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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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Gold Price Recovers Some Losses

Gold Price Recovers Some Losses, Still Below Key 50-Day SMA Resistance

Gold Price Recovers Some Losses, Still Below Key 50-Day SMA Resistance

During Tuesday’s Asian trading session, gold prices (XAU/USD) experienced some buying, partially offsetting Monday’s modest losses. This revival is driven by U.S. macroeconomic data that suggest easing inflation pressures, heightening anticipation of a potential Federal Reserve rate cut in September. These developments provide some support for gold, which does not yield income but often gains when yield-bearing assets like bonds are less attractive. Nonetheless, the metal continues to operate within a familiar range from the past week and remains below the crucial 50-day Simple Moving Average (SMA), signaling that bullish traders should remain cautious.

Recently, the Federal Reserve adopted a hawkish stance, predicting only one interest rate cut this year. This position has been reinforced by multiple Federal Open Market Committee (FOMC) members, maintaining high U.S. Treasury bond yields. These conditions bolster the U.S. Dollar (USD), which, in turn, could limit any significant upward movement in gold prices. Investors and traders are encouraged to await sustained buying before determining that the recent corrective downturn from the record highs in May is concluding and before preparing for potential further gains.

The outlook for gold is tethered not only to U.S. economic indicators and Federal Reserve policies but also to broader global economic dynamics. With inflationary pressures showing signs of subsiding, there could be less impetus for the Fed to maintain higher interest rates, traditionally a scenario that favors gold. However, the complexities of global finance, including ongoing international tensions and economic recoveries, continue to play a significant role in shaping market sentiment and the subsequent demand for safe-haven assets like gold.

Moving forward, market participants will likely monitor upcoming U.S. economic reports and statements from FOMC members closely. These insights will help gauge the strength of the dollar and the trajectory of interest rates, which are pivotal in determining the direction of gold prices. As such, the immediate future of gold trading appears to hinge on a delicate balance of economic indicators, monetary policy expectations, and global market sentiment.

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Gold Price Stays Low Amid Rate Concerns

Gold Price Stays Low Amid Rate Concerns, Rising US Dollar Demand

Gold Price Stays Low Amid Rate Concerns, Rising US Dollar Demand

During early trading in Europe on Tuesday, the gold price (XAU/USD) faced renewed selling pressure, diminishing some of the modest recovery gains it had made from the previous day. These gains had lifted the price from a low of $2,287—the lowest in over a month—sparked by optimistic US employment data. This development has led investors to reconsider their expectations for an impending interest rate cut by the Federal Reserve (Fed) in September, resulting in sustained high US Treasury bond yields and a robust US Dollar (USD). The dollar reached a multi-week high on Monday, which continues to dampen the demand for gold.

Additionally, the People’s Bank of China (PBoC) made a significant shift by sharply curtailing its gold purchasing activities in May. This decision marked the end of an extensive one-and-a-half-year period of consistent buying, diverting investment flows away from gold. Despite these pressures, gold prices are finding some support against deeper losses due to ongoing political uncertainty in Europe and persistent geopolitical risks. These factors are causing traders to adopt a cautious stance, preferring to wait for further economic indicators.

Key upcoming events that traders are watching include the release of the latest US consumer inflation figures and the Federal Open Market Committee (FOMC) decision, both due on Wednesday. These events are highly anticipated as they could provide clearer signals about the Fed’s plans regarding rate cuts. The outcome of these developments will be crucial in shaping the short-term direction of gold prices.

Gold, as a non-yielding asset, typically finds it challenging to compete with yield-bearing investments when interest rates are high. The current strength of the US dollar, fueled by high treasury yields and the Fed’s monetary policy stance, continues to exert downward pressure on gold prices. However, the precious metal’s status as a safe-haven asset amid financial and geopolitical instability could help mitigate some of the negative impacts from these economic factors.

Investors and traders are therefore closely monitoring these economic indicators and central bank decisions, which will play a pivotal role in determining the near-term pricing and investment attractiveness of gold in the current economic landscape.

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Gold Prices Hit Two-Week High as Buyers

Gold Prices Hit Two-Week High as Buyers Bet on Fed Rate Cut

Gold Prices Hit Two-Week High as Buyers Bet on Fed Rate Cut

Gold prices (XAU/USD) have seen consistent buying interest for the second consecutive day, reaching a two-week peak around the $2,373 mark during the early European trading session on Thursday. The momentum is distinctly bullish, fueled by expectations that major central banks worldwide might reduce borrowing costs to stimulate economic growth.

This bullish sentiment was reinforced when the Bank of Canada (BoC), on Wednesday, reduced its benchmark interest rate for the first time in four years from a more than two-decade high, expressing concerns over a decelerating economy. Additionally, the European Central Bank (ECB) is anticipated to lower its interest rates for the first time since March 2016 at its policy meeting conclusion later today.

On another front, market participants are increasingly betting on a potential rate cut by the Federal Reserve (Fed) in response to signs of a cooling U.S. economy. These expectations have kept U.S. Treasury bond yields at their lowest in over two months, which has undermined any attempts by the U.S. Dollar (USD) to capitalize on its modest recovery gains observed over the previous two days. Moreover, ongoing geopolitical tensions, particularly in the Middle East, continue to support the appeal of gold as a safe-haven asset.

Despite these favorable conditions, the upside potential for gold prices appears somewhat capped. Investors remain cautious, with many holding their positions in anticipation of the U.S. Nonfarm Payrolls (NFP) report due on Friday. This key economic indicator could provide significant insights into the health of the U.S. labor market and influence the Fed’s monetary policy decisions moving forward.

Overall, the global economic landscape, characterized by potential rate cuts from major central banks and ongoing geopolitical uncertainties, forms a supportive backdrop for gold. However, the near-term trajectory of gold prices will likely be influenced by upcoming economic data releases and policy announcements, which are keenly awaited by traders and investors alike to gauge the next significant move in the precious metals market.

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WTI Falls Below $74 Amid OPEC+ Plans

WTI Falls Below $74 Amid OPEC+ Plans to Reduce Production Cuts

WTI Falls Below $74 Amid OPEC+ Plans to Reduce Production Cuts

West Texas Intermediate (WTI) oil prices continued their downward trend for the fifth consecutive day, trading at approximately $73.90 per barrel during the Asian trading session on Tuesday. This recent decline in crude oil prices stems from the Organization of the Petroleum Exporting Countries and their allies, including Russia, collectively known as OPEC+, announcing a plan to gradually ease oil production cuts.

OPEC+ has scheduled a phased rollback of their voluntary production cuts totaling 2.2 million barrels per day (bpd), beginning in October. By December, it is anticipated that over 500,000 bpd will re-enter the market, culminating in a total of 1.8 million bpd by June 2025. This move is aimed at stabilizing the oil market which has experienced significant fluctuations.

In a related development, the United States has announced the purchase of an additional 3 million barrels of oil for the country’s Strategic Petroleum Reserve (SPR). This decision, made by the Department of Energy, is part of a broader effort to gradually replenish the reserve following its largest-ever depletion in 2022. Last year, under directives from President Joe Biden, 180 million barrels were released over six months to help manage fuel prices in the aftermath of Russia’s invasion of Ukraine, which had spiked global oil prices.

Additionally, recent U.S. economic data revealed some easing in price pressures. The latest Personal Consumption Expenditure (PCE) data for April showed a softening in inflation, although this did not prompt an immediate rate cut from the Federal Reserve (Fed). The Fed’s hesitation suggests that more time may be needed to meet its inflation targets. Concurrently, the persistently high interest rates are casting a shadow over the U.S. economic outlook, curbing oil demand as higher borrowing costs weigh on economic activities.

Overall, these developments reflect a complex interplay between global oil supply adjustments by OPEC+, strategic reserve policies of the U.S., and broader economic conditions, all of which are contributing to the current trends in oil market dynamics.

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WTI Crude Oil Prices Dip Below $68.50 Amid Stronger USD

WTI Nears $79 as Key US Economic Data Looms

WTI Nears $79 as Key US Economic Data Looms

In the Asian trading session on Thursday, West Texas Intermediate (WTI) crude oil fell slightly to around $79.00 per barrel. Traders are closely monitoring upcoming economic reports, including today’s US Crude Oil Stocks Change report from the Energy Information Administration. Expectations are set for a drawdown of 1.9 million barrels for the week ending May 24, contrasting with the previous addition of 1.825 million barrels. Additionally, the API Weekly Crude Oil Stock last week reported a significant decrease of 6.49 million barrels, following a 2.48 million barrel increase the week before.

Attention is also focused on the upcoming June 2 meeting of the Organization of the Petroleum Exporting Countries (OPEC) and its allies, including Russia, known as OPEC+. The meeting is critical as members will consider extending voluntary output cuts of 2.2 million barrels per day into the second half of 2024. It is widely anticipated that the group will agree to maintain these supply reductions.

Further influencing the oil market are comments from Neel Kashkari, President of the Federal Reserve Bank of Minneapolis, which have stirred concerns about further interest rate hikes. Kashkari noted the possibility of rate increases, casting doubt on the progress of disinflation. Such hawkish monetary policy stances tend to negatively impact the economic outlook and, consequently, depress oil prices.

Additionally, the US dollar has strengthened on the back of rising Treasury yields, fueled by investor risk aversion ahead of significant economic data releases. The forthcoming US Gross Domestic Product Annualized data for Q1 and the Core Personal Consumption Expenditures (PCE) Price Index data set for release on Friday are critical. A stronger dollar makes oil more expensive for holders of other currencies, potentially curbing demand.

These elements combined paint a complex picture for WTI prices, as market participants weigh supply dynamics against broader economic indicators and monetary policy developments.

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WTI Crude Oil Holds Modest Losses Above $70, Bearish Bias Persists

WTI Nears $78.50 as US Inflation Data, OPEC+ Meeting Loom

WTI Nears $78.50 as US Inflation Data, OPEC+ Meeting Loom

West Texas Intermediate (WTI) crude oil prices edged higher as traders anticipate the upcoming meeting of the Organization of the Petroleum Exporting Countries and allies, including Russia (OPEC+), scheduled for June 2. The meeting will address whether to extend the current voluntary output cuts of 2.2 million barrels per day into the second half of 2024. WTI was trading around $78.70 per barrel during Tuesday’s Asian trading session.

The rise in oil prices is also fueled by increased geopolitical tensions in the Middle East. Over the weekend, an Israeli airstrike in Rafah, Gaza, reportedly caused a significant fire, resulting in 45 casualties. This incident has intensified international reactions and added a geopolitical risk premium to oil prices. Additionally, the reported death of an Egyptian soldier in related strikes has further contributed to the risk concerns impacting oil markets.

Market focus is also on the US economic indicators, with traders awaiting the release of the Personal Consumption Expenditures (PCE) Price Index data on Friday. This inflation measure is closely watched by the Federal Reserve to guide its monetary policy decisions. Recent comments from Fed officials suggest a cautious approach to interest rate cuts, emphasizing the need for more substantial evidence of inflation trending towards the 2% annual target. Persistently high interest rates could dampen the US economic outlook and curtail oil demand.

Furthermore, developments in Iran could influence oil supply dynamics. According to reports from Iran’s Tasnim news agency, an economic council led by Iran’s interim president Mohammad Mokhber has approved a plan to boost the country’s oil production from 3.6 million barrels per day to 4 million barrels per day.

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Gold Price

Gold Prices Fall Further Due to Fed’s Hawkish Outlook

Gold Prices Fall Further Due to Fed’s Hawkish Outlook

On Wednesday, gold prices faced downward pressure as sellers stepped in, influenced by the latest Federal Open Market Committee (FOMC) minutes, which were perceived as markedly more hawkish than earlier communications. This interpretation suggests that the U.S. Federal Reserve may maintain its tight monetary policy stance for a prolonged period. The anticipation of continued restrictive policies bolstered the U.S. dollar, which in turn placed significant selling pressure on gold.

The price trajectory of gold in the coming days could hinge on several key economic indicators and events. Market participants are particularly keen on the upcoming preliminary readings of the U.S. Manufacturing and Services Purchasing Managers’ Index (PMI) for May. Should these indicators come in weaker than expected, they could fuel speculation that the Federal Reserve might ease up on interest rates, potentially providing a lift to gold prices.

Moreover, ongoing geopolitical tensions and persistent uncertainties are likely to continue supporting the precious metal by limiting its downside. Despite the pressures from a stronger dollar, factors such as unresolved geopolitical conflicts and sustained high inflation are elements that traditionally drive investors towards the safety of gold.

In addition to the PMI data, several other important economic reports and events are on the horizon, which could influence gold prices. These include the Chicago Fed National Activity Index, weekly Initial Jobless Claims, and New Home Sales data. Additionally, comments from the Federal Reserve’s officials, particularly from Fed’s Bostic, will be closely watched for further insights into the central bank’s future policy direction.

Investors and traders in gold will need to navigate a complex landscape of economic data and Fed communications in the short term. While the hawkish stance of the Federal Reserve poses challenges, the underlying economic uncertainties and the traditional role of gold as a safe-haven asset may provide some support to its prices. As such, the balance of these dynamics will be crucial in determining the near-term movements in the gold market.

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Yuan Falls to Lowest Level Since November as China Permits Declines

Yuan Falls to Lowest Level Since November as China Permits Declines

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

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

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

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

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

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Japanese Yen Weakens Against USD

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

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

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

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

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

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

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

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Lane Asserts ECB Must Maintain Restrictive Stance Throughout the Year

Lane Asserts ECB Must Maintain Restrictive Stance Throughout the Year

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

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

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

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

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

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US Data and Trump Drive Sentiment in the FX Market

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

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

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

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

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

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

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

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

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

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

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

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

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Goldman Predicts Stronger Dollar in Inflation Battle

Goldman Predicts Stronger Dollar in Inflation Battle

Goldman Predicts Stronger Dollar in Inflation Battle

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

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

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

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

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

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UK Government Considers 'Bootcamp' Programs

UK Government Considers ‘Bootcamp’ Programs to Address Employment Shortages

UK Government Considers ‘Bootcamp’ Programs to Address Employment Shortages

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

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

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

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

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

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

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

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

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Chinese Banks Keep Lending Rate Steady After PBOC Decision

Chinese Banks Keep Lending Rate Steady After PBOC Decision

Chinese Banks Keep Lending Rate Steady After PBOC Decision

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

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

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

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

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

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

 

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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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