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USD/CHF Continues to Slide, Approaching

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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USD/JPY Ends Three-Day Slide

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

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

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

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

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

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

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EUR/USD Nears 1.0750 as Risk Appetite Rebounds

EUR/USD Nears 1.0750 as Risk Appetite Rebounds

EUR/USD Nears 1.0750 as Risk Appetite Rebounds

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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US stock market halted its losing trend & inflation to moderate

US stock market halted its losing trend & inflation to moderate

The NASDAQ, which gained 3.3 percent, led all three US benchmarks to a positive finish on Friday, bringing the stock market’s seven-week losing streak to an end. The S&P 500 gained 2.5 percent, while the Dow Jones gained 1.8 percent, with 29 of the 30 members posting increases. The Dow gained 6.2 percent this week, the S&P 500 climbed 6.6 percent, and the NASDAQ surged 6.8% higher.

The rise on Friday was fueled by a long-awaited, but predictable (in my opinion) reduction in inflation. After fuel costs declined during the month, core inflation in the United States climbed by only 0.2 percent in April, the smallest pace since November 2020. In addition, the 12-month rate fell from 6.6 percent to 6.3 percent.

While the inflation rate is favorable, consumer morale is at a 10-year low as a result of rising mortgage rates, rising fuel prices, and a slowing economy.

Two companies that stand out: Costco and Dell

Even if same-store sales declined, Costco was a rare retail winner, rising 1% after disclosing revenue that exceeded its own projections by $1 billion.

Dell increased its revenue by 13% in the first quarter, owing to a return to the office and lower-than-expected cost hikes.

Improving China

However, all eyes were on China, with Baidu and Alibaba both surging more than 12% after reporting stronger advertising revenue and sales than expected.

When the market starts this morning, the strong bullish lead is expected to send the S&P/ASX 200 higher. Check out my ASX 200 morning report for a round-up of the latest headlines. If you’re anything like me, you may believe that now is a wonderful moment to have money “waiting on the sidelines.”

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Stocks in the US are up for the second day in a row

Stocks in the US are up for the second day in a row

Strong retailer numbers mixed with investor bargain-hunting to generate a second straight bullish session on Wall Street on Thursday. Following Wednesday’s positive day, major indices continued to rise, achieving a rare back-to-back gain in 2022. Aside from the positive retailer results, initiatives by Southwest Airlines and JetBlue Airways to raise their revenue predictions, another evidence of robust consumer behavior, added to the momentum.

Analyst after the S&P 500 plummeted for seven weeks in a row, Patrick O’Hare believes the rally is unavoidable. He explained, “The market had been substantially sold… and was due for a bounce.” The Dow Jones Industrial Average rose more than 500 points, or 1.6 percent, to 32,637.19 at the end of the session.

The broad-based S&P 500 rose 2% to 4,057.84, while the tech-heavy NASDAQ Composite Index rose 2.7 percent to 11,740.65. Dollar General and Dollar Tree both saw their stock rise 14% and 21.9 percent, respectively, after posting better-than-expected earnings. Macy’s, up 19.3%, and Williams-Sonoma, up 12.8%, were two other notable stores to announce gains.

Broadcom gained 3.6 percent after announcing a $61 billion deal to buy cloud computing company VMware, which gained 3%. Despite decreasing its revenue forecast, another semiconductor manufacturer, Nvidia, rose 5.2 percent throughout the day.

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US stock market closes higher as US Fed minutes were positive

US stock market closes higher as US Fed minutes were positive

Wall Street ended the day higher on Wednesday, boosted by minutes from the Federal Reserve’s most recent monetary policy meeting, which revealed that officials agreed that the US economy was quite robust as they struggled to control inflation without sparking a recession.

The minutes from the Federal Open Market Committee’s May meeting, which resulted in a 50-basis-point hike in the Fed funds target rate – the largest increase in 22 years – revealed that the majority of the committee’s members believed that more rate hikes would “likely be appropriate” at the committee’s upcoming June and July meetings.

“Consensus is a positive thing,” said Ross Mayfield, an investment strategy analyst at Baird in Louisville, Kentucky. “There isn’t much doubt about what needs to be done in the short term.” “By the time (the Fed) comes to September, they’ll have plenty of economic data to make their decision from there,” Mayfield added.

Early in the day, Wall street the three major U.S. market indexes gyrated amid rising concerns arising from business and consumer surveys, economic statistics, and corporate earnings reports, all of which pointed to a cooling American economy – even as the Fed prepares to slam the brakes on decades-high inflation.

Fears that the Fed’s excessively aggressive interest rate hikes may send the economy into recession, despite evidence that inflation peaked in March, have fanned such fears. Mayfield added, “There’s some validity to the argument that inflation is doing (the Fed’s) job for them.” “A cooling is already taking place, and financial conditions have tightened in the previous month as a result of dollar strength and equity market downturn.”

The Commerce Department is expected to announce its second estimate of first-quarter GDP on Thursday, with economists anticipating a slightly shallower fall than the 1.4 percent quarterly annualized drop previously reported. On Friday, the Personal Consumption Expenditures (PCE) report will be released, which will provide more information about consumer spending and whether inflation peaked in March, as other signs imply.

The Dow Jones Industrial Average increased by 191.66 points, or 0.6 percent, to 32,120.28, the S&P 500 increased by 37.25 points, or 0.95 percent, to 3,978.73, and the NASDAQ Composite increased by 170.29 points, or 1.51 percent, to 11,434.74. Nine of the S&P 500’s 11 major sectors increased, with consumer discretionary stocks leading the way with a 2.8 percent rise.

Amazon.com Inc and Tesla Inc gave the S&P 500 and NASDAQ the biggest boosts, climbing 2.6 percent and 4.9 percent, respectively. Nordstrom Inc, a department store operator, rose 14.0 percent following its bullish annual profit and growth forecasts. Wendy’s stock rose 9.8% after a regulatory filing revealed that shareholder Nelson Peltz was mulling a takeover bid.

Nvidia Corp’s stock dropped more than 8% in after-hours trading after the company’s second-quarter sales projection fell short of forecasts. On the NYSE, advancers exceeded decliners by a 3.56-to-1 ratio; on the NASDAQ, advancers outpaced decliners by a 2.22-to-1 ratio. The S&P 500 added three new 52-week highs and 32 new lows, while the NASDAQ Composite added 23 highs and 255 lows. On U.S. exchanges, volume was 11.19 billion shares, compared to a total session average of 13.27 billion shares over the previous 20 trading days.

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Fears of slower growth in U.S.A have caused stock markets to tumble

Fears of slower growth in U.S.A have caused stock markets to tumble

After statements from social media company Snap and poor economic data raised concern that the US economy was about to decline dramatically, investors sold stocks on Tuesday and bet on a less aggressive Federal Reserve policy. On Tuesday, the NASDAQ Composite, which is dominated by large US technology companies, sank 2.3 percent.

The S&P 500 index, which monitors the fortunes of the largest publicly traded firms, fell 0.8 percent. However, by the time the bell rang, both indices had retreated off early-session lows. The average stock in the broad-based Russell 3000 is down more than 40% from previous highs this year, as the Federal Reserve raises interest rates in an attempt to contain inflation. Investors are concerned that the US economic recovery from the coronavirus pandemic may be diminishing, based on recent statistics showing weaker growth.

Instead of riskier assets, money managers have snatched up US government debt as a safe haven. The 10-year Treasury yield, which swings in lockstep with economic growth and interest rate forecasts, plummeted 0.09 percentage points to 2.76 percent on Tuesday, marking its greatest one-day gain since late April. Snap said late Monday that the “macroeconomic environment has deteriorated farther and faster than anticipated” since it released guidance in April, making investors nervous. The company predicted that sales and profitability for the current quarter would fall short of forecasts. Snap’s stock dropped 43% on Tuesday.

Snap mentioned, among other things, the problems created by increasing inflation, higher borrowing rates, supply chain snafus, and the situation in Ukraine. Because the announcement was unexpected, it had a particularly large impact on Snap’s stock price and the market as a whole. “Certainly, a social media company’s stern warning of ‘macro deterioration’ just a month after giving quarterly guidance presses all the key ‘leading indication’ buttons,” Citi strategist Edward Acton wrote. On Tuesday, Google parent Alphabet fell 5%, while Facebook owner Meta fell 8%, thanks to a sell-off in Snap. This year, the NASDAQ has lost 28% of its value.

Last week, US consumer bellwethers Target and Walmart offered similarly pessimistic forecasts. The grim outlook was worsened by Tuesday’s weak GDP figures. New house sales plummeted nearly 17% in April, according to the US Census Bureau, despite an increase in the number of new homes for sale. According to Doug Duncan, chief economist at Fannie Mae, the data “certainly indicates to a housing market that has shifted.” In May, the S&P purchasing managers’ index showed that business activity in the United States and the United Kingdom slowed. Traders also speculated that the Fed will be less active in raising interest rates than projected earlier this year due to these economic obstacles.

The two-year yield, which is influenced by interest rate forecasts, fell 0.14 percentage point to 2.49 percent. “The Fed wants the economy to slow down.”The economy is slowing down,” said Andrew Brenner, NatAlliance Securities’ head of international fixed income. “The Fed might be able to achieve something without raising rates as much as they might have anticipated.” Data from Europe and Asia only added to investors’ concerns. According to a study accompanying S&P Global’s May flash purchasing managers’ index for the major eurozone economy, German businesses were “increasing their charges for goods and services to cover the greater cost of energy, fuel, raw materials, and employees.”

According to a comparable PMI survey for Japan, manufacturing activity is rising at its weakest pace in three months, which its compilers blame on “supply chain interruptions” caused by “economic sanctions imposed on Russia” and Chinese lockdown measures. The Stoxx 600 index in Europe, which has lost more than a tenth of its value this year, dropped 1.1 percent. The Hang Seng index in Hong Kong fell 1.8 percent, while the Nikkei in Tokyo fell 0.9 percent.

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Big tech and banks are driving Wall Street higher; the Dow is up 2%

Big tech and banks are driving Wall Street higher; the Dow is up 2%

On Monday, US equities finished higher as bank gains and a resurgence in market-leading tech companies fueled a broad-based rally following Wall Street’s largest weekly fall since the dotcom bust more than two decades ago. All three major US market indexes rose between 1.6 and 2.0 percent, with resurgent megacap tech titans Apple Inc and Microsoft Corp providing the biggest boost.

Interest rate-sensitive banks rose 5.1 percent after JPMorgan Chase & Co, the largest U.S. lender, boosted its current year interest income outlook. The stock of JPMorgan Chase increased by 6.2 percent. “It appears to be more of a relief rally than a fundamental shift in market attitude,” said Oliver Pursche, senior vice president at Wealthspire Advisors in New York. “Investors as a group believe another shoe is about to drop, and they are probably correct in the short run.” On Friday, the S&P 500 fell 18.7% from its record closing high set on Jan. 3. If the benchmark index closes 20% or more below that high, it will confirm that the market has been in a downtrend since then.

Concerns over consistently rising inflation and strong moves by the Federal Reserve to contain it have roiled markets in recent weeks, as the global economy deals with the consequences from Russia’s invasion of Ukraine. “Today, it appears the market is less concerned about inflation and the Fed’s ability to orchestrate a smooth landing,” said Chuck Carlson, president and CEO of Horizon Investment Services in Hammond, Indiana. Carlson said that “the bias is still to the downside.”

The Dow Jones Industrial Average increased by 618.34 points, or 1.98 percent, to 31,880.24, the S&P 500 increased by 72.39 points, or 1.86 percent, to 3,973.75, and the NASDAQ Composite increased by 180.66 points, or 1.59 percent, to 11,535.28. On Wednesday, the Fed will disclose minutes from its most recent policy meeting, giving investors a glimpse into its thinking. This week’s economic statistics may provide more evidence that inflation peaked in March, as well as if high prices have harmed consumer purchasing power.

The S&P 500’s 11 major sectors all closed the session in the green, with financials leading the way with a 3.2 percent gain. The first-quarter reporting season is virtually over, with 474 of the S&P 500 businesses having released results. According to Refinitiv, 78 percent of them exceeded expectations. According to Refinitiv, current quarter pre-announcements are typically pessimistic, with 59 negative estimates and 32 positive, compared to 37 negative and 52 positive in the year-ago quarter.

VMWare Inc’s stock jumped 24.8 percent on news that chipmaker Broadcom Inc was in talks to buy the cloud service provider over the weekend. Broadcom’s stock fell 3.1 percent. Didi Global’s U.S.-listed shares fell 4.0 percent after shareholders voted to de-list the Chinese ride-hailing app from the New York Stock Exchange.

On the NYSE, advancers outnumbered decliners by a 2.43-to-1 ratio; on the NASDAQ, advancers outnumbered decliners by a 1.44-to-1 ratio. The S&P 500 added one new 52-week high and 31 new lows, while the NASDAQ Composite added 27 highs and 142 lows. The volume on US exchanges was 10.93 billion shares, down from the average of 13.36 billion during the previous 20 trading days.

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Stocks in the United States finish with a mixed performance

Stocks in the United States finish with a mixed performance

 

On Friday, May 20, 2022, the US stock market ended the day on a mixed note, with a lack of important US economic data putting some investors on the sidelines and concerns about the potential economic consequences from the Federal Reserve’s efforts to suppress inflation rising to the surface. The Dow Jones Industrial Average index increased 8.77 points, or 0.03 percent, to 31,261.90 at the close of trading. The S&P 500 index rose 0.57 points, or 0.01 percent, to 3,901.36.

The NASDAQ Composite Index, which is heavily weighted in technology, fell 33.88 points, or 0.3 percent, to 11,354.62. The S&P 500 lost 2.9 percent this week, the Dow lost 3%, and the NASDAQ lost 3.8 percent. The stock market in the United States has been battered this year by fears of increasing inflation and interest rates, with warnings from Walmart Inc. and other retailers this week adding to concerns about the economy.

Tesla’s stock dropped 6.4 percent after CEO Elon Musk called charges in a news story that he sexually assaulted a flight attendant on a private jet in 2016 “utterly untrue.” Ross Stores’ stock dropped 22.5 percent after the bargain clothes retailer lowered its sales and earnings estimates for 2022. Deere & Company’s stock plunged 14% after the heavy equipment manufacturer reported lower-than-expected quarterly revenue.

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Stocks end the day higher as indexes recover from their recent sell-off

Stocks end the day higher as indexes recover from their recent sell-off

Stocks in the United States rose on Tuesday, helped by a rise in technology companies, as all three indexes recovered after heavy selling last week sparked by concerns about persistently rising prices and the possibility of an economic downturn. Investors mostly ignored Federal Reserve Chair Jerome Powell’s hawkish statements at a Wall Street Journal conference on Tuesday, which suggested the central bank was willing to boost rates above neutral if necessary to cool rising prices.

The S&P 500 increased by 2%, while the Dow Jones Industrial Average increased by 400 points. As technology companies recovered from a negative day on Monday, the NASDAQ Composite rose 2.8 percent. The developments follow six weeks of losses for the S&P 500, the index’s longest losing streak in over a decade, and seven weeks of losses for the Dow Jones Industrial Average, the index’s longest losing streak since 2001.

Walmart (WMT) shares fell 11.38 percent to $131.39 in other markets after the megastore missed earnings expectations. During intraday trade, the store dropped as much as 11.75 percent, marking its worst day since 1980. During the 1987 stock market meltdown, Walmart’s shares dropped 11.68 percent. Retail sales rose 0.9 percent in April, indicating that consumer spending is still holding up despite stubbornly rising inflation.

In a report, Harris Financial Group managing partner Jamie Cox said, “The urge to spend remains high among US consumers.” “Americans have broken free from COVID’s bonds and are not going back. Numbers like this put into question any predictions of a US recession in 2022.”

Uncertainty about the timing and extent of the Federal Reserve’s rate hike cycle has fueled market pressure that has lasted all year. So far in 2022, the S&P 500 is nearly 15% below its all-time high on Jan. 3, the Dow is down around 11%, and the NASDAQ has entered a bear market – well over 20% below its record closing price in November.

Citi Private Bank Chief Investment Officer David Bailin told Yahoo Finance, “Markets lead the economy.” “The fact that markets are currently lower suggests that the consumer and the global economy are both slowing. “According to Comerica Wealth Management Chief Investment Officer John Lynch, equity markets have suffered “serious technical damage” in recent months, with the S&P 500 dipping below the crucial 4,000 level last Monday before touching bear market levels of 3,850 last Thursday.

“Curiously, statements from Fed Chair Jerome Powell indicating the potential of economic hardship in order to accomplish the central bank’s goals of lower inflation may have been the spark for the S&P 500’s rise that began Thursday afternoon and lasted until Friday’s closing,” Lynch said. “However, investors should be aware that the serious technical damage sustained in recent months will take more than a few good days to restore.” Investors will have more Fed speak to think over in the coming days, as additional central bank officials are scheduled to speak through Friday.

In an emailed message, Independent Advisor Alliance Chief Investment Officer Chris Zaccarelli wrote, “The unfortunate truth is that the Fed will need to raise rates more rapidly and to a greater level than many were hoped.” “This year, there will be at least four 50 basis point rate hikes, not three or less, and we will remain careful with risk assets.”

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

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

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

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

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

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

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

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

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Gold Price Climbs Steadily

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

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

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

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

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

Trump’s Tariff Announcement Sparks Market Uncertainty

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

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

Fed Policymakers Express Caution Amid Economic Uncertainty

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

Several Fed officials have weighed in on economic policy:

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

What’s Next for Gold?

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

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Gold Price Rally Holds Strong, But Overbought Conditions Raise Caution

Gold Price Bulls Hold Firm, But Overbought Conditions Suggest Caution

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

 

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

Gold Bulls Retain Control Amid US-China Trade Tensions

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

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

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

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

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

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

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

US Tariff Delay Weighs on Oil Prices

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

OPEC+ Stands Firm on Production Policy

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

Key Technical Levels to Watch

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

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Gold Holds Below $2,800 Despite Intraday Recovery

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

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

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

Technical Outlook: Gold’s Uptrend Intact Despite Intraday Pullback

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

 

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

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

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

Market Drivers to Watch

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

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

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

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

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

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

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

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

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

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

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

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WTI Drops Toward

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

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

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

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

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

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

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EUR/USD Price Forecast

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

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

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

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

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

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EUR/USD Eases Near

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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Gold Price Struggles to Gain Momentum as Traders Await New Catalysts

Gold Price Struggles to Gain Momentum as Traders Await New Catalysts

Gold Price Struggles to Gain Momentum as Traders Await New Catalysts

The Gold price (XAU/USD) has rebounded from multi-day lows but remains under the $2,500 mark amid a renewed bid in the U.S. Dollar (USD) on Wednesday. Despite this, ongoing geopolitical risks and the potential for imminent Federal Reserve (Fed) rate cuts could support the yellow metal in the near term.

Later on Wednesday, the JOLTS Job Openings and the Fed Beige Book are scheduled for release. Investors are particularly focused on Friday’s U.S. August Nonfarm Payrolls (NFP) report, which could influence the size and pace of potential rate cuts at the Fed’s September policy meeting. A weaker-than-expected NFP reading might heighten concerns about a U.S. recession, potentially leading to faster Fed rate cuts and providing a boost to gold, as lower interest rates reduce the opportunity cost of holding non-yielding assets like gold.

Daily Digest Market Movers: Gold Price Pressured by Stronger U.S. Dollar

  • China’s Caixin Services PMI fell to 51.6 in August, down from 52.1 in July and missing the market expectation of 52.2 by a significant margin.
  • Daniel Ghali, a commodity strategist at TD Securities, noted, “Speculative positioning in gold seems maxed out for now. The pressure from the stronger dollar reflects our view on positioning.”
  • The U.S. ISM Manufacturing PMI edged up to 47.2 in August from an eight-month low of 46.8 in July, but this was below the market consensus of 47.5.
  • Traders have increased the likelihood of a more aggressive half-point rate cut to 39%, up from 31% before the release of the ISM Manufacturing PMI report, according to CME Group’s FedWatch tool.
  • The U.S. JOLTS Job Openings are anticipated to decline slightly to 8.10 million, down from 8.184 million in June.
  • The U.S. ISM Services PMI is expected to rise marginally to 51.4 in August from 51.1 in July.

Technical Analysis: Gold Price Maintains Positive Long-Term Outlook

Despite trading in negative territory for the day, gold maintains a bullish trend on the daily chart. The price remains above the key 100-day Exponential Moving Average (EMA), supported by a 14-day Relative Strength Index (RSI) that stays above the midline.

The critical resistance for gold lies between $2,530 and $2,540, corresponding to the upper boundary of a five-month-old ascending channel and the all-time high. A sustained move above this level could open the door to the psychological $2,600 mark.

Conversely, immediate support is found at $2,470, the low from August 22. A breach of this level could lead to a decline towards $2,432, the low from August 15, with further losses potentially driving the price down to $2,377, the 100-day EMA.

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Pound Sterling Drops from Recent Highs as Attention Turns to US Core PCE Inflation

Pound Sterling Drops from Recent Highs as Attention Turns to US Core PCE Inflation

The Pound Sterling (GBP) has pulled back from a more-than-two-year high of 1.3266 against the US Dollar (USD) during Wednesday’s London session. The GBP/USD pair has dipped as the US Dollar regains some strength, with investors now focusing on the upcoming US core Personal Consumption Expenditure Price Index (PCE) data for July, which is due on Friday. This data release could be a key catalyst for the pair.

The US Dollar Index (DXY), which measures the Greenback’s performance against six major currencies, has found some buying interest, rebounding after reaching a new year-to-date low of 100.50.

Despite this recent recovery, the short-term outlook for the US Dollar remains bearish, as market participants are increasingly confident that the Federal Reserve (Fed) will reduce interest rates at its September meeting. The main debate among traders is whether the Fed will implement a significant rate cut or opt for a smaller reduction in borrowing costs.

According to the CME FedWatch tool, the 30-day Federal Funds Futures data indicates a 34.5% probability of a 50-basis point rate cut in September, with the remainder favoring a 25-basis point cut.

Regarding core PCE inflation, economists anticipate that the Fed’s preferred inflation measure rose at a year-on-year rate of 2.7% in July, up from 2.6% in June, with the monthly figures showing steady growth of 0.2%. Persistent inflation would likely reduce market expectations for a large Fed rate cut, while further easing in price pressures could increase the likelihood of more aggressive rate cuts.

Market Movers: Pound Sterling Guided by BoE Mann’s Speech

The Pound Sterling is showing mixed performance against its major counterparts during Wednesday’s European trading hours. The currency is expected to trade in a narrow range as investors seek new insights regarding the Bank of England’s (BoE) interest rate trajectory.

The BoE cut interest rates by 25 basis points to 5% in August, marking the end of its two-and-a-half-year-long restrictive monetary policy stance, as officials grew confident that inflation would sustainably return to the bank’s 2% target. Market participants anticipate that the BoE’s pace of rate cuts for the rest of the year will be slower compared to other central banks, given that the UK economy appears resilient, supported by the August flash S&P Global/CIPS PMI data and robust Q2 GDP growth.

For further direction on interest rates, investors are awaiting a speech from BoE policymaker Catherine Mann, scheduled for 12:15 GMT. Mann was among those who voted to keep interest rates steady at 5.25% during the August 1 policy meeting. Her remarks will be closely scrutinized for any indications of the BoE’s future rate cuts, along with perspectives on service inflation and wage pressures.

On the political front, comments from UK Prime Minister Keir Starmer about the upcoming financial budget, expected in October, have also bolstered the appeal of the Pound Sterling. Starmer suggested that the budget would involve “short-term pain for long-term gain,” with plans to increase taxes, particularly for higher-income households.

Technical Analysis: Pound Sterling Holds Key Support at 1.3200

The Pound Sterling has seen a mild correction after reaching a new two-and-a-half-year high of 1.3266 against the US Dollar. The near-term outlook for the GBP/USD pair remains positive, as it maintains the breakout from the Rising Channel chart pattern on the weekly time frame. If bullish momentum resumes, the pair could target the February 4, 2022, high of 1.3640.

The upward-sloping 20-week Exponential Moving Average (EMA), located near 1.3000, indicates a strong bullish trend. The 14-period Relative Strength Index (RSI) remains in the bullish range of 60.00-80.00, suggesting robust upward momentum, although it has reached overbought territory around 70.00, which could prompt a corrective pullback. On the downside, the psychological level of 1.3000 is expected to serve as crucial support for Pound Sterling bulls.

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Rate Cuts Could Facilitate a Soft Landing

Rate Cuts Could Facilitate a Soft Landing: UBS

Rate Cuts Could Facilitate a Soft Landing: UBS

In a note released on Monday, UBS Financial Services reiterated its forecast that the U.S. economy is on track for a soft landing, despite acknowledging significant risks of a potential downturn. Consumer spending will be a critical factor in determining whether the economy can achieve this outcome.

UBS expects the Federal Reserve to begin lowering interest rates soon, potentially as early as its next meeting in September. These rate cuts are seen as a way to support the economy during this period of uncertainty.
The U.S. labor market has undergone substantial changes since the start of the year. UBS highlighted that the unemployment rate has risen quickly, moving from 3.7% in January to 4.3% in July. Historically, such an increase has been linked with economic downturns. However, UBS suggests this situation might be different, pointing out that the labor market remains robust by historical standards, even though it is no longer as overheated as it was two years ago.

Weekly jobless claims, a leading indicator of labor market health, have shown a rising trend. However, UBS advises interpreting this data cautiously, as it is often volatile and difficult to seasonally adjust. Although claims appear to be increasing, they remain low compared to historical norms, indicating that the labor market, while cooling, is not yet showing signs of a significant downturn.

Consumer spending is expected to play a pivotal role in the U.S. economic recovery. UBS notes that excess savings accumulated during the pandemic have largely been exhausted, making continued income growth crucial for sustaining consumer spending. Despite concerns, recent retail sales data for June and July have been stronger than expected, suggesting that the economic recovery is still on track.

However, the outlook is not without uncertainty. The U.S. government recently revised down its estimate of job growth for the 12 months ending in March by 818,000 jobs. Moreover, the latest labor market report showed some weakness in key income determinants such as wages and hours worked. UBS has adjusted its base case to reflect a soft landing but has increased the probability of a hard landing from 20% to 25%.

Inflation remains a central concern for the Federal Reserve and financial markets. UBS points out that inflation trends have shown some positive signs recently. While inflation was relatively high at the start of the year, more recent data has been softer, with the headline inflation rate slowing to 2.9% year-over-year in July—the lowest since early 2021.

The decline in inflation has been driven by falling goods prices and moderating services inflation. However, UBS notes that shelter inflation, a significant component of the Consumer Price Index (CPI), reaccelerated in July, rising by 0.4% month-over-month, compared to 0.2% in June. Shelter inflation is critical as it constitutes the largest portion of the CPI basket. Excluding shelter, inflation was only 1.7% year-over-year in July, suggesting broader inflationary pressures are easing. UBS remains confident that shelter inflation will eventually decline, especially given the modest increases in new rental leases since early 2023.

The Federal Reserve has indicated its readiness to begin cutting interest rates, as reflected in the minutes from the July FOMC meeting and comments from Fed officials. These rate cuts could start at the September 18 meeting, although uncertainty remains regarding their pace and magnitude.

UBS argues that the sharp rise in the unemployment rate, which the Fed had not anticipated, provides a compelling reason for the central bank to act swiftly. With real interest rates significantly above neutral, there is a case for an initial, aggressive rate cut. UBS’s base scenario involves a total of 100 basis points in rate cuts by the end of the year, potentially requiring a 50-basis-point cut at one of the remaining three FOMC meetings.

Given the Fed’s data-dependent approach, UBS cautions that various outcomes are possible. The upcoming September FOMC meeting is highly anticipated, with the Fed expected to use the meeting’s dot plot to signal its interest rate projections for the rest of the year. This will provide investors with a clearer picture of the Fed’s monetary policy direction and its efforts to guide the economy toward a soft landing.

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Japanese Yen Moves Sideways Despite Hawkish BoJ Signals

Japanese Yen Moves Sideways Despite Hawkish BoJ Signals

Japanese Yen Moves Sideways Despite Hawkish BoJ Signals

The Japanese Yen (JPY) traded sideways against the US Dollar (USD) on Thursday, even as a recent Reuters poll, conducted from August 13-19 and published on Wednesday, showed that 31 out of 54 economists expect the Bank of Japan (BoJ) to raise borrowing costs before the end of the year. The median forecast predicts a 25 basis point hike, which would bring the year-end rate to 0.50%.

Despite these hawkish expectations, the USD/JPY pair gained ground as the Yen weakened following the release of a record trade deficit report on Wednesday. Traders are now eagerly awaiting BoJ Governor Kazuo Ueda’s appearance in parliament on Friday, where he is expected to discuss the central bank’s recent decision to raise interest rates.

On Thursday, the US Dollar edged higher, supported by a modest recovery in Treasury yields. However, the Greenback’s gains could be limited as the Federal Reserve is expected to implement up to 100 basis points (bps) in rate cuts throughout 2024. Market analysts remain divided on whether the Fed will opt for a 25 or 50 bps cut at its September meeting.

According to the CME FedWatch Tool, the probability of a 25 basis point Fed rate cut at the September meeting has decreased to 65.5%, down from 71.0% the previous day. Conversely, the likelihood of a 50 basis point rate cut has risen to 34.5% from 29.0%.

Market Movers: Japanese Yen Holds Steady Ahead of BoJ Governor Ueda’s Speech

Traders are exercising caution ahead of Federal Reserve (Fed) Chair Jerome Powell’s keynote address at the Jackson Hole Symposium on Friday. Powell’s remarks could provide crucial insights into the Fed’s potential interest rate cuts in the United States.

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

Japan’s Merchandise Trade Balance showed a deficit of ¥621.84 billion in July, a sharp reversal from the ¥224.0 billion surplus reported in June, and fell short of market expectations of a ¥330.7 billion deficit. Imports surged by 16.6% year-on-year in July, reaching a 19-month high of ¥10,241.01 billion, up from a 3.2% increase in June. Meanwhile, exports grew by 10.3% YoY to a seven-month high of ¥9,619.17 billion, missing market forecasts of 11.4%.

Fed Governor Michelle Bowman expressed caution on Tuesday, highlighting ongoing upside risks to inflation and warning against overreacting to individual data points, which could undermine the progress already made, according to Reuters.

The Bank of Japan (BoJ) had forecasted that strong economic recovery would help inflation sustainably reach its 2% target, justifying further rate hikes following last month’s increase as part of the BoJ’s efforts to unwind years of extensive monetary stimulus, Reuters reported.

On Sunday, Federal Reserve Bank of San Francisco President Mary Daly emphasized the need for a gradual approach to reducing borrowing costs, while Federal Reserve Bank of Chicago President Austan Goolsbee warned against maintaining a restrictive policy longer than necessary, according to the Financial Times and CNBC, respectively.

On Thursday, Kazutaka Maeda, an economist at Meiji Yasuda Research Institute, commented that recent economic reports are broadly positive, supporting the BoJ’s stance and signaling the potential for further rate hikes, though the central bank would remain cautious after the last rate increase caused a sharp spike in the Yen.

Technical Analysis: USD/JPY Holds Above 145.00

USD/JPY is trading around 145.20 on Thursday. A look at the daily chart shows the pair consolidating under a downtrend line, suggesting a bearish bias. The 14-day Relative Strength Index (RSI) is slightly above 30, indicating the potential for a correction.

On the downside, the USD/JPY pair could find support around the psychological level of 144.00. A break below this level could lead the pair toward the seven-month low of 141.69, recorded on August 5, with further declines potentially targeting the next significant support level at 140.25.

On the upside, immediate resistance could be found at the downtrend line near the nine-day Exponential Moving Average (EMA) at 146.45. A break above this level could weaken the bearish outlook, allowing the pair to test the resistance at 154.50, which has transitioned from previous support to current resistance.

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WTI Crude Oil Remains Below $75.50 Amid Chinese Demand Concerns

WTI Crude Oil Remains Below $75.50 Amid Chinese Demand Concerns

WTI Crude Oil Remains Below $75.50 Amid Chinese Demand Concerns

West Texas Intermediate (WTI) crude oil prices are hovering around $75.30 per barrel during the Asian session on Monday, pressured by concerns over weakened demand from China, the world’s top oil importer.

Recent data from China revealed that Industrial Production increased by 5.1% year-on-year in July, slightly below the expected 5.2% and down from the 5.3% growth recorded in June. This marks the third consecutive month of slowing industrial output, fueling worries about reduced demand for crude oil.

However, geopolitical tensions in the Middle East could potentially support oil prices. The situation has been tense following Hamas’s rejection of a ceasefire deal on Sunday, which has raised concerns over the stability of the region. Israeli Prime Minister Benjamin Netanyahu is set to meet with US Secretary of State Antony Blinken on Monday to discuss the ongoing negotiations, with further talks scheduled in Cairo.
The potential downside for oil prices may be limited by rising expectations of a Federal Reserve interest rate cut as early as September. Recent US economic data has shown strong retail sales and easing inflationary pressures, which could lead to lower borrowing costs and potentially boost economic activity in the US.

San Francisco Fed President Mary Daly and Chicago Fed President Austan Goolsbee both emphasized a cautious approach to rate cuts, suggesting that the Fed should avoid keeping restrictive policies in place longer than necessary.

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Japanese Yen Holds Losses

Japanese Yen Holds Losses as US Dollar Stabilizes Ahead of Key Economic Data

Japanese Yen Holds Losses as US Dollar Stabilizes Ahead of Key Economic Data

The Japanese Yen (JPY) continued its decline against the US Dollar (USD) on Tuesday, with safe-haven flows offering some support amid rising geopolitical tensions in the Middle East.

Japan’s parliament is set to hold a special session on August 23 to discuss the Bank of Japan’s (BoJ) recent decision to raise interest rates. This session, organized by the lower house financial affairs committee, is expected to include an appearance by BoJ Governor Kazuo Ueda, as reported by Reuters.

The USD/JPY pair found support as pressure on the US Dollar eased, following a reduction in expectations for a 50 basis point interest rate cut by the US Federal Reserve (Fed) in September. According to the CME FedWatch Tool, the probability of a 50 basis point cut in September has decreased to 50%, down from 85% the previous week. However, markets still fully anticipate at least a 25 basis point cut at the upcoming meeting.

Investors are closely watching the release of US Producer Price Index (PPI) data on Tuesday and Consumer Price Index (CPI) figures on Wednesday for signs that inflation remains under control in the US.

Daily Digest Market Movers: Yen Weakens as Fed Rate Cut Odds Diminish

Federal Reserve Governor Michelle Bowman commented on Sunday that she sees continued upside risks to inflation and strength in the labor market. Bowman suggested that the Fed may not be ready to cut rates at its September meeting, according to Bloomberg.

A Bloomberg report last week indicated that JP Morgan Asset Management (JPAM) believes the BoJ is unlikely to raise interest rates in the near term. JPAM anticipates that the BoJ may only consider further rate hikes if the Fed cuts rates and the US economy stabilizes, with additional tightening possibly occurring in 2025, provided the global economic environment remains stable.

The BoJ’s Summary of Opinions from its July 30-31 Monetary Policy Meeting revealed that several members believe economic activity and prices are evolving as expected, targeting a neutral rate of “at least around 1%” in the medium term.

BoJ Deputy Governor Shinichi Uchida also highlighted that the BoJ’s interest rate strategy could adapt if market volatility alters economic forecasts, risk assessments, or projections. Given recent market volatility, he emphasized the importance of closely monitoring the economic and price impacts of their policies, stating the need to “maintain the current degree of monetary easing for the time being.”

Minutes from the BoJ’s June meeting indicated concerns among some members about rising import prices due to the recent decline in the JPY, which could pose an upside risk to inflation. One member noted that cost-push inflation might exacerbate underlying inflation if it leads to higher inflation expectations and wage growth.

Technical Analysis: USD/JPY Tests 147.50; Next Barrier at Nine-Day EMA

The USD/JPY pair trades around 147.40 on Tuesday, with the daily chart indicating the pair remains below the nine-day Exponential Moving Average (EMA), suggesting a short-term bearish trend. The 14-day Relative Strength Index (RSI) has breached the 30 level, indicating a potential for a corrective move. If the RSI approaches the 50 level, it could signal a possible improvement in the pair’s momentum.

For support, the USD/JPY pair may test the seven-month low at 141.69, recorded on August 5, followed by the next support level at 140.25.

On the upside, the USD/JPY pair could challenge the immediate barrier at the nine-day EMA around 147.72. A breakout above this level could reduce bearish momentum and allow the pair to approach the 5-day EMA at 153.68, followed by resistance at 154.50.

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Australian Dollar Advances as RBA Signals Potential Rate Hike

Australian Dollar Advances as RBA Signals Potential Rate Hike

Australian Dollar Advances as RBA Signals Potential Rate Hike

The Australian Dollar (AUD) rebounded against the US Dollar (USD) on Monday, driven by hawkish sentiment surrounding the Reserve Bank of Australia (RBA). Positive inflation data from China, a key trading partner, also provided support for the Aussie Dollar.

RBA Governor Michele Bullock emphasized the importance of vigilance regarding inflation risks, stating that the central bank is prepared to raise rates again if necessary. This follows the RBA’s decision to keep rates steady at 4.35% for the sixth consecutive meeting.

On the USD front, market expectations for a potential interest rate cut by the Federal Reserve (Fed) in September have put pressure on the USD, potentially providing further support for the AUD/USD pair. Investors will be closely watching US producer inflation data on Tuesday and consumer inflation figures on Wednesday for signs of stable price growth.

Daily Market Movers: Australian Dollar Rises on Hawkish RBA

RBA Deputy Governor Andrew Hauser attributed persistent inflation to weaker supply and a tight labor market, noting significant uncertainty in economic forecasts. However, the AUD’s gains could be limited by safe-haven flows due to rising geopolitical tensions in the Middle East. Reports suggest Iran may be preparing for a significant strike on Israel, adding a layer of risk to global markets.

Federal Reserve Governor Michelle Bowman reiterated on Sunday her concerns about ongoing inflation risks and a strong labor market, indicating the Fed might not be ready to cut rates in September.

In China, the Consumer Price Index (CPI) rose by 0.5% year-on-year in July, surpassing expectations. Westpac updated its RBA forecast, now predicting the first rate cut will occur in February 2025, moving from the previously anticipated November 2024, and raising its terminal rate forecast to 3.35%.

Last week, Treasurer Jim Chalmers challenged the RBA’s view that the Australian economy is too robust, which he believes is contributing to prolonged inflation. RBA Chief Economist Sarah Hunter also noted that the Australian economy is performing better than previously expected.

Technical Analysis: Australian Dollar Nears Key Support Levels

The AUD/USD pair is trading around 0.6590 on Monday, within an ascending channel that suggests a bullish bias. The 14-day Relative Strength Index (RSI) is consolidating below the 50 level, and a move above this threshold could signal strengthening bullish momentum.

Resistance for the AUD/USD pair is likely around the 0.6630 level, with a breakout potentially pushing the pair toward its six-month high of 0.6798. On the downside, immediate support is seen at 0.6575, with a drop below this level possibly reinforcing a bearish bias, potentially driving the pair toward 0.6540 and further to 0.6470 if pressure persists.

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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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