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Australian Dollar Strengthens as China Prepares Capital Injection for Top Banks

Australian Dollar Strengthens as China Prepares Capital Injection for Top Banks

Australian Dollar Strengthens as China Prepares Capital Injection for Top Banks

The Australian Dollar (AUD) regained some of its recent losses against the US Dollar (USD) on Thursday, benefiting from divergent monetary policy stances between the Reserve Bank of Australia (RBA) and the US Federal Reserve. The AUD also received a boost as China, Australia’s largest trading partner, announced a new round of economic stimulus measures.

Earlier this week, the RBA kept its Official Cash Rate (OCR) unchanged at 4.35%, providing support to the Australian Dollar. RBA Governor Michele Bullock indicated that rates would remain steady for the time being. This contrasts with the US Federal Open Market Committee (FOMC), which recently cut the federal funds rate by 50 basis points, lowering it to a range of 4.75% to 5.0%. According to the CME FedWatch Tool, there is about a 50% chance that the Fed will cut rates by an additional 75 basis points to a range of 4.0%-4.25% by the end of the year.

Market attention now turns to the upcoming release of final US Gross Domestic Product (GDP) figures for the second quarter (Q2), expected later in the North American session.

Market Overview: AUD Supported by Central Bank Divergence

China announced plans to inject over CNY 1 trillion into its largest state-owned banks, which are struggling with shrinking margins, declining profits, and rising bad loans. This capital infusion would be the first of its kind since the 2008 global financial crisis, further bolstering market sentiment for the AUD.

The Reserve Bank of Australia’s Financial Stability Review in September 2024 reaffirmed the resilience of Australia’s financial system. However, the report raised concerns about stress in China’s financial sector and a limited response from Beijing. Domestically, a small but growing number of Australian mortgage holders are falling behind on payments, though only about 2% of owner-occupier borrowers are considered at high risk of default.

Meanwhile, the Commonwealth Bank of Australia (CBA) anticipates that the RBA will downgrade its consumption forecasts in November. This revision, along with rising unemployment and inflation in line with CBA’s expectations, could set the stage for the RBA to implement rate cuts before the year ends.

Fed Governor Adriana Kugler also weighed in, expressing her support for the Fed’s recent 50 basis point rate cut. She indicated that further rate cuts might be warranted if inflation continues to ease.

Geopolitical Developments and Economic Forecasts

Australian Treasurer Jim Chalmers is scheduled to visit China to strengthen economic ties. “Given our reliance on China’s economic stability, it is crucial to engage with key Chinese officials in Beijing,” Chalmers said.

JP Morgan recently advised investors to monitor commodity prices and bond yields in light of China’s stimulus proposals. The bank highlighted that China’s new measures could stimulate global growth and reduce recession risks, though it cautioned about potential reinflation risks.

Australia’s Monthly Consumer Price Index (CPI) rose 2.7% year-over-year in August, down from the previous 3.5% rise and slightly below market expectations of 2.8%.

In response to economic challenges, People’s Bank of China (PBOC) Governor Pan Gongsheng announced a 50 basis point reduction in the Reserve Requirement Ratio (RRR). Additionally, the central bank lowered the seven-day repo rate from 1.7% to 1.5% and reduced the down payment requirement for second homes from 25% to 15%. On Thursday, the PBOC also cut the one-year Medium-term Lending Facility (MLF) rate from 2.30% to 2.0%, following a previous reduction in July.

Technical Outlook: AUD/USD Tests Key Levels

The AUD/USD pair is trading near 0.6830 on Thursday. A technical analysis of the daily chart suggests the pair has fallen below an ascending channel pattern, potentially signaling a weakening bullish trend. However, the 14-day Relative Strength Index (RSI) remains above 50, indicating that bullish sentiment persists.

The AUD/USD could test resistance at 0.6860, the lower boundary of the ascending channel. If the pair returns to the channel, it may resume its upward trend toward 0.6960. On the downside, support is found at the nine-day Exponential Moving Average (EMA) at 0.6809, with stronger support at the psychological level of 0.6700. A break below this level could lead the pair toward a six-week low of 0.6622.

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Japanese Yen Weakens After BoJ Governor Ueda's Dovish Comments

Japanese Yen Softens Following Comments from BoJ Governor Ueda

Japanese Yen Softens Following Comments from BoJ Governor Ueda

The Japanese Yen (JPY) lost ground against the US Dollar (USD) on Tuesday as concerns grew over the Bank of Japan’s (BoJ) reluctance to raise interest rates. BoJ Governor Kazuo Ueda reaffirmed on Friday that it would only be “appropriate to raise rates if trend inflation increases in line with forecasts.”

Governor Ueda emphasized that Japan’s real interest rates remain deeply negative, helping stimulate the economy and push prices higher. He further clarified that the BoJ would consider rate hikes only if economic and price movements align with the quarterly outlook report.

Japan’s Finance Minister Shunichi Suzuki added on Tuesday that he is “monitoring the impact of central banks’ monetary policies.” Suzuki expects the BoJ to maintain close coordination with the government while implementing appropriate measures.

Despite the BoJ’s dovish stance, the USD/JPY pair could face downward pressure due to rising expectations of further rate cuts from the US Federal Reserve in 2024. The CME FedWatch Tool indicates a 50% probability of a 75 basis point reduction, which could bring the Fed’s rate to a range of 4.0-4.25% by the end of the year.

Daily Market Movers: Japanese Yen Remains Tepid Amid BoJ Caution

The Jibun Bank Japan Composite PMI fell slightly in September to 52.5, down from 52.9 in August, which had marked a 15-month high. Nevertheless, this still reflects eight consecutive months of growth, driven mainly by the services sector. The Services PMI rose to 53.9 in September, up from 53.7 in August.

Conversely, Japan’s manufacturing sector showed weakness, as the Manufacturing PMI unexpectedly dropped to 47.0, signaling contraction. Meanwhile, the Services PMI continued its robust expansion, reaching 55.4.

In the US, Minneapolis Fed President Neel Kashkari reiterated his view that further rate cuts are likely in 2024, though he expects them to be smaller than the September reduction. Chicago Fed President Austan Goolsbee and Atlanta Fed President Raphael Bostic also pointed to the need for more rate cuts, with Bostic stating that the US economy is nearing normalized inflation and unemployment rates.

Japan’s newly appointed top currency official, Atsushi Mimura, commented in an interview that the unwinding of past Yen carry trades has likely been completed. However, he warned that a resurgence of such trades could lead to increased market volatility, which the government is monitoring closely.

Inflation data out of Japan shows the Consumer Price Index (CPI) rising to 3.0% year-on-year in August, up from 2.8%, marking the highest level since October 2023. The Core National CPI, excluding fresh food, reached 2.8%, its highest in six months, marking a fourth consecutive month of growth.

Technical Analysis: USD/JPY Holds Above Key Support Near 143.50

The USD/JPY pair is trading around 143.70 on Tuesday, holding above the nine-day EMA at 143.50. The pair continues to move within a descending channel, signaling a bearish outlook. The 14-day Relative Strength Index (RSI) remains below 50, indicating that bearish momentum persists.

A break below the nine-day EMA at 143.01 could push the pair towards the 139.58 support level, marking its lowest point since June 2023. On the upside, immediate resistance is seen at 144.30. A breakout above this level could lead the USD/JPY pair to challenge the 145.00 psychological level.

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Pound Sterling Falls as UK PMI Misses Expectations

Pound Sterling Slips as UK PMI Misses Expectations

Pound Sterling Slips as UK PMI Misses Expectations

The Pound Sterling (GBP) declined on Monday, driven by weaker-than-anticipated preliminary UK S&P Global Purchasing Managers’ Index (PMI) data for September and negative market sentiment. The British currency underperformed against most of its major peers, except for the Euro (EUR), which also fell due to a surprise decline into contraction territory in the Eurozone PMI.

The UK Composite PMI came in at 52.9, down from August’s 53.8, indicating a slower pace of economic growth. Both the manufacturing and service sectors saw larger-than-expected declines.

However, despite the slowdown, the impact on the broader economy is likely to be minimal. Chris Williamson, Chief Business Economist at S&P Global Market Intelligence, remained optimistic about the UK’s economic outlook.

“A slight cooling of output growth across manufacturing and services in September should not be seen as too concerning, as the survey data are still consistent with the economy growing at a rate approaching 0.3% in the third quarter, which aligns with the Bank of England’s forecast,” Williamson noted.

Looking ahead, the Pound’s performance will be influenced by market expectations surrounding the Bank of England’s (BoE) interest rate decisions. Traders predict the BoE may cut rates only once during the remaining two policy meetings this year. The BoE recently left its key interest rates unchanged at 5%, following an 8-1 vote after cutting them by 25 basis points in August.

Daily Market Movers: GBP Declines Against the USD

During Monday’s London session, the Pound Sterling fell to around 1.3250 against the US Dollar (USD) after the weak PMI release. At the same time, the US Dollar Index (DXY), which measures the Greenback’s value against major currencies, surged to 101.20.

Market speculation that the Federal Reserve (Fed) may implement a second consecutive 50-bps rate cut has increased, as concerns about the labor market persist. According to the CME FedWatch tool, there’s nearly a 50% chance that the Fed will cut rates by 50 bps in November, bringing the rate to 4.25%-4.50%.

On Friday, Fed Governor Christopher Waller commented that more rate cuts could occur if labor market conditions deteriorate.

Investors will also keep an eye on the US preliminary S&P Global PMI data for September, due at 13:45 GMT. Economists predict that the Manufacturing PMI may rise slightly to 48.5 from 47.9 in August, although a figure below 50.0 signals contraction. The Services PMI is expected to decline to 55.2 from 55.7, indicating a slight slowdown in growth.

Technical Analysis: GBP/USD Slides to 1.3250

The Pound Sterling dropped to around 1.3250 against the US Dollar in European trading hours. Despite the declin, the near-term outlook for GBP/USD remains solid as it holds above the 20-day Exponential Moving Average (EMA), which sits near 1.3150. Earlier, the Cable rebounded from a corrective dip to the trendline plotted from the December 28, 2023, high of 1.2828, triggering a sharp rally after the breakout on August 21.

The 14-day Relative Strength Index (RSI) has dipped slightly but remains above 60, signaling continued bullish momentum.

In terms of resistance, the GBP/USD pair could face challenges near the psychological level of 1.3500. On the downside, the psychological support at 1.3000 will be crucial.

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Gold Price Holds Steady Near Record Highs Despite Positive

Gold Price Holds Steady Near Record Highs Despite Positive Market Sentiment

Gold Price Holds Steady Near Record Highs Despite Positive Market Sentiment

Gold (XAU/USD) continues its upward momentum for the second consecutive day, edging closer to the $2,600 mark—just shy of its all-time high—during early European trading on Friday. This rise follows the Federal Reserve’s (Fed) substantial interest rate cut on Wednesday, with expectations for another 50 basis point reduction by year-end. This dovish stance has capped the recovery in US Treasury yields, weakening the US Dollar (USD) and supporting the non-yielding asset.

In addition to the Fed’s moves, ongoing concerns about an economic slowdown in the US and China, along with heightened geopolitical risks in the Middle East, are contributing to gold’s appeal. However, the prevailing risk-on sentiment may limit further bullish momentum in the short term. Despite this, the commodity remains on track for a second consecutive weekly gain, with fundamentals suggesting potential for continued appreciation.

Key Market Movers: Gold Remains Strong Amid Expectations of More Fed Rate Cuts in 2024

  • The Fed’s large rate cut on Wednesday, coupled with a forecast for another 50 basis point reduction by year-end, failed to provide the US Dollar with any sustained boost following its recovery from the year-to-date low.
  • Fed policymakers also revised their interest rate projections lower, with expectations for rates to fall to 3.4% in 2025 (previously 4.1%) and to 2.9% in 2026 (down from 3.1%). This revision reignited demand for gold on Thursday.
  • Strong US macroeconomic data, including a drop in Initial Jobless Claims to 219K— the lowest since May—and a rebound in the Philadelphia Fed’s manufacturing index, have not significantly bolstered USD sentiment.
  • Concerns about economic growth, spurred by the Fed’s aggressive rate cuts and slowing Chinese demand, have bolstered gold’s safe-haven status.
  • Ongoing geopolitical tensions in the Middle East, as well as the Russia-Ukraine war, continue to support gold prices, alongside political uncertainty in the US ahead of the November presidential election.
  • Additionally, gold buying by Asian central banks and Russia, aiming to diversify away from the US Dollar, further fuels the bullish outlook for the yellow metal.

Technical Outlook: Gold Bulls Eye $2,610-$2,615 as Key Resistance

From a technical perspective, the $2,600 level—reached on Wednesday—serves as an immediate resistance point. The next key barrier lies around $2,613-$2,615, marking the upper boundary of a short-term ascending channel that began in June. With momentum indicators still in positive territory and well below overbought levels, a sustained breakout above this region could trigger further gains for gold in the near term.

On the downside, the $2,551-$2,550 zone offers initial support, followed by the $2,532-$2,530 range. A break below these levels could see gold testing the psychological $2,500 mark. Below that, the $2,476 level, which aligns with the 50-day Simple Moving Average (SMA) and the lower boundary of the ascending channel, would be the next target. A decisive move below this point would indicate a near-term top, potentially leading to a slide towards the 100-day SMA near $2,412 and eventually the $2,400 level.

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Japanese Yen Consolidates as US Dollar Holds Firm Amid Rising Treasury Yields

Japanese Yen Consolidates as US Dollar Holds Firm Amid Rising Treasury Yields

Japanese Yen Consolidates as US Dollar Holds Firm Amid Rising Treasury Yields

The Japanese Yen (JPY) remained steady against the US Dollar (USD) on Tuesday, supported by the hawkish outlook on the Bank of Japan’s (BoJ) interest rate policy. Traders are cautiously awaiting the BoJ’s policy decision on Friday, expecting rates to remain unchanged but with the possibility of hikes in October and December.

Japanese Finance Minister Shunichi Suzuki emphasized on Tuesday that rapid foreign exchange (FX) fluctuations are undesirable, signaling that officials will closely monitor how these movements impact the Japanese economy. The government remains vigilant about the Yen’s strength and will take necessary actions, according to Reuters.

Meanwhile, the US Dollar is holding ground as expectations mount that the Federal Open Market Committee (FOMC) may announce a significant 50 basis point rate cut on Wednesday. The CME FedWatch Tool shows that markets are pricing in a 38.0% chance of a 25 basis point cut, while the likelihood of a 50 basis point cut has risen to 62.0%, up from 50.0% just a day prior.

Market Movers: Japanese Yen Steady Amid Dovish Fed Expectations

Rabobank economists Jane Foley and Molly Schwartz noted on Monday that net long positions in the Yen are at their highest levels since October 2016. While there is little expectation for a rate hike from the BoJ during its September 20 meeting, traders will be watching for signals of potential action in October.

Commerzbank FX analyst Volkmar Baur predicted that the BoJ would stay on the sidelines this week, suggesting that the Fed’s decisions will have a more significant impact on the USD/JPY pair. Baur noted that the Yen could fall below 140.00 per USD even without a BoJ rate hike.

On Friday, Fitch Ratings released a report suggesting that the BoJ may raise rates to 0.5% by the end of 2024, 0.75% in 2025, and 1.0% by 2026. Meanwhile, BoJ policymaker Naoki Tamura indicated that the central bank should aim for a rate of at least 1% by the second half of the next fiscal year, underscoring the BoJ’s commitment to monetary tightening.

In the US, the University of Michigan’s Consumer Sentiment Index rose to 69.0 in September, surpassing market expectations of 68.0 and marking a four-month high. This reflects improving consumer confidence in the US economy. Additionally, the US Producer Price Index (PPI) rose 0.2% month-on-month in August, beating the forecasted 0.1%, with core PPI increasing by 0.3%, exceeding both expectations and the previous month’s figure.

Technical Analysis: USD/JPY Remains Tepid Around 140.50 Amid 14-Month Lows

USD/JPY is hovering around 140.60 on Tuesday, continuing its downward trend within a descending channel, signaling a bearish outlook. The 14-day Relative Strength Index (RSI) remains below 30, indicating an oversold condition and a potential for an upward correction.

On the downside, the pair is testing support at 140.25, the lowest level since July 2023, followed by the psychological barrier at 140.00. A break below this level could strengthen the bearish sentiment and drive the pair toward the lower boundary of the descending channel at 138.30.

On the upside, resistance is expected around the nine-day EMA at 141.95, followed by the 21-day EMA at 143.78. A breakout above these levels could weaken the bearish bias and push the pair toward the upper boundary of the descending channel at 145.40.

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Australian Dollar Strengthens Amid Rising Odds

Australian Dollar Strengthens Amid Rising Odds of Aggressive Fed Rate Cut

Australian Dollar Strengthens Amid Rising Odds of Aggressive Fed Rate Cut

The Australian Dollar (AUD) edged higher against the US Dollar (USD) on Monday, driven by growing speculation that the US Federal Reserve may implement a substantial 50 basis points (bps) rate cut in its upcoming policy meeting. This potential easing by the Fed could further support the AUD/USD pair’s upward momentum. Traders are also awaiting Australian labor market data later this week, which may influence the Reserve Bank of Australia’s (RBA) monetary policy outlook.

The RBA has maintained a hawkish stance, with Governor Michele Bullock emphasizing that it is too soon to consider rate cuts given the persistent inflationary pressures. RBA Assistant Governor Sarah Hunter echoed this sentiment, noting that while the labor market remains tight, wage growth appears to have peaked and is expected to slow down.

In contrast, the US Dollar is under pressure as US Treasury yields decline amid uncertainty surrounding the Fed’s rate cut. The CME FedWatch Tool indicates a 41.0% chance of a 25 bps cut at the Fed’s September meeting, with the likelihood of a larger 50 bps cut rising to 59.0%, up from 50.0% just a day ago.

Market Highlights: Australian Dollar Benefits from Fed Rate Cut Speculation

The University of Michigan’s Consumer Sentiment Index rose to 69.0 in September, surpassing expectations and marking a four-month high. This improvement reflects a more positive outlook from US consumers after months of pessimism.

China’s Retail Sales growth slowed to 2.1% year-on-year in August, down from 2.7% in July and missing the 2.5% market forecast. Given Australia’s close trade ties with China, shifts in China’s economic performance can significantly affect the Australian economy. Additionally, China’s economy showed signs of weakening in August, with continued slowdowns in industrial production and falling real estate prices, putting pressure on Beijing to increase spending.

Meanwhile, the US Producer Price Index (PPI) for August rose by 0.2% month-on-month, exceeding forecasts, while core PPI also accelerated. Despite these stronger figures, uncertainty remains around the Fed’s rate decision.

Former RBA Governor Bernie Fraser has criticized the current RBA Board for focusing too much on inflation at the expense of employment, warning of recession risks if the cash rate isn’t lowered soon. Australia’s Consumer Inflation Expectations dipped to 4.4% in September, slightly easing from August’s 4.5% reading, reflecting the central bank’s balancing act between controlling inflation and supporting job market growth.

Technical Analysis: AUD/USD Tests Key Resistance at 0.6700

The AUD/USD pair is trading around 0.6700, testing the upper boundary of a descending channel. A breakout above this level could signal a bullish shift in momentum, potentially pushing the pair toward a seven-month high of 0.6798 and the psychological barrier of 0.6800.

On the downside, the pair has immediate support around the nine-day Exponential Moving Average (EMA) at 0.6703. A break below this could reinforce the bearish trend, with further support near the lower boundary of the descending channel around 0.6575.

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Nonfarm Payrolls Data to Test US Labor Market

Nonfarm Payrolls Data to Test US Labor Market in August After July’s Slowdown

Nonfarm Payrolls Data to Test US Labor Market in August After July’s Slowdown

The US Bureau of Labor Statistics (BLS) will release the much-anticipated Nonfarm Payrolls (NFP) data for August on Friday at 12:30 GMT.

This labor market data is crucial for assessing the US Federal Reserve’s (Fed) upcoming interest rate decisions, particularly regarding a potential rate cut in September, which is heightening volatility around the US Dollar (USD).

What to Expect in the August Nonfarm Payrolls Report?

Forecasts suggest that the US economy added 160,000 jobs in August, up from the 114,000 added in July.

The unemployment rate is expected to decrease slightly to 4.2% from July’s 4.3%. Meanwhile, wage growth, measured by Average Hourly Earnings, is anticipated to rise by 3.7% year-over-year in August, following a 3.6% increase in July.

The August data will be pivotal in determining the Fed’s approach to interest rates at its September 17-18 meeting. Fed Chair Jerome Powell recently noted that a further cooling of the labor market could justify more aggressive monetary action, possibly leading to a 50 basis point (bps) rate cut.

In July, the Fed adjusted its policy language to reflect increased attention to both inflation and labor market risks, signaling potential shifts in its dual mandate focus.

TD Securities analysts expect a rebound in payrolls, estimating over 200,000 new jobs in August, with the unemployment rate dropping to 4.2% and wages growing by 0.3% month-over-month.

How Will August Nonfarm Payrolls Impact EUR/USD?

The US Dollar has been weakening against major currencies, pushing EUR/USD closer to the 1.1100 level. A dovish NFP report could reinforce expectations of a larger Fed rate cut, benefiting EUR/USD further.

In the run-up to the NFP release, weak US economic data, including disappointing Institute for Supply Management (ISM) Purchasing Managers Index (PMI) numbers and a decline in job openings, have fueled concerns of a hard landing for the US economy.

The ISM’s Manufacturing Index slightly improved to 47.2 in August from 46.8 in July, but remained in contraction territory. US job openings fell to a 3.5-year low of 7.67 million in July, down from 7.91 million in June. Additionally, the ADP report showed private sector employment increased by just 99,000 in August, a decline from July’s revised 111,000.

As a result of the soft data, market expectations for a 50 bps Fed rate cut have risen, with the FedWatch tool now showing a 47% chance, up from 31% earlier in the week.

A weaker-than-expected NFP print (below 100,000 jobs) could further solidify the case for a significant rate cut in September, likely dragging the USD down while pushing EUR/USD higher. On the other hand, a strong NFP report, especially if accompanied by rising wage inflation, could dampen expectations of an aggressive rate cut, offering support to the US Dollar and pushing EUR/USD lower toward the 1.0900 level.

“The pair remains above the 21-day Simple Moving Average (SMA) at 1.1061, with the 14-day Relative Strength Index (RSI) pointing upward at 58, suggesting continued bullish momentum.”

“Buyers need to clear the year-to-date high of 1.1202 to challenge the 1.1250 psychological barrier, with further resistance at the July 2023 high of 1.1276. On the downside, a break below the 21-day SMA at 1.1061 could trigger a deeper correction, with support levels at the 1.1000 mark and the 50-day SMA at 1.0939.”

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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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Crude Oil Climbed Whether Russia’s Oil Imports Will Be Banned by the EU

Crude Oil Climbed Whether Russia’s Oil Imports Will Be Banned by the EU

Crude oil closed yesterday at 9080, up 2.06%, as traders awaited news on whether the European Union would agree to an embargo on Russian oil imports. On Monday and Tuesday, the EU will gather to consider the sixth package of sanctions against Russia for its invasion of Ukraine, which Moscow refers to as a “special military operation.”

When the Organization of Petroleum Exporting Countries and its allies, including Russia, meet on Thursday, they are expected to reject Western efforts to accelerate output increases, underscoring market tightness. They will maintain to their existing plans to increase output by 432,000 barrels per day in July. Russia slightly increased oil production to 10.17 million barrels per day (bpd) between May 1 and 29, according to the TASS news agency, although output is still over 1 million bpd lower than when the West placed sanctions on Moscow. After some clients postponed or denied Russian barrels owing to sanctions, production from the world’s third-largest producer after the United States and Saudi Arabia fell by almost 10% to 10.05 million bpd in April from February. On May 1-29, TASS reported that output had been marginally restored to 10.17 million bpd.

Technically, the market is seeing fresh buying, with open interest up 9.13 percent to settle at 11055, while prices are up 183 rupees. Crude oil is now getting support at 8987, with a move below seeing prices test 8894 levels, and resistance is now likely to be seen at 9131, with a move above seeing prices test 9182 levels.

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Dollar falls, Gold prices rise in range-bound trade

Dollar falls, Gold prices rise in range-bound trade

Gold prices rose in turbulent trading on Monday, bolstered by a weaker dollar, which boosted greenback-priced metal, though gains were limited as some investors shifted to riskier Asian assets. As of 0152 GMT, spot gold was up 0.2 percent at $1,856.86 per ounce. Gold futures in the United States rose 0.1 percent to $1,859.40.

“We may find that gold will remain nailed to its tight range around $1,850 unless a new catalyst arrives,” City Index senior market analyst Matt Simpson said. “With the 3-day holiday in the US, which means lower liquidity than usual, and a lack of top-tier data until Wednesday, we may find that gold will remain nailed to its tight range around $1,850 unless a new catalyst arrives.”

For the Memorial Day holiday in the United States, federal government offices, stock and bond markets, and the Federal Reserve will be closed on Monday. Despite a mainly positive performance since hitting a more than three-month low of $1,786.60 per ounce on May 16, gold prices are on track for their first monthly drop since March 2021, down roughly 2.4 percent so far.

“Gold’s underperformance has been attributed in part to investors rushing to cash as equities markets dropped, as well as Chinese lockdowns. June is traditionally a bad month for gold, but that trend looks to have been shifted forward by one month “Simpson said. Investors bet on a pause in US monetary tightening, despite big hikes in June and July, as Asian equities followed Wall Street higher and the dollar remained at five-week lows.

For buyers holding other currencies, a weakened dollar makes bullion more appealing. The potential cost of storing non-yielding bullion rises when short-term interest rates in the United States rise. Spot silver increased by 0.1 percent to $22.13 per ounce, platinum increased by 0.1 percent to $954.51, and palladium increased by 0.8 percent to $2,079.39 per ounce.

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Gold prices are declining as the Fed maintains its aggressive policy stance

Gold prices are declining as the Fed maintains its aggressive policy stance

On Thursday, gold prices fell, with some investors profiting after minutes from a US Federal Reserve policy meeting revealed that the central bank was likely to maintain its interest-rate hikes. The price of spot gold fell 0.1 percent to $1,851.57 per ounce. Gold futures in the United States rose 0.2 percent to $1,849.8. According to Brian Lan, managing director of dealer Gold Silver Central, the Fed’s resolve to hiking rates has influenced gold a little, with some profits being taken as the news sinks in, and prices could drop to $1,820 or so.

On Wednesday, gold recovered some of its losses caused by the dollar’s rise as minutes from the Fed’s May meeting suggested the central bank would not become more aggressive, instead raising interest rates by 50 basis points in June and July to combat inflation. In the long run, however, investors who are aware that a recession is on the horizon are looking for a high-value asset that can help them get through this period, and gold will shine, according to Lan.

The opportunity cost of owning bullion, which returns nothing, rises as short-term interest rates and bond yields rise in the United States. During financial crises, however, gold is seen as a safe-haven asset. The Fed’s decision to add two more half-percentage-point raises and then wait to see how they affect the economy was good for gold, but the market’s reaction has been disappointing, according to Michael McCarthy, chief strategy officer at Tiger Brokers in Australia.

The world’s largest gold-backed exchange-traded fund, SPDR Gold Trust, reported a 0.2 percent increase in holdings to 1,069.81 tones on Wednesday, up from 1,068.07 tones the day before. Spot silver rose 0.1 percent to $21.99 per ounce, while platinum rose 0.2 percent and palladium rose 0.5 percent to $2,015.72 per ounce.

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Global oil prices have risen again as EU negotiates with Hungary

Global oil prices have risen again as EU negotiates with Hungary

Oil prices increased on Thursday, extending a cautious advance this week on signals of constrained supply, as the European Union (EU) negotiates with Hungary over plans to prohibit imports from Russia, the world’s second-largest crude supplier, following its invasion of Ukraine. At 0142 GMT, Brent crude futures for July settlement were up 7 cents, or 0.1 percent, to $114.10 per barrel. WTI crude futures for July delivery in the United States rose 22 cents, or 0.2 percent, to $110.55 a barrel.

“An EU embargo on Russian oil imports is the key upward driver,” Commonwealth Bank commodities analyst. On Wednesday, European Council President Charles Michel expressed confidence that a deal may be struck before the council’s next meeting on May 30. However, Hungary continues to be a stumbling barrier to the EU penalties that require unanimous agreement. Hungary is requesting 750 million Euros ($800 million) to improve its refineries and expand a pipeline from Croatia, allowing it to transition away from Russian oil.

Even without a formal ban, Russian oil is scarce on the market as buyers and traders avoid interacting with the country’s crude and fuel providers. Cargoes from Baltic ports are taking lengthier routes to Asian refineries, according to ANZ analysts, while exports to the Netherlands and France have all but ceased. The Permian Basin’s expected growth in oil output to a record high of 5.2 million barrels per day (bpd) is unlikely to close the 2 million to 3 million bpd gap left by lost Russian supply analyst said. Nonetheless, rigorous COVID-19 lockdowns have curbed this week’s increase in oil markets, raising concerns about falling gasoline demand in China, the world’s largest oil importer, and concerns about inflation slowing global economy.

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On the back of the Fed Minutes, sellers of XAU/USD are targeting $1,848

On the back of the Fed Minutes, sellers of XAU/USD are targeting $1,848

During Wednesday’s Asian session, the gold price (XAU/USD) posts its first daily loss in five days, dropping to an intraday low of roughly $1,860. The recent weakness of the metal could be linked to the US dollar’s recovery from a monthly low ahead of crucial data and events. However, the US Dollar Index (DXY) is up 0.21 percent after recovering from a four-week low to reclaim the 102.00 level. The market’s preparations for the US Durable Goods Orders for April, projected at 0.6 percent versus 1.1 percent previously, as well as the Federal Open Market Committee (FOMC) Minutes, could be linked to the risk-negative reports from China and South Korea.

The shooting of three missiles by North Korea, as well as Japan’s displeasure with it, have added to the market’s nervousness ahead of today’s Fed Minutes, and appear to be weighing on the market’s optimism. The news regarding China’s COVID lockdowns and their detrimental effects on the world’s second-largest economy could be on the same line. “Beijing has kept its COVID quarantine in place for another month, while Shanghai authorities aim to keep most restrictions in place this month before releasing the two-month-old lockdown completely on June 1,” Bloomberg said.

While the S&P 500 Futures pare early-day gains at 3,955, up 0.40 percent intraday, the US 10-year Treasury yields remain protective around a one-month low, at 2.76 percent at press time. In contrast to the ECB’s hawkish statements, disappointing US housing statistics and repeated Fedspeak put downward pressure on US Treasury rates and the US Dollar on Tuesday. Gold prices are likely to face the brunt of the US dollar’s recovery in the future. However, any more bearish FOMC Minutes and/or negative US data will allow the precious metal to recover some of its recent losses.

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Gold prices fall as the dollar tries to recover

Gold prices fall as the dollar tries to recover

Gold prices fell marginally on Tuesday as the dollar recovered slightly after a recent dip, impacting on demand for greenback-priced gold. After reaching to its highest level since May 9 of $1,865.29 on Monday, spot gold dipped 0.2 percent to $1,850.40 per ounce at 0240 GMT. Gold futures in the United States were unchanged at $1,848.20. The safe-haven dollar recovered some of its losses from the previous day. Bullion becomes more expensive for foreign customers when the currency strengthens.

Bullion, which is seen as a safe haven during economic downturns, loses its appeal to investors when interest rates in the United States rise since it pays no interest. “Gold remains oversold in my opinion, and the daily closing (on Monday) above the 200-day average is bullish,” Simpson said. The world’s largest gold-backed exchange-traded fund, SPDR Gold Trust, reported a 0.44 percent increase in holdings to 1,068.07 tonnes on Monday, up from 1,063.43 tonnes on Friday.

The yield on the benchmark 10-year Treasury note fell, reducing losses in zero-yield gold. Silver fell 0.3 percent to $21.71 per ounce, platinum fell 1.3 percent to $946.00, while palladium rose 0.1 percent to $1,994.50 per ounce. Due to weaker demand from the automotive industry throughout the Ukraine crisis and a gradual recovery of the chip business from a shortfall, Russia’s Nornickel cut its projection for the global palladium market deficit in 2022.

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Oil rises as traders consider a tight fuel market and poor global growth

Oil rises as traders consider a tight fuel market and poor global growth

Investors evaluated tight product markets against concerns about slowing global growth as oil prices increased at the start of the week. Following four weeks of advances, West Texas Intermediate rose beyond $111 a barrel, the longest such run since February. Prices of gasoline and diesel have risen to new highs ahead of the start of the US driving season, which starts in a week. Bullish oil bets have also been boosted by money managers.

Oil prices have risen this year as a result of increased demand and the worldwide consequences from Russia’s invasion. Energy price increases have led to high inflation, leading central banks to hike interest rates and raising market concerns that GDP could slow. At the same time, to combat Covid-19 outbreaks, China has implemented a series of crippling lockdowns, harming Asia’s greatest economy.

Oil markets are still in backwardation, which is a positive pattern in which short-term prices trade above longer-term ones. Brent’s prompt spread was $2.58 a barrel in backwardation, up from $2.13 a barrel a week ago. A weakening dollar may have given crude an extra boost, making the commodity cheaper for holders of foreign currencies. The dollar fell on Monday after falling 1.4 percent last week, the most since November 2020.

According to Bloomberg Intelligence, oil may have a ceiling of around $110 per barrel due to China’s falling demand and economic growth being hampered by Beijing’s efforts to eradicate Covid-19. Bloomberg Economics has lowered its China growth projection for the year to 2% from 5.7 percent.

The image in Asia’s largest economy is still bleak. Officials in Shanghai have laid out the criteria for classifying portions of the commercial centre as low-risk for Covid-19 as they prepare to terminate two-month quarantine, with no new cases detected outside of confinement. However, Beijing recorded a record number of cases, reviving fears that the capital may be shut down.

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EUR/USD Price Forecast

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

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

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

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

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

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EUR/USD Eases Near

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Technical Outlook: Bullish Momentum Builds 

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

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

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

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

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

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

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

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

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JPY Recovers Losses vs. USD, Bullish Outlook Intact

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Conversely, on the downside:-

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

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

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

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

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

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

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

AUD Pressured by Risk Aversion, Trump’s Tariff Threats

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

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

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

China’s Economic Slowdown Adds Pressure on AUD

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

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

Technical Outlook: AUD/USD Turns Bearish Below 0.6250

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

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

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US Dollar Surges as Trump Revives Tariff Threats

US Dollar Surges as Trump Revives Tariff Threats

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

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

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

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

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

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

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

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

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

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

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

Risk Aversion Rises Amid Trump’s Trade Tariff Push

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

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

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

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

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

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

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NZD/USD Struggles

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

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

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

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

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

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US Yields Boost Dollar, Weaken Yen

US Yields Boost Dollar, Weaken Yen

US Yields Boost Dollar, Weaken Yen

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

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

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

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

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

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

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

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

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

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Cryptocurrency Move Back to Support the Pack to Level

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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Cryptos Market: Bitcoin Shows Bullish Momentum Over Dollar Strength

Cryptos Market: Bitcoin Shows Bullish Momentum Over Dollar Strength

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

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

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

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

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

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

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

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

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Ethereum Rate Hits at Higher Level More Profitable Than Bitcoin Mining

Ethereum Rate Hits at Higher Level More Profitable Than Bitcoin Mining

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

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

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

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

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

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

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

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Cryptocurrency Bitcoin Shows the Bullish Divergence on User Count

Cryptocurrency Bitcoin Shows the Bullish Divergence on User Count

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

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

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

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

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

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

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

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

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

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

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

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

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