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GBP/JPY Slides to 205.00 Amid Intervention Fears

GBP/JPY Slides to 205.00 Amid Intervention Fears

GBP/JPY Slides to 205.00 Amid Intervention Fears

The GBP/JPY pair continued its downward trend for the second consecutive day on Friday, moving away from its highest level since August 2008, which was around 206.15 earlier this week. Currently, the spot prices are trading just above the 205.00 psychological mark, down approximately 0.35% for the day. This decline is largely attributed to concerns that Japanese authorities or the Bank of Japan (BoJ) may intervene in the markets to support the domestic currency.

Japan’s Finance Minister, Shunichi Suzuki, made a statement today indicating that he will closely monitor stock and forex markets with vigilance, noting that a weak Japanese Yen (JPY) is affecting prices. Despite this, a significant appreciation of the JPY remains unlikely due to the BoJ’s dovish stance. The BoJ has been hesitant to provide a detailed plan for reducing bond purchases and raising interest rates. Additionally, the prevailing risk-on environment is expected to limit the demand for the safe-haven JPY, thus restricting the losses for the GBP/JPY pair.

On the other side of the equation, the British Pound (GBP) received a slight boost from exit polls suggesting that Britain’s main opposition Labour Party is set to win a substantial majority in the UK general election. However, this outcome also paves the way for a potential rate cut by the Bank of England (BoE) in August, which could act as a headwind for the Sterling and the GBP/JPY pair. Moreover, the overbought Relative Strength Index (RSI) on the daily chart suggests that some profit-taking might occur as the week comes to an end.

Despite these factors, the GBP/JPY pair is likely to close in positive territory for the fourth consecutive week. The interplay of market interventions by Japanese authorities, the BoJ’s policy stance, and the political developments in the UK will continue to influence the pair’s movements in the near term. Traders will be closely watching these dynamics, especially with the potential for further interventions or policy shifts that could impact the GBP/JPY pair’s trajectory. 

As we move forward, the focus will remain on the actions of the BoJ and the UK political landscape, which are key drivers in the forex market, particularly for the GBP/JPY cross.

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EUR/JPY Rises Above 173.50, Focus on Eurozone PMI

EUR/JPY Rises Above 173.50, Focus on Eurozone PMI

EUR/JPY Rises Above 173.50, Focus on Eurozone PMI

The EUR/JPY pair remains in positive territory for the sixth consecutive day, trading near 173.80 during the early European session on Wednesday. This sustained upward movement is primarily due to the weakening Japanese Yen (JPY), which has been impacted by recent data indicating a contraction in Japanese business activity for June.

The final reading of Japan’s Services PMI fell to 49.4 in June from 49.8 in May, marking the largest downward shift since January 2022 and one of the most significant declines on record. This data has put selling pressure on the JPY, providing a headwind for the currency pair. However, there remains a possibility that the Bank of Japan (BoJ) could intervene in the foreign exchange market, which might lend some support to the JPY in the near term.

On the Euro side, the preliminary Eurozone Harmonized Index of Consumer Prices (HICP) inflation rate eased to 2.5% year-over-year in June, down from 2.6% in May. Despite this slight decrease, these inflation figures are not expected to prompt the European Central Bank (ECB) to cut interest rates at its upcoming policy meeting on July 18. According to Bert Colijn, senior Eurozone economist at the Dutch bank ING, “Nothing in these figures would make the ECB cut again in July, and we think it’ll be eagerly awaiting data over the summer before seriously debating a next rate cut in September.”

Furthermore, ECB President Christine Lagarde stated on Monday that recent economic developments do not indicate an urgent need for further interest rate cuts. This stance highlights the ongoing divergence in monetary policy between the Eurozone and Japan, which continues to support the Euro against the Yen.

Overall, the EUR/JPY cross is benefitting from the contrasting economic situations and monetary policy expectations in the Eurozone and Japan. As the market anticipates further data releases and potential central bank actions, the pair’s performance will likely remain influenced by these macroeconomic factors. For now, the weakening JPY and stable Eurozone inflation are keeping the EUR/JPY on an upward trajectory.

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Asian Shares Mixed After Wall Street Gains

Asian Shares Mixed After Wall Street Gains

Asian Shares Mixed After Wall Street Gains

Asian stocks experienced mixed performance on Tuesday following gains on Wall Street and a surge in U.S. bond yields as election-related issues influenced global markets.

U.S. futures declined, while oil prices increased. The Japanese yen fell to a near 38-year low, hitting 161.67 yen to the dollar early Tuesday. This depreciation in the yen boosted Tokyo’s benchmark Nikkei 225 by 1.1% to 40,074.69, as investors bought export-oriented shares.

In contrast, Australia’s S&P/ASX 200 dropped 0.4% to 7,718.20. South Korea’s Kospi also fell, losing 0.8% to 2,781.92, despite data indicating that the country’s consumer inflation slowed to an 11-month low in June.

Hong Kong’s market showed positive momentum after a holiday break, with the Hang Seng climbing 0.3% to 17,775.84. The Shanghai Composite Index had a modest increase of 0.1% to 2,995.78. Elsewhere in Asia, Taiwan’s Taiex gained 0.6%, while Bangkok’s SET index slipped by 0.4%.

On Wall Street, the S&P 500 rose 0.3% to 5,475.09. The Dow Jones Industrial Average inched up 0.1% to 39,169.52, and the Nasdaq composite gained 0.8% to 17,879.30. European markets saw significant activity, with France’s CAC 40 index jumping as much as 2.8% before settling for a 1.1% gain. Results from France suggested a far-right party might not secure a decisive majority in legislative elections, easing concerns over potential high-debt policies.

This year is significant for elections globally, with voters heading to the polls in the United Kingdom later this week and soon in other countries. In the U.S., pollsters are assessing the impact of the recent debate between President Joe Biden and former President Donald Trump. Investors are also watching the effects of a Supreme Court ruling granting former presidents broad immunity from prosecution, likely delaying a criminal case against Trump until after the November election.

In the financial markets, Treasury yields increased, with the 10-year Treasury yield rising to 4.46% from 4.39% on Friday. This surge reflects expectations of a potential Republican victory in the upcoming elections, reminiscent of market movements from 2016. Higher yields have reversed the trend seen since spring when the yield topped 4.70% in late April.

Previously, easing yields were driven by hopes that inflation would slow enough for the Federal Reserve to cut interest rates. High rates have burdened the U.S. economy, making borrowing more expensive. Recent data showing weaker U.S. manufacturing and decelerating price increases have bolstered hopes for rate cuts.

The week’s economic highlight will be the U.S. government’s employment report on Friday. Economists predict that hiring slowed to 190,000 in June from May’s 272,000, approaching the “Goldilocks” figure of around 150,000, which indicates sustainable growth without fueling inflation.

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NZD/USD Reclaims 0.6100 Amid Weaker USD

NZD/USD Reclaims 0.6100 Amid Weaker USD, Limited Upside

NZD/USD Reclaims 0.6100 Amid Weaker USD, Limited Upside

The NZD/USD pair is experiencing some dip-buying during the Asian session on Monday, aiming to build on Friday’s modest bounce from the mid-0.6000s, its lowest level since mid-May. Currently, spot prices hover around the 0.6100 mark due to a modest weakening of the US Dollar (USD). However, there remains a lack of bullish conviction amid uncertainties regarding the Federal Reserve’s (Fed) potential rate-cut path.

On Friday, the US Personal Consumption Expenditures (PCE) Price Index confirmed the ongoing disinflationary trend, aligning with the Consumer Price Index (CPI) and Producer Price Index (PPI) data for May. This reinforced market expectations that the Fed might begin cutting interest rates at the September policy meeting, putting USD bulls on the defensive. Additionally, a positive tone in US equity futures has undermined the safe-haven appeal of the USD, lending support to the NZD/USD pair.

Despite this, the Fed adopted a more hawkish stance during the June policy meeting, forecasting only one interest rate cut in 2024. Further complicating the outlook, President Joe Biden’s challenging debate with his Republican opponent has increased the odds of a Trump presidency. This potential shift in leadership has raised concerns about the imposition of aggressive tariffs by the Trump administration, which could fuel inflation and trigger higher interest rates. This scenario supports elevated US Treasury bond yields, potentially limiting further USD losses.

Moreover, expectations that the Reserve Bank of New Zealand (RBNZ) might cut rates earlier than anticipated, coupled with China’s economic struggles, could deter bullish traders from placing fresh bets on the NZD/USD pair. Official data released on Sunday revealed that China’s manufacturing activity declined for the second consecutive month in June, while services activity fell to a five-month low. These factors suggest caution before confirming that the NZD/USD pair has formed a near-term bottom.

Looking ahead, traders will focus on important US macroeconomic releases at the start of the new month, including the ISM Manufacturing PMI, which may offer short-term opportunities during the North American session. However, the primary focus will be on the closely-watched US monthly employment report, known as the Nonfarm Payrolls (NFP) report, scheduled for Friday. This report will play a crucial role in influencing near-term USD price dynamics and driving the NZD/USD pair.

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

NZD/USD Nears Mid-0.6000s, Lowest Since Mid-May Ahead of US PCE

NZD/USD Nears Mid-0.6000s, Lowest Since Mid-May Ahead of US PCE

The NZD/USD pair faces renewed selling pressure after a brief respite, plummeting to its lowest level since mid-May during the Asian session on Friday. Spot prices are currently trading just above the mid-0.6000s, down 0.35% for the day, confirming a bearish breakdown through the 50-day Simple Moving Average (SMA).

The US Dollar (USD) has regained positive momentum, bouncing back from Thursday’s softer data-led decline to reach a nearly two-month peak. This resurgence is driven by the Federal Reserve’s (Fed) hawkish outlook, with recent comments from influential FOMC members indicating no rush to begin a rate-cutting cycle. This outlook has triggered a fresh increase in US Treasury bond yields. Additionally, some repositioning ahead of crucial US inflation data has further boosted the dollar, adding to the downward pressure on the NZD/USD pair.

Conversely, the New Zealand Dollar (NZD) is weighed down by expectations of an earlier-than-expected rate cut by the Reserve Bank of New Zealand (RBNZ). This anticipation has overshadowed a generally positive tone in the equity markets, failing to provide any support to the risk-sensitive Kiwi. Consequently, the path of least resistance for the NZD/USD pair remains downward. Traders, however, are likely to await the release of the US Personal Consumption Expenditures (PCE) Price Index for further insights into the Fed’s future policy decisions and the rate-cut path.

A lower-than-expected PCE deflator or a figure in line with market expectations could support the case for two rate cuts by the Fed this year, potentially weakening the USD. Conversely, an upward surprise would likely push back the timing for the first Fed rate cut and trigger a fresh rally for the dollar. Hence, this data release will be crucial in shaping near-term USD price dynamics and determining the next directional move for the NZD/USD pair.

Regardless of the upcoming data, spot prices for the NZD/USD seem poised to register significant weekly losses, continuing a nearly three-week-old downtrend.

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NZD/USD Drops to Near 0.6100

NZD/USD Drops to Near 0.6100 Amid Risk Aversion and Consumer Confidence Concerns

NZD/USD Drops to Near 0.6100 Amid Risk Aversion and Consumer Confidence Concerns

The NZD/USD pair extends its losses for the second consecutive session, trading around 0.6110 during the Asian session on Wednesday. The New Zealand Dollar (NZD) is struggling, possibly due to rising risk aversion ahead of the ANZ-Roy Morgan Consumer Confidence data for June and the release of the US Gross Domestic Product (GDP) figures for the first quarter (Q1) on Thursday. Additionally, market participants are closely watching the US Personal Consumption Expenditure (PCE) Price Index, which is scheduled for release on Friday.

The ongoing uncertainty in the global financial markets has led to heightened caution among investors, impacting the NZD/USD pair. Concerns over the upcoming consumer confidence data have intensified, as this indicator will provide insights into the economic sentiment in New Zealand. A lower-than-expected reading could further dampen the outlook for the NZD.

Moreover, the impending release of the US GDP figures adds another layer of complexity. A robust GDP report could strengthen the US Dollar (USD), making the NZD/USD pair less attractive. Conversely, a weaker GDP figure could offer some relief to the NZD. However, the market remains cautious, waiting for clear signals from these key economic indicators.

Adding to the downward pressure on the NZD, New Zealand’s Treasury issued a statement on Wednesday highlighting the risks posed by a weak economy to its forecasts. The Treasury is considering additional spending and revenue solutions to address these challenges. This admission of economic vulnerability has contributed to the bearish sentiment surrounding the NZD.

Economist McLeish echoed these concerns, pointing to recent data that suggests economic weakness in New Zealand. The combination of internal economic challenges and external uncertainties has created a challenging environment for the NZD.

The upcoming US PCE Price Index release on Friday is another critical factor influencing the NZD/USD pair. As the Federal Reserve’s preferred measure of inflation, the PCE Price Index will be closely scrutinized. A higher-than-expected reading could prompt the Federal Reserve to adopt a more hawkish stance, potentially boosting the USD further and putting additional pressure on the NZD.

In summary, the NZD/USD pair is navigating a complex landscape of economic indicators and market sentiments. The pair’s performance in the coming days will largely depend on the outcomes of the ANZ-Roy Morgan Consumer Confidence data, the US GDP report, and the PCE Price Index. Investors remain cautious, closely monitoring these developments to gauge the future direction of the NZD/USD pair.

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USD/CAD Nears 1.3700 as Fed Postpones Rate Cut

USD/CAD Nears 1.3700 as Fed Postpones Rate Cut

USD/CAD Nears 1.3700 as Fed Postpones Rate Cut

The USD/CAD pair arrested a six-day downtrend, trading near the 1.3700 mark in Monday’s Asian trading session, buoyed by robust U.S. economic data from the previous Friday. The uplift in the U.S. Dollar (USD) was primarily due to an unexpectedly strong U.S. Purchasing Managers Index (PMI) report.

June’s U.S. Composite PMI climbed slightly to 54.6, up from May’s 54.5, marking the highest level seen since April 2022. The Manufacturing PMI also exceeded expectations, rising to 51.7 from the previous 51.3 and surpassing the forecast of 51.0. Additionally, the Services PMI increased to 55.1, up from 54.8 in May, and beat the consensus prediction of 53.7.

The U.S. Dollar Index (DXY), which tracks the USD against a basket of six major currencies, edged higher. This increase follows comments from Federal Reserve officials who indicated a delay in the expected timing of the year’s first interest rate cut. Specifically, Neel Kashkari, President of the Federal Reserve Bank of Minneapolis, noted in a Reuters report that reducing inflation to 2% could take one to two years.

Market expectations have adjusted accordingly, with the CME FedWatch Tool now showing a 65.9% likelihood of a Fed rate cut in September, a decrease from 70.2% a week earlier.

On the Canadian side, the Canadian Dollar (CAD), which often correlates with commodity prices, found some support from rising crude oil prices. Oil markets have reacted to escalating geopolitical tensions, including Israeli military actions in Gaza and continued Ukrainian drone strikes on Russian oil refineries, both of which have stirred supply concerns.

These factors combined to halt the recent slide in the USD/CAD exchange rate, setting the stage for potential fluctuations based on upcoming economic data releases and geopolitical developments.

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Gold Price Consolidates Below $2,750 Amid Mixed Market Signals

Gold Price Consolidates Below $2,750 Amid Mixed Market Signals

Gold prices (XAU/USD) continue to trade within a narrow range near the $2,740 level during early European trading on Tuesday. The market remains influenced by conflicting factors, leaving traders hesitant to make strong directional moves.

US President Donald Trump’s renewed trade tariff threats have sparked inflationary concerns, driving a modest rebound in US Treasury bond yields. This, in turn, supports a recovery in the US Dollar (USD) from its recent one-month low, creating downward pressure on gold prices.

However, fears of potential economic disruptions from Trump’s trade policies are providing support for the safe-haven asset, helping limit its downside. Market participants are also exercising caution ahead of the upcoming two-day Federal Open Market Committee (FOMC) meeting, while US macroeconomic data due later in the day could further influence market sentiment.

Key Developments Impacting Gold Prices

  1. Trade Tariff Concerns:
    President Trump recently announced emergency tariffs of 25% on Colombian imports, though implementation was delayed following an agreement on the acceptance of illegal migrants returned from the US. Trump also signaled impending tariffs on pharmaceuticals, computer chips, aluminum, copper, and potentially steel. These moves have heightened fears of inflation and pushed US Treasury bond yields higher, bolstering the USD and weighing on gold.
  2. Monetary Policy Speculation:
    Despite Trump’s tariff announcements, markets are pricing in two potential 25-basis-point interest rate cuts by the Federal Reserve this year. This expectation could cap bond yields and limit USD gains, offering some support to gold prices.
  3. Data and Events to Watch:
    Later on Tuesday, US economic data such as Durable Goods Orders, the Conference Board’s Consumer Confidence Index, and the Richmond Manufacturing Index may provide additional trading cues. The spotlight will then shift to Wednesday’s FOMC decision, which could significantly impact USD dynamics and set the tone for gold’s next directional move.

Technical Outlook: Resistance and Support Levels

Gold prices showed resilience on Monday, holding above the 23.6% Fibonacci retracement level of the December-January uptrend. Daily chart oscillators remain in positive territory, reinforcing the case for an upward bias.

  • Support Levels:
    Immediate support lies near $2,730, followed by the $2,725-2,750 zone. A break below these levels could push prices toward the 38.2% Fibonacci retracement level near $2,707-2,705, and further to the 50% level around $2,684.
  • Resistance Levels:
    The nearest resistance is at $2,755-2,757, with further hurdles at $2,772-2,773 and $2,786. A decisive break above $2,800 would signal renewed bullish momentum, potentially leading to a test of the all-time high near $2,790 and further gains.

Outlook for Gold

Gold prices remain range-bound as traders weigh opposing forces of inflationary concerns and safe-haven demand. A move above $2,755-2,757 is necessary for bulls to regain control in the short term, while a break below $2,730 would signal deeper corrections. With critical economic data and the FOMC decision on the horizon, gold’s next big move may hinge on shifting market dynamics in the coming days.

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Supermicro Stock Skyrockets 29% After Investigation Clears Fraud Allegations

Super Micro Computer (NASDAQ: SMCI), popularly known as Supermicro, saw its stock price soar by 29% on Monday, closing around $42 per share. This significant jump follows the conclusion of a governance investigation that found no evidence of fraud or misconduct, boosting investor confidence.

Investigation Findings: No Fraud or Misconduct

The investigation, initiated by a special committee in August, addressed concerns raised by Ernst & Young (EY), Supermicro’s former auditor, regarding governance, sales practices, and financial reporting. Key findings include:

  1. Management Integrity: The committee found no substantial concerns regarding the integrity of Supermicro’s senior management, audit committee, or financial reporting practices.
  2. Audit Independence: The audit committee demonstrated appropriate independence and oversight during financial reporting.
  3. Rehiring Practices: The company’s decision to rehire certain employees was deemed consistent with a commitment to legal compliance and accurate financial reporting.

EY’s concerns were ultimately found unsupported, with the committee emphasizing the accuracy of interim and final findings.

Governance Overhaul and Next Steps

To strengthen its governance, Supermicro has embraced the committee’s recommendations, including:

  • Leadership Appointments: Hiring a new Chief Financial Officer (CFO), appointing Kenneth Cheung as Chief Accounting Officer, and recruiting a Chief Compliance Officer and General Counsel.
  • Enhanced Oversight: Improving internal accounting and compliance systems, with better training, monitoring, and oversight practices.

The company has also filed a compliance plan with Nasdaq to catch up on overdue financial reports, ensuring continued listing.

Stock Performance: Recovery in Progress

Supermicro’s stock had plummeted by 85% in mid-November, hitting $17 per share, following its October 10-for-1 stock split and governance concerns. However, confidence rebounded after the investigation’s positive findings. Since November 15, the stock has surged back to $42, marking a 48% year-to-date increase.

With a price-to-earnings (P/E) ratio dropping from 79 in March to 16, Supermicro’s valuation is now drawing comparisons to AI-driven market leaders like NVIDIA. Its focus on AI-enabled servers for high-performance computing positions it as a key player in the tech sector.

Investor Considerations

While the governance investigation cleared Supermicro of fraud, investors are advised to exercise caution until the company releases its delayed financial reports. These filings will provide deeper insights into its financial health and help solidify its recovery. For now, Supermicro’s low valuation and strong earnings potential make it a compelling, albeit cautious, investment opportunity.

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Asian Stocks Decline on Geopolitical Tensions; Nikkei Falls on Inflation Data

Asian Stocks Drop Amid Geopolitical Tensions; Nikkei Slides on Strong Inflation Data

Asian Stocks Drop Amid Geopolitical Tensions; Nikkei Slides on Strong Inflation Data

Asian equities fell on Friday as geopolitical concerns and strong economic data from Japan weighed on sentiment. The escalation of the Russia-Ukraine conflict further dampened risk appetite, while China’s tech sector provided a rare bright spot amid easing regulatory fears.

Key Market Highlights

Geopolitical Tensions Weigh on Markets
Russia intensified its attacks on Ukraine, targeting energy infrastructure and escalating the conflict. President Vladimir Putin issued threats to strike decision-making centers in Kyiv with ballistic missiles, exacerbating global geopolitical uncertainty.

Broad Declines Across Asia

  • Thailand’s SET Index: Dropped 0.2%.
  • Indonesia’s Jakarta Composite: Declined 0.8%.
  • South Korea’s KOSPI: Fell nearly 2%, driven by a 1.8% drop in Samsung Electronics and a 0.7% decline in SK Hynix. Concerns over slowing economic growth deepened after data showed declines in industrial output, retail sales, and facility investment in October.
  • Australia’s ASX 200: Edged 0.3% lower.
  • Malaysia’s KLCI: Dipped 0.2%.

Japan’s Nikkei Slips Amid Yen Strength
Japan’s Nikkei 225 fell 0.5%, and the TOPIX index declined 0.3% as the yen strengthened to a one-month high against the U.S. dollar. Strong inflation data from Tokyo fueled speculation of a Bank of Japan (BOJ) rate hike in December.

  • Tokyo’s core consumer prices exceeded expectations in November, highlighting persistent inflationary pressures.
  • BOJ Governor Kazuo Ueda signaled plans to tighten monetary policy further, supported by a “virtuous cycle” of rising wages and steady inflation.

Chinese Tech Stocks Buck the Trend
Contrary to broader declines, Chinese equities rallied:

  • Shanghai Shenzhen CSI 300: Rose 1.6%.
  • Shanghai Composite: Gained 1.4%.
  • Hang Seng Index: Jumped 1.3%.

Reports suggested that the U.S. may impose less severe sanctions on China’s semiconductor industry than initially feared.

  • Semiconductor Manufacturing International Corp (SMIC) surged over 4%.
  • Hua Hong Semiconductor climbed 3.7%.

Investors are optimistic about Beijing’s recent stimulus measures, and a Reuters poll anticipates modest growth in China’s manufacturing Purchasing Managers’ Index for November, due Saturday.

Outlook

The Asia-Pacific region remains under pressure from geopolitical risks and mixed economic signals. Japan’s inflation dynamics could shift BOJ policy, while China’s tech rally might offer temporary relief amid broader concerns of an economic slowdown.

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WTI Steady at $69 Amid Geopolitical Risks and US Crude Inventory Build

WTI Steadies Near $69.00 Amid Mixed Signals from Geopolitical Risks and US Crude Inventory Build

WTI Steadies Near $69.00 Amid Mixed Signals from Geopolitical Risks and US Crude Inventory Build

West Texas Intermediate (WTI), the US benchmark for crude oil, is trading near $68.95 during Thursday’s session, maintaining a steady stance amid conflicting market drivers. A modest build in US crude inventories and weak Chinese demand weigh on prices, while escalating geopolitical tensions between Russia and Ukraine offer potential support.

US Crude Inventory Build Weighs on Prices
The Energy Information Administration (EIA) reported an increase of 0.545 million barrels in US crude stockpiles for the week ending November 15, slightly above market expectations of a 0.400 million barrel rise but significantly lower than the previous week’s 2.089 million barrel build. The smaller-than-expected inventory increase adds mild pressure to oil prices.

Weak Chinese Demand Adds Downside Pressure
China’s demand for crude oil continues to show weakness, dampening the outlook for global consumption. In October, China’s crude oil demand fell by 5.4% year-on-year. The International Energy Agency (IEA) projects demand growth in China to reach just 140,000 barrels per day (bpd) for 2024, a sharp decline compared to the 1.4 million bpd growth seen in 2023.

Geopolitical Risks Provide Support
Heightened geopolitical tensions involving major oil producers Russia and Ukraine are keeping supply-side concerns alive. This week, Russia accused Ukraine of targeting a facility in the Bryansk region with ATACMS missiles, prompting Russian President Vladimir Putin to lower the threshold for a potential nuclear response. Such risks could disrupt oil supplies, offering a counterbalance to bearish demand factors.

John Kilduff, a partner at Again Capital, highlighted, “These risks to supply are definitely keeping the support here and offsetting to a degree concerns around the global demand outlook.”

Outlook
WTI prices remain at the mercy of mixed signals, with inventory builds and sluggish Chinese demand capping gains while geopolitical risks lend underlying support. Traders will look toward further updates on geopolitical developments and upcoming economic data to gauge the balance between supply and demand factors in the oil market.

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Gold Prices Under Pressure as Stronger USD Weighs Ahead of Fed Decision

Gold Prices Remain Under Pressure as Stronger USD Weighs Ahead of Fed Decision

Gold Prices Remain Under Pressure as Stronger USD Weighs Ahead of Fed Decision

Gold (XAU/USD) continues to trade lower for the second consecutive session on Thursday, impacted by a stronger U.S. Dollar following former President Donald Trump’s victory in the recent U.S. election. The dollar-denominated precious metal is seeing diminished safe-haven appeal as market optimism increases, supported by clearer political outcomes.

Investor focus is now on the upcoming U.S. Federal Reserve decision, with markets largely anticipating a 25 basis-point rate cut. If realized, this could offer some support for Gold, as lower interest rates tend to reduce the opportunity cost of holding non-yielding assets like precious metals. The CME FedWatch Tool currently indicates a 98.1% likelihood of this modest rate reduction.

Market Dynamics: Gold Struggles Amid Higher Yields and “Trump Trades”

Non-yielding Gold faces additional pressure from surging U.S. Treasury yields, with the 2-year and 10-year bond yields hitting 4.31% and 4.47%, respectively, their highest levels since July. Furthermore, the prospect of increased inflation due to Trump’s policy stance, which includes higher trade tariffs and fiscal spending, could prompt some investors to seek Gold as a long-term inflation hedge.

Trump’s proposed economic policies—such as imposing tariffs, expanding the fiscal deficit, and cutting taxes—might conflict with the Federal Reserve’s inflation control goals, likely resulting in a slower pace of monetary easing.

Gold prices have been relatively unaffected by ongoing geopolitical tensions, including Iran’s warning of potential retaliation against Israel’s recent actions.

Additionally, mixed U.S. economic data from this week’s ISM and PMI releases reflect a resilient services sector. The ISM Services PMI rose to 56.0 in October from 54.9 in September, exceeding forecasts, while the S&P Global Services PMI reported a slight dip, coming in at 55.0.

Technical Outlook: Key Support and Resistance Levels for Gold

Gold currently trades near $2,650 per ounce, with technical indicators suggesting a continuation of bearish momentum. On the daily chart, Gold remains below the nine- and 14-day Exponential Moving Averages (EMAs), and the 14-day Relative Strength Index (RSI) remains under 50, both indicating a bearish trend.

On the downside, the next support level sits around $2,603.53, representing a three-week low. A break below this level could push Gold toward the critical $2,500 mark.

Conversely, immediate resistance is found near the psychological level of $2,700, with further resistance at the nine-day EMA of $2,711.40. A breakout above this zone could position Gold to retest its recent high of $2,790.11 reached on October 31.

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Gold Price Holds Steady Near Record High, Awaits US Macro Data for Direction

Gold Price Holds Steady Near Record High, Awaits US Macro Data for Direction

Gold price (XAU/USD) remains robust as it approaches the European session on Tuesday, trading just above the $2,750 mark and close to last week’s all-time high. Geopolitical risks and political uncertainties in the US continue to boost demand for the safe-haven metal. Additionally, lower US Treasury yields and cautious market sentiment lend further support to gold.

At the same time, expectations for smaller Federal Reserve (Fed) rate cuts are expected to support US bond yields, which could help the US Dollar (USD) recover some of the previous session’s losses. This, in turn, tempers new bullish momentum in non-yielding gold as investors await key US economic data releases this week, likely to influence the Fed’s rate outlook and provide new direction for XAU/USD.

Market Movers: Gold Supported by Mixed Factors, USD Buying Limits Gains

The retreat in US Treasury yields led to an intraday pullback in the USD from recent highs, encouraging some dip-buying near $2,725 early this week. Recent positive US data dampened expectations for substantial Fed rate cuts, potentially bolstering bond yields amid concerns about deficit spending after the November 5 election. With the US election drawing near, markets face additional uncertainty as Vice President Kamala Harris and Republican candidate Donald Trump engage in a close race for the presidency. Moreover, heightened tensions in the Middle East have added to market caution, with the US warning Iran of potential consequences if it continues retaliatory strikes.

In the broader market, China reported an 11.18% decline in gold consumption year-over-year for the first three quarters, citing high prices as a dampening factor on jewelry demand. Investors now eye the upcoming US Consumer Confidence Index and Job Openings and Labor Turnover Survey (JOLTS) for insight into the Fed’s rate plans and USD dynamics, likely to affect short-term gold price movements.

Technical Outlook: Gold Awaits Breakout for Bulls to Regain Control

On the technical front, a sustained move above the $2,750 resistance could trigger further buying interest, pushing gold prices past the all-time high around $2,759 and towards the four-month-old ascending trend-line resistance at $2,770–2,775. A continued rally could eventually target the psychological $2,800 level.

However, the Relative Strength Index (RSI) on the daily chart is approaching overbought levels, signaling potential caution for bulls. A short-term consolidation or minor pullback could provide a better entry for additional upside.

If a corrective decline occurs, support could emerge near the $2,725 level, followed by $2,715—the lower boundary of a recent trading range. A decisive break below this range might prompt technical selling, potentially leading gold prices below $2,700 and toward the $2,675 and $2,657–2,655 support areas.

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WTI Struggles Below $70 Amid Demand Concerns and USD Strength

WTI Struggles Below $70 Amid Demand Concerns and USD Strength

WTI Struggles Below $70 Amid Demand Concerns and USD Strength

West Texas Intermediate (WTI) crude oil prices are hovering just below the $70.00 mark during Tuesday’s Asian session, remaining in a tight range around $69.70-$69.75. The commodity has struggled to build on the previous day’s modest gains and stays near the three-week low it touched last Friday. WTI seems vulnerable to continuing its recent downtrend, which has persisted for over two weeks.

The brief positive reaction to the People’s Bank of China’s (PBOC) interest rate cut on Monday was short-lived, as concerns about slowing demand, particularly from China, continued to weigh on oil prices. Both OPEC and the International Energy Agency (IEA) reduced their global demand forecasts last month due to economic challenges in China, the world’s largest oil importer. IEA chief Fatih Birol further fueled these concerns, warning that China’s economic weakness could dampen global oil demand for years to come.

Adding to WTI’s challenges, the US Dollar (USD) has surged to its highest level since early August, driven by expectations of more cautious monetary easing from the Federal Reserve (Fed). A stronger USD tends to weigh on oil prices by making crude more expensive for holders of other currencies.

However, the potential for further escalation in the Middle East conflict, which could disrupt oil supplies from the region, provides some support to WTI prices. This geopolitical risk cautions against overly bearish positions, despite the recent sharp drop from the nearly two-month high of $78.00 reached on October 8.

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As US administration strives for lower gasoline cost, oil prices are falling

As US administration strives for lower gasoline cost, oil prices are falling

Oil prices fell sharply in early trade on Wednesday, despite US President Joe Biden’s efforts to lower increasing fuel costs, which included pressure on large US corporations to help drivers during the country’s peak summer demand. At 00:31 GMT, US West Texas Intermediate (WTI) crude futures were down $1.34, or 1.2 percent, to $108.18 a barrel, while Brent crude futures were down $1.33, or 1.2 percent, to $113.32.

As the US battles rising gasoline costs and inflation, US President Joe Biden is poised to ask for a temporary suspension of the 18.4-cent-per-gallon federal gasoline tax on Wednesday, according to a person briefed on the proposal. On Monday, Biden said he was debating whether or not to run for president.

“Even oil traders recognized that higher oil prices would lead to a more aggressive tag team onslaught from the (US) Fed pushing rates higher and the Biden administration getting increasingly creative on the political and fiscal front to tame the energy inflation beast,” said Stephen Innes, managing partner at SPI Asset Management.

Seven oil corporations are scheduled to meet with Vice President Joe Biden on Thursday, under pressure from the White House to lower fuel costs as they post record profits. On Tuesday, however, Chevron CEO Michael Wirth stated that criticizing the oil business was not the way to lower petrol prices.

“These measures are not helpful in solving the difficulties we face,” Wirth wrote in a letter to Biden, prompting Biden to respond that the industry was being overly sensitive. Despite inflation concerns, demand is projected to rise to pre-COVID levels, and supply is expected to trail demand growth, keeping the market tight, as trading giant Vitol and Exxon Mobil Corp pointed out this week. Oil sanctions imposed by the European Union on Russia for its invasion of Ukraine, which Moscow refers to as a “special operation,” have yet to take effect, implying that supplies will only tighten more.

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Prior to the European open, gold and silver are trading lower

Prior to the European open, gold and silver are trading lower

Gold prices have retraced ahead of the European open after a strong day on Thursday (-0.62%). It has a similar effect as silver (-0.28%), albeit to a smaller amount. Copper is trading flat in the rest of the commodities complex, but spot WTI is up 0.38 percent. Overnight, stock markets in Asia Pacific were mixed. After the meltdown in Europe and America, the Shanghai Composite rallied 1.14 percent, although the ASX (-1.76%) and Nikkei 225 (-1.77%) both struggled. In Europe, futures markets are pointing to a bright start.

The largest mover in FX markets overnight was the USD/JPY, which jumped 1.51% after the Bank of Japan decided to keep its monetary policy unchanged. Bitcoin is currently trading at $20,807 in the crypto currency market. At its most recent meeting; the Bank of Japan announced no changes to monetary policy.

Three Arrows Capital, a crypto hedge fund, is reportedly facing $400 million in liquidations, according to reports. Granholm, the US Energy Secretary, is scheduled to meet with executives from the refining industry to discuss gas prices. Treasury Secretary Janet Yellen has stated that Congress must act on digital asset regulation. Draghi, the Italian prime minister, stated that ECB rate hikes will be more gradual than those of the FOMC.

Germany’s Finance Minister tells ECB President Lagarde that speculation of a fragmentation plan erodes trust. President Biden of the United States claims that a recession is not inescapable. According to sources, China has devised a strategy for controlling iron ore prices (including the formation of a buying cartel). May manufacture in New Zealand: 52.9 (prior 51.2).  The EU CPI, triple witching, and comments from Fed Chair Powell are among the highlights for the rest of the session.

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Gold rises as the dollar falls in anticipation of the Fed’s decision

Gold rises as the dollar falls in anticipation of the Fed’s decision

The dollar index fell 0.2 percent on the day after hitting a near two-decade high the day before, while benchmark US 10-year Treasury yields also fell from multi-year highs. According to Saxo Bank analyst Ole Hansen, gold is trapped between “those focusing on yields and their possible negative influence on gold, and against that we truly have the increasing possibility of stagflation.”

Hotter-than-expected Investors have priced in a 75 basis point (bps) interest rate increase rather than a 50 basis point increase by the Fed to temper increasing price pressures, based on US inflation statistics reported last week. While gold is frequently regarded as a safe haven asset during times of economic uncertainty, rising interest rates and bond yields raise the potential cost of owning it.

In a letter, French lender Societe Generale stated that a stock market catastrophe could lead to some diversification into gold. Investors are now waiting for the Federal Open Market Committee’s interest rate announcement, which is expected at 1800 GMT.

Some of the recent changes, such as yields falling, the dollar weakening, and gold rising, might be reversed if the Fed raises interest rates by only 50 basis points today, according to Commerzbank analysts in a note. Spot silver increased by 1.9 percent to $21.48 per ounce, while platinum increased by 2.1 percent to $939.88 per ounce. Palladium prices were up 1.2 percent to $1,836.85 per ounce.

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Investors expect a major Fed rate hike; gold is higher on lower yields

Investors expect a major Fed rate hike; gold is higher on lower yields

Weaker Treasury yields raised gold prices from near one-month lows on Wednesday, ahead of a possible aggressive interest rate hike by the US Federal Reserve to combat inflation amid rising fears of an oncoming recession. As of 0229 GMT, spot gold was up 0.5 percent at $1,817.12 per ounce, after falling to its lowest level since May 16 at $1,803.90 on Tuesday. Gold futures in the United States climbed 0.3 percent to $1,818.50.Later in the day; the Federal Open Market Committee is likely to announce its interest rate decision at 1800 GMT.

Investors have drastically increased their wagers that the Fed would raise interest rates by 75 basis points (bps) instead of 50 bps, fueling a major selloff across global markets. The opportunity cost of storing bullion, which pays no interest, rises as short-term interest rates and bond yields rise in the United States. Benchmark Gold was supported by a drop in 10-year Treasury yields from a multi-year high. “We believe the overall negative trend in the gold market will be maintained over the next few weeks, with gold dropping below $1,800/oz,” Langford said.

As shell-shocked investors waited to see how aggressive the Fed would be on rates, Asian markets were in a contemplative mood, with many fearful that extreme action would send the world into recession. The dollar remained near its two-decade high from the previous session, making greenback-priced bullion less appealing to purchasers holding foreign currencies. Silver jumped 0.7 percent to $21.22 per ounce on the spot market, while platinum gained 0.8 percent to $926.89 and palladium gained 0.5 percent to $1,824.71.

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Despite growing hawkish Fed bets, XAU/USD remains steady near $1,880

Despite growing hawkish Fed bets, XAU/USD remains steady near $1,880

Despite rising predictions on the Federal Reserve (Fed) taking an extreme hawkish posture this week, gold price (XAU/USD) is bouncing in a small range of $1,868.92-1,879.25 in the early Asian session. Following the announcement of the US Consumer Price Index (CPI) on Friday, the precious metal made a massive upward surge. The shiny metal quickly climbed from $1,828.99 to $1,879.25.

The US CPI was reported at 8.6 percent by the US Bureau of Labor Statistics, significantly higher than the previous print and estimates of 8.3 percent. In addition, the core CPI, which excludes food and energy prices, increased to 6% from 5.9% expected. It’s worth emphasizing that the food and oil processes play a far larger role in exacerbating the inflation problem. In terms of percent-wise rise, the core CPI, which excludes oil and food, has jumped lower than the plain-vanilla CPI. The Federal Reserve (Fed) is expected to announce a rate hike on Wednesday, based on higher-than-expected US inflation and better-than-expected US Nonfarm Payrolls (NFPs).

On a four-hour period, the gold price is about to break out to the upside of its long-term consolidation in the $1,825.10-1,876.01 area. The bullish momentum has been bolstered by a more responsive buying action reported last week from $1,825.10. From the 50-period Exponential Moving Average (EMA) of $1,853.15, the precious metal is auctioning upward. In the meantime, the Relative Strength Index (RSI) (14) has moved into a bullish area of 60.00-80.00, adding to the upside filters.

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Beijing’s COVID warning and inflation fears resulted fallen in prices of Oil

Beijing’s COVID warning and inflation fears resulted fallen in prices of Oil

On Monday, oil prices fell more than $2 as a flare-up in COVID-19 cases in Beijing dampened prospects for a quick increase in China’s fuel demand, while concerns about global inflation and economic development weighed on the market. By 0033 GMT, Brent crude futures had fallen $2.06, or 1.7 percent, to $119.95 a barrel, while US West Texas Intermediate crude had fallen $2.13, or 1.8 percent, to $118.54 a barrel.

Prices plummeted after Chinese officials warned of a “ferocious” COVID outbreak in Beijing on Sunday and announced plans to undertake mass testing in the capital until Wednesday. Concerns about more interest rate hikes following Friday’s significant increase in US inflation figures are also weighing on global financial markets.

In a note, Stephen Innes of SPI Asset Management wrote, “The higher greenback and stagflation fears proved to be the bullish market’s undoing.” “While China remains a huge near-term negative risk, most analysts see the gradual normalization of Chinese demand as a powerful positive for oil, despite the possibility of shutdown noise in the next weeks, because current demand is far from normal.”

Last week, both global oil benchmarks rose more than 1% on data showing robust oil demand in the world’s top consumer, the United States, despite inflation concerns, and on expectations that consumption in China, the world’s second largest consumer, would rebound after lockdown measures were lifted on June 1.

Oil producers and refineries are operating at full capacity to meet peak summer demand, while traders keep a careful eye on the impact of labour unrest in Libya, Norway, and South Korea on oil exports and consumption.

Saudi Arabia, the world’s largest exporter, planned to transfer some petroleum from China to Europe in July to bolster supplies in the West, dealers said.

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XAU/USD is at a crossroads, and US inflation is the key

XAU/USD is at a crossroads, and US inflation is the key

Gold Price found strong bids just below $1,842 and mounted a nice return to close a stormy Thursday with minor losses at $1,848. The shiny metal remained turbulent, but stayed within its usual price range of $1,850. Financial markets were dominated by risk-off flows. Investors were nonetheless concerned about global growth, especially after the European Central Bank (ECB) hinted at a 50 basis point rate hike in September to temper rising inflation expectations.

Investors were concerned that major central banks’ aggressive tightening policies to combat rising prices could push the global economy into recession. As a result, alongside continued increase in Treasury yields, safe-haven demand for the US dollar soared, sending the shining metal back into the red zone. A broad sell-off on Wall Street indices, notably in tech equities, was driven by impending growth uncertainties paired with pre-US inflation release anxiety, helping XAUUSD find a floor.

As traders prepare for the all-important US inflation report, which may provide fresh signals on the Fed’s rate rise forecast, the gold price is nursing losses below $1,850. The main event risk to finish this week, with the ECB decision out of the way, is expected to have a substantial impact on market sentiment as well as dollar valuations. In May, the US Consumer Price Index (CPI) is expected to remain unchanged at 8.3% YoY, while the core CPI is expected to fall to 5.9% YoY from 6.2 percent previously.

If the inflation report surprises markets to the upside, it might signal a faster and larger Fed rate hike, fueling a new surge in the dollar at the expense of gold. A surprising decline in the US CPI could send gold prices soaring, reigniting the debate over peak inflation and easing pressure on the Fed to act forcefully in September.

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ANZ Economists Predict Earlier OCR

ANZ Economists Predict Earlier OCR Cut Amid ‘Meaningful Progress’ in Inflation Battle

ANZ Economists Predict Earlier OCR Cut Amid ‘Meaningful Progress’ in Inflation Battle

Economists at ANZ New Zealand, the country’s largest bank, have revised their forecast for the first Reserve Bank Official Cash Rate (OCR) cut, moving it up to February 2025 from the previously anticipated May 2025.

Currently, the OCR stands at 5.50%, unchanged since May 2023. This adjustment in ANZ’s forecast comes as they observe potential progress in controlling inflation, despite ongoing domestic economic weakness. ANZ’s Chief Economist Sharon Zollner highlighted that recent data and leading indicators support a more confident outlook for a weak economy, prompting the bank to adjust its forecast.

Earlier this year, ANZ had forecasted a steady sequence of OCR cuts starting in August, eventually reducing the rate to 3.5% over 12 months. However, by February, they revised their stance, predicting two 25 basis point increases instead, one in February and another in April. Post the February monetary policy review, ANZ acknowledged their forecast error but still saw a strong chance of the OCR moving up before eventually forecasting a cut in mid-2025, later specified as May.

Zollner explained that before cutting the OCR, the Reserve Bank needs to be confident that Consumer Price Index (CPI) inflation is moving toward 2% and is expected to remain within the 1% to 3% target range. By February 2025, ANZ anticipates seeing fourth-quarter CPI inflation at 2.6% year-on-year and non-tradable inflation dropping below 4% in the following quarter, with unemployment rising above 5%. These conditions, according to Zollner, would justify an OCR cut.

The March CPI was 4%, with unemployment at 4.3%. Non-tradable inflation, which includes domestic goods and services, was at 5.8%, while tradeable inflation, including imported goods, was at 1.6%.

ANZ economists note the housing market remains stagnant, with ANZ holding $107.5 billion in housing loans as of March 31. Looking beyond February, they have penciled in a 25 basis point cut at each Reserve Bank monetary policy meeting, aiming for the OCR to stabilize around 3.5%, considered a neutral rate that neither stimulates nor constrains the economy.

The Reserve Bank itself isn’t forecasting an OCR cut until August next year, while financial markets have priced in a cut for November this year. The next OCR review is scheduled for July 10. Meanwhile, Infometrics’ chief forecaster Gareth Kiernan has also adjusted his forecast, now expecting the first OCR cut in February next year instead of November this year.

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Taiwan Central Bank Chief Links Rate Cut to Inflation Control

Taiwan Central Bank Chief Links Rate Cut to Inflation Control

Taiwan Central Bank Chief Links Rate Cut to Inflation Control

On Thursday, Taiwan’s central bank governor highlighted that inflation remains the crucial determinant in the potential decision to adjust interest rates at the upcoming meeting next week. During a session with legislators in parliament, Governor Yang Chin-long noted that Taiwan’s current interest rates are at their peak in over 15 years.

Governor Yang acknowledged the growing expectations for the U.S. Federal Reserve to reduce its rates by September. However, he emphasized that Taiwan’s economic circumstances differ from the U.S., indicating that any decision by Taiwan’s central bank to alter interest rates would not necessarily mirror the Fed’s actions. He stated that the decision to adjust rates in Taiwan hinges entirely on the domestic inflation scenario, which currently does not align directly with U.S. rates.

Despite not committing to a rate cut, Governor Yang suggested that another rate hike might be off the table for now. He reflected on the market’s reaction to the unexpected rate increase in March, pointing out that frequent surprises regarding rate adjustments are not desirable.

In economic data, Taiwan’s consumer price index (CPI) for April recorded a year-on-year increase of 1.95 percent, which was below the expectations of analysts. This has led the government to report a mild easing in inflation levels. This comes after the central bank, in a move that caught markets off guard in March, increased its policy rate to 2 percent from 1.875 percent. This decision was influenced by ongoing inflationary pressures and an impending rise in electricity prices.

The next rate-setting meeting of the central bank is scheduled for June 13. The economic context for this meeting is shaped by recent statistics indicating that Taiwan’s economy is poised for faster growth in 2024. This optimistic forecast is supported by robust international demand for artificial intelligence (AI) applications and strong domestic consumption. These factors will play a significant role in the central bank’s deliberations on whether to adjust interest rates, balancing the need to manage inflation while supporting economic growth.

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RBA Governor Bullock Predicts 'Quite Low' March GDP Numbers

RBA Governor Bullock Predicts ‘Quite Low’ March GDP Numbers

RBA Governor Bullock Predicts ‘Quite Low’ March GDP Numbers

Reserve Bank of Australia (RBA) Governor Michele Bullock has indicated that a rebound in inflation or persistently high price pressures could necessitate further interest rate hikes. Speaking at a senate estimates hearing, Bullock emphasized the RBA’s readiness to act if inflation remains uncomfortably high, stating that the central bank would not hesitate to increase rates again to control rising prices.

Conversely, Bullock noted that if economic growth were significantly lower than expected, the RBA would consider cutting interest rates to stimulate the economy. She highlighted the importance of monitoring economic indicators closely to determine the appropriate monetary policy response.

Bullock also projected that economic growth would be “quite low” in early 2024. The March quarter national accounts are expected to show minimal growth, with economists predicting a mere 0.2% expansion in the first quarter of 2024. This figure would result in an annual growth rate of just 1.2%, the weakest performance outside the pandemic since the 2000 dot-com bust. When questioned about the concept of a per capita recession, Bullock dismissed the term, stating that it does not accurately reflect job losses and economic difficulties.

In addressing budgetary questions, Bullock avoided labeling Treasurer Jim Chalmers’ May budget as either expansionary or contractionary, citing the complexity of the issue. She argued that various domestic and international factors influence Australia’s economic conditions, not just fiscal policy. Treasury Secretary Steven Kennedy also declined to provide a definitive answer on the budget’s impact during a similar inquiry.

Bullock reassured that federal and state energy rebates would not significantly impact underlying inflation. Despite concerns from some economists that the savings from the rebates might boost spending and inflation, Bullock believes the effect will be minimal. The May budget included a $300 energy rebate for households, which Treasury estimates will reduce headline inflation by 0.5 percentage points.

Under questioning from Liberal Senator Dean Smith, Bullock affirmed that the RBA would not rule out raising interest rates during an election campaign if necessary. The central bank’s decisions will continue to be driven by economic data.

RBA Assistant Governor Christopher Kent highlighted that the effects of the 13 rate hikes since May 2022 are still unfolding. A small group of borrowers with fixed-rate loans are yet to transition to higher variable rates, which could add another 20 basis points to the average mortgage rate. Kent also noted that increased competition among banks for high-quality borrowers has mitigated the impact of rate hikes on households. Only about 80% of the increase in the cash rate has been passed on to borrowers, thanks to competitive banking practices.

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China's Yuan Falls Despite

China’s Yuan Falls Despite Gains Across Asian Markets

China’s Yuan Falls Despite Gains Across Asian Markets

On Tuesday, the Chinese yuan experienced a decline against the dollar, diverging from the general upward trend seen in other Asian currencies. This occurred despite a broader weakening of the greenback, influenced by factors such as foreign dividend payments and ongoing economic concerns.

Before the markets opened, the People’s Bank of China set the daily midpoint rate for the yuan at 7.1083 per US dollar, marking its strongest position since May 22. This rate is central to the managed floating exchange rate system that allows the yuan to fluctuate within a 2% range above or below the midpoint.

In the spot market, the onshore yuan started the day at 7.2400 per dollar. By midday, it had weakened to 7.2456, showing a slight decrease of 43 pips compared to the previous session’s close and standing 1.93% weaker than the midpoint.

Despite recent policy efforts to stimulate the property market, these measures have not managed to sustain capital inflows, according to analysts. HSBC noted that while there have been short-lived increases in equity inflows due to policy changes favoring property, these have not been maintained. On the other hand, there has been a more consistent outflow of funds due to onshore demand for foreign exchange and investments in offshore equities through the southbound trading link.

Additionally, the Chinese blue-chip CSI 300 index has shown signs of weakening after initially rebounding from five-year lows in February. This suggests investor fatigue and uncertainty regarding the effectiveness of the government’s support measures for the market.

Another factor contributing to the yuan’s decline is the seasonal demand for foreign currency by overseas-listed Chinese companies needing to cover dividend payouts. This demand typically leads to selling of the yuan in exchange for foreign currencies.

Market watchers are now looking forward to upcoming U.S. economic indicators, including the ISM services PMI and nonfarm payrolls data, which will provide further insights into the potential adjustments in U.S. interest rates.

For the year, the yuan has fallen by 2.1%, affected by its relatively low yields compared to other currencies and the divergent monetary policies between China and other major economies. Meanwhile, the global dollar index has seen a slight decrease, dropping to 104.08 from 104.14. The offshore yuan is also showing a modest disparity from its onshore counterpart, trading at 7.2573 per dollar, which is 0.16% weaker.

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Japan's Q1 Capex Increase Hints at Positive GDP Revision

Japan’s Q1 Capex Increase Hints at Positive GDP Revision

Japan’s Q1 Capex Increase Hints at Positive GDP Revision

In the January-March period, Japanese companies increased their investment in plant and equipment, driven by a rise in demand for automobiles and efforts to streamline operations. This uptick in capital expenditure suggests that the economic downturn observed in the first quarter might be less severe than previously estimated.

The latest figures indicate a resurgence in private sector-led growth, a key factor for the Bank of Japan as it considers further normalization of its monetary policy. This follows a rate hike in March, the first since 2007. According to the Ministry of Finance, corporate capital spending in Japan grew by 6.8% year-over-year in the first quarter. Despite being the 12th consecutive quarter of gains, the growth rate has decelerated from the previous quarter’s robust 16.4%. Additionally, on a seasonally adjusted quarterly basis, there was a decline of 4.2%, pointing to inconsistent momentum.

These investment figures will play a crucial role in the recalibration of the gross domestic product (GDP) statistics scheduled for release on June 10. Initial estimates had shown a contraction of 2.0% on an annualized basis in the first quarter. Analysts now suggest that these capex figures, combined with public works investment and an increase in inventories, may lead to an adjusted contraction of around 1.8% annualized.

This improved capex data is anticipated to strengthen arguments in favor of the central bank continuing with its policy normalization efforts gradually. Additionally, the Ministry of Finance reported that corporate sales in the first quarter rose by 2.3% from the previous year, while recurring profits surged by 15.1%. Total corporate profits reached 27.4 trillion yen, marking the third highest recorded figure, bolstered by heightened demand in sectors like automotive, chemicals, real estate, and other services. These developments suggest a potential stabilization and gradual recovery of the Japanese economy in the upcoming months.

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Japanese Yen Nears Multi-Month

Tokyo Inflation Rises, Aligning BOJ with Potential Rate Hike

Tokyo Inflation Rises, Aligning BOJ with Potential Rate Hike

Inflation in Tokyo saw a notable uptick in May, with consumer prices excluding fresh food climbing by 1.9%, according to data from the Ministry of Internal Affairs. This increase, which aligns with economists’ predictions, was primarily fueled by higher utility costs due to renewable energy surcharges.

These inflation figures from Tokyo often predict national trends, suggesting that a similar rise could be expected in the upcoming nationwide inflation data. Despite this increase, Tokyo’s inflation rate remains below the national average, largely due to educational subsidies provided by the local government.

Economists are closely monitoring the potential impacts of the upcoming tax cuts in June and the cessation of government utility subsidies on consumer prices and spending habits. Although some analysts foresee a possible early rate hike by the Bank of Japan (BOJ) due to the depreciating yen, others, like Mari Iwashita from Daiwa Securities, anticipate such a move might not occur until October.

Additional data released indicated a mixed economic scenario. Industrial output in April was below expectations, and while the jobless rate stabilized at 2.6%, the job vacancy-to-seeker ratio slightly declined. Nonetheless, the labor market remains tight, potentially leading to higher wages and, subsequently, higher prices.

The BOJ’s approach to interest rates is garnering attention following the end of its negative interest rate policy in March. Solid growth in prices might encourage the BOJ to initiate another rate hike this year if a healthy cycle of rising wages and prices appears to be taking shape. BOJ Governor Kazuo Ueda has hinted at the possibility of gradual rate increases, moving away from the long-standing zero inflation mindset.

On the inflation details, a deeper look at the data reveals a slight slowdown in core inflation, which excludes fresh food and energy, to 1.7%. Service prices also saw a modest rise, impacted by ongoing educational subsidies.

Retail sales data showed a positive trend with a 1.2% increase in April, outperforming expectations. However, factory output dipped slightly by 0.1%, missing the projected 1.5% growth. These figures suggest an uneven recovery pace in Japan’s economy, which continues to face challenges despite some positive signs.

Inflationary pressures are expected to intensify with the phasing out of energy subsidies and a significant increase in renewable energy surcharges, potentially driving the inflation rate towards 3% over the summer. Additionally, the weakening yen, which recently hit a 34-year low against the dollar, poses further risks by increasing import costs. This scenario is compounded by the likelihood of businesses passing on rising labor costs to consumers, reflecting significant pay gains achieved in recent wage negotiations, marking the most substantial increases in nearly three decades.

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Yen Surpasses Threshold Suspected to Trigger Intervention

Yen Surpasses Threshold Suspected to Trigger Intervention

The yen recently fell to a four-week low, touching 157.71 before slightly recovering to 157.39 per dollar, demonstrating the ongoing challenges Japan faces in its attempts to stabilize its currency through market interventions. This decline brings the yen close to the 157.52 mark, a critical level that previously triggered suspected intervention by Japan at the beginning of May to strengthen the currency.

Despite these efforts, the yen continues to weaken due to the substantial difference in interest rates between Japan and other major economies. This discrepancy has made the yen less attractive as investors seek assets with higher returns. Even as Japanese bond yields hit their highest in a decade, the currency’s pressure remains unrelieved.

Japan’s 10-year government bond yield has risen to 1.1%, the highest since July 2011, fueled by speculation that the Bank of Japan (BOJ) might increase interest rates further this year after moving away from negative interest rates in March. However, even slight increases in Japan’s yields seem insufficient to shift market focus away from higher-yielding currencies.

The yen’s depreciation is evident not only against the dollar but also against European currencies, nearing its lowest point since 2008 against the pound and approaching a record low against the euro. The yields on ten-year bonds in the US and UK are more than 300 basis points higher than those in Japan, further highlighting the yen’s unattractiveness.

Japanese authorities have not confirmed their intervention in the currency market, though estimates based on financial deposits at the Bank of Japan suggest they might have purchased around ¥3.5 trillion ($22 billion) worth of yen to support it. Finance Minister Shunichi Suzuki has maintained vigilance over the currency market, promising necessary actions as required.

However, the intervention faces potential complications. US Treasury Secretary Janet Yellen emphasized that currency intervention should rarely be used and should be pre-announced, aligning with the Group of Seven’s agreement to avoid manipulating exchange rates except in cases of extreme volatility. This stance could make it more challenging for Japan to intervene under current conditions.

Moreover, BOJ Board Member Seiji Adachi indicated that ongoing yen weakness could lead to higher prices, potentially hastening the need for another rate hike. Swap markets are now fully pricing in a rate increase by the BOJ in their July meeting, reflecting heightened expectations for monetary tightening in Japan.

In summary, while Japan is keen on supporting the yen, global yield disparities and international diplomatic considerations complicate its intervention efforts. As higher yields continue to dominate global markets, the yen remains under significant downward pressure.

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

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

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

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

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

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

Technical Outlook: Bullish Momentum Builds 

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

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

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

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

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

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

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

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

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JPY Recovers Losses vs. USD, Bullish Outlook Intact

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Conversely, on the downside:-

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

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

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

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

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

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

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

AUD Pressured by Risk Aversion, Trump’s Tariff Threats

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

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

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

China’s Economic Slowdown Adds Pressure on AUD

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

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

Technical Outlook: AUD/USD Turns Bearish Below 0.6250

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

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

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US Dollar Surges as Trump Revives Tariff Threats

US Dollar Surges as Trump Revives Tariff Threats

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

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

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

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

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

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

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

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

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

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

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

Risk Aversion Rises Amid Trump’s Trade Tariff Push

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

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

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

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

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

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

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NZD/USD Struggles

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

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

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

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

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

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US Yields Boost Dollar, Weaken Yen

US Yields Boost Dollar, Weaken Yen

US Yields Boost Dollar, Weaken Yen

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

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

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

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

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

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

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

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

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

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Cryptocurrency Move Back to Support the Pack to Level

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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Cryptos Market: Bitcoin Shows Bullish Momentum Over Dollar Strength

Cryptos Market: Bitcoin Shows Bullish Momentum Over Dollar Strength

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

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

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

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

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

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

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

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

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Ethereum Rate Hits at Higher Level More Profitable Than Bitcoin Mining

Ethereum Rate Hits at Higher Level More Profitable Than Bitcoin Mining

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

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

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

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

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

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

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

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Cryptocurrency Bitcoin Shows the Bullish Divergence on User Count

Cryptocurrency Bitcoin Shows the Bullish Divergence on User Count

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

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

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

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

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

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

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

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

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

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

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

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

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