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Samsung Electronics: System LSI business revenue hit a record high in the first half of the year.Samsung Electronics: Profits are expected to continue to grow in the second half of the year.On July 30th, Huatai Macro Research Report stated that the FOMCs decision to hold rates steady in July somewhat eroded the Feds credibility, leading to rising inflation expectations and higher long-term interest rates. We believe the probability of a Fed rate hike in September remains high. The unexpectedly hawkish FOMC meeting in June resulted in tighter financial conditions, lower inflation expectations, and increased Fed credibility. However, with energy prices rising again, the market may have begun pricing in Warshs claim of zero tolerance for inflation as mere rhetoric. The subsequent rise in inflation expectations and long-term yields suggests that the Feds credibility may have been somewhat eroded. We reiterate our baseline forecast of a high probability of a September rate hike, 1-2 rate hikes this year, and 2 rate hikes before mid-next year. The risks remain: ① Warsh may have been merely bluffing; ② The AI boom may abruptly end, leading to tighter financial conditions and making a rate hike unnecessary. Pay attention to the July-August employment/inflation data and Warshs Jackson Hole speech on August 27th.Samsung Electronics reported a net profit of 71.3 trillion won for the second quarter, compared to market expectations of 68.5 trillion won. The chip divisions operating profit for the second quarter was 89.2 trillion won.On July 30th, according to foreign media reports, international oil prices rose nearly 7% on Wednesday. As large-scale airstrikes reignited in the Middle East, market hopes for an impending end to the conflict between the US, Israel, and Iran were dashed; meanwhile, US government data showed domestic crude oil inventories had fallen to multi-year lows, exacerbating concerns about supply reductions. UBS analyst Giovanni Staúnovo stated that the renewed military strikes in the Middle East and Iranian officials reiterating their intention to control shipping activity in the Strait of Hormuz (despite a significant reduction in oil flow through the strait) further pushed up oil prices. On Wednesday, the US and Saudi Arabia launched strikes against Iranian-backed groups in Iraq, accusing them of drone attacks on Saudi oil facilities. Hours earlier, the US military announced it had successfully thwarted an Iranian raid targeting US forces in the region. Iran, in turn, stated it fired on ships in the Strait of Hormuz and US bases in Jordan.

EUR/USD Expects Fourth Weekly Gains Above 1.0900 Despite The US Dollar's Rebound Advance Ahead Of US NFP

Daniel Rogers

Apr 07, 2023 11:42

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Despite a recent retreat, the EUR/USD bulls maintain control around 1.0920. This reflects the typical Good Friday inactivity and apprehension ahead of the US Nonfarm Payrolls (NFP) report released early in the day. The major currency pair was volatile on Thursday as a result of the US Dollar's initial rebound on fears of a recession, but ended the day unchanged as disappointing US data contrasted with stronger Eurozone data.

 

Fears of a recession in the world's largest economy were prompted by consecutive lackluster US data and falling US Treasury bond yields, giving USD bears a reprieve on Thursday morning. As traders prepared for the all-important NFP, the dollar's subsequent gains were reversed by another disappointing US employment report.

 

Despite this, US Initial Jobless Claims for the week ending March 31 rose to 228K from 200K anticipated and an upwardly revised 246K the prior week. Notable is the increase in Challenger Job Cuts from 77,77K to 89,703K in the given month.

 

Notably, Reuters fanned fears of a recession by citing the most recent decline in the preferred bond market indicator of Federal Reserve (Fed) Chairman Jerome Powell. The most reliable bond market indicator of an imminent economic contraction, according to Federal Reserve research, is the "near-term forward spread" between the forward rate on Treasury bills 18 months from now and the current yield on three-month Treasury bills.

 

According to Reuters, International Monetary Fund (IMF) Managing Director Kristalina Georgieva stated in prepared remarks on Thursday that the global economy is projected to expand by less than 3% in 2023, a decrease from 3.4% in 2022.

 

In other news, Germany's Industrial Production (IP) increased 0.6% year-over-year in February, versus market predictions of -2.7% and previous readings of -1.7%. Additionally, the monthly figures exceeded expectations by 0.1%, coming in at 2.0% compared to 3.7% previously. On Wednesday, Germany Factory Orders for February improved to -5.7% YoY from -12.0% previously revised down and -10.5% market expectations, while MoM growth came in at 4.8% compared to 0.3% expected and 0.5% previous readings.

 

Wall Street and US Treasury bond yields have both reduced weekly losses as a result of these strategies, but investors remain skeptical.

 

In the context of less liquidity surrounding the March US employment report, sporadic activity on the major markets can keep the EUR/USD inactive and prone to abrupt price swings. Notable is the fact that recent dovish Fed forecasts and disappointing US data generate expectations for a positive surprise and enormous price volatility thereafter.


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