Connect with us


Greenback Poised to Challenge May Highs

The firmer than expected US CPI did not change expectations that the Federal Reserve will hike the Fed funds target by 50 bp on June 15.  What it did…



The firmer than expected US CPI did not change expectations that the Federal Reserve will hike the Fed funds target by 50 bp on June 15.  What it did was boost the chances that the 50 bp steps will continue through at least November. The market also sees a greater chances of a 75 bp move.

The reaction to the ECB's indication that it could raise rates by 50 bp in September failed to impress the foreign exchange market. By the end of Q3, the ECB may have hiked by 75 bp and the Fed by 150 bp.  

Japanese officials expressed concern about the pace of the yen's decline ahead of the weekend, while many market participants focus on the level.  The stronger than expected US inflation and the rise US rates to new highs blunted the impact of the verbal intervention as the fundamental driver was underscored.  The next rung in the intervention ladder may not be material intervention, but the G7 reaffirming that while exchange rates should be left to the markets, excess volatility is undesirable.  

In the big picture, we had correctly anticipated that the weaker dollar seen in the second half of May is over. The question now is whether the greenback is on its way to new highs, leaving aside the yen. The market seems increasingly concerned that the more aggressive monetary policy will succeed in checking inflation but at the cost of undermining economic activity, or it will fail, leaving large swathes of the world economy in stagflation.  With that in mind, we turn to the analysis of the price action of the dollar pairs. 

Dollar Index: The Dollar Index appears poised to rechallenge the 105.00 high set on May 13.  The downside pullback from then did not quite meet the minimum retracement objective (38.2%, found near 101.00).  After consolidating (basing), it advanced strongly in the last two sessions, encouraged by the reversal of the euro after the ECB meeting and the stronger than expected US CPI.  In the past two weeks, the Dollar Index has only fallen twice.  The MACD and Slow Stochastic are moving higher and are not over-extended.  A convincing break of 105 would point to the 108-109 area.  

Euro:  The euro tested $1.0775 after the ECB's announcement and ran into a wall of sellers. The bearish outside down day (traded on both sides of Wednesday's range and closed below its low) spurred additional selling and the higher-than-expected US CPI drove it to almost $1.05. It exceeded the (61.8%) retracement objective of the dollar bounce in the second half of May, found near $1.0520.  The momentum indicators have turned down.  The five-day moving average is also crossing back below the 20-day average for the first time since May 20 and expresses the downside momentum.  While the $1.0450 area may offer support, the risk is that the $1.0350 area is retested.  A break of that area would renew speculation of a move to parity.  A move above $1.06 would help stabilize the tone. 

Japanese Yen: The dollar rose by around 4.4% against the yen in the first six sessions here in June. It traded broadly sideways in the last two sessions.  Japan's verbal intervention in late April coincided with a pullback in the US 10-year yield.  However, this time, US yields are rising to new highs and the policy divergence between the BOJ and Fed will widen if the market is correct and the Fed hikes by 50 basis points next week, next month, and in September and November. It is not just fundamental economic considerations favor a weak yen, but the bar to intervention may be higher than appreciated.  Recall that the Great Financial Crisis not the Covid Pandemic saw the major central banks intervene in the foreign exchange market.  The volatility (dollar strength) was addressed via supply (swaps lines with foreign central banks) rather than intervention to influence the price.  The MACD is rising but is only a little above the middle of its range.  On the other hand, the Slow Stochastic has stalled in overbought territory.  The weak yen is not a surprise and speculators in the futures market, perhaps a proxy for momentum traders and trend-followers have a large net short yen position.  A move above the JPY135.00-JPY135.15 band would signal the next leg up that could run toward JPY140.  The BOJ meets at the end of next week.  It will be interesting to see if Governor Kuroda tempers his rhetoric, seemingly advocating a stable but soft yen.  

British Pound: Sterling looks ugly.  The bullish outside up day on June 7 proved for naught. There was no follow through buying, and it stalled in front of the $1.26 cap.  Ahead of the weekend, after the US CPI, sterling was sold through $1.24 to about $1.2300.  This surpassed the (61.8%) retracement of sterling's bounce from the roughly $1.2155 low on May 13 to the late May high near $1.2665.  The Slow Stochastic is falling.  It is around the middle of its range.  The MACD has only begun curling lower.  The five-day moving average also crossed below the 20-day moving average for the first time since May 20.  The next target is around $1.2280 but sterling appears headed for a retest of mid-May low, and a break of it sets up for a test on $1.20.  Sterling reached $1.1840 a few months after the referendum in 2016 and saw almost $1.14 in March 2020.  

Canadian Dollar: The stronger than expected Canadian jobs growth reported before the weekend (135k full-time positions, six-times more than the median forecast in Bloomberg's survey) is another data point highlighting the strength of the Canadian economy. The Bank of Canada is raising interest rates.  After beginning the cycle with a quarter-point move in March, its last two moves have been 50 bp steps.  The swaps market is pricing in an increased risk of a 75 bp move in one of the next two meetings.  The 2.3% slide in the Canadian dollar since the high set on June 8 (the best level since April 21), was not the result of macroeconomic considerations.  A better explanation seems to be erosion of risk appetites (illustrated by the sharp drop in US equities), which could reflect fears that central bank policy is going to either trigger a recession if it is successful or stagflation if it is not. Still, technically, the US dollar looks strong, and the momentum indicators have only recently turned higher. The US dollar rose to almost CAD1.2820, the (61.8%) retracement objective of the down move from the mid-May high (~CAD1.3075).  The next resistance area may be seen around CAD1.2900.  

Australian Dollar: The Reserve Bank of Australia delivered a larger than expected 50 bp hike and still the Australian dollar tumbled around 2.2% last week, to turn in its worst showing since the end of April.  New Covid restrictions in Shanghai did not help matters.  With the losses in last two sessions, the Aussie has surpassed the (50%) retracement of the rally that began in mid-May near $0.6930 and peaked last week near $0.7285.  That retracement target was near $0.7055, and the next retracement (61.8%) is found closer to $0.7000.  A break of the $0.7000 area could spur another 1% drop.  The MACD and Slow Stochastic have only recently turned down.  The momentum indicators suggest there is scope for the Aussie to return toward that mid-May low.  A recovery back above the $0.7100-$0.7130 area would help stabilize the technical tone. A strong jobs report next week could bolster the market's conviction that after the late start, the RBA will deliver another 50 bp hike at the July 5 meeting.

Mexican Peso: The peso has outperformed the JP Morgan Emerging Market Currency Index so far this year.  The peso is up about 3% through the end of last week while the EM FX index is off about 0.8%.  However, last week, the peso underperformed.  It fell by roughly 1.75% to the JP Morgan index falling around 1.25%.  Nearly all the losses were recorded ahead of the weekend, and it was the biggest weekly loss for the peso since last November.  Mexico's May's CPI was slightly firmer than expected and the biweekly report showed some acceleration in the second half of the month.  The risk seems to be increasing of a 75 bp hike from Banxico when it meets on June 23.  The dollar fell from MXN20.4750 on May 12 to MXN19.3150 on May 30.  With last week's advance the greenback met the (50%) retracement target (~MXN19.9440).  The next retracement objective (61.8%) is near MXN20.07. To reach the retracement, dollar will need to take out a downtrend line drawn off the March, April, and May highs that begins the new week around MXN20.03. The momentum indicators have turned higher., and a stronger dollar looks to be the path of least resistance.  

Chinese Yuan: The dollar peaked on May 13 near CNY6.8125 and proceeded to fall.  It bottomed on June 6 slightly below CNY6.64.  It finished last week above CNY6.70, its best level since late May, and above the downtrend line connecting the March, April, and May highs.  The sharp dollar gains after the CPI report signals a likely firm start next week China. The depreciation of various currencies in its trade-weighted basket (CFTS) means the yuan must depreciate against the dollar too or accept appreciation against its trading partners.  The next dollar target may be around CNY6.7500.  In the week ahead, China reports May retail sales, industrial production, investment, and unemployment. The data captures part of the intense lockdown period, and weakness is anticipated.  That said, the May trade surplus was considerably stronger than expected, as was the May lending figures.  The one-year Medium Term Lending rate will be decided on June 15. It was last shaved by 10 bp (to 2.85%) in January, the first cut since April 2020.  A small cut cannot be ruled out, but most do not expect it, and Beijing seems reluctant to use the monetary policy lever much now.  The US premium over China on 10-year rates widened to a new 11-year high a little less than 40 bp ahead of the weekend.  If this makes Chinese bonds less attractive, foreign investors are taking a more constructive look at Chinese equities.  


Read More

Continue Reading


Repeated COVID-19 Vaccination Weakens Immune System: Study

Repeated COVID-19 Vaccination Weakens Immune System: Study

Authored by Zachary Stieber via The Epoch Times (emphasis ours),

Repeated COVID-19…



Repeated COVID-19 Vaccination Weakens Immune System: Study

Authored by Zachary Stieber via The Epoch Times (emphasis ours),

Repeated COVID-19 vaccination weakens the immune system, potentially making people susceptible to life-threatening conditions such as cancer, according to a new study.

A man is given a COVID-19 vaccine in Chelsea, Mass., on Feb. 16, 2021. (Joseph Prezioso/AFP via Getty Images)

Multiple doses of the Pfizer or Moderna COVID-19 vaccines lead to higher levels of antibodies called IgG4, which can provide a protective effect. But a growing body of evidence indicates that the “abnormally high levels” of the immunoglobulin subclass actually make the immune system more susceptible to the COVID-19 spike protein in the vaccines, researchers said in the paper.

They pointed to experiments performed on mice that found multiple boosters on top of the initial COVID-19 vaccination “significantly decreased” protection against both the Delta and Omicron virus variants and testing that found a spike in IgG4 levels after repeat Pfizer vaccination, suggesting immune exhaustion.

Studies have detected higher levels of IgG4 in people who died with COVID-19 when compared to those who recovered and linked the levels with another known determinant of COVID-19-related mortality, the researchers also noted.

A review of the literature also showed that vaccines against HIV, malaria, and pertussis also induce the production of IgG4.

“In sum, COVID-19 epidemiological studies cited in our work plus the failure of HIV, Malaria, and Pertussis vaccines constitute irrefutable evidence demonstrating that an increase in IgG4 levels impairs immune responses,” Alberto Rubio Casillas, a researcher with the biology laboratory at the University of Guadalajara in Mexico and one of the authors of the new paper, told The Epoch Times via email.

The paper was published by the journal Vaccines in May.

Pfizer and Moderna officials didn’t respond to requests for comment.

Both companies utilize messenger RNA (mRNA) technology in their vaccines.

Dr. Robert Malone, who helped invent the technology, said the paper illustrates why he’s been warning about the negative effects of repeated vaccination.

“I warned that more jabs can result in what’s called high zone tolerance, of which the switch to IgG4 is one of the mechanisms. And now we have data that clearly demonstrate that’s occurring in the case of this as well as some other vaccines,” Malone, who wasn’t involved with the study, told The Epoch Times.

So it’s basically validating that this rush to administer and re-administer without having solid data to back those decisions was highly counterproductive and appears to have resulted in a cohort of people that are actually more susceptible to the disease.”

Possible Problems

The weakened immune systems brought about by repeated vaccination could lead to serious problems, including cancer, the researchers said.

Read more here...

Tyler Durden Sat, 06/03/2023 - 22:30

Read More

Continue Reading


Study Falsely Linking Hydroxychloroquine To Increased Deaths Frequently Cited Even After Retraction

Study Falsely Linking Hydroxychloroquine To Increased Deaths Frequently Cited Even After Retraction

Authored by Jessie Zhang via Thje Epoch…



Study Falsely Linking Hydroxychloroquine To Increased Deaths Frequently Cited Even After Retraction

Authored by Jessie Zhang via Thje Epoch Times (emphasis ours),

An Australian and Swedish investigation has found that among the hundreds of COVID-19 research papers that have been withdrawn, a retracted study linking the drug hydroxychloroquine to increased mortality was the most cited paper.

Hydroxychloroquine sulphate tablets. (Memories Over Mocha/Shutterstock)

With 1,360 citations at the time of data extraction, researchers in the field were still referring to the paper “Hydroxychloroquine or chloroquine with or without a macrolide for treatment of COVID-19: a multinational registry analysis” long after it was retracted.

Authors of the analysis involving the University of Wollongong, Linköping University, and Western Sydney Local Health District wrote (pdf) that “most researchers who cite retracted research do not identify that the paper is retracted, even when submitting long after the paper has been withdrawn.”

“This has serious implications for the reliability of published research and the academic literature, which need to be addressed,” they said.

Retraction is the final safeguard against academic error and misconduct, and thus a cornerstone of the entire process of knowledge generation.”

Scientists Question Findings

Over 100 medical professionals wrote an open letter, raising ten major issues with the paper.

These included the fact that there was “no ethics review” and “unusually small reported variances in baseline variables, interventions and outcomes,” as well as “no mention of the countries or hospitals that contributed to the data source and no acknowledgments to their contributions.”

A bottle of Hydroxychloroquine at the Medicine Shoppe in Wilkes-Barre, Pa on March 31, 2020. Some politicians and doctors were sparring over whether to use hydroxychloroquine against the new coronavirus, with many scientists saying the evidence is too thin to recommend it yet. (Mark Moran/The Citizens’ Voice via AP)

Other concerns were that the average daily doses of hydroxychloroquine were higher than the FDA-recommended amounts, which would present skewed results.

They also found that the data that was reportedly from Australian patients did not seem to match data from the Australian government.

Eventually, the study led the World Health Organization to temporarily suspend the trial of hydroxychloroquine on COVID-19 patients and to the UK regulatory body, MHRA, requesting the temporary pause of recruitment into all hydroxychloroquine trials in the UK.

France also changed its national recommendation of the drug in COVID-19 treatments and halted all trials.

Currently, a total of 337 research papers on COVID-19 have been retracted, according to Retraction Watch.

Further retractions are expected as the investigation of proceeds.

Tyler Durden Sat, 06/03/2023 - 17:30

Read More

Continue Reading


Biden Signs Debt Ceiling Bill, Ending Monthslong Political Battle

Biden Signs Debt Ceiling Bill, Ending Monthslong Political Battle

Authored by Lawrence Wilson via The Epoch Times,

President Joe Biden signed…



Biden Signs Debt Ceiling Bill, Ending Monthslong Political Battle

Authored by Lawrence Wilson via The Epoch Times,

President Joe Biden signed the Fiscal Responsibility Act on Saturday, suspending the debt ceiling for 19 months and bringing a monthslong political battle to a close.

The compromise legislation negotiated by Biden and House Speaker Kevin McCarthy (R-Calif.) passed both houses of Congress with bipartisan support this week, averting a potential default on the nation’s financial obligations.

“Passing this budget agreement was critical. The stakes could not have been higher,” Biden said in a Friday evening address to the nation from the Oval Office.

Congressional leaders in both parties, eager to avoid financial disaster, endorsed the bill.

McCarthy referred to the legislation in historic terms, calling it the biggest spending cut ever enacted by Congress. Senate Majority Leader Chuck Schumer (D-N.Y.) said, “We’ve saved the country from the scourge of default,” after the bill passed the Senate on June 1.

House Minority Leader Hakeem Jeffries (D-N.Y.) and Senate Minority Leader Mitch McConnell (R-Ky.) both supported the bill.

Biden vs. McCarthy

The president’s signature ends a monthslong cold war with McCarthy over terms for raising the nation’s $31.4 trillion debt ceiling.

The Financial Responsibility Act suspends the debt ceiling until Jan. 1, 2025, cuts non-defense discretionary spending slightly in 2024, and limits discretionary spending growth to 1 percent in 2025.

The agreement also contains permitting reforms for oil and gas drilling, changes to work requirements for some social welfare programs, and clawbacks of $20 billion in IRS funding and $30 billion in unspent COVID-19 relief funds, among other provisions.

President Joe Biden hosts debt limit talks with House Speaker Kevin McCarthy (R-Calif.) and other congressional leaders in the Oval Office at the White House on May 9, 2023. (Kevin Lamarque/Reuters)

In the absence of congressional action to allow additional borrowing, the United States would have lacked the ready cash to pay all of its bills on June 5, according to Treasury Secretary Janet Yellen.

Yellen announced in January that the country was in danger of reaching its limit.

McCarthy then said Congress would not increase the limit without an agreement from the White House to cut spending. Biden said he would not negotiate over lifting the limit because that would put the full faith and credit of the United States at risk.

The impasse was broken in late April when the House passed the Limit, Save, Grow Act, authorizing a $1.5 trillion increase in borrowing along with spending cuts and other measures favored by Republicans.

Biden then agreed to negotiate with McCarthy, resulting in the Fiscal Responsibility Act.


A vocal minority of lawmakers in both parties opposed the bill.

Some Republicans believed the agreement conceded too much to Democrats. Rep. Chip Roy (R-Texas) nearly blocked the bill in committee, but it cleared by a single vote.

Some Democrats opposed the agreement because it cuts discretionary spending and changes work requirements for the Supplemental Nutrition Assistance Program (SNAP). They said those provisions would hurt working Americans and those in need.

​​House Rules Committee member Rep. Chip Roy (R-Texas) speaks at the Capitol on Jan. 30. (Win McNamee/Getty Images)

A group of Senate Republicans led by Lindsey Graham (R-N.C.) and Susan Collins (R-Maine) initially opposed the bill due to concerns about the level of defense spending. They were brought on board by assurances from Schumer and McConnell that emergency defense appropriations could be added later if needed.

The bill passed the House by a vote of 314 to 117 on May 31. Forty-six Democrats and 71 Republicans voted no.

The Senate passed the measure 63 to 36 the next day. Four Democrats, one Independent, and 41 Republicans voted no.

Mixed Reactions

Outside the Capitol, some observers applauded the bipartisan effort while others echoed the complaints of congressional dissenters.

“This kind of compromise is exactly how divided government should work,” Kelly Veney Darnell, interim CEO of the Bipartisan Policy Center, said in a June 2 statement.

EJ Antoni, a research fellow at The Heritage Institute, said “conservatives have little to celebrate with this deal, and much about which to complain.” According to Antoni, the bill doesn’t actually cut spending. He called it “left-wing legislation” in a statement published June 1.

Navin Nayak, counselor at the Center for American Progress, endorsed the legislation unenthusiastically, saying it was imperfect but necessary in a May 31 statement. Nayak said the Mountain Valley Pipeline, green-lighted by the bill, puts the safety of thousands at risk and the added work requirements will increase hunger in America.

Congress must now work the provisions of the Fiscal Responsibility Act into a federal budget and the dozen appropriations bills required to fund the government in the coming year.

The 2024 fiscal year begins on Oct. 1.

Tyler Durden Sat, 06/03/2023 - 15:30

Read More

Continue Reading