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EUR/USD Drops Toward 1.1700 as US Dollar Strengthens

EUR/USD Drops Toward 1.1700 as US Dollar Strengthens; FOMC Minutes in Spotlight

The EUR/USD pair slid to around 1.1705 during Wednesday’s Asian session, weighed down by renewed strength in the US Dollar. The Euro came under pressure following fresh tariff threats from former US President Donald Trump, which unsettled global markets and added to investor caution. 

Trump reignited global trade concerns by proposing a 50% tariff on copper imports and hinted at possible duties on semiconductors and pharmaceuticals. While he mentioned that negotiations with both the European Union and China are progressing well, he also warned that a tariff notice to the EU could be issued within days. This uncertainty has dented risk sentiment, putting the Euro under additional stress. 

Attention now turns to the Federal Reserve’s meeting minutes, due later today. Market participants are hoping for more clarity on the Fed’s rate path, especially amid growing expectations of monetary easing. 

At its June meeting, the Fed held interest rates steady, maintaining the federal funds rate between 4.25% and 4.50%—a level unchanged since December. However, markets are now pricing in a total of 50 basis points in rate cuts by year-end, potentially beginning as early as October. 

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Australian Dollar Gains as Risk Sentiment Improves, RBA Decision in Focus

Australian Dollar Rises Amid Risk-On Sentiment, Focus Shifts to RBA Rate Decision

The Australian Dollar (AUD) continues its third straight session of gains against the US Dollar (USD) on Monday, following US President Donald Trump’s move to postpone the imposition of reciprocal tariffs. A weaker USD following disappointing US retail sales data has further supported the AUD/USD pair, reigniting speculation that the Federal Reserve (Fed) may cut interest rates later this year despite persistent inflation concerns.

Yet, the AUD’s gains could be capped before the Reserve Bank of Australia’s (RBA) policy announcement on Tuesday, as mounting speculation of a cut in interest rates deters sentiment. The RBA is widely expected to lower its Official Cash Rate (OCR) by 25 basis points (bps) to 4.10%, marking the first rate reduction in four years.

US Dollar Under Pressure Amid Lower Treasury Yields

The US Dollar Index (DXY) is down for the third consecutive session, bogged down by weaker US Treasury yields. At the time of writing, the DXY is trading around 106.70, with 2-year and 10-year Treasury bond yields at 4.26% and 4.47%, respectively.

Statistics released by the US Census Bureau on Friday indicated that US Retail Sales decreased 0.9% in January, a reversal from a revised 0.7% rise in December (earlier reported as 0.4%). The decrease was deeper than the market expectation of a 0.1% decline.

Conversely, Core PPI inflation in the US increased to 3.6% YoY in January, above expectations of 3.3%, though marginally less than the revised 3.7% (initially published as 3.5%). This has consolidated expectations that the Fed will push rate cuts until the second part of the year.

The US Consumer Price Index (CPI) rose 3.0% YoY in January, beating expectations of 2.9%, and core CPI (excluding food and energy) went up to 3.3% from 3.2%, beating expectations of 3.1%. On a month-on-month basis, headline inflation rose 0.5% in January compared to 0.4% in December, with core CPI rising to 0.4% from 0.2% in the same period.

Fed Officials Signal a Cautious Approach to Rate Cuts

In his semi-annual report to Congress, Fed Chair Jerome Powell stated that policymakers “do not need to be in a hurry” to cut interest rates, citing a strong labor market and robust economic growth. Powell also warned that Trump’s tariff policies could exert upward pressure on inflation, making it harder for the central bank to lower rates.

A Reuters poll of economists now indicates the Fed will wait until next quarter to cut rates, citing ongoing inflationary concerns. Although previously, some analysts anticipated a March rate cut; the majority now sees at least one rate cut by June, but opinions remain divided.

Federal Reserve Bank of Cleveland President Beth Hammack echoed this sentiment, saying that maintaining rates at current levels for a long time is probably the right thing to do. Hammack added that a patient strategy will enable the Fed to evaluate economic conditions before altering policy.

Australian Dollar Targets Upper Range Near 0.6400

The AUD/USD currency pair quotes at 0.6360 on Monday, with an uptrend in a rising channel formation. This is indicative of a bullish market inclination, which is also complemented by the 14-day Relative Strength Index (RSI) remaining above 50.

On the upside, the pair could test the upper boundary of the ascending channel at 0.6380, followed by the psychological level of 0.6400.

Major levels of support are the nine-day EMA at 0.6310, followed by the 14-day EMA at 0.6294. A fall below these levels may erode short-term momentum, possibly pulling the pair down to the lower boundary of the rising channel at 0.6270.

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Australian Dollar Declines as US Dollar Strengthens Ahead of Jobless Claims

Australian Dollar Declines as US Dollar Holds Gains Ahead of Jobless Claims

The Australian Dollar (AUD) fell against the US Dollar (USD) on Thursday as trade balance data came in below average than expected. Furthermore, risk-off sentiment, fueled by rising US-China trade tensions, weighs on the AUD/USD.

In December, Australia’s trade surplus fell to $5,085 million, falling short of the 7,000 million anticipated and down from $6,792 million the previous year. While exports increased by 1.1% month on month, this was a decrease from November’s 4.2% increase, while imports increased by 5.9% month on month, much more than the previous 1.4% gain.

US-China Trade Tensions Weigh on Australian Dollar

Investors are still focused on the current trade stagnation between the United States and China, Australia’s top trading partner. China replied to the United States’ new 10% tax, which went into force on Tuesday, causing global market concern. Regarding the situation, President Trump announced on Monday that he intends to engage with China within the next 24 hours. However, he cautioned that failure to achieve an agreement might result in “very, very substantial” tariffs.

Meanwhile, China’s Commerce Ministry imposed a 15% tax on US coal and liquefied natural gas (LNG) imports, as well as an additional 10% levy on crude oil, farm equipment, and some autos. As a countermeasure, China has implemented export limits on important minerals such as tungsten, tellurium, ruthenium, and molybdenum, citing national security concerns.

Amid escalating trade tensions, the Financial Times writes that Chinese firms are quickening preparations to relocate production overseas, mainly to the Middle East, in order to reduce tariff impacts. Some exporters are also considering passing on prices to US consumers or expanding into new markets.

US Dollar Holds Firm Amid Mixed Economic Data

The US Dollar Index (DXY), which tracks the greenback’s performance against a basket of six major currencies, remains stable near 107.50, putting further downward pressure on the AUD/USD. The dollar’s resiliency comes after a weaker-than-expected US Services PMI fell to 52.8 in January, below the market forecast of 54.3.

Investors now focus on Friday’s US Nonfarm Payrolls (NFP) data, a key economic indicator that could influence the Federal Reserve’s monetary policy stance.

The dollar fell on Wednesday, following a poor US Services PMI report. The ISM Services PMI fell to 52.8 in January from a revised 54.0 in December, missing the market forecast of 54.3. Looking ahead, traders are anticipating Friday’s US Nonfarm Payrolls (NFP) report, which could influence the Federal Reserve’s future policy moves.

Technical Outlook: AUD/USD Pulls Back From 0.6300, Eyes Key Support

The AUD/USD pair hovers near 0.6280 on Thursday, retreating from the 0.6300 level. However, sustained trading above the nine- and 14-day Exponential Moving Averages (EMAs) suggests short-term bullish momentum remains intact. The 14-day Relative Strength Index (RSI) is also holding above 50, reinforcing the bullish bias.

On the upside, the pair might target 0.6330, its seven-week high from January 24.

Immediate support comes from the nine-day EMA near 0.6254, followed by the 14-day EMA at 0.6249.

A breach below these levels might weaken the bullish structure, potentially sending the pair below 0.6087, its lowest level since April 2020, which was recorded on February 3.

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Australian Dollar Slips as US Tariffs on China Take Effect

Australian Dollar Slips as US Tariffs on China Take Effect

The Australian Dollar (AUD) falls for the seventh consecutive day as the US Dollar (USD) strengthens following President Donald Trump’s 10% tariff on Chinese imports. Market volatility remains high as investors monitor the continuing US-China trade talks. Trump signaled he may speak with Chinese officials within the next 24 hours, warning that if a deal isn’t reached, tariffs on China will be “very, very substantial.”

Trump also announced a 30-day tariff relief for Mexico and Canada after their nations agreed to send 10,000 troops to the US border to battle drug trafficking. This move follows the introduction of 25% tariffs on Mexican and Canadian goods just two days before.

Chinese Exporters Seek Alternatives

According to the Financial Times, Chinese manufacturers are speeding up plans to transfer production offshore in reaction to US tariffs. Some companies are considering relocating to regions such as the Middle East, while others are looking into passing costs on to US customers or entering new markets.

RBA Rate Cut Expectations Weigh on AUD

The AUD faces additional pressure amid growing expectations that the Reserve Bank of Australia (RBA) may cut rates in February. The RBA has maintained the Official Cash Rate (OCR) at 4.35% since November 2023, stressing that inflation must return to its 2%-3% target range before easing policy.

Analysts at Westpac continue to forecast 100 basis points of rate cuts in 2025, with the market pricing in a more conservative outlook. ANZ, CBA, Westpac, and National Australia Bank (NAB) all anticipate a 25-basis-point (bps) cut in February, with NAB recently revising its forecast forward from May.

US Dollar Strengthens Amid Economic Developments

The US Dollar Index (DXY) stabilizes around 108.70 after erasing gains from the previous session. Recent US economic data support the greenback, with ISM Manufacturing PMI rising to 50.9 in January from 49.3 in December, exceeding expectations of 49.8.

Inflation indicators remain in focus as the Fed’s preferred measure, the Personal Consumption Expenditures (PCE) Price Index, rose 0.3% MoM in December, up from 0.1% in November. Annual PCE inflation increased to 2.6%, while core PCE held steady at 2.8% YoY for the third straight month.

Jerome Powell, Chairman of the Federal Reserve, highlighted that further policy adjustments would be required if there was clear evidence of inflation advance or labor market weakness. Separately, Treasury Secretary Scott Bessent recently argued for new uniform taxes on US imports, beginning at 2.5% and progressively increasing—a departure from his previous stance that tariffs cause inflation.

Australian Dollar Technical Analysis

AUD/USD trades around 0.6210 on Tuesday, remaining within a descending channel pattern on the daily chart, signaling a bearish bias. However, the 14-day Relative Strength Index (RSI) is recovering toward the 50 level, suggesting weakening downside momentum. A breakout above the channel, combined with an RSI move above 50, could indicate a shift toward a bullish outlook.

On the downside, the pair may test the descending channel’s lower boundary near 0.6150. A break below this level could drive AUD/USD toward 0.6087, its lowest point since April 2020.

AUD/USD is currently testing its initial resistance, the nine-day Exponential Moving Average (EMA) of 0.6225, which aligns with the channel’s upper limit. A decisive move over this level could fuel bullish optimism.

 

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Japanese Yen Maintains Strong Bullish Momentum

Japanese Yen Maintains Strong Bullish Momentum; USD/JPY Struggles Below 154.50

The Japanese Yen (JPY) continues to strengthen in early European trading on Thursday, pushing USD/JPY further below 154.50 and closer to its one-month low from earlier this week. Market expectations that the Bank of Japan (BoJ) will hike interest rates again by year-end continue to support the JPY. Additionally, a fresh decline in US Treasury bond yields, narrowing the US-Japan yield differential, has further boosted demand for the lower-yielding Yen.

However, concerns over the potential economic impact of US President Donald Trump’s trade policies may limit aggressive JPY buying. Meanwhile, the Federal Reserve’s (Fed) hawkish pause on Wednesday has bolstered the US Dollar (USD), which could provide some support to the USD/JPY pair. Traders are now looking ahead to the European Central Bank (ECB) meeting, which may increase market volatility and drive further demand for the safe-haven Yen. Additionally, the Advance US Q4 GDP report could introduce short-term trading opportunities.

JPY Gains on Hawkish BoJ Sentiment Amid Market Uncertainty

  • Minutes from the BoJ’s December meeting, released Wednesday, indicated discussions on using neutral interest rate estimates to guide future rate hikes.
  • Former BoJ board member Makoto Sakurai stated on Tuesday that steady rate increases remain feasible due to rising wages, sustained inflation, and strong economic growth.
  • The Federal Reserve, as expected, held rates steady after its two-day meeting and signaled no immediate plans for rate cuts.
  • Fed Chair Jerome Powell emphasized a patient stance, stating there is no urgency to adjust policy and reaffirming that rates will stay elevated amid concerns over Trump’s trade policies, which could fuel inflation.
  • The 10-year US Treasury yield has struggled to sustain gains post-FOMC due to uncertainty surrounding the Trump administration’s economic policies.
  • Reports from Asahi newspaper indicate that Japan’s Prime Minister Shigeru Ishiba is finalizing plans for a February 7 meeting with US President Donald Trump in Washington.
  • The ECB’s policy decision later today is expected to introduce further volatility, alongside the Advance US Q4 GDP print.

USD/JPY at Risk of Retesting Monthly Lows Near 153.70

The USD/JPY pair faced renewed selling pressure near the 156.00 level, breaking below the key 155.00 psychological mark, confirming a multi-month ascending channel breakdown. Momentum indicators on the daily chart suggest continued downside movement, making a retest of the 153.70 region—a multi-week low touched on Monday—a strong possibility.

Key resistance levels for a rebound:

  • 155.00 round figure
  • 155.35-155.40 region
  • 156.00 psychological level

Any recovery attempt is likely to face selling pressure near these levels. A sustained break above 156.25 could trigger short-covering, potentially lifting USD/JPY toward 156.70-156.75, with further resistance at 157.00 and 157.60.

For now, the bias remains bearish, with further losses expected if the pair stays below 154.00. Traders will closely watch US data and global central bank policy updates for the next directional move.

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Gold Price Retreats from Multi-Month High Amid USD Recovery

Gold Price Retreats from Multi-Month High Amid USD Recovery

Gold price (XAU/USD) faces selling pressure at the beginning of the week, pulling back from its highest level since late October, near the $2,786 mark touched on Friday. The US Dollar (USD) has staged a modest recovery following its worst weekly performance since November 2023, which has weighed on the precious metal. However, the broader market dynamics remain supportive of a bullish outlook, suggesting potential dip-buying opportunities at lower price levels.

Market Sentiment Dampened by Trade Tensions and Fed Speculation

Risk sentiment has deteriorated due to US President Donald Trump’s recent decision to impose tariffs on all imports from Colombia, reigniting fears of a trade war. Additionally, expectations that the Federal Reserve (Fed) may cut interest rates twice by year-end, combined with a flight to safe-haven assets, have triggered a fresh decline in US Treasury bond yields. This decline could limit aggressive gains in the USD, potentially cushioning the downside for gold, a non-yielding asset.

Gold Under Pressure from USD Recovery, but Downside Remains Limited

The US Dollar Index (DXY), which tracks the USD against a basket of currencies, rose nearly 0.25% on Monday, driven by revived concerns over US trade policies. President Trump ordered 25% emergency tariffs on all Colombian imports following the country’s refusal to accept deported migrants from the US, with a threat to raise tariffs to 50% next week. Moreover, reports suggest that Trump’s advisors are considering imposing 25% tariffs on Mexico and Canada starting February 1.

In a recent update, the White House confirmed that Colombia has agreed to Trump’s demands, including the unrestricted acceptance of deported individuals. Meanwhile, Trump has reiterated his call for immediate interest rate cuts, fueling speculation of further easing by the Federal Reserve in 2025. The resulting decline in US Treasury yields may act as a headwind for the USD, potentially limiting the extent of gold’s pullback.

Traders Eye Economic Data for Further Clues

Market participants will turn their focus to key US economic data, including Durable Goods Orders, the Conference Board’s Consumer Confidence Index, and the Richmond Manufacturing Index, for fresh impetus during the US trading session.

Gold Price Outlook: Support and Resistance Levels

Gold’s recent decline may attract dip-buying near the $2,736 support zone, as the technical setup remains bullish. Any further slide below the $2,750-2,748 range could find solid support near $2,736, with additional key levels at $2,725-2,720. A break below $2,720 could trigger technical selling, pushing prices toward the $2,665-2,662 zone.

On the upside, a sustained move above the $2,772-2,773 resistance could open the door for a retest of the recent peak near $2,786. Further buying momentum beyond the $2,800 psychological level could signal a renewed bullish phase, extending the upward trend

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Gold Price Holds Defensive Below Multi-Month High Amid Risk-On Sentiment

Gold Price Remains Defensive Below Multi-Month High Amid Risk-On Sentiment

Gold price (XAU/USD) came under selling pressure during the Asian session on Thursday, retreating from the multi-month high of $2,763–$2,764 touched the previous day. This decline halts a three-day winning streak. The US Dollar (USD) gained some strength from its recovery off a monthly low, supported by a rebound in US Treasury bond yields, and the upbeat sentiment in equity markets further dampened demand for the safe-haven metal.

Signs of easing inflation in the US have fueled expectations that the Federal Reserve (Fed) might cut interest rates twice this year, creating a potential headwind for US bond yields and the USD. However, ongoing uncertainty surrounding President Donald Trump’s tariff plans, which could increase trade tensions and market volatility, may help limit the downside for gold prices. Traders may remain cautious and wait for sustained selling pressure to confirm that the one-month uptrend has ended.

Risk-On Mood and Modest USD Rebound Cap Gold Gains

The USD steadied above its recent lows amid recovering Treasury yields, adding pressure to gold prices. In addition, easing geopolitical tensions and a lack of concrete details regarding Trump’s tariff policies have maintained a risk-on sentiment, further undermining gold’s appeal.

While Trump’s proposed tariff policies are considered inflationary, which could prompt the Fed to maintain a hawkish stance, markets are still pricing in at least two Fed rate cuts this year. This outlook may limit the upside for US bond yields and the USD, potentially supporting gold in the near term.

Investors are eyeing Trump’s speech at the World Economic Forum for more clarity on tariffs, alongside the release of US Weekly Jobless Claims, which could influence XAU/USD prices. Upcoming central bank rate decisions, including the Bank of Japan’s meeting on Friday and next week’s announcements from the Fed and the European Central Bank, could inject volatility into the market and impact gold prices.

Gold Price Technical Analysis

Key Support Levels:

  • Immediate support is seen near the $2,725–$2,720 zone, a former resistance-turned-support level.
  • Further declines could target the $2,700 mark, with a decisive break paving the way for a move toward the $2,665–$2,662 region.
  • The $2,627–$2,622 confluence, which includes the 100-day EMA and a short-term ascending trendline, will act as a critical pivot point for short-term traders.

Key Resistance Levels:

  • The recent high near $2,763–$2,764 offers the first resistance level.
  • A break above this zone could see gold prices challenge the all-time high around $2,790, reached in October.
  • The $2,800 mark is the next significant resistance, and a break above it would signal a continuation of the well-established uptrend over the past month.

Outlook:

Gold prices remain influenced by risk sentiment, central bank policy expectations, and USD movements. While near-term bearish factors may limit gains, uncertainty around US tariff policies and inflation trends could provide support, making any dips near key technical levels potential opportunities for dip-buying. Traders will remain focused on upcoming economic data and central bank decisions for further direction.

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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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Yuan Falls to Lowest Level Since November as China Permits Declines

Yuan Falls to Lowest Level Since November as China Permits Declines

China’s onshore yuan dropped to its weakest level since November, signaling that policymakers are gradually allowing the currency to decline against a resilient US dollar. The yuan fell to as low as 7.2487 per dollar as the People’s Bank of China (PBOC) gradually reduced its daily reference rate for the managed currency, reaching a level not seen in four months. This move coincided with a strengthening of the greenback, driven by market expectations that the Federal Reserve is not close to initiating a rate-cut cycle.

The PBOC is navigating a complex balancing act, attempting to weaken the yuan at a pace that supports economic growth without triggering market panic or capital outflows. Throughout the year, the central bank has maintained a steady yuan, but pressures have mounted due to worsening capital outflows and sluggish domestic growth.According to Ken Cheung, chief Asian FX strategist at Mizuho Bank, the PBOC may permit further yuan depreciation. The central bank appears to be focusing on managing the pace of yuan depreciation rather than defending a specific level, particularly in the context of a prolonged high-rate environment in the US.

The yuan’s struggles are not unique in Asia. Japan’s currency recently hit its lowest level against the pound since 2008, and currencies such as the Thai baht and Indonesian rupiah are nearing multi-year lows. These Asian currencies are under pressure due to their wide yield discount compared to the US, which benefits the dollar. This rate gap is further intensified by expectations that the Federal Reserve will not cut rates soon, given the surprisingly resilient US growth and persistent inflation.

Christopher Wong, a strategist at Oversea-Chinese Banking Corp., noted that the higher dollar-yuan rate aligns with broader dollar movements as US yields resumed their upward trend. He added that the yuan is likely to weaken further due to the still-wide rate differentials with the US and the anticipation of more US-China trade frictions.

In summary, the yuan’s recent decline reflects broader regional currency struggles amid a robust dollar and high US interest rates. The PBOC’s careful management of the yuan’s depreciation is aimed at balancing economic support with market stability, a challenge complicated by external economic pressures and domestic growth concerns. As the situation evolves, the market will closely watch the PBOC’s actions and their impact on the broader economic landscape.

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Japanese Yen Weakens Against USD

Japan Wary of Weak Yen’s Downsides, Finance Minister Notes

Japan Wary of Weak Yen’s Downsides, Finance Minister Notes

Japanese Finance Minister Shunichi Suzuki expressed concerns on Tuesday about the current depreciation of the yen, emphasizing the negative effects more than the positives. Suzuki highlighted the challenges posed by a weak yen, including increased costs for companies and consumers due to higher import prices, during a session with a parliamentary committee.

Suzuki pointed out that Japan’s economic policy aims to secure wage growth that outpaces price increases. Given this goal, the adverse impacts of the yen’s weakness are currently a more significant concern for the government.

Furthermore, Suzuki confirmed that Japanese authorities would maintain vigilance over the currency’s influence on the economy and households, and would take necessary actions as required.

The yen has been performing poorly, hovering around 157 per dollar, with a recent position at 156.80 per dollar during early trading in Asia on Tuesday.

Additionally, over the recent weekend, finance leaders from the Group of Seven (G7) advanced nations reiterated their stance against excessively volatile currency movements. This reaffirmation is seen by Japan as support for potential market interventions to stabilize sharp declines in the yen’s value.

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Lane Asserts ECB Must Maintain Restrictive Stance Throughout the Year

Lane Asserts ECB Must Maintain Restrictive Stance Throughout the Year

The European Central Bank (ECB) is poised to initiate interest rate cuts as early as next month, yet Chief Economist Philip Lane emphasizes the necessity to maintain a restrictive monetary policy throughout 2024. In a recent interview with the Financial Times, Lane highlighted that although the ECB plans to ease off the most stringent levels of restriction, the overall policy stance for the year needs to remain tight to stabilize the economic landscape.

Lane indicated that barring any major unforeseen events, the conditions are ripe for beginning to lift the uppermost restrictions at the upcoming June 6 meeting. This initial step in monetary easing has been largely anticipated by financial markets, though the trajectory for subsequent rate adjustments remains uncertain. Current market speculations suggest that the ECB might skip adjustments in July and opt to resume rate reductions in September, aligning with statements from more conservative ECB officials like Joachim Nagel and Isabel Schnabel. Meanwhile, other members of the Governing Council have not publicly disclosed their positions.

Looking ahead to 2024, Lane anticipates a shift in discussions as inflation is expected to come closer to the ECB’s target. The focus will then turn to aligning interest rates with this inflation target, heralding a different phase in the ECB’s monetary policy approach.

Recent economic indicators add complexity to the ECB’s decision-making process. Preliminary data suggests a potential uptick in inflation for May. The core inflation measure, which excludes volatile items such as energy and is a key focus for the ECB, appears to have stabilized for the first time since last July. Furthermore, a significant wage growth indicator for the first quarter showed acceleration, although Lane remarked that the general trend in wage movements still points towards a slowdown, which he considers crucial.

Lane describes the path ahead as “bumpy” and “gradual,” indicating that the ECB’s approach to monetary policy adjustment will be carefully measured to navigate the evolving economic conditions effectively.

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US Data and Trump Drive Sentiment in the FX Market

UK Inflation Hits 3-Year Low; PM Sunak Prioritizes It for July 4 Election

UK Inflation Hits 3-Year Low; PM Sunak Prioritizes It for July 4 Election

In April, the UK experienced a significant decrease in inflation, reaching its lowest level in nearly three years, primarily due to substantial reductions in domestic bills, according to official statistics released Wednesday. This decrease prompted Prime Minister Rishi Sunak to schedule a general election for July 4.

The Office for National Statistics reported that the annual consumer prices index dropped to 2.3% in April, a decline from 3.2% in March. This marked the lowest inflation rate since July 2021, a period still affected by the global economic repercussions of the coronavirus pandemic. This reduction brings inflation closer to the Bank of England’s target rate of 2%, intensifying the pressure on its nine-member rate-setting panel to lower interest rates from the current 16-year peak of 5.25%.

With the Bank of England’s next rate-setting meeting scheduled for June 20, many economists anticipate a cut in borrowing costs. However, persistent concerns among some panel members about price increases in the critical services sector and wage growth rates suggest that a rate cut might be deferred until August to avoid a premature reduction that could trigger a rebound in inflation.

Despite the notable decrease in inflation, it has not fallen as much as some economists had hoped, indicating that the UK’s severe cost of living crisis, described as the worst in around 40 years, is far from over. Lower inflation simply means that prices are increasing at a slower pace than before, but the overall financial pressure remains significant.

James Smith, the research director at the Resolution Foundation, commented on the complexity of the inflation figures. He noted that while it is positive news that headline inflation has returned to more typical levels, it’s disappointing that price pressures haven’t eased further and that services inflation has been more resilient than expected.

Inflation had soared to over 11% at the end of 2022 following Russia’s invasion of Ukraine, which led to sharp increases in energy costs. Over the last couple of years, prices for goods and services have risen by 15%, with food prices increasing by about 25%.

In response to these pressures, the Bank of England, similar to the U.S. Federal Reserve and other global central banks, had previously raised interest rates sharply from near zero in late 2021 to combat inflation initially fueled by supply chain disruptions during the pandemic and later by geopolitical tensions.

These higher interest rates have played a role in cooling the economy by making borrowing more expensive, which in turn reduces spending and helps to control inflation. Recent data indicates that the British economy has begun to grow again.

The Conservative Party, currently governing the UK, hopes that the combination of lower inflation and economic recovery will generate a positive mood among voters ahead of the upcoming general election, despite opinion polls showing the main opposition Labour Party in the lead. During his election announcement, Sunak highlighted the return to normal inflation levels, suggesting that this trend would alleviate price pressures and reduce mortgage rates.

Conversely, Labour’s economy spokesperson, Rachel Reeves, cautioned against premature celebration, indicating that the situation remains challenging for many across the country.

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Goldman Predicts Stronger Dollar in Inflation Battle

Goldman Predicts Stronger Dollar in Inflation Battle

Goldman Predicts Stronger Dollar in Inflation Battle

The U.S. dollar is expected to maintain its strength if the Federal Reserve decides to hold interest rates steady while other countries move towards lowering their borrowing costs, according to analysts from Goldman Sachs Group Inc. The strategists, led by Kamakshya Trivedi and Joseph Briggs, suggest that such a policy divergence would likely support a stronger dollar over an extended period. They anticipate that interest rate cuts in June could occur in Canada, the United Kingdom, and the euro area.

Throughout the year, the dollar has shown considerable strength against its major counterparts in the Group of 10, with a Bloomberg index that tracks the greenback showing a near 3% increase. This performance underscores the dollar’s resilience amidst fluctuating global economic conditions.

Market sentiment regarding the Federal Reserve’s next moves has shifted recently. Initially, traders expected the Fed to implement two rate cuts following a mild inflation report for April. However, the expectations have moderated, with the swaps market now forecasting approximately 40 basis points of rate cuts by year-end, starting with a 25 basis point reduction at the November policy meeting.

Federal Reserve Governor Christopher Waller noted on Tuesday that a continued softening in U.S. economic data over the next three to five months could prompt the central bank to consider reducing borrowing costs towards the end of 2024. In contrast, Christine Lagarde, President of the European Central Bank, hinted that a rate cut could be likely next month, given that the surge in consumer price growth is now largely under control.

The Goldman Sachs analysts also highlighted the importance of macroeconomic factors and potential policy divergences in shaping currency strength. They noted that global central banks have been closely monitoring the Fed’s policy shifts to minimize currency volatility. If these banks commence cuts relatively earlier and more aggressively than the Fed, it might assist the U.S. in achieving its inflation targets. Such strategic differences in monetary policy across major economies are critical in influencing the dollar’s trajectory in the international financial markets.

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UK Government Considers 'Bootcamp' Programs

UK Government Considers ‘Bootcamp’ Programs to Address Employment Shortages

UK Government Considers ‘Bootcamp’ Programs to Address Employment Shortages

The UK government has introduced a new initiative to direct unemployed Britons towards “skills bootcamps,” aiming to fill the labor market gaps left by a decrease in overseas workers. These intensive training programs, which are already in place for various sectors, will now particularly target areas experiencing acute shortages due to recent changes in migration policies.

Work and Pensions Secretary Mel Stride emphasized that the UK has overly depended on foreign labor for a considerable time, and now seeks to foster a workforce built predominantly on domestic talent. The announcement arrives as new statistics on net migration, which reached a record 745,000 in 2022, are expected to be released soon. The government’s response includes stringent measures to reduce incoming migration, including raising the salary threshold for skilled workers to £38,700 and making it tougher for lower-earning Britons to bring foreign spouses to the UK.

These measures aim to cut the number of people entering the UK by about 300,000, presenting significant recruitment challenges across several key industries. The sectors identified for the skills bootcamps include hospitality, healthcare, construction, and manufacturing, where shortages have been particularly pronounced.

Stride outlined that this initiative is not just about filling jobs but about enhancing the prospects and earnings of British workers. He drew parallels with successful strategies employed in 2021 to alleviate the shortage of heavy goods vehicle (HGV) drivers, which included similar bootcamps and Jobcentre training programs.

However, the proposal has faced skepticism from various quarters. Industry leaders have expressed concerns that prioritizing domestic workers might not sufficiently address the severity of the labor shortages that many British businesses are experiencing. Kate Shoesmith, Deputy Chief Executive of the Recruitment and Employment Confederation, argued that the focus should be on creating conditions that foster sustainable economic growth rather than choosing between British and foreign workers.

Criticism also came from the political opposition. Labour’s shadow work and pensions secretary, Alison McGovern, criticized the government for failing to effectively address worker shortages and for undermining the training and skills system. She advocated for a more integrated approach linking the immigration system with skill development.

Similarly, the Liberal Democrats pointed to broader systemic issues, such as NHS waiting times, which they claim inhibit people from returning to work. Work and pensions spokeswoman Wendy Chamberlain suggested that addressing the healthcare backlog should be a priority to spur economic recovery.

This new policy marks a shift towards a more self-sustaining labor force strategy, yet it remains contentious. Critics argue that while the intent to harness domestic talent is commendable, the practicality of filling diverse job vacancies without foreign workers remains uncertain, and the broader impacts on the UK’s economic growth and public services are yet to be seen.

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Chinese Banks Keep Lending Rate Steady After PBOC Decision

Chinese Banks Keep Lending Rate Steady After PBOC Decision

Chinese Banks Keep Lending Rate Steady After PBOC Decision

Chinese banks have left their benchmark lending rates unchanged after the People’s Bank of China’s (PBOC) decision last week to maintain a key rate on loans it offers to lenders. On Monday, the one-year loan prime rate was held steady at 3.45%, in line with economist expectations surveyed by Bloomberg. Similarly, the five-year rate, a reference for mortgages, remained at 3.95%, matching forecasts from the PBOC.

China’s economic recovery has shown strength in the industrial sector, but domestic demand continues to struggle due to the ongoing property downturn. In April, credit experienced an unprecedented shrinkage, highlighting weakened corporate and household sentiment. Despite these challenges, the PBOC opted not to lower the rate on its medium-term lending facility, signaling a cautious approach to supporting the nascent economic recovery while avoiding additional pressure on the yuan.

Some economists anticipate that the PBOC might cut rates or inject more liquidity into the financial system by reducing the reserve requirements for banks in the coming months. Such measures would facilitate banks’ ability to purchase new government bonds as Beijing ramps up fiscal support for the economy.

Last Friday, China began selling the first batch of special sovereign bonds totaling 1 trillion yuan ($139 billion) to sustain infrastructure investment. Provincial governments are also accelerating the issuance of local bonds. In response to the economic imbalances, policymakers have introduced various measures to stimulate domestic demand, with recent efforts focused on the property sector.

Authorities announced the establishment of a nationwide program to release 300 billion yuan in affordable funding to assist state-owned companies in purchasing unsold homes. Additionally, they have removed the floor on mortgage rates and lowered the minimum down payment requirements for homebuyers. These initiatives aim to reduce property inventory and stimulate the housing market.

The combination of maintaining lending rates and introducing new fiscal and monetary measures reflects China’s strategic approach to bolstering economic recovery. The PBOC’s decision to hold rates steady, coupled with targeted support for infrastructure and the property sector, aims to address the imbalances within the economy and foster a more balanced and sustainable growth trajectory.

 

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Yen Subdued as USD Advances on Risk Aversion

Yen Subdued as USD Advances on Risk Aversion

Yen Subdued as USD Advances on Risk Aversion

The Japanese Yen (JPY) continued its downward trend for the second consecutive trading day on Monday, with the USD/JPY pair finding support as the US Dollar (USD) regained strength. This resurgence in the USD follows the release of better-than-expected US employment data last Friday, which bolstered market confidence in the US economy.

On Monday, Japan released a mix of economic data that could help limit the Yen’s downside. Japan’s Gross Domestic Product (GDP) on an annualized basis showed that the economy contracted less than anticipated in the first quarter. However, the quarter-on-quarter GDP figures confirmed a shrinkage, aligning with the preliminary data. This mixed economic picture adds some complexity to the Yen’s outlook, offering slight support amid otherwise bearish sentiment.

Concurrently, the US Dollar Index (DXY), which tracks the USD against six major currencies, continued to climb, supported by rising US Treasury yields. The robust US jobs report has reinforced expectations of a hawkish stance from the Federal Reserve. This is reflected in the CME FedWatch Tool, which shows that the probability of a Fed rate cut of at least 25 basis points in September has decreased to nearly 48.0%, down from 54.8% just a week ago. The stronger job market data suggests that the Federal Reserve may maintain higher interest rates for longer to manage inflation, providing further support to the USD.

The combination of strong US economic data and mixed signals from Japan’s economy is influencing the current dynamics between the Yen and the Dollar. As the USD strengthens on the back of higher yields and reduced expectations of rate cuts, the Yen remains subdued. However, the nuanced economic data from Japan could prevent a steeper decline in the Yen.

Looking ahead, the market will closely monitor upcoming economic reports and central bank communications for further clues on the future direction of the USD/JPY pair. Any significant developments in US inflation data or changes in the Federal Reserve’s policy outlook could further impact the pair’s movement. Similarly, any new economic data from Japan or shifts in Bank of Japan policy could also play a crucial role in determining the Yen’s trajectory.

In summary, the interplay of strong US employment data, rising Treasury yields, and mixed Japanese economic indicators is shaping the current performance of the USD/JPY pair, with the Dollar advancing on risk aversion while the Yen remains under pressure.

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Yen Consolidates as Suzuki Signals No FX Intervention Limit

Yen Consolidates as Suzuki Signals No FX Intervention Limit

Yen Consolidates as Suzuki Signals No FX Intervention Limit

On Friday, the Japanese Yen (JPY) consolidated following the release of Japanese Foreign Reserves for May by the Ministry of Finance, which showed a significant drop to $1,231 billion from $1,279 billion. This marks the lowest level since February 2023, as the government engaged in foreign exchange intervention operations to support the JPY.

Japanese Finance Minister Shunichi Suzuki stated that the government will take action against excessive currency volatility as needed and will evaluate the effectiveness of such interventions. Suzuki stressed the importance of maintaining market trust in public finances, noting that there is no fund limit for foreign exchange (FX) intervention, according to Reuters.

Meanwhile, the US Dollar (USD) struggled due to lower-than-expected employment data from the United States. This has increased hopes for two interest rate cuts by the US Federal Reserve (Fed) in 2024. A Reuters poll conducted from May 31 to June 5 revealed that nearly two-thirds of economists now anticipate an interest rate cut in September. Additionally, the CME FedWatch Tool indicates that the probability of a Fed rate cut in September by at least 25 basis points has risen to nearly 70%, up from 51% a week earlier.

In summary, the Japanese Yen is holding steady as the government continues its efforts to defend the currency through foreign exchange interventions. Finance Minister Suzuki’s commitment to addressing currency volatility and ensuring market confidence underscores the government’s proactive approach. Concurrently, the US Dollar faces downward pressure as expectations grow for the Fed to cut interest rates later this year, influenced by recent employment data. These developments highlight the dynamic nature of global currency markets and the ongoing interplay between monetary policy decisions and economic indicators.

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Australian Dollar Rises on Risk-On Sentiment and Strong China Services PMI

Australian Dollar Rises on Risk-On Sentiment and Strong China Services PMI

Australian Dollar Rises on Risk-On Sentiment and Strong China Services PMI

The Australian Dollar (AUD) gained ground on Wednesday, bolstered by improved risk sentiment and a stronger-than-expected China Services PMI. However, the upward momentum of the Aussie Dollar may be constrained by weaker-than-anticipated domestic economic data. The Gross Domestic Product (GDP) for the first quarter grew by only 0.1% quarter-on-quarter, falling short of the 0.2% expected. On an annual basis, the economy expanded by 1.1%, just below the forecasted 1.2%.

Additionally, the AUD/USD pair faced pressure as the Judo Bank Purchasing Managers Index (PMI) for May was reported at 52.5, lower than the anticipated 53.1. These economic indicators suggest a softer performance for the Australian economy, which could limit the AUD’s gains.

Reserve Bank of Australia (RBA) Governor Michele Bullock commented on the economic outlook, anticipating low GDP growth for the first quarter. Bullock reiterated the central bank’s readiness to act if the Consumer Price Index (CPI) does not return to the target range, highlighting the RBA’s commitment to maintaining price stability.

Across the Pacific, the US Dollar (USD) showed signs of potential rebound due to an upward correction in US Treasury yields. The USD had recently weakened amid rising speculation that the Federal Reserve (Fed) might cut interest rates later this year. However, key US economic data releases, including the ADP Employment Change and ISM Services PMI reports, are expected to provide further direction for the USD. Investors are closely watching these reports for indications of the health of the US economy and any potential shifts in Fed policy.

The Australian Dollar’s performance is also influenced by broader market risk sentiment. The stronger China Services PMI, which indicated robust activity in China’s service sector, contributed to the positive sentiment, as China is a major trading partner for Australia. This external factor helped support the AUD despite the weaker domestic economic data.

In summary, while the Australian Dollar is currently benefiting from improved risk sentiment and strong data from China, its gains are tempered by weaker-than-expected GDP growth and PMI figures. The outlook for the AUD/USD pair will depend on upcoming economic data from both Australia and the US, as well as broader market trends. Investors will be particularly attentive to the US data releases later in the day, which could significantly impact currency movements and broader market sentiment.

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Australian Dollar Stagnant as US Dollar Rises Before ISM PMI

Australian Dollar Stagnant as US Dollar Rises Before ISM PMI

Australian Dollar Stagnant as US Dollar Rises Before ISM PMI

The Australian Dollar (AUD) maintained its stability as investors adopted a cautious stance ahead of the upcoming release of the ISM Manufacturing PMI in the United States on Monday. The AUD found some early support during the Asian trading session following an increase in Australia’s minimum wage by 3.75%, which was within the anticipated range of 3.5% to 4.0%. This policy adjustment provided a mild boost to the domestic currency.

Additionally, the AUD/USD currency pair saw some strengthening after the release of the US Personal Consumption Expenditure (PCE) data. As the Federal Reserve’s favored inflation gauge, the PCE data indicated a softening of price pressures in April, which in turn diminished some of the upward pressure on the US dollar. Simultaneously, Australia’s own inflation metrics showed a pickup, with the monthly inflation rate rising to 3.6%. This increase in inflation may prompt the Reserve Bank of Australia (RBA) to consider further interest rate hikes to temper inflationary pressures.

The Australian Dollar also saw benefits from external influences, notably the Caixin Manufacturing Purchasing Managers Index (PMI) from China, which exceeded expectations for May. This positive data suggested robust manufacturing activity in Australia’s largest trading partner, which is typically a bullish signal for the AUD given the substantial trade ties between the two nations. However, the mood was somewhat tempered by China’s National Bureau of Statistics (NBS) PMI data released on Friday, which came in below expectations and hinted at reduced import demand from China. This is particularly significant for Australia, a leading commodity exporter, as fluctuations in Chinese demand can have substantial repercussions on its economy.

Meanwhile, the US Dollar saw a decline as US Treasury yields fell. This was compounded by comments from Federal Reserve officials suggesting that the central bank might achieve its 2% annual inflation target without the need for further rate hikes. Looking ahead, market participants are keenly awaiting the ISM Manufacturing PMI, with many also gearing up for additional key indicators such as the US Nonfarm Payrolls report due on Friday. These data points will be crucial in shaping market expectations regarding the future monetary policy directions of the Fed.

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US Core PCE Inflation Likely to Hold Steady

Pound Sterling Dips Amid Uncertainty Before US Core PCE Data

Pound Sterling Dips Amid Uncertainty Before US Core PCE Data

The Pound Sterling (GBP) is facing downward pressure in Friday’s early London trading session, as its recovery from a four-day low near 1.2680 seems to have lost momentum. The GBP/USD pair is trading with caution due to the looming release of the United States core Personal Consumption Expenditures (PCE) Price Index data for April, set for publication at 12:30 GMT.

The core PCE Inflation data, which is the Federal Reserve’s (Fed) preferred gauge of inflation, is projected to show a steady increase of 0.3% on a monthly basis and 2.8% annually. These figures are closely watched by investors as they provide crucial insights into inflation trends, influencing the Fed’s monetary policy decisions.

This upcoming release is particularly significant as it comes at a time when the market is attempting to gauge the Fed’s future actions regarding interest rates. Policymakers at the Fed have indicated that they would need to see a sustained decrease in inflation before considering any moves towards policy normalization. Therefore, in-line inflation numbers are likely to temper expectations for any imminent rate cuts, particularly at the Fed’s September meeting.

Conversely, a higher-than-expected inflation reading could stir market speculation that the Fed might delay any interest rate reductions, possibly pushing such actions out to November or later. On the other hand, if the inflation figures come in below expectations, it could bolster the likelihood of the Fed lowering key borrowing rates as early as September.

The anticipation surrounding this data release is causing heightened market sensitivity, with potential implications for currency valuations, bond yields, and stock market movements. Investors and traders are thus keenly observing these indicators, which serve as a barometer for not only U.S. economic health but also global financial stability.

Furthermore, the outcomes of this data release could influence other central banks’ policies, particularly in major economies closely tied to the U.S. financial system. This makes the PCE Inflation data a key focal point not just for currency traders but for the broader financial markets, underscoring its significance in shaping global monetary policy landscapes.

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Australian Dollar Stabilizes Post-Inflation Data, US Dollar Stays Strong

Australian Dollar Stabilizes Post-Inflation Data, US Dollar Stays Strong

The Australian Dollar (AUD) recovered some of its earlier losses on Wednesday following the release of the higher-than-expected Monthly Consumer Price Index (CPI). This robust inflation data has fueled speculation that the Reserve Bank of Australia (RBA) might consider another interest rate hike. The minutes from the RBA’s May policy meeting revealed that the central bank had already contemplated a potential rate increase, adding weight to this possibility.

Earlier in the Asian trading session, the AUD struggled due to increased risk aversion and a stronger US Dollar (USD). The USD’s strength can be attributed to rising US Treasury yields, with the US Dollar Index (DXY), which measures the USD against six major currencies, trading higher around 104.70. 

At the time of reporting, the yields on 2-year and 10-year US Treasury bonds were at 4.96% and 4.54%, respectively.The US Dollar’s rebound on Tuesday followed remarks from Neel Kashkari, President of the Federal Reserve Bank of Minneapolis, who suggested that a rate hike might still be on the table. Kashkari expressed uncertainty about the disinflationary process and predicted only two rate cuts. This hawkish stance has led to increased speculation about the Federal Reserve’s future actions.

According to the CME FedWatch Tool, the probability of the Federal Reserve implementing a 25 basis-point rate cut in September decreased to 41.7%, down from 44.9% the previous day. This shift in expectations underscores the market’s reaction to the Fed’s evolving outlook on interest rates and inflation.Looking ahead, New York Fed President John Williams is scheduled to speak on Wednesday, and the Fed’s Beige Book will be released. 

The Beige Book provides an overview of the current US economic situation based on interviews with key business contacts, economists, market experts, and other sources from the 12 Federal Reserve Districts. These events are likely to offer further insights into the Fed’s perspective on economic conditions and potential policy actions.

In summary, the AUD’s recovery was driven by stronger-than-expected inflation data, raising the prospect of an RBA rate hike. Meanwhile, the USD remains firm, supported by rising Treasury yields and a cautious yet hawkish stance from the Federal Reserve. Market participants will closely monitor upcoming Fed communications and economic reports for further indications of future policy directions.

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Australian Dollar Struggles as US Dollar Strengthens Ahead of US PPI Release

Australian Dollar Stabilizes Ahead of Retail Sales Data

Australian Dollar Stabilizes Ahead of Retail Sales Data

The Australian Dollar (AUD) continued its upward trajectory against the US Dollar (USD) for the second consecutive trading session on Monday, buoyed by an improved risk appetite in global markets. This positive momentum comes even as expectations for imminent Federal Reserve rate cuts diminish. Investors are now keenly focused on the upcoming release of Australia’s Retail Sales data for April, expected to show a modest recovery with a forecasted increase of 0.3%, following a 0.4% decline in the previous month.

The anticipation around the Retail Sales report is high, as it could signal resilience in the Australian consumer market despite ongoing economic uncertainties. A positive outcome could further bolster the Australian Dollar, as it reflects a robust domestic economic activity.

Recent minutes from the Reserve Bank of Australia’s (RBA) meeting have revealed a cautious stance from the board, with uncertainties making it challenging to forecast future adjustments to the cash rate. The board acknowledged the risk of inflation remaining above the target range of 2-3% for a longer period, indicating that tight monetary policies might persist longer than initially expected.

On the American front, the US Dollar experienced some weakening following recent economic reports. The University of Michigan’s 5-year Consumer Inflation Expectations for May was revised slightly downward to 3.0% from the anticipated 3.1%. Additionally, the Consumer Sentiment Index was adjusted upward to 69.1 from an initial estimate of 67.4, though it still represents the lowest sentiment level recorded in the past six months. These indicators suggest a tempered outlook on inflation, potentially influencing the Federal Reserve’s decision-making on interest rates.

Market analysts, using data from the CME FedWatch Tool, now see a reduced likelihood of a Fed rate cut in September, with the probability dropping to 44.9% from 49% just a week ago. This shift in expectations could impact currency dynamics, particularly as the US markets remain closed for the Memorial Day holiday, possibly leading to thinner trading conditions and increased volatility for the AUD/USD pair.

As the Australian economy faces these pivotal moments, the response of the AUD to both domestic economic data and international monetary policy shifts will be critical in determining its short-term trajectory in the forex markets.

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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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