Skip to main content

XtremeMarkets

Xtreme Markets Ltd

Web Trader
Register
Download App
Login
Affiliates
Xtreme Markets Logo

Market News

EUR/USD Drops Toward 1.1700 as US Dollar Strengthens

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

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

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

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

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

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

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

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

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

US Dollar Under Pressure Amid Lower Treasury Yields

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

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

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

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

Fed Officials Signal a Cautious Approach to Rate Cuts

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

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

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

Australian Dollar Targets Upper Range Near 0.6400

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

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

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

Read More
Australian Dollar Declines as US Dollar Strengthens Ahead of Jobless Claims

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

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

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

US-China Trade Tensions Weigh on Australian Dollar

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

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

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

US Dollar Holds Firm Amid Mixed Economic Data

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

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

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

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

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

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

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

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

Read More
Australian Dollar Slips as US Tariffs on China Take Effect

Australian Dollar Slips as US Tariffs on China Take Effect

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

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

Chinese Exporters Seek Alternatives

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

RBA Rate Cut Expectations Weigh on AUD

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

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

US Dollar Strengthens Amid Economic Developments

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

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

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

Australian Dollar Technical Analysis

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

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

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

 

Read More
Japanese Yen Maintains Strong Bullish Momentum

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

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

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

JPY Gains on Hawkish BoJ Sentiment Amid Market Uncertainty

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

USD/JPY at Risk of Retesting Monthly Lows Near 153.70

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

Key resistance levels for a rebound:

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

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

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

Read More
Gold Price Retreats from Multi-Month High Amid USD Recovery

Gold Price Retreats from Multi-Month High Amid USD Recovery

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

Market Sentiment Dampened by Trade Tensions and Fed Speculation

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

Gold Under Pressure from USD Recovery, but Downside Remains Limited

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

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

Traders Eye Economic Data for Further Clues

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

Gold Price Outlook: Support and Resistance Levels

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

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

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

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

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

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

Risk-On Mood and Modest USD Rebound Cap Gold Gains

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

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

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

Gold Price Technical Analysis

Key Support Levels:

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

Key Resistance Levels:

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

Outlook:

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

Read More
Chinese Stocks Rally, but Global Funds Remain Skeptical

Chinese Stocks Rally, but Global Funds Remain Skeptical

Chinese Stocks Rally, but Global Funds Remain Skeptical

Chinese stocks have potentially reached their lowest point, yet there remains a significant hesitation among money managers to reengage fully with the market. The MSCI China Index has seen a 27% rise since its January low, primarily driven by a shift towards undervalued stocks. However, this increase in value hasn’t yet been backed by convincing Chinese corporate earnings, according to insights from Lombard Odier, Pictet Asset Management, and Fidelity International. Despite some optimistic views, such as those from abrdn plc emphasizing the importance of profit gains, the broader investment sentiment remains cautious.

At a glance, Chinese equities haven’t looked this appealing in some time, with major indices entering bull markets bolstered by supportive policies, and long-only funds ceasing to cut positions. However, persistent economic uncertainties and ongoing strategic tensions with the US have diminished the appeal of Chinese stocks as a staple in emerging-market portfolios. John Woods, Chief Investment Officer for Asia at Lombard Odier, notes that tactical plays on short-lived rallies are less preferred than a focus on earnings and fundamentals.

The recent rally, starting in April, took many by surprise, including analysts from Goldman Sachs Group Inc., who noted a widespread fear of missing out among traders. To date, Chinese stocks have regained about $2.5 trillion in market value, recuperating over one third of the losses from a historic downturn earlier this year. This recovery is partly due to a rotation from markets like the US, Japan, and India, where stocks are peaking, towards the relatively low valuations in China, marking the longest stretch of net purchases via Hong Kong trading links in a year.

David Mudd, founder and CIO of PegasusAsia, a hedge fund, predicts a continued shift towards Chinese tech firms from their US counterparts, setting the stage for potential divergences and intriguing trading pairs. The MSCI China Index currently trades at 10 times forward earnings, significantly below both its five-year average and the 20.6 times earnings of the S&P 500.

Nicholas Yeo, head of China equities at abrdn, describes the recent market surge as a technical rebound due to historically low valuations, emphasizing that its sustainability will hinge on forthcoming earnings reports. In contrast, John Lin from AllianceBernstein expresses skepticism, pointing out that the current earnings growth expectations for Chinese stocks, around 10%, may be overly optimistic without supporting corporate performance.As the earnings season progresses, companies within the MSCI China Index have reported a nearly 30% drop in net profits before exceptional items as of mid-May. The upcoming earnings reports from tech giants like Tencent Holdings Ltd. and Alibaba Group Holding Ltd. are highly anticipated, as they could be pivotal in determining the rally’s durability.

Additional momentum for the rally comes from signs of increased policy support in Beijing, especially measures aimed at addressing the stagnant property sector. Simultaneously, the persistent high policy rates in the US make Chinese stocks an attractive alternative, particularly in the tech sector. The Golden Dragon Index, which tracks US-listed Chinese firms, recently experienced a notable rise, fueled by robust quarterly results from Tencent Music Entertainment Group.

Despite the tempting market conditions, Luca Paolini from Pictet remains cautious, opting for tactical investments in China. Morgan Stanley’s strategists, including Laura Wang, advise against chasing the rally, although they recognize specific opportunities. As Beijing encourages companies to enhance dividends and buybacks, and incentivizes key industries like semiconductors, Chinese equities are gradually becoming attractive to value-focused investors, as noted by George Efstathopoulos from Fidelity. However, the critical determinant remains the improvement in consumer sentiment within China, a factor that is still considered fragile.

Read More
Hong Kong Attempts to Attract Saudi Investment to Revitalize Stock Market

Hong Kong Attempts to Attract Saudi Investment to Revitalize Stock Market

Hong Kong Attempts to Attract Saudi Investment to Revitalize Stock Market

Hong Kong is actively seeking investment from Saudi Arabia to help rejuvenate its stock market, which has been facing multiple challenges. The city, known for its role as a global financial hub, is collaborating with the Saudi Tadawul Group to host a conference aimed at attracting fresh stock listings and fund inflows. This comes at a crucial time when Hong Kong needs to bolster its financial status.

The upcoming forum is not only an opportunity for Hong Kong but also for Saudi company officials who are keen on increasing their exposure to Asian markets. According to industry analysts, there is a significant political push fostering closer relations between China, including Hong Kong, and Gulf countries. Chinese businesses have expressed a keen interest in the Middle East, looking for new investment avenues to explore in the region.

This strategic conference highlights Hong Kong Exchanges & Clearing Ltd.’s efforts to attract new investors as part of its broader strategy to diversify its investor base amid reduced interest from U.S. and European investors due to rising geopolitical tensions. 

Last month, the nation’s securities regulator announced initiatives to encourage more companies to launch initial public offerings (IPOs) in Hong Kong, amidst a challenging period marked by a slow Chinese economy and increasing tensions between Beijing and Washington. These factors have led to a decline in investor interest and a significant drop in funds raised through IPOs, reaching a low not seen since 2009.

Bonnie Chan, CEO of Hong Kong Exchanges & Clearing, remains optimistic about the resurgence of significant IPOs in the city, with 100 applications currently in the pipeline and more expected. The recent uptick in applications has provided a hopeful outlook for the market’s recovery.

On the other side, Saudi Arabia sees clear benefits in tightening relations with China. Under the kingdom’s Vision 2030 agenda, spearheaded by Crown Prince Mohammed bin Salman, Saudi Arabia aims to increase foreign ownership and enhance liquidity in its stock markets. The Saudi market has shown robust growth, with the market capitalization increasing by 11% over the past three years, contrasting sharply with Hong Kong’s 25% decline. The Riyadh stock exchange has consistently performed well, attracting significant foreign investment, particularly after its inclusion in MSCI Inc.’s emerging-markets equities benchmark in 2019.

Recently, Hong Kong introduced the CSOP Saudi Arabia ETF, the first such exchange-traded fund in Asia, allowing investors to tap into the Saudi market. Despite a strong start with backing from Saudi Arabia’s sovereign wealth fund, it has seen modest fund inflows. Efforts are underway to cross-list this ETF in Shanghai to enhance accessibility for Chinese investors, who are increasingly recognizing the investment potential in the Middle East.

Further strengthening the ties, Hong Kong and Saudi Arabia have commenced negotiations on an “investment promotion and protection agreement.” There are also plans to launch a Riyadh-based ETF that tracks Hong Kong stock indexes. These initiatives underline the enduring partnership and mutual financial interests between the two regions.

Hong Kong’s Chief Executive John Lee has also expressed aspirations to attract a dual listing from Saudi Aramco, the world’s top oil producer, in Hong Kong. While this remains a future possibility, it signifies the city’s ambition to enhance its stature as a leading financial exchange.

Read More
Asian Stocks Rise Slightly as Hopes for Federal Reserve Action Boost Sentiment

Asian Stocks Rise Slightly as Hopes for Federal Reserve Action Boost Sentiment

Asian Stocks Rise Slightly as Hopes for Federal Reserve Action Boost Sentiment

Asian stock markets achieved modest gains on Tuesday, driven by rising optimism that the Federal Reserve may initiate interest rate cuts within the year. This sentiment mirrored the uptick on Wall Street, sparked by soft U.S. employment figures which fueled speculation about potential changes in Fed policy. The optimism extended across major Asian markets, particularly in Japan, Korea, and Australia, contributing to the longest streak of gains in the region since February.

In Japan, the Nikkei 225 surged by as much as 1.6% as Tokyo investors returned from a holiday, showing robust trading activity. However, markets in Hong Kong and Shanghai experienced fluctuations, alternating between losses and gains throughout the trading day. The Japanese yen weakened following comments from Japan’s top currency official, Masato Kanda, who indicated that there was no immediate need for government intervention in currency markets as long as they remained functional.

The global equity landscape has been positively influenced by adjustments in investor expectations regarding the Federal Reserve’s monetary policy, especially after the recent U.S. jobs data suggested a less robust labor market. Chinese stocks, in particular, saw an uplift from assurances by China’s leaders to introduce new measures aimed at addressing the lingering issues in the housing sector.

Investment analysts highlight Asia’s attractive prospects in terms of growth, earnings potential, and valuation compared to the U.S. According to Ray Sharma-Ong of abrdn Plc, Asian markets have historically outperformed during periods of Fed monetary easing, thanks to better growth dynamics and attractive currency yields.

In the bond markets, there has been a cautious but noticeable shift towards expecting Fed easing this year, influenced by signs of cooling in the U.S. labor market. The yield on U.S. 10-year Treasuries showed little change, mirroring a stable yield environment in Australia as well.

Statements from Federal Reserve officials have underscored this cautious approach. Thomas Barkin, President of the Fed Bank of Richmond, noted that sustained high interest rates are likely to further slow economic growth and help bring inflation down to the 2% target. His counterpart in New York, John Williams, mentioned that rate cuts are anticipated eventually, but the timing would hinge on a broader array of economic data.

Meanwhile, the Reserve Bank of Australia held interest rates steady at a 12-year peak, indicating it would take time before inflation consistently met its target range. In China, positive sentiments were further buoyed as Shenzhen and other major cities relaxed home buying restrictions, part of broader efforts to rejuvenate the struggling real estate sector.

Strategists at HSBC Holdings, including Herald van der Linde, suggest that Chinese markets are poised to remain attractive in the short term due to an undervalued yen, high investment in Japanese funds, and ongoing improvements in China’s regulatory and economic environment. They predict that any Fed easing in late 2024 would likely benefit mainland China more than Japan, pointing to a continued shift in regional market dynamics.

Read More
Asian Stocks Rise Post-Fed Decision; Yen Declines Resume

Asian Stocks Rise Post-Fed Decision; Yen Declines Resume

Asian Stocks Rise Post-Fed Decision; Yen Declines Resume

Most Asian stocks rose following comments from Federal Reserve Chair Jerome Powell, which tempered expectations for further interest-rate hikes. Meanwhile, the yen weakened after briefly surging, indicating possible intervention.

In market movements, equity indexes in Australia and Hong Kong saw gains, while Japanese stocks remained stable. U.S. stock futures experienced a rally, contrasting with a dip in European contracts. Market focus now shifts to forthcoming economic indicators, including euro-area manufacturing data and Apple Inc.’s earnings report.

The yen’s decline by as much as 1.1% against the dollar, following a sharp rise in New York, suggests doubts about Japan’s ability to counter further weakening despite its significant interest-rate gap with the U.S. Japan’s chief currency officer, Masato Kanda, refrained from commenting on potential market interventions.

The Federal Reserve maintained the federal funds rate at 5.25% to 5.5%. Powell indicated that a rate hike is unlikely without clear signs that current policies are insufficient to achieve a 2% inflation target. This stance suggests a cautious approach towards monetary policy, aimed at managing persistent inflation pressures.

On the currency front, the Bloomberg dollar index fell for a second consecutive day, influenced by lower U.S. yields post-Fed announcement. The euro remained steady after a slight increase the previous day.

Corporate earnings also highlighted market dynamics. ArcelorMittal SA reported better-than-expected results, and Apple’s upcoming earnings will provide insights into its performance amid a slowdown in China.

John Woods of Lombard Odier commented on the resilience seen in earnings, emphasizing the predominance of U.S. narratives in the current market environment.

Additional economic insights are expected with the release of April’s non-farm payroll data, with forecasts suggesting a stable unemployment rate of 3.8%. This could indicate persistent robust hiring trends, potentially challenging the Fed’s moderation efforts.

In commodities, oil prices bounced back from prior losses driven by concerns over demand and high U.S. crude inventories. Gold prices increased, supported by the Fed’s indication of a potential shift towards reducing borrowing costs once confident in the easing of inflation.

Read More

Japan Drives Asian Stocks Up, China PMI Steady

Japan Drives Asian Stocks Up, China PMI Steady

Asian stock markets saw gains on Tuesday, with Japan taking the lead, as recent Chinese economic data indicated sustained recovery in the world’s second-largest economy. Japanese and Hong Kong indices climbed, while Chinese mainland shares showed mixed responses after reports of continued growth in factory activities. Meanwhile, U.S. stock futures remained stable following a robust earnings kickoff on Wall Street, despite expectations of sustained high interest rates by the Federal Reserve.

In Japan, equities rose sharply after a national holiday, buoyed by a strong rebound in the yen from a 34-year low against the dollar, amid rumors of government intervention to stabilize the currency. The yen experienced significant volatility, swinging over 2% after a previous drop to 160.17 per dollar, marking the broadest range since late 2022. During Asian trading hours, the yen’s gains moderated slightly as the U.S. dollar strengthened.

Analysts note a cautious optimism surrounding the Japanese currency, as fears of its continued depreciation seem to have eased. Elsewhere in Asia, there’s speculation that China might consider a drastic step to boost its sluggish economy, such as a substantial devaluation of the yuan. Chinese markets are set to close later in the week for the Labor Day holidays.

On the corporate front, Samsung Electronics saw a notable increase in earnings, driven by profits in its semiconductor unit for the first time since 2022, highlighting the surge in global AI development. Shares of Sumitomo Corp. also soared following reports that Elliott Management Corp. had acquired a significant stake in the company. Meanwhile, HSBC announced a decline in its first-quarter pretax profit and the upcoming retirement of its CEO, Noel Quinn, sparking a search for his successor.

In the U.S., early earnings reports are surpassing expectations with a significant majority of companies outperforming initial estimates. This has led to an upward revision in expected earnings growth, boosting investor sentiment. U.S. Treasury yields stabilized after a slight drop, and bond yields in Australia and New Zealand fell.

Market analysts anticipate continued volatility in U.S. markets but remain optimistic, particularly for AI-driven sectors. They recommend a balanced investment approach, emphasizing the potential in U.S. equities, especially technology stocks.

In commodities, oil prices steadied after a notable drop, as peace talks in the Middle East lowered risk premiums. Gold is on track to rise for the third consecutive month, with investors closely watching the upcoming Federal Reserve meeting.

Read More

Apple’s Market Lead in China Slips as Q1 Shipments Drop 6.6%

Apple’s Market Lead in China Slips as Q1 Shipments Drop 6.6%

Apple has been dethroned as the leading smartphone seller in China during the first quarter of 2024, according to preliminary data released by research firm IDC on Thursday. The company saw its smartphone shipments decline by 6.6% compared to the same period last year, amidst fierce competition that has reshaped the market dynamics.

In a closely contested race for market dominance, both Honor and Huawei have now edged out Apple. Honor experienced a rise in market share to 17.1%, while Huawei closely followed with a 17% share. Apple’s market share, in contrast, has slipped to 15.6%. IDC identifies a statistical tie in market share when the difference between companies is 0.1% or less, underscoring just how tight the competition has become.

This shift comes despite Apple’s attempts to regain traction through price promotions during the quarter. Arthur Guo, a senior research analyst at IDC China, noted in the report that these efforts were insufficient to counter the robust challenge posed by Android-based competitors.

Adding to Apple’s challenges, the overall smartphone market in China is on the rise, with total shipments increasing by 6.5% to reach 69.3 million units, as reported by IDC. This growth suggests a recovering market where competition is becoming increasingly stiff.

Further emphasizing the scale of Apple’s current predicament, another research firm, Counterpoint, revealed that Apple’s smartphone shipments in China plummeted by 19% in the first quarter. This marks the company’s poorest performance since 2020, indicating significant hurdles in one of its key markets.

The increasing market share of rivals like Honor and Huawei is indicative of a broader trend where Chinese consumers are responding more favorably to domestic brands, which have been aggressively innovating and marketing their products. As these brands continue to capitalize on national sentiment and technological advancements, Apple faces the dual challenge of adjusting its strategy to regain lost ground and redefining its value proposition to appeal to Chinese consumers amidst a rapidly evolving smartphone landscape.

Read More

UBS Upgrades Chinese Stocks to Overweight

UBS Upgrades Chinese Stocks to Overweight

UBS Group AG has upgraded its rating for a prominent Chinese stock index to overweight, indicating a renewed confidence in the market’s recovery prospects. This upgrade, described as a rare and optimistic move in 2024, reflects UBS’s positive stance on the financial health and earnings potential of China’s largest stocks.

In a detailed analysis released on Tuesday, UBS strategists, including Sunil Tirumalai, highlighted the robust earnings and solid fundamentals of these top companies. They pointed to a noticeable increase in consumer spending and a potential shift in household savings towards market investments as key drivers of this optimism.

The timing of UBS’s bullish outlook on the MSCI China Index coincides with the market showing signs of recovery from a prolonged downturn. The index, along with corporate performance, has begun to improve, buoyed by economic upturns and a tentative easing of corporate struggles. Despite this, the shadow of geopolitical strife and regulatory uncertainties continues to temper investor enthusiasm, preventing a full-scale commitment to this asset class.

Simultaneously, UBS has adjusted its views on other Asian markets, upgrading Hong Kong stocks to overweight while downgrading Taiwan and South Korea’s tech-centric markets to neutral. This shift reflects a broader strategy of divesting from highly valued tech stocks amid expectations of sustained high interest rates by the Federal Reserve.

Year-to-date, the MSCI China Index has risen over 13% from its January low, with similar gains seen in the Hang Seng Index. This growth comes after a cautious period among brokerages who were hesitant to amend their market forecasts following a volatile market phase post-2022’s aggressive rally.

Historically, UBS had moved Chinese stocks to a neutral stance in late 2023, mirroring actions by Morgan Stanley, as it awaited economic stabilization and policy interventions. Recent data, however, shows a rebound in the 12-month forward earnings estimate for the MSCI China Index by 1.7%, the first rise since a dip at 2022’s end.

This positive trend in Chinese equities is further supported by national policies aimed at stabilizing the market and enhancing corporate governance, as outlined in China’s recent “Nine-Point Guideline.” These initiatives are expected to foster better dividend practices and higher quality stock offerings.

Nonetheless, UBS warns that the looming US elections could escalate geopolitical tensions, posing a significant risk to the ongoing recovery in Chinese stocks. This backdrop of uncertainty makes the current market landscape both promising and precarious as investors navigate these complex dynamics.

Read More

WTI Reclaims $81.50 on Saudi Arabia, Russia Supply Tightening

WTI Reclaims $81.50 on Saudi Arabia, Russia Supply Tightening

West Texas Intermediate (WTI) crude oil is currently experiencing a notable rebound, with prices hovering around $81.58. This is a substantial recovery from the weekly low of $74.45 registered last Thursday. The driving force behind this upward trend is primarily the strategic decisions made by Saudi Arabia and Russia regarding their respective oil outputs.

In an attempt to balance the global oil market, Saudi Arabia has opted to extend its voluntary cutback in oil production, retaining a reduced output of one million barrels per day through to September. In parallel, Russia has signaled its intent to curtail its oil exports by an estimated 300,000 barrels per day within the same period.

These calculated moves have already begun to reverberate across the global oil market. The US Energy Information Administration (EIA) reported a record drop of 17 million barrels in crude oil inventories. This dramatic decrease is largely due to increased refinery activity and robust crude export levels. Corroborating this trend, data from the American Petroleum Institute (API) also indicated a significant reduction in US crude oil stockpiles.

As these developments unfold, market participants are keeping a close watch on the imminent release of US wage inflation and employment data. These key economic indicators, due for release on Friday, could offer valuable insights into the Federal Reserve’s monetary policy trajectory for the remainder of the year. A hike in interest rates, for instance, could potentially slow down economic activity and reduce oil demand.

On a positive note, China’s Caixin Services PMI reported a rise to 54.1 in July, signaling a rebound in economic activity. Given China’s position as one of the world’s largest oil consumers, this improvement in economic conditions could provide a boost to WTI prices.

In the days ahead, the focus of the market will shift to the US Nonfarm Payrolls report. Expected to show an increase of roughly 180,000 jobs in July, this report carries considerable influence and could dictate trading opportunities around the WTI price.

In conclusion, the convergence of various factors – including the strategic output cuts by major oil producers, the release of pivotal economic data, and shifts in global demand patterns – promises to create an intriguing narrative in the WTI market. Investors and traders alike will be keenly observing these developments and their potential impact on oil prices.

 

Read More

Worst Quarter for Metals Cap since 2008 due to Global Recession

Worst Quarter for Metals Cap since 2008 due to Global Recession

Base metals experienced their greatest quarterly decline since the global financial crisis of 2008 as worries about a worldwide recession increased and China’s economy very slowly recovered. Although the decrease has been accentuated by price spikes that month as a result of Russia’s invasion of Ukraine, the London Metal Exchange Index has fallen 25% since the end of March. Tin has fared the worst, falling 38%, followed by a 31% decline in aluminium and a 20% decline in copper. Since the beginning of the epidemic, it was the entire index’s first quarterly decrease.

According to ED&F Man analyst Edward Meir’s metals research, “markets have been battered by both growth and inflation worries for some time now and are not getting any relief from G-7 central bankers, the majority of which are set on rising interest rates further.” As virus controls were relaxed, an indicator of factory activity in China increased in June for the first time since February. Although there was some recovery, the demand for metals is still being negatively impacted by a sluggish real estate market. Despite a reduction of quarantine regulations, the Covid Zero policy is still in place, thus there is a persistent potential of more limitations if case numbers increase once more.

The market is still threatened by the impending possibility of a recession in the US and possibly elsewhere in the world. At the annual meeting of the European Central Bank in Portugal, Federal Reserve Chair Jerome Powell and other central bankers cautioned that the globe is transitioning to a regime of greater inflation. As a result, US equity markets opened lower. Major economies are at the very least on the verge of a slowdown that will reduce construction activity. The economy may be in worse shape than previously anticipated, according to new US consumer expenditure data, which also point to further high inflation and interest rate increases.

In London, copper fell 1.7 percent on Thursday. Zinc, nickel, and aluminum all had losses of 1%, 4%, and 6%, respectively. The price of gold for August delivery decreased 0.6 percent to $1,807.30 in New York. The price of gold fell by 7.5% in the second quarter.

 

Read More

Oil declines 2% as fuel supplies and output rise in U.S.A

Oil declines 2% as fuel supplies and output rise in U.S.A

On Wednesday, oil prices fell by around 2% as concerns about a shortage of crude oil were somewhat offset by an increase in gasoline and distillate stocks in the United States and concerns about weaker global economic growth. Brent futures for August delivery decreased $1.72 or 1.5% to close at $116.26 per barrel. The more active September contract, which is due to expire on Thursday, was down $1.35 to $112.45. West Texas Intermediate crude for the United States declined $1.98, or 1.8%, to settle at $109.78 in August.

According to the Energy Information Administration (EIA), despite output reaching its highest level since April 2020 during the initial wave of the coronavirus pandemic, U.S. crude stockpiles decreased last week. As refiners increased production and reached 95 percent of capacity, the greatest level for this time of year in four years, fuel supplies increased.

“The market suffered as a result of the EIA report. The pressure is somewhat reduced by the increase in gasoline and distillate stockpiles, and the increase in U.S. output also contributed to the decrease in price “said John Kilduff, a partner at New York’s Again Capital LLC. U.S. gasoline and distillates futures fell by roughly 3% and 4% as a result of those unexpected inventory increases. Traders claimed that oil futures declined along with the cost of petrol.

The U.S. dollar’s increase to its highest level versus a basket of other currencies since reaching a 19-year high in mid-June added to the pressure on oil. Oil costs increase for buyers using other currencies when the dollar is stronger. On concerns about restricted supply brought on in part by Western sanctions on Russia, Brent and WTI rose by around 7% over the previous three sessions. According to a research note from JP Morgan, “we concluded there is no practical way to keep these barrels out of a market that was already very tight” given that about one-fifth of the world’s oil production capacity is currently subject to sanctions (Iran, Venezuela, Russia).

However, investors are also concerned that, as central banks raise interest rates to combat inflation, declining economies could reduce energy demand. According to Fed Chair Jerome Powell, the U.S. Federal Reserve will not allow the economy to enter a “higher inflation environment,” even if it means hiking interest rates to levels that endanger growth.

According to Ben van Beurden, chief executive officer of Shell PLC, uncertainty in the global oil and gas markets may last for some time because spare capacity is extremely low and demand is still recovering. On Wednesday, a series of two-day meetings between the Organization of the Petroleum Exporting Countries (OPEC) and its allies, including Russia, known as OPEC+, got underway. According to insiders, it appears doubtful that a significant shift in policy will be made this month.

Analysts worry that Saudi Arabia and the United Arab Emirates (UAE) may not have sufficient spare capacity to replace lost Russian supply. This week, French President Emmanuel Macron claimed he had been informed that these companies would find it difficult to raise output even further. The UAE’s energy minister claimed that despite producing over 3 million barrels per day (bpd), the nation had some spare capacity above its 3.17 million bpd OPEC limit. Analysts also cautioned that political upheaval in Libya and Ecuador could further reduce supplies. The Black Sea Caspian Pipeline Consortium (CPC) terminal in Russia will start loading oil again on July 1 from its second single mooring position.

Read More

Over the past 24 hours, crude oil prices increased while gold prices decreased

Over the past 24 hours, crude oil prices increased while gold prices decreased

Over the past 24 hours, gold prices have been trending marginally lower as crude oil prices managed to end the day positively. An increase in the US dollar, which resulted from risk aversion as the tech-heavy Nasdaq 100 fell more than 3 percent, put pressure on the anti-fiat yellow metal. For gold, it might have been a lot worse. The flight to safety caused Treasury yields to decline, which increased the appeal of XAU/USD.

In June, the US Conference Board’s consumer confidence index fell to 98.7 from 100 expected. This represents a decline from 103.2 in May and a 16-month low. Concerns about inflation keep eroding Americans’ perceptions of the economy. Although respondents appeared to be planning to buy more durable products in the future, their desire for leisure (travel) fell with rising prices.

Despite the deteriorating mood, the price of crude oil managed to hold steady. An OPEC+ delegate reported that the oil-producing coalition fell 2.7 million barrels per day short of its output goal in May. This might be restricting supplies and giving WTI an upward push. However, rising concerns about a slowdown in global growth have made the situation for energy prices more difficult.

Commodities will be watching a flood of central bank speech during the next 24 hours. At the ECB forum in Sintra, a panel discussion will take place. Fed Chair Jerome Powell and ECB President Christine Lagarde are scheduled to speak. Market mood may suffer if authorities restate their hawkish viewpoints, thereby depressing the price of gold and crude oil.

GOLD TECHNICAL ANALYSIS

Since May, the price of gold has been largely consolidating on the daily chart. Recent price movement is gradually dragging XAU/USD closer to the crucial support range of 1787 – 1810. The next test for the yellow metal will take place there. Technically speaking, the short-term 20- and 50-day Simple Moving Averages continue to indicate lower.

CRUDE OIL TECHNICAL ANALYSIS

Prices for crude oil are still recovering from last week’s losses. Since then, a bullish Morning Star has been verified, providing a technical tilt to the higher. Additionally, prices are attempting to close back above a crucial upward trendline from December. Such a result would strengthen the case for WTI’s potential upside. If not, losses would resume and the price would drop to its low point from May at 98.22.

Read More

UAE claims it has no spare capacity, oil prices jump by 1%

UAE claims it has no spare capacity, oil prices jump by 1%

The energy minister of the United Arab Emirates stated that the country is producing near capacity, defying expectations that this could assist boost supply in a tight market. As a result, oil prices increased by nearly 1% in early Asian trade on Tuesday. According to some estimates, Saudi Arabia and the United Arab Emirates are the only two OPEC members with extra capacity to make up for lost Russian supplies and subpar performance from other members.

At 00:28 GMT, US West Texas Intermediate (WTI) crude CLc1 futures increased $1.07, or 1%, to $110.64 a barrel, building on a prior session rise of 1.8 percent. The price of Brent oil LCOc1 futures increased $1.08, or 0.9 percent, to $116.17 a barrel, following a prior session increase of 1.7 percent.

“The market was helped by rumours of a seam of restricted supply. According to reports, the capacity limits for two key producers, Saudi Arabia and the UAE, are being reached or will soon be reached “Tobin Gorey, a commodities analyst at Commonwealth Bank, stated in a note. According to its quota of 3.168 million barrels per day (bpd) under the deal with OPEC and its allies, collectively known as OPEC+, the UAE’s energy minister Suhail al-Mazrouei stated on Monday that the country was producing at or close to its full capacity.

His statements corroborated those of French President Emmanuel Macron, who told US President Joe Biden outside the Group of Seven meeting that Saudi Arabia could only increase output by 150,000 bpd, well below its nominal spare capacity of about 2 million bpd, and that the UAE was operating at maximum capacity. Analysts also noted that political upheaval in Libya and Ecuador could further constrain supply. Libya’s National Oil Corp said on Monday that if oil terminal production and shipping don’t pick up within the next three days, it may be necessary to declare force majeure in the Gulf of Sirte region.

According to Ecuador’s Energy Ministry, due to anti-government demonstrations, the nation may fully halt oil production over the next two days. Before the demonstrations, the former OPEC nation was producing about 520,000 barrels per day. These elements highlight market shortages, which have sparked a market recovery this week and countered recession-related price pressure over the previous two weeks. For oil prices to significantly and steadily decline, more barrels must enter the market, according to managing partner Stephen Innes of SPI Asset Management.

Read More

Gold prices increase as ban on new Russian imports

Gold prices increase as ban on new Russian imports

Gold prices rose on Monday as speculation grew that some Western countries could formally forbid the import of the metal from Russia in response to that country’s invasion of Ukraine. By 0231 GMT, spot gold increased 0.5 percent to $1,835.58 per ounce. At $1,836.30, U.S. gold futures were up 0.3 percent. The G-7’s import embargo on Russian gold appears to be giving early Asian markets some short-term assistance.

“However, in practise for the grouping, it is largely a rubber stamp exercise, and I do not expect this to reflect a structural change in the supply/demand outlook that will underpin pricing.” In an effort to put more pressure on Moscow and eliminate its sources of funding for the invasion of Ukraine, four of the wealthy Group of Seven (G-7) countries decided to outlaw the import of Russian gold on Sunday. According to Stephen Innes, managing partner at SPI Asset Management, “the headline will be rapidly absorbed, and the market should return to its tug of war between higher front-end rates, negative for gold, and recession odds suggesting sooner rate reduction, positive for gold.”

Even as markets hailed economic data showing inflation expectations to be less worrying than initially thought, a couple of U.S. central bankers indicated on Friday they favoured future strong rate hikes to curb rapid price increases. Although gold is regarded as an inflation hedge, owning bullion, which pays no interest, has a higher opportunity cost as interest rates rise. Overall, gold is still stuck in the $1,780-$1,880 range that has been in place since early May. To change this dynamic, Halley added, the U.S. dollar must make a significant directional shift.

Spot silver increased 1.2 percent to $21.36 an ounce, platinum increased to $912 and palladium increased to $1,886.65 respectively.

Read More

As the commodity markets drop, gold and silver decline

As the commodity markets drop, gold and silver decline

As the metals markets are participants in a general erosion of the commodity markets driven by crude oil, gold and silver prices are slightly lower in lunchtime U.S. trade on Thursday. Fears of a U.S. and worldwide economic crisis as well as predictions of decreased demand in the upcoming months, notably for metals, have negatively impacted the commodities markets. At $1,834.40, August gold futures were last down $3.80. Comex silver futures for July were last trading at $21.175 per ounce, down $0.251.

Overnight, the world’s stock markets were uneven, with European shares primarily declining and Asian equities primarily rising. At noon, U.S. market indices range from mixed to firmer. The market seems to have changed its attention from being more concerned with inflation to being more concerned with the U.S. and/or global economic recession. Worries that the U.S. economy may enter a recession in the coming months were not significantly reduced by Federal Reserve Chairman Powell’s remarks to a Senate panel on Wednesday. In light of the Federal Reserve’s aggressive tightening of its monetary policy, Powell stated that it will be difficult for the Fed to arrange a smooth landing for the American economy. On Thursday, Powell will address a U.S. House committee.

Nymex crude oil prices are lower and trading at $105.25 per barrel on the major outer markets today. In noon trade, the US dollar index is firmer. The 10-year U.S. Treasury note’s yield, which is at 3.05 percent, has decreased this week. Technically speaking, August gold futures bears currently hold the upper hand. The recent sideways and choppy trading action, however, at lower price levels, is pointing to a possible market bottom. The next upward price target for the bulls is to achieve a closing over strong resistance at the June high of $1,882.50. The next short-term downside price target for bears is to drive futures prices below strong technical resistance at $1,800.00. The highs of this past week ($1,850.30) and previous week ($1,861.50) serve as the first points of resistance. At this week’s low of $1,824.50 and then at $1,815.00, support is first seen.

Silver futures for July In the immediate term, bears have a clear technical advantage. The next upward price target for silver bulls is closing above strong technical resistance at the June high of $22.565 per ounce. The bears’ next downward price target is for prices to close below $20.42, which serves as strong support. The highs of today ($21.495) and last Wednesday ($21.675) are the first areas of resistance. The $21.00 mark and the $20.845 low from June serve as the next levels of support.

Today, July New York copper fell 1,755 points to close at 376.80 cents. Prices today touched a new 16-month low as they closed close to the session low. The overall near-term technical edge is clearly in favour of the copper bears. On the daily bar chart, there is an escalating three-week price downturn. The next upward price target for copper bulls is to raise prices over strong technical resistance at 400 cents and close above it. The bears’ next price target on the downside is for prices to close below strong technical support at 350 cents. 380 cents serves as the first point of resistance, followed by 390 cents. 375 cents serves as the first support, followed by 370 cents.

Read More
EUR/USD Holds Steady

EUR/USD Holds Steady Above 1.0900 After Breaking Losing Streak

EUR/USD Holds Steady Above 1.0900 After Breaking Losing Streak

The EUR/USD pair managed to halt its three-day losing streak, trading around 1.0920 during the Asian session on Friday. The pair’s upward movement can be attributed to a weaker US Dollar (USD), driven by rising expectations of a dovish policy outlook from the US Federal Reserve (Fed).

However, the pair faced some challenges as US Initial Jobless Claims fell to 233,000 for the week ending August 2, coming in below the market forecast of 240,000. This drop followed an upward revision to 250,000 for the previous week, marking the highest level in a year.

The US Dollar Index (DXY), which tracks the USD against a basket of six major currencies, has retreated from recent highs, trading around 103.20. Additionally, a decline in US Treasury yields, currently at 4.01% and 3.97%, has added pressure on the Greenback.

On Thursday, Kansas City Fed President Jeffrey Schmid suggested that easing monetary policy could be “appropriate” if inflation remains subdued. Schmid noted that the current Fed policy stance is “not that restrictive” and acknowledged that while the Fed is nearing its 2% inflation target, it has not yet fully achieved it, according to Reuters.

On the European side, European Central Bank (ECB) policymaker Olli Rehn commented on Wednesday that the ECB could continue cutting interest rates if the inflation trend shows signs of slowing in the near future. Rehn stated, “Inflation continues to slow down, but the path to the 2% target remains bumpy this year,” as reported by Reuters.

Traders are now focused on Germany’s Harmonized Index of Consumer Prices (HICP), scheduled for release on Friday. Market expectations are steady, with forecasts predicting a 2.6% year-on-year increase and a 0.5% month-on-month rise for July.

Read More
EUR/USD Strengthens Above 1.0900 Amid Softer US Dollar

EUR/USD Strengthens Above 1.0900 Amid Softer US Dollar, Geopolitical Risks in Focus

EUR/USD Strengthens Above 1.0900 Amid Softer US Dollar, Geopolitical Risks in Focus

The EUR/USD pair rebounds to around 1.0935 during Thursday’s Asian trading session, breaking a two-day losing streak. A weaker US Dollar (USD) supports the pair, although rising geopolitical risks may limit further gains. Market sentiment remains cautious, with attention on the upcoming US Initial Jobless Claims report.

Last week’s weaker-than-expected US employment data fueled speculation of more significant interest rate cuts by the Federal Reserve (Fed), with markets increasingly betting on a 50 basis point cut at the Fed’s September meeting. The FedWatch tool indicates that the probability of this larger cut is now close to 83%.

On the European front, European Central Bank (ECB) policymaker Olli Rehn suggested on Wednesday that the ECB could consider further rate cuts if inflation appears to be slowing. The ECB held rates steady in July, with President Christine Lagarde stating that the decision for September remains open.

Traders are also eyeing the German Harmonized Index of Consumer Prices (HICP) for July, expected to remain steady at 2.6% year-over-year.

Meanwhile, escalating geopolitical tensions in the Middle East, particularly involving Iran and Israel, are causing market caution. CNN reported late Wednesday that Iran and its allies might be preparing for a retaliatory strike against Israel, potentially influencing risk-sensitive assets like the Euro (EUR).

Read More
EUR/USD Pair Trades

EUR/USD Pair Trades with Mild Losses Amid Mixed Market Sentiment

EUR/USD Pair Trades with Mild Losses Amid Mixed Market Sentiment

The EUR/USD pair is trading with slight losses around the 1.0950 mark during early European trading hours on Tuesday. Improved risk sentiment is providing some support to the US Dollar (USD), limiting the upside potential for the pair. Traders are closely watching the upcoming release of Eurozone Retail Sales data, which is anticipated to ease to 0.1% year-on-year in June.

On Monday, a broad sell-off across financial markets occurred as investors grew increasingly concerned about a potential recession in the US economy. This led to the USD dropping to year-to-date lows near 102.15. However, a shift in global risk sentiment has somewhat eased market fears. Andrzej Szczepaniak, an economist at Nomura, noted, “Markets panicked after the U.S. employment report on Friday.” Currently, traders are pricing in roughly a 60% chance of emergency easing by the US Federal Reserve (Fed).

Chicago Fed President Austan Goolsbee mentioned on Monday that the Fed is prepared to respond if economic or financial conditions worsen. Any comments from Fed officials hinting at earlier rate cuts could weaken the USD in the near term.

On a positive note, the US ISM Services Purchasing Managers Index (PMI) exceeded expectations, rising to 51.4 in July from 48.8 in June, according to data released by the Institute for Supply Management (ISM) on Monday.

Read More
China’s Central Bank to Adjust Temporary Repos Based on Market Conditions

China’s Central Bank to Adjust Temporary Repos Based on Market Conditions

China’s Central Bank to Adjust Temporary Repos Based on Market Conditions

The People’s Bank of China (PBOC) has announced measures to exert greater control over market interest rates by implementing additional open market operations and tightening the range within which short-term rates can fluctuate.

The PBOC will now conduct bond repurchase or reverse repurchase operations in the afternoon, in addition to its traditional morning operations. These afternoon operations will be based on the seven-day reverse repurchase rate, reinforcing it as a key policy benchmark.

PBOC Governor Pan Gongsheng had previously indicated that the bank would reform its interest rate policy to support growth in China’s economy while maintaining stability in the yuan. The PBOC plans to narrow the interest rate corridor, making market rates more aligned with policy targets, and is considering using a single short-term rate to guide the market.

The additional operations will occur from 4 p.m. to 4:20 p.m. on weekdays as needed. The terms for temporary repos and reverse repos will be overnight, with rates set at 20 basis points below and 50 basis points above the seven-day reverse repo rate, respectively. This change aims to ensure sufficient liquidity in the banking system and enhance the precision and effectiveness of open market operations.

The adjustment narrows China’s interest rate corridor from about 230 basis points to 70 basis points. This move is expected to reduce interbank rate volatility, making the seven-day reverse repo rate a more prominent benchmark for asset and liability pricing, including deposit and loan rates.

Recently, the PBOC also announced it would borrow government bonds from primary dealers, indicating a potential strategy to sell securities to temper a market rally and prevent longer-term bond yields from falling. The central bank now holds hundreds of billions of yuan worth of securities and will manage their sale based on market conditions.

China’s sovereign bonds have surged this year due to the country’s economic outlook and expectations for interest rate cuts. Increased demand for financial investments over traditional savings has led to warnings from the PBOC about the risks of a bond bubble, particularly in longer-term debt.

The newly established corridor around the seven-day reverse repo rate suggests a move to tighten control over the short end of the yield curve. With the PBOC also poised to influence the longer end through Treasury bond trading, China might be moving towards yield-curve control. Future rate cuts may be executed through adjustments to the seven-day reverse repo rate first.

This comprehensive approach by the PBOC indicates a strategic shift to manage liquidity and market expectations more effectively, aiming to stabilize and guide the economic landscape amid ongoing challenges.

Read More
Pound Holds Steady as Labour Eyes Election Majority

Pound Holds Steady as Labour Eyes Election Majority

Pound Holds Steady as Labour Eyes Election Majority

UK equity-index futures rose, and the pound maintained its recent gains following an exit poll suggesting the Labour Party will secure a clear mandate for greater economic stability.

Contracts on the FTSE 100 Index increased by 0.2%, while the pound remained steady around $1.276. Early results indicated the Labour Party is poised for a landslide victory, with Keir Starmer likely to become prime minister.

Investors had been anticipating that Starmer’s center-left platform would bring an end to policy-induced market disruptions. Despite Labour’s historical support for higher taxes and trade unions, traders are now confident that the memory of the UK’s gilt crisis two years ago will encourage the next government to act prudently.

UK government bonds will begin trading at 8 a.m. in London. The official exit poll predicts Labour will win 410 of the 650 seats in the House of Commons, the largest majority since Tony Blair’s 1997 victory. Prime Minister Rishi Sunak’s Conservatives are expected to be reduced to 131 seats, down from 365 in 2019, which could result in the loss of several prominent party members. The Liberal Democrats are projected to win 61 seats, while Nigel Farage’s Reform UK is forecasted to gain 13 seats.

The exit poll, based on a comprehensive survey conducted immediately after voters cast their ballots, has historically been more accurate than pre-election opinion polls.

A substantial victory for Labour is expected to support the pound. Before the election, Labour emphasized economic stability in its manifesto and committed to strict spending rules. Rachel Reeves, a former Bank of England staffer poised to become the UK’s finance minister, assured that the administration would not increase three key taxes on wages and goods.

Labour’s promises also included building more houses, creating a publicly-owned energy company, and improving relations with the EU, while ruling out a return to the single market or customs union.

Fiscal stability and better UK-EU relations are expected to positively impact gilts and the pound in the near term, according to strategists at TD Securities. This shift in political landscape suggests a period of stability and confidence in the UK’s economic future.

Read More
Fed Sought More Inflation Data in June Minutes

Fed Sought More Inflation Data in June Minutes

Fed Sought More Inflation Data in June Minutes

At their last policy meeting, Federal Reserve officials were divided on how long to maintain elevated interest rates and were awaiting more evidence that inflation is cooling. The minutes from the Federal Open Market Committee (FOMC) meeting, which ended on June 12, revealed that officials did not anticipate it would be appropriate to lower borrowing costs until more data indicated inflation was moving toward their 2% target.

Since last July, the Fed has kept its key policy rate in a target range of 5.25% to 5.5%, the highest level in over two decades. During the last meeting, officials reduced the number of projected interest-rate cuts for this year to just one. Four policymakers predicted no cuts for 2024, while eight forecasted two.

Participants at the meeting acknowledged the uncertainty surrounding the economic outlook and debated the duration of maintaining a restrictive policy stance. While some officials stressed the need for patience, others highlighted the risk that further weakening in demand could lead to a significant rise in unemployment. Several policymakers were still open to raising interest rates if inflation remained high.

Recent data has shown some progress in cooling inflation, with the Fed’s preferred measure of underlying inflation, which excludes food and energy prices, recording its smallest advance in six months in May. However, Fed Chair Jerome Powell emphasized that more evidence is needed before considering lowering rates.

The minutes also indicated growing caution about the labor market, as the risks to achieving the Fed’s employment and inflation goals have become more balanced. Although the US economy continues to add jobs at a solid pace, the unemployment rate has slightly increased in recent months. San Francisco Fed President Mary Daly noted that the labor market is nearing a point where further slowing could result in higher unemployment.

The upcoming jobs report is expected to show that employers added 190,000 jobs in June, with the unemployment rate holding steady, marking a slowdown from May when payrolls exceeded forecasts.

The minutes also highlighted ongoing debates among officials about the extent to which Fed policy is restraining the economy. Some officials suggested that the continued economic strength could mean the longer-run equilibrium interest rate is higher than previously assessed, implying that the stance of monetary policy and financial conditions might be less restrictive than they appear.

In June, policymakers forecasted that the long-run neutral interest rate, which represents a policy stance that neither stimulates nor restrains the economy, had risen to 2.8%.

 

Read More
Japan's Service Activity Declines

Japan’s Service Activity Declines for First Time in 2 Years, PMI Reveals

Japan’s Service Activity Declines for First Time in 2 Years, PMI Reveals

Japanese service activity contracted in June for the first time in nearly two years as domestic demand cooled, according to a private sector survey released on Wednesday. Despite this contraction, business confidence and hiring indicators remained positive.

The service sector has been a key driver of economic growth in Japan, helping to offset weak manufacturing performance. However, the final au Jibun Bank Service purchasing managers’ index (PMI) fell to 49.4 in June from 53.8 in May, ending a 21-month streak of expansion, as reported by the S&P Global Market Intelligence survey.

The June PMI reading was weaker than the initial flash estimate of 49.8 and marked the first dip below the 50.0 threshold, which separates expansion from contraction, since August 2022. The decline in new business activity in June suggested a pause in growth rather than an outright drop in demand.

Demand decreased in consumer services, finance and insurance, and real estate and business services, while sectors such as transport and storage, and information and communication saw increases. The weak yen, which has depreciated by over 12% this year, supported overseas demand for Japanese services.

Although employment growth slowed, it remained relatively strong, and business confidence for the next 12 months stayed robust. However, a combination of rising wages, food and fuel prices, and the weaker yen drove up input costs, leading to the fastest inflation rate since August of the previous year.

Companies responded to these increased costs by continuing to pass on price hikes to consumers, with the pace of average prices easing only slightly from the record highs seen in April and May. The composite PMI, which includes both manufacturing and service activity, fell to 49.7 in June from 52.6 in May, marking the first time the index dropped below 50.0 in seven months.

In summary, while the Japanese service sector saw its first contraction in nearly two years due to cooling domestic demand, the overall economic outlook remains cautiously optimistic, with ongoing strength in employment and business confidence despite rising costs and inflation pressures.

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

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

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

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

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

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

Technical Outlook: Bullish Momentum Builds 

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

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

Read More
Best Forex Broker

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

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

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

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

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

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

Read More
JPY Recovers Losses vs. USD, Bullish Outlook Intact

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Conversely, on the downside:-

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

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

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

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

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

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

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

AUD Pressured by Risk Aversion, Trump’s Tariff Threats

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

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

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

China’s Economic Slowdown Adds Pressure on AUD

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

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

Technical Outlook: AUD/USD Turns Bearish Below 0.6250

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

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

Read More
US Dollar Surges as Trump Revives Tariff Threats

US Dollar Surges as Trump Revives Tariff Threats

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

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

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

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

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

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

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

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

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

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

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

Risk Aversion Rises Amid Trump’s Trade Tariff Push

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

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

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

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

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

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

Read More
NZD/USD Struggles

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

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

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

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

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

Read More
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.

Read More

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.

Read More

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.

Read More

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

Read More

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.

Read More

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.

Read More

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/

Read More

Popular Articles

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

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

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

EUR/USD Drops Toward 1.1700 as US Dollar Strengthens

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

Forex Trading

Unlocking the Power of Forex Trading: Why Xtreme Markets is Your Ultimate Trading Partner

Commodity currencies

What Are Commodity Currencies? How They Impact Your Forex Trades

AI changing Forex trading?

How is AI changing Forex trading?

Categories

,
,
,

Subscribe Now!