November 14th Financial News

Daily News

Summary:

U.S. CPI data is expected to be affected by how health insurance costs are calculated; ECB Guindos says Eurozone inflation may temporarily rebound, though its prevailing direction is downwards; British Prime Minister reshuffles cabinet...

[Quick Facts]

1. NY Fed October finds softer inflation expectations in October.

2. U.S. CPI is expected to be affected by how health insurance costs are calculated.

3. OPEC: The oil market remains strong despite negative sentiment.

4. Guindos: Eurozone inflation may temporarily rebound, though its prevailing direction is downwards.

5. British Prime Minister reshuffles cabinet.

[News Details]

NY Fed October finds softer inflation expectations in October

The New York Fed's latest consumer expectations survey reported softer inflation expectations in October overall, despite rising expectations for future gasoline price increases, while the outlook for employment and personal finances was basically stable. Respondents expect inflation to fall to 3.6% after a year, down from 3.7% in September, to 3% after three years, unchanged from September, and to 2.7% after five years, down from 2.8% in September. Expected increases in home prices were unchanged at a modest 3% in October, while expectations for future gasoline price increases were revised up to 5% from 4.8% in September, according to the report. The survey found little change in consumers' views of the job market outlook, with fewer people expecting the unemployment rate to rise next year and slightly more people expecting to lose their jobs over the next 12 months. The report also said that households' views of their current personal finances have improved, with a "mixed" view of their situation a year from now.

U.S. CPI is expected to be affected by how health insurance costs are calculated

Changes in the way the U.S. government estimates health insurance costs are expected to slightly boost the CPI, reversing the trend that inflation has eased in recent months. The U.S. Bureau of Labor Statistics made some adjustments to the way the category is tabulated in the October CPI report released on Tuesday. In addition to routine changes in the source data, the new methodology will smooth out some fluctuations and reduce the lag in time of the index. The new calculation is expected to put upward pressure on the overall CPI, at least in the short term. It will also boost supercore services inflation, which excludes energy and housing.

OPEC: The oil market remains strong despite negative sentiment

OPEC said on Monday that oil market fundamentals remain strong. At the same time, it slightly raised its forecast for global oil demand growth in 2023 and maintained its forecast for 2024. The price of Brent crude has fallen back to around $82 a barrel from a yearly high of close to $98 a barrel in September. While supply cuts by OPEC and its allies as well as the conflict in the Middle East have provided support for oil prices, concerns about economic growth and demand are still weighing on them. OPEC's monthly report, however, said that while "negative sentiment has been overstated," "recent data confirms strong growth trends in main global economies and healthy oil market fundamentals." OPEC raised its forecast for world oil demand growth in 2023 to 2.46 million barrels per day (bpd), an increase of 20,000 bpd from the previous forecast. The demand forecast for 2024 was unchanged from last month.

Guindos: Eurozone inflation may temporarily rebound, though its prevailing direction is downwards

European Central Bank (ECB) Vice President Luis de Guindos said in a speech on November 13 that the euro area economy would remain subdued for now but should strengthen again, and there are signs that the labor market is weakening. "We expect a temporary rebound in inflation in the coming months as the base effects from the sharp increase in energy and food prices in autumn 2022 drop out," Guindos said. "But we see the general disinflationary process continuing over the medium term."

Energy prices remain a major source of uncertainty amid heightened geopolitical tensions and the impact of fiscal measures, as do food prices, which could also come under upward pressure due to unfavorable weather conditions and the broader climate crisis. In this highly uncertain environment, where geopolitical shocks are coming in fast, I think we have to be very careful in our communication, so I wouldn't prejudge the future path of interest rates, and it's too early to talk about rate cuts, Guindos said.

British Prime Minister reshuffles cabinet

British Prime Minister Rishi Sunak announced on November 13 to reshuffle the cabinet, with the interior minister, foreign minister, health secretary, and other positions changed.

Sunak fired interior minister Suella Braverman while appointing James Cleverly as interior minister and former PM David Cameron as foreign minister.

On the same day, a number of other government officials resigned or were dismissed. After that, Sunak made more personnel adjustment decisions. According to the new cabinet list, former Health Secretary Steve Barclay was appointed as Environment Secretary, Victoria Atkins as Environment Secretary, John Glen as Paymaster General, and Richard Holden as Conservative Party Chairman and minister without portfolio.

[Focus of the Day]

UTC+8 10:00 U.S. Treasury Sec Yellen Speaks

UTC+8 15:00 U.K. ILO 3-Month Unemployment Rate (Sept)

UTC+8 17:00 European Central Bank Chief Economist Lane Speaks

UTC+8 17:00 European Central Bank Governing Council Member Centeno Speaks

UTC+8 17:30 European Central Bank Governing Council Member Villeroy Speaks

UTC+8 20:30 Bank of England Monetary Policy Member Dhingra Speaks

UTC+8 21:30 U.S. CPI YoY (Oct)

UTC+8 21:45 Bank of England Chief Economist Pill Speaks

UTC+8 01:00 Next Day: European Central Bank Governing Council Member Villeroy Speaks

UTC+8 01:45 Next Day: Chicago Fed President Goolsbee Speaks

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Thomas

Forex

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

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Michelle

Economic

Commodity

Slower-than-expected consumer adoption of electric vehicles (EVs) in 2023, wavering economic growth in China since the pandemic, and burgeoning lithium and cobalt supplies have sent prices of both metals lower, even as producer/hedger interest in futures contracts has expanded dramatically.

China is the biggest market for EVs, while lithium and cobalt are used in the manufacture of EV batteries. Since their 2022 peaks, cobalt prices have fallen by over 50%, from $40 to $16.50 per pound; meanwhile, the price of lithium hydroxide has fallen nearly 75%, from $85 to $23 per kilogram.

Battery Metals Prices are Falling. Will Demand Catch up to Supply?_1

Open interest (OI) – the number of unsettled futures contracts – in both lithium hydroxide and cobalt has increased significantly amid the price declines, stretching out well into 2025, which is more than typical in the metals complex. As of the end of October 2023, Lithium and Cobalt futures had OI as far out as March and December 2025, respectively. These futures curves point toward only a modest hope of recovery in cobalt prices, with December 2025 contracts pricing at around $20.68 per pound, compared to $16.50 for November 2023. It was a similar story in lithium, with March 2025 contracts closing in October at $26.85, compared to $23.83 for the November 2023 contract.

Neither the steep decline in prices over the past 18 months, nor the modest expectations for a recovery in prices over the coming 18-24 months have prevented either contract from seeing dramatic growth in aggregate OI. Indeed, OI has soared to nearly 10,000 contracts for lithium hydroxide and to around 20,000 for cobalt in recent months.

Battery Metals Prices are Falling. Will Demand Catch up to Supply?_2

Part of the reason for the strong growth in OI may have to do with the needs of producers/hedgers to manage their price risk. Both cobalt and lithium have seen explosive growth in global production in recent decades, as well as strong increases in battery use. This is especially the case for lithium, whose mining production has grown 20-fold from 6,100 metric tons in 1994 to 130,000 by 2022.

Much of this increased production has been directed to the battery sector. As recently as 2012, only 23% of lithium was used to make batteries. Today, it is 80%.

Cobalt's growth in production hasn't been as fast as lithium's but has still seen a spectacular 10-fold increase from 17,000 metric tons to over 190,000 between 1994 and 2022. Battery usage has grown from around 25% to around 35% of cobalt use in the United States.

The recent declines in lithium and cobalt prices have been mirrored in other metals. Both aluminum and hot-rolled coil steel prices have fallen by around 50% since their respective highs in 2021 and 2022. Both metals are closely connected to the pace of growth in China, which has disappointed expectations for strong growth following the country's sudden reopening from COVID-19 lockdowns late last year. That said, not all is gloomy in China when it comes to the prospects for battery metals: EVs accounted for nearly 40% of vehicle sales in China so far this year.

While EV sales have disappointed expectations in the U.S., prompting some automakers to delay investments in lithium battery plants, sales continue to expand. In 2020, there were only 50,000 EVs sold in the U.S. per quarter. That figure has now grown to over 300,000 per quarter. Moreover, the revolution in battery technology continues apace. Since 1991, the cost of storing one kilowatt hour of electricity in a lithium battery has plunged by over 98%, from over $7,500 to around $100. That number ticked higher in 2022 from 2021, perhaps owing to the surge in lithium prices between March 2021 and May 2022.

However, the recent 75% drop in lithium hydroxide prices, as well as the more than 50% decline in cobalt prices, might set the cost of lithium battery storage back on its downward trend, fueling greater adoption and ultimately a renewed surge in demand. The main question is can any renewed rise in demand keep pace with growing supplies.

Source: CME Group

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Glendon

Central Bank

Economic

NY Fed Finds Softer Inflation Expectations in October_1

The expected path for inflation softened on balance in October amid rising expectations for future gasoline price increases and a largely stable outlook for employment and personal finances, the Federal Reserve Bank of New York reported on Monday.

Respondents to the bank's latest Survey of Consumer Expectations project inflation a year from now will stand at 3.6% from September's 3.7%, with inflation three years from now seen at 3%, the same level as the prior month, while five years from now inflation is forecast to stand at 2.7%, from September's 2.8%.

The New York Fed found that last month the expected rise in home prices remained at a historically tepid 3%, while survey respondents marked up the projected price of future gasoline price rises to 5%, from September's 4.8%.

The survey found little movement in how consumers view the outlook for the job market, with fewer people expecting higher unemployment next year and a small gain in those who expect to lose their jobs over the next 12 months. The expected path for spending held steady in October at 5.3%, a level well under the 7% the survey found a year ago, while the projected rise in household income was at 3.1% in October, from 3% in September.

The report also said there's been an improvement in how households viewed their current personal financial situation, with a “mixed” view on how things will be a year from now.

The New York Fed's report is most closely watched for its readings on inflation expectations, and it arrives at a time when some data has been spitting out a conflicted outlook for price pressures at a critical point for central bank monetary policy.

The relative stability of New York Fed expectations data contrasts with that seen in the University of Michigan Consumer Sentiment Survey. It found in November a rise in year-ahead expected inflation to 4.4% from 4.2% in October, with five-year expected inflation up to 3.2%, from October's 3%. Those numbers followed large increases in the University of Michigan October survey, which led the survey authors to say the gains are “no fluke.”

The Fed closely watches inflation expectations data because officials believe the expected path of price pressures exert a strong influence on where inflation stands now. Over the last year and a half the Fed has aggressively raised rates in a bid to cool high inflation. It left its rate target steady at its policy meeting at the start of the month as inflation pressures have ebbed. But it kept alive the prospect of more action should inflation not fall further on the path back to 2%.

Fed Chair Jerome Powell said in his press conference after the Federal Open Market Committee meeting that expectations remain “well anchored,” adding “it's just clear that inflation expectations are in a good place” and “there's no real crack in that armor.”

In comments on Friday, Powell acknowledged “inflation has given us a few head fakes” and he reiterated again the Fed will hike rates again if deemed necessary to control inflation.

LPL Financial Chief Economist Jeffrey Roach said, "investors should focus on the more encouraging and more robust survey out of the New York Fed," which he said draws on a bigger sample base and does more to fully capture consumer behavior than the Michigan survey.

By and large, economists are still expecting inflation to move lower albeit at a slow pace. The Philadelphia Fed said on Monday in its latest quarterly Survey of Professional Forecasters that economists expect inflation measured by the personal consumption expenditures price index, the central bank's preferred price pressure gauge, will still be over 2% through 2024, and stand at an annualized 2.3% by the final quarter of that year.

Another major test for inflation readings looms on Tuesday. The government will report on the October consumer price index, Stripped of food and energy, the core CPI is seen up by 4.1% in October, matching September's reading, while overall price pressures are seen moderating.

Source: REUTERS

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Samantha Luan

Stocks

Economic

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

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Justin

Central Bank

Economic

Market did not enjoy the last BoJ meeting

The recent Bank of Japan meeting failed to live up to its expectations despite the fact that Governor Ueda made another small step towards the targeted normalization. The famous yield curve control mechanism was updated with the 1% hard cap being transformed into a reference cap where the BoJ aims to conduct nimble operations. In essence, the 10-year Japanese yield is now allowed to trade above this level, with the BoJ looking ready to intervene forcefully when the pace of adjustment looks too aggressive for its liking.

Interestingly, the Policy Board’s median forecasts for core CPI were also upgraded. The projection for the fiscal year of 2024 increased to 2.8% from 1.9% at the July projections, with the core CPI print for the fiscal year of 2025 seen at a modest 1.7%. The 2025 figure is the reason why the BoJ has not moved more aggressively in its normalization process. Governor Ueda and his crew are looking for stronger signs that domestic demand could support the recent elevated inflation rates. And they assume that this could only happen if monetary policy remains extra supportive and wages continue to rise significantly.

In this context, Japan’s UA Zensen Union, representing mostly manufacturing sector workers, has lodged a claim for a 6% wage hike for a second consecutive year, and one of Japan’s biggest banks has increased its deposit rates for the first time in 12 years. This is probably music to the ears of the BoJ but not yet enough for the central bank to announce its first rate hike since 2007. Governor Ueda is looking for concrete signs that higher wages and rising prices are becoming embedded in the public’s mindset, and not seen as a one-off event driven by external factors.

Importantly, recent economic data has been on the positive side with the PMI surveys surprising on the upside and labor cash earnings showing a yearly increase of 1.2% in September. This might not look like much when compared to other developed nations’ figures, but these data prints are close to what the BoJ has been hoping for.

Key data releases this week

This week the market will be updated on the preliminary GDP print for the third quarter of 2023, following a very strong second quarter. The initial GDP figures from both the US and the UK managed to surprise on the upside, thus raising the possibility for a stronger print than the -0.1% QoQ penciled in now by market analysts. Similarly, lots of focus will be on the GDP price index, which in the previous quarter surpassed the 2015 high of 3.4%.

Equally important will be Thursday’s trade balance data for the month of October. The BoJ would be interested in any signs of a pick-up in imports that have been crashing from the 2022 highs, partly due to the drop in oil and gas prices.

Euro-yen continues higher undaunted

The sky appears to be the limit for yen crosses. The recent disappointing BoJ meeting allowed the euro-yen bulls to stage another rally with the pair recording a new 2023 high and apparently setting course for the April 23, 2008 high at 164.97. The threat of intervention does not seem to trouble the euro bulls since Japanese authorities have up to now limited their reaction to just verbal intervention, possibly at the request of the BoJ.

Having said that, a positive set of figures, especially a stronger GDP print, could result in a bearish reaction with the bears potentially trying to reclaim the 159.64 level. However, this move will most likely prove short-lived. On the flip side, a plethora of weak data releases would satisfy the euro-yen bulls as they potentially continue to test the Japanese authorities’ patience.

Could Japanese GDP Print Reignite Tightening Expectations?_1

Source: XM

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Cohen

Cryptocurrency

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.