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While everyone is waiting for the key US Fed meeting, scandalous information has surfaced in the public domain about how Robert Kaplan, head of the Dallas Fed, and Eric Rosengren of the Bank of Boston, were in full swing trading stocks of funds and various companies, making over a million dollars worth of trades.

S&P500

Of course, this information created a wave of outrage in the trading community. After all, decision makers, knowing insider information on various macroeconomic data, find themselves ahead of everyone else. In fact, such trading is allowed, but only during certain time between meetings. Many people notice that although everything was done correctly according to the law, such actions violate the spirit of the Fed itself.
The whole situation adds fuel to the fire, as Jerome Powell himself, who is up for re-election, has over 100 million USD worth of assets. Of course, these assets are managed by independent individuals, but still any insider information could leak outside the Fed.
The Fed is already under external pressure on this issue. Already now there are demands to tighten the rules so that there are no more such incidents, which completely undermine the credibility of the entire US financial system.
The current scandal puts even more pressure on the Fed to roll back quantitative stimulus. After all, the further the support is pulled, the more the rich will get richer and the poor will get poorer. Controversy may force an unwinding of the tapering plan as soon as this meeting.
Also Biden will very soon have to re-nominate the head of the Fed and he is under pressure from progressive democrats who see the Fed leader as someone who will become more “multi-faceted” and begin to focus on other goals besides inflation and unemployment.
It’s going to be a tough week as the markets are ready to act. Many believe that the current situation gives a “buy bottom” signal, but there are so many contradictions. Everyone knows that markets rise slowly and fall very quickly. So it is worth waiting for the Fed’s decisions and the press conference results. Then the markets will have to digest all the information. At such moments, volatility can increase many times. Therefore, in most cases, it is worth refraining from entering the market until the market decides where to move next.

08.00 Bank of Japan press conference on monetary policy
20.00 US Federal Reserve interest rate decision
20.30 US Federal Open Market Committee press conference

Important Notes on This Publication:

The content of this publication is for general information purposes only. In this context, it is neither an individual investment recommendation or advice nor an offer to purchase or sell securities or other financial products. The content in question and all the information contained therein do not in any way replace individual investor- or investment-oriented advice. No reliable forecast or indication for the future is possible with respect to any presentation or information on the present or past performance of the relevant underlying assets. All information and data presented in this publication are based on reliable sources. However, Bernstein Bank does not guarantee that the information and data contained in this publication is up-to-date, correct and complete. Securities traded on the financial markets are subject to price fluctuations. A contract for difference (CFD) is also a financial instrument with leverage effect. Against this backdrop, CFD trading involves a high risk up to the point of total loss and may not be suitable for all investors. Therefore, make sure that you have fully understood all the correlating risks. If necessary, ask for independent advice.

Just over a year ago, the price of gold reached its record high of $2,000 per ounce. But lately, gold has been underperforming and often loses $40-50 per ounce before recovering almost all of its losses.

Gold

When strong macroeconomic data are released in the US, the dollar starts to show great momentum and rises while gold falls. As soon as the data is weak, the dollar falls and gold either rises very reluctantly or in most cases simply goes nowhere. It used to be just the opposite. As soon as the dollar is in trouble, investors move into gold and sell it only in exceptional cases, when the market is doing well.
This situation shows that gold is not fulfilling its role as a shelter asset at all. The situation has changed a great deal. The world’s banks have been pumping money into their economies for a very long time. The US alone has spent more than 2 trillion dollars in a year and a half to support the economy. By all the rules of economics, that much money should have devalued the dollar. But it is not happening. There are some factors that keep gold from rising.
One suggestion is that bitcoin has pulled in a significant amount of cash flow. Although it is now difficult to imagine that bitcoin could be an asset safe haven. Its value could change too much.
Another hypothesis is about inflation and the US Federal Reserve. After all, they say in all meetings now that inflation is under control. Therefore there is no need to protect assets from inflation and buy gold.
The market has completely lost its fear and is no longer afraid of anything. A serious correction in indices has not taken place for almost a year. There is no need for investors to fear and get out of risky assets. While the markets will be pumped with artificial liquidity, the gold will not reach the price of 2000 dollars per ounce. It takes enough serious negative news and “fear” in the market for that to happen.

08.00 German producer price index for August

Important Notes on This Publication:

The content of this publication is for general information purposes only. In this context, it is neither an individual investment recommendation or advice nor an offer to purchase or sell securities or other financial products. The content in question and all the information contained therein do not in any way replace individual investor- or investment-oriented advice. No reliable forecast or indication for the future is possible with respect to any presentation or information on the present or past performance of the relevant underlying assets. All information and data presented in this publication are based on reliable sources. However, Bernstein Bank does not guarantee that the information and data contained in this publication is up-to-date, correct and complete. Securities traded on the financial markets are subject to price fluctuations. A contract for difference (CFD) is also a financial instrument with leverage effect. Against this backdrop, CFD trading involves a high risk up to the point of total loss and may not be suitable for all investors. Therefore, make sure that you have fully understood all the correlating risks. If necessary, ask for independent advice.

Platinum and palladium have been rising for the last three years, after which the markets have reversed sharply and have been falling steadily for the last five months. It is worth looking at the situation to see if a buying opportunity arises.

Platinum

Due to the shortage of microelectronics, almost all car manufacturers slowed down production, which in turn affected platinum group metals. Platinum started to fall quite rapidly in price. For a while, the price was supported by speculators who wanted to get more out of these metals than gold, but now they are also at risk.
What is happening now. Automobile manufacturers have not been able to restore the former production capacity and are now in limbo. Reuters generally states that the situation in the automotive industry is worsening.
Should we now look at platinum as an investment instrument?
If you look technically, platinum is very much oversold and that is a good signal for a possible entry into a position.
It is worth noting that the precious metal is used quite a lot in green technology products. For example, platinum is a very important element in hydrogen engines. After the US election, Biden already in the first week of his presidency set the course for the development of new “green technologies”. Now a huge amount of dollars is being prepared in the U.S. that will come to the market. Quite a lot of it will be spent on new technologies and projects.
Platinum is now being used in catalytic converters in cars. The continuing tightening of environmental regulations around the world will increase the demand for platinum. There are also plans to use the metal in lithium-air and lithium-sulfur batteries for electric cars.
Putting all factors together, platinum looks good as a long term investment.

03.30 Australian unemployment rate
14.00 Address by ECB head C. Lagarde
14.30 US Retail Sales in August

Important Notes on This Publication:

The content of this publication is for general information purposes only. In this context, it is neither an individual investment recommendation or advice nor an offer to purchase or sell securities or other financial products. The content in question and all the information contained therein do not in any way replace individual investor- or investment-oriented advice. No reliable forecast or indication for the future is possible with respect to any presentation or information on the present or past performance of the relevant underlying assets. All information and data presented in this publication are based on reliable sources. However, Bernstein Bank does not guarantee that the information and data contained in this publication is up-to-date, correct and complete. Securities traded on the financial markets are subject to price fluctuations. A contract for difference (CFD) is also a financial instrument with leverage effect. Against this backdrop, CFD trading involves a high risk up to the point of total loss and may not be suitable for all investors. Therefore, make sure that you have fully understood all the correlating risks. If necessary, ask for independent advice.

The time is coming when the natural gas market is gaining momentum. In the near future, gas prices will experience increased volatility. It’s all the fault of low gas reserves in the USA before the heating season, as well as accelerating inflation. Will everyone be able to survive the winter normally?

Natural Gas

Concerns about reserves are growing and fuelling speculative interest. Around 2bn cubic feet of gas are not yet available to the market because they are in the waters of the Gulf of Mexico. There is a new Hurricane Nicolas ahead, which traders have already started watching. What it will turn into, we will see in the near future. Perhaps the Gulf of Mexico will rest next. Also, China has started buying gas in fairly large volumes as it feels the need for it. Production is picking up at a good pace.
The inflated gas prices have benefited the USA, as LNG exports have increased at a good enough price, but already now a representative of the US Department of Energy Security stated that an increase in LNG supplies to Europe is out of the question.
There comes a time when alternative energy sources are starting to come into play. First of all, it is coal and renewables. The second is the increase in shale gas production and the development of new sources, which will inevitably lead to environmental problems. After all, in order to extract shale gas, huge quantities of water must be used, which will pollute groundwater, and large quantities of methane will be released into the atmosphere.
How the battle between all the energy sources will go is hard to predict. The winter ahead, what it will be, you can find out very soon from the official forecasts. Until the big players in the market come to some kind of compromise, there is no chance for gas to get cheaper.

04.00 China retail sales for August
08.00 UK Consumer Price Index for August
14.00 EU industrial production for July

Important Notes on This Publication:

The content of this publication is for general information purposes only. In this context, it is neither an individual investment recommendation or advice nor an offer to purchase or sell securities or other financial products. The content in question and all the information contained therein do not in any way replace individual investor- or investment-oriented advice. No reliable forecast or indication for the future is possible with respect to any presentation or information on the present or past performance of the relevant underlying assets. All information and data presented in this publication are based on reliable sources. However, Bernstein Bank does not guarantee that the information and data contained in this publication is up-to-date, correct and complete. Securities traded on the financial markets are subject to price fluctuations. A contract for difference (CFD) is also a financial instrument with leverage effect. Against this backdrop, CFD trading involves a high risk up to the point of total loss and may not be suitable for all investors. Therefore, make sure that you have fully understood all the correlating risks. If necessary, ask for independent advice.

One of the main events at the end of last week was the ECB meeting where Christine Lagarde announced the start of a slow unwinding of the stimulus programme. It could be said that the ECB decided to prepare the markets a bit for the winter meeting, at which the central bank will already present a plan to wind down the programme.

EUR/USD

We could say that the European Central Bank has now acted as a kind of shock absorber ahead of the key Fed meeting on 21-22 September. The fact is that all major banks in the world economy, be it the ECB or the Bank of Japan, are pursuing a coordinated monetary policy. This consists in redirecting liquidity in dollars, euros or yen from continent to continent by means of the institution of large commercial banks which are able to obtain funding. In this way they can keep the global economy afloat with liquidity.
Therefore, all current statements made by the banks are consistent with each other. With this in mind, we should assume that the Fed will not be making very loud statements at its meeting, but perhaps will make some initial statements. The unemployment report was disappointing. The Beige Book showed that the economy has started to slow down and the pace of recovery has fallen sharply. We can assume that the Fed will very cautiously announce a programme cut in December not in September and will not start a programme until 2022 at the earliest.
There are still plenty of uncertainties in the market which make it impossible to predict what central banks will do in the near future. In any case, they will be very restrained as it is very easy to set the markets on fire right now.
What does the current situation say for the Euro exchange rate. Most likely, the movement in the range will continue, as there are no serious drivers for a breakthrough in this range. Then, closer to winter, the pair EUR/USD might target the level of 1.16-1.15. One of the factors will be the cheapening oil, which will put pressure on all the commodity prices.

20.00 US Monthly Fiscal Status Report

Important Notes on This Publication:

The content of this publication is for general information purposes only. In this context, it is neither an individual investment recommendation or advice nor an offer to purchase or sell securities or other financial products. The content in question and all the information contained therein do not in any way replace individual investor- or investment-oriented advice. No reliable forecast or indication for the future is possible with respect to any presentation or information on the present or past performance of the relevant underlying assets. All information and data presented in this publication are based on reliable sources. However, Bernstein Bank does not guarantee that the information and data contained in this publication is up-to-date, correct and complete. Securities traded on the financial markets are subject to price fluctuations. A contract for difference (CFD) is also a financial instrument with leverage effect. Against this backdrop, CFD trading involves a high risk up to the point of total loss and may not be suitable for all investors. Therefore, make sure that you have fully understood all the correlating risks. If necessary, ask for independent advice.

While there has been a relative lull in the financial markets, the energy market is in turmoil. Many different factors, both negative and positive, have driven the price sideways. The market is overheated and an exit is imminent, but where to?

OIL.WTI

As before, buyers are supported by oil supply disruptions in the USA. Due to Hurricane Ida, around 65% of the oil production capacity in the Gulf of Mexico is still not working. Because of this, US inventories will decrease, which will definitely affect the price.
Last Thursday’s OPEC+ meeting decided to leave the current plan to increase production by 400k bpd intact. It is safe to say that this cautious scenario will have a smooth effect on quotations.
The news from Iran does not add to the upside. Teheran government did not allow the IAEA representatives to the nuclear facilities and practically derailed the deal on nuclear programme. This implies that oil traders should not expect Iranian oil in the markets any time soon.
All factors seem to be shaping up to suggest that oil should go up in price, which locally it is doing now. But on Thursday, some very interesting news came out of China. The Middle Kingdom has started selling oil from its reserves. The interesting thing about this news is that last year the Chinese were very active in filling their reserves with oil when prices were collapsing and there was a total lockdown in Europe and the US. Now China thinks oil prices are high and worth selling.
As China is one of the most important oil importers, it is worth listening to this opinion carefully. The statement will not have an immediate impact on the markets, but it could be a strong enough factor to start the decline.

8.00 Germany’s harmonised consumer price index at the start of the year
8.00 UK Monthly GDP
14.30 ECB press conference on monetary policy

Important Notes on This Publication:

The content of this publication is for general information purposes only. In this context, it is neither an individual investment recommendation or advice nor an offer to purchase or sell securities or other financial products. The content in question and all the information contained therein do not in any way replace individual investor- or investment-oriented advice. No reliable forecast or indication for the future is possible with respect to any presentation or information on the present or past performance of the relevant underlying assets. All information and data presented in this publication are based on reliable sources. However, Bernstein Bank does not guarantee that the information and data contained in this publication is up-to-date, correct and complete. Securities traded on the financial markets are subject to price fluctuations. A contract for difference (CFD) is also a financial instrument with leverage effect. Against this backdrop, CFD trading involves a high risk up to the point of total loss and may not be suitable for all investors. Therefore, make sure that you have fully understood all the correlating risks. If necessary, ask for independent advice.

Strong economy, strong currency – one of the tenets of fundamental analysis is familiar to any investor. Should investors start thinking about selling off the US dollar as early as Q3 2021 with all economic indicators pointing to a slowdown?

DXY

Things are actually getting a lot more interesting. It won’t be long before we can try to rewrite such fundamental statements as markets change and the world economy changes. This fundamental works when the money supply remains relatively stable and there are no major fluctuations in the balance sheets of major central banks. But in our situation, money is flying into the economy from all directions.
Over the last year we have seen how the stock market can grow with a constant boost from the government. Cash-strapped companies are pouring money into circulation and people are spending free dollars from the government. Most of the big companies show record revenues and profits, and then prices go up as well, fuelling everything around them.
The S&P500 index is now 25% dominated by big tech companies which continue to drive it up. The rest of the companies, especially the smaller ones, are selling off and are in negative territory. Everything is heading towards this trend ending sooner or later.
The current stock market price takes into account all the latest news and predictions from the past couple of months. There will be several events next fall that could quietly move the S&P500 to the 4300-4200 level and the US dollar to 95.
Ahead of the Fed meeting. The labour market is rising and will be strong going forward. A slightly sluggish economy is no reason to keep pumping money into the markets, so we can assume that the Fed will start a bailout programme in 2021 after all.
Another factor that is bound to affect the USD exchange rate is the ECB interest rate decision and the press conference that will shed light on the European Central Bank’s further actions on its stimulus programme. Christine Lagarde is likely to continue to print the Euro, even though many countries have already reported positively on their progress in economic recovery.
Autumn will be a very tricky period for all investors because without strong catalysts there will be a bunch of different factors to consider when making decisions. The dollar could well become a safe haven currency for a while, along with the Swiss franc and gold.

3.30 China Consumer Price Index YTD
13.45 ECB interest rate decision
14.30 ECB press conference on monetary policy

Important Notes on This Publication:

The content of this publication is for general information purposes only. In this context, it is neither an individual investment recommendation or advice nor an offer to purchase or sell securities or other financial products. The content in question and all the information contained therein do not in any way replace individual investor- or investment-oriented advice. No reliable forecast or indication for the future is possible with respect to any presentation or information on the present or past performance of the relevant underlying assets. All information and data presented in this publication are based on reliable sources. However, Bernstein Bank does not guarantee that the information and data contained in this publication is up-to-date, correct and complete. Securities traded on the financial markets are subject to price fluctuations. A contract for difference (CFD) is also a financial instrument with leverage effect. Against this backdrop, CFD trading involves a high risk up to the point of total loss and may not be suitable for all investors. Therefore, make sure that you have fully understood all the correlating risks. If necessary, ask for independent advice.

All last week gold was trying to find some momentum, but could not get out of the sideways trend. This week could be the beginning of a turning point for the gold market, as the downward movement for the US dollar was already in its final stages by the end of last week.

Gold

One of the most important days will be Wednesday. On that day, the Fed’s so called “white paper” will be released which describes the economic problems and trends in the USA. The better the report, the more positive for the USD. If the report is saturated with pessimism, it will be a negative signal for the USD.
The level of 1835 USD/oz proved too strong for gold so far, and on Tuesday we saw a correction to the region of 1795. It happened on the background of the US dollar strengthening, which has been weakening for quite a long time. However, considering the current situation in the US and global economies, this move might be temporary.
The outlook for gold remains positive. The latest PMI data shows that the economy is slowing down globally. Unemployment in the US is still stalling. Stimulus packages in the USA are still not agreed.
There will be a Fed meeting in a fortnight, which may clarify the situation regarding QE roll-over and future interest rates. So many uncertainties are unlikely to give the bulls any chance of a rally in the USD.
As a result we may see poor Q3 reporting data. And let’s not forget that the reporting season will start in mid-October, which is likely to see a correction in the stock market. Therefore, this autumn could be quite interesting for gold in terms of good gains.

01.50 Japan’s Q2 GDP
16.00 Bank of Canada interest rate decision
19.10 FOMC member Williams speech

Important Notes on This Publication:

The content of this publication is for general information purposes only. In this context, it is neither an individual investment recommendation or advice nor an offer to purchase or sell securities or other financial products. The content in question and all the information contained therein do not in any way replace individual investor- or investment-oriented advice. No reliable forecast or indication for the future is possible with respect to any presentation or information on the present or past performance of the relevant underlying assets. All information and data presented in this publication are based on reliable sources. However, Bernstein Bank does not guarantee that the information and data contained in this publication is up-to-date, correct and complete. Securities traded on the financial markets are subject to price fluctuations. A contract for difference (CFD) is also a financial instrument with leverage effect. Against this backdrop, CFD trading involves a high risk up to the point of total loss and may not be suitable for all investors. Therefore, make sure that you have fully understood all the correlating risks. If necessary, ask for independent advice.

While the unemployment figures are surprising investors and stumping the Fed, we should consider where the money, which was approved by the Democrats at the end of August and will go into the US economy very soon, will go.

DXY

The aim of the new support package from Biden is social. The USD 3.5 trillion will already be on the way. The package will consist of several parts. The first is a $1.2 trillion infrastructure package, which will focus on roads, bridges, electricity and water. The second package will focus on social support for the population. This package is also called human infrastructure. Literally, the money is to be spent on the development of human goods. And in particular, for the development of pre-school education, free colleges and other grants. About $300 billion will be used to provide affordable housing. That’s down payments and rental assistance. About $130 billion will be spent on agriculture. Which includes firefighting and environmental conservation.
This package will be financed by higher taxes. And primarily a tax on the rich. The Democrats are going to raise taxes on all sectors of the economy to add revenue to the budget.
Almost all sectors of the US economy are likely to suffer from such changes. The only sectors that are likely to benefit are the green energy industries, for which certain exemptions have been designed.
The next stage of these projects will be approval in the Senate. It is very likely that this package will be approved, as the Democrats have a majority in the Senate.
Thus, Biden’s bills will add quite a serious burden to the US budget and higher taxes are likely to have a negative impact on development of American companies. Also for the financial market, the dollar may have to be weakened once again, even though this package is for 10 years. We have a very interesting autumn ahead, which will bring enough surprises to the market.

8.00 German factory orders for July

Important Notes on This Publication:

The content of this publication is for general information purposes only. In this context, it is neither an individual investment recommendation or advice nor an offer to purchase or sell securities or other financial products. The content in question and all the information contained therein do not in any way replace individual investor- or investment-oriented advice. No reliable forecast or indication for the future is possible with respect to any presentation or information on the present or past performance of the relevant underlying assets. All information and data presented in this publication are based on reliable sources. However, Bernstein Bank does not guarantee that the information and data contained in this publication is up-to-date, correct and complete. Securities traded on the financial markets are subject to price fluctuations. A contract for difference (CFD) is also a financial instrument with leverage effect. Against this backdrop, CFD trading involves a high risk up to the point of total loss and may not be suitable for all investors. Therefore, make sure that you have fully understood all the correlating risks. If necessary, ask for independent advice.

Here we are waiting for the end of the week and with it the long-awaited US jobs report. After Powell’s speech US employment comes out on top. We should not expect strong swings in the markets before this report comes out as not only investors are waiting for it but also the Fed to plan stimulus policy actions.

EUR/USD

Given the latest unemployment and private sector employment data, it is safe to say that this report will not be strong enough to reverse the current trend in the stock market. And that is a good thing. The smoother we approach the start of the tapering of quantitative easing, the better for all.
The biggest impact of the released labour market data has been on the US dollar, which has been weakening since mid-August. Investors realise that a weak jobs report will delay further decisions to reduce support and hence more currency will further affect the exchange rate. There is also still time for speculating with risky assets that might still yield profits.
The technical picture of the EUR/USD pair looks quite readable. By Friday’s reports the pair is approaching an important resistance at 1.19. It is safe to say that on Friday the volatility will increase and there will be an attempt to test this level.
If the pair manages to close at least above 1.1890, it will mean a possible continuation of the bullish movement in the near future.
However, there will be questions about the Euro’s medium-term upside to 1.21. The European Central Bank does not plan any unwinding of economic support at all before spring and will continue to print the Euro at the same pace. It is a negative factor for the strength of the Euro and the central bank does not need a stronger Euro. Almost all sectors of the economy will suffer. Therefore it is very likely that EUR/USD will remain in the 1.17-1.20 range by the end of the year.

11.00 EU retail sales for July
14.30 USA new jobs created outside of agriculture in August
16.00 US ISM Services Business Activity Index for August

Important Notes on This Publication:

The content of this publication is for general information purposes only. In this context, it is neither an individual investment recommendation or advice nor an offer to purchase or sell securities or other financial products. The content in question and all the information contained therein do not in any way replace individual investor- or investment-oriented advice. No reliable forecast or indication for the future is possible with respect to any presentation or information on the present or past performance of the relevant underlying assets. All information and data presented in this publication are based on reliable sources. However, Bernstein Bank does not guarantee that the information and data contained in this publication is up-to-date, correct and complete. Securities traded on the financial markets are subject to price fluctuations. A contract for difference (CFD) is also a financial instrument with leverage effect. Against this backdrop, CFD trading involves a high risk up to the point of total loss and may not be suitable for all investors. Therefore, make sure that you have fully understood all the correlating risks. If necessary, ask for independent advice.