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Asian markets close higher on Monday



Asia-Pacific markets broadly advanced on Monday. The S&P/ASX 200 rose by 0.80%, while other indexes gained 1.50% or more. The Shanghai Composite and the Shenzhen Composite increased by 1.49% and 1.48%, respectively. The KOSPI went up by 1.65%, while the Hang Seng Index climbed by 2.64%. Japanese stock exchanges were closed today, however the Nikkei 225 edged up by 0.54% on Friday.Asian markets followed US indexes, which finished Friday in positive territory. American stock indexes gained about 2% on Friday thanks to strong statistic data which eased recession fears among market players. However, there is still a possibility of a 100 basis point interest rate hike by the Federal Reserve.The upsurge of COVID-19 infections in China is putting pressure on the upside potential of Asian indexes. New quarantine measures threaten to affect economic recovery, increasing the possibility of a recession in China.However, the markets found support in statements by Chinese officials that the country has enough financial resources and options to maintain economic stability in the country. The People's Bank of China has injected 12 billion yuan into the financial system via a seven-day reverse repurchase agreement.On the Hang Seng Index, the best performing stocks were Country Garden Services Holdings, Co., Ltd. (+7.2%), Meitua (+6.4%), and Country Garden Holdings, Co., Ltd., (+6.3%).Chinese oil stocks also went up, with CNOOC, Ltd. increasing by 4.5% and China Petroleum & Chemical, Corp. advancing by 4.1%. Shares of Alibaba Group Holding edged up by 0.8%.On the KOSPI, Samsung Electronics, Co. rose by 2.7%, while LG Electronics, Inc. increased by 1.6%.On the S&P/ASX 200, BHP Group, Ltd. and Rio Tinto, Ltd. gained 1.8% and 1.9% respectively. Shares of Australia & New Zealand Banking Group, Ltd. declined by 1.3% after the company announced it was set to buy Suncorp Bank for 4.9 billion Australian dollars or $3.3 billion.

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Forex Analysis & Reviews: Elliott wave analysis of EUR/USD for July 19, 2022



EUR/USD tested the channel support line at 0.9952 which was just above our ideal target at 0.9902. This could be enough to fulfil the target of wave C and 2 and set the stage for wave 3 higher. The expected impulsive rally in wave 3 should ultimately break above the peak of wave 1 at 1.6038.

To confirm that wave 2 has indeed completed and wave 3 is in motion, we will need a break above minor resistance at 1.0220 and more importantly above resistance at 1.0615.

*The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade.

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Bitcoin steadily rises, but experts see downsurge ahead

Bitcoin went into an upward correction early on Tuesday, reaching $21,793 at the time of writing.

According to CoinMarketCap, over the past 24 hours BTC reached an intraday low of $21,190 and an intraday high of $22,795.



During the trading session, bitcoin rallied and jumped 7.5% to $22,306 in several hours, surpassing $22,000 for the first time since June 8.

However, despite the strong upward movement of the past two days, the bear market still continues for bitcoin, analysts note. The leading currency needs to break above $30,000 to end its downtrend.

Altcoin market
Ethereum, the leading competitor to BTC, has also advanced. At the time of writing, ETH gained 8.12% over the past day and rose to $1,527.

Last week, Ethereum climbed by 20%. ETH has jumped by 47% since the beginning of July, but remains below its all-time high of November 2021 by 71%.

At the end of last week, ETH surged upwards by 12% to $1,300 following an announcement by one of the project's developers that the transition to the proof-of-stake algorithm could occur as early as mid-September.

Out of the top 10 cryptocurrencies by market capitalization, most coins advanced yesterday, except for XRP and several stablecoins.

The best-performing cryptocurrencies were Avalanche (+12.07%), Dogecoin (+5.19%), and Binance Coin (+4.4%).

According to CoinGecko, the best performing coin out of the top 100 cryptocurrencies by market cap was Ethereum Classic, which jumped by 22.8%. The worst performing currency was Lido DAO, which tumbled by 15.4%.

Contrasting outlooks by crypto experts

According to CryptoQuant, a BTC sell-off by miners in the future could push bitcoin's price down significantly.

CryptoQuant's analysts noted that June's downward correction forced miners to dump their BTC holdings to minimize losses and lower the overall risks. The analysts stated that miners are now in a distribution phase and warned that growing pressure caused by the miners' capitulation could push the price well below the $20,000 mark in the near future.

Matthew Kimmell, digital asset analyst at CoinShares, also stated that troubles plaguing the crypto mining sector could cause a downturn for leading digital assets. As mining companies go bankrupt, the prices of mining rigs could also slump, putting extra pressure on crypto assets.

An analysis by Glassnode said the capitulation in the crypto market would likely continue amid ongoing severe financial stress. Rising pressure in the digital asset market would send bitcoin below $20,000.Some experts, such as Nassim Nicholas Taleb, former trader and author of "Black Swan", refused to give any predictions on when the bear market would end. "The journalistic expression 'crypto winter' is highly deceiving; it implies seasonality and, perhaps worse, a reversion to some trend. No, your winter may not be transitory, and what you call winter may degrade into a permanent & inescapable ice age fraught with extinctions," Taleb claimed.

An outlook by Grayscale Investments was more bullish on crypto and bitcoin and particular.

The investment company's analysts claimed the bear market could last for another 250 days, citing their estimates of trend cycles in the crypto market. Grayscale stated the downtrend was a regular market event that repeats every several years, and that it presented a good buying opportunity.

Investment advisor Edward Dowd said bitcoin could soon become an integral part of any investment portfolio, despite the repeated turmoil in the market. Dowd added that BTC could also surpass gold thanks to its decentralized nature and transparency.

Arthur Hayes, former CEO of BitMEX, claimed bitcoin would rise swiftly after touching the bottom. Hayes sees the Federal Reserve begin printing trillions of dollars in the future, which would then push BTC up.

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EUR/USD. Trapped in inflated expectations: ECB July meeting preview

The European Central Bank will sum up the results of its next - July - meeting on Thursday. This is by no means a "passing" meeting: for the first time in the last 11 years, the ECB will raise interest rates.

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By itself, the fact that there will be an increase in the rate has already been resolved, the intrigue remains regarding the magnitude of this increase. In addition, traders are interested in further prospects for tightening monetary policy amid existing risks for the debt market. In other words, the results of tomorrow's meeting will surely provoke strong volatility for the EUR/USD pair. The only question is, on whose mill will the water be poured. If the central bank surprises with an ultra-hawkish tone, the pair could not only test the 1.0300 resistance level, but also consolidate in the area of the 3rd figure. Otherwise, the euro will again be under pressure throughout the market. In my opinion, current market expectations are somewhat overstated, so there is a possibility that the ECB will not live up to its hopes on Thursday.

It is worth noting that a few weeks before the July meeting, traders actually resigned themselves to the fact that the ECB would gradually and measuredly tighten monetary policy. Representatives of the ECB have repeatedly said that it is impossible to sharply raise the rate to curb inflation - primarily because of the risks for the debt market. Just last week, a member of the Board of Governors of the central bank, Olli Rehn, announced that at the July meeting the rate would be increased by 25 basis points. Similar forecasts have been voiced by ECB President Christine Lagarde and some other members of the Board of Governors.


With such a wide-ranging and unequivocal preview, the market has grown accustomed to the idea of a 25-point advance in July. All attention was focused mainly on the prospects for further steps by the ECB, primarily in the context of the September meeting.

However, the day before yesterday, the market was stirred up by journalists from the news agency Reuters. Referring to their anonymous sources in the ECB, they said that the option of a 50-point rate hike is still on the agenda. At the same time, agency reporters quite recently (July 15) interviewed more than 60 economists about the possible outcomes of the July meeting. 62 out of 63 experts surveyed unanimously stated that the central bank will increase the rate by 25 points. In this case, economists reflected market expectations, which until recently prevailed among traders. However, insider information from Reuters, as they say, mixed all the cards.

Amid these hawkish rumors, the euro has significantly strengthened its position against the dollar. Bulls were able to move away from the parity level by more than 200 points, updating a two-week price high on Wednesday, rising to 1.0274. But, in my opinion, this is a Pyrrhic victory for the EUR/USD bulls, which could have negative consequences for the euro.

In fact, EUR/USD bulls are repeating the mistake of the dollar bulls, who were inspired last week by rumors that the Federal Reserve could raise rates by 100 points at once following the results of the July meeting. Such a hawkish scenario was supported by Fed spokeswoman Mary Daly, who, however, does not have a vote in the Committee this year. Nevertheless, the hawkish rumors did their job: the EUR/USD pair again renewed the 20-year price low, plunging below the parity level, to the level of 0.9953. But as soon as other Fed officials (primarily those with voting rights) criticized the idea of a 100-point increase, the greenback weakened across the market. The dollar literally slipped out of the blue and allowed opponents to seize the initiative.

EUR/USD bulls may find themselves in a similar situation on Thursday. After all, now a 25-point increase in the rate is no longer the base scenario, but a "conditional dove" scenario, the implementation of which will put pressure on the euro. To strengthen the single currency, the ECB needs to either raise the rate by 50 points on Thursday or announce such a step in the context of the September meeting in plain text. Any doubts of the central bank will be interpreted against the euro.

Also on the ECB's agenda is the issue of a possible uncontrolled expansion of spreads between the yields of government bonds of the EU core countries and the southern states of the bloc. Back in June, the ECB announced the development of a new tool to limit fragmentation in the eurozone. According to Bloomberg, at its July meeting, the central bank will present an unlimited bond buying tool that will help markets "adjust to sharper and faster interest rate hikes than previously thought." However, if the representatives of the ECB show excessive caution in tightening monetary policy, this fundamental factor will be ignored by the market.

Thus, the single currency found itself in a kind of trap of inflated expectations ahead of the ECB meeting. In my opinion, it will be difficult for ECB members to realize the expected hawkish scenario, even despite a record increase in headline inflation. It is also necessary to take into account that the core consumer price index in the eurozone (excluding volatile energy and food prices) unexpectedly slowed down its growth on an annualized basis, reaching 3.7% instead of the planned growth of 3.9%. And German inflation last month showed the first signs of a slowdown. All these factors reduce the likelihood that the ECB will decide on a 50-point rate hike.

Consequently, EUR/USD bulls are forced to rely only on an unexpected "hawkish impulse" of the ECB. To put it bluntly, this is an unlikely scenario.

In anticipation of such important events of a fundamental nature, it is advisable to stay out of the market. Amid a general weakening of the US currency and a (possible) weakening of the euro, it is reasonable to wait for the results of the ECB's July meeting: the pendulum will swing in one direction on Thursday, determining the further vector of movement for EUR/USD.

*The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade.

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Asian indicators show different directions



The main indices of the Asia-Pacific region show different directions. Some indices are declining, among them the Chinese Shanghai Composite and Shenzhen Composite, which lost 0.42% and 0.06% respectively, as well as the Hong Kong Hang Seng Index, which decreased by 1.35%. At the same time, other indices show a slight increase: the Australian S&P/ASX 200 gained 0.08%, the Japanese Nikkei 225 at 0.22%, and the Korean KOSPI at 0.71%.

A number of different reasons contributed to this ambiguous behavior of the Asia-Pacific indices: the deterioration of the situation with COVID-19 in China and the concerns about the possible economic recovery as a result.

Market participants reacted positively to the Bank of Japan's decision to leave the rate unchanged at -0.1%. However, the central bank's forecasts regarding the increase in GDP worsened somewhat: to 2.4% from 2.9% announced in April. As for the increase in inflation, expectations, on the contrary, increased to 2.3% from 1.9%.

At the same time, the country has seen an increase in imports of goods by 46.1%, which turned out to be higher than analysts' forecasts, who expected an increase in imports by 45.7%. Exports also increased (by 19.4%), which also exceeded expectations of 17.5%.

Of the companies included in the calculation of the Nikkei 225 index, Nikon, Corp. (+2.5%), GS Yuasa, Corp. (+2.4%), as well as Fujitsu, Ltd. (+2%) noted an increase in the value of securities.

Some support for the Asia-Pacific indices was provided by US indicators, which closed the day before with an increase of up to 1.5%. The growth of US indicators is primarily due to the good results of quarterly reporting of companies, especially among the technology sector.

Of the components of the Hang Seng Index, Country Garden Services Holdings, Co., Ltd. (-6.4%), Longfor Group Holdings, Ltd., (-5.3%), China Resources Land, Ltd. (-4.4%), as well as Haidilao International Holding, Ltd. (-2.2%) were marked by a drop in quotes.

The companies that form the basis of the calculation of the Korean KOSPI, on the contrary, showed an increase in the share price. Thus, Samsung Electronics, Co. securities gained 1.5%, and Kia Corp. at 0.5%.

The largest companies from Australia show a drop in quotes: BHP Group, Ltd. securities fell by 1.7%, and Rio Tinto. Ltd. by 2.8%.

While the price of Zip Co. shares rose by 13% after the announcement of the company's plans to optimize its operations in the international market for profit.

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The dollar remains the first violin in the EUR/USD pair, and the euro is afraid to make a mistake



The beginning of this week once again gave the dollar confidence in its strength, which cannot be said about the euro. The latter expects to bounce back after a series of losses, but fears a new decline. Many experts believe that the euro has no room for error.

Currently, the greenback continues the difficult path to strengthening. On Monday, July 25, market participants are preparing for a sharp increase in interest rates in the US (by 75 bp to 2.25-2.5% per annum). This is expected to take place on Wednesday, July 27th. In the current situation, the market is dominated by the risks of a decline in economic growth, so investors once again go to safe assets, in particular, gold and the dollar.

The current economic situation is characterized by the greenback's rise against key world currencies, primarily the euro. On the morning of Monday, July 25, the latter sank a bit in anticipation of information about the business climate in Germany. According to preliminary calculations, this indicator fell to 90.5 points from the previous 92.3 points. Against this backdrop, the EUR/USD pair was trading at 1.0200, retreating from the previous session's closing level of 1.0210.



The current situation negatively affects the exchange rate of the single currency. Last week, the European Central Bank raised its base deposit rate by 50 bp after eight years of negative interest rates. At the same time, the consensus forecast suggested an increase of only 25 bp. According to experts, the ECB's decision is due to concerns about further acceleration of inflation. Against this background, the risk of a possible recession, which was previously relevant, fades.

A further rate hike is planned by the ECB on September 8 this year. At the same time, the pace of monetary tightening by the ECB is very different from those of the Federal Reserve. According to analysts, this figure is significantly behind the results shown by other global central banks. Recall that last month the Fed raised the rate by 75 basis points and is now ready for similar actions.

According to ECB President Christine Lagarde, such a decision is explained by the need to combat galloping inflation, primarily with a large-scale increase in food and energy prices. We note that the target inflation rate is likely to exceed 2%, as inflation in 19 eurozone countries is approaching double digits. In the event of a serious shortage of gas in winter, a further increase in energy prices is possible, experts emphasize.

The ECB officials also agreed on additional assistance to major eurozone debtor countries, including Italy, and introduced a new bond purchase scheme (TPI). Its goal is to prevent an increase in the cost of borrowing for EU member states in the course of tightening the monetary policy of the central bank. When launching this tool, the ECB focuses on public sector bonds with maturities of 1-10 years.

In this situation, the ECB does not rule out a slight devaluation of the European currency. The bank believes that moderation will not hurt the euro. We note that this process is proceeding smoothly, despite the weak economic outlook for the eurozone amid dependence on energy imports.

The strengthening of the dollar contrasts sharply with the fluctuations of its opponent in the EUR/USD pair. According to analysts, the strengthening of the greenback is a pro-inflationary factor for the global economy. However, now a strong USD is not beneficial even to the American authorities, who are actively fighting inflation, which has exceeded 9%. At the same time, only the US authorities can stop the dollar's growth, experts are sure.

A strong US currency negatively affects the ability of developing countries to service their external debts, a large part of which is denominated in USD. In such a situation, their maintenance requires a large number of national currencies. A weak greenback allows the countries of emerging markets to repay their debts in time and in full and increase trade.

The current cycles of strengthening and weakening the dollar are confusing market participants. At the moment, the growth of the USD exchange rate is working to reduce inflation and cool the economy, following the current Fed strategy. In addition, the current situation works for the authority of the greenback, strengthening its position.

In the coming months, the dollar's growth will be uneven, with occasional technical rollbacks. However, the US authorities can stop it at any time. This is possible in the event of a sharp reversal of the current cycle of tightening monetary policy. However, the Fed is unlikely to take such measures amid raging inflation, experts believe.

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The euro raises its head, trying to knock the crown off the dollar



The euro is looking for ways out of the price impasse, into which it has been driven by economic instability and recent parity with the American one. At the same time, the greenback remains the winner in the EUR/ USD pair, despite a short-term subsidence. The US currency was near multi-year highs on Tuesday, July 26, amid expectations of a Federal Reserve rate hike. Recall that the central bank will hold a meeting on Wednesday, July 27, at which it is highly likely to increase the interest rate by 75 bp. This measure is necessary to curb the ever-growing inflation. If the Fed leaves the greenback in limbo after the meeting, then this will be the best option for the euro. However, such a scenario is unlikely, experts warn. One of the euro's trump cards against the dollar is the risk of an approaching recession in the United States, Rabobank currency strategists believe. The bank's specialists have revised the current forecasts for the EUR/USD pair downwards. Analysts believe that by the end of the summer, the single currency may fall to 0.9500 relative to the greenback. As for the planning horizon in the next six months, Rabobank expects the pair to recover to the level of 1.0500. The EUR/USD pair was cruising near 1.0227 on Tuesday, July 26,, recouping previous losses. According to preliminary calculations, another wave of weakening of the greenback is possible at the beginning of next year.



Investors prefer safe assets in the current situation, primarily gold and USD. As a result, the latter is steadily rising in price. According to analysts, in anticipation of a downturn in the global economy, the demand for safe-haven assets is going through the roof. This provides impressive support for the dollar and reduces the euro's chances for further strengthening.

It is difficult for the euro to hold the gained positions amid the steadily growing greenback. The pain point for the euro, as well as for its rival in the EUR/USD pair, is galloping inflation. Recall that since the beginning of 2022, the single currency has dipped in relation to the greenback by 12%. At the same time, inflation in the euro area updated records for eight months: in June, price growth in the EU amounted to 8.6% year on year.

Some experts believe that the weakening of the euro is not an economic, but a political problem, due to the desire of the United States to dominate the world market. In this scenario, there is no place for a strong and independent Europe, whose currency is able to successfully compete with the dollar. "There is an exciting power play behind the current devaluation of the euro," said Feng Xiaohu, a columnist for the Chinese edition of Huanqiu Shibao. According to the expert, the euro's decline is due not only to economic factors. The political ambitions of the United States is in first place, since the euro is the main obstacle for the greenback, which prevents American authorities from "making profit from all over the world."

At the beginning of the week, experts recorded investors' flight from risk in the markets amid concerns about the onset of a global recession. Many analysts believe that the recession is the Fed's payment for curbing inflation, which has already accelerated to 9%. At the same time, market participants believe that the Fed will be able to take control of it. According to experts, there are signs of an impending recession in the US economy. However, they will not prevent the central bank from bringing the federal funds rate to a neutral level.

Many experts warn against misinterpretation of the coming recession in the United States, warning of its destructive power. According to Nouriel Roubini, one of the leading economists who predicted the financial crisis of 2008-2009, one should not count on a mild recession in the American economy. According to the analyst, it will be deep "amid a serious drop in GDP and debt and financial crises."

The growth of the key rate and the huge debts of the American economy, which have reached peak values, add fuel to the fire. At the same time, the debt burden of developed countries is growing, increasing the risks of stagflation, Roubini emphasizes. Recall that stagflation is a combination of an economic downturn with rising prices.

The current tightening of the monetary policy of the Fed and other central banks has a negative impact on the value of assets around the world. Most stock markets are experiencing a downturn, pulling the crypto industry with them. In such a situation, the US currency is the winner, justifying its status as a safe asset. According to the calculations of analysts at Standard Chartered Bank, almost 45% of the strength of the greenback is due to its status as a safe haven currency.

Despite the high probability of further strengthening, USD may decline in the coming weeks due to the Fed's current strategy regarding rates. In the current situation, the market has taken into account the entire cycle of tightening of the monetary policy in prices, but the major players continue to aggressively bet on the greenback's succeeding growth.

At the same time, representatives of the Fed note that they do not plan to raise the rate to 1.00%. The Fed intends to limit itself to an increase of 0.75%, which is fully taken into account in market prices. A potential rate hike of 1.00% will be a surprise for the market and will support the dollar, but such a scenario is unlikely. At the same time, the euro will try to maintain its recent upward momentum, not counting on a further decline in the greenback.

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US stocks closed lower, Dow Jones down 0.71%



At the close of the New York Stock Exchange, the Dow Jones fell 0.71%, the S&P 500 index fell 1.15%, and the NASDAQ Composite index fell 1.87%.

3M Company was the top performer among the components of the Dow Jones index today, up 6.63 points or 4.94% to close at 140.75. Quotes of McDonald's Corporation rose by 6.71 points (2.68%), closing trading at 257.09. Coca-Cola Co rose 1.02 points or 1.64% to close at 63.21. The biggest losers were Walmart Inc, which shed 10.04 points or 7.60% to end the session at 121.98.

Salesforce.com Inc was up 3.85% or 6.83 points to close at 170.46 while Nike Inc was down 3.73% or 4.08 points to close at 105. ,twenty.

Leading gainers among the S&P 500 index components in today's trading were 3M Company, which rose 4.94% to 140.75, General Electric Company, which gained 4.61% to close at 71.51, and shares of Archer-Daniels-Midland Company, which rose 4.36% to end the session at 78.92.

The biggest losers were Fortinet Inc, which shed 7.77% to close at 56.26. Shares of Walmart Inc lost 7.60% to end the session at 121.98. Quotes of Carnival Corporation decreased in price by 7.41% to 8.50.

Leading gainers among the components of the NASDAQ Composite in today's trading were Ayala Pharmaceuticals Inc, which rose 94.25% to hit 1.69, Pagaya, which gained 73.11% to close at 16.74, and Freight Technologies Inc, which rose 67.57% to end the session at 2.48.

The biggest losers were Revelation Biosciences Inc, which shed 51.39% to close at 0.49. Shares of Luokung Technology Corp lost 41.19% to end the session at 0.24. Quotes of Exela Technologies Inc decreased in price by 36.43% to 1.85.

On the New York Stock Exchange, the number of depreciated securities (1938) exceeded the number of closed in positive territory (1172), and quotes of 122 shares remained virtually unchanged. On the NASDAQ stock exchange, 2,320 companies fell in price, 1,412 rose, and 242 remained at the level of the previous close.

The CBOE Volatility Index, which is based on S&P 500 options trading, rose 5.69% to 24.69.

Gold futures for August delivery lost 0.21%, or 3.55, to hit $1.00 a troy ounce. In other commodities, WTI September futures fell 1.48%, or 1.43, to $95.27 a barrel. Brent oil futures for October delivery fell 0.71%, or 0.71, to $99.48 a barrel.

Meanwhile, in the Forex market, EUR/USD fell 0.99% to hit 1.01, while USD/JPY edged up 0.15% to hit 136.87.

Futures on the USD index rose 0.67% to 107.07.

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