Skip to main content

XtremeMarkets

Xtreme Markets Ltd

Web Trader
Register
Download App
Login
Affiliates
Xtreme Markets Logo

Market News

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. 

Read More
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.

Read More
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.

Read More
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.

 

Read More
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.

Read More
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

Read More
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.

Read More

Hopes of Interest Rate Peak Propel European Stocks Higher

Hopes of Interest Rate Peak Propel European Stocks Higher

Optimism over a possible peak in interest rates has given European stocks a slight boost. On Tuesday, minor gains were noted across the European stock market due to traders’ anticipation that central banks would avoid triggering a recession by excessively hiking interest rates in their effort to combat inflation. In particular, Europe’s Stoxx 600 saw an increase of 0.2%, while France’s Cac 40 and Germany’s Dax each rose by 0.1%. It’s worth noting that these gains occurred amidst relatively low trading volumes, given that US markets were closed for the Independence Day holiday.

The Asian markets followed a similar trend. Stocks in this region rose after the Reserve Bank of Australia decided to maintain its interest rates at 4.1%. The bank is currently monitoring the effects of its previous rate increases on the economy. This decision was driven by a quicker-than-anticipated drop in the country’s annual inflation rate, which fell from 6.8 per cent to a 13-month low of 5.6% in May. This news provided some relief to investors who feared central banks might tighten their monetary policy too much in an attempt to curb ongoing price pressures.

Reacting to this news, Australia’s S&P/ASX 200 stock index rose by 0.5%, China’s CSI 300 grew by 0.2%, and Hong Kong’s Hang Seng increased by 0.6%. Japan’s Topix, however, bucked the regional trend and declined by 0.6%.

In other developments, oil prices experienced a surge on Tuesday after Saudi Arabia and Russia, two of the world’s largest producers, announced plans to cut supply in August. Consequently, Brent crude, the international benchmark, rose by 0.8% to trade at $75.27 per barrel, while the US marker West Texas Intermediate climbed by 0.9% to $70.42.

The German economy has also been in the spotlight recently. Germany’s Dax suffered significant losses in the energy and basic materials sectors, resulting in a 0.5% dip in the Stoxx 600 Basic Resources index. Additionally, new data released on Tuesday showed a 0.1% reduction in German exports in May, as high-interest rates continue to impact the country’s main trading partners. This decrease fell significantly short of the expected 0.3% rise projected by analysts.

As we move forward, investors will be keeping a close eye on upcoming economic data. The US employment report due on Friday is particularly anticipated, as it may offer insight into the Federal Reserve’s next policy move.

Read More
Gold Prices Under Pressure as Stronger USD Weighs Ahead of Fed Decision

Nikkei Paces Asia in Market Gains, China Trails

Nikkei Paces Asia in Market Gains, China Trails

Asian stock markets kicked off the week on a positive note, with Japan’s Nikkei Index spearheading the gains while China trailed. The surge in demand for tech stocks fuelled Japan’s market, as investors prepared for a week filled with data that will offer vital insights into the health of the Chinese economy and the direction of U.S. interest rates.

China experienced a dip in factory activity in June, as reflected by the Caixin manufacturing survey, which fell to 50.5 from 50.9 in May. Although this was slightly better than the anticipated market figure of 50.2, it underscored the ongoing weakening trend reflected in other surveys.

In light of this, China’s central bank, the People’s Bank of China, has promised more “forceful” actions to strengthen the economy. This decision comes at a crucial juncture when the country is expected to introduce a new central bank leader and its blue-chip index (.CSI300) lost 5% in the last quarter, even as most of the developed world witnessed a rally.

ANZ analysts caution that efforts to stimulate an economy amidst a significant property downturn, high sector debt, and a dwindling population could be challenging, citing Japan’s struggles in the 1990s as an example.

On the other hand, Japan’s Nikkei (.N225) index recorded nearly 20% growth in the previous quarter, buoyed by expectations that Japanese firms could step in to fill gaps created by the Sino-US decoupling, and a weakened yen. The index registered another 1.7% rise on Monday, inching towards 30-year highs.

According to a Bank of Japan survey, business sentiment improved in Q2, driven by easing supply restrictions and the lifting of pandemic-related measures, leading to enhanced factory output and demand.

However, MSCI’s broadest index of Asia-Pacific shares outside Japan (.MIAPJ0000PUS) rose by just 1.2%, still lagging behind Japan’s performance. EUROSTOXX 50 futures and FTSE futures each rose by 0.4%. S&P 500 futures and Nasdaq futures remained steady, ahead of the July 4 holiday, after recording over 6% growth in June.

The tech sector, already riding high, could receive an additional boost from Tesla’s (TSLA.O) record delivery of 466,000 vehicles in Q2, exceeding market estimates of around 445,000. This follows Apple’s (AAPL.O) achievement of crossing a $3 trillion valuation for the first time, contributing to Nasdaq’s best quarter in four decades.

BofA analysts noted that the market value of the seven largest tech companies has soared by $4.1 trillion this year, with Apple, Microsoft (MSFT.O), and Alphabet (GOOGL.O) now worth more than all emerging markets combined.

Read More
WTI Slips to $71.00 Amid Trade Tariff Concerns and Weak China Data

Dow futures are indicating a downward trend

Dow futures are indicating a downward trend

During the evening trading session on Thursday, U.S. stock futures exhibited a varied performance, following a predominantly positive session for major benchmark averages. This optimistic sentiment was spurred by GDP data that outstripped expectations, thereby bolstering investor confidence. Furthermore, banks saw an upswing after the Federal Reserve announced that all 23 institutions featured in its annual stress test were sufficiently capitalized to endure a severe recession.

By 18:45 ET (22:45 GMT), Dow Jones futures were showing signs of a downward shift, marking a slight dip of 0.1%. In contrast, S&P 500 futures and Nasdaq 100 futures remained stable, indicating no significant changes in these indices’ projected opening levels.

In the wake of extended trading hours, shares of Nike (NYSE:NKE) experienced a 4.3% drop. This decline was triggered by the company’s Q4 earnings per share (EPS) of $0.66, which fell $0.02 short of the analyst estimate of $0.68. Despite this, the company’s revenue reached $12.8 billion, surpassing the anticipated figure of $12.58 billion.

Conversely, Accolade (NASDAQ:ACCD) witnessed a notable surge of 15.4% during after-hours trading. This increase followed their Q1 report, which revealed losses of $0.52 per share, outperforming the expected losses of $0.62 per share. The company also reported revenue of $93.2 million, exceeding the forecasted figure of $90.27 million.

As we look forward to Friday’s trading session, market participants will be keenly observing new data on the PCE price index, personal income and spending, as well as the Michigan consumer sentiment and expectation surveys. These indicators will offer crucial insights into the health of the U.S. economy and could steer the direction of the stock market.

During regular trading on Thursday, the Dow Jones Industrial Average rose by 269.8 points or 0.8%, closing at 34,122.4. Similarly, the S&P 500 climbed by 19.6 points or 0.5% to 4,396.4. However, the Nasdaq Composite wrapped up the day virtually unchanged at 13,591.3.

From a fixed income standpoint, the yield on the United States 10-Year Treasury note was pegged at 3.848%. Given that bond yields move inversely to prices, this level of yield suggests that investors are bracing for a rise in interest rates, which could exert further pressure on the stock market.

Read More

Dow Jones Versus the Nasdaq 100 Amid Rising Government Bond Yields

Dow Jones Versus the Nasdaq 100 Amid Rising Government Bond Yields

The blue-chip-oriented Dow Jones gained cautiously on Wednesday while the tech-heavy Nasdaq 100 sank 1.75% in the worst single-day drop since April 25th. In fact, the Nasdaq/Dow ratio plunged 2.02%, marking the worst 24-hour period since October 27th, which was over 7 months ago. What explains this divergent dynamic and is it a concern for sentiment going forward?

Tech’s underperformance coincided with a strong day for developed countries’ 10-year government bond yields. An average of key nations (such as the United States, Canada, and Australia) soared 3.78% on Wednesday. That was the best single-day gain since December 20th. As we were reminded last year, growth-oriented companies face increasingly difficult challenges in a rising rate climate.

The surge in government bond yields follows two key events that are related: unexpected interest rate hikes from the Reserve Bank of Australia and Bank of Canada. The former was earlier this week while the latter occurred over the past 24 hours. These events served as not just a reminder that the fight against inflation is not done, but that other major central banks, such as the Fed, could yet follow.

With that in mind, the mostly pessimistic sentiment tone set by Wall Street leaves the door open to follow-through during Thursday’s Asia-Pacific trading session. That could place regional indices, such as Australia’s ASX 200 and Hong Kong’s Hang Seng Index vulnerable. Sentiment may thus remain in the driver’s seat given a light economic docket over the remaining 24 hours.

Nasdaq 100 Technical Analysis

On the daily chart, the Nasdaq 100 has fallen back to the 100% Fibonacci extension level at 14271. The index remains in a clear uptrend, with the 20-day Simple Moving Average and January trendline guiding prices higher. Reversing the uptrend would thus require meaningful follow-through lower from here. Key resistance is the 123.6% level at 14852 before 15768 comes into focus.

Read More

FOMO Regime Change for US Stock Market

FOMO Regime Change for US Stock Market

The laggards, Dow Jones Industrial Average & Russell 2000 have recorded stellar single-day outperformances on Friday, 2 June against the Nasdaq 100; at least a three-month high.

Market breadth has improved but fundamental structure remains weak due to stagflation risk.

Positive FOMO (“fear of missing out”) flows may persist at least in the short to medium term due to relatively low levels of positioning, exposure, and sentiment.

On Friday, 2 June, we witnessed a significant flow of rotation among the benchmark US stock indices ahead of the key 16 June “Triple Witching” US options expiration; prior laggards, the Dow Jones Industrial Average and Russell 2000 have recorded one of the best single day outperformance in at least three months against the leading mega-cap tech & AI concentrated Nasdaq 100.

The ongoing medium-term uptrend of the Nasdaq 100 started on 13 October 2022, outperforming the Dow Jones Industrial Average and Russell 2000 in the past seven months. Interestingly, the Dow Jones Industrial Average / Nasdaq 1000 ratio recorded its strongest single-day performance on Friday since 3 Feb 2023 (1.38) while the Russell 2000 / Nasdaq 1000 ratio notched its strongest single-day performance since 26 October 2022 (2.81) supported by strong rallies seen in cyclical, industrial and banking stocks such as 3M (+8.7%), Caterpillar (+8.4%) and US regional banks (KRE ETF +6.2%) on Friday.

On the surface, these positive observations can be considered as an improvement in market breadth as rotation is being spread from the high-flying eight mega-cap tech stocks (FAANG plus MNT; Facebook/Meta, Apple, Amazon, Netflix, Google/Alphabet, Microsoft, Nvidia, and Tesla) that are leading the rally since late October 2022 towards the cyclical laggards.

A higher cost of funding environment cannot be ruled out

However, a higher cost of funding environment amid a lingering risk of stagflation may put a damper on earnings growth. The 10-year US Treasury yield has recovered above its 200-day moving ex-post US debt ceiling deal and is looking for a test on a key resistance at 3.90% with positive momentum.

The leading inverted US Treasury yield curve is pointing to a potential imminent global recession

In addition, we cannot rule out an impending global recession as the leading US Treasury yield curve, the difference between the 10-year and 2-year is now at -0.81%; it’s the most inverted state in almost 42 years.

However, in a nutshell, the trend is always your friend until its ends so do not be surprised by such positive FOMO irrational behavior that can persist in the short to medium-term time horizons which in turn may take the US stock market higher due to a relatively low level of positioning, exposure, and sentiment since the start of the year.

Read More

Dollar Index Looks Unstoppable now

[vc_row full_width=”stretch_row”][vc_column][vc_column_text]

Dollar Index Looks Unstoppable now

On Friday afternoon the new highs rose to 107.6, on the start of European trading session it went 107.45. Since Oct 2002 this was the highest rate and the index added around 20% to its 2021 low.

This is a positive secondary effect for the US(strengthening of dollar), reducing inflationary pressures through imports to ending the talk of dollar weakness that has been prevalent since late 2020.

Central bankers are not welcome too sharp fluctuations in any direction, however they are ignoring the exchange rate against any other currency.

Dollar got a little attention of appreciation by Fed, but it good to be prepared for the change in coming days and weeks to avoid the cause of any uncontrolled rise in dollar, which be devastating.

Fed has begun selling assets off its balance sheet, reducing it by $42.5B. The ECB stopped net buying in July, but active Fed like selling in the matter of uncertainty.

The strengthening of dollar looks controlled so far. But still, after the substantial rise to multi-year highs, markets could start a wave of movement from Europe and Asia, underpinned by the news and current exchange movements. The current market reached a point where it can move in one way. In such a case it is hard to talk about any levels could be the real turning point.[/vc_column_text][/vc_column][/vc_row]

Read More

In the first half, US stocks fell by the most since more than 50 years

In the first half, US stocks fell by the most since more than 50 years

The first half of the year for US stocks was the worst in more than 50 years as a result of a collapse that was started by the Federal Reserve’s attempt to stop persistent inflation and accelerated by growing fears about global growth. The S&P 500 dropped 0.9% on Thursday, bringing the blue-chip index’s decline in the first half of 2022 to 20.6%. Since 1970, when stocks fell as a result of a recession that put a stop to the longest stretch of economic development in American history, Wall Street stocks have not had a year’s start as severe.

According to Bloomberg data on the S&P 1500 index, a larger measure that encompasses small, mid, and large-cap groups, the decline in US stocks has wiped out more than $9 trillion in market value since the end of 2021. The likelihood of recessions in the US and Europe is the dominant market concern, according to Bastien Drut, strategist at Paris-based asset manager CPR. The days of being able to rely on central banks loosening monetary policy to assist economic development are “gone,” he continued, describing the situation as “extremely gloomy.”

The NASDAQ Composite, which is heavily weighted toward technology, has also fallen this year; on Thursday, it lost 1.3%, bringing its losses for the year to roughly 30%.Except for energy stocks, which are up 29% over the past six months, every sector of the S&P 500 has declined. The equities in consumer discretionary companies have dropped the greatest, by 33%. Utility equities, which are viewed as inflation hedge since businesses are better able to pass on increasing costs to customers, have suffered the least this year, down just 2%.

Paul Leech, co-head of global equities at Barclays, claimed that “everything has been highly inflation-driven.” It has been the recurring theme of the year and has truly just gotten worse. Large stock indices have dropped significantly all throughout the world. The Stoxx 600 index for Europe fell 1.5% on Thursday, bringing its yearly loss to almost 17%. In terms of dollars, the MSCI index of the Asia-Pacific markets has fallen 18% in 2022.

Leading policymakers cautioned that the period of low interest rates and moderate inflation had ended following the inflation shock brought on by Russia’s invasion of Ukraine and the coronavirus epidemic on Wednesday at the European Central Bank’s annual conference. Fed Chair Jay Powell has cautioned that the US may experience substantial and frequent price increases that policymakers may find difficult to control if the central bank does not swiftly boost interest rates high enough to combat inflation. The most pain would come from neglecting to confront this high inflation and allowing it to become entrenched, he continued.

Interest rate increases from the Fed and Bank of England have alarmed the markets this month. The Fed increased the federal funds rate by 0.75 percentage points to a new target range of 1.5 to 1.75 percent, and officials have hinted at another significant rate increase for next month. For the first time since 2011, the ECB is also planning a July quarter-point increase.

According to Scott Chronert, US equities analyst at Citigroup, “stubborn inflation readings have provoked an increasingly hawkish Fed response, pushing the policy focus to battle inflation despite potential economic consequences.” Investors are understandably reluctant to purchase due to the Fed’s continuous rate hikes and their concern over resetting earnings expectations. On Wednesday, Citi decreased its S&P 500 year-end projection from 4,700 to 4,200 points. Although the new aim would represent an increase of about 11% above the benchmark’s current level, bank experts also put the likelihood of a worldwide recession at 50%.

Read More
Gold Struggles Below $3,300 as Fed Rate Cut Hopes Dim Ahead of FOMC Minutes

Gold Struggles Below $3,300 as Fed Rate Cut Hopes Dim Ahead of FOMC Minutes

Gold (XAU/USD) dipped to a one-and-a-half-week low near $3,284 during the Asian trading session on Wednesday, weighed down by a stronger US Dollar and rising Treasury yields. Investors are increasingly convinced that recent US tariff hikes may fuel inflation, prompting the Federal Reserve to keep interest rates elevated for longer. 

The firmer Greenback, bolstered by expectations of prolonged Fed tightening and a robust June jobs report, has dulled the appeal of non-yielding assets like gold. Benchmark 10-year US bond yields also climbed, adding further pressure on the precious metal. 

Market participants remain cautious amid ongoing concerns about the economic fallout from Donald Trump’s aggressive tariff proposals. On Tuesday, the former US President threatened to impose duties of up to 50% on copper and 200% on foreign pharmaceuticals, unsettling global markets. However, gold’s traditional safe-haven demand has yet to see significant support in response. 

Traders are now eyeing the release of the FOMC meeting minutes later today, hoping for clues on the Fed’s rate path. Although a July rate cut appears off the table, markets are still pricing in up to 50 basis points of easing by year-end, likely beginning in October. 

Technically, a break below the $3,300 level, coupled with resistance at the 100-period SMA on the 4-hour chart, signals further downside. Momentum indicators suggest gold could slide towards the next support at $3,270, with a deeper drop towards $3,248–$3,247 not ruled out. 

On the upside, recovery attempts may face initial resistance near $3,310 and stronger barriers around $3,326 and $3,340. A decisive move above $3,360 could open the door to a short-term rebound toward the $3,400 mark. 

Read More
Gold Price Climbs Steadily

Gold Price Climbs Steadily, Eyes Record High Amid Trade War Concerns

Gold (XAU/USD) extends its intraday rally, reaching the $2,880 region during the Asian session on Monday. The gains come in response to US President Donald Trump’s plan to impose new 25% tariffs on all steel and aluminum imports, reigniting fears of a global trade war and driving demand for the safe-haven precious metal. Additionally, concerns that Trump’s protectionist policies could fuel inflation further bolster gold’s appeal as a hedge against rising prices.

Gold Supported by Trade War Fears, But Fed Policy Remains a Concern

Despite strong upside momentum, gold’s gains may face limitations due to the resilient US Dollar (USD) and expectations that the Federal Reserve (Fed) might delay further rate cuts. The strong US employment data released on Friday, coupled with inflationary concerns, has reinforced speculation that the Fed will maintain a cautious stance.

Overbought conditions on the daily chart could also deter traders from initiating fresh bullish positions, especially in the absence of key US economic data early in the week.

Trump’s Tariff Announcement Sparks Market Uncertainty

On Sunday, Trump reaffirmed plans to impose 25% tariffs on all steel and aluminum imports into the US, adding that his administration would match tariff rates imposed by other countries. These announcements have further fueled uncertainty and strengthened gold’s safe-haven appeal.

Meanwhile, geopolitical tensions remain elevated. Russian Deputy Foreign Minister Galuzin stated there are no satisfactory proposals for Ukraine peace talks, dismissing Western statements as mere rhetoric. US Vice President JD Vance is reportedly heading to Germany this week to outline US policy proposals.

Fed Policymakers Express Caution Amid Economic Uncertainty

The latest US Nonfarm Payrolls (NFP) report showed 143K jobs were added in January, falling short of the 170K estimate but offset by an unexpected dip in the Unemployment Rate to 4.0%. While the report provides mixed signals, it has reinforced the belief that the Fed will remain cautious regarding further monetary easing.

Several Fed officials have weighed in on economic policy:

  • Minneapolis Fed President Neel Kashkari stated he would consider supporting further rate cuts if inflation data remains favorable and the labor market stays strong.
  • Chicago Fed President Austan Goolsbee noted that inconsistent US government policies create economic uncertainty, making it difficult to assess inflation trends.
  • Fed Governor Adriana Kugler acknowledged steady US economic growth but warned that progress toward the 2% inflation target remains uneven and slow.

What’s Next for Gold?

A stronger US Dollar could act as a headwind for gold prices, limiting aggressive bullish momentum. Traders will closely monitor Fed Chair Jerome Powell’s semi-annual congressional testimony and the upcoming US consumer inflation figures for further market direction.

Read More
Gold Price Rally Holds Strong, But Overbought Conditions Raise Caution

Gold Price Bulls Hold Firm, But Overbought Conditions Suggest Caution

Gold (XAU/USD) continues its upward trajectory through the Asian session on Wednesday, reaching a fresh all-time high near $2,858. Concerns about the economic impact of US President Donald Trump’s trade tariffs continue to drive demand for the safe-haven metal. Furthermore, predictions that the Federal Reserve (Fed) would continue its easing cycle, backed by signs of deteriorating momentum in the US labor market, are fuelling demand for the non-yielding yellow metal.

 

Meanwhile, the US dollar (USD) remains under pressure near its weekly low, with rising expectations of further Fed policy easing, offering an extra lift to gold prices. However, Trump’s decision to suspend tariffs on Canada and Mexico has contributed to a risk-on mentality, which may restrict future gains for XAU/USD. Furthermore, gold is entering overbought territory on the daily chart, implying a short-term consolidation or minor retreat before the advance begins. Traders are now waiting for significant U.S. data releases, such as the ADP private-sector employment report and the ISM Services PMI, for new market signals.

Gold Bulls Retain Control Amid US-China Trade Tensions

Despite the positive risk tone, a further escalation in U.S.-China trade tensions continues to lend support to the upward momentum in gold. In response to President Trump’s latest tariffs, China has imposed targeted duties on US imports, and the threat of a trade war between the world’s two biggest economies has seen gold reach an all-time high on Wednesday.

On the macroeconomic front, the Job Openings and Labor Turnover Survey (JOLTS) released Tuesday revealed a decline in U.S. job openings, dropping to 7.6 million in December from a previous 8.09 million. The data signals a cooling labor market, increasing the likelihood of additional Fed rate cuts. This has kept USD bulls on the defensive and further strengthened XAU/USD.

Trump’s decision to postpone the application of a 25% tax on Canadian and Mexican imports by 30 days has revived hopes that a global trade war can be avoided. However, this has done little to undermine the positive enthusiasm toward gold.

Market players will be keenly monitoring Wednesday’s U.S. economic data, such as the ISM Services PMI and the ADP employment report, which may cause short-term changes in gold prices. However, Friday’s highly anticipated Nonfarm Payrolls (NFP) report continues to be the main focus. Furthermore, any fresh information about trade tariffs is probably going to cause financial markets to become more volatile.

Read More
WTI Crude Oil Struggles Near $72.00, 100-Day SMA Holds as Key Support

WTI Crude Oil Struggles Near $72.00, 100-Day SMA Holds as Key Support

West Texas Intermediate (WTI) crude oil prices fell from a one-week high on Tuesday, attracting sellers for the second straight session. The commodity trades at $72.00, barely above last week’s one-month low and close to the important 100-day Simple Moving Average (SMA) support. 

US Tariff Delay Weighs on Oil Prices

US President Donald Trump has announced a one-month suspension on newly imposed tariffs on imports from Canada and Mexico, easing worries about potential supply disruptions from two of the country’s main oil suppliers. This development put downward pressure on crude oil prices. Furthermore, fears of lower gasoline demand—driven by the larger economic impact of Trump’s trade policies—are contributing to gloomy sentiment in the oil market.

OPEC+ Stands Firm on Production Policy

Despite Trump’s calls for higher output to combat rising oil prices, the Organization of Petroleum Exporting Countries and its allies (OPEC+) have chosen to keep current production levels. This decision may give some support for crude oil prices, avoiding further losses in the near term.

Key Technical Levels to Watch

Traders will closely monitor the 100-day SMA, currently positioned near the $71.00 mark, which serves as a crucial support level. A decisive break below this threshold could trigger an extended pullback from the recent multi-month highs. Conversely, a bounce from this level may reinforce buying interest and help WTI recover from its recent slump.

Read More
Gold Holds Below $2,800 Despite Intraday Recovery

Gold Price Trims Intraday Losses but Remains Below $2,800 Amid Stronger USD

The gold price (XAU/USD) recovers some of its losses following the strong Asian session sell-off but remains in negative territory, hovering around $2,785, down about 0.60% for the day. The recent rise in the US Dollar (USD), fueled by President Donald Trump’s decision to impose tariffs on Canada, Mexico, and China, has pushed the greenback closer to a two-year high, weighing on gold and dragging it away from its all-time high of $2,817, hit on Friday.

However, projections that the Federal Reserve (Fed) would lower interest rates twice by the end of 2025, combined with indications about probable economic disruptions from Trump’s trade policies, contribute to gold’s safe-haven appeal. The current risk-off mentality further shields the downside, so bearish traders should exercise caution ahead of this week’s key US macroeconomic data, which begins with today’s ISM Manufacturing PMI release.

Technical Outlook: Gold’s Uptrend Intact Despite Intraday Pullback

From a technical perspective, the intraday decline found support near the $2,772 resistance-turned-support level, which now serves as a pivotal point. A decisive break below this zone could trigger further selling pressure, exposing gold to the next key support levels:

 

  • $2,755 – Initial downside target
  • $2,740 – Intermediate support
  • $2,725-$2,720 – Strong demand zone
  • $2,700 – Psychological level, a break below which could accelerate losses

Conversely, immediate resistance is seen in the $2,790-$2,800 region, followed by the record high of $2,817. Notably, momentum indicators on the daily chart remain comfortably positive, indicating that gold has not yet reached overbought levels. This provides room for additional upward momentum, confirming the broader bullish trend that began with the December swing bottom.

If gold manages to sustain a move above $2,817, it could pave the way for fresh record highs, with bulls eyeing further gains amid ongoing market uncertainty.

Market Drivers to Watch

US Dollar Strength: The impact of Trump’s tariffs on global trade could continue supporting the USD, potentially weighing on gold.

Federal Reserve Policy: Expectations of rate cuts in 2025 remain a crucial factor for gold’s long-term trajectory.

US Economic Data: The upcoming ISM Manufacturing PMI and Nonfarm Payrolls (NFP) report later this week could trigger volatility in gold prices.

Risk Sentiment: Any escalation in geopolitical or economic tensions could further boost gold’s safe-haven demand.

Overall, while gold has retreated from its highs, the larger bullish trend remains intact, with technical signals suggesting further upward movement as long as critical support levels hold.

Read More
WTI Slips to $71.00 Amid Trade Tariff Concerns and Weak China Data

WTI Slips to $71.00 Amid Trade Tariff Concerns and Weak China Data

West Texas Intermediate (WTI) crude oil prices edge lower during Wednesday’s Asian session, erasing part of the previous day’s modest recovery from a nearly three-week low. The commodity trades near $71.00, down over 0.25% for the day, and remains vulnerable to further losses amid prevailing bearish sentiment.

Investor concerns persist over US President Donald Trump’s threat to impose trade tariffs on Canada, China, and Mexico by February 1, which could weigh on global fuel demand. Additionally, weak Chinese economic data adds to downward pressure. Official PMIs released on Monday highlighted continued weakness in the world’s second-largest economy and top crude importer, raising concerns over lower consumption.

Further pressure on oil prices comes from Trump’s energy policies, which include plans to ramp up US energy production and calls for the Organization of Petroleum Exporting Countries (OPEC) to increase output to drive prices lower.

With bearish fundamentals dominating, WTI remains susceptible to further downside risks in the near term.

Read More
WTI Drops Toward

WTI Drops Toward $74.00 as Trump Pressures OPEC to Lower Oil Prices

West Texas Intermediate (WTI), the US crude oil benchmark, trades near $74.10 on Friday, continuing its downward trend after US President Donald Trump urged Saudi Arabia and the Organization of the Petroleum Exporting Countries (OPEC) to reduce oil prices.

Uncertainty surrounding Trump’s proposed tariffs and energy policies adds to the pressure on WTI. Speaking at the World Economic Forum in Davos on Thursday, Trump announced plans to request Saudi Arabia and OPEC to lower oil prices, saying, “I’m also going to ask Saudi Arabia and OPEC to bring down the cost of oil.”

Expectations of increased US production under Trump’s administration further weigh on oil prices. Earlier this week, Trump declared a national energy emergency, leveraging his authority to expedite the approval of oil, gas, and electricity projects that would typically require years of permitting.

Meanwhile, US crude inventories declined for the ninth consecutive week. The US Energy Information Administration (EIA) reported a drop of 1.017 million barrels in crude oil stockpiles for the week ending January 17, following a 1.962 million-barrel decline in the prior week. Market expectations had forecast a larger decrease of 2.1 million barrels.

Oil traders will closely monitor developments surrounding Trump’s energy policies and tariff announcements. Additionally, attention will shift to the preliminary US S&P Global Purchasing Managers Index (PMI) for January, set for release later on Friday. A weaker-than-expected reading could pressure the US Dollar (USD), potentially offering some support to the USD-denominated WTI price.

Read More
ANZ Economists Predict Earlier OCR

ANZ Economists Predict Earlier OCR Cut Amid ‘Meaningful Progress’ in Inflation Battle

ANZ Economists Predict Earlier OCR Cut Amid ‘Meaningful Progress’ in Inflation Battle

Economists at ANZ New Zealand, the country’s largest bank, have revised their forecast for the first Reserve Bank Official Cash Rate (OCR) cut, moving it up to February 2025 from the previously anticipated May 2025.

Currently, the OCR stands at 5.50%, unchanged since May 2023. This adjustment in ANZ’s forecast comes as they observe potential progress in controlling inflation, despite ongoing domestic economic weakness. ANZ’s Chief Economist Sharon Zollner highlighted that recent data and leading indicators support a more confident outlook for a weak economy, prompting the bank to adjust its forecast.

Earlier this year, ANZ had forecasted a steady sequence of OCR cuts starting in August, eventually reducing the rate to 3.5% over 12 months. However, by February, they revised their stance, predicting two 25 basis point increases instead, one in February and another in April. Post the February monetary policy review, ANZ acknowledged their forecast error but still saw a strong chance of the OCR moving up before eventually forecasting a cut in mid-2025, later specified as May.

Zollner explained that before cutting the OCR, the Reserve Bank needs to be confident that Consumer Price Index (CPI) inflation is moving toward 2% and is expected to remain within the 1% to 3% target range. By February 2025, ANZ anticipates seeing fourth-quarter CPI inflation at 2.6% year-on-year and non-tradable inflation dropping below 4% in the following quarter, with unemployment rising above 5%. These conditions, according to Zollner, would justify an OCR cut.

The March CPI was 4%, with unemployment at 4.3%. Non-tradable inflation, which includes domestic goods and services, was at 5.8%, while tradeable inflation, including imported goods, was at 1.6%.

ANZ economists note the housing market remains stagnant, with ANZ holding $107.5 billion in housing loans as of March 31. Looking beyond February, they have penciled in a 25 basis point cut at each Reserve Bank monetary policy meeting, aiming for the OCR to stabilize around 3.5%, considered a neutral rate that neither stimulates nor constrains the economy.

The Reserve Bank itself isn’t forecasting an OCR cut until August next year, while financial markets have priced in a cut for November this year. The next OCR review is scheduled for July 10. Meanwhile, Infometrics’ chief forecaster Gareth Kiernan has also adjusted his forecast, now expecting the first OCR cut in February next year instead of November this year.

Read More
Taiwan Central Bank Chief Links Rate Cut to Inflation Control

Taiwan Central Bank Chief Links Rate Cut to Inflation Control

Taiwan Central Bank Chief Links Rate Cut to Inflation Control

On Thursday, Taiwan’s central bank governor highlighted that inflation remains the crucial determinant in the potential decision to adjust interest rates at the upcoming meeting next week. During a session with legislators in parliament, Governor Yang Chin-long noted that Taiwan’s current interest rates are at their peak in over 15 years.

Governor Yang acknowledged the growing expectations for the U.S. Federal Reserve to reduce its rates by September. However, he emphasized that Taiwan’s economic circumstances differ from the U.S., indicating that any decision by Taiwan’s central bank to alter interest rates would not necessarily mirror the Fed’s actions. He stated that the decision to adjust rates in Taiwan hinges entirely on the domestic inflation scenario, which currently does not align directly with U.S. rates.

Despite not committing to a rate cut, Governor Yang suggested that another rate hike might be off the table for now. He reflected on the market’s reaction to the unexpected rate increase in March, pointing out that frequent surprises regarding rate adjustments are not desirable.

In economic data, Taiwan’s consumer price index (CPI) for April recorded a year-on-year increase of 1.95 percent, which was below the expectations of analysts. This has led the government to report a mild easing in inflation levels. This comes after the central bank, in a move that caught markets off guard in March, increased its policy rate to 2 percent from 1.875 percent. This decision was influenced by ongoing inflationary pressures and an impending rise in electricity prices.

The next rate-setting meeting of the central bank is scheduled for June 13. The economic context for this meeting is shaped by recent statistics indicating that Taiwan’s economy is poised for faster growth in 2024. This optimistic forecast is supported by robust international demand for artificial intelligence (AI) applications and strong domestic consumption. These factors will play a significant role in the central bank’s deliberations on whether to adjust interest rates, balancing the need to manage inflation while supporting economic growth.

Read More
RBA Governor Bullock Predicts 'Quite Low' March GDP Numbers

RBA Governor Bullock Predicts ‘Quite Low’ March GDP Numbers

RBA Governor Bullock Predicts ‘Quite Low’ March GDP Numbers

Reserve Bank of Australia (RBA) Governor Michele Bullock has indicated that a rebound in inflation or persistently high price pressures could necessitate further interest rate hikes. Speaking at a senate estimates hearing, Bullock emphasized the RBA’s readiness to act if inflation remains uncomfortably high, stating that the central bank would not hesitate to increase rates again to control rising prices.

Conversely, Bullock noted that if economic growth were significantly lower than expected, the RBA would consider cutting interest rates to stimulate the economy. She highlighted the importance of monitoring economic indicators closely to determine the appropriate monetary policy response.

Bullock also projected that economic growth would be “quite low” in early 2024. The March quarter national accounts are expected to show minimal growth, with economists predicting a mere 0.2% expansion in the first quarter of 2024. This figure would result in an annual growth rate of just 1.2%, the weakest performance outside the pandemic since the 2000 dot-com bust. When questioned about the concept of a per capita recession, Bullock dismissed the term, stating that it does not accurately reflect job losses and economic difficulties.

In addressing budgetary questions, Bullock avoided labeling Treasurer Jim Chalmers’ May budget as either expansionary or contractionary, citing the complexity of the issue. She argued that various domestic and international factors influence Australia’s economic conditions, not just fiscal policy. Treasury Secretary Steven Kennedy also declined to provide a definitive answer on the budget’s impact during a similar inquiry.

Bullock reassured that federal and state energy rebates would not significantly impact underlying inflation. Despite concerns from some economists that the savings from the rebates might boost spending and inflation, Bullock believes the effect will be minimal. The May budget included a $300 energy rebate for households, which Treasury estimates will reduce headline inflation by 0.5 percentage points.

Under questioning from Liberal Senator Dean Smith, Bullock affirmed that the RBA would not rule out raising interest rates during an election campaign if necessary. The central bank’s decisions will continue to be driven by economic data.

RBA Assistant Governor Christopher Kent highlighted that the effects of the 13 rate hikes since May 2022 are still unfolding. A small group of borrowers with fixed-rate loans are yet to transition to higher variable rates, which could add another 20 basis points to the average mortgage rate. Kent also noted that increased competition among banks for high-quality borrowers has mitigated the impact of rate hikes on households. Only about 80% of the increase in the cash rate has been passed on to borrowers, thanks to competitive banking practices.

Read More
China's Yuan Falls Despite

China’s Yuan Falls Despite Gains Across Asian Markets

China’s Yuan Falls Despite Gains Across Asian Markets

On Tuesday, the Chinese yuan experienced a decline against the dollar, diverging from the general upward trend seen in other Asian currencies. This occurred despite a broader weakening of the greenback, influenced by factors such as foreign dividend payments and ongoing economic concerns.

Before the markets opened, the People’s Bank of China set the daily midpoint rate for the yuan at 7.1083 per US dollar, marking its strongest position since May 22. This rate is central to the managed floating exchange rate system that allows the yuan to fluctuate within a 2% range above or below the midpoint.

In the spot market, the onshore yuan started the day at 7.2400 per dollar. By midday, it had weakened to 7.2456, showing a slight decrease of 43 pips compared to the previous session’s close and standing 1.93% weaker than the midpoint.

Despite recent policy efforts to stimulate the property market, these measures have not managed to sustain capital inflows, according to analysts. HSBC noted that while there have been short-lived increases in equity inflows due to policy changes favoring property, these have not been maintained. On the other hand, there has been a more consistent outflow of funds due to onshore demand for foreign exchange and investments in offshore equities through the southbound trading link.

Additionally, the Chinese blue-chip CSI 300 index has shown signs of weakening after initially rebounding from five-year lows in February. This suggests investor fatigue and uncertainty regarding the effectiveness of the government’s support measures for the market.

Another factor contributing to the yuan’s decline is the seasonal demand for foreign currency by overseas-listed Chinese companies needing to cover dividend payouts. This demand typically leads to selling of the yuan in exchange for foreign currencies.

Market watchers are now looking forward to upcoming U.S. economic indicators, including the ISM services PMI and nonfarm payrolls data, which will provide further insights into the potential adjustments in U.S. interest rates.

For the year, the yuan has fallen by 2.1%, affected by its relatively low yields compared to other currencies and the divergent monetary policies between China and other major economies. Meanwhile, the global dollar index has seen a slight decrease, dropping to 104.08 from 104.14. The offshore yuan is also showing a modest disparity from its onshore counterpart, trading at 7.2573 per dollar, which is 0.16% weaker.

Read More
Japan's Q1 Capex Increase Hints at Positive GDP Revision

Japan’s Q1 Capex Increase Hints at Positive GDP Revision

Japan’s Q1 Capex Increase Hints at Positive GDP Revision

In the January-March period, Japanese companies increased their investment in plant and equipment, driven by a rise in demand for automobiles and efforts to streamline operations. This uptick in capital expenditure suggests that the economic downturn observed in the first quarter might be less severe than previously estimated.

The latest figures indicate a resurgence in private sector-led growth, a key factor for the Bank of Japan as it considers further normalization of its monetary policy. This follows a rate hike in March, the first since 2007. According to the Ministry of Finance, corporate capital spending in Japan grew by 6.8% year-over-year in the first quarter. Despite being the 12th consecutive quarter of gains, the growth rate has decelerated from the previous quarter’s robust 16.4%. Additionally, on a seasonally adjusted quarterly basis, there was a decline of 4.2%, pointing to inconsistent momentum.

These investment figures will play a crucial role in the recalibration of the gross domestic product (GDP) statistics scheduled for release on June 10. Initial estimates had shown a contraction of 2.0% on an annualized basis in the first quarter. Analysts now suggest that these capex figures, combined with public works investment and an increase in inventories, may lead to an adjusted contraction of around 1.8% annualized.

This improved capex data is anticipated to strengthen arguments in favor of the central bank continuing with its policy normalization efforts gradually. Additionally, the Ministry of Finance reported that corporate sales in the first quarter rose by 2.3% from the previous year, while recurring profits surged by 15.1%. Total corporate profits reached 27.4 trillion yen, marking the third highest recorded figure, bolstered by heightened demand in sectors like automotive, chemicals, real estate, and other services. These developments suggest a potential stabilization and gradual recovery of the Japanese economy in the upcoming months.

Read More
Japanese Yen Nears Multi-Month

Tokyo Inflation Rises, Aligning BOJ with Potential Rate Hike

Tokyo Inflation Rises, Aligning BOJ with Potential Rate Hike

Inflation in Tokyo saw a notable uptick in May, with consumer prices excluding fresh food climbing by 1.9%, according to data from the Ministry of Internal Affairs. This increase, which aligns with economists’ predictions, was primarily fueled by higher utility costs due to renewable energy surcharges.

These inflation figures from Tokyo often predict national trends, suggesting that a similar rise could be expected in the upcoming nationwide inflation data. Despite this increase, Tokyo’s inflation rate remains below the national average, largely due to educational subsidies provided by the local government.

Economists are closely monitoring the potential impacts of the upcoming tax cuts in June and the cessation of government utility subsidies on consumer prices and spending habits. Although some analysts foresee a possible early rate hike by the Bank of Japan (BOJ) due to the depreciating yen, others, like Mari Iwashita from Daiwa Securities, anticipate such a move might not occur until October.

Additional data released indicated a mixed economic scenario. Industrial output in April was below expectations, and while the jobless rate stabilized at 2.6%, the job vacancy-to-seeker ratio slightly declined. Nonetheless, the labor market remains tight, potentially leading to higher wages and, subsequently, higher prices.

The BOJ’s approach to interest rates is garnering attention following the end of its negative interest rate policy in March. Solid growth in prices might encourage the BOJ to initiate another rate hike this year if a healthy cycle of rising wages and prices appears to be taking shape. BOJ Governor Kazuo Ueda has hinted at the possibility of gradual rate increases, moving away from the long-standing zero inflation mindset.

On the inflation details, a deeper look at the data reveals a slight slowdown in core inflation, which excludes fresh food and energy, to 1.7%. Service prices also saw a modest rise, impacted by ongoing educational subsidies.

Retail sales data showed a positive trend with a 1.2% increase in April, outperforming expectations. However, factory output dipped slightly by 0.1%, missing the projected 1.5% growth. These figures suggest an uneven recovery pace in Japan’s economy, which continues to face challenges despite some positive signs.

Inflationary pressures are expected to intensify with the phasing out of energy subsidies and a significant increase in renewable energy surcharges, potentially driving the inflation rate towards 3% over the summer. Additionally, the weakening yen, which recently hit a 34-year low against the dollar, poses further risks by increasing import costs. This scenario is compounded by the likelihood of businesses passing on rising labor costs to consumers, reflecting significant pay gains achieved in recent wage negotiations, marking the most substantial increases in nearly three decades.

Read More

Yen Surpasses Threshold Suspected to Trigger Intervention

Yen Surpasses Threshold Suspected to Trigger Intervention

The yen recently fell to a four-week low, touching 157.71 before slightly recovering to 157.39 per dollar, demonstrating the ongoing challenges Japan faces in its attempts to stabilize its currency through market interventions. This decline brings the yen close to the 157.52 mark, a critical level that previously triggered suspected intervention by Japan at the beginning of May to strengthen the currency.

Despite these efforts, the yen continues to weaken due to the substantial difference in interest rates between Japan and other major economies. This discrepancy has made the yen less attractive as investors seek assets with higher returns. Even as Japanese bond yields hit their highest in a decade, the currency’s pressure remains unrelieved.

Japan’s 10-year government bond yield has risen to 1.1%, the highest since July 2011, fueled by speculation that the Bank of Japan (BOJ) might increase interest rates further this year after moving away from negative interest rates in March. However, even slight increases in Japan’s yields seem insufficient to shift market focus away from higher-yielding currencies.

The yen’s depreciation is evident not only against the dollar but also against European currencies, nearing its lowest point since 2008 against the pound and approaching a record low against the euro. The yields on ten-year bonds in the US and UK are more than 300 basis points higher than those in Japan, further highlighting the yen’s unattractiveness.

Japanese authorities have not confirmed their intervention in the currency market, though estimates based on financial deposits at the Bank of Japan suggest they might have purchased around ¥3.5 trillion ($22 billion) worth of yen to support it. Finance Minister Shunichi Suzuki has maintained vigilance over the currency market, promising necessary actions as required.

However, the intervention faces potential complications. US Treasury Secretary Janet Yellen emphasized that currency intervention should rarely be used and should be pre-announced, aligning with the Group of Seven’s agreement to avoid manipulating exchange rates except in cases of extreme volatility. This stance could make it more challenging for Japan to intervene under current conditions.

Moreover, BOJ Board Member Seiji Adachi indicated that ongoing yen weakness could lead to higher prices, potentially hastening the need for another rate hike. Swap markets are now fully pricing in a rate increase by the BOJ in their July meeting, reflecting heightened expectations for monetary tightening in Japan.

In summary, while Japan is keen on supporting the yen, global yield disparities and international diplomatic considerations complicate its intervention efforts. As higher yields continue to dominate global markets, the yen remains under significant downward pressure.

Read More
Gold Price Struggles to Gain Momentum as Traders Await New Catalysts

Gold Price Struggles to Gain Momentum as Traders Await New Catalysts

Gold Price Struggles to Gain Momentum as Traders Await New Catalysts

The Gold price (XAU/USD) has rebounded from multi-day lows but remains under the $2,500 mark amid a renewed bid in the U.S. Dollar (USD) on Wednesday. Despite this, ongoing geopolitical risks and the potential for imminent Federal Reserve (Fed) rate cuts could support the yellow metal in the near term.

Later on Wednesday, the JOLTS Job Openings and the Fed Beige Book are scheduled for release. Investors are particularly focused on Friday’s U.S. August Nonfarm Payrolls (NFP) report, which could influence the size and pace of potential rate cuts at the Fed’s September policy meeting. A weaker-than-expected NFP reading might heighten concerns about a U.S. recession, potentially leading to faster Fed rate cuts and providing a boost to gold, as lower interest rates reduce the opportunity cost of holding non-yielding assets like gold.

Daily Digest Market Movers: Gold Price Pressured by Stronger U.S. Dollar

  • China’s Caixin Services PMI fell to 51.6 in August, down from 52.1 in July and missing the market expectation of 52.2 by a significant margin.
  • Daniel Ghali, a commodity strategist at TD Securities, noted, “Speculative positioning in gold seems maxed out for now. The pressure from the stronger dollar reflects our view on positioning.”
  • The U.S. ISM Manufacturing PMI edged up to 47.2 in August from an eight-month low of 46.8 in July, but this was below the market consensus of 47.5.
  • Traders have increased the likelihood of a more aggressive half-point rate cut to 39%, up from 31% before the release of the ISM Manufacturing PMI report, according to CME Group’s FedWatch tool.
  • The U.S. JOLTS Job Openings are anticipated to decline slightly to 8.10 million, down from 8.184 million in June.
  • The U.S. ISM Services PMI is expected to rise marginally to 51.4 in August from 51.1 in July.

Technical Analysis: Gold Price Maintains Positive Long-Term Outlook

Despite trading in negative territory for the day, gold maintains a bullish trend on the daily chart. The price remains above the key 100-day Exponential Moving Average (EMA), supported by a 14-day Relative Strength Index (RSI) that stays above the midline.

The critical resistance for gold lies between $2,530 and $2,540, corresponding to the upper boundary of a five-month-old ascending channel and the all-time high. A sustained move above this level could open the door to the psychological $2,600 mark.

Conversely, immediate support is found at $2,470, the low from August 22. A breach of this level could lead to a decline towards $2,432, the low from August 15, with further losses potentially driving the price down to $2,377, the 100-day EMA.

Read More

Pound Sterling Drops from Recent Highs as Attention Turns to US Core PCE Inflation

Pound Sterling Drops from Recent Highs as Attention Turns to US Core PCE Inflation

The Pound Sterling (GBP) has pulled back from a more-than-two-year high of 1.3266 against the US Dollar (USD) during Wednesday’s London session. The GBP/USD pair has dipped as the US Dollar regains some strength, with investors now focusing on the upcoming US core Personal Consumption Expenditure Price Index (PCE) data for July, which is due on Friday. This data release could be a key catalyst for the pair.

The US Dollar Index (DXY), which measures the Greenback’s performance against six major currencies, has found some buying interest, rebounding after reaching a new year-to-date low of 100.50.

Despite this recent recovery, the short-term outlook for the US Dollar remains bearish, as market participants are increasingly confident that the Federal Reserve (Fed) will reduce interest rates at its September meeting. The main debate among traders is whether the Fed will implement a significant rate cut or opt for a smaller reduction in borrowing costs.

According to the CME FedWatch tool, the 30-day Federal Funds Futures data indicates a 34.5% probability of a 50-basis point rate cut in September, with the remainder favoring a 25-basis point cut.

Regarding core PCE inflation, economists anticipate that the Fed’s preferred inflation measure rose at a year-on-year rate of 2.7% in July, up from 2.6% in June, with the monthly figures showing steady growth of 0.2%. Persistent inflation would likely reduce market expectations for a large Fed rate cut, while further easing in price pressures could increase the likelihood of more aggressive rate cuts.

Market Movers: Pound Sterling Guided by BoE Mann’s Speech

The Pound Sterling is showing mixed performance against its major counterparts during Wednesday’s European trading hours. The currency is expected to trade in a narrow range as investors seek new insights regarding the Bank of England’s (BoE) interest rate trajectory.

The BoE cut interest rates by 25 basis points to 5% in August, marking the end of its two-and-a-half-year-long restrictive monetary policy stance, as officials grew confident that inflation would sustainably return to the bank’s 2% target. Market participants anticipate that the BoE’s pace of rate cuts for the rest of the year will be slower compared to other central banks, given that the UK economy appears resilient, supported by the August flash S&P Global/CIPS PMI data and robust Q2 GDP growth.

For further direction on interest rates, investors are awaiting a speech from BoE policymaker Catherine Mann, scheduled for 12:15 GMT. Mann was among those who voted to keep interest rates steady at 5.25% during the August 1 policy meeting. Her remarks will be closely scrutinized for any indications of the BoE’s future rate cuts, along with perspectives on service inflation and wage pressures.

On the political front, comments from UK Prime Minister Keir Starmer about the upcoming financial budget, expected in October, have also bolstered the appeal of the Pound Sterling. Starmer suggested that the budget would involve “short-term pain for long-term gain,” with plans to increase taxes, particularly for higher-income households.

Technical Analysis: Pound Sterling Holds Key Support at 1.3200

The Pound Sterling has seen a mild correction after reaching a new two-and-a-half-year high of 1.3266 against the US Dollar. The near-term outlook for the GBP/USD pair remains positive, as it maintains the breakout from the Rising Channel chart pattern on the weekly time frame. If bullish momentum resumes, the pair could target the February 4, 2022, high of 1.3640.

The upward-sloping 20-week Exponential Moving Average (EMA), located near 1.3000, indicates a strong bullish trend. The 14-period Relative Strength Index (RSI) remains in the bullish range of 60.00-80.00, suggesting robust upward momentum, although it has reached overbought territory around 70.00, which could prompt a corrective pullback. On the downside, the psychological level of 1.3000 is expected to serve as crucial support for Pound Sterling bulls.

Read More
Rate Cuts Could Facilitate a Soft Landing

Rate Cuts Could Facilitate a Soft Landing: UBS

Rate Cuts Could Facilitate a Soft Landing: UBS

In a note released on Monday, UBS Financial Services reiterated its forecast that the U.S. economy is on track for a soft landing, despite acknowledging significant risks of a potential downturn. Consumer spending will be a critical factor in determining whether the economy can achieve this outcome.

UBS expects the Federal Reserve to begin lowering interest rates soon, potentially as early as its next meeting in September. These rate cuts are seen as a way to support the economy during this period of uncertainty.
The U.S. labor market has undergone substantial changes since the start of the year. UBS highlighted that the unemployment rate has risen quickly, moving from 3.7% in January to 4.3% in July. Historically, such an increase has been linked with economic downturns. However, UBS suggests this situation might be different, pointing out that the labor market remains robust by historical standards, even though it is no longer as overheated as it was two years ago.

Weekly jobless claims, a leading indicator of labor market health, have shown a rising trend. However, UBS advises interpreting this data cautiously, as it is often volatile and difficult to seasonally adjust. Although claims appear to be increasing, they remain low compared to historical norms, indicating that the labor market, while cooling, is not yet showing signs of a significant downturn.

Consumer spending is expected to play a pivotal role in the U.S. economic recovery. UBS notes that excess savings accumulated during the pandemic have largely been exhausted, making continued income growth crucial for sustaining consumer spending. Despite concerns, recent retail sales data for June and July have been stronger than expected, suggesting that the economic recovery is still on track.

However, the outlook is not without uncertainty. The U.S. government recently revised down its estimate of job growth for the 12 months ending in March by 818,000 jobs. Moreover, the latest labor market report showed some weakness in key income determinants such as wages and hours worked. UBS has adjusted its base case to reflect a soft landing but has increased the probability of a hard landing from 20% to 25%.

Inflation remains a central concern for the Federal Reserve and financial markets. UBS points out that inflation trends have shown some positive signs recently. While inflation was relatively high at the start of the year, more recent data has been softer, with the headline inflation rate slowing to 2.9% year-over-year in July—the lowest since early 2021.

The decline in inflation has been driven by falling goods prices and moderating services inflation. However, UBS notes that shelter inflation, a significant component of the Consumer Price Index (CPI), reaccelerated in July, rising by 0.4% month-over-month, compared to 0.2% in June. Shelter inflation is critical as it constitutes the largest portion of the CPI basket. Excluding shelter, inflation was only 1.7% year-over-year in July, suggesting broader inflationary pressures are easing. UBS remains confident that shelter inflation will eventually decline, especially given the modest increases in new rental leases since early 2023.

The Federal Reserve has indicated its readiness to begin cutting interest rates, as reflected in the minutes from the July FOMC meeting and comments from Fed officials. These rate cuts could start at the September 18 meeting, although uncertainty remains regarding their pace and magnitude.

UBS argues that the sharp rise in the unemployment rate, which the Fed had not anticipated, provides a compelling reason for the central bank to act swiftly. With real interest rates significantly above neutral, there is a case for an initial, aggressive rate cut. UBS’s base scenario involves a total of 100 basis points in rate cuts by the end of the year, potentially requiring a 50-basis-point cut at one of the remaining three FOMC meetings.

Given the Fed’s data-dependent approach, UBS cautions that various outcomes are possible. The upcoming September FOMC meeting is highly anticipated, with the Fed expected to use the meeting’s dot plot to signal its interest rate projections for the rest of the year. This will provide investors with a clearer picture of the Fed’s monetary policy direction and its efforts to guide the economy toward a soft landing.

Read More
Japanese Yen Moves Sideways Despite Hawkish BoJ Signals

Japanese Yen Moves Sideways Despite Hawkish BoJ Signals

Japanese Yen Moves Sideways Despite Hawkish BoJ Signals

The Japanese Yen (JPY) traded sideways against the US Dollar (USD) on Thursday, even as a recent Reuters poll, conducted from August 13-19 and published on Wednesday, showed that 31 out of 54 economists expect the Bank of Japan (BoJ) to raise borrowing costs before the end of the year. The median forecast predicts a 25 basis point hike, which would bring the year-end rate to 0.50%.

Despite these hawkish expectations, the USD/JPY pair gained ground as the Yen weakened following the release of a record trade deficit report on Wednesday. Traders are now eagerly awaiting BoJ Governor Kazuo Ueda’s appearance in parliament on Friday, where he is expected to discuss the central bank’s recent decision to raise interest rates.

On Thursday, the US Dollar edged higher, supported by a modest recovery in Treasury yields. However, the Greenback’s gains could be limited as the Federal Reserve is expected to implement up to 100 basis points (bps) in rate cuts throughout 2024. Market analysts remain divided on whether the Fed will opt for a 25 or 50 bps cut at its September meeting.

According to the CME FedWatch Tool, the probability of a 25 basis point Fed rate cut at the September meeting has decreased to 65.5%, down from 71.0% the previous day. Conversely, the likelihood of a 50 basis point rate cut has risen to 34.5% from 29.0%.

Market Movers: Japanese Yen Holds Steady Ahead of BoJ Governor Ueda’s Speech

Traders are exercising caution ahead of Federal Reserve (Fed) Chair Jerome Powell’s keynote address at the Jackson Hole Symposium on Friday. Powell’s remarks could provide crucial insights into the Fed’s potential interest rate cuts in the United States.

The minutes from the Fed’s July policy meeting revealed that most officials anticipated a likely rate cut in September, provided inflation continues to cool.

Japan’s Merchandise Trade Balance showed a deficit of ¥621.84 billion in July, a sharp reversal from the ¥224.0 billion surplus reported in June, and fell short of market expectations of a ¥330.7 billion deficit. Imports surged by 16.6% year-on-year in July, reaching a 19-month high of ¥10,241.01 billion, up from a 3.2% increase in June. Meanwhile, exports grew by 10.3% YoY to a seven-month high of ¥9,619.17 billion, missing market forecasts of 11.4%.

Fed Governor Michelle Bowman expressed caution on Tuesday, highlighting ongoing upside risks to inflation and warning against overreacting to individual data points, which could undermine the progress already made, according to Reuters.

The Bank of Japan (BoJ) had forecasted that strong economic recovery would help inflation sustainably reach its 2% target, justifying further rate hikes following last month’s increase as part of the BoJ’s efforts to unwind years of extensive monetary stimulus, Reuters reported.

On Sunday, Federal Reserve Bank of San Francisco President Mary Daly emphasized the need for a gradual approach to reducing borrowing costs, while Federal Reserve Bank of Chicago President Austan Goolsbee warned against maintaining a restrictive policy longer than necessary, according to the Financial Times and CNBC, respectively.

On Thursday, Kazutaka Maeda, an economist at Meiji Yasuda Research Institute, commented that recent economic reports are broadly positive, supporting the BoJ’s stance and signaling the potential for further rate hikes, though the central bank would remain cautious after the last rate increase caused a sharp spike in the Yen.

Technical Analysis: USD/JPY Holds Above 145.00

USD/JPY is trading around 145.20 on Thursday. A look at the daily chart shows the pair consolidating under a downtrend line, suggesting a bearish bias. The 14-day Relative Strength Index (RSI) is slightly above 30, indicating the potential for a correction.

On the downside, the USD/JPY pair could find support around the psychological level of 144.00. A break below this level could lead the pair toward the seven-month low of 141.69, recorded on August 5, with further declines potentially targeting the next significant support level at 140.25.

On the upside, immediate resistance could be found at the downtrend line near the nine-day Exponential Moving Average (EMA) at 146.45. A break above this level could weaken the bearish outlook, allowing the pair to test the resistance at 154.50, which has transitioned from previous support to current resistance.

Read More
WTI Crude Oil Remains Below $75.50 Amid Chinese Demand Concerns

WTI Crude Oil Remains Below $75.50 Amid Chinese Demand Concerns

WTI Crude Oil Remains Below $75.50 Amid Chinese Demand Concerns

West Texas Intermediate (WTI) crude oil prices are hovering around $75.30 per barrel during the Asian session on Monday, pressured by concerns over weakened demand from China, the world’s top oil importer.

Recent data from China revealed that Industrial Production increased by 5.1% year-on-year in July, slightly below the expected 5.2% and down from the 5.3% growth recorded in June. This marks the third consecutive month of slowing industrial output, fueling worries about reduced demand for crude oil.

However, geopolitical tensions in the Middle East could potentially support oil prices. The situation has been tense following Hamas’s rejection of a ceasefire deal on Sunday, which has raised concerns over the stability of the region. Israeli Prime Minister Benjamin Netanyahu is set to meet with US Secretary of State Antony Blinken on Monday to discuss the ongoing negotiations, with further talks scheduled in Cairo.
The potential downside for oil prices may be limited by rising expectations of a Federal Reserve interest rate cut as early as September. Recent US economic data has shown strong retail sales and easing inflationary pressures, which could lead to lower borrowing costs and potentially boost economic activity in the US.

San Francisco Fed President Mary Daly and Chicago Fed President Austan Goolsbee both emphasized a cautious approach to rate cuts, suggesting that the Fed should avoid keeping restrictive policies in place longer than necessary.

Read More
Japanese Yen Holds Losses

Japanese Yen Holds Losses as US Dollar Stabilizes Ahead of Key Economic Data

Japanese Yen Holds Losses as US Dollar Stabilizes Ahead of Key Economic Data

The Japanese Yen (JPY) continued its decline against the US Dollar (USD) on Tuesday, with safe-haven flows offering some support amid rising geopolitical tensions in the Middle East.

Japan’s parliament is set to hold a special session on August 23 to discuss the Bank of Japan’s (BoJ) recent decision to raise interest rates. This session, organized by the lower house financial affairs committee, is expected to include an appearance by BoJ Governor Kazuo Ueda, as reported by Reuters.

The USD/JPY pair found support as pressure on the US Dollar eased, following a reduction in expectations for a 50 basis point interest rate cut by the US Federal Reserve (Fed) in September. According to the CME FedWatch Tool, the probability of a 50 basis point cut in September has decreased to 50%, down from 85% the previous week. However, markets still fully anticipate at least a 25 basis point cut at the upcoming meeting.

Investors are closely watching the release of US Producer Price Index (PPI) data on Tuesday and Consumer Price Index (CPI) figures on Wednesday for signs that inflation remains under control in the US.

Daily Digest Market Movers: Yen Weakens as Fed Rate Cut Odds Diminish

Federal Reserve Governor Michelle Bowman commented on Sunday that she sees continued upside risks to inflation and strength in the labor market. Bowman suggested that the Fed may not be ready to cut rates at its September meeting, according to Bloomberg.

A Bloomberg report last week indicated that JP Morgan Asset Management (JPAM) believes the BoJ is unlikely to raise interest rates in the near term. JPAM anticipates that the BoJ may only consider further rate hikes if the Fed cuts rates and the US economy stabilizes, with additional tightening possibly occurring in 2025, provided the global economic environment remains stable.

The BoJ’s Summary of Opinions from its July 30-31 Monetary Policy Meeting revealed that several members believe economic activity and prices are evolving as expected, targeting a neutral rate of “at least around 1%” in the medium term.

BoJ Deputy Governor Shinichi Uchida also highlighted that the BoJ’s interest rate strategy could adapt if market volatility alters economic forecasts, risk assessments, or projections. Given recent market volatility, he emphasized the importance of closely monitoring the economic and price impacts of their policies, stating the need to “maintain the current degree of monetary easing for the time being.”

Minutes from the BoJ’s June meeting indicated concerns among some members about rising import prices due to the recent decline in the JPY, which could pose an upside risk to inflation. One member noted that cost-push inflation might exacerbate underlying inflation if it leads to higher inflation expectations and wage growth.

Technical Analysis: USD/JPY Tests 147.50; Next Barrier at Nine-Day EMA

The USD/JPY pair trades around 147.40 on Tuesday, with the daily chart indicating the pair remains below the nine-day Exponential Moving Average (EMA), suggesting a short-term bearish trend. The 14-day Relative Strength Index (RSI) has breached the 30 level, indicating a potential for a corrective move. If the RSI approaches the 50 level, it could signal a possible improvement in the pair’s momentum.

For support, the USD/JPY pair may test the seven-month low at 141.69, recorded on August 5, followed by the next support level at 140.25.

On the upside, the USD/JPY pair could challenge the immediate barrier at the nine-day EMA around 147.72. A breakout above this level could reduce bearish momentum and allow the pair to approach the 5-day EMA at 153.68, followed by resistance at 154.50.

Read More
Australian Dollar Advances as RBA Signals Potential Rate Hike

Australian Dollar Advances as RBA Signals Potential Rate Hike

Australian Dollar Advances as RBA Signals Potential Rate Hike

The Australian Dollar (AUD) rebounded against the US Dollar (USD) on Monday, driven by hawkish sentiment surrounding the Reserve Bank of Australia (RBA). Positive inflation data from China, a key trading partner, also provided support for the Aussie Dollar.

RBA Governor Michele Bullock emphasized the importance of vigilance regarding inflation risks, stating that the central bank is prepared to raise rates again if necessary. This follows the RBA’s decision to keep rates steady at 4.35% for the sixth consecutive meeting.

On the USD front, market expectations for a potential interest rate cut by the Federal Reserve (Fed) in September have put pressure on the USD, potentially providing further support for the AUD/USD pair. Investors will be closely watching US producer inflation data on Tuesday and consumer inflation figures on Wednesday for signs of stable price growth.

Daily Market Movers: Australian Dollar Rises on Hawkish RBA

RBA Deputy Governor Andrew Hauser attributed persistent inflation to weaker supply and a tight labor market, noting significant uncertainty in economic forecasts. However, the AUD’s gains could be limited by safe-haven flows due to rising geopolitical tensions in the Middle East. Reports suggest Iran may be preparing for a significant strike on Israel, adding a layer of risk to global markets.

Federal Reserve Governor Michelle Bowman reiterated on Sunday her concerns about ongoing inflation risks and a strong labor market, indicating the Fed might not be ready to cut rates in September.

In China, the Consumer Price Index (CPI) rose by 0.5% year-on-year in July, surpassing expectations. Westpac updated its RBA forecast, now predicting the first rate cut will occur in February 2025, moving from the previously anticipated November 2024, and raising its terminal rate forecast to 3.35%.

Last week, Treasurer Jim Chalmers challenged the RBA’s view that the Australian economy is too robust, which he believes is contributing to prolonged inflation. RBA Chief Economist Sarah Hunter also noted that the Australian economy is performing better than previously expected.

Technical Analysis: Australian Dollar Nears Key Support Levels

The AUD/USD pair is trading around 0.6590 on Monday, within an ascending channel that suggests a bullish bias. The 14-day Relative Strength Index (RSI) is consolidating below the 50 level, and a move above this threshold could signal strengthening bullish momentum.

Resistance for the AUD/USD pair is likely around the 0.6630 level, with a breakout potentially pushing the pair toward its six-month high of 0.6798. On the downside, immediate support is seen at 0.6575, with a drop below this level possibly reinforcing a bearish bias, potentially driving the pair toward 0.6540 and further to 0.6470 if pressure persists.

Read More
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.

Read More

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.

Read More

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.

Read More

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

Read More

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.

Read More

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.

Read More

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/

Read More

Popular Articles

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

Gold Struggles Below $3,300 as Fed Rate Cut Hopes Dim Ahead of FOMC Minutes

Gold Struggles Below $3,300 as Fed Rate Cut Hopes Dim Ahead of FOMC Minutes

EUR/USD Drops Toward 1.1700 as US Dollar Strengthens

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

Forex Trading

Unlocking the Power of Forex Trading: Why Xtreme Markets is Your Ultimate Trading Partner

Commodity currencies

What Are Commodity Currencies? How They Impact Your Forex Trades

AI changing Forex trading?

How is AI changing Forex trading?

Categories

,
,
,

Subscribe Now!