News

25.08.2023 – The best for the end of the week: Today, Jerome Powell will deliver his speech in Jackson Hole. This year’s symposium of the world’s major central banks is entitled ‘Structural Shifts in the Global Economy’.

The market will be waiting for clues as to whether the Fed thinks more tightening is necessary to push down inflation. This is against the backdrop of an unexpectedly robust U.S. economy. Hopes rest on the fact that the process of disinflation is enough for the central bank to stop pushing interest rates up for now.
Goldman sees brake on tightening
Goldman Sachs expects Powell to reiterate his case for a brake in tightening. The message will otherwise be the same as in the July meeting of the Federal Open Market Committee. For example, the Fed chief will reiterate that the central bank’s decisions will depend on incoming data. Goldman expects a 50 basis point rate move in September, and also 25 points in November and December. Meanwhile, Fed Funds trading suggests a 52.5 percent chance of a 75 basis point hike next month.

We suspect that: If Powell hints at a pause in tightening, we will see a moderate rally. If he even talks about coming interest rate cuts, we are likely to see a bigger bull market. What matters is the tone – if he comes across as too dramatic, many analysts will suspect a coming crisis. This was the case recently in China – although the country is causing some concern for Western central bankers anyway. But if Powell indirectly announces further interest rate hikes, there could be setbacks in the stock market. For example, in the S&P500, here the daily chart. However, the Fed chief is unlikely to deliver such a hawkish speech as he did a year ago, when inflation in the U.S. remained at a 40-year high.

Source: Bernstein Bank GmbH

Simon White, Macro Strategist bei Bloomberg, sagte ein „letztes Hurra“ für den Aktienmarkt nach Jackson Hole voraus. Der Boost werde nur kurzlebig sein, da sich der Ausblick für die Liquidität verschlechtere – dabei verwies er auf die rapide angestiegene Rendite im US-Bondmarkt.

Von allem etwas

Zurück zur Volkswirtschaft. Medienberichten zufolge ist die Fed wegen der widersprüchlichen Gesamtlage gespalten. Tatsächlich ist die Inflation innerhalb von einem Jahr von 8,3 auf 3,2 Prozent gesunken. Die US-Wirtschaft zeigt sich unerwartet robust und die Arbeitslosigkeit ist niedrig. Dies alles, obwohl die Zinsen für Hypotheken, Bankkredite und auch für Kreditkarten gestiegen sind. Somit ist die Tür für weitere Zinserhöhungen eigentlich offen, da die Teuerung noch ein Stück vom Zielwert 2,0 entfernt ist. Die US-Wirtschaft sei eine angenehme Überraschung, allerdings brauche sie vorsichtige Überwachung, sagte jüngst Adam Posen, Präsident des Peterson Institute for International Economics in Washington D.C. und früheres Mitglied der Bank of England.
Doch die Gefahr einer Rezession ist noch immer für viele nicht gebannt. So bezifferte der Blue Chip Economic Indicators, das ist eine monatliche Umfrage vom Informationsdienstleister Wolters Kluwer, das Risiko einer Krise in den nächsten zwölf Monaten auf 50 Prozent. Immerhin war dies ein Rückgang von den 56 Prozent des Vormonats.

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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. CFDs are complex instruments and are associated with the high risk of losing money quickly because of the leverage effect. 68% of retail investor accounts lose money trading CFD with this provider. You should consider whether you understand how CFD work and whether you can afford to take the high risk of losing your money.7

24.08.2023 – Nvidia remains the high-flyer when it comes to artificial intelligence (AI): The chip manufacturer again exceeded all expectations in the second quarter. And spread even more optimism for the third quarter. Group CEO Jensen Huang spoke of nothing other than a turning point in the computer business.

The stock remains the ultimate AI bet. Whereby we ask ourselves whether the bulls are not already somewhat spoiled by now. A plus of around 9 percent overnight is not bad. Nevertheless, the current stock market reaction was relatively restrained. Three months ago, the stock shot up by a spectacular 24 percent – that’s how much Nvidia had exceeded analysts’ expectations. Here in the picture the hourly chart.

Source: Bernstein Bank GmbH

Presumably, some investors opted to Sell the News; many investors also cashed out in the days before. Of course, many traders also anticipated the numbers: Nvidia shares had already posted an 11 percent gain on Monday.

Expectations exceeded

To the facts. Sales in the past second quarter were $13.5 billion – the expectation was about $11 billion. Earnings per share came in at $2.70 versus estimates of $2.07. However, the market was completely off its rocker because of the raised forecasts for Q3: Nvidia now expects revenue of $16 billion – that’s $3.5 billion more than the analysts’ average. Moreover, the announced revenue is above the highest whisper estimate of $15 billion. Finally, the icing on the cake was the announcement of a $25 billion share buyback.

A new era
CEO Jensen Huang commented, “A new computing era has begun. Companies worldwide are transitioning from general-purpose to accelerated computing and generative AI. (…) Nvidia GPUs connected by our Mellanox networking and switch technologies and running our CUDA AI software stack make up the computing infrastructure of generative AI.”
We translate the techie-speak: The chipmaker supplies high-quality graphics components for laptops, smartphones and gaming – GPUs for short. De facto, the company is thus working on reinventing modern graphics and making its use in many high-end Artificial Intelligence (AI) applications possible in the first place. In other words, Nvidia is by far the largest supplier of special chips for applications in AI with high computing power.

The conclusion from all this: Nvidia remains the turbo call for all those who are betting on the success of AI. The major bank HSBC, for example, raised the price target to $780 only on Monday. So there’s still a lot of upside. Things will get exciting if a competitor appears at some point and challenges Nvidia’s business. Or an invasion from Taiwan will dry up the chip pipeline; there are already bottlenecks at the contract manufacturer Taiwan Semiconductor. We are curious to see what will happen next – Bernstein Bank wishes successful trades and investments!

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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. CFDs are complex instruments and are associated with the high risk of losing money quickly because of the leverage effect. 68% of retail investor accounts lose money trading CFD with this provider. You should consider whether you understand how CFD work and whether you can afford to take the high risk of losing your money.7

23.08.2023 – Concerns about a corn shortage have vanished into thin air. The price is dipping.

That’s how fast things turn: Just two months or so ago, we had reported on rising prices because of the drought in the United States. But now everything is different. The World Agricultural Supply and Demand Estimates (WASDE) for August gave a mostly bearish picture a few days ago. Here is the daily chart for corn.

Source: Bernstein Bank GmbH

The Agriculture Department initially painted a mixed picture for the U.S. – America is also where the music plays in our trades: “This month’s 2023/24 U.S. corn outlook is for reduced supplies, lower domestic use, smaller exports, and tighter ending stocks.” All in all, the bearish undertone dominated: “Corn production for 2023/24 is forecast at 15.1 billion bushels, down 209 million from the July projection and if realized, would be the second highest on record behind 2016/17.” And it’s this second part of the statement that really packs a punch.

High inventories

Demand in the USA is also falling: “Total U.S. corn use for 2023/24 is cut 95 million bushels to 14.4 billion. Feed and residual use is lowered 25 million bushels based on a smaller crop. Corn used for glucose and dextrose and starch is projected lower based on observed use during 2022/23.” The bottom line is that stock forecasts were only slightly lowered: “ending stocks are lowered 60 million bushels to 2.2 billion. The season-average corn price received by producers is raised 10 cents to $4.90 per bushel.” We think: This extra yield is just a drop in the bucket; it did not support the market.
The verdict of Scott Strand of Hilltop Securities: “For the moment the 2.2 bbu carryout is bearish for US corn prices. We believe that rallies are opportunities for producers to sell, but we don’t see an immediate need for either down and midstream corn users to purchase upside hedges.” In other words, inventories are large enough to keep prices down, there is no reason to hedge long-term with low-priced contracts.

More short positions

In fact, most investors and producers have positioned themselves mostly south. A few days ago, Oliver Sloup of Blue Line Futures judged, “Broken down, funds are holding 255,032 short positions, and 157,527 long positions.” The expert referred to the heat wave in the Midwest. At the same time, however, he stressed the improving outlook for crop quality: U.S. corn was 59 percent “good/excellent,” up 2 percent from a week earlier. In addition, Brazil is likely to have a record crop. For us, this is the most important factor in the whole mix.
Our conclusion: we can hardly see any bullish news for corn. However, the weather can turn things around quickly. Whether long or short – Bernstein Bank wishes successful trades and investments!

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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. CFDs are complex instruments and are associated with the high risk of losing money quickly because of the leverage effect. 68% of retail investor accounts lose money trading CFD with this provider. You should consider whether you understand how CFD work and whether you can afford to take the high risk of losing your money.7

21.08.2023 – This doesn’t look good for the crypto bulls: Elon Musk single-handedly sunk Bitcoin and co. More specifically, it was his space company SpaceX. The matter looks like a major loss of confidence.

Crash in Bitcoin: BTCUSD struggles to build a bottom. Still, there is hope for the bulls: The daily chart shows a small and a very large gap; both would have to be closed again relatively quickly according to the rules of chart technique. Just as it had already been the case about two months ago.

Source: Bernstein Bank GmbH

What had happened: SpaceX, Musk’s space company, sold its entire bitcoin holdings. A few days ago, the “Wall Street Journal” had kicked off the story – bitcoin worth $373 million were said to have been involved. However, it was not clear when the sale went through. It looks like Musk has lost faith in cryptos. That’s because his e-car company Tesla reduced its Bitcon holdings in the second quarter from what was once $1.5 billion to $184 million. Or else, he just needs cash.

Billions wiped out

However: In the meantime, BTC dipped to its lowest level in two months. And thus wiped out all the gains that had accumulated since the asset manager BlackRock registered a Bitcoin ETF. Other e-currencies also plummeted – wiping out nearly $66 billion in stock market value in a very short period of time, as calculated by “Wirtschaftswoche.”
Some believe that it can go further down. For example, Josh Gilbert, market analyst of the social trading platform eToro. He referred to the support at $ 25,000 in an interview with the news agency Bloomberg.
The “BTC Echo” stated the “biggest liquidation wave since the FTX crash.” Bitcoin had not been able to hold any important support. And further: the RSI is now “massively oversold”. For bullish investors, it is now important not to fall below the daily low of August 17, which was 25,186 US dollars. Whereby we ask ourselves, with which stock exchange this price originated. No matter: If this support is also broken, there could be a further sell-off below the 25,000 US dollar mark, judged the “BTC Echo”.
We will keep an eye on the situation for you – Bernstein Bank wishes successful trades and investments!

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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. CFDs are complex instruments and are associated with the high risk of losing money quickly because of the leverage effect. 68% of retail investor accounts lose money trading CFD with this provider. You should consider whether you understand how CFD work and whether you can afford to take the high risk of losing your money.7

16.08.2023 – The recovery has failed to materialize: The Nasdaq 100 has been sending bearish signals for weeks. A recapture of the long-term uptrend remains ambitious.

August has not been good for the bulls so far. Or is it just a bear trap? We shall see. In any case, the index has not recaptured the abandoned long-term uptrend in recent days. Since December of last year and the then intermediate low at 10,687 points, the high-tech index had run continuously upwards. Here in the daily chart a section of the upward trend since May. With a lot of imagination and a little artistic license, a double top can also be identified, that is the double line above – but at least a strong resistance zone at 16,061.

Source: Bernstein Bank GmbH

The ruble had already made strong gains shortly after the Ukraine invasion – from 138 it went down to 52 rubles per greenback. This was due to a fireworks display of countermeasures by the Russian state and central bank, which now seems to have burned off. Strict capital controls, rapidly rising energy prices and a collapse in imports to Russia had initially strengthened the ruble. Plus, of course, a hefty interest rate hike: shortly after the invasion began, the central bank had raised its key rate from 9.5 to 20 percent on Feb. 28, 2022. Then it went back down again. And this July, the central bank raised its key interest rate from 7.5 to 8.5 percent.

Fewer petrodollars
Now, however, things look bleak for the ruble. The cost of war is rising. Western sanctions are taking effect. India or China are getting discount prices on oil and gas. In 2022, Russia’s foreign trade surplus had risen to a record $332 billion. But it has fallen by 80 percent, according to the central bank. Russia’s state budget closed with a deficit of 2.6 trillion rubles, or about 26 billion euros, in the first half of the year. Moscow just reported a budget deficit for the eighth month in a row.

There are also problems in politics. It was not only the strange Prigozhin coup in June that first exposed cracks in the system. At the end of June, even oligarch Oleg Deripaska criticized the invasion of Ukraine as a “colossal mistake” – and the Rusal boss spoke of a “war.” Which usually results in immediate imprisonment.

Haishenwai, Kuyedao and Xing’an
Foreign policy standoffs are also taking place. Turkey has visibly moved away from Russia with the NATO release of Finland and Sweden and the release of Ukrainian soldiers from the Azov regiment-perhaps only for now, perhaps forever.
Beijing, too, is by no means unconditionally on Moscow’s side. As early as April, the “Neue Zürcher Zeitung” pointed out an interesting detail from China. According to a ministerial decree, Russia’s Pacific metropolis Vladivostok must now be called “Haishenwai” again on Chinese maps. Sakhalin Island must be called “Kuyedao”. And the Stanovoi Mountains “Outer Xing’an Mountains”. It looks like Beijing never accepted the loss of its territories to Russia and the “unequal treaties” of the 19th century. Who knows – maybe Chinese tanks will roll into Siberia someday.

Our conclusion from all this: The ruble remains a seismograph for the state of Russia. But a lasting recovery can only be expected if Russia is reintegrated into the global economy. If Russia prevails in the trench warfare in Ukraine, enough Western companies will be ready to invest in the Russian Federation again. We are curious to see what will happen next and wish successful trades and investments!

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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. CFDs are complex instruments and are associated with the high risk of losing money quickly because of the leverage effect. 68% of retail investor accounts lose money trading CFD with this provider. You should consider whether you understand how CFD work and whether you can afford to take the high risk of losing your money.7

14.08.2023 – Here we are again: USDRUB has crashed to the 100 mark. Weeks ago, the euro had already reached the magic 100 mark. The bear market reflects the cracks in the Russian state foundation, which have caused a massive flight of capital.

The ruble is again as weak as it last was in March 2022. Here is the hourly chart of USDRUB. We now suspect countermeasures soon, which could bring profits back to traders on the long side: Moscow wants to buy no more foreign currencies on the world market until the end of the year. In contrast, foreign currencies from the state fund of up to $23 million are to be sold per day. In addition, the Interfax news agency, citing the Central Bank, reported that a hike at the next regular meeting in September is possible. Perhaps it will be another significant rate hike.

Source: Bernstein Bank GmbH

The ruble had already made strong gains shortly after the Ukraine invasion – from 138 it went down to 52 rubles per greenback. This was due to a fireworks display of countermeasures by the Russian state and central bank, which now seems to have burned off. Strict capital controls, rapidly rising energy prices and a collapse in imports to Russia had initially strengthened the ruble. Plus, of course, a hefty interest rate hike: shortly after the invasion began, the central bank had raised its key rate from 9.5 to 20 percent on Feb. 28, 2022. Then it went back down again. And this July, the central bank raised its key interest rate from 7.5 to 8.5 percent.

Fewer petrodollars
Now, however, things look bleak for the ruble. The cost of war is rising. Western sanctions are taking effect. India or China are getting discount prices on oil and gas. In 2022, Russia’s foreign trade surplus had risen to a record $332 billion. But it has fallen by 80 percent, according to the central bank. Russia’s state budget closed with a deficit of 2.6 trillion rubles, or about 26 billion euros, in the first half of the year. Moscow just reported a budget deficit for the eighth month in a row.

There are also problems in politics. It was not only the strange Prigozhin coup in June that first exposed cracks in the system. At the end of June, even oligarch Oleg Deripaska criticized the invasion of Ukraine as a “colossal mistake” – and the Rusal boss spoke of a “war.” Which usually results in immediate imprisonment.

Haishenwai, Kuyedao and Xing’an
Foreign policy standoffs are also taking place. Turkey has visibly moved away from Russia with the NATO release of Finland and Sweden and the release of Ukrainian soldiers from the Azov regiment-perhaps only for now, perhaps forever.
Beijing, too, is by no means unconditionally on Moscow’s side. As early as April, the “Neue Zürcher Zeitung” pointed out an interesting detail from China. According to a ministerial decree, Russia’s Pacific metropolis Vladivostok must now be called “Haishenwai” again on Chinese maps. Sakhalin Island must be called “Kuyedao”. And the Stanovoi Mountains “Outer Xing’an Mountains”. It looks like Beijing never accepted the loss of its territories to Russia and the “unequal treaties” of the 19th century. Who knows – maybe Chinese tanks will roll into Siberia someday.

Our conclusion from all this: The ruble remains a seismograph for the state of Russia. But a lasting recovery can only be expected if Russia is reintegrated into the global economy. If Russia prevails in the trench warfare in Ukraine, enough Western companies will be ready to invest in the Russian Federation again. We are curious to see what will happen next and wish successful trades and investments!

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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. CFDs are complex instruments and are associated with the high risk of losing money quickly because of the leverage effect. 68% of retail investor accounts lose money trading CFD with this provider. You should consider whether you understand how CFD work and whether you can afford to take the high risk of losing your money.7

09.08.2023 – Is this it for the rally in cocoa? Or are we just seeing a temporary setback? Either way, the price has just taken a sharp turn south. We take a look at the background.

It can happen that fast: Since April, the cocoa price had known only one direction – up. The price worked its way up to the high from 2011. But just now the bears invaded the chocolate market. Here is the daily chart.

Source: Bernstein Bank GmbH

According to the website “Barchart.com”, the reason for the recent development is this: “Favorable Weather In West Africa Sparks Long Liquidation In Cocoa Futures”. So the bulls have cashed out for now and closed buying positions.

Plant rot
For now, the heavy continuous rains in West Africa seem to be over. And the outlook for the crop has improved because farmers can work better and a little dryness is good for the plants. Recently, plant diseases had spread: Sprout virus and black pod disease caused increased blackening and rotting of plants. In addition to crop losses, the global market had feared lower quality – and ultimately expected a third season in deficit in 2023/24.

Shortage in the market

Thus, exports from the world’s largest cocoa producer slipped: Ivory Coast farmers shipped 2.9 percent less year over year in the period from Oct. 01 to Aug. 06, according to “Barchart.com.” In addition, inventories at U.S. ports were recently the lowest in more than four months, according to the Intercontinental Exchange commodity exchange in Atlanta.
Côte d’Ivoire forward sales for the period from Oct. 01 to July 07 fell 1.3 million metric tons, or 13.3 percent, year over year. The Ivorian government agency Le Conseil Cafe Cacao had also said on July 18 that Ivory Coast would no longer allow contract sales for exports in the 2023/23 season.

He who comes too late…
Remains a short note on the subject of Behavioral Finance: Always keep an eye on the contra-indicators. Just yesterday, for example, the “Frankfurter Allgemeine Zeitung” noticed the cocoa rally. In the online edition, the title read: “Cocoa prices at historic highs”. The lesson for shrewd traders: when the mainstream media discover a theme, the party is usually over. Because when the old aunts are lured onto the trading floor by such articles to buy, it’s time for the pros to take their leave. Because there is hardly anyone left to support the prices.

By the way, we had already reported on the chocolate bull market weeks ago. Always keep an eye on the realtime news as well. Not only, but also for the soft commodities. Bernstein Bank wishes you successful trades and investments!

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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. CFDs are complex instruments and are associated with the high risk of losing money quickly because of the leverage effect. 68% of retail investor accounts lose money trading CFD with this provider. You should consider whether you understand how CFD work and whether you can afford to take the high risk of losing your money.7

07.08.2023 – Is there really such a thing as seasonal patterns in Forex trading? We found an author who says there is. And he advises to keep an eye on the Australian dollar in August. We’ll abstain from an opinion and briefly summarize the thesis.

If Don Dawson of the financial website “Barchart.com” has his way, we are in the middle of a very interesting phase for the Aussie. He just wrote “Stop Wasting Time And Start Comprehending The Australian Dollars Seasonal Trading Pattern In August.” Dawson believes that if the weekly chart breaks below the May 31 low, it will support the “August seasonal sell pattern”. Here is the weekly chart of AUDUSD.

Source: Bernstein Bank GmbH

The Moore Research Center found that AUD traditionally tends to weaken before the end of Australia’s first fiscal quarter on Sept. 30 – over 15 years, this pattern has produced gains 87 percent of the time. On August 24, for example, the Aussie had closed below its August 04 level in 13 of the past 15 years. Of course, this past pattern does not guarantee success in the future, the author qualified.

Will spring bring a bull market?

Improved economic data can only be expected in Australia from September onwards – because that is when spring begins, which has a positive effect on the job market, growth in gross domestic product and business surveys. Dawson’s thesis: “Longer daylight hours and warmer weather often stimulate economic growth.” Of course, commodity prices are also important for the performance of the foreign exchange – as the country continent exports iron ore, gold or coal.

Looking at monetary policy
Dawson went on to say that the market could be oversold at the moment and need a rally to provide a better entry point for the short trade. He added that this is also due to monetary policy. He said the Reserve Bank of Australia (RBA) has just delayed reaching its inflation target of 2 to 3 percent until late 2025. This has supported the Aussie.
However, the market had expected an interest rate step of 25 basis points – but for the second time in a row, the RBA paused. First, the central bank wanted to analyze the effect of earlier interest rate steps. In the end, hawkish and dovish comments balanced each other out – “which may assist our upcoming seasonal sell in the AUD.”
We are curious to see how the predicted seasonal sell develops – and wish successful trades and investments!

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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. CFDs are complex instruments and are associated with the high risk of losing money quickly because of the leverage effect. 68% of retail investor accounts lose money trading CFD with this provider. You should consider whether you understand how CFD work and whether you can afford to take the high risk of losing your money.7

04.08.2023 – Tokyo has already counteracted the hoped-for turnaround in interest rates. The central bank recently had to intervene to prevent an implosion in government bonds. The market is puzzling over the yen’s further path.

After a brief rally, the yen has since shown weakness again. Here is the 4-hour chart of GBPJPY. The situation is hardly different for the euro and the dollar – higher interest rates prevail in these currency areas. Yesterday, for example, the Bank of England raised the key interest rate by 0.25 percentage points to 5.25 percent – this was the 14th interest rate step in a row. Japan, on the other hand, is shying away from normalizing its monetary policy – and is sticking with its key interest rate of minus 0.1 percent.

Source: Bernstein Bank GmbH

After all, the Bank of Japan last Friday hinted at a gentle departure from its previous monetary policy. The yield of Japan bonds should be able to rise to 1.0 percent instead of the rigid yield target of 0.5 percent. As recently as last Friday, Reuters had commented: “Bank of Japan’s opaque policy shift means stronger, wilder yen”. The yen has become wilder – but not necessarily stronger.

Was probably nothing
Because when the yield on Japan bonds reached a new nine-year high, the Bank of Japan got cold feet on Monday: Tokyo announced the purchase of bonds in the equivalent of 2 billion dollars. In doing so, the BoJ sent a signal: If necessary, stable bond prices are more important than a firm yen. Financial blog ZeroHedge judged, “And while the 10-year yield dropped back below 0.6%, the yen quickly reversed its advance against the dollar as FX traders realized that any attempts at tightening would lead to a collapse in the bond market.” We add: Which would plunge domestic banks and insurers into trouble.

Puzzling Interest Rate Turnaround Light
Loosening control of the yield curve was ultimately half-hearted, judged Win Tin, forex strategist at Brown Brothers Harriman. That will probably continue to weigh on the Japanese currency, he said on Bloomberg TV. The “Frankfurter Allgemeine Zeitung”, on the other hand, stated that Japan’s small interest rate turnaround has great significance for the USA. For Japanese investors – after all, the largest creditors of the United States – domestic yen investments have so far been unattractive. That is now changing.
The conclusion to be drawn from all this is that things remain exciting for the yen. After all, inflation of 3.3 percent on the Nippon is urgently calling for higher interest rates. On the other hand, the financial sector must not falter. The question of how the BoJ will extricate itself from this dilemma will probably toss the yen back and forth for a while. Traders with the right instincts can therefore make good money. Whether long or short – Bernstein Bank wishes successful trades and investments!

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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. CFDs are complex instruments and are associated with the high risk of losing money quickly because of the leverage effect. 68% of retail investor accounts lose money trading CFD with this provider. You should consider whether you understand how CFD work and whether you can afford to take the high risk of losing your money.7

03.08.2023 – Is the bull market in oil now over? New speculation surrounding Saudi Arabia has put the brakes on the rise. Now things are getting exciting: the OPEC+ Joint Ministerial Monitoring Committee will be meeting shortly.

The oil price, which knew only the way north since the end of June, has recently turned south. Here is the four-hour chart for Brent.

Source: Bernstein Bank GmbH

The latest trigger for the setback was a report from Bloomberg, according to which the Saudis could now relax their production cuts again. After all, Brent had crossed the price of 85 dollars per barrel. Higher quotas could help the kingdom regain lost market share. In addition, refineries around the world urgently needed supplies.
The Saudis had announced in June that they would cut production by 1 million barrels per day (bpd). In addition, Riyadh reiterated that it would also produce 1 million bpd less oil in August, following July. As a result, and due to production problems in Nigeria, Angola and Libya, OPEC output has fallen to its lowest level since 2020, according to Oilprice.com.

Saudis probably want $90

Reuters had just reported, citing insiders, that the cartel would not change its production policy. According to Investing.com, this will be joined by further cuts in other OPEC+ countries. Many analysts had recently believed that Saudi Arabia would maintain its cuts in September. “The kingdom will want to see a protracted rise toward $90 a barrel and possibly improvement in Chinese economic data to start considering putting the 1 million barrels per day back into the market,” Tamas Varga of PVM Oil Associates told Bloomberg news agency, for example.
Experts at National Australia Bank also expressed their views in this direction. In an analysis on Tuesday, they said: “Oil prices are on track to hit 2023 price highs in our view. The Organization of Petroleum Exporting Countries (OPEC) meeting this Friday is a potential catalyst for the outlook where we expect Saudi Arabia’s voluntary supply cuts to be extended another month.” There is some confusion about the date, by the way: the online meeting has been postponed to Saturday, according to Reuters.

Fewer reserves in the USA

And also from the USA there had just been quite bullish impulses: Thus the stocks slipped this week by fabulous 15.4 million barrels – the largest minus of all times. And nobody could explain the data of the American Petroleum Institute, judged Oilprice.com. Analysts had expected a drop of only 900,000 barrels.
Also, the much-watched stockpiles at Cushing, a backwater in Oklahoma, fell by another 1.76 million barrels, after already dropping by 2.34 million barrels the week before. The rig count from Baker Hughes in the U.S. showed a stagnant, low level: only 529 wells were active at the end of July, compared to 605 a year ago and 623 at the beginning of the year.
Our conclusion: The oil price stands and falls with the decision of the Saudis. America is unlikely to jump into the Arab gap. Keep an eye on the real-time news on the OPEC meeting – Bernstein Bank wishes successful trades and investments!

___________________________________________________________________________________________________________________________

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. CFDs are complex instruments and are associated with the high risk of losing money quickly because of the leverage effect. 68% of retail investor accounts lose money trading CFD with this provider. You should consider whether you understand how CFD work and whether you can afford to take the high risk of losing your money.7