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DXY: Dollar index recoups losses
US Dollar Index, index, DXY: Dollar index recoups losses Trading idea for the Dollar Index (DXY) on May 29, 2024The dollar index (DXY) is trading at 104.54 on Wednesday, showing mixed dynamics, after yesterday's growth momentum, when the dollar rebounded from the local low on May 20 at 104.24.Buyers of the US currency continue to doubt that the Federal Reserve System (FRS) will begin to reduce the interest rate at the September meeting. These doubts are caused by the uncertainty surrounding the disinflation process. Despite the slowdown in the consumer price index (CPI) in April after three months of growth, Fed officials believe that this decline is not a long-term trend. Yesterday, the president of the Federal Reserve Bank of Minneapolis, Neil Kashkari, noted that the US economy remains stable, and there is no need to rush to lower rates. In his opinion, it is necessary to see a stable slowdown in inflation over several months in order to be sure that price pressure will return to the target level of 2%. Neil Kashkari also stressed that the Fed should not rule out the possibility of a repeat cycle of monetary policy tightening. Against this background, the yield of 10-year US Treasury bonds updated local highs by 4.57%, which allowed the dollar index to strengthen its positioning among other forex currency indices.This week, investors will be closely watching the April data on the basic personal consumption expenditure (PCE) price index in the United States, which will be published on Friday. This indicator is a key indicator for the Fed's inflation assessment. The index is expected to remain at 2.8% in annual terms. A steady rise in inflation will increase the likelihood of interest rates remaining at high levels. At the same time, if the data exceeds expectations, the dollar may resume a bullish rally. In this context, the dollar index retains the strengthening potential, which may be realized before the end of this week.Recommendation: open long positions on DXY when the 104.70 level breaks up with a target of 106.00 and a stop loss at ...
DXY: the US dollar index has been declining all week
US Dollar Index, index, DXY: the US dollar index has been declining all week The trading idea for the US Dollar Index (DXY) on May 15, 2024The US dollar index (DXY) continues to fall for the third day in a row, developing the downward momentum that formed earlier this week. At the moment, the asset is trading at 104.75, ignoring both the growth of industrial inflation in the United States and the "hawkish" statements by the head of the Federal Reserve System (FRS) Jerome Powell.Yesterday, traders drew attention to the data on industrial inflation in the United States. According to a report by the U.S. Bureau of Labor Statistics, the producer price index (PPI) rose 0.5% in April compared to the previous month, significantly exceeding expectations of 0.3%. Annual data on the general and basic producer price indices also exceeded forecasts and amounted to 2.2% and 2.4%, respectively. Economists assume that the acceleration of industrial inflation caused by rising costs of production resources will eventually affect the prices of the consumer basket, which will lead to an increase in overall inflation. According to the latest survey by the Federal Reserve Bank of New York, most economists expect that the average annual inflation in the United States will be 3.3% in a year, instead of the previous forecast of 3%.Also yesterday, Fed Chairman Jerome Powell spoke at the general meeting of the Association of Foreign Bankers in Amsterdam, where he stressed that the economy had shown good results due to an extremely strong labor market, which, in turn, limits the regulator's ability to ease monetary policy. According to Powell, the Fed is no longer so confident that inflation will soon fall to the target level.The April Consumer Price Index (CPI) report is expected to be published today at 12:30 GMT, which will help to more accurately assess the prospects for the Fed's monetary policy. Forecasts suggest a decrease in annual inflation in the United States from 3.5% to 3.4%. If the actual data turns out to be the same or higher, the dollar's growth may begin with renewed vigor.We suggest including a DXY order in the trader's trading plan:Sell-Stop 104.50Take-Profit 103.00Stop-Loss ...
Analytical Forex forecast for NZD/USD, AUD/USD, USD/JPY and USDX on Friday, February 9th
AUD/USD, currency, USD/JPY, currency, NZD/USD, currency, US Dollar Index, index, Analytical Forex forecast for NZD/USD, AUD/USD, USD/JPY and USDX on Friday, February 9th NZD/USD: the New Zealand dollar is rising at the end of the weekThe NZD/USD currency pair is actively strengthening, updating peaks since February 2 and checking the possibility of a breakout through 0.6120. The fundamental background of the market remains stable. The US dollar was supported by recent statements by members of the Federal Reserve System, including Jerome Powell, who indicated a preference for a more cautious approach to raising the cost of loans. This reduces the probability of an interest rate cut by 25 basis points in March to less than 20%, shifting the focus to the May meeting of the regulator.Meanwhile, the New Zealand dollar came under pressure after Chinese inflation data for January was published: the annual consumer price index fell by 0.8% after the previous reading of -0.3%, which turned out to be worse than the expected -0.5%. The monthly consumer price index rose 0.3%, accelerating from 0.1%.Resistance levels: 0.6130, 0.6155, 0.6192, 0.6221.Support levels: 0.6100, 0.6060, 0.6030, 0.6000.AUD/USD: pullback after takeoff balanced the gains of the session on TuesdayThe AUD/USD currency pair is experiencing mixed emotions at the auction, not exceeding the critical mark of 0.6500. The previous day recorded a significant drop in the Australian dollar, effectively canceling the growth gains recorded on Tuesday after the decision of the Reserve Bank of Australia (RBA).As expected, the RBA left the key rate at 4.35%, while in a statement stressing the expectation of a moderate decrease in inflation to the upper limits of the target range by 2025. This indicates a cautious approach to changing monetary policy, although the bank will continue to monitor global economic conditions. The further weakening of the Australian dollar was provoked by domestic economic statistics: the index of manufacturing activity from the Australian Industry Group (AiG) for December showed a decline. The Australian currency is also under pressure from data on consumer inflation in China, which slowed more than expected in January, indicating a slowdown in domestic demand and possible consequences for Australian exports of raw materials.Resistance levels: 0.6500, 0.6543, 0.6569, 0.6600.Support levels: 0.6480, 0.6450, 0.6400, 0.6356.USD/JPY: January bank lending growth in Japan was 3.1%In the Asian trading session, the USD/JPY currency pair shows moderate growth, stabilizing near the level of 149.40 and reaching new peaks since November 27.Current statistics from Japan indicate the difficulties faced by the country's economy: the index tracking consumer spending dropped from 51.8 to 50.2 points in January amid the ongoing onslaught on household financial well-being. This is confirmed by the correction of the household expenditure index in December from -1.0% to -0.9% on a monthly basis and from -2.9% to -2.5% on an annual basis. In parallel, the volume of bank lending in January increased from 3.0% to 3.1%. However, the country's balance of payments for December, adjusted for seasonal fluctuations, showed a decrease from 1925.6 billion yen to 744.3 billion yen, which was significantly lower than analysts' expectations of 1018.9 billion yen.Resistance levels: 150.30, 151.80.Support levels: 147.90, 145.90.USDX: the chance of a US rate cut in March is 20%, according to analystsToday, during the Asian session, the US dollar stabilized at 104.00 in the USDX index after it restored the highs on November 14 at 104.40, aiming to end the week with a slight increase.The strengthening of the dollar was provoked by the statements of the chairman of the US Federal Reserve Jerome Powell. He stressed the need to wait for further evidence of a steady decrease in inflation before deciding to lower interest rates, which forced analysts to reassess expectations and reduce the likelihood of monetary policy easing to 20% in March and to 60% in May.The market's attention was focused on the latest data on the state of the US labor market, released the day before. According to these data, the number of initial applications for unemployment benefits decreased from 227.0 thousand to 218.0 thousand for the week ended February 2, and the number of repeated applications for the week ended January 26 decreased from 1.894 million to 1.871 million, which supported the dollar. However, by the end of the day, the Bulls had lost most of their gains. Now investors are waiting for data on consumer inflation in the United States, which will be published on Tuesday at 15:30 GMT+2.Resistance levels: 104.24, 104.70, 105.20, 105.82.Support levels: 103.60, 103.00, 102.45, ...
DXY: the course for dollar decrease does not change
US Dollar Index, index, DXY: the course for dollar decrease does not change DXY (US Dollar Index) Analysis for January 2024The Dollar Index (DXY) ended 2023 with a predictable decline that saw the US currency lose more than 5% of its value in two months, breaking below 102.00p and hitting a 6-month low.The dollar sagged after a sharp decline in US inflation convinced the Federal Reserve (Fed) to reverse its tight monetary policy, which has seen the key interest rate rise to 5.5% over the past year. November's U.S. consumer price index data showed that the inflation rate fell to 3.1%, the lowest in a year and a half. However, the core CPI, which excludes food and energy prices, remains at 4%.Analysts foresee a further decline in core inflation in the near future. An obvious downtrend is also seen in industrial inflation, which fell from 1.2% to 0.9% in November, while the core producer price index adjusted from 2.3% to 2%. Experts from Citi forecast that in the first quarter of 2024, a further easing of inflationary pressures will contribute to lower consumer activity and renewed selling in the hydrocarbon market, driven by fears of weak global economic growth prospects. Citi expects U.S. inflation to continue to move toward the 2% target, even without additional steps by the Fed to tighten monetary policy.In response to easing inflationary pressures, the Fed at its December meeting left the key rate unchanged at 5.5%, recognizing that it had reached the restrictive level necessary for a gradual decline in inflation. Thus, the regulator's management confirmed that there was no need for further rate hikes, which had been considered as a baseline scenario back in November. The updated forecasts show that the interest rate could fall to 4.6% in 2024, which implies at least three rate cuts, followed by four more in 2025 and three in 2026.At the press conference, Jerome Powell confirmed that officials have started discussing the timing of easing financial conditions, which further undermined the dollar's position in forex currency trading. Market participants believe that the first rate cut could come in March. According to the FedWatch Tool, the probability of such a scenario is now estimated at 78% and continues to grow as additional signals confirming the negative impact of high interest rates on the national economy emerge. For example, the latest U.S. industrial activity reports indicate that the economy has been stagnating for the past three months. The PMI index of the manufacturing sector in December decreased from 49.4 to 48.2. In case of deterioration of economic conditions in the U.S. in early 2024, traders will be convinced of the inevitability of the Fed's interest rate cut. Against this backdrop, the dollar is expecting a prolonged decline, the beginning of which we saw back in late 2023.Our DXY positionSell Stop 100.50Take-Profit 90.00 Stop-Loss ...

Articles about financial markets

Remuneration of American CEOs has reached a record
S&P 500, index, Remuneration of American CEOs has reached a record The annual compensation of CEOs in the United States is breaking records, despite a shortage of workers and inflation. According to MyLogIQ (a provider of analytical products of the U.S. Securities and Exchange Commission), the median salary of executives from the S&P 500 companies reached $14.2 million last year. The salary growth of the majority of company executives was at least 11%.Half of the companies also said that the salary of ordinary employees increased by 3.1% last year, and a third of the companies reported that employee compensation, on the contrary, decreased between 2020 and ...
Updating drivers - looking for landmarks
S&P 500, index, Updating drivers - looking for landmarks The past year ended very successfully for the American market: the S&P 500 rose by 26.9%, although initially a more modest increase was expected. So, our optimistic (!) scenario included an increase in the broad market index to only 10%. However, the US stock markets got off to a good start and remained on top with the support of the adoption of infrastructure reform. The economic recovery also turned out to be more active than we expected, and this helped companies to increase revenue and profit more intensively. At the same time, the development of all these trends contributed to the acceleration of inflation, which went far beyond the expectations of the Fed, the market and our forecasts. It was inflation that became the most discussed topic last year and will absolutely remain at the top of the agenda in the first half of 2022.To bring inflation under control, the Fed thought about reducing the balance sheet only at the beginning of this year: even in December 2021, there was no talk about it. The reduction of the balance sheet, combined with a sharper than originally planned increase in rates, can act as a reliable way to curb inflation expectations. These expectations are formed mainly on stock exchanges, which excludes their negative impact on the economy in general and on the labor market in particular. A steady positive trend in the labor market is indicated by data for October, when the number of open vacancies reached a record 11.03 million, 1.5 times exceeding the number of applicants. This ratio was last observed 50 years ago. Together with an increase in logistics efficiency, the restoration of production capacities and the gradual opening of the economy, this will lead to a gradual decrease in inflation. Of course, we have repeatedly talked about the upcoming opening of the economy after the pandemic during the second half of 2021, but this event is delayed due to the appearance of new COVID-19 strains. And yet, the longer the pandemic continues, the closer its end is.After a negative start to the year for most securities in the technology sector and a general correction, investors should consider closing hedging positions that I advised opening at the end of last year. Now is the time to buy a wide range of stocks with a focus on "value" and "quality" companies. The intensive growth of the economy serves as the basis for optimistic expectations regarding revenue and profit. That is why the upcoming reporting season is the strongest driver of the growth of quotations of representatives of the real sector of the economy. Of course, there is also a trend to reduce the cash flows of companies, since there is no effect of a low base and economic growth begins to slow down. However, it is predicted that the S&P 500 companies will increase sales by almost 15%, and their earnings per share will increase by 21.5%. Among the leaders will be the energy, raw materials and industrial sectors, as well as the segment of secondary necessities. The momentum for an upward movement in their quotes will be provided by strong results for the fourth quarter and optimistic forecasts for January-March. Separately, I would like to note the financial sector, which will not be able to demonstrate a record increase in revenue and profit, but industry forecasts for 2022 may become one of the most optimistic, taking into account the plans of the Federal Reserve to actively raise the key ...
Weekly review. January 10, 2022
EUR/USD, currency, US Dollar Index, index, Brent Crude Oil, commodities, Gold, mineral, Weekly review. January 10, 2022 The year 2022 on world markets will largely be determined by the tightening of monetary policy in the United States, and the first week of the new year confirmed this. The minutes of the Fed's December meeting published last week showed a significant tightening of the position of the regulator's representatives – Fed members believe that the rate can be raised as early as March, and also see a faster reduction in the balance sheet as appropriate. Representatives of the regulator believe that the current economic conditions are already in many ways conducive to tightening the labor market, some even noted the recovery of the labor market already sufficient for such actions, although the majority still expects further improvement in the labor situation. Against this background, it is worth noting the publication of December labor data in the United States, which came out ambiguous. On the one hand, employment in December increased by only 200 thousand. The Bloomberg consensus forecast assumed an employment growth of 450 thousand, and the actual growth rate of the indicator was the lowest since the beginning of 2021. Nevertheless, in many respects such weak employment growth is explained by seasonal adjustment, and the unemployment rate in December fell more than expected. Thus, the indicator has updated the next lows since the beginning of the pandemic, dropping to 3.90% against the expected 4.10%. The unemployment rate continues to approach a historic low of 3.40%, and labor statistics have further increased fears in the market of an imminent tightening of the PREP in the United States. As a result, on Friday, the yields of ten-year US treasuries at the moment exceeded 1.80% per annum - the maximum since the beginning of the pandemic. Today they have returned to these levels again.This week, the dynamics in the market will continue to be determined by expectations for the actions of regulators - investors will follow the statements of representatives of the Fed and the ECB, as well as the publication of price data in the United States for December. Statistics published last week showed an increase in inflation in the EU to 5.00% YoY. As a result, the topics of price growth in December updated the historical maximum, while analysts expected a slight slowdown in price growth. The situation on the supply side also has high inflation in the United States. The December business activity indices indicated a slight easing of logistical problems, however, the further deterioration of the epidemiological situation again intensified disruptions in logistics chains, which does not lead to a significant slowdown in price growth. The FAO World Food Price index fell in December for the first time since July, but food inflation remains at elevated levels. Against this background, US inflation data is likely to continue to bring the Fed rate hike closer, intensifying the negative in the markets.The main event for the oil market in early 2022 was the OPEC+ meeting. However, as expected, it was decided to stick to the current plan to increase production. Nevertheless, the cartel lowered its forecasts for a surplus in the oil market, which allowed Brent crude futures to exceed the level of $80/bbl. Moreover, against the background of interruptions in the supply of black gold from Kazakhstan and Libya, quotations were close to $83/bbl. However, at the end of the week they declined from these levels, today Brent futures are growing by 0.35% and are trading around $82.05/bbl. The main negative for oil this week may be related to the potential strengthening of the dollar amid expectations of a tightening of the PREP in the United States. However, in the absence of a significant strengthening of the dollar, Brent futures may still exceed the levels of $83/bbl– - the quotes may be supported by another weekly decline in oil ...
Inflation is rising in Germany
DAX, index, Inflation is rising in Germany The German Statistical Office published the final data on the dynamics of consumer prices in October in accordance with European reporting standards. They indicate an acceleration of inflation to 4.6%. The indicator is calculated in relation to the prices that were fixed a year earlier. In monthly terms, consumer prices showed an increase of 0.5%. For comparison: in September, inflation in annual and monthly terms was 4.1% and 0.3%, respectively. The calculation of indicators according to German standards showed an increase in the inflation rate in Germany to a maximum for the period since 1993. It amounted to 4.5% in annual terms. Compared to September, prices rose by 0.5%. Both indicators correspond to the forecasts of the surveyed analysts. By the end of September, inflation was 4.1% compared to the same month last year. In monthly terms, it showed zero dynamics. The largest contribution to the growth of October inflation was made by energy carriers. They have risen in price by 18.6%. The cost of food increased by 4.4%. Prices for services increased by ...
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