August 2022

ICE Futures Singapore Monthly Report

Gain a deeper understanding of emerging market trends, risks and opportunities with bitcoin, FX, equity and energy markets analysis. The Research Team at Traddictiv shares their views in this monthly report, including statistics for active or passive traders and hedgers.

MACRO COMMENTARY

Bitcoin reached $25,000 in the first half of August and turned lower the remainder of the month and breached $20,000. The digital asset market continued to follow other risk oriented asset classes such as equities lower. The Ethereum “Merge” is expected to occur, which involves a switch from the “Proof of Work” consensus mechanism to “Proof of Stake”, and could have some influence over digital asset market performance in September. 

  • The United States Federal Reserve has released their “Final Guidance” which provides non-financial institutions or firms described as “institutions offering new types of financial products or with novel charters” a pathway to be granted “master accounts” with the Federal Reserve, which allows access to the banking payment systems. Two such firms would include Custodia Bank and Kraken Bank.
  • Latin American investment bank, BTG Pactual has launched a cryptocurrency exchange in Brazil supporting the trading of bitcoin (BTC), ether (ETH), cardano (ADA), polkadot (DOT), and solana (SOL). Clients will not be able to initially deposit or withdraw their cryptocurrencies on the platform, and will be accessible to their full range of clientele.
  • BlackRock will provide access to digital assets, including bitcoin, for its institutional investors in a partnership with Coinbase. The Aladdin investment platform used by BlockRock’s clients will be linked to Coinbase who will provide digital asset prime brokerage services such as digital asset custody.

The U.S. Dollar Index® (USDX) closed the month at 108.67 with a gain of 2.78%, for a third positive consecutive monthly close after reaching a fresh two-decade high of 109.45.

  • Nonfarm Payrolls data released on 5th August reported that 528,000 new jobs were created during July, more than doubling expectations of 250,000 and a considerable increase on the prior month's revised gain of 293,000 (revised downwards from 372,000). The highest increase in new jobs seen since February this year. The USDX closed the day at 106.49, up 0.83% on the day.
  • Consumer Price Index (CPI) data for all items released on 10th August slowed more than expected as inflation data 12-month ending July was at 8.5% dropping from 9.1% the prior month as energy prices fell. Core Inflation (all items less food and energy) recorded a 5.9% increase over the last 12 months, equaling the data released the prior month to remain at a six-month low. The USDX closed the day at 105.08 with a loss of 1.07% as the markets factored in the potential for less aggressive rate rises in the future from the Fed.
  • FOMC minutes released on 17th August reviewed the pace in which interest rates would likely rise through looking at the effects the current monetary policy tightening is having on curbing inflation. There is also an appreciate of the wider impact rate rises will have on the economy as some Fed participants noted that some interest rate sensitive sectors had already began to feel the effects of the rate rises. The Committee is still committed to bringing inflation in line with its 2% objective in the longer term. The USDX closed marginally up for the day at 106.49 with a gain of 0.11%.

The South Korean Won closed August at 1341.62 KRW against the U.S. Dollar after trading to a high of 1353.00, the weakest the South Korean Won had traded against the U.S. Dollar since April 2009 and losing 2.97% of its value against the U.S. Dollar.

  • July S&P Global Manufacturing PMI data released on 1st August posted a further decline recording a drop to 49.8 against expectations of 50.8 and down from June data released at 51.3.
  • Consumer Price Index (CPI) all items 12-month ending July released on 1st August showed inflation had risen for a sixth consecutive month to reach 6.3% recording a new 24-year high. The data released matched market expectations and exceeded 12-month ending June which recorded a 6.0% increase.
  • Industrial Production data published on 30th August for 12-month ending July recorded a slight increase as numbers printed positive at 1.5% against the previous months data at 1.3% (revised from 1.4%) although woefully below market expectations of 2.9%. Monthly data published for month ending July showed a decline of 1.3% against expectations of -0.1%, a significant fall against June data that was revised downwardly to 1.7% (from 1.9%).
The Singapore Dollar closed the month weaker against the U.S Dollar at $1.3970 compared to Julys close after the U.S. Dollar rose by 1.20% against the Singapore Dollar.

  • PMI Manufacturing data released on 2nd August showed a slight decline based on the prior month as figures published 50.1 against 50.3 reported in June. This data was as expected and still falls within expansion territory albeit slight.
  • Consumer Price Index (CPI) data released on 23rd August showed inflation rose as CPI - all items 12-month ending July recorded an increase of 7.0% to print slightly above market expectations of 6.9% and 12-month ending June at 6.7%. The release was the highest increase seen since June 2008. The rise came from an increase in the costs of food, clothing and housing driven by higher fuel and utility costs.
  • Industrial Production data released on 26th August showed a continued slowdown in manufacturing output for the period 12-month ending July as manufacturing rose by 0.6%, significantly falling short of market expectations at 5.3% and below June’s upwardly revised 12-month data at 2.6% gain. Whilst this number still shows growth, the pace of growth has dramatically fallen since May 2022. The cool down came from a drop in electronics output (-6.3% vs 2.3% June), alongside the continued decline in biomedical manufacturing.(-10.8% from -9.5% June). July month on month data shrank by 2.3% showing a second straight decline following output that shrank by 8.0% (downwardly revised from 8.5%) in June.
The Chinese Yuan Renminbi closed August at 6.9035 CNY against the U.S. Dollar after losing 2.28% of its value during August trading marking a sixth consecutive losing month as the U.S. Dollar bulls gained momentum.

  • Consumer Price Index (CPI) data released on 10th August showed inflation continued to rise with data released for 12-month ending July at 2.7% an increase from 2.5% reported for 12-month ending June. This figure came out just below expectations of 2.9%.
  • Retail Sales figures out on 15th August for 12-month ending July showed a drop in sales from 3.1% recorded for 12-month ending June to 2.7% for 12-month ending July which was significantly below market expectations of 5.0%.
  • The NBS Manufacturing PMI data released on 31st August showed a slight improvement as manufacturing output in August was at 49.4 against 49.0 reported for July, beating market expectations of 49.2. Non-Manufacturing PMI data for August showed a further decline based on the prior months data as figures released 52.6 for August against 53.8 reported for July although exceeded expectations of 52.2.

The ICE Asia Tech 30 Index (ATI) set a new low on 24th August and continued to trade a range between 3,200 and 3,400. Most of the major equity indices including the S&P 500 and the Nasdaq Composite closed the month lower, while the ATI component stock performance was mixed.

  • Chinese component stocks performed mildly positively with the exception of Kuaishou Technology which ended the month lower by 12.9%, Xiaomi Corp down 6.3%, and NetEase Inc. down by 2.0%.
  • Taiwan stocks components were slightly higher except for Hon Hai Precision ending again flat for the month. Taiwan Semiconductor Manufacturing was down by 0.8% and this month MediaTek Inc was lower by 2.3%.
  • Most of the Japanese index components fell in August with the exception of Canon Inc. which gained 6.2% and Keyence Corporation 0.85. The weakest performance was from Z Holdings, which fell this month 11.5%, Fujitsu Limited down by 10.5%, and Fujifilm Holdings by 5.9%.
  • Korean component stocks all fell except for Samsung SDI which rose by 5.1%. Naver Corp fell the most by 7.3%, Samsung Electronic and SK Hynix both fell 2.8%, and Kakao was down 1.9%.

The price of Brent crude oil fell from the end-July high around $104.00, and held a $10-wide range between $90.00 to $100.00 during the middle of the month. Price broke the range in the last few days of August but failed to clear $104.00 before dropping strongly to close the month at $95.64 or 5.6% lower than July.

  • The OPEC+ meeting on Monday 5th September will determine whether production will be maintained or reduced given the recent volatility in price raising concerns with producers. The expectation that OPEC could cut output to support prices is driven by the need to balance restricted supply from the conflict in Libya, against weak growth in the United States despite rising demand in Europe, as natural gas prices accelerate.
  • Uncertainty remained around the outcome of negotiations being brokered through European intermediaries, between the United States and Iran, causing price volatility throughout August. Positive news on additional concessions being considered led to increased oil supply expectations and dampened prices. Negative news had the opposite effect.

MONTHLY CHANGE
Source: Source: ICE Connect, ~30 Days

Important information: The information herein is not intended for distribution to, or use by, any person or entity in any jurisdiction or country where such distribution or use would be contrary to law or regulation.
MARKET FOCUS
SOUTH KOREAN WON - USDKRW | SWD
DAILY TREND: UP (USDKRW)
1st August trading the U.S. Dollar bulls continued to drive the pair higher and whilst it met with some resistance at the high of the day, the USDKRW closed the first day of the month up at 1307.07 with a gain of 0.32%.

The momentum to the upside continued into the following trading day as the USDKRW closed for a gain of 0.56% at 1313.93. This positive close for the U.S. Dollar represented a third straight day of gains to the detriment of the South Korean Won being the quote currency.

The U.S. Dollar bears returned as the appetite for the South Korean Won increased throughout the trading on 3rd August after the pair reached a pocket of resistance at 1312.77 - 1315.56 on a 4-hour chart. The USDKRW closed the day at 1307.80 with a loss of 0.57%.

This selling pressure continued into the 4th August and whilst the bulls fought back the USDKRW continued to fall to record a loss of 0.47% at 1302.01 to wipe out early August gains.

Trading on 5th August the bears initially retained control until the USDKRW reached a pocket of support at 1296.19 – 1291.76 (on a 4-hour chart) that coincided with the lower boundary of the Daily Bollinger Bands. The bulls were waiting and the USDKRW rallied strongly to close the day only marginally down at 1302.24 with a loss of 0.01%.

The USDKRW closed the first full week of July trading at 1302.24 down 0.05%.

8th August the bullish move continued until the pair reached resistance and dropped to cancel out earlier gains made in the trading session. After the drop, the USDKRW reached a pocket of support on a 2-hour chart sitting inside a previously identified wider area of support as the pair closed for the day. The USDKRW closed the day with a loss of 0.25% at 1298.96.

9th August, the bulls returned and the pair took a bounce from a fresh 2-hour support area at 1298.84 – 1294.39, as the demand for the U.S. Dollar was strong. The USDKRW rallied to recover all of the losses made from the prior three trading days to close at 1307.53, with a gain of 0.52%.

On 10th August, the USDKRW continued to rally during early trading until the pair reached a small area of resistance on a 2-hour chart at 1309.91 - 1312.07 where sellers were waiting. The USDKRW dropped to close the day at 1297.42 with a loss of 0.68%.

The pair closed 10th August in an area of support at 1298.84 – 1294.39 created a few days earlier and evident on a 2-hour chart. Here the bulls returned and the USDKRW rallied from the area on 11th August to close the day up at 1305.12 with a gain of 0.58%.

Fortunes reversed the following trading day and the pair dropped after retesting the Daily 20 SMA it had struggled to close above for the previous six days. The USDKRW closed at 1301.28 down 0.29%.

The USDKRW closed the week at 1301.28 with a loss of 0.07%.

15th August trading the USDKRW the bulls were firmly in control as the pair rallied and blasted through the Daily 20 SMA to close the day at 1312.19 with a gain of 0.84%, a significant weakening of the South Korean Won.

16th August the bulls drove the pair higher until the pair reached a pocket of resistance at 1312.77-1315.56 (previously tested on 10th August when the market fell heavily). The bears returned and the pair dropped to close the day 1310.47 down 0.13%.

The bulls returned on 17th August and the pair rallied to close the day up 0.34% at 1314.27. This bullish momentum picked up pace throughout the week as the demand for the U.S. Dollar took off.

The USDKRW closed trading on 18th August at 1325.73, with a gain of 0.82% after blasting through the upper boundary of the Daily Bollinger Band and just falling short of July’s high.

19th August the USDKRW continued to rally, as the demand for the U.S. Dollar remained high the pair closed the day at 1335.59, breaking the July high with a gain of 0.76%.

The USDKRW closed the week at 1335.59 with a gain of 2.64% and a fresh 13-year high.

The USDKRW continued to rally throughout 22nd August to reach a high of 1346.36 before pulling back to close at 1342.43 with a gain of 0.51%.

On 23rd August the bears returned and the USDKRW dropped to close inside the upper boundary of the Daily Bollinger Bands at 1338.71 with a loss of -0.25%.

The USDKRW closed at 1340.25 as an inside day on 24th August as the bulls and the bears both struggled to gain control. The USDKRW gained 0.06% for the day.

The bears returned on 25th August to send the pair lower. The USDKRW closed at 1333.88 with a loss of 0.47%.

On 26th August after reaching a support area on 4-hour chart at 1328.71 – 1323.53 the USDKRW rallied to close 1341.79 with a gain of 0.55%.

The USDKRW closed the week with a gain of 0.46%.

The bullish momentum continued into 29th August until the pair reached the upper boundary of the Daily Bollinger Bands and met resistance; the bears took over and drove the pair lower to recapture some of the earlier gains. The USDKRW closed the day with a gain of 0.23% at 1344.81.

The bulls fought back on 30th August and the USDKRW climbed to create a high of 1353.00, this was a fresh 13-year high. The weakest the South Korean Won had traded at against the U.S. Dollar for thirteen years.

The final day of August trading saw the bears return and the USDKRW closed at 1341.62 with a loss of 0.59% for the day.

The uptrend continued on the weekly chart and August trading re-established the uptrend on the daily.

The USDKRW closed the month at 1341.62 with a gain of 2.97% with the South Korean Won weakening for a third straight month to trade at a 13 year low (being the quote) against the U.S. Dollar.
SINGAPORE DOLLAR - USDSGD | SGD
DAILY TREND: SIDEWAYS (USDSGD)
1st August trading the USDSGD dropped as the U.S. Dollar bears drove the pair lower to reach a small pocket of support evident on a 4-hour chart at 1.3759 – 1.3742, combined with the lower boundary of the Daily Bollinger Bands. After a small bounce, the USDSGD closed at 1.3765 with a loss of 0.28%.

The U.S. Dollar bulls returned on 2nd August as this level held to propel the pair upward. The USDSGD closed the day with a gain of 0.39% at 1.3819.

The bullish momentum was short lived as the bears returned on the 3rd August when the pair reached a high of 1.3847 to recoup earlier gains and closed the day down at 1.3804 with a small loss of 0.08%.

The selling pressure continued as the bears maintained control throughout the majority of trading on 4th August and the pair retested the pocket of support that held on 1st August trading to close at 1.3757 down 0.33%.

Buyers were waiting at this area of support at 1.3759 – 1.3742 and the bulls regained control. The pair rallied on 5th August to close the day with a gain of 0.31% at 1.3802.

The USDSGD closed the first week of August trading at 1.3802 with a modest loss of 0.02% after trading sideways for the majority of the week.

8th August, in early trading the USDSGD continued to move higher until the pair reached the high of the prior trading day where sellers waited and the pair dropped to close the day down at 1.3780 with a loss of 0.23%.

This bearish move continued into the following trading day although the bulls returned and the pair struggled to gain much traction in either direction. Eventually the bears gained some ground and the USDSGD closed down at 1.3777 with a small loss of 0.05%.

The bearish momentum gathered pace on 10th August and the USDSGD dropped to break through the small pocket of support that had held throughout August trading. The USDSGD closed at 1.3686 with a loss of 0.70%, just testing the lower boundary of the Daily Bollinger Bands. A significant gain for the Singapore Dollar as the quote currency in the pair.

After a bearish start to trading on 11th August the bulls returned as the USDSGD reached a lower area of support at 1.3706 – 1.3691 created in May 2022. The pair moved upwards from this area to regain earlier losses and closed the day with a small gain of 0.06% at 1.3695.

The bullish sentiment continued into the 12th August and the USDSGD closed the day up at 1.3711 with a gain of 0.14%.

The USDSGD closed the week with a loss of 0.73% at 1.3711.

The bullish momentum continued into the following trading week with a strong performance for the U.S. Dollar against the Singapore Dollar on Monday’s trading as the pair closed with a 0.54% gain at 1.3785.

This momentum paused on Tuesdays trading as the pair could not find any clear direction and the pair pulled back as it reached the midpoint of the Daily Bollinger Bands to close the day almost where it opened and registered a small loss of 0.01% at 1.3783.

After the pause, the bulls pressed ahead and even though the upward move met some resistance, the USDSGD had a positive close at 1.3806 with a gain of 0.17%.

18th August the bulls drove the USDSGD higher as the Daily 20 EMA gave the pair some support. The pair closed at 1.3846 with a gain of 0.28%.

The momentum continued into trading on 19th August as the pair rallied to reach a high of 1.3923 and pierced the upper boundary of the Daily Bollinger Bands before closing at 1.3912 with a gain of 0.45%.

The USDSGD closed the third week of trading at 1.3912 with a gain of 1.47%.

The demand for the U.S. Dollar continued into trading on 22nd August to the detriment of the Singapore Dollar (being the quote). The USDSGD closed higher for a fourth consecutive positive close at 1.3966 with a gain of 0.39%.

23rd August the U.S. Dollar bulls continued to drive the pair higher until it reached a weekly resistance area at 1.4000 – 1.4096 where sellers were waiting. The selling pressure overwhelmed the bulls and the USDSGD dropped to close the day down 0.39% at 1.3915.

The bulls regained some ground during early trading on the 24th August before the bears returned. The USDSGD closed at 1.3932, a gain of 0.15%.

The bearish sentiment continued into trading on 25th August as the pair dropped throughout the majority of the day to close at 1.3884 with a loss of 0.35%.

The USDSGD bulls returned on 26th August as the pair dropped into a cluster of support areas ranging from 1.3866 – 1.3836 on a 2-hour chart and the pair rallied to close up 0.33% at 1.3934.

The USDSGD closed the week with a gain of 0.15%.

The bulls retuned on Monday 29th August and the USDSGD reached a high of 1.4005, to breach the upper boundary of the Daily Bollinger Bands before pulling back to close at 1.3948 with a gain of 0.10%.

The bulls came back again on 30th August trading and the pair rallied however could not reach the prior days high and closed at 1.3980 with a gain of 0.22%.

The final day of trading the pair struggled to gain momentum in either direction and the USDSGD closed the day down with a loss of 0.04% at 1.3970.

The USDSGD wsa in a sideways phase on a daily chart, as we awaited clear direction although there had been a significant move to the upside during August. The weekly uptrend remained.

The USDSGD closed the month with a gain of 1.20% at 1.3970.
UPCOMING HIGH IMPACT EVENTS
CHINESE YUAN RENMINBI - USDCNH | CNH
DAILY TREND: UP (USDCNH)
On 1st August, the U.S. Dollar bulls were in control and drove the USDCNH upwards to test the upper boundary of the Daily Bollinger Bands before pulling back slightly. The pair closed the first day of August trading with a gain of 0.45% at 6.7804.

The 2nd August the bulls and the bears struggled to gain overall control and after reaching a high at the upper boundary of the Daily Bollinger Bands weakness crept in as the sellers returned the USDCNH closed at 6.7730 with a loss of 0.09%.

3rd August trading the bears returned and the pair closed down at 6.7693 with a loss of 0.21%.

4th August the bearish momentum continued until the pair reached a pocket of support that consisted of a series of lower timeframe levels at 6.7295 – 6.7068. The U.S. Dollar bulls were waiting and the pair took a bounce to recover some of the earlier losses. The USDCNH closed at 6.7498 with a loss of 0.13% to make the third day of losses for the U.S. Dollar against the Yuan to represent Yuan strength being the quote.

5th August the bulls drove the pair higher and although this met with some resistance during the day, the USDCNH closed the day with a gain of 0.13% at 6.7598.

The USDCNH closed the first week of August trading at 6.7598 with a gain of 0.15%

On 8th August after a bullish start to the trading session weakness came in as the U.S. Dollar bears took over and drove prices lower, the USDCNH closed the day down at 6.7574 with a loss of 0.04%

The bears continued to push the pair lower during trading on 9th August and the USDCNH closed down 6.7533 with a loss of 0.05%

10th August the bearish momentum picked up pace and pair continued to trade lower as the U.S. Dollar bears were in control. The USDCNH dropped into an area of support at 6.7295 – 6.7068 that held when tested on 4th August to see the bulls return and the USDCNH stopped trading lower. The pair closed down for the day at 6.7220 with a loss of 0.47%.

11th August the bulls took control and the USDCNH rallied from the area of support tested the prior day to close up at 6.7426 with a gain of 0.29%.

The upside momentum was short lived as the bears returned on 12th August and the pair closed down 6.7307 with a loss of 0.18%.

The USDCNH closed the second week of August trading with a loss of 0.44% at 6.7307.

On 15th August, the U.S. Dollar bulls returned and the pair rallied throughout the day to reach a resistance area which combined both a daily and weekly area with a wider range of 6.8092 – 6.8462. The USDCNH closed inside the area after the largest one-day gain for August up at 6.8147 with a gain of 1.18%.

16th August the USDCNH dropped from the resistance area as the bears returned and the pair closed down at 6.7900 with a loss of 0.30%.

17th August the bulls and the bears struggled to make any gains and the USDCNH closed at 6.7900 with a loss of 0.01%.

On the 18th August, the bulls pushed through and the pair began to rally to retest the area of resistance that caused the drop when tested on 16th August. On the retest, whilst there was evidence of sellers, the drop was not as strong and the pair closed 6.7996 with a gain of 0.11%.

The USDCNH pushed higher during trading on 19 August to test the upper boundary of the resistance area to close at 6.8209 with a gain of 0.35% after sellers drove the pair down for the high of 6.8446.

The USDCNH closed the week at 6.8209, with a gain of 1.27%.

The bullish momentum continued into trading on 22nd August and the USDCNH broke through and traded above the previously tested resistance area. The pair closed at 6.8663 with a gain of 0.48%.

The USDCNH pulled back on 23rd August as the bears returned bringing selling pressure from a higher area of resistance on a daily chart with a range of 6.8687 – 6.8936 to send the pair lower. The USDCNH closed the day with a loss of 0.21% at 6.8511.

The bulls returned on 24th August and drove prices higher although could not push through the resistance area. The USDCNH closed the day with a gain of 0.38% at 6.8742 to recover losses made on the prior day.

The bears returned on 25th August and the USDCNH closed down at 6.8490 with a loss of 0.36% as the USDCNH traded in a sideways range for the third consecutive day due to overhead resistance.

On 26th August, the pair finally broke out above the highs of the past three trading days as the bulls found momentum. The USDCNH closed the day at 6.8925.with a gain of 0.62%.

The USDCNH closed the final full week of August trading with a gain of 0.85% at 6.8925.

The bullish momentum continued during trading on 29th August and the pair broke above the resistance area to reach a high of 6.9326. The USDCNH pulled back to close the day at 6.9136 with a gain of 0.38%.

On 30th August, the bulls continued to drive the pair higher but again sellers returned as the pair reached a high of 6.9290. The USDCNH dropped from the high to close at 6.9204 with a gain of 0.11%.

The bears regained control on the final day of August trading and the USDCNH closed down with a loss of 0.27% at 6.9035.

USDCNH re-established the uptrend within the daily timeframe and remained in an uptrend on a weekly chart.

The USDCNH closed the month of August at 6.9035, with a gain of 2.28%.
  • No major events listed





Source: ICE Connect, FXStreet Economic Calendar
  • No major events listed
  • Fri 9 Sep CPI (Aug)
  • Fri 16 Sep Retail Sales (Aug)
  • Tue 20 Sep PBOC Interest Rate Decision
  • Fri 30 Sep NBS–Manufacturing & Non–Manufacturing PMI (Sep)
U.S. DOLLAR INDEX® FOCUS (DAILY TREND: UP)
INDEX WEIGHTING: EUR 57.6% | JPY 13.6% | GBP 11.9% | CAD 9.1% | SEK 4.2% | CHF 3.6%

The U.S. Dollar Index ® started August trading with the bears in control exerting downward pressure after the bearish closes observed during the prior three trading days. The U.S. Dollar bulls were not enough to reverse early losses after better than expected ISM Manufacturing PMI data for July was released. Data published showed manufacturing output remained in growth territory but the slowdown in output continued. The data released for July came out at 52.8, above market expectations of 52.0 although slightly below July’s release of 53.0. The U.S. Dollar Index ® closed the day just below the lower boundary of the Daily Bollinger Bands at 105.34 with a loss of 0.37%.

The U.S. Dollar Index ® continued to fall during early trading on 2nd August with the bears in control until the U.S. Dollar Index ® dropped to a low of 104.92 and reached an area of support on a daily chart. The area of support was just below the lower Daily Bollinger Bands at 105.06 – 104.45 with a lower timeframe 4-hour level nested within at 105.06 – 104.83. The bulls were waiting and the U.S. Dollar Index ® rallied from this area as money flowed into the safe haven to close the day with a gain of 0.81% at 106.10.

On 3rd August during early trading the market edged sideways as economic data was due to be released. Positive ISM Services PMI released early morning for July showed the service sector economic activity registered a reading of 56.7. This exceeded market expectations of 53.5 and above the prior month’s data of 55.3.to show consistent growth in the service sector, which according to data published had expanded for 26 consecutive months. On this news, the market began to lift and the U.S. Dollar Index ® continued to rally throughout much of the U.S. trading session. The market met resistance when the U.S. Dollar Index ® reached a high of 106.70 and the bears returned. The U.S. Dollar Index ® pulled back towards the end of the trading day to close the day at 106.38 with a gain of 0.11%.

The bearish momentum continued into the following trading day when the U.S. Dollar Index ® dropped back down below the midpoint of the Daily Bollinger Bands as concerns of a looming recession across Europe grew. Also on the 4th August, Loretta Mester from the Cleveland Federal Reserve Bank reiterated at an event that she would like to see inflation coming back down towards the Fed’s target range before policymakers could consider the easing of the Fed’s monetary policy tightening.

Nonfarm Payroll data for July released on 5th August with 528,000 new jobs created during July, more than doubling market expectations of 250,000 jobs and significantly above the downward revised figure of 293,000 published for June. The unemployment figures published better than expected results with the unemployment rate at 3.5%, against expectations of 3.6% and back to pre-pandemic levels. Wage growth also increased as average hourly earnings went up 0.5% for July and a gain of 5.2% compared to a year ago and higher than estimates. The data published pointed towards a strong labour market even though there are mixed messages about the future economy. The U.S. Dollar Index ® rallied on this news throughout the day and after testing the midpoint of the Daily Bollinger Bands (20 SMA) it met resistance and pulled back slightly towards the end of the trading session. The market closed the day with a gain of 0.83% at 106.49.

The U.S. Dollar Index ® closed the first full week of August trading with a gain of 0.72% at 106.49 to recover the losses made during the final week of July trading.

8th August the U.S. Dollar bulls returned during early trading and after the market retraced towards the prior trading day high and the Daily 20 SMA weakness came in and the U.S. Dollar Index ® dropped.to close the day down with a loss of 0.16% at 106.32.

9th August after the bears dominated early trading the U.S. Dollar Index ® reversed during the U.S. session as the bulls returned and the market rallied to recover earlier losses. The U.S. Dollar Index ® closed the day with a modest gain of 0.01% at 106.25.

10th August trading the U.S. Dollar bulls struggled to maintain control and as the U.S. Dollar Index ® reached a high of 106.29, the bears returned and the market dropped which was exacerbated by cooler than expected inflation data.

The latest inflation figures released during the day showed the pace of inflation slowed as Consumer Price Index (CPI) data for all items 12-month ending July announced prices rose by 8.5% falling from 9.1% the prior month, which was the largest annual increase since November 1981. The Core inflation rate, which represents all items less food and energy, showed it had levelled off at 5.9% over the last 12- month period, equaling the data released in June and below expectations of 6.1% to remain at a six-month low. One of the contributing factors to the drop has been the decline in the wholesale energy prices such as Crude Oil.

After a reaching a low of the day at 104.51 the U.S. Dollar Index ® found buyers within the daily area of support at 105.06 – 104.45 and the market began to rise towards the close. The U.S. Dollar Index ® closed the day down at 105.08 with a loss of 1.07% on fears of a less aggressive rate hike cycle by the Fed compared to that previously anticipated.

As inflation remains one of the key priorities, to help gauge future inflation expectations ICE Benchmark Administration has launched the ICE U.S. Dollar Information Expectation Index Family. A useful tool to help answer some of the key questions that will affect how the monetary policy will unfold within the coming quarters

11th August trading during the European session the buyers were out in force and the U.S. Dollar Index ® continued to rise although still was trading within the area of support. This early bullish move was short lived as the U.S. session began and the U.S. Dollar bears returned. As the session drew to a close the bulls fought back although there was little time left to make an impression and the U.S. Dollar Index ® closed the day at 104.99 with a loss of 0.11%.

12th August the bulls returned and the U.S. Dollar Index ® began to rise from the support area. Michigan Consumer Sentiment Index information came out during the day with some welcomed news as data published above expected figures at 55.1 against expectations of 52.2 and July data at 51.5. The U.S. Dollar Index ® closed the day at 105.51 with a gain of 0.47%.

Even after a positive day to end the week, the U.S. Dollar Index ® closed the week with an overall loss of 0.92% at 105.51.

Friday’s bullish move extended further on 15th August as the U.S. Dollar Index ® continued to rally throughout the trading day as the market blasted through the Daily 20 SMA which is had struggled to close above during early August trading. The U.S. Dollar Index ® closed the day with a gain of 0.87% at 106.43.

On 16th August after a positive start to early trading the U.S. Dollar Index ® reached a high of 106.84 where sellers returned. The U.S. Dollar Index ® struggled to break the highs of the month so far (106.81) and that of the 28th July (106.85) which combined had created a resistance level. The U.S. Dollar Index ® pulled back for the remainder of the day to close at 106.39 with a modest gain of 0.02%.

17th August early trading was bearish after Retail Sales data published showed sales were flat with a 0% change in sales month on month. This came in below market expectations of 0.1% and the previous increase in sales, revised downwards from 1.0% to 0.8%. The U.S. Dollar Index ® dropped initially on this news as concerns

The FOMC minutes were released on 17th August based on the Committee meeting that took place on 26th - 27th July. The Fed shared that officials agree that there would eventually be the need to have to pull back the pace of interest rate hikes but wanted to gauge the effects that the hikes were having toward curbing inflation. The Fed’s benchmark rate rose in July by 75 basis points for a second consecutive meeting, which marked the fastest pace of tightening since the early 1980’s. The long-term goal remains to have inflation back within the 2% target. The U.S. Dollar Index ® closed at 106.49 with a 0.11% gain.

As inflation is set to play a key role in interest rate decisions throughout 2022, the ICE U.S. Dollar Information Expectation Index Family is a great tool to help plan for the future.

The chart below provides the historical Index setting over the past year:
The U.S. Dollar bulls drove the market higher during trading on 18th August. The U.S. Dollar Index ® closed at 107.42 with a 0.79% gain as the market pierced the upper boundary of the Daily Bollinger Bands.

The bullish momentum continued into the final trading day of the week as the U.S. Dollar bulls continued to extend the previous day’s gains. The U.S. Dollar Index ® closed 19th August with a gain of 0.64% at 108.10.

The U.S. Dollar Index ® closed the week with an overall gain of 2.45% at 108.10, reversing the prior week losses and the strongest weekly performance in August.

The bullish momentum continued into the following trading week as the U.S. Dollar bulls drove the market higher. The U.S. Dollar Index ® closed 22nd August with a strong performance up at 108.98, with a gain of 0.86% to mark a third consecutive bullish close and a gain of 2.26% during this three-day period.

Trading on the 23rd August saw the bulls drive prices marginally higher during early trading to reach a high of 109.21, breaking July’s high and in doing so creating a fresh two-decade high. Sellers returned and the market dropped. The U.S. Dollar Index ® closed the day down at 108.55 back on the cusp of the upper boundary of the Daily Bollinger Bands with a loss of 0.33%.

Trading on the 24th August, the bulls drove the market higher although struggled to maintain control through the day. Data released for Durable Goods Orders for July showed a decline in orders dropping from 2.2% (revised upwards from 1.9%) to 0% against expected increase of 0.6%.

Nondefense Capital Goods Orders ex. Aircraft also released on 24th August showed a slow down as data published an increase of 0.4% against 0.3% (expected) although below the revised 0.9% data released for June (revised from 0.5%). Neither sets of data had too much of an impact of the U.S. Dollar Index ® direction at the time of release.

The U.S. Dollar Index ® reached a pocket of resistance on a 2-hour chart 108.77 - 109.21 created the prior trading day (23rd) and dropped. The U.S. Dollar Index ® closed the day 108.62 with a gain of 0.12%.

25th August saw a bullish start to early trading. GDP data released at -0.6% which was better than market expectations. The annualized preliminary quarter two GDP figures showed a decline of 0.6% against expectations of a decline of 0.8% and the prior months figures with a decline of 0.9% whilst this technically shows the economy is shrinking it is anticipated to be slightly better than expected. The U.S. Dollar Index ® closed the day lower at 108.43 with a loss of 0.16%.

Trading on 26th August started with the bears driving the market lower during the early trading session until the U.S. Dollar Index ® reached a pocket of support on a 2-hour chart 107.65 – 107.48 where buyers were waiting and the market rallied throughout the remainder of the trading session. The U.S. Dollar Index ® closed the day at 108.75 with a gain of 0.30%.

The U.S. Dollar Index ® closed the week up at 108.75 with a gain of 0.64%

On 29th August, the bullish momentum continued during early trading as the bulls drove the U.S. Dollar Index ® to reach a high of 109.45, a fresh two-decade high. Here the U.S. Dollar Index ® met resistance and dropped throughout the remainder of the day taking out earlier gains. The U.S. Dollar Index ® closed the day at 108.79 with a loss of 0.01%.

On 30th August after a bearish start to early trading, the U.S. Dollar Index ® recovered some ground as the bulls returned although the market struggled to reach the prior days high. The U.S. Dollar Index ® closed trading at 108.75 with a gain of 0.10%.

On 31st August trading, early bullish gains made were lost to the bears.as the trading day continued.

ADP Employment Change data for August released on 31st August shared disappointing numbers with 132,000 new jobs created against July figures of 270,000 as jobs growth slowed for the second consecutive month. This was significantly below market expectations where private employment was anticipated to expand by 288,000. This data suggested a more cautious approach to hiring possible due to the mixed messages in the current economic climate.

The U.S. Dollar Index ® closed the final day of trading at 108.67 with a loss of 0.06%.

The U.S. Dollar Index ® closed the month with a gain of 2.78% at 108.67 for a third consecutive higher monthly close. The whole month continued to trade within the wider range of monthly resistance as the U.S. Dollar Index ® trades near highs not seen for two decades.

The uptrend on the weekly chart continued as the U.S. Dollar Index ® remained trading above a 20 SMA. On a daily chart the uptrend was intact as the U.S. Dollar Index ® continued to rally and was trading back above the Daily 20 SMA.
UPCOMING HIGH IMPACT EVENTS
  • Thr 1 Sep ISM Manufacturing PMI (Aug)
  • Fri 2 Sep Nonfarm Payrolls (Aug)
  • Tue 6 Sep ISM Services PMI (Aug)
  • Wed 7 Sep Fed’s Chair Powell Speech
  • Tue 13 Sep Consumer Price Index (Aug)
  • Thr 15 Sep Retail Sales (Aug)
  • Fri 16 Sep Michigan Consumer Sentiment (Sep) PREL
  • Wed 21 Sep Fed Interest Decision
  • Wed 21 Sep Fed’s Monetary Policy Statement
  • Wed 21 Sep FOMC Economic Projections
  • Wed 21 Sep FOMC Press Conference
  • Tue 27 Sep Durable Goods Order (Aug)
  • Tue 27 Sep Nondefense Capital Goods Orders ex. Aircraft (Aug)
  • Wed 28 Sep Gross Domestic Product Annualized (Q2)

CORRELATIONS

The charts identify price turning points between U.S. Dollar Index®, Brent Crude Oil (BRN) and Bitcoin (XBT) which could be used to identify periods during which prices of each of the markets appear positively or negatively correlated.
BRENT CRUDE OIL (BRN): POSITIVE (SINCE SEPTEMBER)

Source: ICE Connect
NYSE® BITCOIN INDEX (XBT): NEGATIVE (SINCE JANUARY)

ICE ASIA TECH 30 INDEX - ICEAT30 | ATI
DAILY TREND: DOWN
ATI struggled to move higher as equity markets overall were lower with interest rates being increased to tackle higher inflation experienced across most of the developed economies. 

A new low was set by the index at $3,181 on 24th August. An area of resistance around $3,350 will need to be breached and price conviction above $3,750 for trend expectations to change to the upside.

ATI closed the month at $3,253 with a -1.8% change.

Index Composition: 37% China, 23% Japan, 23% Taiwan and 17% South Korea
BRENT CRUDE OIL - BRN | BM
DAILY TREND: DOWN
Brent fell from the end-July high around $104.00 and held a $10-wide range between $90.00 to $100.00 during the middle of the month. Price broke the range on 28th August but failed to clear $104.00 before dropping strongly on the last two days of the month.

Price appeared to be contained between prices ranging from $90.00 to $105.00.

Brent closed the month at $95.64 with a -5.6% change.



UPCOMING HIGH IMPACT EVENTS
NYSE BITCOIN INDEX® - XBT | BMC
DAILY TREND: DOWN
The corrective move in bitcoin’s price in the first half of August managed to reach $25,000 before moving lower towards $20,000 and broke the short term uptrend seen in July. 

Short term price action was sideways with the overall trend indicated as down.

XBT closed the month lower at $20,280 with a -14.9% change.

  • Fri 9 Sep China CPI (Aug)
  • Fri 16 Sep Retail Sales (Aug)
  • Tue 20 Sep PBOC Interest Rate Decision
  • Fri 30 Sep China Non-Manufacturing PMI (Sep)
  • Fri 30 Sep China Non-Manufacturing PMI (Sep)
Source: ICE Connect, FXStreet Economic Calendar
  • Mon 5 Sep OPEC+ policy meeting to decide on whether to decrease supply of oil in October or hold it steady in light of market volatility dampening prices.
  • Spring 2024 bitcoin halving event 
ICE ASIA TECH 30 INDEX CORRELATIONS
The charts identify price turning points between the ICE Asia Tech 30 Index, South Korea’s KOSPI Composite Index (KOSPI) and Thailand’s SET Index (SET) which could be used to identify periods during which prices of each of the markets appear positively or negatively correlated.
KOSPI COMPOSITE INDEX (KOSPI): POSITIVE

Source: ICE Connect
THAILAND SET INDEX (SET): NEGATIVE

PRODUCT HIGHLIGHT: MINI US DOLLAR / SINGAPORE FUTURES
KEY ATTRIBUTES

Micro MSCI USA Index Futures (SMU) contracts with a notional contract size of approximately USD 20,000 (as of the date of writing) are cash-settled. Retail and professional investors are able participate in these markets with minimal upfront deposits and experience a liquid intraday order book provided by appointed market makers during Asian trading hours.

MSCI USA Index constituents include large corporations in information technology (Apple), consumer discretionary (Amazon), communication services (Facebook), Financials (JPMorgan Chase) and health care (Johnson & Johnson).

Brokers offering this product include KGI Futures, Orient Futures and Phillip Nova.

Source: ICE Connect 
MONTHLY EDUCATIONAL BITES
Terminology and concepts of the financial markets and futures.
What is an Interest Rate Differential?

An interest rate differential is a change in the interest rates between the currencies of two countries. It is a measure of how money from two countries compares to each other.

What is the Carry Trade?

The carry trade is where an investor borrows in a currency where the interest rate is low and converts those funds into a currency where the interest rate is higher.

For example, if one currency has an interest rate of 5% and the other has a rate of 1%, it has a 4% interest rate differential. If you were to buy the currency that pays 5% against one that pays 1%, you would be paid on the difference with daily interest payments.
Educational resources are available and provided by Traddictiv.
RISKS AND OPPORTUNITIES FOR CORPORATES AND INDIVIDUAL INVESTORS
Common application of financial market instruments for managing risk and opportunities.
Diversification: Managed Futures

Portfolio diversification is the process of investing your money in different asset classes and securities in order to minimize the overall risk of the portfolio.

For both corporate and individual investors, having access to markets that enable the building of a diversified portfolio is an important consideration when managing futures focused accounts.

Similar to managing risk, the market to trade would be a key variable to clearly state and support with reasons for trading or investing. Reasons for selecting one market over another could include price volatility, liquidity, daily volume traded, size of the minimum price increment, and value of the minimum price increment. Comparing these variables between markets will help decide the suitability and/or risk of each.

For example, the parameters for a price driven strategy may be designed to be applied to any market whether it be index equity futures or forex futures. However, the signals for entry may not always trigger if a trader were just to focus on a single index equity futures. Having access to markets such as the Micro MSCI USA Index futures could add diversification to a portfolio in an efficient manner.

Having access to other futures markets to apply the strategy to allow for the creation of a diversified portfolio with varying entry and exit points or the ability for more trading oriented investors increased opportunities to execute price driven strategies more often across a range of futures markets. 


Limitations
© 2022 Intercontinental Exchange, Inc. The information and materials contained in this document - including text, graphics, links or other items - are provided "as is" and "as available." ICE and its subsidiaries do not warrant the accuracy, adequacy or completeness of  this  information  and  materials  and  expressly  disclaims  any liability or duty in connection with  this  information  and  materials.  This document  is  provided  for  information  purposes  only  and  in  no  way  constitutes  investment, legal or tax  advice  or  a  solicitation  or offer to buy or sell investments or market data or otherwise engage in or provide any investment, financial, trading or any other activity or service. No warranty of any kind, implied, express or statutory, is given in conjunction with the information and materials. The information in this document is liable to change and ICE undertakes no duty to update such information. You should not rely on any information contained in this document without first checking that it is correct and up to date. The content of this document is proprietary to ICE in every respect and is protected by copyright.  No part of this material may be copied, photocopied or duplicated in any form by any means or redistributed without the prior written consent of ICE.  All third party trademarks are owned by their respective owners and are used with permission.

Key Information Documents for certain products covered by the EU Packaged Retail and Insurance-based Investment Products Regulation can be accessed on the relevant exchange website under the heading “Key information Documents (KIDS)”.

Trademarks  of  ICE  and/or  its  affiliates  include  Intercontinental  Exchange,  ICE,  ICE  block  design,  NYSE  and  New  York  Stock Exchange. Information regarding additional trademarks and intellectual property rights of Intercontinental Exchange, Inc. and/or its affiliates is located at www.intercontinentalexchange.com/terms-of-use

To retail investors: Futures contracts based on bitcoin may pose specific risks. Such risks may arise from greater volatility in prices resulting from a range of factors. Those risks could in turn affect financial outcomes associated with maintaining required margins or any losses at final contract settlement.
Connect with ICE