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EUR/USD Drops Toward 1.1700 as US Dollar Strengthens

EUR/USD Drops Toward 1.1700 as US Dollar Strengthens; FOMC Minutes in Spotlight

The EUR/USD pair slid to around 1.1705 during Wednesday’s Asian session, weighed down by renewed strength in the US Dollar. The Euro came under pressure following fresh tariff threats from former US President Donald Trump, which unsettled global markets and added to investor caution. 

Trump reignited global trade concerns by proposing a 50% tariff on copper imports and hinted at possible duties on semiconductors and pharmaceuticals. While he mentioned that negotiations with both the European Union and China are progressing well, he also warned that a tariff notice to the EU could be issued within days. This uncertainty has dented risk sentiment, putting the Euro under additional stress. 

Attention now turns to the Federal Reserve’s meeting minutes, due later today. Market participants are hoping for more clarity on the Fed’s rate path, especially amid growing expectations of monetary easing. 

At its June meeting, the Fed held interest rates steady, maintaining the federal funds rate between 4.25% and 4.50%—a level unchanged since December. However, markets are now pricing in a total of 50 basis points in rate cuts by year-end, potentially beginning as early as October. 

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Australian Dollar Gains as Risk Sentiment Improves, RBA Decision in Focus

Australian Dollar Rises Amid Risk-On Sentiment, Focus Shifts to RBA Rate Decision

The Australian Dollar (AUD) continues its third straight session of gains against the US Dollar (USD) on Monday, following US President Donald Trump’s move to postpone the imposition of reciprocal tariffs. A weaker USD following disappointing US retail sales data has further supported the AUD/USD pair, reigniting speculation that the Federal Reserve (Fed) may cut interest rates later this year despite persistent inflation concerns.

Yet, the AUD’s gains could be capped before the Reserve Bank of Australia’s (RBA) policy announcement on Tuesday, as mounting speculation of a cut in interest rates deters sentiment. The RBA is widely expected to lower its Official Cash Rate (OCR) by 25 basis points (bps) to 4.10%, marking the first rate reduction in four years.

US Dollar Under Pressure Amid Lower Treasury Yields

The US Dollar Index (DXY) is down for the third consecutive session, bogged down by weaker US Treasury yields. At the time of writing, the DXY is trading around 106.70, with 2-year and 10-year Treasury bond yields at 4.26% and 4.47%, respectively.

Statistics released by the US Census Bureau on Friday indicated that US Retail Sales decreased 0.9% in January, a reversal from a revised 0.7% rise in December (earlier reported as 0.4%). The decrease was deeper than the market expectation of a 0.1% decline.

Conversely, Core PPI inflation in the US increased to 3.6% YoY in January, above expectations of 3.3%, though marginally less than the revised 3.7% (initially published as 3.5%). This has consolidated expectations that the Fed will push rate cuts until the second part of the year.

The US Consumer Price Index (CPI) rose 3.0% YoY in January, beating expectations of 2.9%, and core CPI (excluding food and energy) went up to 3.3% from 3.2%, beating expectations of 3.1%. On a month-on-month basis, headline inflation rose 0.5% in January compared to 0.4% in December, with core CPI rising to 0.4% from 0.2% in the same period.

Fed Officials Signal a Cautious Approach to Rate Cuts

In his semi-annual report to Congress, Fed Chair Jerome Powell stated that policymakers “do not need to be in a hurry” to cut interest rates, citing a strong labor market and robust economic growth. Powell also warned that Trump’s tariff policies could exert upward pressure on inflation, making it harder for the central bank to lower rates.

A Reuters poll of economists now indicates the Fed will wait until next quarter to cut rates, citing ongoing inflationary concerns. Although previously, some analysts anticipated a March rate cut; the majority now sees at least one rate cut by June, but opinions remain divided.

Federal Reserve Bank of Cleveland President Beth Hammack echoed this sentiment, saying that maintaining rates at current levels for a long time is probably the right thing to do. Hammack added that a patient strategy will enable the Fed to evaluate economic conditions before altering policy.

Australian Dollar Targets Upper Range Near 0.6400

The AUD/USD currency pair quotes at 0.6360 on Monday, with an uptrend in a rising channel formation. This is indicative of a bullish market inclination, which is also complemented by the 14-day Relative Strength Index (RSI) remaining above 50.

On the upside, the pair could test the upper boundary of the ascending channel at 0.6380, followed by the psychological level of 0.6400.

Major levels of support are the nine-day EMA at 0.6310, followed by the 14-day EMA at 0.6294. A fall below these levels may erode short-term momentum, possibly pulling the pair down to the lower boundary of the rising channel at 0.6270.

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Australian Dollar Declines as US Dollar Strengthens Ahead of Jobless Claims

Australian Dollar Declines as US Dollar Holds Gains Ahead of Jobless Claims

The Australian Dollar (AUD) fell against the US Dollar (USD) on Thursday as trade balance data came in below average than expected. Furthermore, risk-off sentiment, fueled by rising US-China trade tensions, weighs on the AUD/USD.

In December, Australia’s trade surplus fell to $5,085 million, falling short of the 7,000 million anticipated and down from $6,792 million the previous year. While exports increased by 1.1% month on month, this was a decrease from November’s 4.2% increase, while imports increased by 5.9% month on month, much more than the previous 1.4% gain.

US-China Trade Tensions Weigh on Australian Dollar

Investors are still focused on the current trade stagnation between the United States and China, Australia’s top trading partner. China replied to the United States’ new 10% tax, which went into force on Tuesday, causing global market concern. Regarding the situation, President Trump announced on Monday that he intends to engage with China within the next 24 hours. However, he cautioned that failure to achieve an agreement might result in “very, very substantial” tariffs.

Meanwhile, China’s Commerce Ministry imposed a 15% tax on US coal and liquefied natural gas (LNG) imports, as well as an additional 10% levy on crude oil, farm equipment, and some autos. As a countermeasure, China has implemented export limits on important minerals such as tungsten, tellurium, ruthenium, and molybdenum, citing national security concerns.

Amid escalating trade tensions, the Financial Times writes that Chinese firms are quickening preparations to relocate production overseas, mainly to the Middle East, in order to reduce tariff impacts. Some exporters are also considering passing on prices to US consumers or expanding into new markets.

US Dollar Holds Firm Amid Mixed Economic Data

The US Dollar Index (DXY), which tracks the greenback’s performance against a basket of six major currencies, remains stable near 107.50, putting further downward pressure on the AUD/USD. The dollar’s resiliency comes after a weaker-than-expected US Services PMI fell to 52.8 in January, below the market forecast of 54.3.

Investors now focus on Friday’s US Nonfarm Payrolls (NFP) data, a key economic indicator that could influence the Federal Reserve’s monetary policy stance.

The dollar fell on Wednesday, following a poor US Services PMI report. The ISM Services PMI fell to 52.8 in January from a revised 54.0 in December, missing the market forecast of 54.3. Looking ahead, traders are anticipating Friday’s US Nonfarm Payrolls (NFP) report, which could influence the Federal Reserve’s future policy moves.

Technical Outlook: AUD/USD Pulls Back From 0.6300, Eyes Key Support

The AUD/USD pair hovers near 0.6280 on Thursday, retreating from the 0.6300 level. However, sustained trading above the nine- and 14-day Exponential Moving Averages (EMAs) suggests short-term bullish momentum remains intact. The 14-day Relative Strength Index (RSI) is also holding above 50, reinforcing the bullish bias.

On the upside, the pair might target 0.6330, its seven-week high from January 24.

Immediate support comes from the nine-day EMA near 0.6254, followed by the 14-day EMA at 0.6249.

A breach below these levels might weaken the bullish structure, potentially sending the pair below 0.6087, its lowest level since April 2020, which was recorded on February 3.

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Australian Dollar Slips as US Tariffs on China Take Effect

Australian Dollar Slips as US Tariffs on China Take Effect

The Australian Dollar (AUD) falls for the seventh consecutive day as the US Dollar (USD) strengthens following President Donald Trump’s 10% tariff on Chinese imports. Market volatility remains high as investors monitor the continuing US-China trade talks. Trump signaled he may speak with Chinese officials within the next 24 hours, warning that if a deal isn’t reached, tariffs on China will be “very, very substantial.”

Trump also announced a 30-day tariff relief for Mexico and Canada after their nations agreed to send 10,000 troops to the US border to battle drug trafficking. This move follows the introduction of 25% tariffs on Mexican and Canadian goods just two days before.

Chinese Exporters Seek Alternatives

According to the Financial Times, Chinese manufacturers are speeding up plans to transfer production offshore in reaction to US tariffs. Some companies are considering relocating to regions such as the Middle East, while others are looking into passing costs on to US customers or entering new markets.

RBA Rate Cut Expectations Weigh on AUD

The AUD faces additional pressure amid growing expectations that the Reserve Bank of Australia (RBA) may cut rates in February. The RBA has maintained the Official Cash Rate (OCR) at 4.35% since November 2023, stressing that inflation must return to its 2%-3% target range before easing policy.

Analysts at Westpac continue to forecast 100 basis points of rate cuts in 2025, with the market pricing in a more conservative outlook. ANZ, CBA, Westpac, and National Australia Bank (NAB) all anticipate a 25-basis-point (bps) cut in February, with NAB recently revising its forecast forward from May.

US Dollar Strengthens Amid Economic Developments

The US Dollar Index (DXY) stabilizes around 108.70 after erasing gains from the previous session. Recent US economic data support the greenback, with ISM Manufacturing PMI rising to 50.9 in January from 49.3 in December, exceeding expectations of 49.8.

Inflation indicators remain in focus as the Fed’s preferred measure, the Personal Consumption Expenditures (PCE) Price Index, rose 0.3% MoM in December, up from 0.1% in November. Annual PCE inflation increased to 2.6%, while core PCE held steady at 2.8% YoY for the third straight month.

Jerome Powell, Chairman of the Federal Reserve, highlighted that further policy adjustments would be required if there was clear evidence of inflation advance or labor market weakness. Separately, Treasury Secretary Scott Bessent recently argued for new uniform taxes on US imports, beginning at 2.5% and progressively increasing—a departure from his previous stance that tariffs cause inflation.

Australian Dollar Technical Analysis

AUD/USD trades around 0.6210 on Tuesday, remaining within a descending channel pattern on the daily chart, signaling a bearish bias. However, the 14-day Relative Strength Index (RSI) is recovering toward the 50 level, suggesting weakening downside momentum. A breakout above the channel, combined with an RSI move above 50, could indicate a shift toward a bullish outlook.

On the downside, the pair may test the descending channel’s lower boundary near 0.6150. A break below this level could drive AUD/USD toward 0.6087, its lowest point since April 2020.

AUD/USD is currently testing its initial resistance, the nine-day Exponential Moving Average (EMA) of 0.6225, which aligns with the channel’s upper limit. A decisive move over this level could fuel bullish optimism.

 

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Japanese Yen Maintains Strong Bullish Momentum

Japanese Yen Maintains Strong Bullish Momentum; USD/JPY Struggles Below 154.50

The Japanese Yen (JPY) continues to strengthen in early European trading on Thursday, pushing USD/JPY further below 154.50 and closer to its one-month low from earlier this week. Market expectations that the Bank of Japan (BoJ) will hike interest rates again by year-end continue to support the JPY. Additionally, a fresh decline in US Treasury bond yields, narrowing the US-Japan yield differential, has further boosted demand for the lower-yielding Yen.

However, concerns over the potential economic impact of US President Donald Trump’s trade policies may limit aggressive JPY buying. Meanwhile, the Federal Reserve’s (Fed) hawkish pause on Wednesday has bolstered the US Dollar (USD), which could provide some support to the USD/JPY pair. Traders are now looking ahead to the European Central Bank (ECB) meeting, which may increase market volatility and drive further demand for the safe-haven Yen. Additionally, the Advance US Q4 GDP report could introduce short-term trading opportunities.

JPY Gains on Hawkish BoJ Sentiment Amid Market Uncertainty

  • Minutes from the BoJ’s December meeting, released Wednesday, indicated discussions on using neutral interest rate estimates to guide future rate hikes.
  • Former BoJ board member Makoto Sakurai stated on Tuesday that steady rate increases remain feasible due to rising wages, sustained inflation, and strong economic growth.
  • The Federal Reserve, as expected, held rates steady after its two-day meeting and signaled no immediate plans for rate cuts.
  • Fed Chair Jerome Powell emphasized a patient stance, stating there is no urgency to adjust policy and reaffirming that rates will stay elevated amid concerns over Trump’s trade policies, which could fuel inflation.
  • The 10-year US Treasury yield has struggled to sustain gains post-FOMC due to uncertainty surrounding the Trump administration’s economic policies.
  • Reports from Asahi newspaper indicate that Japan’s Prime Minister Shigeru Ishiba is finalizing plans for a February 7 meeting with US President Donald Trump in Washington.
  • The ECB’s policy decision later today is expected to introduce further volatility, alongside the Advance US Q4 GDP print.

USD/JPY at Risk of Retesting Monthly Lows Near 153.70

The USD/JPY pair faced renewed selling pressure near the 156.00 level, breaking below the key 155.00 psychological mark, confirming a multi-month ascending channel breakdown. Momentum indicators on the daily chart suggest continued downside movement, making a retest of the 153.70 region—a multi-week low touched on Monday—a strong possibility.

Key resistance levels for a rebound:

  • 155.00 round figure
  • 155.35-155.40 region
  • 156.00 psychological level

Any recovery attempt is likely to face selling pressure near these levels. A sustained break above 156.25 could trigger short-covering, potentially lifting USD/JPY toward 156.70-156.75, with further resistance at 157.00 and 157.60.

For now, the bias remains bearish, with further losses expected if the pair stays below 154.00. Traders will closely watch US data and global central bank policy updates for the next directional move.

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Gold Price Retreats from Multi-Month High Amid USD Recovery

Gold Price Retreats from Multi-Month High Amid USD Recovery

Gold price (XAU/USD) faces selling pressure at the beginning of the week, pulling back from its highest level since late October, near the $2,786 mark touched on Friday. The US Dollar (USD) has staged a modest recovery following its worst weekly performance since November 2023, which has weighed on the precious metal. However, the broader market dynamics remain supportive of a bullish outlook, suggesting potential dip-buying opportunities at lower price levels.

Market Sentiment Dampened by Trade Tensions and Fed Speculation

Risk sentiment has deteriorated due to US President Donald Trump’s recent decision to impose tariffs on all imports from Colombia, reigniting fears of a trade war. Additionally, expectations that the Federal Reserve (Fed) may cut interest rates twice by year-end, combined with a flight to safe-haven assets, have triggered a fresh decline in US Treasury bond yields. This decline could limit aggressive gains in the USD, potentially cushioning the downside for gold, a non-yielding asset.

Gold Under Pressure from USD Recovery, but Downside Remains Limited

The US Dollar Index (DXY), which tracks the USD against a basket of currencies, rose nearly 0.25% on Monday, driven by revived concerns over US trade policies. President Trump ordered 25% emergency tariffs on all Colombian imports following the country’s refusal to accept deported migrants from the US, with a threat to raise tariffs to 50% next week. Moreover, reports suggest that Trump’s advisors are considering imposing 25% tariffs on Mexico and Canada starting February 1.

In a recent update, the White House confirmed that Colombia has agreed to Trump’s demands, including the unrestricted acceptance of deported individuals. Meanwhile, Trump has reiterated his call for immediate interest rate cuts, fueling speculation of further easing by the Federal Reserve in 2025. The resulting decline in US Treasury yields may act as a headwind for the USD, potentially limiting the extent of gold’s pullback.

Traders Eye Economic Data for Further Clues

Market participants will turn their focus to key US economic data, including Durable Goods Orders, the Conference Board’s Consumer Confidence Index, and the Richmond Manufacturing Index, for fresh impetus during the US trading session.

Gold Price Outlook: Support and Resistance Levels

Gold’s recent decline may attract dip-buying near the $2,736 support zone, as the technical setup remains bullish. Any further slide below the $2,750-2,748 range could find solid support near $2,736, with additional key levels at $2,725-2,720. A break below $2,720 could trigger technical selling, pushing prices toward the $2,665-2,662 zone.

On the upside, a sustained move above the $2,772-2,773 resistance could open the door for a retest of the recent peak near $2,786. Further buying momentum beyond the $2,800 psychological level could signal a renewed bullish phase, extending the upward trend

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Gold Price Holds Defensive Below Multi-Month High Amid Risk-On Sentiment

Gold Price Remains Defensive Below Multi-Month High Amid Risk-On Sentiment

Gold price (XAU/USD) came under selling pressure during the Asian session on Thursday, retreating from the multi-month high of $2,763–$2,764 touched the previous day. This decline halts a three-day winning streak. The US Dollar (USD) gained some strength from its recovery off a monthly low, supported by a rebound in US Treasury bond yields, and the upbeat sentiment in equity markets further dampened demand for the safe-haven metal.

Signs of easing inflation in the US have fueled expectations that the Federal Reserve (Fed) might cut interest rates twice this year, creating a potential headwind for US bond yields and the USD. However, ongoing uncertainty surrounding President Donald Trump’s tariff plans, which could increase trade tensions and market volatility, may help limit the downside for gold prices. Traders may remain cautious and wait for sustained selling pressure to confirm that the one-month uptrend has ended.

Risk-On Mood and Modest USD Rebound Cap Gold Gains

The USD steadied above its recent lows amid recovering Treasury yields, adding pressure to gold prices. In addition, easing geopolitical tensions and a lack of concrete details regarding Trump’s tariff policies have maintained a risk-on sentiment, further undermining gold’s appeal.

While Trump’s proposed tariff policies are considered inflationary, which could prompt the Fed to maintain a hawkish stance, markets are still pricing in at least two Fed rate cuts this year. This outlook may limit the upside for US bond yields and the USD, potentially supporting gold in the near term.

Investors are eyeing Trump’s speech at the World Economic Forum for more clarity on tariffs, alongside the release of US Weekly Jobless Claims, which could influence XAU/USD prices. Upcoming central bank rate decisions, including the Bank of Japan’s meeting on Friday and next week’s announcements from the Fed and the European Central Bank, could inject volatility into the market and impact gold prices.

Gold Price Technical Analysis

Key Support Levels:

  • Immediate support is seen near the $2,725–$2,720 zone, a former resistance-turned-support level.
  • Further declines could target the $2,700 mark, with a decisive break paving the way for a move toward the $2,665–$2,662 region.
  • The $2,627–$2,622 confluence, which includes the 100-day EMA and a short-term ascending trendline, will act as a critical pivot point for short-term traders.

Key Resistance Levels:

  • The recent high near $2,763–$2,764 offers the first resistance level.
  • A break above this zone could see gold prices challenge the all-time high around $2,790, reached in October.
  • The $2,800 mark is the next significant resistance, and a break above it would signal a continuation of the well-established uptrend over the past month.

Outlook:

Gold prices remain influenced by risk sentiment, central bank policy expectations, and USD movements. While near-term bearish factors may limit gains, uncertainty around US tariff policies and inflation trends could provide support, making any dips near key technical levels potential opportunities for dip-buying. Traders will remain focused on upcoming economic data and central bank decisions for further direction.

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Steady Stock Futures Ahead of Inflation Report

Steady Stock Futures Ahead of Inflation Report

Stock futures exhibited little change as investors geared up for the release of the August producer price index, a key indicator of wholesale inflation. Futures linked to the Dow Jones Industrial Average increased by a mere 11 points, equivalent to a 0.03% gain. S&P 500 futures saw a slightly stronger uptick of 0.09%, while Nasdaq 100 futures inched 0.1% higher.

The prior trading day had been mixed, with the Dow, comprising 30 major stocks, declining for the second consecutive day, resulting in a 0.2% drop primarily due to 3M’s performance. On the other hand, the Nasdaq Composite closed with nearly a 0.3% gain, and the S&P 500 added 0.1%.

A significant event on traders’ radar was the August Consumer Price Index (CPI) report, which had a notable impact on market sentiment. The core CPI, excluding food and energy costs, registered a 0.3% increase from the previous month and a 4.3% rise compared to last year. These figures slightly exceeded expectations, as economists had projected a 0.2% increase month-over-month and a 4.3% year-over-year rise. Headline inflation, which includes all items, surged by 0.6% on a monthly basis and 3.7% on a yearly basis, in line with market expectations.

Despite the CPI data, it’s unlikely to alter the Federal Reserve’s approach at its upcoming policy meeting, scheduled to commence on September 19. Fed funds futures pricing data from Wednesday indicated a 97% probability that interest rates would remain unchanged next week, according to the CME FedWatch Tool.

Nevertheless, even if the central bank opts to keep rates steady this time, market volatility is expected to persist in the coming months. According to Fed funds futures pricing data, there’s approximately a 48% chance that rates will increase at the November meeting. Alex McGrath, Chief Investment Officer at NorthEnd Private Wealth, noted, “We believe volatility will be with us through year-end as the risk-on assets that dragged the market higher through 2023 will begin to look expensive in the face of elevated yields.”

Looking ahead, another critical inflation metric, the August Producer Price Index (PPI), is scheduled for release on Thursday. Economists polled by Dow Jones anticipate a 0.4% increase for August, following a surprising 0.3% rise in wholesale prices in July. Additionally, retail sales data is expected before the market opens.

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Mixed Sentiment Ahead of US CPI Keeps Asian Stock Market Trading Sideways

Mixed Sentiment Ahead of US CPI Keeps Asian Stock Market Trading Sideways

Asian stock markets are in a bit of a mixed situation right now, and people are waiting for some important information about the cost of things in the US, called the Consumer Price Index (CPI). The US Dollar is getting a bit more stable, not going up or down as much as before, and it’s around 104.55.

In China, their main stock index, the Shanghai Composite, has gone up a little bit, about 0.10%, to 3,145 points. Another index in China, called the Shenzhen Component, has gone up a bit more, by about 0.29%, to 10,411. But in South Korea, their stock market, known as the Kospi, has gone down a bit, about 0.50%. On the other hand, Japan’s stock market, the Nikkei, is doing better, going up by about 0.61%.

In China, the cost of things for people (we call it the Consumer Price Index or CPI) has gone up a tiny bit in August, by 0.1%. Before that, it was going down by 0.3%. This is a small sign that the economy might be getting more stable. The price of things for the month also went up as expected, by 0.3%.

In Japan, the Finance Minister, Shunichi Suzuki, thinks that the Bank of Japan (BOJ) will do things to make sure prices go up, and they will work closely with the government to do that. This is because the interest rates in Japan have gone up a lot, and people think the BOJ might change the rules about interest rates.

The head of the BOJ, Kazuo Ueda, has said that by the end of the year, they will have enough information to decide if they should keep the interest rates low or not. This makes things interesting for Japan’s money policy.

Next, everyone will be watching the US to see how much prices went up in August, which will be out on Wednesday. People expect that prices in the US went up by 0.5%, and a core number that is important for interest rates will stay at 0.2%. This tells us if the US might change their interest rates in the future. 

Also, we will look at China’s Retail Sales and Industrial Production numbers on Friday. These numbers are important because they show if China’s economy is healthy or not and if it will affect the world. So, people who invest in the stock market need to be careful and watch what happens in these markets because things might change quickly.

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Chinese Property Stocks Fail to Ease Growth Concerns, Bears Control Asian Stock Market

Chinese Property Stocks Fail to Ease Growth Concerns, Bears Control Asian Stock Market

The Asian stock market is not doing so well today. Even though China’s property stocks are getting better, the overall situation is not great. People who trade stocks are being careful because they saw big losses yesterday. They are also waiting for a report called the US ISM Services PMI.

A thing called the MSCI’s Index of Asia-Pacific shares (excluding Japan) has gone down by almost 1%. But in Japan, something called the Nikkei 225 has gone up by 0.75% in the morning.

Yesterday, a number for China’s Caixin Services PMI in August was not so good. It was 51.8, which is lower than the 54.1 from before. This made people worry about China’s economy. There is also a problem between the US and China, and the US Commerce Secretary talked about it. She said that the US will keep taxes on things from China until they look at it again in four years.

Some good things about the US have made the stock market not feel great. There was a report about US Factory Orders, and it was not good. People thought it would be -0.1%, but it was -2.1% for July. But if you don’t count some things, it went up by 0.8%. They also sent out more stuff, and they have more stuff in their stores now. Some people from the US Federal Reserve also talked about money stuff. One person said they want to be careful with money, and another person said they don’t want to make money cheaper.

Even though some news from China said they might help the real estate business, the stock market in China is not doing well. It’s like what’s happening in the US stock market and something called the S&P 500 Futures. The US Dollar is also strong, which means it’s worth a lot compared to other money. Gold and oil prices are not changing much. In New Zealand, Hong Kong, and India, stocks are not doing well either.

In Australia, the numbers looked better than people thought, but it didn’t make the stock market better. It went down by 0.80%.

In the future, what happens in the stock market will depend on what happens in China’s economy and how the US does. We need to watch carefully to see what will happen next.

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China concerns cause European shares to hit one-week low; attention now turns to PMIs

China concerns cause European shares to hit one-week low; attention now turns to PMIs

European stock markets took a bit of a tumble on Tuesday, dropping to their lowest point in a whole week. This was mostly because folks were getting worried about China’s economy not doing so great. See, if China’s economy isn’t doing well, it can affect the global economy, and that makes investors nervous. They’re afraid that a slow recovery in China might mean tough times for everyone else too.

One of the main stock market indicators in Europe, called the STOXX 600, went down by 0.6% on Tuesday. It was the fifth day in a row that it went down. The sectors in Europe that are closely connected to China, like the ones dealing with fancy stuff and building materials, were the ones taking the biggest hits. That’s because new data showed that China’s service industry, which includes things like restaurants and hotels, grew at a slower pace in August, the slowest it has been in eight months.

Later in the day, we were waiting for some news about how businesses in Europe were doing, and it didn’t look great. They were expected to confirm that business activity had actually gone down in August. This news caused some big companies like Roche to see their stock prices drop by 1.1%. Another bank called Credit Agricole saw a drop of 3.0% because Goldman Sachs said it was a good idea to sell their stock. Commerzbank, another bank in Germany, also had a tough time with a 3.3% drop because Barclays said it was a bit heavy on their stock, giving it an “underweight” rating.

So, in simple terms, European shares went down because people were worried about China’s economy, and they’re also keeping a close eye on what the European Central Bank might do with interest rates. Some big companies got hit too because of not-so-great business news. It’s a bit like a rollercoaster ride for the stock market right now, with ups and downs that can make investors feel a bit queasy.

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Mixed Performance in Asian Stock Markets Ahead of Key US PCE Data

Mixed Performance in Asian Stock Markets Ahead of Key US PCE Data

Asian stock markets are giving mixed results on Thursday as investors eagerly wait for the PCE Price Index. This index is an important way to measure how prices for things are going up, and the Federal Reserve likes to watch it. The index is coming out before the big Nonfarm Payrolls report for August. Right now, China’s Shanghai stock index has gone down by 0.60% to 3,117 points, the Shenzhen index has gone down by 0.44% to 10,416 points, Hong Kong’s Hang Seng index has gone down by 2.02% to 18,401 points, South Korea’s Kospi index has gone down by 0.43%, and Japan’s Nikkei index has gone up by 0.77%.

In China, people are worried because factories and services aren’t doing as well this month. This might make the government do things to help the economy, like giving it a boost. The National Bureau of Statistics (NBS) said that China’s Manufacturing Purchasing Managers’ Index (PMI) got a little better in August, but it’s still not as good as what people thought it would be. The NBS Services PMI also went down a bit. The People’s Bank of China (PBOC) said they’re going to give more money to private companies to help the private economy grow.

In Japan, the Bank of Japan (BoJ) said they want to wait longer before they start doing things to control the money supply. Retail Sales in Japan went up by 6.8% in July compared to last year, which is better than what people expected. But the production of things in factories, called Industrial Production, went down by 2.0% in July.

Later on Thursday, we’ll find out how much the economy of India grew in the first quarter of the year. People expect it to have grown by 7.7%, which is better than before.

Looking forward, people will pay attention to the US Core PCE Price Index, how many people are asking for jobless help, and the Chicago PMI later in the day. On Friday, people will watch how well factories are doing in China in August and how many jobs the US added.

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Dow Futures Up, Market Rally Continues; Jobs Data in Focus

Dow Futures Up, Market Rally Continues; Jobs Data in Focus

The positive momentum in Dow Jones futures ahead of Tuesday’s opening was mirrored by upward movement in S&P 500 futures and Nasdaq 100 futures during overnight trading, indicating a buoyant start to the trading session.

This week, the ongoing vigor of the market rally remains a focal point as investors turn their attention towards the eagerly awaited Friday jobs report, a pivotal event in the closing week of August. The implications of this report are far-reaching, potentially influencing expectations around interest rate shifts. A strong report wouldn’t necessarily translate to an imminent rate hike, while a less robust report, with payroll gains hovering around 100,000, could potentially take the possibility of a rate hike off the table. Simultaneously, market watchers are gearing up for the release of the Commerce Department’s data on personal income and spending for July, an influential indicator of inflation favored by the Federal Reserve, scheduled for Thursday.

In terms of earnings, Salesforce.com (CRM), a key player within the Dow Jones, is poised to disclose its second-quarter earnings on Wednesday. Notably, this leaves just Nike (NKE) and Walgreens (WBA) as the remaining components of the Dow Jones Industrial Average yet to announce their earnings reports.

In addition, several software companies are slated to release their earnings, including MongoDB (MDB), Nutanix (NTNX), Samsara (IOT), as well as security software entities such as CrowdStrike (CRWD) and Okta (OKTA).

Reflecting on the previous day’s market performance, the Dow Jones Industrial Average showcased a commendable 0.6% increase, while the S&P 500 and the Nasdaq Composite demonstrated gains of 0.6% and 0.8% respectively, indicating broad-based market positivity.

Major players in the technology sector exhibited noteworthy movement, with electric vehicle behemoth Tesla (TSLA) recording a modest 0.1% increase on Monday. Notably, Nvidia (NVDA) experienced a substantial rebound of 1.8%, reflecting renewed investor confidence. Meanwhile, prominent tech giants on the Dow Jones index, Apple (AAPL) and Microsoft (MSFT), both registered positive strides. Apple’s shares rose by 0.9%, and Microsoft’s shares climbed by 0.2%.

Further highlighting influential market leaders, Alphabet (GOOGL) and Meta Platforms (META) made noteworthy gains, with GOOGL’s stock increasing by 0.9% and Meta’s shares surging by 1.7%.

Among the stocks garnering attention within the ongoing market correction are Baker Hughes (BKR), Cadence Design Systems (CDNS), Fastly (FSLY), and Tidewater (TDW), alongside Dow Jones stalwarts IBM (IBM), Merck (MRK), and Visa (V), identified as pivotal stocks to watch during this period of market flux.

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Nvidia’s AI Success to Revive Nasdaq 100 After Challenging August

Nvidia’s AI Success to Revive Nasdaq 100 After Challenging August

Nvidia’s impressive achievements in the field of artificial intelligence (AI) are having a positive impact on the performance of stocks within the Nasdaq 100 index. Despite a rather challenging month of August, the dynamics changed dramatically thanks to Nvidia’s strong financial results. The company managed to exceed its own ambitious sales projections, and the driving force behind this success was the robust demand for AI-related products and services. Interestingly, this favorable development also had a ripple effect, benefiting other tech giants such as Advanced Micro Devices and Broadcom. Consequently, the future outlook for the Nasdaq 100 has become considerably brighter as a result of Nvidia’s accomplishments in the AI realm.

At the onset of August, concerns were mounting due to a perceived slump in the tech sector’s performance. However, Nvidia’s latest financial results have effectively dispelled these apprehensions and reinforced the belief that investing in AI is indeed a prudent choice. This affirmation carries significant weight as it aligns with the sentiment that investors have held towards tech stocks throughout the year.

Nvidia’s announcement that they are anticipating approximately $16 billion in revenue over the next three months comes as a surprise, especially when contrasted with the market experts’ initial estimate of around $12.5 billion. Furthermore, the company is actively pursuing a stock buyback initiative worth $25 billion, which signals a strong sense of confidence in their own prospects.

Despite a recent 4% decline in value, the Nasdaq 100 index is currently trading at roughly 24 times its projected earnings for the upcoming year. Although this figure has decreased from the 27 times multiple observed in July, it remains notably higher than the historical average of 21 times over the last decade. This suggests that investors continue to place a premium on the tech sector’s growth potential.

In a broader context, the encouraging performance of software companies such as Autodesk, Snowflake, and Splunk serves as additional evidence of the tech industry’s resilience and prosperity. Their positive post-market reports are indicative of a larger trend within the sector.

In conclusion, Nvidia’s accomplishments in the AI domain have not only rejuvenated the Nasdaq 100 index after a sluggish August but also solidified the notion that AI-focused investments hold substantial promise. The surge in Nvidia’s sales, alongside the impressive performance of other software giants, underlines the enduring strength of the tech industry, which is certainly a cause for optimism in the market.

 

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In the idle markets, XAU/USD remains protective at $1,800

In the idle markets, XAU/USD remains protective at $1,800

As global markets battle for clear directions to extend the previous optimism, gold (XAU/USD) prices drop from intraday highs, being range-bound near $1,813-18. During a sluggish Asian session on Wednesday, the precious metal maintained its previous day’s fall from the 200-DMA.

The current Fed speak is more hawkish than previous ones, but reports about the EU’s oil ban on Russian imports, as well as China’s COVID restrictions, put optimists to the test. Despite this, traders remain optimistic due to stronger GDP data from Japan and the Euro zone, buoyant Retail Sales from the US, and the UK’s robust jobs report.

“The Fed should boost rates to 2.25 percent -2.5 percent neutral ranges ‘expeditiously,'” Fed policymaker Evans seems to have weighed on the market’s mood by raising fears of a fast rate hike. Fed Chair Jerome Powell and normally hawkish St Louis Fed President James Bullard argued for a 50 basis point rate hike on Tuesday, putting pressure on the dollar.

In terms of the report, initial Euro zone GDP for Q1 2022 increased past 5.0 percent YoY to 5.1 percent, as well as above 0.2 percent QoQ estimates to 0.3 percent. In April, however, US retail sales increased by 0.9 percent MoM, somewhat higher than the projected 0.7 percent but lower than the upwardly revised 1.4 percent gain (from 0.5 percent). Japan’s preliminary GDP figures for Q1 2022 climbed past -0.4 percent estimates to -0.2 percent QoQ, while Annualized GDP improved to -1.0 percent from -1.8 percent expected.

The Financial Times (FT) reports that China is diverting anti-poverty funds to COVID testing as the crisis worsens, adding to the market’s concerns about the European Commission’s (EC) decision to move away from Russian energy imports. In this environment, US 10-year Treasury rates increased by 0.5 basis points (bps) to 2.988 percent, while S&P 500 Futures struggle to find a clear direction despite Wall Street’s strong advances.

However, if the US Dollar Index, which is currently flat near 103.35, benefits from the latest cautious optimism, gold traders may see additional losses. The greenback gauge could be influenced by second-tier housing figures as well as qualitative factors such as corona virus and geopolitics.

Despite maintaining inside a $5.00 trading range recently, gold prices have maintained the prior day’s retreat from the 200-DMA. XAU/USD may return an annual horizontal support range between $1,790-85, given the bearish MACD signals and the metal’s failure to cross the major moving average, which was around $1,838 by press time.

However, the bears would need a clear downside break of the $1,800 level before trying for the yearlong support. A successful run-up over the 200-day moving average of $1,838, on the other hand, will not be an open welcome to gold buyers, as a downward sloping trend line from late April and multiple resistances from January 25, respectively around $1,845 and $1,855, will test bulls.

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Oil prices starting to fall as EU tries for Russia import ban

Oil prices starting to fall as EU tries for Russia import ban

Oil prices fell in early Asian trade on Tuesday as the European Union’s efforts to establish a ban on Russian oil imports, which would reduce global supply, were met with opposition from Hungary. At 0004 GMT, Brent crude prices were down 35 cents, or 0.3 percent, to $113.89 a barrel, while WTI crude futures were down 52 cents, or 0.5 percent, to $113.68 a barrel. Following Russia’s invasion of Ukraine, EU foreign ministers failed to persuade Budapest to reverse its veto on a proposed oil embargo against the country. All EU countries would have to agree on an embargo.

On the demand side, statistics from China indicated that the world’s second-largest country processed 11% less crude oil in April than a year ago, owing to stringent COVID-19 lockdowns, with daily output falling to its lowest level since March 2020 as refiners cut operations due to lower demand.

While Chinese demand falls, manufacturers in the United States ramp up production to refill supplies reduced by Russia’s war on Ukraine, which Moscow refers to as a “special military operation,” and the coronavirus outbreak. According to the US Energy Information Administration (EIA), oil output in the Permian Region in Texas and New Mexico, the country’s largest shale oil basin, is expected to grow 88,000 barrels per day (bpd) to a record 5.219 million bpd in June.

The Strategic Petroleum Reserve’s inventory decreased to 538 million barrels on Monday, the lowest level since 1987, according to figures released by the US Department of Energy.

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Gold is rising from three-month lows as bond rates in the United States fall

Gold is rising from three-month lows as bond rates in the United States fall

Lower U.S. Treasury rates maintained demand for zero-yield metal afloat above the important psychological support level of roughly $1,800 per ounce on Monday, lifting gold from a more than three-month low reached the previous session. As of 0227 GMT, spot gold was up 0.1 percent at $1,812.15 per ounce. Gold futures in the United States rose 0.1 percent to $1,809.80.

“With $1,800 being such a large round figure, it’s natural for it to give some amount of support as some (traders) try to be bold and buy a dip, while others close out lucrative shorts,” said Matt Simpson, senior market analyst at City Index. Gold prices fell more than 1% on Friday, hitting its lowest level since February 4 at $1,798.86 per ounce, before finishing at $1,811.15.

“However, things aren’t looking good for gold bugs right now. Even if we see a recovery from $1,800, the momentum is obviously pointing lower “Simpson explained. As investors sought shelter owing to concerns about global growth, the dollar began the week barely below a 20-year high against peers, making rival safe-haven gold less appealing to purchasers holding other currencies.

However, 10-year Treasury rates in the United States decreased, boosting demand for non-interest bearing gold. Before the Federal Reserve can fairly conclude that inflation has peaked, it must fall for “many months,” Cleveland Fed president Loretta Mester said Friday, adding that if the numbers do not improve, she would be willing to support a rate rise sooner than the September meeting.

Despite its reputation as an inflation hedge, bullion is vulnerable to rising short-term interest rates and bond yields in the United States, increasing the opportunity cost of keeping it. Silver fell 0.1 percent to $21.06 per ounce, platinum was constant at $938.46, while platinum increased 0.3 percent to $1,949.88.

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As oil stocks rise, Wall Street is turning away from big tech

As oil stocks rise, Wall Street is turning away from big tech

On Wall Street, big tech stocks were all the rage, with speculators buying them up to absurdly high levels. For example, the legendary quintuple of Facebook (now Meta), Amazon, Apple, Netflix, and Google (now Alphabet) took up about a fifth of the S&P 500 at one point—a surprising proportion given that the S&P 500 is often seen as a proxy for the US economy as a whole. Investors, on the other hand, avoided the oil and gas sector due to years of low shareholder returns, growing debt, and shrinking earnings.

The tables have now reversed, with the once-dominant NASDAQ plummeting and oil stocks emerging as the new FAANG: the Technology Select Sector SPDR ETF is down 24.3 percent year-to-date, while its energy counterpart, the Energy Select Sector SPDR ETF, is up 35.9%. Softbank, the embodiment of the excesses that powered the technology stock boom, announced a loss of roughly 1.71 trillion yen, or $13.2 billion, for the fiscal year ended in March on Thursday. The world’s largest technology investor suffered its greatest loss in its four decades of existence.

Energy investors, on the other hand, are ecstatic, since the black gold rush has fueled record profits. Energy equities presently account for only 4.4 percent of the S&P 500, compared to 28 percent for technology. “We’re not claiming that Energy is set to go back in-line with Tech as it did in the mid-2000s when commodities had a tremendous bull run following the Dot Com crisis,” Fowler adds, “but it’s certainly not impossible either.”

For the first time, the world’s most valuable firm is an energy company: Saudi Aramco, the world’s largest oil company, has surpassed Apple in market value, making the Saudi oil behemoth the most valuable company on the planet. This happened after the company’s stock rose 46.20 riyals, boosting its market worth to $2.464 trillion (9.24 trillion riyals), compared to $2.461 trillion for Apple. But the road back to the top for oil is not without bumps. The market is extremely volatile, and the sector’s near 10% drop on Monday indicates that there is a sizable group of short sellers betting against it.

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Gold drops as investors consider US Inflation data

Gold drops as investors consider US Inflation data

In Asia on Thursday morning, gold was down. Investors are analyzing the US consumer price index (CPI), which showed that inflation is still strong but has peaked in April, alleviating fears about the Federal Reserve raising interest rates more aggressively. By 11:12 p.m. ET, gold futures had fallen 0.01 percent to $1,853.58. (3:13 AM GMT). The dollar rose on Thursday morning, moving in the opposite direction of gold.

Inflation in the United States fell marginally in April, although it remained close to a 40-year high. The CPI increased 0.3 percent month over month in April, the lowest increase since August, according to the US Bureau of Labor Statistics, compared to a 1.2 percent increase in March, the highest increase since September 2005.

The Federal Reserve of the United States hiked its interest rate to 1% last week to combat inflation, the largest increase in 22 years. Investors are fearful that the Fed’s tighter policies would cause a recession. The 10-year US Treasury yield fell to 2.90 percent.

The Producer Price Index and first unemployment claims will be released later today in the United States. On the same day, San Francisco Fed President Mary Daly will speak. Silver has rose 0.1 percent against other precious metals. Palladium slipped 0.7 percent and platinum dropped 0.2 percent.

 

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Gold rates are approaching their lowest in three months, while silver prices are also down

Gold rates are approaching their lowest in three months, while silver prices are also down

Gold prices in plummeted to near three-month lows ahead of the release of monthly US inflation statistics, which experts believe would have an influence on the Federal Reserve’s monetary policy stance. Later in the day, at 6 p.m., the US inflation reading will be released. Gold prices on the MCX were down 0.3 percent to $50,421 per grams, while silver futures were down 0.5 percent to $60,310 per kg. Gold has been under pressure since early March, when the dollar rose against the backdrop of rising US Treasury rates, dampening investor excitement for the safe haven commodity.

The US Federal Reserve hiked its benchmark overnight lending rate by half a percentage point last week, but many analysts are questioning whether it has gone too far in tightening monetary policy. Gold is viewed as an inflation hedge and a safe haven in times of political and economic turmoil, but it is especially vulnerable to increasing short-term US interest rates, which boost the opportunity cost of keeping zero-yield metal.

Spot gold sank to a three-month low in international markets Wednesday, ahead of critical US inflation data. As the dollar index stayed near 20-year highs, spot gold was down 0.3 percent at $1,832.06 per ounce. For holders of foreign currencies, a rising dollar makes greenback-priced bullion less appealing. Spot silver declined 0.1 percent to $21.23 per ounce, while platinum rose 0.1 percent to $964.64 and palladium dropped 1.2 percent to $2,040.25.

“Despite some reprieve in the US dollar and US bond rates, gold and silver prices continued to fall. Tuesday’s morning session saw gold and silver rally a little, but they couldn’t hold on to their gains and slid below important support levels of $1840 for gold and $21.30 for silver. “Gold and silver prices plummeted on Tuesday after a member of the United States Federal Reserve stated aggressive interest rate rises may be implemented to combat inflation.

“The dollar was turbulent on Tuesday, swinging between minor gains as traders awaited the US Consumer Price Index data on Wednesday, which might give insight into the Federal Reserve’s future monetary policy path.” Investors have been in a risk-on attitude, with the yield on the benchmark US 10-year note easing down below the psychological barrier of 3%, after reaching its highest level since 2018 at 3.20 percent “On Monday, I ordered.”

“The support level for gold is $1822-1810, while the resistance level is $1850-1862. The support level for silver is $21.10-20.80, while the resistance level is $21.58-21.70. Silver has support at 60,140-59,750 and resistance at 61,150–61,510 in rupee terms, while gold has support at 50,330–50,110 and resistance at 50,880–51,050 “

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Crude Oil Prices May Fall Further Following Saudi Price Cut

Crude Oil Prices May Fall Further Following Saudi Price Cut

Following a significant overnight decrease, WTI crude oil prices were expected to fall further in Asia-Pacific trade. Bloomberg reported that the European Union is modifying its stance on a potential embargo on Russian oil, which appeared to trigger the most of the selling. Hungary’s objections were the major element preventing the EU from outright banning Russian oil.

Hungary’s Prime Minister, Viktor Orban, has cited security concerns over the ban, which has been in the works for weeks since Germany caved last month. Hungary continues to rely heavily on Russian energy products. The EU has granted exemptions to Hungary and Slovakia, but Mr. Orban has declared that his country would want a five-year exemption as well as cash to overhaul Hungary’s infrastructure.

Meanwhile, fears about the world economy are being fueled by rising prices and China’s economic downturn as a result of its Covid lockdowns. Central banks are undertaking strong moves to battle inflation, attempting to prevent high expectations from getting ingrained in the economy, which would only serve to exacerbate high inflation. Shanghai officials increased limits around the city last week, despite a decline in case numbers.

Saudi Aramco, the country’s state-owned oil company, announced a price cut for June. The increase reduces the premium paid by Asian purchasers from more than $9 per barrel to $4.40 per barrel. The premium paid by the majority of European customers will be cut as well next month. The action indicates that the big OPEC producer expects demand to fall, most likely as a result of the Covid outbreaks in China. Given the uncertainties surrounding China’s Covid issue as well as the current war in Ukraine, a greater pullout seems doubtful.

WTI CRUDE OIL TECHNICAL FORECAST

Prices fell below a significant trendline and the 50-day Simple Moving Average (SMA), indicating a breach below confluent support that has supported oil since December 2021. The 100 psychological level is currently being seen as the most immediate area for potential assistance. A dip below that would bring the 100-day SMA, which is now at 95, into focus.

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EUR/USD Steady Near 1.1100, Close to Eight-Month Highs

EUR/USD Steady Near 1.1100, Close to Eight-Month Highs

EUR/USD Steady Near 1.1100, Close to Eight-Month Highs

The EUR/USD pair is holding around 1.1080 during Tuesday’s Asian session, after easing back slightly from an eight-month high of 1.1087. This minor pullback is linked to a stronger US Dollar (USD) amid a rise in risk-averse sentiment. However, the USD might face challenges ahead as the likelihood of a 25 basis point rate cut by the US Federal Reserve (Fed) in September increases.

The CME’s FedWatch Tool indicates a 23.5% chance of a 50 basis point rate cut by the Fed, with a 76.5% probability of a 25 basis point cut in September.

On Monday, Minneapolis Fed President Neel Kashkari mentioned that discussions about potential interest rate cuts in September would be appropriate, citing concerns over a weakening labor market, according to Reuters.

The upcoming Jackson Hole Economic Symposium, starting Thursday, will be closely watched, particularly for Fed Chair Jerome Powell’s speech on Friday.

In the Eurozone, investors are waiting for key data on business activity and consumer prices that could impact the European Central Bank’s (ECB) decision in September. It is expected that the ECB will gradually reduce interest rates, though policymakers remain cautious about committing to a specific path due to the risk of price pressures rising again.

On Tuesday, the Harmonized Index of Consumer Prices (HICP) from the European Monetary Union and Producer Price Index figures from Germany are set to be released, which may influence the ECB’s policy direction.

Shaun Osborne, Chief FX Strategist at Scotiabank, noted that the EUR/USD recently edged slightly above 1.1050, driven largely by broad USD losses with limited other influencing factors.

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Australian Dollar Strengthens Amid Improved Risk Sentiment

Australian Dollar Strengthens Amid Improved Risk Sentiment and Hawkish RBA Stance

Australian Dollar Strengthens Amid Improved Risk Sentiment and Hawkish RBA Stance

The Australian Dollar (AUD) extended its winning streak against the US Dollar (USD) for the third consecutive day on Monday, driven by improved risk sentiment and a hawkish outlook from the Reserve Bank of Australia (RBA). Investors are now eagerly awaiting the RBA Meeting Minutes and the People’s Bank of China’s (PBoC) Interest Rate Decision on Tuesday for further insights.

RBA Governor Michele Bullock emphasized on Friday that the central bank is focused on potential upside risks to inflation and does not foresee any rate cuts in the near future. According to ABC News, Bullock stated that the RBA board believes it has found the right balance between controlling inflation and maintaining economic stability.

The US Dollar faces downward pressure due to increasing expectations that the Federal Reserve (Fed) might cut interest rates starting in September. Recent US economic data showed Retail Sales surpassing expectations, while both the Producer Price Index (PPI) and Consumer Price Index (CPI) suggested that inflation is easing. Additionally, July’s Housing Starts fell to their lowest level since 2020. This week, the market will focus on Federal Reserve Chair Jerome Powell’s upcoming speech.

Daily Market Movers: Australian Dollar Rises Amid Hawkish RBA Outlook

San Francisco Fed President Mary Daly emphasized on Sunday the need for a gradual approach to reducing borrowing costs, pushing back against concerns of a sharp economic slowdown that might justify rapid rate cuts. Meanwhile, Chicago Fed President Austan Goolsbee warned that maintaining a restrictive policy for too long could harm the labor market, highlighting the uncertainty surrounding the Fed’s next move.

In the US, Housing Starts dropped by 6.8% in July, following a 1.1% increase in June. However, the University of Michigan’s Consumer Sentiment Index rose to 67.8 in August, marking its first increase in five months and exceeding expectations.

US Retail Sales also saw a 1.0% month-over-month increase in July, rebounding from June’s 0.2% decline and surpassing the forecasted 0.3% rise. Initial Jobless Claims for the week ending August 9 came in at 227,000, better than anticipated and down from the previous week’s 234,000.

The People’s Bank of China (PBoC) announced on Thursday plans to renew the medium-term lending facility funds maturing on August 15th and conducted open market operations, lending CNY 577.7 billion (USD 80.9 billion) through seven-day reverse bond repurchase agreements at a maintained rate of 1.7%. Changes in China’s economy could significantly impact the Australian market due to close trade ties between the two countries.

US headline CPI rose by 2.9% year-over-year in July, slightly down from the 3% increase in June and below market expectations. The Core CPI, excluding food and energy, rose by 3.2% year-over-year, a slight decrease from the 3.3% rise in June but in line with forecasts.

Technical Analysis: Australian Dollar Targets 0.6700

The Australian Dollar is trading around 0.6680 on Monday, showing an upward trend within an ascending channel on the daily chart, indicating a bullish bias. The 14-day Relative Strength Index (RSI) is also moving towards the 70 mark, supporting the current bullish momentum.

On the upside, the AUD/USD pair could target the upper boundary of the ascending channel near the 0.6740 level. A breakout above this channel could push the pair towards its seven-month high of 0.6798, last seen on July 11.

For support, the lower boundary of the ascending channel around 0.6630 serves as the immediate support level, followed by the nine-day Exponential Moving Average (EMA) at 0.6618. A decline below the EMA could lead the pair to test the throwback level at 0.6575. If the pair drops below this support zone, it might signal a bearish trend, potentially leading it towards the throwback level at 0.6470.

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USD/CHF Dips Below 0.8750 Amid Risk-On Sentiment

USD/CHF Dips Below 0.8750 Amid Risk-On Sentiment and Weaker US Dollar

USD/CHF Dips Below 0.8750 Amid Risk-On Sentiment and Weaker US Dollar

The USD/CHF pair is trading lower, hovering around 0.8715 during the early European session on Friday. This decline is attributed to a softer US Dollar (USD). Meanwhile, the US Dollar Index (DXY), which measures the value of the USD against a basket of major currencies, is down 0.12% for the day, trading around 102.92.

Speculation about a potential rate cut by the US Federal Reserve in September continues to weigh on the Greenback. However, expectations of deeper rate cuts have lessened due to positive US Initial Jobless Claims and strong Retail Sales data reported on Thursday. According to the CME FedWatch Tool, financial markets now see nearly an 80% chance of a rate cut in September, with expectations of 200 basis points of reduction over the next 12 months, although this outlook remains data-dependent.

In Switzerland, the Federal Statistical Office reported on Thursday that the Producer and Import Price Index remained unchanged in July 2024 compared to the previous month. The annual figure showed a 1.7% decline, a slight improvement from the previous 1.9% drop and in line with market expectations.

Diminishing fears of a US economic slowdown are boosting investor sentiment, which is putting pressure on safe-haven currencies like the Swiss Franc (CHF). However, any developments related to economic uncertainty or geopolitical tensions in the Middle East could strengthen the CHF and create headwinds for the USD/CHF pair.

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EUR/USD Steadies Above 1.1000 Ahead of US

EUR/USD Steadies Above 1.1000 Ahead of US Retail Sales Data

EUR/USD Steadies Above 1.1000 Ahead of US Retail Sales Data

The EUR/USD pair is holding steady near 1.1010, consolidating its gains after pulling back from a recent seven-month high during the Asian session on Thursday. The Euro (EUR) strengthened against the US Dollar (USD) after the Eurozone’s second-quarter (Q2) Gross Domestic Product (GDP) growth met expectations.

Data released by Eurostat on Wednesday showed the Eurozone economy grew by 0.3% quarter-on-quarter (QoQ) in Q2, compared to the first quarter of the year. On an annual basis, the economy expanded by 0.6%, aligning with market expectations and potentially providing short-term support for the Euro.

Despite this positive GDP data, the growth outlook remains cautious. ING economist Bert Colijn noted that recent figures raise concerns about the strength of the service sector, leading to lowered GDP growth expectations for the remainder of the year. The European Central Bank (ECB) is anticipated to lower rates again in September, given the fragile economic outlook, after keeping key interest rates unchanged at its July meeting.

In the US, signs of cooling inflation are putting pressure on the USD, creating a favorable environment for the EUR/USD pair. The US headline Consumer Price Index (CPI) inflation dropped to 2.9% year-on-year (YoY) in July, down from 3% in June. This figure was slightly below expectations, as reported by the Labor Department on Wednesday. Core CPI, which excludes food and energy, rose 3.2% YoY, in line with market forecasts but slightly lower than the 3.3% increase seen in July.

Traders are now focused on the upcoming release of US economic data on Thursday, which includes Retail Sales, weekly Initial Jobless Claims, the Philly Fed Manufacturing Index, and Industrial Production. Stronger-than-expected results from these reports could support the USD and limit further gains for the EUR/USD pair.

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EUR/USD Holds Below 1.1000 as Markets

EUR/USD Holds Below 1.1000 as Markets Await Eurozone GDP and US CPI Data

EUR/USD Holds Below 1.1000 as Markets Await Eurozone GDP and US CPI Data

The EUR/USD pair is trading flat around 1.0990 during the early European session on Wednesday, as traders remain cautious ahead of the release of key economic data from both the Eurozone and the US. The focus is on the Eurozone’s Gross Domestic Product (GDP) for the second quarter (Q2) and the US Consumer Price Index (CPI) for July, which are expected to provide direction for the currency pair.

On Tuesday, data from the US Bureau of Labor Statistics showed that the Producer Price Index (PPI) for final demand rose by 2.2% year-on-year (YoY) in July, down from 2.7% in June and below the expected 2.3%. On a monthly basis, the PPI increased by 0.1% in July, following a 0.2% rise in June. The Core PPI, which excludes volatile food and energy prices, rose by 2.4% YoY in July, down from 3.0% in June and lower than the market consensus of 2.7%.

The market is currently pricing in a 25 basis point (bps) rate cut by the Federal Reserve (Fed) in September, with a 50 bps cut not entirely ruled out, depending on upcoming data. Atlanta Fed President Raphael Bostic expressed increased confidence on Tuesday that the Fed can achieve its 2% inflation target, but he emphasized the need for more evidence before supporting a rate cut.

In the Eurozone, the economy is expected to grow by 0.3% quarter-on-quarter (QoQ) and 0.6% year-on-year (YoY) in Q2. If GDP growth falls short of expectations, it could weigh on the Euro (EUR) against the US Dollar (USD).

According to a Reuters poll, most economists expect the European Central Bank (ECB) to cut its deposit rate twice more this year, in September and December. However, the possibility of fewer rate cuts than previously anticipated could limit the downside for the Euro. ING’s chief Eurozone economist, Carsten Brzeski, noted that the ECB might slightly revise its inflation projections upward, which makes continued rate cuts seem contradictory.

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USD/CAD Struggles to Gain Momentum

USD/CAD Struggles to Gain Momentum Near 1.3750 Amid Rising Crude Oil Prices; Focus Shifts to US PPI Data

USD/CAD Struggles to Gain Momentum Near 1.3750 Amid Rising Crude Oil Prices; Focus Shifts to US PPI Data

The USD/CAD pair is trading slightly stronger near 1.3740 during the Asian session on Tuesday, with traders largely adopting a cautious stance ahead of key US economic data releases. The US Producer Price Index (PPI) is the main event for the day, along with a speech by Federal Reserve official Raphael W. Bostic.

The US Dollar is currently in a consolidation phase, reflecting the subdued sentiment in global markets. Market participants are closely watching the PPI data, which is expected to show a year-on-year decrease to 2.3% in July from 2.6%, with Core PPI also anticipated to drop to 2.7% from 3.0%. These figures could provide critical insight into future US interest rate decisions.

Analysts at BBH Global Currency Strategy suggest there is a possibility of a 50 basis points (bps) rate cut by the Federal Reserve, contingent on upcoming data, with current market pricing indicating a 55% likelihood. If key US economic indicators show further weakness this week, it could increase the chances of the Fed implementing more aggressive rate cuts in September, potentially weakening the USD against other currencies.

Over the weekend, Fed Governor Michelle Bowman acknowledged the recent progress in reducing inflation, but noted that it remains uncomfortably above the Fed’s 2% target. She emphasized a cautious approach in considering future policy adjustments.

On the Canadian side, the Bank of Canada (BoC) is expected to implement two additional 25 bps rate cuts this year, likely in September and October, which could limit the Canadian Dollar’s upside. However, rising crude oil prices—driven by geopolitical tensions in the Middle East and expectations of a potential easing cycle by the Fed—could support the CAD. It’s important to note that higher oil prices generally benefit the CAD, as Canada is a major oil exporter to the United States.

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EUR/USD Appreciates Above 1.0900

EUR/USD Appreciates Above 1.0900, Upside Limited by Middle East Tensions

EUR/USD Appreciates Above 1.0900, Upside Limited by Middle East Tensions

The EUR/USD pair has broken its four-day losing streak, trading around 1.0920 during the Asian session on Monday. Traders are anticipating the preliminary Gross Domestic Product (GDP) data for the Eurozone’s second quarter, set for release on Wednesday.

However, the Euro, being sensitive to risk, may face challenges due to escalating geopolitical tensions in the Middle East. On Sunday, Israeli Defense Minister Yoav Gallant informed U.S. Defense Secretary Lloyd Austin of potential Iranian military preparations for a significant strike on Israel. This potential retaliation follows the assassination of Hamas leader Ismail Haniyeh in Tehran in late July, as reported by Axios.

On the U.S. Dollar (USD) front, investors will likely focus on U.S. producer inflation data on Tuesday and consumer inflation figures on Wednesday. These releases will be closely watched for signs of stable price growth.

Expectations of a possible interest rate cut by the Federal Reserve (Fed) in September could weigh on the USD, providing some support for the EUR/USD pair. The CME FedWatch Tool currently indicates a 51.5% chance of a 25-basis point rate cut at the September meeting, up from a 26.0% probability a week ago.

However, comments from Federal Reserve Governor Michelle Bowman on Sunday highlighted ongoing concerns about inflation and labor market strength, suggesting that the Fed may not be ready to cut rates at their next meeting in September, as reported by Bloomberg.

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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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