in contrast, presents a mixed picture, showing signs of vulnerability in several pairings except against Swiss Franc.

Technically, EUR/GBP is worth some attention in this quiet session. Firm break of 0.8715 minor support will argue that rebound from 0.8648 has completed after rejection by 0.8752 resistance. Fall from 0.8754 would then be seen as the third leg of the corrective pattern from 0.8752, and target 0.8648 support again. Nevertheless, in this case, strong support should emerge around 0.8648 to contain downside to complete the consolidation, and finally bring resumption of whole rise from 0.8491.

In Europe, at the time of writing, FTSE is up 0.63%. DAX is up 0.19%. CAC is up 0.29%. Germany 10-year yield is down -0.0221 at 2.697. Earlier in Asia, Nikkei rose 0.05%. Hong Kong HSI rose 1.30%. China Shanghai SSE rose 0.25%. Singapore Strait Times dropped -0.91%. Japan 10-year JGB yield rose 0.0192 to 0.877.

ECB’s de Guindos foresees temporary inflation rebound, December forecasts crucial for policy assessment

In a speech today, ECB Vice President Luis de Guindos said the central bank expects “a temporary rebound” in inflation in the coming months as base-effect drops out of calculations. However, he emphasized that ECB foresees the overall disinflationary process to continue over the medium term.

De Guindos highlighted the unpredictability surrounding energy prices due to geopolitical tensions and fiscal policy impacts, along with the potential upward pressure on food prices resulting from adverse weather events and the broader climate crisis.

Despite a marked decrease in inflation, de Guindos warned that it is expected to remain high for an extended period, with persistent domestic price pressures. “We will therefore ensure that our policy rates will be set at sufficiently restrictive levels for as long as necessary,” he affirmed.

Emphasizing the ECB’s data-dependent approach, de Guindos stated, “Our future decisions on policy rates will continue to be taken on a meeting-by-meeting basis.” He added that the ECB’s December meeting, armed with fresh macroeconomic projections and additional data, will be crucial for reassessing the inflation outlook and necessary policy actions.

Japan’s wholesale inflation eases to 0.8% yoy, continued downward trend

Japan’s corporate goods price index, a key indicator of wholesale inflation, exhibited a significant slowdown in October, underscoring a continued trend of easing price pressures.

The index increased by just 0.8% yoy, falling short of the anticipated 0.9% yoy and marking its first dip below 1% since February 2021. This latest figure also represents the 10th consecutive month of slowing wholesale inflation.

The deceleration in the CGPI can be largely attributed to decreases in the prices of specific commodities. Notably, costs for wood, chemical, and steel products experienced declines, reflecting the broader impact of reduced global commodity prices.

Export price index saw an uptick from 0.5% yoy to 1.0% yoy. Import price index showed a lesser decline, moving from -15.5% yoy to -12.5% yoy.

RBA’s Kohler warns of bumpy road ahead in tackling inflation

In a speech, Marion Kohler, Acting Assistant Governor of RBA, remarked that decline in inflation is expected to be a “more gradual process than previously thought.”

This outlook stems from the current economic environment characterized by “still-high level of domestic demand” and “strong labour” alongside other cost pressures. These factors contribute to the prediction that inflation will hover just below 3% by the end of 2025.

The Assistant Governor pointed out that the recent trend of declining inflation has primarily been “driven by lower goods price inflation.” In stark contrast, “domestically sourced inflation” – especially in the services sector – has shown resilience, being “widespread and slow to decline.”

Kohler also underscored the nuanced challenges in the next phase of controlling inflation, which she anticipates to be “more drawn out than the first.” This outlook aligns with experiences in other advanced economies that have faced similar inflationary patterns.

Furthermore, she cautioned about the potential for unforeseen challenges, citing the recent increase in fuel prices as an example of supply shocks that could unpredictably influence headline inflation.

Kohler emphasized the uncertain nature of the journey ahead in managing inflation, stating, “the road ahead could be bumpy.”

New Zealand BNZ services fell to 48.9, contraction with economic angst

New Zealand’s BusinessNZ Performance of Services Index experienced a notable dip in October, falling from 50.6 to 48.9, a level indicative of contraction in the sector. This decline also positions the index well below its long-term average of 53.5.

Activity and sales experienced a significant drop, moving from 50.9 to 47.4. There was also a downturn in employment, which decreased from 50.5 to 49.3. New orders and business fell as well,from 53.9 to 51.9. On a more positive note, stocks and inventories saw an increase, rising from 48.0 to 51.1, and supplier deliveries edged up slightly from 49.7 to 49.8.

Despite these declines, the proportion of negative comments in October decreased to 58.2%, a reduction from 61.8% in September and 63.9% in August, indicating a slight improvement in business sentiment.

BNZ Senior Economist Craig Ebert said that “combined, the PSI (48.9) and PMI (42.5) paint a picture of economic angst. This counsels caution around GDP for Q3, after it posted a surprising gain of 0.9% in Q2”.

EUR/USD Mid-Day Outlook

Daily Pivots: (S1) 1.0663; (P) 1.0678; (R1) 1.0700; More…

Intraday bias in EUR/USD stays neutral at this point. On the downside, break of 1.0655 minor support, and sustained trading below 55 4H EMA (now at 1.0664), will argue that the rebound from 1.0447 has completed with three waves up to 1.0755. That came after rejection by 1.0764 cluster resistance (38.2% retracement of 1.1274 to 1.0447 at 1.0763). In this case, intraday bias will be turned back to the downside for 1.0447/0515 support zone. Nevertheless, strong bounce from current level, followed by decisive break of 1.0764, will bring stronger rally to 61.8% retracement at 1.0958 next.

In the bigger picture, price actions from 1.1274 are viewed as a corrective pattern to rise from 0.9534 (2022 low). Rise from 1.0447 is tentatively seen as the second leg. Hence while further rally could be seen, upside should be limited by 1.1274 to bring the third leg of the pattern. However, break of 1.0447 will resume the fall to 61.8% retracement of 0.9543 to 1.1274 at 1.0199.

Article Source： ACTIONFOREX

Source: CME Group

Source: REUTERS

A sudden explosive growth in stock options trading in India this year has got the country's retail traders excited and regulators worried about the risks such speculative fervour could spawn.

The boom in derivatives trading in the country's historically conservative markets, where some products such as stock futures are still too expensive, has come after stock exchanges changed some options contracts to facilitate quicker and cheaper bets and as online retail trading platforms mushroomed.

Data from exchanges, which are big winners of this surge in demand, shows the daily average value of assets underlying these stock options more than doubled between March and October to $4.2 trillion. The ratio of the notional value of derivatives to cash trading is the highest in the world.

India's stock market regulator Securities and Exchange Board of India (SEBI) has so far not stepped in to curtail the trading but has issued warnings and said it is aware of the risks.

Market analysts are concerned.

The surge in options activity is more speculative than for hedging purposes, said Mihir Vora, chief investment officer at Trust Mutual Fund. "This can magnify any sharp falls in the market and act as a potential risk," he said.

SEBI and the top Indian exchanges, the National Stock Exchange of India Ltd (NSE) and BSE Ltd, did not respond to e-mails from Reuters.

But Ashish Chauhan, the head of the NSE, said in a message to investors: "Trade in derivatives by retail investors should be avoided because of the high risk involved. Be a long-term player."

Analysts point to historic examples of rookie retail investors being hurt by derivatives trading, notably in South Korea in the early 2000s when regulators had to enforce barriers to retail participation.

Moreover, India's more nascent derivatives markets lack guard rails. Regulators have so far not mandated any minimum net worth or investor qualifications for those trading stock options, and the stock markets almost always rise each year - both recipes for higher risk-taking and complacency.

Dozens of digital trading platforms such as Zerodha, Groww and AngelOne, have become the top brokerage firms in the past couple of years, as a fintech boom and the stay-home environment from the pandemic drives small investors seeking a quick return towards robo-trading and other low-cost platforms.

Axis Mutual Fund estimates there are 4 million active derivatives traders in the country. The traders are mostly small players, according to SEBI data.

Axis said in a report there is as much as 500 times leverage on some options, meaning a 2,000 Indian rupees ($24.01) bet gives the option holder 1 million rupees worth exposure, and often retail investors were holding these bets for just 30 minutes on average.

RETAIL FRENZY

The total number of derivative contracts traded on the National Stock Exchange - which accounts for a bulk of options trading volumes - was 39.85 billion between April and September, almost near the 41.76 billion traded in the financial year that ended in March 2023.

As much as 99% of these are options contracts, which allow holders to bet on a stock or index rising or falling by paying a fraction of the value of the shares.

The "stark" increase in daily options trading turnover raises issues of investor protection, said Ajay Tyagi, former SEBI chief. "There is froth in the market and retail investors are looking to make easy money with limited understanding."

Kailash Plaza, a building in Mumbai's eastern suburbs, has become one of the focal points of the boom, with hundreds of stock market traders, brokers and investment advisers crammed into offices spread across five storeys.

Bhavesh Shah sits in a tiny cubicle behind a translucent door in the plaza. A notice on his door promises that at 500 Indian rupees ($6.00) per month one could make up to 150,000 Indian rupees.

Shah says his youngest client is 21 years old and is investing small sums of money earned from odd jobs. "These youngsters play a lot of games; they think of this as a game as well," he said.

SEBI WARNS AND WATCHES

SEBI will soon mandate that all large brokerage firms give out specific warnings on market risks, said two sources who are familiar with the regulator's thinking. SEBI is also nudging stock exchanges to review incentives offered to large volume traders, they said.

There have also been preliminary discussions on an increase in taxes that might reduce speculative activity, said a third source familiar with the discussions.

However, decisions on taxes are taken by the government and the regulator can at best recommend such a change.

The sources declined to be named as they were not authorised to speak to the media.

Zerodha, one of India's largest discount trading platforms, says more than 65% of its users are first-time investors and over 60% of new accounts come from small towns. The average age of users that joined in the last year is 29.

The platform has seen an uptick in futures and options trading activity, Zerodha said in response to Reuters queries.

People dallying in financial markets in India's bustling small towns are usually less savvy than in trading hubs like Mumbai or Ahmedabad.

Despite the risks, many young investors remain fired up.

Siddharth Joshi, a 36-year old from Surat in western India, said he lost 200,000 rupees trading options on Adani Enterprises shares in January. But he's not giving up, he told Reuters by phone.

"In options trading, I know my loss is capped but there is an opportunity to make maximum profit," he said.

($1 = 83.2575 Indian rupees)

(Reporting by Ira Dugal and Jayshree P. Upadhyay Editing by Vidya Ranganathan and Raju Gopalakrishnan) 

Article Source: zawya

Market did not enjoy the last BoJ meeting

Key data releases this week

Euro-yen continues higher undaunted

Source: XM

Bitcoin (BTC) will “most likely” see a serious price drawdown before a key date for institutional investors dawns, says gold bug Peter Schiff.

In recent X activity, the longtime Bitcoin skeptic sounded the alarm over recent BTC price gains.

Schiff bets on a BTC price "crash" before ETF launches

Bitcoin is a favoirte topic of criticism for Peter Schiff, the chief economist and global strategist at asset management firm Europac.

Throughout the years, he has repeatedly insisted that unlike gold, Bitcoin’s value is destined to return to zero, and that no one in fact wishes to hold it except in order to sell higher later on.

Now, with BTC/USD circling 18-month highs, he has turned his attention to what others say will be a watershed moment for cryptocurrency — the launch of the United States’ first Bitcoin spot price exchange-traded fund (ETF).

An approval is thought to be due in early 2024, while rumors that a green light could come in November are thought to have fueled last week’s ascent past $37,000.

While some believe that the announcement will be a “sell the news” event, where investors reduce exposure once certainty over the ETF hits, for Schiff, a BTC price comedown may not even wait for that.

In an X survey on Nov. 9, he offered two scenarios for a Bitcoin “crash” — before and after the ETF launch. Alternatively, respondents could choose “Buy and HODL till the moon,” which ultimately became the most popular choice with 68% of the nearly 25,000 votes.

Despite this, however, Schiff stood his ground.

“Based on the results my guess is that Bitcoin crashes before the ETF launch,” he responded.

“That why the people who bought the rumor won't actually profit if they wait for the fact to sell.”

AllianceBernstein: Bitcoin ETF "getting slowly priced in"

As Cointelegraph reported, the mood among the institutional sphere is lightening as the ETF debate looks increasingly set to end in Bitcoin’s favor.

Among the latest optimistic BTC price forecasts is that of AllianceBernstein, which last week predicted a peak of $150,000 next cycle.

“We believe early flows could be slower and the build up could be more gradual, and post-halving is when ETF flows momentum could build, leading to a cycle peak in 2025 and not 2024,” analysts wrote in a note quoted by MarketWatch and others.

“The current BTC break-out is just simply ETF approval news getting slowly priced in and then the market monitors the initial outflows and likely gets disappointed in the short run.”

An accompanying chart showed BTC price past and future behavior delineated by halving cycles.

BTC/USD cycle phases (screenshot). Source: AllianceBernstein/MarketWatch

This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.

Article Source: COINTELEGRAPH