Let's look into the Bank of England's Monetary Policy Summary which took place on Thursday the 23rd of September, 2021.
The minutes of the MPC meeting revealed that discussions about inflation showed that might not be as transitory as expected. Further, it highlighted the uncertainty around the labour market regarding wages inflationary pressures due to labour shortage.
The Pound rose after the latest Bank of England (BoE) rate decision. The central bank left interest rates unchanged at a record low of 0.10%. The bank will continue with its asset purchase plan to support the economy costing £875B. The bank is also revised the country's growth forecast for the year to 2.1%, down from 2.9%. However, there's still a broad understanding that the BoE cannot solve the ongoing challenges facing the UK right now, an example would be controlling the spread of the Delta variant, ongoing supply shortages or the issue of inadequate workers.
The Committee voted by a majority of 7-2 for the BoE to continue with its existing programme of UK government bond purchases, financed by the issuance of central bank reserves, maintaining the target for the stock of these government bond purchases at £875 billion and so the total target stock of asset purchases at £895 billion. The two dissenters were Dave Ramsden and Michael Saunders, who voted for an early end of the program by decreasing purchases with a target of £840B.
Alongside this, the BoE noted that some developments have meant that the case for tightening has strengthened, which in turn has prompted a shift in money markets pricing in a 15bps rate hike for March 2022 vs Previous May 2022. That said, the March meeting is not a quarterly meeting like February or May, making it unlikely that a hike will take place in March.
G/U broke above 1.37 to 1.375 in response to a slightly more hawkish than expected statement, nearing the middle of the range between 1.36-1.39. We saw price bounce from the bullish order block at 1.361, the same support level that price has been bouncing off over the past month. It's likely we could see price retrace and collect final orders before continuing its bullish move towards resistance at 1.39.
Hey everyone! Welcome to this week's forex forecast for the week ending September 10th, 2021. I'm TraderBart with A1 Trading, and this week I'll be looking at USDJPY, EURUSD, GBPJPY & XAUUSD.
Price has been consolidating between 109-111 over the past couple of months, and we recently saw price bounce off the range's support back to the middle of the consolidation zone. Look out for a clear break above or below this structure to catch the new trend, following subsequent retests and rejections.
Huge moves rejecting the channel's top last week on E/U as price breaks below 1.18 and is now nearing the major key horizontal level 1.17. This level has been seen as major support over the past year or so, so look out for how price reacts to this level once we see price clearly enter. It's likely we could see the trend continue and price reaches the channel's bottom, before potentially retracing and making a move back towards 1.18.
Looking at the long-term trend on G/J price has recently touched and rejected off the previous high in this range at 156.0 and is now potentially making its move towards the downside. Currently, we have an ascending channel where price is actually at the bottom, and we're now waiting on clear confirmations whether price will break or respect this channel. If we see price break outside the channel, we'll likely see price continue the long-term trend and head towards the downside.
Price is once again back at the bullish order block at 1740, where financial institutions will push price towards before a reversal to take out traders who went long early, most likely at 1765. If we see price break below this zone, this area will become a breaker block, an area to go short off following subsequent retests and rejections.
Analyst / Writer: Sean Streb
● The price of Uranium is up 47% in the last 30 days.
● Sprott Physical Uranium Trust initiated a massive ‘at the market’ purchasing initiative for
● The trust company believes that demand will vastly outstrip supply and mining
capabilities in the coming years as nations increase their green energy programs in the
form of newer fission reactors
● The price increase in Uranium is highly correlated with Sprott purchases.
State of the Market
The savvy commodities trader may have noticed that the price of Uranium stocks have
skyrocketed to new highs in the last few weeks. Those who were out of the loop were
left scratching their heads and wondering: Why has the price of this radioactive metal
gone nuclear? The answer to this is not very clear. It has certainly made waves as a
“meme investment” on the internet, but the underlying companies don't seem to support
their current value. In the current market, Uranium miners sell their product at a loss.
Hard as it is to believe, it actually costs more money per pound for these firms to mine
Uranium than the market is willing to pay. In order to stay operational, these firms are
required to purchase uranium to meet their committed sales and to maintain a minimum
inventory. The end result is that these firms have been forced to operate at a loss for
The recent Q2 2021 Management Report for Cameco Corporation (CCJ) published on
June 30th shows that the company’s Average Unit Cost of Sales is $47-$48 per pound
of Uranium. For comparison, the spot price of Uranium on June 30th was around $32
per pound, a $15 to $16 deficit. To cap this all off, COVID19 hit Uranium miners very
hard, forcing them to close several of their mines.
On paper, virtually none of the miners in this market, even the larger firms, look like an attractive buy. In the short term, it is possible for a firm to operate at a loss. In the long term the company, or in this case, the underlying commodity (Uranium) will either correct, or the firm will go out of business. Since Uranium is, and will continue to be a valuable commodity for manufacturing and energy, bankruptcy is unlikely.
But did the price spike up recently?
The answer to this lies with a new player in the game. In comes the Sprott Physical Uranium Trust (TSX: U.UN). On August 17th, this trust company publicly announced an at the market buying initiative for the radioactive metal. Sprott is purchasing an immense amount of Uranium, and advertising this initiative as a step towards a carbon free energy future. Directly from the August 2021 Fact Sheet: as of the 31st, Sprott currently holds $741,169,791 worth of physical Uranium and they are continuing to purchase more.
To add another dimension to this phenomenon: the current demand for Uranium outstrips the supply. Current global demand fluctuates around 200 million pounds of Uranium, when companies are barely mining at all. Given global production is at 125 million pounds, there is a 75 million pound deficit in production. For more information see the image below, courtesy of Sprott's August 2021 Investor Fact Sheet:
Bank of America/Merril Lynch Analysts also made note of a stunning correlation between the Price of Uranium, and the purchasing habits of Sprott Trust. Given the nature of the Uranium marketplace, it is not surprising to see why Sprott has such an influence on the market.
A combination of factors make Uranium, and Uranium Miners a compelling trading opportunity and a long term investment. The market currently undervalues the metal as supply isn’t meeting demand at current market prices. Based on this factor alone, the price needs to correct or the companies themselves need to adjust their strategy.
The purchasing habits of entities like Sprott indicate a far thinking view of the future of where carbon free renewable energy plays a larger role in developed nations. As countries move away from fossil fuels, they may incorporate more nuclear energy. Uranium, unlike gold, generates interest in the form of power generation and is frequently used in manufacturing. This means there is opportunity for future growth.
One important thing to follow in the future is the narrative surrounding nuclear power generation. Nuclear power will see wider adoption if it is framed as a green energy alternative to fossil fuels. If this begins to occur in the public forum and media, Nuclear power generation will increase, and by proxy, the demand for Uranium will increase.
This week’s risk sentiment vibes looks to be one of risk-off, likely influenced by the never-ending pandemic uncertainty, as well as bearish economic updates & news from China. The USD and JPY out performed the rest of the majors, typical results in a risk-off environment. The USD also benefitted greatly from the positive US retail sales data update, launching it higher on Thursday.
A quick look into the ECB Press Conference which took place on Thursday the 9th of September, 2021.
As expected, the ECB stood pat on rates and held the size of its PEPP envelope at €1.85T. The key adjustment to the policy statement was that purchases under PEPP were to be conducted at a “moderately lower” pace compared to Q2 and Q3; some commentators have suggested this would equate to around €60-70B p/m vs current circa €80B.
At the follow-up press conference, President Lagarde noted that the Euro area economic rebound is in an increasingly advanced stage, and output is set to exceed pre-pandemic levels by the end of this year.
Subsequently, for the accompanying economic projections, the central bank’s 2021 growth forecast was upgraded from 4.6% to 5.0%, with the base-effect spill over resulting in a minor tweak lower to the 2022 growth view, from 4.7% to 4.6%, while 2023 growth view was left unchanged at 2.1%.
The ECB still characterises inflationary pressures as transitory, however, its 2021 inflation projection was lifted from 1.9% to 2.2%, 2022 CPI forecast was raised from 1.5% to 1.7%; 2023 was revised up a touch from 1.4% to 1.5%, and thus it still sees inflation below target at the end of its forecast horizon.
Lagarde went on to state that the decision to slow purchases, and the wording in the statement, was unanimously agreed. For those looking for clues on “life after PEPP”, the President remarked that discussion will take place at the December meeting.
That said, Lagarde reassured markets that when PEPP "was done,” the job of the ECB would still not be complete, as the Governing council attempts to reach its inflation mandate.
Overall, Thursday’s release failed to deviate much from market expectations, with the ECB slowing purchases in Q4 and refraining from giving much in the way of clues as to how PEPP will most likely transition into a beefed-up annual payment plan.
I've been sharing my thoughts on E/U over the past couple of weeks, and have been pointing out the bearish order block underneath 1.19, which we did indeed see price reverse from a couple days ago.
Currently, we're seeing price hold just underneath this medium-term descending channel where we're now waiting on further confirmations as to where price could be heading next.
If price continues to stay below the channel's top, and slowly push lower, it's likely we could see the trend continue and price head towards the channel's bottom. If we do see yet another break higher, the order block will become a breaker block, and essentially an area to go long from.
Let's look at the news event's we've got lining up this week...
The Reserve Bank of Australia is expected to keep interest rates on hold at 0.10% this week at their Rate Statement. We may see some negative remarks considering the number of states placed back in lockdown over the past month.
Also, note that the GDP fell short of expectations in Q2 slowing from the previous expansion at 1.9% to just 0.7%; although the unemployment rate declines, it was mostly due to a fall in labour force participation. With this, policymakers may delay their tapering plans as they cited they will adjust to any "significant setback" for the economy.
No interest rate changes are expected from the Canadian central bank, and officials will likely standstill ahead of the national elections after seeing the unexpected 1.1% contraction in Q2 GDP. Also, note that number crunchers are predicting a monthly GDP contraction for July mostly due to the disruption in the auto industry supply chain and weaker residential investment.
The European Central Bank is also expected to keep rates and bond purchases unchanged. Analysts are divided on whether or not the central bank will be making tapering plans, as the PEPP is scheduled to finish in Q1 next year. Scaling down the size of the purchases could make for a smoother transition to their regular QE program, but policymakers might still decide to defer any actual decision until later this year. Also, any significant revisions to growth and inflation forecasts at this time could impact taper speculations.
The Employment Change report is a measure of the change in the number of employed people in Canada. Job creation is an important leading indicator of consumer spending, which accounts for a majority of overall economic activity. The number of unemployed people is an important signal of overall economic health because consumer spending is highly correlated with labour-market conditions.
Job creation is expected to show a slower 75k gain in hiring versus the earlier 94.5k increase, which should be enough to bring the unemployment rate down from 7.5% to 7.3% in August.
Hey everyone! Welcome to this week's forex forecast for the week ending September 10th, 2021. I'm TraderBart with A1 Trading, and this week I'll be looking at EURUSD, GBPUSD, GBPNZD & XAUUSD.
Price has closed off for the week in the bearish order block just underneath 1.19, and we're now waiting on further moves to take place, to establish whether price will either respect this zone and reverse or continue breaking higher from the descending channel it has just broken out of. Most retailers by this point have been stopped out who went short at the channel's top and are likely going to go long now; however financial institutions usually reverse once more and head back towards the original position.
Price is back once again at this 1.388 key horizontal level which has been seen as clear support and resistance over the past couple of weeks. I made a deep dive on this pair as price was forming the descending triangle, and now that price completed that pattern move, price is now once again back at this level and just under its resistance. If price manages to break higher, we should wait for a confirmation of a retest before going long.
Over the past couple of months, price has been consolidating around this breaker block between 1.96 - 1.98 and we're finally beginning to see a break out of this zone. Price is currently heading towards the previous resistance and new support level from the ascending triangle at 1.92, and liquidity is likely pulling price towards this level. There is an order below where price will likely head to swell to stop out retailers who will go long early before potentially reversing.
Price has closed off for the week just below the resistance in this consolidation zone I've been pointing out between 1800-1835. We're now waiting on clear confirmations whether price will either respect of break this level and if we see a break of this trend. If price closes above 1835, we'll likely see price head higher towards the liquidity void ant around 1890. If price does in fact respect this level and go below, we'll likely see further consolidation on this pair.
Hey everyone! Welcome to this week's forex forecast for the week ending September 3rd, 2021. I'm TraderBart with A1 Trading, and this week I'll be looking at NZDCHF, GBPJPY, GBPNZD & XAUUSD.
Price is now sitting at the descending channel's top and traders are likely waiting on confirmation of either a rejection for a reversal towards the bottom, or price to break out, retest and continue heading higher. There is mixed retail sentiment at the moment, with 57% traders short currently, it's likely we could see price head higher to stop out traders early.
Price is currently consolidating near the channel's bottom and traders are now waiting on confirmations where price could be heading next. A close below the bottom could signify price possibly heading lower, and if price continues to stay inside the channel it's likely we could see price head towards the top in the long run.
Price is looking like it's going to exit the bullish breaker block and possibly head back down towards the key horizontal level around 1.92. If price does make a clear close outside the block, then this could likely happen. If price continues to stay inside, we could potentially see price make the next high again, and going long from this zone wouldn't be a bad idea.
Price is currently back inside the same zone we saw consolidation back in July between 1800 and 1835. A clear break above this level would suggest price is heading higher and if price does close below 1800, we could see price head back inside the channel again.
It was a relatively quiet and mixed week for the financial markets as traders awaited the Jackson Hole Economic Symposium. Risk-on sentiment kicked into overdrive on Friday after Fed Chair Jerome Powell gave his speech at the Jackson Hole event, effectively re-iterating that the Fed was a long way away from raising interest rates and that there was still no rush to tapering bond-buying operations.
1.17 is a key horizontal level to look out for in E/U. We can see in the past 3 years that price has always either fell way below or pushed way higher once price has made a breakthrough from this level. Price is back at this level, and therefore we could expect a big push or pull to either direction over the next upcoming months.
Price is currently sitting at this key horizontal 1.17 level where we can see in the past has been seen as great support, price has been bouncing off this level, and heading higher. Price did recently reverse off this level but has made a retracement back down again - usually a sign of failed support.
There is a descending channel formed in the short-term, and price is currently at the bottom of the channel. We did see price bounce off a couple days ago, but price has since retraced the full move and is just above 1.17. Most traders are likely waiting on price to show further rejections and look to continue the trend, however I believe it's possible we will see price head lower, as we've just had a failed breakthrough attempt.
Looking at retail sentiment, as expected most traders are actually long on E/U and expecting price to push higher from here. We know most retailers are losers and therefore financial institutions are likely to be playing with their positions, and will likely push price lower to take out their trades.
Over the next week, we've got a few news events coming out for both the EUR and USD, some notable ones being USD's unemployment claims and PMI numbers for the Euro next week.
Macroeconomic data for the USD continues to disappoint, yet it's still strengthening against major currencies. After Tuesday's USD Retail Sales event, E/U still declined to the 1.17 level. This illogical behaviour of the greenback is explained by the growth of anti-risk sentiment in the market, and the dollar is the beneficiary of the current situation, despite some problems.
Data on the growth of US inflation was published on Sunday which also did not impress investors. The consumer price index has slowed down its growth, which has been observed over the past four months. The focus is on the tapering debate and whatever clues policymakers would provide on the timing for a tighter monetary policy.
Beyond this, there is an overall concern that the Delta variant will continue to cause major issues, as the world is seeing an increase in that infection rate, which has people worried about whether or not the economy is going to pick up locally as well as globally.