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USD/CHF Continues to Slide, Approaching

USD/CHF Continues to Slide, Approaching 0.9050 Ahead of US Inflation Data Release

USD/CHF Continues to Slide, Approaching 0.9050 Ahead of US Inflation Data Release

USD/CHF edges lower for the second consecutive session, trading around 0.9060 during the Asian hours on Wednesday. The decline of the USD/CHF pair can be attributed to the weaker US Dollar (USD), as investors shrugged off the higher-than-expected US Producer Price Index (PPI) data for April. Investors are now awaiting the Consumer Price Index (CPI) report scheduled for release on Wednesday.

The US Bureau of Labor Statistics (BLS) reported that the PPI rose 0.5% month-over-month (MoM) in April, surpassing market expectations of a 0.3% increase. This rebound comes after a contraction of 0.1% in March. Additionally, the Core PPI, which excludes volatile food and energy prices, also surged by 0.5% MoM, exceeding projections of a 0.2% increase.

Following the release of the PPI data, Federal Reserve Chair Jerome Powell shared his views. According to a Reuters report, Powell anticipated a continued decline in inflation but expressed less confidence in the disinflation outlook compared to previous assessments. He highlighted that Gross Domestic Product (GDP) growth is expected to reach 2% or higher, attributing this positive forecast to the strength of the labor market.

In Switzerland, Producer and Import Prices (YoY) dropped by 1.8% in April, marking a slight improvement from the previous decline of 2.1%. This marks the twelfth consecutive period of decrease, albeit at the slowest rate since December 2023. On a monthly basis, consumer price inflation increased by 0.6%, following a 0.1% rise in the previous month.

Additionally, traders are expected to closely monitor the Industrial Production (YoY) data for the first quarter, scheduled for release on Friday. This report will provide insights into the volume of production across various industries, including factories and manufacturing, in Switzerland.

The overall market sentiment has been cautious, with investors weighing the implications of the US PPI data against the upcoming CPI report. The CPI is a critical measure of inflation, and its results could significantly influence market expectations regarding future monetary policy actions by the Federal Reserve.

The USD/CHF pair’s movement reflects broader market trends, where the USD’s performance is influenced by economic data releases and central bank communications. As traders await the CPI report, the USD/CHF pair may continue to experience volatility.

In conclusion, the USD/CHF pair’s decline during the Asian session is driven by a weaker USD despite higher-than-expected PPI data. With key economic data releases on the horizon, particularly the US CPI report, traders remain vigilant, assessing how these figures will shape future monetary policy decisions and overall market dynamics.

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GBP/USD Stays Above 1.2500 Ahead of Tuesday's UK Labor Data

GBP/USD Stays Above 1.2500 Ahead of Tuesday’s UK Labor Data

GBP/USD Stays Above 1.2500 Ahead of Tuesday’s UK Labor Data

During Monday’s Asian trading session, the GBP/USD pair saw an uptick, reaching close to 1.2520, influenced by a surge in risk appetite. This rise was supported by unexpectedly strong UK Gross Domestic Product (GDP) data released on Friday, indicating that the UK economy grew by 0.6% in the first quarter. This growth rate, the highest in over two years, marked the end of a brief recession and exceeded forecasts.

Despite this positive economic momentum, the British Pound faced headwinds following dovish comments from Huw Pill, the Chief Economist at the Bank of England (BoE). Although the BoE’s Monetary Policy Committee (MPC) held interest rates steady at 5.25% last Thursday, Pill suggested that rate cuts might be on the horizon, reflecting a growing inclination among some MPC members.

Looking ahead, market focus will shift to the upcoming UK labor market data due on Tuesday. Analysts are anticipating the Claimant Count Change to reveal a rise in jobless claims for April. Moreover, the International Labour Organization (ILO) Unemployment Rate for the three-month period is expected to show an uptick in unemployment, adding another layer of complexity to the economic outlook.

On the other side of the Atlantic, investors in the United States are gearing up for a week filled with significant economic reports that could influence market dynamics. Key indicators to watch include the Consumer Price Index (CPI), Producer Price Index (PPI), and Retail Sales data. These figures will provide further insights into the economic environment and potential policy responses from the Federal Reserve.

Meanwhile, the US Dollar faced challenges last Friday following the release of the University of Michigan Consumer Sentiment Index, which unexpectedly fell to a six-month low of 67.4 in May from 77.2 in April, significantly below the forecasted 76. This decline in consumer confidence could have adverse implications for consumer spending and economic growth.

However, the losses in the US Dollar were somewhat mitigated by a rise in inflation expectations. The one-year inflation outlook increased to 3.5%, its highest level in six months, up from 3.2% in April. Furthermore, the five-year inflation forecast also edged higher to 3.1%, suggesting sustained inflationary pressures. These inflation expectations contributed to a slight advance in US Treasury yields, which may offer some support to the US Dollar moving forward.

As both economies brace for more data, the interplay between economic indicators and central bank policies will continue to be a key driver of the GBP/USD exchange rate.

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EUR/USD Climbs as Weakening Labor Market Data Pressures US Dollar

EUR/USD Climbs as Weakening Labor Market Data Pressures US Dollar

EUR/USD Climbs as Weakening Labor Market Data Pressures US Dollar

The EUR/USD pair remains confined within a narrow trading range just beneath the critical resistance level of 1.0800 during Friday’s European trading session. This comes after the pair rebounded sharply from 1.0725. Despite the relative calm, the currency pair maintains its strength, with investors appearing to have fully absorbed the anticipation that the European Central Bank (ECB) will commence its rate reduction process starting in June.

The ECB is currently facing internal divisions regarding the extension of the rate-cutting cycle beyond the initial June reduction. Some members of the ECB are concerned that further rate cuts starting in July could reignite inflationary pressures. This perspective was highlighted by ECB policymaker and Governor of the Bank of Greece, Yannis Stournaras, during an interview with a Greek media outlet last week. Governor Stournaras projected three rate cuts for the year, noting that the economic recovery observed in the first quarter supports the likelihood of this scenario over a potential four cuts. The Eurozone’s economy outperformed expectations in the January-March period, posting a growth rate of 0.3% compared to the anticipated 0.1%.

In contrast, ECB Governing Council member and Governor of Austria’s central bank, Robert Holzmann, expressed a more cautious stance. In remarks reported by Reuters on Wednesday, Governor Holzmann indicated his reluctance to lower key interest rates “too quickly or too strongly,” citing the need for a more measured approach.

This week, the EUR/USD pair’s movement has largely been influenced by overall market sentiment, due in part to a lack of significant economic data from both the Eurozone and the United States. However, the focus is set to shift dramatically next week with the release of the U.S. Consumer Price Index (CPI) data for April, scheduled for Wednesday. This critical indicator is closely monitored as it provides significant insights into inflation trends, which are integral to the Federal Reserve’s policy decisions.

Investors and traders alike are positioning themselves cautiously as they anticipate the data, which could provide further clues on the trajectory of U.S. monetary policy and its implications for the dollar. The outcome of this report could potentially break the EUR/USD pair out of its current holding pattern, either reinforcing the strength seen following its recent recovery or pulling it back down towards previous levels depending on the nature of the data revealed.

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USD/CHF Rises Above 0.9080 Amid Hawkish Fed Remarks, Stronger US Dollar

USD/CHF Rises Above 0.9080 Amid Hawkish Fed Remarks, Stronger US Dollar

USD/CHF Rises Above 0.9080 Amid Hawkish Fed Remarks, Stronger US Dollar

During early European trading on Wednesday, the USD/CHF currency pair recorded modest gains, hovering around 0.9085. The rise is largely attributed to the U.S. dollar’s recovery, spurred by hawkish comments from Federal Reserve officials. These remarks have tempered expectations for potential interest rate cuts in 2024.

The focus is on upcoming speeches by Federal Reserve officials, including Philip Jefferson, Susan Collins, and Lisa Cook, expected later on Wednesday. These addresses are highly anticipated as traders seek further guidance on the direction of U.S. monetary policy.

On Tuesday, Neel Kashkari, President of the Minneapolis Federal Reserve, made hawkish statements, significantly impacting the U.S. dollar. Kashkari emphasized that it is premature to conclude that inflation has peaked, suggesting that the Fed might not cut interest rates this year unless inflation pressures visibly subside.

Market sentiment is reflected in the reduced likelihood of a Fed rate cut this year. Currently, there’s a 65.7% probability of at least a 25 basis point reduction in rates by September, as indicated by the CME FedWatch Tool. Further indicators of economic sentiment will come from the upcoming first release of the U.S. University of Michigan Consumer Sentiment Index, expected on Friday. This index is forecasted to drop slightly to 76.0 in May from April’s 77.2.

On the Swiss side, geopolitical tensions remain a point of concern due to ongoing conflicts in the Middle East. Despite a proposed ceasefire plan between Israel and Hamas, Israel’s war cabinet has decided to continue military operations in Gaza. The New York Times reports that Israel has rejected the ceasefire proposal from Hamas, claiming it fails to meet their conditions. Such developments may drive safe-haven flows, potentially strengthening the Swiss Franc against the U.S. dollar as investors seek stability amidst rising geopolitical tensions.

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USD/JPY Ends Three-Day Slide

USD/JPY Ends Three-Day Slide Above 153.50 as Yellen Warns on Currency Intervention

USD/JPY Ends Three-Day Slide Above 153.50 as Yellen Warns on Currency Intervention

The USD/JPY pair staged a notable reversal during Monday’s Asian trading session, breaking a three-day losing streak. This upward movement was fueled by a modest recovery in the US Dollar (USD) and remarks made by US Treasury Secretary Janet Yellen regarding potential Japanese interventions from the previous week. Currently, the pair is hovering around 153.55, marking a 0.35% gain for the day.

Over the weekend, US Treasury Secretary Janet Yellen acknowledged the significant fluctuations in the Japanese Yen’s value but refrained from confirming whether Japan had intervened to support its currency. Yellen’s stance on potential Japanese interventions has exhibited variability over the past couple of years, often highlighting the importance of a Group of Seven consensus favoring market-driven currency rates. She stressed that interventions should primarily aim to reduce market volatility rather than manipulate currency values. In contrast, Japan’s Finance Minister Shunichi Suzuki has not verified any interventions, according to Bloomberg reports.

The speculation surrounding a potential interest rate cut by the US Federal Reserve (Fed) in September has intensified following the release of weaker-than-expected US employment data. This has contributed to some selling pressure on the Greenback. According to the CME FedWatch tool, traders are currently pricing in an 85.5% probability of no change to the Fed’s fed fund rate in June, while the likelihood of a rate cut in September has surged to 90%.

The latest US employment report, released last Friday, provided indications of a slowdown in the US economy. Nonfarm Payrolls (NFP) increased by 175K in April, down from 315K in March (revised from 303K), falling short of the estimated 243K. This marked the lowest increase since October 2023. Additionally, the Unemployment Rate rose to 3.9% in April, while Average Hourly Earnings experienced a 3.9% year-on-year decline. Furthermore, the US ISM Services Purchasing Managers’ Index (PMI) fell into contractionary territory, decreasing from 51.4 in March to 49.4 in April, below the market consensus of 52.0. These indicators collectively suggest a potential slowdown in the US economic recovery.

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EUR/USD Nears 1.0750 as Risk Appetite Rebounds

EUR/USD Nears 1.0750 as Risk Appetite Rebounds

EUR/USD Nears 1.0750 as Risk Appetite Rebounds

The EUR/USD pair continued its upward momentum, marking a third consecutive day of gains as it hovered around the 1.0730 level during Friday’s Asian session. This surge in the currency pair was fueled by a resurgence in risk appetite, particularly favoring risk-sensitive currencies such as the Euro. Investors found reassurance in the stabilizing risk sentiment, which preceded the eagerly awaited release of US Nonfarm Payrolls (NFP) data.

The upcoming NFP report for April is anticipated to reveal a reading of 243K, compared to the previous figure of 303K. Additionally, market attention is also focused on the release of Average Hourly Earnings and ISM Services PMI later in the day. These data releases are expected to provide further insights into the current state of the United States economy, influencing market sentiment and trading dynamics.

In the backdrop of these developments, Thursday’s release of US Initial Jobless Claims data for the week ending April 26 showcased no change from the previous week, holding steady at 208K. This figure, which stands as the lowest level in two months and notably below market expectations of 212K, could potentially afford the Federal Reserve greater flexibility in delaying interest rate cuts.

Shifting focus to productivity metrics, US Nonfarm Productivity exhibited a modest increase of 0.3% in the first quarter, following an upwardly revised 3.5% surge in the preceding quarter. However, this growth fell short of the anticipated 0.8% rise, marking the slowest pace of productivity expansion since the January-March quarter of 2023.

Meanwhile, in the Eurozone, Philip Lane, the Chief Economist of the European Central Bank (ECB), delivered insights during a virtual guest lecture at the University of Stanford. Lane highlighted that while inflation has decreased more rapidly than initially foreseen by the ECB, the transmission of policy effects is experiencing delays. He emphasized the ongoing unfolding of the tightening impacts from previous rate hikes, reaffirming the ECB’s commitment to a data-dependent approach rather than a rigid rate trajectory.

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USD/CAD Rises Above 1.3750 as Markets Await Fed Rate Decision

USD/CAD Rises Above 1.3750 as Markets Await Fed Rate Decision

USD/CAD Rises Above 1.3750 as Markets Await Fed Rate Decision

The USD/CAD currency pair was trading positively around 1.3778 on Wednesday during the early trading hours in Asia. The pair gained strength, influenced by weaker economic indicators from Canada and a robust US Dollar. Specifically, Canada’s Gross Domestic Product (GDP) for February underperformed expectations, growing only 0.2% month-over-month compared to the anticipated 0.3%, as reported by Statistics Canada. This slower growth rate, down from January’s 0.5% expansion, put downward pressure on the Canadian Dollar (Loonie).

On the other side of the pair, the US Dollar remained firm, trading above 106.30, supported by various economic reports and market sentiments. The focus now turns to the US Federal Reserve’s interest rate decision, anticipated later on Wednesday. Market consensus does not foresee a rate change at this meeting. However, Federal Reserve Chair Jerome Powell’s subsequent press conference is eagerly awaited for any insights into future monetary policy, particularly regarding the persistence of high rates.

Market expectations have shifted recently, with the CME FedWatch Tool indicating that the likelihood of a Fed rate cut in September has decreased to 44%, a significant drop from 60% earlier in the week. This adjustment reflects a more cautious approach by financial markets towards anticipating rate cuts, possibly underpinning the Dollar further.

Additionally, several key economic indicators are scheduled for release. These include the US ADP Employment Change, ISM Manufacturing PMI, and the Canadian counterpart from S&P Global. These reports could provide further clues about the economic health of both countries. The US economy showed mixed signals as the Conference Board’s Consumer Confidence Index dropped to its lowest since July 2022, indicating a decline in optimism among consumers. In contrast, the Employment Cost Index in the US for the first quarter of 2024 indicated a stronger-than-expected rise of 1.2% year-over-year, surpassing the consensus forecast of 1.0%.

Meanwhile, Canada’s economic prospects seem challenged, not only by internal metrics but also by external factors like oil prices. As the leading crude oil exporter to the US, Canada’s currency is susceptible to fluctuations in oil markets. Recently, declining oil prices have exerted additional selling pressure on the Loonie, complicating the economic outlook and potentially prompting the Bank of Canada to consider a rate cut in June to support economic growth.

Investors and traders are keeping a close watch on these developments, as any new economic data or policy changes could significantly influence the direction of the USD/CAD pair in the coming days.

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As Fears Grow, Stocks Rally. Maintain the shakiness of Wall Street

As Fears Grow, Stocks Rally. Maintain the shakiness of Wall Street

Stocks in the United States rose on Tuesday as Treasury yields fell, but Wall Street remained shaky as investors awaited more clarity on interest rates, inflation, and the economy’s trajectory. After reversing a morning loss of 1%, the S&P 500 rose 39.25 points, or 1%, to 4,160.68. After bouncing back and forth between losses and gains throughout the day, the Dow Jones Industrial Average increased 264.36 points, or 0.8 percent, to 33,180.14. The NASDAQ composite rose 113.86 points to 12,175.23, up 0.9 percent.

Apple, Microsoft, and other technology stocks were among the greatest drivers of the market’s rise. They profited from a decline in Treasury yields, which saw the 10-year yield dip below 3%. In recent years, lower yields have encouraged investors to pay greater prices for stocks, particularly those that are rapidly developing.

Energy producer stocks also soared as oil prices increased to about $120 per barrel, a year-to-date gain of more than 55%. Exxon Mobil increased by 4.6 percent, while ConocoPhillips increased by 4.5 percent.

Kohl’s stock jumped 9.5 percent after the department store chain announced it is in advanced talks to sell itself to Vitamin Shoppe owner Franchise Group for $8 billion. J.M. Smucker’s stock surged 5.7 percent after the company reported better-than-expected results.

Stocks first plunged as Target warned of reduced profit margins as it reduces prices to clear out inventory, sending Wall Street into a tailspin. The retail behemoth dropped 2.3 percent after announcing changes it said were need to stay up with shifting customer behaviour. Shoppers across the country are spending more on restaurants and travel than they were earlier in the pandemic on sprucing up their homes.

Other shops were affected by the downturn, and Walmart’s stock dropped 1.2 percent. Worries were heightened by the World Bank’s dramatic downward revision of its economic growth prediction for this year. It cited Russia’s conflict on Ukraine and the threat of severe food shortages as reasons for the return of “stagflation,” a poisonous combo of high inflation and sluggish growth that hasn’t been witnessed in more than four decades.

The economy’s fragility has been on Wall Street’s mind this year, amid concerns about Federal Reserve interest-rate hikes. The central bank is acting aggressively to combat the highest inflation in decades, but if it goes too far or too fast, it risks suffocating the economy. At its meeting next week, the Federal Reserve is largely expected to raise its benchmark short-term interest rate by half a percentage point. That would be the second consecutive hike of more than double the regular amount, with a third expected in July.

The Fed isn’t the only one who has scaled back the huge aid given to the economy and financial markets during the pandemic. The Reserve Bank of Australia startled investors by hiking interest rates by half a percentage point on Tuesday. Markets confront further hurdles even if central banks master the delicate act of slowing the economy just enough to stop inflation without causing a recession.

“Rising rates and slowing GDP are not a helpful environment for investors, therefore it is unlikely that equities or fixed income returns will approach the stimulus-fueled returns of the past two years.” She believes the United States will avoid a recession. With expectations for a more aggressive Fed, Treasury rates have mainly risen this year. They did, however, moderate a little on Tuesday.

Late Monday, the yield on the 10-year Treasury dipped to 2.98 percent from 3.03 percent. The two-year yield, which is more closely linked to Fed action expectations, fell to 2.72 percent from 2.73 percent. Markets may continue volatile until additional information about inflation and the economy becomes available. The latest report on the consumer price index will be released by the US government on Friday, which will provide the next major update on inflation.

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Higher US bond yields and the USD halted Wall Street

Higher US bond yields and the USD halted Wall Street

Higher US bond yields and a stronger USD dragged down Wall Street futures on Monday. Higher bond yields, i.e. higher borrowing costs, are generally negative for corporate profitability, whereas a stronger dollar is unfavourable for export-oriented US MNCs, particularly tech companies. After a slight reversal from about +3.203 percent to +2.706 percent in May, the US 10Y bond yield broke +3.00 percent again on Monday. Higher inflation and faster/larger Fed tightening, combined with diminishing chances of a September pause following a better-than-expected May NFP job report and comments by Fed’s Mester on Friday, drove up US bond yields.

In addition, due to the rising policy divergence between the Fed and the BOJ, the USDJPY surged to about 131.68, its highest level since 2002. In April, Japan’s headline CPI (inflation) increased by 2.5 percent, the highest level since October 2014. In April, Japan’s core CPI, which excludes fresh food but includes gasoline expenses, jumped to +2.1 percent, the highest level in more than seven years. However, Japan’s core-core CPI, which excludes both fresh food and fuel expenses and is similar to the standard/US/European version of core CPI, was just +0.8 percent in April, nearly two years high.

Overall inflation in Japan has risen in recent months as a result of Yen depreciation (which is good for imported inflation), higher commodities, such as imported oil and gas, and higher raw material costs. In contrast to the standard core CPI, which excludes both food and fuel prices, BOJ officially follows core CPI, which excludes only fresh foods and not fuel costs. Although Japan’s core CPI rose above the BOJ’s target of +2.0 percent in April after rising for the eighth consecutive month (unusual in Japan) and accelerating from a 0.8 percent increase in March, on average, it’s still well below 2% in recent months after months of negative prints as the Japanese economy has been in decades of structural deflation/depression or even occasional recession for various reasons and past policy mistakes by the BOJ.

In any case, Japan’s core-core CPI, which is nearly identical to normal core CPI, remains far below the BOJ’s sustainable target of +2.0 percent. In any case, the BOJ wants a stable 2% core CPI (Japanese translation) underpinned by substantial wage growth, which is still lacking, according to the BOJ. Sluggish wage growth, on the other hand, makes it more difficult for businesses to pass on higher prices to consumers, resulting in a deflationary cycle that runs counter to the US economy.

As a result, the BOJ is unable to adjust its QQE policy, resulting in significant policy divergence not only with the Fed, but also with the ECB, which has been jawboning for an unusually uber-hawkish stance in recent months in order to contain inflation expectations.

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The recovery of the US stock market will be put to the test by inflation

The recovery of the US stock market will be put to the test by inflation

The rise that brought US stocks back from the brink of a bear market will be put to the test next week, when consumer price data will reveal how much more the Federal Reserve will need to do to combat the worst inflation in decades. Despite a rough week, the S&P 500 is still up more than 5% from last month’s lows, which saw the benchmark index drop over 20% from its all-time high. After dropping 1% in the previous week, the index was down around 14 percent from its January 3 high.

More upside may be contingent on investors’ belief that officials are making success in combating rising costs. Signs that inflation is still high might reinforce the case for even more aggressive monetary tightening, potentially spooking a market already shaken by fears that a hawkish Fed could wreak havoc on the US economy.

“Until we see a major shift lower in inflation, this market is likely to stay range-bound,” said Mona Mahajan, senior investment strategist at Edward Jones, which currently favours large-cap stocks over small-cap stocks due to larger companies’ ability to withstand greater input and salary expenses. “Clearly, the print next week will be crucial.” The consumer price index (CPI) climbed 8.3 percent in the 12 months ending in April, down from an 8.5 percent annual rate recorded the month before, which was the biggest year-on-year increase in 40 years. The May inflation report is one of the final major pieces of information before the Fed’s meeting on June 14-15, when the central bank is largely expected to hike rates by another 50 basis points.

“If inflation continues to be a problem,” Paul Nolte, portfolio manager at Kingsview Investment Management, said, “the Fed may not have the option of coasting later this year.” Nolte has reduced equity exposure in his portfolios, particularly in growth stocks, and increased cash balances, citing issues such as still-high market valuations.

The CPI report comes as investors assess the impact of the Fed’s 75 basis point monetary tightening already implemented this year on growth. US firms recruited more workers than expected in May and maintained a strong rate of wage rises, according to employment data released Friday, indicators of strength that might keep the Fed on an aggressive monetary policy tightening path.

Meanwhile, numerous senior corporate leaders, including Jamie Dimon of JPMorgan Chase and Elon Musk of Tesla, have expressed pessimism about the central bank’s ability to control inflation without harming the economy. Musk stated in an email to executives that he has a “very awful feeling” about the economy and that the electric carmaker needs to slash approximately 10% of its workforce.

Higher prices have historically prompted the Fed to raise interest rates, with higher bond yields decreasing the value of future corporate profits. Investors’ views on inflation are essential to how they value shares. Consumers and corporations both face higher costs as a result of rising pricing. According to Jeff Buchbinder, equities strategist at LPL Financial, the S&P 500 trades at about 18.7 times trailing 12-month earnings, a high valuation compared to prior inflationary periods that signals investors fear the present level of price increases may not endure.

LPL predicts that inflation will begin to reduce this year, and that corporations will continue to do well. The firm’s year-end target for the S&P 500 is between 4,800 and 4,900, which is approximately 16 percent higher than the index’s current level as of Friday afternoon.

Others, on the other hand, have been more pessimistic. Morgan Stanley strategists termed the latest rise a “bear market rally” earlier this week, predicting the S&P 500 would tumble to about 3,400 by mid-August, citing poor earnings and economic signs. “Everyone agrees that the high prints or peak inflation numbers are likely in the rearview mirror,” said Art Hogan, chief market strategist at National Securities. “If that turns out not to be the case, markets will be thrown into disarray.”

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Ahead of job news, global stock markets climb, but US rates fall

Ahead of job news, global stock markets climb, but US rates fall

On Thursday, global equity markets climbed, while US yields fell, as lower-than-expected private payrolls data raised optimism that the American economy was slowing and that the Federal Reserve may be convinced to change its hawkish attitude on interest rates and inflation. The ADP National Employment Report released on Thursday indicated that private payrolls increased by 128,000 jobs in May, far less than the consensus projection of 300,000 jobs, indicating that labour demand was slowing.

If the private payrolls data is confirmed by the Labor Department’s more complete jobs report on Friday, Sandy Villere, portfolio manager at Villere & Co in New Orleans, believes the Fed will be unlikely to maintain its rate rise pace. “In essence, good news is terrible news and bad news is good news. That suggests the economy may be cooling a little, and the Fed may be able to ease up on its rate hikes, as the Fed is virtually in charge of everything right now “Villere remarked.

The MSCI world equity index, which includes stocks from 50 nations, rose 1.42 percent. The STOXX 600 index rose 0.57 percent across Europe. Treasury yields in the United States have retreated from recent highs ahead of the much watched employment report and what it might reveal about the future path of interest rates. On Thursday, two Fed officials, Vice Chair Lael Brainard and Cleveland Fed President Loretta Mester, reaffirmed that the US central bank will likely keep hiking rates at a rapid pace unless inflation moderates.

The benchmark 10-year note was trading at 2.9149 percent, while two-year notes were selling at 2.6438 percent. On Wall Street, the S&P; The Dow Jones Industrial Average increased by 1.33 percent to 33,248.28, while the S&P 500 increased by 1.84 percent to 4,176.82 and the NASDAQ Composite increased by 2.69 percent to 12,316.90. Oil prices rose as U.S. crude inventories declined more than expected due to strong demand for gasoline, and OPEC+ agreed to increase crude output to compensate for a drop in Russian output.

Brent futures jumped 1.69 percent to $118.26 a barrel, while WTI crude in the United States rose 1.97 percent to $117.53 a barrel. The dollar weakened across the board, giving up some of the gains made in recent sessions as investors sought higher-yielding currencies in response to rising risk sentiment.

The dollar index dropped 0.78 percent, while the euro increased 0.94 percent to $1.0746. Gold prices increased by more than 1%, helped by a weaker dollar and reports on US private payrolls. Gold futures in the United States gained 1.38 percent to $1,868.70 an ounce, while spot gold rose 1.3 percent to $1,868.59 an ounce.

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To begin June trading, stocks are down

To begin June trading, stocks are down

After a volatile trading month, US stock indices fell on the first day of June. The three major US indexes all gave up their morning advances. To close at 4101.23, the S&P 500 dropped 30.92 points, or 0.7 percent. The Dow Jones Industrial Average dropped 176.89 points, or 0.5 percent, to 32813.23, while the NASDAQ Composite, which tracks technology, slid 86.93 points, or 0.7 percent, to 11994.46. After a month marked by big movements in both directions, major U.S. indexes fell on Tuesday, causing the S&P 500 to close May essentially flat.

The start of a new trading month begins on Wednesday, but few investors expect a break from the high volatility that has characterized markets this year. Many traders are concerned about the rate of interest rate hikes by the Federal Reserve and whether they will send the US economy into recession. According to Deutsche Bank analysts, eight of the last 11 protracted Fed rate-hike cycles ended in recession. Even so, many traders believe that a recession is unlikely, and that any serious economic slowdown in the United States could be months away. As a result, some investors have jumped into the market to buy shares with low valuations, causing markets to become more volatile.

Many investors and strategists are still debating whether last week’s surge, which saw all three main U.S. indices rise by at least 6%, represented the start of a longer-term recovery or simply a respite from this year’s selling pressure.

“Most of the gains we witnessed last week were a bear-market rally,” Vaughan Nelson Investment Management’s chief executive and chief investment officer Chris Wallis said. “I believe we will see continued volatility, but there is a high probability the market will bottom between June and September.”

Mr. Wallis does not rule out the potential of a recession this year, fueled by a slowing global economy and rising inflation. Morningstar’s chief U.S. equities strategist, Dave Sekera, was optimistic on value companies at the start of the year, but now believes growth stocks, which have taken a beating this year, are undervalued. This year, the Russell 1000 Value Index is down 6%, while the Russell 1000 Growth Index is down 23%. “The market frequently behaves like a pendulum.”We believe it swings too far in one extreme or the other at times,” he explained.

Traders have recently been reassured by the Fed’s clear messaging on the need for half-percentage-point interest-rate rises during its June and July policy meetings. What happens next, on the other hand, is less obvious. On Wednesday, the Bank of Canada raised its policy interest rate by a half-percentage point.

“For us, the question is whether [the recent surge] is a one-month or six-month phenomena,” said Viraj Patel, Vanda Research’s global macro strategist. In the absence of a major data shock, he expects U.S. equities will grind higher in the coming weeks, but he doesn’t believe stocks are on track for a longer-term gain.

During the summer, trading desks may be understaffed, which might lead to increased volatility in the weeks ahead. Summer trading has reduced trade volumes and liquidity, resulting in more dramatic stock price movements. Many investors are also anticipating increased volatility in other asset groups, which have experienced significant swings this year.

The Institute for Supply Management’s indicator of US manufacturing activity increased to 56.1 in May from 55.4 in April, according to economic statistics. The Wall Street Journal polled economists, who predicted a drop to 54.5 percent. A reading of more than 50 shows growth.

As Americans continue to leave occupations at an alarming rate, hiring demand in the United States remains high. Seasonally adjusted job vacancies declined to 11.4 million in April from an upwardly revised 11.9 million in March, according to data issued by the Labor Department on Wednesday. Wages have risen as a result of the tight labour market, contributing to historically high inflation.

According to some observers, the market should consolidate and break away from whipsawed trading sessions as more closely monitored economic data on inflation and gross domestic product is issued in the coming months. “I believe the second half of the year will be stronger than the first because we will have more information,” Liz Young, SoFi’s head of investment strategy, said.

The 10-year Treasury note yield rose to 2.930 percent on Wednesday, up from 2.842 percent the day before. Bond prices and yields move in opposite directions. The benchmark note’s yields are still significantly below this year’s closing high of 3.124 percent, but they have risen this week as speculators continue to rethink interest rate policy.

As investors digested European Union leaders’ intention to impose an oil embargo on Russia and a prohibition on insuring ships carrying Russian oil, crude prices increased. Some members of OPEC are also considering suspending Russia’s involvement in an oil-production agreement. “Oil prices have been on a roller coaster ride…and I believe they will remain elevated,” Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown, said. “I continue to believe that oil and rising energy prices will be an inflationary factor weighing on markets.”

Salesforce jumped $15.83, or 9.9%, to $176.07 after posting sales that beat analyst forecasts, assuaging fears about the company’s business software demand. According to Dow Jones Market Data, the stock was the top performer in both the Dow and the S&P 500 on Wednesday. Victoria’s Secret’s stock surged $3.68, or 8.9%, to $44.89 after the company reported a profit that beat analyst estimates.

In tumultuous intraday trading, shares of energy companies bounced between gains and losses. To $70.42, Occidental Petroleum gained $1.11, or 1.6 percent. The Stoxx Europe 600, a pan-European index, fell 1% overseas. Trading in Asia was a mixed bag. As Covid-19 lockdowns in China’s financial capital lessened, the Shanghai Composite fell 0.1 percent. The Hang Seng index in Hong Kong declined 0.6 percent. The Nikkei 225 index in Japan, on the other hand, increased by 0.7 percent.

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Stocks end a bumpy month with a drop as the rally fades

Stocks end a bumpy month with a drop as the rally fades

After a recovery late last week failed to maintain pace, US stocks ended a bumpy month of May down on Tuesday. In a turbulent session, the S&P 500 dropped 0.6 percent, while the Dow Jones Industrial Average dropped 220 points, or 0.7 percent. The NASDAQ Composite Index fell 0.4%.

These developments follow weekly gains of more than 6% for all three indices on Friday, reversing seven consecutive losing weeks for the S&P 500 and NASDAQ, and eight weeks of losses for the Dow. Concerns about inflation and interest rate hikes impacted on sentiment in May, making it another bumpy month for equity markets. The three major indexes all finished the month on a negative note.

Meanwhile, Bitcoin and Ethereum climbed on Tuesday as part of a broader crypto currency relief rally. Oil futures rose on reports that Chinese officials were about to terminate a two-month COVID-19 lockdown in Shanghai and that EU leader had agreed to halt buying Russian crude oil and petroleum products. Brent crude oil futures increased 3.7 percent to $123.83, while WTI crude oil futures rose 3.6 percent to $118.70.

Following the premiere of TOP GUN over Memorial Day weekend, shares of movie theatre operator AMC soared as much as 10% in early trading. According to AMC, U.S. cinemas enjoyed a 122 percent year-over-year rise over last year’s holiday weekend, indicating good indicators of post-COVID resurgence for the industry. AMC shares are on track for a fourth straight day of advances following a nearly 40% gain in the previous three sessions, according to pre-market action.

The latest bounce on Wall Street follows a string of positive quarterly earnings reports in recent trading sessions, which helped momentarily alleviate fears about the impact of inflation on corporate profits. Prices appeared to be peaking, according to recent economic statistics, which helped to boost sentiment. Stocks are still down substantially for the year, and some strategists are doubtful that a bottom has been created. In a statement to clients, Morgan Stanley CIO Michael Wilson wrote, “Last week’s performance will prove to be another bear market rally in the end.”

Stocks have had a tumultuous month, fueled by concerns over decades-high inflation and fears that the Federal Reserve’s efforts to reign in skyrocketing prices by raising interest rates may send the economy into recession. “The primary rationale ascribed to this particular rally beyond just an oversold bounce is that the Fed may be contemplating a pause in September,” Wilson wrote, adding that “inflation remains too high for the Fed’s liking, and so whatever pivot investors hope for will be too immaterial to change the downtrend in equity prices.”

Investors are anticipated to be influenced by a flurry of critical employment data this week, including the all-important May jobs report, which will be released on Friday. Even though earnings season is over, further reports from Salesforce.com, GameStop, Chewy, and HP are expected to be released through Friday.

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In May, Global stock markets swing positive due to Fed bets

In May, Global stock markets swing positive due to Fed bets

On forecasts of a likely pause in US monetary tightening and after an easing of COVID restrictions in China, world stock markets climbed on Monday and the dollar was held near five-week lows. Following signals of peaking American inflation on Friday, confidence in a less aggressive Federal Reserve strengthened, helping the MSCI’s benchmark index for global markets turn positive for the month.

The news that Shanghai officials would lift several restrictions on businesses restarting operations from Wednesday, easing a city-wide lockdown that began two months ago, also helped to lighten the mood. The MSCI index climbed to its highest level in more than four weeks at 656.4 points at 1332 GMT, boosted by a bullish session in Europe following robust gains in Asia. So far this month, the index has gained 0.5 percent.

“It appears that the worst is over. The dreadful news has been released. According to Carlo Franchini, head of institutional clients at Banca Ifigest in Milan, “the market is hopeful it has seen the bottom.” “There also appears to be some clarity on what the ECB (European Central Bank) will do.” There will be rate hikes, which should take the bloc away from negative rates, which have distorted banks and markets,” he added.

The STOXX 600 index of European stocks rose 0.3 percent, while Japan’s Nikkei climbed 2.2 percent and Chinese blue chips rose 0.7 percent. Despite the fact that Wall Street will be closed for the Memorial Day holiday, derivative markets in the United States were active. S&P 500 e-mini futures gained 0.3 percent after rallying 6.6 percent last week in their greatest week of the year, while NASDAQ e-minis gained 0.7 percent.

Investors have pounced on suggestions that the Federal Reserve may delay its tightening after a series of sharp hikes in June and July.”Talk of a Fed rate hike halt is working wonders for everything from equities to bonds, and – sadly – commodities as well,” said Arne Petimezas of AFS Group in Amsterdam. Over the last few weeks, the Fed’s terminal rate pricing has been slashed by around 50 basis points. Fed pricing, predictably, signals the Fed will decrease rates following the annual Jackson Hole retreat in August,” he noted in a note.

The safe-haven dollar has fallen as market sentiment has improved, while the euro has risen thanks to hawkish statements from European Central Bank officials who have hinted at a rate move as early as July.

“U.S. economic data look to be stalling, ECB officials are contemplating even faster first rate hikes, and front-end rate differentials have begun to shift in the euro’s favour,” according to Goldman Sachs analyst Zach Pandl. “A dramatic downturn in the US economy – if not accompanied by similar weakness in Europe – might result in a meaningful euro bounce, while the opposite could also be true if US data hold up better than expected,” Pandl noted. “We believe there are downside risks to US GDP and have advised USD/JPY put options to reflect this.”

This emphasises the significance of crucial U.S. data due this week, including the ISM manufacturing survey on Wednesday and the May payrolls report on Friday. With unemployment at 3.5 percent, payrolls are expected to climb by a robust 320,000, but this would be down from April. The euro surged to a five-week high of $1.0764, up 0.35 percent from the previous week’s high of 1.6 percent. After losing 1.3 percent last week, the dollar index sank to a new five-week low of 101.35 and was last down 0.2 percent at 101.46.

After reaching a one-week high of 6.654 per dollar, China’s offshore yuan climbed 0.3 percent. Treasuries rallied on Friday, with 10-year note rates ending just over a six-week low of 2.743 percent, down from a high of 3.203 percent on May 9. In Europe, rates surged on Monday after German inflation surpassed expectations in May, hitting 8.7%, its highest level in over half a century. Germany’s 10-year rates jumped 9 basis points to 1.064 percent, a one-week high.

The dollar’s decline aided gold’s recovery from recent lows, pushing the metal up 0.4 percent to $1,860.5 an ounce. Oil prices rose to their highest level in over two months as traders awaited the outcome of a planned European Union summit on a ban on Russian oil imports. Brent crude gained 0.4 percent to $119.91 per barrel, while US crude increased 0.5 percent to $115.64 per barrel.

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

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

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

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

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

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

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

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

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Gold Price Climbs Steadily

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

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

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

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

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

Trump’s Tariff Announcement Sparks Market Uncertainty

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

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

Fed Policymakers Express Caution Amid Economic Uncertainty

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

Several Fed officials have weighed in on economic policy:

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

What’s Next for Gold?

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

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Gold Price Rally Holds Strong, But Overbought Conditions Raise Caution

Gold Price Bulls Hold Firm, But Overbought Conditions Suggest Caution

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

 

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

Gold Bulls Retain Control Amid US-China Trade Tensions

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

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

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

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

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

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

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

US Tariff Delay Weighs on Oil Prices

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

OPEC+ Stands Firm on Production Policy

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

Key Technical Levels to Watch

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

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Gold Holds Below $2,800 Despite Intraday Recovery

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

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

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

Technical Outlook: Gold’s Uptrend Intact Despite Intraday Pullback

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

 

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

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

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

Market Drivers to Watch

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

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

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

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

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

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

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

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

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

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

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

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WTI Drops Toward

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

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

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

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

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

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

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EUR/USD Price Forecast

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

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

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

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

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

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EUR/USD Eases Near

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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NZD/USD Holds Below 0.6000 on Dovish RBNZ Outlook, US GDP Data Awaited

NZD/USD Holds Below 0.6000 on Dovish RBNZ Outlook, US GDP Data Awaited

The NZD/USD pair remains under pressure near 0.5970 during the Asian session on Wednesday, weighed down by the Reserve Bank of New Zealand’s (RBNZ) dovish outlook. Market participants are now looking ahead to key US data, including the third-quarter GDP report and ADP Employment Change for October, which are due on Wednesday.

Goldman Sachs analysts foresee a potentially aggressive stance from the RBNZ, forecasting rate cuts of 50 basis points in both November and February, with a possibility of a 75 bps cut in November. This dovish stance is expected to weaken the New Zealand Dollar (NZD) in the short term.
Adding to NZD sentiment, China is reportedly considering issuing an additional 10 trillion yuan (approximately $1.4 trillion) in debt to support its slowing economy. This potential stimulus could benefit the China-proxy Kiwi, as China is a significant trading partner for New Zealand.

Meanwhile, the expectation of a less aggressive rate path from the US Federal Reserve supports the US Dollar. Markets have nearly priced in a 98.4% probability of a 25 bps rate cut by the Fed in November. However, recent US economic data presents a mixed picture; the September JOLTS report showed job openings at their lowest level in over three years, while the Conference Board’s Consumer Confidence Index for October reached a nine-month high, reflecting optimism in the labor market.

With US Q3 GDP and Nonfarm Payrolls (NFP) data in focus, traders will monitor these releases for further insights into the US economic trajectory and potential impacts on the NZD/USD pair.

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Australian Dollar Steady Amid RBA’s Restrictive Policy Outlook

Australian Dollar Declines Amid Market Caution

Australian Dollar Declines Amid Market Caution

The Australian Dollar (AUD) edged lower against the US Dollar (USD) on Thursday, though the AUD/USD pair experienced minor gains as the USD softened slightly with a modest dip in US Treasury yields. The AUD might find some support from the hawkish tone surrounding the Reserve Bank of Australia (RBA).

RBA Deputy Governor Andrew Hauser highlighted the country’s robust labor participation rate earlier this week and emphasized that while the RBA bases decisions on data, it is not excessively data-dependent.

The USD has strengthened as markets closely watch the Federal Reserve’s (Fed) interest rate trajectory, with expectations rising that the Fed may be less aggressive in cutting rates than initially anticipated. Additionally, the USD is buoyed by speculation about former President Donald Trump’s potential second term in the upcoming US presidential election. Traders are likely to keep an eye on Friday’s US Durable Goods Orders and Michigan Consumer Sentiment Index reports.

During an event in Las Vegas on Thursday, Republican nominee Donald Trump used his well-known catchphrase, pledging to “build an economy that lifts up all Americans,” with a particular focus on supporting minority communities, as reported by Reuters.

Daily Digest Market Movers: Australian Dollar Down Ahead of US Presidential Election

According to the CME FedWatch Tool, there is a 97% probability of a 25-basis-point Fed rate cut in November, with little expectation of a 50-basis-point reduction. Meanwhile, Vice President Kamala Harris drew support from high-profile figures, including Bruce Springsteen and former President Barack Obama, at a rally in Georgia, a critical battleground state.

Recent S&P Global data shows positive US economic momentum. The October Composite PMI rose to 54.3 from 54.0, while the Services PMI beat expectations at 55.3, and Manufacturing PMI improved to 47.8. In Australia, Judo Bank’s Composite PMI slightly rose to 49.8 in October, showing continued contraction in private sector output. Services PMI inched up to 50.6, while the Manufacturing PMI fell further to 46.6.

The Fed’s Beige Book on Wednesday described economic activity as “little changed,” a shift from August’s report, which indicated growth in some districts. San Francisco Fed President Mary Daly and Minneapolis Fed President Neel Kashkari both commented on stable economic conditions, with Kashkari suggesting that any rate cuts will be gradual.

In China, the People’s Bank of China (PBoC) reduced both the 1-year and 5-year Loan Prime Rates, which could boost demand for Australian exports. Additionally, National Australia Bank has moved forward its RBA rate cut projection to February 2025, expecting gradual reductions to reach 3.10% by early 2026.

Technical Analysis: AUD/USD Hovering Near Two-Month Low

The AUD/USD pair is trading around 0.6640, near a two-month low. Technical indicators reveal a short-term bearish trend, with the pair staying below the nine-day Exponential Moving Average (EMA) and the 14-day Relative Strength Index (RSI) under 50, signaling bearish sentiment.

The pair is testing support at 0.6614, with a significant support level at the psychological 0.6600 mark. On the upside, resistance is expected at the nine-day EMA of 0.6672, followed by the 50-day EMA at 0.6724, with a break above potentially leading toward the 0.6800 level.

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US Dollar Stabilizes After Recent Losses

US Dollar Holds Steady Amid Correction, Market Focus Shifts to Key Mid-Tier Data

US Dollar Holds Steady Amid Correction, Market Focus Shifts to Key Mid-Tier Data

The US Dollar (USD) maintains resilience against major counterparts early Friday after losing momentum on Thursday. European trading hours will center on Germany’s IFO business sentiment surveys, while later in the day, US data releases, including September Durable Goods Orders and the final revision of October’s University of Michigan Consumer Sentiment Index, are expected. Additionally, Canada’s September Retail Sales report will provide insights into consumer spending trends.

Improving risk sentiment hindered the USD’s weekly rally extension on Thursday. As Wall Street’s main indexes closed higher, the USD Index dipped by 0.4%, marking its largest one-day drop in a month. In early European trading Friday, the USD Index stabilizes above 104.00, with US stock index futures edging higher.

The GBP/USD pair recovered over 0.4% on Thursday, erasing previous losses and consolidating near 1.2970, just shy of testing the key 1.3000 level. Meanwhile, despite broader USD softness, USD/CAD posted modest gains on Thursday. The Canadian Dollar struggled for traction following the Bank of Canada’s (BoC) recent decision to cut its policy rate by 50 basis points, keeping the pair near 1.3850 in early Friday trading.

The USD/JPY pair corrected after a three-day rally, influenced by optimism surrounding the US economic outlook, as noted by Bank of Japan (BoJ) Governor Kazuo Ueda. Japan’s Economy Minister Ryosei Akazawa reiterated the importance of stable currency moves aligned with fundamentals, as Tokyo’s Consumer Price Index (CPI) grew at a softer annual rate of 1.8% in October compared to 2.1% in September.
Gold gained traction on Thursday, appreciating 0.75% as US Treasury bond yields declined, providing support for the XAU/USD pair, which remains relatively quiet around $2,750 in early European trading. Investors will continue to monitor USD developments and risk sentiment amid Friday’s mid-tier data releases for additional directional cues.

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Australian Dollar Faces Downward Pressure Amid Risk-Off Sentiment

Australian Dollar Faces Downward Pressure Amid Risk-Off Sentiment

Australian Dollar Faces Downward Pressure Amid Risk-Off Sentiment

The Australian Dollar (AUD) struggled to maintain its previous gains on Wednesday, as the AUD/USD pair came under pressure from a stronger US Dollar (USD) driven by rising US Treasury yields. The growing risk aversion in markets, partly fueled by the increasing odds of Donald Trump winning the presidency, has added selling pressure on US Treasury bonds, thereby boosting the USD.

However, the downside for the AUD may be limited due to hawkish expectations surrounding the Reserve Bank of Australia (RBA). Positive employment data has strengthened the case for the RBA to maintain a firm stance on interest rates. Additionally, China’s recent rate cuts have provided further support for the Aussie, as China is Australia’s largest trading partner.

The US Dollar’s gains have been reinforced by signs of economic resilience and lingering concerns about inflation, which have reduced the likelihood of a significant rate cut by the Federal Reserve in November. According to the CME FedWatch Tool, there is a 91% probability of a 25-basis-point rate cut, with no expectations for a larger 50-basis-point reduction.

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Australian Labor Market Surprises with Strong Job Growth

Australian Labor Market Surprises Positively – Commerzbank

Australian Labor Market Surprises Positively – Commerzbank

Australia’s employment report delivered stronger-than-expected results this morning, joining the list of countries with unexpectedly robust labor data, notes Commerzbank’s FX analyst, Michael Pfister.

AUD Supported Amid Strong Job Creation

“Job creation reached 64.1k, slightly outpacing August’s already strong figure, with most gains driven by full-time positions. Meanwhile, the unemployment rate was revised down slightly and remains at 4.1%, close to historic lows and well below the decade average. This positive news has significantly boosted the Australian dollar today.”

RBA to Watch Inflation Before Acting on Rates

“Future decisions by the Reserve Bank of Australia (RBA) will also hinge on third-quarter inflation data, set to be released in two weeks. However, given the labor market’s continued strength and the upward trend in recent months, there seems little immediate reason for the RBA to consider cutting rates in early November.”

Outlook for the Australian Dollar

“The RBA is expected to maintain its current policy at least until early next year, keeping the Australian dollar supported in the near term. However, Australia’s economic fate remains closely tied to China’s performance. If Chinese economic data weakens, the Australian dollar could face renewed pressure.”

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Global Investors in the Dark on China as Wall Street Surges

Global Investors Left in the Dark on China as Wall Street Surges

Global Investors Left in the Dark on China as Wall Street Surges

Global investors are struggling to navigate China’s economic uncertainties after Beijing’s weekend stimulus update underwhelmed markets. While China remains in a fog, Wall Street powered ahead with the S&P 500 and Dow extending their rally, setting the stage for Tokyo to join in when its mafrkets reopen after a three-day holiday.

Tech stocks, particularly in the chip sector, surged despite the U.S. Treasury market being closed for Columbus Day. Market sentiment was buoyed by excitement around third-quarter earnings, with financial giants like JP Morgan and Wells Fargo kicking things off last Friday. Big names like Citi, Bank of America, and Goldman Sachs are set to release their earnings on Tuesday, keeping expectations high for more impressive financial results.

Meanwhile, the U.S. dollar reached its highest level since mid-August, bolstered by safe-haven demand triggered by China’s “Joint Sword 2024B” military drills near Taiwan, which the U.S. labeled as destabilizing. The greenback also gained ground against the yuan as investors were disappointed by China’s lackluster stimulus measures. Instead of bold fiscal action, Beijing reshuffled its economic approach, which failed to inspire confidence.

Unsurprisingly, the yuan fell to 7.09 per dollar, its lowest since mid-September, and has dropped roughly 1% since China’s central bank implemented aggressive stimulus in late September. Meanwhile, gold and oil prices dipped, with markets betting on a modest 25-basis point rate cut by the Federal Reserve in November, reflecting confidence in the U.S. economy’s soft-landing scenario. This narrative is fueling Wall Street’s record-breaking momentum.

U.S. rate futures are now showing an 87% likelihood of a 25-bps cut in November, with only a 13% chance of a pause, indicating that traders expect a gradual but steady easing cycle from the Fed.

The dollar’s rise, nearing the 150 yen mark, suggests that Tokyo’s Nikkei index could build on its recent highs, adding to its remarkable 27% surge since early August. However, foreign exchange traders are wary that this upward momentum could prompt the Bank of Japan to consider a Q4 rate hike, especially after upcoming elections. Such a move could create significant volatility in global markets, shaking currency values and stock prices alike.

In contrast, Chinese markets are under pressure. U.S.-listed Chinese stocks suffered losses on Monday as investors, worried about the potential for a second Trump presidency, began reducing their exposure. The reasoning is that no major U.S. allocator wants to increase their stakes in Chinese assets ahead of the possibility of renewed tariffs and tensions with a Trump administration.

China’s economic woes are growing as demand wanes and deflation looms. Monday’s data revealed that export growth slowed to just 2.4% in September, a sharp drop from August. This signals that exporters may have rushed to ship goods earlier to avoid potential Western tariffs. As Beijing faces growing pressures, especially with the U.S. election on the horizon, its stimulus efforts, while a step in the right direction, seem insufficient to resolve its deeper economic challenges.

The country’s property market crisis remains a significant concern. The sheer volume of unsold housing is staggering—unfinished presold units are eight times the annual completion rate, roughly 60 million units. Clearing this backlog could take years, if not decades, and without substantial reforms and financial injections, any recovery in China’s housing market appears distant. The International Monetary Fund (IMF) has warned that the property crisis, combined with slowing manufacturing and export sectors, could exacerbate China’s economic fragility.

Investors are closely watching Beijing for more decisive action, but without stronger measures, the current rally in global markets could fade as quickly as it began.

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US CPI Inflation Data Could Impact Fed Rate Outlook | Key Market Insights

US CPI Inflation Data Could Shape Market Expectations for Fed Rate Decisions

US CPI Inflation Data Could Shape Market Expectations for Fed Rate Decisions

The U.S. Bureau of Labor Statistics (BLS) is set to release the eagerly awaited Consumer Price Index (CPI) inflation data for September on Thursday at 12:30 GMT.

The U.S. Dollar (USD) faces potential volatility, as the report could play a significant role in shaping the market’s expectations for the Federal Reserve’s (Fed) interest rate policy for the remainder of the year.

What to Expect in the Upcoming CPI Data?

Inflation in the U.S., as measured by the CPI, is expected to have risen by 2.3% year-over-year in September, down from the 2.5% increase recorded in August. Meanwhile, core CPI inflation—which excludes volatile food and energy prices—is forecast to remain steady at 3.2% for the same period.

On a monthly basis, both the CPI and core CPI are anticipated to see moderate increases of 0.1% and 0.2%, respectively.

Previewing the September report, analysts from TD Securities stated, “Our forecasts suggest that core inflation lost some momentum, showing a 0.24% month-over-month gain, down from the 0.28% recorded in August.” They added, “Headline inflation likely saw a meaningful deceleration, as energy prices continued to provide relief. Core goods prices likely contributed to inflation for the first time in seven months, while housing inflation probably eased, helping to pull down core services inflation.”

Fed Outlook on Interest Rates

Regarding the Fed’s outlook, Governor Adriana Kugler recently indicated she would support additional rate cuts if inflation continues to ease as projected. However, St. Louis Fed President Alberto Musalem took a more cautious stance, warning that easing policy too aggressively could harm the Fed’s credibility and future economic stability. He argued that “the risks of reducing rates too soon outweigh those of keeping rates higher for longer, especially given the potential threat of persistent inflation.”

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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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