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Gold Price Holds Gains Around $2,670, Supported by Softer Risk Sentiment

Gold Price Holds Gains Around $2,670, Supported by Softer Risk Sentiment

Gold Price Holds Gains Around $2,670, Supported by Softer Risk Sentiment

Gold (XAU/USD) continues to edge higher for the second consecutive day on Wednesday, extending its recent positive streak, reaching a one-and-a-half-week high around $2,670 during the Asian session. The ongoing geopolitical tensions in the Middle East are fueling a risk-off sentiment, which is providing support to the safe-haven appeal of gold.

Meanwhile, the US Dollar (USD) is consolidating near a two-month peak, offering limited movement in the gold market. However, growing expectations that the Federal Reserve (Fed) will ease its monetary policy less aggressively, with a likely 25 basis point rate cut in November, are keeping any major USD decline in check. This calls for caution before making aggressive bullish bets on the non-yielding precious metal.

Market Movers: Gold Underpinned by Multiple Factors, Lacks Strong Bullish Momentum

US Treasury bond yields fell for the second straight day on Tuesday, as weaker-than-expected manufacturing data and easing inflation concerns, aided by lower oil prices, boosted demand for gold. The New York Fed’s Empire State Manufacturing Index, which surged to a 29-month high in September, fell sharply to -11.9 in October, the weakest level since May, signaling worsening economic conditions.

Falling oil prices, due to lower supply disruption fears and weaker demand prospects, further ease inflationary pressures, creating room for the Fed to cut interest rates. However, markets are pricing in a higher chance of a smaller rate cut at the next FOMC meeting in November, which could strengthen the US Dollar and limit gold’s upside potential.

San Francisco Fed President Mary Daly remarked that significant progress has been made in controlling inflation, and she anticipates one or two more rate cuts this year if the economic outlook remains on track. Similarly, Atlanta Fed President Raphael Bostic commented that the US economy is performing well and recession risks remain low, with inflation expected to return to the Fed’s 2% target.

On the geopolitical front, Israeli Prime Minister Benjamin Netanyahu rejected calls for a ceasefire with Lebanon, while Hezbollah threatened to escalate its attacks, increasing the risk of a broader conflict. The Biden administration has urged Israel to allow more humanitarian aid into Gaza, warning of potential consequences, including halting US arms transfers.

This week, market attention will shift to key US economic data releases, including Monthly Retail Sales, Industrial Production, and Weekly Initial Jobless Claims, as well as China’s economic reports.

Technical Outlook: Gold Nears All-Time High, Bullish Potential Intact

Technically, gold’s next resistance is expected around the $2,685-$2,686 level, close to the all-time high reached in September. A decisive break above the $2,700 psychological level could pave the way for further gains, extending the multi-month uptrend supported by positive momentum indicators on the daily chart.

On the downside, immediate support lies near the $2,650 area, with the next key level around $2,630-$2,632. A further decline could attract buyers near the $2,600 level, which serves as a crucial pivot. A decisive break below this level might trigger technical selling and lead to deeper losses for gold.

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Japanese Yen Vulnerable Against USD, Hovers Near Lowest Levels Since Early August

Japanese Yen Vulnerable Against USD, Hovers Near Lowest Levels Since Early August

The Japanese Yen (JPY) continues to struggle, failing to hold onto modest gains from the Asian session against the US Dollar (USD), and remains near its lowest point since early August, touched on Monday. Investors are scaling back their expectations for further interest rate hikes by the Bank of Japan (BoJ) in 2024. This, combined with the prevailing risk-on sentiment in the markets, has diminished demand for the safe-haven JPY.

At the same time, expectations for a less aggressive monetary easing approach from the Federal Reserve (Fed) and predictions of a standard 25 basis point rate cut in November are keeping US Treasury yields elevated. This supports the USD, which hovers near a two-month high, limiting any gains for the lower-yielding JPY and pushing the USD/JPY pair back towards the 150.00 psychological level in the latest trading.

Market Highlights: Yen Struggles Amid Elevated US Bond Yields and Risk-On Sentiment

  • Japanese Prime Minister Shigeru Ishiba’s recent comments have dampened market expectations for further BoJ rate hikes in the near term.
  • US equity markets maintained their upward momentum on Monday, with the S&P 500 and Dow Jones Industrial Average reaching record highs amid optimism over strong corporate earnings.
  • The USD has strengthened significantly over the past two weeks, reaching its highest level since August 8 due to bets on smaller Fed rate cuts.
  • Minneapolis Fed President Neel Kashkari indicated that recent job data shows the labor market remains resilient, with future policy moves being data-dependent.
  • Fed Governor Christopher Waller suggested the central bank should proceed cautiously with rate cuts, especially in light of recent policy meetings.
  • According to the CME Group’s FedWatch Tool, markets are pricing in a strong likelihood of a 25 basis point rate cut in November, with over a 15% chance of no cut.
  • Rising US bond yields, particularly the 10-year Treasury yield, which recently exceeded the 4% mark, favor the USD and continue to pressure the low-yielding JPY.

Traders are now looking to the release of the Empire State Manufacturing Index and speeches from key Federal Open Market Committee (FOMC) members for further direction.

Technical Outlook: USD/JPY Approaching Key Levels

From a technical standpoint, any further decline in USD/JPY is expected to attract buying interest around the 149.00 level. This should help limit downside moves near the 148.55-148.50 support zone. A break below this area could lead to increased selling pressure, pushing the pair below the 148.00 mark and potentially toward last week’s low around 147.35-147.30.

On the upside, sustained strength above the key psychological level of 150.00 could trigger fresh buying interest. With daily chart oscillators holding in positive territory and not yet overbought, the USD/JPY pair could aim for the August swing high around 150.85-150.90. A move beyond 151.00 would suggest the pair has bottomed out, paving the way for further appreciation in the near term.

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Japanese Yen Consolidates Against USD | Near Lowest Level Since Early August

Japanese Yen Consolidates Against USD, Hovers Near Lowest Level Since Early August

Japanese Yen Consolidates Against USD, Hovers Near Lowest Level Since Early August

The Japanese Yen (JPY) continues its sideways consolidation against the US Dollar (USD), remaining near its lowest level since early August during Monday’s early European session. Comments from Japanese Prime Minister Shigeru Ishiba last week, which were critical of further monetary tightening, have dampened expectations for additional rate hikes by the Bank of Japan (BoJ). This, combined with a generally positive risk sentiment in global markets, has weakened demand for the safe-haven JPY.

Meanwhile, the USD holds steady near a two-month high reached last week, supported by expectations of less aggressive policy easing from the Federal Reserve (Fed). However, despite the strong USD, the Fed is still anticipated to lower interest rates by 25 basis points in November, contrasting with the BoJ’s likely continuation of its rate-hiking cycle. This divergence in policy is preventing traders from making fresh bullish bets on the USD/JPY pair.

Market Sentiment: Yen Traders Hesitate Amid Mixed Signals

The futures market indicates less than a 50% chance that the BoJ will raise rates by 10 basis points before year-end, following Prime Minister Ishiba’s dovish tone in early October. Additionally, Japan’s economic data, including a drop in real wages for the first time in three months and declining household spending, along with easing price pressures from raw material costs, raises doubts about how aggressively the BoJ will pursue further rate hikes.

Meanwhile, China’s finance ministry signaled potential increased debt issuance to support its domestic economy, but provided few details about stimulus plans. Despite this, investors remain optimistic that comprehensive measures will be introduced to stabilize key sectors, buoyed by the recent rally in US equity markets, which hit record highs last Friday.

In the US, September’s Producer Price Index (PPI) data revealed a 1.8% rise in the headline figure and a 2.8% increase in the core measure on a yearly basis, both slightly exceeding expectations. Combined with last week’s hotter-than-expected US consumer inflation data, this has reduced the likelihood of another large rate cut by the Fed in November, strengthening the USD. That said, the Fed is still expected to continue lowering rates due to signs of labor market weakness, while the BoJ remains on course to hike rates again by year-end, which limits the upside for the USD/JPY pair.

Technical Outlook: USD/JPY Positive Bias Holds Above 148.00

From a technical perspective, the USD/JPY pair recently broke through its 50-day Simple Moving Average (SMA) for the first time since mid-July and climbed above the 38.2% Fibonacci retracement level of its July-September decline. This breakout, along with positive signals from daily chart oscillators, suggests that the pair’s path of least resistance is to the upside. A move above last week’s high around the 149.55-149.60 region would confirm the bullish bias, potentially pushing prices towards the 150.00 psychological level, and possibly extending towards the 50% Fibonacci level near 150.75-150.80.

On the downside, any significant dip below the 149.00 mark is likely to attract buying interest around the 148.55 region, which should limit losses near 148.00. A decisive break below this level could trigger technical selling, dragging the pair toward intermediate support at 147.35 and potentially down to 147.00 or 146.50.

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Gold Price Holds Gains as USD Strength Limits Upside Ahead of US PPI Data

Gold Price Holds Intraday Gains, But USD Strength Limits Upside Ahead of US PPI Data

Gold Price Holds Intraday Gains, But USD Strength Limits Upside Ahead of US PPI Data

Gold (XAU/USD) has retreated slightly from a three-day high, trading around the $2,640 level during early European hours on Friday. Despite the dip, the precious metal remains up over 0.40% for the day. A rise in U.S. weekly jobless claims signals some weakness in the labor market, which could allow the Federal Reserve (Fed) to continue cutting interest rates. This has led to a modest drop in U.S. Treasury yields and a softer risk sentiment, supporting gold prices for the second consecutive day.

However, stronger-than-expected U.S. consumer inflation data on Thursday reduced expectations of a significant rate cut by the Fed in November. This has supported the U.S. dollar, halting its recent pullback and creating headwinds for gold’s upward momentum. Traders are now focusing on the upcoming U.S. Producer Price Index (PPI), along with the Preliminary Michigan Consumer Sentiment Index and inflation expectations, for short-term direction.

Key Market Drivers: Gold Holds Steady Ahead of US PPI

  • US Inflation Data: The Labor Department reported on Thursday that the headline Consumer Price Index rose 2.4% year-over-year through September, while core inflation, excluding food and energy, climbed 3.3%. This stronger inflation data fueled speculation that the Fed will slow the pace of future rate cuts, boosting the U.S. dollar to near two-month highs, though the initial reaction faded.
  • Labor Market Weakness: U.S. weekly jobless claims rose by 33,000 to a seasonally adjusted 258,000, higher than the 230,000 expected, indicating some softening in the labor market. As the Fed shifts focus toward maximum sustainable employment, this mixed data suggests continued rate cuts, potentially supporting gold prices.
  • Treasury Yields and USD Strength: Despite the jobless claims data, the 10-year U.S. Treasury yield remains above 4%, bolstering the U.S. dollar and capping further gains for gold.
  • China’s Stimulus Measures: China’s finance ministry is expected to release details of fiscal stimulus measures, which could support risk sentiment and limit any significant upside for gold in the short term.

Looking ahead, traders will be closely watching the release of the U.S. PPI data, which is expected to impact USD demand and create trading opportunities for gold heading into the weekend.

Technical Outlook: Gold Poised for Further Gains

From a technical perspective, the recent rebound from near the $2,600 level and the move above the $2,630 support-turned-resistance zone favor bullish traders. The daily chart oscillators remain in positive territory, suggesting that gold may continue to rise toward the $2,657-$2,658 resistance area, with the $2,670-$2,672 supply zone as the next target. If momentum continues, gold could test its all-time high around $2,685-$2,686, with the $2,700 level serving as a key psychological resistance.

On the downside, the $2,630-$2,628 region now acts as immediate support, with a break below this level potentially opening the door for a test of the pivotal $2,600 mark. A sustained drop below $2,600 could trigger deeper losses, with the next key support at $2,560, followed by $2,535-$2,530, and eventually $2,500.

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Gold Price Recovers from Multi-Week Low, but Upside Potential Remains Limited Ahead of US CPI

Gold Price Recovers from Multi-Week Low, but Upside Potential Remains Limited Ahead of US CPI

Gold Price Recovers from Multi-Week Low, but Upside Potential Remains Limited Ahead of US CPI

Gold (XAU/USD) is experiencing a modest rebound on Thursday, recovering from a six-day losing streak that pushed prices to a near three-week low, around the $2,605-$2,604 range. This intraday uptick is likely due to repositioning ahead of the crucial US Consumer Price Index (CPI) report, which could shape expectations about the Federal Reserve’s (Fed) rate cut decisions and impact demand for the non-yielding metal.

At the same time, widespread market belief that the Fed will lower rates by 25 basis points in November has kept the 10-year U.S. Treasury yield above the 4% mark, boosting the U.S. Dollar (USD) to an eight-week high. This is a headwind for gold, which may limit any substantial upside. Traders are cautious, waiting for a stronger follow-through in the market before assuming that the recent corrective decline from gold’s all-time peak has concluded.

Market Factors Limiting Gold’s Upside: Strong USD and Moderate Fed Easing

The minutes from the September Federal Open Market Committee (FOMC) meeting showed a majority favored a 50 bps rate cut, confident in achieving a 2% inflation target. Some committee members, however, pushed for only a 25 bps reduction, citing still-elevated inflation and strong economic growth. There was a consensus that this large cut would not determine the pace of future reductions, which helped push the USD to a two-month high.

Additionally, key Fed officials expressed a more cautious stance on aggressive easing. Dallas Fed President Lorie Logan mentioned uncertainties in the economic outlook, while Boston Fed President Susan Collins emphasized that policy will remain data-driven. San Francisco Fed President Mary Daly hinted at more rate cuts but noted that the September decision does not indicate the size of future cuts.

Current market pricing shows a greater likelihood of a 25 bps rate cut in November and a more than 20% chance that rates will be left unchanged.

Safe-Haven Demand Supports Gold Amid Geopolitical Risks

Geopolitical tensions, particularly between Israel and Iran, are contributing to safe-haven demand for gold. Israeli Defense Minister Yoav Gallant recently warned of a potential strike against Iran, which could increase market volatility and lend further support to gold. However, traders are likely holding off on aggressive positioning until after the release of the US inflation data.

Technical Outlook: Bearish Bias with Limited Upside

From a technical perspective, the recent breakdown below the $2,630 support level signals a bearish outlook for gold. The daily chart oscillators remain in positive territory, but the metal has yet to sustain a break below the critical $2,600 level, making traders cautious about deeper losses.

If the price decisively breaks below $2,600, the next support levels to watch are $2,560, followed by the $2,535-$2,530 zone, with the $2,500 psychological level acting as a major downside target.

On the flip side, the $2,630-$2,635 range now serves as an immediate resistance level. Any upward movement is expected to face selling pressure around the $2,657-$2,658 barrier, with a sustained rally above this level possibly pushing gold toward the $2,670-$2,672 zone. A move beyond this point could challenge the all-time high near $2,685-$2,686, with a break above $2,700 setting the stage for further gains in the long-term uptrend.

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New Zealand Dollar Hits Seven-Week Low After RBNZ Cuts Interest Rate by 50 bps

New Zealand Dollar Hits Seven-Week Low After RBNZ Cuts Interest Rate by 50 bps

New Zealand Dollar Hits Seven-Week Low After RBNZ Cuts Interest Rate by 50 bps

The New Zealand Dollar (NZD) has dropped to its lowest level since mid-August, following the Reserve Bank of New Zealand’s (RBNZ) decision to cut the Official Cash Rate (OCR) by 50 basis points, lowering it from 5.25% to 4.75% at the October meeting. As anticipated, the move led to immediate selling pressure on the Kiwi. Additionally, the lack of new stimulus measures from Chinese officials has added to the NZD’s decline, as China remains a major trading partner for New Zealand.

Looking ahead, market participants will focus on the Federal Open Market Committee (FOMC) Minutes release later on Wednesday, followed by Thursday’s US Consumer Price Index (CPI) data for September. If inflation comes in softer than expected, it could weigh on the USD and provide some relief for the NZD/USD pair.

Market Movers: New Zealand Dollar Remains Weak Post-RBNZ Decision

The RBNZ’s Monetary Policy Statement (MPS) indicated that the annual consumer price inflation is within the target range of 1-3%. The decision to cut the OCR by 50 basis points aims to maintain low and stable inflation while avoiding instability in output, employment, interest rates, and exchange rates.

In the US, Federal Reserve Vice Chair Philip Jefferson noted that the Fed’s September 50 bps rate cut aimed to support the labor market while inflation eases. However, despite progress, inflation has not yet met target levels, according to Atlanta Fed President Raphael Bostic. New York Fed President John Williams also backed the recent rate cuts, signaling the possibility of additional cuts later this year.

Technical Analysis: NZD/USD Faces Downward Pressure

The New Zealand Dollar remains under pressure, continuing its downtrend against the US Dollar. The pair has fallen below the key 100-day Exponential Moving Average (EMA) and is nearing a break below the ascending trend channel on the daily chart. This bearish momentum is supported by the 14-day Relative Strength Index (RSI), which is sitting below the midline at 41.10, favoring sellers in the short term.

A decisive break below the lower boundary of the trend channel at 0.6135 could open the door to the 0.6000 psychological level. If the pair sustains trading below this level, it could test 0.5974, the low from August 15.

On the upside, immediate resistance is seen at the 100-day EMA, around 0.6142. If the NZD/USD pair can push higher, it may target 0.6254, the high from September 6. Further gains could aim for the round figure of 0.6300, with the upper limit of the trend channel at 0.6365.

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Australian Dollar Slips as China Holds Back on Major Stimulus Measures

Australian Dollar Slips as China Holds Back on Major Stimulus Measures

Australian Dollar Slips as China Holds Back on Major Stimulus Measures

The Australian Dollar (AUD) extended its decline on Tuesday, pressured by comments from the National Development and Reform Commission (NDRC) of China. During a press conference, China’s state planner acknowledged that the country’s economy is facing increasingly complex internal and external challenges. The lack of additional major stimulus from Chinese officials disappointed traders. Furthermore, the broader risk-off sentiment, fueled by escalating geopolitical tensions in the Middle East, contributed to selling pressure on risk-sensitive assets like the AUD.

Despite the downward movement, the Australian Dollar’s losses could be limited due to the Reserve Bank of Australia’s (RBA) hawkish stance, as reflected in the September Meeting Minutes. Investors now await remarks from Federal Reserve officials later on Tuesday, looking for guidance ahead of the Federal Open Market Committee (FOMC) Minutes. The focus will shift to the release of the US Consumer Price Index (CPI) for September, due on Thursday, for further clues on the US economic outlook.

Daily Market Movers: Australian Dollar Loses Ground After China’s NDRC Conference

The RBA’s September Meeting Minutes, released on Tuesday, revealed discussions among board members on possible future rate adjustments. The minutes emphasized that policy would need to remain restrictive until inflation is consistently moving toward the target range. RBA Deputy Governor Andrew Hauser stated that lowering inflation remains a priority, and the task is not yet complete.

Meanwhile, in the US, St. Louis Fed President Alberto Musalem expressed support for additional interest rate cuts, noting that economic performance will shape monetary policy. Similarly, Minneapolis Fed President Neel Kashkari backed a 50-basis-point rate cut, highlighting that the risks have shifted from high inflation toward higher unemployment. According to the CME FedWatch Tool, the probability of a 25-basis-point Fed rate cut in November has surged to 85%, up from 31.1% last week.

Technical Analysis: AUD/USD Remains Bullish in the Long Term

Despite recent setbacks, the AUD/USD pair is attempting a rebound. On the daily chart, the pair remains within the lower boundary of its ascending trend channel, maintaining a bullish bias as it stays supported above the 100-day Exponential Moving Average (EMA). However, the 14-day Relative Strength Index (RSI) is below the midline at 47.0, suggesting potential for further consolidation or downside movement.

Initial support for the AUD/USD pair lies at 0.6735, the lower limit of the trend channel. A break below this level could trigger bearish momentum, pushing the pair toward the psychological level of 0.6700, with further downside potential at 0.6622, the low of September 11.

On the upside, resistance is first seen at 0.6823, the high from August 29. If the pair extends its gains, it could target 0.6942, the high from September 30. A decisive break above this level could attract more buyers, lifting AUD/USD toward the upper boundary of the trend channel at 0.6980.

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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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WTI Crude Stays Below $68.50 Ahead of OPEC+ Meeting

WTI Maintains Slight Uptick, Trading Near $76.50 as Market Anticipates US PMI Data Release

WTI Maintains Slight Uptick, Trading Near $76.50 as Market Anticipates US PMI Data Release

Western Texas Intermediate (WTI), a key benchmark for U.S. crude oil, has been trading around $76.50, demonstrating modest gains as the market awaits pivotal developments from the Organization of Petroleum Exporting Countries and allies (OPEC+). This anticipation is primarily centered around the upcoming virtual meeting scheduled for November 30, where decisions on oil production levels will be a significant focus.

OPEC+, an influential group in the global oil market, plays a crucial role in determining oil output levels. This upcoming meeting is particularly noteworthy as there are discussions around extending oil production cuts. Saudi Arabia, a leading oil exporter globally, is reportedly considering maintaining its production cut of 1 million barrels per day into the next year. Moreover, there is a possibility of OPEC+ members agreeing on additional supply reductions in response to recent declines in oil prices. The decision whether or not to implement further cuts in 2023 will be critical, as it holds the potential to significantly influence oil prices.

Adding another layer to this complex scenario is the recent data on U.S. crude oil inventories. According to the U.S. Energy Information Administration’s (EIA) weekly report, there was an unexpected increase of 8.70 million barrels for the week ending November 17, far exceeding the market’s anticipation of a 0.90 million barrel rise. This surge in inventories, from the previous reading of a 4.60 million barrel gain, adds to the factors influencing WTI’s pricing dynamics.

Concurrently, there’s growing optimism surrounding China’s economic stimulus plans, which could potentially stabilize WTI prices. Reports from Bloomberg indicate that China, a major global oil consumer, is including key property developers like Country Garden Holdings Co, Sino-Ocean Group, and CIFI Holdings in a list of 50 firms eligible for financial support. This support to the real estate sector in China, coupled with its status as a significant oil consumer, is likely to have a positive effect on WTI prices.

The immediate future for WTI prices also hinges on the release of the US S&P Global Purchasing Managers’ Index (PMI) data. There’s an anticipation of a slight decrease in both the Manufacturing and Services PMI indices. These indicators, essential for gauging economic health, could influence the USD-denominated WTI prices. Oil traders are closely monitoring these developments, ready to adjust their strategies based on the outcomes of the OPEC+ meeting and the U.S. economic indicators.

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Gold Price Maintains Minor Gains Amid Uncertainty

Gold Holds Near Two-Week High Ahead of FOMC Minutes

Gold Holds Near Two-Week High Ahead of FOMC Minutes

Gold prices (XAU/USD) have shown robust gains on Tuesday, maintaining their strong performance near a two-week high during the early European session. The persistent weakening of the US Dollar (USD) is a key driver, fueled by growing expectations of a dovish stance from the Federal Reserve (Fed). This shift in sentiment is providing strong support for the precious metal.

The recent disappointing US macroeconomic data has further diminished any remaining hopes of imminent interest rate hikes. Instead, it has generated speculation about the possibility of rate cuts in 2024. As a result, US Treasury bond yields have continued to decline, reinforcing the appeal of gold as a non-yielding asset.

Despite these supportive factors, gold’s positive momentum faces some headwinds from the generally upbeat sentiment in the equity markets. Optimism has been growing regarding additional stimulus measures in China to bolster the post-pandemic economic recovery. This positive sentiment has somewhat dampened the demand for traditional safe-haven assets like gold.

Investors are closely watching for cues from the release of the Federal Open Market Committee (FOMC) meeting minutes scheduled for later during the US trading session. This release is expected to provide valuable insights into the timing of the Fed’s potential monetary policy adjustments and is likely to influence gold’s direction in the near term.

In summary, gold is holding firm near a two-week high, benefiting from a weaker US Dollar and the prospect of a dovish Fed. However, it faces competition from the buoyant equity markets, driven by optimism surrounding stimulus measures in China. The FOMC meeting minutes release will be a crucial event to monitor, as it could offer clarity on the Fed’s monetary policy intentions and impact gold prices accordingly.

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Gold Price

Gold Price Lingers at Monthly Low Amid Anticipation of Fed Rate Insights

Gold Price Lingers at Monthly Low Amid Anticipation of Fed Rate Insights

As the markets navigate through uncertain tides, the price of gold persists at a near-monthly nadir, weighed down by continued selling pressure. As of Tuesday, gold (XAU/USD) wrestles with tepid demand, barely holding above its monthly low as it enters the European trading session. The strengthening U.S. Dollar (USD), which is rebounding from its September 20 low—its weakest point reached just the day before—casts a shadow over the traditional stalwart of commodities. Compounding this is the absence of new developments in geopolitical tensions, which traditionally might bolster gold’s appeal as a refuge asset.

Market sentiment remains fragile amidst geopolitical anxieties, particularly due to uncertainties in the Middle East. The lackluster performance of global equity markets mirrors this nervousness, providing a somewhat supportive backdrop for gold prices. However, a notable decline in U.S. Treasury bond yields—prompted by increasing speculation that the Federal Reserve may be approaching the tail end of its rate-hiking cycle—offers a glimmer of hope for gold, an asset that typically does not offer yields. This complex dynamic calls for a strategic approach from investors, particularly those with bearish inclinations towards the precious metal.

Looking forward, the anticipation is palpable among traders who are closely monitoring the Federal Reserve for hints on the future trajectory of interest rates. All eyes are on the upcoming pronouncements from pivotal figures within the Federal Open Market Committee (FOMC), including the much-anticipated commentary from Fed Chair Jerome Powell scheduled for mid-week. These communications are expected to significantly influence the short-term fluctuations of the USD and, by extension, the strategic positioning for gold.

Investors remain on standby for these insights, which could signal a new direction for gold’s valuation. Meanwhile, the impending release of the U.S. Trade Balance report on Tuesday offers yet another potential catalyst that could inject volatility into the markets, particularly during the early hours of the North American session.

The precious metal’s journey is emblematic of the broader economic narrative, entwined with policy decisions, fiscal reports, and geopolitical events that shape market sentiment. The delicate interplay between these factors and the resultant investor behavior underscores the complexity of forecasting gold’s future standing. As traders parse through economic data and geopolitical news, the dance between caution and opportunity continues to unfold in the global financial markets. The precious metal’s fortunes, while currently subdued, await the myriad forces at play, ready to pivot with each new piece of critical information.

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Gold Price Falls Amid Renewed USD Strength, Rising US Bond Yields

Gold’s Pricing Dynamics Amidst External Influences

Gold’s Pricing Dynamics Amidst External Influences

Gold’s pricing trajectory has experienced a downturn, reflecting a negative sentiment for two consecutive days, particularly as it lingers beneath the notable $2,000 benchmark. As we transition into the European trading session, numerous factors contribute to this phenomenon.

At the forefront of these influences is the anticipation surrounding the Federal Reserve’s (Fed) strategies. Market analysts largely believe that the Fed will remain unyielding in its hawkish approach, all in a bid to realign inflation to its designated 2% target. Such expectations have invigorated the US Treasury bond yields. Consequently, a rejuvenated demand for the US Dollar (USD) has emerged. The resultant effect of this surging USD demand is a palpable pressure on gold, primarily because gold doesn’t offer yield, distinguishing it from bonds and equities.

Geopolitical developments further accentuate these price dynamics. Israel’s recent tactics, reflecting restraint in its actions within Gaza, have assuaged overarching concerns about a potential exacerbation of tensions in the Middle East. This de-escalation sentiment, in turn, challenges gold’s traditional stature as a ‘safe-haven’ asset, leading to a softened demand for the precious metal. However, it’s crucial to acknowledge that the prevailing tension between Israel and Hamas hasn’t entirely dissipated. This lingering volatility, coupled with the prevailing ambiguity surrounding China’s economic revival, infuses some buoyancy into the gold price.

Interestingly, despite the downward pressure on gold, the market hasn’t witnessed aggressive selling, suggesting that traders might be exercising prudence. Such restraint could be attributed to the anticipation surrounding the imminent Federal Open Market Committee (FOMC) monetary policy assembly, spread across two days, commencing on Tuesday. The financial world awaits with bated breath for the Fed’s pronouncements, expected on Wednesday. The consensus is that interest rates will remain stable, projected between 5.25% and 5.50%, marking a peak not seen in over two decades. For stakeholders, the focal point would be any indications regarding prospective adjustments in the interest rates. These insights will undoubtedly shape the USD’s value and, by extension, gold’s pricing direction.

In summary, gold’s current price behavior is a confluence of macroeconomic policies, global political scenarios, and market speculations. With the FOMC meeting around the corner, the financial markets are braced for potential shifts in the precious metal’s valuation.

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Gold Price Maintains Steady Gains Amid Middle East Tensions and Anticipation of US PCE Price Index Release

Gold Price Maintains Steady Gains Amid Middle East Tensions and Anticipation of US PCE Price Index Release

For the third consecutive day on Friday, the gold price (XAU/USD) has witnessed a rise, underpinned by a consistent demand for safe-haven assets due to the ongoing unrest in the Middle East and stability in the US Dollar (USD). Yet, the precious metal still lingers below its recent five-month peak. This hesitation arises from the growing consensus that the Federal Reserve (Fed) will maintain its hawkish approach, resulting in sustained higher interest rates.

Traders are currently displaying caution around gold, opting to wait rather than make bold moves as the release of the Personal Consumption Expenditure (PCE) Price Index from the US approaches. This data, expected to be released soon, will be pivotal in setting expectations regarding the Fed’s imminent policy decisions, which will inevitably impact the USD and influence the trajectory of the non-yielding yellow metal. Despite this atmosphere of watchfulness, XAU/USD is on track to mark its third consecutive week of modest gains.

The backdrop for this movement in gold prices is multi-faceted:

– Ongoing geopolitical tensions are reinforcing the appeal of safe-haven assets like gold. However, expectations of a hawkish Federal Reserve have tempered any aggressive moves by bullish traders.

– Recent developments have seen Israeli forces make brief but significant incursions into Gaza, stirring concerns of a broader ground invasion.

– In a separate event, US military forces executed airstrikes on two sites in eastern Syria. This move comes as a response to multiple drone and missile attacks targeting American forces in the area.

– US President Joe Biden has sent a direct communication to Iran’s Supreme Leader, cautioning against any attacks on US bases or personnel in the Middle East.

– Recent economic data has spotlighted the US economy’s robust performance, growing at an impressive 4.9% annualized rate in the third quarter – its swiftest in almost two years.

– Given this economic resilience, it’s anticipated that the Fed will remain hawkish, potentially signaling another rate hike before the year concludes.

– Additionally, recently released US data that showed weaker-than-projected inflation and disposable income has further cemented beliefs that the Federal Reserve might retain its current stance through November.

With all eyes on the imminent release of the US PCE Price Index data, investors are keenly awaiting cues about the Fed’s subsequent moves before committing to any significant financial directions.

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WTI Nears $73.00 Amidst Rising Tensions

WTI Oil Stabilizes in Mid-$83 Range, Holding Near One-Week Low

WTI Oil Stabilizes in Mid-$83 Range, Holding Near One-Week Low

The West Texas Intermediate (WTI) Crude Oil prices have reportedly stabilized and are now fluctuating within a narrow trading band. As of the recent Asian trade session on Wednesday, the commodity was seen trading just below the mid-$83 range. This comes after a sharp pullback from a high over the past two weeks, which has led to significant losses, hitting a low that hasn’t been seen in more than a week.

This stabilization of the WTI prices can be attributed to several factors. On the global front, efforts by world leaders to contain the ongoing conflict between Israel and Hamas have been intensified, allowing for the delivery of much-needed humanitarian aid to Gaza. This has eased concerns about potential disruptions in oil supply which could have resulted in price volatility.

Additionally, the recent release of weak PMI data from the Euro Zone has reignited fears of a potential recession. Such an economic downturn is expected to negatively impact fuel demand, thus adding further pressure on the WTI Crude Oil prices. However, the US’s resilient economy, as indicated by the flash PMI prints, continues to provide some support.

The Federal Reserve’s (Fed) commitment to maintaining its hawkish stance to tackle inflation has also contributed to the stability of WTI prices. Despite the rising borrowing costs leading to economic headwinds, the strong fuel demand in the United States post-summer season and the tightening of global supplies have helped limit losses for crude oil prices.

Moreover, data from the American Petroleum Institute (API) has shown that US inventories have decreased by over 2 million barrels in the week leading up to October 20. This information precedes the official report from the Energy Information Administration, which is expected to be released later during the US session on Wednesday. The forthcoming report is likely to provide fresh impetus to oil prices.

Despite these factors, the overall fundamental backdrop appears to favour bearish traders. The WTI Crude Oil price’s ability to hold near a one-week low and oscillate in a narrow band around the mid-$83 range indicates a market that, while volatile, is showing signs of stabilizing. However, with numerous factors at play, including global conflicts, economic indicators, and supply-demand dynamics, the future trajectory of WTI prices remains uncertain.

 

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WTI Crude Stays Above $69 Amid Supply Worries Over Russia-Ukraine Conflict

WTI Climbs to $89.10 in Light of US SPR Initiatives and Rising Middle-East Strife

WTI Climbs to $89.10 in Light of US SPR Initiatives and Rising Middle-East Strife

The Western Texas Intermediate (WTI) oil has been experiencing a consistent ascent, marking its fourth consecutive day of gains. As the Asian trading session commenced on Friday, it was observed trading around the $89.10 per barrel mark. This continued rise in WTI prices can be attributed to a combination of geopolitical tensions and strategic oil reserve considerations.

A significant contributor to this uptrend is the escalating conflict between Israel and Gaza. There are heightened concerns that this unrest could spiral throughout the Middle East, jeopardizing the steady supply of oil from one of the world’s most prolific production zones. The already volatile situation was exacerbated by an explosion at a Gaza-based hospital, which, coupled with the imminent threat of an Israeli ground offensive, has cast shadows of uncertainty over the region’s stability. Such geopolitical tensions often have ripple effects on global oil prices, and the current scenario is no exception.

The U.S., a major consumer of oil, is grappling with its own set of challenges. A dwindling domestic oil inventory has put upward pressure on prices. Recognizing the potential risks of depleting reserves, the U.S. government has outlined an ambitious plan to rejuvenate the nation’s Strategic Petroleum Reserve (SPR). This strategic move is multifaceted. Not only does it aim to reinforce national energy security, but it also strives to ensure that there’s an adequate emergency oil reserve. A recent announcement by the U.S. Department of Energy affirmed the government’s commitment to this endeavor, revealing plans to procure 6 million barrels of crude oil destined for the SPR in the forthcoming December and January.

On the global front, major oil powerhouses, namely Saudi Arabia and Russia, are playing their part by extending oil supply cutbacks until year’s end. This decision is in anticipation of a projected supply deficit as the year draws to a close.

Moreover, the U.S.’s decision to momentarily lift oil sanctions on Venezuela has stirred the waters within the OPEC+ conglomerate. Despite this move, insiders from OPEC+ have indicated that it wouldn’t trigger any abrupt policy shifts. They believe that Venezuela’s oil production resurgence will be a slow process, thereby negating the need for hasty policy recalibrations within the OPEC+ framework.

In essence, the oil market currently finds itself at the confluence of several pivotal factors. Whether it’s geopolitical tensions, strategic reserve considerations, or global production dynamics, each element is playing a role in shaping oil prices. The intertwined nature of these factors ensures that oil prices remain underpinned for the foreseeable future.

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EUR/USD Price Forecast

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

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

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

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

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

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EUR/USD Eases Near

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Technical Outlook: Bullish Momentum Builds 

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

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

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

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

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

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

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

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

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JPY Recovers Losses vs. USD, Bullish Outlook Intact

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Conversely, on the downside:-

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

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

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

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

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

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

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

AUD Pressured by Risk Aversion, Trump’s Tariff Threats

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

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

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

China’s Economic Slowdown Adds Pressure on AUD

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

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

Technical Outlook: AUD/USD Turns Bearish Below 0.6250

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

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

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US Dollar Surges as Trump Revives Tariff Threats

US Dollar Surges as Trump Revives Tariff Threats

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

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

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

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

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

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

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

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

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

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

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

Risk Aversion Rises Amid Trump’s Trade Tariff Push

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

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

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

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

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

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

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NZD/USD Struggles

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

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

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

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

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

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US Yields Boost Dollar, Weaken Yen

US Yields Boost Dollar, Weaken Yen

US Yields Boost Dollar, Weaken Yen

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

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

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

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

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

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

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

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

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

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Cryptocurrency Move Back to Support the Pack to Level

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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Cryptos Market: Bitcoin Shows Bullish Momentum Over Dollar Strength

Cryptos Market: Bitcoin Shows Bullish Momentum Over Dollar Strength

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

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

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

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

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

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

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

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

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Ethereum Rate Hits at Higher Level More Profitable Than Bitcoin Mining

Ethereum Rate Hits at Higher Level More Profitable Than Bitcoin Mining

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

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

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

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

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

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

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

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Cryptocurrency Bitcoin Shows the Bullish Divergence on User Count

Cryptocurrency Bitcoin Shows the Bullish Divergence on User Count

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

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

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

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

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

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

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

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

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

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

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

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

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