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The Dollar: Was it the ECB and BOJ or the Bounce in Equities?

After extending its recent gains, the dollar fell sharply at the end of last week. Many factors could have sparked the pullback, including the stronger…

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After extending its recent gains, the dollar fell sharply at the end of last week. Many factors could have sparked the pullback, including the stronger expressions of concern by Japanese officials with an implicit threat of intervention and perceptions of an increased likelihood that the ECB will deliver another 75 bp hike next month. We had anticipated that the dollar bulls would turn cautious after the ECB meeting and before the September 13 US CPI report. 

Headline CPI may have fallen last month for the first time since May 2020. It follows a flat reading in July and could reinforce expectations that US inflation has peaked. This may see some participants reconsider a 75 bp hike at the September 20-21 FOMC meeting. However, given that price pressures remain elevated, the core may even tick higher, the strength of the labor market and the messaging for Chair Powell point to another large move. With the Fed standing accused of being late to recognize the persistence of inflation, officials appear to want to drive home their commitment to bring inflation down, which means erring on the side of another big hike.  

Still, broadly speaking, the dollar's momentum indicators were stretched, and a correction was arguably overdue. We are not convinced that it was triggered by the ECB's 75 bp rate hike, as many suggest. First, it would seem more likely that the euro's rally would have taken place on Thursday if that were the case. Second, while the euro rallied before the weekend, it was among the weakest of the major currencies, losing ground against sterling, the Swiss franc, and the Antipodeans. Nor are we persuaded that there has been a change in the underlying drivers and dynamics.  

The yen bounced back after stopping a whisker away from JPY145.00. Japanese officials threatened unspecified action, but most participants remain dubious. The odds that unilateral intervention that does not signal a policy change would be successful are slim. The 10-year Treasury rose for the sixth consecutive week. Over this run, the yield has risen from 2.65% to 3.35%. The US 2-year note yield rose to a new multiyear high (~3.57%) at the end of last week. Speculators in the currency futures market had covered short yen exposure from mid-May to mid-August and have grown since then. However, at about 58.2k contracts, it is a little more than half the April peak (each contract is forJPY12.5 mln or ~$87.5k).  

We suspect the currency move reflected a near-term change in risk appetites. The S&P 500 and NASDAQ bottomed after the US returned from the Labor Day holiday on September 6. The low was around the (61.8%) retracement objective of the June-August bear market rally. The greenback topped the day against most of the major currencies. The dollar's setback ahead of the weekend coincided with the gap higher opening of the S&P and NASDAQ. The strong close suggests there may be follow-through next week. At the same time, the dollar could remain offered ahead of the CPI report.  

The momentum indicators on most of the currency pairs we look at below give the dollar room to correct lower. However, past the US CPI data, real sector data may support the idea that consumption (retail sales) and production (industrial output) point to an expanding economy. As a result, the dollar may find better traction ahead of the FOMC meeting and the Italian election (September 25).  

Technical analysis can help identify and quantify the risks. So, let's turn to the price action.  

Dollar Index: If the dollar is correcting lower, what is the move that is being corrected? Our working hypothesis is that it is the move that began from around 104.65 (Aug 10-11).   It peaked at slightly below 110.80 in the middle of last week. The three-day decline, the longest in a month, in the second half of last week met the (38.2%) retracement objective near 108.45 (the pre-weekend low was almost 108.35). The next retracement level (50%) is about 107.70. Provided the 107.00 (61.8%) area holds, the plain vanilla correction story appears validated, and the Dollar Index can return to the highs. However, the momentum indicators warn that the corrective forces may have just begun. The MACD is turning down from below the highs seen in mid-July, suggesting a possible bearish divergence. The Slow Stochastic is also turning down but from over-extended levels.  

Euro: After recording new 20-year lows (~$0.9865) in the middle of last week, the euro reached almost $1.0115 ahead of the weekend before consolidating in around $1.0050 for most of the North American session. This met the (50%) retracement of the euro's losses since the August 10 high, a little shy of $1.0370. The next retracement (61.8%) is $1.0175.  If the euro has forged a double bottom, it could project back to the August 10 high. The MACD has turned up from the middle of its range, never taking out the low from mid-July, when the euro initially dipped below parity. The Slow Stochastic has been gently rising since the third week in August. Ahead of the weekend, the euro settled above its 20-day moving average (~$1.0015) for the first time since August 14. Indeed, the five-day moving average looks poised to cross back above the 20-day for the first time in three weeks.  

Japanese Yen: The dollar approached JPY145 for the first time in nearly a quarter of a century in the middle of last week. It spurred stronger warnings from Japanese officials, who expressed more concern about the volatility than the level or the direction. Three-month implied vol rose from a little below 10% in mid-August to over 13% last Wednesday. Recall it peaked in mid-June at 14%. On the other hand, three-month actual volatility (historic) is about 12.1%, a little above the June peak and the highest since the pandemic first struck. While intervention may seem tempting, it is fraught with risks. Perhaps, the only thing worse than no intervention would be failed intervention. Amid the broad dollar pullback ahead of the weekend, the greenback fell to about JPY141.50 and closed above JPY142.60. The MACD looks poised to turn lower from levels not seen since April. The Slow Stochastic has already turned down but only barely and is still over-extended. If JPY145 is the top of the near-term range, then JPY140 may be at the lower end.  

British Pound:  Sterling briefly traded at its lowest level since 1985 last week, near $1.1405. It closed above $1.15 that day, seeming to reject the lows. The bullish hammer candlestick pattern pointed to further gains, and sterling reached almost $1.1650 before the weekend. The MACD and the Slow Stochastic are curling up. The last leg lower began with an outside down day on August 26, when it traded on both sides of the previous day's range and settled below the low. It peaked at $1.16. Before the weekend, sterling met the (50%) retracement of that leg lower. The next retracement (61.8%) is around $1.1710, and the 20-day moving average is a little higher, slightly above $1.1730. The (38.2%) retracement of the large move from the August 10 high (~$1.2275) comes in around $1.1740. Even though sterling has traded below $1.15 every session this month, it has not closed below it once. 

Canadian Dollar:  The disappointing Canadian jobs data was unable to offset the positive impulses from risk-on of rising stocks, and the Canadian dollar set new highs for the month ahead of the weekend. The greenback pushed above CAD1.32 in the middle of the week and reversed lower. It sunk nearly CAD1.2980 at the end of the week. The momentum indicators have recently turned lower. Canada lost 113.5k jobs in June-August, and almost 85% were full-time posts. The increase in the participation rate to 64.8% does not account for the jump in the unemployment rate to 5.4% from 4.9%. The data reinforces our sense that the outperformance of the Canadian economy is behind it. Not coincidentally, the S&P 500 rose for the past three sessions, and its roughly 3.4% gain was the best since June. The US dollar closed below the near-term trend line drawn off the mid- and late August lows (~CAD1.3080 on September 12). The US dollar approached the halfway mark of the rally since August 10 (~CAD1.2730), which is found near CAD1.2970. The next retracement (61.8%) is around CAD1.2910, where the US dollar bottomed in late August.  

Australian Dollar: The Aussie met a minimum technical objective in the middle of last week at $0.6700. It recovered smartly before the weekend to peak near $0.6875. The 20-day moving average is there too. The (38.2%) retracement objective of the leg lower that began from the roughly $0.7135 high on August 11 came in near $0.6865. The next retracement target (68.2%) is found about $0.6920. The MACD is turning up from the lower part of its range, while the Slow Stochastic has turned higher but is still over-extended. Australia reports August jobs data on September 15. Australia lost almost 87k full-time jobs in July. The re-opening of the border has seen a surge in migration and could be distorting the labor market. Part-time positions rose by 46k. Wage pressure remains modest, with a 0.7% increase in Q2 and a 2.6% year-over-year increase. After four half-point increases, the market sees only about a 1-in-10 chance of a fifth one, suspecting the central bank will dial back to a quarter-point move at the next meeting on October 4.  

Mexican Peso: For about a month, the US dollar has been chopping against the Mexican peso between roughly MXN19.82 and MXN20.26. It rose to almost MXN20.19 on September 7 and was turned back and fell to about MXN19.87 at the end of the week. The MACD is flat this month. The Slow Stochastic has turned down from the upper half of its range. Mexico has a light economic calendar in the week ahead, leaving the peso at the mercy of external developments and the broader risk environment. Net-net, the peso was virtually flat last week, as was the JP Morgan Emerging Market Currency Index. Brazil was among the earliest and most aggressive in the rate hikes, and it may be among the first to be done. Inflation (IPCA measure) has trended since peaking near 12.1% in April. Before the weekend, it reported that CPI stood at 8.7% in August. The dollar has traded choppily against the Brazilian real. Net-net, it has been nearly flat over the past four weeks.  

Chinese Yuan:  The US dollar rose for the fourth consecutive week against the Chinese yuan. The PBOC has been setting the dollar's reference rate below where the market (Bloomberg, median forecast) projects it. This is aimed at slowing the dollar's rise/yuan's decline as the dollar can only rise 2% from the fix, though it rarely moves half of that. The PBOC also cut the required reserves on foreign currency deposits by 200 bp, twice as much reduction earlier this year. The dollar gapped higher on Monday, as it has done the previous two Mondays. The greenback's retreat before the weekend saw a new low for the week, but the open gap was not closed. It extends to about CNY6.9095. With inflation decelerating and PPI now below CPI, officials ostensibly have scope to cut the benchmark one-year medium-term lending rate in the coming days. But it shaved 10 bp off it last month, making a cut now seem unlikely. August retail sales and industrial production may show the economy stabilizing at a lower level of activity while property investment continues to fall.  



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First-ever social responsibility report of Chinese enterprises in Saudi Arabia incorporates BGI Genomics projects

On December 1, 2022, the Social Responsibility Report of Chinese Companies in Saudi Arabia was officially launched, which is the first such report released…

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On December 1, 2022, the Social Responsibility Report of Chinese Companies in Saudi Arabia was officially launched, which is the first such report released by the Contact Office of Chinese Companies in Saudi Arabia. BGI Genomics projects in the Kingdom have been incorporated into this report.

Credit: BGI Genomics

On December 1, 2022, the Social Responsibility Report of Chinese Companies in Saudi Arabia was officially launched, which is the first such report released by the Contact Office of Chinese Companies in Saudi Arabia. BGI Genomics projects in the Kingdom have been incorporated into this report.

This event was attended by around 150 representatives of Chinese and Saudi enterprises, Saudi government officials, experts in the field of sustainable development, CCTV, Xinhua News Agency, Saudi Press Agency, Arab News and other media professionals. This Report presents the key projects and best practices of Chinese enterprises to fulfil their social and environmental responsibilities while advancing the Kingdom’s industry development.

Chen Weiqing, the Chinese ambassador to Saudi Arabia, said in his video speech that the Report highlighted Chinese enterprises’ best practices in serving the local community, safe production, green and low-carbon development and promoting local employment. The release of the Report helps Chinese enterprises in the Kingdom to strengthen communication with the local community, laying a stronger foundation for future collaboration.

Epidemic control and accelerating post-COVID 19 recovery

BGI Genomics has been fulfilling its corporate social responsibilities and worked with the Saudi people to fight the COVID-19 epidemic.

In March 2020, Saudi Arabia was hit by the pandemic. The Saudi government decided to adopt BGI Genomics’ Huo-Yan laboratory solution in April 2020. At the forefront of the fight against the epidemic, the company has built six laboratories in Riyadh, Makkah, Madinah, Dammam and Asir within two months, with a total area of nearly 5,000 square meters and a maximum daily testing throughput of 50,000 samples.

By the end of December 2021, BGI Genomics had sent 14 groups of experts, engineers and laboratory technicians to Saudi Arabia, amounting to over 700 people, and tested more than 16 million virus samples, accounting for more than half of the tests conducted during this period. The company has successfully trained over 400 qualified Saudi technicians, and all laboratories have been transferred to local authorities for the operation.

In the post-epidemic era, the Huo-Yan laboratories can continue to make positive contributions to public health, working with local medical institutions and the public health system to make breakthroughs in areas such as reproductive health, tumour prevention and control, and prevention.

Enhancing genomic technology localization and testing capabilities

In July 2022, BGI Almanahil and Tibbiyah Holdings, a wholly owned subsidiary of the Saudi Faisaliah Group, announced a joint venture (JV) to establish an integrated, trans-omics medical testing company specializing in genetic testing.

This JV company will help improve Saudi Arabia’s local clinical and public health testing and manufacturing capabilities, promote the localization of strategic products that have long been imported, contribute to the implementation and realization of the Kingdom’s Vision 2030 roadmap, and significantly enhance local capacity for third-party medical testing services as well as local production of critical medical supplies.

BGI Genomics attaches great importance to fulfilling its corporate social responsibility and has released its social responsibility report for four consecutive years since 2017. Since its establishment, the company has always been guided by the goal of enhancing health outcomes for all, relying on its autonomous multi-omics platform to accelerate technological innovation, promote reproductive health, strengthen tumour prevention and control, and accurately cure infections, and is committed to becoming a global leader in precision medicine and covering the entire public health industry chain.

The company will continue to work together with all stakeholders to contribute to the Kingdom’s Vision 2030 and the Belt and Road Initiative and looks forward to growing with our partners.

 

About BGI Genomics

BGI Genomics, headquartered in Shenzhen China, is the world’s leading integrated solutions provider of precision medicine. Our services cover over 100 countries and regions, involving more than 2,300 medical institutions. In July 2017, as a subsidiary of BGI Group, BGI Genomics (300676.SZ) was officially listed on the Shenzhen Stock Exchange.

 


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Alcohol deaths in the UK rose to record level in 2021

Nearly 10,000 people died from alcohol in 2021.

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Deaths from alcohol in the UK have risen to their highest level since records began in 2001, according to the latest data from the Office for National Statistics (ONS). In 2021, 9,641 people (14.8 per 100,000) died as a result of alcohol: a rise of 7.4% from 2020.

The leading cause of alcohol-specific deaths (deaths caused by diseases known to be a direct consequence of alcohol) continues to be liver disease. More than three-quarters (78%) of all alcohol deaths in 2021 were attributed to this cause. The remainder of the deaths were due to “mental and behavioural disorders because of the use of alcohol” and “accidental poisoning by, and exposure to, alcohol”.

Although there is no such thing as a safe level of drinking, and many people would feel the health benefits of reducing consumption, most of the risks of developing health problems and dying are skewed towards those who drink the most.

Between 2012 and 2019 alcohol-specific deaths remained relatively stable. It is no coincidence that deaths rose sharply during the first two years of the pandemic: those that were already drinking at harmful levels increased their consumption further during this period. Although liver disease can take years to develop, this process is accelerated when those drinking at harmful levels increase their consumption further.

Other statistics show that unplanned alcohol-related hospital admissions decreased during this period, which may have meant missed opportunities to provide help for those people experiencing problems with alcohol.

Looking beyond the headline figures, there are important differences in various groups within the population. Alcohol-specific deaths were not spread equally. For example, men were twice as likely to die as women. In 2021, 20.1 men per 100,000 died compared with 9.9 women.

Where you live in the UK matters, too, as deaths in Scotland are the highest, followed by Northern Ireland, Wales then and England – although the gap between the nations seems to be narrowing.

In England, deaths are highest in the north-east of England (20.4 per 100,000), which is twice as high as those in London (10.2 per 100,000). Although rates have increased in all regions; for example, there was a rise of 38% in south-west England from 2019 to 2021. This reflects what is already known about the relationship between deprivation and harm from alcohol. There is a two to fivefold higher risk of dying among lower-income groups compared with those from the higher-income groups.

Reflecting the growing trend of young people drinking less than older age groups, it is those aged 50 to 64 that account for most deaths due to liver disease. In 2021, for example, 39 people aged 25 to 29 died from alcohol-related liver disease, compared with 1,326 of those aged 50 to 59. This is related to a greater number of years of drinking but is also a general reflection that when older adults were younger, they tended to drink more than younger people do now.

Numbers of alcohol-specific deaths, by five-year age group and individual cause. Office for National Statistics – Alcohol-specific deaths in the UK: registered in 2021, National Records of Scotland and the Northern Ireland Statistics and Research Agency

Addressing harms

So what can be done to begin to address alcohol harms? It has been estimated that almost a quarter of drinkers in the UK drink above the recommended low-risk drinking guidelines. So this is a health and social issue that requires a national response. Low-impact initiatives, such as education and awareness raising, may not be enough.

The costs of alcohol to society are significant. A recent review estimated this to be £27 billion annually, with only half of this offset by tax revenue on alcohol products.

Timely access to specialist treatment can help to reduce the health risks associated with alcohol. Unfortunately, there have been significant cuts to funding for this type of intervention.

Around 80% of people classed as dependent on alcohol in England are not currently getting treatment support. While there has recently been extra funding for drug services to try and correct historic cuts, this has not been extended to alcohol. Reversing this by investing in services could help to reduce the rising number dying prematurely from alcohol.

A new strategy is long overdue

The last government strategy for alcohol was published in 2012, so there is a pressing need for a new one. This must address all the ways that the harms from alcohol can be tackled, from marketing and pricing to specialist treatment and recovery services.

A group, led by Liverpool MP Dan Carden, with cross-party support, recently called on the government to initiate an independent review of alcohol harm, along the lines of the review led by Dame Carol Black, which had a significant influence on drug policy and treatment funding.

Without such a review and strategy based on it, the harms caused by alcohol including premature death will continue to rise year after year. So much has changed since the last alcohol strategy in 2012 not least the current cost of living crisis. The outlook for investment in public health looks bleak, added to which this government doesn’t seem willing to curtail the efforts of the alcohol industry in marketing and protecting its products.

Harry Sumnall receives and has received funding from grant awarding bodies for alcohol and other drug research. He sits on grant-awarding funding panels, and is an unpaid scientific adviser to the MIND Foundation.

Ian Hamilton does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.

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International

Alcohol deaths in the UK rose to record levels in 2021

Nearly 10,000 people died from alcohol in 2021.

Published

on

By

There has been a record rise in deaths from alcohol in the UK, according to the latest data from the Office for National Statistics (ONS). In 2021, 9,641 people died as a result of alcohol: a rise of 7.4% from 2020.

The leading cause of alcohol-specific deaths (deaths caused by diseases known to be a direct consequence of alcohol) continues to be liver disease. More than three-quarters (78%) of all alcohol deaths in 2021 were attributed to this cause. The remainder of the deaths were due to “mental and behavioural disorders because of the use of alcohol” and “accidental poisoning by, and exposure to, alcohol”.

Although there is no such thing as a safe level of drinking, and many people would feel the health benefits of reducing consumption, most of the risks of developing health problems and dying are skewed towards those who drink the most.

Between 2012 and 2019 alcohol-specific deaths remained relatively stable. It is no coincidence that deaths rose sharply during the first two years of the pandemic: those that were already drinking at harmful levels increased their consumption further during this period. Although liver disease can take years to develop, this process is accelerated when those drinking at harmful levels increase their consumption further.

Other statistics show that unplanned alcohol-related hospital admissions decreased during this period, which may have meant missed opportunities to provide help for those people experiencing problems with alcohol.

Looking beyond the headline figures, there are important differences in various groups within the population. Alcohol-specific deaths were not spread equally. For example, men were twice as likely to die as women. In 2021, 20.1 men per 100,000 died compared with 9.9 women.

Where you live in the UK matters, too, as deaths in Scotland are the highest, followed by Northern Ireland, Wales then and England – although the gap between the nations seems to be narrowing.

In England, deaths are highest in the north-east of England (20.4 per 100,000), which is twice as high as those in London (10.2 per 100,000). Although rates have increased in all regions; for example, there was a rise of 38% in south-west England from 2019 to 2021. This reflects what is already known about the relationship between deprivation and harm from alcohol. There is a two to fivefold higher risk of dying among lower-income groups compared with those from the higher-income groups.

Reflecting the growing trend of young people drinking less than older age groups, it is those aged 50 to 64 that account for most deaths due to liver disease. In 2021, for example, 39 people aged 25 to 29 died from alcohol-related liver disease, compared with 1,326 of those aged 50 to 59. This is related to a greater number of years of drinking but is also a general reflection that when older adults were younger, they tended to drink more than younger people do now.

Numbers of alcohol-specific deaths, by five-year age group and individual cause. Office for National Statistics – Alcohol-specific deaths in the UK: registered in 2021, National Records of Scotland and the Northern Ireland Statistics and Research Agency

Addressing harms

So what can be done to begin to address alcohol harms? It has been estimated that almost a quarter of drinkers in the UK drink above the recommended low-risk drinking guidelines. So this is a health and social issue that requires a national response. Low-impact initiatives, such as education and awareness raising, may not be enough.

The costs of alcohol to society are significant. A recent review estimated this to be £27 billion annually, with only half of this offset by tax revenue on alcohol products.

Timely access to specialist treatment can help to reduce the health risks associated with alcohol. Unfortunately, there have been significant cuts to funding for this type of intervention.

Around 80% of people classed as dependent on alcohol in England are not currently getting treatment support. While there has recently been extra funding for drug services to try and correct historic cuts, this has not been extended to alcohol. Reversing this by investing in services could help to reduce the rising number dying prematurely from alcohol.

A new strategy is long overdue

The last government strategy for alcohol was published in 2012, so there is a pressing need for a new one. This must address all the ways that the harms from alcohol can be tackled, from marketing and pricing to specialist treatment and recovery services.

A group, led by Liverpool MP Dan Carden, with cross-party support, recently called on the government to initiate an independent review of alcohol harm, along the lines of the review led by Dame Carol Black, which had a significant influence on drug policy and treatment funding.

Without such a review and strategy based on it, the harms caused by alcohol including premature death will continue to rise year after year. So much has changed since the last alcohol strategy in 2012 not least the current cost of living crisis. The outlook for investment in public health looks bleak, added to which this government doesn’t seem willing to curtail the efforts of the alcohol industry in marketing and protecting its products.

Harry Sumnall receives and has received funding from grant awarding bodies for alcohol and other drug research. He sits on grant-awarding funding panels, and is an unpaid scientific adviser to the MIND Foundation.

Ian Hamilton does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.

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