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USD/CAD Holds Near One-Week Low

USD/CAD Drops Below 1.3650 Amid Weaker US Dollar

USD/CAD Drops Below 1.3650 Amid Weaker US Dollar

The USD/CAD currency pair experienced a dip to 1.3645 during the early European trading hours on Monday, marking its lowest point in nearly three weeks. This decline was primarily driven by a weakening US Dollar (USD), which continues to be the dominant force influencing the pair, especially in the absence of significant economic data releases from Canada.

As traders turn their attention to the week’s key events, the spotlight intensifies on the Federal Open Market Committee (FOMC) meeting, scheduled to conclude on Wednesday. This meeting is crucial as it could provide insights into future monetary policy directions. Although no rate changes are anticipated at this meeting, the tone adopted by Fed Chair Jerome Powell and other committee members is expected to lean towards the hawkish side. Powell has previously emphasized the need for the central bank to be more confident that inflation is consistently trending towards its 2% target before considering any rate cuts.

The probability of a rate cut by the Federal Reserve has seen a noticeable shift in investor expectations. Last week, the likelihood of a rate reduction in July was pegged at 50%, but this has now dropped to 25%. By September, however, markets have priced in nearly a 60% chance of a rate cut, as per the CME FedWatch tool.

Recent inflation data from the US further complicates the economic landscape. The Personal Consumption Expenditures (PCE) Price Index, a key measure of inflation, rose to 2.7% year-over-year (YoY) in March, up from 2.5% in February and surpassing market expectations of 2.6%. The Core PCE, which is closely watched by the Fed, increased to 2.8% YoY, also above the consensus of 2.6%.On the Canadian side, the policy stance of the Bank of Canada (BoC) is under scrutiny. 

Despite a recent split among its governing council members regarding the timing of interest rate reductions, there is a broad expectation that the BoC might begin to lower rates as early as June or July. Such a move could potentially place downward pressure on the Canadian Dollar (CAD), although this might be somewhat mitigated by Canada’s inflation rate, which at 2.9% in March, sits comfortably within the BoC’s target range of 1-3%.

Adding to the complexities is the performance of crude oil prices, which traditionally influence the CAD due to Canada’s status as the largest crude oil exporter to the United States. A decline in crude oil prices has been exerting additional selling pressure on the CAD, further influencing the USD/CAD trading dynamics.

As the week progresses, market participants will closely monitor these developments, particularly the outcomes of the FOMC meeting and subsequent US employment data, to gauge potential directions for the USD/CAD pair.

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EUR/USD Holds Near 1.0600 as US Dollar Weakens on Profit-Taking

EUR/JPY Rises Above 167.50 After BoJ Rate Decision

EUR/JPY Rises Above 167.50 After BoJ Rate Decision

The EUR/JPY currency pair soared to its highest level since 2008, reaching 167.20 during the Asian trading session on Friday. This significant rise is largely attributed to the depreciation of the Japanese Yen (JPY) following the Bank of Japan’s (BoJ) latest policy announcement.In its April meeting, the BoJ opted to maintain the key interest rate at 0%, aligning with market expectations. This decision came after a notable rate hike in March—the first since 2007—which marked the end of Japan’s negative interest rate policy initiated in 2016.

The BoJ also updated its economic forecasts, suggesting that inflation is expected to hover near its 2% target for the next three years. This outlook hints at the possibility of further rate increases later this year as the central bank remains committed to adjusting its monetary stance to sustain economic growth and price stability. 

Additionally, the BoJ reaffirmed its commitment to purchasing government bonds at a rate of approximately 6 trillion yen ($38.45 billion) per month, as set out in its March guidance.Following these developments, the JPY saw a decrease in demand compared to the Euro (EUR), as traders reacted to the central bank’s stance and the broader economic signals.

Simultaneously, data from Japan indicated a slowdown in inflationary pressures within Tokyo. April’s Consumer Price Index (CPI) for Tokyo showed a year-over-year increase of 1.8%, a decline from the previous 2.6% rise. The core CPI, excluding fresh food and energy, also increased by 1.8% year-over-year, falling short of the expected 2.7% and down from 2.9% in the prior period. 

These figures, representing a significant drop in inflation rates, also contributed to the weakening of the JPY as a traditionally safe-haven asset.Meanwhile, in Europe, discussions around monetary policy are also shaping market dynamics. European Central Bank (ECB) policymaker Joachim Nagel recently voiced support for a potential rate cut in June, although he clarified that such a move would not necessarily lead to a series of further cuts. Additionally, ECB official Fabio Panetta expressed that modest rate reductions could mitigate the risk of prolonged economic stagnation within the eurozone.

These contrasting monetary policies and economic indicators in Japan and Europe are pivotal in driving the EUR/JPY exchange rate, reflecting broader economic trends and central bank strategies in both regions. As such, investors and traders continue to monitor these developments closely, adjusting their strategies in response to shifts in central bank policies and macroeconomic data.

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AUD/JPY Rises on Strong Australian Consumer Inflation Data

AUD/JPY Rises on Strong Australian Consumer Inflation Data

The AUD/JPY currency pair continues its upward trajectory for the third consecutive day, recovering from initial losses earlier on Wednesday. This rally is supported by the release of unexpectedly strong Consumer Price Index (CPI) data by the Australian Bureau of Statistics (ABS), which significantly influences the Reserve Bank of Australia’s (RBA) monetary policy direction. The positive inflation figures have strengthened the Australian Dollar (AUD), boosting the AUD/JPY exchange rate.

The Australian Dollar’s rise is further propelled by a surge in risk appetite, reflected in the gains seen in the ASX 200 Index, particularly within the technology and healthcare sectors. This positive movement in Australian shares mirrors the upward trend on Wall Street, which has been buoyed by impressive corporate earnings reports that have generally uplifted market sentiment. Additionally, easing tensions in the Middle East have also contributed to the favorable market environment, creating a more robust appetite for riskier assets like the Australian Dollar.

On the other hand, the Japanese Yen (JPY) faces challenges amid a widening yield gap between Japan and other major economies. This disparity has prompted traders to engage in ‘carry trade’ activities, where they borrow yen at lower interest rates to invest in higher-yielding assets elsewhere. Despite the downward pressure on the Yen, there has been no intervention from Japanese authorities to shore up the currency. As the Bank of Japan (BoJ) begins its two-day policy meeting on Thursday, market participants speculate that Tokyo may delay any intervention in the currency market until at least the following week, as per insights from a Reuters report.

The AUD/JPY’s strength is a reflection of broader economic indicators and geopolitical developments, which continue to shape the dynamics between these two major currencies. As traders and investors keep a keen eye on the outcomes of the BoJ’s policy meeting and any potential moves by the Japanese authorities, the AUD/JPY cross remains a key barometer of shifting economic sentiments and policy decisions in the Asia-Pacific region. This scenario presents a complex interplay of economic data, central bank policies, and global market trends that drive the movements of these currencies on the forex market.

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USD/CHF Gains Momentum Above 0.8550 Ahead of FOMC Minutes

USD/CHF Rises Above 0.9100 on Hawkish Fed Comments

USD/CHF Rises Above 0.9100 on Hawkish Fed Comments

The USD/CHF currency pair exhibited strength on Monday morning during the early European trading hours, buoyed by a shift in market sentiment concerning the U.S. interest rate outlook. Market participants are now anticipating fewer rate cuts from the Federal Reserve (Fed) this year, with expectations consolidating around just one or two adjustments.

This week, financial markets are keenly awaiting the release of key U.S. economic indicators that could influence Fed policy decisions going forward. Notably, the preliminary U.S. Gross Domestic Product (GDP) figures for the first quarter (Q1) and the Personal Consumption Expenditures (PCE) Price Index will take center stage, providing fresh insights into the economic landscape.

Investors are recalibrating their interest rate forecasts in light of a resilient U.S. economy coupled with persistent inflation pressures. Despite inflation retreating from the peak levels seen during the pandemic, recent data suggest it remains above the Fed’s comfort zone. This has prompted several Fed officials to advocate for a cautious approach to monetary easing. They favor maintaining higher interest rates for an extended period than initially expected, a stance reinforced by a series of unexpectedly high inflation readings.

This “high-for-longer” interest rate scenario has been supportive for the U.S. dollar, lending upward momentum to the USD/CHF pair. The dollar’s ascent is further backed by remarks from key Fed figures. On Friday, Chicago Fed President Austan Goolsbee indicated a potential delay in rate cuts, citing a “stalled” progress in reducing inflation to desired levels. Similarly, Atlanta Fed President Raphael Bostic has suggested that rate cuts might not occur until the end of the year, aligning with a more conservative monetary policy approach.

Meanwhile, the Swiss economic outlook also remains in focus. Swiss National Bank (SNB) Chairman Thomas Jordan recently emphasized the importance of prioritizing price stability in monetary policy decisions. He highlighted challenges such as low economic growth and high debt levels in many countries, which could influence Switzerland’s financial strategy.

Additionally, geopolitical developments could impact the financial markets. Rising tensions in the Middle East, especially between Israel and Iran, are likely to increase demand for safe-haven assets such as the Swiss Franc. This could potentially limit the upward trajectory of the USD/CHF pair by bolstering the Franc’s appeal during times of uncertainty.

In summary, the USD/CHF pair is navigating a complex landscape shaped by shifting Fed expectations, critical economic releases, and international tensions, all of which could dictate its performance in the near term.

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NZD/USD

NZD/USD Stays Below 0.5900 Amid Risk-Off Mood, Rising US Dollar Demand

NZD/USD Stays Below 0.5900 Amid Risk-Off Mood, Rising US Dollar Demand

The NZD/USD currency pair faced downward pressure, trading around 0.5880 in the early European session on Friday. The pair’s decline was influenced by a risk-off sentiment fueled by escalating tensions between Israel and Iran, which boosted the US Dollar’s appeal as a safe-haven currency. Additionally, the US Dollar Index (DXY) saw an uptick, rising above 106.20 and nearing its highest level since November 2023.

Recent geopolitical developments have intensified concerns among investors. US officials disclosed that Israel had conducted military strikes against Iran and had informed the Biden administration of its plans to initiate these attacks within 24 to 48 hours from early Thursday.

Israeli authorities assured that the strikes would not target Iranian nuclear facilities, a detail confirmed by reports from CNN. These unfolding events in the Middle East are likely to increase market volatility as investors watch for potential impacts on global stability, which could further strengthen safe-haven currencies like the US Dollar.

Moreover, the possibility that the US Federal Reserve might postpone cuts to interest rates also lends support to the USD. Comments from several Fed officials highlighted ongoing high inflation in the US, suggesting that the central bank is looking for more decisive evidence of a downward inflation trajectory before making any moves to lower rates.

On the New Zealand side, economic data has shown a slight improvement, although challenges remain. Statistics New Zealand reported a decline in the country’s inflation, yet it continues to exceed the Reserve Bank of New Zealand’s (RBNZ) target range of 1 to 3%. This persistent high inflation might prompt the RBNZ to maintain elevated interest rates longer than some might anticipate, potentially supporting the NZD against further losses.

Investors are thus faced with a complex mix of factors: geopolitical risks enhancing the USD’s safe-haven status, tentative US monetary policy potentially delaying interest rate cuts, and New Zealand’s economic policy aimed at curbing inflation. These elements are crucial for market participants to consider as they evaluate the future movements of the NZD/USD pair amidst global financial uncertainty.

The situation remains fluid, with geopolitical tensions and economic indicators from both the US and New Zealand likely to drive significant market movements in the coming days. Investors will need to stay alert to the rapid developments in the Middle East and the economic updates from major central banks to navigate the volatile currency markets effectively.

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EUR/USD

EUR/USD Stays Above 1.0650 as US Dollar Faces Fresh Sell-Off

EUR/USD Stays Above 1.0650 as US Dollar Faces Fresh Sell-Off

The EUR/USD currency pair saw a modest increase, reaching 1.0672 in Thursday’s early Asian trading session. This rise was supported by a combination of renewed selling pressure on the US Dollar and a generally risk-acceptant market atmosphere. Key economic indicators set to be released later on Thursday include weekly Initial Jobless Claims, the Philadelphia Fed Manufacturing Index, the CB Leading Index, and Existing Home Sales. These data points are eagerly awaited by investors who are gauging the economic landscape.

Despite the upward movement of the EUR/USD, sentiments were tempered by comments from Federal Reserve Chairman Jerome Powell earlier in the week. Powell indicated that recent economic data do not provide much confidence that the Fed’s 2% inflation target will be met soon, suggesting a prolonged period of tight monetary policy which could strengthen the US Dollar in the short term. This hawkish outlook may limit the potential gains for the EUR/USD pair. Market predictions now reflect a nearly 71% expectation for a Fed rate cut in September, as per the CME FedWatch Tool.

Conversely, the European Central Bank (ECB) is showing signs of a more dovish policy stance. ECB policymaker Joachim Nagel hinted at a possible rate cut in June, although he acknowledged that inflation rates are still higher than desirable. Furthermore, ECB official Bostjan Vasle proposed that the deposit rate might be reduced to 3% by year’s end, down from the current record high of 4%, provided that the expected disinflation progresses. This potential easing in ECB policy could pressure the Euro and, by extension, the EUR/USD pair.

The differing directions in monetary policy between the Fed and ECB are primarily influencing the dynamics of the EUR/USD exchange. While the Fed’s cautious approach might bolster the US Dollar, the ECB’s potential rate cuts could weaken the Euro, creating a complex environment for the currency pair. Investors continue to watch these developments closely, as they could significantly impact the direction of EUR/USD moving forward. As the global economic scenario evolves, the interplay between these monetary policies will be crucial in shaping market movements.

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USD/CAD

USD/CAD Drops as US Dollar Weakens and Oil Prices Fall

USD/CAD Drops as US Dollar Weakens and Oil Prices Fall

The USD/CAD currency pair ended its five-day rally, settling at around 1.3820 during the Asian trading session on Wednesday. This shift was primarily due to a modest correction in the US Dollar (USD), which exerted downward pressure on the pair. Despite this, declining crude oil prices were seen as a potential threat to the Canadian Dollar (CAD), likely capping further losses in the USD/CAD pair.

Recent Canadian economic data has played a significant role in the forex dynamics. The latest inflation metrics could influence the Bank of Canada’s (BoC) monetary policy decisions, particularly the possibility of easing borrowing conditions at its upcoming June meeting. Notably, the core inflation rate, which is a critical indicator for the central bank, showed continued signs of moderation.

The Consumer Price Index (CPI) rose by 0.6% month-over-month in March, slightly below the anticipated 0.7%, but still above February’s 0.3% increase. Annually, CPI increased by 2.9%, marginally higher than the previous 2.8%. More critically, the year-over-year Core CPI, which excludes volatile items such as food and energy, increased by 2.0%, down from 2.1% in the prior measurement, indicating a potential easing of inflationary pressures. On a monthly basis, the Core CPI saw a 0.5% increase, significantly higher than the previous month’s 0.1% rise.

Meanwhile, in the United States, Federal Reserve (Fed) officials have maintained a hawkish tone which might support the USD in the short term. The US Dollar Index (DXY), after reaching a five-month peak at 106.51, experienced a slight retreat due to a decrease in US Treasury yields.

Fed Chairman Jerome Powell’s recent comments have underscored this perspective. During a speech on Tuesday, Powell acknowledged the robustness of the US economy but cautioned that progress towards the Fed’s 2% inflation target has been slower than expected this year. Powell’s statement indicated that more time and possibly more stringent monetary measures would be needed to stabilize inflation rates.

This hawkish outlook from the Fed contrasts with the potential dovish turn by the BoC, based on the Canadian inflation data. Such diverging paths could influence the USD/CAD pair significantly in the coming weeks. The interplay between US monetary policy and Canadian economic indicators will likely be a key driver of the pair’s movements as traders and investors recalibrate their expectations based on these developments.

In summary, while the USD/CAD has paused its recent uptrend due to a combination of factors including US Dollar corrections and weaker oil prices, the underlying economic indicators from both Canada and the United States will play crucial roles in determining its future direction. Investors should keep a close watch on upcoming economic releases and central bank statements to better navigate this volatile currency pair.

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Stocks finish mixed as tech stocks face additional pressure

Stocks finish mixed as tech stocks face additional pressure

On Monday, U.S. stocks finished mixed, with shares unable to find direction as fears about the economy’s prospects grew amid rising inflation. The S&P 500 finished the turbulent day down 0.4 percent at 4,008.01. The NASDAQ slid 1.2 percent to 11,662.79 as mega-cap technology giants such as Apple (AAPL) slumped, dragging the index down. The Dow Jones Industrial Average finished at 32,223.42, up marginally.

Even after new GDP statistics from China came in weaker-than-expected, as the latest wave of virus-related restrictions in the country hampered movement, US crude oil prices (CL=F) reversed earlier losses and gained. Retail sales in China fell by 11.1 percent in April compared to the same month last year, the worst loss since March 2020, while industrial production unexpectedly fell by 2.9 percent.

The decline in risk assets on Monday prolonged a recent period of market turbulence. Stocks finished last week with their sixth straight weekly decline, sending the S&P 500 16.1 percent below its January 3 peak. As the Federal Reserve seeks to cool inflation reaching its highest level in four decades, geopolitical upheaval in Ukraine continues, and China grapples with its biggest COVID epidemic since 2020, investors are weighing the chances of a broader economic slowdown.

In response to these worries, Wall Street analysts have become increasingly cautious about equities. In a recent report, Goldman Sachs lowered its S&P 500 year-end price forecast to 4,300 from 4,700. According to David Kostin, Goldman Sachs’ top U.S. stock strategist, the reduced goal reflects “higher interest rates and weaker economic growth than we previously projected.” In a recession, the S&P 500 will likely fall much further to 3,600, according to Kostin. Other strategists emphasized the present multiplicity of equities risks and advised against reading too much into one-day rebounds.

“At this moment, we believe the tipping point is an open question. We’re probably in the middle of two repricings: one caused by the Federal Reserve, and the other induced by the market “U.S. Bank Asset Management’s chief investment officer, Eric Freedman, told Yahoo Finance Live. “When the Fed announces a rate hike, every other asset class must drop in price and increase in yield. So we’re right in the thick of it. Depending on what the Fed decides to do in terms of messaging, this might be a turning moment.”

“However, the next repricing — and the danger of possible additional downside — will occur if higher commodity costs and higher borrowing rates structurally flow into the actual economy and stay there for some time,” he warned. “So I believe we’re in a profoundly oversold state… but we’d still be cautious right now because we believe there’s more potential downside coming.”

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The stock market meltdown may not be ended yet

The stock market meltdown may not be ended yet

A massive outflow of funds, a $11 trillion loss, and the biggest losing run for world markets since the financial crisis of 2008. The bad news is that it may not be over yet. The MSCI ACWI Index selloff has slashed company valuations across the US and Europe, but strategists ranging from Morgan Stanley’s Michael Wilson to Citigroup’s Robert Buckland expect stocks to fall even more amid concerns about high inflation, hawkish central banks, and slowing economic growth, particularly in the US.

According to Bank of America Corp., money is continuing to flow out of every asset class, and the exodus is accelerating as investors flee companies like Apple Inc. The S&P 500 has capacity to fall roughly 14% more before hitting important support levels, according to historically significant technical levels, although the number of businesses that have reached a one-year low is still a long cry from the amount during the economic growth concern that rocked markets in 2018.

“Investors are continuing to cut their positions, especially in technology and growth equities,” said Andreas Lipkow, a Comdirect Bank strategist. “However, sentiment must decline substantially more before a viable floor can be formed.”

On the other hand, some argue that the sell-off has already produced pockets of value in a variety of sectors, including commodities and even technology, which is valued on future profits growth and so avoided during periods of high interest rates. The NASDAQ 100 index rose on Friday, but it still ended the week down more than 2%.

Peter Oppenheimer of Goldman Sachs Group Inc. is one of the most well-known strategists to say it’s time to buy the drop, while Thomas Hayes, head of Great Hill Capital LLC, said “old school tech” equities like Intel Corp and Cisco Systems Inc. are now selling at favorable multiples.

However, despite the value, the larger market appears to be crumbling as the possibility of a recession becomes more widespread. Even as growth concerns deepen, the Federal Reserve’s and other central banks’ focus on inflation means investors can no longer rely on the monetary elixir that has kept the long-running bull market afloat.

The MSCI ACWI has plummeted for six weeks in a row, the Stoxx Europe 600 has lost 6% since late March, and the S&P 500 has lost more than twice as much. Except for the tech boom and the global financial crisis, the S&P 500 is still around 14% above its 200-week moving average, which has traditionally served as a floor throughout all major bear markets. After yet another down week for the US benchmark, Canaccord Genuity strategists predict additional losses on Monday due to forced margin selling.

Despite the recent drops — the S&P 500 is down more than 13% from its March 29 peak — stress indicators aren’t at levels seen during previous downturns. Only around 30% of the benchmark’s members have seen a one-year low, compared to roughly 50% during the 2018 growth concern and 82 percent during the 2008 global financial crisis.

Furthermore, the 14-day relative strength index indicates that the S&P 500 is not yet at the bottom. While the Stoxx Europe 600 Index reached oversold territory last week, the US benchmark has yet to do so, which is usually a sign of approaching recovery. As the threat of slower growth pounds economically sensitive cyclical industries, defensive equities have been in high demand. The Stoxx 600 Defensives Index is expected to remain unchanged in 2022, compared to a 15% loss for cyclicals, according to analysts at Barclays and Morgan Stanley. Claudia Panseri of UBS Wealth Management believes that the cyclical-versus-defensive relative performance is pricing for a “moderate recession.”

Despite the fact that technology companies’ valuations have plummeted — the tech-heavy Nasdaq 100 currently trades at under 20 times forecast profits, the lowest since April 2020 — some strategists believe they will continue under pressure from central banks’ aggressive monetary tightening.

According to Bank of America, tech equities recently had their largest weekly outflows of the year. Even after the price declines, Valerie Gastaldy, a technical analyst at Day By Day SAS, believes the sector might lose another 10% before reaching a bottom. “I don’t believe we’ve seen surrender yet,” Dan Boardman-Weston, CEO of BRI Wealth Management, said. “This week has been particularly severe, and investor mood, particularly in the technology sector, has taken a beating.

When compared to previous eras of defensive strength, more might be on the way. Relative gains this year are still trailing those in 2016, which were sparked by China’s slowdown and Brexit concerns, as well as in the early days of the pandemic in 2020.

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Global stock markets are falling as inflation and economic concerns remain

Global stock markets are falling as inflation and economic concerns remain

On Thursday, global shares slumped to an 18-month low, as investors worried that rising inflation would endure, forcing central banks to continue tightening monetary policy. Stocks in the United States closed a choppy session marginally down, as investors juggled concerns over lingering inflation with evidence that it may be peaking. Since plunging from its all-time high in January, the S&P 500 has come dangerously close to confirming a bear market.

A German warning that Russia was now using energy supply as a “weapon” heightened economic concerns in Europe. The STOXX 600 index was down 0.75 percent throughout Europe. As of 5:09 p.m. ET, the MSCI global stock index was down 0.69 percent (2109 GMT). Oil prices were uneven as a result of supply concerns stemming from the planned European Union embargo on Russian oil. Brent crude dropped 6 cents to $107.45 per barrel. WTI crude oil increased 42 cents, or 0.4 percent, to $106.13 a barrel.

The producer price index for final demand grew 0.5 percent in April, less than the 1.6 percent increase in March, according to the US Labor Department, as growing energy prices slowed. Consumer price growth fell to 8.3 percent in April from 8.5 percent in March, but it still beat experts’ expectations of 8.1 percent.

“Since the Fed hiked rates… and the accompanying robust US jobs market, and CPI statistics have reinforced worries over the scale of the task confronting the Fed,” ANZ bank analysts stated. Overnight, the leading pan-Asian Pacific indices fell 2.5 percent to a 22-month low. The Nikkei 225 lost 1.8 percent. Stocks in emerging markets fell 2.28 percent.

Treasury yields have fallen. After the benchmark US government bond fell to a morning low of 2.816 percent, the yield on 10-year Treasury notes US10YT=RR plummeted 7.1 basis points to 2.843 percent. Germany’s benchmark 10-year yield fell as much as 15 basis points to 0.85 percent, its lowest level in over two weeks.

With the collapse of the so-called stablecoin TerraUSD, selling in bitcoin, and a 15% drop in the next-largest cryptocurrency, ether, the crash in cryptocurrency markets proceeded .Tether, the world’s largest stablecoin by market capitalization with a value directly linked to the dollar, has fallen below its so-called “peg” to the dollar. Crypto markets have already lost over $1 trillion due to the worldwide sell-off. This week, about a third of that loss occurred. “The breakdown of the peg in TerraUSD has resulted in several unpleasant and foreseeable consequences. BTC, ETH, and most ALT coins have suffered widespread liquidation “Other cryptocurrencies, stated Richard Usher, head of OTC trading at BCB Group.

Precious metals were also down. Gold declined 1.7 percent to $1,821.52 an ounce on the spot market. Gold futures in the United States declined 1.64 percent to $1,823.80 per ounce.  In official trade, benchmark copper on the London Metal Exchange was down 3.6 percent at $9,000 per tonne, after sliding as low as $8,938. Prices have dropped 17% after reaching a peak of $10,845 in March.

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NASDAQ is down more than 3% as investors are disappointed by US inflation statistics

NASDAQ is down more than 3% as investors are disappointed by US inflation statistics

After U.S. inflation statistics failed to ease investor concerns about interest rates and the economy, US equities closed substantially lower on Wednesday, with the NASDAQ plunging more than 3% and the Dow plummeting for the fifth day in a row. The S&P 500 index fell 1.7 percent and is now down 18 percent from its record closing high on Jan. 3.

Inflation may have peaked in April, according to the Labor Department’s monthly consumer price index (CPI), but it is expected to remain high enough to put the Federal Reserve on the brakes to cool demand. Last month, the CPI rose 0.3 percent, the weakest increase since August, while experts surveyed by Reuters expected consumer prices to rise 0.2 percent in April.

Quincy Krosby, chief equities strategist at LPL Financial in Charlotte, North Carolina, said, “It didn’t remove the perception that there’s more to go in terms of reigning in inflation.” “The market is trying to figure out if we’ll see growth slow down more than predicted” when the Fed hikes rates, she added.

Apple’s stock fell 5.2 percent, putting the NASDAQ and S&P 500 indexes under the most pressure. “Apple is getting a lot of attention right now,” Krosby added. “From many viewpoints, Apple is the indicator for the market because of its heft.” Growth stocks have been hammered particularly hard by investor fears about whether the Fed would continue to boost interest rates quickly. The consumer discretionary and technology sectors each declined 3%, leading the S&P 500 sector falls.

The Dow Jones Industrial Average sank 326.63 points, or 1.02 percent, to 31,834.11, the S&P 500 dropped 65.87 points, or 1.65 percent, to 3,935.18, and the NASDAQ Composite plunged 373.44 points, or 3.18 percent, to 11,364.24.The Dow’s five-day losing skid was the longest since mid-February. Energy stocks finished higher, helping to keep the S&P 500 and Dow from falling too much. Exxon Mobil Corporation’s stock was up 2.1%

In general, value stocks outpaced growth stocks. The S&P growth index fell 2.8 percent on the day, while the S&P value index fell 0.5 percent. Investors are waiting for fresh inflation data on Thursday, when the US producer price index is released. Stocks have declined this year as a result of rate fears, the Ukraine crisis, and China’s recent coronavirus lockdowns.

Coinbase Global Inc fell 26.4 percent after missing revenue projections in the first quarter, owing to market volatility that has reduced investor demand for risk assets. The total number of shares traded on US exchanges was 15.38 billion, compared to an average of 12.75 billion over the prior 20 trading days. On the NYSE, declining issues outnumbered advancing ones by a 2.16-to-1 ratio; on the NASDAQ, decliners were favoured by a 3.70-to-1 ratio. The S&P 500 index made one new 52-week high and 67 new lows, while the NASDAQ Composite made ten new highs and 1,221 new lows.

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Dow falls for the fourth day in a row

Dow falls for the fourth day in a row

On Tuesday, the market fluctuated between gains and losses as concerns about inflation, interest rates, and the economy weighed on investors. The NASDAQ Composite, which is heavily weighted in technology, was up 2.8 percent at one point. Stocks had virtually lost those gains by late morning, and they seemed to be on course to continue a painful three-day slump. However, as the day progressed, investors’ focus shifted to Wednesday’s consumer price report and the prospect that inflation had peaked, and equities began to recover.

The S&P 500 rose 9.81 points, or 0.2 percent, to 4001.05, a day after the broad index fell 3.2 percent to its year-low. To 11737.67, the NASDAQ Composite Index rose 114.42 points, or 1%. “The market misread the consumer price index, resulting in the afternoon rebound,” said Matt Peron, director of research at Janus Henderson Investors.

The Dow Jones Industrial Average dropped for the fourth trading session in a row, reaching a 52-week low. At 32160.74, it was down 84.96 points, or 0.3 percent. A concoction of geopolitical threats and economic headwinds is unsettling markets and presenting the greatest threat to global growth in years. In the United States, the Federal Reserve has begun raising interest rates in response to rising inflation, and investors are concerned that the move may send the country into recession.

Global markets are also in a state of flux. Resurgent Covid-19 breakouts in China, as well as Beijing’s rigorous response to them, threaten to resurrect the supply chain bottlenecks that drove inflation higher in the first place. The crisis in Ukraine threatens to keep energy costs high in Europe, putting a damper on the region’s prosperity.

“People came in this morning anticipating a relief rally after being hammered the past several days,” said Joe Quinlan, Merrill’s and Bank of America Private Bank’s head of CIO Market Strategy. “However, we have seldom seen three big market-moving factors combine, such as inflation in the United States, Covid difficulties in China, and the crisis in Ukraine.” Some buyers bought equities that had been hammered by the headwinds early Tuesday.

“At this point, everyone is waiting to see if we’ve bottomed,” said Quincy Krosby, LPL Financial’s Chief Equity Strategist. “I have a feeling we haven’t hit bottom yet.” Ms. Krosby expects Wednesday’s publication on new consumer-price index data to show that inflation climbed at a slower pace in April than the previous month. She emphasised that investor opinion may shift on a dime. A speech by Fed Chairman Jerome Powell in January 2019 hinted that the central bank would be conservative with rate hikes, reversing a major market selloff.

Mr. Quinlan believes the market has entered a new period, and investors are more likely to wait for convincing proof that the obstacles have passed before speculating on the equities reaching a bottom. He stated, “Investors are quite suspicious right now.” “They want to see the data,” says the source. They refuse to pay attention to policymakers. Any enhancements will help construct the bottom scaffolding. But we haven’t arrived yet.” Peloton Interactive slumped $1.23, or 8.7%, to $12.90 after announcing lower sales and rising losses as the stationary-bike maker grapples with the return of pre-pandemic consumer habits.

Pfizer said it will purchase the balance of Biohaven Pharmaceutical Holding Co. for roughly $11.6 billion, sending the stock up $56.86, or 68 percent, to $140. After Prologis announced that it had made an offer to purchase Duke Realty for $23.7 billion, the stock gained $1.87, or 3.9 percent, to $49.58. The stock of Prologis dropped $6.96, or 5.3 percent, to $125.41. The yield on the benchmark 10-year Treasury note fell to 2.990 percent on Tuesday, down from 3.080 percent the day before. Overseas, the Stoxx Europe 600 index gained 0.7 percent. In Asia, the Nikkei 225 fell 0.6 percent, the Shanghai Composite jumped 1.1 percent, and the Hang Seng Index in Hong Kong fell 1.8 percent.

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US stock sell-off deepens as S&P & NASDAQ falls

US stock sell-off deepens as S&P & NASDAQ falls

The brutal market sell-off resumed on Monday, with all three main indices finishing down starting the week. The S&P 500 fell below 4,000 for the first time since April 2021, while the tech-heavy NASDAQ fell more than 4%. The Cboe Volatility Index, or stock market fear measure, rose to 34.66 on Monday. Stocks fell even as the yield on the 10-year Treasury note fell to around 3.04 percent, down from 3.1 percent on Friday, as investors sought to avoid the carnage in markets.

So far in 2022, there has been nowhere to hide in markets as equities, bonds, and cryptocurrency have all been crushed, and stocks and bonds are seeing a simultaneous correction for the first time in over 50 years. “Investors, in my opinion, have become too gloomy about the future for the US economy and stock market,” experienced stock market bull Edward Yardeni told the Financial Times on Monday. “I can’t remember such stock bearishness in a long time.”

According to Morgan Stanley analysts in a Monday report, retail traders have now lost all of the money they made during the outbreak. Twitter’s shares dropped on Monday. In the absence of Elon Musk’s takeover attempt, the company’s expected price, according to short seller Hindenburg Research, would be 37% lower. According to the experts, Tesla’s CEO has complete control over the sale and might revise his offer.

According to Bloomberg, Goldman Sachs is planning to discontinue working with most SPACs owing to liability concerns and increased regulation in the market. However, if the SEC relaxes its SPAC supervision standards, the investment bank may reconsider. Lumber prices fell to their lowest level of the year on Monday, as the highest mortgage rates in 13 years weighed on home demand.

Overseas, China’s yuan fell to an 18-month low versus the dollar, as Beijing’s Covid restrictions weighed on the economy and US bond rates remained high. Meanwhile, the three most valuable cryptocurrencies by market capitalization – bitcoin, ether, and solana – all fell on Monday. Coinbase and Silvergate Capital stock dropped in tandem with the overall token selloff. West Texas Intermediate crude fell 6.7 percent to $102.39 a barrel. Brent crude, the worldwide standard, fell 6.4% to $105.20 per barrel. Gold fell 1.53 percent to $1,853.20 per ounce. The 10-year Treasury yield fell 8.4 basis points to 3.04 percent.

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Dollar rises as equity markets are jolted by nervousness

Dollar rises as equity markets are jolted by nervousness

The dollar started the week on a solid note, bolstered by dramatically increasing US yields and investors’ flight to safety as Chinese lockdowns, conflict on the outskirts of Europe, and fear of higher interest rates pushed markets into a frenzy. In early trade, the US dollar hit a 22-month high against the growth-sensitive New Zealand dollar and surged more than 0.5 percent against the Australian dollar to a three-month high while US stock market futures fell 1%. The benchmark 10-year Treasury yield was at its highest since 2018 at 3.1464 percent, while the dollar is a whisker away from a new two-decade high at 130.73 yen.

The dollar has nearly reached a five-year high against the euro, which lost 0.2 percent to $1.0529. Sterling was trading slightly around two-year lows set last week after the Bank of England cautioned that the British economy was entering a slump. “The dollar will be supported by outperformance in the US economy and lower equity prices,” said Joe Capurso, a strategist at the Commonwealth Bank of Australia in Sydney.

“Despite considerable rises in interest rates, financial conditions in the main economies have not tightened much the need to tighten financial conditions and rein in inflation underpins the rationale for significant future increases.” Last week, the US dollar index rose for the fifth week in a row, reaching a nearly 20-year high after the US Federal Reserve raised its benchmark funds rate by 50 basis points and solid employment data bolstered expectations on additional hefty raises.

The index was recently at 103.78. Futures markets are pricing in a 75 percent likelihood of a 75 basis point rate hike at the Fed’s next meeting in June, and more than 200 basis points of tightening by the end of the year. The release of US inflation statistics on Wednesday might inspire even more aggressive wagers, especially if the rate of headline price hikes does not slow to 8.1 percent as forecast.

“Risks around US CPI appear binary; a slowdown from 8.5 percent would be modestly encouraging, but a bounce would undoubtedly reignite expectations for 75 basis point Fed increases, and possibly support the currency,” ANZ Bank analysts said. “As the reality of volatility strikes, the concept that synchronized global tightening would go smoothly feels like a lost dream.”

Cryptocurrencies have been hammered in the rush away from riskier assets, with bitcoin nursing weekend losses and trading at its lowest levels of the year at $34,000, while ether, which slid 4% on Sunday, was trading at $2,525. At the same time, the crisis in Ukraine is upsetting global commodities markets, and China’s lockdowns are slowing GDP. Last month, China’s unemployment rate reached its highest level since March 2020, and the yuan was trading around an 18-month low of 6.7319 per dollar in offshore trade.

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

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

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

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

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

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

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

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

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Gold Price Climbs Steadily

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

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

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

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

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

Trump’s Tariff Announcement Sparks Market Uncertainty

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

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

Fed Policymakers Express Caution Amid Economic Uncertainty

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

Several Fed officials have weighed in on economic policy:

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

What’s Next for Gold?

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

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Gold Price Rally Holds Strong, But Overbought Conditions Raise Caution

Gold Price Bulls Hold Firm, But Overbought Conditions Suggest Caution

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

 

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

Gold Bulls Retain Control Amid US-China Trade Tensions

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

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

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

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

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

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

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

US Tariff Delay Weighs on Oil Prices

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

OPEC+ Stands Firm on Production Policy

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

Key Technical Levels to Watch

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

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Gold Holds Below $2,800 Despite Intraday Recovery

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

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

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

Technical Outlook: Gold’s Uptrend Intact Despite Intraday Pullback

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

 

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

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

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

Market Drivers to Watch

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

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

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

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

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

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

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

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

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

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

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

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WTI Drops Toward

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

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

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

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

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

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

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EUR/USD Price Forecast

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

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

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

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

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

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EUR/USD Eases Near

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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Gold Price Struggles to Gain Momentum as Traders Await New Catalysts

Gold Price Struggles to Gain Momentum as Traders Await New Catalysts

Gold Price Struggles to Gain Momentum as Traders Await New Catalysts

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

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

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

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

Technical Analysis: Gold Price Maintains Positive Long-Term Outlook

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Technical Analysis: Pound Sterling Holds Key Support at 1.3200

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

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

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Rate Cuts Could Facilitate a Soft Landing

Rate Cuts Could Facilitate a Soft Landing: UBS

Rate Cuts Could Facilitate a Soft Landing: UBS

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

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

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

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

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

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

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

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

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

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

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Japanese Yen Moves Sideways Despite Hawkish BoJ Signals

Japanese Yen Moves Sideways Despite Hawkish BoJ Signals

Japanese Yen Moves Sideways Despite Hawkish BoJ Signals

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

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

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

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

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

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

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

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

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

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

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

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

Technical Analysis: USD/JPY Holds Above 145.00

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

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

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

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WTI Crude Oil Remains Below $75.50 Amid Chinese Demand Concerns

WTI Crude Oil Remains Below $75.50 Amid Chinese Demand Concerns

WTI Crude Oil Remains Below $75.50 Amid Chinese Demand Concerns

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

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

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

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

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Japanese Yen Holds Losses

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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Australian Dollar Advances as RBA Signals Potential Rate Hike

Australian Dollar Advances as RBA Signals Potential Rate Hike

Australian Dollar Advances as RBA Signals Potential Rate Hike

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

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

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

Daily Market Movers: Australian Dollar Rises on Hawkish RBA

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

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

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

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

Technical Analysis: Australian Dollar Nears Key Support Levels

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

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

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US Yields Boost Dollar, Weaken Yen

US Yields Boost Dollar, Weaken Yen

US Yields Boost Dollar, Weaken Yen

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

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

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

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

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

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

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

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

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

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Cryptocurrency Move Back to Support the Pack to Level

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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Cryptos Market: Bitcoin Shows Bullish Momentum Over Dollar Strength

Cryptos Market: Bitcoin Shows Bullish Momentum Over Dollar Strength

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

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

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

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

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

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

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

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

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Ethereum Rate Hits at Higher Level More Profitable Than Bitcoin Mining

Ethereum Rate Hits at Higher Level More Profitable Than Bitcoin Mining

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

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

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

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

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

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

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

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Cryptocurrency Bitcoin Shows the Bullish Divergence on User Count

Cryptocurrency Bitcoin Shows the Bullish Divergence on User Count

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

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

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

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

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

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

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

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

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

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

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

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

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