One of the driving forces behind inflation
Inflation
Inflation is defined as a quantitative measure of the rate in which the average price level of goods and services in an economy or country increases over a period of time. It is the rise in the general level of prices where a given currency effectively buys less than it did in prior periods.In terms of assessing the strength or currencies, and by extension foreign exchange, inflation or measures of it are extremely influential. Inflation stems from the overall creation of money. This money is measured by the level of the total money supply of a specific currency, for example the US dollar, which is constantly increasing. However, an increase in the money supply does not necessarily mean that there is inflation. What leads to inflation is a faster increase in the money supply in relation to the wealth produced (measured with GDP). As such, this generates pressure of demand on a supply that does not increase at the same rate. The consumer price index then increases, generating inflation.How Does Inflation Affect Forex?The level of inflation has a direct impact on the exchange rate between two currencies on several levels.This includes purchasing power parity, which attempts to compare different purchasing powers of each country according to the general price level. In doing so, this makes it possible to determine the country with the most expensive cost of living.The currency with the higher inflation rate consequently loses value and depreciates, while the currency with the lower inflation rate appreciates on the forex market.Interest rates are also impacted. Inflation rates that are too high push interest rates up, which has the effect of depreciating the currency on foreign exchange. Conversely, inflation that is too low (or deflation) pushes interest rates down, which has the effect of appreciating the currency on the forex market.
Inflation is defined as a quantitative measure of the rate in which the average price level of goods and services in an economy or country increases over a period of time. It is the rise in the general level of prices where a given currency effectively buys less than it did in prior periods.In terms of assessing the strength or currencies, and by extension foreign exchange, inflation or measures of it are extremely influential. Inflation stems from the overall creation of money. This money is measured by the level of the total money supply of a specific currency, for example the US dollar, which is constantly increasing. However, an increase in the money supply does not necessarily mean that there is inflation. What leads to inflation is a faster increase in the money supply in relation to the wealth produced (measured with GDP). As such, this generates pressure of demand on a supply that does not increase at the same rate. The consumer price index then increases, generating inflation.How Does Inflation Affect Forex?The level of inflation has a direct impact on the exchange rate between two currencies on several levels.This includes purchasing power parity, which attempts to compare different purchasing powers of each country according to the general price level. In doing so, this makes it possible to determine the country with the most expensive cost of living.The currency with the higher inflation rate consequently loses value and depreciates, while the currency with the lower inflation rate appreciates on the forex market.Interest rates are also impacted. Inflation rates that are too high push interest rates up, which has the effect of depreciating the currency on foreign exchange. Conversely, inflation that is too low (or deflation) pushes interest rates down, which has the effect of appreciating the currency on the forex market.
Read this Term has been the cost of housing and rents, along with the wealth effect that comes with it, and the instability that potentially could cause if the bubble breaks.
Redfin, the large real estate brokerage company, has asked about 8% of its employees to leave today. The site a 17% below expectations demand in May. They also said they don’t have enough work for agents and support staff.
Finally the anticipate that they could be facing years not months of fewer home sales.
Not a good omen for home prices going forward.
Looking at lumber futures
Futures
Futures or a futures contract represents a legal agreement to buy or sell a security or asset at a predetermined price at a specified time in the future. Of note, the parties are not known to each other.These transactions usually involve commodities or other securities involving the buying and selling for a forward or predetermined price.Futures also adhere to a delivery date, which specifies the date of delivery and payment. Relative to other forms of investing futures are much more complex, as they involve specified and non-flexible parameters.Futures Trading ExplainedFutures contracts are negotiated at exchanges that act as a unified marketplace for both buyers and sellers. Buyers of contracts represent long position holders, while selling parties constitute short position holders.Both parties risk their counterparty walking away if the price goes against them. As such, the contract can involve both parties incurring a margin of the value of the contract with a mutually trusted third party.This margin can range substantially, depending on the current volatility of the market of the security being traded.Futures can be incredibly risky and are the textbook definition of market speculation. A trader who predicts that the price of an asset will move in a certain direction can contract to buy or sell it in the future at a price.If this prediction is correct, the trader will profit. If the prediction is incorrect there will be losses. Futures trading is considered an advanced type of trading that requires prior knowledge and understanding.For this reason, retail traders will seldom be afforded access to futures trading by brokers without first undergoing specific questions or account requirements.
Futures or a futures contract represents a legal agreement to buy or sell a security or asset at a predetermined price at a specified time in the future. Of note, the parties are not known to each other.These transactions usually involve commodities or other securities involving the buying and selling for a forward or predetermined price.Futures also adhere to a delivery date, which specifies the date of delivery and payment. Relative to other forms of investing futures are much more complex, as they involve specified and non-flexible parameters.Futures Trading ExplainedFutures contracts are negotiated at exchanges that act as a unified marketplace for both buyers and sellers. Buyers of contracts represent long position holders, while selling parties constitute short position holders.Both parties risk their counterparty walking away if the price goes against them. As such, the contract can involve both parties incurring a margin of the value of the contract with a mutually trusted third party.This margin can range substantially, depending on the current volatility of the market of the security being traded.Futures can be incredibly risky and are the textbook definition of market speculation. A trader who predicts that the price of an asset will move in a certain direction can contract to buy or sell it in the future at a price.If this prediction is correct, the trader will profit. If the prediction is incorrect there will be losses. Futures trading is considered an advanced type of trading that requires prior knowledge and understanding.For this reason, retail traders will seldom be afforded access to futures trading by brokers without first undergoing specific questions or account requirements.
Read this Term (a proxy for the housing market), the price is trading to the lowest level since September 2021 today, and in the process is moving further away from its 200 week moving average. Last week, the price moved and closed below that moving average for the 1st time since August 2021.
The move lower is sharp contrast to the high reached in May 2021 up near 1733.5. The current price is trading at 527.1. That’s a decline of near 70%.
PS Also asking employees to leave today was Coinbase, the digital currency broker. They announced the need to reduce staff by 18% saying they overhired.
The price of bitcoin reached the lowest level since December 2020 today, reaching to a low of $20816.35.
The $20,000 level should provide support with stops on a break.
Way back when, the crazy price targets were for bitcoin to reach $20000. That was broken in December 20, 2020, and the rest is history with the high reaching $69000 in November 2021.
Today, the price got within $816 of the $20000 level and has bounced back toward $22500.
Looking at the weekly chart, the 200 week MA is at $22364. A close below the 200 week MA this week would be the first since the low in early March 2020 at the start of the pandemic (for one weekly bar).
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