At the beginning of the Asian market on Tuesday (August 23), spot gold was hovering near a four-week low, currently trading around $1,737. The price of gold continued its decline overnight, hitting a low of $1,727.69 per ounce, a new low since July 28. , and closed down for six consecutive trading days, investors are increasingly worried about the United States and Europe. 1 Raising interest rates Actions to curb inflation will weaken the global economy. Safe-haven demand for the U.S. dollar has surged again, helping the U.S. dollar hit a new high in more than five weeks, approaching the nearly two-decade high set in July, significantly suppressing gold prices; and market expectations This week Federal Reserve Chairman Powell will deliver a hawkish speech at the Jackson Hole annual meeting.
TD Securities (TD Securities) commodities Daniel Ghali said gold is under pressure from the dollar and market expectations that the market will strengthen when Federal Reserve Chairman Powell speaks at the central bank meeting in Jackson Hole, Wyoming later this week. The Fed's hawkish stance. Gold prices could fall below $1,700 after Jackson Hole meeting.
This trading day will usher in the August Markit manufacturing PMI preliminary values for France, Germany, the Eurozone, the UK and the United States. The current market expectation is that the performance will be worse than the performance in July, and it is expected that the PMI values for France, Germany and the Eurozone will further Staying away from the 50 line of prosperity and contraction, this provides further upward momentum for the US dollar in the short term, which may further suppress gold prices, but is expected to support gold prices in the medium and long term.
[The founder of Palumbo Wealth Management looks forward to the Jackson Hole Global Central Bank Annual Meeting: The Federal Reserve is expected to "turn slightly hawkish"]
Philip Palumbo, the founder of Palumbo Wealth Management, believes that this year's Jackson Hole Annual Meeting is particularly important because the Federal Reserve is taking a to a crossroads to try to curb inflation without sending the economy into chaos. Palumbo expects the Fed to turn "slightly hawkish" by raising interest rates more and for a longer period.
Philip Palumbo pointed out, "If the Fed is going to control inflation, it needs the economy to slow down. Over the past month, market interest rates have been falling and the stock market has been rising, all of which are contrary to what the Fed is trying to achieve. Just a little hawkishness "Bets that the Fed will remain hawkish have reached an unprecedented high." 】
The agency pointed out that before the Jackson Hole annual meeting, hedge funds 's bets on the Fed's hawkishness reached an unprecedented high, and the short position of the Secured Overnight Financing Rate (SOFR) futures reached a record high of 695,000. contract (a fluctuation of 1 BP is worth $17 million), this bet will be profitable if Fed Chairman Powell rules out the possibility of turning dovish at the Jackson Hole annual meeting.
In the Eurodollar futures market, hedge funds have a net short position of more than 2.6 million contracts, near the highest level this year. At the same time, traders also established a large put structure on the 10-year Treasury note, betting that the yield on the 10-year Treasury note would move higher to 3.70% in a month.
The head of U.S. interest rate strategy at BMO Capital Markets said that judging from the 3-year Treasury bonds leading the decline, shorting on U.S. bonds reflects market expectations that the Federal Reserve does not intend to adjust the direction of monetary policy in the short term.
[The U.S. dollar rose to a five-week high driven by risk aversion, and the euro fell below parity again]
The U.S. dollar rose across the board on Monday, with the U.S. dollar index hitting a maximum of 109.10, a new high since July 15, 20 points away from the high hit in mid-July. The year's high of 109.29 was not far away, and it closed at 108.96, an increase of about 0.8%; the euro fell below parity against the U.S. dollar again, hitting a low of 0.9925, and closed at 0.9940, a decrease of about 0.98%. Investors are increasingly worried that the United States and Europe will raise interest rates to curb inflation. Weaken the global economy and therefore stay away from riskier assets.
The dollar has found support in recent sessions as several Federal Reserve officials reiterated their stance on aggressive tightening of monetary policy. Earlier this week, the Federal Reserve will hold a seminar in Jackson Hole, Wyoming.
The most recent official to speak was Richmond Fed President Barkin. He said on Friday that the "strong intention" of Fed officials is to speed up the pace of interest rate increases and make early efforts.Michael Brown, director of market intelligence at
Caxton, said: "The market saw the reality from Fed officials who spoke last week that an immediate dovish turn was unlikely, and then risk aversion emerged."
Brown said, "Investors are now clearly expecting Fed Chairman Powell will sound relatively hawkish at Jackson Hole on Friday The message, risk aversion and the Fed's hawkish tone are well combined and the dollar will move higher, especially as growth concerns, especially in Europe, continue to grow"
Russian state energy giant Gazprom (Gazprom) Russia's main pipeline supplying natural gas to Europe will stop supply for three days at the end of this month, it said on Friday. Investors worry that the supply suspension could exacerbate the energy crisis that has weighed on the euro in recent months.
Bundesbank President Nagel said that the German economy is one of the countries most vulnerable to disruptions in Russian natural gas supply. If the energy crisis continues to worsen, the German economy "may" suffer a recession in the winter.
[ Citi : Expectations that the Federal Reserve will adopt a more dovish tone may be weakening. It is recommended to go long on the dollar, etc.]
Citi Chief Technical Strategist Tom Fitzpatrick said that the Fed’s work is far from finished, and they need to raise interest rates by 75% in September. basis points until inflation (or other factors) subsides. Achieving this goal in the short term without a recession and rising unemployment may be a difficult challenge. Stocks and credit markets have improved in recent months, while 10-year U.S. Treasury yields have retreated from 10-year highs hit in June on expectations the Federal Reserve will slow its pace of interest rate hikes and set the stage for the worst of inflation. It's past. The rise in U.S. bond yields last week and Monday suggests that expectations that the Fed will adopt a more dovish tone may be weakening, and the market may start to look unstable again.
Fitzpatrick recommends going short fixed income, long the U.S. dollar, closing or shorting stocks, short gold, and long energy.
Fundamentals are mainly bullish
[The British economy shrank by a record 11% in 2020, the worst since 1709]
Official data updated on Monday showed that the British economy recorded its largest decline in more than 300 years in 2020, It shrank more than any other major economy. That year, the UK was hit by the COVID-19 epidemic.
The Office for National Statistics said Gross Domestic Product (GDP) fell by 11.0% in 2020. The fall is larger than any previous estimate by the Office for National Statistics and is the largest since 1709, according to historical data held by the Bank of England.
UK statisticians regularly update GDP estimates as more data becomes available.
Preliminary estimates from the Office for National Statistics have shown that UK output recorded the largest decline in 2020 since the "Great Frost" of 1709. But recently, the National Bureau of Statistics revised the decline to 9.3%, the largest decline since World War I.
Even before the latest revision, the UK's economic downturn was the largest among the Group of Seven (G7), with the latest downward revision taking it further than Spain, which saw output fall by 10.8%.
[Citi predicts UK inflation will peak at 18% in early 2023]
UK consumer price inflation will peak at 18% in early 2023 - a Bank of England target - an economist at Citigroup said on Monday. nine times, and he raised his forecast again in light of the latest jump in energy prices.
Benjamin Nabarro said in a note to clients: "The question now is what can be done in policy to offset the impact on inflation and the real economy."
Consumer price inflation last exceeded 18% in 1976 .
Nabarro said Truss, the front-runner to be Britain's next prime minister, was likely to propose measures to support households that would have a limited offsetting impact on overall inflation.
The report also said that it now looks like inflation will peak well above the 13% forecast by the Bank of England in August, and its Monetary Policy Committee may conclude that the risk of inflation becoming more stubborn has increased.
Nabarro said: "This means letting interest rates go deep into restrictive areas, and quickly."
For a long time, gold has generally been regarded as a tool to hedge inflation, and expectations of high inflation tend to support gold prices.
[The Bank of Japan is expected to revise down its economic growth forecast in October to reflect weak consumption]
Former Bank of Japan Survey and Statistics Director Kameda Productions said on Monday that when the Bank of Japan releases its latest quarterly assessment in October, it is expected to revise down its economic forecast because Slowing global demand and the resurgence of the new coronavirus epidemic have weighed on exports and consumption.
Kameda Production told Reuters that Japan's economic recovery is at an "important juncture" and consumption momentum has stagnated during the summer. As new crown cases rise again and rising living costs hit households, consumption is likely to stagnate in the third quarter. Before, or only barely growing, the Japanese economy's post-epidemic recovery may face threats.
Kameda said the Bank of Japan may lower its growth forecast for the current fiscal year in October, from the 2.4% growth forecast in July to 2% or less. It may also revise down as the prospect of a global economic slowdown intensifies. Growth is forecast at 2.0% for the next fiscal year.
Kameda Productions is very familiar with the preparation process of central bank quarterly forecasts because he serves as the director of surveys and statistics. He resigned from the Bank of Japan in May this year and is currently an executive economist at a think tank under Soma Holdings .
In terms of price outlook, Kameda Productions pointed out that Japan's core inflation rate may briefly reach 3% later this year due to soaring fuel and food costs.
While inflation will ease next year as the impact of energy costs dissipates, it may remain near the 2% target for longer than expected as businesses continue to pass on higher raw material costs to households, he said. But this is purely cost-push inflation, which is very different from the demand-driven inflation pursued by the Bank of Japan.
Kameda Production said that although Japan's economic fragility provides rationality for maintaining ultra-loose policies, the Bank of Japan may believe that there is room for small adjustments to the stimulus plan in the future. These adjustments may involve interest rate targets and policy path guidance so that the central bank can have More flexibility in adjusting monetary policy.
[U.S. stocks closed sharply lower at nearly two-week lows]
U.S. Wall Street stocks closed sharply lower at nearly two-week lows on Monday, with investors nervous about the annual meeting of global central banks later this week in Jackson Hole, Wyoming, where the Federal Reserve is expected A strong commitment to curbing inflation will be emphasized at the meeting.
All 11 sectors in the S&P 500 index were lower, led by consumer discretionary stocks, which fell 2.84%, followed by information technology stocks T, which fell 2.78%.
Nvidia ( Huida /Nvidia) fell 4.6%, Amazon fell 3.6%, Microsoft and Apple both fell by more than 2%.
Wall Street’s summer rally ended last week. Year to date, the S&P 500 is down about 13% and the Nasdaq is down more than 20%.
The CBOE Market Volatility Index, known as Wall Street's fear gauge, rose to 23.9, the highest in more than two weeks.
As of the close, the S&P 500 index plunged 2.14% to close at 4137.99 points. The Nasdaq index fell 2.55% to close at 12381.57 points. The Dow Jones Industrial Average fell 1.91% to close at 33063.61 points.
[ Ukraine bans Independence Day celebrations, United Nations says war killed more than 5,500 civilians]
Ukraine’s capital Kiev has banned public celebrations this week to mark independence from the Soviet Union, citing Russian attacks. The threat increases. The United Nations said on Monday that the war has killed more than 5,500 civilians.
Ukraine said that near its front line in the country's south, Russia fired rockets at several towns north and west of Europe's largest nuclear power plant, which Russian troops seized shortly after invading Ukraine in February.
Ukrainian President Zelensky said over the weekend that Moscow might try "something particularly ugly" ahead of Wednesday's 31st Independence Day. Wednesday also marks half a year since Russia invaded Ukraine.
Local authorities in Kiev banned public events related to the anniversary from Monday to Thursday due to the possibility of rocket attacks, a document showed.
Fears of an attack intensified after Russian news agencies reported that Russia's Federal Security Service (FSB) on Monday accused Ukrainian special forces of carrying out the murder of Darya Dugina, the daughter of well-known Russian ultranationalist theorist Dukin.
The Office of the United Nations High Commissioner for Human Rights said on Monday, citing its monitoring team in Ukraine, that 5,587 civilians were killed and 7,890 injured between February 24 and August 21, mainly as a result of shelling, rockets and missile attack.
Separately, Kiev Army Chief Gen. Valeriy Zaluzhnyi provided what appeared to be the first public death toll for the Ukrainian army, saying that nearly 9,000 soldiers died in the fighting.
[Ukraine has raised about 855 million hryvnia for the army. Party to buy drone】
U The Ukrainian National News Agency reported on August 22 that Fedorov, Deputy Prime Minister of Ukraine and Minister of Digital Transformation , announced on the same day that Ukraine’s “Drone Corps” project launched through the United24 donation platform has raised approximately 855 million GRY. VNA (approximately $23.75 million) is used to purchase drones for the military, and has received 472 drones so far, some of which are already used on the front lines.
[Borrell: EU will train the Ukrainian army]
European Commission Vice President and "Foreign Minister" Borrell said that the EU plans to train the Ukrainian army outside Ukraine and on the territory of neighboring countries. Borrell told a news conference in Spain that this would be an "important task" because "this is not a small conflict." The Ukrainian army has been trained on NATO (NATO) and Pentagon . NATO has previously confirmed that tens of thousands of soldiers have received these training programs. At the same time, Borrell also talked about the situation with the Iran nuclear deal, saying that Tehran's response to the proposal was "reasonable."
Overall, the market will focus on Federal Reserve Chairman Jerome Powell’s speech at the Jackson Hole Central Bank Symposium on Friday to learn more about how aggressive the Fed may be in raising interest rates in the future. Analysts generally expect Powell to make a hawkish voice, which is expected to further support the US dollar and suppress the price of gold. The short-term bias of gold prices is to further test the support near the July 27 low of 1711.38, or even near the 1700 mark, and the lower track support of Bollinger Band Not too far off. Above , pay attention to the resistance near 5 daily moving average 1748.22.
In addition, the European and American August PMI data to be released this trading day and the US July PCE data to be released on Wednesday are also positive for the US dollar and negative for gold prices. Investors need to be vigilant and pay attention to whether the US dollar can break the record set in July in the past 20 years. Resistance near the high point of 109.30.
This article comes from Huitong.com
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