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Home ANALYSIS

The strongest to weakest of the major currencies

A.R Chowdhury by A.R Chowdhury
March 18, 2022
Reading Time: 8 mins read
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The strongest to weakest of the major currencies

Forex

The strongest to weakest of the major currencies

The CHF is the strongest and the EUR is the weakest as NA trader enter for the day. The USD is is mixed with modest declines vs the CHF, CAD, AUD and NZD and gains vs the EUR, GBP and JPY. Today we will get some Fedspeak after the hiatus leading into and immediately following the FOMC rate hike on Wednesday. Fed’s Bowman, Evans and Barkin will explain themselves to the market. Fed’s Waller will also speak on CNBC momentarily. Fed’s Bullard who voted for 50 BP hike and also wanted to raise rates to 3.0% by the end of 2022 (now that is Volker-esque), had his first say in a note he penned (see Adam’s post here).

Stocks are lower in pre-market trading. Yesterday the major  indices 
Indices

Stock market indices represents an index that measures a particular stock market or a segment of the stock market. These instruments are important investors as they help compare current price levels with past prices to calculate market performance.The main two parameters for indices are that they are both investable and transparent. For example, investors can invest in a stock market index by buying an index fund, which is structured as either a mutual fund or an exchange-traded fund, and track an index. The difference between an index fund’s performance and the index, if any, is called tracking error. Most major countries boast multiple indices. Commonly traded indices include the S&P 500, NASDAQ-100, Dow Jones Industrial Average (DIJA), EURO STOXX 50, Hang Seng Index, and many more.Stock market indices can be characterized or segmented by the index coverage set of stocks. The overall coverage of an index constitutes an underlying group of stocks, most commonly grouped together by underlying investor demand.How to Trade IndicesRetail brokers offer indices exposure through the use of contracts-for-difference (CFDs) or exchange-traded funds (ETFs). Each are popular ways to trade specific markets and are almost always on offer at most brokers.Investors can choose between multiple types of indices that traditionally fall within several categories. This includes country coverage, regional coverage, global coverage, exchange-based coverage, and sector-based coverage.All indices are ultimately weighted in a number of different ways. The most common mechanisms include market-capitalization weighting, free-float adjusted market capitalization weighting, volatility weighting, price weighting, and others.

Stock market indices represents an index that measures a particular stock market or a segment of the stock market. These instruments are important investors as they help compare current price levels with past prices to calculate market performance.The main two parameters for indices are that they are both investable and transparent. For example, investors can invest in a stock market index by buying an index fund, which is structured as either a mutual fund or an exchange-traded fund, and track an index. The difference between an index fund’s performance and the index, if any, is called tracking error. Most major countries boast multiple indices. Commonly traded indices include the S&P 500, NASDAQ-100, Dow Jones Industrial Average (DIJA), EURO STOXX 50, Hang Seng Index, and many more.Stock market indices can be characterized or segmented by the index coverage set of stocks. The overall coverage of an index constitutes an underlying group of stocks, most commonly grouped together by underlying investor demand.How to Trade IndicesRetail brokers offer indices exposure through the use of contracts-for-difference (CFDs) or exchange-traded funds (ETFs). Each are popular ways to trade specific markets and are almost always on offer at most brokers.Investors can choose between multiple types of indices that traditionally fall within several categories. This includes country coverage, regional coverage, global coverage, exchange-based coverage, and sector-based coverage.All indices are ultimately weighted in a number of different ways. The most common mechanisms include market-capitalization weighting, free-float adjusted market capitalization weighting, volatility weighting, price weighting, and others.
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closed above their 200 hour MAs for the first time in a while. It would be disappointing for a move below the MA levels today to end the week. The S&P (at 4356) and Dow (at 34011) are still above the respective MAs in pre-market trading, but the Nasdaq has dipped back below it’s MA (assuming it opens where it is trading now) at 13547.44. Be aware.

Biden is to talk to Xi on Russian aggression and warns of helping Russia get through sanctions. The EU said they have evidence of dialogue on cooperation between the two countries.

Russia met bond obligations at least for now which is a good thing.

China’s Xi announced a pivot in regard to Covid suppression. They will be more tolerant (“maximum prevention” with the “least cost”).

The Hong Kong Hang Seng index fell -0.41%. The Shanghai composite index rose 1.12%.

US stocks are set open lower. US yields are lower.  Gold 
Gold

Gold is the most widely traded and important commodity. Prized for its historical importance and used for trading an exchange of goods, the gold market today is estimated at nearly $2.4 trillion.The value of gold fluctuates constantly, as it trades on public exchanges where it has a price that is determined by supply and demand. Gold has historically had tremendous significance and even today is extremely sought after. Gold has been used as a currency as it doesn’t corrode, and the material allows for some absorption of light creating a yellow glow, which lends the name yellow metal.Ultimately, institutional and retail investors buy and sell gold contracts or physical gold, thus creating the demand and supply flow.This can be pure speculation, to acquire or distribute physical gold, or as a hedge for commercial application. For day-traders, the purpose of trading gold is to profit from its daily price movements.How to Trade GoldDay-trading gold is speculating on its short-term price movements. Of note, physical gold is not actually handled or taken possession of, rather the transactions take place electronically and only profits or losses are reflected in the trading account.There are a number of ways to ultimately trade gold. Retail brokers typically offer exposure to gold through contracts-for-difference (CFDs).Beyond retail brokers, the main way to trade gold is via a futures contract. This represents an agreement to buy or sell something, i.e. gold at a future date. Buying a gold futures contract doesn’t mean you actually have to take possession of the physical commodity.Day traders close out all contracts (trades) each day and make a profit based on the difference between the price they bought the contract and the price they sold it at. However, on a futures exchange, gold moves in $0.10 increments only. This increment is known as a tick. It is the smallest movement a futures contract can make. If you buy or sell a futures contract, how many ticks the price moves away from your entry price determines your profit or loss.

Gold is the most widely traded and important commodity. Prized for its historical importance and used for trading an exchange of goods, the gold market today is estimated at nearly $2.4 trillion.The value of gold fluctuates constantly, as it trades on public exchanges where it has a price that is determined by supply and demand. Gold has historically had tremendous significance and even today is extremely sought after. Gold has been used as a currency as it doesn’t corrode, and the material allows for some absorption of light creating a yellow glow, which lends the name yellow metal.Ultimately, institutional and retail investors buy and sell gold contracts or physical gold, thus creating the demand and supply flow.This can be pure speculation, to acquire or distribute physical gold, or as a hedge for commercial application. For day-traders, the purpose of trading gold is to profit from its daily price movements.How to Trade GoldDay-trading gold is speculating on its short-term price movements. Of note, physical gold is not actually handled or taken possession of, rather the transactions take place electronically and only profits or losses are reflected in the trading account.There are a number of ways to ultimately trade gold. Retail brokers typically offer exposure to gold through contracts-for-difference (CFDs).Beyond retail brokers, the main way to trade gold is via a futures contract. This represents an agreement to buy or sell something, i.e. gold at a future date. Buying a gold futures contract doesn’t mean you actually have to take possession of the physical commodity.Day traders close out all contracts (trades) each day and make a profit based on the difference between the price they bought the contract and the price they sold it at. However, on a futures exchange, gold moves in $0.10 increments only. This increment is known as a tick. It is the smallest movement a futures contract can make. If you buy or sell a futures contract, how many ticks the price moves away from your entry price determines your profit or loss.
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is down modestly. Oil is up modestly.

A snapshot of the markets are showing:

  • Spot gold is down five dollars or -0.27% at $1937.57
  • Spot silver is down nine cents or -0.36% $25.21
  • WTI crude oil futures are trading at $103.22 after settling at $102.98 yesterday
  • bitcoin is trading at $40,489. It was trading around $40,700 near 5 PM yesterday

In the premarket for US stocks, the major indices are lower. Nevertheless the major indices are expected to close higher for the week due to a solid three day run:

  • Dow industrial average -200 the points after yesterday’s 417.66 point rise
  • S&P index -32 points after yesterday’s 53.81 point rise
  • NASDAQ index down -118 points after yesterday’s 178.23 point rise

In the European equity markets, the major indices are lower:

  • German Dax -1.7%
  • France’s CAC -1.5%
  • UK’s FTSE 100 -0.6%
  • Spain’s Ibex, -1%
  • Italy’s FTSE MIB -1%

In the US debt market, yields are lower with the two – 10 year spread down a pip at 24.3 basis points. The two – 10 year spread reached a low of around 19 basis points, before rebounding back higher yesterday. That was the lowest since March 2020 at the start of the pandemic (it reached around eight basis points at that time). A negative curve often precludes a recession.

US rates

US rates are lower

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In the European debt market, the benchmark 10 year yields are also trading to the downside.

Europe yields

European 10 year yields are lower
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A.R Chowdhury

A.R Chowdhury

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