August Service ISM Surged, Heating up Concerns Over Inflation 

The Institute for Supply Management released the ISM services index for August, which showed a recovery in business activity. The index unexpectedly rose to 54.5 from market expectations of 52.5, up from 52.7 in July and reaching a six-month peak.

From the analysis of the service industry portfolio, as many as 13 of the 18 industries surveyed by the ISM non-manufacturing industry have increased.

Industries such as catering and accommodation, real estate leasing, construction, retail, transportation and warehousing have shown steady expansion of new order demand and willingness to recruit.

The service industry data was better than expected, driving up treasury yields, meanwhile, putting pressure on stock markets. The three major U.S. stock indexes all ended in decline. 

The ISM Non-Manufacturing Index profile 

The ISM Non-Manufacturing Index is a comprehensive indicator that tracks non-manufacturing activities such as employment trends, prices, new orders and other sub-items.

The index takes 50 as the critical point. If the index is at 50, it means that the economy of this month remains unchanged from the previous month; if the index is above 50 for several consecutive months, it indicates that non-manufacturing activities are expanding and prices are rising, implying that the overall economy is in expanding state.

On the contrary, when the index is below the 50 level, it means that the overall economy is in a state of contraction. 

(Service PMI, Institute for Supply Management ISM) 

Conclusion

The August ISM services index report has introduced a level of unpredictability and excitement to the financial landscape. It’s not just a data report; it’s a narrative, a story with twists and turns that continue to unfold.

To stay updated on this ever-evolving economic drama and gain access to expert analysis, make sure to follow our platform closely. We offer the key to unraveling the complex world of finance and economics, providing you with a structured approach to understanding the latest developments.

Disclaimer  

Comments, news, research, analysis, price, and all information contained in the article only serve as general information for readers and do not suggest any advice. Ultima Markets has taken reasonable measures to provide up-to-date information, but cannot guarantee accuracy, and may modify without notice. Ultima Markets will not be responsible for any loss incurred due to the application of the information provided. 

Focus on XAU/USD today. 

Fundamentally, yesterday the United States released ISM data on the service industry, just like the market outlook shared on Monday. The Fed is currently looking for data support. Consumption is one of the three economic carriages in the United States. The good performance of the ISM service industry PMI will greatly stimulate the bullish trend of the US dollar. The PMI data unexpectedly strengthened in August to 54.5, reflecting sustained strength in consumer demand and the overall economy and strengthening hopes that the United States can avoid recession. It also brings potential signs that inflation will still rise, and the dollar will maintain a certain bullish trend until the data is digested this week. 

Technically, the gold finally fell below the 33-day and 7-day moving average yesterday, and the market’s short trend is relatively clear. 

(Daily chart of XAU/USD, source: Ultima Markets MT4) 

The stochastic oscillator also sent a short signal, and the market on the daily chart has a probability of going back to the moving average lines during the Asian session. 

(4-hour chart of XAU/USD, source: Ultima Markets MT4) 

On the 4-hour chart, after the market peaked and fell below the neckline this week, the moving average lines subsequently made a dead cross which is kind of short signal. It is worth noting that the stochastic oscillator currently indicates that the market is about to bottom out, and there is a certain probability of rebound or consolidation. 

(1-hour chart of XAU/USD, source: Ultima Markets MT4) 

According to the pivot indicator in Ultima Markets MT4, the pivot of the day was 1919.46. 

Bullish above 1919.46, the first target is 1923.54, and the second target is 1933.25 

Bearish below 1919.46, the first target is 1909.75, the second target is 1905.56 

Disclaimer 

Comments, news, research, analysis, prices and other information contained in this article can only be regarded as general market information, provided only to help readers understand the market situation, and do not constitute investment advice. Ultima Markets will not be responsible for any damage or loss (including but not limited to any loss of profits) that may arise from the direct or indirect use or reliance on such information. 

Words like economic downturn or financial crisis often made headlines in recent years, especially after the Covid-19 pandemic, when many people’s incomes were lowered. During tough economic times, common people tend to face financial stress and job uncertainty, but making a living is still a necessity for them. Against this backdrop, if people can win a large jackpot at a relatively low cost, just like a lottery, that would undoubtedly provide temporary relief from financial difficulties and offer a glimmer of hope for a bright future.

Fortunately, the forex trading is just like this lottery, giving you a sense of hope and a chance to escape from financial worries. Of course, forex trading offers no guarantee that you can win high returns 100%. However, compared with lotteries which depend on pure luck, you may manage to win high profits by learning professional knowledge. Have an interest in joining forex trading? Let’s dive in.

What is Forex Trading?

Forex trading, also known as foreign exchange trading, refers to a game where you trade different countries’ currencies. In forex trading, you can purchase one currency and sell another one at the same time. For example, you might buy US dollars and sell euros, if you believe that the dollars will be more valuable compared to the euros in the future.

The goal of forex trading is to make a profit by taking advantage of changes in currency exchange rates. Exchange rates are the prices at which one currency can be exchanged for another. These rates can go up or down, just like the prices of your favorite Pokémon cards.

When participating in forex trading, you can use leverage, which is like borrowing money from a broker to make bigger trades. This may sound a bit complex for a beginner. Just imagine you are playing a video game, and you have a special power-up making your character stronger. Given the leverage is a key concept in forex trading, we will go through more details in the article “Understanding Margin and Leverage: Why Forex Trading May Boost Your Profits“. For now, you just need to keep this mind: Leverage can increase your potential profits, but it also increases the risk, so it’s important to use it wisely and understand the potential consequences.

To start your journey in forex trading, you’ll need to open an account with a forex broker, which is like having a platform to trade currencies. In such a platform, you will have access to the necessary tools, indicators and charts to help you make informed trading decisions. With Ultima Markets, you can not only trade currencies with our high leverage ratio, but also precious metals, commodities, indices, shares, and cryptos. In our multi-asset platform, you may win your own lottery by fully utilizing the price movements in various popular assets. Click here to register your account with Ultima Markets.

Why You Should not Miss the Opportunity of Forex Trading?

You may hear the news that someone got convicted for controlling one company’s share price. This kind of news is commonplace in the capital markets, as controlling one company’s share price requires relatively less money and power. But no single individual or entity has the power to fully control the forex market. The forex market is the largest and most liquid financial market in the world, with numerous participants, including central banks, commercial banks, hedge funds, corporations, and retail traders.

The forex market operates in a decentralized manner, meaning there is no central authority or governing body that dictates prices or controls the market as a whole. Instead, currency prices in the forex market are determined by the forces of supply and demand. In other words, if you master the professional trading knowledge, you may succeed in earning high returns without the need to worry that the price of assets you invest into may be distorted by some big market makers.

This gives common people a chance to win their lotteries as mentioned in the beginning of the article. The forex exchange rate resembles the password to decode the economic fluctuations, government policies, and investment decisions. In the forex market, the price of currencies are determined by the most professional traders in the world, resulting in a fair market.

Anyway, it’s important to remember that forex trading also involves risks, just like any game or investment. Prices can be influenced by many factors, such as economic news, political events, or even natural disasters. The forex trading is not a guaranteed approach to making money, but with knowledge, practice, and a responsible strategy, it can be an enticing and potentially profitable activity.

Summary

• Forex trading refers to a game where you trade different countries’ currencies.
• The goal of forex trading is to make a profit by taking advantage of changes in currency exchange rates.
• There is no central authority or governing body that dictates prices or controls the market as a whole.

You will never understand why forex trading may help you win the financial lotteries, if you have no idea about margin and leverage, the two key elements in forex trading.

What Are Leverage and Margin?

The terms, leverage and margin, are often used interchangeably in the forex trading, so let’s try to explain these two terms altogether.

Imagine you are playing a video game, and you have a special power-up that makes your character stronger. In forex trading, the leverage is exactly that power-up allowing you to control a bigger amount of capital with only a small amount of your own money. In simple terms, leverage is a multiple to magnify your money deposited into your trading account.

If leverage is a multiple of your deposit, then margin is the amount of money required to open a trading position. It is a small portion of the total value of the trade that you must have in your trading account. Margin serves as a form of collateral or security for the broker against potential losses.

Margin and leverage are important because it enables you to access the forex market with a smaller capital investment. In other words, you can engage in trade with limited funds and potentially profit from currency price movements.

How Leverage and Margin Work in Forex Trading?

Let’s say you want to trade $10,000 worth of a currency pair, but you only have $100 in your trading account. With leverage, your broker can lend you the remaining $9,900. In this case, the initial deposit of $100 is your margin, and your leverage ratio is 1:100 ($100/$10,000). Leverage allows you to amplify your potential profits. If the price of the currency pair goes in your favor, you can make a higher percentage return on your initial investment.

However, it’s key to remember that margin and leverage not only magnify your profit, but also amplify your losses if the trade fails to go as planned. If the price of the currency pair moves against you, you can lose more money than you initially invested. This is why it’s crucial to use leverage prudentially, and understand the potential risks involved.

Let’s continue with that video game analogy. If you use your special power-up correctly, then your character will be stronger, and you can defeat enemies easily and win more points. But if you use power-up in the wrong way, you may lose more points than if you don’t have the power-up. Similarly, if your forex trades don’t go well, you can lose more money with leverage than if you were trading with just your own funds.

Summary

• Leverage is a multiple to magnify the money deposited into your trading account.
• Margin is the amount of money required to open a trading position.
• You only have $100 in your trading account, but you want to trade $10,000 worth of a currency pair. With leverage, your broker can lend you the remaining $9,900. In this case, the initial deposit of $100 is your margin, and the leverage ratio is 1:100 ($100/$10,000).

Watch out for ECB Lagarde’s words

At last, the euro has shrugged off bad economic news and inflation has come under control. It might be the time for ECB to reconsider its tightening monetary policy . Investors will focus on whether the European Central Bank will pause interest rate hikes in September as expected.

(Inflation rates in the euro zone in the past year)

ECB’s Dilemma: To Hike or Not to Hike

The August PMI report due on Wed. is going to be in the spotlight. Forecasts show the manufacturing sector slumps further, and start to take a toll on services sector, endangering the euro zone economy.

With sluggish numbers, the ECB could take a break in September rate hike, however, the euro might receive a hit. Most economists believe the ECB will pause rate hikes in September but see room for an increase before the end of 2023 amid rising inflation.

Lagarde’s Utterances: A Market Barometer

Separately, at the Jackson Hole Global Central Bank Economic Symposium on Saturday, European Central Bank President Lagarde’s speech is going to be very important. Investors will look for clues from the review.

U.S. Economic Resilience

Based on data released in the past week, the US economy continued to maintain a strong momentum. Retail sales and manufacturing figures unexpectedly rose as residential numbers climbed. The strength of the U.S. dollar has caused the euro to remain in a downward trend.

(EUR/USD daily cycle, Ultima Markets MT4)

July 4th represents a turning point at present. If it is broken, the upward momentum will subside, leaving little hope for EUR/USD to stage a rebound.

Market Volatility: The Lagarde Effect

It is worth noting that the overall volatility of the euro against the US dollar has slowed down significantly. Both the overall volatility on the chart and the average level of the 200 -period ATR indicators are declining. As a result,  Lagarde’s speech is going to shift the market volatility.

Conclusion

In conclusion, as we navigate the complex web of economic variables, ECB President Lagarde’s words loom large on the horizon.

The ECB’s delicate balancing act and the resilient U.S. economy have set the stage for a captivating narrative in the world of finance.

For investors and market participants, astutely decoding the signals emanating from these developments will be essential in making informed decisions.

Disclaimer

Comments, news, research, analysis, price, and all information contained in the article only serve as general information for readers and do not suggest any advice. Ultima Markets has taken reasonable measures to provide up-to-date information, but cannot guarantee accuracy, and may modify without notice. Ultima Markets will not be responsible for any loss incurred due to the application of the information provided.

With easing policy, Yen sets to depreciate

Japan announced the latest July core CPI annual rate excluding fresh foods rose 3.1% year-over-year, slightly down from 3.3% in the previous month.

The figure matched with the Bank of Japan’s expectation. The slowdown is linked to lower energy prices, especially data from the Tokyo region showing a slight deceleration in inflation.

(Japan’s inflation level in the past year)

A Cautious Approach by the Bank of Japan

The BOJ’s holding back on raising rates makes a sharp contrast to its peers. The Bank of Japan has taken steps to curb potential economic risks, including allowing long-term government bond yields to rise to 1%. However, the monetary policies have not prevented the yen from depreciation.

The USD/JPY Exchange Rate

The exchange rate of USD/JPY began to fall in the past two days but remained above the high of 145. Over time, Japan’s low rate could lead to capital outflows, putting downward pressure on the yen.

(USD/JPY daily cycle, Ultima Markets MT4)

External Factors at Play

The future of the yen is not solely determined by Japan’s economic policies. External factors, such as global crises or recessions, can play a crucial role in shaping the currency’s fate. A crisis or recession might deter further rate cuts, yet the strength of the U.S. economy reduces this possibility.

A Turning Point at 150

Although the Japanese government could intervene the yen’s depreciation, its long-term course might remain unchanged. 150 marks a turning point. If USD/JPY rises above it, the Bank of Japan is expected to step into the market.

The Ongoing Tug-of-War

In summary, Japan’s inflation levels and the state of the global economy continue to be key determinants in the yen’s value. Under the current circumstances, the Bank of Japan’s easing policy is likely to support the trend of yen depreciation.

However, it’s essential to remember that external factors can still bring about short-term changes in this delicate balance.

Disclaimer

Comments, news, research, analysis, price, and all information contained in the article only serve as general information for readers and do not suggest any advice. Ultima Markets has taken reasonable measures to provide up-to-date information, but cannot guarantee accuracy, and may modify without notice. Ultima Markets will not be responsible for any loss incurred due to the application of the information provided.

Focus on AUD/JPY.

Fundamentally speaking, Japan’s inflation has not declined, which increases the probability of the Bank of Japan’s future tightening policy. After a long-term depreciation, the yen has space for a short-term rebound. AUD/JPY has less room for arbitrage than USD/JPY. With strong USD, please watch out for AUD/JPY bear.

Technically speaking, the AUD/JPY daily stochastic oscillator shows a dead cross, falling below the 50 median line.

(Golden daily cycle, Ultima Markets MT4)

The exchange rate began to decline after falling below the 65- day moving average. It is worth noting that before the short-term moving average crosses again, the market has a high probability of touching the 240 -day moving average and rising again.

(AUD/JPY in 1 -hour period, Ultima Markets MT4)

In 1-hour period, the bearish trend is obvious, and the exchange has fallen below the 2400 -period moving average. However, there is a certain probability that it will find support and rebound there. You may wait for short entry here.

(AUD/JPY in 1 -hour period, Ultima Markets MT4)

According to the pivot indicator in Ultima Markets MT4, the central price is 93.489,

Bullish above 93.489, the first target is 93.759, and the second target 94.272.

Bearish below 93.489, the first target is 92.987, and the second target is 92.706.

Disclaimer Comments, news, research, analysis, price, and all information contained in the article only serve as general information for readers and do not suggest any advice. Ultima Markets has taken reasonable measures to provide up-to-date information, but cannot guarantee accuracy, and may modify without notice. Ultima Markets will not be responsible for any loss incurred due to the application of the information provided.