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EUR-USD

EUR/USD Drops Near 1.0600 as Fed Rate Hike Expectations Grow

EUR/USD Drops Near 1.0600 as Fed Rate Hike Expectations Grow

EUR/USD has dropped to near 1.0610, marking its sixth consecutive session of decline, amid trading in the Asian markets on Tuesday. The strong US Dollar, buoyed by rising US Treasury yields and solid retail sales data, is applying pressure on the Euro.

The US Dollar Index (DXY) has risen to approximately 106.20. Current yields for 2-year and 10-year US Treasury bonds are 4.92% and 4.60%, respectively. These increases are partly due to escalating tensions in the Middle East, which have driven investors towards the safety of the US Dollar.

March’s US Retail Sales showed a 0.7% rise, surpassing the anticipated 0.3% and revising February’s figures from 0.6% to 0.9%. The Retail Sales Control Group also reported a significant increase of 1.1%, which was a jump from the prior 0.3%.

San Francisco Federal Reserve President Mary Daly commented on the economic outlook, noting that while inflation has somewhat subsided, the journey to stable prices is not over. Daly stressed the necessity for inflation to consistently approach the target before any policy adjustments are made. She also pointed out the robust growth of the economy and the strong labor market, even though inflation rates remain above desired levels.

Conversely, the Euro’s value is weakening due to cautious statements from European Central Bank (ECB) officials. ECB Governing Council member Gediminas Šimkus hinted at a more than 50% chance of over three interest rate cuts this year. Additionally, ECB Chief Economist Philip Lane indicated that domestic inflation has not improved as much as other inflation metrics. Despite this, Lane remains optimistic about reaching the inflation target by 2025.

These various economic indicators and policy statements from key central bank figures are shaping investor expectations and market dynamics, influencing the EUR/USD currency pair’s movements.

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NZD/USD

NZD/USD Holds Near 0.5950 as Business NZ PSI Enters Contraction

NZD/USD Holds Near 0.5950 as Business NZ PSI Enters Contraction

The NZD/USD has made a slight recovery from its five-month trough of 0.5927, observed on Monday, stabilizing around 0.5950 in the Asian trading session. This modest rebound occurs amidst a backdrop of economic concerns as New Zealand’s services sector reenters contraction territory. The Business NZ Performance of Services Index (PSI) for March distressingly fell to 47.5 from a previous 52.6, signaling a downturn in the sector.

Doug Steel, a Senior Economist at Bank of New Zealand (BNZ), commented on the implications of the latest PSI data. He noted that combining this weak service sector performance with the poor results from last week’s Manufacturing PMI points to a potential sharp contraction in GDP. Steel suggested that GDP could shrink by over 2% from last year, a forecast much gloomier than most analysts’ expectations.

Looking ahead, investors and market analysts are gearing up for a critical week of economic releases. Significant attention is centered on China, New Zealand’s principal trading partner, which will disclose several key economic figures on Tuesday. These include the Q1 GDP growth rate along with March’s Industrial Output and Retail Sales data. The anticipation around these releases is high as they could indicate shifts in regional economic dynamics.

Furthermore, domestic focus will soon turn to New Zealand’s own economic health with the upcoming release of Consumer Price Index (CPI) data on Wednesday. This inflation metric is crucial for gauging the country’s economic trajectory and potential monetary policy adjustments.

In the United States, the economic landscape appears robust by comparison. Recent data revealed a higher-than-expected rise in the Core Producer Price Index (PPI), with a year-over-year increase of 2.4% in March, surpassing the forecasted 2.3%. This indicates persistent inflationary pressures, which may lead the Federal Reserve to reconsider its monetary easing strategies.

Market watchers are also poised for the release of the US Retail Sales figures next Monday, which will provide further insights into consumer confidence and spending trends. Additionally, the financial community will closely follow a panel discussion featuring Lorie K. Logan, President of the Federal Reserve Bank of Kansas, at the upcoming BoJ-IMF conference.

These upcoming events underscore a week filled with pivotal economic data that could influence global financial markets and inform future monetary policy decisions in both New Zealand and abroad.

 

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USD-CHF

USD/CHF Rises Above 0.9100 Before US PPI Data

USD/CHF Rises Above 0.9100 Before US PPI Data

In the early European session on Thursday, the USD/CHF currency pair exhibited a bullish momentum, climbing to 0.9125, marking its highest level since October 2023. This upward trend in the pair is primarily attributed to the unexpectedly high U.S. inflation figures for March, which have led investors to revise their predictions regarding the Federal Reserve’s interest rate cuts, now leaning away from a reduction this year. This shift in investor sentiment has fortified the U.S. Dollar (USD), lending it considerable support.

The shift in expectations came after the release of the U.S. Consumer Price Index (CPI) data for March, which indicated a significant and unanticipated increase. This surge in inflation resulted in analysts pushing back their forecasts for the first rate cut, now expected in September instead of the previously anticipated June. Breaking down the numbers, the headline CPI witnessed a 0.4% month-over-month increase in March, while the annual CPI saw a 3.5% year-over-year jump. Even more telling was the Core CPI, which strips out the more volatile food and energy sectors; it rose 0.4% on a monthly basis and exhibited a substantial 3.8% increase from the previous year.

The minutes from the latest Federal Reserve meeting further underscored concerns about persistently high inflation. Federal Reserve officials expressed unease regarding inflation levels, which continued to exceed the Fed’s 2% target. This discomfort, coupled with the recent data, did little to boost confidence that inflation was on a trajectory towards this target. Consequently, the persistence of higher U.S. interest rates has been a significant factor propelling the USD upwards, which in turn has positively impacted the USD/CHF pair.

Concurrently, the geopolitical landscape, particularly in the Middle East, introduces a layer of uncertainty that could influence currency markets. The ongoing tensions and the precarious nature of ceasefire talks between Israel and Hamas add to this uncertainty. The recent statements by Israel’s Foreign Minister, Israel Kat, were a stark reminder of the volatile situation. He cautioned that Israel would respond firmly if Iran initiated an attack from its territory. This statement followed remarks by Iran’s supreme leader, who called for retribution against Israel for a perceived attack on an Iranian consulate in Syria the previous week.

Such geopolitical tensions typically result in an increased demand for safe-haven assets, with the Swiss Franc (CHF) often being a beneficiary of such shifts in investor preference. Therefore, while the USD gains strength from domestic economic factors, the CHF could see a boost from these international developments, making the USD/CHF pair one to watch closely in the current global context.

 

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RBA Holding Rates Steady

AUD/JPY Nears 99.90 Amid Expectations of RBA Holding Rates Steady

AUD/JPY Nears 99.90 Amid Expectations of RBA Holding Rates Steady

The Australian Dollar/Japanese Yen (AUD/JPY) exchange rate has shown a significant uptrend, reaching nearly 99.90 during Monday’s European trading session. This bullish trend in the currency pair is largely driven by the robust performance of the Australian Dollar, buoyed by positive developments in Australia’s domestic financial markets. A key contributor to this strength is the notable rise in the Australian Securities Exchange (ASX 200 Index), especially with a marked surge in the technology sector at the week’s onset.

Complementing the Australian Dollar’s rise is the uptick in Australia’s 10-year government bond yield, which has soared to approximately 4.1%, marking a new high in over a month. This increase mirrors the rally in U.S. bond yields, triggered by unexpectedly strong U.S. job data. Consequently, there’s growing speculation that the U.S. Federal Reserve may opt for a prolonged period of higher interest rates.

Investor sentiment is tilting away from the possibility of the Reserve Bank of Australia (RBA) implementing rate cuts anytime in 2024. This shift is underpinned by the recent positive economic indicators from the U.S., which hint at sustained higher borrowing costs in the world’s largest economy. Such expectations are lending support to the Australian Dollar, further propelling the AUD/JPY pair upward.

Despite these gains, the Australian Dollar faced some pressure last week due to stagnant Final Retail Sales and less-than-optimistic Trade Balance data. Market watchers remain vigilant regarding the trajectory of copper and oil prices, as any significant appreciation in these commodities could bolster the Australian Dollar further, positively influencing the AUD/JPY pair.

On the other side of the pairing, the Japanese Yen is experiencing downward pressure, with the Bank of Japan (BoJ) showing reticence towards any major policy tightening moves. Furthermore, easing geopolitical tensions, particularly in the Middle East, are reducing the traditional safe-haven appeal of the Yen. Notably, Israel’s recent decision to pull back additional troops from Southern Gaza, potentially in response to international pressures, has contributed to this de-escalation.

Adding to the mix, Bank of Japan Governor Kazuo Ueda’s recent remarks indicate a possible shift in the BoJ’s policy approach. Speaking about his tenure, which began about a year ago, Governor Ueda expressed an interest in simplifying and clarifying the central bank’s policy framework, contingent on favorable economic conditions. This potential policy shift, coupled with the global economic landscape, plays a pivotal role in shaping the dynamics of the AUD/JPY currency pair.

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EUR/USD Declines Toward

EUR/USD Declines Toward 1.0830 Amid Market Caution, Attention on US NFP Data

EUR/USD Declines Toward 1.0830 Amid Market Caution, Attention on US NFP Data

The Euro to Dollar exchange rate (EUR/USD) continues its downward trajectory that began on Thursday, approaching a value near 1.0830 during the Asian trading session on Friday. This movement reflects an increase in market caution, significantly influenced by escalating geopolitical tensions in the Middle East, which have bolstered the US Dollar (USD).

The current geopolitical climate has become more strained following Iran’s vow to retaliate against Israel’s recent attack on its embassy in Syria, an incident that resulted in the deaths of Iranian military personnel. Additionally, new reports suggesting heightened threats against Israeli embassies in the United States by Iran have further intensified market apprehensions.

On the economic front, the USD experienced some downward pressure due to less-than-robust employment data from the United States. Despite this, remarks from several Federal Reserve officials that were perceived as neutral seem to have curbed a steeper decline in the USD’s value.

In terms of specific data, US Initial Jobless Claims for the week ending March 29 increased to 221,000 from the previous week’s figure of 212,000, though it was still below market expectations of 214,000. US Challenger Job Cuts for March also showed an increase, reaching 90,309, which is above the previous figure of 84,638.On the other side of the Atlantic, the Eurozone’s economic indicators paint a mixed picture. The Eurostat Producer Price Index (PPI) for February showed a decrease of 1.0%, surpassing expectations and marking a more significant decline than in previous months. Furthermore, the year-over-year decline in the PPI also outstripped expectations, though by a smaller margin. 

The Eurozone’s Composite PMI also showed signs of improvement, indicating a slight expansion in economic activity. Interestingly, the latest inflation data from the Eurozone shows a sharper-than-expected decrease in the annual rate for March. This development fuels speculation about potential monetary policy actions by the European Central Bank (ECB), with some market participants anticipating a possible rate cut in June. As traders navigate these multifaceted economic and geopolitical landscapes, they keenly await upcoming data releases. Significant among these are Germany’s Factory Orders and Eurozone Retail Sales. 

From the United States, the market is particularly focused on the upcoming release of Average Hourly Earnings and Nonfarm Payrolls data, which are considered crucial indicators of the country’s economic health.

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USD/CAD Nears

USD/CAD Nears 1.3560, Drops Due to Rising Crude Oil Prices

USD/CAD Nears 1.3560, Drops Due to Rising Crude Oil Prices

The USD/CAD currency pair continues its downward trajectory for the second consecutive day, inching closer to 1.3560 in the Asian trading session on Wednesday. This negative movement is primarily influenced by the robust performance of Crude oil prices, which bolsters the Canadian Dollar (CAD), thereby exerting a downward force on the USD/CAD pair.

Crude oil prices, particularly Western Texas Intermediate (WTI), are hovering around $84.80, marking their highest point since October 2023. This surge in oil prices can be attributed to a combination of factors, including the weakening of the US Dollar and rising concerns over supply disruptions due to ongoing geopolitical uncertainties.

Furthermore, the US Dollar Index (DXY), which measures the strength of the US Dollar against a basket of major currencies, is facing a downward pressure, contributing to the weakening of the USD/CAD pair. This weakening of the DXY comes in the wake of dovish remarks from Federal Reserve (Fed) officials. Notably, Cleveland Fed President Loretta Mester expressed an expectation of potential rate cuts later in the year. Similarly, San Francisco Fed President Mary Daly suggested that three rate cuts in 2024 might be “reasonable,” though such a decision would depend on further convincing economic evidence.

In recent US economic news, data released on Tuesday highlighted some key figures. The US February JOLTS Job Openings report showed an increase to 8.756 million, up from the previous figure of 8.748 million, exceeding market expectations. Additionally, there was a notable rebound in Factory Orders, which rose by 1.4% month-on-month in February, following a 3.8% decline in the previous period.

Investors and market participants are now turning their attention to upcoming economic data releases. For Canada, the focus is on the Import and Export data due on Thursday, and the labor market data scheduled for release on Friday. In the United States, key data points include the ADP Employment Change and ISM Services PMI, both set for release on Wednesday. Moreover, the US economic outlook is set to gain further clarity with Federal Reserve Chairman Jerome Powell scheduled to speak at the Stanford Business, Government, and Society Forum in Stanford.

Overall, the combination of strong Crude oil prices, dovish statements from Fed officials, and upcoming economic data releases are key factors influencing the movement of the USD/CAD pair, with market participants closely monitoring these developments to gauge future trends.

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NZD/USD Nears 0.5980 Amid Fed's Powell Dovish

NZD/USD Nears 0.5980 Amid Fed’s Powell Dovish Remarks, Eyes on US ISM PMI

NZD/USD Nears 0.5980 Amid Fed’s Powell Dovish Remarks, Eyes on US ISM PMI

The NZD/USD currency pair has continued its upward trajectory for the second straight day, making notable gains during Monday’s Asian trading session and approaching the 0.5980 mark. This upward movement comes in the wake of dovish statements from Federal Reserve Chairman Jerome Powell last Friday. Powell’s comments, particularly regarding the recent Personal Consumption Expenditures Price Index (PCE) data from the United States, have been interpreted as aligning with the Fed’s openness to potential interest rate reductions this year.

Adding to this sentiment, Federal Reserve Board Governor Christopher Waller has expressed that there’s no urgency to implement rate cuts, given the persistent inflationary pressures. Similarly, San Francisco Fed President Mary C. Daly has underlined the Fed’s readiness to adjust rates as necessary based on evolving data, while also highlighting the strength of the US economy and downplaying the likelihood of an imminent downturn.

The US Dollar Index (DXY) has been facing headwinds, partly due to lower yields on US Treasury bonds. The DXY is currently hovering around 104.50, with yields on the 2-year and 10-year US bonds at 4.60% and 4.19%, respectively. Despite these challenges, Fed officials are still projecting three rate reductions within the year, with market anticipations leaning towards the first cut occurring at the Fed’s June meeting.

On the other side of the pairing, the New Zealand Dollar (NZD) is experiencing its own pressures, fueled by speculations that the Reserve Bank of New Zealand (RBNZ) might start reducing policy rates early next year. RBNZ Governor Adrian Orr has noted the central bank’s progress in reining in inflation to within its target range. Orr has also suggested that the peak in interest rates has likely been reached, paving the way for potential rate cuts.

Further boosting the Kiwi Dollar, recent data from China has shown encouraging signs. The Chinese Purchasing Managers Index (PMI) for March indicated that manufacturing activity in China expanded for the first time in six months. China’s Caixin Manufacturing PMI reported a figure of 51.1, slightly above expectations and the previous month’s figure of 50.9. Additionally, the National Bureau of Statistics (NBS) Manufacturing PMI in China rose to 50.8 in March from 49.1 previously, while the NBS Non-Manufacturing PMI climbed to 53.0 from 51.4.

Looking ahead, traders are likely to approach the market with caution as they await the release of the ISM Manufacturing PMI from the United States, scheduled for later in the North American session. Additionally, upcoming data releases, such as the Building Permits from Statistics New Zealand this Thursday, will be closely monitored for their potential impact on currency movements.

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Asian Stocks Inch Up Amid Geopolitical Risk, Anticipating Chinese GDP

Asian Stocks Inch Up Amid Geopolitical Risk, Anticipating Chinese GDP

Asian markets took a positive turn on Tuesday, following the upward momentum in US equities. This recovery comes after a period of losses influenced by the unfolding events in the Middle East. However, the overall market sentiment remains delicate, primarily due to concerns about the potential escalation of the Israel-Hamas conflict into a more extensive proxy war with Iran. Additionally, investors are cautiously eyeing significant Chinese economic data scheduled for release this week.

The ongoing Israeli-Palestinian conflict is a significant factor affecting the risk landscape. Israeli forces have continued their airstrikes on Gaza as efforts to secure a ceasefire have faced obstacles. Israel’s Defense Forces chief indicated the possibility of an eventual ground invasion into the Gaza Strip to combat the Hamas group, a move that could further escalate tensions. Iran has issued warnings in response to a ground invasion, adding to the geopolitical complexities. Moreover, there is a separate potential conflict on Israel’s northern border with Lebanon, involving exchanges of artillery fire with the Iran-backed Hezbollah group. These factors collectively cast a shadow of uncertainty over the markets.

Traders may also be adopting a cautious stance, awaiting the release of China’s third-quarter GDP data, a pivotal event given China’s status as Asia’s largest economy. Expectations point toward ongoing economic weakness, raising concerns about China’s economic conditions. Disappointing Chinese data has the potential to impact global risk sentiment and exert downward pressure on Asian stocks. Additionally, market participants are closely monitoring the scheduled speech by Federal Reserve Chair Jerome Powell later in the week.

The influence of elevated US Treasury bond yields cannot be overlooked. Concerns persist about the economic headwinds stemming from rising borrowing costs, which could act as a restraint on equity market gains, especially as companies prepare to report their quarterly earnings. 

Looking ahead, the market’s sentiment will likely be shaped by a combination of factors, including upcoming economic data releases in the United States, developments in geopolitics, and movements in US bond yields. Retail sales and industrial production figures, set for release during the early North American session, will offer further insights and influence traders’ decisions as they assess short-term opportunities.

 

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Treasuries and Stocks Rally on Fed Comments

Treasuries and Stocks Rally on Fed Comments

Financial markets witnessed a surge as Treasuries and Asian shares soared, driven by Federal Reserve comments that raised speculation about the central bank’s future actions.

The two-year Treasury, sensitive to policy changes, experienced its most significant drop since August’s end. Simultaneously, the benchmark 10-year Treasury had its best performance since March. These moves led traders to bet on the conclusion of the U.S. tightening cycle, amplified by the Israel-Hamas conflict, which spurred demand for safe-haven assets.

As a result, the MSCI’s Asia Pacific Index is set for its most significant gain in three months, with European and U.S. stock futures showing a modest increase. However, the potential impact of the Middle East conflict remains uncertain.

Federal Reserve Vice Chair Philip Jefferson suggested a cautious approach, given the recent rise in Treasury yields. Lorie Logan, President of the Federal Reserve Bank of Dallas, also hinted that surging long-term rates might reduce the need for further tightening.

Despite Middle East tensions, markets have remained relatively calm, offering some reassurance to investors, according to Hideyuki Ishiguro, a senior strategist at Nomura Asset Management.

Traders initially bet on another Fed rate hike this year after a surprising surge in U.S. employment in September. However, this changed as central bank officials downplayed the possibility of another 2023 rate increase.

The dollar remained steady as odds for another Fed tightening eased. It traded in a narrow range against its Group-of-10 peers.

However, Middle East tensions could escalate further, with reports of a top U.S. general warning Iran to stay out of the Israel-Hamas conflict.

In Asia, Chinese developer Country Garden Holdings Co. warned of its first-ever default, potentially leading to one of the nation’s largest restructurings.

Oil prices dipped slightly after Monday’s increase following the Hamas attack, while gold remained relatively stable.

Geopolitical concerns, coupled with moderating global economic growth, present challenges for markets, according to Solita Marcelli, chief investment officer Americas at UBS Global Wealth Management. She said they favor fixed income over equities, citing a better risk-reward profile for fixed income.

Potential risks to U.S. stocks may arise from fiscal policy constraints, especially as the Fed combats high inflation, according to Morgan Stanley’s Michael Wilson. He believes that the absence of a long-term structure supporting fiscal discipline could impact financial markets.

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Asia Stocks Fall, Aussie Remains Down

Asia Stocks Fall, Aussie Remains Down

Hong Kong’s stock market faced a significant setback, plunging by as much as 3.4% upon reopening after a holiday, making it an underperformer compared to other regional indices. This decline contributed to the broader MSCI Asia Pacific Index hitting its lowest point since December of the previous year. Simultaneously, China was observing a weeklong holiday.

The Australian dollar managed to stabilize after an earlier loss, while the country’s government bonds remained steady, despite the central bank’s decision to keep its policy rate unchanged for the fourth consecutive meeting on Tuesday. The central bank issued a warning about the potential necessity for further tightening of monetary policy.

Asian bond markets experienced a downturn, with Australia’s 10-year bond yield hovering around its highest level since 2011. This mirrored the decline seen in US Treasuries following a series of hawkish statements from the Federal Reserve. These statements overshadowed earlier optimism regarding a deal to avert a US government shutdown. Treasury yields across all maturities increased by approximately 10 basis points on Monday, with the benchmark 10-year note yield reaching its highest level since 2007. However, Treasuries in Asia managed to stabilize on Tuesday.

Market strategist Charu Chanana from Saxo Capital Markets highlighted, “Markets remain risk-averse as the prospect of higher rates for a longer period continues to resonate due to marginally hawkish US data and central bank speakers.”

As the threat of a US government shutdown subsided, global bond selloffs accelerated, with traders increasing their bets on a potential rate hike from the Federal Reserve in November.

In contrast to the overall market trend, China Evergrande Group experienced a surge of up to 42% as it resumed trading following a halt last week.

In the commodities market, gold held its ground after experiencing a decline to its lowest point since March. Oil prices, on the other hand, saw a dip, with West Texas Intermediate falling below $90 a barrel. A Citigroup Inc. analyst suggested that reduced demand from China could limit the price gains resulting from OPEC+ supply cuts.

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S&P 500 Bounces to $4,300, Yet September Ends in Losses

S&P 500 Bounces to $4,300, Yet September Ends in Losses

The Standard & Poor’s (S&P) 500 index managed to regain some ground on Thursday, posting a respectable gain of nearly 0.60% and closing just below the critical $4,300.00 level. This positive momentum was mirrored by other major U.S. indices, with the Dow Jones Industrial Average (DJIA) climbing 116 points to settle at $33,666.34, an increase of 0.35%, and the Nasdaq Composite outperforming, surging over 0.80% to end the day at $13,201.28.

The rebound in U.S. equities came as a welcome respite for investors who had been enduring a challenging period in September. The S&P 500, in particular, had experienced a sharp decline in recent weeks, with its value plummeting over 5.0% from its September peak, which had approached the lofty heights of $4,540.00. September, it seems, is poised to become the year’s worst-performing month for equities, with most major indexes retreating from the summertime highs.

The sharp drop in equity prices earlier in the month was attributed to a multitude of factors, which sent jitters throughout the financial markets. Chief among these concerns were uncertainties surrounding the Federal Reserve’s stance on reducing its bond-buying program and the impending specter of rising interest rates. Additionally, worries regarding the impact of the Delta variant of COVID-19 on the global economic recovery added to the prevailing unease.

Thursday’s rebound in the stock market was accompanied by a relaxation of selling pressure and a respite for U.S. Treasury yields. This newfound stability allowed equities to regain some lost ground as investors looked forward to Friday’s release of the crucial U.S. Personal Consumption Expenditure (PCE) Price Index data.

One of the key events on the horizon is the release of the U.S. PCE inflation measure for the month of August, which is expected to hold steady at 0.2%. Investors are closely monitoring inflation data as it plays a pivotal role in the Federal Reserve’s monetary policy decisions and can have a significant impact on market sentiment.

In addition to inflation concerns, there has been growing apprehension among investors regarding the possibility of a U.S. government shutdown driven by partisan politics. These fears, coupled with worries about a potential economic recession, have weighed heavily on equity markets.

As the month of September draws to a close, investors are bracing for continued volatility and uncertainty. The path forward for U.S. equities remains uncertain, with market participants closely monitoring economic data releases, central bank statements, and geopolitical developments that could shape the trajectory of financial markets in the coming months.

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US Yields Surge, Asia Stocks Fall Amid Fed’s Hawkish Stance

US Yields Surge, Asia Stocks Fall Amid Fed’s Hawkish Stance

US Treasury yields hit a fresh 16-year high, reaching 4.552%, marking levels not seen since October 2007. This surge was driven by the Federal Reserve and other major central banks signaling that interest rates would remain elevated for an extended period. Consequently, the US dollar held near a 10-month high, with the US dollar index reaching 106.10, its highest since November 30, before settling at 106.00.

In response to the soaring yields and a strong dollar, Asia-Pacific stock markets faced declines. MSCI’s broadest index of Asia-Pacific shares outside Japan dropped by 0.33%. Tokyo’s Nikkei fell by 0.7%, South Korea’s Kospi slid 1%, and Hong Kong’s Hang Seng slipped 0.3%. Mainland Chinese blue chips opened flat.

US stock futures pointed to a 0.3% decline, following a 0.4% rise in the S&P 500 overnight. Traders now consider the likelihood of another quarter-point Federal Reserve rate hike by January to be a toss-up, and they have postponed expectations for rate cuts until the summer.

Westpac strategists anticipate further increases in yields in the near term, which would also strengthen the dollar. They foresee 10-year yields potentially peaking around 4.75% in the coming weeks. Chicago Fed President Austan Goolsbee noted that the risk of persistent inflation above the Fed’s 2% target outweighed concerns about the Fed’s tightening policy hindering the economy.

The US economy’s relative outperformance, compared to the stagnation in the eurozone and Britain, has supported the dollar against those currencies. The euro edged down to US$1.05855, nearing its overnight low of US$1.0575, last seen in mid-March. Sterling also slipped to US$1.22065, approaching Monday’s six-month low of US$1.21945. The dollar remained near an 11-month peak of 148.97 yen, raising the possibility of Japanese authorities intervening in the currency markets.

Gold remained relatively stable at around US$1,915, after falling from above US$1,947 over the past week. Crude oil continued to weaken due to concerns that central banks would keep interest rates elevated for an extended period, potentially impacting fuel demand. Brent crude futures were down 11 cents at US$93.18 a barrel, while US West Texas Intermediate crude futures traded 1 cent lower at US$89.67.

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US Dollar Stabilizes After Recent Losses

Stocks Plummet, US Yields Surge, Dollar Gains Momentum as Federal Reserve Adopts Hawkish Stance

Stocks Plummet, US Yields Surge, Dollar Gains Momentum as Federal Reserve Adopts Hawkish Stance

Asia-Pacific shares followed the downward trend set by Wall Street on Thursday, as investors interpreted the latest policy statements from the US Federal Reserve as a signal of higher and longer interest rates. 

The broadest index of Asia-Pacific shares outside Japan, MSCI’s (.MIAPJ0000PUS), was down 0.4% in early afternoon Hong Kong time. Japan’s Nikkei (.N225) slid 0.6%, China’s blue-chip (.CSI300) dipped 0.6%, and Hong Kong’s benchmark shed 1.3%.

The yield on two-year US Treasury notes rose to a 17-year high of 5.1970% on Thursday morning and hovered around 5.18% by early afternoon. 

Similarly, Japan’s 10-year government bond yield reached its highest level in a decade, in line with the US 10-year Treasury yields, which hit a 16-year peak at 4.4310%.

“We anticipate further increases in bond yields in the near future due to the Federal Reserve’s hawkish position,” said Tai Hui, APAC chief market strategist at J.P. Morgan Asset Management. He added that while high interest rates can cool the economy, they remain positive on long-term government bonds, investment grade corporate debt, as well as growth and tech stocks.

Ben Luk, senior multi-asset strategist at State Street Global Markets, noted that the overall tone of the Fed’s latest meeting was not excessively hawkish but there were two surprises. The forecasts for 2024 were slightly higher than expected, and Fed statements indicated that macroeconomic growth would hold up despite higher rates. 

The US central bank held interest rates steady on Wednesday and projected an increase by the end of the year, stating that monetary policy will likely be much tighter through 2024 than previously estimated. The median forecast for the federal funds rate at the end of the year is now 5.1%, compared to the 4.6% estimated in June. 

The upward revisions to rate forecasts prompted a rebound in the US dollar, pushed US Treasury yields to multi-year highs, flattened the yield curve, and caused stocks to tumble.

The dollar index, which measures the currency against a basket of rivals, reached its highest level since March 9 at 105.59 on Thursday, bringing the yen close to its weakest point since November. The pound fell to fresh multi-month lows following an inflation report on Wednesday, raising questions about whether the Bank of England will also hold rates.

Major stock futures in Asia experienced fluctuations in early afternoon trading. US stock futures, the S&P 500 e-minis, were down 0.3%. Similarly, the pan-region Euro Stoxx 50 futures, German DAX futures, and FTSE futures all declined by approximately 1%.

Investors are now closely watching monetary policy decisions from Indonesia, the Philippines, and Taiwan on Thursday, while the Bank of England’s decision will also provide guidance to Asian markets.

Oil prices fell in Asian trade following the largest decline in a month in the previous session. US crude dropped 0.72% to $89.01 a barrel, and Brent crude fell to $92.87 per barrel. 

Gold remained slightly lower, with spot gold trading at $1,927.96 an ounce.

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Asian Stocks Dip Amid Cautious Mood, Focus on Fed Rate Decision

Asian Stocks Dip Amid Cautious Mood, Focus on Fed Rate Decision

Asian stock markets faced a mild setback on Tuesday, marked by cautious sentiment among investors as they awaited the forthcoming Federal Reserve interest rate decision. This heightened sense of caution stems from growing concerns that the Federal Reserve’s commitment to maintaining higher interest rates for an extended period could potentially exert a negative impact on consumers in the United States.

As of the most recent market data, the Shanghai Composite Index in China managed a slight uptick of 0.02%, reaching a level of 3,126 points. Meanwhile, the Shenzhen Component Index experienced a 0.73% decline, settling at 10,126 points. Hong Kong’s Hang Seng Index recorded a meager 0.02% gain, bringing it to 17,933 points. Conversely, South Korea’s Kospi Index faced a 0.41% decline, and Japan’s Nikkei Index witnessed a more pronounced drop of 0.99%.

Despite some positive developments within China’s real estate sector, these developments failed to generate significant upward momentum in market sentiment on Tuesday. Notably, Country Garden secured bondholder approval for the last of eight local notes, for which it had sought an extension of repayment deadlines. Similarly, Sunac gained approval from its creditors for its debt restructuring plan.

In Japan, the Bank of Japan (BoJ) is poised to announce its interest rate policy later in the week, specifically on Friday. Market observers are closely monitoring signals from the BoJ, which appear to suggest a potential exit from its ultra-loose monetary policy sooner than initially anticipated. Recent remarks by Governor Kazuo Ueda have fueled speculation and contributed to a notable surge in interest rates.

Looking ahead, market participants are eagerly anticipating the Federal Reserve’s impending interest rate decision, scheduled for Wednesday at 18:00 GMT. Following this decision, Federal Reserve Chairman Jerome Powell will hold a press conference, during which he may offer insights into the central bank’s ‘dot plot’ projections and inflation expectations. As the week progresses, the financial community’s focus will shift toward the Bank of Japan’s monetary policy meeting, also slated for Friday.

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XAU/USD closes in to the golden ratio of 61.8 percent

XAU/USD closes into the golden ratio of 61.8 percent

In Asia, the price is attempting to break below the 50% mean reversion line, exposing the 61.8 percent Fibo target of $1,850 once more. Following a move into the 50 percent mean reversion level of the hourly bullish impulse highlighted in earlier trading, the gold price is backpedalling further at $1,852, as shown in the technical analysis below. The US dollar has been on the rise since mid-week and has remained steady in Asia, rising higher in the DXY index’s basket of currencies.

The US dollar index rose on Wednesday, erasing earlier losses as investors exited stocks at the same time as the US 10-year auction touched a high yield of 3.03 percent, up from the previous auction’s high of 2.943 percent. The dollar also hit a new two-decade high against the yen, despite the Bank of Japan remaining one of the few global central banks to maintain a dovish approach. Following this, US rates have rallied, with the 10-year presently holding above 3%, bolstering the greenback.

Following warnings from the OECD that the world will pay a high price for the war in Ukraine, gold has been promoted for its safe-haven attributes. “It cut its global growth forecast for this year from 4.5 percent to 3 percent, down from 4.5 percent in December.” This comes after the World Bank altered its growth prediction earlier this week. As the dollar rose, gold gave up some gains late in the day,” according to ANZ Bank analysts.

“While the fighting in Ukraine helped to send the bears packing, the fading of geopolitical risk premia across global assets hasn’t seen this cohort of discretionary traders liquidate their position,” according to analysts at TD Securities. “As a result, the disparity between gold and real rates can be linked to both an excessive rise in real rates as a result of quantitative tightening, as well as the still-significant amount of complacent length maintained in gold, which keeps gold’s prices elevated.”

The focus for the rest of the day will be on the European Central Bank before traders prepare for Friday’s US inflation report. TD Securities analysts believe the EUR/USD has limited potential to advance unless the governor, Christine Lagarde, “commits to a series of 50s,” especially with the Euribor curve trading as it is and US CPI due the next day. For EURUSD to trade lower, the risk/reward ratio is more advantageous.

TDS analysts also believe the ECB will “announce that the APP will terminate within weeks” and “give a strong signal that rate rises will occur in July and September” (October remains a more interesting meeting in this sense). Forecasts show higher inflation and slower growth, reflecting the ECB’s ongoing difficulties. “As a result, gold may be appealing due to its safe-haven features. The precious metal has found some support from investors due to the worsening economic backdrop. Despite a stronger dollar, gold has just climbed past $1,850.

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On constrained supply, oil rises 1%, with US crude hitting a 13-week high

On constrained supply, oil rises 1%, with US crude hitting a 13-week high

On Tuesday, oil prices rose by around 1%, with U.S. crude settling at a 13-week high due to supply concerns, including the likelihood of no nuclear deal with Iran and forecasts for demand growth in China, which is reducing pandemic lockdowns. According to Reuters polled analysts, U.S. crude inventories decreased last week. A decline in petroleum stockpiles might boost prices further more.

On Tuesday, at 4:30 p.m. EDT (2030 GMT), the American Petroleum Institute (API) will release its inventory report. On Wednesday at 10:30 a.m. EDT (1430 GMT), the US Energy Information Administration (EIA) releases its report.

“Several numbers” in the EIA report, according to Robert Yawger, executive director of energy futures at Mizuho, are “within striking distance of historical lows,” including possibly crude storage for the country, crude storage at Cushing, Oklahoma, and crude storage in the Strategic Petroleum Reserve.

Brent crude futures rose $1.06, or 0.9 percent, to $120.57 per barrel, the highest level since May 31. WTI crude in the United States rose 91 cents, or 0.8 percent, to $119.41, its highest settlement since March 8 and matching an August 2008 settlement high.

Iran’s demands for sanctions relief, according to the US, are impeding progress on reviving the 2015 nuclear deal. According to analysts, a deal might increase global oil supplies by 1 million barrels per day. In 2022, the US EIA predicts that both crude production and petroleum demand will increase in the United States.

Expectations that demand will resume in China, where the capital Beijing and the business hub Shanghai have started resuming normalcy after two months of lockdowns, boosted prices. Analysts also questioned that global oil supplies would grow significantly as a result of OPEC+’s decision to accelerate output increases last week. According to analysts, the rise in quotas from OPEC+, the Organization of Petroleum Exporting Countries (OPEC) and allied producers including Russia, is less than the loss of Russian crude as a result of Western sanctions, and it also fails to alleviate an oil product deficit.

Oil prices could touch $150 a barrel shortly and continue higher this year, according to Trafigura’s CEO, with demand destruction probable by the end of the year. For the period between the second half of 2022 and the first half of following year, Goldman Sachs boosted its Brent oil price projections by $10 to $135 a barrel, citing an unsolved structural supply shortage.

In other supply concerns, Libya’s Sharara oilfield was shut down again late Monday, and more than a tenth of Norway’s offshore oil and gas workers intend to strike starting Sunday if state-mediated pay negotiations fail.

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Oil falls after breaking through $120 as inflation and GDP concerns in the United States bite

Oil falls after breaking through $120 as inflation and GDP concerns in the United States bite

In Monday’s session, oil rose to near three-month highs above $120 a barrel before falling on profit-taking and concerns about the impact on the US economy of record fuel prices in a country already grappling with 40-year high inflation. “The rule of thumb is that every $10 increase in the price of a barrel of oil subtracts one-tenth of a point from GDP,” said Mark Zandi, chief economist at Moody’s Analytics. GDP is the broadest indicator of the country’s economic health.

On Monday, the average price of gasoline at U.S. gas stations reached all-time highs near $4.87 per gallon, up from $3.05 a year earlier. Diesel was $5.65 per gallon on average, up from $3.20 a year ago. Two schools of thought have emerged regarding the economic impact of such high fuel prices: one believes that demand destruction in gasoline is already taking place, with four-week consumption down 2.6 percent in the third week of May compared to a year ago; the other believes that because fuel is a “inelastic” commodity, its demand will not be harmed as much as the broader US economy.

Economists are concerned that the Federal Reserve’s efforts to combat inflation will push the US into recession. Since the beginning of the year, the economy has been on a downward trend, with negative growth of 1.4 percent in the first quarter. It will officially be in recession if it does not return to positive territory by the second quarter, as it only takes two consecutive negative quarters to cause a recession.

The New York-traded benchmark for US crude, West Texas Intermediate, fell 37 cents, or 0.3 percent, to $118.50 per barrel. “I believe people will only cut back on their driving to a certain extent,” Zandi remarked. “Other sorts of discretionary expenditure will take a blow.” WTI hit a high of $121 earlier today, its highest level since the first week of March, when it soared to nearly $130 following the imposition of the first Western sanctions on Russia for its invasion of Ukraine. WTI is up 57 percent year to date.

Brent, the worldwide standard for crude traded in London, fell 21 cents, or 0.2 percent, to $119.51 for a barrel due in August. Brent had previously hit a session high of $121.85. It has increased by 53% year over year. Oil prices rose to three-month highs as a result of Europe’s ban on most Russian oil products, which went into effect last week as the West escalated its sanctions against Moscow over the Ukraine conflict. Traders blamed Monday’s gain on China’s removal of Covid restrictions, solid US employment growth, and an ill-timed Saudi increase in the selling price of its petroleum.

The rise in oil occurred ahead of the Consumer Price Index’s May reading, which is coming on Friday and will be scrutinized for signs of further contraction following its 8.3 percent climb in the year to April. That was the first time the CPI measurement had dipped since August, when it had increased by 5.3 percent on an annual basis.

Saudi Arabia boosted the official selling price, or OSP, for its flagship Arab light crude to Asia to a $6.50 premium above the average of the Oman and Dubai benchmarks on Sunday, up from a $4.40 premium in June. The July OSP is the highest since May, when prices reached all-time highs due to fears of supply disruptions from Russia as a result of sanctions imposed in response to its invasion of Ukraine.

The price increase came despite OPEC+, the Organization of Petroleum Exporting Countries and its partners, agreeing last week to expand supply by 648,000 barrels per day in July and August, or 50% more than previously planned. However, Russia, which has already lost one million barrels per day owing to sanctions, and nations like Angola and Nigeria, which have frequently failed to fulfil set output objectives, were included in the accord.

As a result, analysts estimate that the net impact of the OPEC+ rise will be roughly 560,000 barrels per day, compared to the planned 1.3 million, because most members of the oil exporters’ alliance have already reached their production capacity. In comments cited by Reuters, Avtar Sandu, manager of commodities at Phillip Futures in Singapore, remarked that oil producers are “making hay while the sun shines.”

Summer driving demand and a solid job climate in the United States, as well as the relaxation of Covid lockdowns in China, are all contributing to oil’s bullish hype, according to Sandu. The only bearish aspect in oil, if there was one, was news that Eni and Repsol could start shipping Venezuelan oil to Europe as soon as next month to compensate for Russian crude. The shipments would restore oil-for-debt swaps that were interrupted two years ago when the US tightened sanctions against Venezuela.

“Should Venezuelan and Libyan production be returned to Europe and North America, it will not be significant enough to cut prices in the medium term,” Halley added. “Global refining margins show that demand for gasoline and diesel remains strong, with the refining glut in refined products supporting crude prices.”

According to Sunil Kumar Dixit, chief technical strategist at skcharting.com, oil is now in its seventh month of a bull run, with six weeks of steady positive closes, and $130 was WTI’s aim. “The recent week’s long price action has built strong bullish momentum that aims a retest of the $123 – $124.50 and $127 levels before retesting $130 provided the rally receives appropriate volume support,” Dixit added. He said that the readings of the Stochastics, Relative Strength Index, and Moving Average were also extremely supportive of additional rise.

WTI will be supported at $115 this week, according to Dixit. “At that time, weakness below $111 will put the brakes on the rally, and momentum will turn into a correction, exposing oil to $100 and below,” he warned.

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US jobs report indicates more rate hikes are on the way, gold prices are rising

US jobs report indicates more rate hikes are on the way, gold prices are rising

Even as the US jobs report suggested additional interest rate hikes this year, gold was up in Asia on Monday morning, putting pressure on non-yielding bullion. By 10:26 p.m. ET, gold futures were up 0.32 percent to $1856.20. (2:26 AM GMT). For the previous week, it has fluctuated between $1,828 and $1,864, with an overall average of $1,850.

Since new job market statistics revealed no signs of the US economy succumbing to high inflation and rising borrowing costs, the Federal Reserve is on track to raise interest rates by half a point in June, July, and possibly beyond. Gold fell on Friday as statistics indicated that firms in the United States employed more people than expected in May and continued to raise wages at a rapid rate.

Meanwhile, investors increased their bets on interest rate hikes by the European Central Bank this year, pricing in a larger, 50 basis-point raise at one of the bank’s policy meetings by October. Because gold pays no interest, higher rates increase the opportunity cost of storing it. Sibanye Stillwater, a South African precious metals miner, announced on Friday that trade unions leading a strike at its gold operations had received a mandate from their members to accept a three-year pay contract.

According to the president of the mining chamber, Ghana’s gold production plunged 30% last year, to its lowest level in more than a decade, knocking the country off its perch as Africa’s top producer. Gold discounts widened in India the previous week as demand slowed owing to rising prices and the end of the wedding season. Consumers in top consumer China were likewise wary of buying bullion as coronavirus restrictions were gradually eased. Platinum rose 0.2 percent to $1,015.99 per ounce, while palladium rose 0.9 percent to $1,993.52. The price of silver increased by 0.1 percent to $21.92 per ounce.

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With an eye on the US NFP, the XAU/USD is approaching the $1,875 mark

With an eye on the US NFP, the XAU/USD is approaching the $1,875 mark

The gold price (XAU/USD) is swinging around $1,870, following an upswing to reclaim a one-month high during Friday’s early Asian session, as the NFP-related caution saps enthusiasm. The recent mixed stories about China, as well as resurgence in US Treasury yields, may also pose a threat to gold prices.

The previous day, though, the yellow metal climbed the highest in a fortnight as the US Dollar Index experienced its greatest daily drop in two weeks. Softer US statistics and Fed policymakers’ hesitation, on the other hand, appeared to have prompted the US dollar’s decline, as well as accelerated gold prices.

The early indication of Friday’s US Nonfarm Payrolls (NFP), namely the US ADP Employment Change, fell to 128K for May, vs 300K estimates and a downwardly revised 202K previous figure. The Weekly US Initial Jobless Claims, on the other hand, fell to 200K from 210K expected and 211K the week before. In addition, Nonfarm Productivity and Unit Labor Costs also improved in Q1, to -7.3 percent and 12.6 percent, respectively, compared to market consensus numbers of -7.5 percent and 11.6 percent. Furthermore, factory orders in the United States fell by 0.3 percent in April, compared to a revised 1.8 percent in March and an estimate of 0.7 percent.

Lael Brainard, the Vice-Chair of the Federal Reserve, and Loretta Mester, the President of the Cleveland Federal Reserve, both repeated statements that suggested increasing odds supporting the Fed’s aggressive rate hikes. Deputy US Trade Representative (USTR) Sarah Bianchi stated in a Reuters interview on Thursday that “all options are on the table” when it comes to tariff determinations on Chinese goods. “The US Trade Representative is seeking a ‘strategic realignment’ with China, as well as a tariff structure that ‘makes sense,'” the diplomat noted.

While Wall Street benchmarks gained for the first time in a week, US Treasury rates remained under pressure. The S&P 500 Futures have recently posted minor increases, although US Treasury rates have paused their recent decline around 2.92 percent, indicating the market’s cautious confidence. Moving forward, gold traders will be looking for a new direction in the US jobs report for May, as well as the ISM Services PMI for the same month.

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OPEC prepares to establish new output targets, oil prices are rising

OPEC prepares to establish new output targets, oil prices are rising

Oil prices have climbed ahead of the OPEC cartel of oil-producing nations’ meeting on Thursday, as ministers prepare to establish output targets for July in their first meeting since the European Union slapped sanctions on Russian petroleum. Some members of OPEC are pressuring the organisation to eliminate Russia, the world’s third largest oil producer, from future quotas, potentially allowing Saudi Arabia and the United Arab Emirates to pump more oil.

Brent crude oil futures, the North Sea benchmark, climbed 2% to $117 a barrel at one point on Wednesday. West Texas Intermediate, its North American counterpart, climbed by a comparable amount to just under $116 a barrel. Prices had dipped from highs of over $125 earlier in the week, but had rebounded as investors considered how much supply could be raised to offset the sanctions’ impact.

On Thursday, ministers from OPEC’S 13 members and ten non-Opec producers led by Russia, known as Opec+, will meet by video conference. They’re anticipated to accept a 432,000-barrel-per-day hike in July, the latest in a series of monthly increases that began in September 2021. Russia has fallen behind the rest of the group, with output predicted to fall by 8% this year. According to the Wall Street Journal, Russia’s declining production has spurred some countries, including Gulf members, to propose eliminating Russia from production targets, allowing other members to increase their output.

Oil and energy costs have risen dramatically in recent months as global economies emerge from pandemic lockdowns, exacerbated by the consequences from Russia’s invasion of Ukraine. As people struggle with increased fuel prices, rapid price swings have contributed to inflationary pressures and cost-of-living issues around the world.

The price hikes have prompted failed attempts by US Vice President Joe Biden and UK Prime Minister Boris Johnson to persuade other major oil producers, such as Saudi Arabia, to pump more, infuriating environmentalists who argue that governments should instead focus on energy efficiency measures that could quickly reduce demand. G7 energy ministers urged for higher OPEC production during a meeting last week in Germany.

The break-up of the Opec+ group, according to Bjarne Schieldrop, chief commodities analyst at SEB, will allow Saudi Arabia and the UAE to employ their spare capacity to boost production. However, he questioned if it would help to relieve the pressure on global markets. He claimed that “minds in the EU and the US are concentrated on damaging Russian petro-income.” “More oil from Saudi Arabia and the United Arab Emirates will allow the west to impose stricter sanctions, reducing Russian oil supplies while keeping oil prices stable.” As a result, there would be no more supply for the market overall.”

Russian Foreign Minister Sergei Lavrov, on the other hand, stated on Wednesday that Russia hopes to continue working with OPEC. “The ideas of cooperation on this basis retain their meaning and relevance,” Lavrov said at a news conference in Saudi Arabia during a visit to the Middle East. Most of Russia’s important banks involved in the oil trade have been sanctioned by the US, EU, and allies such as the UK, and the EU belatedly agreed on a partial embargo on oil imports on Tuesday.

Another step to make it more difficult for Russia to export has been collaboration between the UK and the EU to prohibit insurers from insuring ships transporting Russian oil. The world’s oldest insurance market, Lloyd’s of London, announced on Wednesday that it is working closely with British and other governments and authorities to impose global sanctions on Russia.

“Lloyd’s supports and remains committed to the implementation of a global sanctions framework against Russia,” the company said. The EU embargo will not affect oil transported to Hungary, the Czech Republic, and Slovakia via the Soviet-era Druzhba pipeline, and Bloomberg Economics estimates that Russia will still receive $285 billion (£226 billion) in fossil fuel exports this year, including gas, on which European countries rely heavily.

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Ahead of the Manufacturing PMI, XAU/USD is expected to fall

Ahead of the Manufacturing PMI, XAU/USD is expected to fall 

In the New York session, the gold price (XAU/USD) broke down from its prior consolidation in a $1,846.20-1,864.16 range. The precious metal has been very volatile as investors prepare for the Federal Reserve (Fed) to increase the scope of its aggressive stance in June.

Inflationary forces in the US economy have wreaked havoc on the Federal Reserve and the US government. On Tuesday, US President Joe Biden and Federal Reserve Chairman Jerome Powell held a meeting to discuss strategies to rein down surging inflation. Whatever steps the Fed takes to alleviate price pressures, one thing is certain: the liquidity absorption programme will be tightened even further, and gold prices will remain on pins and needles.

Meanwhile, the US dollar index is consolidating above 101.70, and after a fall, it is likely to see initiative buying. Today’s day will be dominated by the ISM Manufacturing PMI, which is expected to be lower at 54.5, compared to the previous print of 55.4. On the hourly scale, a negative breach of the Symmetrical Triangle resulted in a volatility expansion, which brought gold prices sharply lower. The precious metal’s downfall will find a cushion around roughly $1,820.00. At $1,846.00 and $1,850.00, respectively, declining 20- and 50-period Exponential Moving Averages (EMAs) suggest additional downside. The Relative Strength Index (RSI) (14) has also switched to a bearish range of 20.00-40.00, adding to the downside filters.

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EUR/USD Price Forecast

EUR/USD Price Forecast: Consolidating Below 1.0500 Amid Multi-Week High

The EUR/USD currency pair is having a hard time continuing its recent winning streak, trading in a tight range just below the 1.0500 psychological mark during the Asian session on Monday. In spite of the consolidation, the pair is still close to its three-week high of Friday, buoyed by a weaker US Dollar (USD).

Technically, the pair‘s location above the 38.2% Fibonacci retracement level of the November-January bear run, combined with upbeat oscillators on the daily chart, indicates that the bullish momentum is still intact. This leaves room for a potential rally towards the 1.0545-1.0555 resistance area, which coincides with the 50% Fibonacci retracement level and the 100-day Exponential Moving Average (EMA).

A successful breach above this crucial barrier may set the stage for additional gains, with EUR/USD potentially challenging the 1.0600 level. A break above this level may propel the pair towards the December 2024 swing high of 1.0630, close to the 61.8% Fibonacci retracement level. Further bullish momentum may continue to drive the rebound from its more than two-year low in January.

To the contrary, however, the 38.2% Fibonacci level of 1.0465 acts as an instant support level. A resolute breach through this area can drive selling momentum faster, pulling the pair towards the 1.0400 round number and down further into the mid-1.0300s (23.6% Fibonacci level). Failure to hold these levels could shift the bias in favor of bearish traders, potentially exposing the 1.0200 handle.

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EUR/USD Eases Near

EUR/USD Eases Near 1.0300 Ahead of Lagarde’s Speech

The EUR/USD pair edges lower to approximately 1.0310 during the Asian session on Monday, weighed down by a stronger US Dollar (USD). Market participants are focused on the upcoming Eurozone Sentix Investor Confidence data for February and a speech by European Central Bank (ECB) President Christine Lagarde later in the day.

On Friday, former US President Donald Trump announced plans to introduce reciprocal tariffs on multiple countries by Tuesday or Wednesday, though he did not specify which ones. This move has heightened concerns about a global trade war, fueling demand for the safe-haven USD.

“The immediate concern might not be inflation, as counter-effects like a demand slowdown could come into play. However, the bigger issue is uncertainty and the shift toward a more protectionist world,” said Charu Chanana, Chief Investment Strategist at Saxo.

Meanwhile, the Euro faces pressure from growing expectations of further ECB rate cuts amid sluggish economic growth. ECB Governing Council member Boris Vujcic stated that the market’s anticipation of three rate cuts this year is reasonable. However, he emphasized that greater clarity on monetary policy direction may not emerge until early in the second quarter.

Traders will keep a close eye on US trade policies, especially Trump’s repeated threats against Europe. JPMorgan economist Nora Szentivanyi noted that the objectives, timing, and tariff rates remain unclear. Nonetheless, the European Commission has stated it would retaliate firmly against any tariffs imposed by the US.

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EUR/USD Holds Below 1.0400 Ahead of Eurozone Retail Sales Data

EUR/USD Struggles Below 1.0400 Ahead of Eurozone Retail Sales Data

EUR/USD is trading lower around 1.0390 in the Asian session on Thursday, extending losses following a two-day recovery. Investors remain wary ahead of the release of Eurozone Retail Sales data later today.

Market predictions suggest that Eurozone retail sales scaled by 1.9% year on year in December, up from the previous 1.2% increase. However, the monthly number is expected to fall by 0.1%, erasing the 0.1% increase reported in November.

The euro remains under pressure as market sentiment points to further monetary easing by the European Central Bank (ECB). Policymakers feel optimistic that inflation will steadily return to the ECB’s 2% objective, lessening the need for additional tightening.

Meanwhile, the US Dollar Index (DXY), which tracks the dollar against six major currencies, has stabilized at 107.70, restricting EUR/USD’s upside potential. The dollar’s resiliency comes after a three-day losing skid, which puts pressure on the pair.

On Thursday, Federal Reserve Vice Chair Philip Jefferson reiterated his desire for keeping existing interest rates, underlining that the Fed’s policy remained restrictive despite the 100-basis-point drop. Meanwhile, San Francisco Federal Reserve President Mary Daly emphasized the central bank’s cautious attitude in the face of prolonged economic uncertainties.

The dollar weakened on Wednesday following a disappointing US Services PMI reading. The ISM Services PMI dropped to 52.8 in January from a revised 54.0 in December, falling short of the market consensus of 54.3. Looking ahead, traders are watching Friday’s US Nonfarm Payrolls (NFP) report, which might influence the Federal Reserve’s next policy actions.

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EUR/USD Stuck in Range Near 1.0375-1.0380 as Bulls Struggle for Direction

EUR/USD Struggles for Clear Direction, Stays Range-Bound Near 1.0375-1.0380

The EUR/USD pair continues in consolidation mode, failing to build on its recent recovery from the 1.0200 region—the lowest level since January 13. After reaching a weekly high earlier on Wednesday, the pair is fluctuating within a narrow range around 1.0375-1.0380, showing little change for the day amid mixed market signals.

Tuesday’s Job Openings and Labor Turnover Survey (JOLTS) indicated a cooling U.S. labor market, reinforcing expectations of Federal Reserve (Fed) policy easing. Markets are now factoring in the likelihood of two rate cuts by the Fed this year. Risk-on sentiment also remains prevalent, but should continue to weigh on demand for the safe-haven USD, and thereby support EUR/USD.

Upside momentum, however remains constrained by issues on the introduction of U.S. tariffs over the goods to be imported in Europe under Trump’s administration, among others, and the ECB dovish direction which is being felt in restraining the Euro though HICP was reported higher to an annual rate of 2.5% in the last month, still, does not allow much upside in this pair.

Looking ahead, market participants will focus on the final Eurozone Services PMI release, while the U.S. economic calendar highlights the ADP private-sector employment report and the ISM Services PMI. Movements in the USD could also be influenced by key FOMC member speeches. Still, Friday’s NFP report will focus more attention on it as it will help deliver a better picture of the situation in the U.S. labor market and set the direction for future Fed policy.

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GBP/USD Holds Above 1.2400 as Markets Watch China Tariff Developments

GBP/USD Holds Above 1.2400 as Markets Watch China Tariff Developments

GBP/USD extends its gains for a second consecutive session, trading around 1.2430 during Asian market hours on Tuesday. With  the  decision   by   U.S. President Donald Trump   to pause tariffs on Mexico and Canada , the pair benefits from a risk-on sentiment .

Despite this, investors continue to pay close attention to ongoing trade negotiations, making market volatility a major concern. Trump declared that he would postpone imposing high tariffs on Canada and Mexico for at least 30 days following their agreements to send 10,000 troops to the U.S. border to fight drug trafficking.

This move follows Trump’s recent decision to impose 25% tariffs on Mexican and Canadian goods, along with a 10% tariff on Chinese imports. Additional tariffs on China are anticipated to go into effect Tuesday at 5:00 GMT. Trump managed to say that talks with Chinese officials might happen “probably over the next 24 hours,” and that tariffs on China would be “very, very substantial” if an agreement could not be made.

Meanwhile, the U.S. Dollar Index (DXY), which tracks the USD against six major currencies, hovers around 108.70 after erasing most of its gains from the previous session. Strong U.S. economic data could provide support for the greenback, as the ISM Manufacturing PMI climbed to 50.9 in January from 49.3 in December, surpassing the expected 49.8.

While GBP/USD may rise, the British Pound’s upside may be limited, given the expectation that the Bank of England (BoE) will cut interest rates once again. Despite rising wages in the UK, the BoE is expected to lower interest rates by 25 basis points to 4.5% on Thursday.

The BoE’s Monetary Policy Committee (MPC) is expected to vote 8-1 in favor of the rate cut, with one member likely advocating for maintaining rates at their current level for now.

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EUR/USD Drops to 1.0200 on Trump’s Trade Tariffs

EUR/USD Slumps to Multi-Week Low Near 1.0200 Amid Trump’s Trade Tariffs

The EUR/USD pair extends its decline on Monday, plunging to the 1.0200 region—a three-week low—during the early Asian session. This drop brings the pair closer to its lowest level in over two years, last seen in January, reinforcing the ongoing multi-month downtrend.

The US Dollar (USD) gains broad strength following President Donald Trump’s weekend announcement of new tariffs: 25% duties on imports from Canada and Mexico, along with an additional 10% tariff on Chinese goods. These measures escalate global trade tensions, dampening investor appetite for riskier assets and boosting demand for the safe-haven USD. As a result, the EUR/USD pair faces renewed selling pressure.

Adding to the bearish sentiment, Trump also declared on Friday evening that he would impose tariffs on goods from the European Union. This, coupled with the European Central Bank’s (ECB) dovish stance, further weighs on the euro. Last Thursday, the ECB cut borrowing costs by 25 basis points (bps) as expected and signaled the possibility of additional rate cuts before the year’s end, exacerbating the euro’s weakness.

The policy divergence between the ECB and the Federal Reserve (Fed) further tilts market sentiment in favor of the USD. While the Fed has opted for a hawkish pause, supporting the dollar’s strength, a recent pullback in US Treasury yields may limit further USD gains and offer some relief to the EUR/USD pair. However, the overall market outlook suggests that the pair’s downside momentum is likely to persist.

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EUR/USD Holds Above 1.0400 | Focus on Q4 GDP & ECB Policy Decision

EUR/USD Holds Above 1.0400 Ahead of Q4 GDP Data and ECB Policy Decision

The EUR/USD pair is edging higher after three consecutive losses, trading near 1.0420 during Thursday’s Asian session. The rebound is primarily driven by a technical pullback in the US Dollar (USD). Meanwhile, the US Dollar Index (DXY), which tracks the greenback against six major currencies, remains just below 108.00.

Despite the recent uptick, further gains for EUR/USD may be capped as the USD could regain strength following the Federal Reserve’s (Fed) cautious approach to monetary policy. The Fed reinforced its hawkish stance by removing language suggesting confidence in inflation reaching its 2% target.

During his press conference, Fed Chair Jerome Powell emphasized that any policy changes would require “real progress on inflation or some weakness in the labor market.” As expected, the Fed maintained its overnight borrowing rate at 4.25%-4.50% during its January meeting on Wednesday. This decision follows three consecutive rate cuts since September 2024, totaling a one-percentage-point reduction.

Meanwhile, the Euro faces downward pressure as the European Central Bank (ECB) is widely expected to cut interest rates by 25 basis points in its policy meeting on Thursday, lowering the Deposit Rate to 2.75%. Market sentiment suggests that further rate cuts from the ECB may follow in the coming months, potentially weighing on the Euro.

Investors will closely watch the release of fourth-quarter Gross Domestic Product (GDP) data from the Eurozone and Germany on Thursday. Later in the day, focus will shift to the US Annualized GDP report, which could influence market sentiment and currency movements.

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USD/JPY Holds Steady Near 147.00 as Yen Weakens on Trade Tensions and BoJ Rate Outlook

USD/JPY Holds Steady Near 147.00 as Yen Weakens on Trade Tensions and BoJ Rate Outlook

The Japanese Yen (JPY) continues to trade with a bearish bias on Wednesday, keeping the USD/JPY pair firm around the 147.00 mark during the Asian session. A stronger US Dollar and persistent concerns over rising trade tensions are weighing heavily on the Yen, as markets brace for the impact of US tariffs on Japanese goods starting August 1. 

Former US President Donald Trump’s announcement of a 25% tariff on Japanese imports, coupled with the threat of retaliatory action, has sparked renewed fears over Japan’s economic resilience. The country’s Q1 GDP contracted, real wages in May dropped at their steepest pace in nearly two years, and political uncertainty is rising ahead of the July 20 House of Councillors election. Recent polls suggest the ruling LDP-Komeito coalition may struggle to retain its majority, further dampening investor confidence. 

These developments have led traders to scale back expectations of a rate hike by the Bank of Japan this year. The combination of domestic headwinds and external pressure is weakening the JPY, while the US Dollar continues to gain on expectations that rising tariffs will stoke inflation and prompt the Federal Reserve to maintain a hawkish stance. 

The Fed’s June decision to hold interest rates steady, along with a strong US jobs report, has reinforced the belief that rate cuts may be delayed until at least October. The FOMC meeting minutes, due later today, will be closely watched for insights into the Fed’s policy trajectory. Markets currently anticipate up to 50 basis points in rate cuts by year-end. 

Technical Outlook: Bullish Momentum Builds 

Technically, USD/JPY’s break and close above the 100-day Simple Moving Average (SMA) — for the first time since February — signals potential for further gains. Positive momentum on the daily chart supports a move toward the 147.60–147.65 resistance area, with the 148.00 handle, a key June high, in sight. 

On the downside, immediate support lies near 146.50, with the 100-day SMA just below 146.00 acting as a critical pivot. A decisive break below this level could shift momentum in favor of bears, opening room for deeper losses. 

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NZD/USD gains ground to near 0.5700 on weaker US PMI data

During the early Asian session on Thursday, the NZD/USD pair was trading slightly higher at 0.5690. The Greenback falls against the New Zealand Dollar (NZD) as US economic data disappoints. Investors will keenly monitor developments in the rekindled trade battle between the United States and China, the world’s two largest economies. 

The weaker US Services Purchasing Manager Index (PMI) could weigh on the Greenback and generate a tailwind for the pair. The US ISM Services PMI fell to 52.8 in January from 54.0 (revised from 54.1) in December. This reading came in below the market consensus of 54.3.

On the other hand, New Zealand’s fourth-quarter employment report will put the RBNZ on pace to decrease the Official Cash Rate (OCR) by 50 basis points (bps) to 3.75% this month. Statistics New Zealand said on Wednesday that the country’s unemployment rate increased to 5.1% in Q4, up from 4.8% the previous quarter. This result was a four-year high and exceeded the 25-year average of 4.8%. Rising expectations that the Reserve Bank of New Zealand (RBNZ) may decrease interest rates may further impact on the New Zealand Dollar (NZD).

“In line with RBNZ guidance, markets continue to imply another 50bps rate cut to 3.75% at the February 19 meeting and the policy rate to through around 3.00% over the next 12 months. Bottom line: NZ-US 2-year bond yield spreads can further weigh on NZD/USD,” noted Société Générale’s FX analysts. 

On Tuesday, the finance ministry in China unveiled a package of tariffs on various US products such as crude oil, farm equipment, and some autos in a sharp response to an announcement made by US President Donald Trump imposing a 10% tariff on Chinese imports. Further, China served notice to several companies including Google for potential sanctions in response to Trump’s tariffs. Any sign of uncertainty or a rising trade war tension may see the China-proxy Kiwi being dragged lower, as China remains one of the major trading partners to New Zealand.

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JPY Recovers Losses vs. USD, Bullish Outlook Intact

Japanese Yen Recovers Some Losses Against USD; Bullish Outlook Remains Intact

The Japanese yen (JPY) cut some of its intraday losses against the US dollar (USD) on Monday, bringing the USD/JPY pair back below the mid-155.00s during the early European session. The Bank of Japan’s (BoJ) Summary of Opinions showed conversations about the possibility of further hikes in interest rates. Furthermore, Tokyo’s core inflation increased at the quickest annual rate in nearly a year, raising expectations of further policy tightening by the BoJ, which supports the JPY.

Beyond monetary policy, narrowing interest rate differentials between Japan and other major economies, including the US, alongside a broader risk-off sentiment, provide additional support to the safe-haven JPY. However, concerns over the economic impact of US President Donald Trump’s newly announced trade tariffs limit the yen’s upside. Meanwhile, the USD remains broadly strong, allowing the USD/JPY pair to maintain its positive momentum for a second consecutive day, ahead of the upcoming US ISM Manufacturing PMI report.

Yen Gains Traction Amid BoJ Rate Hike Bets and Trade War Fears

US President Donald Trump signed an executive order on Saturday to impose 25% tariffs on imports from Canada and Mexico and 10% tariffs on Chinese goods, effective Tuesday.

Canada’s Prime Minister Justin Trudeau, Mexico’s President Claudia Sheinbaum, and China’s foreign ministry all replied quickly, indicating probable retaliation. The US Dollar continues to climb, approaching a two-year high last hit in January, supporting the USD/JPY pair’s upward trend.

The Bank of Japan’s latest Summary of Opinions, released on Monday, showed that policymakers are thinking about additional rate hikes, though this has failed to appreciably lift the JPY.

Board members of the Bank of Japan stressed the need of continuing to raise interest rates if economic conditions and inflation remain stable.

Japan’s Finance Minister Katsunobu Kato stated that the government is closely monitoring the impact of Trump’s tariffs on the yen amid concerns over potential economic fallout.

Economy Minister Ryosei Akazawa reiterated Japan’s commitment to achieving the BoJ’s 2% inflation target while implementing measures to offset rising living costs.

The US-Japan yield spread remains near a multi-week low, which, coupled with risk aversion, could help stabilize the yen in the near term.

Investors now turn their focus to key US economic data, starting with today’s ISM Manufacturing PMI, followed by the highly anticipated Nonfarm Payrolls (NFP) report on Friday.

USD/JPY Faces Resistance Near 156.25; Bears in Control Below This Level

From a technical standpoint, last week’s strong rebound from the 50% Fibonacci retracement level of the December-January rally and the subsequent upside move favor bullish traders. However, additional gains beyond 156.00 may encounter resistance near last week’s swing high at 156.25. A sustained break above this level could spark a short-covering rally, pushing the pair towards:

  • 156.70-156.75 resistance
  • 157.00 psychological mark
  • 157.60 horizontal barrier
  • Potential extension towards 158.00, with an ultimate target at the 158.85-158.90 multi-month high from January 10

Conversely, on the downside:-

  • 155.00 serves as immediate support
  • Below this, watch for key levels at 154.55-154.50 and 154.00
  • A break below the 153.70 January low could accelerate the decline towards 153.30 and eventually 153.00

While the JPY is exhibiting some resilience, the overall trend remains unpredictable, with market participants intently watching economic indicators and geopolitical developments.

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Australian Dollar Drops as RBA Rate Cut Bets Rise, Fed Decision Looms

Australian Dollar Slides Amid Rising Odds of RBA Rate Cuts, Fed Decision in Focus

The Australian Dollar (AUD) extends its losing streak for a third consecutive session against the US Dollar (USD), weighed down by softer-than-expected inflation data from Australia.

Australia’s Consumer Price Index (CPI) rose by 0.2% quarter-on-quarter in Q4 2024, matching the previous quarter but missing the expected 0.3%. On an annual basis, CPI eased to 2.4% from 2.8% in Q3, below the market forecast of 2.5%. Despite December’s monthly CPI ticking up to 2.5% YoY, inflation remains within the Reserve Bank of Australia’s (RBA) 2%-3% target range. Meanwhile, the RBA’s Trimmed Mean CPI slowed to 3.2% YoY, its weakest pace in three years, slightly under the anticipated 3.3%.

Australian Treasurer Jim Chalmers expressed confidence that “the worst of the inflation challenge is behind us” and that a “soft landing” is increasingly likely. The cooling inflation strengthens the case for an RBA rate cut in February. The central bank has held the Official Cash Rate (OCR) steady at 4.35% since November 2023, emphasizing the need for inflation to “sustainably” return to target before considering a rate reduction.

AUD Pressured by Risk Aversion, Trump’s Tariff Threats

The AUD faces additional headwinds from risk-off sentiment following tariff threats by former US President Donald Trump. On Monday, Trump announced plans to impose tariffs on imports of key commodities, including computer chips, pharmaceuticals, steel, aluminum, and copper, aiming to boost US manufacturing.

Meanwhile, the US Dollar Index (DXY) holds firm around 108.00 as traders turn their attention to the upcoming Federal Reserve (Fed) interest rate decision. Market expectations, per the CME FedWatch tool, indicate near-certainty that the Fed will maintain its policy rate at 4.25%-4.50%. Investors will closely watch Fed Chair Jerome Powell’s press conference for guidance on future policy shifts.

Concerns over the potential inflationary impact of Trump’s trade policies add another layer of uncertainty. US Bank chief economist Beth Ann Bovino noted, “A number of White House proposals appear inflationary, which could keep the Fed in check.” Additionally, Treasury Secretary Scott Bessent has proposed universal tariffs on US imports starting at 2.5%, with Trump reportedly favoring even higher rates.

China’s Economic Slowdown Adds Pressure on AUD

The Australian Dollar remains vulnerable to China’s economic struggles. China’s NBS Manufacturing PMI dropped to 49.1 in January from 50.1, missing expectations, while the Non-Manufacturing PMI slipped to 50.2 from 52.2. As Australia’s largest trading partner, China’s weak data weighs heavily on the AUD.

Despite China’s recent stimulus measures, including a $7.25 billion investment in index products and long-term stock investments, concerns persist. Industrial profits fell 3.3% YoY in 2024, marking a third consecutive year of contraction, driven by weak demand, deflationary pressures, and a prolonged property sector slump.

Technical Outlook: AUD/USD Turns Bearish Below 0.6250

The AUD/USD pair trades near 0.6230 on Wednesday after breaking below the ascending channel on the daily chart, signaling a shift toward a bearish bias. The 14-day Relative Strength Index (RSI) has dropped below 50, reinforcing downside momentum.

A decisive break below key support at the lower boundary of the ascending channel strengthens the bearish outlook, potentially pushing AUD/USD toward 0.6131—its lowest level since April 2020. On the upside, immediate resistance lies at the nine-day Exponential Moving Average (EMA) at 0.6256. A rebound above this level could reintroduce a bullish bias, with the next upside target near 0.6360.

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US Dollar Surges as Trump Revives Tariff Threats

US Dollar Surges as Trump Revives Tariff Threats

The US dollar strengthened significantly against all major currencies after President Donald Trump and his Treasury Secretary reignited concerns about potential tariffs, raising fears that trade policies may return to the forefront. Risk-sensitive currencies, particularly those tied to China, saw sharp declines, while the euro weakened amid speculation that the European Union could soon face tariff pressures. Simultaneously, the Japanese yen took a hit as traders hedged against potential US inflation spikes and rising Treasury yields.

This market turbulence followed a Financial Times report indicating that Scott Bessent, the newly appointed Treasury Department official, supports a phased approach to implementing universal tariffs on US imports. The initial proposal suggests starting with a 2.5% tariff rate. However, President Trump hinted at a much broader scope, potentially targeting a range of imports from steel to semiconductor chips and suggesting higher tariff rates over time.

The administration’s “moderate” proposal involves a gradual increase in tariffs, reaching 20% over eight months in increments of 2.5% per month. This timeline has triggered speculation about more extreme scenarios and raised questions about the global trade concessions needed to halt these measures. Bessent’s approach, which allows businesses time to adjust, could also spark a rush of imports and exports to avoid higher future costs.

Amid these developments, financial markets are grappling with the potential outcomes. Traders are assessing whether the proposed tariff measures are fully priced in and evaluating the likelihood of de-escalation through negotiation.

On the positive side, any concessions or agreements that delay or reduce tariffs could stabilize markets. However, the risks of escalating tariffs, particularly if negotiations fail, remain a significant concern. Higher tariffs could disrupt global trade and have far-reaching implications for currency valuations.

While we initially favored long positions on the dollar, the unfolding tariff narrative has introduced significant uncertainty. Staying prepared for sudden shifts in policy and market dynamics is now crucial as the situation continues to evolve.

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Australian Dollar Weakens Amid Concerns Over Trump’s Trade Policies and Mixed Chinese Data

Australian Dollar Weakens Amid Concerns Over Trump’s Trade Policies and Mixed Chinese Data

The Australian Dollar (AUD) ended its three-day winning streak against the US Dollar (USD) on Monday, with the AUD/USD pair trading flat following the release of mixed Chinese Purchasing Managers’ Index (PMI) data. As a close trade partner, Australia’s economy is heavily influenced by China’s economic performance.

China’s National Bureau of Statistics (NBS) reported that the Manufacturing PMI fell to 49.1 in January, down from 50.1 in December, missing market expectations. Similarly, the Non-Manufacturing PMI dropped to 50.2 from the previous month’s 52.2. These weaker-than-expected figures suggest a slowdown in China’s economic recovery, weighing on the risk-sensitive Australian Dollar.

Despite fresh stimulus measures from China aimed at revitalizing its equity markets, the AUD struggled to gain momentum. The China Securities Regulatory Commission (CSRC) announced a second round of long-term stock investment pilot programs valued at 52 billion Yuan ($7.25 billion). However, these measures have done little to alleviate investor concerns about China’s economic challenges.

Risk Aversion Rises Amid Trump’s Trade Tariff Push

Broader market sentiment took a hit as reports emerged that US President Donald Trump’s advisers are pushing to impose 25% tariffs on Mexico and Canada as early as February 1, bypassing negotiations. According to the Wall Street Journal, Trump’s willingness to move swiftly on tariffs follows similar actions taken against Colombia, raising fears of escalating trade tensions and dampening demand for riskier assets like the Australian Dollar.

Adding to the negative outlook, China’s Industrial Profits declined by 3.3% year-over-year in 2024 to CNY 7,431.05 billion, marking the third consecutive year of contraction. This downturn highlights ongoing economic headwinds, including weak demand, rising deflationary pressures, and a prolonged slump in the property sector.

Technical Analysis: AUD/USD Eyes Key Resistance Amid Bullish Setup

The AUD/USD pair is trading near 0.6290 on Monday, showing signs of upward momentum within an ascending channel on the daily chart, indicating a potential bullish bias. The 14-day Relative Strength Index (RSI) remains slightly above 50, reflecting mild optimism in the market.

On the upside, the pair could retest the psychological resistance level at 0.6300, with the next target near the channel’s upper boundary around 0.6350.

Support levels are found at the nine-day Exponential Moving Average (EMA) of 0.6265, followed by the 14-day EMA at 0.6254. A stronger support lies near the channel’s lower boundary around 0.6240, which could act as a safety net in case of a downside correction.

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NZD/USD Struggles

NZD/USD Struggles Below 0.5700 Amid Trump’s Tariff Plans and Dovish RBNZ Expectations

The NZD/USD pair remains under pressure, trading near 0.5675 during the early Asian session on Friday. The New Zealand Dollar (NZD) faces headwinds due to uncertainty surrounding US President Donald Trump’s proposed tariffs on China and the dovish outlook of the Reserve Bank of New Zealand (RBNZ).

New Zealand’s Consumer Price Index (CPI) for the fourth quarter of 2024 indicated a continued decline in underlying inflation, strengthening expectations of additional rate cuts by the RBNZ. Swap markets now estimate a nearly 90% chance of a 50-basis-point (bps) rate cut on February 19, building on the two cuts already implemented in this cycle. The RBNZ is projected to deliver a total of 100 bps in rate cuts through the remainder of 2025.

Meanwhile, the downside for the pair could be capped by recent comments from Trump. Speaking at the World Economic Forum in Davos on Thursday, Trump called for immediate interest rate cuts by the US Federal Reserve (Fed). “With oil prices going down, I’ll demand that interest rates drop immediately, and likewise, they should be dropping all over the world,” Trump said.

Investors are now closely watching for further details on Trump’s tariff policies, alongside key US economic data releases. The flash US S&P Global Manufacturing and Services PMI for January will be a key focus later on Friday, along with the release of US Existing Home Sales and the Michigan Consumer Sentiment Index.

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US Yields Boost Dollar, Weaken Yen

US Yields Boost Dollar, Weaken Yen

US Yields Boost Dollar, Weaken Yen

The dollar strengthened on Tuesday, driven by rising U.S. yields, putting pressure on low-yielding currencies like China’s yuan and Japan’s yen, which fell to its lowest level since 1986.

Benchmark 10-year Treasury yields increased nearly 14 basis points to 4.479% overnight. Analysts attributed this rise to expectations of Donald Trump winning the U.S. presidency, which could lead to higher tariffs and increased government borrowing.

As the dollar gained, the euro reversed part of a small rally following the first round of France’s election, which aligned with polling predictions. The euro last traded at $1.0735.

The yen dropped to 161.72 per dollar on Monday, its weakest in nearly 38 years, primarily due to the significant interest rate gap between the U.S. and Japan. On Tuesday, the yen traded at 161.55 per dollar in Asia and was under pressure from yen bears wary of potential intervention by Japanese authorities. The yen also hit a lifetime low of 173.67 against the euro on Monday and remained near that level on Tuesday.

In the bond market, the 10-year yield gap between U.S. and Japanese rates stood at 340 basis points, and nearly 440 basis points at the two-year tenor. China’s yuan, which reached a seven-month low against the dollar last week, faced similar pressure, with U.S. 10-year yields more than 220 basis points higher than Chinese government bond yields.

Robust manufacturing data in China and an announcement from the central bank about borrowing bonds, likely to sell them and stabilize falling yields, provided only a brief boost to the currency on Monday. The yuan last traded at 7.3043 in offshore markets on Tuesday, close to its June low.

The New Zealand dollar slipped 0.3% in early trade and was testing support at its 200-day moving average at $0.6075. The British pound remained steady at $1.2641. The Australian dollar hovered within its recent range at $0.6650, with traders focused on central bank minutes to gauge the likelihood of future interest rate hikes. Swaps market pricing suggests a one-in-three chance of a rate hike as soon as next month.

The question remains about the trigger for such a move. ING economist Rob Carnell noted that discussions have taken place, but the specific trigger for a hike is still uncertain. There is a leaning towards forecasting a hike at the August meeting.

Overall, the strengthening dollar and rising U.S. yields continue to exert pressure on low-yielding currencies, with markets closely watching upcoming central bank decisions and geopolitical developments.

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Cryptocurrency Move Back to Support the Pack to Level

If we have a look at the bearish start to the day in the majors and the Bitcoin move back to the level by $18,500 to the support pack. The Bitcoin to USD was seemed down at the level by 1.16% on this Thursday that reversing a 1.25% gain to the Wednesday to the ended the day at the level $18,260.0. At the start of the day, the Bitcoin rose to the early morning intraday to the high at the level before hitting the reverse level.

The major resistance level goes at the level by $18,878 and the Bitcoin fell to the intraday low to the level by $17,935.0.

The close term bullish pattern stayed flawless, disregarding the most recent pullback to sub-$18,000 levels. For the bears, Bitcoin would have to slide through the 62% FIB of $10,095 to shape a close term bearish pattern.

The Bitcoin was somewhere near at the level by 1.03% to $18,072.0. A blended beginning to the day saw Bitcoin ascend to an early morning high of $18,299.0 prior to tumbling to a low of $18,070.0.

Bitcoin left the significant help and obstruction levels untested from the get-go.

Somewhere else, it was a bearish beginning to the day for the majors. The Ripple’s XRP was somewhere around at the level 2.69% to lead the route down.

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Bitcoin Slips Down Below at Level $13,000 Since the Last Rally

Bitcoin Slips Down Below at Level $13,000 Since the Last Rally

The Bitcoin seems to the low at the level of $9,813 in September that managed the bitcoin to reach at the level high at $13,868. The bitcoin price is rejected to the sequential indicators on the 3-day chart.

If we have a look at the current candlestick of the 3-day chart it will seem significantly bearish and the TD sequential indicators are presented a sell signal. The 50- SMA seems down at the level of $10,600 and the 100 SMA at the level of $9,47.

The In/Out of the Money Around Price chart shows the closest and most grounded help region to be somewhere in the range of the level at $12,687 and $13,073 with near 624,000 BTC in volume. A break below this point can drive the cost of Bitcoin down to $11,914.

Despite the fact that bears appear to have assumed responsibility for the present moment, the powerful day by day upswing stays unblemished for Bitcoin. The 50-SMA and the 100-SMA harmonize around $11,200 which will go about as a critical help level. The MACD keeps bullish and the most basic obstruction level is still at $13,863. A breakout over this point can without much of a range drive the lead digital currency towards the untouched high at the level of $20,000.

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Bitcoin Price Clear the Path and Rose to the Level $13,000

Bitcoin Price Clear the Path and Rose to the Level $13,000

Bitcoin Price of the bulls has been the full control of the market to the price at the level of $11,340 to $12,835. The cryptocurrency had the largest to the single day that put the gain. The MACD shows the increasing the bullish momentum to price the growth anticipated.

The position detector is a convenient little apparatus that causes us to imagine solid opposition and backing levels. According to the everyday conjunction detector, there is an absence of solid obstruction levels on the potential gain. This should be empowering news for the buyers as they plan to bring BTC into the $13,000-zone.

Santiment’s holder’s distribution charts show you the number of addresses having a place with a specific symbolic section. According to the chart, the number of addresses holding 10,000-100,000 tokens tumbled from 111 on October 8 to 104 on October 20. This is an intensely bearish sign as it shows that the whales are selling off their property.

Bitcoin buyers have the opportunity to bring the cost into the level at $13,000 and even the $14,000 interference. The everyday intersection finder shows a total absence of solid opposition barriers straightforward.

For the bears, the drawback is covered off at the $12,000-$12,100 uphold divider. A break below that zone will bring the value down to $11,000, which has both the 50-day and 100-day SMA

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Cryptos Market: Bitcoin Shows Bullish Momentum Over Dollar Strength

Cryptos Market: Bitcoin Shows Bullish Momentum Over Dollar Strength

The BTC/USD traded at the level of $11,355 after the mild rejection of the top-level $11,720 that losing some of the bullish.

Ethereum USD had a similar fate at the higher risk that seeing the longer pullback than the Bitcoin. If we talk about the XRP/USD is the clear loser after breaking below the 50 SMA and the 100 SMA on the daily chart that currently trading at the level of $0.2482 after yet facing another rejection.

Bitcoin, BTC to USD, fell by 1.02% on Tuesday. Incompletely turning around a 1.55% increase from Monday, Bitcoin finished the day at the level of $11,442.0.

It was a quiet beginning to the day. Bitcoin rose to a late morning intraday high to the level of $11,574.9 before operating reverse.

Missing the mark concerning the primary significant obstruction level at $11,830, Bitcoin tumbled to an early evening intraday low of $11,333.0.

Avoiding the primary significant help level at $11,201 Bitcoin quickly returned to $11,470 levels before moving back.

The close term bullish pattern stayed perfect, upheld by the most recent move back through to $11,000 levels. For the bears, Bitcoin would need to slide through the 62% FIB of $6,400 to shape a close term bearish pattern.

Bitcoin was up by 0.22% to $11,467.0. A beginning to the day saw Bitcoin tumble to an early morning low of $11,427.0 before ascending to a high at the level of $11,467.0. Bitcoin left the support and Resistance levels untested at an early stage.

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Ethereum Rate Hits at Higher Level More Profitable Than Bitcoin Mining

Ethereum Rate Hits at Higher Level More Profitable Than Bitcoin Mining

Let’s have a look at the cryptocurrency that hovering near to the level at $10,600 mark. The Bitcoin price is consolidating to the 50-12 Hour SMA and the 200-12 Hours SMA. The strong resistance lies at the level 50-12 SMA that repeatedly rejected the price.

This repeated dismissal may drop the value down to the level at  $10,400 uphold level, which is by all accounts the main observable help level on the drawback. If case this level doesn’t hold firm, at that point you can anticipate that the cost should plunge below $10,000. For this situation, one can anticipate that BTC should tumble to the level of $9,700 before it experiences another solid help.

While this may not appear to be a huge number, remember that every one of these addresses holds a great many dollars worth of Bitcoin. The fishes using the stale value activity to merge their positions look good for the general market.

With respect to the top 50 digital forms of money, the greatest failures incorporate Compound, down 12% over the most recent 24 hours, UMA down 12%, OMG Network down at the level 13%, Yearn.finance down 16%, and Aave down 18%. The main bull among the sloths of bears is EOS, which broke out greatly as covered Tuesday.

Ethereum has since September 23, been holding inside a rising equal channel. Recuperation towards $400 flamed out marginally above $360 a week ago. On the drawback, the misfortunes that followed grasped uphold at the level of $335 throughout the end of the week, permitting the shrewd agreement sign to revitalize, making strides above $350.

The Ethereum selling pressure in the market halted the increase at the 50 SMA and 100 SMA. Ether fell below the climbing channel, confirming a bear banner.

The downside of a significant help zone shows that Ethereum is at grave risk of spiraling to the level at $300. Other than the various simple help zones, the most significant one lies somewhere in the range of $298 and $309. Previously, around 879,000 locations purchased almost 2 million ETH.

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Cryptocurrency Bitcoin Shows the Bullish Divergence on User Count

Cryptocurrency Bitcoin Shows the Bullish Divergence on User Count

The Bitcoin moves back and shows the bearish to the start of the day with the support level at $10,900 to the broader market.

The Bitcoin BTC to USD is rose by the level at 1.33% this Tuesday and reversing the loss at the level of 0.83% on Monday.

It was a mixed start to the day. Bitcoin fell to an early morning low $10,674.2 before finding support.

Steering clear of the major support levels, Bitcoin struck a late morning high at the level of $10,815.4 before operating reverse.

Coming up short of the major resistance levels, Bitcoin slid to a late afternoon intraday low $10,654.0.

Steering clear of the first major support level at $10,585, Bitcoin rallied to a final hour intraday high at the level of $10,889.0.

Falling short of the first major resistance level at $10,915, Bitcoin eased back to end the day at sub-$10,860 levels.

The near-term bullish trend remained whole, in contempt of the latest pullback. For the bears, Bitcoin would need to slide through the 62% FIB of $6,400 to form a near-term bearish trend. At the hour of composing, Bitcoin was somewhere around 0.28% to the level of $10,826.0. It was a blended beginning to the day. Bitcoin rose to an early morning high $10,866.0 before tumbling to a low $10,826.0.

Bitcoin started the significant help and obstruction levels untested from the get-go. Somewhere else, it was a blended beginning to the day.

Bitcoin Cash ABC (+0.54%), Bitcoin Cash SV to the level (+0.62%), and Crypto.com Coin (+0.65%) evaded the pattern right off the bat.

It was a bearish beginning to the day for the remainder of the majors, in any case. Binance Coin was somewhere around 1.18% to lead the way down.

https://xtreamforex.com/nasdaq-futures-shows-the-short/

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