Summary of Minutes of the Fed's May meeting released last night

  + Most Fed officials agree that it will be necessary to tighten 50 basis points in the next 2 meetings in June and July.

 + The Fed also signaled that it is likely to end the process of raising interest rates by the end of this year.

 => The minutes showed that the FED raised interest rates faster than the market expected, but softened and was a bit more dovish when signaling that it would likely pause raising interest rates at the end of the year...  Investors are more relaxed and optimistic.

Analysis on Gold

  In yesterday's session, precious metal Gold dropped from 1836 to 1813 ($23) and closed the day session with a bearish candle around 1814. With this bearish candle closing,  then my personal opinion will prioritize the Sell option in today's trading session.

 - Switching to a shorter time frame than H4, we can see that the last 3 candles Gold is decreasing steadily, thus reinforcing the above view.  In my opinion, you can sell the Gold band from 1814-1817 with a safe target around 1800-1805 and beyond 1795.

This is only analysis and signal with proper levels will be shared for trading.

Investment banks rush to cut yuan forecasts again after April revisions

SHANGHAI/HONG KONG (Reuters) - Major investment houses are cutting their forecasts for the yuan for the second time in just three weeks as the Chinese currency's recent sharp declines tore through their previous revisions, catching many off guard.

A triple whammy of slowing growth, COVID-19-related economic disruptions and aggressive U.S. Fed tightening has put strong downward pressure on the yuan, while Chinese authorities appear to be standing aside to let their tightly managed currency drop.

The spot yuan rate has tumbled more than 6% against the dollar in the last four weeks and was at 6.7992 per dollar on Monday, busting past the 6.71 median year-end forecast in a poll of nine banks in late April.

Several banks now see the yuan weaking to 6.9 or even hitting the 7 mark before the end of the year, levels not seen since the early stage of the pandemic in 2020.

HSBC said in a note that the currency had become stretched, "especially against the backdrop of China's economy slowing and the Fed remaining firmly hawkish.

"Neither are new developments per se, but things have become more intense, which we believe warrants consideration for our forecasts."

HSBC, cutting its yuan forecast for the second time in three weeks, now expects the yuan to trade at 6.75 per dollar at the end of the second quarter before bouncing to 6.70 at the end of Q3, compared with 6.60 and 6.62, respectively, after its previous revision.

The late April poll of nine banks had projected the yuan at 6.63 per dollar at the end of June, according to the median forecast. A majority of respondents expected the yuan to weaken further to 6.71 towards the year-end.

But the yuan's latest fall, to its lowest in nearly 20 months and a rare gyration for a currency that has typically been tightly managed within a thin range, has led many analysts to project further weakness.

A slew of weaker-than-expected April economic data released on Monday and last week, including credit lending, retail sales and industrial output, reaffirmed market views that the world's second-largest economy faces mounting headwinds as COVID-19 lockdowns take a heavy toll.

"USD/CNY could rise fast to 7 if onshore COVID situations worsen with more lockdowns followed by severe supply chain disruptions," Barclays (LON:BARC) said in a note.

The bank also noted the possibility, however, that the yuan could quickly retrace if authorities step in to prop up the currency or to bolster the economy.

"The downside risk comes from the People's Bank of China (PBOC) leaning aggressively against further CNY weakness and a sharper decline in dollar than we expected; risk sentiment could also boost CNY in the case of massive stimulus. In this case, USD/CNY could see quick retracement to 6.70."

Barclays lowered its yuan forecasts to 6.9 per dollar at end-Q2 from 6.3 previously, to account for a stronger dollar and foreign portfolio outflows.

Others, including Mizuho Bank and UBS, also trimmed their yuan projections to reflect bearish sentiment.

Ken Cheung, chief Asian FX strategist at Mizuho Bank, cut his year-end yuan forecast for a second time on Monday to 6.7 from 6.6.

Wang Tao, chief China economist at UBS, revised her year-end yuan forecast to 6.9 from 6.6 previously.

"USD/CNY may break 7 before end-year due to USD strength and a likely sharp weakening of China's exports and general economy, but should settle below 7 by year end," she said.

"This is because we expect the COVID-related economic impact to decline in the second half of the year, with growth momentum rebounding and market confidence improving."

Analysis on Gold on May 9, 2022

On Friday, the US released Nonfarm payrolls data, this data was better than market expectations but only caused Gold to decline slightly to 1875. Gold then bounced up to close the daily candle equal to 1875.  The bullish candle is around 1882. This also makes the last candle close with a bearish candle, but retreated quite long.

 My personal view at the beginning of this week's trading session is that Gold will continue to gain momentum.  The closest support area for this precious metal is around 1873-1877.  Here we can establish a long position with a safe target around 1883 -1888.

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Dollar rises towards 20-year high, euro dips after weak data

 LONDON (Reuters) - The dollar rose back towards a 20-year high on Monday as the euro struggled around the $1.05 mark, with investors preparing for a busy week of central bank meetings including a likely Federal Reserve interest rate hike.

The euro also came under pressure after a survey showed that euro zone manufacturing output growth stalled last month as factories struggled to source raw materials, while demand took a knock from steep price increases.

Markets in Asia and London were closed for public holidays, so trading was quiet.

Investors are expecting the Fed to hike rates by 50 basis points when it meets on Tuesday and Wednesday. The uncertainty is around how hawkish Fed Chair Jerome Powell will sound in comments following the decision.

Markets are pricing in an aggressive run of rate hikes from the Fed as it tries to tame soaring inflation.

That, together with an expected slower rate of European Central Bank tightening and worries about the impact of the war in Ukraine on the euro zone economy, has sent investors scrambling for dollars and left the euro at five-year lows.

The dollar index gained 5% in April, its best monthly performance since January 2015.

"We expect the USD to stay strong versus the EUR, as a hawkish FOMC (Federal Open Market Committee) stance and geopolitical concerns will support the USD," UBS Global Wealth Management wrote in a research note.

"Short-term investors may look to sell rallies in EURUSD above $1.08."

The wealth manager has lowered its euro/dollar forecasts to $1.05 for June from a previous $1.11, $1.06 for September, $1.08 for December and $1.10 for March 2023.

The dollar index was last at 103.36, up 0.1% on the day. The euro lost 0.2% to $1.0525.

BNP Paribas (OTC:BNPQY) strategists said last week that big speculative flows and not concerns about a worsening economic outlook explained the euro's slide to a five-year low below $1.05 this week.


Elsewhere, the dollar gained half a percent on the Chinese yuan in offshore markets, reaching 6.6895, just below its strongest since late 2020.

Sterling slipped 0.1% to $1.2570, while Japan's yen was down against the dollar at 129.91 but off recent lows.

Other central bank meetings this week include the Bank of England on Thursday, which is expected to raise rates by 25 basis points to 1%.

Steve Englander, head of global G10 FX Research at Standard Chartered (OTC:SCBFF), said there was a reasonable case to be made for central bank intervention to weaken the surging dollar.

But in the absence of policymakers outside the United States turning more hawkish, intervention would not have a big impact, he added.

"We doubt intervention would have a sustained impact until the ECB and BoJ (Bank of Japan) offer more policy rate support," he said.

The Australian and New Zealand dollars initially fell sharply in Asian hours as a sell-off on Wall Street undermined risk appetite and overshadowed the prospect of higher interest rates at home.

The Aussie bounced off three-month lows in European hours and was last at $0.7074, unchanged on the day.

The Australian dollar shed 5.7% last month as European recessionary fears and lockdowns in China undermined risk assets.

The Kiwi dollar hit its lowest since mid-2020 at $0.6422, having lost 6.9% in April, before recovering to $0.6448.

Bursa Malaysia ends lower amid mixed regional market

 KUALA LUMPUR (April 27): Bursa Malaysia closed broadly lower on selling in heavyweights led by Petronas Chemicals Group Bhd and Press Metal Aluminium Holdings Bhd, amid a mixed regional market performance due to uncertainties and heightened market volatility, dealers said.

The benchmark FTSE Bursa Malaysia KLCI (FBM KLCI) was 10.7 points or 0.67% lower to 1,585.98 from Tuesday’s close of 1,596.68.

The index opened 5.03 points weaker at 1,591.65 and moved between 1,585.17 and 1,593.34 throughout the day.Market breadth was broadly negative with losers surpassing gainers 645 to 300, while 425 counters were unchanged, 921 untraded, and 43 others suspended.

Total turnover fell marginally to 2.21 billion units worth RM1.89 billion from 2.25 billion units worth RM1.92 billion on Tuesday.

Rakuten Trade Sdn Bhd vice president of equity research Thong Pak Leng said the key regional markets ended mixed due to mixed sentiment amid the increasing global market risks.

Shanghai’s SSE Composite meanwhile rebounded strongly to close higher as investors took the opportunity to bargain hunt for cheaper stocks following the recent selldown.

“On the domestic front, we expect the FBM KLCI to remain in consolidation mode over the short term due to many uncertainties and heightened market volatility.

“We foresee the benchmark index to move within the 1,580-1,600 range for the remaining week with immediate resistance at 1,615 and support at 1,580,” he told Bernama.

Thong said that additionally, the index is seemingly quite well supported at the 1,580 level, hence he expects the accumulation of stocks to persist on dips.

Across the region, the Singapore Straits Times Index fell 0.07% to 3,319.82, Japan’s Nikkei 225 dipped 1.17% to 26,386.63, South Korea's Kospi decreased 1.1% to 2,639.06, while Shanghai’s SSE Composite soared 2.49% to 2,958.28, and Hong Kong’s Hang Seng Index was marginally higher by 0.06% to 19,946.36.

On the local bourse, heavyweights Malayan Banking Bhd gained three sen to RM8.98, Public Bank Bhd fell one sen to RM4.71, Petronas Chemicals was down 30 sen to RM9.92, IHH Healthcare Bhd slipped eight sen to RM6.57, and CIMB Group Holdings Bhd lost four sen to RM5.15.

Of the actives, Cheetah Holdings Bhd rose three sen to 20.5 sen, Vizione Holdings Bhd added one sen to 10.5 sen and its warrants gained half-a-sen to two sen, while both Techna-X Bhd and Dagang NeXchange Bhd were flat at 11 sen and RM1.02, respectively.

On the index board, the FBM Emas Index was 83.32 points weaker at 11,337.8, FBM Emas Shariah Index trimmed 112.41 points to 11,881.95, FBM 70 dropped 119.32 points to 13,528.79, FBMT 100 Index dipped 79.45 points to 10,997.68, and the FBM ACE lost 47.64 points to 5,570.77.

Sector-wise, the Industrial Products and Services Index declined 3.96 points to 206.17, the Plantation Index went down 70.27 points to 8,718.19, and the Financial Services Index fell 34.47 points to 16,800.02.

Main Market volume rose to 1.63 billion shares worth RM1.73 billion compared with 1.46 billion shares worth RM1.76 billion on Tuesday.

Warrants turnover shrank to 229.22 million units valued at RM43.5 million against 351.29 million units valued at RM52.98 million.

ACE Market volume dwindled to 351.21 million shares worth RM120.22 million versus 431.23 million shares worth RM111.73 million previously.

Consumer products and services counters accounted for 358.12 million shares traded on the Main Market, industrial products and services (361.13 million), construction (192.43 million), technology (174.46 million), SPAC (nil), financial services (59.26  million), property (151.17 million), plantation (77.57 million), REITs (6.61 million), closed/fund (147,200), energy (158.62 million), healthcare (30.9 million), telecommunications and media (24.39 million), transportation and logistics (19.31 million), and utilities (15.97 million).

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Analysis on Gold on April 20, 2022

 📕 Comment on Gold on April 20, 2022:

 - In yesterday's trading session, precious metal Gold had one day of decline from 1981 to 1943 ($38), closing the day session with a strong bearish candle around 1949. Gold has returned.  back to the upper boundary of the previous sideways range.  With Gold approaching this support zone, I think it's likely that Gold will have a rebound in the early trading session today.

 - On the H4 chart, Gold may recover to around the threshold of 1950-1951 and is expected to rise around the threshold of 1962-1965.  Here, there is a high possibility that Gold will face selling pressure and drop again.

Summary of Minutes of the Fed's May meeting released last night

  + Most Fed officials agree that it will be necessary to tighten 50 basis points in the next 2 meetings in June and July.  + The Fed also s...