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Japanese Yen Strengthens

Japanese Yen Strengthens as Traders Anticipate BoJ Rate Hike

Japanese Yen Strengthens as Traders Anticipate BoJ Rate Hike

The Japanese Yen (JPY) continues to gain momentum for the second consecutive day as Bank of Japan (BoJ) Governor Kazuo Ueda’s hawkish comments stand in stark contrast to the dovish tone of Federal Reserve Chair Jerome Powell.

In a speech to Parliament on Friday, Governor Ueda suggested that the BoJ might consider further interest rate hikes if economic conditions align with their projections. July’s National Consumer Price Index (CPI) data remained at its highest level since February, further supporting the BoJ’s hawkish outlook.

Meanwhile, the US Dollar (USD) is weakening due to increasing expectations of a rate cut in September. During the Jackson Hole Symposium, Fed Chair Powell remarked, “The time has come for policy to adjust,” though he did not specify the timing or scale of the potential cuts.

Market participants are now widely anticipating a 25 basis point (bps) rate cut from the Federal Reserve in September. The CME FedWatch Tool shows that markets are fully pricing in at least this amount.

Daily Market Movers: Japanese Yen Rises on BoJ Ueda’s Hawkish Comments

Bloomberg reported that Philadelphia Fed President Patrick Harker emphasized the need for a gradual reduction in US interest rates. Reuters added that Chicago Fed President Austan Goolsbee noted that monetary policy is currently at its most restrictive level, with the Fed now focusing on achieving its employment mandate.

Governor Ueda, speaking before the Japanese parliament on Friday, clarified that the BoJ is “not considering selling long-term Japanese government bonds (JGBs) as a tool for adjusting interest rates.” He added that any reduction in JGB purchases would only account for about 7-8% of the balance sheet, which is a relatively small decrease. Ueda further mentioned that if the economy meets their projections, there could be a phase where interest rates might be adjusted slightly higher.

Japan’s National CPI rose by 2.8% year-on-year in July, maintaining this rate for the third consecutive month and remaining at its highest level since February. Additionally, the National CPI excluding Fresh Food increased by 2.7%, the highest reading since February, in line with expectations.

In the US, the Composite PMI edged down slightly to 54.1 in August from 54.3 in July, a four-month low but still above market expectations of 53.5. This indicates continued growth in US business activity, marking 19 consecutive months of expansion.

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

Technical Analysis: USD/JPY Drops Near 144.00

USD/JPY traded around 143.90 on Friday, with the daily chart indicating the pair is positioned below a downtrend line, suggesting a bearish outlook. However, the 14-day Relative Strength Index (RSI) remains slightly above 30, indicating that the bearish trend might persist.

On the downside, the USD/JPY pair may approach the seven-month low of 141.69, recorded on August 5. A break below this level could drive the pair toward the throwback support level at 140.25.

In terms of resistance, the USD/JPY pair may test the immediate barrier at the downtrend line around the psychological level of 145.00, followed by the nine-day Exponential Moving Average (EMA) at the 145.74 level. A breakthrough above the nine-day EMA could lead the pair to explore the region around the throwback-turned-resistance at the 154.50 level.

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Gold Price Holds Below $2,500 as Traders

Gold Price Holds Below $2,500 as Traders Await Powell’s Speech

Gold Price Holds Below $2,500 as Traders Await Powell’s Speech

Gold (XAU/USD) is seeing some dip-buying on the last trading day of the week, partially recovering from Thursday’s over 1% drop to a weekly low. The US Dollar (USD) is struggling to build on its overnight rebound from the year-to-date low, due to expectations of lower interest rates in the US. This dovish outlook has triggered a decline in US Treasury bond yields, putting pressure on the Greenback. Additionally, ongoing geopolitical risks are providing support to the safe-haven appeal of gold.

However, traders remain cautious and are avoiding significant bullish positions ahead of Federal Reserve Chair Jerome Powell’s speech at the Jackson Hole Symposium later today. This hesitation is keeping gold prices below the key psychological level of $2,500 as the European session approaches. Powell’s remarks will be closely analyzed for indications regarding the Fed’s potential rate-cut path, which will significantly impact near-term USD price movements and offer new directional momentum for gold.

Daily Market Movers: Gold Traders on Standby for Powell’s Speech

On Thursday, the US Dollar staged a solid recovery from its 2024 low, buoyed by rebounding US Treasury bond yields, which drew investors away from gold. However, the USD’s recovery lacked sustained momentum due to market speculation that the Federal Reserve might begin a rate-cutting cycle in September, limiting losses for XAU/USD.

On the economic data front, the US Department of Labor reported that initial jobless claims rose to a seasonally adjusted 232,000 for the week ending August 17, up from the previous 228,000. This followed an annual benchmark review revealing that US employers added 818,000 fewer jobs than initially reported for the year through March.

Minutes from the Federal Open Market Committee (FOMC) meeting on July 30-31 showed an increasing number of policymakers supporting a rate cut next month due to progress in reducing inflation. The S&P Global flash PMI indicated that US manufacturing activity contracted at its fastest pace this year, although the services sector saw a surprise increase. The composite PMI showed continued healthy expansion in US private sector business activity, with selling price inflation nearing pre-pandemic levels.

Comments from regional Fed officials reflect a cautious stance on rate cuts. Kansas City Fed President Jeffrey Schmid emphasized the need for more data to support a rate reduction, while Philadelphia Fed President Patrick Harker indicated openness to a September cut, contingent on economic data. Boston Fed President Susan Collins also suggested that a rate cut would soon be appropriate as inflation data stabilizes.

Market attention is now focused on Fed Chair Jerome Powell’s upcoming speech, which will be pivotal in signaling the future trajectory of interest rates and influencing gold’s direction.

Technical Analysis: Gold’s Setup Suggests Potential for Further Gains

From a technical perspective, gold’s recent decline found support near the $2,370 horizontal resistance-turned-support level, which now serves as a crucial pivot point. A decisive break below this level could trigger technical selling, pushing gold prices towards the next support area around $2,345-$2,343. Further downside could extend towards the 50-day Simple Moving Average (SMA), currently positioned just above the $2,400 mark.

Conversely, if gold can regain momentum above the $2,500 level, it will face initial resistance around the $2,513-$2,514 region. Clearing this hurdle could open the door to testing the all-time high near $2,531-$2,532, potentially reigniting bullish momentum and extending gold’s recent uptrend.

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US Dollar Faces Continued Pressure as Market Focus

US Dollar Faces Continued Pressure as Market Focus Shifts to PMI Data

US Dollar Faces Continued Pressure as Market Focus Shifts to PMI Data

After a brief recovery earlier in the day on Wednesday, the US Dollar Index reversed course during the American session, marking its fourth consecutive day of losses. As of Thursday’s European trading hours, all eyes are on the preliminary August PMI data from Germany and the Eurozone, provided by HCOB, alongside the S&P Global/CIPS PMI figures. Later in the day, the US economic calendar will feature weekly Initial Jobless Claims, Existing Home Sales, and S&P Global PMI data.

On Wednesday, the US Bureau of Labor Statistics reported a preliminary estimate indicating a benchmark revision for March 2024’s total Nonfarm employment, with a downward adjustment of -818,000 (-0.5%). Additionally, minutes from the Federal Reserve’s July 30-31 policy meeting revealed that a significant majority of policymakers felt that, should the incoming data align with expectations, easing policy at the next meeting would likely be appropriate. The USD Index is currently trading just above 101.20, down over 1% since the start of the week. Meanwhile, US stock futures are slightly lower, and the 10-year US Treasury bond yield remains near the lower end of its weekly range, around 3.8%.

In Asian trading, data from Australia showed the Judo Bank Composite PMI rose to 51.4 in August’s preliminary reading, up from 49.9 in July. However, this improvement failed to significantly impact AUD/USD, which continues to trade sideways around 0.6750.

EUR/USD surpassed 1.1170 on Wednesday, reaching its highest level since July 2023 before entering a consolidation phase early Thursday. The pair is currently steady at around 1.1150.

GBP/USD maintained its bullish momentum on Wednesday, climbing above 1.3100 for the first time in over a year. The pair remains just below this level as of Thursday morning in Europe.

USD/JPY was unable to capitalize on the USD’s broader weakness, closing flat on Thursday. The pair continues to trade sideways around 145.50 at the start of the European session.

Gold, which had corrected from its record high of $2,531 set on Tuesday, stabilized above $2,500 late Wednesday. XAU/USD remains relatively quiet, trading near $2,510 early Thursday.

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How Responsible is the Polish Central Bank

How Responsible is the Polish Central Bank? – Commerzbank Analysis

How Responsible is the Polish Central Bank? – Commerzbank Analysis

The Polish zloty weakened against the euro and other CE3 currencies yesterday after Poland’s Constitutional Court issued a controversial ruling. The court declared that NBP governor Adam Glapinski could not be held accountable by a parliamentary committee, the State Tribunal, or through any report by such bodies, citing constitutional guarantees of central bank independence. This argument has been used by the previous ruling party (PiS) from the outset of this dispute, notes Commerzbank’s FX Analyst Tatha Ghose.

Zloty Weakens Against the Euro

“We believe this argument lacks merit and doubt that parliament will consider the Constitutional Court’s ruling as binding. Poland’s Constitutional Court has been compromised since the rule of law disputes with the EU and lacks legitimacy. Other key courts are also dominated by right-wing PiS affiliates. The accusations from both sides are driven by ideology rather than good faith.”

“On balance, it seems clear that Glapinski’s ’emergency’ rate cuts just before the elections, coupled with his refusal to cut rates further after an opposing political party took over, were politically motivated. The NBP cannot now claim ‘central bank independence’ after failing to uphold its constitutional duty to remain apolitical.”

“The new KO government will likely proceed with the planned Sejm procedures despite the court’s ruling, pushing for Glapinski’s suspension. Glapinski, in turn, will likely use the ruling to resist interrogation. This standoff is expected to continue in parliament for the next year without a clear resolution. As a result, monetary policy is likely to remain highly politicized and stagnant during this period.”

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EUR/USD Approaches YTD Highs Near

EUR/USD Approaches YTD Highs Near 1.1050 on Expectations of Fed Rate Cuts

EUR/USD Approaches YTD Highs Near 1.1050 on Expectations of Fed Rate Cuts

The EUR/USD pair climbed to year-to-date (YTD) highs, nearing 1.1040, during early European trading on Monday. This rise is supported by a broad weakening of the US Dollar (USD) amid increasing speculation that the Federal Reserve (Fed) might cut interest rates in September. Market participants are now keenly awaiting Fed Chair Jerome Powell’s speech on Friday for further insights into potential rate cuts.

On Sunday, San Francisco Fed President Mary Daly expressed greater confidence that inflation is under control, suggesting that it might be time to consider lowering borrowing costs from the current range of 5.25% to 5.5%. Chicago Fed President Austan Goolsbee also cautioned that the US central bank should avoid maintaining restrictive policies longer than necessary. These dovish remarks from Fed officials have added selling pressure on the Greenback and provided a boost to EUR/USD.

Currently, investors are pricing in a roughly 70% chance of a quarter-point Fed rate cut in September, with some expecting a more substantial half-point cut. Morningstar’s chief US economist, Preston Caldwell, noted that the latest CPI report further supports the case for aggressive Fed rate cuts starting in September, with an initial 25 basis point cut projected to bring the Fed Funds rate down to 5.00-5.25%.

Meanwhile, the Euro (EUR) remains resilient as markets anticipate a gradual reduction in interest rates by the European Central Bank (ECB). At the latest press conference, ECB President Christine Lagarde emphasized a cautious, data-dependent approach, stating that policymakers are “not pre-committing to a particular rate path” and will make decisions on a meeting-by-meeting basis.

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Japanese Yen Strengthens

Japanese Yen Strengthens Amid Hawkish BoJ Sentiment; US Data in Focus

Japanese Yen Strengthens Amid Hawkish BoJ Sentiment; US Data in Focus

The Japanese Yen (JPY) rebounded against the US Dollar (USD) on Friday, likely bolstered by Japan’s strong second-quarter GDP growth, which fuels speculation about a potential interest rate hike from the Bank of Japan (BoJ).

However, the Yen may face headwinds due to political uncertainty in Japan, triggered by reports suggesting that Prime Minister Fumio Kishida will not seek re-election as party leader in September, potentially ending his term as prime minister.

The USD/JPY pair is trending lower as the US Dollar weakens, pressured by declining Treasury yields. Moreover, traders are fully pricing in a 25 basis point rate cut by the US Federal Reserve for September, according to the CME FedWatch tool.

Despite this, the Greenback found some support from recent positive US economic data, which has eased recession fears. Upcoming data, including the preliminary US Michigan Consumer Sentiment Index for August and July’s Building Permits, will be closely watched during the North American session.

Market Highlights: Japanese Yen Rises on Hawkish BoJ Outlook

On Thursday, the US Census Bureau reported a 1.0% month-over-month increase in US Retail Sales for July, reversing June’s 0.2% decline and exceeding the expected 0.3% rise. Additionally, Initial Jobless Claims for the week ending August 9 came in at 227,000, lower than the forecast of 235,000 and down from 234,000 the previous week.

Japanese Economy Minister Yoshitaka Shindo expressed optimism on Thursday, stating that Japan’s economy is expected to recover gradually as wages and incomes improve. He also mentioned that the government will work closely with the BoJ to implement flexible macroeconomic policies.

Japan’s GDP grew by 0.8% quarter-on-quarter in Q2, beating market expectations of 0.5% and rebounding from a 0.6% contraction in Q1. This marks the strongest quarterly growth since Q1 2023. On an annualized basis, GDP grew by 3.1%, surpassing the 2.1% market consensus and reversing a 2.3% contraction in Q1. This is the highest yearly growth since Q2 2023.

Federal Reserve Bank of Chicago President Austan Goolsbee expressed concern on Wednesday about the labor market rather than inflation, noting recent improvements in price pressures alongside weak employment data. He added that the extent of rate cuts will depend on prevailing economic conditions, according to Bloomberg.

US Consumer Price Index (CPI) data showed a 2.9% year-over-year increase in July, slightly down from the 3% rise in June and below market expectations. The Core CPI, excluding food and energy, rose by 3.2% year-over-year, a slight decrease from June’s 3.3% increase, in line with market forecasts.

Prime Minister Fumio Kishida announced on Wednesday that he will not seek re-election as the leader of the Liberal Democratic Party (LDP) in September. Kishida highlighted the need to address Japan’s deflationary pressures by promoting wage and investment growth, with the goal of expanding Japan’s GDP to ¥600 trillion.

Rabobank’s senior FX strategist, Jane Foley, noted that this week’s series of US data releases, along with the upcoming Jackson Hole event, should offer more clarity on potential US policy actions. The primary expectation is for the Fed to cut rates by 25 basis points in September, with another potential cut by year-end.

Technical Analysis: USD/JPY Slips Toward 148.50; Immediate Support at Nine-Day EMA

The USD/JPY pair is trading around 148.80 on Friday. The daily chart indicates that the pair is above the nine-day Exponential Moving Average (EMA), suggesting a short-term bullish trend. However, the 14-day Relative Strength Index (RSI) remains below 50, and further gains would confirm a bullish momentum.

In terms of support levels, the USD/JPY pair may find immediate support at the nine-day EMA, around 148.09. A drop below this level could enhance the bearish outlook, potentially pushing the pair toward the seven-month low of 141.69, recorded on August 5. A continued decline could bring the pair closer to the next support level at 140.25.

On the upside, the USD/JPY pair could target the 50-day EMA at 153.08, with a possibility of testing the resistance level at 154.50, which has shifted from previous throwback support to current pullback resistance.

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Australian Dollar Declines as US Dollar Gains Strength

Australian Dollar Declines as US Dollar Gains Strength Ahead of CPI Inflation Data

Australian Dollar Declines as US Dollar Gains Strength Ahead of CPI Inflation Data

The Australian Dollar (AUD) has weakened against the US Dollar (USD) following an unexpected rate cut by the Reserve Bank of New Zealand (RBNZ) on Wednesday. The RBNZ reduced its Official Cash Rate (OCR) by 25 basis points to 5.25% from 5.50%. Given the close economic ties between Australia and New Zealand, developments in one country can influence the other, impacting their respective currencies.

Despite this, the AUD found some support from recent data showing that Australian wage growth remained strong in the second quarter, leading the Reserve Bank of Australia (RBA) to maintain a hawkish stance on its policy outlook. The RBA kept the cash rate steady at its meeting last week, aiming to return inflation to its 2-3% target range.

RBA Governor Michele Bullock ruled out the possibility of rate cuts within the next six months, emphasizing the bank’s cautious approach to inflation risks and its readiness to raise rates if necessary. Traders are now focused on the upcoming release of Consumer Inflation Expectations and Employment data from Australia on Thursday.

The AUD/USD pair saw support as the US Dollar retreated following weaker-than-expected Producer Price Index (PPI) data from the United States (US) released on Tuesday. Investors are now looking ahead to the US CPI inflation report on Wednesday, which could provide insights into the Federal Reserve’s (Fed) interest rate strategy.

Market Movers: Potential for Australian Dollar Appreciation Amid RBA’s Hawkish Stance

On Tuesday, Atlanta Fed President Raphael Bostic expressed increased confidence in the Fed’s ability to achieve its 2% inflation target, though he noted that more evidence is needed before supporting a rate reduction, according to Reuters.

The US Core Producer Price Index (PPI) rose by 2.4% year-on-year in July, down from the previous 3.0%, and below the expected 2.7%. The overall PPI increased by 2.2% YoY in July, compared to 2.7% in June, missing the market forecast of 2.3%. Month-over-month, PPI rose by 0.1% after a 0.2% increase in June.

In Australia, Westpac Consumer Confidence rose by 2.8% in August, reversing a 1.1% decline in July. Meanwhile, the Wage Price Index saw a 0.8% rise in the second quarter, slightly below the expected 0.9% increase.

RBA Deputy Governor Andrew Hauser attributed persistent inflation to weaker supply and a tight labor market, noting the significant uncertainty surrounding economic forecasts.

However, the AUD’s upside could be limited by safe-haven flows due to rising geopolitical tensions in the Middle East. On Sunday, Defense Minister Yoav Gallant informed US Defense Secretary Lloyd Austin of Iran’s military activities, which suggest preparations for a significant strike on Israel, according to Axios writer Barak Ravid.

Federal Reserve Governor Michelle Bowman also stated on Sunday that she sees ongoing inflation risks and labor market strength, indicating that the Fed may not be ready to cut rates at their next meeting in September, according to Bloomberg.

Westpac recently revised its RBA forecast, now predicting the first rate cut in February 2025, delayed from the previously expected November 2024. They also adjusted their terminal rate forecast to 3.35% from 3.10%, reflecting the RBA’s cautious approach, requiring stronger evidence before considering rate cuts.

Technical Analysis: Australian Dollar Trades Near 0.6650

The Australian Dollar is trading around 0.6640 on Wednesday. Technical analysis of the daily chart shows that the AUD/USD pair is moving within an ascending channel, indicating a strengthening bullish trend. The 14-day Relative Strength Index (RSI) has also moved above the 50 level, confirming the bullish momentum.

On the upside, the AUD/USD pair may test the upper boundary of the ascending channel at the 0.6675 level. A breakout above this level could propel the pair toward its six-month high of 0.6798, achieved on July 11.

In terms of support, the AUD/USD pair could test the nine-day Exponential Moving Average (EMA) at 0.6587, followed by the lower boundary of the ascending channel and the throwback level at 0.6575. A drop below this level could lead to a bearish outlook, potentially pushing the pair toward the throwback level at 0.6470.

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U.S. stocks fail to change much as the quarter end approaches

U.S. stocks failed to change much as the quarter end approaches

As investors analyzed remarks made by central bankers at a panel in Europe and anticipated more quarterly profit reports, U.S. stocks ended the day with no movement. On Wednesday, the Dow Jones Industrial Average rose 82.32 points, or 0.3%, to 31029.31. The NASDAQ Composite Index dropped 3.65 points, or 0.03 percent, to 11177.89, while the S&P 500 dropped 2.72 points, or less than 0.1 percent, to 3818.83.

The market is having a brutal first half after three years in a row of double-digit increases. The S&P 500 has lost roughly 20 percent of its value so far this year, making it likely that this will be its worst first half in fifty years.

Rising interest rates and sluggish growth are two factors that have a negative impact on stock prices. Stocks have also been affected by the swift return of inflation, a faltering Chinese economy, and a conflict in Ukraine that startled the commodity markets. Before the second half of the year begins on Friday, investors need to reorganise, according to State Street managing director Michael Arone. As the Fourth of July and the first half came to an end, he added, “We’re limping.”

Investors should take comfort in the fact that a poor first half does not imply a poor second half. The S&P 500 experienced a first-half decline of 21% and a second-half gain of 27% in 1970, concluding the year approximately level. As a result of a number of data releases showing that increased prices are dampening consumer optimism, stocks started the week on a low note. Investors continued to worry that if central banks tightened policy too quickly to combat inflation, it may trigger a recession.

At the European Central Bank’s annual economic policy conference in Portugal, Federal Reserve Chairman Jerome Powell said the epidemic had disturbed the economy in ways that could continue to generate more inflation or volatility in pricing pressures than previously. Is there a chance that we might go too far? There is unquestionably a risk, Mr. Powell remarked on Wednesday. “Failing to restore pricing stability would be the worse mistake to make, to put it that way,”

Some investors are losing faith in the Fed’s ability to arrange a “soft landing,” in which interest rates increase to combat inflation without causing the economy to enter a recession. “Until we have a strong indication that inflation has peaked, we anticipate markets will at best remain stable. Our belief in a soft landing has diminished even further, and the market is moving in that direction as well, according to Pictet Asset Management multiasset strategist Arun Sai.

After three straight days of advances, the yield on the benchmark 10-year Treasury note decreased to 3.091% from 3.206 percent on Tuesday. Prices increase as yields decrease. Investors are anticipating more corporate profit reports as the second quarter draws to a close. Even though FactSet projects a relatively small 5.8 percent increase in S&P 500 company earnings, early misses raise doubts about that estimate.

The market has been rattled by some earnings reports, according to Andrew Slimmon, a portfolio manager at Morgan Stanley Investment Management. “I assumed we’d see a rally into month-end,” he said. Bed Bath & Beyond, a retailer, provided an example of the point on Wednesday. After the company reported a larger quarterly loss than Wall Street anticipated and announced the departure of its chief executive, the shares dropped $1.54, or 24 percent, to $4.99.

General Mills’ stock increased $4.46, or 6.3 percent, to $74.72 after the firm reported that higher prices helped boost sales despite the food manufacturer selling fewer products overall. In 2022, consumer staples stocks have excelled. Carnival, a cruise line, dropped $1.46, or 14%, to $8.87, quickening a loss sparked by several price-target reductions made by stock research analysts.

Bitcoin was trading at around $20,000. After creditors filed a lawsuit against the cryptocurrency hedge fund Three Arrows Capital for failing to pay back debts, a court in the British Virgin Islands ordered it to liquidate. Stoxx Europe 600, a continental index, decreased 0.7 percent. Most important benchmarks fell in Asia. Hong Kong’s Hang Seng Index dropped 1.9 percent, while the Shanghai Composite Index dropped 1.4 percent. Nikkei 225 in Japan fell 0.9 percent.

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Stocks drop following poor consumer confidence reading

Stocks drop following poor consumer confidence reading

As investors analyzed new economic data in search of hints regarding the rate of monetary policy tightening, U.S. stocks declined on Tuesday, giving up early gains and sliding for a second straight day. To reach 30946.99, the Dow Jones Industrial Average fell 491.27 points, or 1.6 percent. Earlier in the session, the blue-chip index rose as much as 1.4 percent. The S&P 500 dropped 78.56 points, or 2%, to finish the day at 3821.55. The NASDAQ Composite Index, which focuses on technology, dropped 343.01 points, or 3%, to 11181.54.

The major indices have been extremely sensitive to news and data in recent sessions as investors evaluate how long the market’s recovery from its lows will last. As a result of the Federal Reserve raising interest rates earlier this month, the S&P 500 entered a bear market or a 20 percent decline from its recent top.

Stocks’ initial momentum was gone. Tuesday, following data from the Conference Board that revealed consumers’ short-term expectations for the American economy had fallen precipitously to their lowest level in a decade. As Americans continue to weigh the effects of high prices and rising rates, consumer confidence dropped for a second month in a row. The unfavorable report comes after a barometer from the University of Michigan issued on Friday indicated that consumer mood had reached its lowest level ever.

The unfavourable report comes after a barometer from the University of Michigan issued on Friday indicated that consumer mood had reached its lowest level ever. In a paradoxical view where bad news was good news, weak economic statistics fuelled a stock market rise last week as investors thought the Fed could delay its monetary-policy tightening. According to Boston Partners’ Mike Mullaney, head of global markets research, Tuesday’s consumer reading is “poor news that’s awful news.”

“The Fed is going to be that much more aggressive in squashing inflation,” he added. “If inflation expectations are rising up to the amount they are right now. Market volatility, as demonstrated by Tuesday’s intraday reversal, might also be linked to a lack of liquidity, according to Jim Besaw of GenTrust. Because there are “not a lot of risk takers right now,” the chief investment officer claimed that he has observed markets move more than anticipated when carrying out trades for customers. The lack of liquidity over the past few months has made a lot of problems worse, he said.

Portfolio rebalancing may have an effect on market movement as the month and the quarter come to an end later this week, Mr. Besaw added With a decline of almost 20% this year, the S&P 500 is on pace for its worst first-half performance since 1970. Eloise Goulder, head of the global market, data, and positioning intelligence teams in equity trading at JPMorgan Chase, said: “The challenge is when we hit a market bottom and when we get that turning point, and it’s not necessarily straight away.” She continued, “We need to see the combination of inflation having peaked, and data having steadied, for me to get bullish about the second half of the year.”

Other information made public on Tuesday morning revealed that the increase in property prices in April somewhat slowed. The average home price in the nation’s main metropolitan areas, as measured by the S&P CoreLogic Case-Shiller National Home Price Index, increased at a somewhat slower annualised rate in April compared to March. Mortgage rates doubled earlier this month, reaching their highest point in more than 13 years.

In other news, China’s National Health Commission announced that it would relax its rigorous quarantine regulations for visitors from other countries in an effort to strike a compromise between its zero-Covid policy and the strains on its second-largest economy. Following the consumer confidence report, consumer-discretionary stocks drove the S&P 500 lower. Nike was one of the index’s worst laggards, dropping $7.72, or 7 percent, to $102.78 after the sneaker manufacturer reported nearly flat quarterly sales and a drop in earnings.

Mega-cap technology stocks also experienced a sell-off, which hurt the major indices. Each of Apple, Microsoft, and parent company Alphabet saw at least a 3 percent decline. To reach $107.40, Amazon.com lost $5.82, or 5.1 percent. The benchmark 10-year U.S. Treasury note’s yield increased in the bond market, rising to 3.206 percent from 3.193 percent on Monday. When bond prices decrease, yields increase. Globally, the Stoxx Europe 600 index increased by 0.3% thanks to a surge in equities for manufacturing and energy sectors. After the announcement, indexes generally increased throughout Asia.

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Stock Market declines following massive rally last week

Stock Market declines following massive rally last week

U.S. stocks declined on Monday, erasing some of the gains made during a surge last week as expectations for the direction of interest-rate rises by the Federal Reserve softened. Early gains were erased by the S&P 500, which dropped 11.63 points, or 0.3 percent, to close at 3900.11. The technology-focused NASDAQ Composite Index fell 83.07 points, or 0.7 percent, to 11524.55, while the Dow Jones Industrial Average dropped 62.42 points, or 0.2 percent, to 31438.26.

Investors were reportedly in a holding pattern, and traders reported low volumes and a calm day. Justin Wiggs, managing director in stock trading at Stifel Nicolaus, compared the paltry volumes to those last week and said, “It’s extremely lethargic today.” He continued, describing how FTSE Russell’s stock benchmarks were rebalanced on Friday by adding and removing stocks.

The S&P 500 experienced its highest one-day percentage rise in the past two years on Friday. Investors have revised their expectations for the Federal Reserve to tighten monetary policy at a rapid pace in response to weaker-than-expected U.S. economic statistics. This year’s market volatility has been triggered by the Fed’s efforts to raise interest rates and rein in inflation. Earlier this month, the S&P 500 entered a bear market, or a 20 percent decline from its most recent top.

However, recent studies have shown that the American economy—and possibly inflation—is starting to slow down. The most recent proof was released on Friday, when the University of Michigan reduced its June estimate of inflation forecasts over the following five to ten years down, to 3.1 percent from 3.3 percent.

In other economic news, data released on Monday revealed that durable goods orders increased more than anticipated in May. According to the National Association of Realtors’ monthly index, U.S. pending-home sales increased by 0.7 percent in May. The rise occurs despite rising mortgage rates and ends a six-month slump.

Florian Ielpo, head of macro at Lombard Odier Investment Managers in Geneva, stated that “any good macroeconomic news is perceived as bad market news.” “If we continue to experience robust growth and inflation, the Fed and ECB will raise interest rates, and we will experience a recession.” He predicted that as investors rebalance their portfolios ahead of Thursday, which is the end of the second quarter, stocks are likely to receive more support in the near term.

He claimed that the recent signals of inflation having peaked and bearish market posture together “provide a double punch that is pushing equities up.” In recent weeks, Treasury yields have decreased as investors gambled that the Fed’s ambitions to raise rates will be thwarted by a deteriorating economy. According to experts at UBS, investors are boosting their wagers that the Fed will start lowering rates in the middle of 2023.

Investors have reduced their anticipation of rate increases this year as well. According to CME Group, traders assigned a 52 percent probability that the Fed will increase interest rates by an additional 2 percentage points this year in futures bets made on Monday. This is a decrease from a chance of 74% one week prior.

The benchmark 10-year Treasury note’s yield was 3.133% on Monday, up from 3.125% on Friday but still significantly below its peak of 3.482% this month. Bond yields increase as prices decline. Some of the worst performers were consumer stocks. Following a proxy advisory firm’s recommendation that Spirit Airlines investors approve a planned merger with Frontier Airlines, the airline’s shares dropped $1.95, or 8%, to $22.57. Spirit received multiple offers from JetBlue Airways as well as a sweetened offer from Frontier on Friday. The offers will be voted on by Spirit’s shareholders at a special meeting on Thursday.

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After stock rebound week, stock futures are marginally higher

After stock rebound week, stock futures are marginally higher

Following a significant recovery last week from this year’s sharp declines, U.S. stock futures increased marginally on Monday morning. Wall Street is getting ready to close out the worst first half for equities in decades despite the rebound. Futures for the Dow Jones Industrial Average increased 30 points, or 0.1 percent. The NASDAQ 100 futures increased by 0.51 percent and the S&P 500 futures increased by 0.22 percent. These actions came after a pivotal recovery week in which the Dow industrials rose by more than 800 points, or 2.7 percent. The NASDAQ Composite rose 3.3 percent, while the S&P 500 rose 3.1 percent.

The major averages recorded their first positive week since May thanks to their increases. The Dow increased 5.4% last week. The NASDAQ Composite rose 7.5 percent, while the S&P 500 rose 6.5 percent. Participants in the market kept determining whether stocks have reached a bottom or are only momentarily recovering from oversold levels. As investors rebalance their holdings at the end of the quarter, stocks may continue to rise in the near future. For the foreseeable future, the equity market is “expected to be… in a go-nowhere-fast phase,”

“Earnings are both a bright spot and a wildcard, while inflation is running hot, mood is muted, liquidity is disappearing, etc. Overall, that suggests to us that we’re likely to be in a sideways trending pattern for some time, Sandven continued. Wall Street anticipates the most recent reading of durable goods orders to be released Monday before the bell on the economic front.

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Fears about economy is growing as Wall Street’s hiring frenzy eases

Fears about economy is growing as Wall Street’s hiring frenzy eases

After a hiring frenzy last year, Wall Street is slowing down due to the growing uncertainty around the U.S. economic future and the ensuing decline in the financial markets. In 2021 and early this year, Wall Street firms, including banks like Citigroup Inc, JPMorgan Chase & Co, and Wells Fargo & Co, were obliged to pay more to attract and keep employees due to fierce hiring competition. The increase in bonuses was the biggest in 15 years.

However, hiring fever is waning, according to executives, recruitment experts, and recent data. According to Alan Johnson, managing director of compensation consultancy firm Johnson Associates, “by the end of 2021 it was white hot with unprecedented demand for employment and pay.” “It’s changing swiftly from extremely hot to normal, and by the end of the year it might even turn cold. Undoubtedly, a change is taking place.”

According to the most recent U.S. Bureau of Labor Statistics data, firms in the securities, commodity contracts, investments, funds, and trusts sector were still adding jobs, but the rate of growth was noticeably slower in May, adding only 1,200 positions as opposed to 4,600 in April. In contrast, the industry experienced its largest annual headcount growth since 2000 in 2021, when the monthly average was 3,400.

In light of the weakening global markets, some clients have paused some talent searches, according to Alberto Mirabal, senior vice president for investment banking at the recruitment firm GQR Global Markets. These clients want to “see how things shake out” before adding to their already sizable teams.

We’re observing a little slowness, he added. Some Wall Street firms are concerned about the possibility of a recession due to rising inflation that has been compounded by Russia’s invasion of Ukraine and subsequent interest rate increases. Layoffs are already happening in several areas of the banking sector, most notably the mortgage sector, which is especially vulnerable to interest rate increases that harm house sales.

According to Bloomberg, JPMorgan Chase & Co. is this week reassigning hundreds of workers from its home loan division and firing hundreds more. The industry is not yet experiencing widespread hiring freezes or layoffs, the recruiters claimed, although in general. In addition, some smaller companies, such as boutique investment bank Lazard, are trying to seize the opportunity presented by the evolving market to attract top personnel for themselves.

After 2021, which he described as being the most difficult in a decade for staff retention and remuneration, Lazard Chief Executive Kenneth Jacobs claimed that a hiring slowdown was assisting his company in attracting new talent. Jacobs stated last week at a Morgan Stanley conference that “the rivalry for talent is lessening.” “I believe we’ll try to profit from this.”

Equity capital markets have experienced the sharpest reduction in activity; according to Julian Bell is the managing director and head of the Americas for the Sheffield Haworth talent firm. Broker-dealers will suffer more than full-service banks as a result, according to this. According to him, brokers in the main equities capital markets sectors of healthcare/biotech and technology will suffer the most. Investment bankers are not worried about impending layoffs, despite the fact that hiring is decreasing and salary expectations have decreased following an extraordinarily robust payout in 2021.

According to Anthony Keizner, managing partner at Odyssey Search Partners, whose clients include private equity, hedge funds, and investment funds, “they still think they’re relatively understaffed for the deal volumes that they have.” According to him, certain clients are still quite hungry for skill. The car isn’t about to crash, Keizner replied, “maybe the foot is off the gas just a little.”

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Stocks decline as Wall Street’s effort at a rally fails

Stocks decline as Wall Street’s effort at a rally fails

As markets struggled to maintain a recovery from earlier in the day, stocks modestly declined on Wednesday in turbulent trading. Traders also considered remarks made by Federal Reserve Chair Jerome Powell, who reaffirmed the position of the central bank in battling inflation. In the last hour of trade, the Dow Jones Industrial Average fell 47.12 points, or 0.15 percent, to 30,483.13. To 3,759.89, the S&P 500 fell 0.13 percent. To 11,053.08, the NASDAQ Composite dropped 0.15 percent.

Stock prices have recently been affected by growing fears of a Wall Street slump. On Wednesday, Fed Chair Powell testified before Congress that the Fed has the “resolve” to rein in inflation, which has risen to 40-year highs. The Fed chairman told the Senate Banking Committee, “At the Fed, we realise the suffering high inflation is inflicting. “We are acting quickly to bring inflation back down because we are strongly committed to doing so.”

Until it sees “compelling evidence that inflation is heading down,” Powell continued, the Fed will maintain its current trajectory. He added that it has grown “much more difficult” to provide a smooth landing for the economy without one. The Federal Reserve increased interest rates by 0.75 percentage points last week and warned that a similar hike could occur again the following month. Investors were alarmed by the central bank’s previous week change to a more aggressive stance against inflation, fearing that it would prefer a recession to continued high inflation.

Jerome Powell has made it clearly apparent that the Fed will keep raising interest rates until inflation starts to decline because inflation is still the largest risk to financial assets. Robert Schein, chief investment officer at Blanke Schein Wealth Management, wrote that a sustained rally for risk assets is difficult to envision until that time. Till the Fed gives the go-ahead, “tight monetary conditions will continue to be a headwind for financial markets,” Schein said.

This week on Wall Street, anticipation of an impending recession grew. According to evidence showing that consumers are beginning to cut down on spending, Citigroup increased the likelihood of a worldwide recession to 50%. The cumulative probability of recession is now approaching 50%, according to a note from Citigroup. “The experience of history indicates that disinflation generally bears considerable costs for growth,” the paper stated.

According to Goldman Sachs, the risks are “greater and more front-loaded,” making a recession for the American economy more likely. The Fed will feel compelled to respond forcefully to high headline inflation and consumer inflation expectations if energy prices continue to rise, even if activity slows sharply, the firm said in a note to clients. “The main reasons are that our baseline growth path is now lower and that we are increasingly concerned.” In the meantime, UBS stated in a note to clients on Tuesday that while in its base scenario it does not anticipate a U.S. or global recession in 2022 or 2023, “it is obvious that the possibilities of a hard landing are rising.”

Given the robustness of consumer and bank balance sheets, UBS continued, “Even if the economy does enter a recession, it should be a brief one. “Oil prices fell on worries that a weaker economy may reduce fuel consumption, hurting energy equities. With a decline of about 4.2 percent, the sector had the worst performance on the broad-market index. Shares of ConocoPhillips and Marathon Oil fell by around 6.3 percent and 7.2 percent, respectively. Exxon Mobil and Occidental Petroleum had declines of 3.6% and almost 4%, respectively.

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After a recent pullback, US stocks are up 2%

After a recent pullback, US stocks are up 2%

Following a recent selloff, global market indices rose dramatically on Tuesday, with major U.S. stock indexes each closing the day up more than 2%, while the Japanese yen sank to its lowest level since October 1998 against the US dollar. As investors returned from a long weekend, Wall Street gained, with buyers snapping up shares of megacap growth and energy businesses hammered by global economic concerns last week.

With the rise in oil prices, energy stocks have risen as well. Summer fuel demand drove up oil prices. “You’ve pushed the ball under the water deep enough now that we’re getting a bounce,” said Paul Nolte, portfolio manager at Kingsview Investment Management in Chicago, after back-to-back weeks of 5% drops. However, according to Nolte, “Interest rates are continuing to rise. The price of oil continues to rise.” Investors have been on edge due to expectations of interest rate hikes from major central banks and concerns about a worldwide recession. To confront high inflation, central banks are expected to tighten policy.

The Dow Jones Industrial Average increased by 641.47 points, or 2.15 percent, to 30,530.25; the S&P 500 increased by 89.95 points, or 2.45 percent, to 3,764.79; and the NASDAQ Composite increased by 270.95 points, or 2.51 percent, to 11,069.30. The pan-European STOXX 600 index increased 0.35 percent, while MSCI’s global stock index increased 1.83 percent.

The risk-off mindset that dragged on US markets last week has subsided, resulting in higher Treasury yields. Benchmark 10-year rates were at 3.305 percent, up from the previous week’s finish of 3.239 percent. For signals on rates, all eyes are on Fed Chair Jerome Powell’s hearing to the Senate Banking Committee on Wednesday. Goldman Sachs (NYSE:GS) now believes there is a 30% risk that the US economy would enter a recession in the coming year, up from its previous estimate of 15%.

In the foreign exchange market, the Japanese yen fell to 136.330 per dollar against the US dollar. Fumio Kishida, Japan’s prime minister, said the central bank should keep its current ultra-loose monetary policy. This distinguishes it from other major central banks. Brent crude futures increased by 52 cents, or 0.5 percent, to $114.65 a barrel. The July West Texas Intermediate (WTI) crude contract in the United States ended on Tuesday, finishing at $110.65, up $1.09, or 1%. At $109.52, the more active August contract was up $1.53. Gold fell 0.3 percent to $1,832.27 an ounce on the spot market.

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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. 

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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.

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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.

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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.

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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.

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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.

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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.

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EUR/USD Price Forecast

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

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

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

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

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

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EUR/USD Eases Near

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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Japanese Yen Bears Show Resilience Despite Intervention Concerns

Japan’s Economy Contracts with Yen Fall, Rising Inflation

Japan’s Economy Contracts with Yen Fall, Rising Inflation

Japan’s economic landscape has encountered another setback, entering a phase of contraction during the summer months, highlighting the delicate state of its economic recovery. This has prompted discussions about the necessity for ongoing assistance from both the Bank of Japan (BOJ) and the government. The nation’s Gross Domestic Product (GDP) receded at an annualized rate of 2.1% in the third quarter, a stark contrast to the mild 0.4% contraction anticipated by analysts. This decline in GDP was driven by a reduction in business spending, stagnant consumer spending, and a rise in imports, according to the latest report from the Cabinet Office.

The unexpected depth of the contraction signals a more vulnerable economic recovery than experts had initially assessed, suggesting that substantial support from the government and the BOJ may still be required. The underwhelming performance of the Japanese economy also provides the BOJ with substantial grounds to postpone any imminent policy shifts towards normalizing monetary practices, amidst the ongoing uncertainties marked by a weak yen, sustained inflation, and an uncertain global economic environment.

Despite the indications of a soft consumer spending during the summer, especially within the service sector, the persisting inflation has led to a tightening of household budgets, further dampening expenditure. The central bank’s Governor, Kazuo Ueda, has reiterated the institution’s stance to hold off on any policy changes until there is more concrete evidence of a robust interplay between wages, price stability, and economic growth.

However, Ueda has also subtly indicated that Japan is on a path towards achieving its 2% inflation target, which is essential for the shift towards normal monetary policy. This has sparked some speculation about the possibility of an earlier than expected policy shift. Despite this, the current economic scenario could pose a risk to such a shift towards normalcy.

Adding to the economic challenges, the third-quarter figures have shown that businesses have reduced capital spending by 0.6%, following a 1% decline in the previous quarter. This trend indicates that firms are scaling back their investments, even in the face of inflationary pressures and a need for more investment in digital infrastructure to mitigate labor shortages. The reluctance to invest could be attributed to the rising costs and uncertainty about future economic conditions, underscoring the need for continued strategic economic planning and support to navigate through the current economic headwinds.

 

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US Faces 87% Increase in Debt Interest Costs at Fiscal Year Start

US Faces 87% Increase in Debt Interest Costs at Fiscal Year Start

The United States commenced its fiscal year facing an 87% surge in the cost of interest on its national debt, a stark indicator of the financial burden that increased Treasury yields have imposed. In October, the government paid a striking $88.9 billion in interest, a significant leap from the same month in the previous year, according to the latest data from the Treasury Department.

This substantial increase comes even as the federal budget deficit for October contracted by 24% to $66.6 billion compared to $87.9 billion the year before. When taking into account calendar discrepancies, the deficit reduction stands at 4%. This decrease can be largely attributed to an influx of unusually high tax revenues, particularly from deferred tax payments in California and several other regions, which were postponed from earlier in the last fiscal year to October of the current year.

This financial update arrives just as the federal government faces a possible shutdown due to a deadlock in Congress over the budget. The Republican-majority House is pushing for spending reductions, a move opposed by Senate Democrats, with the current funding slated to expire on November 17.

A significant force behind the rise in interest expenses is the Federal Reserve’s robust campaign of interest rate hikes, the most aggressive the country has seen in decades, which remains a primary factor in the federal deficit.

The weighted average interest rate on the United States’ total outstanding debt stood at 3.05% at October’s end, marking the highest level since 2010 and reflecting an 87 basis point escalation from the previous year. The yield on seven-year Treasury notes hit approximately 4.68% on a recent Monday afternoon, a stark contrast to the 2.04% average maintained over the last decade through 2019.

Despite the robust nature of the U.S. economy, which has shown surprising resilience, the ballooning deficit signifies deeper fiscal vulnerabilities that have elicited renewed concerns from economists, politicians, and credit-rating institutions. The fiscal deficit effectively doubled for the year concluding in September, igniting alarms over the long-term fiscal health of the nation.

These concerns culminated in a stern warning from Moody’s Investors Service, which hinted at a potential downgrade of the United States’ sterling credit rating, citing the expanding budget deficits and deep-seated political divisions as key factors in their assessment.

 

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Australian Dollar Holds Steady Despite Weak US Dollar

Australian Dollar Holds Steady Despite Weak US Dollar

Amid a backdrop of fluctuating global currencies, the Australian Dollar (AUD) is holding its ground despite the US Dollar (USD)’s continued weaknesses. The AUD’s resilience comes even as US Treasury yields show an uptick, challenging the conventional dynamics between yield performance and currency strength. However, the AUD/USD exchange rate has been under pressure following the Reserve Bank of Australia’s (RBA) latest monetary policy meeting, which signaled a cautious approach moving forward.

The RBA recently released its Monetary Policy Statement, outlining the economic challenges faced by Australia, primarily driven by persistent inflation and subdued economic activity. The central bank remains focused on bringing inflation back within its target range, and while a pause in rate hikes was considered, the RBA is leaning towards the likelihood of further rate increases as a means to address inflationary pressures.

Despite the financial strain on Australian households, the RBA is forecasting a dual scenario of increased inflation and GDP growth, while also adjusting its outlook for unemployment and wages downward. These mixed signals reflect the complexity of the current economic environment and the delicate balance the central bank must maintain in its policy decisions.

Internationally, the spotlight turns to the anticipated US-China Presidential meeting, with US President Joe Biden poised to strengthen military communication channels with China. National Security Adviser Jake Sullivan has highlighted this objective ahead of the leaders’ in-person dialogue scheduled for Wednesday at the Asia-Pacific Economic Cooperation summit in San Francisco.

This high-level meeting is expected to cover a broad array of global issues, including the ongoing Israel-Hamas conflict, Russia’s activities in Ukraine, the global fentanyl trade, and discussions on artificial intelligence and fair trade practices. The outcome of these talks could have significant implications for international relations and economic policies.

Domestically in the US, Federal Reserve Chair Jerome Powell has taken a surprisingly hawkish tone, raising doubts about whether current policies are stringent enough to curb inflation to the Fed’s target rate. This has led to market speculation regarding the future trajectory of the Fed’s rate-tightening regime.

In the meantime, consumer confidence in the US appears to be waning, with the preliminary Michigan Consumer Sentiment Index for November indicating a decline. This data suggests a potential impact on consumer spending and could influence future USD movements.

Currency traders are now looking ahead to several key economic releases. The AUD/USD pair will be influenced by the upcoming Westpac Consumer Confidence report, while globally, the release of the US Consumer Price Index and China’s Industrial Production and Retail Sales figures will provide further insights into the health of these major economies and the potential direction of their respective currencies.

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US Dollar Price

U.S. Dollar Index Nears the 106.00 Threshold Amid Economic Data and Federal Reserve Insights

U.S. Dollar Index Nears the 106.00 Threshold Amid Economic Data and Federal Reserve Insights

The U.S. Dollar Index (DXY), a significant gauge of the dollar’s strength against a basket of currencies, is on the cusp of the notable 106.00 mark, showcasing a resilient recovery as the trading week concludes. With an optimistic lift in the market, the DXY is testing this key resistance level, indicative of sustained momentum in the currency’s valuation.

The dollar’s revival has been particularly fueled by the cautious yet forward-looking commentary from Federal Reserve Chair Jerome Powell during a recent question-and-answer session. Chair Powell’s remarks suggested a careful approach by the Fed, signaling no rush to escalate the interest rate hikes, which has been a pivot point for the dollar’s surge. While Powell acknowledged a moderation in inflationary pressures, he also maintained that the possibility of further rate adjustments remains on the table to achieve the Fed’s inflation target of 2%.

Powell’s tempered stance seems to reflect a dual narrative of the Fed’s commitment to curbing inflation while also recognizing the potential risks of over-tightening. This balancing act is key as the Federal Reserve evaluates whether the current benchmark interest rate is adequate to maintain inflation at the desired level.

As market participants digest these insights, attention is also turning to upcoming economic indicators. The preliminary Michigan Consumer Sentiment Index for November is slated for release and is expected to garner significant attention. Additionally, financial markets are poised to consider the perspectives of Federal Reserve officials, including Dallas Fed’s L. Logan, known for his hawkish views, and Atlanta Fed’s R. Bostic, a centrist slated to vote in 2024. Their assessments and projections will be critical in shaping market expectations and the dollar’s trajectory.

While the DXY demonstrates resilience in approaching the 106.00 threshold, it does so amid a broader context where the U.S. economy shows robust fundamentals, yet inflation rates remain stubbornly above the Fed’s preferred target. Moreover, a cooling U.S. labor market contributes to the complex backdrop against which the Federal Reserve’s current policy stance is being scrutinized.

As the week draws to a close, the dollar has shown some signs of hesitance, struggling to firmly breach the 106.00 barrier. This resistance level has become a focal point following the index’s rebound from recent lows in the sub-105.00 domain as of November 6. The hesitation comes despite the overall positive economic health of the U.S., suggesting that market sentiment is cautious, weighing the potential for an ongoing standoff in the Fed’s hawkish policy measures.

Market observers and investors alike are closely monitoring these developments, understanding that the confluence of economic data releases and Fed communications in the coming days could provide pivotal clues for the dollar’s direction. This dynamic interplay of economic data and policymaker rhetoric underscores the intricate link between monetary policy, investor sentiment, and the nuanced movements of currency markets.

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People’s Bank of China Announces Measures to Boost Economy

People’s Bank of China Announces Measures to Boost Economy

China’s central bank, the People’s Bank of China (PBOC), is taking proactive steps to support the nation’s robust economic recovery, according to Pan Gongsheng, the PBOC’s governor. These measures include reducing financing costs, maintaining ample liquidity, and safeguarding financial stability.

Addressing the Annual Conference of Financial Street Forum 2023 in Beijing, Pan stated that the PBOC would provide liquidity support to indebted local governments when necessary and prevent risks in the property market from spreading to other sectors. Experts interpret these remarks as a signal of the PBOC’s commitment to reinforcing the ongoing economic recovery momentum.

To achieve these goals, the PBOC may consider cutting the reserve requirement ratio (RRR) this month, with the possibility of another interest rate cut later in the year. These actions aim to stimulate economic growth, which has shown signs of strengthening recently, with increased production and consumption, improved employment, and inflation trends.

Pan emphasized that the PBOC would maintain interest rates at a level conducive to achieving the economy’s potential growth rate, ensuring lower financing costs for the real economy while maintaining overall stability. The central bank’s focus is on supporting sustainable and high-quality development, with particular attention to technological innovation and small private enterprises.

In line with recent financial directives, the PBOC aims to create a favorable monetary and financial environment, providing high-quality financial services to key strategic areas and addressing weak points in the economy. While there may be room for interest rate cuts, the central bank is cautious about excessive stimulus to avoid compromising long-term economic prospects.

Pan also highlighted efforts to manage government debt and transition local government financing vehicles into financially independent, sustainable entities that do not rely on government credit. Emergency liquidity support for regions burdened with heavy debt may be provided through a special purpose vehicle, a monetary policy tool.

Regarding the property market, Pan reassured that its correction has had a manageable impact on the financial system. Real estate-related loans represent only 23 percent of the outstanding value of bank loans, and property market transactions have improved since August. The PBOC aims to prevent property market risks from affecting other sectors while meeting the reasonable financing needs of real estate enterprises and maintaining their key financial channels, such as loans and bonds, stable.

In conclusion, the People’s Bank of China is actively implementing measures to support China’s economic recovery, focusing on reducing financing costs, ensuring ample liquidity, and safeguarding financial stability. These efforts align with the goal of achieving sustainable and high-quality economic development while managing potential risks in the financial system and property market.

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Pound Sterling’s Vulnerability Heightened by Anticipation of UK Q3 GDP Figures

Pound Sterling’s Vulnerability Heightened by Anticipation of UK Q3 GDP Figures

The Pound Sterling is witnessing a gradual decline as investor sentiment has become cautious in the lead-up to the release of the UK’s third-quarter Gross Domestic Product (GDP) figures, alongside Federal Reserve Chair Jerome Powell’s comments on the direction of interest rates. There is an anticipated nominal shrinkage in the UK’s economic growth, attributable to companies not operating at full capacity, a trend driven by diminished household spending.

A subdued level of business investment continues as firms are compelled to delay expansion due to increased borrowing expenses. The Bank of England forecasts a protracted downturn in labor demand and investment, with economic output expected to stagnate. Recessionary risks are further amplified by tensions in the Middle East, which threaten to disrupt supply chains and increase energy costs.

As the anticipation for the Q3 GDP data grows, the Pound Sterling has been consolidating beneath the key resistance level of 1.2300, signaling investor apprehension about potential economic damage caused by the Bank of England’s aggressive interest rate hikes. The expectation is that the UK economy might have seen a contraction of 0.1% in this quarter, a reversal from the 0.2% growth observed during the April to June quarter.

The bleak outlook for the UK’s third-quarter performance stems from an intensifying cost of living crisis, which has triggered a significant reduction in retail demand. Over two of the previous quarter’s three months, household expenditure declined as individuals felt the pinch of higher inflation and a rebound in energy prices, eroding real income.

Recent data from Barclays and the British Retail Consortium indicates a deceleration in consumer spending to 2.6% and 2.5% in October, respectively, down from 4.2% in September according to Barclays, and below the 3-month and 12-month averages of 3.1% and 4.2% reported by the BRC. This reduction in spending highlights the financial challenges households face amidst soaring inflation rates, which hit 6.7% in September.

Many consumers are limiting discretionary spending, saving instead for Christmas and anticipated winter fuel expenses, as pointed out by Esme Harwood, a director at Barclays. This conservative spending behavior is reflected in the sharp downturn in business activities during the third quarter due to weak retail demand, leading to reduced labor demand and cutbacks on purchasing and inventory.

Reports from S&P Global show that the Services PMI has lingered below the growth-indicative threshold of 50.0 for three consecutive months. The Manufacturing PMI has also been in contraction for almost a year. Additionally, construction spending has seen a significant drop as prospective homebuyers delay purchases to avoid the higher installment costs associated with the current high borrowing rates.

Bank of England Chief Economist Huw Pill, in a recent commentary, highlighted the increased risks of a significant economic slowdown, given the central bank’s commitment to curbing inflation to 2% within two years. Pill cautioned that the repercussions of a restrictive monetary stance are likely to be most acutely felt by lower-income households.

Forecasts from the Bank of England suggest a stagnant economy over the coming two years, which could have a continuing negative impact on labor demand. The latest UK job survey from KPMG and REC reveals employer hesitance in offering permanent positions, with a preference for temporary staffing in the face of economic uncertainty.

In the geopolitical arena, the conflict involving Israel and Hamas has escalated with actions targeting Hamas tunnels in Gaza by the Israeli Defense Forces. Meanwhile, the US Dollar Index has been exhibiting sideways movement around the 105.70 mark, as the market awaits further guidance from Federal Reserve Chair Jerome Powell’s upcoming speech, which is expected to shed light on the monetary policy direction for December.

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Australian Dollar Steadies Above

Australian Dollar Hits Three-Month High as RBA Rate Decision Looms

Australian Dollar Hits Three-Month High as RBA Rate Decision Looms

The Australian Dollar (AUD) is exhibiting strength as it ascends towards a three-month peak on Monday, sustained by the prospect of the Reserve Bank of Australia’s (RBA) impending interest rate decision. Market sentiment is inclined toward a 25 basis point hike by the RBA in alignment with Australia’s edging inflation, offering support to the AUD. The RBA Shadow Board further reinforces this outlook, suggesting a November rate increase with a 62% likelihood of the cash rate exceeding 4.10%.

Additionally, the AUD/USD pair gains from a surge in risk appetite, driven by speculations that the US Federal Reserve may have concluded its cycle of monetary policy tightening. Signals of this development stem from recent economic indicators showing a slowdown in the US economy. The US Dollar Index (DXY) suffered a loss of over 1% in the last session, responding to a dip in US Treasury yields following weaker-than-anticipated nonfarm payroll figures, which also dampened US Dollar sentiment.

In market movement, several indicators have reflected on the AUD’s position. The annual inflation rate measured by Australia’s TD Securities adjusted to 5.1% in September, a drop from the previous 5.7%. Retail Sales modestly rebounded to 0.2% in the third quarter, a recovery from an earlier decline. The Australian Trade Balance contracted to 6,786M in September, falling below expectations of 9,400M and the prior mark of 10,161M. Meanwhile, the yearly Consumer Price Index (CPI) in Australia noted a 5.6% rise up to September 2023, although the quarterly inflation dipped to 5.4% year-on-year for Q3. From the US, the release of Non-Farm Payrolls (NFP) for October revealed a disappointing 150K jobs added, trailing behind the 180K forecast and showing a significant reduction from September’s 297K. Furthermore, US Average Hourly Earnings increased by 4.1% year-over-year, slightly over the 4.0% projected, even as the month-on-month growth tapered to 0.2%. The US ISM Services PMI also witnessed a decrease, and recent unemployment claims showed a slight uptick, providing a comprehensive backdrop for the currency’s movements as attentions pivot to the RBA’s policy announcement.

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US Yields Boost Dollar, Weaken Yen

US Yields Boost Dollar, Weaken Yen

US Yields Boost Dollar, Weaken Yen

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

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

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

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

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

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

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

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

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

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Cryptocurrency Move Back to Support the Pack to Level

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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Cryptos Market: Bitcoin Shows Bullish Momentum Over Dollar Strength

Cryptos Market: Bitcoin Shows Bullish Momentum Over Dollar Strength

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

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

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

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

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

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

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

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

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Ethereum Rate Hits at Higher Level More Profitable Than Bitcoin Mining

Ethereum Rate Hits at Higher Level More Profitable Than Bitcoin Mining

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

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

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

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

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

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

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

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Cryptocurrency Bitcoin Shows the Bullish Divergence on User Count

Cryptocurrency Bitcoin Shows the Bullish Divergence on User Count

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

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

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

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

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

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

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

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

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

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

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

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

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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

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What Are Commodity Currencies? How They Impact Your Forex Trades

AI changing Forex trading?

How is AI changing Forex trading?

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