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On September 2nd, Bank of New Zealand (BNZ) stated that a September rate hike by the Reserve Bank of New Zealand (RBNZ) is a foregone conclusion. The RBNZ is expected to hint at further rate hikes before the cash rate reaches or exceeds the neutral level, with a peak of approximately 3.5%. However, BNZs internal view is that the RBNZ will ultimately raise rates by 25 basis points at each meeting, reaching 4.0% by May 2027. Downside risks to the economy are more prominent, including a potential El Niño-induced recession, election-related delays in recovery, and a broader global asset price correction. On the upside, structural inflationary pressures may continue to accumulate regardless of the RBNZs response. BNZs core view stems from the RBNZs July statement that "further reduction in monetary stimulus may still be necessary" to bring inflation back to target. BNZ expects inflation to remain above the target range until mid-2027, forecasting an annual CPI of 3.7% for the September quarter, significantly higher than the RBNZs own forecast of 3.3%.On Wednesday, September 2, the Hang Seng Index opened down 48.91 points, or 0.19%, at 25,280.82; the Hang Seng Tech Index opened down 18.66 points, or 0.41%, at 4,532.22; the H-share Index opened down 15.39 points, or 0.18%, at 8,447.25; and the Red Chip Index opened down 8.28 points, or 0.2%, at 4,129.92.Hong Kong stocks opened lower, with the Hang Seng Index down 0.19% and the Hang Seng Tech Index down 0.41%. Biopharmaceutical stocks led the gains, while gold stocks fell sharply. Zijin Mining International (02259.HK) fell more than 4%.On September 2nd, the highest 7-day annualized yield of Tencent Wealth Managements "Current Account +" was 1.1340%, and the lowest was 0.7020%. The highest 7-day annualized yield of WeChat Pays "Lingqian Tong" was 1.1010%, and the lowest was 0.8700%. The highest 7-day annualized yield of Alipays "Yuebao" was 1.0650%, and the lowest was 0.8690%.September 2nd - ASB Bank of New Zealand stated that with financial markets having almost fully priced in a 25 basis point rate hike, there is limited room for a hawkish surprise in the decision itself. The ASB expects at least one more rate hike before the end of the year, with a peak rate of around 3.3%, slightly below current market pricing. If this occurs as expected, it could lead to a mildly dovish repricing at the front end of the New Zealand yield curve, putting some pressure on the New Zealand dollar. The ASB also noted that tightening financial conditions (including a stronger trade-weighted index and rising swap rates) are a theme the Reserve Bank of New Zealand is likely to cite, weakening the case for a particularly hawkish statement. Given the two-way risks to the medium-term inflation outlook, currency and interest rate markets are likely to remain highly sensitive to New Zealand data in the coming months, regardless of Wednesdays outcome.

Forecast for Silver Price: XAG/USD is rising quickly and is approaching the $20.00 mark

Alina Haynes

Sep 15, 2022 11:43

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Silver price recovers around the 50-day exponential moving average and advances towards a daily high of $19.69 on Wednesday after the US Labor Department reported that August PPI was in line with predictions of diminishing inflationary pressures on the producer side. Therefore, the XAG/USD is trading at $19.61, 1.86% higher than its initial price.

 

Before Wall Street opened, the Bureau of Labor Statistics (BLS) of the United States reported that the Producer Price Index (PPI) for August decreased by 0.1%, in line with expectations, while the year-over-year figure fell to 8.7%, less than the 9.8% reported in July. Meanwhile, the so-called core PPI, which excludes volatile goods, increased by 0.4% month-over-month and 7.3% year.

 

In the meantime, the US Dollar Index, a measure of the dollar's value against a basket of six currencies, ended Wednesday's session down 0.15 percent, at 109.648, weighed down by US Treasury yields, particularly the 10-year benchmark note rate, which remained unchanged throughout the day at approximately 3.404%.

 

The US Dollar Index reflects the aforementioned by declining by 0.09% and falling below the 110.000 barrier. Similarly, the US 10-year benchmark note rate exhibits signs of weariness, remaining flat at approximately 3.414%.

 

The fact that US 10-year TIPS yields, a proxy for actual yields, rose by only one basis point to 0.939% was a further factor supporting the white metal price.

 

On Thursday, the US economic calendar will contain jobless claims, retail sales, and the New York and Philadelphia Fed Manufacturing Indices, which will serve as a precursor to the ISM report in October.

 

The daily XAG/USD chart depicts the white metal as neutral to bearishly biased. Nonetheless, if silver buyers recapture the $20,000 threshold, this might pave the way for a test of a four-month-old downslope trendline near $20.20 prior to reaching the 100-day EMA at $20.39. A breach of the latter will reveal the cycle high from August 15 at $20.87, ahead of the psychological milestone of $21.00.


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