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Euro Rallies Then Falls Against the Dollar on Upbeat US Inflation

Euro Rallies Then Falls Against the Dollar on Upbeat US Inflation

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Euro coins stand on euro banknotes

The euro today rallied higher against the US dollar following hawkish speeches by European Central Bank policymakers during the early European session. The EUR/USD currency pair later gave up some of its gains as the Brexit rhetoric weighed on the single currency combined with the upbeat American inflation data.

The EUR/USD currency pair today rallied from an initial low of 1.1823 in the Australian market to a high of 1.1874 in the mid-European session before falling ahead of the American session.

The currency pair’s initial rally was boosted by the hawkish comments from ECB policymakers published by Reuters. The ECB Governor Christine Lagarde said that the risk of a second wave of coronavirus infections across the euro area added uncertainty to the region’s economic recovery. Philip Lane, the ECB’s Chief Economist, clarified that the bank was open to very accommodative policies. Isabel Schnabel, an ECB’s Executive Board member, added that the bank’s measures were working, but some of them could take much longer to bear fruit. The release of in-line German inflation data for August by the Federal Statistical Office had a muted impact on the pair. 

The currency pair headed lower after the EU gave Britain a 3-week ultimatum to alter its stance on Brexit, which soured investor risk appetite. The release of upbeat US inflation data for August by the Bureau of Labor Statistics also dragged the pair lower.

The currency pair’s performance over the upcoming weekend is likely to be affected by geopolitical events.

The EUR/USD currency pair was trading at1.1836 as at 15:10 GMT, having fallen from a high of 1.1874. The EUR/JPY currency pair was trading at 125.70, having dropped from a high of 126.12.

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International

CHF/JPY further potential up move reinforced by CHF safe haven status

CHF was the top-performing currency among the USD pairs in the past five days. An uptick in geopolitical risk premium has reinforced CHF’s safe haven…

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1 hour ago

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October 16, 2023

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  • CHF was the top-performing currency among the USD pairs in the past five days.
  • An uptick in geopolitical risk premium has reinforced CHF’s safe haven status.
  • CHF/JPY short-term and major uptrend phases remain intact with the next intermediate resistance coming in at 167.90/168.30.

This is a follow-up analysis of our prior report, “CHF/JPY Technical: Continuation of potential bullish impulsive up move” published on 10 October 2023. Click here for a recap.

The CHF/JPY has staged the expected impulsive up move sequence and met the 165.20/165.60 intermediate resistance zone as highlighted in our previous analysis; the cross-pair printed an intraday high of 166.12 last Friday, US session, 13 October.

The current short-term uptrend phase in place since the 3 October 2023 low of 160.01 has been driven by the momentum factor supporting the CHF/JPY’s major uptrend phase since the 13 January 2023 low of 137.44.

Also, the rising geopolitical risk premium trigged by the current Israel-Hamas conflict has not abated, and now with the latest attacks orchestrated over the weekend by Hezbollah, a militant group backed by Iran on Israeli army posts in the north may have caused a further rift among key stakeholders in the Middle East region which in turn can further escalate the turmoil in the current “fragile state” of international relations affairs.

CHF maintains safe haven status but not JPY

Fig 1:  USD major pairs rolling 5-day performance as of 16 Oct 2023 (Source: TradingView, click to enlarge chart)

In in state of rising geopolitical tensions, the safe-haven proxy currencies, the Japanese yen (JPY) and Swiss franc (CHF) tend to be the likely outperformers in the foreign exchange market. Based on a five-day rolling performance basis as of 16 October 2023, the CHF has indeed climbed up against the US dollar where the USD/CHF rate is the worst performer among the US dollar major pairs that recorded a loss of -0.48% at this time of the writing.

However, the JPY has lost its safe haven status this time round as the USD/JPY rate has been firmed above 148.25 (the intermediate support in place since 5 October 2023) due to a “hesitant” Bank of Japan (BoJ) that does not give any clear indication of bringing forward its plans in the removal of negative interest rates policy.

Major uptrend supported by bullish momentum

Fig 2:  CHF/JPY major & medium-term trends as of 16 Oct 2023 (Source: TradingView, click to enlarge chart)

After the appearance of the weekly bullish reversal “Hammer” candlestick sighted for the week ended 6 October 2023, the price actions of the CHF/JPY had a positive follow-through that led to the formation of a weekly bullish long-bodied candlestick that ended on 13 October that surpassed the highs of the prior weekly candlesticks seen in the past three weeks.

These observations coupled with an uptick seen in the daily RSI momentum indicator that has yet to reach its overbought zone (above the 70 level) suggest that medium-term bullish momentum remains intact and has increased the odds of a clearance above the 166.60 intermediate resistance (22/30 August 2023 swing highs).

164.75 is the key support to watch in the short-term

Fig 3:  CHF/JPY minor short-term trend as of 16 Oct 2023 (Source: TradingView, click to enlarge chart)

Watch the 164.75 key short-term pivotal support (also the 50-day moving) on the 1-hour chart of CHF/JPY to maintain its current bullish impulsive up move sequence within its short-term uptrend phase in place since the 3 October 2023 low.

A clearance above 166.60 sees the next intermediate resistance coming in at 167.90/168.30 (a Fibonacci extension cluster).

However, a break below 164.75 negates the bullish tone for a deeper pull-back towards the next support of 163.60 (20-day moving average, 9 October 2023 minor swing low & 38.2% Fibonacci retracement of the current up move from 3 October 2023 low to 13 October 2023 high).

 

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Government

Wolf protection in Europe has become deeply political – Spain’s experience tells us why

Some European countries view wolf protection differently to others. A look at Spain’s experience may explain why.

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1 hour ago

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October 16, 2023

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Wolves are making a comeback throughout Europe – but not everyone's happy. Ramon Carretero/Shutterstock

Wolves are staging a comeback in many areas of Europe after centuries of persecution. Over the past decade alone, they have expanded their range on the continent by more than 25%.

This resurgence was brought into sharp focus in September 2023 following a controversial statement by Ursula von der Leyen, president of the European Commission. She said: “The concentration of wolf packs in some European regions has become a real danger for livestock and potentially also for humans. I urge local and national authorities to take action where necessary.”

But what is the right action to take? Recent decisions by EU member states do not reflect a consensus on the matter.

The Swiss senate has voted to ease restrictions on culling their roughly 200 wolves to safeguard livestock that roam freely in the Alps. Spain, which is home to more than 2,000 wolves and boasts extensive livestock grazing systems, has adopted a contrasting stance.

In 2021, the Spanish government declared wolves strictly protected. It aims to increase the wolf population by 18% and encourage farmers to implement livestock protection measures like installing fences or keeping guard dogs.

An examination of Spain’s motivations for protection may provide some insight into what motivates countries to adopt such different approaches to coexistence.

Ursula von der Leyen giving a statement to the press.
President of the European Commission, Ursula von der Leyen. Alexandros Michailidis/Shutterstock

What does coexistence mean?

In new research that I carried out with several colleagues, we investigated how people in Spain interpret and experience coexistence with wolves. Our findings revealed three distinct and, to some extent, conflicting views of what coexistence means and how it should be achieved.

Read more: How to live with large predators – lessons from Spanish wolf country

“Traditionalists” cared deeply about the landscapes, livelihoods and biodiversity that evolved together throughout millennia of free-range pastoralism. They saw people as a part of nature and interpreted coexistence as a state where the wolf was controlled to not disrupt pastoral activities.

“Protectionists” wanted to restore “wild” nature (with minimal human influence) and believed that the wolf would catalyse this process. They saw coexistence as a state where human activities were controlled so that wolves could roam free.

“Pragmatists” were less fixated on a certain type of nature and more on the relationships and context within each location. They regarded coexistence as a state where the needs of different groups (including wolves) were balanced.

Relaxing or increasing wolf protection has come to represent these different visions of the future. Each of these visions offers advantages to some people and wildlife and presents challenges for others. As a result, the topic has become deeply political.

The politics of wolf conservation

In Spain, the proposal to protect wolves was put forward by protectionists, and aligned with the agenda of the incumbent left-wing government. Podemos, one of the left coalition parties, submitted a proposition for strict wolf protection in 2016 (when they were in opposition) in collaboration with pro-wolf advocacy groups.

By contrast, Spain’s right-wing political parties were firmly opposed. These parties tend to target rural voters, for whom the return of carnivores has come to symbolise the demise of pastoral cultures.

The proposal was ultimately endorsed by the government based on wolves’ “scientific, ecological and cultural value” – largely subjective criteria. For instance, one could argue that the fox, which is not protected, possesses similar values. These criteria do not consider how stringent wolf protection measures might affect other cultural or ecological values, like pastoral farming systems.

Spain’s decision was also influenced by the protectionists’ view of the wolf’s conservation status. A species that is classified as having a “favourable” status (adequate to guarantee its long-term survival) in the EU Habitats Directive can, in some instances, be hunted. However, conservationists disagree about the criteria and data on which this status is based.

For example, an assessment submitted to the International Union for Conservation of Nature Red List in 2018 indicates that the Iberian wolf population is large, stable and slowly expanding. By contrast, a report published by a pro-wolf advocacy group in 2017 claimed that more wolves were killed than born in Spain during that year.

The latter has been accused of being biased and unscientific. However, it did not stop the Spanish Environment Ministry from using the report to reclassify the conservation status of wolves from “favourable” (as it was in previous reports) to “unfavourable”. In other words, information was interpreted, selected and presented in a way that justified increased protection.

The Swedish government, which has been led by a right-wing coalition since 2022, seeks to achieve the opposite. It has ordered the Environment Protection Agency to review if the established threshold for favourable status, set to a minimum of 300 in 2019, can be lowered to enable increased culling.

Free-roaming sheep in Spain.
Free-roaming sheep in the Picos de Europa National Park, Asturias, Spain. Hanna Pettersson, CC BY-NC-SA

This nature or that nature?

To bridge the political divide between protection and persecution, as well as between the restoration of “wild” versus pastoral landscapes, a reevaluation of how decisions are made and what evidence is considered is needed.

Science plays a crucial role in evaluating various policy options and their consequences, such as the effect of an increased wolf population on sheep or deer behaviour. But it cannot determine the “correct” course of action. That choice depends on what people, livestock and wildlife in a particular place need to live well. In other words: context matters.

In most cases, the question is not a matter of choosing between “this or that”, but rather, how we get “a little bit of everything”. Reconciling different interests and finding a way forward requires public participation and, usually, professional mediation. These are the actions that the European Commission should encourage among member states.

With this in mind, it is concerning that the pragmatic interpretation is largely overlooked in the debate. Ultimately, the sustainable coexistence of humans and wolves does not hinge on whether wolves are hunted or protected, or even on the size of the wolf population. Rather, it hinges on how these decisions are made.

Hanna Pettersson received funding from Leeds-York Natural Environment Research Council (NERC) Doctoral Training Partnership (DTP) SPHERES under grant NE/L002574/.

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International

Lipson: The Sick Alliance Between The Left And Muslim Extremists

Lipson: The Sick Alliance Between The Left And Muslim Extremists

Authored by Charles Lipson via RealClearPolitics.com,

The virulent anti-Israel…

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2 hours ago

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October 16, 2023

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Lipson: The Sick Alliance Between The Left And Muslim Extremists

Authored by Charles Lipson via RealClearPolitics.com,

The virulent anti-Israel protests across America and Europe throw a glaring light on the bizarre alliance between left-wing activists and militant Muslims. That odd combination has been the bedrock of political activism at universities and in the streets for years. It began in universities, where it now dominates political discourse, threatens Jewish students, and intimidates anyone brave enough to voice their dissent. We can now see how it has spread far beyond the campus.

What makes the alliance so strange are the deep-seated differences between leftists and Muslim fundamentalists over core beliefs.

The left supports women’s rights and full equality in the workplace and public sphere. Militant Muslims oppose them.

The left supports gay rights and gay marriage. Militant Muslims toss gays off buildings. None would dare hold a public march in Pakistan, Iran, or Saudi Arabia.

The left supports abortion rights. Militant Muslims oppose them.

The left supports religious freedom, including the right to reject religion altogether. Militant Muslims believe heretics should be executed.

The left rallies against book banning. Militant Muslims embrace it for any book they believe insults Islam or supports Israel.

The left opposes the death penalty. Militant Muslims endorse it and praise their governments for using it.

These beliefs are not marginal for either group. They are foundational, and they are profoundly opposed to each other. Still, the two groups have formed a long-standing alliance. How do they deal with these profound differences? And why are they allied?

They deal with differences very simply: They never mention them when they act jointly, primarily against Israel and its supporters across the world. They have joined together to form a more powerful coalition against shared enemies. They would destroy that partnership by raising issues where they differ.

Far better to focus on their agreement, which goes beyond hating Israel to claim Western capitalism has oppressed, degraded, and ruined the world. Since the U.S. is now the world’s greatest power, it is tagged as the main source of that malignancy, at home and abroad. As they see it, Africa, Asia, the Middle East, and Latin America are poor because they have been oppressed by capitalist nations and their corporations. If they have terrible governments, they have them only because the West has installed and sustained them.

This critique is based on a shared, but muddled, ideology. The heart of that ideology is its illiberalism. Both groups are fundamentally opposed to the forbearance of individual differences, including very different views and goals, that are essential to Western constitutional democracies. In their place, these opponents rely on a toxic brew of ideas drawn from:

  • Karl Marx, of course

  • Franz Fanon (“The Wretched of the Earth”)

  • Edward Said (“Orientalism”)

  • Herbert Marcuse (and the Frankfurt School of “cultural Marxism”)

  • And, for the most extreme Muslims, revolutionary theologians like Sayyid Qutb, the intellectual father of Egypt’s Muslim Brotherhood and its subsidiary in Gaza, Hamas

The mixture of these ideas makes a confused jumble. But “incoherent” doesn’t mean “useless.” It serves as a kind of makeshift glue that binds disparate groups in opposition to what they see as the West’s oppressive bourgeois culture, its tolerance for divergent views, and the unequal outcomes produced by market competition (softened by transfer payments). Overturn it all, they say, in the name of “social justice.” They have no idea of what to replace it with. In fact, the coalition would break apart if either side emphasized its proposed alternatives.

This negative, often nihilistic, ideology inverts the old adage, “might makes right.” Their implicit claim is that “weakness and poverty make right.” It doesn’t. What’s right or wrong has nothing to do with who has wealth and power and who does not.

These self-proclaimed champions of the poor add one more sloppy argument to the mix. They claim people are poor and weak only because they have been oppressed and exploited.

One implication is that people in poor countries would be far better off if they had never been touched by the West and its institutions. They would thrive under their own social and political systems (and, in the West, some version of socialism). That, at least, is the unspoken claim underlying the coalition of the left and militant Islam. Some progressives (who aren’t poor) make common cause by self-flagellation. They are “repentant oppressors.” Their remorse has all the religious fervor of medieval monks who wore hairshirts and beat themselves with whips for their sins.

The idea that the West is responsible for the world’s poverty has a core of truthful criticism next to a mountain of lies. One doesn’t have to apologize for colonialism to note that almost everyone on planet Earth lived in grinding poverty until the cumulative effects of industrialization began to take hold after 1800. That process began in northwestern Europe and gradually spread across the world, lifting income, health, diet, and life expectancy. Where it failed was in countries racked by civil unrest or governed by rapacious regimes that didn’t provide public order or secure property rights and stole the revenues needed to provide essential public goods.

As for human liberation, no societies voluntarily ended human bondage until the West did it, mostly in the 18th and 19th centuries. Britain spent enormous sums stationing its navy off the African coast to prevent the transshipment of slaves, which had been captured and sold by local tribes. Britain gained nothing financially from that effort; it did it for moral reasons. In America, “free states” in the North and Midwest abolished slavery well before the Civil War. The war itself ended slavery, though blacks were still oppressed for another century by Jim Crow laws (in the South) and segregation (everywhere). Those practices were always inconsistent with the Western ideal of human equality and were finally outlawed in the mid-1960s by the Civil Rights Act and Voting Rights Act.

The current fight over millions of illegal immigrants obscures one fact common to all modern states and two crucial features of American history. The common fact is that state sovereignty includes the essential right to control who can enter each country. What makes U.S. history so unusual is that it has welcomed tens of millions of legal immigrants and integrated them, by fits and starts, into a society where common citizenship transcends ethnic and religious heritage. Today, most Americans appreciate the fruits of that integration in art, music, food, and culture, drawn from multiple cultural traditions. The left, with its focus on identity politics, damns much of that sharing as “cultural appropriation.” It is a deliberate attempt to divide the country into separate, opposed camps, based on birth.

The depth of this ideological rot is most visible on college campuses, where some students (and a few faculty) hate America and Israel so much they have actually rallied in support of Hamas and attempted to justify its atrocities as somehow the liberation of the poor and oppressed. It’s a disgusting idea.

It’s high time Americans went beyond revulsion and defended their basic, liberal ideals and the constitutional democracy founded upon them. We don’t have to accept the mantle of “oppressors” because of events that happened long before we were born, for which we are not responsible, and from which we never profited. We don’t have to accept the damning slur that our success is due to “privilege” rather than hard work, time-tested values, and a good education. The greatest “privilege” is not inherited wealth or status. It is being raised in a stable home by loving parents, living in an orderly community, and growing up in a country where each of us is free to pursue our own goals and define ourselves as we choose.

We can and should recognize America’s flaws – and work toward correcting them – without falsely painting our nation’s past as primarily a legacy of slavery and stolen wealth (the “1619” project and its twin, “decolonization” studies).

America is a great nation, for all its flaws.

Its greatness lay in the experiment of 1776 and establishment of a democracy that has endured and slowly incorporated all its people into the body politic.

The values that undergird that democracy are worth remembering, worth cherishing, and worth fighting to keep, even as a vile coalition celebrates those who kidnap and murder in the perverted name of religion. That’s not “social justice.” That’s an age-old crime.

Tyler Durden Sun, 10/15/2023 - 23:45

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