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Japanese Yen Nears Multi-Month

Japanese Yen Recovery from Multi-Month Low Against USD Shows Limited Bullish Commitment

Japanese Yen Recovery from Multi-Month Low Against USD Shows Limited Bullish Commitment

The Japanese Yen (JPY) has gained ground for a second consecutive day, rebounding from a recent multi-month low near 153.20 against the US Dollar (USD) reached earlier this week. This recovery follows verbal interventions by Japanese authorities, which have been instrumental in supporting the Yen. Meanwhile, US Dollar bulls have turned cautious amid a modest dip in US Treasury bond yields, adding a downward bias to the USD/JPY pair.

However, doubts about further interest rate hikes by the Bank of Japan (BoJ) in 2024, compounded by uncertainty around upcoming elections in Japan and a drop in Tokyo’s core inflation rate below the 2% target, may limit further JPY appreciation. Additionally, a generally positive risk sentiment tempers aggressive bets on the Yen as a safe-haven asset. Concurrently, expectations of smaller rate cuts by the Federal Reserve (Fed) may continue to support the USD and curb losses for the USD/JPY pair.

Market Movers: Yen Supported by Intervention, Economic Concerns Persist

Friday’s data from the Statistics Bureau of Japan showed the headline Tokyo Consumer Price Index (CPI) rose by 1.8% year-over-year in October, down from 2.2% in the previous month. Core CPI, excluding fresh food prices, matched market expectations at 1.8% but remained below the BoJ’s 2% target, signaling persistent economic challenges. A private-sector survey released Thursday revealed that Japan’s manufacturing and services sectors contracted in October, pointing to weak economic conditions and raising doubts about the BoJ’s potential for further rate hikes in the near term.

Japan’s Economy Minister Ryosei Akazawa stressed the need for stable currency movements reflecting economic fundamentals, acknowledging the varied effects of a weaker Yen on the economy. Japan’s vice finance minister for international affairs, Atsushi Mimura, reiterated that the government closely monitors FX volatility, aiming to mitigate excess fluctuations.

The US Dollar, meanwhile, paused its recent pullback from a three-month high amid expectations of less aggressive policy easing by the Fed, lending some support to the USD/JPY pair. Traders will be watching Friday’s US macro data, including Durable Goods Orders and the revised Michigan Consumer Sentiment Index, as Japan’s Sunday election approaches.

Technical Outlook: Key Levels for USD/JPY

Technically, a break below the 151.60-151.55 support zone could accelerate the USD/JPY’s slide to the 151.00 level. Further declines may find support near 150.65, a confluence of the 200-day Simple Moving Average (SMA) and the 50% Fibonacci retracement level of the July-September pullback. If this level breaks, it may signal the end of the recent rally, shifting bias toward bearish traders.

Alternatively, a move beyond 152.00 could see USD/JPY testing the 152.60-152.65 region. Continued upward momentum could allow the pair to approach the 153.00 mark and, if surpassed, the 61.8% Fibonacci level at 153.20. Clearing this point would likely open the path toward further gains around the 154.00 level and the 154.30 resistance zone.

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Australian Dollar Drops on Weak GDP Data and RBA Rate Cut Bets

Australian Dollar Holds Steady as US Dollar Softens Ahead of PMI Data

Australian Dollar Holds Steady as US Dollar Softens Ahead of PMI Data

The Australian Dollar (AUD) strengthened against the US Dollar (USD) on Thursday, supported by the release of domestic Purchasing Managers Index (PMI) data. The AUD/USD pair moved higher as the USD experienced a slight dip, driven by a modest pullback in US Treasury yields, with the 2-year and 10-year yields standing at 4.07% and 4.23%, respectively, at the time of writing.

The Australian Dollar’s performance is further bolstered by hawkish sentiment surrounding the Reserve Bank of Australia (RBA), underpinned by strong employment figures. Earlier in the week, RBA Deputy Governor Andrew Hauser highlighted the high labor participation rate, emphasizing that the central bank remains data-driven but not overly fixated on any single data point.

The USD, meanwhile, came under pressure following the release of the Federal Reserve’s (Fed) Beige Book on Wednesday. The report noted that economic activity across the US was “little changed in nearly all Districts,” contrasting with August’s report, which had indicated growth in three Districts and stable activity in nine.

Market participants are now closely watching the release of the S&P Global Purchasing Managers Index (PMI), a key indicator of US private sector activity in both the manufacturing and services sectors, which is scheduled for Thursday.

Market Movers: Australian Dollar Gains on RBA Hawkish Sentiment

According to the CME FedWatch Tool, there is an 88.9% chance of a 25-basis-point rate cut from the Federal Reserve, with no expectation of a larger 50-basis-point reduction.

Australia’s Judo Bank Composite PMI slightly rose to 49.8 in October from 49.6 in September, marking the second consecutive month of contraction in private sector output. The Services PMI edged up to 50.6 from 50.5, marking its ninth consecutive month of expansion, while the Manufacturing PMI slipped to 46.6 from 46.7, continuing its decline.

In a social media post, Federal Reserve Bank of San Francisco President Mary Daly noted that the US economy is in a better position, with inflation significantly lower and the labor market stabilizing. Meanwhile, Minneapolis Fed President Neel Kashkari indicated that the Fed is monitoring the labor market for signs of instability and suggested that any rate cuts will likely be gradual rather than aggressive.

China’s central bank, the People’s Bank of China (PBoC), lowered its 1-year Loan Prime Rate (LPR) to 3.10% from 3.35% and its 5-year LPR to 3.60% from 3.85%, as expected. These cuts aim to stimulate domestic economic activity in China, which could, in turn, boost demand for Australian exports.

National Australia Bank recently revised its projection for the RBA, now expecting the first rate cut in February 2025, earlier than the previously anticipated May timeline. The bank foresees gradual cuts, with rates expected to reach 3.10% by early 2026.

Technical Analysis: Australian Dollar Remains Below 0.6650

The AUD/USD pair is trading around 0.6640 on Thursday, maintaining a bearish outlook in the short term. The pair remains below the nine-day Exponential Moving Average (EMA), and the 14-day Relative Strength Index (RSI) is below 50, reinforcing the negative sentiment.

On the downside, the AUD/USD pair may retest its two-month low of 0.6614, last seen on Wednesday. The next key support lies at the psychological level of 0.6600.

On the upside, resistance is expected at the nine-day EMA at 0.6680, followed by the 50-day EMA at 0.6728. A break above these levels could pave the way for a potential move toward the psychological resistance at 0.6800.

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Japanese Yen Weakens Below 152.00 Against USD, Hits Fresh Three-Month Low

Japanese Yen Weakens Below 152.00 Against USD, Hits Fresh Three-Month Low

Japanese Yen Weakens Below 152.00 Against USD, Hits Fresh Three-Month Low

The Japanese Yen (JPY) extended its losing streak against the US Dollar (USD) for a third consecutive day, pushing the USD/JPY pair above the 152.00 level for the first time since late July during Wednesday’s Asian session. This recent weakness is driven by uncertainty over the Bank of Japan’s (BoJ) ability to raise interest rates further in 2024, a key factor in the Yen’s decline since early October.

The drop below the psychological 150.00 level earlier this month sparked verbal interventions from Japanese officials, though these efforts have done little to bolster the JPY. Even the prevailing risk-off sentiment, fueled by ongoing geopolitical tensions in the Middle East, has not provided the usual support for the safe-haven currency.

Meanwhile, expectations that the Federal Reserve (Fed) will ease its pace of rate cuts have driven US Treasury yields to a three-month high, boosting the USD. This further reinforces the outlook for continued JPY depreciation and more gains for the USD/JPY pair.

Market Movers: JPY Weakness Persists Despite Intervention Warnings

  • The Japanese Yen has fallen to its weakest level in nearly three months as doubts grow over the BoJ’s rate-hike plans.
  • Verbal interventions from Japanese authorities after the JPY fell below the key 150.00 mark have failed to reverse its downward trend.
  • Slower expected rate cuts by the Fed and concerns over increased US fiscal deficits after the upcoming presidential election have triggered a bond market selloff.
  • Yields on the 10-year US Treasury bond have reached levels not seen since July, pushing the US Dollar to its highest point since early August.
  • San Francisco Fed President Mary Daly highlighted that inflation has eased and the labor market is on a more sustainable path, supporting the Fed’s cautious approach.
  • Former President Donald Trump’s rising odds in the US election have led to speculation about inflation-inducing tariffs.
  • Geopolitical risks remain high as markets eye a potential Israeli strike on Iran. Hezbollah fired rockets at two bases near Tel Aviv and a naval base near Haifa on Tuesday.
  • Diplomatic efforts to resolve the year-long Middle East conflict have thus far failed, reducing investor appetite for riskier assets.
  • Traders await the US Existing Home Sales report, while the focus remains on BoJ Governor Kazuo Ueda’s upcoming speech at the IMF-hosted “Governors Talk.”
  • Tokyo consumer inflation data, due Friday, will also be a key factor ahead of Japan’s general election on October 27 and the BoJ meeting on October 31.

Technical Outlook: USD/JPY Breakout Above 152.00 Signals Bullish Momentum

From a technical standpoint, the recent breakout above the 100-day Simple Moving Average (SMA) signals further bullish potential for the USD/JPY pair. Oscillators on the daily chart remain in positive territory, suggesting the possibility of additional gains beyond the 152.00 mark. Follow-through buying could continue to drive the pair upward in line with the ongoing uptrend seen over the past month.

However, the Relative Strength Index (RSI) is nearing overbought levels, prompting caution among aggressive bulls. A period of near-term consolidation or a modest pullback may be prudent before positioning for further appreciation.

On the downside, support is likely to be found near the 151.20-151.15 region, with a break below the 151.00 mark seen as a buying opportunity. The 150.60 level could act as a key support point, below which the pair may accelerate its decline toward the 150.00 psychological level.

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Australian Dollar Supported by Hawkish RBA Outlook

Australian Dollar Supported by Hawkish RBA Outlook, But Faces Pressure from Rising US Treasury Yields

Australian Dollar Supported by Hawkish RBA Outlook, But Faces Pressure from Rising US Treasury Yields

The Australian Dollar (AUD) regained some of its recent losses against the US Dollar (USD) on Tuesday, buoyed by a hawkish stance from the Reserve Bank of Australia (RBA) and strong domestic employment data. However, the AUD/USD pair continues to face resistance due to surging US Treasury yields, which rose by over 2% on Monday amid concerns about inflation and economic strength in the US.

The Aussie Dollar’s resilience is supported by market expectations that the RBA may maintain a tighter monetary policy in the near term, given positive labor market conditions in Australia. Additionally, China’s recent interest rate cuts have provided a boost, as the nation remains Australia’s largest trading partner, and lower borrowing costs in China could stimulate demand for Australian exports.

In contrast, the US Dollar has gained strength following economic data that suggests the Federal Reserve (Fed) is unlikely to implement a large rate cut in November. The likelihood of a modest 25-basis-point cut stands at 89.1%, with no significant expectations for a more aggressive 50-basis-point reduction. Rising US bond yields, driven by stronger retail sales and a drop in initial jobless claims, further support the greenback, creating headwinds for AUD/USD.

Traders are now awaiting the release of Purchasing Managers Index (PMI) reports from both the US and Australia on Thursday, which could shed light on the health of their respective economies and influence future monetary policy decisions.

Market Movers: Australian Dollar Declines Amid Risk Aversion

  • US 2-year and 10-year Treasury yields are at 4.02% and 4.19%, respectively, reflecting rising demand for US debt.
  • Minneapolis Fed President Neel Kashkari noted that the Fed is closely monitoring the labor market, signaling that rate cuts will be gradual and moderate.
  • San Francisco Fed President Mary Daly emphasized the central bank’s data-driven approach to interest rate adjustments.
  • RBA Deputy Governor Andrew Hauser, speaking at the CBA 2024 Global Markets Conference, expressed surprise at Australia’s strong employment growth, highlighting the country’s high labor participation rate.
  • The People’s Bank of China (PBoC) lowered its 1-year Loan Prime Rate (LPR) to 3.10% and the 5-year LPR to 3.60%, which could boost China’s domestic economy and demand for Australian exports.
  • National Australia Bank revised its forecast, expecting the RBA’s first rate cut in February 2025, earlier than previously projected.

Technical Outlook: AUD/USD Faces Bearish Pressure

The AUD/USD pair is trading around 0.6660, close to eight-week lows. On the daily chart, the pair remains below the nine-day Exponential Moving Average (EMA), signaling a bearish short-term trend. The 14-day Relative Strength Index (RSI) is also below 50, further reinforcing this sentiment.

On the downside, the pair may test support at its eight-week low of 0.6622, with the psychological level of 0.6600 providing further support. Resistance is expected at the nine-day EMA around 0.6700, followed by the 50-day EMA at 0.6734. A break above these levels could pave the way for a move toward 0.6800.

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Gold Price Overbought, Bulls Should Exercise Caution Amid Renewed

Gold Price Overbought, Bulls Should Exercise Caution Amid Renewed USD Strength

Gold Price Overbought, Bulls Should Exercise Caution Amid Renewed USD Strength

Gold (XAU/USD) remains near its intraday highs through early European trading, hovering close to its all-time peak of around $2,730. The continued accommodative monetary policy environment and persistent geopolitical tensions, especially from the Middle East conflicts, support the precious metal’s upward momentum. Additionally, political uncertainty in the US has contributed to gold’s rally over the past two weeks.

Despite this, expectations of modest rate cuts by the Federal Reserve (Fed) are helping keep US Treasury yields elevated, which in turn strengthens the US Dollar (USD) and invites some dip-buying interest. The USD Index (DXY) is back near its recent high, the highest since early August. Combined with slightly overbought conditions in the daily gold chart, further gains for the metal could be limited.

Daily Market Movers: Gold Holds Up Despite USD Strength

  • Geopolitical risks: The situation in the Middle East remains volatile, with rising tensions between Israel and Iran adding to concerns. Israel has intensified attacks on Lebanon and Gaza, raising fears of a broader regional conflict, which supports safe-haven demand for gold.
  • US political uncertainty: Polls show a tight race between Donald Trump and Vice President Kamala Harris, adding further risk and boosting demand for gold as a safe-haven asset.
  • Central bank actions: The European Central Bank has recently cut interest rates for the third time this year, while the Fed and the Bank of England are expected to lower borrowing costs further, adding to the support for gold’s bullish trend.

Technical Outlook: Bulls Remain Strong, But Caution Advised

Technically, gold’s sustained strength above $2,700 signals continued bullish momentum. However, with the Relative Strength Index (RSI) surpassing 70, signaling overbought conditions, traders may want to wait for consolidation or a pullback before positioning for further gains. Immediate support lies at the $2,700 level, with potential downside targets around the $2,662-2,660 range and further support near $2,647-2,646. A break below these levels could accelerate selling toward $2,600.

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Japanese Yen Gains Strength Against USD Amid BoJ Policy Uncertainty

Japanese Yen Gains Traction Against USD Amid BoJ Uncertainty

Japanese Yen Gains Traction Against USD Amid BoJ Uncertainty

The Japanese Yen (JPY) is seeing an upward trend during Friday’s Asian session, partially recovering from the previous day’s losses against the US Dollar (USD), reaching its strongest level since early August. Several factors are driving the JPY’s gains, including verbal intervention from Japanese officials and stronger domestic inflation data, which could potentially prompt the Bank of Japan (BoJ) to consider rate hikes.

Contributing to the JPY’s strength is a modest pullback in the USD from its two-and-a-half-month high. However, expectations that the BoJ will refrain from raising interest rates, given signs of easing inflation and the upcoming general election on October 27, may limit the Yen’s potential gains. Additionally, the market is anticipating smaller interest rate cuts by the US Federal Reserve (Fed), which could further cap losses in the USD/JPY pair.

Key Market Movers: Verbal Intervention and Inflation Data Boost Yen

Japan’s Vice Finance Minister for International Affairs, Atsushi Mimura, expressed concern over the rapid and one-sided moves in the Yen, stating that excessive volatility in the currency market is undesirable. Furthermore, a government spokesperson emphasized the importance of stable currency movements that reflect economic fundamentals, signaling that authorities are closely monitoring the situation, particularly speculative moves in the market.

In addition to the intervention, government data showed a deceleration in Japan’s headline Consumer Price Index (CPI) to 2.5% YoY in September, while the Core CPI, excluding fresh food, eased from a 10-month high. These signs of easing inflation, coupled with opposition to rate hikes from Prime Minister Shigeru Ishiba, raise questions about how much room the BoJ has to pursue further tightening.

Meanwhile, the Chinese economy’s 0.9% growth in the third quarter of 2024, coupled with stronger-than-expected Retail Sales and Industrial Production, had little impact on market sentiment.

On the US side, strong economic data continues to support the Greenback. Thursday’s positive US data reaffirmed market bets for a less aggressive Fed rate-cutting cycle, keeping US Treasury yields elevated, which serves as a tailwind for the USD. The USD Index (DXY) remains near its highest level since August, which could limit the USD/JPY pair’s downside potential.

USD/JPY Technical Outlook: Dips Toward 149.20 Present Buying Opportunities

From a technical standpoint, the breakout above the psychological 150.00 level signals renewed bullish momentum. Indicators on the daily chart remain comfortably in positive territory, with no immediate signs of being overbought, suggesting that the USD/JPY pair could continue to climb.

Any pullbacks toward the 149.20 level may be viewed as buying opportunities, with further support at the 149.00 level. Below this, the pair could see a corrective fall toward the 148.60-148.55 region and eventually test the 148.00 mark, with a key support zone around 147.35-147.30. A break below this area could shift the market bias toward bearish traders.

On the upside, a sustained move above the overnight high of 150.30 could push the pair toward the August peak at 150.85-150.90, with potential further gains beyond the 151.00 level, opening the door to a near-term rally toward 152.00.

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Crude Oil Steadies as Markets Monitor Middle East Tensions

Crude Oil Steadies as Markets Monitor Middle East Tensions and China’s Economic Outlook

Crude Oil Steadies as Markets Monitor Middle East Tensions and China’s Economic Outlook

Crude oil prices stabilized on Thursday after a four-day losing streak that resulted in a nearly 7% weekly drop. The market has found a temporary floor, with traders weighing geopolitical risks, particularly doubts over whether Israeli Prime Minister Benjamin Netanyahu will honor his pledge to the U.S. not to strike Iranian oil facilities. Further support for oil came from a surprise drawdown in U.S. stock piles, with the American Petroleum Institute (API) reporting a decrease of 1.58 million barrels for the week ending October 11, compared to expectations of a 2.3 million barrel increase.

Meanwhile, the U.S. Dollar Index (DXY), which tracks the Greenback against six major currencies, is bracing for a volatile session. In addition to a slew of U.S. economic data, markets are watching the European Central Bank (ECB), which is expected to announce a 25 basis point rate cut. With core Eurozone economies facing significant challenges, ECB President Christine Lagarde’s response to prevent further Euro weakness will be closely scrutinized.

As of this writing, West Texas Intermediate (WTI) crude oil is trading at $70.00, while Brent crude is at $74.09.

Key Market Drivers

  1. China’s Economic Stimulus: China has unveiled a plan to inject 4 trillion yuan (CNY) into its housing market, although markets reacted poorly to the lower-than-expected figure, down from an earlier 6 trillion yuan estimate. The announcement has had limited impact on oil prices so far.
  2. Middle East Tensions: Pressure continues to mount on Israeli Prime Minister Netanyahu, with growing calls within his cabinet to disregard U.S. advice and strike Iranian oil facilities. An article from an opposition leader in the Jerusalem Post urging an immediate attack has heightened tensions, according to Reuters.
  3. S. Oil Stockpiles: Later today, the Energy Information Administration (EIA) will release its weekly oil inventory data for the week ending October 11. Analysts expect a modest build of 2.3 million barrels, following a larger-than-anticipated increase of 5.81 million barrels the previous week.

Oil Price Technical Outlook: Struggle at $70.00

Crude oil is battling to hold the $70.00 level, but the path ahead remains uncertain. Geopolitical events could cause prices to spike, but absent any major developments, oil could see further declines. As markets hedge against a potential presidential win by former U.S. President Donald Trump in the November 5 elections, crude oil appears uncertain on how to factor this into pricing.

For crude oil to regain momentum, it must first close above the critical resistance at $71.46, a level that provided support earlier in the week. Beyond this, the next significant challenge lies at $75.28, where the 100-day Simple Moving Average (SMA) aligns with other key technical indicators.

On the downside, $71.46 has now flipped to resistance. If oil falls further, traders will look to the $67.11 level, which provided support in May-June 2023. A break below this could send prices toward the 2024 year-to-date low of $64.75, followed by the 2023 low of $64.38.

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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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Japanese Yen Bears Show Resilience Despite Intervention Concerns

Japan’s Economy Contracts with Yen Fall, Rising Inflation

Japan’s Economy Contracts with Yen Fall, Rising Inflation

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

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

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

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

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

 

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

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

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

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

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

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

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

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

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

 

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Australian Dollar Holds Steady Despite Weak US Dollar

Australian Dollar Holds Steady Despite Weak US Dollar

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

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

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

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

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

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

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

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

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US Dollar Price

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

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

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

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

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

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

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

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

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

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People’s Bank of China Announces Measures to Boost Economy

People’s Bank of China Announces Measures to Boost Economy

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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Australian Dollar Steadies Above

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

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

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

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

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

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US Yields Boost Dollar, Weaken Yen

US Yields Boost Dollar, Weaken Yen

US Yields Boost Dollar, Weaken Yen

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

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

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

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

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

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

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

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

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

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Cryptocurrency Move Back to Support the Pack to Level

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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Cryptos Market: Bitcoin Shows Bullish Momentum Over Dollar Strength

Cryptos Market: Bitcoin Shows Bullish Momentum Over Dollar Strength

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

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

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

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

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

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

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

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

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Ethereum Rate Hits at Higher Level More Profitable Than Bitcoin Mining

Ethereum Rate Hits at Higher Level More Profitable Than Bitcoin Mining

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

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

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

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

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

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

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

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Cryptocurrency Bitcoin Shows the Bullish Divergence on User Count

Cryptocurrency Bitcoin Shows the Bullish Divergence on User Count

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

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

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

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

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

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

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

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

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

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

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

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

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